8-K

                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.



                                    FORM 8-K

                                 CURRENT REPORT

                    Pursuant to Section 13 or 15 (d) of the
                      Securities and Exchange Act of 1934



         Date of Report (Date of earliest event reported): May 2, 1995


                        COEUR D'ALENE MINES CORPORATION
             (Exact name of Registrant as specified in its charter)


              Idaho                    1-8641            82-0109423
    (State or other jurisdiction     (Commission       (IRS Employer
          of incorporation)          File Number)      Identification
                                                         Number)

             400 Coeur d'Alene Mines Bldg.
             505 Front Avenue
             Coeur d'Alene, Idaho                    83814
    (Address of principal executive offices)      (zip code)


    Registrant's telephone number, including area code: (208) 667-3511


                                 Not Applicable
         (Former name or former address, if changed since last report)



Item 2.  Acquisition or Disposition of Assets.

          On  May  2,  1993,   Callahan  Mining  Corporation   ("Callahan"),   a
wholly-owned   subsidiary  of  Coeur  d'Alene   Mines   Corporation   ("Coeur"),
consummated its sale of the assets of The Flexaust  Company Division of Callahan
(the "Flexaust Division") and the shares representing 50% of the equity interest
owned by Callahan in Flexadux Incorporated ("Flexadux"), to The Flexaust Company
Inc. ("TFC") and its parent, Schauenburg  International,  Inc. ("SII"). The sale
was  effected  pursuant to an Asset and Stock  Purchase  Agreement,  dated as of
April 28, 1995,  among SII, TFC and Callahan  (the  "Agreement").  A copy of the
Agreement is filed as an exhibit hereto and is incorporated herein by reference.
The Flexaust  Division was engaged in the  manufacture  and sale of  lightweight
flexible  hose and duct and metal tubing.  In addition,  an affiliate of SII and
TFC  purchased  Callahan's  50%  equity  interest  in a foreign  subsidiary  and
Callahan  also effected the sale of certain real  properties  used in connection
with the Flexhaust Division operations.

          Pursuant to the Agreement,  Callahan sold the Flexaust Division assets
and Flexadux  shares for  approximately  $10 million  payable in cash,  of which
approximately $4 million was paid at the closing and the balance is payable over
the next five years.

          During the second  quarter of 1995,  Coeur d'Alene  Mines  Corporation
expects to recognize a pre-tax gain of approximately $4.4 million as a result of
the above transactions.

Item 7.   Financial Statement, Proforma Financial Information and
          Exhibits

          In  accordance  with  Items  7(a)(4)  and  7(b)(2)  of Form  8-K,  the
financial  statements  called  for by Item 7(a) of Form 8-K and Rule  3-05(b) of
Regulation S-X, and the proforma  financial  information called for by Item 7(b)
of Form 8-K and Article XI of Regulation S-X, will be filed by amendment as soon
as practicable but not later than July 16, 1995.

                    The following exhibit is filed herewith:

             Exhibit No.                                Document

                 2                          Asset and Stock Purchase  Agreement,
                                            dated as of April  28,  1995,  among
                                            Schauenburg International, Inc., The
                                            Flexaust Company, Inc., and Callahan
                                            Mining Corporation.


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     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                                COEUR D'ALENE MINES CORPORATION
                                                (Registrant)


Dated: May 17, 1995                             By: /s/JAMES A. SABALA
                                                James A. Sabala
                                                Senior Vice President and
                                                Chief Financial Officer





                                       3

EX-2

                                                                       EXHIBIT 2

                       ASSET AND STOCK PURCHASE AGREEMENT


     This Asset and Stock Purchase  Agreement (this  "Agreement") is dated as of
April 28, 1995 among  SCHAUENBURG  INTERNATIONAL,  INC., a Delaware  corporation
("SII"),  THE FLEXAUST COMPANY INC., an Indiana corporation ("TFC") (SII and TFC
are referred to individually as a "Buyer" and collectively as the "Buyers"), and
CALLAHAN  MINING  CORPORATION,   an  Arizona  corporation   ("Callahan"  or  the
"Seller").

PREAMBLE

     Flexadux  Incorporated,  a  Delaware  corporation  ("Flexadux"),   and  The
Flexaust Company, a division of the Seller (the "Flexaust  Division"),  together
are  engaged  in  the  business  of  manufacturing  and  selling  metal  tubing,
industrial   neoprene  and  plastic  hoses,   duct  and  related  products  (the
"Business").  The Seller is a  wholly-owned  subsidiary  of Coeur  D'Alene Mines
Corporation  and TFC is a wholly-owned  subsidiary of SII. In addition,  SII and
the Seller each own 50% of the outstanding shares of stock of Flexadux.

     The Seller  wishes to sell to TFC,  and TFC wishes to purchase  and acquire
from the Seller,  the assets of the Flexaust Division (which,  together with the
assets of  Flexadux,  constitute  all of the  assets  used in or  related to the
Business),  and the Seller wishes to sell to SII, and SII wishes to purchase and
acquire from the Seller,  the shares of Flexadux stock owned by the Seller,  all
upon the terms and subject to the  conditions  set forth  herein.  In  addition,
Schauenburg  GmbH,  an  affiliate  of the Buyers,  will acquire the Seller's 50%
equity interest in Flexaust GmbH, and Flormar Realty Company, L.L.C., an Indiana
limited liability company  ("Flormar"),  will acquire the Seller's real property
located in Warsaw,  Indiana at which a portion  of the  Business  is  conducted.
Therefore,  in  consideration  of their mutual promises set forth herein and for
other good and valuable  consideration  the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereby agree
as follows.

                                   ARTICLE I

                                THE TRANSACTION

     1.01 Purchase and Sale of Assets and Shares.  At the Closing referred to in
Section 1.03 below,  TFC shall  purchase  from the Seller,  and the Seller shall
sell, convey, assign, transfer and deliver to TFC, free and clear of any and all
liens,  charges,  encumbrances,  security  interests  and  claims  of  any  kind
whatsoever  ("Liens"),  all of the Seller's rights, title and interest in and to
the following assets of the Flexaust Division (the "Assets"):

          (a) all cash and cash equivalents  (including  marketable  securities)
held by the Seller and derived from or relating to the Business,  and all notes,
drafts and accounts



receivable of the Seller relating to the Business;

          (b)  all  machinery,   equipment  (including  without  limitation  all
laboratory,  testing and office  equipment),  tools and furniture located in the
plants or offices occupied by the Seller and used in or relating to the Business
(collectively, the "Machinery and Equipment"), and all supplies, spare parts and
warranties relating to the Machinery and Equipment;

          (c) all raw materials,  work-in-process,  finished goods,  samples and
other  inventories  of the  Seller  used  in  the  Business  (collectively,  the
"Inventory");

          (d) all of the Seller's  patents and patent  applications,  registered
and unregistered  trademarks and service marks,  logos, trade names,  common law
and registered  copyrights and corporate  names, and all applications for any of
the foregoing, related to the Business, together with all of the Seller's rights
to use all of the foregoing forever, and all goodwill associated with any of the
foregoing, (collectively, the "Intellectual Property");

          (e)  all  inventions,   processes,   methods,  designs,   engineering,
technical  and  shop  drawings,  specifications,   trade  secrets,  confidential
information,  know-how  and  ideas,  whether  patentable  or not,  shop  rights,
licenses and other similar  rights used in or relating to the Business,  and all
drawings, records, books and other indicia of the foregoing,  however evidenced,
together  with all of the Seller's  rights to use all of the  foregoing  and all
goodwill associated with any of the foregoing;

          (f) all of the Seller's rights under contracts,  purchase  agreements,
bids, purchase orders,  employment  agreements and other agreements and business
arrangements relating to the Business (collectively, the "Contracts");

          (g) to the extent  transferable,  all  governmental and other permits,
licenses,  authorizations,   consents,  orders,  concessions,  certificates  and
governmental  and  customer  approvals  obtained by or  belonging  to the Seller
relating to the Business (collectively, the "Permits");

          (h)  all  advertising  material  and  all  other  printed  or  written
materials relating to the Business;

          (i) all records  pertaining  to any of the foregoing and to customers,
suppliers and personnel,  and all books, ledgers,  files and business records of
every kind  relating to the Business or the Assets,  except for the minute books
and stock ledgers of the Seller (collectively, the "Books and Records");

          (j) all  goodwill  of the  Business  as a going  concern and all other
intangible properties; and

          (k) any other  asset of the Seller  which is not  referred to in items
(a)-(j)  above  and which is  reflected  on the  Balance  Sheet (as that term is
defined in Section 2.06 below) for the Flexaust Division or which has been or is
acquired by the Seller  between the Balance  Sheet Date (as that term is defined
in Section  2.06 below) and the Closing Date (as that term is defined in Section
1.03 below) and which is used in or related to the Business;

                                       2




provided,  that notwithstanding any other provision hereof, the Assets shall not
include the property of the Seller listed on Schedule 1.01 hereto (the "Excluded
Assets").  In addition,  at the Closing, SII shall purchase from the Seller, and
the Seller shall sell,  convey,  assign,  transfer and deliver to SII,  free and
clear of any and all Liens, all of the Seller's right, title and interest in and
to the 25 shares of common stock of Flexadux which it owns (the "Shares").

     1.02 No Assumption of Liabilities.  TFC shall not assume or be obligated to
perform any liability or obligation of the Seller other than the liabilities and
obligations identified on Schedule 1.02 hereto (the "Assumed Liabilities") as of
the Effective Time. All liabilities and obligations of the Seller not so assumed
shall be referred to herein as the "Excluded Liabilities."

     1.03 Closing.

          (a) Time and Place.  The closing under this Agreement (the  "Closing")
will take place at 10:00 a.m.,  local time,  on April 28, 1995 at the offices of
Cohen  &  Grigsby,  P.C.,  2900  CNG  Tower,  625  Liberty  Avenue,  Pittsburgh,
Pennsylvania, or at such other time, date or place as to which the parties shall
mutually agree,  but no later than April 30, 1995. The date on which the Closing
occurs is sometimes  referred to herein as the "Closing Date." The Closing shall
be effective as of 11:59 p.m. on April 30, 1995 (the "Effective Time").

          (b) Deliveries and Proceedings at the Closing. At the Closing:

               (i)  Assignment  Instruments.  The  Seller  shall  deliver to the
Buyers  such  bills  of  sale,  endorsements,  assignments  and  other  good and
sufficient  instruments  of conveyance  and transfer,  satisfactory  in form and
substance to the Buyers and their counsel, as shall be effective to vest in TFC,
as of the Effective Time, all of the Seller's rights,  title and interest in and
to the Assets and to vest in SII all of the Seller's rights,  title and interest
in and to the Shares,  in each case, free and clear of all Liens,  and to assign
to TFC and permit  TFC to assume  the  Assumed  Liabilities  (collectively,  the
"Assignment  Instruments").  Simultaneously with such delivery, the Seller shall
have taken all additional steps as may be necessary to put TFC in possession and
operating control of the Assets and the Seller's interest in the Business.

               (ii) Stock  Certificates.  The Seller shall deliver to SII one or
more stock  certificates,  duly endorsed for transfer to SII,  representing  the
Shares.

               (iii)  Payment of  Purchase  Price.  The Buyers  shall pay to the
Seller the  portion of the  Purchase  Price (as  defined in Section  1.04 below)
payable at closing in the manner set forth in Section 1.04 below.

               (iv) Flormar Purchase Agreement. Flormar shall have completed the
purchase from the Seller of the real property located at 1510 Armstrong Road and
1515  Armstrong  Road,  Warsaw,  Indiana at which a portion of the  Business  is
conducted  for a purchase  price of  $758,331,  pursuant to a separate  purchase
agreement (the "Flormar Purchase Agreement"). 

                                       3


               (v)  Employment  Agreements.  TFC  shall  have  entered  into  an
Employment Agreement in substantially the form attached hereto as Exhibit A with
Frederick R. Radcliffe,  currently the President of the Flexaust  Division,  and
William  Draper,  currently  the Senior Vice  President of Sales of the Flexaust
Division  (such  agreements  are  referred to  hereinafter  collectively  as the
"Employment Agreements").

               (vi) Non-Competition  Agreement.  The Buyers and the Seller shall
execute and deliver a  Non-Competition  Agreement in  substantially  the form of
Exhibit  B  hereto  (the  "Non-Competition  Agreement"  and,  together  with the
Assignment  Instruments,  the  Flormar  Purchase  Agreement  and the  Employment
Agreements, the "Related Agreements").

               (vii)  Flexaust  GmbH  Closing.  The  closing  of the sale by the
Seller to  Schauenburg  GmbH of its 50% equity  interest in Flexaust  GmbH for a
purchase price of $50,000 pursuant to a separate  purchase  agreement shall have
occurred.

               (viii) Other Deliveries.  The closing  certificates,  opinions of
counsel and other documents  required to be delivered pursuant to this Agreement
shall be exchanged.

     1.04  Payment of Purchase  Price.  The Buyers  shall pay to the Seller,  in
consideration  for  the  Assets  and the  Shares,  a total  of  $8,880,539  (the
"Purchase  Price"),  $8,451,539  of which shall be paid by TFC to the Seller for
the  Assets  and  $429,000  of which  shall be paid by SII to the Seller for the
Shares (the  portion of the  Purchase  Price being paid by TFC for the Assets is
referred to  hereinafter  as the "Asset  Purchase  Price" and the portion of the
Purchase  Price being paid by SII for the Shares is referred to  hereinafter  as
the Shares Purchase Price"). The Purchase Price shall be paid as follows:

          (a)  Payment  of Closing  Amount.  As part of the  Purchase  Price the
Buyers shall deliver to the Seller,  in immediately  available  funds, a closing
amount (the "Closing Amount") of $2,880,539.  $2,451,539 of this amount shall be
paid by TFC to the Seller for the  Assets and  $429,000  shall be paid by SII to
the Seller for the Shares.

          (b) Deferred  Amount.  Subject to  adjustment  as set forth in Section
7.04 below,  the balance of the Purchase  Price,  or $6,000,000  (the  "Deferred
Amount"),  shall be payable by TFC to the Seller, together with accrued interest
on the unpaid portion of the Deferred Amount as set forth below, pursuant to the
following schedule:

                                       4


                              Date                              Payment 
                           -----------                         ----------
                           May 1, 1996                         $1,000,000
                           May 1, 1997                          1,000,000
                           May 1, 1998                          1,200,000
                           May 1, 1999                          1,600,000
                           May 1, 2000                          1,200,000

The unpaid  portion of the Deferred  Amount shall bear interest from the Closing
Date at an annual rate of seven percent (7%). TFC shall have the right to prepay
all or any portion of the Deferred Amount notwithstanding the schedule set forth
above.

          (c) Grant of Security Interest.  As security for the obligation of TFC
to pay the Deferred Amount to the Seller,  effective as of the Closing Date, TFC
hereby  grants the Seller a  security  interest  in the Assets and the assets of
Flexadux identified on Schedule 1.04(c) hereto (the "Collateral"). TFC agrees to
execute and deliver to the Seller at the Closing such documents and  instruments
as are  required to evidence or perfect the  Seller's  security  interest in the
Collateral,  including  without  limitation  Uniform  Commercial  Code financing
statements  (the  "Financing  Statements").  The  Seller  agrees  that  upon any
reduction in the unpaid  portion of the Deferred  Amount and upon the request of
TFC, it shall  release its security  interest in some or all of the  Collateral,
provided that the Seller shall not be required to release its security  interest
in  any  Collateral   unless  TFC   demonstrates  to  the  Seller's   reasonable
satisfaction that the value of the remaining Collateral is at least equal to the
unpaid portion of the Deferred  Amount.  The Seller's  security  interest in the
Collateral  shall  terminate  upon final  payment  by the Buyer of the  Deferred
Amount and all accrued interest thereon.  TFC agrees that the Seller shall, upon
a default by TFC in its payment  obligations  pursuant to Section 1.04(b) above,
have and be entitled to exercise all the rights and remedies of a secured  party
under  applicable law with respect to the lease  covering the Seller's  Ontario,
California facility, which lease is more particularly described on Schedule 2.12
hereto, as if the Seller had a valid and enforceable  security interest in TFC's
right, title and interest in and to such lease.

     1.05  Allocation of Purchase  Price.  TFC and the Seller agree to use their
best efforts to comply with the  applicable  requirements  under section 1060 of
the Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  by preparing a
schedule  to be executed  by TFC and the Seller at the  Closing  reflecting  the
allocation  of the  Asset  Purchase  Price to the  respective  Assets  and to be
reflected in their respective income tax returns;  provided,  however,  that any
failure to agree on any such  allocation  shall not operate to relieve any party
of its  obligations  under this  Agreement.  Schedule 1.05 hereto sets forth the
allocation  agreed to by TFC and the Seller and all other payments to be made by
the Buyers or their affiliates to the Seller pursuant to the Related  Agreements
(including the Shares Purchase Price,  the amount being paid by Schauenburg GmbH
for the stock of Flexaust  GmbH,  the amount  being paid by TFC  pursuant to the
Non-Competition  Agreement and the amount being paid by Flormar  pursuant to the
Flormar Purchase Agreement).

                                       5

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

     The Seller hereby represents and warrants to the Buyers as follows:

     2.01  Organization.  Flexadux  is a  corporation  duly  organized,  validly
existing  and in good  standing  under  the laws of the State of  Delaware.  The
Seller is a corporation  duly organized,  validly  existing and in good standing
under the laws of the State of Arizona.  Each of Flexadux and the Seller has the
full  corporate  power to own or lease its properties and assets as now owned or
leased,  to carry on its business as and where now being  conducted and to make,
execute,  deliver and perform the Related Agreements to which it is a party. The
copies of the articles of  incorporation  and bylaws of Flexadux and the Seller,
as amended to date,  which have been  delivered  to the Buyers,  are correct and
complete and are in full force and effect.

     2.02 Subsidiaries;  Capitalization and Ownership of Flexadux. Except as set
forth on Schedule 2.02 hereto and except for the Seller's ownership of shares of
Flexadux,  neither the Seller nor Flexadux directly or indirectly owns any stock
of, or any other interest in, any  corporation or business entity engaged in the
Business.  The  capitalization  of Flexadux  consists  solely of 100  authorized
shares of common  stock,  par value $1.00 per share,  50 of which are issued and
presently  outstanding.  The  Seller is the record  and  beneficial  owner of 25
shares of common stock of Flexadux,  free and clear of all Liens, and SII is the
record and beneficial owner of 25 shares of Flexadux common stock.

     2.03 Location of Business and Assets.  Set forth on Schedule 2.03 hereto is
a true and correct list of each location  (specifying  country,  state,  county,
city and  street  address)  where  the  Seller  or  Flexadux  (a) has a place of
business used in or relating to the  Business,  (b) owns or leases real property
used in or  relating to the  Business or (c) owns or leases any other  property,
including  inventory,  equipment,  and  furniture,  used in or  relating  to the
Business.

     2.04  Authorization  and  Enforceability;  Title to Assets.  The execution,
delivery and performance by the Seller of the Related  Agreements to which it is
a party have been duly authorized by all necessary  corporate action on the part
of the Seller.  This Agreement and the Related  Agreements  have been or will be
duly  executed and  delivered by the Seller and  constitute  or will  constitute
legal,  valid and binding  obligations of the Seller  enforceable  against it in
accordance  with their  respective  terms.  Upon the  Seller's  delivery  at the
Closing of the Assignment  Instruments and the stock  certificates  representing
the Shares, duly endorsed for transfer, in accordance herewith, TFC will acquire
good and valid title to the Assets and SII will  acquire good and valid title to
the Shares, in each case free and clear of all Liens.

     2.05 No Violation of Laws or Agreements.  The execution and delivery by the
Seller of this  Agreement  and the Related  Agreements to which it is a party do
not, and the consummation of the transactions contemplated by this Agreement and
the  Related  Agreements  and the  compliance  with the  terms,  conditions  and
provisions hereof and thereof by the Seller will not:

                                       6

          (a)  contravene  any  provision  of the  certificate  or  articles  of
incorporation or bylaws of the Seller or Flexadux;

          (b) conflict with or result in a breach of or constitute a default (or
an event which might,  with the passage of time or the giving of notice or both,
constitute a default)  under any of the terms,  conditions  or provisions of any
indenture,  mortgage,  loan  or  credit  agreement  or any  other  agreement  or
instrument  to which  the  Seller or  Flexadux  is a party or by which it or its
assets may be bound or affected,  or any judgment or order (a "Judgment") of any
court, any governmental department, commission, board, agency or instrumentality
or any arbitrator (each a "Judicial Authority"), or any applicable law, statute,
rule,  regulation,  code or ordinance  (a "Law") of any federal,  state or local
government authority (each a "Government Authority");

          (c) result in the creation or  imposition  of any Lien upon any of the
assets of the  Seller or  Flexadux  or give to others  any  interests  or rights
therein except for the security interest in the Collateral granted by TFC to the
Seller pursuant to Section 1.04(c) above;

          (d) result in the  maturation  or  acceleration  of any  liability  or
obligation  of the Seller or  Flexadux  or give others the right to cause such a
maturation or acceleration; or

          (e) result in the  termination of or loss of any right, or give others
the right to cause such a termination  or loss,  under any agreement or contract
to which the Seller or Flexadux is a party or by which it is bound.

     2.06 Financial Statements.

          (a) The  books of  account  and  related  records  of the  Seller  and
Flexadux with respect to the Business  fairly  reflect in reasonable  detail its
assets,  liabilities  and  transactions  in accordance  with generally  accepted
accounting principles ("GAAP") applied on a consistent basis.

          (b) The Seller has  delivered  to the Buyers the  following  financial
statements (the "Financial Statements"):

               (i) the unaudited  statement of income of Flexadux for its fiscal
year ended  December 31, 1994 and the unaudited  balance sheet of Flexadux as of
such date and

               (ii) the unaudited  statement of income of the Flexaust  Division
for the fiscal year ended  December 31, 1994 and the unaudited  balance sheet of
the Flexaust Division as of such date.

          (c) The  Financial  Statements:  (i) are correct  and  complete in all
material  respects and in accordance  with the books and records of the Flexaust
Division  and  Flexadux,   respectively;   (ii)  fairly  present  the  financial
condition,  assets and  liabilities of Flexadux and the Flexaust  Division (on a
stand-alone  basis)  as of  their  respective  dates  and the  results  of their
operations  and changes in their  financial  position  for the  periods  covered
thereby;  and (iii) have been  prepared  in  accordance  with GAAP  applied on a
consistent basis. All references in

                                       7

this Agreement to a "Balance  Sheet" shall mean the balance sheet of Flexadux or
the Flexaust  Division (as the case may be) as at December 31, 1994  included in
the Financial  Statements  and all  references to the "Balance Sheet Date" shall
mean December 31, 1994.

     2.07 No  Undisclosed  Liabilities.  Neither the Seller nor Flexadux has any
liability or obligation  relating to the Business of any nature,  whether due or
to become due,  absolute,  contingent,  known,  unknown or otherwise,  including
without  limitation  liabilities  for or in  respect  of Taxes  (as  hereinafter
defined) and any interest or penalties relating thereto,  except for liabilities
that (a) are fully  reflected on the Balance  Sheet of the Flexaust  Division or
Flexadux (as the case may be), (b) have been incurred in the ordinary  course of
business since the Balance Sheet Date and are fully  reflected as liabilities on
the books of account of the  Flexaust  Division or Flexadux (as the case may be)
and in any interim financial  statements  provided to the Buyers,  including the
Final  Takeover  Balance Sheets  required by Section 7.04 below,  none of which,
individually  or in the  aggregate,  have been  materially  adverse,  or (c) are
disclosed on Schedule 2.07 hereto.

     2.08 No Changes.  Except as  disclosed on Schedule  2.08 hereto,  since the
Balance Sheet Date the Seller and Flexadux  have  conducted the Business only in
the ordinary course.  Without limiting the generality of the foregoing sentence,
except as disclosed on Schedule 2.08 hereto, since the Balance Sheet Date, there
has not been, with respect to the Business:

          (a)  any  change  in the  financial  condition,  assets,  liabilities,
prospects,  net worth or business of the Business except changes in the ordinary
course of business, none of which, individually or in the aggregate, has been or
will be materially adverse to the Business;

          (b) any  damage,  destruction  or  loss,  whether  or not  covered  by
insurance,  adversely  affecting  the  properties,  business or prospects of the
Business, or any material deterioration in the operating condition of the assets
of the Business;

          (c) any  mortgage or pledge on, or  subjection  to any Lien of, any of
the Assets, tangible or intangible, relating to the Business;

          (d) any strike, walkout or labor trouble;

          (e) any wage or  salary  increases  or any  employment  or  consulting
contract or  arrangement  entered into with any officer,  employee or consultant
relating to the Business  which is not  terminable  at will  without  penalty or
continuing obligation;

          (f) any making of or  commitment to make any capital  expenditures  in
excess of $50,000 in the aggregate;

          (g) any cancellation or waiver of any right with respect to the Assets
or the Business or permitting any of such rights to lapse, except, in each case,
in the ordinary course of business;
                                       8

          (h)  any  payment,  discharge  or  satisfaction  of any  liability  or
obligation  (whether accrued,  absolute,  contingent or otherwise) by either the
Seller or Flexadux  other than the payment,  discharge or  satisfaction,  in the
ordinary course of business, of liabilities or obligations shown or reflected on
the  Balance  Sheet of the  Flexaust  Division  or  Flexadux  or incurred in the
ordinary course of business since the Balance Sheet Date;

          (i) any sale,  transfer or other  disposition of any Assets except (x)
sales of  inventory  in the  ordinary  course  of  business,  (y) sales or other
dispositions  of assets  which are not material to the Business and (z) the sale
of the Amesbury Facility (as defined in Section 4.02 below);

          (j) any  adverse  change or any  threat of any  adverse  change in the
relations of the Seller or Flexadux  with, or any loss or threat of loss of, any
of the important suppliers, clients or customers of the Business;

          (k)  any  write-offs  as   uncollectible  of  any  notes  or  accounts
receivable of the Seller or Flexadux or  write-downs  of the value of any assets
or inventory by the Seller or Flexadux  other than in  immaterial  amounts or in
the ordinary  course of business  consistent with past practice and at a rate no
greater than during the twelve month period ending on the Balance Sheet Date;

          (l) any  change by either  the  Seller or  Flexadux  in any  method of
accounting or keeping its books of account or in its accounting practices;

          (m) any payment, loan or advance of any amount to or in respect of, or
the sale,  transfer or lease of any properties or assets to, or entering into of
any agreement, arrangement or transaction with, any related party except for (i)
directors'  fees and (ii)  compensation  to the  officers  and  employees of the
Seller or Flexadux with respect to the Business at rates not exceeding the rates
of compensation disclosed on Schedule 2.23 hereto;

          (n) to the best knowledge of the Seller,  any disclosure to any person
not an employee or other disposal of any trade secret, process or know-how; or

          (o) any transaction, agreement or event outside the ordinary course of
business  or  inconsistent  with past  practice or which has had or is likely to
have a material  adverse effect on the business,  properties or prospects of the
Business.

                                       9

     2.09 Taxes.

          (a) Each of the Seller and Flexadux has, with respect to the Business,
(i) timely filed all returns and reports required to be filed by it with respect
to all foreign, federal, state and local income, payroll,  withholding,  excise,
sales,  use,  personal  property,  use and occupancy,  business and  occupation,
mercantile, real estate, stock, franchise or other tax (all the foregoing taxes,
including  interest and penalties thereon and including  estimated taxes,  being
hereinafter  collectively  called  "Taxes"),  (ii) paid all Taxes  shown to have
become due  pursuant to such  returns and reports and (iii) paid all other Taxes
due,  including without  limitation Taxes for which a notice of or assessment or
demand for payment has been  received.  All such returns  have been  prepared in
accordance  with all applicable  Laws and accurately  reflect the taxable income
(or other measure of Tax) of the Seller or Flexadux (as the case may be).

          (b) The  accruals  for Taxes  contained  in the  Balance  Sheet of the
Seller and  Flexadux  are  adequate  to cover all  liabilities  for Taxes of the
Seller or Flexadux (as the case may be) for all periods  ending on or before the
Balance Sheet Date, and nothing has occurred subsequent to that date to make any
of such accruals inadequate. All Taxes for periods ended after the Balance Sheet
Date through the date hereof have been paid or are adequately  reserved  against
on the books of the Seller or Flexadux and on any interim  financial  statements
provided to the Buyers,  including the Final Takeover Balance Sheets required by
Section 7.04 below.

          (c) Each of the Seller and Flexadux  has timely filed all  information
returns or reports  which are  required to be filed with respect to the Business
and has  accurately  reported all  information  required to be reflected on such
returns or reports.  There are no proposed assessments of Tax against either the
Seller or Flexadux or proposed  adjustments  to any tax returns or reports filed
pending against either the Seller or Flexadux.

          (d)  Schedule  2.09 hereto lists the most recent Tax return and report
of the Seller and Flexadux that has been audited by the relevant authorities and
all deficiencies or proposed  deficiencies  resulting from such audits have been
paid or are adequately  provided for in the Balance Sheet,  and no Tax return or
report is under  examination  by any taxing  authority.  Neither  the Seller nor
Flexadux  has ever (i)  executed a waiver or consent  extending  any  statute of
limitation for federal income or other tax liability which remains  outstanding,
(ii) joined in or been required to join in filing a consolidated  federal income
tax return with any other party, except as listed on Schedule 2.09 hereto, (iii)
applied for a tax ruling,  (iv) entered into a closing agreement with any taxing
authority or (vi) filed an election under section  338(g) or section  338(h)(10)
of the Code or caused a deemed election under section 338(e) of the Code to have
occurred.

     2.10 Inventory.  All of the inventories of the Seller and Flexadux relating
to the  Business,  including  those  reflected in the Balance  Sheets and in the
Final Takeover  Balance Sheets,  are valued at the lower of cost or market,  the
cost  thereof  being  determined  on a  first-in,  first-out  basis,  except  as
disclosed in the Financial Statements.  All of the inventories of the Seller and
Flexadux reflected in the Balance Sheets and all inventories  acquired since the
Balance Sheet Date consist of items of a quality and quantity usable and salable
in the ordinary course of the Business  within a reasonable  period of time, and
all of the raw materials and

                                       10


work in process  inventories of the Seller or Flexadux  relating to the Business
reflected  in the Balance  Sheets and all such  inventories  acquired  since the
Balance  Sheet Date can  reasonably  be expected to be consumed in the  ordinary
course of business within a reasonable  period of time. None of the inventory of
the Seller or  Flexadux  relating to the  Business  is obsolete or slow  moving.
Attached  hereto  as  Schedule  2.10  is a  true  and  correct  summary  of  the
inventories  of the Seller and  Flexadux  relating  to the  Business of finished
goods,  work in  process  and raw  materials  as of the  last  day of the  month
immediately preceding the present month.

     2.11 Accounts  Receivable.  All of the accounts  receivable of Flexadux and
the Seller  with  respect to the  Business,  including  those  reflected  on the
Balance  Sheets  and  the  Final  Takeover  Balance  Sheets  represent   amounts
receivable for merchandise actually delivered or services actually provided (or,
in the case of non-trade  accounts or notes,  represent  amounts  receivable  in
respect of other bona fide business  transactions),  have arisen in the ordinary
course of  business,  are not subject to any  counterclaims  or offsets and have
been billed and generally  are due within 30 days after such  billing.  All such
receivables  are reasonably  believed to be fully  collectible in the normal and
ordinary  course of  business,  except to the extent of the reserve for doubtful
accounts reflected on the Balance Sheet. Schedule 2.11 hereto sets forth (a) the
total amount of accounts  receivable of the Business  outstanding as of the last
day of the month  immediately  preceding  the present month and (b) the aging of
such receivables based on the following  schedule:  0-30 days, 31-60 days, 61-90
days and over 90 days, from the due date thereof.

     2.12 Real Property.

          (a)  Schedule  2.12 hereto  sets forth a true and correct  list of all
leases for real property  (including  any subleases and  assignments  of leases)
used in or relating to the  Business  with respect to which either the Seller or
Flexadux  is  the  lessee  (or  the   sublessee   or  assignee  of  the  lessee)
(collectively, "Leases") and the location of all properties covered thereby, and
indicates  which  of such  Leases  will  require  the  consent  of the  landlord
thereunder in order to prevent a default from occurring thereunder upon the sale
of the Assets to TFC or the sale of the Shares to SII. All of such Leases are in
full force and effect,  all parties  thereto are in  compliance  with all of the
terms  thereof and no default or event  which,  with the giving of notice or the
passage of time or both,  would  constitute a default exists with respect to any
party under any of such Leases.

          (b) Each of the Seller and Flexadux presently owns (beneficially or of
record) the real  properties  described on Schedule  2.12 used in or relating to
the  Business  (the real  properties  owned or leased by the Seller or Flexadux,
including all structures and improvements  thereon, are referred to collectively
as the "Seller Properties").

          (c)  Schedule  2.12  sets  forth a true and  correct  list of all real
properties (other than the Seller  Properties) which were owned or leased by the
Seller or Flexadux  and used in or  relating  to the  Business at any time since
January 1, 1985 (all such properties and all other  properties  which were owned
or  leased  by the  Seller  or  Flexadux  since  its  inception,  including  all
structures  and  improvements  thereon,  are  referred to as the "Former  Seller
Properties"),  together with a brief description of the activities  conducted on
such properties by the Seller or

                                       11

Flexadux or the  occupants  thereof  during the time when the Seller or Flexadux
owned or occupied such properties.

     2.13 Material Agreements. Except as listed on Schedule 2.13 hereto, neither
the Seller nor  Flexadux  is a party to or bound by any  agreement,  contract or
commitment, oral or written, formal or informal, of the following types relating
to the Business (collectively, "Material Agreements"):

          (a) employment or consulting agreements;

          (b) powers of attorney;

          (c) sales agency,  manufacturer's  representative and  distributorship
agreements or other distribution or commission arrangements;

          (d) licenses of patents,  trademarks  or other  intellectual  property
rights;

          (e)  agreements,  orders or commitments  for the purchase of services,
supplies or finished  products  from any one supplier for an amount in excess of
$10,000;

          (f)  agreements,  orders or  commitments  for the sale of  products or
services for more than $10,000 to any single purchaser;

          (g)  agreements,  orders or  commitments  for the sale of  products or
services to any Government Authority;

          (h)  contracts  or  options  relating  to the  sale by the  Seller  or
Flexadux of any asset,  other than sales of inventory in the ordinary  course of
business;

          (i) agreements or commitments  for capital  expenditures  in excess of
$25,000 for any single project;

          (j) joint venture agreements;

          (k) lease agreements for personal property;

          (l)  agreements  relating to the assumption or guarantee by the Seller
or  Flexadux  of any  liability  or  obligation  of any other  person or entity,
whether absolute, accrued, contingent or otherwise;

          (m)  agreements,  contracts  or  commitments  for  any  charitable  or
political contribution; or

          (n) other  agreements,  contracts or commitments which are material to
the Business,  or which involve payments or receipts of more than $10,000 in any
single year, or

                                       12

which were entered into other than in the ordinary and usual course of business,
and which are not listed on any other Schedule hereto.

     All such Material  Agreements are in full force and effect,  all parties to
such Material  Agreements  have, to the best  knowledge of the Seller,  complied
with the provisions thereof (including without limitation any provision relating
to hiring practices, equal opportunity of employment or affirmative action), and
no default or event  which,  with the giving of notice or the passage of time or
both,  would  constitute a default exists with respect to any party under any of
such Material Agreements.  Schedule 2.13 hereto indicates which of such Material
Agreements  will  require the  consent of a party  thereto in order to prevent a
default from occurring  thereunder  upon the sale of the Assets and the Business
to TFC or the sale of the Shares to SII.

     2.14 Patents and Intellectual  Property  Rights.  Schedule 2.14 hereto sets
forth a true and correct list of all patents,  patent  applications,  trademarks
and trade  names,  copyrights,  service  marks,  logos  and  other  Intellectual
Property presently held, owned or used by the Seller or Flexadux relating to the
Business, or necessary to the Business as it is now conducted,  all of which are
valid and in good standing,  and none of which infringes (nor has any claim been
made that any of them  infringes)  the  patents,  trademarks  or other rights of
others.  The  manufacture,  sale  or  use  of any  products  now  or  heretofore
manufactured  or sold by the Business did not and does not infringe (nor has any
claim been made that any such action infringes) the patents or rights of others.

     2.15  Title  to  Assets.  Each of the  Seller  and  Flexadux  has  good and
marketable  title (fee or leasehold) to all of its  properties  and assets which
relate to the Business,  including the  properties  and assets  reflected in the
Balance  Sheets  (except  those  disposed of in the ordinary  course of business
since the  Balance  Sheet  Date),  free and clear of any Liens  except (a) minor
imperfections  of  title,  none  of  which,  individually  or in the  aggregate,
materially  detracts  from  the  value  of or  impairs  the use of the  affected
properties  or impairs the  operations  of the  Business,  (b) Liens for current
taxes not yet due and  payable  and (c) as  disclosed  on  Schedule  2.15 hereto
(collectively, "Permitted Liens"). The assets of the Flexaust Division, together
with the assets of Flexadux,  constitute all of the assets used in or related to
the Business.

     2.16 Condition of Assets. The buildings,  equipment,  machinery, furniture,
improvements  and other assets of the Seller and Flexadux used in or relating to
the  Business,  including  those  reflected in the Balance  Sheets,  are in good
operating  condition and repair and are suitable for the purposes for which they
are used in the Business.

     2.17  Permits.  Schedule  2.17 hereto sets forth a true and correct list of
all material Permits held by the Seller or Flexadux with respect to the Business
or the Assets and  indicates  which of such  Permits will require the consent of
the issuing Government  Authorities for such Permits to remain in full force and
effect upon the sale of the Assets to TFC and the sale of the Shares to SII. All
such  Permits  are in full force and effect and the Seller and  Flexadux  are in
compliance  with the terms and  conditions  thereof.  The  Seller  and  Flexadux
together  hold all  Permits  required  under all Laws which are  material to the
Business.

                                       13

     2.18 Compliance with Laws. Each of the Seller and Flexadux has complied and
is in  substantial  compliance  with all material  Laws relating to the Business
(including  without  limitation  those  relating  to  environmental  protection,
occupational  safety  and  health and equal  employment  practices).  No notice,
citation,  summons or order has been  issued,  no complaint  has been filed,  no
penalty  has  been  assessed  and no  investigation  or  review  is  pending  or
threatened  by any  Government  Authority or other entity which has had or could
have a material effect on the Business with respect to any alleged  violation by
either the Seller or Flexadux of any Law.

     2.19  Environmental  Matters.  Except as set forth on Schedule 2.19 hereto,
none of the following events has occurred:

          (a) any direct or indirect discharge,  disposal,  spillage,  emission,
escape,  pumping,  pouring,  injection,  release,  seepage or  filtration of any
Hazardous  Substance (as hereinafter  defined) at, upon,  under or within any of
the Seller Properties or, to the best knowledge of the Seller, the Former Seller
Properties,  or from any of the Seller  Properties  or, to the best knowledge of
the Seller, from any of the Former Seller Properties, to any other real property
or  into  the  air or  any  body  of  water,  in  violation  of  any  applicable
Environmental Laws (as defined below);

          (b) any deposit, storage,  dumping,  placement or use of any Hazardous
Substance  at,  upon,  under or within  the  Seller  Properties  or, to the best
knowledge  of the Seller,  the Former  Seller  Properties  in  violation  of any
applicable Environmental Laws;

          (c) the transport,  disposal,  abandonment or discarding by the Seller
or Flexadux or their respective employees, agents or independent contractors, of
any Hazardous Substance in violation of any applicable Environmental Laws;

          (d) any activity which could result in any material liability, cost or
expense  to any  past,  present  or  future  owner  or  occupier  of the  Seller
Properties or, to the best knowledge of the Seller, the Former Seller Properties
under any applicable Environmental Laws; or

          (e)  any  other  material  violation  of  or  noncompliance  with  any
Environmental  Law by either the Seller or Flexadux  or any of their  respective
employees  or,  to the best  knowledge  of the  Seller,  agents  or  independent
contractors.

As used  herein,  "Environmental  Laws" shall mean any Laws which  relate to the
environment  or human  health  or  safety,  including  without  limitation  Laws
relating  to  the  use,   storage,   treatment,   transportation,   manufacture,
refinement,  handling,  production or disposal of any Hazardous  Substance,  and
"Hazardous  Substance"  shall  mean (i) any  flammable  substances,  explosives,
radioactive materials,  hazardous materials, hazardous wastes, toxic substances,
pollutants, contaminants or any related materials or substances specified in any
applicable Environmental Laws (including any "hazardous substance" as defined in
the Comprehensive  Environmental  Response Compensation Liability Act, 42 U.S.C.
ss.ss.6901  et  seq.),  and (ii)  asbestos,  polychlorinated  biphenyls,  radon,
petroleum products and urea formaldehyde.

                                       14


     2.20    ERISA Matters.

          (a) Except for the  benefit  plans  listed on  Schedule  2.20  hereto,
neither the Seller nor Flexadux sponsors or maintains nor is required, either by
law or by contract,  to contribute to any employee welfare benefit plan,  within
the meaning of section 3(1) of the Employee  Retirement  Income  Security Act of
1974, as amended ("ERISA"), with respect to the Business or any employees of the
Business nor to any employee pension benefit plan, within the meaning of section
3(2) of ERISA,  with  respect to the  Business or any  employees of the Business
(all such plans,  including the Pension Plan, are referred to  individually as a
"Plan" and  collectively  as the  "Plans").  Neither the Seller nor Flexadux has
contributed  to, nor is it required to contribute to, any  multi-employer  plan,
within the meaning of section 3(37) of ERISA, with respect to the Business.

          (b) All contributions  required,  by law or by contract, to be made to
any Plan for any plan year or other  period on the basis of which  contributions
are required  ending before the date hereof have been made as of the date hereof
or have been adequately provided for in the Financial Statements.

          (c) The Plans and any  trusts or  insurance  contracts  maintained  in
connection  therewith have been  administered  in compliance  with ERISA and the
Code in all material respects,  and the Seller and Flexadux (as applicable) have
complied in all material  respects with all legal  requirements  with respect to
the Plans, including any reporting and disclosure requirements.

          (d) No Plan,  nor any trust  created  thereunder,  nor any  trustee or
administrator  thereof, has engaged in any transaction prohibited by section 406
or section 407 of ERISA,  or by section  4975 of the Code,  which could  subject
either  Seller  or any Plan to any  penalty  imposed  under  ERISA or to any tax
imposed by section 4975 of the Code or, if any such transaction has occurred, it
has been  corrected,  within the  meaning of section  4975 of the Code,  and all
applicable Taxes and penalties with respect thereto have been paid.

          (e) Each Plan has been  determined by the Internal  Revenue Service to
be  "qualified"  within the meaning of section 401(a) of the Code and the Seller
has  provided  the Buyers  with a copy of the most recent  determination  letter
issued by the Internal  Revenue  Service  with respect to each Plan.  The Seller
knows of no fact that may adversely affect the qualified status of any Plan.

          (f) No "reportable  event" as that term is defined in section  4043(c)
of ERISA has occurred with respect to any Plan.

          (g) The Seller has provided the Buyers with true and correct copies of
the IRS Form 5500 most recently filed for each Plan.

          (h) Neither the Seller nor Flexadux nor any other employer which, with
either of them, could be or has been considered to be a "single employer" within
the meaning of

                                       15

section 414(b) or 414(c) of the Code has ever terminated or withdrawn, wholly or
partially,  from any multi-employer  plan within the meaning of section 3(37) of
ERISA, nor has any such employer announced an intention to withdraw, but not yet
completed such withdrawal, from any multi-employer plan.

          (i) There are no actions, suits, investigations or proceedings pending
or, to the best  knowledge of the Seller,  threatened  against or affecting  any
Plan, any fiduciaries  thereof or the assets of any trust thereunder,  at law or
in equity,  by or before any Judicial  Authority,  and there is no basis for any
such  action,  suit,  investigation  or  proceeding.   There  are  presently  no
outstanding  Judgments against or affecting any Plan, any fiduciaries thereof or
the assets of any trust thereunder.

     2.21 Consents. No consent, approval or authorization of, or registration or
filing  with,  any person or entity,  including  any  Government  Authority,  is
required in connection  with the execution and delivery of this Agreement or the
consummation  of the  transactions  contemplated  hereby,  except  as  otherwise
disclosed on a Schedule to this Agreement.

     2.22 No Pending Litigation or Proceedings.  Except as set forth on Schedule
2.07, there are no actions, suits, investigations, or proceedings pending or, to
the best  knowledge of the Seller,  threatened  against or affecting  either the
Seller  or  Flexadux,  the  Business,  any of the  Assets  or the  Shares or the
Seller's or Flexadux's  respective  rights thereto,  at law or in equity,  by or
before any Judicial or Government  Authority,  and to the best  knowledge of the
Seller there is no basis for any such action, suit, investigation or proceeding.
To the  best  knowledge  of the  Seller,  there  are  presently  no  outstanding
Judgments  against or  affecting  either the Seller or  Flexadux or any of their
assets or affecting the Business,  the Assets, the Shares or the Seller's rights
thereto.

     2.23 Officers and  Employees.  Schedule 2.23 hereto  contains a list of all
officers and other employees of and consultants to either the Seller or Flexadux
employed or used in connection  with the Business whose current annual salary or
rate of  compensation,  exclusive of commissions,  is $25,000 or more,  together
with the current  job title or  relationship  to the Seller or Flexadux  and the
aggregate remuneration rate for each such person.

     2.24 Labor Relations. The relations of each of the Seller and Flexadux with
its  employees in the Business  are good.  Except as disclosed on Schedule  2.24
hereto, with respect to the Business:

          (a) no employee of either the Seller or Flexadux is represented by any
union or other labor organization,  and neither the Seller nor Flexadux is party
to any union or collective bargaining agreement;

          (b) no employees of either the Seller or Flexadux are party to, or are
the target of, any union organizing drive or similar activity;

                                       16

          (c) there is no unfair  labor  practice  charge or  complaint  against
either the Seller or Flexadux  pending or, to the best  knowledge of the Seller,
threatened  before the National Labor Relations Board or any other Government or
Judicial Authority;

          (d) there is no labor strike,  dispute,  slow down or stoppage pending
or, to the best knowledge of the Seller,  threatened against or involving either
the Seller or Flexadux;

          (e) no labor  grievance  which might have an adverse  affect on either
the Seller or Flexadux or the conduct of the Business is pending or, to the best
knowledge of the Seller, threatened;

          (f) to the best  knowledge  of the  Seller,  neither  the  Seller  nor
Flexadux is or has engaged in any unfair or discriminatory labor practices which
remain unresolved as of the date of this Agreement;

          (g) no  agreement to which either the Seller or Flexadux is a party or
by which it is bound restricts  Seller or Flexadux from  relocating,  closing or
terminating any of its operations or facilities; and

          (h) neither the Seller nor Flexadux has  experienced any work stoppage
or other labor difficulty in the past three years.

     2.25 Products; Products Liability.

          (a)  Schedule  2.25 hereto  sets forth a true and correct  list of all
product lines currently or formerly manufactured or sold by the Business and all
services  currently or formerly  provided by the Business  with respect to which
either the Seller or Flexadux has any outstanding  warranty obligations or other
liabilities, whether actual or contingent.

          (b) The Seller has delivered to the Buyers true and correct  copies of
all express  warranties in effect with respect to any products  manufactured  or
sold, and any services provided by, the Business.

          (c) Except for  lawsuits,  claims,  damages  and  expenses  adequately
covered  by  insurance,  to the  best  knowledge  of  the  Seller  there  are no
liabilities of either the Seller or Flexadux,  fixed or contingent,  asserted or
unasserted, with respect to (i) any product manufactured or sold by the Business
or (ii) any claim for the breach of any express or implied  product  warranty or
any other similar claim with respect to any product  manufactured or sold by the
Business.

     2.26 Insurance.  Schedule 2.26 hereto sets forth a true and correct list of
all  policies of  insurance of which either the Seller or Flexadux is the owner,
insured or beneficiary relating to the Business, or covering any of its property
used in or relating to the  Business,  indicating  for each policy the  carrier,
risks insured, the amounts of coverage,  deductible, premium rate, cash value if
any,  expiration date and any pending claims  thereunder.  All such policies are
outstanding  and in full  force  and  effect.  The  coverages  provided  by such
policies are

                                       17

reasonable,  in both scope and amount,  in light of the risks  attendant  to the
businesses  in which the Seller or  Flexadux  is, or has been,  engaged  and are
comparable  to coverages  customarily  maintained by the Seller or Flexadux in a
similar  line of business,  and such  insurance  is  reasonably  believed to be,
subject to  reasonable  deductibles,  sufficient  in the  aggregate to cover all
reasonably  foreseeable  damage to and liabilities or contingencies  relating to
the conduct by the Seller and Flexadux of the Business. There is no default with
respect to any  provision  contained in any such policy,  nor has there been any
failure to give any notice or present any  material  claim under any such policy
in a timely fashion or in the manner or detail  required by such policy.  Except
as set forth on  Schedule  2.26,  there are no  outstanding  unpaid  premiums or
claims  under such  policies.  Schedule  2.26  contains an accurate and complete
description  of any  provision  contained  in such  policies  which  provide for
retrospective or retroactive premium  adjustments.  No notice of cancellation or
non-renewal with respect to, or disallowance of any claim under, any such policy
has been  received  by either the  Seller or  Flexadux.  Neither  the Seller nor
Flexadux has been refused any  insurance,  nor has its coverage  been limited by
any insurance carrier to which it has applied for insurance or with which it has
carried  insurance  during the last five  years.  Since  January  1,  1990,  all
products  liability  and general  liability  policies  maintained  by or for the
benefit of either the Seller or Flexadux have been "occurrence" policies and not
"claims made" policies.

     2.27 Customers and Suppliers.  Schedule 2.27 hereto contains a list of each
of the customers and suppliers of the Business whose  purchases from or sales to
the Business  constituted five percent or more of the net sales or net purchases
of the Business, respectively, during any of the fiscal years ended December 31,
1992,  December 31, 1993 or December 31, 1994 or during the  three-month  period
ended March 31,  1995,  showing,  with  respect to each,  the name and  address,
dollar volume and nature of the relationship (including the principal categories
of  products  bought or sold).  Neither  the Seller nor  Flexadux is required to
provide  any  material  bonding  or other  financial  security  arrangements  in
connection with any of the transactions with any of such customers or suppliers.
Neither the Seller nor Flexadux has received any direct  communication  (whether
oral or written) of any  intention of any customer  identified  on Schedule 2.27
hereto to discontinue its relationship as a customer of, or materially to reduce
its purchases from the Business.

     2.28  Brokerage.  Neither the Seller nor Flexadux has made any agreement or
taken any other action which might cause anyone to become entitled to a finder's
or  broker's  fee or  commission  as a result of the  transactions  contemplated
hereunder.

     2.29  Disclosure.  No  representation  or  warranty  by the  Seller in this
Agreement,  and  no  Exhibit,  Schedule,   document,  statement  or  certificate
furnished or to be furnished to the Buyers pursuant hereto or in connection with
the  transactions  contemplated  hereby,  contains  or will  contain  any untrue
statement  of a  material  fact or omits or will omit to state a  material  fact
necessary to (a) make the  statements or facts  contained  herein or therein not
misleading or (b) provide the Buyers with adequate and complete  information  as
to the Seller,  Flexadux and their respective affairs, the Business,  the Assets
and the Shares.
                                       18


                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE BUYERS

       The Buyers hereby represent and warrant to the Seller as follows:

     3.01  Organization.  TFC is a corporation duly organized,  validly existing
and  in  good  standing  under  the  laws  of the  State  of  Indiana.  SII is a
corporation duly organized, validly existing and in good standing under the laws
of the State of  Delaware.  Each  Buyer has the full  corporate  power to own or
lease its properties and assets as now owned or leased, to carry on its business
as and where now being conducted and to make, execute,  deliver and perform this
Agreement and the Related Agreements to which it is a party.

     3.02  Authorization  and  Enforceability.   The  execution,   delivery  and
performance of this Agreement and the Related  Agreements to which each Buyer is
a party have been duly authorized by all necessary  corporate action on the part
of such Buyer. This Agreement and the Related  Agreements to which each Buyer is
a party  have been or will be duly  executed  and  delivered  by such  Buyer and
constitute  or will  constitute  legal,  valid and binding  obligations  of such
Buyer, enforceable against it in accordance with their respective terms.

     3.03 No Violation of Laws or Agreements. The execution and delivery of this
Agreement and the Related  Agreements to which each Buyer is a party do not, and
the  consummation  of the  transactions  contemplated  by this Agreement and the
Related Agreements and the compliance with the terms,  conditions and provisions
hereof and thereof by such Buyer will not,  conflict  with or result in a breach
of or  constitute a default (or an event which might,  with the giving of notice
of the passage of time or both,  constitute  a default)  under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement or
any other  agreement  or  instrument  to which such Buyer is a party or by which
such Buyer or any of its assets may be bound or  affected,  or any  Judgment  or
material Law.

     3.04  Brokerage.  Neither  Buyer has made any  agreement or taken any other
action which might cause anyone to become entitled to a finder's or broker's fee
or commission as a result of the transactions contemplated hereunder.


                                   ARTICLE IV

         CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTIES PRIOR TO CLOSING

     4.01 Conduct of Business  Pending  Closing.  From and after the date hereof
and pending the Closing,  and unless the Buyers shall otherwise consent or agree
in writing, the Seller covenants and agrees that:

          (a)  Ordinary  Course.  The Business  shall be  conducted  only in the
ordinary course and consistent with past practice,  including without limitation
billing,  shipping and collection practices,  inventory transactions and payment
of accounts payable.

                                       19

          (b)  Preservation  of Business.  The Seller  shall use all  reasonable
efforts to preserve the business  organization of the Business  intact,  to keep
available  to the Buyers the services of the present  officers and  employees of
the  Business  and to  preserve  for the Buyers the good will of the  suppliers,
customers and others having business relations with the Business.

          (c)  Material  Transactions.  The Seller  shall,  with  respect to the
Business:

               (i) permit the Buyers to have on the premises of the Business, at
the Buyers' expense,  a representative  of the Buyers who shall consult with the
Seller and supervise the conduct of the Business in a manner satisfactory to the
Buyers;

               (ii) in the  event of a  casualty,  loss or  damage to any of the
Assets prior to the Closing Date for which the Seller or Flexadux is insured, at
the  option of the  Buyers,  either  repair or  replace  such  damaged  Asset or
transfer the proceeds of such insurance to the Buyers at Closing;

               (iii) not enter into any contract or commitment  the  performance
of which may extend beyond the Closing, except those made in the ordinary course
of business the terms of which are consistent  with past practice and reasonable
in light of current conditions;

               (iv) not enter into any  employment  or  consulting  contract  or
arrangement  with any person relating to the Business which is not terminable at
will without penalty or continuing obligation;

               (v) not  incur,  create,  assume  or  suffer  to exist  any Lien,
tenancy or other matter affecting title to any of its assets used in or relating
to the Business, except Permitted Liens;

               (vi) not  make,  change or revoke  any tax  election  or make any
agreement or settlement with any taxing authority;

               (vii)  loan or  advance  funds  to, or make an  investment  in or
capital contribution to, any person or entity;

               (viii)  not sell,  transfer  or  otherwise  dispose of any of the
Assets  except for sales of  inventory  in the  ordinary  course of business and
sales or other dispositions of assets which are not material to the Business, or
sell,  transfer or otherwise  dispose of any of the Shares, or negotiate with or
enter into any agreement  with any person or entity to do any of the  foregoing,
except as permitted by Section 4.02 below;

               (ix)  merge or  consolidate  with or into any  other  entity,  or
negotiate or enter into any agreement with any person or entity to do any of the
foregoing;
                                       20

               (x) not take any action or permit to occur any event described in
Section 2.08, except as otherwise expressly required by the terms hereof;

               (xi) not take any  action or omit to take any  action  which will
result in a  violation  of any  material  Law or cause a breach of any  material
agreements, contracts or commitments;

               (xii)  promptly  notify the  Buyers in writing of any  materially
adverse developments with respect to the Business, the Assets or the Shares;

               (xiii) enter into no transaction, and use its best efforts not to
permit any event to occur, which would result in any of the  representations and
warranties of the Seller  contained in this Agreement not being true and correct
at and as of the time  immediately  after the occurrence of such  transaction or
event;
               (xiv) maintain  levels of Inventory  substantially  in accordance
with the Inventory  levels of the Business as of the date hereof (as adjusted to
reflect  purchase  orders received after the date hereof) and in accordance with
the Seller's normal business practices; or

               (xv) not incur any other  obligation  or  liability,  absolute or
contingent,  with  respect  to the  Business  except in the  ordinary  course of
business and consistent with past practice.

     4.02  Permitted  Transfers  of Assets to  Others.  Notwithstanding  Section
4.01(c)(viii) above, the Seller may sell its Amesbury, Massachusetts facility at
which a portion of the Business is conducted (the "Amesbury  Facility") provided
that (i) the sale price for the Amesbury Facility shall be at least $390,000 and
(ii) all proceeds of such sale shall  remain in the Flexaust  Division and shall
be transferred to TFC at the Closing.

     4.03  Insurance.  The Seller and Flexadux  shall maintain in full force and
effect the  policies of  insurance  listed on  Schedule  2.26,  subject  only to
variations  required by the ordinary  operations of its  business,  or else will
obtain,  prior to the lapse of any such policy,  substantially  similar coverage
with  insurers of  recognized  standing and  approved by the Buyers.  The Seller
shall promptly notify the Buyers of any change of insurer or type of coverage in
respect of the policies listed on Schedule 2.26 hereto.

     4.04  Satisfaction  of Closing  Conditions.  The Buyers and the Seller each
shall  (a)  use  their  best  efforts  to  cause  all of the  conditions  to the
obligations of the other under Article V of this Agreement to be satisfied on or
prior to the Closing Date and (b) promptly notify the other of any event or fact
which   represents   or  is   likely  to  cause  a  breach  of  any  of  or  its
representations, warranties, covenants or agreements hereunder. The Seller shall
promptly  advise the Buyers in writing of the  occurrence  of any  condition  or
development  (exclusive  of  general  economic  factors  affecting  business  in
general) of a nature  that is or may be  materially  adverse to the  businesses,
operations,  assets,  prospects or  conditions  (financial  or otherwise) of the
Business.

                                       21

     4.05 Access, Information and Documents;  Confidentiality.  The Seller shall
give  to  the  Buyers  and  to  the  Buyers'  counsel,   accountants  and  other
representatives  (collectively,  "Representatives")  full access  during  normal
business  hours to all of the Seller's and  Flexadux's  properties,  books,  tax
returns, contracts,  commitments,  records, officers,  personnel and accountants
relating to the Business and will furnish to the Buyers all such  documents  and
copies of documents and all such other  information  with respect to the affairs
of the Business as the Buyers may reasonably request. The Buyers agree that they
will  hold in strict  confidence,  and cause  their  Representatives  to hold in
strict confidence,  all information  obtained from the Seller under this Section
4.05  and  will  not  disclose,  and will  cause  their  Representatives  not to
disclose,  any portion of such  information  to any third party  (except for (i)
information  which,  at the time of disclosure or thereafter,  became or becomes
generally  known to the public  through no act or omission  of the Buyers;  (ii)
information  that is already in possession of the Buyers free of any  obligation
of confidence  to the Seller or any other third party;  (iii)  information  that
became or becomes available to the Buyers from a third party who did not acquire
such  information  under an obligation of  confidentiality,  either  directly or
indirectly;  or (iv) information that was or becomes required to be disclosed by
law, provided,  however, that the Buyers shall give prior written notice of such
disclosure to the Seller,  use their best efforts to limit such disclosure,  and
make  such  disclosure  only to the  extent  so  required).  In the  event  this
Agreement is terminated  pursuant to Section  5.03(a) below or the  transactions
contemplated by this Agreement are otherwise not  consummated,  the Buyers shall
immediately   upon  request  of  the  Seller  return,   and  shall  cause  their
Representatives  to  immediately  return,  all  copies  of  documents  and other
information  obtained  pursuant to this Section 4.05 without retaining copies or
extracts thereof.

     4.06 Audit of Inventory.  As soon as practicable prior to the Closing Date,
the  Buyers  and the  Seller  shall  conduct  an  audit of the  Inventory  being
purchased by TFC pursuant hereto, at the Buyers' expense.

     4.07  Environmental Law Compliance.  Prior to the Closing Date, the Buyers,
at their sole option,  may cause an  environmental  audit to be performed on the
Seller  Properties.   Such   environmental   audit  shall  be  performed  by  an
environmental  auditing  firm  selected by the Buyers and at the sole expense of
the Buyers.

     4.08  Consents  and Best  Efforts.  The Buyers and the Seller will take all
reasonable action required to obtain all consents,  approvals and agreements of,
and to give and make all notices and filings with, any third parties,  including
Governmental Authorities, necessary to authorize, approve or permit the full and
complete  transfer  of the  Business,  the  Assets  and the Shares to the Buyers
pursuant to this Agreement.  The Buyers and the Seller covenant and agree to use
their best efforts to take,  or cause to be taken,  all actions and do, or cause
to be done,  all things and execute any documents  necessary or advisable  under
applicable laws or as reasonably  requested by the other party to consummate and
make effective the transactions contemplated hereby.

                                       22

     4.09 Certain Employee Matters.

          (a) Nothing in this  Agreement  (i) requires the Buyers to hire, or to
offer to hire,  any employees of the Seller  employed at the Amesbury  Facility,
(ii)  constitutes an offer to employ such employees or (iii) requires the Buyers
to pay any such persons severance pay in the event of termination of employment.
Notwithstanding the foregoing,  the Buyers may make offers of employment to such
of the  employees  of the Seller  working in the Business as the Buyers in their
sole  discretion  may  choose,  and the  Seller  shall use its best  efforts  to
persuade such  employees to accept such offers.  Prior to the Closing Date,  the
Seller shall afford the Buyers  reasonable  access to the Seller's  employees to
allow the Buyer to interview such employees.

          (b) The Buyers do not and shall not assume or be  responsible  for any
obligations or liabilities  arising out of any employment  relationship  between
the Seller  and any  employee  or former  employee,  and  without  limiting  the
foregoing,  the Buyers shall have no liability or obligation in connection  with
either Seller's  employees or former employees and their  beneficiaries for: (i)
contributions  to or payments  under  employee  benefit  plans,  stock  options,
programs, arrangements or understandings;  (ii) accrued, but unused, sick leave,
vacation pay and severance pay, if any; (iii)  liabilities or obligations  under
any collective bargaining agreement or bargaining relationship;  or (iv) claims,
demands,  administrative  proceedings  or suits arising out of, or in connection
with, alleged unlawful employment practices of the Seller.

          (c) Pursuant to Section  4.09(a) above,  the Buyers are not hiring any
of the employees of the Seller  employed at the Amesbury  Facility and listed on
Schedule  4.09(c)(i)  hereto  (the  "Amesbury  Employees").   However,  TFC  has
requested  the  Seller  not to  terminate,  and the  Seller  has  agreed  not to
terminate,  the Amesbury  Employees listed on Schedule  4.09(c)(ii) hereto (such
employees are referred to as the "Holdover  Amesbury  Employees")  until May 12,
1995.  The  Seller  shall use its best  efforts to cause the  Holdover  Amesbury
Employees to perform such  services for TFC as TFC may  reasonably  direct.  TFC
shall  reimburse  the Seller for the costs of the Seller  relating to payment of
regular  salary or wages and  normal  benefits  (other  than  severance  pay and
accrued vacation, sick leave and holiday pay) to the Holdover Amesbury Employees
(at the employee's  current salary or wage rate) for the period from May 1, 1995
through May 12, 1995  (except as otherwise  indicated on Schedule  4.09(c)(ii)).
The Buyers shall not be responsible  for any other costs of the Seller  relating
to the Amesbury Employees (including the Holdover Amesbury Employees).

     4.10 Bulk Sales Law Compliance.  The Buyer hereby waives  compliance by the
Seller  with  the  requirements  of the  bulk  sales  law of  any  state  having
jurisdiction.

                                       23

                                   ARTICLE V

                       CONDITIONS TO CLOSING; TERMINATION

     5.01 Conditions  Precedent to Obligations of Buyers.  The obligation of the
Buyers to proceed with the Closing is subject to the  fulfillment on or prior to
the Closing Date of the  following  conditions  (any one or more of which may be
waived in whole or in part by the Buyers at the Buyers' option):

          (a) Bringdown of Representations  and Warranties.  The representations
and  warranties  of the Seller  contained  in this  Agreement  shall be true and
correct on and as of the  Closing  Date with the same force and effect as though
such  representations  and  warranties had been made on and as of such date, and
the  Buyers  shall have  received a  certificate  to such  effect  signed by the
President of the Seller.

          (b) Performance and Compliance. The Seller shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied  with by it on or before the Closing  Date,  and the
Buyers shall have received a certificate  to such effect signed by the President
of the Seller.

          (c) Opinion of Counsel.  The Buyers shall have received from Freedman,
Levey,  Kroll & Simonds,  counsel for the Seller,  an opinion  dated the Closing
Date in form and substance  satisfactory to Buyers,  with respect to the matters
set forth in Section 2.01, 2.04 (first two sentences only), 2.05, 2.18, 2.21 and
2.22 and with  respect  to such  other  matters  as the  Buyers  may  reasonably
request.

          (d) Satisfactory  Instruments.  All instruments and documents required
on the Seller's part to effectuate and consummate the transactions  contemplated
hereby  shall be  delivered  to the  Buyers  and shall be in form and  substance
reasonably satisfactory to the Buyers.

          (e)  Consents.  All  consents  necessary  to  prevent a  default  from
occurring  under any of the Leases or  Material  Agreements,  or to prevent  any
suspension  or  termination  of any of the Permits or withdrawal of any right or
privilege thereunder, shall have been obtained by the Seller.

          (f)  Litigation.  No Judgment  shall be in effect  which  restrains or
prohibits the transactions contemplated hereby or which would limit or adversely
affect  TFC's  ownership  or  control of the  Assets or SII's  ownership  of the
Shares, and there shall not be pending or threatened,  by or before any Judicial
or  Government  Authority,  any  action  or  proceeding  challenging  any of the
transactions contemplated by this Agreement or the Related Agreements or seeking
monetary  relief by reason of the  consummation  of such  transactions  or which
might affect TFC's right to own, operate or control the Assets after the Closing
Date in the manner in which they were operated prior thereto, SII's right to own
the Shares after the Closing Date, or which might have a material adverse effect
on the business, prospects or condition (financial or otherwise) of the Assets.

                                       24

          (g) Employment  Agreements.  Frederick R. Radcliffe and William Draper
each shall have entered into an Employment Agreement with TFC.

          (h) Flormar Purchase Closing. The closing of the sale by the Seller to
Flormar of the Seller's  Warsaw,  Indiana real property  pursuant to the Flormar
Purchase Agreement shall have occurred.

          (i) Flexaust  GmbH  Closing.  The closing of the sale by the Seller to
Schauenburg  GmbH of its  50%  equity  interest  in  Flexaust  GmbH  shall  have
occurred.

          (j)  Approval  of Board of  Directors.  This  Agreement,  the  Related
Agreements and all transactions  contemplated  hereby or thereby shall have been
duly approved by all required  corporate  action on the part of (i) each Buyer's
board  of  directors  and  (ii)  the  Seller's   board  of  directors  and  sole
shareholder.  In addition,  the Buyers shall have received copies,  certified by
the  Secretary  of the  Seller,  of the  resolutions  of the  Seller's  board of
directors and sole shareholder approving said agreements and transactions.

          (k) No  Material  Adverse  Change.  There  shall have been no material
adverse  change  since the  Balance  Sheet Date in the  businesses,  operations,
assets, prospects or condition (financial or otherwise) of the Business.

          (l) Compliance With Laws. The Seller shall have duly complied with all
such  applicable  Laws (other  than bulk sales laws) as may be required  for the
valid  and  effective  consummation  of the  transactions  contemplated  by this
Agreement.

          (m)  Assignment  Instruments.  The  Seller  shall  have  executed  and
delivered to the Buyers the Assignment Instruments.

          (n)  Non-Competition  Agreement.  The Seller  shall have  executed and
delivered to the Buyers the Non-Competition Agreement.

     5.02 Conditions  Precedent to the Obligations of the Seller. The obligation
of the Seller to proceed  with the Closing is subject to the  fulfillment  on or
prior to the Closing Date of the following  conditions (any one or more of which
may be waived in whole or in part by the Seller at the Seller's option):

          (a) Bringdown of Representations  and Warranties.  The representations
and  warranties  of the Buyers  contained  in this  Agreement  shall be true and
correct on and as of the  Closing  Date with the same force and effect as though
such  representations  and warranties had been made on as of such date, and each
Buyer shall have delivered to the Seller a certificate to such effect.

          (b)  Performance  and  Compliance.  Each  of  the  Buyers  shall  have
performed all of the covenants and complied with all the provisions  required by
this Agreement to be

                                       25

performed or complied with by it on or before the Closing Date,  and each of the
Buyers shall have delivered to the Seller a certificate to such effect.

          (c) Opinion of Counsel for Buyers. The Seller shall have received from
Cohen & Grigsby, P.C., counsel for the Buyers, an opinion dated the Closing Date
in form and substance  satisfactory  to the Seller,  with respect to the matters
set forth in Sections 3.01, 3.02 and 3.03 and with respect to such other matters
as the Seller may reasonably request.

          (d) Satisfactory  Instruments.  All instruments and documents required
on the  part  of the  Buyers  to  effectuate  and  consummate  the  transactions
contemplated  hereby  shall be  delivered to the Seller and shall be in form and
substance reasonably satisfactory to the Seller.

          (e)  Litigation.  No Judgment  shall be in effect  which  restrains or
prohibits the transactions contemplated hereby and there shall not be pending or
threatened,  by or before any Judicial or  Government  Authority,  any action or
proceeding challenging any of the transactions contemplated by this Agreement or
the Related  Agreements or seeking monetary relief by reason of the consummation
of such transactions.

          (f) Flormar Purchase Closing. The closing of the sale by the Seller to
Flormar of the Seller's  Warsaw,  Indiana real property  pursuant to the Flormar
Purchase Agreement shall have occurred.

          (g) Flexaust  GmbH  Closing.  The closing of the sale by the Seller to
Schauenburg  GmbH of its  50%  equity  interest  in  Flexaust  GmbH  shall  have
occurred.

          (h)  Approval  of Board  of  Directors  This  Agreement,  the  Related
Agreements and all transactions  contemplated  hereby or thereby shall have been
duly approved by all required  corporate  action on the part of (i) each Buyer's
board  of  directors  and  (ii)  the  Seller's   board  of  directors  and  sole
shareholder. In addition, the Seller shall have received from each Buyer a copy,
certified by the Secretary or Assistant  Secretary of such Buyer, of resolutions
of each Buyer's board of directors  approving said agreements and  transactions.

      5.03 Termination.

          (a) When Agreement May Be Terminated. This Agreement may be terminated
at any time prior to Closing:

               (i) by mutual consent of the Buyers and the Seller;

               (ii) by the Buyers if there has been a material misrepresentation
by  the  Seller  hereunder,  a  material  breach  by  the  Seller  of any of its
warranties or covenants set forth herein, or if any of the conditions  specified
in Section 5.01 hereof shall not have been  fulfilled  within the time  required
and shall not have been waived by the Buyers;

                                       26

               (iii)   by  the   Seller   if   there   has   been   a   material
misrepresentation  by either Buyer hereunder,  a material breach by either Buyer
of any  of  its  warranties  or  covenants  set  forth  herein  or if any of the
conditions specified in Section 5.02 hereof shall not have been fulfilled within
the time required and shall not have been waived by the Seller;

               (iv) by the  Buyers or the Seller if the  Closing  shall not have
occurred  on or prior to April 30,  1995 (as such date may be extended by mutual
consent of the Buyers and the  Seller);  provided  that the Buyers or the Seller
may terminate  this  Agreement  pursuant to this  subparagraph  (iv) only if the
Closing  shall not have  occurred  prior to such date for a reason  other than a
failure by such party to satisfy  the  conditions  to Closing of the other party
set forth in Section  5.01 or 5.02  hereof or a failure by such party to bargain
in good faith; or

               (v) by the Buyers  under the  circumstances  set forth in Section
4.07 above.

          (b)  Effect  of  Termination.  In the  event  of  termination  of this
Agreement by either the Seller or the Buyers as provided  above,  this Agreement
shall forthwith  terminate and there shall be no liability on the part of either
the Seller or the Buyers,  except for liabilities  arising from a breach of this
Agreement prior to such termination.


                                   ARTICLE VI

                                INDEMNIFICATION

     6.01  Indemnification  by the Seller. The Seller hereby agrees to indemnify
and hold harmless the Buyers from and against:

          (a)  any  loss,   liability  (including  without  limitation  any  Tax
liability),  claim, obligation, damage or deficiency of or to the Buyers arising
out of or  resulting  from (i) any  misrepresentation,  breach  of  warranty  or
nonfulfillment  of any covenant on the part of either  Seller  contained in this
Agreement or in any statement or certificate furnished or to be furnished to the
Buyers  pursuant  hereto or in  connection  with the  transactions  contemplated
hereby,  or (ii) any  investigation  by any Government or Judicial  Authority of
either Seller or its business or affairs,  to the extent such  investigation  is
addressed to events  occurring  prior to the Closing  Date, or (iii) any events,
actions or omissions occurring prior to the Closing Date and which relate to the
Business or the Assets (other than Assumed Liabilities),  or (iv) resulting from
the Buyer's  waiver of  compliance  by the Seller with the  requirements  of any
applicable bulk sales law; and

          (b) any  actions,  judgments,  costs and expenses  (including  without
limitation  reasonable  attorneys  fees  and  all  other  expenses  incurred  in
investigating, preparing or

                                       27

defending any litigation, proceeding or investigation,  commenced or threatened)
incident to any of the foregoing or the enforcement of this Section 6.01.

     6.02  Indemnification  by Buyers.  The Buyers hereby agree to indemnify and
hold harmless the Seller from and against:

          (a) any loss, liability, claim, obligation, damage or deficiency of or
to the Seller arising out of or resulting from (i) any misrepresentation, breach
of  warranty  or  nonfulfillment  of any  covenant  on the part of either  Buyer
contained in this Agreement or in any statement or  certificate  furnished or to
be  furnished to the Seller in  connection  with the  transactions  contemplated
hereby,  or (ii) any  investigation  by any Government or Judicial  Authority of
either Buyer or its  business or affairs,  to the extent such  investigation  is
addressed to events, actions or omissions occurring on or after the Closing Date
and which relate to the  Business or the Assets or (iii) events  occurring on or
after the Closing Date or from any Assumed Liability; and

          (b) any actions judgments,  costs and expenses  (including  reasonable
attorneys fees and all other expenses  incurred in  investigating,  preparing or
defending any litigation or proceeding, commenced or threatened) incident to any
of the foregoing or the enforcement of this Section 6.02.

     6.03  Representation, Cooperation and Settlement.

          (a) A party  seeking  indemnification  pursuant to this Article VI (an
"Indemnitee")   shall  give  prompt  written  notice  to  the  party  from  whom
indemnification  is sought (an  "Indemnitor") of any claim asserted against such
Indemnitee  which  might give rise to a claim by such  Indemnitee  against  such
Indemnitor  based on the  indemnity  agreement  contained  in this  Article  VI,
stating the nature and basis of the  first-mentioned  claim and the amount (or a
good faith estimate) thereof.

          (b) An Indemnitor  shall have full  responsibility  and authority with
respect to the disposition of any action,  suit or proceeding brought against an
Indemnitee  with respect to which such  Indemnitor may have liability  under the
indemnity  agreement  contained in this Article VI (an "Action");  provided that
notwithstanding  the  foregoing,  if such  Indemnitor  shall  fail or  refuse to
exercise  such  responsibility  and  authority  within a  reasonable  time after
receiving  notice from the Indemnitee of such action,  suit or proceeding,  then
such Indemnitee may do so at such Indemnitor's expense. If any Action is brought
against an Indemnitee which is defended by an Indemnitor,  such Indemnitee shall
have the right,  at its own  expense,  to be  represented  by counsel of its own
choosing and with whom counsel for such  Indemnitor  shall confer in  connection
with the defense of any such  Action.  Each of such  Indemnitee  and  Indemnitor
shall make  available  to the  counsel and  accountants  of the other all of its
books and records  relating to such Action,  and the parties  agree to render to
each other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such Action.

                                       28

     6.04 Duration of Indemnification  Obligations. No claim for indemnification
pursuant  to this  Article VI shall be made after the third  anniversary  of the
Closing Date, except that such time limitation shall not apply to:

          (a) claims for  misrepresentations or breaches of warranty relating to
Section 2.09 (relating to Taxes),  which may be asserted until after the running
of the applicable  statute of limitations  with respect to the taxable period to
which a particular claim relates;

          (b) claims for  misrepresentations or breaches of warranty relating to
Section 2.19 (relating to environmental  matters),  which claims may be asserted
until after the running of the applicable statute of limitations, if any;

          (c) claims for  misrepresentations or breaches of warranty relating to
Section 2.20  (relating to ERISA),  which claims may be asserted until after the
running of the applicable  statute of limitations  with respect to the period of
time to which a particular claim relates;

          (d) claims which have been the subject of a notice from an  Indemnitee
to an Indemnitor prior to such date;

          (e)  claims  made by an  Indemnitee  pursuant  to  Section  6.01(b) or
6.02(b),  which  may be  asserted  until  after the  amount  of an  Indemnitor's
indemnification  liability  with  respect  to the  underlying  claim is  finally
determined;

          (f) claims for  misrepresentations  or  breaches  of  warranty if such
representation  or warranty was made with actual  knowledge that it contained an
untrue  statement  of a  material  fact or  omitted  to  state a  material  fact
necessary to make the  statements or facts  contained  therein not misleading or
constituted fraud under applicable Laws; and

          (g) claims made by the Buyers pursuant to Section 6.01(a)(ii).

     6.05  Satisfaction of Claims Against the Seller.  The Buyers shall have the
right to set-off the amount of any claim for indemnification  against the Seller
against  any amounts  owed by TFC to the Seller  under  Section  1.04(b) of this
Agreement and, so long as the Buyers have acted  reasonably and in good faith in
asserting such claim for indemnification against the Seller, the exercise by the
Buyers of such setoff right shall not constitute a default  against  obligations
under Section 1.04(b).


                                  ARTICLE VII

                   COVENANTS OF THE PARTIES AFTER THE CLOSING

     7.01 Further Assurances. From time to time after the Closing Date, upon the
request  of the Buyers the  Seller  shall (a) make  available  to the Buyers any
records, documents or other information relating to the Business and retained by
the Seller and (b) execute, deliver and acknowledge all such further instruments
of transfer and conveyance and take all such other

                                       29

actions as the Buyers may reasonably  require to more  effectively  transfer the
Assets to TFC or the Shares to SII. In addition,  upon the request of the Seller
the Buyers  shall (a) make  available  to the Seller any  records,  documents or
other  information  relating to the Business and in the possession of the Buyers
for the purpose of  enabling  the Seller to prepare tax returns or for any other
reasonable  purpose and (b) execute,  deliver and  acknowledge  all such further
documents  and  instruments  and take all such  other  actions as the Seller may
reasonably require to more effectively complete the transactions contemplated by
this Agreement or the Related Agreements.

     7.02 Delivery of Payments and Documents.  The Seller shall,  as promptly as
practicable  after receipt thereof,  properly endorse (if necessary) and deliver
to TFC any payments or  documents  received by the Seller on account of any item
constituting a part of the Assets or otherwise relating to the Business.
 
     7.03  Non-Transferable  Contracts.  If the  Seller is unable to obtain  the
consent,  if required,  of any third party to the  assignment of any contract or
agreement  constituting an Assumed  Liability to the Buyers,  then such contract
shall  constitute an Excluded  Asset,  and the Seller shall remain solely liable
for the  performance  of such  contract.  The Buyers agree to cooperate with the
Seller to perform any such contract.  All proceeds of any such contract shall be
delivered to the Buyers promptly upon the Seller's receipt thereof.

     7.04 Final Takeover Balance Sheets; Adjustments to Purchase Price.

          (a) The  parties  have  intended  that  the  Purchase  Price  would be
adjusted with  reference to the net worth of the Flexaust  Division and Flexadux
as of  December  31,  1994.  Therefore,  in  order  to  permit  the  appropriate
adjustments to the Purchase  Price to be made,  within 45 days after the Closing
Date, the Seller shall provide the Buyers with unaudited  interim balance sheets
for Flexadux and the Flexaust  Division as of the  Effective  Time (each interim
balance sheet is referred to as a "Final Takeover Balance Sheet")  demonstrating
that, as of the Effective Time, (i) the book value of the assets of the Flexaust
Division  less the book value of the Amesbury  Facility (net of the items on the
balance  sheet assumed by TFC pursuant to Section 1.02 and listed in paragraph 4
of Schedule 1.02) was at least $5,359,675, and (ii) the book value of the assets
of  Flexadux  (net of  liabilities)  was at least  $858,225.  The Buyers and the
Seller each shall designate a representative  to assist and shall cooperate with
each other in preparing the Final Takeover Balance Sheets.

          (b) Each  Final  Takeover  Balance  Sheet  shall be  accompanied  by a
certificate  of the Seller  representing  and warranting to the Buyers that such
Final Balance Sheet (i) is correct and complete and in accordance with the books
and records of  Flexadux or the  Flexaust  Division  (as the case may be);  (ii)
fairly presents the financial condition,  assets and liabilities of the Flexaust
Division  (on a  stand-alone  basis) or Flexadux  (as the case may be) as of its
date;  and  (iii)  has been  prepared  in  accordance  with  GAAP  applied  on a
consistent basis.

          (c) The  Seller  shall pay to TFC,  within  10 days  after the date of
delivery  of the Final  Takeover  Balance  Sheets,  an  amount  equal to (i) the
amount,  if any, by which the book value of the assets of the Flexaust  Division
less the book value of the Amesbury Facility

                                       30

(net of the items on the balance  sheet  assumed by TFC pursuant to Section 1.02
and listed in paragraph 4 of Schedule 1.02) was less than $5,359,675,  plus (ii)
the amount,  if any,  by which the book value of the assets of Flexadux  (net of
liabilities)  was less than  $858,225.  If the book  value of the  assets of the
Flexaust Division less the book value of the Amesbury Facility (net of the items
on the  balance  sheet  assumed by TFC  pursuant  to Section  1.02 and listed in
paragraph  4 of Schedule  1.02)  exceeds  $5,359,675,  then TFC shall pay to the
Seller,  within 10 days after the date of delivery of the Final Takeover Balance
Sheets, an amount equal to such excess (if any).

          (d) SII shall  pay to the  Seller,  within  10 days  after the date of
delivery of the Final  Takeover  Balance  Sheets,  an amount equal to 50% of the
earnings of Flexadux,  if any, for the period from January 1, 1995 through April
30, 1995.

     7.05 Use of Trade Names.  The Seller  acknowledges  that from and after the
Closing Date it shall have no right to use any trade names which  constitute any
part of the Assets.  Therefore,  the Seller  agrees that  immediately  after the
Closing  it will take all such  action  as is  necessary  to permit  TFC to have
exclusive right to any and all such trade names.

     7.06 Use of Amesbury  Facility.  The Seller shall take all actions required
to enable TFC to lawfully occupy the Amesbury Facility,  at no cost to TFC, from
the Effective Time until May 31, 1995.


                                  ARTICLE VIII

                                 MISCELLANEOUS

     8.01  Notices.  All  notices,  requests,  demands and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly given and
received (a) upon delivery, if personally delivered,  (b) on the tenth day after
being deposited with the U.S. Postal Service or the Deutsche Bundespost, if sent
by certified or registered mail, return receipt  requested,  (c) on the next day
after being  deposited with a reliable  overnight  delivery  service or (d) upon
receipt of an  answerback,  if transmitted  by telefax,  postage  prepaid in all
cases  other  than  telefax,  addressed  to the  other  party  at the  following
addresses, or telefax numbers in the case of a telefax (or at such other address
or telefax number as shall be given in writing by any party to the others):

               If to the Buyers, to:

               The Flexaust Company Inc.
               1510 Armstrong Road
               Warsaw, Indiana  46580
               Telefax Number: (219) 267-7909

               Attention: Fred Radcliffe, President

                                       31






               With a required copy to:

               Schauenburg GmbH
               Weseler Strasse 35
               45478 Muelheim-Ruhr
               Federal Republic of Germany
               Telefax Number:  (011) 49-208-54110

               Attention:  Werner Hackenberg

               Cohen & Grigsby
               2900 CNG Tower
               625 Liberty Avenue
               Pittsburgh, PA  15222
               Telefax Number: (412) 391-3382

               Attention:  Hugh W. Nevin, Jr., Esq.


               If to the Seller, to:

               Callahan Mining Corporation
               505 Front Avenue,
               P.O. Box 1
               Coeur d'Alene, Idaho  83814
               Telefax Number:  (208) 667-2213

               Attention:  James A. Sabala

               With a required copy to:

               Callahan Mining Corporation
               505 Front Avenue
               P.O. Box 1
               Coeur d'Alene, Idaho  83814
               Telefax Number:  (208) 667-2213

               Attention:  William F. Boyd, Esq.


     8.02  Successors  and  Assigns.  This  Agreement  and all rights and powers
granted  hereby  shall bind and inure to the benefit of the  parties  hereto and
their respective successors and assigns.

                                       32

     8.03 Governing  Law. This Agreement  shall be governed by and construed and
enforced in accordance with the laws of the State of Indiana.

     8.04 Counterparts;  Telefacsimile Execution. This Agreement may be executed
in two or more  counterparts,  each of which  shall be deemed an  original,  but
which together  shall  constitute  one and the same  instrument.  Delivery of an
executed  counterpart  of this  Agreement by  telefacsimile  shall be equally as
effective as delivery of a manually executed counterpart of this Agreement.  Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall  deliver a manually  executed  counterpart,  but the  failure to deliver a
manually executed  counterpart shall not affect the validity,  enforceability or
binding effect of this Agreement.

     8.05 Amendment. To be effective,  any amendment or waiver to this Agreement
must be in writing and be signed by the party  against whom  enforcement  of the
same is sought.

     8.06 Severability. If any portion of this Agreement shall for any reason be
held by a court of competent  jurisdiction to be invalid and unenforceable,  the
valid and  enforceable  provisions will continue to be given effect and bind the
parties hereto.

     8.07 Entire  Agreement.  This  Agreement  and the  Schedules  and  Exhibits
hereto,  each of which is  hereby  incorporated  herein,  set  forth  all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject  matter  hereof,  and supersede all prior and
contemporaneous  agreements  and  understandings,   inducements  or  conditions,
express or implied, oral or written.

                                       33



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

                                    BUYERS:

                                    THE FLEXAUST COMPANY INC.

                                    By:/s/Jack B. Meyer
                                    Title:  Chairman


                                    SCHAUENBURG INTERNATIONAL, INC.

                                    By:/s/Werner Hackenberg
                                    Title:  President


                                    SELLER:

                                    CALLAHAN MINING CORPORATION

                                    By:/s/James A. Sabala
                                    Title:  Vice President


                                       34