GENERAL DYNAMICS CORP
AGREEMENT AND PLAN OF MERGER
<DOCUMENT>
<TYPE>EX-10.45
<SEQUENCE>2
<FILENAME>w42338ex10-45.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10-45













                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                          GENERAL DYNAMICS CORPORATION,

                          MARS ACQUISITION CORPORATION

                                       AND

                            PRIMEX TECHNOLOGIES, INC.




<PAGE>   2




                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
DESCRIPTION                                                                                                    PAGE
-----------                                                                                                    ----

<S>                                                                                                              <C>
ARTICLE 1         THE MERGER......................................................................................1
      Section 1.1          The Merger.............................................................................1
      Section 1.2          The Closing............................................................................1
      Section 1.3          Effective Time.........................................................................2
      Section 1.4          Effects of the Merger..................................................................2
      Section 1.5          Articles of Incorporation and Bylaws...................................................2
      Section 1.6          Directors..............................................................................2
      Section 1.7          Officers...............................................................................2
      Section 1.8          Conversion of Company Common Stock.....................................................2
      Section 1.9          Stock Options; Equity-Based Awards.....................................................3
      Section 1.10         Conversion of Acquisition Corporation Common Stock.....................................4
      Section 1.11         Dissenters' Rights.....................................................................4

ARTICLE 2         STOCKHOLDER APPROVAL............................................................................5
      Section 2.1          Company Actions........................................................................5
      Section 2.2          SEC Comments...........................................................................5

ARTICLE 3         PAYMENT.........................................................................................5
      Section 3.1          Surrender of Certificates..............................................................5
      Section 3.2          Paying Agent; Certificate Surrender Procedures.........................................6
      Section 3.3          Transfer Books.........................................................................6
      Section 3.4          Termination of Payment Fund............................................................7
      Section 3.5          Lost Certificates......................................................................7
      Section 3.6          No Rights as Stockholder...............................................................7
      Section 3.7          Withholding............................................................................7
      Section 3.8          Escheat................................................................................7

ARTICLE 4         REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................8
      Section 4.1          Organization...........................................................................8
      Section 4.2          Authorization of Transaction; Enforceability...........................................8
      Section 4.3          Noncontravention; Consents.............................................................9
      Section 4.4          Capitalization.........................................................................9
      Section 4.5          Company Reports; Proxy Statement......................................................11
      Section 4.6          No Undisclosed Liabilities............................................................11
      Section 4.7          Absence of Material Adverse Change....................................................12
      Section 4.8          Litigation and Legal Compliance.......................................................12
</TABLE>


                                       ii
<PAGE>   3

<TABLE>
<S>                                                                                                             <C>
      Section 4.9          Contract Matters......................................................................12
      Section 4.10         Tax Matters...........................................................................15
      Section 4.11         Employee Benefit Matters..............................................................16
      Section 4.12         Environmental Matters.................................................................20
      Section 4.13         Title.................................................................................22
      Section 4.14         Intellectual Property Matters.........................................................22
      Section 4.15         Labor Matters.........................................................................23
      Section 4.16         Rights Agreement......................................................................23
      Section 4.17         State Takeover Laws...................................................................23
      Section 4.18         Brokers' Fees.........................................................................23
      Section 4.19         Representations and Warranties........................................................24

ARTICLE 5         REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION.......................................24
      Section 5.1          Organization..........................................................................24
      Section 5.2          Authorization of Transaction; Enforceability..........................................24
      Section 5.3          Noncontravention; Consents............................................................25
      Section 5.4          Adequate Cash Resources...............................................................25
      Section 5.5          No Capital Ownership in the Company...................................................25

ARTICLE 6         COVENANTS......................................................................................25
      Section 6.1          General...............................................................................25
      Section 6.2          Notices and Consents..................................................................25
      Section 6.3          Interim Conduct of the Company........................................................26
      Section 6.4          Preservation of Organization..........................................................28
      Section 6.5          Full Access...........................................................................28
      Section 6.6          Notice of Developments................................................................28
      Section 6.7          Nonsolicitation of Acquisition Proposals..............................................29
      Section 6.8          Indemnification.......................................................................30
      Section 6.9          Public Announcements..................................................................32
      Section 6.10         Preservation of Programs and  Agreements..............................................32
      Section 6.11         Actions Regarding Antitakeover Statutes...............................................32
      Section 6.12         Defense of Orders and Injunctions.....................................................32
      Section 6.13         Employee Benefit Matters..............................................................32
      Section 6.14         Standstill Provisions.................................................................34
</TABLE>



                                      iii
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<TABLE>
<S>                                                                                                             <C>
ARTICLE 7         CONDITIONS TO THE CONSUMMATION OF THE MERGER...................................................35
      Section 7.1          Conditions to the Obligations of Each Party...........................................35
      Section 7.2          Conditions to the Obligation of the Company...........................................35
      Section 7.3          Conditions to the Obligation of the Parent Corporation and the Acquisition
                           Corporation...........................................................................36
      Section 7.4          Frustration of Closing Conditions.....................................................36

ARTICLE 8         TERMINATION, AMENDMENT AND WAIVER..............................................................36
      Section 8.1          Termination...........................................................................36
      Section 8.2          Effect of Termination.................................................................37
      Section 8.3          Termination Fee.......................................................................38

ARTICLE 9         MISCELLANEOUS..................................................................................39
      Section 9.1          Nonsurvival of Representations........................................................39
      Section 9.2          Remedies..............................................................................39
      Section 9.3          Successors and Assigns................................................................39
      Section 9.4          Amendment.............................................................................39
      Section 9.5          Extension and Waiver..................................................................40
      Section 9.6          Severability..........................................................................40
      Section 9.7          Counterparts..........................................................................40
      Section 9.8          Descriptive Headings..................................................................40
      Section 9.9          Notices...............................................................................40
      Section 9.10         No Third Party Beneficiaries..........................................................41
      Section 9.11         Entire Agreement......................................................................41
      Section 9.12         Construction..........................................................................41
      Section 9.13         Submission to Jurisdiction............................................................42
      Section 9.14         Governing Law.........................................................................42
</TABLE>


                                       iv
<PAGE>   5



                             TABLE OF DEFINED TERMS

Acquisition Corporation                             Preamble
Acquisition Proposal                                Section 6.7(b)
Antitrust Laws                                      Section 4.3
Certificate                                         Section 3.1
Closing                                             Section 1.2
Closing Date                                        Section 1.2
Code                                                Section 4.10(f)
Coli Policy                                         Section 4.11(j)
Company                                             Preamble
Company Common Stock                                Section 1.8(a)
Company Disclosure Letter                           Article 4
Company Material Adverse Effect                     Section 4.1
Company Plans                                       Section 4.11(a)
Company SEC Documents                               Section 4.5(a)
Company Stock-Based Award                           Section 1.9(a)(ii)
Company Stockholder Approval                        Section 2.1(a)
Company Stockholders Meeting                        Section 2.1(a)
Confidentiality Agreement                           Section 6.5
Delaware Act                                        Section 1.1
Effective Time                                      Section 1.3
Employee Pension Benefit Plan                       Section 4.11(a)
Employee Welfare Benefit Plan                       Section 4.11(a)
Employees                                           Section 6.13(a)
Environmental Law                                   Section 4.12(b)
ERISA                                               Section 4.11(a)
Government Contract                                 Section 4.9(b)
Government Subcontract                              Section 4.9(b)
Hazardous Materials                                 Section 4.12(c)
HSR Act                                             Section 4.3
Indemnified Parties                                 Section 6.8(a)
Intellectual Property                               Section 4.14(b)
Lien                                                Section 4.3
Merger                                              Section 1.1
Merger Consideration                                Section 1.8(a)
Option Consideration                                Section 1.9(a)(iii)
Parent Corporation                                  Preamble
Parent Corporation Disclosure Letter                Article 5
Parent Corporation Material Adverse Effect          Section 6.2
Paying Agent                                        Section 3.1
Payment Fund                                        Section 3.2(a)


                                       v
<PAGE>   6

Permitted Liens                                     Section 4.13
Proxy Statement                                     Section 2.1(b)
Rights Agreement                                    Section 4.16
SAR                                                 Section 1.9(a)
SEC                                                 Section 2.1(b)
Securities Act                                      Section 4.5(a)
Securities Exchange Act                             Section 1.9(d)
Stock Option                                        Section 1.9(a)
Stock Plans                                         Section 1.9(a)
Subsidiary                                          Section 1.8(c)
Superior Proposal                                   Section 6.7(b)
Surviving Corporation                               Section 1.1
Taxes                                               Section 4.10(a)
Tax Returns                                         Section 4.10(a)
Termination Fee                                     Section 8.3(a)
Third Party Acquisition                             Section 8.3(b)
Virginia Act                                        Section 1.1


                                       vi
<PAGE>   7



                          AGREEMENT AND PLAN OF MERGER


         AGREEMENT AND PLAN OF MERGER dated as of November 9, 2000 among General
Dynamics Corporation, a Delaware corporation (the "Parent Corporation"), Mars
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Parent Corporation (the "Acquisition Corporation"), and Primex Technologies,
Inc., a Virginia corporation (the "Company").

         The Boards of Directors of the Parent Corporation, the Acquisition
Corporation, and the Company have each determined that a business combination
among the Parent Corporation, the Acquisition Corporation and the Company is
desirable and in the best interests of the Parent Corporation, the Acquisition
Corporation and the Company and their respective stockholders. The Boards of
Directors of the Parent Corporation, the Acquisition Corporation and the Company
accordingly have each duly adopted resolutions approving this Agreement and the
transactions contemplated hereby.

         NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the value, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                                    ARTICLE 1

                                   THE MERGER

         Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.3)
the Acquisition Corporation will be merged (the "Merger") with and into the
Company in accordance with the provisions of the Delaware General Corporation
Law (the "Delaware Act") and the Virginia Stock Corporation Act (the "Virginia
Act"). Following the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and the separate corporate existence
of the Acquisition Corporation will cease.

         Section 1.2 The Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Jenner & Block, 601 13th Street, N.W., Washington, D.C. 20005, at
10:00 a.m., local time, no later than the third business day following the
satisfaction or waiver, to the extent permitted by applicable laws, of the
conditions set forth in Article 7 (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or,
where permitted, waiver of those conditions), or at such other date, time or
place as the Parent Corporation and the Company may agree. The date upon which
the Closing occurs is referred to in this Agreement as the "Closing Date."


<PAGE>   8

         Section 1.3 Effective Time. The Merger will be consummated by the
filing of articles of merger with the State Corporation Commission of Virginia
in accordance with Section 720 of the Virginia Act and a certificate of merger
in accordance with Section 252 of the Delaware Act. The time the Merger becomes
effective in accordance with Section 720 of the Virginia Act is referred to in
this Agreement as the "Effective Time."

         Section 1.4 Effects of the Merger. The Merger will have the effects set
forth in Section 721 of the Virginia Act and Section 259 of the Delaware Act.
Without limiting the generality of the foregoing, as of the Effective Time, all
properties, rights, privileges, powers and franchises of the Company and the
Acquisition Corporation will vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Acquisition Corporation will
become debts, liabilities and duties of the Surviving Corporation.

         Section 1.5 Articles of Incorporation and Bylaws. At the Effective
Time, the articles of incorporation and bylaws of the Company in the respective
forms delivered by the Company to the Parent Corporation prior to the date of
this Agreement will be the articles of incorporation and bylaws of the Surviving
Corporation, until amended by the Surviving Corporation pursuant to applicable
law.

         Section 1.6 Directors. The directors of the Acquisition Corporation at
the Effective Time will be the initial directors of the Surviving Corporation
and will hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
articles of incorporation and bylaws of the Surviving Corporation or as
otherwise provided by law.

         Section 1.7 Officers. The officers of the Acquisition Corporation at
the Effective Time will be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the articles
of incorporation and bylaws of the Surviving Corporation or as otherwise
provided by law.

         Section 1.8 Conversion of Company Common Stock.

                  (a)      Subject to the provisions of Section 1.8(b), each
         share of the Company's Common Stock, par value $1.00 per share (the
         "Company Common Stock"), issued and outstanding immediately prior to
         the Effective Time (other than shares of Company Common Stock held in
         the treasury of the Company, held by any Subsidiary of the Company or
         held by the Parent Corporation or any Subsidiary of the Parent
         Corporation) will, by virtue of the Merger and without any action on
         the part of the holder thereof, be canceled and converted into the
         right to receive, upon the surrender of the certificate formerly
         representing such share, $32.10 in cash (the "Merger Consideration").
         In the event that, subsequent to the date of this Agreement but prior
         to the Effective Time, (i) the outstanding shares of Company Common
         Stock are changed into a different



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<PAGE>   9

         number of shares or a different class as a result of a stock split,
         reverse stock split, stock dividend, subdivision, reclassification,
         combination, exchange, recapitalization or similar transaction, or (ii)
         there is any dividend, other than the regular quarterly dividend of
         $0.075 per share of Company Common Stock, the Merger Consideration into
         which each share of Company Common Stock will be converted as a result
         of the Merger will be adjusted appropriately.

                  (b)      Each share of Company Common Stock held in the
         treasury of the Company, held by any Subsidiary of the Company or held
         by the Parent Corporation or any Subsidiary of the Parent Corporation
         immediately prior to the Effective Time will, by virtue of the Merger
         and without any action on the part of the holder thereof, be canceled
         and retired and will cease to exist. For purposes of this Section
         1.8(b), shares of Company Common Stock owned beneficially or held of
         record by any plan, program or arrangement sponsored or maintained for
         the benefit of any current or former employee of the Company, the
         Parent Corporation or any of their respective Subsidiaries will not be
         deemed to be held by the Company, the Parent Corporation or any such
         Subsidiary, regardless of whether the Company, the Parent Corporation
         or any such Subsidiary has the power, directly or indirectly, to vote
         or control the disposition of such shares.

                  (c)      The term "Subsidiary" as used in this Agreement means
         any corporation, partnership, limited liability company or other
         business entity 50 percent or more of the outstanding voting equity
         securities of which are owned, directly or indirectly, by the Company
         or the Parent Corporation, as applicable.

         Section 1.9 Stock Options; Equity-Based Awards

                  (a)      (i) The Company will take all necessary actions to
         cause each option to purchase shares of Company Common Stock (a "Stock
         Option") and each stock appreciation right linked to the price of
         Company Common Stock (a "SAR") granted under any stock option plan,
         program, agreement or arrangement of the Company or any of its
         Subsidiaries (collectively, the "Stock Plans") which is outstanding and
         unexercised immediately prior to the Effective Time, whether vested or
         unvested, to be cancelled as of the Effective Time and to be converted
         at the Effective Time into the right to receive in cash from the
         Company an amount equal to the product of (a) the excess, if any, of
         the Merger Consideration over the exercise price per share of Company
         Common Stock of such Stock Option or SAR and (b) the number of shares
         of Company Common Stock subject to such Stock Option or SAR; provided,
         however, that no cash payment shall be made with respect to any SAR
         that is related to a Stock Option in respect of which such a cash
         payment is made.

                  (ii)     The Company will take all necessary actions to cause
         each right of any kind, whether vested or unvested, contingent or
         accrued, to acquire or receive shares of Company Common Stock or to
         receive benefits measured by the value of a number of



                                       3
<PAGE>   10

         shares of Company Common Stock, that may be held, awarded, outstanding,
         credited, payable or reserved for issuance under the Stock Plans
         (including, without limitation, restricted stock, restricted stock
         units, performance awards and deferred stock units), except for Stock
         Options and SARs converted in accordance with Section 1.9(a)(i) above
         (each, a "Company Stock-Based Award") outstanding immediately prior to
         the Effective Time to fully vest and become immediately distributable
         and payable, and each Company Stock-Based Award shall be cancelled as
         of the Effective Time and converted as of the Effective Time into the
         right to receive in cash from the Company an amount equal to the
         product of (x) the Merger Consideration (less any applicable exercise
         price) and (y) the number of shares of Company Common Stock subject to
         such Company Stock-Based Award.

                  (iii)    Any cash payments required to be made pursuant to
         this Section 1.9(a) (the "Option Consideration") will be made (subject
         to applicable withholding and payroll taxes) promptly following the
         Effective Time.

         (b)      No additional Stock Options, SARs, or other equity-based
awards or other rights to acquire Company Common Stock will be granted pursuant
to the Stock Plans or otherwise after the date of this Agreement.

         (c)      The Board of Directors, or applicable committee thereof, of
the Company will grant all approvals and take all other actions required
pursuant to Rules 16b-3 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations of the SEC thereunder, the "Securities
Exchange Act"), to cause the disposition in the Merger of Company Common Stock,
Stock Options and SARs to be exempt from the provisions of Section 16(b) of the
Securities Exchange Act.

         Section 1.10 Conversion of Acquisition Corporation Common Stock. Each
share of the Common Stock, par value $1.00 per share, of the Acquisition
Corporation issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of the Common Stock, par value $1.00 per
share, of the Surviving Corporation.

         Section 1.11 Dissenters' Rights. Subject to the consummation of the
Merger on the terms and conditions contained in this Agreement, the parties
hereto confirm that the holders of shares of Company Common Stock will not have
dissenters' rights under Article 15 of the Virginia Act.



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<PAGE>   11

                                    ARTICLE 2

                              STOCKHOLDER APPROVAL

         Section 2.1 Company Actions. The Company, acting through its Board of
Directors, in accordance with applicable law, including the Virginia Act, its
Articles of Incorporation and Bylaws and the rules applicable to companies
listed on of The Nasdaq Stock Market, will:

                  (a)      duly call, give notice of, convene and hold a special
         meeting of its stockholders (the "Company Stockholders Meeting"), to be
         held as soon as practicable after the date of this Agreement, for the
         purpose of submitting this Agreement for approval by the holders of
         more than two-thirds of the outstanding shares of Company Common Stock
         (the "Company Stockholder Approval");

                  (b)      prepare and file with the Securities and Exchange
         Commission (the "SEC") as promptly as practicable after the date of
         this Agreement a Proxy Statement and related materials (the "Proxy
         Statement") with respect to the Company Stockholders Meeting satisfying
         the requirements of the Securities Exchange Act, respond promptly to
         any comments raised by the SEC with respect to the preliminary version
         of the Proxy Statement, and cause the definitive version of the Proxy
         Statement to be mailed to its stockholders as soon as it is legally
         permitted to do so; and

                  (c)      include in the Proxy Statement (i) subject to Section
         6.7(d), the recommendation of the Board of Directors of the Company
         that the stockholders of the Company vote in favor of the approval of
         this Agreement and the transactions contemplated hereby and (ii) the
         written opinion dated as of the date of this Agreement of Goldman,
         Sachs & Co., financial advisor to the Board of Directors of the
         Company, to the effect that as of the date of this Agreement the Merger
         Consideration is fair to the stockholders of the Company, other than
         the Parent Corporation and its affiliates, from a financial point of
         view.

         Section 2.2 SEC Comments. The Company will promptly advise the Parent
Corporation of receipt by the Company of, and will promptly furnish the Parent
Corporation with copies of, all comments received from the SEC with respect to
the Proxy Statement and will consult with the Parent Corporation in responding
to such comments.

                                    ARTICLE 3

                                     PAYMENT

         Section 3.1 Surrender of Certificates. From and after the Effective
Time, each holder of a certificate that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (a "Certificate") will be
entitled to receive in exchange therefor, upon



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<PAGE>   12

surrender thereof to a paying agent (the "Paying Agent") to be designated by the
Parent Corporation prior to the Effective Time with approval of the Company,
which approval shall not be unreasonably withheld, the Merger Consideration into
which the shares of Company Common Stock evidenced by such Certificate were
converted pursuant to the Merger. No interest will be payable on the Merger
Consideration to be paid to any holder of a Certificate irrespective of the time
at which such Certificate is surrendered for exchange.

         Section 3.2 Paying Agent; Certificate Surrender Procedures.

                  (a)      As soon as reasonably practicable following the
         Effective Time, the Parent Corporation will deposit, or cause to be
         deposited, with the Paying Agent, an amount in cash sufficient to
         provide all funds necessary for the Paying Agent to make payment of the
         Merger Consideration pursuant to Section 1.8 (the "Payment Fund").
         Pending payment of such funds to the holders of certificates for shares
         of Company Common Stock, such funds will be held and may be invested by
         the Paying Agent as Parent Corporation directs (so long as such
         directions do not impair the rights of holders of Company Common Stock)
         in the direct obligations of the United States, obligations for which
         the full faith and credit of the United States is pledged to provide
         for the payment of principal and interest or commercial paper rated of
         the highest quality by Moody's Investors Services, Inc. or Standard &
         Poor's Corporation. Any net profit resulting from, or interest or
         income produced by, such investments will be payable to the Surviving
         Corporation or Parent Corporation, as Parent Corporation directs.
         Parent Corporation will promptly replace any monies lost through any
         investment made pursuant to this Section 3.2.

                  (b)      As soon as reasonably practicable after the Effective
         Time, the Parent Corporation will instruct the Paying Agent to mail to
         each record holder of a Certificate (i) a letter of transmittal (which
         will specify that delivery will be effected, and risk of loss and title
         to such Certificates will pass, only upon delivery of the Certificate
         to the Paying Agent and will be in such form and have such other
         provisions as the Parent Corporation will reasonably specify) and (ii)
         instructions for use in effecting the surrender of Certificates for the
         Merger Consideration. Commencing immediately after the Effective Time,
         upon the surrender to the Paying Agent of such Certificate or
         Certificates, together with a duly executed and completed letter of
         transmittal and all other documents and other materials required by the
         Paying Agent to be delivered in connection therewith, the holder will
         be entitled to receive the Merger Consideration into which the
         Certificate or Certificates so surrendered have been converted in
         accordance with the provisions of Section 1.8.

         Section 3.3 Transfer Books. The stock transfer books of the Company
will be closed at the Effective Time and no transfer of any shares of Company
Common Stock will thereafter be recorded on any of the stock transfer books. In
the event of a transfer of ownership of any Company Common Stock prior to the
Effective Time that is not registered in the stock transfer



                                       6
<PAGE>   13

records of the Company at the Effective Time, the Merger Consideration into
which such Company Common Stock has been converted in the Merger will be paid to
the transferee in accordance with the provisions of Section 3.2(b) only if the
Certificate is surrendered as provided in Section 3.2 and accompanied by all
documents required to evidence and effect such transfer and by evidence of
payment of any applicable stock transfer taxes.

         Section 3.4 Termination of Payment Fund. Any portion of the Payment
Fund which remains undistributed one hundred eighty (180) days after the
Effective Time will be delivered to the Parent Corporation upon demand, and each
holder of Company Common Stock who has not theretofore surrendered Certificates
in accordance with the provisions of this Article 3 will thereafter look only to
the Parent Corporation for satisfaction of such holder's claims for the Merger
Consideration.

         Section 3.5 Lost Certificates. If any Certificate has been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Parent Corporation, the posting by such person of a bond in such reasonable
amount as the Parent Corporation may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to Section 1.8.

         Section 3.6 No Rights as Stockholder. From and after the Effective
Time, the holders of Certificates will cease to have any rights as a stockholder
of the Surviving Corporation except as otherwise provided in this Agreement or
by applicable law, and the Parent Corporation will be entitled to treat each
Certificate that has not yet been surrendered for exchange solely as evidence of
the right to receive the Merger Consideration into which the shares of Company
Common Stock evidenced by such Certificate have been converted pursuant to the
Merger; provided, however, that each holder of a Certificate that has become
entitled to any declared and unpaid dividend will continue to be entitled to
such dividend following the Effective Time, and the Surviving Corporation will
pay such dividend to such holder in the amount and on the date specified
therefor by the Board of Directors of the Company at the time of declaration
thereof.

         Section 3.7 Withholding. The Parent Corporation will be entitled to
deduct and withhold from the Merger Consideration otherwise payable to any
former holder of Company Common Stock all amounts relating to federal and state
income and payroll taxes required by law to be deducted or withheld therefrom.

         Section 3.8 Escheat. Neither the Parent Corporation, the Acquisition
Corporation nor the Company will be liable to any former holder of Company
Common Stock for any portion of the Merger Consideration delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
In the event any Certificate has not been surrendered for the Merger
Consideration prior to the sixth anniversary of the Closing Date, or prior to
such earlier date as of which such Certificate or the Merger Consideration
payable upon the surrender thereof



                                       7
<PAGE>   14

would otherwise escheat to or become the property of any governmental entity,
then the Merger Consideration otherwise payable upon the surrender of such
Certificate will, to the extent permitted by applicable law, become the property
of the Surviving Corporation, free and clear of all rights, interests and
adverse claims of any person.

                                    ARTICLE 4

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Parent Corporation and the
Acquisition Corporation that except as disclosed in the reports, schedules,
forms, statements and other documents filed by the Company with the SEC since
December 31, 1999 and publicly available prior to the date of this Agreement or
as disclosed in the letter dated as of the date of this Agreement from the
Company to the Parent Corporation (the "Company Disclosure Letter"):

         Section 4.1 Organization. The Company and each of its Subsidiaries is
(a) a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, (b) has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
being conducted, and (c) is in good standing under the laws of the jurisdiction
of its incorporation and is duly qualified to conduct business as a foreign
corporation in each other jurisdiction where such qualification is required,
except, in the case of clauses (b) and (c) above, where such failure,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on the business, financial condition, operations or results of
operations of the Company and its Subsidiaries taken as a whole (other than
changes or effects resulting from occurrences relating to the economy in
general, the securities markets in general or the Company's industry in general
and not specifically relating to the Company) or the ability of the Company to
consummate the Merger and to perform its obligations under this Agreement (a
"Company Material Adverse Effect"). The Company has delivered to the Parent
Corporation correct and complete copies of its articles of incorporation and
bylaws, as presently in effect, and, upon request, will make available to the
Parent Corporation after the date of this Agreement correct and complete copies
of the articles of incorporation and bylaws, as presently in effect, of each of
its Subsidiaries.

         Section 4.2 Authorization of Transaction; Enforceability. Subject to
obtaining the Company Stockholder Approval, the Company has full corporate power
and authority and has taken all requisite corporate action to enable it to
execute and deliver this Agreement, to consummate the Merger and the other
transactions contemplated hereby and to perform its obligations hereunder. The
Board of Directors of the Company, at a meeting thereof duly called and held,
has duly adopted resolutions, by more than the required vote, approving this
Agreement, the Merger and the other transactions contemplated hereby,
determining that the terms and conditions of this Agreement, the Merger and the
other transactions contemplated hereby are in the best interests of the Company
and its stockholders and recommending that the Company's stockholders approve
this Agreement. The foregoing resolutions of the Board of



                                       8
<PAGE>   15

Directors of the Company have not been modified, supplemented or rescinded and
remain in full force and effect as of the date of this Agreement. In connection
with its adoption of the foregoing resolutions, the Board of Directors of the
Company received the written opinion of Goldman, Sachs & Co., financial advisor
to the Board of Directors of the Company, dated as of the date of this
Agreement, to the effect that, as of such date, the Merger Consideration is fair
to the stockholders of the Company, other than the Parent Corporation and its
affiliates, from a financial point of view. The foregoing opinion has not been
modified, supplemented or rescinded prior to the date of this Agreement. The
Company will deliver to the Parent Corporation promptly after the date of this
Agreement correct and complete copies of the foregoing resolutions and opinion.
Assuming due execution and authorization by the Parent Corporation and the
Acquisition Corporation, this Agreement constitutes the valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms and conditions.

         Section 4.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Securities
Exchange Act and the "blue sky" laws and regulations of various states, (b) the
filing of a Notification and Report Form and related material with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Act of 1976, as amended (the "HSR Act"), and
any other filing required pursuant to any other applicable competition, merger
control, antitrust or similar law or regulation (together with the HSR Act, the
"Antitrust Laws"), (c) the filing of articles of merger pursuant to the Virginia
Act, a certificate of merger pursuant to the Delaware Act and any applicable
documents with the relevant authorities of other jurisdictions in which the
Company or any of its Subsidiaries is qualified to do business, and (d) any
filings required under the rules and regulations of The NASDAQ Stock Market,
neither the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, will
constitute a violation of, be in conflict with, constitute or create (with or
without notice or lapse of time or both) a default under, give rise to any right
of termination, cancellation, amendment or acceleration with respect to, or
result in the creation or imposition of any lien, encumbrance, security interest
or other claim (a "Lien") upon any property of the Company or any of its
Subsidiaries pursuant to (i) the articles of incorporation or bylaws of the
Company or any of its Subsidiaries, (ii) any constitutional provision, law,
rule, regulation, permit, order, writ, injunction, judgment or decree to which
the Company or any of its Subsidiaries is subject or (iii) any agreement or
commitment to which the Company or any of its Subsidiaries is a party or by
which the Company, any of its Subsidiaries or any of their respective properties
is bound or subject, except, in the case of clauses (ii) and (iii) above, for
such matters which, individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect.

         Section 4.4 Capitalization.

                  (a)      As of the date of this Agreement, the authorized
         capital stock of the Company consists of 60,000,000 shares of Company
         Common Stock and 10,000,000



                                       9
<PAGE>   16

         shares of Preferred Stock, par value $1.00 per share, none of which
         shares of Preferred Stock have been issued. As of the close of business
         on November 3, 2000, 10,401,241 shares of Company Common Stock were
         issued and outstanding, 129,480 shares of Company Common Stock were
         reserved for restricted stock grants or awards (including stock grants
         or awards to non-employee directors), no shares were held by the
         Company as treasury shares and 1,641,732 shares were reserved for
         issuance upon the exercise of outstanding Stock Options. All of the
         issued and outstanding shares of capital stock of the Company have been
         duly authorized and are validly issued, fully paid and nonassessable.

                  (b)      Other than Stock Options to acquire an aggregate of
         not more than 1,560,952 shares of Company Common Stock and not more
         than 80,823 shares of Company Common Stock which are subject to
         restricted stock granted or awarded (including stock grants or awards
         to non-employee directors) by the Company to current and former
         directors, officers, employees and advisors of the Company and its
         Subsidiaries, there are no outstanding or authorized options, warrants,
         subscription rights, conversion rights, exchange rights or other
         contracts or commitments that could require the Company or any of its
         Subsidiaries to issue, sell or otherwise cause to become outstanding
         any of its capital stock. There are no outstanding stock appreciation,
         phantom stock, profit participation or similar rights with respect to
         the Company or any of its Subsidiaries. The schedule of Stock Options
         and SARs set forth in the Company Disclosure Letter sets forth a list
         of all outstanding Stock Options and SARs as of the date set forth
         therein, the respective exercise prices thereof or amount of such
         rights and the holders thereof.

                  (c)      Neither the Company nor any of its Subsidiaries is a
         party to any voting trust, proxy or other agreement or understanding
         with respect to the voting of any capital stock of the Company or any
         of its Subsidiaries.

                  (d)      The Board of Directors of the Company has not
         declared any dividend or distribution with respect to the Company
         Common Stock the record or payment date for which is on or after the
         date of this Agreement (other than any regular quarterly dividend of
         $0.075 per share of Company Common Stock).

                  (e)      All of the outstanding shares of the capital stock of
         each of the Company's Subsidiaries have been validly issued, are fully
         paid and nonassessable and are owned by the Company or one of its
         Subsidiaries, free and clear of any Lien. Except for its Subsidiaries
         set forth in the Company Disclosure Letter, the Company does not
         control directly or indirectly or have any direct or indirect equity
         participation in any corporation, partnership, limited liability
         company, joint venture or other entity.





                                       10
<PAGE>   17

         Section 4.5 Company Reports; Proxy Statement.

                  (a)      The Company has since December 31, 1996 filed all
         reports, forms, statements and other documents (collectively, together
         with all financial statements included or incorporated by reference
         therein, the "Company SEC Documents") required to be filed by the
         Company with the SEC pursuant to the provisions of the Securities Act
         of 1933, as amended (the "Securities Act") or the Securities Exchange
         Act. Each of the Company SEC Documents, as of its filing date, complied
         in all material respects with the applicable requirements of the
         Securities Act and the Securities Exchange Act. None of the Company SEC
         Documents, as of their respective filing dates, contained any untrue
         statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. No Subsidiary of the Company is required to file
         any reports, forms, statements or other documents pursuant to the
         Securities Act or the Securities Exchange Act.

                  (b)      Each of the consolidated financial statements
         (including related notes) included in the Company SEC Documents
         presented fairly in all material respects the consolidated financial
         condition, cash flows and results of operations of the Company and its
         Subsidiaries for the respective periods or as of the respective dates
         set forth therein. Each of the financial statements (including related
         notes) included in the Company SEC Documents has been prepared in
         accordance with United States generally accepted accounting principles,
         consistently applied during the periods involved, except (i) as noted
         therein, (ii) to the extent required by changes in United States
         generally accepted accounting principles or (iii) in the case of
         unaudited interim financial statements, normal recurring year-end audit
         adjustments.

                  (c)      The Company has delivered to the Parent Corporation
         correct and complete copies of any proposed or contemplated amendments
         or modifications to the Company SEC Documents (including any exhibit
         documents included therein) that have not yet been filed by the Company
         with the SEC.

                  (d)      The Proxy Statement will comply in all material
         respects with the applicable requirements of the Securities Exchange
         Act and will not, at the time the definitive Proxy Statement is filed
         with the SEC and mailed to the stockholders of the Company, contain any
         untrue statement of material fact or omit to state any material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. No representation or warranty is made herein by
         the Company with respect to any information, if any, supplied in
         writing by the Parent Corporation for inclusion in the Proxy Statement.

         Section 4.6 No Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities or obligations (whether absolute or contingent,
liquidated or unliquidated, or due or to



                                       11
<PAGE>   18

become due) except for (a) liabilities and obligations referenced (whether by
value or otherwise) or reflected in the Company SEC Documents, (b) liabilities
and obligations incurred in the ordinary course of business, consistent with
past practice, since October 1, 2000, and (c) other liabilities and obligations
which, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.

         Section 4.7 Absence of Material Adverse Change. Since October 1, 2000
there has not been a Company Material Adverse Effect nor has there occurred any
event, change, effect or development which, individually or in the aggregate, is
reasonably likely to have a Company Material Adverse Effect.

         Section 4.8 Litigation and Legal Compliance.

                  (a)      As of the date of this Agreement, the Company
         Disclosure Letter sets forth each instance in which the Company or any
         of its Subsidiaries is (i) subject to any material unsatisfied judgment
         order, decree, stipulation, injunction or charge or (ii) a party to or,
         to the Company's knowledge, threatened to be made a party to any
         material charge, complaint, action, suit, proceeding, hearing or, to
         the Company's knowledge, investigation of or in any court or
         quasi-judicial or administrative agency of any federal, state, local or
         foreign jurisdiction, except for judgments, orders, decrees,
         stipulations, injunctions, charges, complaints, actions, suits,
         proceedings, hearings and investigations which, individually or in the
         aggregate, are not reasonably likely to have a Company Material Adverse
         Effect. As of the date of this Agreement, there are no judicial or
         administrative actions, proceedings or, to the Company's knowledge,
         investigations pending or, to the Company's knowledge, threatened that
         question the validity of this Agreement or any action taken or to be
         taken by the Company in connection with this Agreement,

                  (b)      Except for instances of noncompliance which,
         individually or in the aggregate, are not reasonably likely to have a
         Company Material Adverse Effect, and except for Environmental Laws,
         which are the subject of Section 4.12, the Company and its Subsidiaries
         are in compliance with each constitutional provision, law, rule,
         regulation, permit, order, writ, injunction, judgment or decree to
         which the Company or any of its Subsidiaries is subject.

         Section 4.9 Contract Matters.

                  (a)      Neither the Company nor any of its Subsidiaries is in
         default or violation of (and no event has occurred which with notice or
         the lapse of time or both would constitute a default or violation) of
         any term, condition or provision of any note, mortgage, indenture, loan
         agreement, other evidence of indebtedness, guarantee, license, lease,
         agreement or other contract, instrument or contractual obligation to
         which the Company or any of its Subsidiaries is a party or by which any
         of their respective assets is



                                       12
<PAGE>   19

         bound, except for any such default or failure which, individually or in
         the aggregate, is not reasonably likely to have a Company Material
         Adverse Effect.

                  (b)      With respect to each contract, agreement, bid or
         proposal between the Company or any of its Subsidiaries and any
         domestic or foreign government or governmental agency, including any
         facilities contract for the use of government-owned facilities (a
         "Government Contract"), and each contract, agreement, bid or proposal
         that is a subcontract between the Company or any of its Subsidiaries
         and a third party relating to a contract between such third party and
         any domestic or foreign government or governmental agency (a
         "Government Subcontract"), (i) the Company and each of its Subsidiaries
         have complied with all terms and conditions of such Government Contract
         or Government Subcontract, including all clauses, provisions and
         requirements incorporated expressly, by reference or by operation of
         law therein, (ii) the Company and each of its Subsidiaries have
         complied with all requirements of all laws, rules, regulations or
         agreements pertaining to such Government Contract or Government
         subcontract, including where applicable the Cost Accounting Standards
         disclosure statement of the Company or such Subsidiary, (iii) all
         representations and certifications executed, acknowledged or set forth
         in or pertaining to such Government Contract or Government Subcontract
         were complete and correct as of their effective dates and the Company
         and its Subsidiaries have complied with all such representations and
         certifications, (iv) neither the United States government nor any prime
         contractor, subcontractor or other person or entity has notified the
         Company or any of its Subsidiaries, in writing or orally, that the
         Company or any of its Subsidiaries has breached or violated any law,
         rule, regulation, certification, representation, clause, provision or
         requirement pertaining to such Government Contract or Government
         Subcontract, (v) neither the Company nor any of its Subsidiaries has
         received any notice of termination for convenience, notice of
         termination for default, cure notice or show cause notice pertaining to
         such Government Contract or Government Subcontract, (vi) other than in
         the ordinary course of business, no cost incurred by the Company or any
         of its Subsidiaries pertaining to such Government Contract or
         Government Subcontract has been questioned or challenged, is the
         subject of any audit or investigation or has been disallowed by any
         government or governmental agency, and (vii) no payments due to the
         Company or any of its Subsidiaries pertaining to such Government
         Contract or Government Subcontract has been withheld or set off, nor
         has any claim been made to withhold or set off money, and the Company
         and its Subsidiaries are entitled to all progress payments received to
         date with respect thereto, except for any such failure, noncompliance,
         inaccuracy, breach, violation, termination, cost, investigation,
         disallowance or payment which, individually or in the aggregate, is not
         reasonably likely to have a Company Material Adverse Effect.

                  (c)      To the Company's knowledge, neither the Company nor
         any of its Subsidiaries any of the respective directors, officers,
         employees, consultants or agents of the Company or any of its
         Subsidiaries is or since January 1, 1997 has been under administrative,
         civil or criminal investigation, indictment or information by any



                                       13
<PAGE>   20

         government or governmental agency or any audit or in investigation by
         the Company or any of its Subsidiaries with respect to any alleged act
         or omission arising under or relating to any Government Contract or
         Government Subcontract.

                  (d)      There exist (i) no material outstanding claims
         against the Company or any of its Subsidiaries, either by any
         government or governmental agency or by any prime contractor,
         subcontractor, vendor or other person or entity, arising under or
         relating to any Government Contract or Government Subcontract, and (ii)
         no disputes between the Company or any of its Subsidiaries and the
         United States government under the Contract Disputes Act or any other
         federal statute or between the Company or any of its Subsidiaries and
         any prime contractor, subcontractor or vendor arising under or relating
         to any Government Contract or Government Subcontract, except for any
         such claim or dispute which, individually or in the aggregate, is not
         reasonably likely to have a Company Material Adverse Effect. Neither
         the Company nor any of its Subsidiaries has (i) any interest in any
         pending or potential material claim against any government or
         governmental agency or (ii) any interest in any pending claim against
         any prime contractor, subcontractor or vendor arising under or relating
         to any Government Contract or Government Subcontract, which, if
         adversely determined against the Company, individually or in the
         aggregate, is reasonably likely to have a Company Material Adverse
         Effect.

                  (e)      Since January 1, 1997, neither the Company nor any of
         its Subsidiaries has been debarred or suspended from participation in
         the award of contracts with the United States government or any other
         government or governmental agency (excluding for this purpose
         ineligibility to bid on certain contracts due to generally applicable
         bidding requirements). To the Company's knowledge, there exists no
         facts or circumstances that would warrant the institution of suspension
         or debarment proceedings or the finding of nonresponsibility or
         ineligibility on the part of the Company, any of its Subsidiaries or
         any of their respective directors, officers or employees. No payment
         has been made by or on behalf of the Company or any of its Subsidiaries
         in connection with any Government Contract or Government Subcontract in
         violation of applicable procurement laws, rules and regulations or in
         violation of, or requiring disclosure pursuant to, the Foreign Corrupt
         Practices Act, as amended, except for any such violation or failure to
         disclose which, individually or in the aggregate, is not reasonably
         likely to have a Company Material Adverse Effect.

                  (f)      The Company Disclosure Letter sets forth, as of the
         date of this Agreement, a list of each contract by the Company or any
         of its Subsidiaries with any customer or supplier that (i) involves an
         obligation of $3,000,000 or more (per annum, if applicable) or (ii)
         represents one of the top three contracts (in dollar value) for any
         particular business unit of the Company, provided the value of any such
         contract exceeds $500,000 (per annum, if applicable), and identifies
         the parties to the contract, the general



                                       14
<PAGE>   21

         nature of the contract and the term and amount of each contract,
         whether a prime contract, subcontract or otherwise.

         Section 4.10 Tax Matters.

                  (a)      For each taxable period beginning on or after January
         1, 1997, the Company and each of its Subsidiaries have timely filed all
         required returns, declarations, reports, claims for refund or
         information returns and statements, including any schedule or
         attachment thereto (collectively "Tax Returns"), relating to any
         federal, state, local or foreign net income, gross income, gross
         receipts, sales, use, ad valorem, transfer, franchise, profits,
         license, lease, service, service use, withholding, payroll, employment,
         excise, severance, stamp, occupation, premium, property, windfall
         profits, customs, duties or other tax, fee, assessment or charge,
         including any interest, penalty or addition thereto and including any
         liability for the taxes of any other person or entity under Treasury
         Regulation Section 1.1502-6 (or any similar state, local or foreign
         law, rule or regulation), and any liability in respect of any tax as a
         transferee or successor, by law, contract or otherwise (collectively
         "Taxes"), and all such Tax Returns are accurate and complete in all
         respects, except to the extent any such failure to file or any such
         inaccuracy in any filed Tax Return, individually or in the aggregate,
         is not reasonably likely to have a Company Material Adverse Effect. All
         Taxes owed by the Company or any of its Subsidiaries (whether or not
         shown on any Tax Return) have been paid or adequately reserved for in
         accordance with generally accepted accounting principles in the
         financial statements of the Company, except (i) for any Taxes related
         to any period prior to January 1, 1997 for which the Company would be
         entitled to indemnification from Olin Corporation and are not required
         to be reserved in the financial statements of the Company in accordance
         with generally accepted accounting principles or (ii) except to the
         extent any such failure to pay or reserve, individually or in the
         aggregate, is not reasonably likely to have a Company Material Adverse
         Effect.

                  (b)      The most recent financial statements contained in the
         Company SEC Documents reflect adequate reserves in accordance with
         generally accepted accounting principles for all Taxes payable by the
         Company and its Subsidiaries for all Tax periods and portions thereof
         through the date of such financial statements, except to the extent
         that any failure to so reserve, individually or in the aggregate, is
         not reasonably likely to have a Company Material Adverse Effect. No
         deficiency with respect to Taxes has been proposed, asserted or
         assessed against the Company or any of its Subsidiaries and no requests
         for waivers of the time to assess any such Taxes are pending, except to
         the extent any such deficiency or request for waiver, individually or
         in the aggregate, is not reasonably likely to have a Company Material
         Adverse Effect.

                  (c)      For each taxable period beginning on or after January
         1, 1997, none of the federal income Tax Returns of the Company or any
         of its Subsidiaries consolidated in such Tax Returns have been examined
         by and settled with the Internal Revenue Service.



                                       15
<PAGE>   22

                  (d)      Except for Liens for current Taxes not yet due and
         payable or which are being contested in good faith, there is no Lien
         affecting any of the assets or properties of the Company or any of its
         Subsidiaries that arose in connection with any failure or alleged
         failure to pay any Tax, except for Liens which, individually or in the
         aggregate, are not reasonably likely to have a Company Material Adverse
         Effect.

                  (e)      Neither the Company nor any of its Subsidiaries is a
         party to any Tax allocation or Tax sharing agreement with any person
         other than the Company or any of its Subsidiaries.

                  (f)      No amount payable by either the Company or any of its
         Subsidiaries will be subject to disallowance under Section 162(m) of
         the Internal Revenue Code of 1986, as amended (the "Code").

                  (g)      Neither the Company nor any of its Subsidiaries has
         made any payments, is obligated to make any payments or is a party to
         any agreement that could obligate it to make any payments as a result
         of the execution and delivery of this Agreement, the obtaining of the
         Company Stockholder Approval or the consummation of the Merger or any
         other transaction contemplated by this Agreement (including as a result
         of termination of employment on or following the Effective Time) that
         would not be fully deductible by reason of Section 280G of the Code.

         Section 4.11 Employee Benefit Matters.

                  (a)      The Company Disclosure Letter lists each plan,
         program, agreement or arrangement constituting a material employee
         welfare benefit plan (an "Employee Welfare Benefit Plan") as defined in
         Section 3(1) of the Employee Retirement Income Security Act of 1974, as
         amended ("ERISA"), or a material employee pension benefit plan (an
         "Employee Pension Benefit Plan") as defined in Section 3(2) of ERISA,
         and each other material employee benefit plan, agreement, program or
         arrangement or employment practice maintained by the Company or any of
         its Subsidiaries with respect to any of its current or former employees
         or to which the Company or any of the Company Subsidiaries contributes
         or is required to contribute with respect to any of its current or
         former employees (collectively, the "Company Plans"). With respect to
         each Company Plan:

                           (i)      such Company Plan (and each related trust,
                  insurance contract or fund) has been administered in a manner
                  consistent in all respects with its written terms and complies
                  in form and operation with the applicable requirements of
                  ERISA and the Code and other applicable laws, except for
                  failures of administration or compliance which, individually
                  or in the aggregate, are not reasonably likely to have a
                  Company Material Adverse Effect;



                                       16
<PAGE>   23

                           (ii)     all required reports and descriptions
                  (including Form 5500 Annual Reports, Summary Annual Reports,
                  PBGC-1's and Summary Plan Descriptions) have been filed or
                  distributed appropriately with respect to such Company Plan,
                  except for failures of filing or distribution which,
                  individually or in the aggregate, are not reasonably likely to
                  have a Company Material Adverse Effect;

                           (iii)    the requirements of Part 6 of Subtitle B of
                  Title I of ERISA and Section 4980B of the Code have been met
                  with respect to each such Company Plan which is an Employee
                  Welfare Benefit Plan, except for failures which, individually
                  or in the aggregate, are not reasonably likely to have a
                  Company Material Adverse Effect;

                           (iv)     all material contributions, premiums or
                  other payments (including all employer contributions and
                  employee salary reduction contributions) that are required to
                  be made under the terms of any Company Plan have been timely
                  made or have been reflected on the financial statements
                  contained in the Company's most recent Form 10-Q filed with
                  the SEC;

                           (v)      each such Company Plan which is an Employee
                  Pension Benefit Plan intended to be a "qualified plan" under
                  Section 401(a) of the Code has received a favorable
                  determination letter from the Internal Revenue Service, and no
                  event has occurred which could reasonably be expected to cause
                  the loss, revocation or denial of any such favorable
                  determination letter;

                           (vi)     the Company has made available and will
                  continue to make available to the Parent Corporation, upon its
                  request, correct and complete copies of the plan documents and
                  most recent summary plan descriptions, the most recent
                  determination letter received from the Internal Revenue
                  Service, the most recent Form 5500 Annual Report, the most
                  recent actuarial report, the most recent audited financial
                  statements, and all related trust agreements, insurance
                  contracts and other funding agreements that implement such
                  Company Plan (but excluding the failure to make available any
                  such document which is not material). The valuation summaries
                  provided by the Company to the Parent Corporation reasonably
                  represent the assets and liabilities attributable to Company
                  Plans calculated in accordance with the Company's past
                  practices, but excluding any failure which, individually or in
                  the aggregate, is not reasonably likely to have a Company
                  Material Adverse Effect;

                           (vii)    no Company Plan which is an Employee Pension
                  Benefit Plan has been amended in any manner which would
                  require the posting of security under Section 401(a)(29) of
                  the Code or Section 307 of ERISA, except any such action



                                       17
<PAGE>   24

                  which, individually or in the aggregate, is not reasonably
                  likely to have a Company Material Adverse Effect;

                           (viii)   neither the Company nor any of its
                  Subsidiaries has communicated to any employee (excluding
                  internal memoranda to management) any plan or commitment,
                  whether or not legally binding, to create any additional
                  employee benefit plan or to modify or change any Company Plan
                  affecting any employee or terminated employee of the Company
                  or any of its Subsidiaries, except any such action which,
                  individually or in the aggregate, is not reasonably likely to
                  have a Company Material Adverse Effect;

                           (ix)     the Company Disclosure Letter includes a
                  workers' compensation paid loss summary through the date of
                  this Agreement on an accident year basis; the Company
                  Disclosure Letter additionally includes a recent listing of
                  all open workers compensation claims showing claimant name,
                  claim number, description, paid loss and case reserve, except
                  for any such claim which, individually or in the aggregate, is
                  not reasonably likely to have a Company Material Adverse
                  Effect;

                           (x)      the Company has never been nor is a party to
                  or otherwise bound by any advance agreement or similar
                  arrangement with any foreign, federal, state or local
                  government or regulatory body relating to the allowability,
                  allocation or reimbursement of benefit costs or other matters
                  in connection with any Company Plan;

                           (xi)     any Company Plan is by its terms able to be
                  amended or terminated by the Company; and

                           (xii)    there are no liabilities or obligations
                  relating to any individual's current or former employment with
                  the Company or its Subsidiaries or related entities arising in
                  connection with any violation of any applicable law, except
                  for any liabilities or obligations which, individually or in
                  the aggregate, is not reasonably likely to have a Company
                  Material Adverse Effect.

                  (b)      With respect to each Employee Welfare Benefit Plan or
         Employee Pension Benefit Plan that the Company or any of its
         Subsidiaries maintains or ever has maintained, or to which any of them
         contributes, ever has contributed or ever has been required to
         contribute:

                           (i)      no such Employee Pension Benefit Plan (other
                  than any Multiemployer Plan) has been completely or partially
                  terminated (other than any termination which, individually or
                  in the aggregate, is not reasonably likely to have a Company
                  Material Adverse Effect), no reportable event (as defined in
                  Section 4043 of ERISA) for which the 30-day reporting
                  requirement has not been waived, as to which notices would be
                  required to be filed with the Pension Benefit



                                       18
<PAGE>   25

                  Guaranty Corporation, has occurred but has not yet been so
                  reported (but excluding any failure to report which,
                  individually or in the aggregate, is not reasonably likely to
                  have a Company Material Adverse Effect), and no proceeding by
                  the Pension Benefit Guaranty Corporation to terminate such
                  Employee Pension Benefit Plan (other than any Multiemployer
                  Plan) has been instituted;

                           (ii)     there have been no non-exempt prohibited
                  transactions (as defined in Section 406 of ERISA and Section
                  4975 of the Code) with respect to such plan, no fiduciary has
                  any liability for breach of fiduciary duty or any other
                  failure to act or comply in connection with the administration
                  or investment of the assets of such plan, and no action, suit,
                  proceeding, hearing or, to the Company's knowledge,
                  investigation with respect to the administration or the
                  investment of the assets of such plan (other than routine
                  claims for benefits) is pending or, to the Company's
                  knowledge, threatened, but excluding, from each of the
                  foregoing, events or circumstances which, individually or in
                  the aggregate, are not reasonably likely to have a Company
                  Material Adverse Effect; and

                           (iii)    other than routine claims for benefits, none
                  of the Company or any of its Subsidiaries or related entities
                  has incurred, and the Company has no reason to expect that the
                  Company or any of its Subsidiaries or related entities will
                  incur, any liability under Subtitle C or D Title IV of ERISA
                  or under the Code with respect to any Company Plan that is an
                  Employee Pension Benefit Plan.

                  (c)      Neither the Company nor any of its Subsidiaries
         presently contributes to, nor, since January 1, 1997, have they been
         obligated to contribute to, a Multiemployer Plan.

                  (d)      Other than pursuant to a Company Plan, neither the
         Company nor any of its Subsidiaries has any obligation to provide
         medical, health, life insurance or other welfare benefits for current
         or future retired or terminated employees, their spouses or their
         dependents (other than in accordance with Section 4980B of the Code).

                  (e)      No Company Plan contains any provision that would
         prohibit the transactions contemplated by this Agreement, would give
         rise to any severance, termination or other payments as a result of the
         transactions contemplated by this Agreement (alone or together with the
         occurrence of any other event), or would cause any payment,
         acceleration or increase in benefits provided by any Company Plan as a
         result of the transactions contemplated by this Agreement (alone or
         together with the occurrence of any other event), but excluding from
         this paragraph (e) any payment or any benefit, acceleration or increase
         to directors and employees, as to the top tier employees in the amounts
         (based on the Company's good faith estimates as of the date of this
         Agreement) and to the individuals specifically set forth in, and as to
         other employees in the aggregate amount (based on the Company's good
         faith estimates as of the date of this Agreement) specifically set
         forth in, the Company Disclosure Letter and excluding any



                                       19
<PAGE>   26

         non-employee or non-director payment or benefit acceleration or
         increase which is not material.

                  (f)      No individual classified as a non-employee for
         purposes of receiving employee benefits (such an independent
         contractor, leased employee, consultant or special consultant),
         regardless of treatment for other purposes, is eligible pursuant to the
         terms thereof to participate in or receive benefits under any Company
         Plan intended to qualify under Section 401(a) of the Code.

                  (g)      The provisions of Section 6.01(a) of the Distribution
         Agreement by and between Olin Corporation and Company dated December
         30, 1996 shall continue to apply to affected employees following the
         Effective Time.

                  (h)      The PRIME Plan does not take into account as
         compensation for plan allocation purposes any bonus bank payment from
         the Company Incentive Compensation Plan that may be paid on account of
         the Merger contemplated herein.

                  (i)      Certain of the Company Plans have been amended as
         stated in the Company Disclosure Letter.

                  (j)      The Company has previously provided to the Parent
         Corporation a list of each Company owned life insurance policy (each a
         "Coli Policy"). With respect to each Coli Policy:

                           (i)      for purposes of Code Section 264(a)(4), each
                  Coli Policy qualifies as a contract purchased on or before
                  June 20, 1986, no change has taken place prior to the date of
                  this Agreement and will not be taken on or before the Closing
                  Date to affect such status, and this status has never been
                  challenged by the Internal Revenue Service (or any other
                  government agency) in any audit or any other administrative or
                  judicial proceeding;

                           (ii)     the aggregate cash surrender value of the
                  Coli Policies as of December 31, 1999 is set forth in the
                  materials previously disclosed to the Parent Corporation; and

                           (iii)    there are no loans against such policies.

         Section 4.12 Environmental Matters.

                  (a)      Except for matters which, individually or in the
         aggregate, are not reasonably likely to have a Company Material Adverse
         Effect: (i) the Company and its Subsidiaries are, and, to the Company's
         knowledge, since January 1, 1997 have been in compliance in all
         respects with all Environmental Laws (as defined in Section 4.12(b)) in
         connection with the ownership, use, maintenance and operation of their
         owned, operated



                                       20
<PAGE>   27

         or leased real property used by them and otherwise in connection with
         their operations, (ii) neither the Company nor any of its Subsidiaries
         has any liability, whether contingent or otherwise, under, or for any
         violations of, any Environmental Law, (iii) no notices of any violation
         or alleged violation of, non-compliance or alleged noncompliance with
         or any liability under, any Environmental Law have been received by the
         Company or any of its Subsidiaries since January 1, 1997 that are
         currently outstanding and unresolved as of the date of this Agreement,
         and, to the Company's knowledge, there are no other outstanding notices
         that are unresolved for which the Company or any of its Subsidiaries
         have responsibility, (iv) there are no administrative, civil or
         criminal writs, injunctions, decrees, orders or judgments outstanding
         or any administrative, civil or criminal actions, suits, claims,
         proceedings or, to the Company's knowledge, investigations pending or,
         to the Company's knowledge, threatened, relating to compliance with or
         liability under any Environmental Law affecting the Company or any of
         its Subsidiaries, (v) the Company and its Subsidiaries possess valid
         environmental permits required by any Environmental Law in connection
         with the ownership, use, maintenance and operation of its owned,
         operated and leased real property, and (vi) to the knowledge of the
         Company, no material changes or alterations in the practices or
         operations of the Company or any of its Subsidiaries as presently
         conducted are anticipated to be required in the future in order to
         permit the Company and its Subsidiaries to continue to comply in all
         material respects with all applicable Environmental Laws. The Company
         Disclosure Letter sets forth the amount reserved as of October 1, 2000
         by the Company for compliance with all Environmental Laws.

                  (b)      The term "Environmental Law" as used in this
         Agreement means any law, rule, regulation, permit, order, writ,
         injunction, judgment or decree with respect to the preservation of the
         environment or the promotion of worker health and safety, including any
         law, rule, regulation, permit, order, writ, injunction, judgment or
         decree relating to Hazardous Materials (as defined in Section 4.12(c)).
         Without limiting the generality of the foregoing, the term will
         encompass each of the following statutes and the regulations
         promulgated thereunder, and any similar applicable state, local or
         foreign law, rule or regulation, each as amended (i) the Comprehensive
         Environmental Response, Compensation, and Liability Act of 1980, (ii)
         the Solid Waste Disposal Act, (iii) the Hazardous Materials
         Transportation Act, (iv) the Toxic Substances Control Act, (v) the
         Clean Water Act, (vi) the Clean Air Act, (vii) the Safe Drinking Water
         Act, (viii) the National Environmental Policy Act of 1969, (ix) the
         Superfund Amendments and Reauthorization Act of 1986, (x) Title III of
         the Superfund Amendments and Reauthorization Act, (xi) the Federal
         Insecticide, Fungicide and Rodenticide Act and (xii) the provisions of
         the Occupational Safety and Health Act of 1970 relating to the handling
         of and exposure to Hazardous Materials.

                  (c)      The term "Hazardous Materials" as used in this
         Agreement means each and every element, compound, chemical mixture,
         contaminant, pollutant, material, waste or other substance (i) that is
         defined, determined or identified as hazardous or toxic under any
         Environmental Law or (ii) the spilling, leaking, pumping, pouring,
         emitting,



                                       21
<PAGE>   28

         emptying, discharging, injecting, storing, escaping, leaching, dumping,
         discarding, burying, abandoning or disposing into the environment of
         which is prohibited under any Environmental Law. Without limiting the
         generality of the foregoing, the term will include (i) "hazardous
         substances" as defined in the Comprehensive Environmental Response,
         Compensation, and Liability Act of 1980, and regulations promulgated
         thereunder, each as amended, (ii) "extremely hazardous substance" as
         defined in the Superfund Amendments and Reauthorization Act of 1986, or
         Title III of the Superfund Amendments and Reauthorization Act and
         regulations promulgated thereunder, each as amended, (iii) "hazardous
         waste" as defined in the Solid Waste Disposal Act and regulations
         promulgated thereunder, each as amended, (iv) "hazardous materials" as
         defined in the Hazardous Materials Transportation Act and the
         regulations promulgated thereunder, each as amended, (v) "chemical
         substance or mixture" as defined in the Toxic Substances Control Act
         and regulation promulgated thereunder, each as amended, (vi) petroleum
         and petroleum products and byproducts and (vii) asbestos.

         Section 4.13 Title. The Company and its Subsidiaries has good and, in
the case of real property, marketable title to all the properties and assets
purported to be owned by them, free and clear of all Liens except (a) Liens for
current Taxes or assessments not delinquent, (b) builder, mechanic,
warehousemen, materialmen, contractor, workmen, repairmen, carrier or other
similar Liens arising and continuing in the ordinary course of business for
obligations that are not delinquent, (c) the rights, if any, of vendors having
possession of tooling of the Company and its Subsidiaries, (d) liens arising
from the receipt by the Company and its Subsidiaries of progress payments by the
United States government, (e) Liens securing rental payments under capital lease
arrangements and (f) other Liens which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect (collectively,
"Permitted Liens").

         Section 4.14 Intellectual Property Matters.

                  (a)      The Company and its Subsidiaries own or have the
         right to use pursuant to valid license, sublicense, agreement or
         permission all items of Intellectual Property necessary for their
         operations as presently conducted and as presently proposed to be
         conducted, except where the failure to have such rights, individually
         or in the aggregate, are not reasonably likely to have a Company
         Material Adverse Effect. Neither the Company nor any of its
         Subsidiaries has received any charge, complaint, claim, demand or
         notice alleging any interference, infringement, misappropriation or
         violation of the Intellectual Property rights of any third party. Since
         January 1, 1997, to the Company's knowledge, no third party has
         interfered with, infringed upon, misappropriated or otherwise come into
         conflict with any Intellectual Property rights of the Company or any of
         its Subsidiaries, except for misappropriations and violations which,
         individually or in the aggregate, are not reasonably likely to have a
         Company Material Adverse Effect.

                  (b)      The term "Intellectual Property" as used in this
         Agreement means, collectively, patents, patent disclosures, trademarks,
         service marks, logos, trade names, copyrights and mask works, and all
         registrations, applications, reissuances, continuations,



                                       22
<PAGE>   29

         continuations-in-part, revisions, extensions, reexaminations and
         associated good will with respect to each of the foregoing, computer
         software (including source and object codes), computer programs,
         computer data bases and related documentation and materials, data,
         documentation, trade secrets, confidential business information
         (including ideas, formulas, compositions, inventions, know-how,
         manufacturing and production processes and techniques, research and
         development information, drawings, designs, plans, proposals and
         technical data, financial, marketing and business data and pricing and
         cost information) and all other intellectual property rights (in
         whatever form or medium).

         Section 4.15 Labor Matters. There are no controversies pending or, to
the Company's knowledge, threatened between the Company or any of its
Subsidiaries and any of their current or former employees or any labor or other
collective bargaining unit representing any such employee that are reasonably
likely to have a Company Material Adverse Effect or are reasonably likely to
result in a material labor strike, dispute, slow-down or work stoppage. The
Company is not aware of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company or any of its Subsidiaries. To the Company's knowledge, as of the date
of this Agreement no executive, key employee or group of employees of the
Company or any of its Subsidiaries has any plan to terminate employment with the
Company and its Subsidiaries, which termination, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect. As of
the date of this Agreement, there are no current DOL, OFCCP or EEOC audits. As
of the date of this Agreement, there are no OFCCP concilliation agreements in
effect.

         Section 4.16 Rights Agreement. The Company has taken all requisite
action under the Rights Agreement dated as of February 1, 2000 between the
Company and The Bank of New York (the "Rights Agreement") to cause the
provisions of the Rights Agreement or any other similar agreement not to be
applicable to this Agreement, the Merger or the other transactions contemplated
hereby.

         Section 4.17 State Takeover Laws. The resolutions adopted by the Board
of Directors of the Company approving this Agreement are sufficient to cause the
provisions of Article 14 of the Virginia Act to be inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby. Article
14.1 of the Virginia Act is not applicable to this Agreement, the Merger and the
other transactions contemplated hereby pursuant to Article VII, Section 5 of the
Bylaws of the Company as in effect on the date of this Agreement. To the
Company's knowledge, no other fair price, moratorium, control share acquisition
or other form of antitakeover statute, rule or regulation of any state or
jurisdiction applies or purports to apply to this Agreement, the Merger or the
other transactions contemplated hereby.

         Section 4.18 Brokers' Fees. Except for the fees and expenses payable by
the Company to Goldman, Sachs & Co., neither the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any financial advisor, broker, finder or agent with respect to the transactions
contemplated by this Agreement. The Company has delivered to the Parent
Corporation a correct and complete copy of the engagement letter between the
Company



                                       23
<PAGE>   30

and Goldman, Sachs & Co. relating to the transactions contemplated by this
Agreement, which letter describes the fees payable to Goldman, Sachs & Co. in
connection with this Agreement.

         Section 4.19 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement in the aggregate,
disregarding all qualifications and exceptions contained therein relating to
materiality or Company Material Adverse Effect, are true and correct with only
such exceptions which in the aggregate are not reasonably likely to have a
Company Material Adverse Effect. In the event a representation and warranty is
qualified by a Company Material Adverse Effect exception and there occurs a
Company Material Adverse Effect with respect thereto, such representation and
warranty shall be conclusively deemed breached without regard to whether the
Company Material Adverse Effect was or was not reasonably likely.

                                    ARTICLE 5

            REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION

         Each of the Parent Corporation and the Acquisition Corporation, as the
case may be, represents and warrants to the Company that:

         Section 5.1 Organization. Each of the Parent Corporation and the
Acquisition Corporation is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as presently being conducted. All of the outstanding
shares of the capital stock of the Acquisition Corporation have been validly
issued, are fully paid and nonassessable and are owned by the Parent Corporation
free and clear of any Lien. The Acquisition Corporation has been organized
solely for the purpose of engaging in the Merger and the other transactions
contemplated by this Agreement and has not engaged in any business other than
contemplated by this Agreement.

         Section 5.2 Authorization of Transaction; Enforceability. Each of the
Parent Corporation and the Acquisition Corporation has full corporate power and
authority and has taken all requisite corporate action to enable it to execute
and deliver this Agreement, to consummate the Merger and the other transactions
contemplated hereby and to perform its obligations hereunder. Each of the Board
of Directors of the Parent Corporation and the Board of Directors of the
Acquisition Corporation has duly adopted resolutions, by the requisite majority
vote, approving this Agreement, the Merger and the other transactions
contemplated hereby and determining that the terms and conditions of this
Agreement, the Merger and the other transactions contemplated hereby are in the
best interests of the Parent Corporation and its stockholders and of the
Acquisition Corporation and its sole stockholder, as the case may be. The
foregoing resolutions of each such Board of Directors have not been modified,
supplemented or rescinded and remain in full force and effect as of the date of
this Agreement. This Agreement constitutes the valid and legally binding
obligation of each of the Parent



                                       24
<PAGE>   31

Corporation and the Acquisition Corporation, enforceable against the Parent
Corporation and the Acquisition Corporation in accordance with its terms and
conditions.

         Section 5.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Securities
Exchange Act and the "blue sky" laws and regulations of various states, (b) the
filing of a Notification and Report Form and related material with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act and any other filing required by any other Antitrust
Law, (c) the filing of articles of merger pursuant to the Virginia Act and a
certificate of merger under the Delaware Act, and (d) any filings required under
the rules and regulations of the New York Stock Exchange, neither the execution
and delivery of this Agreement by the Parent Corporation or the Acquisition
Corporation, nor the consummation by the Parent Corporation or the Acquisition
Corporation of the transactions contemplated hereby, will constitute a violation
of, be in conflict with, or result in the breach of (i) the charter or bylaws of
the Parent Corporation or the Acquisition Corporation, (ii) any constitutional
provision, law, rule, regulation, permit, order, writ, injunction, judgment or
decree to which the Parent Corporation or the Acquisition Corporation is subject
or (iii) any material agreement or commitment to which the Parent Corporation or
the Acquisition Corporation is a party or by which either of them is bound or
subject.

         Section 5.4 Adequate Cash Resources. The Parent Corporation has
adequate resources to provide the aggregate Merger Consideration and the Option
Consideration in cash in the amount and at the time required by Section 1.9 or
by Article 3.

         Section 5.5 No Capital Ownership in the Company. Neither the Parent
Corporation nor any of its Subsidiaries owns any shares of Company Common Stock.

                                    ARTICLE 6

                                    COVENANTS

         Section 6.1 General. Each of the parties will use its respective best
efforts to take all action and to do all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.

         Section 6.2 Notices and Consents. Each of the parties prior to the
Closing Date will give all notices to third parties and governmental entities
and will use its respective best efforts to obtain all third party and
governmental consents and approvals that are required in connection with the
transactions contemplated by this Agreement. Within five business days following
the execution and delivery of this Agreement, each of the parties will file a
Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, will use its respective best efforts to obtain early
termination of the applicable waiting period and will make all further filings
pursuant thereto or any other Antitrust Law that may be necessary, proper or
advisable. The



                                       25
<PAGE>   32

foregoing two sentences will not be deemed to require the Parent Corporation to
enter into any agreement, consent decree or other commitment requiring the
Parent Corporation or any of its Subsidiaries to divest or hold separate any
assets (including any assets of the Company or any of its Subsidiaries) or to
take any other action which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on the business, financial condition,
operations or results of operations of the Parent Corporation and its
Subsidiaries taken as a whole (other than changes or effects resulting from
occurrences relating to the economy in general, the securities markets in
general or the Parent Corporation's industry in general and not specifically
relating to the Parent Corporation) (a "Parent Corporation Material Adverse
Effect").

         Section 6.3 Interim Conduct of the Company. Except as expressly
contemplated by this Agreement, as set forth in the Company Disclosure Letter,
as required by law or by the terms of any contract in effect on the date of this
Agreement or as the Parent Corporation may approve, which approval will not be
unreasonably withheld or delayed, from and after the date of this Agreement
through the Closing Date, the Company will, and will cause each of its
Subsidiaries to, conduct its operations in accordance with its ordinary course
of business, consistent with past practice, and in accordance with such covenant
will not, and will not cause or permit any of its Subsidiaries to:

                  (a)      amend its articles of incorporation or bylaws or file
         any certificate of designation or similar instrument with respect to
         any shares of its authorized but unissued capital stock;

                  (b)      authorize or effect any stock split or combination or
         reclassification of shares of its capital stock;

                  (c)      declare or pay any dividend or distribution with
         respect to its capital stock (other than the regular quarterly dividend
         of $0.075 per share of Company Common Stock and dividends payable by a
         Subsidiary of the Company to the Company or another Subsidiary), issue
         or authorize the issuance of any shares of its capital stock (other
         than in connection with the exercise of currently outstanding Stock
         Options listed in the Company Disclosure Letter) or any other
         securities exercisable or exchangeable for or convertible into shares
         of its capital stock, or repurchase, redeem or otherwise acquire for
         value any shares of its capital stock or any other securities
         exercisable or exchangeable for or convertible into shares of its
         capital stock;

                  (d)      merge or consolidate with any entity;

                  (e)      sell, lease or otherwise dispose of any of its
         capital assets, including any shares of the capital stock of any of its
         Subsidiaries, other than sales, leases or other dispositions of
         machinery, equipment, tools, vehicles and other operating assets no
         longer required in its operations made in the ordinary course of
         business, consistent with past practice;



                                       26
<PAGE>   33

                  (f)      liquidate, dissolve or effect any recapitalization or
         reorganization in any form;

                  (g)      acquire any interest in any business (whether by
         purchase of assets, purchase of stock, merger or otherwise) or enter
         into any joint venture;

                  (h)      create, incur, assume or suffer to exist any
         indebtedness for borrowed money (including capital lease obligations),
         other than indebtedness existing as of the date of this Agreement,
         borrowings under existing credit lines in the ordinary course of
         business, consistent with past practice, and intercompany indebtedness
         among the Company and its Subsidiaries arising in the ordinary course
         of business, consistent with past practice;

                  (i)      create, incur, assume or suffer to exist any Lien
         (other than Permitted Liens) affecting any of its material assets or
         properties;

                  (j)      except as required as the result of changes in United
         States generally accepted accounting principles, change any of the
         accounting principles or practices used by it or revalue in any
         material respect any of its assets or properties, other than
         write-downs of inventory or accounts receivable in the ordinary course
         of business, consistent with past practice;

                  (k)      except as required under the terms of any collective
         bargaining agreement in effect as of the date of this Agreement or as
         required by applicable law, grant any general or uniform increase in
         the rates of pay of its employees or grant any increase in the benefits
         under any bonus or employee benefit plan or other arrangement, contract
         or commitment;

                  (l)      except for any increase required under the terms of
         any collective bargaining agreement or consulting, executive or
         employment agreement in effect on the date of this Agreement or as
         required by applicable law, increase the compensation payable or to
         become payable to officers and salaried employees with a base salary in
         excess of $100,000 per year or increase any bonus, insurance, pension
         or other benefit plan, payment or arrangement made to, for or with any
         such officers or salaried employees;

                  (m)      enter into any contract or commitment or engage in
         any transaction with any affiliated person or entity (other than the
         Company or its Subsidiaries) or enter into any contract or commitment
         or engage in any transaction with any unaffiliated person or entity
         which, to the Company's knowledge, is reasonably likely to have a
         Company Material Adverse Effect;

                  (n)      make any material Tax election or settle or
         compromise any material Tax liability, except in the ordinary course of
         business;



                                       27
<PAGE>   34

                  (o)      pay, discharge or satisfy any claims, liabilities or
         obligations other than the payment, discharge and satisfaction in the
         ordinary course of business of liabilities reflected or reserved for in
         the consolidated financial statements of the Company or otherwise
         incurred in the ordinary course of business, consistent with past
         practice;

                  (p)      settle or compromise any material pending or
         threatened suit, action or proceeding; or

                  (q)      commit to do any of the foregoing.

         Section 6.4 Preservation of Organization. Subject to compliance with
the provisions of Section 6.3, the Company will, and will cause each of its
Subsidiaries to, use its best efforts to preserve its business organization
intact in all material respects, use its reasonable efforts to keep available to
the Company and its Subsidiaries, the present officers and employees of the
Company and its Subsidiaries as a group and use its best efforts to preserve the
present relationships of the Company and its Subsidiaries with suppliers and
customers and others having business relations with the Company and its
Subsidiaries.

         Section 6.5 Full Access. The Company will, and will cause its
Subsidiaries and its and their representatives to, afford the Parent Corporation
and its representatives reasonable access, upon reasonable notice at all
reasonable times to all premises, properties, books, records, contracts and
documents of or pertaining to the Company and its Subsidiaries. Notwithstanding
the foregoing, neither party will be required to provide access or to disclose
information where such access or disclosure would contravene any law or contract
or would result in the waiver of any legal privilege or work-product protection.
Any information disclosed will be subject to the provisions of the
Confidentiality Agreement, dated March 17, 2000, between the Company and the
Parent Corporation (the "Confidentiality Agreement").

         Section 6.6 Notice of Developments. The Company will give prompt
written notice to the Parent Corporation of any material development affecting
the Company or any of its Subsidiaries. Each party will give prompt written
notice to the other of any material development which would give rise to a
failure of a condition set forth in Section 7.2 (in the case of the Parent
Corporation or the Acquisition Corporation) or Section 7.3 (in the case or the
Company). No such written notice of such a material development will be deemed
to have amended any of the disclosures set forth in the Company Disclosure
Letter, to have qualified the representations and warranties contained herein
and to have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of such material development.



                                       28
<PAGE>   35

         Section 6.7 Nonsolicitation of Acquisition Proposals.

                  (a)      The Company and each of its Subsidiaries, and each of
         their respective directors, officers, employees, agents and
         representatives, will immediately cease any discussions or negotiations
         presently being conducted with respect to any Acquisition Proposal. The
         Company and its Subsidiaries will not and will use their best efforts
         to cause their respective directors, officers, employees, agents and
         representatives not to (i) initiate or solicit, directly or indirectly,
         any inquiries with respect to, or the making of, any Acquisition
         Proposal or (ii) engage in any negotiations or discussions with,
         furnish any information or data to or enter into any letter of intent,
         agreement in principle, acquisition agreement or similar agreement with
         any party relating to any Acquisition Proposal; provided, however, that
         the Board of Directors of the Company may, in response to an
         Acquisition Proposal that the Board of Directors of the Company
         determines in good faith is reasonably likely to lead to a Superior
         Proposal, (A) furnish information with respect to the Company and its
         Subsidiaries to the person making such Acquisition Proposal (and its
         representatives) pursuant to a confidentiality agreement containing
         provisions at least as restrictive with respect to such person as the
         restrictions on the Parent Corporation contained in the Confidentiality
         Agreement (as modified by Section 6.14) and (B) participate in
         discussions or negotiations with the person making such Acquisition
         Proposal (and its representatives) regarding such Acquisition Proposal.
         The Company will be responsible for any breach of the provisions of
         this Section 6.7 by any director, officer, employee, agent or
         representative of the Company or any of its Subsidiaries.

                  (b)      The term "Acquisition Proposal" as used in this
         Agreement means any bona fide proposal, whether or not in writing, made
         by a party that if consummated would result in such party acquiring
         beneficial ownership (as defined under Rule 13(d) promulgated under the
         Securities Exchange Act) of more than 20% of the consolidated assets
         (determined based on book or fair market value) of, or more than 20% of
         the voting power in, the Company and its Subsidiaries, taken as a
         whole, pursuant to a merger, consolidation or other business
         combination, sale of shares of capital stock, sale of assets, tender or
         exchange offer or similar transaction involving the Company or any of
         its Subsidiaries, including any single or multi-step transaction or
         series of related transactions that is structured to permit such party
         to acquire such beneficial ownership.

                  (c)      The term "Superior Proposal" as used in this
         Agreement means any bona fide proposal, in writing, made by a party
         that (i) if consummated, would result in such party acquiring
         beneficial ownership of more than 50% of the consolidated assets
         (determined based on book or fair market value) of, or more than 50% of
         the voting power in, the Company and its Subsidiaries, taken as a
         whole, pursuant to a merger, consolidation or other business
         combination, sale of shares of capital stock, sale of assets, tender or
         exchange offer or similar transaction involving the Company or any of
         its Subsidiaries, including any single or multi-step transaction or
         series of related transactions that is structured to permit such party
         to acquire such beneficial ownership,



                                       29
<PAGE>   36

         and (ii) the Board of Directors of the Company, after consultation with
         its outside legal counsel and financial advisers, determines in its
         good faith business judgment (x) is superior from a financial view to
         the stockholders of the Company and (y) is reasonably capable of being
         completed, taking into account all legal, financial, regulatory and
         other aspects of such proposal.

                  (d)      Nothing contained in this Agreement will prohibit the
         Company from (i) taking and disclosing to its stockholders a position
         contemplated by Rule 14e-2(a) promulgated under the Securities Exchange
         Act or (ii) making any disclosure or recommendation, including a
         withdrawal or adverse amendment of its recommendation of the Merger
         that would permit the Parent Corporation to terminate this Agreement
         pursuant to Section 8.1(c)(ii), to the Company's stockholders if the
         Board of Directors of the Company, after consultation with its outside
         legal counsel, determines in good faith that failure to so disclose or
         recommend would be inconsistent with applicable law.

         Section 6.8 Indemnification.

                  (a)      From and after the Closing Date, the Parent
         Corporation will cause the Surviving Corporation to indemnify, defend
         and hold harmless each person who is now, or has been at any time prior
         to the Effective Time, an officer or director of the Company or any of
         its present or former Subsidiaries or corporate parents (collectively,
         the "Indemnified Parties") from and against all losses, claims, damages
         and expenses (including reasonable attorney's fees and expenses)
         arising out of or relating to actions or omissions, or alleged actions
         or omissions, occurring at or prior to the Effective Time to the
         fullest extent permitted from time to time by the Virginia Act or any
         other applicable laws as presently or hereafter in effect.

                  (b)      Any determination required to be made with respect to
         whether any Indemnified Party may be entitled to indemnification will,
         if requested by such Indemnified Party, be made by independent legal
         counsel selected by the Indemnified Party and reasonably satisfactory
         to the Surviving Corporation.

                  (c)      For a period of six years after the Closing Date, the
         Parent Corporation will cause to be maintained in effect the policies
         of directors and officers liability insurance and fiduciary liability
         insurance currently maintained by the Company with respect to claims
         arising from or relating to actions or omissions, or alleged actions or
         omissions, occurring on or prior to the Closing Date. The Parent
         Corporation may at its discretion substitute for such policies
         currently maintained by the Company directors and officers liability
         insurance and fiduciary liability insurance policies with reputable and
         financially sound carriers providing for no less favorable coverage.
         Notwithstanding the provisions of this Section 6.8(c), the Parent
         Corporation will not be obligated to make annual premium payments with
         respect to such policies of insurance to the extent such premiums
         exceed 200 percent of the annual premiums paid by the Company as of the
         date of this Agreement. If the annual premium costs necessary to
         maintain such



                                       30
<PAGE>   37

         insurance coverage exceed the foregoing amount, the Parent Corporation
         will maintain the most advantageous policies of directors and officers
         liability insurance and fiduciary liability insurance obtainable for an
         annual premium equal to the foregoing amount.

                  (d)      To the fullest extent permitted from time to time
         under the law of the Commonwealth of Virginia, the Parent Corporation
         will cause the Surviving Corporation to pay on an as-incurred basis
         the reasonable fees and expenses of each Indemnified Party (including
         reasonable fees and expenses of counsel) in advance of the final
         disposition of any action, suit, proceeding or investigation that is
         the subject of the right to indemnification, subject to reimbursement
         in the event such Indemnified Party is not entitled to
         indemnification.

                  (e)      The provisions providing for director and officer
         indemnification, abrogation of liability and advancement of expenses
         set forth in Article VII of the articles of incorporation of the
         Company, as in effect immediately prior to the Effective Time, will
         apply to each Indemnified Party with respect to all matters occurring
         on or prior to the Effective Time. The foregoing will not be deemed to
         restrict the right of the Surviving Corporation to modify the
         provisions of its articles of incorporation relating to director and
         officer indemnification, abrogation of liability or advancement of
         expenses with respect to events or occurrences after the Closing Date
         but such modifications shall not adversely affect the rights of the
         Indemnified Parties hereunder. The Parent Corporation shall cause the
         Surviving Corporation to honor the provisions of this Section 6.8(e).

                  (f)      In the event of any action, suit, investigation or
         proceeding, the Indemnified Party will be entitled to control the
         defense thereof with counsel of its own choosing reasonably acceptable
         to the Parent Corporation, and the Parent Corporation and the Surviving
         Corporation will cooperate in the defense thereof, provided that
         neither the Parent Corporation nor the Surviving Corporation will be
         liable for the fees of more than one counsel for all Indemnified
         Parties, other than local counsel, unless the use of a single counsel
         would present conflict of interest issues which would make it
         impracticable for all Indemnified Parties to be represented by a single
         counsel, and provided further that neither the Parent Corporation nor
         the Surviving Corporation will be liable for any settlement effected
         without its written consent (which consent will not be unreasonably
         withheld or delayed).

                  (g)      The rights of each Indemnified Party hereunder will
         be in addition to any other rights such Indemnified Party may have
         under the articles of incorporation or bylaws of the Surviving
         Corporation or any of their respective Subsidiaries, under the law of
         the Commonwealth of Virginia or otherwise. Notwithstanding anything to
         the contrary contained in this Agreement or otherwise, the provisions
         of this Section 6.8 will survive the consummation of the Merger, and
         each Indemnified Party will, for all purposes, be a third party
         beneficiary of the covenants and agreements contained in this Section
         6.8 and, accordingly, will be treated as a party to this Agreement for
         purposes of



                                       31
<PAGE>   38

         the rights and remedies relating to enforcement of such covenants and
         agreements and will be entitled to enforce any such rights and exercise
         any such remedies directly against the Parent Corporation and the
         Surviving Corporation.

                  (h)      Nothing in this Section 6.8 will diminish any rights
         or entitlements available to any director or officer of the Company
         under the Company's articles of incorporation as in effect immediately
         prior to the Effective Time.

         Section 6.9 Public Announcements. The initial press release announcing
the transactions contemplated by this Agreement will be a joint press release.
Thereafter, the Parent Corporation and the Company will consult with one another
before issuing any press releases or otherwise making any public announcements
with respect to the transactions contemplated by this Agreement and, except as
may be required by applicable law or by the rules and regulations of the New
York Stock Exchange or of The Nasdaq Stock Market, will not issue any such press
release or make any such announcement prior to such consultation.

         Section 6.10 Preservation of Programs and Agreements. From and after
the date of this Agreement through the Closing Date, the Company will not enter
into any agreement which it knows or has reason to know is reasonably likely to
cause a major customer of the Company or any of its Subsidiaries to terminate
any material program or agreement, the overall effect of which, after taking
into account the anticipated benefits of the new agreement and the anticipated
detriments of such termination, is reasonably likely to have a Company Material
Adverse Effect.

         Section 6.11 Actions Regarding Antitakeover Statutes. If any fair
price, moratorium, control share acquisition or other form of antitakeover
statute, rule or regulation is or becomes applicable to the transactions
contemplated by this Agreement, the Board of Directors of the Company will grant
such approvals and take such other actions as may be required so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms and conditions set forth in this Agreement.

         Section 6.12 Defense of Orders and Injunctions. In the event either
party becomes subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by this Agreement, each party will use its best efforts to overturn or lift such
order or injunction. The foregoing will not be deemed to require the Parent
Corporation to enter into any agreement, consent decree or other commitment
requiring the Parent Corporation or any of its Subsidiaries to divest or hold
separate any assets or to take any other action which, individually or in the
aggregate, is reasonably likely to have a Parent Corporation Material Adverse
Effect.

         Section 6.13 Employee Benefit Matters.

                           (a)      Subject to applicable collective bargaining
                  agreements, until (or in respect of the period ending on )
                  December 31, 2001, Parent Corporation shall cause to be
                  maintained for the employees and former employees of the
                  Company and its Subsidiaries (the "Employees"), benefits and
                  benefit levels which are, in



                                       32
<PAGE>   39

                  the aggregate, substantially similar to benefits and benefit
                  levels as provided by the Company and its Subsidiaries through
                  any Company Plan that is an Employee Pension Benefit Plan, an
                  Employee Welfare Benefit Plan, or a fringe benefit program
                  (providing, for example, sick pay, vacation pay and tuition
                  reimbursement) prior to the Effective Time. Notwithstanding
                  the foregoing, without limitation, this Section 6.13(a) shall
                  not apply to any bonus, incentive, or equity-based
                  compensation plan or arrangement. Further, subject to Section
                  6.3(k), this Section 6.13(a) shall not prohibit any change in
                  benefits or benefit levels adopted prior to the Effective Time
                  and effective on or after the Effective Time or any other
                  change in benefits (such as a change in vendor, co-pay,
                  deductible, lifetime maximum, etc.) that would have been made
                  by the Company in the ordinary course during the 2001 year to
                  reflect market conditions for the provision of these benefits.

                           (b)      The Parent Corporation will honor and will
                  cause the Surviving Corporation to honor, in accordance with
                  their respective terms, the Company Plans and all of the
                  Company's other employee benefit, compensation, employment,
                  severance and termination plans, programs, policies, and
                  arrangements, including any rights or benefits arising as a
                  result of the transactions contemplated by this Agreement
                  (either alone or in combination with any other event).

                           (c)      Solely for purposes of eligibility and
                  vesting under the employee benefit plans of the Parent
                  Corporation and its Subsidiaries (including the Surviving
                  Corporation) providing benefits to any Employees after the
                  Effective Time, each Employee will be credited with his or her
                  years of service with the Company and its Subsidiaries (and
                  any predecessor entities thereof) before the Effective Time,
                  to the same extent as such employee was entitled, before the
                  Effective Time, to credit for such service under any similar
                  Company Plan. Following the Effective Time, the Parent
                  Corporation will, or will cause its Subsidiaries to, (i) waive
                  any pre-existing condition limitation under any Employee
                  Welfare Benefit Plan maintained by the Parent Corporation or
                  any of its Subsidiaries in which Employees and their eligible
                  dependents participate (except to the extent that such
                  pre-existing condition limitation would have been applicable
                  under the comparable Company Employee Welfare Benefit Plans
                  immediately prior to the Effective Time), and (ii) provide
                  each Employee with credit for any co-payments and deductibles
                  incurred prior to the Effective Time (or such earlier or later
                  transition date to new Employee Welfare Benefits Plans) for
                  the calendar year in which the Effective Time (or such earlier
                  or later transaction date) occurs, in satisfying any
                  applicable deductible or out-of-pocket requirements under any
                  welfare plans that the Employees participate in after the
                  Effective Time.



                                       33
<PAGE>   40

                           (d)      The Parent Corporation will, and will cause
                  the Surviving Corporation and their respective representatives
                  to, afford any officer (as of the Effective Time) of the
                  Company and any of his or her representatives reasonable
                  access, upon reasonable notice, to such books and records of
                  the Company and the Surviving Corporation as are reasonably
                  required by such officer to determine amounts owing to such
                  officer under any Company Plan.

                           (e)      The Parent Corporation and the Company agree
                  to implement the provisions of Section 6.13(e) of the Company
                  Disclosure Letter.

                           (f)      Subject to applicable collective bargaining
                  agreements, notwithstanding any provision to the contrary
                  contained in this Agreement, through the period ending on
                  December 31, 2001, the Parent Corporation and its Subsidiaries
                  (including the Surviving Corporation) will provide severance
                  benefits and severance compensation to the Employees that, in
                  the aggregate, are not less favorable to the Employees than
                  those provided by the Company under a Company Plan to the
                  Employees immediately prior to the Effective Time.

                           (g)      Nothing contained herein will create any
                  rights in any third party, including without limitation, any
                  right to employment or right to any particular benefit (except
                  as set forth in Sections 6.13(d) and (e)). Except as
                  specifically provided, nothing contained herein shall be
                  construed as prohibiting or restricting in any way the right
                  of the Parent Company or the Company (or any successor
                  thereto) to modify, amend or terminate any employee benefit
                  plan, program or arrangement in whole or in part at any time
                  after the Effective Time.

                           (h)      The Company agrees that an independent
                  trustee, either a bank or a trust company, will act with
                  respect to the Merger on behalf of each Company Plan (and its
                  participants) that holds Company Common Stock in accordance
                  with the terms and conditions of such Plan.

         Section 6.14 Standstill Provisions. The restrictions on the Parent
Corporation and the Acquisition Corporation contained in the Standstill
Provisions of the Confidentiality Agreement between the Parent Corporation and
the Company are hereby waived by the Company to the extent reasonably required
to permit the Parent Corporation and the Acquisition Corporation to comply with
their obligations or enforce their rights under this Agreement.



                                       34
<PAGE>   41

                                    ARTICLE 7

                  CONDITIONS TO THE CONSUMMATION OF THE MERGER

         Section 7.1 Conditions to the Obligations of Each Party. The respective
obligation of each party to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:

                  (a)      the Company will have obtained the Company
         Stockholder Approval;

                  (b)      all applicable waiting periods (and any extensions
         thereof) under the HSR Act will have terminated or expired;

                  (c)      all other consents, authorizations, orders and
         approvals of or filings with any governmental commission, board or
         other regulatory authority (other than in its capacity as a customer of
         the Company or its Subsidiaries) required in connection with the
         consummation of the transactions contemplated by this Agreement will
         have been obtained or made, except where the failure to obtain or make
         such consents, authorizations, orders, approvals or filings, from and
         after the Closing Date, individually or in the aggregate, are not
         reasonably likely to have a Company Material Adverse Effect; and

                  (d)      no party will be subject to any order or injunction
         of a court of competent jurisdiction or other legal restraint which
         prohibits the consummation of the Merger.

         Section 7.2 Conditions to the Obligation of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Closing Date of each of the following conditions:

                  (a)      the representations and warranties of each of the
         Parent Corporation and the Acquisition Corporation contained herein (i)
         that are qualified as to materiality will be true and correct and (ii)
         that are not qualified by materiality will be true and correct in all
         material respects, in each case (i) and (ii), as of the date of this
         Agreement and as of the Closing Date with the same effect as though
         made as of the Closing Date, except that the accuracy of
         representations and warranties that by their terms speak as of a
         specified date will be determined as of such date; and

                  (b)      each of the Parent Corporation and the Acquisition
         Corporation will have in all material respects performed and complied
         with all of its obligations under this Agreement required to be
         performed by it at or prior to the Closing Date.

         The Parent Corporation and the Acquisition Corporation will furnish the
Company with a customary bring down certificate with respect to the satisfaction
of the conditions set forth in Sections 7.2(a) and (b).



                                       35
<PAGE>   42

         Section 7.3 Conditions to the Obligation of the Parent Corporation and
the Acquisition Corporation. The obligation of the Parent Corporation and the
Acquisition Corporation to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:

                  (a)      the representations and warranties of the Company
         contained herein (i) that are subject to a Company Material Adverse
         Effect qualification will be true and correct and (ii) that are not
         subject to a Company Material Adverse Effect qualification will be true
         and correct, except that this clause (ii) will be deemed satisfied so
         long as any failures of such representations and warranties, taken
         together, are not reasonable likely to have a Company Material Adverse
         Effect, in each case (i) and (ii), as of the date of this Agreement and
         as of the Closing Date with the same effect as though made as of the
         Closing Date, except that the accuracy of representations and
         warranties that by their terms speak as of a specified date will be
         determined as of such date; and

                  (b)      the Company will have in all material respects
         performed and complied with all of its obligations under this Agreement
         required to be performed by it at or prior to the Closing Date;

         The Company will furnish the Parent Corporation with a customary bring
down certificate with respect to the satisfaction of the conditions set forth in
Sections 7.3(a) and (b) .

         Section 7.4 Frustration of Closing Conditions. None of the Company, the
Parent Corporation or the Acquisition Corporation may rely on the failure of any
condition set forth in Section 7.1, 7.2 or 7.3, as the case may be, to be
satisfied if such party's breach of this Agreement has been a principal reason
that such condition has not been satisfied.

                                    ARTICLE 8

                        TERMINATION, AMENDMENT AND WAIVER

         Section 8.1 Termination . This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
the receipt of the Company Stockholder Approval):

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

                  (b)      by the Parent Corporation or the Company if any court
         of competent jurisdiction or other governmental agency has issued a
         final order, decree or ruling or taken any other final action
         restraining, enjoining or otherwise prohibiting the consummation of the
         Merger, and such order, decree, ruling or other action is or has become
         nonappealable;



                                       36
<PAGE>   43

                  (c)      by the Parent Corporation if (i) the Company has
         breached any of its representations, warranties or covenants set forth
         in this Agreement, which breach (A) would give rise to the failure of a
         condition set forth in Section 7.3 and (B)is not cured within 30 days
         after the date written notice of such breach is given by the Parent
         Corporation to the Company, (ii) the Board of Directors of the Company
         has withdrawn or amended in any manner adverse to the Parent
         Corporation and the Acquisition Corporation its recommendation and
         approval of the Merger, (iii) the Company Stockholder Approval has not
         been obtained at a meeting duly called for such purpose or (iv) the
         Merger has not been consummated on or before March 31, 2001; or

                  (d)      by the Company if (i) either the Parent Corporation
         or the Acquisition Corporation has breached any of its representations,
         warranties or covenants set forth in this Agreement, which breach (A)
         would give rise to the failure of a condition set forth in Section 7.2
         and (B) is not cured within 30 days after the date written notice of
         such breach is given by the Company to the Parent Corporation, (ii) the
         Company Stockholder Approval has not been obtained at a meeting called
         for such purpose or (iii) the Merger has not been consummated on or
         before March 31, 2001.

         Section 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement will
forthwith become void and will be deemed to have terminated without liability to
any party (except for any liability of any party then in willful material breach
of any covenant or agreement); provided that the provisions of the
Confidentiality Agreement and the last sentence of Section 6.5, this Section
8.2, Section 8.3 and Article 9 (other than the exception clause in Section 9.10)
of this Agreement will continue in full force and effect notwithstanding such
termination and abandonment.




                                       37
<PAGE>   44


         Section 8.3 Termination Fee.

                  (a)      If an Acquisition Proposal has been made to the
         Company or its stockholders or any person has announced an intention to
         make an Acquisition Proposal and thereafter

                           (i)      the Parent Corporation terminates this
                  Agreement pursuant to Section 8.1(c)(ii) or Section
                  8.1(c)(iii),

                           (ii)     the Company terminates this Agreement
                  pursuant to Section 8.1(d)(ii), or

                           (iii)    a vote of the stockholders of the Company
                  does not occur and either the Parent Corporation terminates
                  this Agreement pursuant to Section 8.1(c) (iv) or the Company
                  terminates this Agreement pursuant to Section 8.1(d)(iii)

                                              and

                           (x)      the Company enters into an agreement with
                  respect to a Third Party Acquisition within 12 months of the
                  date of such termination, or

                           (y)      a Third Party Acquisition occurs within 12
                  months after the date of such termination,

         then the Company will pay to the Parent Corporation, within one
         business day following the occurrence of such event referred to in
         clause (x) or clause (y), a termination fee equal to $10 million (the
         "Termination Fee"), payable by wire transfer of immediately available
         funds to an account designated by the Parent Corporation.

                  (b)      The term "Third Party Acquisition" as used in this
         Agreement means (i) the acquisition of the Company by merger or
         otherwise by any person (including for purposes of this Section 8.3(b)
         any "person" or "group" as defined in Section 13(d)(3) of the
         Securities Exchange Act) or entity other than the Parent Corporation or
         any of its affiliates, (ii) the acquisition by any person or entity
         other than the Parent Corporation or any of its affiliates of more than
         50 percent of the consolidated assets (determined based on book or fair
         market value) of the Company and its Subsidiaries or (iii) the
         acquisition by any person or entity other than the Parent Corporation
         or any of its affiliates of more than 50 percent of the outstanding
         shares of Company Common Stock, (iv) the adoption by the Company of any
         plan of liquidation or the declaration by the Company of any
         extraordinary dividend or distribution (including any distribution of
         any shares of the capital stock of any material Subsidiary) of cash or
         property constituting more than 50 percent of the consolidated assets
         (determined based on book or fair market value) of the Company and its
         Subsidiaries or (v) the purchase by the Company or any of its
         Subsidiaries of more than 50 percent of the outstanding shares of
         Company Common Stock.

                  (c)      Except as specifically provided in this Section 8.3,
         each party will bear its own expenses incurred in connection with the
         transactions contemplated by this Agreement, whether or not such
         transactions are consummated.



                                       38
<PAGE>   45

                  (d)      The Company acknowledges that the agreements
         regarding the payment of fees contained in this Section 8.3 are an
         integral part of the transactions contemplated by this Agreement and
         that, in the absence of such agreements, the Parent Corporation and the
         Acquisition Corporation would not have entered into this Agreement. The
         Company accordingly agrees that in the event the Company fails to pay
         the Termination Fee promptly, the Company will in addition to the
         payment of such amount also pay to the Parent Corporation all of the
         reasonable costs and expenses (including reasonable attorneys' fees and
         expenses) incurred by the Parent Corporation in the enforcement of its
         rights under this Section 8.3, together with interest on such amount at
         a rate of 11 percent per annum from the date upon which such payment
         was due, to and including the date of payment. Provided that the
         Company was not in breach of the provisions of Section 6.7, payment of
         the Termination Fee will constitute full and complete satisfaction, and
         will constitute the Parent Corporation's sole and exclusive remedy for
         any loss, liability, damage or claim arising out of or in connection
         with any such termination of this Agreement or the facts and
         circumstances resulting in or related to this Agreement.

                                    ARTICLE 9

                                  MISCELLANEOUS

         Section 9.1 Nonsurvival of Representations. The representations and
warranties contained in this Agreement will not survive the Merger or the
termination of this Agreement.

         Section 9.2 Remedies. The parties agree that irreparable damage would
occur in the event that the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
will be entitled to specific performance of the terms of this Agreement, without
posting a bond or other security, this being in addition to any other remedy to
which they are entitled at law or in equity.

         Section 9.3 Successors and Assigns. No party hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement without the written consent of the other parties hereto. Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto or thereto will
be binding upon and enforceable against the respective successors and assigns of
such party and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.

         Section 9.4 Amendment. This Agreement may be amended by the execution
and delivery of an written instrument by or on behalf of the Parent Corporation,
the Acquisition Corporation and the Company at any time before or after the
Company Stockholder Approval, provided that after the date of the Company
Stockholder Approval, no amendment to this Agreement will be made without the
approval of stockholders of the Company to the extent such approval is required
under the Virginia Act.



                                       39
<PAGE>   46

         Section 9.5 Extension and Waiver. At any time prior to the Effective
Time, the parties may extend the time for performance of or waive compliance
with any of the covenants or agreements of the other parties to this Agreement
and may waive any breach of the representations or warranties of such other
parties. No agreement extending or waiving any provision of this Agreement will
be valid or binding unless it is in writing and is executed and delivered by or
on behalf of the party against which it is sought to be enforced.

         Section 9.6 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

         Section 9.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.

         Section 9.8 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

         Section 9.9 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally to
the recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or three business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Parent Corporation and the Company at the addresses
indicated below:

         If to the Parent
         Corporation                 General Dynamics Corporation
                                     3190 Fairview Park Drive
                                     Falls Church, Virginia   22041-4523
                                     Attention:    David A. Savner, Esq.
                                                   Senior Vice President and
                                                   General Counsel
                                     Facsimile No: (703) 876-3125

         With a copy (which will
         not constitute notice) to:  Jenner & Block
                                     One IBM Plaza, 40th Floor
                                     Chicago, IL   60611
                                     Attention:     Charles J. McCarthy, Esq.
                                     Facsimile No.: (312)  840-7745



                                       40
<PAGE>   47

         If to the Company:          Primex Technologies, Inc.
                                     10101 9th Street North
                                     St. Petersburg, FL  33716
                                     Attention:     George H. Pain
                                                    Vice President and
                                                        General Counsel
                                     Facsimile No.: (727) 578-8286

         With a copy (which will
         not constitute notice) to   Cravath, Swaine & Moore
                                     825 Eighth Avenue
                                     New York, NY  10019
                                     Attention:    Robert I. Townsend, III, Esq.
                                     Facsimile No.:  (212) 474-3700

or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.

         Section 9.10 No Third Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any person or entity other than the Parent
Corporation, the Acquisition Corporation and the Company and their respective
successors and permitted assigns, except that the respective beneficiaries as of
the Closing Date of the provisions of Section 6.8 and Sections 6.13(d) and (e)
will, for all purposes, be third party beneficiaries of the covenants and
agreements contained therein and, accordingly, will be treated as a party to
this Agreement for purposes of the rights and remedies relating to enforcement
of such covenants and agreements and will be entitled to enforce any such rights
and exercise any such remedies directly against the Parent Corporation and the
Surviving Corporation.

         Section 9.11 Entire Agreement. This Agreement (including the
Confidentiality Agreement, the Company Disclosure Letter and the other documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.

         Section 9.12 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction will be applied against any party. The use of
the word "including" in this Agreement means "including without limitation" and
is intended by the parties to be by way of example rather than limitation. As
used in this Agreement, the qualification "to the Company's knowledge" and
clauses of similar effect will mean the actual knowledge by any executive
officer of the Company or of its Subsidiaries (or other officer or manager of
the Company or of its Subsidiaries if such officer or manager has primary
responsibility over the subject matter in question) of the



                                       41
<PAGE>   48

existence or absence of facts which would contradict a particular representation
and warranty of the Company.

         Section 9.13 Submission to Jurisdiction. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
Alexandria, Virginia, in any action or proceeding arising out of or relating to
this Agreement, agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each of the parties to this Agreement waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety or other security that might be required of any other party with
respect thereto.

         Section 9.14 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES HERETO WILL BE
GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE COMMONWEALTH
OF VIRGINIA, EXCEPT THE DELAWARE ACT SHALL GOVERN THE CORPORATE MERGER
PROCEDURES AND EFFECT WITH RESPECT TO THE ACQUISITION CORPORATION.

                                     * * * *




                                       42
<PAGE>   49




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



                               GENERAL DYNAMICS CORPORATION



                               By:        /s/ Nicholas D. Chabraja
                                     ---------------------------------------
                                        Nicholas D. Chabraja
                                        Chairman and Chief Executive Officer



                               MARS ACQUISITION CORPORATION

                               By:        /s/ Arthur J. Veith
                                     ---------------------------------------
                                         Arthur J. Veitch
                                         President




                               PRIMEX TECHNOLOGIES, INC.


                               By:        /s/ James G. Hascall
                                     ---------------------------------------
                                        James G. Hascall
                                        Chairman and Chief Executive Officer











                                       43
</TEXT>
</DOCUMENT>
