EXHIBIT 2.1

                    STOCK AND REAL ESTATE PURCHASE AGREEMENT



         THIS STOCK AND REAL ESTATE PURCHASE  AGREEMENT  (hereinafter  sometimes
called the  "Agreement")  is made as of the 22nd day of June in the year 2001 by
and  among  AMERICAN  LOCKER  GROUP,   INCORPORATED,   a  Delaware   corporation
(hereinafter  sometimes called the "Buyer"), of the one part, and JANIE D'ADDIO,
an individual resident of Dallas County, Texas (hereinafter sometimes called the
"Stock  Seller")  and  SALVATORE  D'ADDIO  and JANE  D'ADDIO,  husband and wife,
individual residents of Dallas County, Texas (hereinafter sometimes collectively
called the "Real Estate Sellers"), of the other part.

                                    RECITALS

         The Stock Seller  desires to sell,  and the Buyer  desires to purchase,
all of the issued  and  outstanding  shares  (hereinafter  sometimes  called the
"Company  Shares") of capital stock of B.L.L.  Corporation,  a Texas corporation
doing  business as Security  Manufacturing  Corporation  (hereinafter  sometimes
called the  "Company") and the Real Estate Sellers desire to sell, and the Buyer
desires to  purchase,  the  certain  piece or parcel of land  located in Tarrant
County, Texas, as more particularly described in the Description of the Land set
forth  in  Exhibit  "A"  attached  hereto  and made a part  hereof  (hereinafter
sometimes called the "Land"),  together with the building and other improvements
erected thereon (hereinafter  sometimes  collectively called the "Building") and
all  appurtenances,  subject  to  the  title  exceptions  as  more  particularly
described in the Schedule of Title  Exceptions set forth in Exhibit "B" attached
hereto  and  made  a  part  hereof  (hereinafter  sometimes  called  the  "Title
Exceptions"),  for  the  consideration  and on  the  terms  set  forth  in  this
Agreement.

                                    AGREEMENT

         The  Buyer,  the Stock  Seller and Real  Estate  Sellers,  the  parties
hereto, intending to be legally bound, agree as follows:

                                    ARTICLE I

          SALE AND TRANSFER OF COMPANY SHARES AND REAL ESTATE; CLOSING

         SECTION 1.1 COMPANY SHARES. Subject to the terms and conditions of this
Agreement,  at the  closing  as  defined  in  Section  1.4  hereof  (hereinafter
sometimes  called the  "Closing"),  the Stock Seller shall sell and transfer the
Company Shares to the Buyer and the Buyer shall purchase the Company Shares from
the Stock Seller.




         SECTION 1.2 REAL ESTATE.  Subject to the terms and  conditions  of this
Agreement,  at the Closing,  the Real Estate Sellers shall sell and transfer the
real estate as defined in Article II hereof  (hereinafter  sometimes  called the
"Real  Estate") to the Buyer and the Buyer shall  purchase  the Real Estate from
the Real Estate Sellers.

         SECTION 1.3       PURCHASE PRICES.

         (a) The purchase  price for the Company Shares  (hereinafter  sometimes
called the "Share Purchase Price") shall consist of the sum of Nine Million, One
Hundred Thousand Dollars  ($9,100,000) payable in accordance with the provisions
of Section 1.4 hereof.

         (b) The  purchase  price  for the Real  Estate  (hereinafter  sometimes
called the "Real Estate  Purchase  Price")  shall  consist of Three Million Five
Hundred  Thousand  Dollars  ($3,500,000) in cash. The Real Estate Purchase Price
shall be allocated  for income tax,  transfer tax and all other  purposes to the
extent of Five Hundred Thousand Dollars ($500,000) to the Land and the remainder
thereof to the Building.

         SECTION 1.4 PAYMENT OF SHARE PURCHASE  PRICE.  The Share Purchase Price
shall be payable by the Buyer in cash in four  installments,  the first of which
shall be payable at the closing  referred to in Section 1.5 hereof  (hereinafter
sometimes  called the  "Closing")  in the amount of Eight  Million,  One Hundred
Forty Thousand Dollars ($8,140,000), the second of which shall be payable by the
first anniversary of the date of the Closing  (hereinafter  sometimes called the
"Closing  Date"),  in the  amount  of  Three  Hundred  Twenty  Thousand  Dollars
($320,000), the third of which shall be payable by the second anniversary of the
Closing Date in the amount of Three Hundred Twenty Thousand  Dollars  ($320,000)
and the fourth of which shall be payable by the third anniversary of the Closing
Date in the amount of Three Hundred  Twenty  Thousand  Dollars  ($320,000).  The
obligations of the Buyer to pay the second, third and fourth installments of the
Share Purchase Price shall be evidenced by a promissory note to the order of the
Stock Seller in the principal amount thereof,  together with interest thereon at
the annual rate of six and one-half percent (6.5%), in substantially the form of
Exhibit "C" attached hereto and made a part hereof (hereinafter sometimes called
the "Promissory Note") which the Buyer shall deliver at the Closing.

         SECTION 1.5 CLOSING. The Closing of the simultaneous  purchase and sale
of the Company Shares and the Real Estate  provided for in this Agreement  shall
take place in the offices of Gardere  Wynne  Sewell,  LLP,  counsel to the Stock
Seller and the Real Estate Sellers,  1601 Elm Street, Suite 300, Dallas,  Texas,
at ten o'clock a.m.  (local time) on Friday,  the 6th day of July,  2001,  or at
such other time and place as the parties may agree. Subject to the provisions of
Article VII hereof,  failure to consummate  the purchase and sale of the Company
Shares and the Real Estate  provided for in this  Agreement on the date and time
and at the place determined pursuant to this Section 1.5 shall not result in the
termination  of this Agreement and shall not relieve any party of any obligation
under this Agreement.


                                     - 2 -



         SECTION  1.6  CLOSING  OBLIGATIONS.  At the Closing on the date thereof
(hereinafter sometimes called the "Closing Date"):

         (a)  Against  performance  by the Buyer of its  obligations  under this
Section 1.5, the Stock Seller and the Real Estate Sellers (hereinafter sometimes
collectively called the "Sellers") shall deliver to or for the Buyer:

               (i) the  certificate  or  certificates  representing  the Company
          Shares,  duly endorsed (or  accompanied by duly executed stock powers)
          by the Stock Seller for transfer to the Buyer;

               (ii) the release in the form of Exhibit "D"  attached  hereto and
          made a part  hereof  executed by the  Sellers  (hereinafter  sometimes
          called the "Sellers' Release");

               (iii) the  resignations  of each of the directors and officers of
          the Company, effective as of the Closing Date;

               (iv) the consulting agreement in the form of Exhibit "E" attached
          hereto and made a part hereof  executed by Janie D'Addio  (hereinafter
          sometimes called the "Janie D'Addio Consulting Agreement");

               (v) the consulting  agreement in the form of Exhibit "F" attached
          hereto  and  made  a  part  hereof   executed  by  Salvatore   D'Addio
          (hereinafter   sometimes  called  the  "Salvatore  D'Addio  Consulting
          Agreement");

               (vi) the sales  representative  agreement  in the form of Exhibit
          "G" attached  hereto and made a part hereof  executed by Janie D'Addio
          (hereinafter sometimes called the "Sales Representative Agreement");

               (vii) the warranty  deed  executed and  acknowledged  by the Real
          Estate Sellers in recordable  form  acceptable to the title  insurance
          company (hereinafter  sometimes called the "Title Company") which will
          issue to the Buyer  hereunder a  commitment  to issue an owner's and a
          mortgagee's  title insurance  policy in accordance with the provisions
          of Section 6.1(d) hereof;

               (viii)  the  federal  income  tax  certification  in the  form of
          Exhibit  "H"  attached  hereto and made a part hereof  executed  under
          penalty of perjury by the Real Estate Sellers; and

               (ix) a  certificate  executed  by the  Sellers  representing  and
          warranting  to  the  Buyer  that  each  of  the   representations  and
          warranties  of Sellers in this  Agreement was accurate in all respects
          as of the date of this Agreement and is accurate in all respects as of
          the Closing Date as if made on the Closing Date.


                                     - 3 -


         (b) against  performance by the Sellers of their obligations under this
Section 1.6, the Buyer shall deliver to or for the Sellers:

               (i) the initial  portion of the Share  Purchase  Price payable to
          the Stock  Seller in  accordance  with the  provisions  of Section 1.4
          hereof;

               (ii) the Promissory Note executed by the Buyer;

               (iii) the cash portion of the Real Estate  Purchase Price payable
          to the Real Estate Sellers;

               (iv) the  Janie  D'Addio  Consulting  Agreement  executed  by the
          Company and guaranteed by the Buyer;

               (v) the Salvatore D'Addio  Consulting  Agreement  executed by the
          Company and guaranteed by the Buyer;

               (vi) the Sales  Representative  Agreement executed by the Company
          and guaranteed by the Buyer; and

               (vii)  a  certificate  executed  by the  Buyer  representing  and
          warranting  to  the  Sellers  that  each  of the  representations  and
          warranties of the Buyer in this Agreement was accurate in all respects
          as of date of this Agreement and is accurate in all respects as of the
          Closing Date as if made on the Closing Date;

         (c)  Simultaneously,  upon the Closing,  the Real Estate  Sellers shall
deliver to or for the Buyer  their  assignment  of the lease of the Real  Estate
between them as landlord and the Company as tenant (hereinafter sometimes called
the "Real Estate Lease") executed by the Real Estate Sellers and the Buyer shall
deliver to or for the Real Estate Sellers its  assumption of the  obligations of
the landlord thereunder, executed by the Buyer.

         (d) Simultaneously, upon the Closing, the Stock Seller shall deliver to
the  Company  her  termination  of the line of credit  and any other  commitment
previously  made by the Stock  Seller to advance  funds to or for the benefit of
the Company.

         SECTION 1.7 APPORTIONMENT. All real estate taxes and assessments on the
Real Estate and water and sewer  rentals  therefor not paid by the Company under
the Real Estate  Lease,  together  with rentals and other charges under the Real
Estate Lease,  shall be apportioned  between the Buyer, on the one hand, and the
Real Estate  Sellers,  on the other hand, as of the end of the Closing Date on a
PER DIEM basis.  If bills for real estate taxes on the Real Estate have not been
issued as of the  Closing,  and if the amount of such taxes for the then current
tax fiscal year is not then known, the  apportionment of real estate taxes shall
be made at the  Closing  on the basis of the prior  year's  real  estate  taxes,
subject,  however, to adjustment following the Closing once such bills have been
issued.  Any  credit  due to the Buyer  pursuant  to this  Section  1.7 shall be
applied as a credit to the


                                     - 4 -



Real  Estate  Purchase  Price  hereunder;  and any credit due to the Real Estate
Sellers  pursuant  to this  Section 1.7 shall be paid by the Buyer to or for the
Real Estate  Sellers at the  Closing as an addition to the Real Estate  Purchase
Price.

         SECTION 1.8 TRANSFER TAXES AND OTHER COSTS.  The Buyer shall pay at the
Closing any and all costs and expenses for the  appraisal  and the survey of the
Real  Estate,  as  well  as  any  mortgagee's  policy  of  title  insurance,  as
contemplated by this Agreement. The Real Estate Sellers shall pay at the Closing
any and all costs and expenses for title  examination and insurance  (other than
any  mortgagee's  policy  of  title  insurance),  real  estate  transfer  taxes,
recordation  and  documentary  stamp and other fees incurred from, out of, or in
connection  with the  conveyance  of the Real Estate,  as  contemplated  by this
Agreement.

                                   ARTICLE II

                                   DEFINITIONS

                  For the purposes of this  Agreement,  the following terms have
the meanings specified or referred to in this Article II:

                  "Affiliate"  means a Related  Person with  respect to a Person
other than an individual.

                  "APPLICABLE  CONTRACT"  means any Contract (a) under which the
         Company has or may acquire any rights,  (b) under which the Company has
         or may become  subject to any  obligation  or liability or (c) by which
         the  Company or any of the assets  owned or used by it,  including  the
         Real Estate, is or may become bound.

                  "BALANCE SHEET" means the balance sheet  constituting  part of
         the  financial  statements  of the Company as of October 31, 2000,  and
         referred to in Section 3.1(d) hereof.

                  "BEST EFFORTS" mean the efforts that a prudent Person desirous
         of achieving a result would use in similar circumstances to ensure that
         such result is achieved as expeditiously as possible.

                  "BREACH" means that a "Breach" of a representation,  warranty,
         covenant,  obligation  or  other  provision  of this  Agreement  or any
         instrument  delivered pursuant to this Agreement will be deemed to have
         occurred if there is or has been (a) any inaccuracy in or breach of, or
         any failure to perform or comply with, such  representation,  warranty,
         covenant,  obligation  or other  provision,  or (b) any  claim  (by any
         Person) or other occurrence or circumstance that is or was inconsistent
         with such  representation,  warranty,  covenant,  obligation,  or other
         provision,  and the term "Breach"  means any such  inaccuracy,  breach,
         failure, claim, occurrence or circumstance.


                                     - 5 -




                  "BUILDING" means the building and other  improvements  erected
on the Land.

                  "BUYER" means American Locker Group, Incorporated,  a Delaware
         corporation, its successors and permitted assigns hereunder.

                  "CLOSING" means the term as defined in Section 1.5 hereof.

                  "CLOSING DATE" means the date and time as of which the Closing
actually takes place.

                  "COMPANY" means B.L.L. Corporation,  a Texas corporation,  its
successors and assigns.

                  "COMPANY SHARES" mean all the issued and outstanding shares of
         capital stock of the Company referred to in the Recitals hereinabove.

                  "CONSENT" means any approval, consent, ratification, waiver or
         other authorization (including any Governmental Authorization).

                  "CONSULTING  AGREEMENTS" mean collectively,  the Janie D'Addio
         Consulting Agreement and the Salvatore D'Addio Consulting Agreement.

                  "CONTEMPLATED  TRANSACTIONS"  means  all of  the  transactions
         contemplated by this  Agreement,  including (a) the sale of the Company
         Shares  by the  Stock  Seller  to the  Buyer;  (b) the sale of the Real
         Estate by the Real  Estate  Sellers  to the Buyer;  (c) the  execution,
         delivery,  and  performance  of the  Consulting  Agreements,  the Sales
         Representative  Agreement, and the Promissory Note; (d) the performance
         by the  Buyer  and  the  Sellers  of  their  respective  covenants  and
         obligations under this Agreement;  and (e) the Buyer's  acquisition and
         ownership  of the  Company  Shares and  exercise  of  control  over the
         Company.

                  "CONTRACT" means any agreement, contract, obligation, promise,
         or  undertaking  (whether  written  or oral and  whether  expressed  or
         implied) that is legally binding.

                  "DAMAGES" means the term as defined in Section 8.2 hereof.

                  "DISCLOSURE  SCHEDULE" means the Disclosure Schedule delivered
         by the Sellers to the Buyer as of the date hereof.

                  "ENCUMBRANCE"  means any  charge,  claim,  community  property
         interest, condition, equitable interest, lien, option, pledge, security
         interest, right of first refusal, or restriction of any kind, including
         any  restriction  on use,  voting,  transfer,  receipt  of  income,  or
         exercise of any other attribute of ownership.

                                     - 6 -



                  "ENVIRONMENT"  means soil, land surface or subsurface  strata,
         surface waters  (including  navigable  waters,  ocean waters,  streams,
         ponds,  drainage basins,  and wetlands,  ground waters,  drinking water
         supply, stream sediments, ambient air (including indoor air), plant and
         animal life, and any other environmental medium or natural resource.

                  "ENVIRONMENTAL,  HEALTH AND SAFETY LIABILITIES" mean any cost,
         damages,  expense,  liability,   obligation,  or  other  responsibility
         arising  from or under  Environmental  Law or  Occupational  Safety and
         Health Law and  consisting  of or  relating  to (a) any  environmental,
         health, or safety matters or conditions  (including on-site or off-site
         contamination,  occupational  safety  and  health,  and  regulation  of
         chemical  substances or  products);  (b) fines,  penalties,  judgments,
         awards,  settlements,  legal or  administrative  proceedings,  damages,
         losses,  claims,  demands and  response,  investigative,  remedial,  or
         inspection  costs  and  expenses  arising  under  Environmental  Law or
         Occupational Safety and Health Law; (c) financial  responsibility under
         Environmental  Law or  Occupational  Safety and Health Law for clean-up
         costs or  corrective  action,  including any  investigation,  clean-up,
         removal,   containment,   or  other   remediation  or  response  action
         (hereinafter   sometimes  called  "Clean-up")  required  by  applicable
         Environmental Law or Occupational Safety and Health Law (whether or not
         such Clean-up has been required or requested by any  Governmental  Body
         or any other Person) and for any natural resource  damages;  or (d) any
         other  compliance,  corrective,  investigative,  or  remedial  measures
         required under Environmental Law or Occupational Safety and Health Law.
         The terms  "removal,"  "remedial,"  and "response  action"  include the
         types  of  activities  covered  by  the  United  States   Comprehensive
         Environmental Response, Compensation, and Liability Act.

                  "ENVIRONMENTAL  LAW" means any Legal Requirement that requires
         or relates to: (a) advising appropriate authorities, employees, and the
         public of  intended  or actual  releases  of  pollutants  or  hazardous
         substances  or  materials,  violations  of discharge  limits,  or other
         prohibitions  and of the  commencement of activities,  such as resource
         extraction or construction,  that could have significant  impact on the
         Environment;  (b)  preventing  or  reducing  to  acceptable  levels the
         release of  pollutants or hazardous  substances  or materials  into the
         Environment;  (c) reducing the quantities,  preventing the release,  or
         minimizing the hazardous  characteristics of wastes that are generated;
         (d) assuring that products are designed, formulated,  packaged and used
         so that they do not present  unreasonable  risks to human health or the
         Environment  when  used  or  disposed  of;  (e)  protecting  resources,
         species, or ecological amenities; (f) reducing to acceptable levels the
         risks  inherent  in  the   transportation   of  hazardous   substances,
         pollutants,  oil, or other potentially harmful substances; (g) cleaning
         up  pollutants  that  have  been  released,  preventing  the  threat of
         release,  or paying the costs of such  clean-up or  prevention;  or (h)
         making  responsible  parties pay private parties or groups of them, for
         damages  done  to  their  health  or  the  Environment,  or  permitting
         self-appointed  representatives  of the public  interest to recover for
         injuries done to public assets.


                                     - 7 -



                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974 or any successor law, and regulations and rules issued pursuant to
         that Act or any successor law.

                  "FACILITIES"  mean  any  real  property,  leasehold,  or other
         interests currently or formerly owned by the Company and any buildings,
         plants,  structures, or equipment (including motor vehicles, tank cars,
         and  rolling  stock)  currently  or  formerly  owned or operated by the
         Company.

                  "GAAP"  means  generally  accepted  United  States  accounting
         principles,  applied on a basis  consistent with the basis on which the
         Balance Sheet and the other financial statements referred to in Section
         3.1(d) were prepared.

                  "GOVERNMENTAL  AUTHORIZATION"  means  any  approval,  consent,
         license, permit, waiver, or other authorization issued, granted, given,
         or  otherwise   made  available  by  or  under  the  authority  of  any
         Governmental Body or pursuant to any Legal Requirement.

                  "GOVERNMENTAL BODY" means any (a) nation, state, county, city,
         town,  village,  district,  or other  jurisdiction  of any nature;  (b)
         federal,  state, local,  municipal,  foreign, or other government;  (c)
         governmental or  quasi-governmental  authority of any nature (including
         any governmental agency,  branch,  department,  official, or entity and
         any court or other tribunal); (d) multi-national  organization or body;
         or (e) body exercising,  or entitled to exercise,  any  administrative,
         executive,  judicial,   legislative,   police,  regulatory,  or  taxing
         authority or power of any nature.

                  "HAZARDOUS  ACTIVITY"  means  the  distribution,   generation,
         handling, importing, manufacturing, processing, production, refinement,
         Release,   storage,   transfer,   transportation,   treatment,  or  use
         (including  any  withdrawal or other use of  groundwater)  of Hazardous
         Materials in, on, under,  about, or from the Facilities,  including the
         Real Estate,  or any part thereof into the  Environment,  and any other
         act, business,  operation,  or thing that increases the danger, or risk
         of danger, or poses an unreasonable risk of harm to persons or property
         on or off the Facilities, including the Real Estate, or that may affect
         the value of the Facilities, including the Real Estate, or the Company.

                  "HAZARDOUS  MATERIALS"  mean any waste or other substance that
         is  listed,  defined,   designated,  or  classified  as,  or  otherwise
         determined to be, hazardous,  radioactive, or toxic or a pollutant or a
         contaminant under or pursuant to any Environmental  Law,  including any
         admixture or solution thereof, and specifically including petroleum and
         all derivatives thereof or synthetic  substitutes therefor and asbestos
         or asbestos-containing materials.

                  "INDEMNIFIED  PERSONS" mean the term as defined in Section 8.2
hereof.


                                     - 8 -




                  "INTELLECTUAL  PROPERTY  ASSETS"  mean the term as  defined in
Section 3.1(w) hereof.

                  "IRC" means the Internal Revenue Code of 1986 or any successor
         law, and regulations issued by the IRS pursuant to the Internal Revenue
         Code or any successor law.

                  "IRS" means the United States Internal  Revenue Service or any
         successor  agency  and,  to the  extent  relevant,  the  United  States
         Department of the Treasury.

                  "JANIE  D'ADDIO  CONSULTING  AGREEMENT"  means the  Consulting
         Agreement  dated the Closing Date between the Company and Janie D'Addio
         in substantially the form set forth in Exhibit "E" hereto.

                  "KNOWLEDGE"  means that an  individual  will be deemed to have
         "Knowledge" of a particular fact or other matter if (a) such individual
         is  actually  aware of such  fact or  other  matter;  or (b) a  prudent
         individual  could be expected to discover or otherwise  become aware of
         such fact or other  matter in the  course of  conducting  a  reasonably
         comprehensive  investigation  conceiving  the existence of such fact or
         other  matter.  A Person (other than an  individual)  will be deemed to
         have "Knowledge" of a particular fact or other matter if any individual
         who is serving, or who has at any time served, as a director,  officer,
         partner,  executor,  or  trustee  of  such  Person  (or in any  similar
         capacity)  has,  or at any time  had,  knowledge  of such fact or other
         matter.

                  "LAND"  means the certain  piece or parcel of land  located in
         Tarrant  County,   Texas,  as  more   particularly   described  in  the
         Description of the Land set forth in Exhibit "A" hereto.

                  "LEGAL   REQUIREMENT"   means  any  federal,   state,   local,
         municipal,   foreign,    international,    multinational,    or   other
         administrative order, constitution, law, ordinance, principle of common
         law, regulation, statute, or treaty.

                  "OCCUPATIONAL   SAFETY  AND   HEALTH   LAW"  means  any  Legal
         Requirement  designed to provide safe and healthful working  conditions
         and to reduce occupational safety and health hazards,  and any program,
         whether   governmental  or  private  (including  those  promulgated  or
         sponsored by industry associations and insurance  companies),  designed
         to provide safe and healthful working conditions.

                  "ORDER"  means  any  award,  decision,  injunction,  judgment,
         order, ruling,  subpoena, or verdict entered, issued, made, or rendered
         by any court,  administrative  agency, or other Governmental Body or by
         any arbitrator.

                  "ORDINARY  COURSE OF BUSINESS" means that an action taken by a
         Person  will be deemed to have been  taken in the  "Ordinary  Course of
         Business"  only  if:


                                     - 9 -



        (a)  such  action  is  consistent  with  the past
         practices  of such  Person and is taken in the  ordinary  course of the
         normal  day-to-day  operations  of such Person;  (b) such action is not
         required to be  authorized by the board of directors of such Person (or
         by any Person or group of Persons  exercising similar  authority);  and
         (c)  such  action  is  similar  in  nature  and  magnitude  to  actions
         customarily taken,  without any authorization by the board of directors
         (or by any Person or group of Persons exercising similar authority), in
         the  ordinary  course  of the  normal  day-to-day  operations  of other
         Persons that are in the same line of business as such Person.

                  "ORGANIZATIONAL DOCUMENTS" mean, in the case of a corporation,
         the articles or certificate of incorporation and the bylaws thereof and
         any amendment to any of the foregoing.

                  "PERSON"  means any  individual,  corporation  (including  any
         non-profit  corporation),   general  or  limited  partnership,  limited
         liability  company,   joint  venture,   estate,   trust,   association,
         organization, labor union, or other entity or Governmental Body.

                  "PLAN" means the term as defined in Section 3.1(n) hereof.

                  "PROCEEDING" means any action,  arbitration,  audit,  hearing,
         investigation,   litigation,   or  suit   (whether   civil,   criminal,
         administrative,   investigative,   or  informal)  commenced,   brought,
         conducted,  or  heard  by  or  before,  or  otherwise  involving,   any
         Governmental Body or arbitrator.

                  "PROMISSORY  NOTE" means the Promissory Note dated the Closing
         Date issued by the Buyer to the Stock Seller in substantially  the form
         set forth in Exhibit "C" hereto.

                  "REAL   ESTATE"   means  the  Land,   the   Building  and  all
appurtenances.

                  "REAL  ESTATE  LEASE"  means the  Agreement  dated May 1, 1995
         between Janie D'Addio, lessor, and Security Manufacturing  Corporation,
         lessee,  as amended on October 1, 1996, and further  amended on January
         1, 2001.

                  "REAL  ESTATE  SELLERS"  means  Salvatore   D'Addio  and  Jane
         D'Addio,  husband and wife,  as  referred to on the first page  hereof,
         their successors and permitted assigns.

                  "RELATED   PERSON"   means  with   respect  to  a   particular
individual:

                    (a) each other member of such individual's Family;

                    (b) any Person that is directly or indirectly  controlled by
               such  individual  or one or more  members  of  such  individual's
               Family;




                                     - 10 -


                    (c) any Person in which such  individual  or members of such
               individual's  Family hold  (individually  or in the  aggregate) a
               Material Interest; and

                    (d) any Person with respect to which such  individual or one
               or more members of such individual's Family serves as a director,
               officer, partner, executor, or trustee (in a similar capacity);

               and means  with  respect  to a  specified  Person  other  than an
               individual:

                    (a) any Person that  directly  or  indirectly  controls,  is
               directly  or  indirectly   controlled   by,  or  is  directly  or
               indirectly under common control with such specified Person;

                    (b) any  Person  that  holds  a  Material  Interest  in such
               specified Person;

                    (c) each Person that serves as a director, officer, partner,
               executor,  or trustee of such  specified  Person (or in a similar
               capacity);

                    (d) any  Person  in  which  such  specified  Person  holds a
               Material Interest;

                    (e) any Person with respect to which such  specified  Person
               serves  as a  general  partner  or a  trustee  (or  in a  similar
               capacity); and

                    (f) any Related Person of any individual described in clause
               (b) or (c).

         For  purposes of this  definition,  (a) the  "Family" of an  individual
         includes (i) the individual,  (ii) the  individual's  spouse and former
         spouses,  (iii)  any  other  natural  person  who  is  related  to  the
         individual or the  individual's  spouse within the second  degree,  and
         (iv) any other natural person who resides with such individual, and (b)
         "Material Interest" means direct or indirect  beneficial  ownership (as
         defined in Rule 13d-3  under the  Securities  Exchange  Act of 1934) of
         voting  securities or other voting interests  representing at least ten
         percent  (10%) of the  outstanding  voting  power of a Person or equity
         securities or other equity interests  representing at least twenty-five
         percent (25%) of the outstanding  equity securities or equity interests
         in a Person.

                  "RELEASE" means any spilling, leaking, emitting,  discharging,
         depositing,  escaping,  leaching,  dumping, or other releasing into the
         Environment, whether intentional or unintentional.



                                     - 11 -


                  "REPRESENTATIVE"  means, with respect to a particular  Person,
         any director,  officer, employee, agent, consultant,  advisor, or other
         representative  of such Person,  including legal counsel,  accountants,
         and financial advisors.

                  "SALES    REPRESENTATIVE    AGREEMENT"    means    the   Sales
         Representative Agreement dated the Closing Date between the Company and
         Janie  D'Addio  in  substantially  the form set  forth in  Exhibit  "G"
         hereto.

                  "SALVATORE D'ADDIO CONSULTING  AGREEMENT" means the Consulting
         Agreement  dated the Closing  Date  between  the Company and  Salvatore
         D'Addio in substantially the form set forth in Exhibit "F" hereto.

                  "SECURITIES  ACT"  means  the  Securities  Act of  1933 or any
         successor law, and regulations and rules issued pursuant to that Act or
         any successor law.

                  "SELLERS" mean, collectively,  the Stock Seller  and  the Real
         Estate Sellers.

                  "SELLERS' CLOSING DOCUMENTS" mean, collectively, the documents
         to be  delivered by the Sellers at the Closing in  accordance  with the
         provisions of Section 1.6 hereof.

                  "SELLERS' RELEASE" means the Release dated the Closing Date by
         the Sellers in substantially the form set forth in Exhibit "D" hereto.

                  "STOCK  SELLER"  means  Janie  D'Addio,   her  successors  and
permitted assigns.

                  "SUBSIDIARY"  means with  respect  to any Person  (hereinafter
         sometimes called the "Owner"), any corporation or other Person of which
         securities or other  interests  having the power to elect a majority of
         that  corporation's  or other  Person's  board of  directors or similar
         governing  body,  or otherwise  having the power to direct the business
         and policies of that corporation or other Person (other than securities
         or other  interests  having  such  power only upon the  happening  of a
         contingency that has not occurred) are held by the Owner or one or more
         of its  Subsidiaries;  when  used  without  reference  to a  particular
         Person, "Subsidiary" means a Subsidiary of the Company.

                  "TAX" means any tax (including  any income tax,  capital gains
         tax, value-added tax, sales tax, property tax, gift tax or estate tax),
         levy,   assessment,   tariff,   duty   (including  any  customs  duty),
         deficiency,  or other fee, and any related charge or amount  (including
         any fine, penalty, interest, or addition to tax), imposed, assessed, or
         collected by or under the authority of any Governmental Body or payable
         pursuant to any tax-sharing agreement or any other Contract relating to
         the sharing or payment of any such tax, levy, assessment, tariff, duty,
         deficiency, or fee.


                                     - 12 -



                  "TAX  RETURN"  means any  return  (including  any  information
         return), report, statement,  schedule,  notice, form, or other document
         or information filed with or submitted to, or required to be filed with
         or  submitted  to,  any  Governmental   Body  in  connection  with  the
         determination,  assessment,  collection,  or  payment  of any tax or in
         connection with the administration, implementation or enforcement of or
         compliance with any Legal Requirement relating to any Tax.

                  "THREAT  OF  RELEASE"  means  a  substantial  likelihood  of a
         Release that may require action in order to prevent or mitigate  damage
         to the Environment that may result from such Release.

                  "THREATENED" means that a claim, Proceeding,  dispute, action,
         or other matter will be deemed to have been made (orally or in writing)
         or any notice has been given  (orally or in  writing),  or if any other
         event has occurred or any other circumstances  exist, that would lead a
         prudent  Person to  conclude  that such a claim,  Proceeding,  dispute,
         action, or other matter is likely to be asserted,  commenced, taken, or
         otherwise pursued in the future.

                  "TITLE  COMPANY"  means  the  title  insurance   company  duly
         licensed  in the State of Texas to engage in the  business  of insuring
         titles  to real  estate,  designated  by the Real  Estate  Sellers  and
         acceptable to the Buyer.

                  "TITLE EXCEPTIONS" means the title exceptions set forth in the
         Schedule of Title Exceptions set forth in Exhibit "B" hereto.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1    REPRESENTATIONS AND WARRANTIES OF SELLERS.  The Sellers,
jointly and severally, represent and warrant to the Buyer as follows:

                  (a)  ORGANIZATION   AND  GOOD  STANDING.   The  Company  is  a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Texas, the jurisdiction of its  incorporation,
         with full corporate power and authority to conduct it business as it is
         now  being   conducted   under  the  name  of  Security   Manufacturing
         Corporation,  to own or use the  properties and assets that it purports
         to own or use, and to perform all its obligations  under the Applicable
         Contracts.  The Company is duly  qualified  to do business as a foreign
         corporation  and is in good  standing  under the laws of each state and
         other jurisdiction set forth in Part 3.1(a) of the Disclosure Schedule;
         and there exists no other state or other  jurisdiction  in which either
         the ownership or use of the properties  owned or used by the Company or
         the  nature  of  the   activities   conducted   by  it  requires   such
         qualification.  The Sellers  have  delivered to the Buyer copies of the
         Organizational Documents of the Company, as currently in effect.


                                     - 13 -


                  (b)  AUTHORITY; NO CONFLICT.


                           (i) This Agreement  constitutes the legal, valid, and
                  binding obligation of each of the Sellers, enforceable against
                  the Sellers in accordance  with its terms.  Upon the execution
                  and  delivery by each of the Sellers of the  Sellers'  Closing
                  Documents,  the Sellers' Closing Documents will constitute the
                  legal,  valid and binding  obligations of each of the Sellers,
                  enforceable against each of the Sellers who is a party thereto
                  in accordance with their respective terms. Each of the Sellers
                  has the absolute and unrestricted right, power,  authority and
                  capacity  to  execute  and  deliver  this  Agreement  and  the
                  Sellers'  Closing  Documents to which he or she is a party and
                  to perform his or her obligations under this Agreement and the
                  Sellers' Closing Documents to which he or she is a party.

                           (ii)  Except as set forth in Part  3.1(b)(ii)  of the
                  Disclosure  Schedule,  neither the  execution  and delivery of
                  this Agreement nor the  consummation  or performance of any of
                  the  Contemplated  Transactions  by the Sellers or the Company
                  will,  directly or indirectly (with or without notice or lapse
                  of time):

                                    (A) contravene,  conflict with, or result in
                           a violation of any  provision  of the  Organizational
                           Documents of the Company or any resolution adopted by
                           the board of  directors  or the  stockholders  of the
                           Company;

                                    (B) contravene,  conflict with, or result in
                           a  violation  of,  or give any  Governmental  Body or
                           other  Person  the  right  to  challenge  any  of the
                           Contemplated  Transactions  or to exercise any remedy
                           or obtain any relief under, any Legal  Requirement or
                           any Order to which the Company or any of the Sellers,
                           or any of the  assets  owned or used by the  Company,
                           including the Real Estate, may be subject;

                                    (C) contravene,  conflict with, or result in
                           a violation of any of the terms or  requirements  of,
                           or give any  Governmental  Body the right to  revoke,
                           withdraw,  suspend, cancel, terminate, or modify, any
                           Governmental   Authorization  that  is  held  by  the
                           Company or that otherwise relates to the business of,
                           or any of the  assets  owned or used by the  Company,
                           including the Real Estate.


                                     - 14 -



                                    (D)     cause the Company to  become subject
                           to, or become liable for the payment of, any Tax;

                                    (E)     cause any of the assets owned by the
                           Company to be   reassessed or revalued by  any taxing
                           authority or other Governmental Body;

                                    (F) contravene,  conflict with, or result in
                           a violation  or breach of any  provision  of, or give
                           any Person the right to declare a default or exercise
                           any remedy under,  or to  accelerate  the maturity or
                           performance of, or to cancel,  terminate,  or modify,
                           any Applicable Contract; or

                                    (G) result in the  imposition or creation of
                           any  Encumbrance  upon, or with respect to any of the
                           assets  owned or used by the Company,  including  the
                           Real Estate.

                  Except  as set  forth  in Part  3.1(b)(ii)  of the  Disclosure
                  Schedule,  none of the  Sellers  or the  Company is or will be
                  required to give any notice to or obtain any Consent  from any
                  Person in  connection  with the execution and delivery of this
                  Agreement or the  consummation  or  performance  of any of the
                  Contemplated Transactions.

                           (iii) The Stock  Seller is acquiring  the  Promissory
                  Note  for  her  own  account,  and  not  with  a  view  to its
                  distribution  within  the  meaning  of  Section  2(11)  of the
                  Securities  Act. The Stock Seller is an "accredited  investor"
                  as such term is defined in Rule  501(a)  under the  Securities
                  Act.

                  (c)  CAPITALIZATION.  The authorized  equity securities of the
         Company  consist of one  hundred  thousand  (100,000)  shares of common
         stock, par value One Dollar ($1.00) per share, of which eleven thousand
         (11,000)  shares are issued and  outstanding and constitute the Company
         Shares.  The Stock Seller is and will be on the Closing Date the record
         and beneficial  owner and holder of the Company Shares,  free and clear
         of all  Encumbrances.  Except  as  set  forth  in  Part  3.1(c)  of the
         Disclosure  Schedule,  no legend or other  reference  to any  purported
         Encumbrance appears upon any certificate representing equity securities
         of the Company. All of the outstanding equity securities of the Company
         have been duly  authorized  and  validly  issued and are fully paid and
         nonassessable.  Except  for  this  Agreement,  there  are no  Contracts
         relating to the issuance, sale, or transfer of any equity securities or
         other  securities  of  the  Company.  None  of the  outstanding  equity
         securities  or other  securities of the Company was issued in violation
         of the Securities Act or any other Legal Requirement.  The Company does
         not  own,  or does  not  have  any  Contract  to  acquire,  any  equity
         securities or other  securities of any Person or any direct or indirect
         equity or ownership interest in any other business.

                  (d)  FINANCIAL STATEMENTS.  The Stock Seller has  delivered to
         the Buyer (a) audited balance sheets of the Company as of October 31 in
         each of the years 1998 through 2000, and  the   related   statements of
         income, changes in

                                     - 15 -



         stockholders'  equity, and cash flow for each of the fiscal years then
         ended,  together with the report thereon of Powell, Duvall & Parr, LLP
         and  its  predecessors,   independent  certified  public  accountants,
         including  in each case the notes  thereto  (collectively,  "Financial
         Statements").  The Financial  Statements,  including the notes, fairly
         present the financial condition and the results of operations, changes
         in  stockholders'  equity,  and  cash  flow of the  Company  as at the
         respective  dates of and for the periods  referred to in the Financial
         Statements,  all in accordance  with GAAP;  the  Financial  Statements
         reflect  the  consistent  application  of such  accounting  principles
         throughout the periods  involved  (except as disclosed in the notes to
         such  financial  statements).  No financial  statements  of any Person
         other than the  Company  are  required  by GAAP to be  included in the
         financial   statements   of  the  Company,   including  the  Financial
         Statements.

                  (e)  BOOKS AND RECORDS.  The   books of account, minute books,
         stock record books, and other business  records  of the Company, all of
         which have been made available  to  the Buyer, are complete and correct
         and have been maintained in accordance with  sound  business practices,
         including the   maintenance of an adequate system of internal controls.
         The minute books of the Company contain  accurate  and complete records
         of all   meetings held  of,  and  corporate  action   taken   by,   the
         stockholders, the Board of Directors,   and   committees   of the Board
         of Directors of  the  Company, and no meeting of any such stockholders,
         Board of Directors, or   committee has been held for which minutes have
         not been prepared and are not contained in such minute books.  At   the
         Closing, all  of  those  books and records will be in the possession of
         the Company.

                  (f)  TITLE TO PROPERTIES; ENCUMBRANCES.  Part  3.1(f) of   the
         Disclosure Schedule contains a complete and accurate list  of all  real
         property,   real  property  and other  leaseholds, or  other  interests
         therein owned by the Company, including the Real Estate.  The   Sellers
         have delivered or made available to the Buyer copies of the   deeds and
         other instruments (as recorded) by which the Company or the Real Estate
         Sellers acquired such  real  property  and interests, and copies of all
         title insurance policies, opinions, abstracts,   and   surveys   in the
         possession of the Sellers or the Company and relating to such  property
         or interests.  The Company owns (with good and marketable title  in the
         case of real property) all the properties  and   assets (whether  real,
         personal, or mixed and whether   tangible   or intangible)  that   they
         purport to own, including all of the properties and assets reflected in
         the Balance Sheet (except for assets   held   under capitalized  leases
         disclosed in Part 3.1(f)   of   the   Disclosure Schedule  and personal
         property including inventory  sold  since the date of the Balance Sheet
         in the Ordinary Course of Business) and   all   of   the properties and
         assets purchased or otherwise acquired   by the Company  since the date
         of the Balance Sheet (except  for personal  property  acquired and sold
         since the date of the Balance Sheet in the Ordinary Course  of Business
         and consistent  with  past  practice, which  subsequently  purchased or
         acquired   properties  and assets (other than  inventory and short-term
         investments) are listed in Part 3.1(f) of the Disclosure Schedule.  All
         material properties and assets reflected in the Balance Sheet are  free
         and clear of all Encumbrances and are not,


                                     - 16 -


         in the case of real  property,  subject to any rights of way,  building
         use restrictions,   exceptions, variances, reservations, or limitations
         of any nature, except,  with respect to all such properties and assets,
         (A)  the  security   interest   securing  the  specific   liability  or
         obligation disclosed  in Part 3.1(f) of the Disclosure  Schedule,  with
         respect to  which no default  (or event  that,  with notice or lapse of
         time or  both, would  constitute a default)  exists,  and (B) liens for
         current taxes not yet due.

                  (g) TITLE TO THE REAL ESTATE;  ENCUMBRANCES.  The Real  Estate
         Sellers  own (with good and marketable title) the Real Estate, free and
         clear of all  Encumbrances  except for the Real Estate Lease, liens for
         current taxes  not yet due, the Title  Exceptions and other zoning laws
         and other land use  restrictions  that do not  impair  the  present or
         anticipated use of  the Real Estate.  The Real Estate is not subject to
         any rights of way,  building use restrictions,  exceptions,  variances,
         reservations  or   limitations  of any nature  except as referred to in
         this  Section  3.1(g) or  disclosed  in Part 3.1(g) of the  Disclosure
         Schedule.  All buildings,   plants and structures  constituting part of
         the Real  Estate,  including   the  Building,  lie  wholly  within  the
         boundaries of the Land constituting part of the Real Estate and do not
         encroach upon the property of,  or otherwise conflict with the property
         rights of, any other Person.

                  (h) CONDITION AND  SUFFICIENCY  OF ASSETS.  The Facilities of,
         or  currently  used by, the  Company,  including  the  Building and any
         other buildings,  plants and structures  constituting part of the Real
         Estate,  are structurally  sound, are in good  operating  condition and
         repair,  and are adequate for the use to which  they are being put; and
         none of the Building or of such other Facilities  of, or currently used
         by,  the  Company  is in need of  maintenance  or   repairs  except for
         ordinary  routine  maintenance  and repairs  that are  not  material in
         nature or cost.  The Facilities of, or currently used  by, the Company,
         including the Building and any other buildings,  plants  and structures
         constituting part of the Real Estate, are sufficient for  the continued
         conduct  by the  Company  of  its  businesses  after  the   Closing  in
         substantially the same manner as conducted prior to the Closing.

                  (i) ACCOUNTS  RECEIVABLE.  All  accounts  receivable   of  the
         Company  that are reflected on the Balance  Sheet or on the  accounting
         records  of  the   Company   as  of  the  Closing   Date   (hereinafter
         collectively  sometimes   called  the  "Accounts  Receivable"  in  this
         Section 3.1(i)) represent  or will represent valid obligations  arising
         from  sales  actually   made  or  services  actually  performed  in the
         Ordinary  Course of  Business.  Unless paid prior to the Closing  Date,
         the  Accounts  Receivable are or will be as of the Closing Date current
         and  collectible  net of the  reserves shown on the Balance Sheet or on
         the  accounting  records of the  Company as of the Closing  Date (which
         reserves are adequate and  calculated  consistent   with past  practice
         and,  in the case of the  reserve  as of the  Closing  Date,  will  not
         represent a greater percentage as of the Closing Date than  the reserve
         reflected in the Balance Sheet represented of the Accounts   Receivable
         reflected  therein and will not represent a material adverse  change in
         the  composition  of such  Accounts  Receivable  in terms  of   aging).
         Subject to such reserves,  each of


                                     - 17 -



         the  Accounts  Receivable  either  has  or will be  collected  in full,
         without any  set-off,  within one hundred  twenty (120) days  after the
         day on which it first  becomes due and  payable.  There is no  contest,
         claim, or right of set-off,  other than returns in the Ordinary  Course
         of  Business,  under any  Contract  with any  obligor  of  an  Accounts
         Receivable  relating  to the  amount  or   validity  of  such  Accounts
         Receivable. Part 3.1(i) of the Disclosure  Schedule contains a complete
         and  accurate  list of all Accounts  Receivable   as of the date of the
         Balance  Sheet,  which  list sets  forth  the  aging of  such  Accounts
         Receivable.

                  (j)  INVENTORY.  All  inventory  of  the  Company,  whether or
         not reflected on the Balance Sheet, consists of a  quality and quantity
         usable and  salable in the  Ordinary  Course of   Business,  except for
         obsolete items and items of below-standard  quality,  all of which have
         been  written  off or  written  down to  net  realizable  value  in the
         Balance  Sheet or on the  accounting   records of the Company as of the
         Closing Date, as the case may be. All  inventories not written off have
         been priced at the lower of cost or  net realizable value on an average
         cost basis.  The  quantities  of  each item of  inventory  (whether raw
         materials,   work-in-process, or finished goods) are not excessive, but
         are reasonable in the present circumstances of the Company.

                  (k) NO UNDISCLOSED LIABILITIES. The Company has no liabilities
         or  obligations  of  any nature  (whether  known or unknown and whether
         absolute, accrued,  contingent, or otherwise) except for liabilities or
         obligations  reflected  or  reserved  against in the Balance  Sheet and
         current liabilities  incurred  in the Ordinary Course of Business since
         the date of the Balance Sheet.

                  (l) TAXES.

                           (i) The  Company has filed or caused to be filed on a
                  timely basis all Tax Returns  that are or were  required to be
                  filed by or with respect to the Company pursuant to applicable
                  Legal  Requirements.  The Stock  Seller has  delivered  to the
                  Buyer  copies of, and Part 3.1(l) of the  Disclosure  Schedule
                  contains a complete and accurate list of, all such Tax Returns
                  (excluding  payroll tax returns and sales tax  returns)  filed
                  since  October  31,  1998.  The  Company  has  paid,  or  made
                  provision  for the payment of, all Taxes that have or may have
                  become due  pursuant  to those Tax  Returns or  otherwise,  or
                  pursuant  to any  assessment  received  by the  Sellers or the
                  Company.

                           (ii) The United  States  federal and state income Tax
                  Returns of the Company subject to such Taxes are closed by the
                  applicable  statute  of  limitations  for  all  taxable  years
                  through  October  31,  1997.  Part  3.1(l)  of the  Disclosure
                  Schedule  contains a complete and accurate  list of all audits
                  of all such Tax Returns, including a description of the nature
                  and  outcome of each  audit.  All  deficiencies  proposed as a
                  result of such audits  have been paid,  reserved  against,  or
                  settled.  Part 3.1(l)of the Disclosure



                                     - 18 -


                  Schedule  describes  all   adjustments  to the  United  States
                  federal  income  Tax  Returns  filed  by the  Company  for all
                  taxable  years  since  October 31,  1990,  and  the  resulting
                  deficiencies proposed by the IRS.  None of the  Sellers or the
                  Company  has  given or  been   requested  to give  waivers  or
                  extensions  (or  is or  would  be  subject  to a  waiver  or
                  extension  given by any  other  Person)  of any  statute  of
                  limitations  relating   to the payment of Taxes of the Company
                  for which the Company may be liable.

                           (iii)  The  charges,   accruals,  and  reserves  with
                  respect  to Taxes on the  books of the  Company  are  adequate
                  (determined in accordance with GAAP) and are at least equal to
                  the Company's  liability  for Taxes.  There exists no proposed
                  tax assessment  against the Company except as disclosed on the
                  Balance Sheet or in Part 3.1(l) of the Disclosure Schedule. No
                  consent to the application of Section 341(f)(2) of the IRC has
                  been  filed  with  respect  to any  property  or assets  held,
                  acquired, or to be acquired by the Company. All Taxes that the
                  Company is or was required by Legal  Requirements  to withhold
                  or collect have been duly  withheld or  collected  and, to the
                  extent  required,  have been paid to the  proper  Governmental
                  Body or other Person.

                           (iv) All Tax  Returns  filed by the Company are true,
                  correct and complete.  There is no tax sharing  agreement that
                  will require any payment by the Company after the date of this
                  Agreement.  During  the  consistency  period  (as  defined  in
                  Section  338(h)(4)  of the IRC with respect to the Sale of the
                  Company  Shares to the  Buyer)  neither  the  Company  nor any
                  target  affiliate (as defined in Section  338(h)(6) of the IRC
                  with  respect to the sale of the Company  Shares to the Buyer)
                  has sold or will sell any  property  or assets to the Buyer or
                  to any member of the  affiliated  group (as defined in Section
                  338(h)(5) of the IRC) that includes the Buyer.  Part 3.1(l) of
                  the Disclosure Schedule lists all such target affiliates.

                  (m) NO  MATERIAL  ADVERSE  CHANGE.  Since   the  date  of  the
               Balance Sheet,  there has not been any material adverse change in
               the  business,  operations,   properties,  prospects,  assets  or
               condition of the Company, including the Real Estate; and no event
               has  occurred  or  circumstance  exists that may result in such a
               material adverse change except,  however,  for a decline in sales
               of the  Company  during  the  months  of  December,  January  and
               February in the Ordinary Course of Business.

                  (n)      EMPLOYEE BENEFITS.

                           (i)     As used in this Section 3.1(n), the following
                  terms have the meanings set forth below:

                                     - 19 -


                           "Company  Other  Benefit  Obligation"  means an Other
                           Benefit  Obligation owed,  adopted or followed by the
                           Company or an ERISA Affiliate of the Company.

                           "Company  Plan"  means all Plans of which the Company
                           or an ERISA Affiliate of the Company is or was a Plan
                           Sponsor,   or  to  which  the  Company  or  an  ERISA
                           Affiliate of the Company otherwise contributes or has
                           contributed,  or in  which  the  Company  or an ERISA
                           Affiliate of the Company  otherwise  participates  or
                           has  participated.  All  references  to Plans  are to
                           Company Plans unless the context requires otherwise.

                           "Company  VEBA"  means a VEBA whose  members  include
                           employees  of the Company or any ERISA  Affiliate  of
                           the Company.

                           "ERISA Affiliate" means, with respect to the Company,
                           any other  Person  that,  together  with the Company,
                           would be treated as a single  employer  under Section
                           414 of the IRC.

                           "Multi-Employer   Plan"  has  the  meaning  given  in
                           Section 3(37)(A) of ERISA.

                           "Other Benefit  Obligations"  means all  obligations,
                           arrangements,  or customary practices, whether or not
                           legally enforceable,  to provide benefits, other than
                           salary,  as compensation  for services  rendered,  to
                           present  or former  directors,  employees  or agents,
                           other than obligations,  arrangements,  and practices
                           that are Plans.  Other  Benefit  Obligations  include
                           consulting  agreements  under which the  compensation
                           paid  does not  depend  upon the  amount  of  service
                           rendered,   sabbatical  policies,  severance  payment
                           policies,  and fringe  benefits within the meaning of
                           Section 132 of the IRC.

                           "PBGC"   means   the   Pension    Benefit    Guaranty
                           Corporation, or any successor thereto.

                           "Pension  Plan"  has the  meaning  given  in  Section
                           3(2)(A) of ERISA.

                           "Plan"  has the  meaning  given  in  Section  3(3) of
                           ERISA.

                           "Plan  Sponsor"  has the  meaning  given  in  Section
                           3(16)(B) of ERISA.

                           "Qualified   Plan"  means  any  Plan  that  meets  or
                           purports to meet the  requirements  of Section 401(a)
                           of the IRC.


                                     - 20 -


                           "Title IV Plans"  means all  Pension  Plans  that are
                           subject   to   Title   IV  of   ERISA,   other   than
                           Multi-Employer Plans.

                           "VEBA"  means  a  voluntary   employees   beneficiary
                           association under Section 501(c)(9) of the IRC.

                           "Welfare  Plan" has the meaning given in Section 3(1)
                           of ERISA.

                           (ii) Part 3.1(n) of the Disclosure  Schedule contains
                  a complete and  accurate  list of all Company  Plans,  Company
                  Other  Benefit  Obligations,  and Company  VEBAs.  None of the
                  Company Plans are defined  benefit  Pension  Plans,  Qualified
                  Plans, Title IV Plans or Multi-Employer  Plans. Part 3.1(n) of
                  the Disclosure  Schedule contains a complete and accurate list
                  of all ERISA Affiliates of the Company.  There are no Plans of
                  which any such ERISA  Affiliate is or was a Plan  Sponsor,  in
                  which   any  such   ERISA   Affiliate   participates   or  has
                  participated, or to which any such ERISA Affiliate contributes
                  or has  contributed.  Part 3.1(n) of the  Disclosure  Schedule
                  sets forth a  calculation  of the liability of the Company for
                  post-retirement   benefits  other  than   pensions,   made  in
                  accordance  with  Financial  Accounting  Statement  106 of the
                  Financial  Accounting  Standards Board,  regardless of whether
                  the  Company is required by this  Statement  to disclose  such
                  information. Part 3.1(n) of the Disclosure Schedule sets forth
                  the financial cost of all  obligations  owed under any Company
                  Plan or Company Other Benefit  Obligation  that is not subject
                  to the disclosure and reporting requirements of ERISA.

                           (iii) The Sellers have delivered to the Buyer (A) all
                  documents  that set  forth  the  terms of each  Company  Plan,
                  Company Other Benefit  Obligation,  or Company VEBA and of any
                  related  trust,  including all plan  descriptions  and summary
                  plan  descriptions  of Company  Plans for which the Sellers or
                  the Company are required to prepare,  file and distribute plan
                  descriptions and summary plan descriptions,  and all summaries
                  and descriptions  furnished to participants and  beneficiaries
                  regarding  Company Plans,  Company Other Benefit  Obligations,
                  and Company VEBAs for which a plan description or summary plan
                  description is not required;  (B) all  personnel,  payroll and
                  employment manuals and policies; (C) all collective bargaining
                  agreements  pursuant to which  contributions have been made or
                  obligations  incurred  (including  both  pension  and  welfare
                  benefits)  by the  Company  and the  ERISA  Affiliates  of the
                  Company, and all collective  bargaining agreements pursuant to
                  which  contributions are being made or obligations are owed by
                  such entities;  (D) a written  description of any Company Plan
                  or Company Other Benefit  Obligation  that is not otherwise in
                  writing; (E) all registration statements filed with respect to
                  any Company Plan; (F) all insurance  policies  purchased by or
                  to provide  benefit under any Company Plan; (G) all


                                     - 21 -


                  all  contracts  with  third  party administrators,  actuaries,
                  investment   managers,   consultants, and  other   independent
                  contractors that relate to any  Company  Plan,  Company  Other
                  Benefit Obligation, or Company VEBA; (H) all reports submitted
                  within the four (4) years preceding the date of this Agreement
                  by third party administrators, actuaries, investment managers,
                  consultants, or other independent  contractors with respect to
                  any Company Plan,  Company  Other   Benefit   Obligations,  or
                  Company VEBA; (I) all   notifications  to  employees of  their
                  rights under Sections 601 et seq. of ERISA  and Section  4980B
                  of the IRC; (J) the Form 5500 filed in each of the most recent
                  three (3)  plan  years  with  respect   to each  Company Plan,
                  including   all   schedules   thereto  and   the  opinions  of
                  independent  accountants;  (K) all notices that were given  by
                  the Company or any ERISA  Affiliate  of the Company   or   any
                  Company Plan to the IRS, the PBGC,  or   any  participant   or
                  beneficiary,   pursuant   to   statute, within four  (4) years
                  preceding the date of this Agreement,  including  notices that
                  are expressly mentioned  elsewhere in this Section 3.1(n); (L)
                  all notices that were given by the   IRS,   the   PBGC, or the
                  United States  Department of Labor to the  Company,  any ERISA
                  Affiliate of the Company or any Company Plan  within  the four
                  (4) years preceding the date of this  Agreement;  and (M) with
                  respect to  Qualified   Plans   and   VEBAs, the   most recent
                  determination letter for each Plan of the  Company  that is  a
                  Qualified Plan.

                           (iv)  (A)  The  Company  has  performed  all  of  its
                  obligations  under all Company  Plans,  Company  Other Benefit
                  Obligations,   and  Company   VEBAs.   The  Company  has  made
                  appropriate  entries in its financial  records and  statements
                  for all obligations and  liabilities  under such Plans,  VEBAs
                  and  Obligations  that have  accrued  but are not due.  (B) No
                  statement, either written or oral has been made by the Company
                  to any  Person  with  regard  to any  Plan  or  Other  Benefit
                  Obligation  that was not in accordance  with the Plan or Other
                  Benefit  Obligation  and that could  have an adverse  economic
                  consequence  to the Company or to the Buyer;  (C) the Company,
                  with respect to all Company Plans, Other Benefits Obligations,
                  and Company  VEBAs,  is, and each Company Plan,  Company Other
                  Benefit  Obligation,  and Company VEBAs is, in full compliance
                  with ERISA, the IRC, and other applicable Laws,  including the
                  provisions  of such Laws  expressly  mentioned in this Section
                  3.1(n)   and  with  any   applicable   collective   bargaining
                  agreement.  No transaction  prohibited by Section 406 of ERISA
                  and no "prohibited  transaction"  under Section 4975(c) of the
                  IRC have occurred  with respect to any Company  Plan.  None of
                  the Sellers or the Company has any  liability  to the IRS with
                  respect  to any  Plan,  including  any  liability  imposed  by
                  Chapter 43 of the IRC.  None of the Sellers or the Company has
                  any  liability to the PBGC with respect to any Plan or has any
                  liability  under  Sections  502 or 4071 of ERISA.  All filings
                  required by ERISA and the IRC as to each Plan have been timely
                  filed,   and  all  notices  and  disclosures  to  participants
                  required


                                     - 22 -



                  by either ERISA or the IRC  have  been  timely  provided.  All
                  contributions and payments made or accrued with respect to all
                  Company Plans, Company Other  Benefit Obligations, and Company
                  VEBAs are  deductible under Sections 162 or 404 of the IRC. No
                  amount,  or any asset of any  Company Plan or Company VEBA, is
                  subject to tax as unrelated business taxable  income. (D) Each
                  Company   Plan   can be  terminated within thirty  (30)  days,
                  without payment of any   additional   contribution  or  amount
                  (other than normal  administrative  costs of  termination) and
                  without the vesting or acceleration  of any benefits  promised
                  by such Plan. (E)  Since   the   date of the  Balance   Sheet,
                  there  has been no establishment  or  amendment of any Company
                  Plan, Company VEBA, or Company Other Benefit  Obligation.  (F)
                  No event has incurred or circumstance exists that could result
                  in a material  increase in premium   costs  of  Company  Plans
                  and  Company  Other  Benefit Obligations that are insured,  or
                  a   material  increase  in  benefit  costs of such   Plans and
                  Obligations  that are  self-insured.  (G) Other   than  claims
                  for  benefits  submitted  by  participants  or  beneficiaries,
                  no claim against, or legal proceeding  involving,  any Company
                  Plan,  Company Other Benefit  Obligation,  or Company  VEBA is
                  pending or, to the Sellers' Knowledge is Threatened.  (H)   No
                  Company Plan is a stock bonus, pension, or profit-sharing plan
                  within  the  meaning  of  Section  401(a)  of the IRC.  (I) No
                  Company Plan is a Qualified  Plan. Each Company VEBA is exempt
                  from  federal  income  tax.  (J) The  Company  and each  ERISA
                  Affiliate of the Company has met the minimum funding standard,
                  and has made all contributions required,  under Section 302 or
                  ERISA  and  Section  402 of the IRC.  (K) No  Company  Plan is
                  subject  to Title IV of ERISA.  (L) The  Company  has paid all
                  amounts  due to the PBGC  under  Section  4007 of  ERISA.  (M)
                  Neither the Company nor any ERISA Affiliate of the Company has
                  ceased  operations at any facility or has  withdrawn  from any
                  Title IV Plan in a manner that would subject any entity or the
                  Sellers to liability under Sections 4062(e),  4063, or 4064 of
                  ERISA.  (N) Neither the Company nor any ERISA Affiliate of the
                  Company has filed a notice of intent to terminate  any Plan or
                  has adopted any amendment to treat a Plan as  terminated.  The
                  PBGC has not instituted  proceedings to treat any Company Plan
                  as terminated.  No event has occurred or  circumstance  exists
                  that may  constitute  grounds  under Section 4042 of ERISA for
                  the  termination  of,  or  the  appointment  of a  Trustee  to
                  administer any,  Company Plan. (0) No amendment has been made,
                  or is  reasonably  expected  to be made,  to any Plan that has
                  required or could  require  the  provision  of security  under
                  Section 307 of ERISA or Section  401(a)(29) of the IRC. (P) No
                  accumulated funding deficiency,  whether or not waived, exists
                  with  respect to any Company  Plan;  no event has  occurred or
                  circumstance  exists that may result in an accumulated funding
                  deficiency  as of the last day of the current plan year of any
                  such Plan. (Q) No reportable event (as defined in Section 4043
                  of ERISA and the regulations  issued thereunder) has occurred.
                  (R) None of the Sellers or the Company  has  Knowledge  of any
                  facts or circumstances  that may give

                                     - 23 -


                  rise to any  liability of any of the  Sellers,  the Company or
                  the Buyer to the PBGC under Title IV of ERISA. (S) Neither the
                  Company  nor any  ERISA  Affiliate  of the  Company  has  ever
                  established   maintained  or   contributed   to  or  otherwise
                  participated in, or had an obligation to maintain,  contribute
                  to, or otherwise  participate in, any Multi-Employer Plan. (T)
                  Neither the Company nor any ERISA Affiliate of the Company has
                  withdrawn from any  Multi-Employer  Plan with respect to which
                  there  is any  outstanding  liability  as of the  date of this
                  Agreement.  No event has occurred or circumstance  exists that
                  presents a risk of the occurrence of any  withdrawal  from, or
                  the participation,  termination, reorganization, or insolvency
                  of, any Multi-Employer Plan that could result in any liability
                  of either the Company or the Buyer to a  Multi-Employer  Plan.
                  (U) Neither the Company nor any ERISA Affiliate of the Company
                  has received notice from any Multi-Employer Plan that it is in
                  reorganization or is insolvent,  that increased  contributions
                  may be required to avoid a reduction  in plan  benefits or the
                  imposition  of any excise  tax,  or that such Plan  intends to
                  terminate or has  terminated.  (V) No  Multi-Employer  Plan to
                  which  the  Company  or any  ERISA  Affiliate  of the  Company
                  contributes  or has  contributed  is a  party  to any  pending
                  merger or asset or  liability  transfer  or is  subject to any
                  proceeding  brought  by the PBGC.  (W)  Except  to the  extent
                  required under Section 601 et. seq. of ERISA and Section 4980B
                  of the IRC,  the Company  does not  provide  health or welfare
                  benefits for any retired or former employee or is obligated to
                  provide  health or welfare  benefits  to any  active  employee
                  following such employee's  retirement or other  termination of
                  service. (X) The Company has the right to modify and terminate
                  benefits to retirees  (other than  pensions)  with  respect to
                  both  retired  and active  employees.  (Y) The Sellers and the
                  Company have  complied  with the  provisions of Section 601 et
                  seq.  of ERISA and  Section  4980B of the IRC.  (Z) No payment
                  that is  owed  or may  become  due to any  director,  officer,
                  employee or agent of the Company will be non-deductible to the
                  Company or subject to tax under  Section  280G or Section 4999
                  of the IRC;  nor will the Company be required to "gross up" or
                  otherwise compensate any such person because of the imposition
                  of any  excise  tax on a  payment  to such  person.  (AA)  The
                  consummation of the Contemplated  Transactions will not result
                  in the payment vesting, or acceleration of any benefit.

                  (o)   COMPLIANCE   WITH   LEGAL   REQUIREMENTS;   GOVERNMENTAL
         AUTHORIZATIONS.  (i)  Except  as  set  forth  in  Part  3.1(o)  of  the
         Disclosure Schedule:

                           (A) The Company  is, and at all times  since  October
                  31,  1998  has  been,  in  full  compliance  with  each  Legal
                  Requirement  that is or was applicable to it or to the conduct
                  or operation of its business or the ownership or use of any of
                  its assets, including the Real Estate;


                                     - 24 -


                           (B) No event has occurred or circumstance exists that
                  (with or without  notice or lapse of time) (x) may  constitute
                  or result in a  violation  by the  Company of, or a failure on
                  the part of the Company to comply with, any Legal Requirement,
                  or (y) may  give  rise to any  obligation  on the  part of the
                  Company to  undertake  or bear all or any  portion of the cost
                  of, any remedial action of any nature; and

                           (C) The  Company  has not  received at any time since
                  October 31, 1998, any notice or other  communication  (whether
                  oral or  written)  from  any  Governmental  Body or any  other
                  Person  regarding  (x)  any  actual,   alleged,   possible  or
                  potential  violation of, or failure to comply with,  any Legal
                  Requirement,   or  (z)  any  actual,  alleged,   possible,  or
                  potential  obligation on the part of the Company to undertake,
                  or to bear all or any  portion  of the cost of,  any  remedial
                  action of any nature.

                  (ii)  Part  3.1(o)  of  the  Disclosure  Schedule  contains  a
         complete and accurate list of each Governmental  Authorization  that is
         held by the Company or that otherwise relates to the business of, or to
         any of the assets  owned or used by, the  Company,  including  the Real
         Estate. Each Governmental Authorization listed or required to be listed
         in Part  3.1(o) of the  Disclosure  Schedule is valid and in full force
         and  effect.  Except  as set  forth in Part  3.1(o)  of the  Disclosure
         Schedule:

                           (A) The Company  is, and at all times  since  October
                  31, 1998 has been,  in full  compliance  with all of the terms
                  and requirements of each Governmental Authorization identified
                  as required to be identified in Part 3.1(p) of the  Disclosure
                  Schedule;

                           (B) No event has occurred or circumstance exists that
                  may (with or without  notice or lapse of time) (x)  constitute
                  or result  directly or indirectly in a violation of or failure
                  to comply  with any term or  requirement  of any  Governmental
                  Authorization  listed or  required to be listed in Part 3.1(o)
                  of  the  Disclosure   Schedule  or  (y)  result   directly  or
                  indirectly   in  the   revocation,   withdrawal,   suspension,
                  cancellation,  or termination of, or any  modification to, any
                  Governmental  Authorization listed or required to be listed in
                  Part 3.1(o) of the Disclosure Schedule;

                           (C) The  Company  has not  received at any time since
                  October  31, 1998 any notice or other  communication  (whether
                  oral or  written)  from  any  Governmental  Body or any  other
                  Person  regarding  (x)  any  actual,  alleged,   possible,  or
                  potential  violation  of or failure to comply with any term or
                  requirement  of any  Governmental  Authorization  or  (y)  any
                  actual,   proposed,   possible,   or   potential   revocation,
                  withdrawal,  suspension,  cancellation,   termination  of,  or
                  modification to any Governmental Authorization; and



                                     - 25 -


                           (D) All applications  required to have been filed for
                  the  renewal  of the  Governmental  Authorizations  listed  or
                  required  to be  listed  in  Part  3.1(o)  of  the  Disclosure
                  Schedule have been duly filed prior to the  expiration of such
                  Governmental   Authorizations  on  a  timely  basis  with  the
                  appropriate   Governmental   Bodies,  and  all  other  filings
                  required to have been made with  respect to such  Governmental
                  Authorizations  have been duly made on a timely basis with the
                  appropriate Governmental Bodies.

                           The Governmental Authorizations listed in Part 3.1(o)
                  of the Disclosure Schedule collectively  constitute all of the
                  Governmental Authorizations necessary to permit the Company to
                  lawfully  conduct and  operate  its  business in the manner it
                  currently  conducts and operates  such  business and to permit
                  the  Company  to own and use its  assets,  including  the Real
                  Estate, in the manner in which it currently owns and uses such
                  assets.

                  (p) LEGAL PROCEEDINGS; ORDERS.

                           (i) There is no pending  Proceeding (A) that has been
                  commenced by or against the Company or that otherwise  relates
                  to or may affect the  business  of, or any of the assets owned
                  or used by, the Company,  including  the Real  Estate;  or (B)
                  that  challenges,  or that may have the effect of  preventing,
                  delaying,  making illegal, or otherwise  interfering with, any
                  of the  Contemplated  Transactions.  To the  Knowledge  of the
                  Sellers  and the  Company  (1) no  such  Proceeding  has  been
                  Threatened,  and (2) no event  has  occurred  or  circumstance
                  exists  that  may give  rise to or  serve  as a basis  for the
                  commencement of any such Proceeding.

                           (ii) There is no Order to which the Company or any of
                  the assets  owned or used by the Company,  including  the Real
                  Estate,  is  subject;  none of the  Sellers  is subject to any
                  Order that  relates to the  business of, or any of the assets,
                  including the Real Estate,  owned or used by the Company;  and
                  no  officer,  director,  agent,  or employee of the Company is
                  subject to any Order that  prohibits  such officer,  director,
                  agent, or employee from engaging in or continuing any conduct,
                  activity,  or practice relating to the business of the Company
                  or the Real Estate.

                           (iii)  Neither  the  Company,  nor any of the  assets
                  owned or used by the Company,  including the Real Estate,  nor
                  the Sellers  with respect to the Real Estate or the Company or
                  any of the other assets owned or used by the Company is or has
                  been subject to any Order.

                  (q) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth
         in Part  3.1(q)  of the  Disclosure  Schedule,  since  the  date of the
         Balance  Sheet,  the Company has  conducted  its  business  only in the
         Ordinary  Course of  Business  and there has not been any (i) change in
         the Company's  authorized or issued capital


                                     - 26 -



         stock; grant of any stock option or right to purchase shares of capital
         stock of the Company;  issuance of any security convertible,  into such
         capital stock; grant of any registration rights; purchase,  redemption,
         retirement  or other  acquisition  by the  Company of any shares of any
         such capital stock;  or declaration or payment of any dividend or other
         distribution  or payment in  respect of shares of capital  stock;  (ii)
         amendment to the Organizational Documents of the Company, (iii) payment
         or  increase  by  the  Company  of  any  bonuses,  salaries,  or  other
         compensation  to any  stockholder,  director,  officer,  or employee or
         entry into any  employment,  severance,  or similar  Contract  with any
         director,  officer,  or employee;  (iv) adoption of, or increase in the
         payments to or benefits  under,  any  profit-sharing,  bonus,  deferred
         compensation,   savings,  insurance,   pension,  retirement,  or  other
         employee  benefit plan for or with any  employees  of the Company;  (v)
         damage  to or  destruction  or loss of any  asset  or  property  of the
         Company, or the Real Estate, whether or not covered by insurance;  (vi)
         entry into,  termination of, or receipt of notice of termination of (A)
         any  license,  distributorship,  dealer,  sales  representative,  joint
         venture,   credit,  or  similar  agreement,  or  (B)  any  Contract  or
         transaction involving a total remaining commitment by or to the Company
         of at least Ten  Thousand  Dollars  ($10,000);  (vii) sale  (other than
         sales of inventory in the Ordinary Course of Business), lease, or other
         disposition of any asset or property of the Company or the Real Estate,
         or mortgage,  pledge, or imposition of any lien or other encumbrance on
         any asset or property of the Company or the Real Estate,  including the
         sale, lease, or other disposition of the Intellectual  Property Assets;
         (viii)  cancellation  or waiver of any claims or rights,  including but
         not  limited  to claims or rights of the  Sellers or the  Company  with
         respect to the Real Estate;  (ix) change in the accounting methods used
         by the  Company;  or (x)  agreement,  whether  oral or written,  by the
         Sellers or the Company to do any of the foregoing; except, however, for
         the  Letter  of Intent  referred  to in  Section  9.8  hereof  and this
         Agreement.

                  (r) CONTRACTS; NO DEFAULTS.


                           (i) Part 3.1(r) of the Disclosure Schedule contains a
                  complete and accurate  list, and the Sellers have delivered to
                  the Buyer  true and  complete  copies  of (A) each  Applicable
                  Contract that involves  performance of services or delivery of
                  goods or  materials  by the  Company  of an amount or value in
                  excess of Five Thousand Dollars ($5,000);  (B) each Applicable
                  Contract that involves  performance of services or delivery of
                  goods or  materials  to the  Company  of an amount or value in
                  excess of Five Thousand Dollars ($5,000);  (C) each Applicable
                  Contract  that was not entered into in the Ordinary  Course of
                  Business  and that  involves  expenditures  or receipts of the
                  Company in excess of Five Thousand Dollars ($5,000);  (D) each
                  lease, rental or occupancy agreement, license, installment and
                  conditional  sale  agreement,  and other  Applicable  Contract
                  affecting the  ownership of,  leasing of, title to, use of, or
                  any  leasehold  or other  interest  in,  any real or  personal
                  property;  (E) each  licensing  agreement or other  Applicable
                  Contract with respect to


                                     - 27 -



                  patents,   trademarks,   copyrights,   or  other  intellectual
                  property,   including   agreements   with  current  or  former
                  employees,   consultants,   or   contractors   regarding   the
                  appropriation or the  nondisclosure of any of the Intellectual
                  Property Assets; (F) each collective  bargaining agreement and
                  other Applicable  Contract to or with any labor union or other
                  employee  representative  of a group  of  employees;  (G) each
                  joint  venture,  partnership,  and other  Applicable  Contract
                  (however named) involving a sharing of profits, losses, costs,
                  or liabilities by the Company with any other Person;  (H) each
                  Applicable  Contract  containing  covenants  that  in any  way
                  purport to restrict  the  business  activity of the Company or
                  any Affiliate of the Company, including the Sellers, to engage
                  in any line of  business or to compete  with any  Person;  (I)
                  each Applicable  Contract  providing for payments to or by any
                  Person  based on sales,  purchases,  or  profits,  other  than
                  direct payments for goods;  (J) each power of attorney granted
                  by  or  for  the  Company  that  is  currently  effective  and
                  outstanding;  (K) each Applicable  Contract entered into other
                  than in the  Ordinary  Course of  Business  that  contains  or
                  provides  for an  express  undertaking  by the  Company  to be
                  responsible  for  consequential  damages;  (L) each Applicable
                  Contract for capital  expenditures  in excess of Five Thousand
                  Dollars  ($5,000);  (M) each written warranty,  guaranty,  and
                  other  similar   undertaking   with  respect  to   contractual
                  performance extended by the Company other than in the Ordinary
                  Course of Business;  and (N) each amendment,  supplement,  and
                  modification  (whether  oral or  written) in respect of any of
                  the foregoing.

                           (ii)  Except  as set  forth  in  Part  3.1(r)  of the
                  Disclosure  Schedule:  (A) none of the Sellers (and no Related
                  Person of any of the  Sellers)  has or may  acquire any rights
                  under,  and none of the Sellers  has or may become  subject to
                  any obligation or liability  under,  any Contract that relates
                  to the  business of, or any of the assets owned or used by the
                  Company,  except,  however,  for the Real  Estate;  and (B) no
                  officer,  director, agent, employee,  consultant or contractor
                  of the Company is bound by any Contract that purports to limit
                  the  ability  of  such  officer,  director,  agent,  employee,
                  consultant,  or  contractor  to (1) engage in or continue  any
                  conduct, activity, or practice relating to the business of the
                  Company  or (2) assign to the  Company or to any other  Person
                  any rights to any invention, improvement or discovery.

                           (iii)  Except  as set  forth  in Part  3.1(r)  of the
                  Disclosure  Schedule,  each Applicable  Contract identified or
                  required to be  identified  in Part  3.1(r) of the  Disclosure
                  Schedule  is in  full  force  and  effect  and  is  valid  and
                  enforceable in accordance with its terms.

                           (iv)  Except  as set  forth  in  Part  3.1(r)  of the
                  Disclosure  Schedule:  (A) the  Company  is,  and at all times
                  since November 1, 1998, has been, in full  compliance with all
                  applicable terms and requirements of


                                     - 28 -



                  each  Applicable  Contract  under which the Company has or had
                  any  obligation or liability or by which the Company or any of
                  the assets  owned or used by the Company,  including  the Real
                  Estate, is or was bound; (B) each other Person that has or had
                  any  obligation  or liability  under any  Applicable  Contract
                  under  which the  Company has or had any rights is, and at all
                  times since  November 1, 1998,  has been,  in full  compliance
                  with all applicable  terms and  requirements of such Contract;
                  (C) no event has occurred or circumstance exists that (with or
                  without  notice  or lapse of time)  may  contravene,  conflict
                  with,  or result  in a  violation  or  breach  of, or give the
                  Company  or other  Person  the right to  declare a default  or
                  exercise any remedy under,  or to  accelerate  the maturity or
                  performance  of,  or to  cancel,  terminate,  or  modify,  any
                  Applicable  Contract;  and (D) the Company has not given to or
                  received from any other Person,  at any time since October 31,
                  1998,  any  notice  or other  communication  (whether  oral or
                  written) regarding any actual, alleged, possible, or potential
                  violation  or breach  of, or  default  under,  any  Applicable
                  Contract.

                           (v)  There  are no  renegotiations  of,  attempts  to
                  renegotiate, or outstanding rights to renegotiate any material
                  amounts  paid or  payable  to the  Company  under  current  or
                  completed  Applicable  Contracts with any Person,  and no such
                  Person has made written demand for such renegotation.

                           (vi) The Applicable  Contracts  relating to the sale,
                  design,  manufacture,  or provision of products or services by
                  the Company have been  entered into in the Ordinary  Course of
                  Business and have been entered into without the  commission of
                  any act  alone or in  concert  with any other  Person,  or any
                  consideration  having been paid or promised,  that is or would
                  be in violation of any Legal Requirement.

                           (vii) The  Applicable  Contracts not evidenced by any
                  writing  contain no terms  adverse to the  Company  and remain
                  terminable by the Company at will without penalty.

                  (s) INSURANCE.

                           (i) The Sellers have delivered to the Buyer: (A) true
                  and complete  copies of all policies of insurance to which the
                  Company is a party or under which the Company, or any director
                  or officer of the Company,  is or has been covered at any time
                  within  the  three  (3)  years  preceding  the  date  of  this
                  Agreement;  (B) true and  complete  copies of all  policies of
                  insurance to which the Real Estate Sellers are a party with

                  respect  to the Real  Estate or under  which  the Real  Estate
                  Sellers  are or have been  covered  with  respect  to the Real
                  Estate at any time  within the three (3) years  preceding  the
                  date of this  Agreement;  (C) true and


                                     - 29 -


                  complete  copies of all pending  applications  for policies of
                  insurance;  and  (D)  any  statement  by  the  auditor  of the
                  Company's Financial  Statements with regard to the adequacy of
                  the Company's coverage or of the reserves for claims.

                           (ii)   Part   3.1(s)  of  the   Disclosure   Schedule
                  describes: (A) any self-insurance  arrangement by or affecting
                  the  Company  or  the  Real  Estate,  including  any  reserves
                  established   thereunder;   (B)  any  Applicable  Contract  or
                  arrangement,  other  than  a  policy  of  insurance,  for  the
                  transfer  or sharing of any risk by the  Company;  and (C) all
                  obligations  of the Company to third  parties  with respect to
                  insurance (including such obligations under leases and service
                  agreements)   and  identifies  the  policy  under  which  such
                  coverage is provided.

                           (iii) Part  3.1(s) of the  Disclosure  Schedule  sets
                  forth,  by year,  for the current  policy year and each of the
                  three (3) preceding  policy  years:  (A) a summary of the loss
                  experience under each policy; (B) a statement  describing each
                  claim  under an  insurance  policy  (other  than any health or
                  hospitalization  policy  maintained  by the  Company  for  the
                  benefit of any employee or his or her  dependents)  which sets
                  forth the name of the claimant;  the description of the policy
                  by insurer, type of insurance, and period of coverage; and the
                  amount  and a  brief  description  of  the  claim;  and  (C) a
                  statement  describing the loss  experience for all claims that
                  were self-insured,  including the number and aggregate cost of
                  such claims.

                           (iv) (A) All  policies  of  insurance  to  which  the
                  Company is a party or that provide coverage to the Real Estate
                  Sellers,  with respect to the Real Estate,  or to the Company,
                  or to any  director or officer of the Company  with respect to
                  the Company are valid, outstanding and enforceable, are issued
                  by an insurer that is financially  sound and reputable;  taken
                  together,  provide adequate insurance coverage for the assets,
                  including the Real Estate,  and the operations of the Company;
                  are sufficient for compliance with all Legal  Requirements and
                  Applicable  Contracts  to which the  Company  is a party or by
                  which the  Company is bound;  will  continue in full force and
                  effect   following  the   consummation  of  the   Contemplated
                  Transactions  in  accordance  with  their  terms;  and  do not
                  provide  for any  retrospective  premium  adjustment  or other
                  experienced-based  liability on the part of the  Company.  (B)
                  Neither the Real Estate  Sellers nor the Company has  received
                  (1) any refusal of coverage or any notice that a defense  will
                  be afforded with  reservation of rights,  or (2) any notice of
                  cancellation or any other indication that any insurance policy
                  is no longer in full force or effect or will not be renewed or
                  that  the  issuer  of any  policy  is not  willing  or able to
                  perform  its  obligations  thereunder.  (C)  The  Real  Estate
                  Sellers and the Company have paid all  premiums  due, and have
                  otherwise performed all of their respective obligations, under
                  each policy to which the Real Estate Sellers or the Company is
                  a party or that provides  coverage to the Real Estate Sellers,
                  the Company or a director or officer of the  Company.  (D) The
                  Real Estate  Sellers

                                     - 30 -



                  and the Company have given notice to the insurer of all claims
                  that may be insured thereby.

                  (t) BANK AND BROKERAGE ACCOUNTS. Part 3.1(t) of the Disclosure
         Schedule  contains a complete  and accurate  list of all bank,  savings
         bank,  stock  and  bond  brokerage,  investment  and  similar  accounts
         maintained  by,  for, or in the name of the  Company,  the name of each
         officer, employee or other agent of the Company with signature or other
         authority over such account and the name,  address and telephone number
         of any Person  administering  such account by or for such bank, savings
         bank,  stock  and bond  brokerage  firm,  investment  company  or other
         organization with which the Company maintains such account. The Company
         has no cash,  cash  equivalents,  other  securities  or similar  assets
         except in such accounts.

                  (u) ENVIRONMENTAL MATTERS.

                           (i) Each of the Real Estate  Sellers  with respect to
                           the Real  Estate and the Company is, and at all times
                           has been, in full  compliance  with, and has not been
                           and is not  in  violation  of or  liable  under,  any
                           Environmental  Law.  Neither any of the Sellers  with
                           respect to the Real  Estate nor the  Company  has any
                           basis  to  expect,  nor has any of them or any  other
                           Person for whose  conduct  they are or may be held to
                           be  responsible  received,  any actual or  Threatened
                           order,  notice, or other  communication  from (A) any
                           Governmental  Body or private  citizen  acting in the
                           public interest, or (B) the current or prior owner or
                           operator  of  any  Facilities,   including  the  Real
                           Estate,  of any  actual  or  potential  violation  or
                           failure to comply with any  Environmental  Law, or of
                           any actual or  Threatened  obligation to undertake or
                           bear  the  cost  of any  Environmental,  Health,  and
                           Safety   Liabilities  with  respect  to  any  of  the
                           Facilities,  including the Real Estate,  or any other
                           properties  or  assets  (whether  real,  personal  or
                           mixed) in which the Company has had any interest,  or
                           with respect to any property or Facilities, including
                           the Real Estate,  at or to which Hazardous  Materials
                           were generated,  manufactured,  refined, transferred,
                           imported,  used,  or  processed by the Company or any
                           other  Person  for whose  conduct  they are or may be
                           held  responsible or from which  Hazardous  Materials
                           have  been  transported,  treated,  stored,  handled,
                           transferred, disposed, recycled, or received.

                                    (ii)  There  are  no  pending   or,  to  the
                           Knowledge of the Sellers and the Company,  Threatened
                           claims,  Encumbrances,  or other  restrictions of any
                           nature, resulting from any Environmental, Health, and
                           Safety  Liabilities  or arising  under or pursuant to
                           any  Environmental  Law, with respect to or affecting
                           any

                                     - 31 -



                           of the Facilities,  including the Real Estate, or any
                           other  properties and assets (whether real,  personal
                           or  mixed)  in  which  the  Company  has  or  had  an
                           interest.

                                    (iii) None of the Sellers or the Company has
                           any basis to expect, nor has any of them or any other
                           Person  for  whose  conduct  they are nor may be held
                           responsible,   received,  any  citation,   directive,
                           inquiry,  notice, Order,  summons,  waiving, or other
                           communication  that  relates to  Hazardous  Activity,
                           Hazardous  Materials,  or  any  alleged,  actual,  or
                           potential  violation  or failure  to comply  with any
                           Environmental  Law,  or of any  alleged,  actual,  or
                           potential obligation to undertake or bear the cost of
                           any Environmental, Health and Safety Liabilities with
                           respect to any of the Facilities,  including the Real
                           Estate,  or any other  properties or assets  (whether
                           real,  personal or mixed) in which the Company had an
                           interest, or with respect to any property or facility
                           to which Hazardous Materials generated, manufactured,
                           refined, transferred,  imported, used or processed by
                           the Company,  or any other  Person for whose  conduct
                           the Company is or may be held responsible,  have been
                           transported,  treated,  stored,  handled transferred,
                           disposed, recycled or received.

                                    (iv)  Neither  any of the  Sellers  nor  the
                           Company nor any other  Person for whose  conduct they
                           are   or   may   be   held   responsible,   has   any
                           Environmental,  Health  and Safety  Liabilities  with
                           respect to the Facilities, including the Real Estate,
                           or with  respect to any other  properties  and assets
                           (whether  real,  personal  or  mixed)  in  which  the
                           Company (or any predecessor), has or had an interest,
                           or at any  property  geologically  or  hydrologically
                           adjoining the Facilities,  including the Real Estate,
                           or any such other property or assets.

                                    (v) There are no Hazardous Materials present
                           on or in the Environment at the Facilities, including
                           the  Real   Estate,   or  at  any   geologically   or
                           hydrologically  adjoining  property,   including  any
                           Hazardous  Materials  contained  in barrels  above or
                           underground storage tanks, landfills,  land deposits,
                           dumps, equipment (whether moveable or fixed) or other
                           containers,   either  temporary  or  permanent,   and
                           deposited or located in land,  water,  sumps,  or any
                           other  part of the  Facilities,  including  the  Real
                           Estate, or such adjoining  property,  or incorporated
                           into any  structure  therein or thereon.  None of the
                           Sellers,  the  Company,  any other  Person  for whose
                           conduct they are or may be held  responsible,  or any
                           other Person has permitted or conducted,  or is aware
                           of, any Hazardous  Activity conducted with respect to
                           the  Facilities,


                                     - 32 -


                           including the Real Estate, or any other properties or
                           assets  (whether real,  personal,  or mixed) in which
                           any  of the  Sellers  or  the  Company  has or had an
                           interest.

                                    (vi)  There has been no  Release  or, to the
                           Knowledge of the Sellers and the  Company,  Threat of
                           Release,  of any  Hazardous  Materials at or from the
                           Facilities,  including the Real Estate,  or at any of
                           the other  locations  where any  Hazardous  Materials
                           were generated,  manufactured,  refined, transferred,
                           produced,  imported, used or processed from or by the
                           Facilities,  including the Real Estate, or from or by
                           any  other   properties  and  assets  (whether  real,
                           personal or mixed) in which the Company has or had an
                           interest  or  any   geologically  or   hydrologically
                           adjoining  property,  whether  by  the  Sellers,  the
                           Company or any other Person.

                                    (vii)  The  Sellers  have  delivered  to the
                           Buyer true and  complete  copies  and  results of any
                           reports,  studies,   analyses,  tests  or  monitoring
                           possessed  or  initiated by any of the Sellers or the
                           Company   pertaining   to   Hazardous   Materials  or
                           Hazardous Activities in, on, or under the Facilities,
                           including the Real Estate,  or concerning  compliance
                           by the Sellers,  the Company, or any other Person for
                           whose  conduct  they are or may be held  responsible,
                           with Environmental Laws.

                  (v) EMPLOYEES.


                                    (i) Part 3.1(v) of the  Disclosure  Schedule
                           contains  a  complete  and   accurate   list  of  the
                           following  information  for each employee or director
                           of the Company,  including  each employee on leave of
                           absence or layoff status;  name of the employee;  job
                           title;  current  compensation paid or payable and any
                           change  in  compensation   since  October  31,  2000;
                           vacation accrued for 2001 or thereafter;  and service
                           credited for purposes of vesting and  eligibility  to
                           participate under the Company's pension,  retirement,
                           profit-sharing,        thrift-savings,       deferred
                           compensation,   stock  bonus,   stock  option,   cash
                           bonuses,    employee   stock   ownership   (including
                           investment   credit  or  payroll  stock   ownership),
                           severance  pay,  insurance,   medical,   welfare,  or
                           vacation plan, other Employee Pension Benefit Plan or
                           Employee  Welfare Benefit Plan, or any other employee
                           benefit  plan  or  any  Plan  for  directors  of  the
                           Company.

                                    (ii) No  employee or director of the Company
                           is  a  party  to,  or  is  otherwise  bound  by,  any
                           agreement    or     arrangement,     including    any
                           confidentiality,   non-competition,   or  proprietary
                           rights  agreement,  between such employee or director
                           and  any  other


                                     - 33 -


                           person  that in any  way  adversely  affects  or will
                           affect (A) the performance of his or her duties as an
                           employee  or  director  of the  Company  or  (B)  the
                           ability  of the  Company  to  conduct  its  business,
                           including any such  confidentiality,  non-competition
                           or proprietary  rights  agreement with the Sellers or
                           the Company by any such employee or director.  To the
                           Sellers'  Knowledge,  no director,  officer, or other
                           key  employee of the  Company  other than the Sellers
                           intends to terminate his or her  employment  with the
                           Company.

                                    (iii) Part 3.1(v) of the Disclosure Schedule
                           also  contains a complete  and  accurate  list of the
                           following  information  for each retired  employee or
                           director   of  the   Company  or  their   dependents,
                           receiving  benefits or scheduled to receive  benefits
                           in the future; name of employee or director;  pension
                           benefit;  pension option  election;  retiree  medical
                           insurance coverage,  retiree life insurance coverage,
                           and other benefits.

                  (w) LABOR RELATIONS;  COMPLIANCE.  Since October 31, 1998, the
         Company  has not been or is a party  to any  collective  bargaining  or
         other labor Contract. Since October 31, 1998, there has not been, there
         is not presently  pending or existing,  and there is not Threatened (i)
         any strike, slowdown,  picketing,  work stoppage, or employee grievance
         process,  (ii) any  Proceeding  against or affecting the Company or the
         Real Estate relating to the alleged  violation of any Legal Requirement
         pertaining  to labor  relations or  employment  matters,  including any
         charge or  complaint  filed by an employee  or union with the  National
         Labor Relations Board, the Equal Employment Opportunity Commission,  or
         any comparable  Governmental Body,  organizational  activity,  or other
         labor or  employment  dispute  against or affecting  the Company or its
         premises,  including  the Real  Estate  or (iii)  any  application  for
         certification of a collective  bargaining  agent. No event has occurred
         or  circumstances  exists  that  could  provide  the basis for any work
         stoppage or other labor  dispute.  There is no lockout of any employees
         by the Company,  and no such action is contemplated by the Company. The
         Company  has  complied  in all  respects  with all  Legal  Requirements
         relating    to    employment,     equal     employment     opportunity,
         nondiscrimination,  immigration,  wages,  hours,  benefits,  collective
         bargaining,   the  payment  of  social   security  and  similar  taxes,
         occupational  safety and health, and plant closing.  The Company is not
         liable for the  payment of any  compensation,  damages,  taxes,  fines,
         penalties, or other amounts, however designated,  for failure to comply
         with any of the foregoing Legal Requirements.

                  (x) INTELLECTUAL PROPERTY.

                                    (i) For the purposes of this Section 3.1 (x)
                           the term "Intellectual  Property Assets" includes (A)
                           the  name  "B.L.L.   Corporation,"   all   fictitious
                           business  names  including  "Security


                                     - 34 -


                           Manufacturing            Corporation,"            and
                           "Better-Locks-for-Less,"  trading  names,  registered
                           and  unregistered  trademarks,   service  marks,  and
                           applications   (collectively,   "Marks");   (B)   all
                           patents,  patent  applications,  and  inventions  and
                           discoveries  that  may be  patentable  (collectively,
                           "Patents");  (C) all  copyrights  in  both  published
                           works   and    unpublished    works    (collectively,
                           "Copyrights");  and (D) all know-how,  trade secrets,
                           confidential  information,  customer lists, software,
                           technical  information,   data,  process  technology,
                           plans, drawings and blue prints (collectively, "Trade
                           Secrets");  owned, used or licensed by the Company as
                           licensee or licensor.

                                    (ii) Part 3.1(x) of the Disclosure  Schedule
                           contains a complete  and  accurate  list and  summary
                           description, including any royalties paid or received
                           by the Company, of all Applicable  Contracts relating
                           to the  Intellectual  Property  Assets  to which  the
                           Company is a party or by which the  Company is bound,
                           except  for  any  license  implied  by the  sale of a
                           product and perpetual,  paid-up licenses for commonly
                           available  "off the shelf"  software  programs  under
                           which  the  Company  is the  licensee.  There  are no
                           outstanding   and,   to   the   Sellers'   Knowledge,
                           Threatened  disputes or disagreements with respect to
                           any such Contract.

                                    (iii) (A) The  Intellectual  Property Assets
                           are all  those  necessary  for the  operation  of the
                           Company's  business  and the Real  Estate as they are
                           currently conducted.  The Company is the owner of all
                           right,  title and interest outright or as licensee in
                           and to each of the Intellectual Property Assets, free
                           and  clear  of all  Encumbrances  and  other  adverse
                           claims, and has the right to use without payment to a
                           third party all of the Intellectual  Property Assets.
                           (B)  Except  as  set  forth  in  Part  3.1(x)  of the
                           Disclosure Schedule, all former and current employees
                           of the Company have executed  written  Contracts with
                           the Company  that assign to the Company all rights to
                           any   inventions,   improvements,    discoveries   or
                           information  relating to the  business of the Company
                           and the Real  Estate.  No employee of the Company has
                           entered into any Contract that restricts or limits in
                           any way the  scope  or  type  of  work in  which  the
                           employee  may be engaged or requires  the employee to
                           transfer,  assign, or disclose information concerning
                           his or her work to anyone other than the Company.

                                    (iv)  (A)  Part  3.1(x)  of  the  Disclosure
                           Schedule  contains a complete and  accurate  list and
                           summary  description  of all Patents.  The Company is
                           the owner of all right,  title and interest  outright
                           or as  licensee in and to each of the  Patents,  free
                           and  clear  of all  Encumbrances  and  other  adverse
                           claims.  (B) All of the issued  Patents are currently
                           in   compliance   with  formal   legal   requirements



                                     - 35 -


                          (including  payment  of  filing,   examination,   and
                           maintenance  fees and  proofs of  working or use) are
                           valid and  enforceable,  and are not  subject  to any
                           maintenance  fees or taxes  or  actions  falling  due
                           within ninety (90) days after the Closing  Date.  (C)
                           No  Patent  has  been  or  is  now  involved  in  any
                           interference,  reissue,  reexamination, or opposition
                           proceeding  to the  Sellers'  Knowledge,  there is no
                           potentially  interfering patent or patent application
                           of any third party. (D) No Patent is infringed or, to
                           the  Sellers'  Knowledge,   has  been  challenged  or
                           threatened   in  any  way.   None  of  the   products
                           manufactured  and sold,  nor any  process or know-how
                           used,  by the  Company  infringes  or is  alleged  to
                           infringe any patent or other proprietary right of any
                           other Person.  (E) All products  made,  used, or sold
                           under the  Patents  have been  marked with the proper
                           patent notice.

                                    (v)  (A)  Part  3.1(x)  of  the   Disclosure
                           Schedule  contains a complete and  accurate  list and
                           summary  description of all Marks. The Company is the
                           owner of all right, title and interest in and to each
                           of the Marks,  free and clear of all Encumbrances and
                           other  adverse  claims.  (B) all Marks that have been
                           registered   with  the  United   States   Patent  and
                           Trademark Office are currently in compliance with all
                           formal  legal  requirements   (including  the  timely
                           post-registration  filing  of  affidavits  of use and
                           incontestability and renewal applications), are valid
                           and   enforceable,   and  are  not   subject  to  any
                           maintenance  fees or taxes  or  actions  falling  due
                           within ninety (90) days after the Closing  Date.  (C)
                           No  Mark  has  been  or  is  now   involved   in  any
                           opposition,  invalidation,  or  cancellation  and, to
                           Sellers' Knowledge, no such action is Threatened with
                           respect  to  any of the  Marks.  (D) To the  Sellers'
                           Knowledge,   there  is  no  potentially   interfering
                           trademark  or  trademark  application  of  any  third
                           party.  (E) No Mark is infringed  or, to the Sellers'
                           Knowledge,  has been  challenged or threatened in any
                           way. None of the Marks used by the Company  infringes
                           or is alleged to infringe any  tradename,  trademark,
                           or service mark of any third party.  (F) All products
                           and  materials  containing  a Mark  bear  the  proper
                           federal registration notice where permitted by law.

                                    (vi)  (A)  Part  3.1(x)  of  the  Disclosure
                           Schedule  contains a complete and  accurate  list and
                           summary description of all Copyrights. The Company is
                           the owner of all right, title, and interest in and to
                           each  of   Copyrights,   free   and   clear   of  all
                           Encumbrances  and other adverse  claims.  (B) All the
                           Copyrights  have been registered and are currently in
                           compliance with formal legal requirements,  are valid
                           and   enforceable,   and  are  not   subject  to  any
                           maintenance  fees or taxes  or  actions  falling  due
                           within ninety (90) days after the Closing  Date.  (C)
                           No  Copyright  is


                                     - 36 -


                           infringed  or, to the  Sellers'  Knowledge,  has been
                           challenged  or  threatened  in any  way.  None of the
                           subject matter of any of the Copyrights  infringes or
                           is alleged to  infringe  any  copyright  of any third
                           party or is a derivative  work based on the work of a
                           third  party.  (D)  All  works   encompassed  by  the
                           Copyrights have been marked with the proper copyright
                           notice.

                                    (vii) (A) With respect to each Trade Secret,
                           the  documentation  relating to such Trade  Secret is
                           current,  accurate,  and  sufficient  in  detail  and
                           content to  identify  and explain it and to allow its
                           full and proper use without reliance on the knowledge
                           or memory of any individual.  (B) The Sellers and the
                           Company  have  taken all  reasonable  precautions  to
                           protect the  secrecy,  confidentiality,  and value of
                           the Trade Secrets. (C) The Company has good title and
                           an absolute right to use the Trade Secrets. The Trade
                           Secrets  are not  part  of the  public  knowledge  or
                           literature,  and to the Sellers' Knowledge,  have not
                           been used,  divulged,  or appropriated either for the
                           benefit of any Person  (other than the Company) or to
                           the  detriment  of the  Company.  No Trade  Secret is
                           subject to any adverse  claim or has been  challenged
                           or threatened in any way.

                  (y)  CERTAIN  PAYMENTS.  Except as set forth in Part 3.1(y) of
         the Disclosure  Schedule,  since October 31, 1998,  neither the Company
         nor any director, officer, agent, or employee of the Company, including
         the Sellers,  or any other Person  associated  with or acting for or on
         behalf of the Company or with respect to the Real Estate,  has directly
         or indirectly (i) made any contribution,  gift, bribe, rebate,  payoff,
         influence payment,  kickback or other payment to any Person, private or
         public, regardless of form, whether in money, property, or services (A)
         to obtain  favorable  treatment  in securing  business,  (B) to pay for
         favorable  treatment for the business  secured,  (C) to obtain  special
         concessions  or for special  concessions  already  obtained,  for or in
         respect  to the  Company,  any  Affiliate  of the  Company  or the Real
         Estate,  or  (D)  in  violation  of  any  Legal  Requirement,  or  (ii)
         established  or maintained any fund or asset that has not been recorded
         in the books and records of the Company.

                  (z) DISCLOSURE.


                           (i) No  representation  or warranty of the Sellers in
                  this  Agreement  and no statement in the  Disclosure  Schedule
                  omits  to  state  a  material  fact   necessary  to  make  the
                  statements herein or therein, in light of the circumstances in
                  which they were made,  not  misleading.  (ii) No notice  given
                  pursuant to Section 4.5 will  contain any untrue  statement or
                  omit to state a material fail necessary to make the statements
                  therein or in this  Agreement,  in light of  circumstances  in
                  which they were made, not  misleading.  (iii) There is no fact
                  known to any of the Sellers that has specific  application  to
                  either the Sellers


                                     - 37 -


                  or the  Company  (other  than  general  economic  or  industry
                  conditions) and that materially  adversely affects, or, as far
                  as any of  the  Sellers  can  reasonably  foresee,  materially
                  threatens the assets, business, prospects, financial condition
                  or results of  operations  of the  Company or the Real  Estate
                  that  has  not  been  set  forth  in  this  Agreement  or  the
                  Disclosure Schedule.

                  (aa) RELATIONSHIP WITH RELATED PERSONS. None of the Sellers or
         any  Related  Person of the  Sellers or of the  Company  has,  or since
         October 31, 1998 has had, any interest in any property  (whether  real,
         personal  or mixed  and  whether  tangible  or  intangible)  used in or
         pertaining to the Company's  business,  except,  however,  for the Real
         Estate.  None of the Sellers or any Related Person of the Sellers or of
         the Company is, or since  October 31, 1998 has owned (of record or as a
         beneficial  owner) an equity  interest or any other financial or profit
         interest in, a Person that has (i) had business  dealings or a material
         financial  interest in any transaction with the Company or (ii) engaged
         in  competition  with  the  Company  with  respect  to any  line of the
         products or services of the  Company (a  "Competing  Business")  in any
         market  presently  served by the  Company.  Except as set forth in Part
         3.1(aa) of the Disclosure Schedule,  none of the Sellers or any Related
         Person of the  Sellers  or of the  Company  is a party to any  Contract
         with, or has any claim or right against the Company.

                  (bb)  BROKERS OR FINDERS.  The  Sellers and their  agents have
         incurred no  obligation or  liability,  contingent  or  otherwise,  for
         brokerage  or finders  fees or  agents'  commissions  or other  similar
         payment in connection  with this  Agreement,  including the Real Estate
         and will  indemnify  and hold the Buyer  harmless from any such payment
         alleged to be due by or through  the  Sellers as a result of the action
         of the Sellers or their agents.

         SECTION 3.2  REPRESENTATIONS  AND  WARRANTIES  OF THE BUYER.  The Buyer
represents and warrants to the Sellers as follows:

                  (a) ORGANIZATION AND GOOD STANDING. The Buyer is a corporation
         duly organized,  validly existing,  and in good standing under the laws
         of the State of Delaware.

                  (b) AUTHORITY; NO CONFLICT.

                                    (i) This  Agreement  constitutes  the legal,
                           valid   and   binding   obligation   of  the   Buyer,
                           enforceable  against the Buyer in accordance with its
                           terms.  Upon the  execution and delivery by the Buyer
                           hereunder  of the  Promissory  Note,  the  Consulting
                           Agreements  and the Sales  Representative  Agreement,
                           (A) the Promissory  Note,  the Consulting  Agreements
                           and   the   Sales   Representative   Agreement   will
                           constitute the legal,  valid and binding  obligations
                           of  the  Buyer,  enforceable  against  the  Buyer  in
                           accordance with their respective terms. The Buyer has
                           the

                                     - 38 -



                           absolute and unrestricted  right, power and authority
                           to execute and deliver this Agreement, the Promissory
                           Note,  the   Consulting   Agreements  and  the  Sales
                           Representative   Agreement   and   to   perform   its
                           obligations  under  this  Agreement,  the  Promissory
                           Note,  the   Consulting   Agreements  and  the  Sales
                           Representative Agreement.

                                    (ii) Neither the  execution  and delivery of
                           this Agreement by the Buyer nor the  consummation  or
                           performance of any of the  Contemplated  Transactions
                           by the  Buyer  will  give  any  Person  the  right to
                           prevent,  delay,  or otherwise  interfere with any of
                           the  Contemplated  Transactions  pursuant  to (1) any
                           provision  of the Buyer's  Organizational  Documents;
                           (2) any resolution  adopted by the board of directors
                           or the  stockholders  of the  Buyer;  (3)  any  Legal
                           Requirement  or  Order  to  which  the  Buyer  may be
                           subject;  or (4) any Contract to which the Buyer is a
                           party or by which the Buyer may be bound.  Except for
                           the Consent of Manufacturers & Traders Trust Company,
                           which  Consent  the Buyer shall  obtain  prior to the
                           Closing, the Buyer is not and will not be required to
                           obtain any Consent from any Person in connection with
                           the execution  and delivery of this  Agreement or the
                           consummation   or   performance   of   any   of   the
                           Contemplated Transactions.

                  (c)  INVESTMENT  INTENT.  The Buyer is  acquiring  the Company
         Shares  for its own  account,  or the  account of a  Subsidiary  of the
         Buyer, and not with a view to their distribution  within the meaning of
         Section 2(11) of the Securities Act.

                  (d) CERTAIN  PROCEEDINGS.  There is no pending Proceeding that
         has been commenced  against the Buyer and that challenges,  or may have
         the  effect of  preventing,  delaying,  making  illegal,  or  otherwise
         interfering with, any of the Contemplated Transactions.  To the Buyer's
         Knowledge, no such Proceeding has been Threatened.

                  (e) BROKERS OR FINDERS.  The Buyer and its officers and agents
         have incurred no obligation or liability,  contingent or otherwise, for
         brokerage  or finders'  fees or agents'  commissions  or other  similar
         payment in connection  with this  Agreement and will indemnify and hold
         the  Sellers  harmless  from any such  payment  alleged to be due by or
         through  the  Buyer  as a  result  of the  action  of the  Buyer or its
         officers or agents.

                                   ARTICLE IV

                 COVENANTS OF THE SELLERS PRIOR TO CLOSING DATE

         SECTION  4.1  ACCESS  AND  INVESTIGATION.  Between  the  date  of  this
Agreement and the Closing Date, the Sellers will, and will cause the Company and
its


                                     - 39 -


Representatives to (a) afford the Buyer and its  Representatives and prospective
lenders and their  Representatives  (collectively,  the "Buyer's Advisors") full
and free  access to the  Company's  personnel,  properties,  including  the Real
Estate and subsurface testing,  contracts, books and records and other documents
and data,  (b) furnish to the Buyer and the Buyer's  Advisors with copies of all
such contracts,  books and records, and other existing documents and data as the
Buyer may reasonably request, and (c) furnish the Buyer and the Buyer's Advisors
with such additional financial, operating, and other data and information as the
Buyer may reasonably request.

         SECTION 4.2 OPERATION OF THE BUSINESS OF THE COMPANY.  Between the date
of this  Agreement  and the Closing Date,  the Sellers will,  and will cause the
Company to (a) conduct the business of the Company  only in the Ordinary  Course
of Business;  (b) use their Best Efforts to preserve intact the current business
organization  of the  Company,  keep  available  the  services  of  the  current
officers,  employees,  and agents of the Company, and maintain the relations and
good will with suppliers,  customers,  landlords,  creditors, employees, agents,
and others having business  relationships with the Company;  (c) confer with the
Buyer concerning  operational  matters of a material  nature;  and (d) otherwise
report  periodically  to the  Buyer  concerning  the  status  of  the  business,
operations, and finances of the Company.

         SECTION 4.3 NEGATIVE  COVENANT.  Except as otherwise  permitted by this
Agreement,  between the date of this Agreement and the Closing Date, the Sellers
will not, and will cause the Company not to,  without the prior written  consent
of the Buyer, take any affirmative action, or fail to take any reasonable action
within their or its  control,  as a result of which any of the changes or events
listed in Section 3.1(q) is likely to occur.

         SECTION 4.4 REQUIRED  APPROVALS.  As promptly as practicable  after the
date of this  Agreement,  the Sellers will,  and will cause the Company to, make
all  filings  required  by  Legal  Requirements  to be made by them in  order to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, the Sellers will, and will cause the Company to, (a) cooperate
with the Buyer with  respect to all filings  that the Buyer elects to make or is
required  by Legal  Requirements  to make in  connection  with the  Contemplated
Transactions  and (b)  cooperate  with  the  Buyer  in  obtaining  all  consents
identified in Section 3.2(b) hereof.

         SECTION 4.5  NOTIFICATION.  Between the date of this  Agreement and the
Closing Date,  each of the Sellers will promptly  notify the Buyer in writing if
such Seller or the Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of the Sellers' representations and warranties as of
the date of this  Agreement,  or if such Seller or the Company  becomes aware of
the  occurrence  after the date of this  Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach  of any  such  representation  or  warranty  had such  representation  or
warranty  been made as of the time of  occurrence  or  discovery of such fact or
condition.  Should  any  such  fact  or  condition  require  any  change  in the
Disclosure  Schedule  if the  Disclosure  Schedule  were  dated  the date of the
occurrence or discovery of


                                     - 40 -


any such fact or  condition,  the Sellers will  promptly  deliver to the Buyer a
supplement to the Disclosure  Schedule  specifying such change.  During the same
period,  each of the Sellers will promptly notify the Buyer of the occurrence of
any  Breach  of any  covenant  of  the  Sellers  in  this  Article  IV or of the
occurrence  of any event that may make the  satisfaction  of the  conditions  in
Section 6.1 impossible or unlikely.

         SECTION 4.6 PAYMENT OF  INDEBTEDNESS  BY RELATED  PERSONS.  The Sellers
will cause all indebtedness  owed to the Company by either of the Sellers or any
Related Person of either of the Sellers to be paid in full prior to the Closing.

         SECTION 4.7  CLEAN-UP OF CERTAIN  HAZARDS.  The Sellers  will cause the
Company at its cost to remove from the Land constituting part of Real Estate and
dispose  of in  accordance  with  all  Legal  Requirements  the pile of dirt and
contaminated  soil as  discussed  in the  environmental  assessment  of the Real
Estate  referred to in Section  6.1(d) hereof and to furnish to or for the Buyer
prior to the Closing  evidence  reasonably  satisfactory  to the Buyer that such
dirt pile and contaminated soil have been removed from the Land.

         SECTION 4.8 BYLAWS AND STOCK  CERTIFICATES.  The Sellers will cause the
Company  to amend  its  Bylaws  by the  elimination  of the  provisions  thereof
referred to in Part 3.1(b)(ii) and Part 3.1(c) of the Disclosure Schedule and to
remove the legend  referring to any restriction on the transfer of capital stock
of the  Company  from any and all  stock  certificates  evidencing  the  Company
Shares.

         SECTION 4.9 NO NEGOTIATION.  Until such time, if any, as this Agreement
is  terminated  pursuant to Article VIII hereof,  the Sellers will not, and will
cause  the  Company  and  each of  their  Representatives  not to,  directly  or
indirectly,  solicit,  initiate,  or encourage any inquiries or proposals  from,
discuss or negotiate  with,  provide any non-public  information to, or consider
the merits of any  unsolicited  inquiries or proposals  from,  any Person (other
than the Buyer) relating to any  transaction  involving the sale of the business
or assets (other than in the Ordinary  Course of Business) of the Company or the
Real  Estate,  or  any of the  capital  stock  of  the  Company  or any  merger,
consolidation,  business  combination,  or  similar  transaction  involving  the
Company.

         SECTION 4.10 BEST EFFORTS.  Between the date of this  Agreement and the
Closing Date, the Sellers will use their Best Efforts to cause the conditions in
Sections 6.1 and 6.2 to be satisfied.

                                    ARTICLE V

                    COVENANTS OF BUYER PRIOR TO CLOSING DATE

         SECTION  5.1  APPROVALS  OF   GOVERNMENTAL   BODIES.   As  promptly  as
practicable  after the date of this  Agreement,  the Buyer will,  and will cause
each of its Related Persons to, make all filings required by Legal  Requirements
to be made by them to consummate the Contemplated Transactions. Between the date
of this  Agreement and


                                     - 41 -


the Closing Date, the Buyer will, and will cause each of its Related Persons to,
cooperate  with the Sellers  with  respect to all  filings  that the Sellers are
required  by Legal  Requirements  to make in  connection  with the  Contemplated
Transactions and cooperate with the Sellers in obtaining all consents identified
in  Part  3.1(b)  of the  Disclosure  Schedule;  provided,  however,  that  this
Agreement  will not  require  the Buyer to  dispose of or make any change in any
portion of its  business or to incur any other  burden to obtain a  Governmental
Authorization.

         SECTION 5.2 BEST  EFFORTS.  Between the date of this  Agreement and the
Closing  Date,  the Buyer will use its Best Efforts to cause the  conditions  in
Sections 6.1 and 6.2 hereof to be satisfied.

                                   ARTICLE VI

                  CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE

         SECTION 6.1  CONDITIONS  PRECEDENT TO BUYER'S  OBLIGATION.  The Buyer's
obligation  to purchase the Seller's  Shares and the Real Estate and to take the
other actions required to be taken by the Buyer at the Closing is subject to the
satisfaction,  at or prior to the Closing,  of each of the following  conditions
(any of which may be waived by the Buyer, in whole or in part):

                  (a)   ACCURACY  OF   REPRESENTATIONS.   All  of  the  Sellers'
         representations   and   warranties   in  this   Agreement   (considered
         collectively)  and  each  of  these   representations   and  warranties
         (considered  individually),  must have been accurate in all respects as
         of the date of this Agreement,  and must be accurate in all respects as
         of the Closing  Date as if made on the  Closing  Date,  without  giving
         effect to any supplement to the Disclosure Schedule.

                  (b)  SELLERS'  PERFORMANCE.  (i)  All  of  the  covenants  and
         obligations  that the Sellers are required to perform or to comply with
         pursuant  to this  Agreement  at or  prior to the  Closing  (considered
         collectively),  and each of these covenants and obligations (considered
         individually),  must have been duly  performed and complied with in all
         material respects. (ii) Each document required to be delivered pursuant
         to Section 1.6 hereof must have been  delivered,  and each of the other
         covenants  and  obligations  in Sections  4.4,  4.6, 4.7, 4.8, and 4.10
         hereof must have been performed and complied with in all respects.

                  (c) CONSENTS.  Each of the Consents  identified in Part 3.1(b)
         of the Disclosure  Schedule and each Consent  identified in Section 3.2
         hereof must have been obtained and must be in full force and effect.

                  (d) ADDITIONAL DOCUMENTS. Each of the following documents must
         have been  delivered  to the Buyer:  (i) an  opinion  of Gardere  Wynne
         Sewell,   LLP,  counsel  to  the  Sellers,   dated  the  Closing  Date,
         substantially  to the effects set forth in Exhibit "I" attached  hereto
         and made a part  hereof,  (ii) a survey  made by a


                                     - 42 -



         surveyor  or  engineer  duly  licensed  as such in the  State  of Texas
         reflecting the boundaries of the Land, the location of the Building and
         any other  improvements  erected  on the Land and the  location  of the
         Title  Exceptions,  certified  to, and in form  accepted  by, the Title
         Company for the  elimination  of any general  survey  exception  in any
         owner's or mortgagee's  policy of title insurance to be issued thereby,
         (iii) a  commitment  from the Title  Company to issue an owner's  and a
         mortgagee's  policy of title insurance insuring the fee simple title of
         the Buyer in the Real  Estate  without  exception  other than the Title
         Exceptions upon the Closing,  (iv) an appraisal of the Real Estate made
         no earlier than November 1, 2000, by a member of the American Institute
         of Appraisers appraising the fair market value of the Real Estate in an
         amount  no less  than the Real  Estate  Purchase  Price,  (v) a Phase I
         environmental assessment of the Real Estate, including the Building and
         any other  improvements  erected on the Land, made by an  environmental
         engineer  acceptable  to the  Buyer  and  disclosing  no  environmental
         conditions other than those which the Sellers shall remedy prior to the
         Closing,  and (vi) such  other  documents  as the Buyer may  reasonably
         request  for the  purpose of (1)  enabling  its  counsel to provide the
         opinion  referred to in Section 6.2(d),  (2) evidencing the accuracy of
         any of the Sellers' representations and warranties,  (3) evidencing the
         performance by the Sellers,  or the compliance by the Sellers with, any
         covenant or obligation required to be performed or complied with by the
         Sellers,  or  any of  them,  (4)  evidencing  the  satisfaction  of any
         condition referred to in this Section 6.1 or (5) otherwise facilitating
         the   consummation   or   performance   of  any  of  the   Contemplated
         Transactions.

                  (e) NO PROCEEDINGS.  Since the date of this  Agreement,  there
         must not have been  commenced  or  Threatened  against  the  Buyer,  or
         against  any Person  affiliated  with the  Buyer,  any  Proceeding  (i)
         involving  any  challenge  to, or seeking  damages  or other  relief in
         connection with, any of the Contemplated Transactions, or (ii) that may
         have the effect of preventing,  delaying,  making illegal, or otherwise
         interfering with any of the Contemplated Transactions.

                  (f) NO CLAIM REGARDING  OWNERSHIP OR PROCEEDS.  There must not
         have been made or  Threatened  by any Person any claim  asserting  that
         such  Person (i) is the holder or the  beneficial  owner of, or has the
         right to acquire or to obtain beneficial ownership of, any stock of, or
         any other voting,  equity, or ownership interest in, the Company or the
         Real Estate or (ii) is  entitled to all or any portion of the  Purchase
         Price payable for the Company Shares or for the Real Estate.

                  (g)  NO  PROHIBITION.   Neither  the   consummation   nor  the
         performance of any of the  Contemplated  Transactions  will directly or
         indirectly  (with or  without  notice  or lapse  of  time),  materially
         contravene,  or conflict with, or result in a material violation of, or
         cause the Buyer or any Person  affiliated  with the Buyer to suffer any
         material   adverse   consequence   under,   (i)  any  applicable  Legal
         Requirement or Order,  or (ii) any Legal  Requirement or Order that has
         been  published,  introduced,  or  otherwise  proposed by or before any
         Governmental Body.



                                     - 43 -


         SECTION 6.2 CONDITIONS  PRECEDENT TO SELLERS'  OBLIGATION.  The Sellers
obligations to sell the Company Shares and the Real Estate and to take the other
actions  required  to be taken by the  Sellers at the  Closing is subject to the
satisfaction,  at or prior to the Closing,  of each of the following  conditions
(any of which may be waived by the Sellers, in whole or in part):

                  (a)   ACCURACY   OF   REPRESENTATIONS.   All  of  the  Buyer's
         representations   and   warranties   in  this   Agreement   (considered
         collectively),   and  each  of  these  representations  and  warranties
         (considered  individually)  must have  been  accurate  in all  material
         respects as of the date of this  Agreement  and must be accurate in all
         respects as of the Closing Date as if made on the Closing Date.

                  (b)  BUYER'S  PERFORMANCE.   (i)  All  of  the  covenants  and
         obligations  that the Buyer is  required  to perform or to comply  with
         pursuant  to this  Agreement  at or  prior to the  Closing  (considered
         collectively),  and each of these covenants and obligations (considered
         individually),  must  have  been  performed  and  complied  with in all
         material  respects.  (ii) The  Buyer  must have  delivered  each of the
         documents required to be delivered by the Buyer pursuant to Section 1.6
         hereof and must have made the cash payments  required to be made by the
         Buyer pursuant to Section 1.6 hereof.

                  (c) CONSENTS.  Each of the Consents  identified in Part 3.1(b)
         of the Disclosure  Schedule must have been obtained and must be in full
         force and effect.

                  (d)  ADDITIONAL  DOCUMENTS.  The Buyer  must have  caused  the
         following  documents  to be  delivered to the Sellers (i) an opinion of
         the Law Offices of Alan H.  Finegold,  LLC counsel to the Buyer,  dated
         the Closing Date, substantially to the effects set forth in Exhibit "J"
         attached  hereto and made a part hereof;  and (ii) such other documents
         as the Sellers may  reasonably  request for the purpose of (A) enabling
         their counsel to provide the opinion  referred to in Section  6.1(d)(i)
         hereof,  (B) evidencing the accuracy of any  representation or warranty
         of the Buyer,  (C) evidencing  the  performance by the Buyer of, or the
         compliance by the Buyer with, any covenant or obligation required to be
         performed  or  complied  with  by  the  Buyer,   (D)   evidencing   the
         satisfaction  of any condition  referred to in this Section 6.2, or (E)
         otherwise  facilitating  the  consummation  of any of the  Contemplated
         Transactions.

                  (e) NO  INJUNCTION.  There  must not be in  effect  any  Legal
         Requirement  or any  injunction  or other Order that (i)  prohibits the
         sale of the Company  Shares or the Real  Estate to the Buyer,  and (ii)
         has been adopted or issued or has otherwise become effective, since the
         date of this Agreement.



                                     - 44 -



                                   ARTICLE VII

                                   TERMINATION

         SECTION 7.1  TERMINATION  EVENTS.  This  Agreement may, by notice given
prior to or at the Closing, be terminated:

                  (a) by either the Buyer or the Sellers if a material Breach of
         any provision of this  Agreement has been  committed by the other party
         and such Breach has not been waived; or

                  (b) (i) by the Buyer if any of the  conditions  in Section 6.1
         hereof has not been satisfied as of the Closing Date or if satisfaction
         of such a condition  is or becomes  impossible  (other than through the
         failure  of the  Buyer  to  comply  with  its  obligations  under  this
         Agreement)  and the Buyer has not waived such a condition  on or before
         the Closing Date; or (ii) by the Sellers,  if any of the  conditions in
         Section 6.2 hereof has not been  satisfied as of the Closing Date or if
         satisfaction of such a condition is or becomes  impossible  (other than
         through the  failure of the  Sellers to comply  with their  obligations
         under this Agreement) and the Sellers have not waived such condition on
         or before the Closing Date; or

                  (c)      by mutual consent of the Buyer and the Sellers; or

                  (d) by either the Buyer or the  Sellers if the Closing has not
         occurred  (other  than  through  the  failure  of the party  seeking to
         terminate  this  Agreement to comply fully with its  obligations  under
         this Agreement) on or before the close of business Friday,  the 6th day
         of July, 2001, or such later date as the parties may agree upon.

         SECTION 7.2 EFFECT OF  TERMINATION.  Each party's right of  termination
under  Section 7.1 hereof is in  addition to any other  rights it may have under
this Agreement or otherwise, and the exercise of a right of termination will not
be an election of remedies.  If this Agreement is terminated pursuant to Section
7.1 hereof,  all further  obligations  of the parties under this  Agreement will
terminate,  except,  however,  that the obligations in Sections 10.1 hereof will
survive;  provided,  however,  that, if this  Agreement is terminated by a party
because of the Breach of this  Agreement  by the other  party or because  one or
more  of the  conditions  to the  terminating  party's  obligations  under  this
Agreement is not  satisfied as a result of the other  party's  failure to comply
with its  obligations  under this Agreement,  the  terminating  party's right to
pursue all legal remedies will survive such termination unimpaired.


                                     - 45 -


                                  ARTICLE VIII

                            INDEMNIFICATION; REMEDIES

         SECTION  8.1  SURVIVAL;   RIGHT  TO  INDEMNIFICATION  NOT  AFFECTED  BY
KNOWLEDGE.  All representations,  warranties,  covenants and obligations in this
Agreement,  the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificate  delivered  pursuant to Section 1.6(a)(ix) hereof, and any other
Certificate  or document  delivered  pursuant to this Agreement will survive the
Closing, subject, however, to the provisions of Section 8.5 hereof. The right to
indemnification,   payment   of   Damages   or  other   remedy   based  on  such
representations,  warranties,  covenants and obligations will not be affected by
any  investigation  conducted  with  respect to, or any  Knowledge  acquired (or
capable of being  acquired) at any time,  whether  before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or  obligation.  The  waiver  of any  condition  based  on the  accuracy  of any
representation  or warranty,  or on the  performance  of or compliance  with any
covenant or obligation, will not affect the right of indemnification, payment of
Damages, or other remedy based on such  representations,  warranties,  covenants
and obligations.

         SECTION 8.2  INDEMNIFICATION  AND  PAYMENT OF DAMAGES BY  SELLERS.  The
Sellers, jointly and severally,  will indemnify and hold harmless the Buyer, the
Company and their respective Representatives, stockholders, controlling persons,
and affiliates  (collectively the Indemnified Persons") for, and will pay to the
Indemnified Persons,  without duplication,  the amount of, any loss,  liability,
claim,  damage  (including  incidental  and  consequential   damages),   expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:

                  (a) any Breach of any  representation  or warranty made by the
         Sellers in this Agreement  (without  giving effect to any supplement to
         the Disclosure Schedule),  the Disclosure Schedule,  the supplements to
         the Disclosure Schedule, or any other certificate or document delivered
         by the Sellers pursuant to this Agreement;

                  (b) any Breach of any  representation  or warranty made by the
         Sellers in this  Agreement as if such  representation  or warranty were
         made  on  and as of the  Closing  Date  without  giving  effect  to any
         supplement to the Disclosure Schedule,  other than any such Breach that
         is  disclosed  in a  supplement  to  the  Disclosure  Schedule  and  is
         expressly  identified in the certificate  delivered pursuant to Section
         1.6(a)(ix) as having caused the condition  specified in Section  6.1(a)
         not to be satisfied.

                  (c)  any  Breach  by any of the  Sellers  of any  covenant  or
         obligation of the Sellers in this Agreement;

                  (d) any product  shipped or  manufactured  by, or any services
         provided by, the Company prior to the Closing Date;


                                     - 46 -



                  (e) any Environmental,  Health, and Safety Liabilities arising
         out of or relating to (i) (A) the ownership, operation, or condition at
         any time on or prior to the Closing Date of the  Facilities,  including
         the Real Estate,  or any other  properties  and assets  (whether  real,
         personal,  or mixed,  and whether  tangible or intangible) in which the
         Company has or had an interest, or (B) any Hazardous Materials or other
         contaminants  that were present on the  Facilities,  including the Real
         Estate,  or such other properties and assets at any time on or prior to
         the  Closing  Date;  or  (ii)  (A) any  Hazardous  Materials  or  other
         contaminants,   wherever   located,   that  were,  or  were  allegedly,
         generated, transported, stored, treated, Released, or otherwise handled
         by the Company or by any other Person for whose  conduct the Company is
         or may be held responsible at any time on or prior to the Closing Date,
         or (C) any Hazardous Activities that were, or were allegedly, conducted
         by the Company or by any other Person for whose  conduct the Company is
         or may be held responsible; or

                  (f) any bodily  injury  (including  illness,  disability,  and
         death and  regardless  of when any such  bodily  injury  occurred,  was
         incurred,  or  manifested  itself,  personal  injury,  property  damage
         (including trespass,  nuisance,  wrongful eviction,  and deprivation of
         the  use of  real  property),  or  other  damage  of or to any  Person,
         including  any employee or former  employee of the Company or any other
         Person for whose conduct the Company or may be held responsible, in any
         way  arising  from or alleged by arising  from any  Hazardous  Activity
         conducted  or  allegedly  conducted  with  respect  to the  Facilities,
         including the Real Estate, or the operation of the Company prior to the
         Closing  Date,  or from  Hazardous  Material  that was (i)  present  or
         suspected  to be  present on or before  the  Closing  Date on or at the
         Facilities,  including  the Real Estate (or present or  suspected to be
         present on any other property,  if such Hazardous  Material emanated or
         allegedly emanated from the Facilities, including the Real Estate on or
         prior to the Closing  Date) or (ii)  Released or allegedly  Released by
         the Company or any other Person for whose conduct the Company is or may
         be held responsible, at any time on or prior to the Closing Date.

                  (g) any  matter  disclosed  in Part  3.1(q) of the  Disclosure
         Schedule; or

                  (h) any claim by any Person for  brokerage or finder's fees or
         commissions   or  similar   payments   based  upon  any   agreement  or
         understanding  alleged to have been made by any such Person with any of
         the Sellers or the Company  (or any Person  acting on their  behalf) in
         connection with any of the Contemplated Transactions.

The remedies  provided in this Section 8.2 will not be exclusive of or limit any
other  remedies  that may be  available  to the Buyer or the  other  Indemnified
Persons.

         SECTION 8.3  INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. The Buyer
will  indemnify  and hold  harmless  the  Sellers,  and will pay to the Sellers,
without duplication,  the amount of any Damages arising, directly or indirectly,
from or in


                                     - 47 -


         connection with (a) any Breach of any  representation  or warranty made
         by the Buyer in this Agreement or in any  certificate  delivered by the
         Buyer  pursuant to this  Agreement,  (b) any Breach by the Buyer of any
         covenant or obligation of the Buyer in this Agreement, or (c) any claim
         by any Person for brokerage or finders' fees or  commissions or similar
         payments based upon any agreement or understanding alleged to have been
         made by such  Person  with  the  Buyer  (or any  Person  acting  on its
         behalf), in connection with any of the Contemplated Transactions.

         SECTION 8.4       TIME LIMITATIONS.

         (a) If the Closing  occurs,  the Sellers  will have no  liability  (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or  obligation  to be performed  and complied with prior to the Closing
Date, other than those in Sections 3.1(c), (f), (g), (l), (n), (o), (u), (v) and
(w),  unless on or before the second  anniversary  of the Closing Date the Buyer
notifies the Sellers of a claim  specifying  the factual  basis of that claim in
reasonable detail to the extent then known by the Buyer; a claim with respect to
Sections  3.1(l),  (n),  (o),  (v) and (w) may be made at any time  prior to the
expiration of the  applicable  statute of  limitations;  a claim with respect to
Sections  3.1(c),   (f),  (g)  and  (u)  or  a  claim  for   indemnification  or
reimbursement  not based upon any  representation or warranty or any covenant or
obligation to be performed  and complied with prior to the Closing Date,  may be
made at any time indefinitely;  provided, however, that the Sellers will have no
such liability with respect to any  representation or warranty in Section 3.1(o)
regarding  any  Legal   Requirement  other  than  the  Legal  Requirement  of  a
Governmental  Body unless,  on or before the second  anniversary  of the Closing
Date, the Buyer notifies the Sellers of a claim  specifying the factual basis of
that  claim in  reasonable  detail to the extent  then  known by the Buyer;  and
provided,  further,  however, that the Sellers will have no such liability under
Section  8.2(d) for or under any  product  warranty  made by the  Company to any
customer  with  respect to any product  shipped or  manufactured  by the Company
prior to the Closing Date  unless,  on or before the second  anniversary  of the
Closing Date, the Buyer  notifies the Sellers of a claim  specifying the factual
basis of that claim in reasonable detail to the extent then known by the Buyer.

         (b) If the  Closing  occurs,  the  Buyer  will have no  liability  (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or  obligation  to be performed  and complied with prior to the Closing
Date, unless on or before the second anniversary of the Closing Date the Sellers
notify  the  Buyer of a claim  specifying  the  factual  basis of that  claim in
reasonable detail to the extent then known by the Sellers.

         SECTION 8.5       LIMITATIONS ON AMOUNT.

                  (a) The Sellers will have no liability (for indemnification or
otherwise)  with  respect to the matters  described  in clause (a),  clause (b),
clause (d) or, to the extent  relating to any failure to perform or comply prior
to the Closing  Date,  clause (c) of Section  8.2 hereof  until the total of all
Damages with respect to such matters exceed Thirty Thousand  Dollars  ($30,000);
provided,  however,  that,  if the total of all  Damages  with  respect  to such
matters  exceeds  Thirty  Thousand  Dollars  ($30,000)  the  Sellers  will


                                     - 48 -


have liability for the entire amount  thereof in excess of Ten Thousand  Dollars
($10,000), subject, however, to the provisions of Section 8.5(b).

                  (b) The Sellers will have no liability (for indemnification or
otherwise) in excess of Nine Hundred Sixty  Thousand  Dollars  ($960,000) in the
aggregate  with  respect to any  representation  or  warranty,  or  covenant  or
obligation  to be performed or complied  with prior to the Closing  Date,  other
than those in Sections 3.1(c), (f), (g), (l), (n), (o), (u), (v) and (w).

                  (c)   Notwithstanding  the  foregoing  in  this  Section  8.5,
nevertheless,  this  Section  8.5 will not  apply  to any  Breach  of any of the
Sellers'  representations  and  warranties  as to which any of the  Sellers  had
Knowledge  at any  time  prior  to the date on  which  such  representation  and
warranty is made or any intentional Breach by any of the Sellers of any covenant
or  obligation;  and the Sellers  will be jointly and  severally  liable for all
Damages with respect to such Breaches.

         SECTION 8.6 RIGHT OF SET-OFF.  Upon notice to the Sellers specifying in
reasonable  detail the basis for such set-off,  the Buyer may set-off any amount
to which it may be entitled  under this Article VIII against  amounts  otherwise
then payable under the Promissory Note; provided,  however,  that, if, following
such notice,  the Sellers  inform the Buyer of their  preference  that the Buyer
set-off such amount  against  amounts  otherwise  payable  under the  Consulting
Agreements,  the Buyer may cause the Company to set-off such amount  against the
amounts  otherwise then payable under the Consulting  Agreements,  to the extent
thereof PRO RATA in proportion to the amounts otherwise then payable thereunder.
The  exercise  of such right of set-off by Buyer in good  faith,  whether or not
ultimately  determined to be justified,  will not constitute an event of default
under the Promissory Note or the Consulting Agreements. Neither the exercise of,
nor the failure to exercise,  such right of set-off will  constitute an election
of remedies or otherwise limit the Buyer in any manner in the enforcement of any
other remedies that may be available to it.

         SECTION 8.7       PROCEDURE FOR INDEMNIFICATION - THIRD-PARTY CLAIMS.

                  (a)  Promptly  after  receipt by an  indemnified  party  under
         Sections  8.2 or 8.3 of notice of the  commencement  of any  Proceeding
         against  it,  such  indemnified  party  will,  if a claim is to be made
         against an  indemnifying  party under such Section,  give notice to the
         indemnifying  party of the  commencement of such claim; but the failure
         to notify the  indemnifying  party will not  relieve  the  indemnifying
         party  of any  liability  that it may  have to any  indemnified  party,
         except to the extent that the indemnifying  party demonstrates that the
         defense  of such  action  is  prejudiced  by the  indemnifying  party's
         failure to give such notice.

                  (b) If any Proceeding referred to in Section 8.7(a) is brought
         against an  indemnified  party and it gives notice to the  indemnifying
         party of the  commencement of such Proceeding,  the indemnifying  party
         will,  unless the claim involves  Taxes,  be entitled to participate in
         such  Proceeding  and,  to the extent  that


                                     - 49 -


         it wishes  (unless (i) the  indemnifying  party is also a party to such
         Proceeding  and the  indemnified  party  determines  in good faith that
         joint representation  would be inappropriate,  or (ii) the indemnifying
         party fails to provide reasonable assurance to the indemnified party of
         its  financial   capacity  to  defend  such   Proceeding   and  provide
         indemnification with respect to such Proceeding), to assume the defense
         of  such  Proceeding  with  counsel  reasonably   satisfactory  to  the
         indemnified party and, after notice from the indemnifying  party to the
         indemnified  party  of its  election  to  assume  the  defense  of such
         Proceeding,  the indemnifying  party will not, as long as it diligently
         conducts such defense,  be liable to the  indemnified  party under this
         Article VIII for any fees of other  counsel or any other  expenses with
         respect to the defense of such  Proceeding,  in each case  subsequently
         incurred by the  indemnifying  party in connection  with the defense of
         such Proceeding,  other than reasonable costs of investigation.  If the
         indemnifying party assumes the defense of a Proceeding,  (i) it will be
         conclusively established for purposes of this Agreement that the claims
         made  in that  Proceeding  are  within  the  scope  of and  subject  to
         indemnification; (ii) no compromise or settlement of such claims may be
         effected by the  indemnifying  party  without the  indemnified  party's
         consent,  which consent shall not be unreasonably  withheld or delayed,
         unless (A) there is no finding or admission  of any  violation of Legal
         Requirements or any violation of the rights of any Person and no effect
         on any other claims that may be made against the indemnified party, and
         (B) the sole relief provided is monetary  damages that are paid in full
         by the indemnifying party; and (iii) the indemnified party will have no
         liability  with respect to any  compromise or settlement of such claims
         effected  without its  consent.  If notice is given to an  indemnifying
         party of the commencement of any Proceeding and the indemnifying  party
         does not, within ten (10) days after the indemnified  party's notice is
         given,  give notice to the indemnified  party of its election to assume
         the defense of such Proceeding, the indemnifying party will be bound by
         any  determination  made  in  such  Proceeding  or  any  compromise  or
         settlement effected by the indemnified party.

                  (c)  Notwithstanding  the foregoing,  if an indemnified  party
         determines in good faith that there is a reasonable  probability that a
         Proceeding may adversely  affect it or its  affiliates  other than as a
         result  of  monetary   damages  for  which  it  would  be  entitled  to
         indemnification  under this Agreement,  the  indemnified  party may, by
         notice to the indemnifying party, assume the exclusive right to defend,
         compromise, or settle such Proceeding;  but the indemnifying party will
         not be bound by any  determination  of a Proceeding  so defended or any
         compromise or settlement effected without its consent (which may not be
         unreasonably withheld).

                  (d) Notwithstanding the foregoing,  if any Proceeding referred
         to in Section  8.7(a) is  brought  against  an  indemnified  party with
         respect to a claim involving Taxes, the indemnified party will not only
         give timely notice to the  indemnifying  party of the  commencement  of
         such  Proceeding but also apprise the  indemnifying  party from time to
         time reasonably of, and consult with the indemnifying  party about, the
         conduct of such Proceeding.

                                     - 50 -



                  (e)  The   Sellers   hereby   consent  to  the   non-exclusive
         jurisdiction  of any court in which a Proceeding is brought against any
         Indemnified Person for purposes of any claim that an Indemnified Person
         may have under this  Agreement  with respect to such  Proceeding or the
         matters  alleged  therein,  and agree that process may be served on the
         Sellers with respect to such a claim anywhere.

         SECTION 8.8 PROCEDURE FOR  INDEMNIFICATION  - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.

         SECTION 8.9 ENVIRONMENTAL  MATTERS.  Notwithstanding  the provisions of
Section  8.7,  the Buyer will be entitled to control any  Clean-up,  any related
Proceeding,  and  except  as  provided  in the  following  sentence,  any  other
Proceeding,  with respect to which  indemnity  may be sought under clause (e) or
clause (f) of Section 8.2. The procedure  described in Section 8.7 will apply to
any claim solely for monetary damages relating to a matter covered by clause (e)
or clause (f) of Section 8.2.

         SECTION 8.10 EXCLUSION FROM INDEMNIFICATION.  Notwithstanding  anything
contained  in this  Agreement  to the  contrary,  (a) the  Sellers  will have no
liability or obligation to the Buyer for any Damages arising from, out of, or in
connection  with the  termination of the line of credit or commitment to advance
funds as provided  under  Section  1.6(d)  hereof;  (b) the Sellers will have no
liability or obligation to the Buyer for any Damages arising from, out of, or in
connection  with the ownership,  operation or condition of the Real Estate prior
to the time when the Real Estate Sellers  acquired the Real Estate on August 29,
1990,  unless,  however,  the Real Estate  Sellers,  or either one of them,  has
Knowledge of such  ownership,  operation or  condition,  including any Hazardous
Materials  or other  contaminants;  (c) the Sellers  will have no  liability  or
obligation  to the Buyer for any Damages with respect to any  representation  or
warranty  under the warranty  deed referred to in Section  1.6(a)(vii)  or under
Section  3.1(g) to the extent that (i) the Real Estate Sellers will not have the
right to recover the amount thereof under any owner's policy of title  insurance
issued  thereto and (ii) the Buyer recovers the amount thereof under the owner's
policy of title  insurance  issued to the Buyer  hereunder;  and (d) the Sellers
will have no liability or obligation to the Buyer for any Damages covered by any
policy of insurance  referred to in Part 3.1(s) of the Disclosure  Schedule,  to
the extent that after the Closing Date the Company  recovers the amount  thereof
under such policy.

                                   ARTICLE IX

                                   ARBITRATION

         SECTION 9.1 ARBITRATION  GENERALLY.  Any controversy,  claim or dispute
between  the  Buyer and the  Sellers  directly  or  indirectly  concerning  this
Agreement,  or the subject matter  hereof,  including  questions  concerning the
scope  and  applicability  of this  Article  IX,  will  be  finally  settled  by
arbitration  held in Dallas,  Texas, in accordance with



                                     - 51 -


the Uniform  Arbitration Act of the State of Texas, or any substitute or similar
statute  of the  State of Texas  from time to time in  effect,  and the rules of
commercial arbitration then followed by the American Arbitration  Association or
any successor to the functions thereof.  The arbitrators will have the right and
authority to determine how their decision or  determination  as to each issue or
matter in dispute may be implemented  or enforced.  Any decision or award of the
arbitrators  will be final and  conclusive on the parties to this  Agreement and
there will be no appeal  therefrom  other than for gross  negligence  or willful
misconduct.

         SECTION 9.2  COMPULSION  OF  ARBITRATION.  Each of the  parties  hereto
agrees that an action to compel  arbitration  pursuant to this  Agreement may be
brought in any court of competent jurisdiction in accordance with the provisions
of  Section  10.5  hereof.  Application  may  also be made  to  such  court  for
confirmation  of any  decision  or  award  of the  arbitrators,  for an order of
enforcement and for any other remedies which may be necessary to effectuate such
decision or award.  All the parties hereto hereby consent to the jurisdiction of
the arbitrators and of such court and waive any objection to the jurisdiction of
such arbitrators and court.

         SECTION 9.3 EXCEPTION TO ARBITRATION.  Notwithstanding the foregoing in
this Article IX, nothing contained herein will require  arbitration of any issue
arising under this Agreement for which injunctive relief or specific performance
is successfully sought by any party hereto.

                                    ARTICLE X

                               GENERAL PROVISIONS

         SECTION 10.1 EXPENSES.  Except as otherwise  expressly provided in this
Agreement,  each  party to this  Agreement  will  bear its  respective  expenses
incurred in connection with the preparation,  execution, and performance of this
Agreement and the Contemplated Transactions,  including all fees and expenses of
agents,  representatives,  counsel and  accountants.  The Sellers will cause the
Company  not to  incur  any  out-of-pocket  expenses  in  connection  with  this
Agreement. In the event of termination of this Agreement, the obligation of each
party to pay its own  expenses  will be  subject  to any  rights  of such  party
arising from a Breach of this Agreement by another party.

         SECTION 10.2 PUBLIC  ANNOUNCEMENTS.  Any public announcement or similar
publicity with respect to this Agreement or the Contemplated  Transactions  will
be issued,  if at all, at such time and in such manner as the Buyer  determines.
Unless  consented  to in writing by the Buyer in  advance or  required  by Legal
Requirements,  prior to the  Closing,  the  Sellers  shall,  and shall cause the
Company  to,  keep this  Agreement  strictly  confidential  and may not make any
disclosure  of this  Agreement  to any  Person.  The  Sellers and the Buyer will
consult with each other  concerning the means by which the Company's  employees,
customers  and  suppliers  and others  having  dealings with the Company will be
informed of the Contemplated Transactions;  and the Buyer will have the right to
be present for any such communication.



                                     - 52 -


         SECTION 10.3 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time shall be of the essence.

         SECTION  10.4  NOTICES.  All  notices,  consents,  waivers,  and  other
communications  under this  Agreement  must be in writing  and will be deemed to
have been duly given when (a)  delivered by hand (with written  confirmation  of
receipt), (b) sent by telecopier (with written confirmation of receipt) provided
that a copy is mailed by registered mail, return receipt requested,  or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service  (receipt  requested),  in each case to the  appropriate  addresses  and
telecopier  numbers set forth below (or to such other  addresses and  telecopier
numbers as a party may designate by notice to the other parties):

                (a)  If to the Sellers:  Janie D'Addio and Salvatore D'Addio and
                                            Jane D'Addio
                                         c/o Jane D. Fergason, Esq.
                                         1601 Elm Street, Suite 300
                                         Dallas, Texas  75201-4761
                                         Facsimile No.:  (214) 999-3835

                     with a copy to:     Gardere Wynne Sewell, LLP
                                         1601 Elm Street, Suite 300
                                         Dallas, Texas  75201-4761
                                         Attention:  Jane D. Fergason, Esq.
                                         Facsimile No.:  (214) 999-3835

                (b)  If to the Buyer: American Locker Group, Incorporated
                                      5889 Forbes Avenue, Suite 100
                                      Pittsburgh, Pennsylvania  15217
                                      Attention:  Edward F. Ruttenberg,
                                                       Chairman
                                      Facsimile No.: (412) 422-2378

                     with a copy to:  Law Offices of Alan H. Finegold, LLC
                                      Six PPG Place, Suite 1150
                                      Pittsburgh, Pennsylvania  15222
                                      Attention:  Alan H. Finegold, Esq.
                                      Facsimile No.: (412) 562-1613

         SECTION 10.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any  provision of, or based on any right arising out of, this
Agreement  may be brought  against any of the parties in the courts of the State
of Texas,  County of Tarrant, or if it has or can acquire  jurisdiction,  in the
United States District Court for the Northern District of Texas; and each of the
parties  consents to the  jurisdiction  of such  courts (and of the  appropriate
appellate  courts) in any such action or proceeding  and

                                     - 53 -



waives any objection to venue laid therein.  Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere.

         SECTION 10.6 FURTHER  ASSURANCE.  The parties agree (a) to furnish upon
request to each other such  further  information,  (b) to execute and deliver to
each other such other documents,  and (c) to do such other acts and things,  all
as the other party may  reasonably  request for the purpose of carrying  out the
intent of this Agreement and the documents referred to in this Agreement.

         SECTION  10.7  WAIVER.  The rights and  remedies of the parties to this
Agreement are cumulative and not alternative.  Neither the failure nor any delay
by any party in exercising any right,  power,  or privilege under this Agreement
or the documents  referred to in this Agreement will operate as a waiver of such
right, power or privilege;  and no single or partial exercise of any such right,
power or privilege  will  preclude any other or further  exercise of such right,
power or privilege or the exercise of any other right,  power or  privilege.  To
the maximum  extent  permitted by applicable  law, (a) no claim or right arising
out of this  Agreement or the  documents  referred to in this  Agreement  can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing  signed by the other party;  (b) no waiver that
may be given by a party will be applicable  except in the specific  instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any  obligation of such party or of the right of the party giving
such notice or demand as provided in this Agreement or the documents referred to
in this Agreement.

         SECTION  10.8  ENTIRE  AGREEMENT  AND   MODIFICATION.   This  Agreement
supersedes all prior agreements between or among the parties with respect to its
subject matter (including the Letter of Intent dated December 28, 2000 addressed
to Janie D'Addio and Salvatore D'Addio from American Locker Group, Incorporated)
and  constitutes  (along with the  documents  referred to in this  Agreement)  a
complete and exclusive  statement of the terms of the agreement between or among
the  parties  with  respect to its subject  matter.  This  Agreement  may not be
amended except by a written  agreement  executed by the party to be charged with
the amendment.

         SECTION 10.9      DISCLOSURE SCHEDULE.

         (a) The  disclosures  in the  Disclosure  Schedule,  and  those  in any
supplement  thereto,  must relate only to the  representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.

         (b) In the event of any  inconsistency  between the  statements  in the
body of this  Agreement  and those in the  Disclosure  Schedule  (other  than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically  identified  representation  or warranty),  the statements in the
body of this Agreement will control.


                                     - 54 -



         SECTION 10.10 ASSIGNMENTS,  SUCCESSORS, AND NO THIRD-PARTY RIGHTS. None
of the parties  may assign any of its rights  under this  Agreement  without the
prior consent of the other parties;  except,  however, that the Buyer may assign
any of its rights under this Agreement to any Subsidiary or  Subsidiaries of the
Buyer.  Subject to the  preceding  sentence,  this  Agreement  will apply to, be
binding in all respects  upon,  and inure to the benefit of the  successors  and
permitted  assigns of the  parties.  Nothing  expressed  or  referred to in this
Agreement  shall be  construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of its
provisions  and  conditions  shall be for the sole and exclusive  benefit of the
parties to this Agreement and their successors and permitted assigns.

         SECTION 10.11 SEVERABILITY.  If any provision of this Agreement is held
invalid  or  unenforceable  by any court of  competent  jurisdiction,  the other
provisions  of this  Agreement  shall  remain  in full  force  and  effect.  Any
provision of this Agreement held invalid or unenforceable only in part or degree
shall  remain  in full  force and  effect  to the  extent  not held  invalid  or
unenforceable.

         SECTION 10.12 ARTICLE AND SECTION HEADINGS;  CONSTRUCTION. The headings
of the Articles and Sections in this  Agreement are provided for  convenience of
reference only and shall not affect the construction or  interpretation  of this
Agreement.  All references to "Article" or "Section" or "Sections"  refer to the
corresponding Article or Second or Sections of this Agreement. All words used in
this  Agreement  shall  be  construed  to be of such  gender  or  number  as the
circumstances require. Unless otherwise expressly provided, the word "including"
shall not limit the preceding words or terms.

         SECTION 10.13  GOVERNING LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

         SECTION 10.14  COUNTERPARTS.  This  Agreement may be executed in one or
more counterparts,  each of which shall be deemed to be an original copy of this
Agreement and all of which,  when taken together,  shall be deemed to constitute
one and the same agreement.



                                     - 55 -





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

                                            BUYER:

ATTEST:                                     AMERICAN LOCKER GROUP,
                                             INCORPORATED

/s/ ROY J. GLOSSER                          By  /s/ EDWARD F. RUTTENBERG
- ---------------------------                 ------------------------------------
Title:  TREASURER                           Title:  Chairman of the Board

[Corporate Seal]


WITNESS:                                    SELLERS:

/s/ GEORGINE GARCIA                         /s/ JANIE D'ADDIO          [Seal]
- --------------------------                  ---------------------------
                                                JANIE D'ADDIO

/s/ GEORGINE GARCIA                         /s/ SALVATORE D'ADDIO      [Seal]
- --------------------------                  ---------------------------
                                                SALVATORE D'ADDIO

/s/ GEORGINE GARCIA                        /s/ JANE D'ADDIO            [Seal]
- --------------------------                 ---------------------------
                                               JANE D'ADDIO



                                     - 56 -




               Exhibits excluded as not required under SK Item 601