Agreement and Plan of Merger - Thor Industries Inc. and Keystone RV Co.

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                          Agreement and Plan of Merger


                                  by and among

                             Thor Acquisition Corp.,
                             Thor Industries, Inc.,
                               Keystone RV Company
                                       and
                  certain parties listed on the signature pages
                                 attached hereto



                                November 9, 2001


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                                Table of Contents

                                                                            Page
                                                                            ----
                                                                                
Article I The Merger...........................................................2

         SECTION 1.01          The Merger......................................2
         SECTION 1.02          Effective Time..................................2
         SECTION 1.03          Effects of the Merger...........................3
         SECTION 1.04          Certificate of Incorporation and By-laws........3
         SECTION 1.05          Directors.......................................3
         SECTION 1.06          Officers........................................3
         SECTION 1.07          Tax Consequences................................3

Article II Merger Consideration; Conversion of Securities; 
        Adjustment; Escrow.....................................................4

         SECTION 2.01          Merger Consideration............................4
         SECTION 2.02          Cancellation and Conversion of the Capital 
                               Stock and Stock Options of the Company and 
                               Acquisition Subsidiary..........................6
         SECTION 2.03          Exchange Procedure; Payment.....................7
         SECTION 2.04          Adjustment of Merger Consideration..............8
         SECTION 2.05          Escrow.........................................10

Article III Representations And Warranties Of The Company 
        And The Principal Shareholder.........................................13

         SECTION 3.01          Organization; Good Standing....................13
         SECTION 3.02          Capitalization; Title to Shares................13
         SECTION 3.03          Subsidiaries...................................14
         SECTION 3.04          Authority Relative to this Agreement...........14
         SECTION 3.05          Consents and Approvals; No Violations..........14
         SECTION 3.06          Financial Statements...........................15
         SECTION 3.07          Absence of Undisclosed Liabilities.............16
         SECTION 3.08          Absence of Certain Changes or Events...........16
         SECTION 3.09          Company's Agreements...........................17
         SECTION 3.10          Real Property..................................18
         SECTION 3.11          Machinery and Equipment........................19
         SECTION 3.12          Inventories....................................20
         SECTION 3.13          Accounts Receivable............................20
         SECTION 3.14          Intellectual Property Rights...................20
         SECTION 3.15          Licenses.......................................21
         SECTION 3.16          Title to Assets................................21
         SECTION 3.17          Corporate Minute Books; Bank Accounts..........21
         SECTION 3.19          Employees; Benefit Plans.......................23
         SECTION 3.20          Insurance......................................26
         SECTION 3.21          Litigation.....................................26
         SECTION 3.22          Compliance with Laws...........................27
         SECTION 3.23          NHTSA; Other Safety Standards..................27

                                       


         SECTION 3.24          Product Liability; Product Recalls.............27
         SECTION 3.25          Warranties.....................................28
         SECTION 3.26          Dealer Network; Rebates and Refunds............28
         SECTION 3.27          Environmental Matters..........................28
         SECTION 3.28          Disclosure.....................................30
         SECTION 3.29          Tax Matters....................................31
         SECTION 3.30          Exclusive Representations and Warranties.......31

Article IV Representations and Warranties of Parent and 
        Acquisition Subsidiary................................................33

         SECTION 4.01          Organization; Good Standing....................33
         SECTION 4.02          Authority Relative to this Agreement...........33
         SECTION 4.03          Consents and Approvals; No Violations..........33
         SECTION 4.04          Validity of Shares Issued......................34
         SECTION 4.05          Capitalization of Acquisition Subsidiary.......34
         SECTION 4.06          Litigation.....................................34
         SECTION 4.07          SEC Reports; Financial Statements..............35
         SECTION 4.08          Tax Matters....................................35
         SECTION 4.09          Exclusive Representations and Warranties.......35

Article V Conduct and Transactions Prior to Closing...........................36

         SECTION 5.01          Conduct of Business............................36
         SECTION 5.02          Certain Changes or Events......................36
         SECTION 5.03          Access to Information..........................37
         SECTION 5.04          Non-Solicitation...............................37
         SECTION 5.05          Additional Agreements..........................37
         SECTION 5.06          Communications with Agencies...................38
         SECTION 5.07          HSR Act Compliance.............................38
         SECTION 5.08          Public Disclosure..............................38
         SECTION 5.09          Books and Records..............................38
         SECTION 5.10          Supplements to and Amendments of the 
                               Disclosure Schedule............................38
         SECTION 5.11          Tax Matters....................................39

Article VI Conditions to Closing..............................................39

         SECTION 6.01          Conditions to Obligations of Parent and 
                               Acquisition Subsidiary.........................39
         SECTION 6.02          Conditions to Obligations of the Company 
                               and the Holders................................42

Article VII Closing...........................................................43

         SECTION 7.01          Closing Date...................................43
         SECTION 7.02          Deliveries by the Company and the Holders......43
         SECTION 7.03          Deliveries by Parent and 
                               Acquisition Subsidiary.........................44
         SECTION 7.04          Further Assurances.............................44

Article VIII Private Placement; Restrictions On Transfer; 
             Registration Statement...........................................45

                                       


         SECTION 8.01          Securities Act Compliance......................45
         SECTION 8.02          Restrictions on Transfer.......................46
         SECTION 8.03          Legends........................................47
         SECTION 8.04          Registration of Parent Common Stock............47

Article IX Survival; Indemnification..........................................48

         SECTION 9.01          Survival Past Closing..........................48
         SECTION 9.02          Indemnification by the Holders.................48
         SECTION 9.03          Indemnification by Parent and 
                               Acquisition Subsidiary.........................49
         SECTION 9.04          Limitation on Indemnification..................49
         SECTION 9.05          Exclusive Remedy...............................50
         SECTION 9.06          Indemnification Procedures.....................50

Article X Termination of Agreement............................................52

         SECTION 10.01         Events of Termination..........................52
         SECTION 10.02         Effect of Termination..........................52

Article XI Finder's Fees......................................................53


Article XII Notices...........................................................53


Article XIII Miscellaneous....................................................56

         SECTION 13.01         Expenses.......................................56
         SECTION 13.02         Entire Agreement...............................56
         SECTION 13.03         Amendments and Waivers.........................56
         SECTION 13.04         Successors and Assigns.........................57
         SECTION 13.05         Governing Law..................................57
         SECTION 13.06         Severability...................................57
         SECTION 13.07         No Third-Party Beneficiaries...................57
         SECTION 13.08         Attorneys' Fees................................57
         SECTION 13.09         Remedies.......................................57
         SECTION 13.10         Consent to Jurisdiction and Service of 
                               Process........................................58
         SECTION 13.11         Counterparts...................................58
         SECTION 13.12         Certain References; Captions...................58
         SECTION 13.13         Interpretation.................................58
         SECTION 13.14         Guaranty by Parent.............................59
         SECTION 13.15         Holder Representatives.........................59
         SECTION 13.16         Knowledge......................................60
         SECTION 13.17         Material Adverse Effect........................60
         SECTION 13.18         Company Director and Officer 
                               Indemnification................................60
         SECTION 13.19         Defined Terms..................................60

EXHIBITS

         EXHIBIT 1.02               Forms of Certificate of Merger
         EXHIBIT 2.01               Form of Certificate of Designation

                                       


         EXHIBIT 2.05(a)            Form of Escrow Agreement
         EXHIBIT 2.05(b)(i)         Form of Letter Agreement
         EXHIBIT 2.05(b)(ii)        Form of Additional Escrow Agreement
         EXHIBIT 6.01(e)            Form of Opinion of Counsel for the Company 
                                    and the Holders
         EXHIBIT 6.02(e)            Form of Opinion of Counsel for Parent and 
                                    Acquisition Subsidiary
         EXHIBIT 7.02(d)            Form of Non-Competition Agreement
         EXHIBIT 7.02(f)            Form of Holder Release
         EXHIBIT 8.02               Form of Stock Restriction Agreement
         EXHIBIT 8.04               Form of Registration Rights Agreement

ANNEXES

         ANNEX 2.04(c)              Thor Warranty Reserve Formula
         ANNEX 6.01(a)              Additional Closing Covenants and Conditions
         ANNEX 6.01(c)              Consents Required to be Obtained
         ANNEX 6.01(i)              Liens Not Required to be Released or 
                                    Terminated by the Company
         ANNEX 9.02(iii)            Additional Matters







                          Agreement and Plan of Merger
                          ----------------------------


                Agreement  and plan of merger dated as of November 9, 2001 (this
"Agreement")  by and  among  Thor  Acquisition  Corp.,  a  Delaware  corporation
 ---------
("Acquisition  Subsidiary"),  Thor  Industries,  Inc.,  a  Delaware  corporation
  -----------------------
("Parent"),  Keystone RV Company,  an Indiana  corporation (the "Company"),  the
  ------                                                         -------
shareholders of the Company whose names are listed at the foot of this Agreement
(the  "Shareholders"),  the  holders of the  Company  Stock  Options (as defined
       ------------
below) whose names are listed at the foot of this Agreement (the "Optionholders"
                                                                  -------------
and,  together  with the  Shareholders,  collectively  referred to herein as the
"Holders"),  and H. Coleman Davis, III and Joseph F. Trustey, as representatives
 -------
of the Holders (each, a "Holder  Representative"  and collectively,  the "Holder
                         ----------------------                           ------
Representatives").
---------------

                              W I T N E S S E T H:
                               - - - - - - - - - -


                WHEREAS, the Company is engaged in the business (the "Business")
                                                                      --------
of  manufacturing  and  marketing  recreational  vehicles,  consisting of travel
trailers and fifth-wheel vehicles (the "Product");
                                        -------

                WHEREAS,   the  Company   desires  to  merge  with   Acquisition
Subsidiary and Acquisition  Subsidiary  desires to merge with the Company,  upon
the terms and  subject to the  conditions  set forth  herein,  whereby  (i) each
issued and outstanding  share of voting common stock,  par value $.01 per share,
of the Company  (the  "Company  Common  Stock") and each issued and  outstanding
                       ----------------------
share of Series B convertible  preferred stock, par value $.01 per share, of the
Company (the "Company Convertible  Preferred Stock") will be converted into cash
              ------------------------------------
and either (x) shares of common stock,  par value $.10 per share, of Parent (the
"Parent  Common Stock") or (y) shares of Series A convertible  preferred  stock,
par value $.10 per share, of Parent (the "Parent  Preferred  Stock"),  (ii) each
                                          ------------------------
issued and outstanding  share of Series A redeemable  preferred stock, par value
$.01 per share, of the Company (the "Company  Redeemable  Preferred  Stock" and,
                                     -------------------------------------
together with the Company Convertible Preferred Stock,  collectively referred to
herein as the "Company  Preferred  Stock") will be converted into cash and (iii)
               -------------------------
each issued and outstanding option to purchase shares of Company Common Stock (a
"Company  Stock  Option") will be canceled and the holders  thereof will receive
 ----------------------
cash and either shares of Parent Common Stock or Parent Preferred Stock, in such
amounts, in such proportion and in such manner as hereinafter described;

                WHEREAS,  subject to the matter described on Schedule 3.02(a) of
                                                             ----------------
the Disclosure Schedule, the Shareholders own, and will own immediately prior to
the Closing (as defined in Section 7.01), of record and beneficially, all of the
Company Common Stock and Company Preferred Stock, and the Optionholders own, and
will own immediately prior to the Closing,  of record and  beneficially,  all of
the Company  Stock  Options,  and have agreed to cause the Company to enter into
this Agreement and  consummate the  transactions  contemplated  hereby,  and, in
their capacity as shareholders and  optionholders,  to enter into this Agreement
and consummate the transactions contemplated hereby; and

                                       


                WHEREAS,  in the case that the  Merger is a Forward  Merger  (as
defined in Section 1.01(a)), it is intended for U.S. federal income tax purposes
that the Merger  shall  constitute  a  "reorganization"  within  the  meaning of
Section  368(a) of the Internal  Revenue Code of 1986,  as amended (the "Code"),
                                                                         ----
and that this Agreement shall constitute a "plan of reorganization" for purposes
of Section 368 of the Code.

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

                                   ARTICLE I
                                   THE MERGER

SECTION 1.01    The  Merger.  Upon the terms and subject to the  conditions  set
                -----------
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL") and the Indiana Business  Corporation Law (the "IBCL"),  at the
          ----                                                   ----
Effective Time (as defined in Section 1.02):

        (a)     If, (i) on the last trading day preceding the Closing Date,  the
closing price of a share of Parent  Common Stock on the New York Stock  Exchange
(the "Closing Stock Price") is $29.00 or greater per share,  or (ii) the Closing
      -------------------
Stock Price is less than $29.00 per share,  but Parent  receives the tax opinion
described in Section 6.01(j),  and the Company shall so elect, the Company shall
be merged with and into  Acquisition  Subsidiary (the "Forward  Merger").  After
                                                       ---------------
giving effect to the Forward  Merger,  the separate  corporate  existence of the
Company shall cease and Acquisition  Subsidiary  shall continue as the surviving
corporation  (the  "Forward  Merger  Surviving  Corporation"),  and  Acquisition
                    ---------------------------------------
Subsidiary  shall  succeed to and assume all the rights and  obligations  of the
Company in accordance with the DGCL; or

        (b)     If the condition to a Forward Merger pursuant to Section 1.01(a)
above is not satisfied, Acquisition Subsidiary shall be merged with and into the
Company (the "Reverse  Merger").  After giving effect to the Reverse Merger, the
              ---------------
separate  corporate  existence  of  Acquisition  Subsidiary  shall cease and the
Company  shall  continue  as the  surviving  corporation  (the  "Reverse  Merger
                                                                 ---------------
Surviving  Corporation"),  and the Company  shall  succeed to and assume all the
----------------------
rights and obligations of Acquisition Subsidiary in accordance with the IBCL.

        For purposes of this  Agreement (i) the term "Merger"  shall mean either
                                                      ------
the Forward Merger or the Reverse Merger, whichever is applicable,  and (ii) the
term  "Surviving  Corporation"  shall mean either the Forward  Merger  Surviving
       ----------------------
Corporation  or  the  Reverse  Merger   Surviving   Corporation,   whichever  is
applicable.  

SECTION 1.02    Effective Time. The parties shall prepare, execute and deliver a
                --------------
certificate of merger and/or other  appropriate  documents in substantially  the
form(s)  annexed hereto as Exhibit 1.02 (in any such case, the  "Certificate  of
                           ------------                          ---------------
Merger") in accordance with the relevant provisions of the DGCL and the IBCL and
------
file same with the Secretary of State of the State of Delaware and the Secretary
of  State  of the  State of  Indiana,  respectively.  The  Merger  shall  become
effective  upon the filing of the  Certificate  of Merger with the  Secretary of
State  of the  State of  Delaware  (in the case of the  Forward  Merger)  or the
Secretary  of State of the State of Indiana (in the case of the Reverse  Merger)
or at such  subsequent  time or date as Parent and the  Company  shall agree and

                                       2


specify  in the  Certificate  of Merger.  The time at which the  Merger  becomes
effective is referred to in this Agreement as the "Effective Time". In addition,
                                                   --------------
in the case  that the  Merger  is a  Reverse  Merger,  Parent  shall  cause  the
Certificate of Designation  (as defined in Section  2.01(a)(ii)(B))  to be filed
with the Secretary of State of the State of Delaware at the Effective Time.

SECTION 1.03    Effects of the  Merger.  At and after the  Effective  Time,  the
                ----------------------
Surviving Corporation shall succeed to and possess, without further act or deed,
all of the estate, rights,  privileges,  powers and franchises,  both public and
private, and all of the property,  real, personal, and mixed, of the Company and
Acquisition Subsidiary;  all debts due to the Company and Acquisition Subsidiary
shall be vested in the Surviving  Corporation;  all claims,  demands,  property,
rights,  privileges,  powers and  franchises  and every  other  interest  of the
Company and Acquisition  Subsidiary  shall be as effectively the property of the
Surviving  Corporation as they were of the Company and  Acquisition  Subsidiary,
respectively;  the title to any real estate  vested by deed or  otherwise in the
Company and Acquisition Subsidiary shall not revert or be in any way impaired by
reason of the  Merger,  but shall be vested in the  Surviving  Corporation;  all
rights  of  creditors  and all  liens  upon  any  property  of the  Company  and
Acquisition  Subsidiary  shall be preserved  unimpaired,  limited in lien to the
property  affected by such lien at the  Effective  Time of the  Merger;  and all
debts,  liabilities,  and duties of the Company and Acquisition Subsidiary shall
thenceforth  attach to the Surviving  Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it.

SECTION 1.04    Certificate of Incorporation and By-laws.
                ----------------------------------------

                (a)     The   Certificate   of   Incorporation   of  Acquisition
Subsidiary,  as in effect  immediately prior to the Effective Time, shall be the
Certificate  of  Incorporation  of the Surviving  Corporation  until  thereafter
changed or amended as provided therein or by applicable law.

                (b)     The  By-laws  of  Acquisition  Subsidiary  as in  effect
immediately  prior to the  Effective  Time shall be the By-laws of the Surviving
Corporation  until  thereafter  changed  or amended  as  provided  therein or by
applicable law.

SECTION 1.05    Directors.  The directors of Acquisition  Subsidiary immediately
                ---------
prior to the Effective Time shall be the directors of the Surviving  Corporation
until the  earlier of their  resignation  or removal or until  their  respective
successors are duly elected and qualified, as the case may be.

SECTION 1.06    Officers. The officers of the Acquisition Subsidiary immediately
                --------
prior to the Effective  Time shall be the officers of the Surviving  Corporation
until the  earlier of their  resignation  or removal or until  their  respective
successors are duly elected and qualified, as the case may be; provided, that H.
                                                               --------
Coleman  Davis,  III  shall  be  appointed  as the  President  of the  Surviving
Corporation effective immediately after the Effective Time.

SECTION 1.07    Tax  Consequences.  In the case  that the  Merger  is a  Forward
                -----------------
Merger,  it is intended by the parties hereto that, for U.S.  federal income tax

                                        3



purposes,  the Merger shall constitute a "reorganization"  within the meaning of
Section 368(a) of the Code, and that each of Parent,  Acquisition Subsidiary and
the Company shall be a party,  within the meaning of Section 368(b) of the Code,
to the  "reorganization."  In such case,  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 U.S. Treasury  Regulations.  Accordingly,  both
prior to and after the  Closing  Date,  the books and  records of Parent and the
Surviving  Corporation  shall be  maintained,  and all tax returns and schedules
thereto shall be filed,  in a manner  consistent with the Merger being qualified
as a  tax-free  merger  under  Section  368(a)  of the Code  (unless  a court of
competent jurisdiction renders a determination (as defined in Section 1313(a)(1)
of the Code) that the Merger does not qualify as such).  Each party hereto shall
provide to each of the other parties hereto such information,  reports,  returns
and schedules as may reasonably be required to assist in accounting or reporting
the Merger as being so qualified.

                                   ARTICLE II
       MERGER CONSIDERATION; CONVERSION OF SECURITIES; ADJUSTMENT; ESCROW

SECTION 2.01    Merger Consideration.
                --------------------

        (a)     Merger  Consideration;  Cash/Stock  Ratio.  The total  amount of
                -----------------------------------------
consideration to be paid by Parent or Acquisition  Subsidiary (i) for all of the
shares of Company Common Stock and Company  Preferred Stock,  (ii) in respect of
all Company Stock Options and (iii) on account of the Company  Expense  Payments
pursuant  to  Section  13.01(b),  shall be One  Hundred  Fifty  Million  Dollars
($150,000,000)  (the "Merger  Consideration"),  which amount shall be subject to
                      ---------------------
adjustment in accordance  with Section 2.04. The Merger  Consideration  shall be
paid as follows:

                (i)     fifty-five  percent  (55%) of the  Merger  Consideration
                (the "Cash  Portion") shall be paid in cash,  without  interest;
                      -------------
                and

                (ii)    forty-five  percent  (45%) of the  Merger  Consideration
                (the "Stock Portion") shall be paid as follows:
                      -------------
                                                                   

                        (A)     In the case that the Merger is a Forward Merger,
                        the  Stock  Portion  shall be that  number  of shares of
                        Parent  Common  Stock  determined  by  dividing  (x) the
                        amount of the Stock  Portion by (y) $30.00 (the  "Common
                                                                          ------
                        Stock Stated Value"); or
                        ------------------

                        (B)     In the case that the Merger is a Reverse Merger,
                        the  Stock  Portion  shall be that  number  of shares of
                        Parent  Preferred Stock,  having the rights,  powers and
                        preferences  set forth in the Certificate of Designation
                        substantially in the form annexed hereto as Exhibit 2.01
                                                                    ------------
                        (the  "Certificate  of   Designation"),   determined  by
                               -----------------------------
                        dividing  (x) the  amount  of the Stock  Portion  by (y)
                        $100.00 (the "Preferred Stock Stated Value").
                                      ----------------------------

                                       4


        The ratio of the Cash Portion to the Stock Portion (i.e., 55% to 45%) is
referred to herein as the "Cash/Stock Ratio". 
                           ----------------

        (b)     Payment of Merger  Consideration.  Subject to Section 2.05,  the
                --------------------------------
Merger Consideration shall be paid as follows:

                (i)     in cash,  in payment  of the  Company  Expense  Payments
                pursuant to Section 13.01(b);

                (ii)    in cash,  to (A) the holders of the  Company  Redeemable
                Preferred  Stock,  on a per share basis,  the original  purchase
                price of such Company Redeemable  Preferred Stock of $100.00 per
                share,  plus all accrued and unpaid  dividends  on such  Company
                Redeemable  Preferred  Stock  through and  including the Closing
                Date (as  defined in Section  7.01),  and (B) the holders of the
                Company  Convertible  Preferred Stock, on a per share basis, all
                accrued  and  unpaid  dividends  on  such  Company   Convertible
                Preferred Stock through and including the Closing Date;

                (iii)   in  cash  and  either  Parent  Common  Stock  or  Parent
                Preferred  Stock,  as the case may be, (in  accordance  with the
                Adjusted  Cash/Stock Ratio, as defined below), to the holders of
                the Company Stock Options, an amount in respect thereof equal to
                the  product of (A) the excess of the Merger  Consideration  Per
                Common Share (as defined below) over the exercise price thereof,
                if any,  and (B) the  number of shares of Common  Stock  subject
                thereto (such  payment to be net of taxes  required by law to be
                withheld with respect thereto). For purposes hereof, the "Merger
                                                                          ------
                Consideration Per Common Share" shall mean the quotient obtained
                ------------------------------
                by  dividing  (A) the sum of (x) the  Merger  Consideration  (as
                adjusted pursuant to Section 2.04(a)(i)),  less the amounts paid
                pursuant to clauses (i) and (ii)  above,  and (y) the  aggregate
                exercise   price  of  all  Company  Stock  Options   vested  and
                exercisable  immediately prior to the Effective Time, by (B) the
                sum of (x) the number of shares of Company  Common  Stock issued
                and outstanding immediately prior to the Effective Time, (y) the
                number of shares of Company  Convertible  Preferred Stock issued
                and  outstanding   immediately   prior  to  the  Effective  Time
                (calculated  on an  as-converted  basis),  and (z) the number of
                shares of Company  Common Stock  issuable  upon  exercise of the
                Company Stock Options prior to the Effective Time,  assuming the
                full vesting and exercise of such Company Stock Options; and

                (iv)    in  cash  and  either  Parent  Common  Stock  or  Parent
                Preferred  Stock,  as the case may be, (in  accordance  with the
                Adjusted  Cash/Stock  Ratio),  to the holders of Company  Common
                Stock and Company Convertible  Preferred Stock (calculated on an
                as-converted  basis,  after giving  effect to the payment of any
                dividends  thereon  pursuant to clause (ii)(B) above),  on a per
                share  basis,  the  excess of (A) the Merger  Consideration  (as
                adjusted pursuant to Section  2.04(a)(i)) over (B) the aggregate

                                       5


                of the portion of the Merger  Consideration  payable pursuant to
                clauses (i), (ii) and (iii) of this Section 2.01(b).

        For the purposes of this  Agreement,  the  "Adjusted  Cash/Stock  Ratio"
                                                    ---------------------------
shall  mean the  ratio of (A) the Cash  Portion,  less (x) the  Company  Expense
Payments  made  pursuant  to Section  2.01(b)(i)  and Section  13.01(b)  and (y)
payments in respect of the Company  Redeemable  Preferred  Stock and accrued and
unpaid  dividends  on  the  Company  Redeemable   Preferred  Stock  and  Company
Convertible  Preferred  Stock made pursuant to Section  2.01(b)(ii),  to (B) the
Stock Portion.

        (c)     Calculation of Payments;  Method of Payment.  Not later than two
                -------------------------------------------
(2) business days prior to the Closing,  the Holder  Representatives  shall give
Parent and Acquisition  Subsidiary a notice stating the amounts payable pursuant
to each of clauses (i), (ii), (iii) and (iv) of Section  2.01(b),  together with
the names and tax  identification  numbers of the recipients of each of the Cash
Portion and the Stock  Portion.  Subject to Section  2.05,  all  payments of the
Stock Portion shall be made by delivery of fully paid and  nonassessable  shares
of Parent  Common  Stock (in the case of a Forward  Merger) or Parent  Preferred
Stock (in the case of a Reverse  Merger).  Subject to Section 2.05, all payments
of the  Cash  Portion  shall be paid on the  Closing  Date by wire  transfer  of
immediately  available funds to an account or accounts  designated by the Holder
Representatives not later than two (2) business days prior to the Closing.

SECTION 2.02    Cancellation  and  Conversion  of the  Capital  Stock  and Stock
                ----------------------------------------------------------------
Options of the Company and  Acquisition  Subsidiary.  At the Effective  Time, by
---------------------------------------------------
virtue of the  Merger  and  without  any action on the part of the holder of any
shares of capital stock of the Company, Parent or Acquisition Subsidiary:

        (a)     Capital  Stock  of  Acquisition  Subsidiary.   Each  issued  and
                -------------------------------------------
outstanding  share of common stock of Acquisition  Subsidiary shall be converted
into and shall become one validly issued,  fully paid and nonassessable share of
common stock of the Surviving Corporation.

        (b)     Cancellation  of Treasury  Stock.  Each share of Company  Common
                --------------------------------
Stock that is owned by the Company as treasury  stock  immediately  prior to the
Effective  Time shall  automatically  be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.

        (c)     Conversion of the Company Redeemable Preferred Stock. Each share
                ----------------------------------------------------
of Company Redeemable  Preferred Stock issued and outstanding  immediately prior
to the Effective Time shall be converted,  on a per share basis,  into the right
to receive, in cash, the amounts described in Section 2.01(b)(ii)(A).

        (d)     Cancellation of the Company Stock Options.  Immediately prior to
                -----------------------------------------
the Effective Time, each issued and outstanding Company Stock Option, whether or
not then exercisable or vested,  shall become fully  exercisable and vested.  At
the  Effective  Time,  each  Company  Stock  Option  which  is then  issued  and
outstanding shall be canceled and in consideration of such cancellation,  Parent
shall pay to the holders of the Company Stock  Options the amounts  described in

                                       6


Section 2.01(b)(iii). No payment shall be made with respect to any Company Stock
Option having an exercise price greater than the Merger Consideration Per Common
Share.

        (e)     Conversion of the Company  Common Stock and Company  Convertible
                ----------------------------------------------------------------
Preferred  Stock.  All of the shares of the  Company  Common  Stock and  Company
----------------
Convertible  Preferred Stock  (calculated on an  as-converted  basis) issued and
outstanding  immediately  prior to the  Effective  Time (other than shares to be
canceled in accordance with Section 2.02(b)) shall be converted,  on a per share
basis, into the right to receive the amounts  described in Section  2.01(b)(iv).
In addition,  the holders of Company  Convertible  Preferred Stock shall receive
the amounts specified in Section 2.01(b)(ii)(B).

SECTION 2.03    Exchange Procedure; Payment.
                ---------------------------

        (a)     Exchange Procedure.  At the Effective Time all shares of Company
                ------------------
Common  Stock and Company  Preferred  Stock shall no longer be  outstanding  and
shall  automatically  be canceled and shall cease to exist, and each holder of a
certificate  that  immediately  prior to the Effective Time represented any such
shares (a  "Certificate")  shall cease to have any rights with respect  thereto,
            -----------
except the right to receive its allocable share of the Merger  Consideration  in
accordance  with Sections  2.01 and 2.02.  Upon  surrender of a Certificate  for
cancellation,  the Shareholder shall be entitled to receive in exchange therefor
the amount of cash and/or either Parent Common Stock or Parent  Preferred Stock,
as the  case  may  be,  into  which  the  shares  formerly  represented  by such
Certificate  shall have been converted  pursuant to Sections 2.02(c) and (e) and
the Certificate so surrendered shall forthwith be canceled.

        (b)     Fractional  Shares.  In no event shall any  fractional  share of
                ------------------
Parent  Common Stock or Parent  Preferred  Stock,  as the case may be, be issued
pursuant  to this  Article  II.  Instead,  each  Holder who  otherwise  would be
entitled  to  receive  a  fractional  share of  Parent  Common  Stock or  Parent
Preferred  Stock,  as the case may be, shall  receive an amount of cash equal to
the product of the same fraction  multiplied by the Common Stock Stated Value or
the Preferred Stock Stated Value, as the case may be.

        (c)     Adjustments.  Any  shares  of Parent  Common  Stock to be issued
                -----------
hereunder shall be of Parent Common Stock as constituted on the date hereof, and
such shares shall be appropriately  adjusted for stock splits,  stock dividends,
combinations or reclassifications of shares, reorganization, recapitalization or
other similar change in such common stock occurring  between the date hereof and
the Closing Date, if any.

        (d)     No Further  Ownership  Rights in Company Common Stock or Company
                ----------------------------------------------------------------
Preferred  Stock. All cash and Parent Common Stock or Parent Preferred Stock, as
----------------
the case may be, paid upon the surrender of a Certificate in accordance with the
terms of this Article II shall be deemed to have been paid in full  satisfaction
of all  rights  pertaining  to the  shares of  Company  Common  Stock or Company
Preferred Stock formerly represented by such Certificate.

        (e)     Lost  Certificates.  If any  Certificate  shall  have been lost,
                ------------------
stolen or destroyed,  upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost,  stolen or destroyed,  Parent shall pay in

                                       7


respect of such lost,  stolen or destroyed  Certificate  the  applicable  Merger
Consideration.

        (f)     Dividends  in  Connection  with Parent  Common  Stock and Parent
                ----------------------------------------------------------------
Preferred Stock. Dividends or other distributions made in connection with Parent
---------------
Common Stock or Parent Preferred Stock, as the case may be, shall be distributed
only to those of the Holders who have  surrendered  their  Certificates or whose
Company Stock  Options have been  canceled and who have  received  Parent Common
Stock or Parent Preferred Stock, as the case may be, therefor in accordance with
this Article II.

        (g)     Withholding Rights.  Parent and Acquisition  Subsidiary shall be
                ------------------
entitled  to  deduct  and   withhold   from  the  Cash  Portion  of  the  Merger
Consideration  otherwise  payable  pursuant to this  Agreement  to any holder of
shares of Company  Common Stock or Company  Preferred  Stock or of Company Stock
Options such amounts as Parent or Acquisition  Subsidiary are 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  and  paid  over to the  appropriate  taxing  authority  by  Parent  or
Acquisition  Subsidiary such withheld  amounts shall be treated for all purposes
of this  Agreement  as having  been paid to the  holder of the shares of Company
Common Stock or Company  Preferred Stock or any Company Stock Options in respect
of which  such  deduction  and  withholding  was made by Parent  or  Acquisition
Subsidiary.

SECTION 2.04    Adjustment of Merger Consideration.
                ----------------------------------

        (a)     The Merger Consideration will be adjusted upward or downward, on
a dollar for dollar basis, to the extent that the Company's  shareholder  equity
as of the  Closing  Date as finally  determined  in  accordance  with  generally
accepted accounting  principles ("GAAP"),  applied on a consistent basis, except
                                  ----
as otherwise set forth in Sections 2.04(c) and 13.01(c)  ("Shareholder  Equity")
                                                           -------------------
is  greater  than  or  less  than  Twenty  Million  Dollars  ($20,000,000).  The
Shareholder Equity shall be determined as follows:

                (i)     For  purposes  of  determining  the amount of the Merger
                Consideration  to be paid on the Closing Date,  the  Shareholder
                Equity  will be  determined  in the same  manner  as it is to be
                determined  in preparing the Audited  Closing  Balance Sheet (as
                defined below), except that it shall be based upon the unaudited
                balance  sheet of the  Company  as of  September  30,  2001 (the
                "Estimated  Closing Balance  Sheet").  The Company shall deliver
                the Estimated  Closing  Balance Sheet to Parent and  Acquisition
                Subsidiary  not later than three (3) business  days prior to the
                Closing.

                (ii)    In  order  to  conclusively  determine  the  Shareholder
                Equity as of the Closing Date,  Parent,  with the cooperation of
                the Holders, will cause a balance sheet of the Company as of the
                Closing  Date (the  "Closing  Balance  Sheet") to be prepared as
                                     -----------------------
                promptly as  practicable  following  the Closing Date and Parent
                will  engage  Deloitte & Touche LLP ("D&T") to audit the Closing
                                                      ---
                Balance Sheet (as audited, the "Audited Closing Balance Sheet").
                                                -----------------------------

                                       8


                The Audited  Closing  Balance Sheet shall be prepared based upon
                the Company's books and records in accordance with GAAP, applied
                on a consistent basis, except as otherwise set forth in Sections
                2.04(c) and 13.01(c). The parties will use their reasonable best
                efforts to cause D&T to complete and deliver the Audited Closing
                Balance  Sheet to Parent and the Holder  Representatives  within
                sixty  (60) days after  D&T's  receipt  of the  Closing  Balance
                Sheet.  The parties shall  cooperate with D&T in connection with
                such audit,  and shall  provide D&T with all books,  records and
                other papers necessary for such purpose.

                (iii)   The  Audited  Closing  Balance  Sheet shall be final and
                binding on the  parties,  unless  within  thirty (30) days after
                receipt thereof the Holder  Representatives  shall give Parent a
                notice of  objection  (an  "Objection  Notice").  The  Objection
                                            -----------------
                Notice  shall  specify  each item the  Holders  object to in the
                Audited  Closing  Balance Sheet,  together with a calculation of
                each  disputed   amount,   and  shall  include  all   supporting
                calculations  and data used in that  determination.  Any item in
                the Audited Closing Balance Sheet that is not objected to in the
                Objection  Notice shall be deemed  agreed and shall be final and
                binding on the parties.

                (iv)    In the event an  Objection  Notice is given,  Parent and
                the Holder Representatives,  together with D&T and the Company's
                auditors,  Ernst & Young LLP ("E&Y"), shall meet in an effort to
                                               ---
                resolve any  objection and arrive at a final  determination.  If
                Parent and the Holder  Representatives are unable to arrive at a
                final  determination  within  ten (10) days  after an  Objection
                Notice  is  given,  the  matter  shall be  submitted  for  final
                determination   to  a  firm  of  independent   certified  public
                accountants  upon  which the Holder  Representatives  and Parent
                mutually agree (the  "Independent  Firm").  The Independent Firm
                                      -----------------
                shall make a final determination in writing as to all matters in
                dispute within thirty (30) days after its appointment;  and such
                determination  shall  be  final  and  binding  on  the  parties;
                provided   that    notwithstanding    the   Independent   Firm's
                --------
                determination of the Shareholder Equity, for purposes hereof the
                Shareholder  Equity  shall  be  neither  less  than  the  amount
                specified in the Audited  Closing Balance Sheet nor greater than
                the amount specified in the Objection Notice.

                (v)     Parent  shall  pay any fees  owing to D&T in  connection
                with this  Section,  and the Holders shall pay any fees owing to
                E&Y in  connection  with  this  Section.  Any fees  owing to the
                Independent  Firm in connection  with this Section shall be paid
                in direct  proportion to the amounts of the disputed  items that
                are lost by the Holders or Parent, as the case may be.

        (b)     Method of Adjustment.  In the event that the Shareholder  Equity
                --------------------
as finally  determined  pursuant to this Section is greater than the Shareholder
Equity as determined  pursuant to the Estimated  Closing  Balance Sheet,  Parent
will pay such  difference  to the Holders in  additional  cash and Parent Common
Stock or Parent  Preferred  Stock,  as the case may be,  which  shall be paid in

                                       9


accordance with the Cash/Stock  Ratio, with the value of the Parent Common Stock
to be based  on the  Common  Stock  Stated  Value  and the  value of the  Parent
Preferred  Stock to be based on the  Preferred  Stock  Stated  Value;  provided,
                                                                       --------
however,  if payments  made under this Section  2.04(b) in  accordance  with the
-------
Cash/Stock  Ratio would  result in the total  number of shares of Parent  Common
Stock or Parent  Preferred  Stock  (calculated on an  as-converted  basis) being
delivered pursuant to this Article II to exceed 2,250,000 shares, Parent, at its
option, may elect to pay cash in lieu of Parent Common Stock or Parent Preferred
Stock,  as the case may be,  for any  shares in excess  thereof  (at a per share
price equal to the Common  Stock  Stated  Value or the  Preferred  Stock  Stated
Value, as the case may be); provided,  further, that any such election by Parent
                            --------   -------
shall be limited to such extent as is necessary  so that the Forward  Merger (if
applicable) shall have the tax consequences  described in Section 1.07. Any such
payment to the  Holders  shall be paid to the  Holders,  pro rata,  based on the
                                                         --- ----
respective  portion of the Merger  Consideration that each Holder is entitled to
receive  pursuant  to  Sections  2.01(b)(iii)  and (iv).  In the event  that the
Shareholder Equity as finally  determined  pursuant to this Section is less than
the Shareholder  Equity as determined  pursuant to the Estimated Closing Balance
Sheet,  such  difference  shall be withdrawn from the Escrowed Funds (as defined
below) in accordance  with the  Cash/Stock  Ratio,  with the value of the Parent
Common  Stock to be based on the Common  Stock Stated Value and the value of the
Parent  Preferred  Stock to be based on the Preferred  Stock Stated  Value,  and
delivered to Parent in accordance with Section 2.05(a)(i).

        (c)     Shareholder  Equity.  For  purposes of  determining  Shareholder
                -------------------
Equity,  (i) the Shareholder  Equity shall be increased by the amount of any Tax
Benefit (as defined below) the Company or the Surviving  Corporation arising out
of or attributable to the exercise (or cancellation pursuant to Section 2.02(d))
of the Company  Stock  Options  (whether  or not  permitted  by GAAP),  (ii) the
Company Redeemable  Preferred Stock, and any accrued and unpaid dividends on the
Company  Redeemable  Preferred  Stock and on the Company  Convertible  Preferred
Stock  (whether  or not  declared),  shall be  included  in the  calculation  of
Shareholder  Equity,  (iii) the Estimated  Closing Balance Sheet and the Audited
Closing  Balance  Sheet shall not reflect  any asset for any sums  deposited  in
court in  connection  with the  matter  described  on  Schedule  3.02(a)  of the
Disclosure  Schedule  (as  defined  below)  or any  subscription  receivable  in
connection  with such matter,  nor any liability or reserve in  connection  with
such  matter,  (iv) the Audited  Closing  Balance  Sheet  shall have  accrued or
reserved thereon each of the items specified in this Agreement as being required
to be  accrued  or  reserved  on  the  Audited  Closing  Balance  Sheet,  in the
respective amounts specified herein and, further, all such accruals and reserves
shall be  determined  as if the Audited  Closing  Balance  Sheet were a year-end
balance  sheet  of the  Company,  and  (v)  the  warranty  reserve  used  in the
preparation  of the  Estimated  Closing  Balance  Sheet and the Audited  Closing
Balance  Sheet in each case shall be adjusted to reflect the reserve which would
be required if it were calculated in accordance  with the Thor Warranty  Reserve
Formula annexed hereto as Annex 2.04(c).
                          -------------

SECTION 2.05    Escrow.
                ------

        (a)     Notwithstanding  anything  to the  contrary  contained  in  this
Article  II, on the  Closing  Date,  there  shall be  deducted  from the  Merger
Consideration  payable pursuant to Sections 2.01(b)(iii) and (iv), on a pro rata
basis, the sum of Twenty Million Dollars  ($20,000,000)  (the "Escrowed Funds"),
                                                               --------------
which sum will be deposited into an interest bearing escrow account,  to be held
by The Chase Manhattan Bank (the "Escrow Agent") pursuant to an escrow agreement
                                  ------------

                                       10


to be entered into on the Closing Date among Parent, the Surviving  Corporation,
the Holders,  the Holder  Representatives  and the Escrow Agent in substantially
the form  annexed  hereto as  Exhibit  2.05(a)  (the  "Escrow  Agreement").  The
                              ----------------         -----------------
Escrowed Funds will be deposited in accordance with the Cash/Stock  Ratio (i.e.,
55% of the  Escrowed  Funds will be cash and 45% of the  Escrowed  Funds will be
shares of Parent  Common Stock or Parent  Preferred  Stock,  as the case may be,
together with duly endorsed blank stock powers) valued based on the Common Stock
Stated Value or the Preferred Stock Stated Value, respectively,  as indicated in
Section  2.01(a)(ii).  In addition,  any shares of Parent Common Stock or Parent
Preferred  Stock, as the case may be, issued from time to time after the Closing
Date in respect of the shares of Parent Common Stock or Parent  Preferred  Stock
included in the Escrowed Funds by virtue of any stock split,  stock combination,
stock dividend or reclassification of shares,  reorganization,  recapitalization
or similar  change  shall be  immediately  deposited  into the  escrow  account,
together with duly  endorsed  blank stock powers,  and shall,  upon deposit,  be
deemed to be part of the Escrowed Funds for all purposes hereunder. The Escrowed
Funds will secure (x) any  adjustments to the Merger  Consideration  as provided
for in Section  2.04,  and (y) the Holders'  indemnification  obligations  under
Articles IX and XI of this  Agreement.  The Escrowed  Funds will be withdrawn or
released as follows:

                (i)     upon the final  determination of the Shareholder  Equity
                in accordance  with Section  2.04,  (A) if Parent is entitled to
                receive any adjustment of the Merger  Consideration,  the amount
                of such adjustment shall be withdrawn from the Escrowed Funds in
                accordance  with Section 2.04,  and paid to Parent,  within five
                (5) days after such final determination,  and (B) there shall be
                withdrawn from the Escrowed  Funds the amounts  necessary to pay
                any fees payable by the Holders to E&Y and the Independent Firm,
                as applicable,  pursuant to Section 2.04(a)(v),  such amounts to
                be paid directly to E&Y and the Independent Firm, as applicable;

                (ii)    following  the final  determination  of the  Shareholder
                Equity in accordance  with Section 2.04 and the  withdrawal,  if
                any,  of  Escrowed  Funds as  provided  in clause (i)  above,  a
                portion of the  Escrowed  Funds will be  released to the Holders
                (in accordance  with the Cash/Stock  Ratio) such that the sum of
                $15,000,000  (with the value of the Parent  Common  Stock or the
                Parent  Preferred  Stock, as the case may be, to be based on the
                Common Stock Stated Value or the  Preferred  Stock Stated Value,
                respectively) will remain as Escrowed Funds; provided,  however,
                that if less than  $15,000,000  (valued in the  manner  provided
                above) shall remain after the  withdrawal  as provided in clause
                (i)  above,  each  Holder,  within  five  (5)  days  after  such
                withdrawal,  shall  deposit  such  additional  cash and, at each
                Holder's  option,  shares  of  Parent  Common  Stock  or  Parent
                Preferred  Stock,  as the  case  may be  (valued  in the  manner
                provided above,  but not to exceed  forty-five  percent (45%) of
                the  amount  required  to be  deposited)  as needed to cause the
                Escrowed Funds to be $15,000,000 (such deposit to be made by the
                Holders, pro rata, based on the respective portion of the Merger
                Consideration  that each  Holder is  entitled  to receive  under
                Sections 2.01(b)(iii) and (iv)); and

                                       11


                (iii)   the   remaining    Escrowed    Funds    (including   any
                undistributed interest earned thereon), if any, will be released
                to the  Holders on the first  (1st)  anniversary  of the Closing
                Date;  provided,  however,  that if  prior to such  first  (1st)
                       --------   -------
                anniversary  Parent  or the  Surviving  Corporation  shall  give
                notice  of a claim or claims  for  indemnification  pursuant  to
                Articles IX or XI of this Agreement, then: (A) if any such claim
                is resolved prior to such first (1st)  anniversary,  by judicial
                determination or otherwise, any sums due Parent or the Surviving
                Corporation  shall be withdrawn from the Escrowed Funds and paid
                to Parent or the  Surviving  Corporation,  within  five (5) days
                after such resolution;  or (B) if any such claim is not resolved
                prior to such first (1st) anniversary, the amount of such claim,
                plus  the  reasonably   estimated   amount  of  legal  fees  and
                disbursements to be incurred in connection  therewith,  shall be
                retained as Escrowed  Funds  until such claim is  resolved.  Any
                amounts to be withdrawn or to be retained pursuant to clause (A)
                or (B) above shall be withdrawn or  retained,  respectively,  as
                follows: (x) if such claim is a Third Party Claim (as defined in
                Section 9.06(b)),  first from Escrowed Funds consisting of cash,
                and  thereafter  from  shares of Parent  Common  Stock or Parent
                Preferred  Stock,  as the case may be,  and (y) if such claim is
                not a Third Party Claim, in accordance with the Cash/Stock Ratio
                or, at the option of the Holder  Representatives,  in cash.  For
                purposes of  determining  the number of shares of Parent  Common
                Stock (if  applicable)  to be  withdrawn  or to be  retained  as
                Escrowed Funds under this clause (iii),  the Parent Common Stock
                shall be deemed to have a value equal to the Common Stock Stated
                Value.  For  purposes  of  determining  the  number of shares of
                Parent  Preferred Stock (if applicable) to be withdrawn or to be
                retained as Escrowed  Funds under this clause (iii),  the Parent
                Preferred  Stock  shall be deemed  to have a value  equal to the
                Preferred Stock Stated Value.

        Any Escrowed Funds released to the Holders shall be paid to the Holders,
pro rata, based on the respective portion of the Merger  Consideration that each
Holder is entitled  to receive  pursuant to Section  2.01(b)(iii)  and (iv),  it
being  agreed that no Escrowed  Funds shall be released to any Holder in respect
of the Company Redeemable Preferred Stock.

        (b)     In addition,  notwithstanding anything to the contrary contained
in this Article II, on the Closing Date, there shall be deducted from the Merger
Consideration  payable pursuant to Sections 2.01(b)(iii) and (iv), on a pro rata
                                                                        --- ----
basis,  an  additional  sum, in cash,  in the amount (the  "Additional  Escrowed
                                                            ----------  --------
Funds") specified in the letter agreement to be entered into on the Closing Date
-----
among   Parent,   the  Surviving   Corporation,   the  Holders  and  the  Holder
Representatives  in substantially the form annexed hereto as Exhibit  2.05(b)(i)
                                                             -------------------
(the "Letter  Agreement").  The Additional Escrowed Funds will be deposited into
      -----------------
an interest bearing escrow account to be held by the Escrow Agent pursuant to an
escrow  agreement  to be entered  into on the  Closing  Date among  Parent,  the
Surviving  Corporation,  the Holders, the Holder  Representatives and the Escrow
Agent in  substantially  the form  annexed  hereto as Exhibit  2.05(b)(ii)  (the
                                                      -------------------
"Additional  Escrow  Agreement",   and,  together  with  the  Escrow  Agreement,
 -----------------------------
collectively,  the "Escrow  Agreements"),  and will be  withdrawn or released in
                    ------------------
accordance  with the terms of the Letter  Agreement  and the  Additional  Escrow
Agreement.


                                       12


                                  ARTICLE III
   REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL SHAREHOLDER

         Except as set forth on the disclosure schedule, with specific reference
to the Section or subsection of this Agreement to which the  information  stated
in such  disclosure  relates  (the  "Disclosure  Schedule"),  the Company and H.
                                     --------------------
Coleman Davis, III (the "Principal  Shareholder") hereby represent,  warrant and
                         ---------  -----------
agree,  as of the date of this Agreement and as of the Closing Date, as follows,
each of which  representations,  warranties and agreements shall be deemed to be
independently  material  and to have been relied upon by Parent and  Acquisition
Subsidiary:

SECTION 3.01    Organization;  Good Standing.  The Company is a corporation duly
                ----------------------------
organized,  validly existing and in good standing under the laws of the State of
Indiana,  has full power and authority,  corporate and other, to own and operate
its property  (including the operation of leased property),  and to carry on the
Business as it is now being  conducted,  and is duly  qualified or licensed as a
foreign  corporation to do business and is in good standing in each jurisdiction
(all of which other  jurisdictions,  if any, are listed on Schedule 3.01 hereto)
                                                           -------------
in which the  character  of the  property  owned or the  nature of the  business
transacted by it makes such qualification or licensing necessary, except that if
the Company is not so qualified in any such jurisdiction it can become qualified
without any Material  Adverse  Effect (as defined in Section  13.17)  (including
assessment  of state taxes for prior  years).  True and  complete  copies of the
Company's  Articles of  Incorporation  and  By-laws  (including  all  amendments
thereto),  as in  effect  on the  date  hereof,  have  been  delivered,  or made
available, to Parent and Acquisition Subsidiary.

SECTION 3.02    Capitalization; Title to Shares.
                -------------------------------

        (a)     The  Company's  authorized  capital  stock  consists  solely  of
10,000,000 shares of Company Common Stock, 1,000,000 shares of non-voting common
stock,  par value $.01 per share (the "Company  Non-Voting  Common Stock"),  and
                                       ---------------------------------
2,000,000 shares of Company  Preferred Stock. As of the date hereof,  there are,
and as of the Closing Date there will be, (i) 14,026.45  issued and  outstanding
shares of Company Common Stock, (ii) no issued and outstanding shares of Company
Non-Voting Common Stock,  (iii) 112,564 issued and outstanding shares of Company
Preferred  Stock  (consisting of 99,000 shares of Company  Redeemable  Preferred
Stock and 13,564 shares of Company Convertible  Preferred Stock), (iv) no shares
of Company  Common  Stock or  Company  Preferred  Stock  held by the  Company as
treasury  shares,  and (v) 9,394.43  shares of Company Common Stock reserved for
issuance  upon  conversion  of Company  Convertible  Preferred  Stock and 948.25
shares of Company  Common  Stock  reserved  for  issuance  upon the  exercise of
outstanding  Company Stock  Options.  All  outstanding  shares of Company Common
Stock and Company  Preferred  Stock are and will on the Closing  Date be validly
issued,  fully  paid and  nonassessable.  Subject  to the  matter  described  on
Schedule  3.02(a),  the  Shareholders  own,  of  record,  all of the  issued and
----------------
outstanding  shares of Company  Common Stock and Company  Preferred  Stock.  The
Optionholders own, of record, all of the Company Stock Options.

                                       13


        (b)     Schedule  3.02(b)  is a true  and  complete  list as of the date
                -----------------
hereof,  of all issued and  outstanding  shares of the Company  Common Stock and
Company Preferred Stock, and the names and number of shares owned by each of the
holders  thereof.  Each  Shareholder  owns,  of record,  the number of shares of
Company Common Stock and Company Preferred Stock,  respectively,  set forth next
to such Shareholder's name on Schedule 3.02(b).

        (c)     Schedule  3.02(c) is a true and  complete  list,  as of the date
                -----------------
hereof, of all outstanding  Company Stock Options,  the number of shares subject
to each such Company Stock Option,  the grant dates and exercise  prices thereof
and the names of the holders thereof.  Each  Optionholder  owns, of record,  the
Company  Stock  Options set forth next to such  Optionholder's  name on Schedule
3.02(c).

        (d)     Except  as  set   forth   above,   there   are  no   outstanding
subscriptions,  options,  rights,  warrants or other  commitments  entitling any
person to purchase or otherwise  subscribe  for or acquire any shares of capital
stock of the Company or any security convertible into or exchangeable for shares
of capital stock of the Company, nor is there presently outstanding any security
convertible into or exchangeable for shares of capital stock of the Company, nor
has the Company entered into any agreement with respect to any of the foregoing.
The Company has no obligation  to  repurchase,  redeem or otherwise  acquire any
shares of capital stock of, or other equity or voting interests in, the Company.
There are no irrevocable  proxies and no voting  agreements to which the Company
is a party  with  respect  to any shares of the  capital  stock or other  voting
securities of the Company.

SECTION 3.03    Subsidiaries.  The  Company  does not have,  nor has the Company
                ------------
ever had,  any  subsidiaries,  and the Company does not own, nor has the Company
ever owned,  directly or  indirectly,  any capital  stock of, or other equity or
voting interests in, any corporation,  partnership,  limited liability  company,
joint venture, association or other entity.

SECTION 3.04    Authority  Relative to this Agreement.  The Company has the full
                -------------------------------------
legal right,  power and capacity and all authority and approval  required by law
to enter into this  Agreement and the documents and  instruments  to be executed
and  delivered  by it  pursuant  hereto,  and to perform  fully its  obligations
hereunder and thereunder. The execution, delivery and performance by the Company
of this Agreement and the documents and instruments to be executed and delivered
by it  pursuant  hereto have been duly  authorized  by all  requisite  corporate
action  (including  all action  required  of the  Company's  Board of  Directors
(including any committees of the Board of Directors,  to the extent  applicable)
and the  Shareholders),  and no other  corporate  proceedings on the part of the
Company are necessary to approve this Agreement or the documents and instruments
to be  executed  and  delivered  by it pursuant  hereto,  or to  consummate  the
transactions  contemplated  hereby or thereby.  This Agreement and the documents
and  instruments  to be executed and delivered  pursuant  hereto are and will be
duly executed and delivered by the Company and are and will be the legal,  valid
and binding obligations of the Company enforceable against it in accordance with
their terms.

SECTION 3.05    Consents and Approvals; No Violations.
                -------------------------------------

        (a)     Except for applicable  requirements  of the Securities  Exchange
Act of 1934, as amended (the  "Exchange  Act"),  the  Securities Act of 1933, as
                               -------------
amended  (the  "Securities  Act"),  state Blue Sky laws,  the  Hart-Scott-Rodino
                ---------------

                                       14


Antitrust  Improvements  Act of 1976, as amended (the "HSR Act"),  the filing of
                                                       -------
the  Certificate  of  Merger  as  required  by the DGCL and the  IBCL,  and,  if
applicable,  the filing of the  Certificate  of  Designation  as required by the
DGCL, no filing or registration with, and no permit,  authorization,  consent or
approval  of,  any  public  body or  authority,  including  courts of  competent
jurisdiction,  domestic or foreign ("Governmental Entity"), is necessary for the
                                     -------------------
consummation by the Company of the transactions contemplated by this Agreement.

        (b)     Neither the  execution  and  delivery of this  Agreement  or the
documents and  instruments to be executed and delivered  pursuant  hereto by the
Company nor the  consummation  by the Company of the  transactions  contemplated
hereby or thereby,  nor  compliance  by the Company  with any of the  provisions
hereof  or  thereof,  will (i)  conflict  with or  result  in any  breach of any
provision  of the  Articles of  Incorporation  or By-laws of the  Company,  (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or  both) a  default  or give  rise to any  right of  termination,
cancellation or  acceleration of or loss of a material  benefit under, or result
in the creation of any Lien (as defined below) (except for Permitted  Liens,  as
defined  below) in or upon any of the properties or assets of the Company under,
or give rise to any increased,  additional,  accelerated or guaranteed rights or
entitlements under, or require any consent, approval or notice under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract,  agreement,  lease or other  instrument  or  obligation  to which  the
Company  is a party or by which it or any of its  properties  or  assets  may be
bound, or (iii) violate any order, writ,  injunction,  decree,  statute, rule or
regulation  applicable to the Company or any of its properties or assets, except
in the case of (ii) or (iii) for  violations,  breaches or defaults  which would
not,  in the  aggregate,  have a Material  Adverse  Effect  and which  would not
prevent or materially delay the  consummation of the  transactions  contemplated
hereby.  For purposes of this Agreement,  the term "Liens" shall mean all liens,
                                                    -----
pledges, mortgages,  security interests,  claims, charges and other encumbrances
of any kind or nature  whatsoever,  and the term  "Permitted  Liens"  shall mean
                                                   ----------------
Liens for taxes, assessments or governmental charges, or landlords', mechanics',
materialmen's,   supplier's  or  similar  Liens,  in  each  case  that  are  not
delinquent,  which  are  being  contested  in good  faith,  and  which  are not,
individually or in the aggregate, material.

SECTION 3.06    Financial  Statements.  Schedule  3.06 hereto  contains  (a) the
                ---------------------   --------------
balance  sheet  of  the  Company  as  of  December  31,  2000,  1999  and  1998,
respectively,  and the related  statement of income,  retained earnings and cash
flow for the fiscal years then ended,  together with the notes thereto,  audited
by E&Y, certified public  accountants,  with respect to the years ended 2000 and
1999, and McGladrey & Pullen LLP ("M&P"),  certified  public  accountants,  with
                                   ---
respect to the year ended 1998 (collectively, the "Audited Statements"); and (b)
                                                   ------------------
the unaudited  balance  sheet of the Company as of September  30, 2001,  and the
related unaudited  statement of income,  retained earnings and cash flow for the
nine-month   period  then  ended,   prepared  by  the  Company  (the  "Unaudited
                                                                       ---------
Statements").  All such statements  (collectively,  the "Financial  Statements")
----------                                               ---------------------
have been  prepared  in  conformity  with GAAP  applied  on a  consistent  basis
throughout the periods involved and fairly present in all material  respects the
financial  position of the Company as of the dates  indicated and the results of
the Company's operations and cash flows for the periods then ended (subject,  in
the case of the Unaudited  Statements,  to normal and recurring  year-end  audit
adjustments, none of which, individually or in the aggregate, are expected to be
material and the absence of footnotes otherwise required under GAAP).

                                       15


SECTION 3.07    Absence of Undisclosed Liabilities.  Except as and to the extent
                ----------------------------------
reflected or reserved against in the 2000 Audited Statements, the Company had no
liabilities or obligations  that are required to be recorded in accordance  with
GAAP, as of the date thereof (other than  obligations  of continued  performance
under the Company's  Agreements  (as defined in Section  3.09(a)) and other than
commitments and arrangements incident to the normal conduct of business that are
not  required to be  disclosed  on Schedule  3.09(a) or (b)),  known or unknown,
secured or unsecured  (whether  accrued,  absolute,  contingent  or  otherwise),
including,  without limitation,  tax liabilities due or to become due. Except as
and to the extent reflected or reserved against in the Unaudited Statements, the
Company has incurred no  liabilities  or  obligations  since  December 31, 2000,
other than  current  liabilities  incurred  in the  ordinary  course of business
consistent   with  past  practice  or  in  connection   with  the   transactions
contemplated hereby.

SECTION 3.08    Absence of Certain  Changes or Events.  Since December 31, 2000,
                -------------------------------------
the Company has conducted its business  only in the ordinary  course  consistent
with past practice,  and there has not occurred any event or condition which has
or may reasonably be expected to have a Material  Adverse Effect,  and,  without
limiting the generality of the  foregoing,  the Company has not (a) incurred any
obligation  or  liability,  secured or  unsecured  (whether  accrued,  absolute,
contingent  or  otherwise),  whether  due  or  to  become  due,  except  current
liabilities in the ordinary course of business  consistent with past practice or
those  reflected on the Unaudited  Statements,  (b)  discharged or satisfied any
Lien (except for Permitted Liens),  or paid any obligation or liability,  except
current  liabilities  becoming due in the ordinary course of business consistent
with past  practice,  (c) mortgaged,  pledged,  or subjected to Lien (except for
Permitted  Liens)  any  of  the  Company's   properties  or  assets,  (d)  sold,
transferred,  licensed or otherwise disposed of any of the Company's  properties
or assets other than in the  ordinary  course of business  consistent  with past
practice,  (e) increased the compensation  payable or to become payable by it to
any of its directors, officers, employees or agents whose total compensation for
services  rendered  after any such  increase  is more than  $100,000,  except as
provided by any agreement,  either written or oral, the terms of which have been
disclosed on Schedule  3.08, or made any bonus,  percentage of  compensation  or
             --------------
other  like  benefit  accruing  to or for  the  credit  of any  such  directors,
officers, employees,  consultants or agents of the Company (except in accordance
with any Company  Benefit Plan set forth in Schedule  3.19),  (f)  terminated or
received  any notice of  termination  of any  material  contract,  or any lease,
trademark,  patent,  patent  application,  copyright or trade name protection or
other  agreement,  (g) suffered any damage,  destruction or loss (whether or not
covered by  insurance)  to the  Company's  properties or assets which has or may
reasonably  be expected to have a Material  Adverse  Effect,  (h)  suffered  any
taking or seizure of all or any part of the  Company's  properties  or assets by
condemnation  or eminent  domain,  (i)  experienced  any material  change in its
relations  with  its  vendors,   suppliers,   lenders,  dealers,   distributors,
customers,  employees,  consultants  or agents  which has or may  reasonably  be
expected to have a Material  Adverse  Effect,  (j) acquired any capital stock or
other securities of any corporation or any interest in any business  enterprise,
or otherwise  made any loan or advance to or investment  in any person,  firm or
corporation (other than advances to employees in the ordinary course of business
consistent  with past  practice),  (k) made any capital  expenditures or capital
additions   exceeding  $100,000  singly  or  $200,000  in  the  aggregate,   (l)
instituted,  settled or agreed to settle any  litigation,  action or  proceeding
before any court or  governmental  body affecting its financial  condition,  its
property or its business  operations  involving a claim in excess of $5,000, (m)
made  any  purchase   commitment  in  excess  of  normal,   ordinary  and  usual
requirements,  or made any material change in its selling, pricing, or personnel

                                       16


practices  other than in the ordinary  course of business  consistent  with past
practice,  (n) made any change in accounting  principles  or methods,  or in the
manner of keeping  books,  accounts and records of the Company  which is, or may
be,  inconsistent  with the  principles  or  methodology  by which the Financial
Statements have been prepared, (o) entered into any contract,  agreement,  lease
or other  arrangement or transaction,  or taken any other action,  except in the
ordinary  course of  business  consistent  with past  practice,  (p) changed the
authorized  capital  stock of the  Company,  redeemed  any capital  stock of the
Company,  issued, sold or otherwise disposed of any capital stock of the Company
or any  option  to  acquire  capital  stock of the  Company,  or any  securities
convertible into or exchangeable for capital stock of the Company, increased its
funded  indebtedness,  or made any declaration,  setting aside or payment of any
dividend or any other  distribution  (whether  in cash,  stock or  property)  in
respect of its capital stock (other than dividends payable in respect of Company
Preferred Stock), or (q) entered into any agreement or made any commitment to do
any of the things described in the preceding subsections (a) through (p) of this
Section 3.08.

SECTION 3.09    Company's Agreements.
                --------------------

        (a)     The  Company  is not a party  to,  nor are any of the  Company's
assets bound by, any  executory  agreements  (including  dealer and  distributor
agreements),  purchase orders (other than purchase commitments for raw materials
and supplies in the ordinary course of business), bailment agreements, equipment
leases, commitments,  contracts, employment agreements,  repurchase or floorplan
financing agreements, warranties, guarantees, understandings or other agreements
(i) which  involve or may involve the payment of more than  $25,000,  (ii) which
are of a duration in excess of twelve  (12)  months  from the date of  execution
thereof,  (iii) to which any stockholder,  officer,  director or employee of the
Company or any member of such person's  immediate family, or any business entity
in which such person is a partner,  investor,  officer or director is a party in
any  capacity,  (iv) which  contain a covenant  restricting  the  ability of the
Company  (or which,  following  the  consummation  of the Merger,  restrict  the
ability  of  Parent  or  any  of  its  subsidiaries,   including  the  Surviving
Corporation)  to compete in any business or in any geographic  area or to employ
or solicit the  employment of any persons,  or requiring the Company to maintain
the  confidentiality  of any  information,  (v) which relate to any indebtedness
(which term shall include  capital  leases and operating  leases) of the Company
that is outstanding or may be incurred or any guarantees of or by the Company of
indebtedness  of any other person,  or (vi) which create or evidence a Lien upon
any of the Company's  assets or properties (such  agreements,  together with any
Real Property  Leases set forth in Schedule  3.10(b)  hereto,  being referred to
herein collectively as the "Company's Agreements").  True and complete copies of
                            --------------------
each of the Company's  Agreements  (including all amendments  thereto) have been
delivered to Parent and Acquisition Subsidiary. Each of the Company's Agreements
is in full force and effect,  is between the Company and the counterparty  named
on Schedule  3.09(a)  hereto,  has an  expiration  date as set forth on Schedule
   -----------------
3.09(a) hereto, has not been amended or modified except as set forth on Schedule
3.09(a) hereto, and constitutes the entire agreement between the parties thereto
with  respect to the  subject  matter  thereof.  The  Company is not and, to the
knowledge of the Company,  no other party to any Company Agreement is in default
thereunder, nor does the Company have knowledge of any fact or circumstance with
respect to any Company  Agreement  which upon notice or lapse of time could give
rise to a default thereunder.

                                       17


        (b)     Attached hereto as Schedule  3.09(b) is a true and complete list
                                   ----------------
of all purchase  orders (other than purchase  commitments  for raw materials and
supplies in the ordinary course of business)  ("Open Purchase  Orders") to which
                                                ---------------------
the  Company is a party or by which the  Company is bound  which  involve or may
involve the payment of more than $10,000 to any single vendor or supplier.  True
and  complete  copies of all such Open  Purchase  Orders have been  delivered to
Parent and  Acquisition  Subsidiary.  The Company has performed all  obligations
required to be performed by the Company to date under each Open Purchase  Order.
The Company is not and, to the  knowledge of the Company,  no other party to any
Open  Purchase  Order  is in  default  thereunder,  nor does  the  Company  have
knowledge of any fact or  circumstance  with respect to any Open Purchase  Order
which upon notice or lapse of time could give rise to a default thereunder.

        (c)     None of the parties to the Damon Purchase  Agreement (as defined
below) have made any claims  against any other party or parties  thereto for any
breach thereunder,  nor, to the knowledge of the Company, is there any basis for
any claim under (i) that certain Asset Purchase  Agreement dated as of April 28,
2000  (the  "Damon  Purchase  Agreement")  by  and  among  the  Company,   Damon
             --------------------------
Corporation, an Indiana corporation ("Damon"), and Lindon Investments,  Inc., an
                                      -----
Indiana corporation,  (ii) that certain Non-Competition  Agreement,  dated April
28,  2000,  by and between the  Company  and Damon,  restricting  certain of the
Company's  activities  (the  "Company  Non-Compete"),   or  (iii)  that  certain
                              --------------------
Non-Competition  Agreement, dated as of April 28, 2000, by and between Damon and
the   Company,   restricting   certain  of  Damon's   activities   (the   "Damon
                                                                           -----
Non-Compete").  The Company had performed,  and has no further  obligations with
-----------
respect to, the joint marketing  efforts described in Sections 7.5(a) and (b) of
the Damon Purchase Agreement.  The Company  Non-Compete  terminated on April 28,
2001 in accordance with its terms, and the Company has no further  obligation or
liabilities  thereunder.  The Damon Purchase Agreement and the Damon Non-Compete
are in full force and effect, have not been amended or modified,  and constitute
the entire  agreement  between the parties  thereto  with respect to the subject
matter  thereof.  To the  knowledge of the Company,  neither  party to the Damon
Non-Compete  has  breached  the terms  thereof or made any claim of breach  with
respect  thereto,  and, to the knowledge of the Company,  there is not any basis
for any claim of breach.

SECTION 3.10    Real Property.
                -------------

        (a)     Schedule 3.10(a) hereto lists all real property  interests owned
                ---------------
by the Company (the "Owned Real  Property") and any contract for the purchase or
                     --------------------
sale of real  property.  The Company has good and marketable fee simple title to
the Owned Real Property, subject only to those exceptions to title identified on
Schedule   3.10(a)   hereto.   Each  parcel  of  Owned  Real  Property  and  all
improvements,  located  thereon (i) complies in all material  respects  with all
covenants,  conditions and restrictions affecting such property, either recorded
or of which the Company has knowledge, (ii) is not presently occupied or used by
any party  other than its owner,  (iii) is not subject to any option to purchase
or lease, right of first refusal to purchase or lease,  reversionary interest or
other instrument or Lien,  whether recorded or unrecorded,  which would prohibit
or  require  the  consent  or  waiver of  another  party to the  Merger  and the
transactions  contemplated  hereby  or  any  subsequent  sale  or  lease  of the
property,  and (iv) is not subject to any mortgage,  deed of trust or other Lien
securing debt which will not be entirely  released and satisfied at the Closing.
There are no taxes  currently  levied  against the Owned Real Property which are

                                       18


due and payable and have not been paid. No party has provided  goods or services
to or in  connection  with the Owned  Real  Property  which  will  result in any
mechanic's, materialmens', supplier's, or other Lien as a result of the wrongful
failure to pay for the same prior to Closing.  The Company has made available to
Parent and  Acquisition  Subsidiary  accurate and  complete  copies of all title
insurance  policies,  surveys and other  documents  and records  relating to the
Owned Real  Property  that such parties  have  requested to the extent that such
material was actually in the possession of the Company.

        (b)     The real property leases listed on Schedule  3.10(b) hereto (the
                                                   -----------------
"Real Property  Leases")  constitute  all leases,  subleases or licenses of real
 ---------------------
property  (the "Leased Real  Property"),  whether  written or oral, to which the
                ---------------------
Company is a party or is bound  (including any leases with respect to the Leased
Real  Property  owned by one or more of the  Holders  or any  affiliates  of the
Holders).  Schedule 3.10(b)  identifies each Real Property Lease by the premises
covered thereby,  the date of lease and all amendments and supplements  thereto,
the name of the landlord  thereunder,  and the term of the lease,  including the
expiration  date  thereof.  True and correct  copies of each of the written Real
Property Leases (including all amendments thereto) have been delivered to Parent
and  Acquisition  Subsidiary.  The Company has valid and  enforceable  leasehold
interests in the Leased Real  Property,  free and clear of all Liens (other than
Permitted  Liens).  Each Real Property  Lease  affords the Company  peaceful and
undisturbed  possession of the Leased Real Property covered  thereby,  and there
exists no event of default or event, occurrence, condition or act (including the
transactions  contemplated by this Agreement) on the part of the Company, or, to
the knowledge of the Company, on the part of the lessor thereunder,  which, with
the giving of notice, the lapse of time or the happening of any further event or
condition,  would become a material default under such Real Property Lease, give
rise to a right in the lessor to terminate the Real Property Lease or change any
of the  material  terms  thereof  or  render  the  lessee  liable  to incur  any
expenditure  under such Real Property Lease. In the event any such Real Property
Lease requires the lessee to exercise,  on or before the date hereof,  an option
to renew in  order to  continue  the term  thereof,  the  Company  has  properly
exercised such option to renew.

        (c)     The  Owned  Real   Property   and  the  Leased   Real   Property
(collectively,  the "Real  Property")  are the only real  property  necessary or
                     --------------
required in  connection  with the  operation  of the Business as it is now being
conducted.  To the knowledge of the Company,  the Real Property and improvements
thereon may  lawfully be used in  connection  with the  Business.  Except to the
extent that such  non-compliance  would not have a Material Adverse Effect,  the
Real Property and  improvements  are in  compliance  with all  applicable  laws,
rules,  regulations and ordinances of all Governmental  Entities including,  but
not limited to, zoning, building, health, safety and environmental laws; and the
Company has not received any notices of violations with respect thereto.

SECTION 3.11    Machinery  and  Equipment.  All  machinery,  equipment and other
                -------------------------
tangible  assets of the Company,  necessary and utilized in the operation of the
Business,  are in good operating  condition and in a state of repair  sufficient
for the conduct of normal operations  without the necessity of any known capital
expenditure in excess of $15,000. The Company's assets and properties (including
leased  assets and  properties,  if any) are  adequate  to enable the Company to
conduct the  Business  as now being  conducted.  The  Company  does not have any

                                       19


commitment or plan to make any capital expenditure in excess of $15,000 that has
not been set forth on Schedule 3.11 hereto.
                      -------------

SECTION 3.12    Inventories.  The  inventories  of the  Company  consist  of raw
                -----------
materials,  work in process, and finished goods of a quality and quantity usable
or salable in the normal  course of the Business of the Company,  except for any
slow moving,  obsolete inventory or inventory of below-standard  quality, all of
which is immaterial or has been written off or written down to realizable  value
or for which  there has been a reserve  established  pursuant  to the  Financial
Statements.  The valuation at which the  inventories  of the Company are carried
reflects  the normal  inventory  valuation  policy of the  Company  (applied  in
accordance   with  GAAP)   which   states   inventory   at  the  lower  of  cost
(first-in-first-out-method)   or  market  and  the  Company's   regular  costing
standards with respect to work in process and finished goods inventory.

SECTION 3.13    Accounts  Receivable.  The  accounts  receivable  of the Company
                --------------------
result  from and will  result  from bona fide sales  made by the  Company in the
ordinary  course  of  business  consistent  with  past  practice  and have  been
collected in the ordinary course after provision for doubtful accounts and other
reserves  required by GAAP. The accounts  receivable of the Company that will be
recorded  on the  Audited  Closing  Balance  Sheet  will be  collectible  in the
ordinary  course  after  provision  for  doubtful  accounts  and other  reserves
required  by GAAP as set forth  thereon  The  amounts  due, or to become due, in
respect of such  accounts  receivable  are not, to the Company's  knowledge,  in
dispute and there are no, and will not be, any setoffs or counterclaims asserted
against any of the accounts receivable of the Company.

SECTION 3.14    Intellectual  Property Rights.  Attached hereto as Schedule 3.14
                -----------------------------                      -------------
is a true and  complete  list of all  Intellectual  Property  Rights (as defined
below)  used or held for use by the  Company in  connection  with the  Business,
other than  computer  software  programs  which are  generally  sold in consumer
retail stores.  The Company shall  disclose any patent  application in which the
Company has any  interest  to Parent and  Acquisition  Subsidiary  on a separate
confidential list. The Company owns, or is validly licensed or otherwise has the
right  to use,  all  Intellectual  Property  Rights  used or held for use by the
Company  and  all  goodwill  associated  therewith  on or  with  respect  to the
Company's  Products in the same manner in which any such  Intellectual  Property
Right have been or are now being  used.  The  Company  has not  infringed  upon,
misappropriated or otherwise  violated any Intellectual  Property Right or other
proprietary  information  of any other person.  Except as noted on Schedule 3.14
hereto,  there is no claim, demand or proceeding pending or, to the knowledge of
the Company, threatened, that pertains to or challenges the right of the Company
to use any of the  Intellectual  Property  Rights  identified  on Schedule  3.14
hereto  (including any claim that the Company must license or refrain from using
any Intellectual  Property Rights or other proprietary  information of any other
person).  The  Company  has not  granted  any  license or other right and has no
obligation  to grant any license or other  right with  respect  thereto.  To the
knowledge of the Company, no other person has infringed upon, misappropriated or
otherwise violated any Intellectual  Property Right of the Company.  The Company
has delivered to Parent and Acquisition  Subsidiary a true, complete and correct
copy of all correspondence  involving any claim,  demand or proceeding listed or
referred to on Schedule  3.14 hereto.  Without  limiting the  generality  of the
foregoing,  to the knowledge of the Company,  fully paid,  enforceable  licenses
govern the  Company's  use of software in which the  Microsoft  Corporation  has

                                       20


Intellectual  Property  Rights,  each of such licenses remains in full force and
effect,  the Company has not breached any such license in any material  respect,
and the Company has paid all amounts that have heretofore become due and payable
in respect of such licenses. As used in this Agreement,  "Intellectual  Property
Rights" means,  collectively,  with respect to the U.S. and Canada,  any and all
now known or hereafter known tangible and intangible: (i) rights associated with
works of authorship  including  copyrights,  moral rights and  mask-works;  (ii)
trademark and trade name rights and similar  rights;  (iii) trade secret rights;
(iv) patent rights,  designs,  algorithms,  computer programs,  methods of doing
business, other proprietary ideas, designs,  concepts,  techniques,  inventions,
discoveries and  improvements,  whether or not patentable,  and other industrial
property rights;  (v) all other  intellectual and industrial  property rights of
every kind and nature and however  designated,  whether  arising by operation of
law,  contract,   license  or  otherwise;   (vi)  all   registrations,   initial
applications,   renewals,  extensions,   continuations,   continuations-in-part,
divisions  or reissues  thereof now or  hereafter  existing,  made,  or in force
(including any rights in any of the foregoing);  (vii) Internet websites, rights
in domain names,  computer  programs and software;  and (viii) any other service
mark,  design,  logo,  trade  secret,  know-how,  customer  list  or  financial,
business,  marketing or other information,  material or industrial property of a
party or any of its affiliates.

SECTION 3.15    Licenses.   The  Company  possesses  all  patents,   franchises,
                --------
permits,  licenses,  certificates  and consents  required from any  Governmental
Entity or any other  person  necessary  to enable  the  Company  to carry on the
Business  as now  conducted  and to own and operate  its  properties  (including
leased property) as now owned and operated  (collectively,  "Licenses"),  except
                                                             --------
for those licenses that are not,  individually or in the aggregate,  material to
the  operation of the  Business.  Each of the Licenses will remain in full force
and effect  following  consummation  of the  transactions  contemplated  by this
Agreement.  Attached  hereto as Schedule 3.15 is a true and complete list of all
                                -------------
such Licenses.

SECTION 3.16    Title to Assets.  All of the Company's assets and properties and
                ---------------
all assets and properties necessary or required in connection with the operation
of the Business as conducted as of the date hereof will, on the Closing Date, be
owned by the Company,  free and clear of all Liens whatsoever  (except Permitted
Liens), and the consummation of the transactions  contemplated by this Agreement
will not give rise to any Lien on such  assets or  properties.  With  respect to
leased Real Property,  the Company  holds,  and on the Closing Date will hold, a
valid leasehold  interest in and to the Real Property Leases,  in each case free
and clear of all Liens whatsoever  (except Permitted Liens).  There are not, and
on the  Closing  Date there will not be, any  outstanding  agreements,  options,
commitments  or rights  with,  to or in any third party to acquire or use any of
the Company's assets or properties.

SECTION 3.17    Corporate Minute Books; Bank Accounts.
                -------------------------------------

        (a)     The minute  books of the Company  contain  complete and accurate
records of all meetings  which were required to be convened and other  corporate
actions of its  stockholders  and directors and committees of directors (if any)
which were required to be taken, in each case pursuant to the Company's Articles
of Incorporation,  the IBCL and/or any material  agreements to which the Company
is a party. True and complete copies of the minute books have been delivered, or
made available to, Parent and Acquisition Subsidiary.

                                       21


        (b)     Schedule  3.17(b) hereto contains a complete and correct list of
                -----------------
all bank accounts and safe deposit  boxes of the Company and persons  authorized
to sign or  otherwise  act with  respect  thereto  as of the date  hereof  and a
complete and correct list of all persons  holding a general or special  power of
attorney granted by the Company and a complete and correct copy thereof.

SECTION 3.18    Taxes.
                -----

        (a)     The  Company  has timely  filed all tax  returns  required to be
filed by it and all such returns are true and complete in all material respects.
The Company has timely paid all taxes shown as due on such returns and all taxes
otherwise due and the Unaudited Statements adequately provide in accordance with
GAAP for all taxes  payable by the  Company  (in  addition  to any  reserve  for
deferred taxes  established to reflect timing  differences  between book and tax
income) for all taxable  periods and  portions  thereof or, with  respect to the
period in which the Closing occurs,  such taxes (excluding those taxes resulting
from or attributable to the transactions contemplated by this Agreement) will be
accrued  through the Closing  Date on the Audited  Closing  Balance  Sheet.  The
Company has made all payments  required by any governmental  program of workers'
social  security or unemployment  compensation,  has withheld and, to the extent
due, paid over to the appropriate  Governmental  Entity all amounts  required by
law to be withheld  from the wages or salaries of  employees,  and is not liable
for any arrears of wage or salary  withholdings  or any taxes or  penalties  for
failure to comply with any of the  foregoing.  The Company has not requested any
extension  of time within which to file any tax return in respect of any taxable
year which has not since been filed,  and no  outstanding  waivers or comparable
consents regarding the application of the statute of limitations with respect to
any taxes or tax returns has been given by or on behalf of the Company. True and
complete  copies of all  Federal  income tax  returns of the  Company  have been
delivered to Parent and Acquisition Subsidiary.

        (b)     No  deficiencies  for any taxes have been proposed,  asserted or
assessed against the Company that are not adequately  reflected in the Financial
Statements,  or that will not be  adequately  reflected  in the Audited  Closing
Balance Sheet  (excluding  those taxes  resulting  from or  attributable  to the
transactions contemplated by this Agreement), and no requests for waivers of the
time to assess  any such taxes have been  granted  or are  pending.  There is no
audit,  examination,  deficiency  or refund  litigation  pending with respect to
taxes and during  the past three  years no taxing  authority  has given  written
notice  of the  intent  to  commence  any  such  examination,  audit  or  refund
litigation and which such  examination,  audit or refund  litigation has not yet
ended.  None of the assets or  properties  of the  Company is subject to any tax
lien,  other than any such liens for taxes which are not due and payable,  which
may  thereafter  be paid  without  penalty  or the  validity  of which are being
contested  in good  faith by  appropriate  proceedings  and for  which  adequate
provisions are being maintained in accordance with GAAP.

        (c)     No claim has been made in  writing  by a taxing  authority  in a
jurisdiction  where the Company does not file tax returns to the effect that the
Company is or may be subject to taxation by that jurisdiction.

        (d)     The   Company   has  not  been  a  member   of  an   affiliated,
consolidated,  combined or unitary group for tax purposes,  or made any election

                                       22


or participated in any arrangement whereby any tax liability or any tax asset of
the Company was determined or taken into account for tax purposes with reference
to or in  conjunction  with any tax  liability  or any tax  asset  of any  other
person.

        (e)     The  Company is not a party to any tax sharing  agreement  or to
any  other  agreement  or  arrangement,  as a result of which  liability  of the
Company  to any taxing  authority  is  determined  or taken  into  account  with
reference  to the  activities  of any  other  person,  and  the  Company  is not
currently  under any  obligation to pay any amounts as a result of having been a
party to such an agreement  or  arrangement,  regardless  of whether such tax is
imposed on the Company.

        (f)     As  used  in  this  Agreement,  "taxes"  shall  include  all (x)
                                                 -----
domestic and foreign (whether national,  federal,  state,  provincial,  local or
otherwise) income,  franchise,  property,  sales, excise,  employment,  payroll,
social security, value-added, ad valorem, transfer, withholding and other taxes,
including taxes based on or measured by gross receipts,  profits,  sales, use or
occupation, tariffs, levies, impositions, assessments or governmental charges of
any nature  whatsoever,  including  any  interest,  penalties or additions  with
respect  to any of the  foregoing,  and (y)  liability  for the  payment  of any
amounts as a result of being party to any tax sharing  agreement  or as a result
of any express or implied  obligation to indemnify any other person with respect
to the  payment of any amounts of the types  described  in clause (x) or (y). As
used in this Agreement,  "tax return" shall mean any report,  return,  document,
                          ----------
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction with respect to taxes,  including information returns,
any documents with respect to or  accompanying  payments of estimated  taxes, or
with respect to or  accompanying  requests for the extension of time in which to
file any such report, return, document, declaration or other information.

SECTION 3.19    Employees; Benefit Plans.
                ------------------------

        (a)     Employees.  Attached  hereto as  Schedule  3.19(a) is a true and
                ---------                        ----------------
complete list of the names,  positions  and current  salary rates of all present
directors,  officers and  employees of the Company  whose total  current  annual
compensation is $100,000 or more,  together with a summary showing the salaries,
bonuses,  additional  compensation  and other  like  benefits,  if any,  paid or
payable to such persons for the fiscal year ended December 31, 2000 and that are
expected  to be paid or  payable  to such  persons  for the  fiscal  year  ended
December 31, 2001. All salaries, bonuses, additional compensation and other like
benefits,  including vacation,  of all past and present employees of the Company
shall be properly  accrued and reserved on the Audited  Closing Balance Sheet in
accordance  with  GAAP.  To the  knowledge  of the  Company,  no officer or "Key
                                                                             ---
Employee"  (which  means,  as used herein,  any employee  whose  current  annual
--------
compensation  is $100,000 or more),  of the Company  intends to terminate his or
her employment with the Company, nor does the Company have any present intention
to terminate the  employment  of any officer or such Key Employee,  whether as a
result of the  consummation  of the Merger or  otherwise.  The  Company  (i) has
correctly   categorized  all  employees  as  either   employees  or  independent
contractors  for federal tax purposes,  and is in compliance with all applicable
federal,  state and local laws,  rules and  regulations  (domestic  and foreign)
respecting their employment,  employment practices,  labor, terms and conditions
of employment and wages and hours, in each case, with respect to employees, (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages,  salaries and other  payments to  employees,  (iii) is not liable for any

                                       23


arrears of wages or any taxes or any  penalty  for failure to comply with any of
the foregoing,  (iv) is not liable for any payment to any trust or other fund or
to any governmental or  administrative  authority,  with respect to unemployment
compensation benefits,  social security or other benefits for employees, and (v)
has provided  employees with the benefits to which they are entitled pursuant to
the terms of all Company Benefit Plans (as defined below).

        (b)     Employment,  Severance and Stay Bonus Agreements. The Company is
                ------------------------------------------------
not, nor will it be on the Closing Date, a party to or bound by (i) any contract
with any present or former  director,  officer,  employee or  consultant  of the
Company,  (ii) any employment,  termination,  severance or stay bonus agreement,
(iii) any agreement  with any director,  officer,  employee or consultant of the
Company  (A) the  benefits  of which are  contingent,  or the terms of which are
materially altered,  upon the occurrence of a transaction  involving the Company
of the nature of any of the  transactions  contemplated by this  Agreement,  (B)
providing  any term of  employment  or  compensation  guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
officer or employee,  or (iv) any agreement or plan,  including any stock option
plan or stock purchase plan, any of the benefits of which will be increased,  or
the vesting or other  realization of the benefits of which will be  accelerated,
by the  occurrence of the  transactions  contemplated  by this  Agreement or the
value of any of the  benefits  of which will be  calculated  on the basis of the
transactions  contemplated by this Agreement. The Company has not made or become
obligated  to make,  or will not,  as a result of any event  connected  with the
transactions  contemplated herein, make or become obligated to make, any "excess
parachute  payment" as defined in Section  280G of the Code  (without  regard to
subsection (b)(4) thereof).  Any amount that could be received (whether in cash,
property, or vesting of property) as a result of the transaction contemplated by
this Agreement (or their termination of service  incidental to such transaction)
by any officer, director,  employee or independent contractor of the Company who
is  a  "disqualified  individual"  (as  defined  in  Company  proposed  Treasury
Regulation  Section  1.280G-1),  under any  employment  arrangement  or  Company
Benefit  Plan (as  defined  below),  will  not be  characterized  as an  "excess
parachute payment" as defined in Section 280G of the Code.

        (c)     Benefit  Plans.  Schedule  3.19(c)  hereto  contains  a true and
                --------------   -----------------
complete  list of all  bonus,  profit-sharing,  stock  purchase,  stock  option,
pension,  retirement,  health,  welfare,  severance  pay or any other current or
deferred  remuneration or compensation  plan,  arrangement or practice and other
fringe benefits, including, without limitation, all "employee benefit plans" (as
defined in Section 3(3) 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 "employee  pension  benefit plans" (as defined in
Section 3(2) of ERISA)  (collectively,  "Company  Benefit Plans")  maintained or
                                         ----------------------
contributed  to by the Company or any person or entity that,  together  with the
Company, is treated as a single employer (a "Commonly  Controlled Entity") under
                                             ---------------------------
Section  414(b),  (c), (m) or (o) of the Code, for the benefit of any current or
former directors,  officers,  employees or consultants of the Company. Except as
described in the Financial  Statements,  the Company has no Company Benefit Plan
currently  in  existence  which is subject to the  requirements  of ERISA.  With
respect to each Company Benefit Plan:

                (i)     The Company has  provided or made  available  to Parent,
                true and complete  copies of (A) each Company  Benefit Plan (or,
                in the case of any unwritten Company Benefit Plans, descriptions
                thereof),  (B) the  most  recent  annual  report  on  Form  5500

                                       24


                required  to be filed with the  Internal  Revenue  Service  (the
                "IRS") with  respect to each  Company  Benefit Plan (if any such
                 ---
                report  was   required),   (C)  the  most  recent  summary  plan
                description for each Company Benefit Plan for which such summary
                plan  description is required,  and (D) each trust agreement and
                group  annuity  contract  relating to any Company  Benefit Plan.
                Each Company  Benefit Plan has been  administered  in accordance
                with its terms. The Company and all of the Company Benefit Plans
                are in compliance in all material  respects with all  applicable
                provisions of ERISA and the Code and all other applicable law.

                (ii)    Neither the Company nor any Commonly  Controlled  Entity
                has  maintained,  contributed to or been obligated to contribute
                to any Company Benefit Plan that is subject to Title IV of ERISA
                or Section 412 of the Code with  respect to which the Company or
                any Commonly  Controlled  Entity has  liabilities or obligations
                (whether accrued, absolute, contingent or otherwise).

                (iii)   With  respect  to any  Company  Benefit  Plan that is an
                employee  welfare  benefit  plan,  there are no  understandings,
                agreements or undertakings,  written or oral, that would prevent
                any such plan  (including  any such plan  covering  retirees  or
                other former employees) from being amended or terminated without
                material  liability  to the  Company on or at any time after the
                Effective Time.

                (iv)    Each Company  Benefit Plan that is an "employee  pension
                benefit  plan"  within the meaning of Section  3(2) of ERISA and
                that is intended to be  qualified  under  Section  401(a) of the
                Code, has received a favorable determination letter from the IRS
                with  respect to "TRA" (as  defined  in Section 1 of Rev.  Proc.
                93-39),  and to the  knowledge of the Company  there are not any
                circumstances  likely  to  result  in  revocation  of  any  such
                favorable  determination  letter. There is no pending or, to the
                knowledge  of  the  Company,   threatened   material  litigation
                relating to any of the Company  Benefit  Plans.  The Company has
                not engaged in a transaction with respect to any Company Benefit
                Plan  that,  assuming  the  taxable  period of such  transaction
                expired as of the date  hereof,  could  subject the Company to a
                tax or  penalty  imposed by either  Section  4975 of the Code or
                Section 502(i) of ERISA.

                (v)     All contributions  made or required to be made under the
                terms of any Company  Benefit Plan for any period since  January
                1, 2000 are set forth on Schedule  3.19(c) hereto,  and all such
                contributions  have been timely made or have been  reflected  on
                the  Financial  Statements,  or,  with  respect to the period in
                which the Closing  occurs,  will be accrued  through the Closing
                Date on the Audited Closing Balance Sheet.

                                       25


                (vi)    The Company has no  obligations  for retiree  health and
                life benefits under any Company Benefit Plan nor has the Company
                ever  represented,  promised or  contracted  (whether in oral or
                written form) to any employee(s) that such employee(s)  would be
                provided with retiree health or life benefits.

        (d)     Collective   Bargaining   Agreements.   None  of  the  Company's
                ------------------------------------
employees is covered by a collective  bargaining agreement and there is no union
or other organization seeking or claiming to represent any such employees. There
is no labor dispute,  strike, work stoppage or lockout,  or, to the knowledge of
the  Company,  any threat  thereof,  by or with  respect to any  employee of the
Company.

SECTION 3.20    Insurance.  Attached  hereto  as  Schedule  3.20  is a true  and
                ---------                         --------------
complete list of all  insurance  policies in force with respect to the Company's
assets and the Business of the Company,  identifying  the type of coverage,  the
coverage limit, the term thereof,  and the annual premiums  payable thereon.  To
the  knowledge of the Company all such policies are adequate to insure the risks
covered  thereby.  The Company is not,  nor will it be on the Closing  Date,  in
default in any respect  under any such policy,  and the Company  shall  continue
such policies in force and effect through the Closing Date.

SECTION 3.21    Litigation.  Schedule  3.21 hereto sets forth each legal action,
                ----------   --------------
suit, arbitration,  or other legal or administrative proceeding or investigation
before any  Governmental  Entity  pending or, to the  knowledge  of the Company,
threatened,  to which the Company is a party that (a) affects the  Company,  the
Business  or any of the  Company's  properties  or  assets,  (b)  questions  the
validity of this Agreement or any other  documents or instruments to be executed
and delivered by the Company or any of the Holders pursuant hereto, or the right
of the  Company or any of the Holders to enter into this  Agreement  or any such
other documents or instruments,  or to consummate the transactions  contemplated
hereby or thereby,  or (c) if  adversely  determined,  would be likely to have a
material  adverse  effect on the ability of the Company or any of the Holders to
perform  their  respective  obligations  under this  Agreement or any such other
documents or instruments.  To the knowledge of the Company,  except as set forth
on  Schedule  3.21  hereto,  there is no fact or facts  existing  which could be
reasonably  expected to result in, nor is there any basis for,  any such action,
suit,  arbitration,  or other proceeding or investigation.  Schedule 3.21 hereto
identifies,  with respect to each action, suit, arbitration, or other proceeding
or  investigation  set forth  thereon,  the parties  thereto,  the nature of the
claim,  the status  thereof,  the court or other tribunal in which such claim is
being heard, and whether such claim is fully covered by insurance. The Financial
Statements  include,  and the Audited  Closing  Balance Sheet will  include,  an
adequate  reserve,  determined  in  accordance  with GAAP,  for all liability or
potential liability resulting or arising from any action, suit, arbitration,  or
other proceeding or investigation listed on Schedule 3.21 hereto. The Company is
not a party to or subject to any order, writ, injunction,  decree,  judgement or
other  restriction of any  Governmental  Entity which has or could be reasonably
likely  to have a  Material  Adverse  Effect  or could be  reasonably  likely to
prevent or materially  delay the Company's  ability to enter into this Agreement
or any other  documents or  instruments  to be executed and  delivered  pursuant
hereto or consummate the transactions contemplated hereby or thereby.

                                       26


SECTION 3.22    Compliance  with Laws.  The Company  has  complied  with,  is in
                ---------------------
compliance  with,  and has not received  notice of any violation of, any and all
applicable laws, rules, regulations and ordinances regulating or relating to the
Business, including but not limited to those relating to the employment of labor
(including labor who are not U.S.  citizens),  the establishment and maintenance
of working conditions for labor, employee safety, environmental and conservation
matters, the manufacture,  sale and distribution of the Company's Products,  the
North  American Free Trade  Agreement,  as amended,  and the  establishment  and
maintenance of the Company's relationships with suppliers and customers,  except
to the extent such non-compliance would not have a Material Adverse Effect.

SECTION 3.23    NHTSA; Other Safety Standards.  The Company has not received any
                -----------------------------
notices  or  other  correspondence  from the  National  Highway  Traffic  Safety
Administration ("NHTSA") relating to the Company's Products. To the knowledge of
the Company, the Company has complied with all NHTSA requirements, including but
not limited to Federal Motor Vehicle  Safety  Standards,  in effect from time to
time in  connection  with the  manufacture  of the  Company's  Products.  To the
knowledge of the Company,  all of the Company's  Products are, and have been, at
the time of sale in compliance with all other safety standards,  including,  but
not limited to, all standards of the Recreational  Vehicle Industry  Association
and the  Canadian  Standards  Association,  those  imposed  on the  Business  by
statute,  rule or regulation of any Governmental Entity or industry association,
and the Company has not received notice of any such infractions or been required
to undertake any remedial measures in response thereto.

SECTION 3.24    Product Liability; Product Recalls.
                ----------------------------------

        (a)     To the knowledge of the Company,  all of the Company's  Products
that the Company has  manufactured  and sold have been  merchantable,  free from
defects in material and workmanship, and suitable for the purpose for which they
were sold.  The Company's  Products have not been subject to any product  recall
(including any safety or  NHTSA-related  recall) or service bulletin and, to the
knowledge  of the  Company,  there  is no  fact  or  facts  existing  which  may
reasonably be expected to result in any such recall or service bulletin.  Except
as  disclosed  on  Schedule  3.21  hereto,  there  is  no  legal  action,  suit,
arbitration, or other legal or administrative proceeding or investigation before
any  Governmental  Entity,   pending  or,  to  the  knowledge  of  the  Company,
threatened,  involving  any  product  liability,  product  recall  or  otherwise
involving any Product of the Company. To the knowledge of the Company, except as
disclosed on Schedule  3.21  hereto,  there is no fact or facts  existing  which
could be reasonably  expected to result in, nor is there any basis for, any such
action, suit, arbitration, or other proceeding or investigation.

        (b)     The Company has insurance  against loss or damage arising out of
product  liability,  true and  complete  copies of which have been  delivered to
Parent and Acquisition  Subsidiary.  Such insurance covers all incidents of loss
which have occurred  prior to the date hereof or which may occur  resulting from
the Company's Products sold prior to the Closing. All incidents of damage claims
paid by the  Company  or by its  insurance  carrier  in the two (2) year  period
preceding the date of this Agreement are described in Schedule 3.24 hereto.  The
                                                      -------------
Financial  Statements  include,  and the  Audited  Closing  Balance  Sheet  will
include,  an  adequate  reserve  (or  shall  otherwise  reflect  an  appropriate
accrual),  determined  in accordance  with GAAP,  for all liability or potential
liability  resulting or arising from any product  recall that has been initiated
or breach of warranty  claims that have been  asserted,  or that are  reasonably

                                       27


likely to be initiated or asserted, in connection with Products manufactured and
sold by the Company, including the matters set forth on Schedule 3.24 hereto, in
each  case,  as of the date of such  Financial  Statements  or  Audited  Closing
Balance Sheet, as the case may be.



SECTION 3.25    Warranties.  There  are no oral  or  written  warranties  on the
                ----------
Products manufactured or sold by the Company,  whether express or implied, other
than as set  forth  and  described  in  Schedule  3.25  hereto  and any  implied
                                        --------------
warranties that may be imposed by operation of law.

SECTION 3.26    Dealer Network; Rebates and Refunds.
                -----------------------------------

        (a)     The Company has provided Parent and Acquisition  Subsidiary with
a true and complete  list of the  Company's  top thirty (30) dealers in terms of
the  Company's  sales,  together  with the sales  made  thereto,  for the annual
periods  January 1, 1998 through  December 31, 2000, and for the periods January
1, 2000  through  August 31, 2000 and January 1, 2001  through  August 31, 2001.
True and complete copies of all dealer  agreements have been delivered to Parent
and Acquisition  Subsidiary.  To the knowledge of the Company, there has been no
adverse  change in the  Company's  relationship  with any of the top thirty (30)
dealers (as of August 31, 2001),  nor, to the knowledge of the Company,  has any
such  dealer  indicated  to the  Company  that it does not intend to continue to
carry the Company's Products.

        (b)     The Company has disclosed to Parent and  Acquisition  Subsidiary
(i) all significant refunds, rebates, discounts and return policies or practices
that the  Company  has engaged in with  respect to persons  supplying  goods and
services  to the  Company  and (ii) all annual  programs  relating  to  refunds,
rebates, discounts and return policies or practices that the Company has engaged
in with respect to  furnishing  the  Company's  Products to others in connection
with the Business.

SECTION 3.27    Environmental Matters.
                ---------------------

        (a)     Permits   and   Authorizations.   The  Company   possesses   all
                ------------------------------
Environmental  Permits (as defined below)  necessary to conduct the Business and
related operations as currently conducted.

        (b)     Compliance.  The Company is in  compliance  with all  applicable
                ----------
Environmental Laws (as defined below) and all Environmental  Permits (as defined
below),  other than minor infractions  which,  individually or in the aggregate,
will not require the  expenditure  of more than a nominal  amount for compliance
with respect  thereto or remediation  thereof,  and the Company has not received
any (i) oral or  written  communication  from any  Governmental  Entity or other
person  that  alleges  that the  Company  has  violated  or is liable  under any
Environmental  Law or (ii) written request for  information  pursuant to Section
104(e)  of the  U.S.  Comprehensive  Environmental  Response,  Compensation  and
Liability  Act or similar  state  statute  concerning  the disposal of Hazardous
Materials (as defined  below).  The Company does not have  knowledge of any past
events, conditions, circumstances,  activities, practices, incidents, actions or
plans  of  the  Company  which  may  cause  noncompliance  with  all  applicable
Environmental Laws and all Environmental  Permits, or which may give rise to any

                                       28


liability for any claim,  action,  suit,  proceeding,  hearing or investigation,
based on or related to the disposal, storage, handling, manufacture, processing,
distribution,  use,  treatment or  transportation,  or the emission,  discharge,
release  or  threatened  release  into the  environment  by the  Company  of any
Hazardous  Materials.  The Company has reported,  to the extent  required by all
Environmental  Laws, all past and present sites owned or operated by the Company
where Hazardous  Materials have been treated,  stored,  disposed of or otherwise
handled.

        (c)     Environmental  Claims.  There are no  Environmental  Claims  (as
                ---------------------
defined  below) (i)  pending or, to the  knowledge  of the  Company,  threatened
against  the  Company  or (ii)  to the  knowledge  of the  Company,  pending  or
threatened  against any person whose liability for any  Environmental  Claim the
Company has retained or assumed,  either  contractually  or by operation of law.
The  Company  has not  contractually  retained  or assumed  any  liabilities  or
obligations  that would be expected  to provide the basis for any  Environmental
Claim. There are not any, nor have there been any,  Environmental Claims pending
or, to the  knowledge  of the  Company,  threatened  against  the Company by any
landlord or third party pursuant to any of the Real Property Leases, nor, to the
knowledge of the Company, is there currently, or has there been previously,  any
basis  therefor.  There is no on-site or off-site  location to which the Company
has  transported  or  disposed  of  Hazardous  Materials  or  arranged  for  the
transportation  or disposal of Hazardous  Materials  which is the subject of any
enforcement action or any other  investigation by any Governmental  Entity which
could lead to any claim  against  the Company for any  clean-up  cost,  remedial
work, damage to natural resources or personal injury, including, but not limited
to, any claim under any  Environmental  Law, and there is no on-site or off-site
location to which the Company has transported or disposed of Hazardous Materials
or arranged  for the  transportation  or disposal of Hazardous  Materials  which
could become the subject of any enforcement  action by any  Governmental  Entity
which could lead to any liability of the Company for any clean-up cost, remedial
work, damage to natural resources or personal injury, including, but not limited
to, any claim under any Environmental Law.

        (d)     Releases.  To the  knowledge of the  Company,  there has been no
                --------
Release (as defined below) of any Hazardous Materials at, from, in, to, under or
on any property currently or previously owned or operated by the Company,  other
than in  compliance  with  applicable  Environmental  Laws or the  terms  of any
applicable  permit (and no such property is  contaminated by any such substance)
that could reasonably be expected to form the basis of any Environmental Claim.

        (e)     Recognized  Environmental  Conditions.  None  of  the  following
                -------------------------------------
exists at any property or facility  owned or operated by the Company:  (i) under
or above-ground  storage tanks, (ii) asbestos containing material in any form or
condition,  (iii) materials or equipment  containing  polychlorinated  biphenyls
("PCBs"),  or (iv)  landfills,  surface  impoundments,  or disposal  areas.  The
  ----
Company has provided copies (or, if not available,  accurate written  summaries)
of all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf,  or which  otherwise  are in the  possession,  of the
Company  respecting any facility site or other property  previously or presently
owned or operated by the Company.

        (f)     Definitions.
                -----------

                                       29


        (i)     "Environmental Claims" means any and all, regulatory or judicial
                 --------------------
        actions,  orders,  decrees, suits, demand letters,  directives,  claims,
        liens,  investigations,  proceedings  or  notices  of  noncompliance  or
        violation by any Governmental  Entity or other person alleging potential
        responsibility  or  liability  including  potential   responsibility  or
        liability for costs of enforcement, investigation, cleanup, governmental
        response,  removal  or  remediation,   for  natural  resources  damages,
        property  damage,  personal  injuries or penalties or for  contribution,
        indemnification,   cost  recovery,  compensation  or  injunctive  relief
        arising  out of,  based on or  related to (A) the  presence,  Release or
        threatened  Release of, or exposure to, any  Hazardous  Materials at any
        location,  whether  or not  owned,  operated,  leased or  managed by the
        Company or any of its  subsidiaries,  or (B)  circumstances  forming the
        basis of any violation or alleged  violation of any Environmental Law or
        Environmental Permit.

        (ii)    "Environmental  Laws"  means all  domestic  or foreign  (whether
                 -------------------
        national,   federal,   state,  provincial  or  otherwise)  laws,  rules,
        regulations,   orders,   decrees,   common  law,  judgments  or  binding
        agreements   issued,   promulgated  or  entered  into  by  or  with  any
        Governmental   Entity   relating  to  pollution  or  protection  of  the
        environment (including ambient air, surface water, groundwater, soils or
        subsurface  strata) or  protection  of human health as it relates to the
        environment,  including  laws and  regulations  relating  to Releases or
        threatened  Releases of Hazardous Materials or otherwise relating to the
        generation,  manufacture,   processing,  distribution,  use,  treatment,
        storage, transport, handling of or exposure to Hazardous Materials.

        (iii)   "Environmental    Permits"   means   all   permits,    licenses,
                 ------------------------
        registrations  and  other   authorizations   required  under  applicable
        Environmental Laws.

        (iv)    "Hazardous Materials" means all hazardous,  toxic,  explosive or
                 -------------------
        radioactive substances, wastes or other pollutants,  including petroleum
        or petroleum distillates, asbestos or asbestos-containing material, PCBs
        or  PCB-containing  materials or  equipment,  radon gas,  infectious  or
        medical  wastes  and  all  other  substances  or  wastes  of any  nature
        regulated pursuant to any Environmental Law.

        (v)     "Release" means any release, spill, emission,  leaking, dumping,
                 -------
        injection, pouring, deposit, disposal, discharge, dispersal, leaching or
        migration into the environment  (including  ambient air,  surface water,
        groundwater,  land surface or subsurface strata) or within any building,
        structure, facility or fixture.

SECTION 3.28    Disclosure.  Neither this Agreement, nor any Exhibit or Schedule
                ----------
hereto,  nor any certificate or document required to be delivered by the Company
to Parent and Acquisition  Subsidiary  pursuant to Section 6.01 contains or will
contain,  as of the date  thereof,  any untrue  statement of a material  fact or
omits or will omit to state a material  fact  necessary  to make the  statements

                                       30


therein,  in light of the  circumstances  in which  they are made,  not false or
misleading.

SECTION 3.29    Tax  Matters.  The Company has not taken any action and does not
                ------------
know of any facts, agreements,  plans or other circumstances which, individually
or in the  aggregate,  could cause the  Forward  Merger (if  applicable)  not to
constitute a "reorganization" within the meaning of Section 368(a) of the Code.

SECTION 3.30    Exclusive Representations and Warranties.  Except as, and to the
                ----------------------------------------
extent,  set forth in this  Agreement and the documents  and  instruments  to be
executed  and  delivered   pursuant  hereto,  the  Company  does  not  make  any
representations or warranties whatsoever to Parent or Acquisition Subsidiary.

                                  ARTICLE III.A
                  REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

        Except as set forth on the Disclosure Schedule,  with specific reference
to the section or subsection of this Agreement to which the  information  stated
in such disclosure relates, each Holder, severally, not jointly,  represents and
warrants  and  agrees,  as of the date of this  Agreement  and as of the Closing
Date, as follows, each of which representations, warranties and agreements shall
be deemed to be  independently  material  and to have been relied upon by Parent
and Acquisition Subsidiary:

SECTION 3.01A   Organization;  Good  Standing.  In the event that such Holder is
                -----------------------------
not an individual, such Holder is duly organized or formed, validly existing and
in good  standing  under the laws of the  jurisdiction  of its  organization  or
formation.

SECTION 3.02A   Title.
                -----

        (a)     Such  Shareholder  owns, of record and  beneficially,  as of the
date hereof, and will own, of record and beneficially,  immediately prior to the
Closing,  the number of shares of Company  Common  Stock and  Company  Preferred
Stock,  respectively,  as are  set  forth  next to  such  Shareholder's  name on
Schedule  3.02(b),  free and clear of all  Liens,  and the  consummation  of the
-----------------
transactions  contemplated  by this  Agreement  will not give  rise to any Liens
thereon.

        (b)     Such Optionholder  owns, of record and  beneficially,  as of the
date hereof, and will own, of record and beneficially,  immediately prior to the
Closing,  the Company Stock Options as are set forth next to such Optionholder's
name on Schedule  3.02(c),  free and clear of all Liens, and the consummation of
        ----------------
the transactions  contemplated by this Agreement will not give rise to any Liens
thereon.

        (c)     There are no rights or other commitments entitling any person to
purchase  or acquire  any shares of capital  stock of the  Company  held by such
Holder or any security  convertible  into or exchangeable  for shares of capital
stock of the Company held by such Holder,  nor has such Holder  entered into any
agreement with respect to any of the foregoing. There are no irrevocable proxies
and no voting  agreements  to which such  Holder is a party with  respect to any
shares of the capital  stock or other voting  securities  of the Company held by
such Holder.

                                       31


SECTION 3.03A   Authority  Relative to this Agreement.  Such Holder has the full
                -------------------------------------
legal right,  power and capacity and all authority and approval  required by law
to enter into this  Agreement and the documents and  instruments  to be executed
and  delivered  by him pursuant  hereto,  and to perform  fully his  obligations
hereunder and  thereunder.  In the event that such Holder is not an  individual,
the execution, delivery and performance by such Holder of this Agreement and the
documents and  instruments to be executed and delivered by such Holder  pursuant
hereto have been duly  authorized  by all  necessary  corporate or other action.
This  Agreement and the documents and  instruments  to be executed and delivered
pursuant  hereto are and will be duly  executed and delivered by such Holder and
are and  will  be the  legal,  valid  and  binding  obligations  of such  Holder
enforceable against such Holder in accordance with their terms.

SECTION 3.04A   Consents and Approvals; No Violations.
                -------------------------------------

        (a)     Except for  applicable  requirements  of the  Exchange  Act, the
Securities  Act,  state  Blue Sky  laws,  the HSR  Act,  and the  filing  of the
Certificate of Merger as required by the DGCL and the IBCL,  and, if applicable,
the filing of the  Certificate of Designation as required by the DGCL, no filing
or registration with, and no permit, authorization,  consent or approval of, any
Governmental  Entity is  necessary  for the  consummation  by such Holder of the
transactions contemplated by this Agreement.

        (b)     Neither the  execution  and  delivery of this  Agreement  or the
documents and  instruments to be executed and delivered  pursuant hereto by such
Holder,  nor the  consummation by such Holder of the  transactions  contemplated
hereby or thereby,  nor  compliance  by such  Holder with any of the  provisions
hereof  or  thereof  will (i)  conflict  with or  result  in any  breach  of any
provision of the Articles of Incorporation or By-laws of the Company, or, in the
case  that  such  Holder  is not an  individual,  such  Holder's  organizational
documents,  (ii)  result in a  violation  or breach of, or  constitute  (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination,  cancellation  or acceleration of or loss of a material  benefit
under,  or result in the  creation of any Lien (except for  Permitted  Liens) or
give rise to any  increased,  additional,  accelerated  or guaranteed  rights or
entitlements under, or require any consent, approval or notice under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract,  agreement,  lease or other  instrument  or  obligation  to which such
Holder is a party or by which such Holder or any of its properties or assets may
be bound, or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to such Holder or any of its properties or assets.

SECTION 3.05A   Litigation.  There is no legal  action,  suit,  arbitration,  or
                ----------
other  legal  or   administrative   proceeding  or   investigation   before  any
Governmental Entity pending or, to the knowledge of such Holder,  threatened, to
which such Holder is a party that (a) questions  the validity of this  Agreement
or any other  documents  or  instruments  to be executed  and  delivered by such
Holder pursuant hereto, or the right of such Holder to enter into this Agreement
or any such other  documents or instruments,  or to consummate the  transactions
contemplated hereby or thereby, or (b) if adversely determined,  would be likely
to have a material  adverse  effect on the ability of such Holder to perform his
respective  obligations  under this  Agreement  or any such other  documents  or
instruments. To the knowledge of such Holder, there is no fact or facts existing
which are reasonably expected to result in, nor is there any basis for, any such
action, suit, arbitration, or other proceeding or investigation.  Such Holder is

                                       32


not a party to or subject to any order, writ,  injunction,  decree,  judgment or
other  restriction  of any  Governmental  Entity which is  reasonably  likely to
prevent or materially  delay such Holder's  ability to enter into this Agreement
or any other  documents or  instruments  to be executed and  delivered  pursuant
hereto or consummate the transactions contemplated hereby or thereby.

SECTION 3.06A   Related Party Transactions.  None of such Holder, if such Holder
                --------------------------
is an individual,  any member of such Holder's immediate family, or any business
entity in which such Holder is a partner,  investor,  director or officer,  is a
party to any contract,  agreement,  lease or other arrangement or transaction to
which the Company or any of the Company's assets or properties are bound.

SECTION 3.07A   Exclusive Representations and Warranties.  Except as, and to the
                ----------------------------------------
extent,  set forth in this  Agreement and the documents  and  instruments  to be
executed  and  delivered  pursuant  hereto,   such  Holder  does  not  make  any
representations or warranties whatsoever to Parent or Acquisition Subsidiary.

                                   ARTICLE IV
      REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITIOIN SUBSIDIARY

        Parent and Acquisition  Subsidiary hereby represent,  warrant and agree,
as follows,  each of which  representations,  warranties and agreements shall be
deemed to be independently  material and to have been relied upon by the Company
and the Holders:

SECTION 4.01    Organization;  Good  Standing.  Each of Parent  and  Acquisition
                -----------------------------
Subsidiary  is a  corporation  duly  organized,  validly  existing  and in  good
standing under the laws of the State of Delaware.

SECTION 4.02    Authority  Relative  to  this  Agreement.  Each  of  Parent  and
                ----------------------------------------
Acquisition  Subsidiary has the full legal right and power and all authority and
approval  required by law to enter into this  Agreement  and the  documents  and
instruments to be executed and delivered by it pursuant  hereto,  and to perform
fully its  obligations  hereunder and  thereunder.  The execution,  delivery and
performance  by Parent  or  Acquisition  Subsidiary  of this  Agreement  and the
documents and  instruments to be executed and delivered by them pursuant  hereto
have been duly authorized by all necessary  corporate action. This Agreement and
the documents and  instruments to be executed and delivered  pursuant  hereto by
Parent or Acquisition  Subsidiary  are and will be the legal,  valid and binding
obligations  of Parent and  Acquisition  Subsidiary,  respectively,  enforceable
against them in accordance with their terms.

SECTION 4.03    Consents and Approvals; No Violations.
                -------------------------------------

        (a)     Except for  applicable  requirements  of the  Exchange  Act, the
Securities Act, state Blue Sky laws, the HSR Act, and the filing and recordation
of the  Certificate  of Merger as  required  by the DGCL and the IBCL,  and,  if
applicable,  the filing of the  Certificate  of  Designation  as required by the
DGCL, no filing or registration with, and no permit,  authorization,  consent or
approval of, any Governmental Entity is necessary for the consummation by Parent

                                       33


or Acquisition Subsidiary of the transactions contemplated by this Agreement.

        (b)     Neither the  execution  and  delivery of this  Agreement  or the
documents and instruments to be executed and delivered pursuant hereto by Parent
or  Acquisition  Subsidiary  nor  the  consummation  by  Parent  or  Acquisition
Subsidiary of the transactions contemplated hereby or thereby, nor compliance by
Parent or Acquisition  Subsidiary with any of the provisions  hereof or thereof,
will  (i)  conflict  with  or  result  in any  breach  of any  provision  of the
respective  Certificates  of  Incorporation  or By-laws of Parent or Acquisition
Subsidiary,  (ii) result in a  violation  or breach of, or  constitute  (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination,  cancellation  or acceleration of or loss of a material  benefit
under, or result in the creation of any Lien in or upon any of the properties or
assets of Parent or Acquisition Subsidiary under, or give rise to any increased,
additional,  accelerated or guaranteed rights or entitlements  under, or require
any  consent,  approval  or  notice  under,  any of  the  terms,  conditions  or
provisions of any note, bond, mortgage, indenture, license, contract, agreement,
lease or other instrument or obligation to which either of Parent or Acquisition
Subsidiary  is a party or by which either of them or any of their  properties or
assets  may be bound or (iii)  violate  any  order,  writ,  injunction,  decree,
statute,  rule or regulation  applicable to Parent or Acquisition  Subsidiary or
any of their  properties  or  assets,  except  in the case of (ii) or (iii)  for
violations,  breaches or defaults  which  would not,  in the  aggregate,  have a
material  adverse effect and which would not prevent or materially delay or have
a material adverse effect on the  consummation of the transactions  contemplated
hereby.

SECTION 4.04    Validity of Shares Issued.  The shares of Parent Common Stock or
                -------------------------
Parent  Preferred  Stock,  as the case may be, to be delivered to the Holders in
accordance  with Article II hereof will at the Effective Time, and the shares of
Parent Common Stock issuable upon conversion of Parent Preferred Stock will upon
issuance,  be validly issued,  fully paid and  nonassessable,  and the shares of
Parent  Common Stock or, in the case of Parent  Preferred  Stock,  the shares of
Parent Common Stock issuable upon conversion thereof,  will be listed on the New
York Stock  Exchange  subject only to official  notice of issuance.  The rights,
powers,  and  preferences of the Parent  Preferred Stock are as set forth in the
Certificate of Designation annexed hereto as Exhibit 2.01.

SECTION 4.05    Capitalization of Acquisition Subsidiary. The authorized capital
                ----------------------------------------
stock of  Acquisition  Subsidiary  consists of 100 shares of common  stock,  par
value  $.0001 per share,  all of which,  as of the date  hereof,  are issued and
outstanding and are held by Parent. All of the outstanding shares of Acquisition
Subsidiary's  common stock have been duly authorized and validly issued, and are
fully paid and nonassessable.

SECTION 4.06    Litigation.  There is no legal  action,  suit,  arbitration,  or
                ----------
other  legal  or   administrative   proceeding  or   investigation   before  any
Governmental  Entity  pending  or, to the  knowledge  of Parent and  Acquisition
Subsidiary,  threatened,  to which Parent or  Acquisition  Subsidiary is a party
that (a)  questions  the validity of this  Agreement  or any other  documents or
instruments  to be executed and  delivered by Parent or  Acquisition  Subsidiary
pursuant hereto, or the right of Parent and Acquisition Subsidiary to enter into
this Agreement or any such other documents or instruments,  or to consummate the
transactions  contemplated  hereby or thereby,  or (b) if adversely  determined,
would be likely to have a material  adverse  effect on the ability of Parent and
Acquisition  Subsidiary  to  perform  their  respective  obligations  under this

                                       34


Agreement or any such other documents or instruments. To the knowledge of Parent
and  Acquisition  Subsidiary,  there  is no fact or  facts  existing  which  are
reasonably  expected to result in, nor is there any basis for,  any such action,
suit,  arbitration,  or other  proceeding or  investigation.  Neither Parent nor
Acquisition  Subsidiary is a party to or subject to any order, writ, injunction,
decree, judgment or other restriction of any Governmental Entity which has or is
reasonably  likely to  prevent  or  materially  delay  Parent's  or  Acquisition
Subsidiary's  ability  to enter into this  Agreement  or any other  document  or
instrument  to be executed  and  delivered  pursuant  hereto or  consummate  the
transactions contemplated hereby or thereby.

SECTION 4.07    SEC Reports;  Financial Statements.  Since July 31, 2000, Parent
                ----------------------------------
has timely filed with the  Securities  and Exchange  Commission  (the "SEC") all
reports and other documents required to be filed by it under the Exchange Act or
the Securities Act  (collectively,  the "SEC Reports") and is otherwise eligible
                                         -----------
to file a  registration  statement on Form S-3 covering the offering and sale of
the Parent Common Stock. As of their respective dates, or, if amended, as of the
date of such amendment,  the SEC Reports complied in all material  respects with
the  requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and  regulations of the SEC promulgated  thereunder  applicable to
such SEC Reports.  As of their respective dates, or, if amended,  as of the date
of such  amendment,  the SEC Reports did not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.  The financial statements (including
the related notes) included in the SEC Reports comply as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations  of the SEC with  respect  thereto  in effect at the time of filing,
have been  prepared in accordance  with GAAP  (except,  in the case of unaudited
statements,  as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods  involved  (except as may be indicated in the notes  thereto)
and fairly present in all material respects the consolidated  financial position
of Parent and its  consolidated  subsidiaries  as of the dates thereof and their
consolidated  results of  operations  and cash flows for the periods  then ended
(subject, in the case of unaudited statements,  to normal and recurring year-end
audit adjustments and the absence of footnotes otherwise required under GAAP).

SECTION 4.08    Tax Matters. Neither Parent nor Acquisition Subsidiary has taken
                -----------
any action, or knows of any fact, agreement,  plan or other circumstances which,
individually or in the aggregate, could cause the Forward Merger (if applicable)
not to constitute a "reorganization" within the meaning of Section 368(a) of the
Code.

SECTION 4.09    Exclusive Representations and Warranties.  Except as, and to the
                ----------------------------------------
extent,  set forth in this  Agreement and the documents  and  instruments  to be
executed  and  delivered   pursuant  hereto,   neither  Parent  nor  Acquisition
Subsidiary makes any representations or warranties  whatsoever to the Company or
the Holders.

                                       35


                                   ARTICLE V
                    CONDUCT AND TRANSACTIONS PRIOR TO CLOSING

SECTION 5.01    Conduct of Business. From the date hereof until the Closing, the
                -------------------
Company shall, and the Principal Shareholder shall cause the Company to, conduct
the Business and operations of the Company in accordance  with past practice and
in the ordinary  course of business,  maintain the  Company's  current  business
organization and goodwill,  use its commercially  reasonable efforts to continue
to  retain  the  services  of the  Company's  present  officers,  employees  and
consultants,  and preserve the Company's  relationship with vendors,  suppliers,
dealers,  distributors,  customers and others having business  dealings with the
Company,  and neither  the  Company nor any of the Holders  shall enter into any
transaction  or  perform  any act  which  would  constitute  a  breach  of their
respective  representations,  warranties,  covenants  and  agreements  contained
herein.

SECTION 5.02    Certain  Changes  or  Events.  From the date  hereof  until  the
                ----------------------------
Closing,  except as  specifically  provided  herein  or with the  prior  written
consent of Parent and Acquisition Subsidiary, none of the Company or the Holders
shall,  and none of the Holders  shall cause the Company to, (a) take any action
to amend the Company's Articles of Incorporation or By-Laws,  (b) issue, sell or
otherwise dispose of any of the Company's authorized but unissued capital stock,
redeem any  issued and  outstanding  capital  stock of the  Company or issue any
option to acquire  capital stock of the Company,  or any securities  convertible
into or  exchangeable  for capital stock of the Company,  (c) declare or pay any
dividend or make any other  distribution  in cash or  property on the  Company's
capital  stock  (other than  dividends  payable in respect of Company  Preferred
Stock),  (d) merge or consolidate the Company with or into any corporation,  (e)
make or allow the  Company  to become  liable  for any wage or salary  increase,
bonus,  profit-sharing or incentive  payment to any of its officers,  directors,
employees or stockholders,  or otherwise establish, sponsor or amend any Company
Benefit  Plan except as required by law or pursuant to any  agreement or Company
Benefit Plan disclosed on Schedule 3.19 hereto, (f) sell or otherwise dispose of
or encumber  any of the  Company's  properties  or assets other than in sales or
dispositions in the ordinary course of business consistent with past practice or
in connection with normal repairs, renewals and replacements,  (g) modify, amend
or cancel any of the Company's  existing  leases or enter into any  commitments,
contracts,  agreements,  leases, warranties,  guarantees or understandings other
than in the ordinary course of business consistent with past practice,  (h) fail
to operate the Business in the customary  manner and in the ordinary and regular
course  of  business  consistent  with past  practice  and to  maintain  in good
condition  the  Company's  business  premises,  plant,  fixtures,  furniture and
equipment,  reasonable wear and tear excepted, (i) cancel or compromise any debt
or claim related to the Company's  assets,  other than in the ordinary course of
business,  (j) waive or release any rights of value  relating  to the  Company's
assets, other than in the ordinary course of business, (k) transfer or grant any
rights in or under  any  concessions,  leases,  licenses,  agreements,  patents,
inventions,  trademarks, trade names, service marks, brand marks, brand names or
copyrights, or with respect to any know-how,  processes or formulas, relating to
its assets,  other than in the ordinary course of business  consistent with past
practice,  (l) enter into any employment  contract with any officer or employee,
or make any loan to, or enter into any transaction of any other nature with, any
of  the  Company's  directors,   officers  or  employees,  (m)  enter  into  any
transaction,  contract or commitment  with respect to its assets,  other than in
the ordinary course of business  consistent  with past practice,  (n) suffer any
casualty  loss or damage  (whether  or not such loss or damage  shall  have been

                                       36


covered by  insurance)  which  affects its  ability to conduct  its  business or
affects the value of its assets as carried on its books,  (o) suffer any adverse
change in its financial condition or results of operations or in its assets, (p)
take any other action which might  adversely  affect the  interests of Parent or
Acquisition Subsidiary hereunder or diminish the value of the Company as a going
concern,  (q) alter the manner of  keeping  the  Company's  books,  accounts  or
records or the accounting  practices therein reflected,  including any change in
the costing standards reflected in the Unaudited Statements,  (r) enter into any
contract,  agreement, lease or other arrangement or transaction with the Company
or any of the Holders or any affiliate thereof,  or (s) enter into any contract,
agreement or  commitment  with respect to, or propose or  authorize,  any of the
actions described in the foregoing clauses (a) through (r).

SECTION 5.03    Access to  Information.  Between the date hereof and the Closing
                ----------------------
Date,  the Company  shall afford  Parent and  Acquisition  Subsidiary  and their
respective  representatives  access, during normal business hours, to all of the
Company's  business  operations,   properties,  books,  files  and  records,  to
cooperate  in the  examination  thereof  and to furnish  Parent and  Acquisition
Subsidiary with all information  with respect to the business and affairs of the
Company as Parent and Acquisition Subsidiary may reasonably request.  Parent and
Acquisition Subsidiary and their respective representatives shall have the right
to discuss the affairs of the Company with the directors,  officers,  employees,
consultants,  advisors and agents of the Company. No such examination,  however,
shall  constitute a waiver or  relinquishment  by either  Parent or  Acquisition
Subsidiary of their respective right to rely upon the Company's and the Holders'
representations, warranties, covenants and agreements as made herein or pursuant
hereto. All information  furnished to Parent or Acquisition  Subsidiary pursuant
to this Section 5.03 shall be subject,  as applicable,  to the provisions of the
Confidentiality Agreement dated July 31, 2001 between the Company and Parent.

SECTION 5.04    Non-Solicitation.  Between the date hereof and the Closing Date,
                ----------------
neither the Company nor any of the Holders will,  and neither will permit any of
its officers,  directors,  affiliates, agents or representatives to, directly or
indirectly,  (i)  solicit,  initiate,   encourage,  conduct  or  engage  in  any
discussions, or enter into any agreement or understanding, with any other person
or  entity  relating  to a merger,  business  combination,  recapitalization  or
similar  corporate event involving the Company or relating to the sale of any of
the capital  stock of the Company or any  material  portion of the assets of the
Company, or (ii) disclose any nonpublic  information relating to the Company, or
afford access to the properties,  books or records of the Company,  to any other
person or entity that may be considering any such transaction.

SECTION 5.05    Additional  Agreements.  Subject  to the  terms  and  conditions
                ----------------------
herein  provided,  each of the parties hereto agrees to use its reasonable  best
efforts to take promptly,  or cause to be taken, all actions and to do promptly,
or cause to be done promptly,  all things  necessary,  proper or advisable under
applicable laws to consummate and make effective the  transactions  contemplated
by this  Agreement,  and to satisfy all of the  conditions  to the Closing to be
satisfied by such party,  including  using its reasonable best efforts to obtain
all  necessary  actions  or  non-actions,   extensions,  waivers,  consents  and
approvals  from all  applicable  Governmental  Entities and third  parties,  and
effecting all necessary registrations and filings. Each Holder shall vote its or
his  securities  of the  Company  at  any  general  or  special  meeting  of the
stockholders  of the Company,  or pursuant to a written consent in lieu thereof,
in  favor  of,  and  shall  approve,  the  Merger  and  the  other  transactions
contemplated hereby. Each of the parties hereto agrees not to take any action or

                                       37


fail to take any  action  that  would be likely to cause any  representation  or
warranty  contained  in this  Agreement  to cease to be true or accurate or that
would be  reasonably  likely to prevent the  performance  of any covenant or the
satisfaction of any condition contained in this Agreement.  Nothing contained in
this  Agreement  shall be construed to require Parent (i) to divest or commit to
divest any assets or business of Parent, any subsidiary of Parent or the Company
or (ii) to make or commit to make any change to the manner in which the business
of Parent or any  subsidiary  of Parent or the  Company  or to the  relationship
between  Parent,  any  subsidiary  of  Parent  or the  Company  and any  vendor,
supplier, lender, dealer, distributor or customer.

SECTION 5.06    Communications with Agencies. The Company will promptly transmit
                ----------------------------
to Parent and Acquisition Subsidiary copies of any communications with NHTSA and
any other federal or state  regulatory  agencies  received after the date hereof
which relate to the Business.

SECTION 5.07    HSR Act Compliance.  Prior to the date hereof, the parties filed
                ------------------
the Notification and Report Form required to be filed under the HSR Act with the
Federal Trade  Commission and the  Department of Justice in connection  with the
transactions  contemplated  hereby,  and the applicable waiting period under the
HSR Act has expired.

SECTION 5.08    Public  Disclosure.  Prior  to the  Closing,  no  party  to this
                ------------------
Agreement  shall make or cause to be made any press  release  or similar  public
announcement or  communication in any form with respect to this Agreement or the
transactions  contemplated  hereby,  without the  consent of the other  parties,
except if Parent,  based on the advice of its counsel,  reasonably believes that
such disclosure is required to comply with requirements of applicable law or the
rules of the New York  Stock  Exchange,  in which  event  Parent,  to the extent
practicable,  will provide the Company with a copy of the proposed press release
or other public announcement prior to its disclosure.

SECTION 5.09    Books  and  Records.   From  the  Closing  Date,  the  Surviving
                -------------------
Corporation  shall  maintain  such books and records of the Company as have been
delivered to it by the Company and the Holders  until the time for the taking of
any federal tax audit of the Company for its fiscal year 2001 shall have expired
and shall  provide  the  Holders  and their  representatives  reasonable  access
thereto in order to enable the Holders to (a) prepare their tax returns, and (b)
perform  any other acts  reasonably  related  to their  former  interest  in the
Company.

SECTION 5.10    Supplements to and Amendments of the Disclosure Schedule.  Prior
                --------------------------------------------------------
to the Closing, the Company and the Principal  Shareholder,  with respect to the
representations  and warranties set forth in Article III, and each Holder,  with
respect to the  representations and warranties set forth in Article III.A, agree
that they shall promptly supplement or amend, as the case may be, the Disclosure
Schedule with respect to any matter,  condition or occurrence  arising after the
date hereof  which,  if existing or occurring as of the date of this  Agreement,
would  have  been  required  to be set  forth  or  described  in the  Disclosure
Schedule;  provided,  however,  Parent and Acquisition Subsidiary shall have the
right to refuse to waive any failure of the Company,  the Principal  Shareholder
or the Holders to satisfy the condition set forth in Section 6.01(b) as a result
of any  supplement  or amendment  of the  Disclosure  Schedule  pursuant to this
Section 5.10. To the extent that Parent and Acquisition  Subsidiary  shall waive
such failure to satisfy the  condition  set forth as Section  6.01(b),  any such
supplement  to or  amendment  of the  Disclosure  Schedule  with  respect to any

                                       38


matter,  condition  or  occurrence  arising  after  the  date  hereof  shall  be
considered part of the Disclosure  Schedule and, as such, Parent and Acquisition
Subsidiary  shall  not  make  any  claim  for  indemnification   based  on  such
supplements  or  amendments  pursuant to Article IX hereof.  Any  supplement  or
amendment of the  Disclosure  Schedule with respect to any matter,  condition or
occurrence  existing or occurring as of the date of this  Agreement  that should
have been, but was not, set forth or described in the Disclosure Schedule, shall
not  affect  the  rights of Parent  and  Acquisition  Subsidiary  under  Section
10.01(iii) or (iv) or Section 10.02 hereof.

SECTION 5.11    Tax Matters.
                -----------

        (a)     Parent  and  Acquisition  Subsidiary,  on the one hand,  and the
Company,  on the other hand, shall execute and deliver to Akin,  Gump,  Strauss,
Hauer  & Feld,   L.L.P.,   counsel  for  Parent  and  Acquisition   Subsidiary,
certificates,  with a copy to the other parties hereto, at such time or times as
reasonably  requested  by such  counsel in  connection  with its delivery of the
opinion referred to in Section 6.01(j), in the case that the Merger is a Forward
Merger.

        (b)     Each of the parties hereto  covenants and agrees (i) not to take
any action (or to cause the  Surviving  Corporation,  any affiliate of Parent or
Acquisition  Subsidiary or any affiliate of the Company, as the case may be, not
to take any  action)  and (ii) not to fail to take any  action  (or to cause the
Surviving Corporation,  any affiliate of Parent or Acquisition Subsidiary or any
affiliate of the  Company,  as the case may be, not to fail to take any action),
which if taken or not  taken,  as the case may be,  (excluding  in each case any
action or failure to take any action  that is  contemplated  by this  Agreement)
could be reasonably  anticipated to cause the transactions  contemplated by this
Agreement not to constitute a "reorganization" under Section 368(a) of the Code,
in the case that the Merger is a Forward Merger.

        (c)     Parent,  on  behalf of  itself  and on  behalf of the  Surviving
Corporation,  agrees to report any  transaction  that occurs on the Closing Date
and that is not in the ordinary course of business consistent with past practice
as occurring  after the Effective Time of the Merger (other than as described in
Section   2.04(c)(i)),   unless   precluded   from   doing  so   under   Section
1.1502-76(b)(1)(ii)(B) of the U.S. Treasury Regulations.

        (d)     The  provisions of Sections  5.11(a),  (b) and (c) shall survive
the Closing.

        (e)     The  Company  shall  certify in writing to Parent on the Closing
Date that none of the shares of capital  stock of the Company  constitute a U.S.
real property  interest as defined in Section 897 of the Code. The certification
contemplated  by this  Section  5.11(e)  will  comply in all  respects  with the
requirements of Section 1.1445-2 of the U.S. Treasury Regulations.

                                   ARTICLE VI
                              CONDITIONS TO CLOSING 

SECTION 6.01    Conditions to Obligations of Parent and Acquisition  Subsidiary.
                ---------------------------------------------------------------
The obligations of Parent and Acquisition  Subsidiary to close the  transactions
contemplated  by this Agreement are subject to the prior  fulfillment of each of
the  following  conditions;  provided,  however,  that  Parent  and  Acquisition
                             --------   -------

                                       39


Subsidiary may waive in writing any one or more of such conditions:

        (a)     Performance  of  Obligations.  The Company and the Holders shall
                ----------------------------
have complied with and performed all the terms, covenants and conditions of this
Agreement  required to be complied with and performed by them on or prior to the
Closing Date (including,  without  limitation,  the performance of the covenants
and conditions set forth on Annex 6.01(a) annexed  hereto),  and shall have made
all of the  deliveries  required to have been made hereunder by them on or prior
to the Closing Date.

        (b)     Representations  and Warranties.  All of the representations and
                -------------------------------
warranties  made by the  Company,  the  Principal  Shareholder  and the  Holders
contained in this Agreement shall be true and correct, in all material respects,
on the Closing Date, as if made on the Closing Date.

        (c)     Consents.  All necessary approvals of Governmental Entities and,
                --------
to the extent  specified  on Annex  6.01(c)  annexed  hereto,  consents of third
                             -------------
parties to the  transactions  contemplated  by this  Agreement,  shall have been
obtained and the applicable  waiting period with respect to the Merger under the
HSR Act shall have expired.

        (d)     Resolutions. The Company and the Holders shall have delivered to
                -----------
Parent and  Acquisition  Subsidiary the  resolutions  of the Company's  Board of
Directors  (including  any  committees  of the Board of  Directors to the extent
applicable) and stockholders authorizing the execution, delivery and performance
of this Agreement and the documents and instruments to be executed and delivered
by the Company pursuant hereto,  and the  transactions  contemplated  hereby and
thereby  (including the  acceleration of vesting and  exercisability  of Company
Stock Options),  certified by the President of the Company and dated the Closing
Date.

        (e)     Legal Opinion.  The Company and the Holders shall have furnished
                -------------
Parent and Acquisition  Subsidiary  with an opinion,  dated the Closing Date, of
Hutchins, Wheeler & Dittmar, A Professional Corporation, counsel for the Company
and the Holders, and of Baker & Daniels, special Indiana counsel for the Company
and the Holders,  addressed to Parent and Acquisition Subsidiary,  substantially
in the form annexed hereto as Exhibit 6.01(e).
                              ---------------

        (f)     Closing  Certificates.  The Company shall have furnished  Parent
                ---------------------
and Acquisition Subsidiary with a certificate,  dated as of the Closing Date and
executed by the President of the Company, certifying that each of the conditions
set forth in Section  6.01(a),  (b) (other than with respect to  representations
and warranties made by the Holders), (k), (l) and (m) has been satisfied.

        (g)     Legal  Matters.  All  legal  matters  in  connection  with  this
                --------------
Agreement and the Closing  hereunder shall be approved by Akin,  Gump,  Strauss,
Hauer & Feld, L.L.P., counsel for Parent and Acquisition  Subsidiary;  and there
shall have been  furnished  to such  counsel by the Company and the Holders such
corporate  and  other  records  and  information  as they  may  reasonably  have
requested for such purpose.

        (h)     Financial Statements;  "Comfort" Letters. Parent and Acquisition
                ----------------------------------------
Subsidiary shall have received the following:

                                       40



                (i)     assurances  from its  auditors,  D&T, that the Financial
                Statements  referred to in Section 3.06 (or such other financial
                statements  as the  Shareholders  or the Company may cause to be
                prepared and/or audited), as to both scope of review and periods
                covered,  comply with the reporting  requirements  of Section 13
                and 15 of the Exchange Act;

                (ii)    from the Company's current independent  certified public
                accountants,  E&Y, (a) "comfort" letter addressed to Parent,  in
                form  and  substance  reasonably   satisfactory  to  Parent  and
                reasonably   customary  in  scope  and   substance  for  letters
                delivered by independent  public  accountants in connection with
                transactions such as those  contemplated by Section 8.04 and the
                Registration Rights Agreement, together with assurances from E&Y
                that additional "comfort" letters will be furnished as requested
                in  connection  with any  other  filings  by  Parent  under  the
                Exchange Act or the  Securities  Act  (including  any additional
                Registration  Statements required to be filed by Parent pursuant
                to the Registration Rights Agreement); and

                (iii)   from E&Y and the Company's former independent  certified
                public  accountants,   M&P,  consent  letters,   permitting  the
                inclusion  of the  Financial  Statements  referred to in Section
                3.06 (or such other financial statements that the Holders or the
                Company may cause to be prepared  and/or audited) in the initial
                Registration  Statement,  together with  assurances from E&Y and
                M&P  that  additional  consent  letters  will  be  furnished  as
                requested in  connection  with any other filings by Parent under
                the Exchange Act or the Securities Act (including any additional
                Registration  Statements required to be filed by Parent pursuant
                to the Registration Rights Agreement).

        (i)     Liens.  Parent and Acquisition  Subsidiary shall be satisfied or
                -----
shall have received assurances reasonably satisfactory to them that all Liens on
any of the  Company's  assets  (except  those Liens,  if any, set forth on Annex
6.01(i)  annexed  hereto  and  Permitted  Liens)  have  been  duly  released  or
terminated.

        (j)     Tax  Opinion.  In the case that the Merger is a Forward  Merger,
                ------------
Parent and Acquisition  Subsidiary shall have received an opinion of Akin, Gump,
Strauss,  Hauer & Feld,  L.L.P.,  counsel to Parent and Acquisition  Subsidiary,
that the Merger will qualify as a "reorganization" within the meaning of Section
368(a) of the Code.

        (k)     Borrowings  Limitation.  The aggregate borrowings of the Company
                ----------------------
(which shall be  calculated  without  taking into account  checks  issued by the
Company and not yet deposited for collection)  shall not exceed $1,000,000 as of
the Closing Date.

        (l)     No Material Adverse Change. The absence, between the date hereof
                --------------------------
and the Closing Date, of any material  adverse  change in the business,  assets,
liabilities,  operations,  prospects,  properties  or  condition,  financial  or
otherwise, of the Company.

                                       41


        (m)     Legal   Restraints,   Proceedings.   The   absence  of  (i)  any
                ---------------------------------
injunction,  order or decree  issued by any court of competent  jurisdiction  or
other legal  restraint  or  prohibition  that has the effect of  preventing  the
consummation of the transactions contemplated herein as of the Closing Date, and
(ii) any pending or  threatened  claims or legal  proceedings  as of the Closing
Date which would, if adversely determined, have a material adverse effect on the
transactions contemplated herein.

        (n)     Director  and  Officer  Resignations.   Parent  and  Acquisition
                ------------------------------------
Subsidiary shall have received resignations, to be effective as of the Effective
Time,  in form  and  substance  satisfactory  to  Parent,  of all  officers  and
directors of the Company.

SECTION 6.02    Conditions to  Obligations  of the Company and the Holders.  The
                ----------------------------------------------------------
obligations   of  the  Company  and  the  Holders  to  close  the   transactions
contemplated  by this Agreement are subject to the prior  fulfillment of each of
the following  conditions;  provided,  however, that the Company and the Holders
may waive in writing any one or more of such conditions:

        (a)     Performance of Obligations.  Parent and  Acquisition  Subsidiary
                --------------------------
shall  each have  complied  with and  performed  all the  terms,  covenants  and
conditions of this Agreement  required to be complied with and performed by each
on or prior to the Closing Date,  and each shall have made all of the deliveries
required to have been made hereunder by them on or prior to the Closing Date.

        (b)     Representations  and Warranties.  All of the representations and
                -------------------------------
warranties made by Parent and Acquisition Subsidiary contained in this Agreement
shall be true and correct, in all material respects,  on the Closing Date, as if
made on the Closing Date.

        (c)     Consents.  All necessary approvals of Governmental  Entities and
                --------
consents of third parties to the  transactions  contemplated  by this  Agreement
shall have been obtained and the  applicable  waiting period with respect to the
Merger under the HSR Act shall have expired.

        (d)     Resolutions;  Officers.  Parent and Acquisition Subsidiary shall
                ----------------------
have  delivered  to the Company and the  Holders  (i) the  resolutions  of their
respective  Boards  of  Directors   authorizing  the  execution,   delivery  and
performance  by them of this  Agreement and the documents and  instruments to be
executed and delivered by Parent and Acquisition Subsidiary pursuant hereto, and
the  transactions  contemplated  hereby  and  thereby,  each  certified  by  the
President  of Parent and  Acquisition  Subsidiary,  respectively,  and dated the
Closing Date, and (ii) the resolution of the Board of Directors of the Surviving
Corporation  appointing H. Coleman Davis,  III as the President of the Surviving
Corporation effective immediately after the Effective Time.

        (e)     Legal  Opinion.  Parent and  Acquisition  Subsidiary  shall have
                --------------
furnished  the Company and the Holders with an opinion,  dated the Closing Date,
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for Parent and Acquisition
Subsidiary, addressed to the Company and the Shareholders,  substantially in the
form annexed hereto as Exhibit 6.02(e).
                       ---------------

        (f)     Closing  Certificate.  Parent and Acquisition  Subsidiary  shall
                --------------------
have furnished the Company and the Holders with a  certificate,  dated as of the

                                       42


Closing Date and executed by the President of Parent and Acquisition Subsidiary,
respectively,  certifying  that  each of the  conditions  set  forth in  Section
6.02(a) and (b) has been satisfied.

        (g)     Legal  Matters.  All  legal  matters  in  connection  with  this
                --------------
Agreement  and the Closing  hereunder  shall be approved by Hutchins,  Wheeler & Dittmar,  A Professional  Corporation,  counsel for the Company and the Holders;
and  there  shall  be  furnished  to such  counsel  by  Parent  and  Acquisition
Subsidiary  such  corporate  and  other  records  and  information  as they  may
reasonably have requested for such purposes.

        (h)     Listing.  The shares of Parent  Common  Stock or, in the case of
                -------
Parent  Preferred  Stock,  the  shares  of Parent  Common  Stock  issuable  upon
conversion of the Parent Preferred Stock, shall have been listed on the New York
Stock Exchange subject only to official notice of issuance.

        (i)     Legal   Restraints,   Proceedings.   The   absence  of  (i)  any
                ---------------------------------
injunction,  order or decree  issued by any court of competent  jurisdiction  or
other legal  restraint  or  prohibition  that has the effect of  preventing  the
consummation of the transactions contemplated herein as of the Closing Date, and
(ii) any pending or  threatened  claims or legal  proceedings  as of the Closing
Date which would, if adversely determined, have a material adverse effect on the
transactions contemplated herein.

                                  ARTICLE VII
                                     CLOSING 

SECTION 7.01    Closing Date.  Upon the terms and subject to the  conditions set
                ------------
forth in this Agreement,  the closing of the Merger (the  "Closing")  shall take
                                                           -------
place at 11:00  a.m.,  New York time,  on the later to occur of (i)  November 9,
2001 or (ii) the third (3rd)  business day after the  satisfaction  or waiver of
the  conditions  set forth in Article VI (other  than those that by their  terms
cannot be satisfied  until the time of Closing),  at the offices of Akin,  Gump,
Strauss,  Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York 10022, or
at such  other  time,  date or place  agreed to in  writing  by  Parent  and the
Company.  The date on which the Closing actually occurs is referred to herein as
the "Closing Date".
     ------------

SECTION 7.02    Deliveries by the Company and the Holders.  At the Closing,  the
                -----------------------------------------
Company and the Holders shall deliver to Parent and Acquisition Subsidiary:

        (a)     The Certificate of Merger, duly executed by the Company;

        (b)     The Registration Rights Agreement, duly executed by the Holders;

        (c)     The Escrow  Agreement,  the Letter  Agreement and the Additional
Escrow   Agreement,   each  duly   executed   by  the  Holders  and  the  Holder
Representatives;

        (d)     A  non-competition  agreement,  substantially  in  the  form  of
Exhibit 7.02(d) annexed hereto,  duly executed by each of H. Coleman Davis, III,
--------------
Ronald Fenech,  William  Fenech,  Robert Gaff, Jr., Kim Price and Tonja Lucchese
(collectively, the "Non-Competition Agreements");
                    --------------------------              

                                       43


        (e)     The Stock Restriction Agreement, duly executed by the Holders;

        (f)     A release,  substantially in the form of Exhibit 7.02(f) annexed
hereto,  duly  executed  by  each  of the  Holders  (collectively,  the  "Holder
Releases"); and

        (g)     All other documents required pursuant to this Agreement,  all in
form  and  substance   satisfactory   to  counsel  for  Parent  and  Acquisition
Subsidiary,  as well as any  further  documentation  or  instruments  as Parent,
Acquisition Subsidiary or their counsel may reasonably require to effectuate the
terms of this Agreement.

SECTION 7.03    Deliveries by Parent and Acquisition Subsidiary. At the Closing,
                -----------------------------------------------
Parent and Acquisition Subsidiary shall deliver to the Holders:

        (a)     The   Certificate  of  Merger,   duly  executed  by  Acquisition
Subsidiary;

        (b)     The  Merger   Consideration,   consisting  of  (i)  certificates
representing the shares of Parent Common Stock or Parent Preferred Stock, as the
case may be,  and (ii) the Cash  Portion,  to  which  each  Holder  is  entitled
pursuant to Article II hereof;  provided,  however,  that the Escrowed Funds and
the Additional  Escrowed  Funds shall be deducted from the Merger  Consideration
and delivered to the Escrow Agent in accordance with Section 2.05;

        (c)     The Registration Rights Agreement, duly executed by Parent;

        (d)     The Escrow  Agreement,  the Letter  Agreement and the Additional
Escrow Agreement, each duly executed by Parent and the Surviving Corporation;

        (e)     The Stock Restriction Agreement, duly executed by Parent;

        (f)     In the case that the Merger is a Reverse Merger, the Certificate
of Designation, duly executed by Parent; and

        (g)     All other documents required pursuant to this Agreement,  all in
form and substance  satisfactory to counsel for the Company and the Holders,  as
well as any further  documentation or instruments as the Company, the Holders or
their counsel may reasonably request to effectuate the terms of this Agreement.

SECTION 7.04    Further  Assurances.  The Holders  and Parent  each  agree,  and
                -------------------
Parent shall cause the Surviving  Corporation to agree, that at any time or from
time to time after the  Closing  Date that upon  request  of the other  party or
parties, the Holders,  Parent and/or the Surviving Corporation,  as the case may
be, will execute, acknowledge and deliver such other and further instruments and
take such other action or actions as the requesting party may reasonably request
in  order to  effectuate  the  terms of this  Agreement  and the  documents  and
instruments contemplated hereby.

                                       44


                                  ARTICLE VIII
                         PRIVATE PLACEMENT; RESTRICTIONS 
                       ON TRANSFER; REGISTRATION STATEMENT

SECTION 8.01    Securities Act  Compliance.  The issuance of Parent Common Stock
                --------------------------
or Parent  Preferred  Stock (or any Parent Common Stock issuable upon conversion
of Parent  Preferred  Stock),  as the case may be, to the  Holders  pursuant  to
Article II herein shall be effected as a private  placement  pursuant to Section
4(2) of the Securities Act. In connection therewith,  each Holder represents and
warrants to Parent and Acquisition Subsidiary the following:

        (a)     such Holder is either (i) an "accredited investor" (as such term
                is defined in Rule 501(a) of  Regulation  D  promulgated  by the
                SEC) or (ii)  together with such  Holder's  representatives  and
                advisors,  has such  knowledge  and  experience in financial and
                business  matters that such Holder is capable of evaluating  the
                merits and risks of acquiring  the shares of Parent Common Stock
                or Parent  Preferred  Stock (or any Parent Common Stock issuable
                upon conversion of Parent  Preferred Stock) acquired or that may
                be acquired by such Holder pursuant to Article II herein. Unless
                such  Holder  is an  accredited  investor,  such  Holder  hereby
                confirms  that none of the persons or  entities  serving as such
                Holder's representatives and advisors is an affiliate, director,
                officer  or  other   employee  of  Parent,   nor  has  any  such
                representative   or  advisor   advised  such  Holder  that  such
                representative or advisor has or presently  contemplates having,
                or  has  had  within  the  past  two  (2)  years,  any  material
                relationship with Parent;

        (b)     such  Holder  understands  and agrees  that the shares of Parent
                Common  Stock or Parent  Preferred  Stock (or any Parent  Common
                Stock  issuable  upon  conversion  of  Parent  Preferred  Stock)
                acquired  or that may be  acquired  by such  Holder  pursuant to
                Article II herein have not been registered  under the Securities
                Act, or under any state  securities  laws, and that  accordingly
                such shares will not be fully  transferable  except as permitted
                under various  exemptions  contained in the  Securities  Act, or
                upon  satisfaction of the registration  and prospectus  delivery
                requirements of the Securities Act;

        (c)     such Holder acknowledges that such Holder must bear the economic
                risk of an investment in shares of Parent Common Stock or Parent
                Preferred  Stock  (or any  Parent  Common  Stock  issuable  upon
                conversion of Parent  Preferred  Stock)  acquired or that may be
                acquired  by such  Holder  pursuant  to Article II herein for an
                indefinite  period  of  time  since  such  shares  will  not  be
                registered  under the  Securities Act as of the Closing Date and
                therefore  cannot be sold unless  such  shares are  subsequently
                registered  or  an  exemption   from   registration   under  the
                Securities Act is available;

        (d)    such Holder  understands  that the shares of Parent Common Stock
                or Parent  Preferred  Stock (or any Parent Common Stock issuable
                upon conversion of Parent  Preferred Stock) acquired or that may
                be  acquired  by such  Holder  pursuant to Article II herein are
                being  offered and sold  pursuant to this  Agreement in reliance
                upon federal and state exemptions for transactions not involving
                any public offering;

                                       45


        (e)     such Holder has (i) had the  opportunity  to meet with  officers
                and other  representatives  of Parent to discuss  its  business,
                assets,   liabilities,   financial  condition,  cash  flow,  and
                operations,  and (ii)  received all  materials,  documents,  and
                other  information that such Holder deems necessary or advisable
                to  evaluate  the  shares  of  Parent  Common  Stock  or  Parent
                Preferred  Stock  (or any  Parent  Common  Stock  issuable  upon
                conversion of Parent  Preferred  Stock)  acquired or that may be
                acquired   by  such   Holder   pursuant  to  Article  II  herein
                (including,  but not limited to, the filing on Form 10-K for the
                fiscal year ended July 31, 2001 made by Parent with the SEC);

        (f)     such Holder has made an independent examination,  investigation,
                analysis,  and  evaluation  of Parent  and the  shares of Parent
                Common  Stock or Parent  Preferred  Stock (or any Parent  Common
                Stock  issuable  upon  conversion  of  Parent  Preferred  Stock)
                acquired  or that may be  acquired  by such  Holder  pursuant to
                Article II herein,  including  such Holder's own estimate of the
                value of such shares;

        (g)     the shares of Parent Common Stock or Parent  Preferred Stock (or
                any Parent  Common  Stock  issuable  upon  conversion  of Parent
                Preferred Stock) acquired or that may be acquired by such Holder
                pursuant  to Article II herein are being and will be acquired by
                such Holder for such Holder's own account,  for investment only,
                not as a  nominee  or  agent,  and  not  with  a  view  to or in
                connection with any resale or distribution thereof other than in
                accordance   with  the  Securities  Act  and  other   applicable
                securities laws; and

        (h)     such Holder has no present  intention  of selling,  granting any
                participation in, or otherwise distributing the shares of Parent
                Common  Stock or Parent  Preferred  Stock (or any Parent  Common
                Stock  issuable  upon  conversion  of  Parent  Preferred  Stock)
                acquired  or that may be  acquired  by such  Holder  pursuant to
                Article II herein other than in accordance  with the  Securities
                Act and other  applicable  securities laws, nor does such Holder
                have any contract,  undertaking,  agreement or arrangement  with
                any person to sell, transfer or grant participation with respect
                to such shares to such person or to any third  person other than
                in  accordance  with the  Securities  Act and  other  applicable
                securities laws.

Each Holder  covenants and agrees with Parent and  Acquisition  Subsidiary  that
such Holder will not sell, assign, transfer, pledge, hypothecate or encumber, or
offer to or grant any option for or  participation  in, or issue any  derivative
security based on, or any put, call or similar  arrangement with respect to, any
of the shares of Parent  Common Stock or Parent  Preferred  Stock (or any Parent
Common Stock issuable upon  conversion of Parent  Preferred  Stock)  acquired or
that may be acquired  by such  Holder  pursuant to Article II herein (any of the
foregoing,  a  "Disposition"  or, as the context may  indicate,  to  "Dispose"),
                                                                      -------
except in compliance  with the Securities Act, any other  applicable  securities
laws, and, if applicable,  the provisions of the  Registration  Rights Agreement
and the Stock Restriction Agreement.

SECTION 8.02    Restrictions  on Transfer.  The shares of Parent Common Stock or
                ------------------------
Parent  Preferred  Stock (or any Parent Common Stock issuable upon conversion of
Parent  Preferred  Stock),  as the case may be, received by each of the Holders,
other than the Summit Holders,  pursuant to Article II hereof,  shall be subject
to restrictions on Disposition as set forth in a stock restriction  agreement to

                                       46


be  entered  into on the  Closing  Date by and  among  Parent  and each  Holder,
substantially in the form annexed hereto as Exhibit 8.02 (the "Stock Restriction
                                            ------------       -----------------
Agreement").  For purposes of this  Agreement,  the term "Summit  Holders" shall
---------                                                 ---------------
mean,   collectively,   (i)  Summit   Investors  III,  LP,  a  Delaware  limited
partnership,  (ii) Summit Ventures V, LP, a Delaware limited partnership,  (iii)
Summit V  Advisors  Fund,  LP, a Delaware  limited  partnership,  (iv)  Summit V
Advisors  Fund  (QP),  LP, a  Delaware  limited  partnership,  and (v)  Summit V
Companion Fund, LP, a Delaware limited partnership.

SECTION 8.03    Legends.
                -------

        (a)     Each certificate representing a share or shares of Parent Common
Stock or Parent  Preferred  Stock (or any  Parent  Common  Stock  issuable  upon
conversion  of Parent  Preferred  Stock)  shall have  stamped,  printed or typed
thereon the following legend to reflect the provisions of Section 8.01:

                THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
                THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),
                AND MAY NOT BE OFFERED,  SOLD, PLEDGED OR OTHERWISE TRANSFERRED,
                EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
                THE SECURITIES ACT AND A CURRENT  PROSPECTUS,  (2) IN ACCORDANCE
                WITH RULE 144 UNDER  THE  SECURITIES  ACT,  OR (3)  PURSUANT  TO
                ANOTHER   APPLICABLE   EXEMPTION  FROM  REGISTRATION  UNDER  THE
                SECURITIES ACT.

        (b)     In addition,  each certificate issued to a Holder who is a party
to the Stock Restriction Agreement shall have stamped,  printed or typed thereon
the legend required pursuant to the Stock Restriction Agreement.

        (c)     Each  certificate  representing  a share  or  shares  of  Parent
Preferred Stock (if applicable) shall have stamped, printed or typed thereon the
following legend:

                THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER UPON REQUEST AND
                WITHOUT CHARGE, A FULL STATEMENT OF THE  DESIGNATIONS,  RELATIVE
                RIGHTS,  PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH CLASS
                AND  EACH  SERIES  THEREOF   AUTHORIZED  TO  BE  ISSUED  BY  THE
                CORPORATION.

SECTION 8.04    Registration  of  Parent  Common  Stock.  Parent  shall  use its
                ---------------------------------------
reasonable  best efforts to cause the shares of Parent Common Stock  received by
the Holders  pursuant to Article II herein or any Parent  Common Stock  issuable
upon  conversion  of Parent  Preferred  Stock,  as the case may be, that are not
subject  to  restrictions  on  Disposition  pursuant  to the  Stock  Restriction
Agreement,  to be registered for sale from time to time by the Holders on one or

                                       47


more  shelf   registration   statements  on  Form  S-3  (each,  a  "Registration
                                                                    ------------
Statement").  The initial  Registration  Statement  shall (i) be filed by Parent
---------
with the SEC not later than two (2) business days  following  the Closing,  (ii)
cover only  those  shares of Parent  Common  Stock or the  Parent  Common  Stock
issuable upon conversion of Parent Preferred Stock, as the case may be, received
by any  Holders  who are not  Restricted  Shareholders  (as defined in the Stock
Restriction Agreement),  and (iii) remain effective for a period of up to twelve
(12)  months  following  the  effective  date  thereof.  Parent  shall  use  its
reasonable  best  efforts  to cause the  initial  Registration  Statement  to be
declared  effective  by the SEC as  soon as  practicable  following  the  filing
thereof. In addition,  Parent will file additional Registration Statements on or
about each anniversary of the Closing Date until the fifth (5th)  anniversary of
the Closing Date as required to permit sales of shares of Parent Common Stock or
the Parent Common Stock issuable upon conversion of Parent  Preferred  Stock, as
the case may be,  received  by the  Restricted  Shareholders  to the extent such
shares  are not  subject  to  restrictions  on  transfer  pursuant  to the Stock
Restriction  Agreement,  in excess of the  number of shares  that may be sold by
each such Restricted Shareholder without registration pursuant to Rule 144 under
the  Securities  Act,  all as more fully  described in the  Registration  Rights
Agreement.  On the  Closing  Date,  Parent and each  Holder  shall  enter into a
registration  rights  agreement  substantially  in the form  annexed  hereto  as
Exhibit 8.04 (the "Registration Rights Agreement").
------------       -----------------------------

                                   ARTICLE IX
                            SURVIVAL; INDEMNIFICATION

SECTION 9.01    Survival Past  Closing.  Any  investigation  or  examination  by
                ----------------------
Parent or Acquisition  Subsidiary of the business,  properties or affairs of the
Company or the Holders shall not affect the  representations  and  warranties of
the Company and the Holders herein contained, and the respective representations
and warranties of the parties herein  contained  shall survive the Closing for a
period of one (1) year (referred to herein as "General  Representations"),  with
                                               ------------------------
the  exception  of (i)  representations  and  warranties  of the Company and the
Principal  Shareholder  with  respect to taxes,  product  liability  and product
recall claims and environmental matters, as set forth in Sections 3.18, 3.24 and
3.27,  respectively  (referred  to herein as "Special  Representations"),  which
                                              ------------------------
shall survive the Closing for the applicable  statute of  limitations,  and (ii)
representations  and  warranties  of each  Holder as set forth in Article  III.A
hereof (referred to herein as "Personal  Representations"),  which shall survive
                               -------------------------
indefinitely.

SECTION 9.02    Indemnification  by the Holders.  The Holders  shall  indemnify,
                -------------------------------
defend and hold Parent,  Acquisition  Subsidiary,  the Surviving Corporation and
their  respective  officers,  directors,  employees,  agents,  subsidiaries  and
affiliates harmless from and against any and all liabilities,  losses,  damages,
claims, fines,  penalties,  costs and expenses,  including,  without limitation,
reasonable  attorneys' and accounting fees (collectively,  "Losses") incurred by
                                                            ------
Parent,  Acquisition  Subsidiary,  the  Surviving  Corporation  or any of  their
respective officers,  directors,  employees, agents, subsidiaries or affiliates,
arising  out of or  resulting  from  (i) any  breach  of any  representation  or
warranty  made by the Company or the Holders  contained in this  Agreement or in
any schedule hereto, (ii) the nonperformance of any covenant or obligation to be
performed by the Company or the Holders under this  Agreement,  and/or (iii) any
of the matters  described on Annex 9.02(iii) hereto (the "Additional  Matters");
                             --------------               -------------------
provided,  however,  that (x) no Holder shall be required to  indemnify  for any
--------   -------
Losses in excess of the  portion of the Merger  Consideration  received  by such

                                       48


Holder,  except for Losses  arising out of or resulting  from the breach of such
Holder's  Personal  Representations,  which shall not be limited,  (y) no Holder
shall be required to indemnify for any Losses  arising out of or resulting  from
the breach of any other Holder's Personal Representations,  and (z) Losses shall
be reduced by any Tax Benefit  resulting from or net insurance  proceeds  (after
deducting  any  costs  of  collection)  received  by  Parent  or  the  Surviving
Corporation  in  connection  with  the  claims  giving  rise to  indemnification
hereunder.  The obligations of the Holders  pursuant to this Article IX shall be
joint and several,  to the extent of the Escrowed Funds,  and otherwise shall be
several among the Holders as provided in Section 9.05.

         For purposes of this Agreement,  "Tax Benefit" shall mean (i) an actual
reduction in taxes payable,  (ii) an actual refund of taxes  previously paid, or
(iii) the present value of any future refund, future credit, reduction in future
taxes  payable as a result of an increased  net  operating  loss or other future
reduction in an otherwise required tax payment,  including in each such case any
interest paid (or in the case of a future refund,  payable) thereon. The present
value of the amounts  described in clause (iii) of the preceding  sentence shall
be computed  (A) using the tax rate  applicable  to the highest  level of income
with respect to such tax under the applicable tax law on the date prescribed for
payment of the  indemnity  payment  (taking into  account,  if  applicable,  the
character  of the  income  which is  reduced  by the loss or  similar  item) and
assuming  sufficient  income in all  applicable tax periods to use such benefit,
and (B) using as a  discount  rate the  interest  rate on such date  imposed  on
corporate  deficiencies  paid  within  thirty  (30) days of a notice of proposed
deficiency under Section 6621(a) of the Code.

SECTION 9.03    Indemnification by Parent and Acquisition Subsidiary. Parent and
                ----------------------------------------------------
Acquisition  Subsidiary shall jointly and severally  indemnify,  defend and hold
the Holders and their  respective  affiliates  harmless from and against any and
all Losses incurred by any of the Holders or their affiliates  arising out of or
resulting from (i) any breach of any  representation  or warranty made by Parent
or  Acquisition  Subsidiary  contained  in  this  Agreement,   and/or  (ii)  the
nonperformance  of any  covenant  or  obligation  to be  performed  by Parent or
Acquisition Subsidiary under this Agreement.

SECTION 9.04    Limitation on  Indemnification.  Neither the Holders pursuant to
                ------------------------------
Section 9.02 nor Parent,  Acquisition  Subsidiary or the  Surviving  Corporation
pursuant to Section 9.03 shall be obligated to indemnify  the other  against any
Losses until Parent,  Acquisition Subsidiary and the Surviving  Corporation,  on
one hand, or the Holders,  on the other hand, have incurred  aggregate Losses in
excess of One  Million  Dollars  ($1,000,000)  (the  "Basket"),  except that the
Basket shall not be applicable to claims for indemnification against the Holders
for breaches of Special Representations,  Personal Representations or Additional
Matters,  in  which  case  Parent,  Acquisition  Subsidiary  and  the  Surviving
Corporation  shall be entitled to receive  the full amount of their  Losses.  At
such time as the aggregate Losses  (including Losses arising out of or resulting
from Special  Representations,  Personal  Representations or Additional Matters)
incurred by Parent, Acquisition Subsidiary and the Surviving Corporation, on one
hand,  or Losses  incurred by the Holders,  on the other hand,  shall exceed the
Basket,  such party  shall be  entitled to receive the full amount of its Losses
(and not only that portion which is in excess of the Basket).

                                       49


SECTION 9.05    Exclusive  Remedy.  The withdrawal of Escrowed Funds  (including
                -----------------
any undistributed interest earned thereon), as provided in Section 2.05(a)(iii),
will be the exclusive  source of  satisfaction  for monetary  Losses  subject to
indemnification  by the Holders  pursuant to this Article IX,  except for Losses
arising out of or resulting from breaches of Special Representations or Personal
Representations.  Subject to the  provisions of Section 9.02, (a) Losses arising
out of or resulting from breaches of Personal  Representations  may, in the sole
discretion  of Parent,  Acquisition  Subsidiary  and Surviving  Corporation,  be
satisfied from any source including, but not limited to, the Escrowed Funds; (b)
Losses  arising out of or  resulting  from  breaches of Special  Representations
shall be paid, first, from the Escrowed Funds and, thereafter,  from any source,
provided,  however,  that the maximum  amount of all monetary  Losses subject to
--------   -------
indemnification  by the Holders  pursuant  to this  Article IX arising out of or
resulting from General  Representations,  Special Representations and Additional
Matters  (but not  Personal  Representations)  shall not exceed  Twenty  Million
Dollars  ($20,000,000)  (inclusive of the Fifteen Million Dollars  ($15,000,000)
deposited as Escrowed Funds, after giving effect to any withdrawal or release of
Escrowed  Funds  pursuant to Sections  2.05(a)(i));  and (c) any  liability  for
Losses arising out of or resulting from breaches of Special  Representations  or
Additional Matters from sources other than Escrowed Funds shall be several among
the  Holders,   pro  rata,  based  on  the  respective  portion  of  the  Merger
Consideration received by each such Holder under Sections 2.01(b)(iii) and (iv).
From and after the Closing Date,  the provisions of this Article IX shall be the
sole and exclusive  remedy for monetary damages arising out of or resulting from
the breach of any  representations  or warranties made pursuant to Articles III,
III.A or IV of this  Agreement,  absent fraud or intentional  misrepresentation.
Nothing  contained in this Article IX shall limit or affect the  obligations  of
the Holders pursuant to the Letter Agreement.

SECTION 9.06      Indemnification Procedures.
                  --------------------------

        (a)     If Parent,  Acquisition Subsidiary or the Surviving Corporation,

on one hand,  or the Holders,  on the other hand,  shall  receive  notice of any
matter  which  such  party,  or  any of its  officers,  directors  subsidiaries,
employees,  agents,  subsidiaries  or  affiliates  (any  of  the  foregoing,  an
"Indemnitee"),  has determined has given,  or, with respect to any matters other
 ----------
than a breach of a  representation  or warranty  set forth in Section  3.22,  is
reasonably likely to result in, a right of indemnification under this Agreement,
the Indemnitee  shall promptly give the  indemnifying  party (the  "Indemnitor")
                                                                    ----------
written notice of such claim,  stating the amount of the Losses,  if known,  and
method of computation thereof,  all with reasonable  particularity and including
documentary proof, if available, and containing a reference to the provisions of
this Agreement in respect of which such right of  indemnification  is claimed or
arises;  provided,  however,  that failure to so notify the Indemnitor shall not
         --------   -------
relieve the  Indemnitor  from any liability  which it may have on account of the
claim,  except to the extent the Indemnitor  shall have been  prejudiced by such
failure.

        (b)     If an Indemnitee shall receive notice of any claim or proceeding
initiated by a third party which is or may be subject to indemnification  (each,
a "Third Party  Claim"),  the  Indemnitee  shall  promptly  give the  Indemnitor
   ------------------
written notice of such Third Party Claim; provided,  however, that failure to so
                                          --------   -------
notify the Indemnitor  shall not relieve the Indemnitor from any liability which
it may have on  account  of the Third  Party  Claim,  except to the  extent  the
Indemnitor  shall  have  been  prejudiced  by such  failure.  In such  event the
Indemnitee  shall permit the  Indemnitor,  at its option,  to participate in the
defense  of such Third  Party  Claim by counsel of its own choice and at its own

                                       50


expense. If, however,  the Indemnitor  acknowledges in writing its obligation to
indemnify the Indemnitee  hereunder against all Losses that may result from such
Third Party Claim and the Indemnitee is reasonably satisfied that the Indemnitor
has sufficient funds available  (whether Escrowed Funds or otherwise) to pay any
Losses  resulting  from such Third Party  Claim,  then the  Indemnitor  shall be
entitled,  at its  option,  to assume and  control  the defense of such claim by
counsel of its own choice and at its own expense,  provided that the  Indemnitor
                                                   --------
and its  counsel  shall  proceed  with  diligence  and good faith  with  respect
thereto.  Notwithstanding the foregoing,  the Indemnitee shall have the right to
employ  separate  counsel in any Third Party Claim and the fees and  expenses of
such counsel shall be at the expense of such  Indemnitor  if: (i) the Indemnitor
has failed to promptly  assume the defense and employ  counsel or (ii) the named
parties to any such Third Party Claim (including any impleaded  parties) include
such Indemnitee and any Indemnitor,  and such Indemnitee shall have been advised
by its counsel that there is a conflict of interest  between the  Indemnitor and
such  Indemnitee  with  respect to such Third Party Claim or with respect to any
legal defense which may be available;  provided,  however,  that the  Indemnitor
                                       --------   -------
shall not in such event be  responsible  hereunder  for the fees and expenses of
more  than  one  firm of  separate  counsel  in  connection  with  any  claim or
proceeding.

        (c)     In the event the Indemnitor exercises its right to undertake the
defense of any Third  Party  Claim,  the  Indemnitee  shall  cooperate  with the
Indemnitor  in such  defense and make  available  to the  Indemnitor  witnesses,
pertinent  records,  materials and  information  in its  possession or under its
control  relating  thereto  as  are  reasonably  requested  by  the  Indemnitor.
Similarly,  in the event the Indemnitee is,  directly or indirectly,  conducting
the defense against any Third Party Claim,  the Indemnitor  shall cooperate with
the Indemnitee in such defense and make  available to the Indemnitee  witnesses,
pertinent  records,  materials and  information  in its  possession or under its
control relating thereto as are reasonably requested by the Indemnitee. No Third
Party Claim may be settled by the Indemnitor  without the written consent of the
Indemnitee,  which  consent  shall  not be  unreasonably  withheld  or  delayed;
provided, however, that the Indemnitor may settle such Third Party Claim without
--------  -------
the  consent  of the  Indemnitee  so  long as the  settlement  (x)  includes  an
unconditional  release  of the  Indemnitee,  in form  and  substance  reasonably
satisfactory  to the  Indemnitee,  from the third party  claimant,  (y) does not
impose any liabilities or obligations on the Indemnitee, and (z) with respect to
any  non-monetary  provision  of any  settlement  of a claim  in  which  Parent,
Acquisition Subsidiary or the Surviving Corporation is the Indemnitee,  does not
impose  conditions  upon the Indemnitee  which, in the  Indemnitee's  good faith
judgment,  could have a material  adverse  effect on the  business,  operations,
assets, properties or prospects of the Indemnitee. No Third Party Claim which is
being  defended  in good faith by the  Indemnitee  alone,  or  jointly  with the
Indemnitor,  shall be settled by the Indemnitee  without the written  consent of
the  Indemnitor,  which consent shall not be  unreasonably  withheld;  provided,
                                                                       --------
however,  that the  Indemnitee  may settle such claim without the consent of the
-------
Indemnitor so long as the  settlement (x) includes an  unconditional  release of
the Indemnitor, in form and substance reasonably satisfactory to the Indemnitor,
from the claim by the  Indemnitee  and the third party claimant and (y) does not
impose any liabilities or obligations on the Indemnitor.

                                       51


                                   ARTICLE X
                            TERMINATION OF AGREEMENT

SECTION 10.01   Events of Termination. This Agreement may be terminated, and the
                ---------------------
transactions  contemplated  hereby  may be  abandoned,  at any time prior to the
Closing Date:

                (i)     by the mutual  consent of the Boards of Directors of the
                Company, Parent and Acquisition Subsidiary;

                (ii)    by  either  Parent  or  Acquisition  Subsidiary,  if the
                Company or any of the Holders  breaches any of their  respective
                representations,  warranties,  covenants or agreements contained
                in this Agreement;

                (iii)   by the  Company,  if  Parent or  Acquisition  Subsidiary
                breaches any of their  respective  representations,  warranties,
                covenants or agreements contained in this Agreement;

                (iv)    by either Parent or Acquisition  Subsidiary,  on the one
                hand,  or  the  Company,  on  the  other  hand,  if  any  of the
                conditions to such party's obligations to close the transactions
                contemplated  by this  Agreement is not  satisfied (or waived in
                writing by such  party) on or prior to  November  30,  2001 (the
                "Outside  Date");  provided,   however,  that  if  any  of  such
                 -------------     --------    -------
                conditions  is not  satisfied  as a result of the  breach by any
                party  of  its   representations,   warranties,   covenants   or
                agreements   contained  in  this   Agreement,   then  the  party
                responsible  for  such  breach  shall  not  have  the  right  to
                terminate this Agreement pursuant to this clause (iv);

                (v)     by either Parent or Acquisition  Subsidiary,  on the one
                hand, or the Company,  on the other hand, if the Closing has not
                occurred on or prior to the  Outside  Date;  provided,  however,
                                                             --------   -------
                that if the Closing has not  occurred on or prior to the Outside
                Date  as  a  result   of  the   breach   by  any  party  of  its
                representations,  warranties,  covenants or agreements contained
                in this  Agreement,  then the party  responsible for such breach
                shall not have the right to terminate this Agreement pursuant to
                this clause (v); or

                (vi)    by either Parent or Acquisition  Subsidiary,  on the one
                hand, or the Company, on the other hand, if any of the following
                shall occur:  (i) any  suspension  or  limitation  of trading in
                securities  generally on the New York Stock Exchange lasting for
                more than  twenty-four (24) hours,  (ii) any banking  moratorium
                declared by U.S. Federal or New York  authorities,  or (iii) any
                outbreak or escalation of major  hostilities in which the United
                States  is  involved  or  any  other  substantial   national  or
                international calamity or emergency.

SECTION 10.02   Effect of  Termination.  In the event that  either  party  shall
                ----------------------
elect to terminate this  Agreement  pursuant to any provision  contained  herein
expressly  giving  such  party  the  right to  terminate  this  Agreement,  this
Agreement  shall  forthwith  terminate and have no further  effect,  and neither
party shall have any further  obligation  or  liability  (except with respect to

                                       52


those  provisions  hereof  which  expressly  survive  any  termination  of  this
Agreement).  Notwithstanding  the foregoing,  the  termination of this Agreement
pursuant to any  provision  hereof shall not relieve any party of any  liability
for a  breach  of any  representation  or  warranty,  or  nonperformance  of any
covenant or obligation  hereunder,  and any such termination shall not be deemed
to be a waiver of any available remedy for any such breach or nonperformance.

                                   ARTICLE XI
                                  FINDER'S FEES

        The Company and the Holders, on the one hand, and Parent and Acquisition
Subsidiary,  on the other  hand,  represent  and warrant to each other that they
respectively have had no dealings with any finder, broker,  financial advisor or
investment  banker in  connection  with the  transactions  contemplated  by this
Agreement,  other  than  Barrington  Associates  ("Barrington"),  which has been
                                                   ----------
engaged pursuant to separate  agreement by the Company and the Holders and whose
compensation  will be paid in  accordance  with  Section  13.01(b)  hereof.  The
Holders will indemnify and hold Parent and Acquisition  Subsidiary harmless from
and against any and all  liabilities  (including  but not limited to  reasonable
attorneys'  fees)  to  which  either  may be  subjected  by  reason  of (i)  any
compensation or amounts due or to become due to Barrington (including any Losses
relating to or arising out of that certain engagement letter dated July 26, 2001
between Barrington and the Company or that certain termination agreement of even
date herewith between  Barrington and the Company),  or (ii) any other finder's,
broker's, financial advisor's,  investment banker's or similar fee or commission
with respect to the  transactions  contemplated  by this Agreement to the extent
such fee is attributable to any action undertaken by the Holders or the Company;
provided,  however,  any  liabilities  arising  out  of or  resulting  from  the
--------   -------
foregoing may, in the sole discretion of Parent,  Acquisition Subsidiary and the
Surviving Corporation,  be satisfied from any source including,  but not limited
to, the Escrowed Funds; and provided, further, that the liability of the Holders
                            --------  -------
for such  liabilities  from the Escrowed  Funds shall be joint and several,  and
otherwise shall be several among the Holders,  pro rata, based on the respective
                                               --- ----
portion of Merger  Consideration  received  by each such Holder  under  Sections
2.01(b)(iii)  and (iv).  Parent and  Acquisition  Subsidiary  will  jointly  and
severally  indemnify and hold the Holders  harmless from and against any and all
liabilities  (including but not limited to reasonable  attorneys' fees) to which
any of them may be  subjected  by reason of any  finder's,  broker's,  financial
advisor's,  investment banker's or similar fee or commission with respect to the
transactions   contemplated  by  this  Agreement  to  the  extent  such  fee  is
attributable to any action undertaken by Parent or Acquisition  Subsidiary.  The
provisions of this Article XI shall survive any termination of this Agreement.

                                  ARTICLE XII
                                     NOTICES

        Any notice  required  or  permitted  to be given by any party under this
Agreement shall be given in writing and shall be deemed  effectively  given upon
personal  delivery to the party to be notified,  on the next  business day after
delivery to a nationally  recognized  overnight  courier  service,  when sent by
confirmed facsimile if sent during normal business hours of the recipient, or if
not,  then on the next  business day, or five days after deposit with the United

                                       53


States Post Office,  by  registered  or certified  mail,  postage  prepaid,  and
addressed  to the  party to be  notified  at the  address  or  facsimile  number
indicated  below for such  party,  or at such  other  address  as such party may
designate upon written notice to the other parties (except that notice of change
of address  shall be deemed given upon  receipt).  Telephone  numbers and e-mail
addresses are provided herein for convenience  only, and  communications by such
means shall not constitute effective notice hereunder.

                  (a)      In the case of Parent or Acquisition Subsidiary:

                           Thor Industries, Inc.
                           419 West Pike Street
                           Jackson Center, Ohio  45334
                           Attn:  President
                           Facsimile:  937-596-6539
                           Telephone:  937-596-6849

                           With a copy to:

                           Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                           590 Madison Avenue
                           New York, New York  10022
                           Attn:    Alan Siegel
                                    Steven H. Scheinman
                           Facsimile:  212-872-1002
                           Telephone:  212-872-1000
                           E-mail:    asiegel@akingump.com
                                      sscheinman@akingump.com

                  (b)      In the case of the Company:

                           Keystone RV Company
                           17400 Hackberry Drive
                           Goshen, Indiana  46526
                           Attn:  President
                           Facsimile:  219-642-3281
                           Telephone:  219-642-1508
                           E-mail:  coled@keystonerv.com

                                       54


                           With a copy to:

                           Hutchins, Wheeler & Dittmar
                           A Professional Corporation
                           101 Federal Street
                           Boston, Massachusetts  02110
                           Attn:  James Westra, Esq.
                                  Marilyn French, Esq.
                           Facsimile:  617-951-1295
                           Telephone:  617-951-6600
                           E-mail:  jxw@hutch.com
                                    mxf@hutch.com

                  (c)      In the  case of the  Holders,  to each of the  Holder
Representatives:

                           H. Coleman Davis, III
                           c/o Keystone RV Company
                           17400 Hackberry Drive
                           Goshen, Indiana  46526
                           Facsimile:  219-642-3281
                           Telephone:  219-642-1508
                           E-mail:  coled@keystonerv.com

                           and

                           Joseph F. Trustey
                           c/o Summit Partners
                           600 Atlantic Avenue
                           Suite 2800
                           Boston, MA  02210
                           Facsimile:  617-824-1100
                           Telephone:  617-824-1000
                           E-mail:  jtrustey@summitpartners.com

                           In each case, with a copy to:

                           Hutchins, Wheeler & Dittmar
                           A Professional Corporation
                           101 Federal Street
                           Boston, Massachusetts  02110
                           Attn:  James Westra, Esq.
                                  Marilyn French, Esq.
                           Facsimile:  617-951-1295
                           Telephone:  617-951-6600
                           E-mail:  jxw@hutch.com
                                    mxf@hutch.com

                                       55



                                  ARTICLE XIII
                                  MISCELLANEOUS

SECTION 13.01   Expenses.
                --------

        (a)     Irrespective  of whether the Closing is effected,  and except as
otherwise expressly provided herein, Parent and Acquisition Subsidiary shall pay
all costs and expenses that they incur,  and the Holders shall pay all costs and
expenses that the Company or the Holders incur,  including,  but not limited to,
legal, accounting,  financial advisory and investment banking fees and expenses,
with respect to the  negotiation  and execution of this  Agreement and any other
documents or instruments to be executed and delivered  pursuant hereto,  and the
performance of any covenants to be performed by such party and  satisfaction  of
any  conditions  to be  satisfied  by such party which are  contained  herein or
therein.  The provisions of this Section 13.01 shall survive any  termination of
this Agreement.

        (b)     Notwithstanding  Section 13.01(a),  upon the Closing, Parent and
Acquisition  Subsidiary shall pay, on behalf of the Company and the Holders, (i)
all fees and  expenses  incurred by the Company  and the  Holders  described  in
Section  13.01(a)  above,  directly  to  the  Company's  and  Holder's  counsel,
investment  banker and  accountants as set forth in a  disbursement  instruction
letter to be  delivered  by the Company to Parent no later than two (2) business
days  prior to the  Closing  Date,  and (ii) any fees  payable  on or before the
Closing Date by the Holders to the Escrow Agent pursuant to the Escrow Agreement
and the Additional Escrow Agreement.  Not later than two (2) business days prior
to the  Closing  Date,  the Holder  Representatives  shall  cause (x)  Hutchins,
Wheeler & Dittmar,  A Professional  Corporation,  counsel to the Company and the
Holders, to deliver a letter to Parent indicating the final amount of legal fees
owed it with wire  payment  instructions,  and (y)  Barrington,  the  investment
banker  for the  Company,  to  deliver a letter to Parent  indicating  the final
amount of investment banking fees owed to it with wire payment instructions, and
(z) E&Y,  the  accountants  for the  Company,  to  deliver  a letter  to  Parent
indicating the accounting fees owed to it. All payments by Parent or Acquisition
Subsidiary of fees and expenses  pursuant to this Section  13.01(b) are referred
to herein collectively as "Company Expense Payments".
                           ------------------------

        (c)     In the event that any costs or  expenses  of the  Company or the
Holders are not paid by the Holders pursuant to Section 13.01(a) or by Parent or
Acquisition Subsidiary pursuant to Section 13.01(b) and, instead, are payable by
the Company (or the Surviving Corporation) following the Closing, such costs and
expenses  shall be accrued and reserved on the Estimated  Closing  Balance Sheet
and the Audited Closing Balance Sheet for purposes of Section 2.04.

SECTION 13.02   Entire Agreement. This Agreement, together with the Exhibits and
                ----------------
Schedules  annexed hereto,  and the documents and instruments to be executed and
delivered pursuant hereto, constitutes the entire understanding and agreement by
and among the parties  hereto with  respect to the subject  matter  hereof,  and
supersedes  all prior  negotiations,  agreements and  understandings  among such
parties with respect to the subject matter hereof.

SECTION 13.03   Amendments  and  Waivers.  Any  term  of this  Agreement  may be
                ------------------------
amended and the  observance of any term of this  Agreement may be waived (either

                                       56


generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively), only by an instrument in writing and signed by the party against
whom such amendment or waiver is sought to be enforced;  provided, however, that
                                                         --------  -------
any such  amendment  or waiver  signed by the  Holder  Representatives  shall be
binding on all of the Holders as provided  in Section  13.15.  The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a further or continuing  waiver of such breach or as a waiver of
any other or subsequent  breach.  No failure on the part of any party hereto, to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver  thereof,  nor shall any single or partial  exercise of such
right,  power or remedy  by any  party  hereto,  preclude  any other or  further
exercise thereof or the exercise of any other right, power or remedy.



SECTION 13.04   Successors and Assigns.  Acquisition  Subsidiary  shall have the
                ----------------------
right to assign this Agreement and its rights and  obligations  hereunder to any
wholly-owned subsidiary of Parent. Except as provided in the preceding sentence,
neither this  Agreement  nor any rights  hereunder  may be assigned by any party
without the prior written consent of the other parties.  This Agreement shall be
binding  upon and shall  inure to the  benefit of the  parties  hereto and their
respective successors and permitted assigns.

SECTION 13.05   Governing Law. This Agreement, including the validity hereof and
                -------------
the rights and  obligations  of the parties  hereunder,  and all  amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance  with and governed by the domestic  substantive  laws of the State of
New  York  without  giving  effect  to any  choice  of law or  conflicts  of law
provision or rule that would cause the  application of the domestic  substantive
laws of any other jurisdiction.

SECTION 13.06   Severability.  If any provisions of this Agreement as applied to
                ------------
any part or to any  circumstance  shall be  adjudged by a court to be invalid or
unenforceable,  the same  shall in no way  affect  any other  provision  of this
Agreement,  the application of such provision in any other  circumstances or the
validity or enforceability of this Agreement.

SECTION 13.07   No Third-Party Beneficiaries. Nothing in this Agreement, express
                ----------------------------
or implied, shall create or confer on any person other than the parties or their
respective successors and permitted assigns, any rights,  remedies,  obligations
or liabilities, except as expressly provided in Article IX hereof.

SECTION 13.08   Attorneys'  Fees. If any action at law or in equity is necessary
                ----------------
to enforce or interpret  the terms of this  Agreement  or any other  document or
instrument to be executed or delivered  pursuant  hereto,  the prevailing  party
shall be entitled to reasonable  attorneys'  fees,  costs and  disbursements  in
addition to any other relief to which such party may be entitled.

SECTION 13.09   Remedies.  In  case  any one or  more  of the  covenants  and/or
                --------
agreements  set forth in this  Agreement  shall have been  breached by any party
hereto,  the party or  parties  entitled  to the  benefit of such  covenants  or
agreements may, except as may otherwise be expressly provided in this Agreement,
proceed to protect and enforce  their rights  either by suit in equity and/or by
action at law, including,  but not limited to, an action for damages as a result

                                       57


of any such  breach  and/or  an  action  for  specific  performance  of any such
covenant or  agreement  contained  in this  Agreement.  The  rights,  powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other  right,  power or remedy  which such  parties may have under any other
agreement or law. No single or partial assertion or exercise of any right, power
or remedy of a party hereunder shall preclude any other or further  assertion or
exercise thereof.  From and after the Closing Date, the provisions  contained in
Article IX herein shall be the sole and  exclusive  remedy for monetary  damages
arising out of or resulting from the breach of any representations or warranties
made pursuant to Articles III,  III.A or IV of this  Agreement,  absent fraud or
intentional misrepresentation.

SECTION 13.10   Consent to Jurisdiction and Service of Process. Each Holder, for
                ----------------------------------------------
itself,  its  personal  representatives,  legatees,  heirs and  assigns,  hereby
consents to the personal  jurisdiction  of the courts of the County and State of
New York and of the United States  District  Court for the Southern  District of
New York, each as may have competent  jurisdiction,  with respect to any dispute
or  controversy  arising under or in connection  with this  Agreement and agrees
that  process  issued out of any such court or in  accordance  with the rules of
practice  of such  court  may be  served  by mail or other  form of  substituted
service to the Holder  Representatives,  as provided by Section 13.15(a), at the
addresses  and with  copies as  provided  in  Article  XII and that any  actions
therein may be consolidated  in a single action.  Each Holder also agrees not to
bring any  dispute  or  controversy  arising  under or in  connection  with this
Agreement in any other  court.  Each Holder  waives any defense of  inconvenient
forum to the maintenance of any dispute or controversy so brought and waives any
bond,  surety,  or other security that may be required of any other party hereto
with respect  such dispute or  controversy.  Nothing  contained  herein shall be
deemed to prevent Parent,  Acquisition  Subsidiary or the Surviving  Corporation
from effecting  service of process upon any Holder in any other manner permitted
by law or from commencing any action in any court having competent jurisdiction.

SECTION 13.11   Counterparts.  This  Agreement  may be  executed  in two or more
                ------------
counterparts,  each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

SECTION 13.12   Certain References;  Captions. Whenever the context may require,
                -----------------------------
any pronoun used in this Agreement  shall include the  corresponding  masculine,
feminine or neuter  forms,  and the singular  form of nouns,  pronouns and verbs
shall  include  the plural  and vice  versa.  The terms  "herein",  "hereof"  or
"hereunder"  or similar  terms as used in this  Agreement  refer to this  entire
Agreement  and not to the  particular  provision in which the term is used.  The
headings and captions used in this Agreement are used for  convenience  only and
are not to be considered in construing or interpreting  this  Agreement.  Unless
otherwise stated,  all references herein to Articles,  Sections,  subsections or
other  provisions  are  references to Articles,  Sections,  subsections or other
provisions of this  Agreement.  All  references to the term "business day" shall
mean any day on which banks in New York or Indiana are not required or permitted
to be closed.

SECTION 13.13   Interpretation.  This Agreement shall be construed reasonably to
                --------------
carry out its intent without presumption against or in favor of either party.

                                       58


SECTION 13.14   Guaranty  by  Parent.  By its  signature  below,  Parent  hereby
                --------------------
guarantees the obligations of Acquisition Subsidiary pursuant to this Agreement.

SECTION 13.15   Holder Representatives.
                ----------------------

        (a)     Each of the Holders  hereby  appoints and  designates the Holder
Representatives,  acting jointly, and not individually, to perform all such acts
as are required, authorized or contemplated by this Agreement to be performed by
the Holders (including,  without  limitation,  the execution and delivery of any
waivers, consents, approvals,  extensions,  amendments and other agreements, the
giving and receipt of notices,  the  resolution  of disputes  and any matters or
proceedings  referred to in Article IX hereof) and hereby  acknowledges that the
Holder  Representatives  shall be the only persons authorized to take any action
so required,  authorized or contemplated  by this Agreement by any Holder.  Each
Holder further designates and appoints each of the Holder Representatives as its
agent for service of process with  respect to any disputes  regarding or arising
out of this Agreement or any of the transactions contemplated hereby.

        (b)     Each Holder  acknowledges  and agrees that the  appointment  and
designation contemplated by this Section 13.15 shall be coupled with an interest
and shall survive the death or mental or physical  incapacity of such Holder and
that each Holder shall severally  indemnify the Holder  Representatives and hold
each  harmless  against any loss,  liability or expense  incurred  without gross
negligence or willful misconduct on the part of the Holder  Representatives  and
arising out of or in connection with the acceptance or  administration  of their
duties hereunder.

        (c)     Each   Holder   acknowledges   and   agrees   that  the   Holder
Representatives  shall be  entitled  to rely on the  opinion of counsel and that
upon such reliance on counsel the Holder  Representatives  shall have  performed
their duties in good faith.

        (d)     Each  Holder  hereby  authorizes  the  other  parties  hereto to
disregard  any  notice or other  action  taken by any  Holder  pursuant  to this
Agreement  except for the Holder  Representatives.  The other parties hereto are
and will be entitled to rely on any action so taken, or any notice given, by the
Holder  Representatives  and are and will be  entitled  and  authorized  to give
notices only to the Holder Representatives in lieu of any notice contemplated by
this Agreement to be given to any Holder.

        (e)     The appointment  and  designation of the Holder  Representatives
pursuant to this Section 13.15 shall be  irrevocable  except in the event of (i)
the  termination  or  resignation  from the Summit  Holders  by, or the death or
physical or mental  incapacity of, Joseph F. Trustey,  in which event the Summit
Holders shall  promptly (x)  designate  his  successor  and (y) deliver  written
notice to the other  parties  hereto of such  designation,  or (ii) the death or
physical  or mental  incapacity  of H.  Coleman  Davis III,  in which  event the
Holders  (other  than the Summit  Holders)  who have  received a majority of the
Merger  Consideration  delivered hereunder  (including the Escrowed Funds) shall
promptly (x) designate his successor and (y) deliver written notice to the other
parties hereto of such designation;  provided, however, that in the event that a
                                     --------  -------
successor is not appointed and designated  pursuant to clause (i) or (ii) within
fifteen  (15) days  after  the  event  giving  rise to the need to  designate  a

                                       59


successor  (or any shorter  time as required to permit  Parent or the  Surviving
Corporation  to give any notice or  preserve,  enforce or exercise any rights or
remedies  under  this  Agreement  that must be  given,  preserved,  enforced  or
exercised within such shorter time period), Parent and the Surviving Corporation
may,  in  their  sole  discretion,  elect  to  treat  the  other  of the  Holder
Representatives, notwithstanding the joint appointment and designation set forth
in Section 13.15(a), as the sole Holder Representative for such purpose, and if,
at any time, no Holder  Representative is properly  designated  pursuant hereto,
Parent and the Surviving  Corporation  may, in their sole  discretion,  elect to
treat any Holder as the sole Holder Representative for such purpose.

SECTION 13.16   Knowledge.  As used in this Agreement,  the term "knowledge" (or
                ---------
words of similar  import)  means,  with respect to (i) the  Company,  the actual
knowledge of each of the Holders,  (ii) Parent and Acquisition  Subsidiary,  the
actual knowledge of its Chairman,  Vice Chairman and Chief Financial Officer and
(iii) each Holder,  the actual knowledge of such Holder,  in each case after due
and reasonable inquiry,  which, in the case of clauses (i) and (ii) above, shall
consist of due and  reasonable  inquiry  of those  officers  and  Holders of the
Company or of those officers of Parent and Acquisition  Subsidiary,  as the case
may be,  who  would  normally  be  expected  to have  knowledge  of the truth or
completeness of the representation or warranty in question.

SECTION 13.17   Material  Adverse Effect.  As used in this  Agreement,  the term
                ------------------------
"Material  Adverse Effect" means,  with respect to the Company,  any breach of a
 ------------------------
representation  or  warranty  hereunder  or a covenant  to be  performed  by the
Company  or the  Holders  the effect of which may be to (x) impede or impair the
operation of the Business in the ordinary  course  consistent with past practice
or (y) cause the Company (or the Surviving  Corporation) to pay or become liable
to pay more than  $10,000 to remedy any single  such event,  violation,  breach,
default  or  termination  (as  the  case  may be) or more  than  $25,000  in the
aggregate for all such events, violations, breaches, or defaults or terminations
(as the case may be).

SECTION 13.18   Company Director and Officer Indemnification. From and after the
                --------------------------------------------
Effective  Time,  Parent will cause the Surviving  Corporation  to indemnify and
hold harmless each  director and officer of the Company who are  signatories  to
this  Agreement  against  any  liability  and  reasonable  expense  incurred  in
connection with any claim, action, suit, proceeding or investigation arising out
of or pertaining  to matters  existing or occurring at or prior to the Effective
Time,  whether asserted or claimed prior to (but only to the extent set forth on
Schedule 3.21 hereto),  at or after the  Effective  Time, to the fullest  extent
-------------
that the Company would have been  permitted  under Indiana law and the Company's
Restated  Articles of  Incorporation  or By-laws in effect on the date hereof to
indemnify  any such  person;  provided,  however,  that no such person  shall be
                              --------   -------
entitled to such  indemnification  in  connection  with any such claim,  action,
suit,  proceeding or investigation  relating to the matter described in Schedule
3.02(a) hereto (and, by their signature  below,  each director or officer of the
Company  executing  this  Agreement  hereby  acknowledges  that he shall  not be
entitled to such indemnification).

SECTION 13.19   Defined Terms.  The following terms used in this Agreement shall
                -------------
have the meanings set forth in the corresponding Sections or subsections of this
Agreement:

"Acquisition Subsidiary"                                  Heading Paragraph
"Additional Escrow Agreement"                             Section 2.05(b)

                                       60


"Additional Escrowed Funds"                               Section 2.05(b)
"Additional Matters"                                      Section 9.02
"Adjusted Cash/Stock Ratio"                               Section 2.01(b)
"Agreement"                                               Heading Paragraph
"Audited Closing Balance Sheet"                           Section 2.04(a)(ii)
"Audited Statements"                                      Section 3.06
"Barrington"                                              Article XI
"Basket"                                                  Section 9.04
"Business"                                                Whereas Clause 1
"Cash Portion"                                            Section 2.01(a)(i)
"Cash/Stock Ratio"                                        Section 2.01(a)
"Certificate"                                             Section 2.03(a)
"Certificate of Designation"                              Section 2.01(a)(ii)(B)
"Certificate of Merger"                                   Section 1.02
"Closing"                                                 Section 7.01
"Closing Date"                                            Section 7.01
"Closing Stock Price"                                     Section 1.01(a)
"Code"                                                    Whereas Clause 4
"Common Stock Stated Value"                               Section 2.01(a)(ii)(A)
"Commonly Controlled Entity"                              Section 3.19(c)
"Company"                                                 Heading Paragraph
"Company Benefit Plans"                                   Section 3.19(c)
"Company Common Stock"                                    Whereas Clause 2
"Company Convertible Preferred Stock"                     Whereas Clause 2
"Company Expense Payments"                                Section 13.01(b)
"Company Non-Compete"                                     Section 3.09(c)
"Company Non-Voting Common Stock"                         Section 3.02
"Company Preferred Stock"                                 Whereas Clause 2
"Company Redeemable Preferred Stock"                      Whereas Clause 2
"Company Stock Option"                                    Whereas Clause 2
"Company's Agreements"                                    Section 3.09
"D&T"                                                     Section 2.04(a)(ii)
"Damon"                                                   Section 3.09(c)
"Damon Non-Compete"                                       Section 3.09(c)
"Damon Purchase Agreement"                                Section 3.09(c)
"DGCL"                                                    Section 1.01
"Disclosure Schedule"                                     Article III
"Disposition" (or "Dispose")                              Section 8.01
"E&Y"                                                     Section 2.04(a)(iv)
"Effective Time"                                          Section 1.02
"Environmental Claims"                                    Section 3.27(f)(i)
"Environmental Laws"                                      Section 3.27(f)(ii)
"Environmental Permits"                                   Section 3.27(f)(iii)
"ERISA"                                                   Section 3.19(c)
"Escrow Agent"                                            Section 2.05(a)
"Escrow Agreement"                                        Section 2.05(a)

                                       61


"Escrow Agreements"                                       Section 2.05(b)
"Escrowed Funds"                                          Section 2.05(a)
"Estimated Closing Balance Sheet"                         Section 2.04(a)(i)
"Exchange Act"                                            Section 3.05(a)
"Financial Statements"                                    Section 3.06
"Forward Merger"                                          Section 1.01(a)
"Forward Merger Surviving Corporation"                    Section 1.01(a)
"GAAP"                                                    Section 2.04(a)
"General Representations"                                 Section 9.01
"Governmental Entity"                                     Section 3.05(a)
"Hazardous Materials"                                     Section 3.27(f)(iv)
"Holders"                                                 Heading Paragraph
"Holder Releases"                                         Section 7.02(f)
"Holder Representative"                                   Heading Paragraph
"Holder Representatives"                                  Heading Paragraph
"HSR Act"                                                 Section 3.05(a)
"IBCL"                                                    Section 1.01
"Indemnitee"                                              Section 9.06(a)
"Indemnitor"                                              Section 9.06(a)
"Independent Firm"                                        Section 2.04(a)(iv)
"Intellectual Property Rights"                            Section 3.14
"IRS"                                                     Section 3.19(c)(i)
"Key Employee"                                            Section 3.19(a)
"knowledge"                                               Section 13.16
"Leased Real Property"                                    Section 3.10(b)
"Letter Agreement"                                        Section 2.05(b)
"Licenses"                                                Section 3.15
"Liens"                                                   Section 3.05(b)
"Losses"                                                  Section 9.02
"M&P"                                                     Section 3.06
"Material Adverse Effect"                                 Section 13.17
"Merger"                                                  Section 1.01
"Merger Consideration Per Common Share"                   Section 2.01(b)(iii)
"Merger Consideration"                                    Section 2.01(a)
"NHTSA"                                                   Section 3.23
"Non-Competition Agreements"                              Section 7.02(d)
"Objection Notice"                                        Section 2.04(a)(iii)
"Open Purchase Orders"                                    Section 3.09(b)
"Optionholders"                                           Heading Paragraph
"Outside Date"                                            Section 10.01(iv)
"Owned Real Property"                                     Section 3.10(a)
"Parent"                                                  Heading Paragraph
"Parent Common Stock"                                     Whereas Clause 2
"Parent Preferred Stock"                                  Whereas Clause 2
"PCBs"                                                    Section 3.27(e)
"Permitted Liens"                                         Section 3.05(b)

                                       62


"Personal Representations"                                Section 9.01
"Preferred Stock Stated Value"                            Section 2.01(a)(ii)(B)
"Principal Shareholder"                                   Article III
"Product"                                                 Whereas Clause 1
"Real Property"                                           Section 3.10(c)
"Real Property Leases"                                    Section 3.10(b)
"Registration Rights Agreement"                           Section 8.04
"Registration Statement"                                  Section 8.04
"Release"                                                 Section 3.27(f)(v)
"Reverse Merger"                                          Section 1.01(b)
"Reverse Merger Surviving Corporation"                    Section 1.01(b)
"SEC"                                                     Section 4.07
"SEC Reports"                                             Section 4.07
"Securities Act"                                          Section 3.05(a)
"Shareholder Equity"                                      Section 2.04(a)
"Shareholders"                                            Heading Paragraph
"Special Representations"                                 Section 9.01
"Stock Portion"                                           Section 2.01(a)(ii)
"Stock Restriction Agreement"                             Section 8.02
"Summit Holders"                                          Section 8.02
"Surviving Corporation"                                   Section 1.01
"Tax Benefit"                                             Section 9.02
"tax return"                                              Section 3.18(f)
"taxes"                                                   Section 3.18(f)
"Third Party Claim"                                       Section 9.06(b)
"Unaudited Statements"                                    Section 3.06



                                       63



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


ACQUISITION SUBSIDIARY:                        THOR ACQUISITION CORP.


                                               By: /s/ Wade F. B. Thompson
                                                   -----------------------------
                                                   Name:  Wade F. B. Thompson
                                                   Title: President


PARENT:                                        THOR INDUSTRIES, INC.


                                               By: /s/ Wade F. B. Thompson
                                                   -----------------------------
                                                   Name:  Wade F. B. Thompson
                                                   Title: President


COMPANY:                                      KEYSTONE RV COMPANY


                                              By: /s/ H. Coleman Davis, III
                                                  ------------------------------
                                                   Name:  H. Coleman Davis, III
                                                   Title: President


SHAREHOLDERS:                                 SUMMIT INVESTORS III, L.P.


                                              By: /s/ Joseph F. Trustey
                                                  -----------------------------
                                                  Name:   Joseph F. Trustey
                                                  Title:  General Partner


                                  


                                               SUMMIT VENTURES V, L.P.

                                               By:  Summit Partners V, L.P.
                                                    Its General Partner


                                               By:  Summit Partners, LLC
                                                    Its General Partner


                                               By: /s/ Joseph F. Trustey
                                                   -----------------------------
                                                   Name:  Joseph F. Trustey
                                                   Title: Member


                                                SUMMIT V ADVISORS FUND, L.P.

                                                By:  Summit Partners, LLC
                                                     Its General Partner


                                                By: /s/ Joseph F. Trustey
                                                    ----------------------------
                                                    Name:  Joseph F. Trustey
                                                    Title: Member


                                               SUMMIT V ADVISORS FUND (QP), L.P.

                                               By:  Summit Partners LLC
                                                       Its General Partner

                                               By:  /s/ Joseph F. Trustey
                                                    ----------------------------
                                                    Name:  Joseph F. Trustey
                                                    Title: Member

                                      


                                               SUMMIT V COMPANION FUND, L.P.

                                               By:  Summit Partners V, L.P.
                                                    Its General Partner

                                               By:  Summit Partners, LLC
                                                    Its General Partner


                                               By: /s/ Joseph F. Trustey
                                                   -----------------------------
                                                   Name:  Joseph F. Trustey
                                                   Title: Member


                                               /s/ H. Coleman Davis, III
                                               ---------------------------------
                                               H. Coleman Davis, III


                                               /s/ Robert E. Gaff, Jr.
                                               ---------------------------------
                                               Robert E. Gaff, Jr.


                                               /s/ William C. Fenech
                                               ---------------------------------
                                               William C. Fenech


                                               /s/ Ronald J. Fenech
                                               ---------------------------------
                                               Ronald J. Fenech


                                               /s/ Tonja Lucchese
                                               ---------------------------------
                                               Tonja Lucchese


                                               /s/ Kim M. Price
                                               ---------------------------------
                                               Kim M. Price


                                               /s/ Douglas Rheinheimer
                                               ---------------------------------
                                               Douglas Rheinheimer



                             




OPTIONHOLDERS:                                 /s/ James R. Brotherson
                                               ---------------------------------
                                               James R. Brotherson


                                               /s/ Donald J. Clark
                                               ---------------------------------
                                               Donald J. Clark


                                               /s/ H. Coleman Davis, III
                                               ---------------------------------
                                               H. Coleman Davis, III






        Each  of  the  undersigned  hereby   acknowledges  his  appointment  and
designation as a Holder Representative and his willingness to fulfill the duties
of a Holder Representative as contemplated by this Agreement


HOLDER REPRESENTATIVES


/s/ H. Coleman Davis, III
-------------------------
H. Coleman Davis, III

/s/ Joseph F. Trustey
---------------------
Joseph F. Trustey


        Each of the undersigned hereby acknowledges and agrees to the provisions
of Section 13.18 hereof.



/s/ H. Coleman Davis, III
-------------------------
H. Coleman Davis, III

/s/ Joseph F. Trustey
---------------------
Joseph F. Trustey


/s/ James R. Brotherson
-----------------------
James R. Brotherson


/s/ Kim M. Price
----------------
Kim M. Price