SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT


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


Date of Report (Date of earliest event reported): July 1, 1997


                               GRIFFON CORPORATION
             (Exact name of registrant as specified in its charter)


   Delaware                   1-6620              11-1893410
(State or other          (Commission File       (IRS Employer
jurisdiction of              Number)          Identification No.)
incorporation)


100 Jericho Quadrangle, Jericho, New York            11753
(Address of principal executive offices)           (Zip Code)


Registrant's telephone number,
   including area code:                           516-938-5544










Item 2.  Acquisition or Disposition of Assets

     On July 1, 1997, the Company, through its wholly-owned subsidiary  Clopay  
Corporation,  acquired  all of  the  outstanding  shares  of Holmes-Hally  
Industries in a cash  transaction from the Paul M. Halopoff Trust, the Halopoff
Irrevocable Trust and the Halopoff Family Trust. The purchase price of $35 
million is subject to adjustment based on audited financial statements to be 
prepared  as of the  date  of  closing.  The  acquisition  was  financed  by
borrowings  under an existing $60 million credit  facility with Fleet Bank, N.A.
and the Chase Manhattan Bank.

     Holmes-Hally  Industries is a  manufacturer  and  installer of  residential
garage doors and related hardware in the Western United States with annual sales
of approximately $80 million.  Its assets and operations will become part of the
Company's building products segment.








Item 7.  Financial Statements and Exhibits
     (c) Exhibits
         2(a)  Stock purchase agreement dated as of June 4,
               1997 between Clopay Corporation (Purchaser) and
               Marcia Kay Radelet and Timothy P. Halopoff, as
               co-trustees under the Paul M. Halopoff Trust,
               dated September 30, 1975; Timothy P. Halopoff,
               as trustee under the Halopoff Irrevocable
               Trust, dated February 21, 1991, and Marcia Kay
               Radelet, as trustee under the Halopoff Family
               Trust, dated October 14, 1985 (Sellers), and
               Marcia Kay Radelet

         2(b)  First Amendment to Stock Purchase Agreement





                                    SIGNATURE


     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.

                                   GRIFFON CORPORATION
                                   (Registrant)


Date: July 10, 1997                /s/ Robert Balemian
                                       Robert Balemian
                                       President


                            STOCK PURCHASE AGREEMENT

                         DATED AS OF June 4, 1997


                                     BETWEEN


                               CLOPAY CORPORATION
                                   (Purchaser)

                                       AND

                   MARCIA KAY RADELET AND TIMOTHY P. HALOPOFF,
                AS CO-TRUSTEES UNDER THE PAUL M. HALOPOFF TRUST,
                            DATED SEPTEMBER 30, 1975

                              TIMOTHY P. HALOPOFF,
                AS TRUSTEE UNDER THE HALOPOFF IRREVOCABLE TRUST,
                          DATED FEBRUARY 21, 1991, and

                               MARCIA KAY RADELET,
                   AS TRUSTEE UNDER THE HALOPOFF FAMILY TRUST,
                             DATED OCTOBER 14, 1985
                                 (Sellers) , and

                               MARCIA KAY RADELET









                                TABLE OF CONTENTS

                                                            Page

ARTICLE 1:  PURCHASE AND SALE OF SHARES........................1

     1.1     Purchase and Sale ................................1
     1.2     Purchase Price....................................1
     1.3     Closing; Closing Date Payments of Unadjusted 
             Purchase Price; Escrow............................2

ARTICLE 2:  ADJUSTMENTS TO PURCHASE PRICE......................3

    2.1    September 30, 1996 and Closing Date Statements......3
    2.2    Adjustment To Unadjusted Purchase Price.............3
    2.3    Purchaser's Review..................................4
    2.4    Purchase Price Adjustment...........................4

ARTICLE 3:  REPRESENTATIONS AND WARRANTIES OF PURCHASER........5

    3.1    Organization, Good Standing, Authority and 
           Enforceability......................................5
    3.2    Agreement Not in Breach of Other Instruments........5
    3.3    Compliance with Laws................................5
    3.4    No Legal Bar........................................5
    3.5    Investment Banker/Brokerage.........................6
    3.6    Investment..........................................6

ARTICLE 4:  REPRESENTATIONS AND WARRANTIES OF SELLERS..........6

    4.1    Authority of Sellers................................6
    4.2    Capitalization of Holmes-Hally Industries Shares....6
    4.3    Organization, Good Standing and Authority of 
           Holmes-Hally Industries.............................7
    4.4    Affiliates and Subsidiaries.........................7
    4.5    Agreement Not in Contravention......................8
    4.6    Books and Records...................................9
    4.7    Tax Returns, Tax Audits and Tax Liabilities.........9
    4.8    Transactions with Related Parties..................10
    4.9    Real Property and Leaseholds.......................10
    4.10   Tangible Personal Property, Excluding Inventory....11
    4.11   Intangible Personal Property.......................12
    4.12   HHI's Financial Statements; Bank Accounts..........12




    4.13   Undisclosed Liabilities............................14
    4.14   Absence of Changes.................................14
    4.15   Accounts Receivable................................14
    4.16   Insurance..........................................14
    4.17   Environmental Matters..............................15
    4.18   Agreements and Contracts...........................17
    4.19   Employment Matters.................................18
    4.20   Employee Benefit Plans.............................19
    4.21   Claims, Investigation and Litigation...............22
    4.22   Compliance with Laws...............................22
    4.23   Brokerage..........................................23
    4.24   Licenses and Permits...............................23
    4.25   Notices and Consents...............................23
    4.26   Guarantees.........................................23
    4.27   Customers and Sales................................23
    4.28   Conflict of Interest...............................24
    4.29   No Sensitive Transactions..........................24
    4.30   Inventory..........................................24
    4.31   Information and Statements.........................25
    4.32   Powers of Attorney.................................25
    4.33   Prepayment Penalties...............................25
    4.34   Release of Confidential Information................25
    4.35   Excluded Stock.....................................26

ARTICLE 5:  ADDITIONAL AGREEMENTS.............................26

    5.1    Product Claims.....................................26
    5.2    Employee Benefit Plans.............................26
    5.3    Accounts Receivable................................26
    5.4    [Intentionally Left Blank].........................27
    5.5    Proprietary Business Information...................27
    5.6    Cooperation........................................27
    5.7    Cooperation in Litigation..........................28
    5.8    Environmental Remediation..........................28
    5.9    [Intentionally Left Blank].........................28
    5.10   Cash Receipts......................................28
    5.11   Taxes..............................................28
    5.12   Payment of Indebtedness by Related Persons.........29
    5.13   No Negotiation.....................................29
    5.14   Best Efforts.......................................29
    5.15   Cooperation With Purchaser's Due Diligence.........30
    5.16   Required Approvals.................................30
    5.17   Notification.......................................30


ARTICLE 6:  COVENANTS AND CONDITIONS RELATING TO CLOSING......31

    6.1    Covenants of Sellers Prior to Closing..............31
    6.2    Conditions Precedent to Purchaser's Obligation 
           to Close...........................................33
    6.3    Conditions Precedent to Sellers' Obligation 
           to Close...........................................35

ARTICLE 7:  INDEMNIFICATION...................................37

    7.1    Indemnities........................................37

ARTICLE 8:  RESOLUTION OF DISPUTES............................39

    8.1    Accounting Disputes................................39
    8.2    Other Disputes.....................................40
    8.3    Arbitration Procedures.............................40

ARTICLE 9:  OTHER PROVISIONS..................................41

    9.1    Survival of Representations........................41
    9.2    Expenses...........................................41
    9.3    Non-Competition Covenants..........................42
    9.4    Public Releases....................................43
    9.5    Duty to Act Reasonably.............................43
    9.6    Knowledge..........................................43

ARTICLE 10:  TERMINATION......................................43

    10.1   Termination Events.................................43
    10.2   Effect of Termination..............................44

ARTICLE 11:  MISCELLANEOUS....................................45

    11.1   Integration........................................45
    11.2   Amendments.........................................45
    11.3   Successor; Assignment..............................45
    11.4   Notices and Legal Process..........................45
    11.5   Counterparts.......................................46
    11.6   Captions...........................................46
    11.7   Parties in Interest................................46
    11.8   Severability; Construction.........................46
    11.9   Applicable Law.....................................47



                            STOCK PURCHASE AGREEMENT

    THIS  STOCK  PURCHASE   AGREEMENT   ("Agreement")  made  this  4th  day  of
June,  1997 between  CLOPAY  CORPORATION,  a Delaware  corporation
("Purchaser"), and MARCIA KAY RADELET and TIMOTHY P. HALOPOFF, as Co-Trustees of
THE PAUL M. HALOPOFF TRUST,  dated September 30, 1975,  TIMOTHY P. HALOPOFF,  as
Trustee of THE HALOPOFF  IRREVOCABLE  TRUST, dated February 21, 1991, and MARCIA
KAY RADELET,  as Trustee of THE HALOPOFF  FAMILY  TRUST,  dated October 14, 1985
(together, "Sellers"), and MARCIA KAY RADELET, individually.

                                    RECITALS

    WHEREAS,  Sellers  are  holders  of  legal  title of all of the  issued  and
outstanding  shares  of  Holmes-Hally   Industries,   a  California  corporation
(hereinafter  referred  to as  "HHI"),  which  is  engaged  in the  business  of
manufacturing,  selling, distributing, installing and servicing garage doors and
other  related  products,  including,  but not  limited to,  springs,  hardware,
electronic  openers  and  other  components  and parts  for such  products,  for
industrial, commercial, and residential use (the "Business");

    WHEREAS,  Purchaser and Sellers have agreed that on the terms and conditions
of this  Agreement,  Sellers shall sell and Purchaser  shall  purchase all legal
title,  interest  and control of the issued and  outstanding  shares of HHI (the
"Shares"); and

    WHEREAS,  MARCIA  KAY  RADELET  has  agreed to  provide  certain  individual
indemnities and other promises to Purchaser.

    NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained  and for  other  good and  valuable  consideration,  the  receipt  and
adequacy  of which the  parties  each  acknowledge,  the  parties  each agree as
follows:

                                    ARTICLE 1
                          PURCHASE AND SALE OF SHARES

    1.1  Purchase  and  Sale.  Subject  to the  terms  and  conditions  of  this
Agreement,  at the  Closing  Date,  as defined in 1.3.1,  Sellers  shall  sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase,
acquire  and accept  from them,  all  rights,  title and  interest in and to the
Shares.

    1.2 Purchase Price.  The purchase price agreed upon for the Shares as of May
31, 1996 was $40,500,000,  based upon the net asset value of HHI as shown on the
May 31, 1996 Financial  Statements as defined in 4.12.1,  subject to adjustment
for the net asset  value  effect of the sale by HHI of certain  excluded  assets
identified  in  Schedule  1.2(a) (the  "Excluded  Assets") to one or more of the
Sellers as provided in 6.2.9(a).  Accordingly, the purchase price to be paid to
Sellers as of the Closing Date for the Shares (the  "Purchase  Price")  shall be
$40,500,000.00, adjusted as follows:


           (a) if the  difference  between  (i) the  Closing Net Asset Value (as
that term is defined in 4.12.4) of HHI as of the Closing  Date (after the sale
of all of the  Excluded  Assets to one or more of the  Sellers as  provided in
6.2.9(a))  and (ii) the net asset  value of HHI as of May 31,  1996 (as shown on
the May 31, 1996  Financial  Statements)  is a positive  number,  then plus such
difference;  or  if  such  difference  is a  negative  number,  then  less  such
difference; and

           (b)    subject to the "Purchase Price Adjustment", if any, provided 
for in  2.4.

[To  illustrate the parties'  understanding  of the method of calculation of the
Purchase  Price,  Schedule  1.2(b)  provides  an example of the  Purchase  Price
calculation,  including the  calculation of the Unadjusted  Purchase  Price,  as
stated in 2.1 below.]

    1.3    Closing; Closing Date Payments of Unadjusted Purchase Price; Escrow.

           1.3.1  The  closing  of the  transactions  herein  contemplated  (the
"Closing")  shall occur on Tuesday,  July 1, 1997,  ("the Closing  Date") at the
offices of Anderson, Ablon, Lewis & Gale, LLP in Los Angeles, California, unless
the  parties  hereto  agree in writing to a  different  date and  location.  The
effective  time of the sale and purchase of the Shares and the effective time of
the Closing shall be as of the close of business on the Closing Date.

           1.3.2  At the Closing:

                  (a)  Purchaser  shall deliver to the escrow agent (the "Escrow
Agent") under the escrow agreement among the Escrow Agent, Sellers and Purchaser
(the  "Escrow  Agreement")  in the form  attached  hereto as Schedule  1.3.2 and
entered  into on or before  the  Closing  Date,  an amount  equal to twelve  and
one-half  percent (12.5%) of the Unadjusted  Purchase Price as defined in 2.1.1
below (the "Escrow  Funds") in immediately  available  U.S. funds  ("Immediately
Available  Funds"),  by wire transfer to an escrow account ("Escrow Account") in
the name of the Escrow Agent; and

                  (b)  Purchaser  shall  deliver to Sellers  the  balance of the
Unadjusted  Purchase Price in Immediately  Available Funds by wire transfer to a
bank account,  designated in writing at least two (2) business days prior to the
Closing Date, by Sellers; and

                  (c)  Sellers  shall  deliver  certificates   representing  the
Shares,  duly endorsed in blank, or accompanied by stock powers duly executed in
blank,  in proper form for transfer to Purchaser with all signatures  notarized,
unless executed or endorsed at the Closing.



                                    ARTICLE 2
                         ADJUSTMENTS TO PURCHASE PRICE

    2.1    September 30, 1996 and Closing Date Statements.

           2.1.1 "Unadjusted Purchase Price" means a calculation of the Purchase
Price  (determined  in accordance  with 1.2) on the basis of the 1996 Financial
Statements as defined in 4.12.3 (less the  $2,774,540  net asset value of CASI,
including  the Excluded  Stock,  as of September  30,  1996,  but not  otherwise
adjusted  for the net  asset  value  effect  of the sale by HHI of the  Excluded
Assets to the Sellers as provided in  6.2.9(a)).  Purchaser and Sellers  hereby
agree that the Unadjusted Purchase Price is $39,031,199, as computed in Schedule
1.2(b).

           2.1.2 As soon as possible  after the  Closing  Date (and in any event
within 60 calendar days  thereafter),  Sellers  shall deliver to Purchasers  the
audited financial statements (including footnotes) for HHI prepared by McGladrey
and  Pullen  LLP   ("McGladrey")   to  conform  to  this  2.1.2  (the  "Closing
Statements"),  which shall reflect the assets and  liabilities  of HHI as of the
Closing Date, including,  without limitation,  the "Gross Margin" (as defined in
Section 2.4), the Closing Net Asset Value (after the sale of all of the Excluded
Assets to one or more of the Sellers as provided in 6.2.9(a)),  and the results
of  operations  and sources and uses (cash flows) of funds of HHI for the period
between September 30, 1996 and the Closing Date,  together with a calculation of
the Purchase Price as defined in 1.2,  including the Purchase Price Adjustment,
if any, as  provided  for in 2.4.  Purchaser  shall  fully  cooperate  with the
Sellers,  including  their  attorneys,   accountants  and  representatives,   in
providing them with full access to the books and records (including the right to
make copies) and to the  facilities and personnel of HHI  post-Closing  in order
that Sellers,  including their attorneys,  accountants and representatives,  can
prepare  the Closing  Statements.  The Sellers  shall  certify  that the Closing
Statements (a) shall have been prepared in accordance  with  generally  accepted
accounting principles applied on a basis consistent with the methods, procedures
and  practices  as the 1996  Financial  Statements,  including  the  taking of a
physical  inventory by Sellers on the Closing Date;  (b) will have been prepared
from the books and  records  of HHI,  which  were  complete  and  correct in all
material  respects;  and (c) will contain and reflect all necessary  adjustments
and accruals for a fair and accurate  presentation of the financial condition of
HHI as of the Closing Date and the results of operations for the period covered.

    2.2 Adjustment To Unadjusted  Purchase Price. If there shall be a difference
between the Purchase Price and the Unadjusted  Purchase Price,  payments will be
made to either Purchaser or Sellers as set forth below.






           2.2.1 If the Purchase Price is greater than the  Unadjusted  Purchase
Price,  then  Purchaser  shall pay to Sellers an amount equal to the  difference
between the Purchase Price and the Unadjusted  Purchase Price, i.e., the "Excess
Amount",  together  with  interest  thereon from the Closing Date at a per annum
rate  equal  to  seven  percent  (7%),  in  Immediately  Available  Funds on the
Settlement Date;  provided  however,  that to the extent that any portion of the
Excess Amount is not in dispute, Purchaser shall immediately pay such undisputed
amount, including interest thereon, to Sellers.

           2.2.2 If the  Unadjusted  Purchase Price is greater than the Purchase
Price,  then Sellers  shall pay to  Purchaser an amount equal to the  difference
between the  Unadjusted  Purchase  Price and the Purchase  Price,  together with
interest  thereon  from the  Closing  Date at a per  annum  rate  equal to seven
percent (7%), in Immediately  Available Funds, on the Settlement Date;  provided
however,  that to the  extent  that any  portion  of such  difference  is not in
dispute,  Sellers  shall  immediately  pay  such  undisputed  amount,  including
interest thereon, to Purchaser.

           2.2.3 The  "Settlement  Date" shall be a business day  designated  by
Purchaser,  and  shall be  within 10  calendar  days  after the later of (i) the
expiration,  without  service of notice upon the Sellers of  objections,  of the
period  provided for in 2.3 for  objections  by  Purchaser to Sellers'  Closing
Statements and Sellers' calculation of the Purchase Price, or (ii) the date upon
which  the  parties  either  agree  upon any  adjustments  to  Sellers'  Closing
Statements and the calculation of the Purchase  Price,  or, if Purchaser and the
Sellers  shall not reach such  agreement,  then the date upon which any Purchase
Price dispute is resolved by arbitration as provided in 8.1 below.

    2.3 Purchaser's  Review.  Purchaser shall review Sellers' Closing Statements
and calculation of the Purchase Price,  including the Purchase Price Adjustment,
if any, promptly upon receipt thereof. If Purchaser believes that corrections or
adjustments   are  necessary  in  order  for  the  Closing   Statements  or  the
calculations to be prepared in accordance  with this Agreement,  Purchaser shall
deliver to Sellers a notice within 45 calendar days after Purchaser's receipt of
the Closing Statements and Sellers' calculation of the Purchase Price, including
the Purchase Price Adjustment, if any, identifying the amount and nature of such
adjustments. Each party will cooperate with the other in providing access to the
facilities,  personnel and records of HHI in  connection  with the review of the
Closing Statements and calculation of the Purchase Price, including the Purchase
Price  Adjustment,  if any. Within 45 calendar days after receipt by the Sellers
of any notice by  Purchaser  pursuant to this 2.3,  the parties  shall  attempt
mutually to resolve Purchaser's proposed adjustments.  If the parties are unable
mutually  to resolve  all of  Purchaser's  proposed  adjustments  within such 45
calendar  day  period,  then the sole  method  of  resolution  of any  remaining
disputes over Purchaser's  proposed  adjustments shall be through arbitration as
provided in 8.1 below.

    2.4 Purchase Price Adjustment. If the Gross Margin (i.e., the Net Sales less
Cost of Goods  Sold) of HHI for the  period  from  October 1, 1996  through  the
Closing  Date, as reflected in the Closing  Statements,  is less than Twenty and
Eight-Tenths  percent  (20.8%),  then  the  Purchase  Price  shall  be  adjusted



downwards,  but not to exceed a maximum  adjustment  of Nine Million One Hundred
Fifty One Thousand Two Hundred Thirty Five Dollars ($9,151,235.00),  as provided
in Schedule  2.4, such Purchase  Price  adjustment  referred to as the "Purchase
Price  Adjustment." For purposes of this 2.4,  "Gross Margin",  "Net Sales" and
"Cost of Goods  Sold" will be  calculated  and  determined  consistent  with the
accounting  methods,  procedures  and practices  reflected in the 1996 Financial
Statements.

                                    ARTICLE 3

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

    Purchaser  represents  and  warrants to Sellers  that as of the date of this
Agreement:

    3.1 Organization, Good Standing, Authority and Enforceability.  Purchaser is
a corporation  duly organized,  validly  existing and in good standing under the
laws of the State of Delaware.  Purchaser has full  authority and power to carry
on its business as it is now conducted, and to own, lease and operate the assets
owned, leased or operated by it. Purchaser has all requisite corporate power and
authority  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated hereby. This Agreement and each of the other agreements executed in
connection  herewith by  Purchaser  have been duly  executed  and  delivered  by
Purchaser,  and upon  execution  thereof  by the  other  parties  thereto  shall
constitute legal, valid and binding obligations of Purchaser enforceable against
Purchaser, in accordance with their respective terms.

    3.2 Agreement Not in Breach of Other Instruments. The execution and delivery
of this Agreement, the consummation of the transactions  contemplated hereby and
the  fulfillment  of the terms  hereof will not violate or result in a breach of
any of the terms or  provisions  of, or constitute a default (or an event which,
with notice or the passage of time, or both,  would constitute a default) under,
or conflict with or result in the  termination of, or accelerate the performance
required  by,  (i) any  agreement,  indenture,  or  other  instrument  to  which
Purchaser is a party or by which  Purchaser is bound,  (ii) the  Certificate  of
Incorporation or Bylaws of Purchaser, (iii) any judgment, decree, order or award
of any court,  governmental  body or arbitrator by which  Purchaser is bound, or
(iv) any law, rule or regulation applicable to Purchaser.

    3.3 Compliance with Laws. All consents, approvals and authorizations and all
other requirements  prescribed by law, rule or regulation which must be obtained
or satisfied by Purchaser and which are necessary for the execution and delivery
by Purchaser of this Agreement and the documents to be executed and delivered by
Purchaser in connection  herewith and in order to permit the consummation of the
transactions   contemplated  by  this  Agreement  have  been  obtained  and  are
satisfied.

    3.4 No Legal Bar. Purchaser is not prohibited by any order, writ, injunction
or  decree  of  any  body  of  competent   jurisdiction  from  consummating  the
transactions  contemplated by this Agreement and all other agreements referenced
herein,  and no such action or proceeding  is pending  against  Purchaser  which



questions the validity of this  Agreement or any such other  agreements,  any of
the  transactions  contemplated  hereby or thereby or any action  which has been
taken by any of the parties in connection herewith or therewith or in connection
with any of the transactions contemplated hereby or thereby.

    3.5 Investment Banker/Brokerage.  No investment banker, broker or finder has
acted for  Purchaser in  connection  with this  Agreement  and the  transactions
contemplated  herein.  Purchaser  shall  indemnify  and  hold  Sellers  harmless
pursuant  to 7.1.2  hereof from and  against  any  liability  to any brokers or
finders purporting to act on Purchaser's behalf.

    3.6  Investment.  Purchaser is acquiring  the Shares for its own account for
investment  and with no  present  view to the  distribution  thereof  within the
meaning of the Securities Act of 1933, as amended.

                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES
                                   OF SELLERS

    Sellers  represent  and  warrant  to  Purchaser  that as of the date of this
Agreement:

    4.1 Authority of Sellers.  Sellers  collectively hold marketable legal title
to the Shares.  Sellers have all requisite  power,  rights and  authority  under
applicable  law  and  the  trusts  identified  in the  first  paragraph  of this
Agreement (together the "Trusts") to enter into this Agreement and to consummate
the  transactions  contemplated  hereby  without the  approval or consent of any
person,  including  the  beneficiaries  of the Trusts,  or any  entity,  probate
magistrate,  judge or any other judicial body or agency. Except for the Sellers,
there are no persons or entities who or which have any legal interest whatsoever
in any of the  Shares  or the  Purchase  Price.  The  Sellers  shall  convey  to
Purchaser all right, title and interest in and to the Shares to Purchaser at the
Closing,  free of any claim or interest on the part of the  beneficiaries of the
Trusts or any other person or entity.  This  Agreement and each other  agreement
and  instrument  to be executed by Sellers in  connection  herewith have been or
will be duly  executed and when  delivered to  Purchaser  and upon  execution by
Purchaser and any other parties  thereto,  will constitute the legal,  valid and
binding  obligations of Sellers,  enforceable in accordance  with the respective
terms  of such  documents.  The  execution,  delivery  and  performance  of this
Agreement and the transactions and ancillary documents  contemplated hereby have
been duly authorized and approved by Sellers in their  respective  capacities as
trustees of the Trusts.

    4.2    Capitalization of Holmes-Hally Industries Shares.

           4.2.1 The entire  authorized  capital  stock of HHI consists of 7,500
shares  of  capital  stock,  $10.00  par value  each,  of which  1,809.5  shares
currently are authorized,  issued and  outstanding and comprise the Shares.  The
Shares are held by Sellers as provided in Schedule 4.2.1. The Shares are validly
issued, fully paid and nonassessable.  The Shares were issued in full compliance
with all applicable federal and state securities laws. The Shares held of record



by  Sellers  constitute  all of the  capital  stock of HHI which is  issued  and
outstanding.  There are no  shares of  preferred  stock  issued or  outstanding.
Sellers   hold  legal  title  to  the  Shares  free  and  clear  of  all  liens,
encumbrances,  voting trusts and claims of any kind  whatsoever  and free of any
statutory  or  contractual  shareholder  preemptive  rights  excepting  only the
beneficial rights of the beneficiaries under the aforesaid Trusts.  There are no
options,  calls,  warrants or other securities or rights  outstanding  which are
convertible into,  exercisable for, or related to any shares of capital stock of
HHI.

           4.2.2  Legal  title to the  shares  is held  solely  in the  Sellers.
Sellers have full power and authority to transfer all right,  title and interest
in and to the Shares,  without  the consent or approval of any court,  agency or
person,  and to  deliver to  Purchaser  the  certificates  for the Shares in the
manner  contemplated  by this  Agreement  and, upon Closing,  shall  transfer to
Purchaser  the entire legal and  beneficial  ownership  of the Shares,  free and
clear of all liens,  encumbrances  and claims of any kind whatsoever and free of
any statutory or contractual  shareholder preemptive rights and any restrictions
or  obligations of trust.  None of the Shares is subject to any proxies,  voting
trusts, voting agreements,  shareholders agreement,  close corporation agreement
or other  arrangements or understandings  that affect the Sellers' right to vote
or transfer the Shares and, upon  transfer to Purchaser,  the Shares will not be
subject  to  any  proxies,   voting  trusts,  voting  agreements,   shareholders
agreements, close corporation agreements or other arrangements or understandings
that would, in any manner limit or affect  Purchaser's right to vote or transfer
the Shares.

           4.2.3 None of  Sellers  is  engaged  in, or is a party to, or has any
basis to anticipate,  any legal action or other  proceeding  before any court or
administrative  agency  in  connection  with  the  Shares  or  the  transactions
contemplated by this Agreement.

    4.3    Organization, Good Standing and Authority of Holmes-Hally Industries.
HHI is a corporation duly organized, validly existing and in good standing under
the laws of the State of California.  HHI has full authority and power to 
conduct business as it historically has been conducted by it, and to own or 
lease, and operate all of its properties and assets.  HHI is qualified to do 
business and is in good standing as a foreign corporation in each jurisdiction 
where the failure to obtain or maintain such qualification or good standing 
would have an adverse effect on HHI's conduct of the Business or assets in such 
jurisdiction or result in taxes, fines or penalties not reserved for on the 
Closing Statements. Schedule 4.3(a) sets forth each jurisdiction in which HHI 
is qualified to do business and Schedule 4.3(b) sets forth each jurisdiction 
where HHI owns or leases real property.  Schedule 4.3(c) includes:  (a) a true 
and complete copy of HHI's Articles of Incorporation, as amended to date, to be 
certified by the Secretary of State of California as of a date not more than 14 
calendar days prior to the Closing Date, (b) a certificate of good standing in 
respect of HHI from each jurisdiction listed in Schedules 4.3(a) and 4.3(b), 
each to be certified by the appropriate Secretary of State as of a date not more
than 14 calendar days prior to the Closing Date; and (c) a true and complete 
copy of HHI's Bylaws, as amended to date, certified by the Secretary of HHI.


    4.4    Affiliates and Subsidiaries.

           4.4.1 Except as provided in Section  4.4.2,  Schedule  4.4.1(a)  sets
forth  a list of all  subsidiaries  of HHI  (individually,  a  "Subsidiary"  and
collectively,  the  "Subsidiaries").  Each of the  Subsidiaries is a corporation
wholly owned by HHI and duly  organized,  validly  existing and in good standing
under the laws of its state of incorporation as set forth on Schedule  4.4.1(a).
Each  Subsidiary  has  full  authority  and  power  to  conduct  business  as it
historically  has been conducted by it, and to own or lease,  and operate all of
its properties and assets. Each Subsidiary is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the failure to
obtain or maintain such  qualification  or good  standing  would have an adverse
effect.  Schedule 4.4.1(b) sets forth each jurisdiction in which each Subsidiary
is qualified to do business,  and Schedule 4.4.1(c) sets forth each jurisdiction
where each Subsidiary owns or leases real property.  Schedule 4.4.1(d) includes:
(a) a true and complete copy of each Subsidiary's Articles of Incorporation,  as
amended to date, to be certified by the Secretary of State of such  Subsidiary's
state of  incorporation as of a date not more than 14 calendar days prior to the
Closing Date, (b) a certificate  of good standing in respect of such  Subsidiary
from each  applicable  jurisdiction  listed in Schedules  4.4.1(a) and 4.4.1(b),
each to be certified by the appropriate Secretary of State as of a date not more
than 14 calendar  days prior to the Closing  Date;  and (c) a true and  complete
copy of each Subsidiary's Bylaws, as amended to date, certified by the Secretary
of each such Subsidiary.

           4.4.2 The  Subsidiaries  do not include  CASI,  the stock of which is
owned  approximately  38% by HHI.  The  stock of CASI is not being  conveyed  to
Purchaser under this Agreement (the "Excluded Stock").  CASI has been maintained
as a separate and complete  corporate  entity,  and no liability,  obligation or
duty of CASI has or will become a liability,  obligation  or duty of HHI.  Other
than the Excluded  Stock,  the Sellers and the Trust  beneficiaries  do not own,
directly or  indirectly,  beneficially  or legally,  any interest or  investment
(whether equity or debt) in any corporation, partnership, trust or other entity,
engaged  in any  manner in the same or similar  business  as HHI,  except as set
forth on Schedule  4.4.2.  The appraised fair market value of the Excluded Stock
is Seven Hundred Nineteen Thousand One Hundred Dollars ($719,100.00).

           4.4.3 Schedule  4.4.3(a) sets forth, with respect to each Subsidiary,
the total number of  authorized  shares of capital stock and the total number of
such shares  issued and  outstanding.  HHI is the owner of all of the issued and
outstanding  shares of  capital  stock of the  Subsidiaries,  which  shares  are
validly  issued,  fully paid and  nonassessable.  There are no  options,  calls,
warrants or other securities or rights  outstanding  which are convertible into,
exercisable  for or  related  to  any  shares  of  capital  stock  of any of the
Subsidiaries.

           4.4.4 Except as set forth on Schedule 4.4.4(a),  the Subsidiaries had
as of September 30, 1996,  and will have as of the Closing Date, no  contractual
or non-contractual  obligations,  debts or liabilities of any nature, accrued or
unaccrued,  contingent or absolute, direct or indirect,  recorded or unrecorded,
potential or realized, which obligations,  debts or liabilities should have been
or should be, as the case may be, but were not,  properly  included on the books
thereof in accordance with generally accepted accounting principles applied on a
consistent  basis.  The  Subsidiaries  do  not  own  any  Personal  Property  or
Intangible Personal Property,  as such terms are hereinafter  defined,  which is
used in the  operation of the Business and do not own any other assets except as
set forth on Schedule 4.4.4(a).


    4.5  Agreement  Not in  Contravention.  Neither the execution or delivery of
this Agreement nor the consummation of the transactions contemplated herein will
result in (a) a violation of any provision of the Articles of  Incorporation  or
By-Laws  of HHI or any  Subsidiary;  (b) a  violation  of any  provision  of any
declaration  of trust or  other  document  concerning  the  legal or  beneficial
ownership  or control of the  Shares;  (c) to the  "knowledge  of  Sellers",  as
defined in 9.6, the breach of any term or provision of, or constitute a default
under,  any  contract,  agreement,  declaration  of trust,  lease (except to the
extent  that the prior  consent of a  landlord  is  required  as a result of the
transactions  contemplated  herein),  commitment,  license,  franchise,  permit,
authorization,  or  concession  to which any of  Sellers or HHI is a party or by
which the Business is bound, or constitute an event which with notice,  lapse of
time,  or both,  could  result in any such  violation;  (d) to the  knowledge of
Sellers,  the  violation  by  any of  Sellers  or  HHI  of  any  statute,  rule,
regulation,  ordinance,  code, order,  judgment,  writ,  injunction,  decree, or
award, or constitute an event which with notice,  lapse of time, or both,  could
result in any or such  violation;  (e) the  imposition  of any  lien,  mortgage,
pledge,  easement,  or  encumbrance  upon the Shares,  or, to the  knowledge  of
Sellers,  any claim,  restriction or charge (except to the extent that the prior
consent of a landlord is required as a result of the  transactions  contemplated
herein) on the  Business,  or  constitute  an event which with notice,  lapse of
time, or both, could result in any such imposition;  or (f) except to the extent
that the prior consent of a landlord is required as a result of the transactions
contemplated  herein,  permit the  creation  of any lien or  encumbrance  on the
Shares or permit the  acceleration of the maturity date of any obligation  under
any  indenture,  mortgage,  lease,  lien,  instrument or other  agreement or any
property or asset of HHI, or enable any party to any agreement to which HHI is a
party to exercise a right to terminate or otherwise modify the terms thereof.

    4.6 Books and Records. All the books and records of HHI, including,  without
limitation,   the  accounting  records,   customer  lists,  sales,   purchasing,
production  and  operation  records,  employment  records and tax and  financial
records,  claim,  warranty and  litigation  records,  production  and  operating
records,   insurance   policies,   risk   management   and  insurance   records,
environmental and other assessments,  legal and accounting opinions,  marketing,
advertising and pricing materials, and all general documents and correspondence,
together  with all  minute  books,  stock  certificate  books and stock  ledgers
(collectively,  the  "Records")  are in the possession of HHI and located at the
locations  identified  on  Schedule  4.6 or have been  delivered  to  Purchaser.
Sellers may retain, for themselves,  copies of HHI's tax and other records,  but
Sellers  represent  that,  to the knowledge of Sellers,  all original  books and
records  of HHI,  of all kinds  are  retained  at the  locations  identified  in
Schedule 4.6 and after the date of this  Agreement  (through  the Closing  Date)
will  continue to be retained at and will not be removed from the  locations set
forth on Schedule 4.6.

    4.7    Tax Returns, Tax Audits and Tax Liabilities.

           4.7.1  Schedule  4.7.1(a)  contains  complete  copies of all  federal
income tax,  state income tax and  franchise tax returns of HHI filed for fiscal
years ended on and after  September  30, 1992,  and Schedule  4.7.1(d)  contains
complete  copies of all  examination  reports  and  statements  of  deficiencies
assessed against HHI in respect thereof.


           4.7.2 "Tax" or "Taxes"  means any and all federal,  state,  local and
foreign net or gross income, gross receipts, net proceeds,  sales, use, license,
ad valorem,  value added,  franchise,  withholding,  Social  Security,  payroll,
employment,  excise, real and personal property,  alternative or add-on minimum,
environmental  or  other  taxes,  assessments,  duties,  fees,  levies  or other
governmental charges of any nature whatever,  whether or not disputed,  together
with penalties,  interest and related charges and fees. HHI has timely filed all
returns, statements,  reports and forms (including estimated tax and information
returns)  ("Returns")  required  to  be  filed  with  any  domestic  or  foreign
governmental or regulatory  authority  responsible for the imposition of any Tax
(a "Taxing  Authority"),  and HHI has timely  paid in full and has no  liability
with  respect to Taxes for all  periods  through  the  Closing  Date  except for
current  Taxes which are not yet due and payable,  provisions  for which will be
made on the  Closing  Balance  Sheet.  All such  Returns  are true,  correct and
complete.  The 1995 Financial Statements,  1996 Financial Statements and Closing
Balance Sheet include or will include  accruals for Taxes and for any penalties,
interest and related  charges and fees thereon and such accruals are  sufficient
to pay the Taxes for the accrual  period.  State sales tax  assessments  will be
specifically  reserved  or accrued  for on the  Closing  Statements  by state in
accordance with generally accepted accounting principles. All Federal Income Tax
Returns of HHI filed since  October 1, 1991,  to the extent  audited,  have been
reported upon by the Internal  Revenue Service  through  September 30, 1994 with
"no change" as filed,  except as set forth on Schedule  4.7.1(c).  Except as set
forth on Schedule 4.7.1(b) there is no claim, audit, action,  suit,  proceeding,
or investigation now pending against or with respect to HHI, and none of Sellers
knows of any such threatened  claims,  audits,  actions,  suits,  proceedings or
investigations, or any basis for any assessment of additional Taxes against HHI.
There are no liens for Taxes  upon the assets of HHI  except  liens for  current
real and personal  property taxes not yet due and payable.  HHI has withheld and
timely paid all amounts and Taxes  required by law or  agreement  to be withheld
from  and  paid  in  connection  with  wages,  salaries,  commissions  or  other
compensation of its employees,  agents,  independent  contractors or other third
parties,  and HHI has no liability  for Taxes of any party other than itself and
its  Subsidiaries  under Treasury  Regulations  or any similar  provision of any
state,  local or foreign  law,  as a  transferee  or  successor,  by contract or
otherwise.  Except at set forth on Schedule  4.7.2,  there are not in effect any
waivers or extensions of statutes of limitations by HHI. Purchaser shall control
any audits and  examinations  the  results of which could  adversely  affect any
liability of HHI for taxes incurred after the Closing; provided however, that if
Sellers have any  liability for or with respect to the payment of any Taxes they
shall have the right to  reasonably  participate  in and control any such audits
and examinations along with Purchaser, and Purchaser shall timely advise Sellers
of the  rights  thereof.  To the  knowledge  of  Sellers,  HHI is  subject to no
obligation  to make any  payments  that are not  deductible  under  280G of the
Internal Revenue Code.

    4.8  Transactions  with Related  Parties.  HHI is not indebted,  directly or
indirectly,  to any of its shareholders,  employees,  directors or other related
parties  for any  liability  or  obligation,  nor,  to the  knowledge  of any of
Sellers,  to any  subcontractor  of HHI,  whether  arising  by  reason  of stock
ownership, contract, oral or written agreement or otherwise, in any manner which
will in any way  affect  Purchaser's  ownership  of,  possession  of or right to
operate  the  Business  after the  Closing  Date in any manner  which  Purchaser



chooses or which will not be  reflected  on the 1996  Financial  Statements  and
Closing Statements, as applicable.

    4.9    Real Property and Leaseholds.

           4.9.1  Schedule   4.9.1(a)  contains  a  complete  list  showing  the
location,  including street addresses,  of all real property owned,  occupied or
leased (direct or by operation of law) by HHI currently and, to the knowledge of
Sellers,  at any time in the past 5 years,  showing dates of ownership,  type of
ownership,  occupancy  or tenancy  and the nature of HHI's use.  The  properties
listed on Schedule  4.9.1(a) are referred to  hereinafter as the "HHI Sites." As
to each HHI Site currently  owned by HHI,  Schedule  4.9.1(b) lists the date HHI
(or its  predecessor-in-interest)  acquired the property and each mortgage, lien
and encumbrance on such property other than permitted liens ("Permitted  Liens")
consisting of any (a) liens for Taxes not yet due and payable or being contested
in good faith by appropriate  proceedings,  (b) liens and exceptions  previously
disclosed and  acceptable to Purchaser and described in Schedule  4.9.1(b),  and
(c)  zoning,   building,   environmental  or  other  ordinances  and  any  other
restrictions imposed by any governmental or regulatory authority,  provided that
to the  knowledge  of  Sellers,  no HHI  Site  and no use of any HHI  Site is in
violation of the same. All buildings,  fixtures,  mechanical  systems (including
electrical,  plumbing  and  heating),  and roof,  gutters  and down  spouts  and
structural  systems of all  facilities  shown in Schedule  4.9.1(a) as currently
owned, leased or occupied by HHI are in sufficient condition and repair as to be
suitable for the operation of the Business as presently conducted.

           4.9.2  Except  as  indicated  on  Schedule  4.9.2:  (a)  no  officer,
director,  shareholder,  affiliate or employee of HHI or its  Subsidiaries  owns
directly  or  indirectly,  in  whole  or in  part,  any of the  real  properties
described  on Schedule  4.9.1(a) nor has any  interest  therein;  (b) HHI is the
beneficial  owner of, and has fee simple  title to each parcel of real  property
set forth as being owned by it on Schedule 4.9.1(a), free and clear of any forms
of liens, encumbrances or security interests except Permitted Liens; (c) no real
property  leased by HHI is subject to any sublease or  subtenancy  entitling any
third party to  occupancy  or use thereof and no third party has given notice to
HHI that it claims any such right; (d) no event has occurred which,  through the
passage  of time or the  giving of notice or both,  would  constitute  a default
under any lease  (except to the extent  that the prior  consent of  landlord  is
required as a result of the transactions  contemplated herein),  would cause the
acceleration  of any  obligation of HHI or the creation of a lien or encumbrance
upon any asset thereof or interfere with HHI's right to occupy any leasehold and
to quiet  enjoyment  thereof  (except  to the extent  that the prior  consent of
landlord is required as a result of the transactions  contemplated  herein); and
(e) the leases  relating  to real  property  leased by HHI are in full force and
effect  and  are  enforceable  by  HHI  according  to  their  terms,   and  such
enforceability  is not adversely  affected by this Agreement or the transactions
contemplated  by this Agreement  (except to the extent that the prior consent of
landlord is required as a result of the transactions contemplated herein).


    4.10   Tangible Personal Property, Excluding Inventory.

           4.10.1 Each item of  tangible  personal  property  used by HHI in the
Business  ("Personal  Property"),  is owned by HHI free and clear of all  liens,
encumbrances and claims except as shown in Schedule 4.10.1. Schedule 4.10.1 also
includes a list of all Personal Property held under any lease,  conditional sale
contract,  installment sale contract,  bailment,  storage  agreement or security
arrangement. No Personal Property is subject to charges or restrictions,  except
for liens, if any, for personal property taxes not yet due and payable except as
shown on  Schedule  4.10.1.  Except for  inventories  of raw  material,  work in
process and finished goods used or sold in the ordinary course of business,  and
except for other changes in Personal Property made in the ordinary course of the
Business,  all items of Personal  Property as of  September  30, 1996 will be in
existence on the Closing Date and will be in the  possession  of HHI and located
at an HHI Site  currently  leased  to,  owned or  occupied  by HHI and listed in
Schedule 4.9.1(a). All items of equipment,  materials or other tangible Personal
Property that are present at any HHI Site and which are used in the Business are
owned by or leased to HHI except as separately  listed in Schedule  4.10.1.  HHI
owns or otherwise has the right to use all of the Personal  Property now used by
it in the  operation  of the  Business or located at any HHI Site.  The Personal
Property  represents all of the tangible personal property that is necessary for
the conduct of its Business as presently conducted.

           4.10.2 Each item of Personal Property leased by HHI is currently in 
such condition  that,  upon the return of such  property  to its owner in its 
present condition at the end of the relevant lease term or as otherwise  
contemplated by the  applicable  agreement  between  HHI and the  owner or 
lessor  thereof,  the obligations of HHI to such owners or lessors would be 
discharged without further obligation or payment for any repairs or other work, 
termination fee, penalty or other payment or fee,  except for excess  mileage  
charges for leased  vehicles, which charges shall not exceed $20,000 in the 
aggregate as of the Closing Date.

    4.11  Intangible  Personal  Property.  Schedule 4.11 contains (a) a true and
complete list of all United  States and foreign  patents,  patent  applications,
trade  names,  trademarks,  trade  name and  trademark  registration,  copyright
registrations  and applications for any of the foregoing (with all trade secrets
of HHI, "Intangible Personal Property") owned,  licensed or used by HHI, and (b)
a true and complete list of all licenses or similar  agreements or  arrangements
to  which  HHI is a party  either  as  licensee  or  licensor  for any  items of
Intangible Personal Property. Except as described on Schedule 4.11, (a) there is
no Intangible  Personal  Property  necessary to or used in the operations of the
Business as presently conducted that is not owned by or licensed to HHI; (b) HHI
owns or has the right to use the Intangible  Personal Property free and clear of
all liens,  security  interests,  charges,  encumbrances,  equities  and, to the
knowledge  of Sellers,  other  adverse  claims,  except as described on Schedule
4.11; (c) except as described in Schedule 4.11, no interference actions or other
judicial or adversary  proceedings  concerning  any of such items of  Intangible
Personal  Property are pending and, to the knowledge of any of Sellers,  no such
action or proceeding is threatened; (d) to the knowledge of Sellers, HHI has the



exclusive right and authority to use such items of Intangible  Personal Property
in  connection  with  the  conduct  of  the  Business  in the  manner  presently
conducted,  and to the  knowledge of Sellers,  such use does not conflict  with,
infringe   upon  or   violate   any   rights,   including   without   limitation
confidentiality  obligations and trade secret rights, of any other person,  firm
or  corporation;  (e) to the  knowledge  of Sellers,  no person or entity is now
infringing or has ever  infringed on HHI's rights with respect to the Intangible
Personal  Property,  except as set forth on Schedule  4.11; and (f) there are no
outstanding  disputes  or other  disagreements  with  respect to any  Intangible
Personal Property, except as described in Schedule 4.11.

    4.12   HHI's Financial Statements; Bank Accounts.

           4.12.1 May 31, 1996 Financial Statements. The "May 31, 1996 Financial
Statements"  means HHI's unaudited  balance sheet dated as of May 31, 1996 ("May
31,  1996  Balance  Sheet"),  income  statement  for the period  October 1, 1995
through May 31, 1996 (the "May 31, 1996 Income  Statement") and Income Statement
Adjustment for Non-Recurring  Items and Private Company Add backs for the period
October 1, 1995  through  May 31, 1996 ("May 31,  1996  Adjustments")  copies of
which are attached as Schedule 4.12.1.
           4.12.2 1995 Financial  Statements.  The "1995  Financial  Statements"
means the financial  statements  of HHI for the fiscal year ended  September 30,
1995 audited by  McGladrey  and  adjusted  for  non-recurring  items and private
company add backs,  copies of which are  attached as Schedule  4.12.2.  The 1995
Financial  Statements  (a) contain all  necessary  adjustments  and  accruals to
present fairly and accurately the financial  position of HHI as of September 30,
1995 and the results of  operations  and the sources and uses of all funds (cash
flows) of HHI for the period  ended  September  30, 1995;  (b) were  prepared in
accordance with the normal methods,  procedures and practice of the Business and
in  accordance  with the books and records of HHI,  which books and records were
complete  and  correct  in all  material  respects  and there  were no  material
differences  between such books and records and the 1995  Financial  Statements;
(c) were prepared in accordance with generally  accepted  accounting  principles
applied on a basis  consistent with those of the preceding years; (d) separately
reflect CASI,  including the Excluded  Stock,  as of September 30, 1995; and (e)
were audited by McGladrey and contain the unqualified opinion of McGladrey as to
the matters contained therein.

           4.12.3 The 1996 Financial Statements. The "1996 Financial Statements"
means the  financial  statements  of HHI prepared  and audited by McGladrey  and
adjusted  for  non-recurring  items and private  company add backs,  which shall
include a balance  sheet dated as of  September  30,  1996,  including  specific
identification and valuation of CASI,  including the Excluded Stock,  Statements
of Income for the fiscal year ended  September 30, 1996,  Statements of Retained
Earnings for the fiscal year ended September 30, 1996,  Statements of Cash Flows
for the fiscal year ended  September  30,  1996,  the opinion of  McGladrey  and
appropriate  Notes  thereto,  copies of which are  attached  hereto as  Schedule
4.12.3. The 1996 Financial Statements (a) contain all necessary  adjustments and
accruals to present fairly and  accurately  the financial  position of HHI as of
September  30, 1996 and the results of  operations  of HHI for the period  ended
September 30, 1996;  (b) were prepared in  accordance  with the normal  methods,
procedures  and practice of the Business  and in  accordance  with the books and
records  of HHI,  which  books and  records  were  complete  and  correct in all



material respects and there were no material  differences between such books and
records and the 1996 Financial Statements;  (c) were prepared in accordance with
generally accepted accounting  principles applied on a basis consistent with the
1995 Financial  Statements;  (d) separately reflect CASI, including the Excluded
Stock,  as of September 30, 1996;  (e) were audited by McGladrey and contain the
unqualified opinion of McGladrey to the matters contained therein.

           4.12.4 The Closing  Statements.  The Closing Statements shall conform
to the  requirements  of  2.1.2  above.  The net  asset  value of HHI as of the
Closing Date (the "Closing Net Asset Value") and the "Gross Margin" of HHI as of
the Closing Date shall be determined in the same manner used in the  preparation
of the 1996 Financial Statements.

           4.12.5 HHI's Bank Statements.  Schedule 4.12.5 contains a list of all
bank, brokerage, trust and other financial institution accounts, including their
respective  account number,  name and address of the institution,  and a list of
all authorized signatories to each such account.

    4.13  Undisclosed  Liabilities.  There  are and  will be no  contractual  or
non-contractual  obligations,  debts or  liabilities  of any nature,  accrued or
unaccrued,  contingent or absolute, direct or indirect,  recorded or unrecorded,
potential  or  realized,  of HHI as of  September  30, 1996 or as of the Closing
Date,  that are not  reflected on the 1996  Financial  Statements or will not be
reflected on HHI's Closing  Statements,  or both of them, as appropriate,  which
obligations,  debts or liabilities should have been properly included therein in
accordance with generally accepted accounting principles applied on a consistent
basis.

    4.14  Absence of  Changes.  Except as  disclosed  on  Schedule  4.14,  since
September 30, 1996 and except as may concern only the Excluded Assets, there has
not  been,  nor  are  there  on the  date  of this  Agreement,  (a) any  damage,
destruction  or loss (whether or not covered by insurance)  adversely  affecting
the operations, properties, assets or condition of the Business; and (b) HHI has
not paid any  dividends  (except  in the  ordinary  course of  operation  of the
Business) or otherwise distributed any cash, securities or assets to any Seller.

    4.15 Accounts Receivable.  All receivables of HHI, including those that will
be included in the  Closing  Statements  (a) have and will have arisen from bona
fide transactions in the usual and ordinary course of HHI's business  consistent
with past practice,  (b) are and will have been recorded by HHI consistent  with
HHI's past  practices,  and (c) are not and will not be  factored,  assigned  or
subject to any liens or security interests.

    4.16  Insurance.  Except for welfare benefit plans provided for by insurance
as set forth on Schedule  4.20.1,  Schedule 4.16 lists all liability,  property,
workers' compensation,  directors' and officers' liability,  surety and fidelity
bonds, and other insurance  policies  currently in effect insuring the Business,
owners, operations, employees and real and personal property of HHI and insuring



HHI against risks or relating to the  ownership,  use or operation of any of the
assets or properties  of HHI or the  Business,  including all policies that have
been issued to HHI and all  policies  that have been issued to any person  other
than HHI for the benefit of HHI. With respect to each of such policies, Schedule
4.16 sets forth a list of the premiums to be paid under such policies, the dates
such  premiums are due, and premiums  which have been prepaid by HHI.  After the
date of this  Agreement,  HHI shall not have purchased or acquired  different or
additional  policies  of  the  type  described  above  (excluding  renewals  and
replacement policies acquired in the ordinary course), without the prior written
consent of  Purchaser.  Schedule  4.16 also sets  forth a list of all  insurance
policies  that have  expired  which cover any  currently  outstanding  claims or
litigation.  Except as specifically set forth on Schedule 4.16, to the knowledge
of  Sellers,  there are no  reservations  of rights  with  respect  to claims or
lawsuits and no insurance  company has within the past 3 years  refused to write
any insurance  covering HHI. To the knowledge of Sellers,  no  consultant,  risk
manager, underwriter or similar person or entity has recommended, because of any
adverse condition or risk, any increase in reserves, change in business practice
or work to be done on or with  respect to the assets of HHI in  connection  with
any  insurance or  self-insurance  of HHI except as indicated on Schedule  4.16.
HHI's general  liability,  casualty and similar insurance provide coverage on an
"occurrence" rather than on a "claims made" basis.


    4.17   Environmental Matters.  For purposes of this Agreement:

           (a)  "Hazardous  Materials"  shall  mean  any  substance,   chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant,
or material which is hazardous,  toxic or otherwise potentially harmful to human
health  or  the  environment   including,   without   limitation  (a)  asbestos,
polychlorinated  biphenyls,  and petroleum  (including crude oil or any fraction
thereof) and (b) any substance identified as "hazardous," "extremely hazardous,"
or  "toxic"  or  otherwise  regulated  pursuant  to any  Environmental  Law,  as
hereinafter defined;

           (b) The term "Environmental Law" shall mean all applicable  national,
state,  local and foreign  laws  (including  common and civil law)  regulations,
rules or ordinances,  and  administrative or judicial  interpretations  thereof,
relating  to  pollution  or  protection  of  human  health  or  the  environment
including,   without  limitation,  (a)  Comprehensive   Environmental  Response,
Compensation  and Liability Act of 1980, as amended by the Superfund  Amendments
and  Reauthorization  Act of 1986, 42 USC 9601 et seq.; (b) Solid Waste Disposal
Act,  as amended by the  Resource  Conservation  and  Recovery  Act of 1976,  as
amended by the  Hazardous  and Solid Waste  Amendments  of 1984,  42 USC 6901 et
seq.; (c) Federal Water  Pollution  Control Act of 1972, as amended by the Clean
Water Act of 1977, as amended, 33 USC 1251 et seq.; (d) Toxic Substances Control
Act of 1976,  as  amended,  15 USC  2601 et seq.;  (e)  Emergency  Planning  and
Community  Right-to-Know Act of 1986, 42 USC 11001 et seq.; (f) Clean Air Act of
1966,  as amended by the Clean Air Act  Amendments of 1990, 42 USC 7401 et seq.;
(g) National  Environmental Policy Act of 1970, as amended, 42 USC 4321 et seq.;
(h)  Rivers  and  Harbors  Act of 1899,  as  amended,  33 USC 401 et  seq.;  (i)
Endangered  Species  Act  of  1973,  as  amended,  16 USC  1531,  et  seq.;  




(j)Occupational  Safety and Health Act of 1970, as amended, 29 USC 651 et seq.; 
(k) Safe  Drinking  Water  Act of 1974,  as  amended,  42 USC  300(f)  et seq.;
(l) Hazardous  Materials  Transportation  Act, as amended, 49 USC 1801, et seq.;
and (m) any other federal, state or local  environmental laws, or any amendments
or supplements to any such laws or regulations, whether in effect as of or prior
to the Closing.

           (c) The term "Environmental Claim" means any and all claims, actions,
notices,   demands,  causes  of  action,  suits,   proceedings,   administrative
proceedings,  investigations,  losses,  judgments,  decrees,  penalties,  fines,
liens, debts,  damages,  liabilities,  expenses (including  expenses,  costs and
investments  incurred in  connection  with removal,  abatement or  remediation),
personal  injuries,  governmental  response costs,  natural resources damages or
settlement  thereof,  together  with  attorneys'  fees and any  other  costs and
expenses  regarding or against HHI or any property owned,  leased or occupied by
HHI, arising from or related to, in whole or in part, any  Environmental  Law or
the failure to obtain,  obtaining of or compliance with permits, orders or other
authorizations  including,  without  limitation,  with  respect  to  generation,
handling, storage, transportation,  emission, recycling, reclamation, treatment,
disposal  or release  of any  Hazardous  Materials,  and all  applicable  record
keeping, notification, reporting and training requirements.

           4.17.1 To the knowledge of Sellers, HHI, and its employees, officers,
agents and  contractors  are,  have been and as of the  Closing  Date will be in
compliance with all  Environmental  Laws,  except as  specifically  set forth on
Schedule  4.17.1,  which  compliance   includes,   without  limitation  (a)  the
possession by HHI of all permits,  registrations,  approvals, licenses and other
governmental  authorizations  required under  Environmental  Laws and compliance
with the terms and conditions  thereof;  (b) proper handling,  use,  generation,
collection,  treatment,  storage,  transportation,  recovery,  removal, release,
discharge,  ownership, exposure, or disposal of Hazardous Materials; and (c) all
requirements with regard to record keeping, notification, reporting and employee
training requirements  respecting Hazardous Materials,  workplace safety and all
Environmental Laws.

           4.17.2 Except as  specifically  set forth on Schedule  4.17.2,  at no
time prior to the date of this  Agreement has HHI, and its officers,  directors,
shareholders,  employees or agents been alleged or found to be in violation  of,
or  subject  to  any  administrative  or  judicial  proceeding  pursuant  to any
Environmental Law.

           4.17.3 Except as specifically set forth on Schedule 4.17.3, there are
no pending or, to the knowledge of Sellers, threatened,  Environmental Claims or
circumstances  which  reasonably  could form the basis for the  assertion of any
Environmental Claim, including,  without limitation, any claim arising from past
or present practices of HHI under any Environmental  Law, with respect to HHI or
any  person or  entity  whose  liability  for such  Environmental  Claim HHI has
assumed or retained either contractually or by operation of law.



           4.17.4  HHI is not  now,  nor has HHI in the  past  been,  nor to the
knowledge of Sellers will be prior to the Closing Date,  subject to any removal,
remedial, cost reimbursement, cost recovery or contribution obligation under any
Environmental Law, except as specifically set forth on Schedule 4.17.4.

           4.17.5 Except as specifically set forth on Schedule 4.17.5,  no prior
use by HHI, or to the knowledge of Sellers,  by the prior owners or users of any
HHI Site,  has occurred which (a) violates any  Environmental  Law, or (b) could
reasonably be expected to form the basis of an Environmental Claim.

           4.17.6 Except as specifically  set forth on Schedule  4.17.6,  no HHI
Site  is  on  any  federal  or  state   "Superfund"   list  or  subject  to  any
environmentally related liens, investigations or cleanups, and no claim has been
made or, to the  knowledge of Sellers,  threatened,  against HHI alleging  costs
arising from any Hazardous Materials relating to any HHI Site or the Business.

           4.17.7 Except as specifically  set forth on Schedule  4.17.7,  to the
knowledge of Sellers,  no  disposal,  injection,  discharge  or recharge  wells,
underground tanks, septic systems,  landfills or waste disposal areas exist now,
or to the knowledge of Sellers existed, at any time in the past on any HHI Site.
Except as set forth on Schedule  4.17.7,  during HHI's possession and use of the
HHI Sites and, to the knowledge of Sellers, prior to such possession and use, no
Hazardous Materials were released (by discharge,  emissions,  spill or any other
form of release),  or accumulated  thereon except in accordance  with applicable
laws,  and  all  improvements  thereon  were  constructed  pursuant  to  and  in
accordance with all permits and approvals  necessary under  applicable  federal,
state or local laws and in  accordance  with plans and  specifications,  if any,
submitted to the appropriate  permit issuing  authorities in support of all such
permit applications and approvals.

           4.17.8 Except as specifically  set forth on Schedule  4.17.8,  HHI is
not a party to any  contracts or other  agreements  with respect to the Business
relating to the  storage,  transportation,  treatment  or disposal of  Hazardous
Materials;

           4.17.9 Nothing in this Agreement shall be deemed to waive Purchaser's
rights under applicable laws and regulations  with respect to any  Environmental
Claim,  whether or not the  occurrences  or conditions  giving rise to the claim
were known to Sellers as of the date of this Agreement.

    4.18   Agreements and Contracts.

           4.18.1  Except as set forth on any other  Schedule  hereto,  Schedule
4.18.1 contains a complete list of all contracts, agreements and understandings,
written or oral, including, without limitation, purchase agreements,  mortgages,
guarantees,  security  agreements  (such as Uniform  Commercial  Code  financing
statements),  loan  agreements,  intercompany  agreements  and  agreements  with
affiliates,  exclusive  territory  arrangements  and leases of real or  personal
property to which HHI is a party (the "Contracts")  except: (a) leases disclosed
on Schedule  4.9.1(a);  (b) each contract with a customer made prior to the date



of this  Agreement  whereby HHI is  obligated  to deliver  less than  $50,000 in
invoice  value of  finished  goods in each  transaction  or  series  of  related
transactions  and is to be fully  performed by HHI within 90 calendar days after
the Closing Date; (c) each purchase  commitment made by HHI prior to the date of
this Agreement  which is not in excess of $50,000 in each  transaction or series
of related transactions,  and is to be fully performed by HHI within 90 calendar
days after the Closing  Date;  and (d) product  warranties  included in Schedule
4.18.2  below.  The  Contracts  are in full  force and  effect and are valid and
binding upon HHI and enforceable  against HHI in accordance with their terms and
to Sellers knowledge,  are valid and binding upon the other parties thereto. HHI
and, to the knowledge of Sellers, the other parties thereto,  have complied with
and are  complying  with all  provisions of the Contracts and are not in default
under any  provision  thereof,  and no party to any of the  Contracts  has given
notice to any other  party  thereto  that the latter is in  default  thereunder,
except as provided in Schedule 4.18.1.  HHI is not in default under any Contract
and, to the knowledge of Sellers,  no act or omission has occurred  which,  with
notice or lapse of time or both,  would  constitute a default  under any term or
provision of any such Contract, except as provided in Schedule 4.18.1. Except as
to certain real  property  leases  identified  in Schedule  4.18.1,  as to which
Sellers shall attempt to secure the consent by the landlords to the  transaction
contemplated  under this Agreement,  this Agreement and the  consummation of the
transactions  contemplated  hereby shall not result in a default under or breach
of, or require the  consent or  approval of any party to, any of the  Contracts,
and  there  is no  cause  reasonably  to  believe  that  HHI will not be able to
fulfill,  when due,  all of the  obligations  of HHI under the  Contracts  which
remain to be fulfilled after the Closing.

           4.18.2  Schedule  4.18.2 sets forth all product  warranties in effect
and that will be in  effect  as to  products  sold by HHI  within  the five year
period  preceding  the date of this  Agreement.  Except as disclosed on Schedule
4.18.2 and as will be  reflected  on the  Closing  Balance  Sheet,  there are no
pending  or, to the  knowledge  of Sellers  threatened,  Extraordinary  Warranty
Claims.   "Extraordinary   Warranty   Claims"  means  claims   against  HHI,  or
circumstances which could give rise thereto, involving product recalls, Consumer
Product Safety Commission inquiry or actions,  similar inquiry or actions by any
state or local  government or agency  thereof,  allegations  of deceptive  trade
practices or violation of consumer sales protection laws or other claims against
or liability of HHI in connection  with one or more defects  appearing in common
with respect to a substantial  number of product units or the  installation of a
substantial number of product units made, installed,  distributed or sold by HHI
at any time prior to the date of this Agreement. Schedule 4.18.2 also sets forth
a history of all Extraordinary  Warranty Claims asserted against HHI relating to
products or  installation  services  for the five (5) years prior to the date of
this Agreement.

           4.18.3 The books and  records of HHI set forth all open  orders  from
customers of HHI. Except as disclosed on Schedule  4.18.3,  all such open orders
arose in the ordinary course of business,  are to the knowledge of Sellers, from
customers who are not less  creditworthy  than the  customers  with whom HHI has
customarily  done business at any time prior to the date of this Agreement,  and
are for the purchase of goods or services at prices customarily charged by HHI.



    4.19 Employment  Matters.  To the knowledge of Sellers,  except as listed on
Schedule 4.19(a):  (a) HHI has good employee  relations with its employees;  (b)
there are no  controversies  with,  or  pending  or  threatened  claims  by, any
employee or former employee of HHI against HHI, other than for  compensation and
benefits due in the ordinary  course of employment as of the Closing;  (c) there
are no pending  claims  against  HHI arising out of any  statute,  ordinance  or
regulation relating to employment practices or occupational or safety and health
standards or work place  safety;  (d) there are no pending or  threatened  labor
disputes,  including,  without limitation,  slowdowns, strikes or work stoppages
against  HHI;  and (e) there are no union  organizing  activities  in process or
contemplated  with  respect  to  HHI.  HHI is  not a  party  to  any  collective
bargaining  agreement,  except those listed on and attached as Schedule 4.19(b).
Schedule  4.19(c)  sets  forth the total  annual  compensation  for the  current
calendar year of each employee of HHI whose  compensation,  on the basis of wage
or salary,  is in excess of $40,000,  and lists the seniority  (i.e.,  length of
service) of each such employee as well as any empty  positions  (open spots with
no incumbents) on HHI's management  organization  chart.  Schedule 4.19(d) lists
each person who provides  full-time  services to HHI who is not employed by HHI,
and the nature of the services provided. To the knowledge of Sellers, (a) HHI is
not engaged in any unfair labor practice or other unlawful  employment  practice
and otherwise is not  substantially  out of compliance with applicable  federal,
state and local laws, statutes, ordinances, rules, regulations, codes and orders
relating to conditions of employment, and (b) HHI has not incurred any liability
for any arrearages of wages (including, without limitation, vacation, severance,
overtime or minimum pay), penalties, interest or employment taxes for failure to
comply  with  any  of the  foregoing,  or  any  other  payments  in  respect  of
employment.  To the knowledge of Sellers,  HHI has made all contributions to all
employee welfare and retirement benefit plans required by such plans or by HHI's
practices  to be made on or before  the date of this  Agreement.  HHI's  Closing
Statements  will  accurately  reflect,   and  will  include  separate  schedules
disclosing,   HHI's  liability  for  accrued  compensation,   including  without
limitation,  wages,  salaries,  vacations,   holidays,  sick  pay,  self-insured
disability benefits,  bonuses,  severance and employment taxes,  including those
bonuses  reflected in Schedule 6.1.1.  Except as set forth on Schedule  4.19(e):
(a) to the knowledge of Sellers, HHI has good relations with its subcontractors;
(b) there are no  controversies  with or pending or, to the  knowledge of any of
Sellers  threatened,  or claims by any subcontractor or former  subcontractor of
HHI against HHI, other than for  compensation  due in the ordinary course of the
subcontractor's  relationship  with HHI; (c) there are no pending claims against
HHI arising out of any statute,  ordinance or regulation  relating to employment
practices or occupational or safety and health  standards in connection with any
subcontractor  of HHI;  and (d) there are no  pending  or, to the  knowledge  of
Sellers threatened, labor disputes,  including,  without limitation,  slowdowns,
strikes or work stoppages against HHI involving any subcontractor of HHI.

    4.20   Employee Benefit Plans.

           4.20.1 (a)  Schedule  4.20.1 sets forth a list of each  Benefit  Plan



currently  covering  any present or former  officers,  employees or directors of
HHI. The term  "Benefit  Plan" means each  "employee  pension  benefit plan" (as
defined in 3(2) of the Employee  Retirement  Income  Security  Act of 1974,  as
amended  ("ERISA"),  hereinafter a "Pension  Plan"),  "employee  welfare benefit
plan" (as  defined in 3(1) of ERISA,  hereinafter  a  "Welfare  Plan") and each
other plan,  arrangement or policy  (written or oral) relating to stock options,
stock purchases, compensation, deferred compensation, severance, fringe benefits
or other  employee  benefits,  in each case  maintained  or  contributed  to, or
required  to be  maintained  or  contributed  to, by HHI or any other  person or
entity that together with HHI, is treated as a single  employer  under  414(b),
(c),  (m) or (o) of the Internal  Revenue Code of 1986,  as amended (the "Code")
(each,  together with HHI and Sellers, a "Commonly  Controlled  Entity") for the
benefit of any present or former  officers,  employees or  directors.  Except as
reflected in the 1996 Financial  Statements and the Closing Statements or as set
forth in Schedule 4.20.1, neither HHI nor any Commonly Controlled Entity has any
obligations  with respect to retiree  health  benefits  under any Benefit  Plan.
Schedule 4.20.1  contains true,  complete and correct copies of (a) each Benefit
Plan  with  respect  to HHI (or,  in the case of any  unwritten  Benefit  Plans,
descriptions thereof), (b) the most recent annual report on Form 5500 filed with
the Internal  Revenue  Service with respect to each Benefit Plan with respect to
HHI (if any such report was  required by  applicable  law),  (c) the most recent
summary  plan  description  (or similar  document)  for each  Benefit  Plan with
respect  to HHI for  which  such a  summary  plan  description  is  required  by
applicable law or was otherwise  provided to plan  participants or beneficiaries
and (d) each trust agreement and insurance or annuity  contract  relating to any
Benefit Plan with respect to HHI. Except as set forth in Schedule  4.20.1,  each
such Form 5500 and each such summary plan description (or similar  document) was
and is as of the  date of this  Agreement  true,  complete  and  correct  in all
material respects.

                  (b) To the  knowledge  of Sellers,  (a) each  Benefit Plan has
been administered in all material respects in accordance with its terms,  except
as otherwise required by applicable law or to maintain its tax qualified status,
and (b) HHI and its Commonly  Controlled  Entities and all the Benefit Plans are
in compliance in all material respects with the applicable  provisions of ERISA,
the Code, and all other applicable laws. Except as set forth in Schedule 4.20.1,
there are no investigations by any governmental entity,  termination proceedings
or other claims (except claims for benefits  payable in the normal  operation of
the Benefit Plans),  suits or proceedings  against or involving any Benefit Plan
or asserting  any rights to or claims for  benefits  under any Benefit Plan that
could give rise to any liability in or with respect to HHI, and to the knowledge
of Sellers,  there are no facts that could give rise to any liability in or with
respect  to  HHI  in the  event  of  any  such  investigation,  claim,  suit  or
proceeding.

                  (c) (1) All  contributions  to, and payments from, the Benefit
Plans that may have been required to be made by HHI and its Commonly  Controlled
Entities in  accordance  with the terms of the  Benefit  Plans,  any  applicable
collective  bargaining agreement and, when applicable,  302 of ERISA or 412 of



the Code,  have been timely made (except to the extent any failure to contribute
or pay would not result in a liability in or with respect to HHI), (2) there has
been no application for or waiver of the minimum funding  standards imposed by 
412 of the Code with respect to any Benefit Plan that is a Pension Plan,  (3) no
Pension Plan had an  "accumulated  funding  deficiency"  within the meaning of 
412(a) of the Code as of the end of the most recently  completed  plan year, (4)
to the knowledge of Sellers, there are no outstanding liabilities or claims with
respect to any Pension Plan  previously  maintained and terminated by HHI or its
Commonly Controlled Entities,  in each case which could result in a liability in
or with respect to HHI.

                  (d) To the knowledge of Sellers,  no event has occurred and no
circumstances  exist that would  reasonably be expected to adversely  affect the
tax  qualification  of any Benefit  Plan that is intended to be a tax  qualified
plan under  Sections  401(a) and 501(a) of the Code and result in a liability in
or with respect to HHI.

                  (e) To the  knowledge of Sellers,  Schedule  4.20.1  discloses
whether: (1) any "prohibited  transaction" (as defined in 4975 of the Code or 
406 of ERISA) has  occurred  that  involves the assets of any Benefit Plan which
could  result in a  liability  in or with  respect  to HHI;  (2) any  prohibited
transaction  has  occurred  that could  subject HHI or its  Commonly  Controlled
Entities, any of their employees, a trustee, administrator or other fiduciary of
any trust  created  under any Benefit Plan to the tax or sanctions on prohibited
transactions  imposed by 4975 of the Code or Title of ERISA which could  result
in a liability  in or with  respect to HHI;  (3) any Pension  Plan that has been
terminated or has been the subject of a "reportable  event" (as defined in 4043
of  ERISA  and the  regulations  thereunder  other  than  any  reportable  event
occurring  by reason of the  transactions  contemplated  by this  Agreement or a
reportable  event for which notice to the Pension Benefit  Guaranty  Corporation
has been  waived)  which could  result in a liability in or with respect to HHI;
and (4) HHI or its Commonly Controlled Entities or any trustee, administrator or
other  fiduciary  of any Benefit Plan or any agent of any of the  foregoing  has
engaged in any transaction or acted in a manner that could, or has failed to act
so as to, subject HHI or its Commonly Controlled Entities to a risk of incurring
liability for breach of fiduciary  duty under ERISA or any other  applicable law
and which could result in a liability in or with respect to HHI.

                  (f)  To the knowledge of Sellers, neither HHI nor its Commonly
Controlled Entities has incurred any liability to a Pension Plan (other than for
contributions not yet due) or to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums  not yet due) that would  result in a liability
in or with  respect to HHI,  which  liability  has not been fully paid as of the
date of this Agreement.

                  (g) To the knowledge of Sellers,  neither HHI nor its Commonly
Controlled Entities has (a) engaged in a transaction described in 4069 of ERISA



that could result in a liability in or with respect to HHI at any time after the
date of this  Agreement  or (b) acted or failed  to act in a manner  that  could
result in fines, penalties,  taxes or related charges imposed in or with respect
to HHI under 502(c),  (i) or (1) of ERISA,  4071 of ERISA or Chapter 43 of the
Code.

                  (h)  Neither HHI nor its  Commonly  Controlled  Entities  have
withdrawn  from,  or  failed  to  make  any  required   contributions   to,  any
"multiemployer  plan" (as defined in  4001(a)(3) of ERISA) within the preceding
five (5) years.

                  (i) The list of Welfare  Plans with respect to HHI in Schedule
4.20.1 discloses whether each Welfare Plan is (i) unfunded,  (ii) funded through
a "welfare  benefit  fund",  as such term is defined in 419(e) of the Code,  or
other funding  mechanism or (iii)  insured.  To the  knowledge of Sellers,  each
other such Welfare Plan may be amended or terminated  without  liability  (other
than  liability  for the  payment of claims  incurred  and  benefits  accrued or
payable) to HHI, its Commonly Controlled Entities or Purchaser at any time after
the Closing  Date.  To the  knowledge  of Sellers,  neither HHI nor its Commonly
Controlled  Entities  has failed to comply in all respects  with the  applicable
requirements  of 4980B(f) of the Code with respect to each Benefit Plan that is
a group  health  plan,  as such term is defined in 5000(b)  of the Code,  which
failure could result in a liability in or with respect to HHI.

                  (j) To the  knowledge  of  Sellers,  except  as set  forth  in
Schedule  4.20.1,  the  transactions  contemplated  by this  Agreement  will not
entitle any employee of HHI to any additional  benefits or any  acceleration  of
the time of payment or vesting of any benefits under any Benefit Plan.

                  (k) All benefit plans maintained  outside of the United States
(the "Foreign  Plans") are in material  compliance  with all applicable laws and
regulations  (including all laws and regulations relating to non-discrimination)
and have been  operated  in all  material  respects  with the plans'  respective
terms.  There are no material  unfunded  liabilities  under or in respect of the
Foreign Plans, and all contributions or other payments required to be made to or
in respect of the Foreign Plans prior to the Closing Date have been made or will
be made prior to the Closing Date.

           4.20.2  All   liabilities  and  expenses  with  respect  to  benefits
applicable  to employees  and former  employees  (and  eligible  dependents  and
beneficiaries  of such  employees and former  employees) of HHI for which claims
have been made to an applicable plan fiduciary,  administrator  or sponsor prior
to the Closing  Date under any Benefit  Plan have or shall have been paid for or
provided for in the Closing Statements and the transactions  contemplated by the
Agreement will not cause Purchaser to incur any liability, obligation or expense
whatsoever  under any  Benefit  Plan with  respect  to  benefits  applicable  to
employees and former employees and eligible dependents and beneficiaries of such
employees  and former  employees  of HHI for which  claims  have been made to an
applicable  plan fiduciary,  administrator  or sponsor prior to the Closing Date
under any Benefit Plan. The Closing  Statements shall include specific  accruals
for a pro-rata portion of the current years' employer 401K contribution.



    4.21  Claims,  Investigation  and  Litigation.  Schedule  4.21(a)  lists and
describes each claim and litigation  matter by or against HHI or to which HHI is
a party or by which it is bound or which relates to any of the Shares,  whenever
arising,  that is in process or pending before any court,  government  agency or
authority,  arbitrator,  mediator or other body,  or which to the  knowledge  of
Sellers,  is  threatened,  whether  insured  or  uninsured,  (including  without
limitation claims and litigation related to product liability). Schedule 4.21(b)
separately lists all investigations (including,  without limitation,  government
investigations or audits), judgments,  orders, writs, injunctions and decrees of
any federal,  state or local court or  governmental  authority to which HHI is a
party or by which it is bound or which  relate to the  Business or to any Shares
or HHI products.  Schedule  4.21(c) lists and describes  each claim,  litigation
matter,  investigation,  judgment or order of any court,  agency or governmental
authority to which HHI was a party within the five year period prior to the date
of this Agreement, excluding, however, those listed in Schedule 4.21(a). HHI has
timely notified its insurance carriers of all claims covered by HHI's insurance.
HHI has never been subject to an award of punitive damages.

    4.22  Compliance  with Laws.  Except as disclosed in Schedule  4.22, HHI has
not, during the three (3) years  preceding the date of this Agreement,  received
any notice to the effect that,  or otherwise  been advised  that,  HHI is not in
compliance with any statutes,  regulations,  orders,  ordinances,  codes, rules,
regulations and other laws of the United States of America and all state,  local
and  foreign  governments,  and  agencies  of any of the  foregoing  and, to the
knowledge of Sellers,  HHI  currently is in compliance  with all such  statutes,
regulations,  orders,  ordinances or other laws. Except as disclosed in Schedule
4.22,  HHI has not,  during  the  three  (3)  years  preceding  the date of this
Agreement, received any complaints from any government agency or any third party
alleging that HHI is responsible for illegal or obnoxious odors,  lights,  noise
or any other forms of nuisance, or product defects.

    4.23 Brokerage.  Except for Anne K. Vrolyk, of Vrolyk & Company,  no broker,
finder  or  investment  banker  has  acted  for  any of  Sellers  or  the  Trust
beneficiaries   in  connection   with  this   Agreement  and  the   transactions
contemplated  herein.  All fees and expenses of Vrolyk & Company will be paid by
Sellers.

    4.24 Licenses and Permits.  Schedule 4.24 lists all  governmental  licenses,
permits and authorizations which are held or used by HHI. Except as disclosed in
Schedule  4.24,  and as to local  contractor  licenses and permits for which new
licenses and permits will be required  upon any change in control of HHI, to the
knowledge  of  Sellers,  there  are  no  governmental   licenses,   permits  and
authorizations  which will be materially adversely affected by this Agreement or
the consummation of the transactions  contemplated by this Agreement and, to the
knowledge of Sellers, (a) such licenses, permits and authorizations are the only



governmental  licenses,  permits and  authorizations  currently required for the
operation of the Business; (b) all such licenses, permits and authorizations are
in effect on the date of this  Agreement;  (c) HHI has  complied in all material
respects with all conditions or requirements  imposed by such licenses,  permits
and authorizations;  and (d) HHI has not received any notice, nor has any of HHI
or  Sellers  any  reason to  believe,  that any  authority  intends to cancel or
terminate any of such licenses,  permits or authorizations or that valid grounds
for such cancellation or termination currently exist.

    4.25 Notices and Consents.  To the knowledge of Sellers,  no consents of, or
notices to, any  governmental  or  administrative  agencies  are  required  with
respect to the consummation of the  transactions  contemplated by this Agreement
except  for  notification  previously  made  pursuant  to the  Hart-Scott-Rodino
Antitrust  Improvements  Act of 1976 (the  "HSR  Act"),  and  except as noted in
Section 4.24.

    4.26 Guarantees. HHI is not a guarantor,  indemnitor or otherwise liable for
any indebtedness of any other person,  firm or corporation except as endorser of
checks received and deposited in the ordinary course of the Business.

    4.27 Customers and Sales.  None of Sellers has any knowledge of or reason to
believe that any HHI customer who purchased  more than $50,000 worth of products
or services from HHI in either fiscal year 1996 or 1995, intends to terminate or
decrease its purchases of products or services from HHI or not purchase products
or  services  from HHI  after  the date of this  Agreement  in at least the same
quantity  and  upon the same  prices,  terms  and  conditions  as such  customer
regularly  purchased from HHI prior to the date of this Agreement during the two
year period prior to the Closing Date.  For purposes of this 4.27,  "knowledge"
and  "reason to  believe"  shall be deemed  evidenced,  without  limitation,  by
serious or repeated  complaints or  cancellation of orders from any HHI customer
who  purchased  more than $50,000  worth of products or services from HHI during
such two year period.


    4.28 Conflict of Interest. Except as disclosed in Schedule 4.28 or interests
which aggregate no more than $5,000 in value, to the knowledge of Sellers (which
for purposes hereof shall include the knowledge of the Trust beneficiaries),  no
employee  of  HHI  has  (a) an  equity  or  debt  interest  in any  corporation,
partnership, joint venture, association,  organization or other person or entity
which  furnishes or sells services or products to HHI, or purchases from HHI any
goods or services,  or  otherwise  does  business  with HHI; or (b) a beneficial
interest in any contract  (including  leases),  commitment or agreement to which
HHI is a party.

    4.29 No Sensitive Transactions. None of Sellers, the Trust beneficiaries nor
HHI has  directly  or  indirectly  used  funds  or other  assets  of HHI for (a)
contributions,  gifts,  entertainment,  or other expenses  relating to political



activity other than as specifically permitted by applicable law; (b) payments to
or for the benefit of any officials or employees of any government or any agency
or  instrumentality  of any government,  either foreign or domestic,  other than
payments  required or allowed by law; (c) any other purpose described in 162(c)
of the Code; or (d) the  establishment  or maintenance of a secret or unrecorded
fund or account. There have been no false, fictitious,  or materially misleading
entries (as such terms are used in the Foreign Corrupt  Practices Act or similar
laws  applicable to  transactions  involving the Business)  made in the books or
records of HHI.

    4.30   Inventory.

           4.30.1 All  inventories of raw materials,  work in process,  supplies
and  finished  goods  (the  "Inventories")   reflected  on  the  1996  Financial
Statements, were, as of the date thereof, and all Inventories to be reflected on
the Closing  Balance  Sheet,  will be, as of the Closing Date, (i) owned by HHI,
free and clear of all liens,  security  interests  and other  charges,  and (ii)
located on an HHI Site then owned,  leased or occupied by HHI.  All  Inventories
located on an HHI Site presently (i.e., as of the date of this Agreement) owned,
leased or occupied by HHI are, as of the date of this Agreement, and if not sold
by HHI in the  ordinary  course of  business,  will be, as of the Closing  Date,
owned by HHI, free and clear of all liens, security interests and other charges.

           4.30.2 HHI's  Inventories  were,  for purposes of preparing  the 1996
Financial Statements, and will be, for purposes of preparing the Closing Balance
Sheet,  valued in good faith and in  accordance  with HHI's  customary  Business
practices,  based  upon the  probability  of future  use  (taking  into  account
obsolete,  defective and slow-moving  items, and items otherwise of a quality or
quantity  not readily  usable or salable in the  ordinary  and normal  course of
Business)  and  probable  future  sales  prices.  Except as set forth in Section
4.30.4,  it is HHI's  customary  Business  practice  that an item will be deemed
"obsolete",  "slow-moving"  or  "otherwise  of a quality or quantity not readily
useable or salable in the  ordinary  and normal  course of  Business",  and thus
subject to  revaluation  based upon the  probability  of future use and probable
future sales prices,  if it is not sold, or if it is not converted into finished
goods (as to work in process,  supplies and raw materials) and thereafter  sold,
at regular pricing for first-quality  goods within twenty-four (24) months after
the earlier of its manufacture or purchase by HHI.



           4.30.3 Except as provided in Section  4.30.4,  any (a) finished goods
of HHI  manufactured  or purchased prior to the Closing Date that cannot be sold
by HHI in good faith and the ordinary course of the Business within  twenty-four
(24)  months  after the earlier of their  manufacture  or purchase by HHI (in no
event  later  than  twenty-four  (24)  months  after the  Closing  Date) and (b)
supplies and materials purchased by HHI prior to the Closing Date that cannot be
used to  manufacture  finished  goods  which  can be sold in good  faith and the
ordinary course of the Business within twenty-four (24) months after their 
purchase by HHI (in no event later than  twenty-four (24) months after the 
Closing Date) shall be revalued to market price at such time (based upon the 
probability of future use and probable future sales prices) and Sellers shall 



promptly pay (directly, and not from the Escrow Funds) to Purchaser the 
difference  between the value  reflected on the Closing Statements of any 
Inventories so written down and their value as written down to market price.The 
Clypenglyde portion of the Inventories reflected on the Closing Statements 
shall not  exceed  Six  Hundred   Thousand  Dollars ($600,000.00).

           4.30.4 (a) The Clypenglyde  portion of the  Inventories  reflected on
the Closing  Statements  (whether raw  materials,  work in process,  supplies or
finished goods),  which in good faith and in the ordinary course of the Business
are not sold by HHI (or used to  manufacture  finished  goods  which are sold by
HHI) within twenty-four (24) months after the Closing Date, shall be revalued at
such time at fifty percent  (50%) of the values  stated  therefor on the Closing
Statements,  and Sellers  shall then  promptly pay  (directly,  and not from the
Escrow  Funds)  to  Purchaser  the  value  of  the  Clypenglyde  portion  of the
Inventories so written down.

           (b) The  Clypenglyde  portion  of the  Inventories  reflected  on the
Closing Statements (whether raw materials, work in process, supplies or finished
goods),  which in good faith and in the ordinary  course of the Business are not
sold by HHI (or used to manufacture finished goods which are sold by HHI) within
forty-eight  (48)  months  after the Closing  Date,  shall be revalued to market
price at such time (based upon the probability of future use and probable future
sales prices) and Sellers shall then  promptly pay  (directly,  and not from the
Escrow  Funds)  to  Purchaser  the  value  of  the  Clypenglyde  portion  of the
Inventories then additionally written down.


    4.31  Information  and  Statements.  No  representation  or warranty made to
Purchaser  in this  Agreement  by or on behalf of  Sellers  contains  any untrue
statement  of a material  fact or omits to state a material  fact  necessary  in
order to make the statements so made, in light of the circumstances  under which
they are made, not misleading.

    4.32 Powers of Attorney.  Except as set forth on Schedule  4.32, HHI has not
given to any person or organization  for any purpose any power of attorney which
is  currently  in effect,  and the Sellers (as to the Shares) have not given any
party or organization any power of attorney which currently is in effect,  which
Power of Attorney is irrevocable as provided under its terms.

    4.33   Prepayment Penalties.  HHI has no debt that would incur a prepayment 
penalty upon the prepayment of such debt.

    4.34 Release of  Confidential  Information.  Except as set forth on Schedule
4.34,  HHI and  Sellers  have not,  subsequent  to October 1, 1996,  released or
provided  any of HHI's  "Confidential  Information",  as defined in that certain
NON-DISCLOSURE AGREEMENT, dated April 25, 1996 between Purchaser and HHI, to any
third person for any purpose relating to any transaction or proposed transaction
involving the sale of the business or assets (other than in the ordinary  course
of  business)  of  HHI,  or any of the  capital  stock  of HHI,  or any  merger,
consolidation, business combination, or similar transaction involving HHI.

    4.35   Excluded Stock. There has been no material change in CASI's prospects
or value since December 31, 1996.

                                    ARTICLE 5
                              ADDITIONAL AGREEMENTS

    5.1 Product Claims.  Sellers shall have no liability or responsibility  with
respect to any products manufactured,  sold or installed or services provided by
HHI from and after  the  Closing  Date,  and  Purchaser  shall  indemnify,  hold
harmless and defend each of Sellers against any such liability or responsibility
and all costs and expenses (including  attorneys' fees) incurred by Sellers with
respect thereto.



    5.2  Employee  Benefit  Plans.  For such  time  after  the  Closing  Date as
Purchaser,  in its sole discretion deems advisable,  Purchaser will continue the
sponsorship  and  administration  by HHI of HHI's  existing  health,  dental and
retirement plans,  including,  without limitation,  the Benefit Plans.  However,
except to the extent specifically  provided therefore on the Closing Statements,
Purchaser  shall not thereby be deemed  liable for  contributions  allocable  to
periods  prior to the  Closing  Date;  and,  except to the  extent  specifically
provided  therefore on the Closing  Statements,  Purchaser  shall not thereby be
deemed liable for premium charges or increases or any other liability or expense
relating  to any  Benefit  Plan,  including,  but not  limited  to, any  funding
obligations  or claims  arising from or related to any  incidents,  illnesses or
accidents which occurred or were known or diagnosed prior to the Closing,  which
relate to periods prior to the Closing Date.

    5.3  Accounts  Receivable.  After  the  Closing  Date,  Purchaser  shall use
commercially reasonable efforts in good faith to collect the Accounts Receivable
of HHI as reflected on HHI's Closing Statements, using HHI's normal procedures.

           (a) If within one (1) year  after the  Closing  Date,  HHI shall have
recovered such amounts from the Accounts Receivable as, in the aggregate,  shall
exceed  the  value  of  the  Accounts  Receivable  reflected  on  HHI's  Closing
Statements  net of the  reserves  stated  therein for  doubtful  accounts,  then
Purchaser shall promptly cause HHI to pay such excess to Sellers.

           (b) If within one (1) year after the Closing Date, HHI shall not have
recovered such amounts from the Accounts Receivable as, in the aggregate,  shall
total the value of the Accounts Receivable reflected on HHI's Closing Statements
net of the reserves stated therein for doubtful  accounts,  then, at Purchaser's
request and in Purchaser's discretion, Sellers shall promptly pay (directly, and
not from the Escrow  Funds) such  shortfall to Purchaser,  and  Purchaser  shall
assign all such uncollected items to Sellers.


           (c) For  purposes of 5.3(a) and  5.3(b),  Purchaser  will  allocate
payments  made  by  customers  with  respect  to any  account  in  the  Accounts
Receivable,  as follows: (i) any amounts designated by the payor for application
to particular items will be allocated as so designated; (ii) any payments not so
designated by the payor for application to particular items, and amounts paid in
excess of designated items in an account, will be applied to undisputed items in
the account  based on aging,  against the oldest such items first;  (iii) to the



extent  that  payments  not  so  designated  by the  payor  for  application  to
particular  items  exceed  the  total of the  undisputed  items  in the  account
(including  the most current such items),  such  payments  next shall be applied
against any disputed items in the account;  and (iv) to the extent that there is
any balance  remaining from any customer's  payments after being applied to such
customer's  account with the priorities  listed in (i) through (iii) above, such
balance shall be credited  against future purchases from HHI by the customer or,
upon  request by the  customer,  returned  to it, and will not be deemed to have
been recovered upon the Accounts Receivable.

    5.4    INTENTIONALLY LEFT BLANK

    5.5 Proprietary  Business  Information.  Except at the request of Purchaser,
none of Sellers  shall,  directly  or  indirectly,  disclose  or  authorize  the
disclosure by any person or entity,  or use or enable any other person or entity
to disclose or use,  any  confidential  information,  trade  secrets,  marketing
plans, strategic plans, technical, financial, operational,  marketing, customer,
supplier or similar or different confidential or proprietary information nor any
other  non-public  information  regarding any of HHI, the Business or Purchaser,
including  their  respective  financial  condition,  or  any  terms,  prices  or
information concerning this Agreement,  any of the agreements ancillary to it or
any of the transactions contemplated by this Agreement,  provided, however, that
such  information  may be  furnished  to Sellers'  legal  counsel,  accountants,
financial  advisors,  investment  banker and their other  authorized  agents and
representatives  to the extent required for activities  directly  related to the
transactions  contemplated  by this Agreement and the preparation of reports and
tax returns required to be filed by Sellers.

    5.6   Cooperation.   Sellers,   including   their   attorneys,   agents  and
representatives,  shall  have the right  following  the  Closing  Date,  to have
reasonable  access  during  normal  business  hours,  upon not less than two (2)
business   days'   notice  to  HHI,  to  the  books,   records   and   accounts,
correspondence,  minutes,  production  records,  employment  records  and  other
similar information  transferred to Purchaser pursuant to this Agreement for the
limited purposes of concluding their involvement with HHI after the Closing Date
and  obtaining   information   reasonably   necessary  in  connection  with  any
post-closing liability. In addition,  Sellers, including their attorneys, agents
and representatives,  shall have such right of access to the Records provided by
Sellers to Purchaser at Closing, upon such prior notification and during regular
business hours, in order to discharge  Sellers'  indemnification  obligations to
Purchaser  at any time after the  Closing  Date,  subject to HHI's then  current
record retention  policies,  which in any case will provide for the retention of
records  by HHI for not less  than  five  (5)  years  after  the  Closing  Date.
Individuals  who  shall  be  granted  such  access  are  the  Sellers  and  such
accountants,   attorneys,  agents  or  other  consultants  as  the  Sellers  may
reasonably require and of which the Sellers shall give HHI not less than two (2)
business days' prior notice, for the limited purposes set forth above,  provided
that  Purchaser  and HHI shall not be  required  hereby to permit  more than two
individuals such access at a time.

    5.7 Cooperation in Litigation. Each party will reasonably cooperate with the
other,  without  charge to the other for such  cooperation,  in the  defense  or
prosecution of any litigation or proceeding  already  instituted or which may be
instituted  hereafter against or by such party relating to or arising out of the



conduct of HHI prior to or after the Closing other than  litigation  arising out
of this Agreement and the transactions contemplated by it.

    5.8  Environmental   Remediation.   After  the  Closing,  Purchaser  in  its
discretion  may complete the  investigation  and the  reasonable  remediation of
those matters listed in any Schedule to 4.17,  together with any  Environmental
Claims discovered in the course of Purchaser's due diligence. Sellers, including
their attorneys,  accountants,  agents and consultants, shall have the right, at
their expense, to monitor the investigation and remediation  activities pursuant
to this 5.8,  and Purchaser  shall make  available to such persons all analysis
and work  done by or for it,  including  opinions  of  Purchaser's  consultants.
Purchaser  and  Sellers,  including  their  attorneys,  accountants,  agents and
consultants,  shall maintain in confidence all analysis, work, reports and other
information connected with the investigation and remediation hereunder,  subject
only to  disclosures  which are  legally  required  to be made in the opinion of
legal counsel to the disclosing party.

    5.9    INTENTIONALLY LEFT BLANK

    5.10 Cash  Receipts.  The Sellers  promptly shall deliver to HHI any cash or
other  payments any of them may receive  with respect to the Business  after the
Closing, except for refunds as provided in Section 5.11.4 below.

    5.11   Taxes.

           5.11.1 Tax  Returns.  Sellers  shall  cause HHI to include all of its
income for all periods  through and including the Closing Date on the applicable
federal and state income tax returns  hereafter  required to be filed by HHI for
such periods,  and Sellers shall cause HHI to pay (or to adequately  reserve for
the  payment  thereof on the Closing  Statements)  any and all federal and state
income  taxes  attributable  to such  income.  Sellers  will allow  Purchaser an
opportunity  to reasonably  review and comment on such tax returns,  and Sellers
shall  not  cause  HHI to take any  position  on such  tax  returns  that  would
materially  adversely  affect HHI after the Closing  Date.  HHI's income will be
apportioned for the period up to and including the Closing Date, and separately,
thereafter, for the period after the Closing Date, by HHI's Closing of its books
as of the end of the Closing Date,  and by HHI's filing of all federal and state
income tax returns, as applicable, as of the Closing Date.

           5.11.2  Audits.  Purchaser  promptly  shall notify the Sellers,  upon
receipt after  Closing by Purchaser or HHI of any notice of any Tax audits,  any
pending or threatened tax  assessments or any requests by a taxing  authority to
extend the  applicable  statute of limitations  relating to taxable  periods and
Taxes for which Sellers have any liability under this Agreement. The Sellers and
Purchaser  together shall discuss HHI's interests in any such tax audit or other
examination by any taxing  authority,  but Purchaser  shall  reasonably  control
whether to contest,  resolve and defend  against any  assessment  for additional
taxes,  notice of tax deficiency or other adjustment of taxes of, or relating to
HHI for taxable  periods of HHI whether ending  before,  on or after the Closing
Date; provided however, that Sellers, together with their attorneys, accountants
and representatives,  shall have the right to reasonably participate in any such



tax  audits  or other  examinations,  and to  reasonably  determine  whether  to
contest,  resolve and defend against any assessment for additional taxes, notice
of tax  deficiency  or other  adjustment  of taxes of, or  relating  to  taxable
periods and Taxes for which Sellers have any liability under this Agreement.

           5.11.3 Cooperation.  Purchaser and Sellers shall, and Purchaser shall
cause HHI to,  provide  the  requesting  party with such  reasonable  assistance
(without  charge) as may be  requested  by the other  party,  including  without
limitation  signature of tax returns  reviewed and approved by Purchaser,  which
approval will not be  unreasonably  withheld by  Purchaser,  and access for such
requesting  party,  including its attorneys,  accountants  and  representatives,
during  normal  business  hours  and upon not less than two (2)  business  days'
advance  notice,  to such other party's  employees,  books and records as may be
reasonably  requested in  connection  with the  preparation  of any return,  any
audit, or any judicial or administrative proceeding or determination relating to
liability  for Taxes,  and each party shall retain,  for a reasonable  period of
time (but not less than five (5) years after the Closing  Date or until the year
following the expiration of all applicable  statues of limitation,  whichever is
later) and provide the other party with, any records or information or any other
assistance  (including,  without limitation,  making employees available to such
other  party)  which may be  relevant  to such tax  return,  audit,  proceeding,
determination or liability for Taxes.

           5.11.4 Refunds. After the Closing Date, Purchaser shall promptly pay 
to Sellers, all tax refunds, including interest, paid to HHI for, or with 
respect to, all  periods on or before the Closing  Date to the extent that such 
refunds and interest are not accrued on the Closing Statements.

    5.12   Payment of Indebtedness by Related Persons.  Sellers will cause all
indebtedness owed to HHI by Sellers or any Trust beneficiary to be paid in full
prior to Closing.

    5.13 No  Negotiation.  Until  such  time,  if  any,  as  this  Agreement  is
terminated pursuant to Article 10, Sellers and the Trust beneficiaries will not,
and  will  cause  HHI not to,  directly  or  indirectly  solicit,  initiate,  or
encourage any inquiries or proposals from,  discuss or negotiate  with,  provide
any  non-public  information  to, or  consider  the  merits  of any  unsolicited
inquiries or proposals from, any person (other than  Purchaser)  relating to any
transaction  involving  the sale of the  business  or assets  (other than in the
ordinary  course of business) of HHI, or any of the capital stock of HHI, or any
merger,  consolidation,  business combination,  or similar transaction involving
HHI.

    5.14 Best  Efforts.  From the date of this  Agreement  up and to the Closing
Date, Sellers shall use their best efforts to cause the conditions in 6.2 to be
satisfied,  and Purchaser will use its best efforts to cause the conditions in 
6.3 to be satisfied.



    5.15 Cooperation  With  Purchaser's Due Diligence.  Between the date of this
Agreement and the Closing Date,  Sellers will, and will cause HHI to, (a) afford
Purchaser  and  its  representatives  timely  and  reasonable  access  to  HHI's
officers,  directors,   customers,  customer  lists,  vendor  lists,  employees,
auditors,  agents,  facilities  and  personal  property,  contracts,  books  and
records,   and  other   documents  and  data,  (b)  afford   Purchaser  and  its
representatives  timely  and  reasonable  access to all HHI Sites,  (c)  furnish
Purchaser and Purchaser's  representatives  with copies of all contracts,  books
and records,  and other  existing  documents  and data of HHI as  Purchaser  may
request,  and (d) furnish  Purchaser and Purchaser's  representatives  with such
additional financial,  operating,  and other data and information respecting HHI
and  the  Business  as  Purchaser  through  the  Settlement  Date  may  request,
including, but not limited to, the work papers, details of adjustments,  and any
other  documents  prepared by HHI and  McGladrey or either of them in connection
with preparation and audit of the 1995 Financial Statements,  the 1996 Financial
Statements,  or  the  Closing  Statements,  so  that  Purchaser  may  thoroughly
understand HHI and the Business and its history,  including, but not limited to,
the  assets,   operations  and  net   profitability  of  the  Business  and  the
determination to be made of the Closing Net Asset Value, including the valuation
of the Excluded Assets and the calculation of the Purchase Price.  Additionally,
Sellers  shall  permit,  and  shall  cause  HHI to  permit,  Purchaser  and  its
accountants and other representatives to be present at the physical inventory to
be conducted in preparation of the Closing Statements,  and immediately prior to
the Closing, confirm by physical inspection the existences and condition of such
equipment and other physical assets of HHI as Purchaser shall request to see.

    5.16 Required  Approvals.  As promptly as practicable after the date of this
Agreement,  Sellers will,  and will cause HHI to, and Purchaser  will,  make all
filings  reasonably  required  to be made by them in  order  to  consummate  the
transactions contemplated by this Agreement (including all filings under the HSR
Act). Between the date of this Agreement and the Closing Date, Sellers will, and
will cause HHI to, and Purchaser  will (a)  reasonably  cooperate with all other
parties  hereto with respect to all filings that any party hereto elects to make
or is required to make in connection with the transactions  contemplated by this
Agreement,  and (b)  reasonably  cooperate  with all  other  parties  hereto  in
obtaining all consents  necessary for the  continuation of the Business as owned
by Purchaser after the Closing.

    5.17 Notification.  Between the date of this Agreement and the Closing Date,
each of Purchaser and the Sellers will  promptly  notify the other in writing if
it becomes aware of any fact or condition that causes or constitutes a breach of
any of their  respective  representations  and warranties as of the date of this
Agreement,  or if such person becomes aware of the occurrence  after the date of
this  Agreement of any fact or condition that would cause or constitute a breach
of any such  representation or warranty had such representation or warranty been
made as of the time of occurrence or discovery of such fact or condition. If any
such  fact or  condition  would  require  any  change in the  Schedules  to this
Agreement,  if the Schedules  were dated the date of the occurrence or discovery
of any such fact or condition,  Purchaser,  or the Sellers will promptly deliver
to the other  parties  hereto a  supplement  to the  Schedules  specifying  such
change.  During the same period,  the Sellers will promptly notify  Purchaser of
the occurrence of any breach of any covenant in 6.1 or of the occurrence of any
event that may make the  satisfaction  of the  conditions in 6.2  impossible or
unlikely.



                                    ARTICLE 6
                  COVENANTS AND CONDITIONS RELATING TO CLOSING

    6.1    Covenants of Sellers Prior to Closing.

           6.1.1  Operation of the Business.  Between the date of this Agreement
and the Closing Date, Sellers will, and will cause HHI to:

                  (a) conduct the business of HHI only in the ordinary course of
business,  except for the sale by HHI of the  Excluded  Assets to one or more of
the Sellers as provided in 6.2.9(a);

                  (b) use its reasonable best efforts to (i) preserve intact the
current  business  organization  of HHI, (ii) keep available the services of the
current officers, employees, and agents of HHI, (iii) preserve existing customer
relationships,  and (iv) maintain the  relations  and good will with  suppliers,
customers,  landlords,  creditors, employees, agents, and others having business
relationships with HHI. Without limiting the foregoing,  as of the Closing Date,
Sellers  shall  have  caused  HHI  to pay to its  managers  and  key  employees,
consistent  with its prior  practices  for prior  periods,  any and all  regular
bonuses and all special  bonuses.  All unpaid  bonuses are set forth in Schedule
6.1.1 and are  reflected on the Closing  Statements to the extent not paid prior
to the Closing.

                  (c) confer with Purchaser  concerning all operational  matters
that  are of a  material  nature  and are  outside  of the  ordinary  course  of
business,  for which purpose "material" shall mean, without limitation,  matters
which involve commitments or costs exceeding $50,000 in any instance or which in
any instance  commit HHI to action or performance  which  reasonably will not be
completed within six months after the Closing Date;

                  (d)  otherwise  advise  Purchaser  promptly  of any current or
prospective  changes in the status of the business,  operations  and finances of
HHI or affecting the prospects of the Business which are  materially  adverse in
nature  or  out of the  ordinary  course  of the  Business,  for  which  purpose
"materially  adverse in nature"  shall mean having an  expected  impact upon the
earnings,  assets or liabilities of HHI exceeding $50,000 in any single instance
or in the aggregate.

           6.1.2 Negative Covenant.  Except as otherwise  expressly permitted by
this  Agreement and except for the sale by HHI of the Excluded  Assets to one or
more of the Sellers as provided in 6.2.9(a), between the date of this Agreement
and the Closing Date,  Sellers will not, and shall not allow HHI to, without the
prior consent of Purchaser,  take any  affirmative  action,  or fail to take any
reasonable  action within their control,  the result of which would cause any of
the changes or events listed below likely to occur:

                  (a)  change  in HHI's  authorized  or  issued  capital  stock;
issuance or grant of any stock option,  warrant,  or other  derivative  security
exercisable or convertible  into the capital stock of HHI;  issuance or grant of
any right to purchase  shares of capital stock of HHI;  issuance of any security



convertible into such capital stock; grant of any registration rights; purchase,
redemption,  retirement,  or other  acquisition by HHI of any shares of any such
capital stock;  or declaration or payment of any dividend or other  distribution
or payment in respect of shares of capital stock;

                  (b)  amendment to the organizational documents of HHI;

                  (c)  increase  by  HHI  of  any  salaries  or  other   regular
compensation to any stockholder,  director,  officer, or (except in the ordinary
course of business) employee or entry into any employment, severance, or similar
contract with any director, officer, or employee;

                  (d)  adoption  of, or increase in the  payments to or benefits
under, any profit sharing,  bonus, deferred  compensation,  savings,  insurance,
pension, retirement, or other employee benefit plan for or with any employees of
HHI;

                  (e) damage to or  destruction or loss of any asset or property
of HHI, whether or not covered by insurance,  materially and adversely affecting
the properties,  assets,  business,  financial  condition,  or prospects of HHI,
taken as a whole;

                  (f)  entry  into,  termination  of,  or  receipt  of notice of
termination of (i) any license,  distributorship,  dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any contract or transaction
of a material nature and not in the ordinary  course of the Business,  for which
purpose  "material"  shall  mean,  without  limitation,  matters  which  involve
commitments or costs exceeding  $50,000 in any instance or which in any instance
commit  HHI to action or  performance  which  reasonably  will not be  completed
within six months after the Closing Date;

                  (g) sale (other than sales of inventory in the ordinary course
of business),  lease, or other  disposition of any asset or property (other than
sales of assets and properties in the ordinary course of business,  which in the
aggregate exceed $50,000) of HHI or mortgage,  pledge, or imposition of any lien
or other  encumbrance  on any material  asset or property of HHI,  including the
sale, lease, or other disposition of any intellectual property owned by HHI;

                  (h)  cancellation or waiver of any claims or rights with a 
value to HHI in excess of $10,000.00;

                  (i)  material change in the accounting methods used by HHI;

                  (j)  sublease, assignment, transfer of occupancy or closure of
any facility operated by HHI;

                  (k)  incur  any  debt  or   liability,   including   debts  or
liabilities  incurred  under existing  credit lines or agreements  except in the
ordinary course of business consistent with HHI's past practices;

                  (l)  incur any liens or charges other than Permitted Liens; or



                  (m)  agreement, whether oral or written, by HHI to do any of 
the foregoing.

    6.2  Conditions  Precedent to  Purchaser's  Obligation to Close.  Subject to
Section  6.2.19,  Purchaser's  obligation to purchase the Shares and to take the
other actions required to be taken by Purchaser at the Closing is subject to the
satisfaction,  at or prior to the Closing,  of each of the following  conditions
(any of which may be waived by Purchaser, in whole or in part).

           6.2.1   Accuracy   of   Representations.   Each  and   every  of  the
representations and warranties of Seller must have been accurate in all material
respects both as of the date of this  Agreement and as of the Closing Date as if
made  on  the  Closing  Date.  Where  any of the  specific  representations  and
warranties  of Sellers  are subject to a general or  specific  qualification  of
materiality, whether or not defined as dollar impact, the reference to "material
respects"  in  this  6.2.1  shall  not  be  deemed  to  further   qualify  such
representation or warranty.

           6.2.2 Performance of Covenants.  All of the covenants and obligations
that  Sellers  are  required  to  perform  or to comply  with  pursuant  to this
Agreement at or prior to the Closing must have been duly  performed and complied
with in all material respects.

           6.2.3  Consents.   All  approvals,   consents,   authorizations   and
declarations,  filings  and  registrations  with third  parties  and  government
agencies required to consummate the transactions  contemplated hereby (including
all approvals under HSR Act) shall have been obtained or made,  shall be in full
force and effect and shall be reasonably  satisfactory  in form and substance to
Purchaser and its counsel, and the consents, where required, of landlords of the
major HHI Sites as set forth on  Schedule  6.2.12(a),  shall have been  obtained
without any change  reasonably  deemed  materially  adverse by  Purchaser in the
terms, conditions or rents under the applicable leases.

           6.2.4  INTENTIONALLY LEFT BLANK.

           6.2.5 Legal  Opinion.  Sellers shall deliver to Purchaser the opinion
of Anderson,  Ablon,  Lewis & Gale,  LLP,  attorneys for Sellers and HHI, in the
form attached hereto as Schedule 6.2.5.

           6.2.6 No Proceedings.  Since the date of this  Agreement,  there must
not have been commenced or threatened against  Purchaser,  or against any person
affiliated  with  Purchaser,  any  proceeding (a) involving any challenge to, or
seeking  damages or other relief in  connection  with,  any of the  transactions
contemplated by this  Agreement,  or (b) that may have the effect of preventing,
unreasonably delaying,  making illegal, or otherwise interfering with any of the
transactions  contemplated by this Agreement,  or preventing the ordinary course
operation of the Business as presently conducted.




           6.2.7 No Claim Regarding Stock Ownership or Sale Proceeds. There must
not have been made or  threatened  by any person any claim  asserting  that such
person (a) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any stock of, or any other voting, equity,
or  ownership  interest  in, HHI, or (b) is entitled to all,  any or any greater
portion of the Purchase Price payable for the Shares.

           6.2.8 No Prohibition. Neither the consummation nor the performance of
any of the  transactions  contemplated  by  this  Agreement  will,  directly  or
indirectly (with or without notice or lapse of time), materially contravene,  or
conflict with, or result in a material  violation of, or cause  Purchaser or any
person  affiliated  with  Purchaser to suffer any material  adverse  consequence
under,  (a)  any  applicable  legal  requirement  or  order,  or (b)  any  legal
requirement or order that has been published,  introduced, or otherwise proposed
by or before any governmental body.

           6.2.9 Excluded Assets and Related Party Payables and Receivables. (a)
On or prior to the Closing, Sellers shall have caused the Excluded Stock to have
been sold at its then fair  market  value,  for cash;  and,  Sellers  shall have
caused  the  remaining  Excluded  Assets to have  been  sold at their  then book
values,  for cash. The obligation of the buyer(s) of the Excluded  Assets may be
evidenced  initially by a promissory  note, but such  promissory note shall have
been paid in full to HHI on or before the Closing under this Agreement.

           (b) On or prior to the Closing,  HHI shall have  received  payment in
full,  in cash,  of all sums owed to HHI  (without  respect to maturity  date or
demand) from Sellers or Sellers' beneficiaries.

           (c) On or prior to the Closing, HHI shall have paid in full, in cash,
all sums owed by HHI (without  respect to maturity date or demand) to Sellers or
Sellers' beneficiaries.

           6.2.10 Due  Diligence.  Sellers  acknowledge  that this  Agreement is
executed prior to Purchaser's  completion of its due diligence  investigation of
HHI and the Business. Subject to Section 6.2.19, Purchaser shall have the right,
in  the  exercise  of its  reasonable  business  discretion,  to  terminate  the
Agreement  upon notice to Sellers if (a)  Purchaser  determines  that any of the
representations  of Sellers  herein or in any  document  delivered  to Purchaser
hereto  are not true and  correct in any  material  respect,  without  regard to
Sellers'  knowledge of the truth or accuracy thereof,  or (b) upon completion by
Purchaser  of its  due  diligence  investigation,  Purchaser  becomes  aware  of
information  concerning HHI or the Business,  including  without  limitation any
information  disclosed  by Sellers or on any  Schedule  to this  Agreement,  not
previously  fully  disclosed to Purchaser  prior to the execution  hereof,  that
could in Purchaser's reasonable business judgment have a material adverse effect
upon the Business or Purchaser's operation of the Business.

           6.2.11 Tax Certificates.  Sellers shall cause HHI to deliver any Tax
certificates reasonably requested by Purchaser.



           6.2.12 Title Insurance.  Sellers shall have arranged for Purchaser to
receive,  at  Purchaser's  expense at normal premium rates, a current ALTA-B (or
local  equivalent)  form of Leasehold Title Insurance  Policy as to the specific
leased HHI Sites listed on Schedule  6.2.12(a) or an irrevocable binder to issue
the same.  Such policies shall be standard in form and  substance,  and shall be
actually delivered promptly after the Closing Date.

           6.2.13  Estoppel  Certificates.  Purchaser  shall  have  received  an
estoppel  certificate in the form attached hereto as Schedule 6.2.13(a) from the
lessor under each of the real property  leases  listed in Schedule  6.2.12(a) in
each case dated not earlier than the date of this  Agreement,  and an attornment
certificate in the form of Schedule  6.2.13(b) from the holders of all mortgages
on the HHI Sites specifically listed in Schedule  6.2.12(a),  to the extent that
such holders  have not already  attorned to HHI and a change in ownership of HHI
triggers the possible exercise of rights by any such holders.

           6.2.14  Resignation.  Sellers  shall  have  delivered  to  Purchaser,
resignations  of the entire board of directors  of HHI,  and  terminations  with
respect  to all  powers  of  attorney  and  agency  relationships  specified  by
Purchaser  prior to the Closing Date,  in each case  effective as of the Closing
Date.

           6.2.15 Signature Authority. Sellers shall have caused HHI to take all
action  necessary  to cause the  termination  of the power of all HHI  officers,
directors,  employees or agents to borrow,  discount debt  obligations,  cash or
draw  checks or  otherwise  act on behalf of HHI with  respect  to all HHI bank,
brokerage and other financial institution accounts after the Closing Date.

           6.2.16 Notice to Employees.  Sellers shall have caused HHI to deliver
to all HHI  employees  any  notice  required  to be given to them under any law,
rule,  regulation,  ordinance  or Benefit  Plan as a result of the  transactions
contemplated hereby.

           6.2.17 Additional  Documents.  (a) The Sellers,  Purchaser and MARCIA
KAY RADELET  shall have  mutually  agreed upon the Escrow Agent acting under the
Escrow  Agreement and the  investment  policy for the funds  deposited  into the
Escrow Account.  The Sellers,  Purchaser and MARCIA KAY RADELET and the mutually
designated  Escrow Agent shall have entered into the Escrow  Agreement;  and (b)
the Sellers shall have caused to be delivered to Purchaser such other  documents
as  Purchaser  may  reasonably  request  for the purpose of (i)  evidencing  the
accuracy of any  representation  or warranty of  Sellers,  (ii)  evidencing  the
performance  by Sellers,  or the  compliance  by Sellers,  with any  covenant or
obligation  required  to  be  performed  or  complied  with  by  Sellers,  (iii)
evidencing the satisfaction of any condition  referred to in this 6.2, and (iv)
otherwise facilitating the consummation of any of the transactions  contemplated
by this Agreement.

           6.2.18 Net Sales  Volume.  The "Net Sales" (as defined in Section 2.4
above) of HHI for the period from October 1, 1996  through  April 30, 1997 shall
equal  or  exceed   Forty   Five   Million   Five   Hundred   Thousand   Dollars
($45,500,000.00).




           6.2.19  Remedy  for  Certain   Failures.   Notwithstanding   anything
contained  in  Sections  6.1  and/or  6.2  (other  than  Section  6.2.18) to the
contrary,  if any one or more of the conditions set forth in Sections 6.1 or 6.2
(other than Section  6.2.18) have not been fully  satisfied or complied with (or
waived by Purchaser) at or prior to the Closing, and if such failures to satisfy
or comply can be quantified into dollars, and the cumulative amount thereof does
not exceed  $1,000,000,  then, and in that event,  Purchaser shall  nevertheless
remain  fully  obligated  to purchase  the Shares and to take the other  actions
required to be taken by Purchaser at the Closing,  subject to an  adjustment  of
the Purchase Price to take into account such dollar quantified failures. If such
failures to satisfy or comply can be quantified into dollars, but the cumulative
amount  thereof  exceeds  $1,000,000,  then,  and in that event,  Purchaser  and
Sellers shall  reasonably  and in good faith  attempt to mutually  agree upon an
appropriate reduction in the Purchase Price before the scheduled Closing Date in
order to attempt to avoid a termination of this  Agreement.  Any dispute arising
out of this  Section  6.2.19  shall be resolved in  accordance  with the dispute
mechanism set forth in Section 8.2.

    6.3  Conditions   Precedent  to  Sellers'  Obligation  to  Close.   Sellers'
obligation to sell the Shares and to take the other actions required to be taken
by Sellers at the  Closing  is subject to the  satisfaction,  at or prior to the
Closing,  of each of the  following  conditions  (any of which  may be waived by
Sellers, in whole or in part):

           6.3.1 Accuracy of Representations. All of Purchaser's representations
and warranties in this Agreement (considered individually and collectively) must
have  been  accurate  in all  material  respects  both  as of the  date  of this
Agreement and as of the Closing Date as if made on the Closing Date, and Sellers
must  have  received  a  certificate  dated as of the  Closing  Date  signed  by
Purchaser as to the foregoing.

           6.3.2 Purchaser's  Performance.  All of the covenants and obligations
that  Purchaser  is  required  to perform  or to comply  with  pursuant  to this
Agreement at or prior to the Closing  (considered  individually or collectively)
must have been performed and complied with in all material respects.

           6.3.3  Consents.  All approvals under the HSR Act must have occurred.
All consents and approvals required for Closing and described in 5.16 must have
been obtained and must be in effect.

           6.3.4 Legal Opinion. Purchaser shall deliver to the Sellers the 
opinion of Blau, Kramer, Wactlar & Lieberman, attorneys for Purchaser, in the 
form attached hereto as Schedule 6.3.4.

           6.3.5  Additional  Documents.   Purchaser  must  have  caused  to  be
delivered to Sellers such other documents as Sellers may reasonably  request for
the purpose of (a) evidencing the accuracy of any  representation or warranty of
Purchaser,  (b) evidencing the performance by Purchaser of, or the compliance by
Purchaser with, any covenant or obligation  required to be performed or complied
with by Purchaser,  (c) evidencing the satisfaction of any condition referred to



in this 6.3,  or (d)  otherwise  facilitating  the  consummation  of any of the
transactions contemplated by this Agreement.

           6.3.6  No  Injunction.   There  must  not  be  in  effect  any  legal
requirement  or any  injunction  or other order that  prohibits  the sale of the
Shares by Sellers to Purchaser, and has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.

                                    ARTICLE 7
                                 INDEMNIFICATION

    7.1    Indemnities.

           7.1.1 By Sellers. (a) From the Closing Date through and including the
fourth (4th) yearly  anniversary date thereof,  Sellers shall fully and promptly
pay, perform,  discharge,  defend,  indemnify and hold harmless  Purchaser,  its
affiliates and parents and their respective directors,  officers,  and employees
(collectively,  the "Purchaser  Group") from all claims,  demands,  liabilities,
actions or suits,  losses,  costs or damages and expenses,  including reasonable
attorneys' fees ("Claim or Loss" or in the aggregate,  "Claims and Losses") made
against or  incurred  by the  Purchaser  Group,  which arise out of or are based
upon:

                  (i)  any misrepresentation or breach of warranty of Sellers, 
subject to the limitation set forth in Section 9.1, or

                  (ii) any breach or non-fulfillment of any covenant or 
agreement of Sellers under this Agreement; or

                  (iii)  public  or  private   third  party  Claims  and  Losses
resulting from the operation of the Business  prior to the Closing Date,  except
for ordinary product warranty claims.

           (b) Notwithstanding anything to the contrary contained hereinabove in
Section  7.1.1(a),  Sellers  shall have no obligation to indemnify the Purchaser
Group,  or any of them, for any Claims and Losses to the extent that such Claims
and Losses are specifically reserved for on the Closing Statements.

           (c) Notwithstanding anything to the contrary contained hereinabove in
Section  7.1.1(a),  Sellers  shall have no obligation to indemnify the Purchaser
Group,  or any of them, for any Claims and Losses to the extent that such Claims
and Losses are insured  against by any  policies of insurance in existence on or
prior to the Closing.

           (d) Notwithstanding anything to the contrary contained hereinabove in
Section  7.1.1(a),  Sellers  shall have no obligation to indemnify the Purchaser
Group,  or any of them,  for any Claims and Losses until such time,  if ever, as
the  aggregate of all Claims and Losses  (subject to Sections  7.1.1(b) and (c))
exceed Five Hundred Thousand Dollars ($500,000).  If the aggregate of all Claims
and Losses  (subject to Sections  7.1.1(b)  and (c)) shall  exceed Five  Hundred



Thousand Dollars ($500,000),  Sellers shall be liable to indemnify the Purchaser
Group for all Claims and Losses arising under Section 7.1.1(a),  including those
included in determining the preceding Five Hundred Thousand  Dollars  ($500,000)
aggregate "basket", subject to Sections 7.1.1(b) and (c).




           (e) Notwithstanding  anything contained in Sections 4.17.9,  7.1.1(a)
and/or (d) to the contrary,  Sellers total cumulative  indemnification liability
to the  Purchaser  Group  shall be  payable  solely  from,  and shall be limited
strictly  to the  extent of,  all the funds at any time  existing  in the Escrow
Account;  except that,  as to the  following  specific  categories of Claims and
Losses,  MARCIA KAY RADELET (as a primary  obligor and not as a  guarantor,  and
without those defenses  available  under  applicable law to a surety),  first as
Trustee of THE HALOPOFF  FAMILY TRUST,  dated October 14, 1985,  and  thereafter
personally,  shall defend,  indemnify and hold harmless the Purchaser Group from
funds outside of the Escrow Account:

                  (i) tax liabilities post-Closing in regard to (A) the payments
to  Sellers,  or any of  them,  or any  Trust  beneficiary,  from  HHI;  (B) the
valuation of the Excluded Stock; and (C) the removal or purchase of the Excluded
Stock or other assets from HHI at any time on or before the Closing Date; and

                  (ii) any Environmental Claim arising with respect to the 
underground storage tank identified on Schedule 7.1.1(e); and

                  (iii)     a breach of any of the representations contained in
Sections 4.1 and 4.2.

           (f)  Notwithstanding  anything  contained in Section  7.1.1(e) to the
contrary,  the  Purchaser  Group may elect to charge the Escrow  Account for any
Claims and Losses for which MARCIA KAY RADELET, first as Trustee of THE HALOPOFF
FAMILY  TRUST,  dated October 14, 1985,  and  thereafter  personally,  agreed to
defend, indemnify and hold harmless the Purchaser Group under subparts (i), (ii)
and (iii)  above,  and in such  event,  MARCIA  KAY  RADELET  shall  immediately
thereafter repay such charged amounts to the Escrow Account.

           7.1.2 By Purchaser.  Purchaser shall fully and promptly pay, perform,
discharge,  defend,  indemnify  and hold harmless  Sellers and their  respective
Trust beneficiaries (the "Seller Group") from all Claims and Losses made against
or incurred by any of the Seller Group which arise out of or are based upon:

                  (a)  any misrepresentation, breach of warranty or breach or 
non-fulfillment of any covenant or agreement of Purchaser under this Agreement;
or

                  (b)  the operation of the Business after the Closing Date, 
except as provided in Section 7.1.1.




           7.1.3  Notice of Claim.  Any  indemnified  person or party under this
Agreement,  upon incurring a Claim or Loss or being notified of a Claim or Loss,
promptly shall give prompt written notice of Claims and Losses which are subject
to the  provisions  of  this  7.1.3  ("Action")  to the  other  parties  hereto
accompanied by copies of any written documentation with respect thereto received
by the notifying party and stating the basis upon which indemnification is being
sought  pursuant to this  Agreement.  Such notice  shall  constitute a claim for
indemnification hereunder.

           7.1.4 Defense of Action. A party required to provide  indemnification
under this Agreement  (the  "Indemnifying  Party") shall have the right,  at its
option,  to  compromise or defend any Action at its own expense and with its own
counsel. The other party thereto (the "Indemnified Party") shall have the right,
at its option,  to  participate  in the settlement or defense of any Action with
its own counsel and at its own expense,  but the  Indemnifying  Party shall have
the right to control such settlement or defense.  The parties agree to cooperate
in any such defense or settlement  and to give each other  reasonable  access to
all  information  relevant  thereto.  The  Indemnifying  Party shall  reasonably
consider the  Indemnified  Party's  advice.  The parties  will  cooperate in the
prosecution  of any claim or lawsuit by an  Indemnified  Party against any third
party and which  arises  out of an Action.  In the event  that the  Indemnifying
Party  fails to notify  the  Indemnified  Party of its intent to take any action
within 15 calendar days after receipt of a claim for indemnification  hereunder,
the Indemnified  Party without waiving any rights to  indemnification  hereunder
may  defend  such  Action  and shall have the right to enter into any good faith
settlement  thereof  without the prior  written  consent  from the  Indemnifying
Party, all at the expense of the Indemnifying Party.

                                    ARTICLE 8
                             RESOLUTION OF DISPUTES

Purchaser  and  Sellers  agree  that  any and all  disputes  (other  than  those
equitable  in nature)  arising  after the  Closing  Date  under this  Agreement,
including  Article 7 above, and all unresolved Claims under the Escrow Agreement
(as defined therein) shall be finally and exclusively resolved by arbitration as
provided in this Article 8.

    8.1  Accounting  Disputes.  Any and all  accounting  disputes  arising  with
respect to the Sellers' Closing  Statements or calculation of the Purchase Price
and  the  adjustments  to  the  Unadjusted  Purchase  Price,  including  without
limitation the determination of the Closing Net Asset Value,  including disputes
arising under 4.12, shall be resolved by arbitration before an audit partner of
a nationally  recognized  independent public accounting firm reasonably selected
by Sellers and  Purchaser,  or if  Purchaser  and Sellers  cannot  agree on such
accounting firm, Price Waterhouse, LLP (the "Accounting Arbitrator").  Purchaser
and Sellers shall acknowledge and confirm that neither the Accounting Arbitrator



nor any firm in which he or she is a partner or is employed presently has or has
within the past three (3) years had any professional or other  relationship with
Purchaser, Sellers or the Trust beneficiaries, as the case may be, that could be
construed  as a  material  conflict  of  interest.  Except as  provided  in this
Agreement or as the parties and the Accounting  Arbitrator agree otherwise,  the
Accounting  Arbitrator  shall  apply  the  Commercial  Arbitration  Rules of the
American Arbitration  Association.  The decision of the Accounting Arbitrator on
the  accounting  matters in dispute  shall be  conclusive  and binding  upon the
parties,  and a judgment upon the award of the  Arbitrator may be entered in any
court having jurisdiction.  Payment in accordance with the Arbitrator's decision
shall be made within 10 calendar days.


    8.2 Other  Disputes.  Any and all  disputes  arising out of this  Agreement,
including  disputes under Article 7 above,  and any unresolved  Claims under the
Escrow Agreement except those  accounting-related  disputes  referred to in 8.1
above and  violations  of 9.3 below and those which shall not have been settled
by negotiation  between the parties shall be resolved by  arbitration  conducted
before a board of three  arbitrators  chosen by the  parties.  Each party  shall
select one arbitrator,  and the two arbitrators so selected shall select a third
arbitrator.  Except as  provided  in this  Agreement  or as the  parties and the
arbitrators  otherwise agree, the arbitration  panel thus chosen shall apply the
Commercial  Arbitration Rules of the American  Arbitration  Association.  In the
event  the  arbitrators  chosen by the  parties  are  unable  to agree  upon the
resolution of any dispute,  the decision of the third  arbitrator alone shall be
controlling. The determination of the panel shall be conclusive and binding upon
the parties and a judgment upon the award of the  Arbitrators  may be entered in
any court having jurisdiction.

    8.3 Arbitration Procedures. All arbitration proceedings shall be held in Los
Angeles,  California,  unless otherwise  agreed by the parties.  The expenses of
each party, including legal and accounting expenses, shall be borne by the party
incurring them,  except that the parties shall pay equally all fees and expenses
of the arbitrator(s) and any consultants or advisors  providing  services to the
arbitrator(s).  Arbitration  shall be initiated  by either party making  written
demand on the other for arbitration of a specifically  stated issue or issues if
the  parties  fail  within any time limits  provided  in this  Agreement  (or 30
calendar  days,  if no shorter  limit is stated) to resolve the matter by mutual
discussions.  Within 10 calendar  days after  either  party has so notified  the
other of its demand for  arbitration,  the parties shall select an arbitrator or
arbitrators as provided in 8.1 or 8.2, as appropriate. Within 30 calendar days
after the  selection  of the  arbitrator(s),  the parties  will  consult for the
purpose  of  attempting  to define  and limit the  issues to be  decided  by the
arbitrator(s);  will  exchange all  documents  to be offered in the  arbitration
proceeding;  and will  provide  each  other  with the  names of  witnesses  each
proposes  to  present  at any  arbitration  hearing  together  with a  statement
summarizing the testimony such witness is anticipated to offer.  Evidence in the
arbitration  will be  limited  to (a) an initial  position  statement  from each
party; (b) a reply by each party to the other's initial position statement;  (c)
documents and  statements of witnesses  identified  during such 30 day period as
provided  above;  and  (d) if a  hearing  is  held,  opening  and  closing  oral
presentations  by the parties or their  representatives  and responses to direct



questions from the  arbitrator(s).  A party's initial position statement must be
submitted to the arbitrator(s) and the other party within 30 calendar days after
the  selection  of the  arbitrators.  The reply by a party to the other  party's
initial position  statement must be submitted to the arbitrator(s) and the other
party  within 20  calendar  days after  receipt of such  other  party's  initial
position  statement.  The  arbitrator(s)  shall have the discretion to determine
whether or not a hearing  upon the matters in dispute is desirable or whether to
make the arbitration  decisions based on the submitted statements and documents.
In any event, the  arbitrator(s)  will render decisions on all issues in dispute
within 30  calendar  days after the  earlier of (i) the last  submittal  by both
parties of their replies and accompanying  documents, as provided above, or (ii)
the  last  day  upon  which  a party  may  submit  its  statements,  reply,  and
accompanying documents within the times stated above. The arbitrator(s) shall be
authorized only to determine which position presented to them is more correct or
supported  by the facts and  applicable  laws,  and shall not be  authorized  to
determine  a  different  result than  presented  by one party or the other.  For
purposes of such deadlines,  a period of time shall be counted  beginning on the
day  following  the  occurrence  or instance  establishing  the beginning of the
period (such as the receipt of a party's initial position statement),  and, if a
period shall end on a Sunday or postal holiday, it shall be extended to the next
regular business day. No interrogatories, depositions or other discovery, and no
extensions of the above timetables,  shall be permitted except by mutual consent
of the parties or as approved by the arbitrator(s) for good cause shown.

                                    ARTICLE 9
                                OTHER PROVISIONS

    9.1 Survival of Representations.  No representations or warranties contained
in  this  Agreement  shall  survive  the  Closing,  and  upon  the  Closing  all
representations  and  warranties  shall be  extinguished  as of the date of this
Agreement,  except for those contained in the following specifically  referenced
Sections,  which shall  survive the Closing:  Sections  3.1, 3.2, 3.3, 3.4, 3.5,
3.6, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 4.12.2,  4.12.3,  4.12.4 (including that
portion of Section 2.1.2 relevant thereto), 4.12.5, 4.13, 4.30, 4.31 (as limited
to   the   aforementioned   specifically   referenced   Sections),   and   4.35.
Notwithstanding  the foregoing,  all representations and warranties with respect
to the Closing  Statements  which are not  specifically  listed as  surviving as
provided in the preceding sentence, shall survive until the Settlement Date, and
upon the Settlement Date shall be extinguished as of the date of this Agreement.

    9.2    Expenses.

           (a)  Each  party to this  Agreement  shall  bear  its own  respective
expenses  in  connection  with  the  acquisition  and  the  other   transactions
contemplated  by this Agreement,  including the fees of attorneys,  accountants,
advisors,  investment  bankers and  representatives.  The Sellers shall bear all



costs arising out of or relating to the transfer of the Shares to the Purchaser,
including, but not limited to any transfer or use taxes.

           (b)  With  respect  to the  expense  of the  taking  of the  physical
inventories of raw materials,  work in process and finished goods on the Closing
Date,  each party shall pay its own  accountants or other  representatives.  Any
expense  incurred  other than with respect to each party's  accountants or other
representatives  shall be paid by HHI.  The  aforementioned  physical  inventory
shall be conducted in a manner consistent with and using the same procedures and
practices as HHI has used in the preparation of prior inventories,  as reflected
in the financial statements  previously delivered to Purchaser.  Purchaser shall
have the right to have its accountants and other representatives  present at the
counting of the raw materials, work in process and finished goods.

    9.3    Non-Competition Covenants.

           9.3.1 In  consideration  of this  Agreement  and the  purchase of the
Shares by Purchaser,  MARCIA KAY RADELET,  individually and as Co-Trustee of THE
PAUL M.  HALOPOFF  TRUST,  and as Trustee of THE HALOPOFF  FAMILY  TRUST,  dated
October 14, 1985,  represents,  warrants,  covenants and agrees that, during the
period  commencing  on the date of this  Agreement  and  ending  on the  seventh
anniversary of the Closing Date (the "Time  Period"),  she shall not, within any
territory  west of the  Mississippi  River (the  "Territory"),  (i)  directly or
indirectly,  compete with the Business,  or (ii) directly or indirectly have any
interest in, own, manage, operate, join, control, direct, be connected with as a
stockholder  (other than as a stockholder  of less than five percent (5%) of the
issued and  outstanding  stock of a publicly held  corporation),  joint venture,
partner or  consultant,  or  otherwise  engage or invest or  participate  in any
business that directly or indirectly competes with the Business.

           9.3.2 The parties  intend that the covenants and agreements set forth
in  this  9.3  shall  be  deemed  to be a  series  of  separate  covenants  and
agreements,  one for each and every state or portion  thereof  contained  in the
Territory.  If any of the  restrictions  set  forth  in this  9.3,  or any part
thereof  should be declared  invalid,  or if a court shall  refuse to enforce in
such action all of the separate  covenants deemed to be included herein, for any
reason  whatsoever,  then  such  unenforceable  covenants  shall be deemed to be
eliminated from the provisions  thereof to the extent necessary and the validity
or enforceability of the remainder of such covenants and restrictions  shall not
thereby be adversely effected.

           9.3.3 MARCIA KAY RADELET  recognizes  that the foregoing  territorial
and time  limitations are properly  required for the adequate  protection of the
Business and that in the event that any such  territorial or time  limitation is
deemed to be unreasonable by a court of competent jurisdiction,  then MARCIA KAY
RADELET  agrees to submit to the  reduction of either said  territorial  or time



limitation,  or  both,  to such  an area or  period  as said  court  shall  deem
reasonable.

           9.3.4  Each  of  the  Sellers  represent,  warrant  and  covenant  to
Purchaser  that during the Time Period,  they shall not solicit or encourage any
person to leave the employ of HHI or Purchaser.

           9.3.5 Each of the Sellers,  by executing this Agreement,  agrees that
the remedy at law for any breach of the  covenants  set forth in this  Article 9
shall be inadequate and that  Purchaser,  its  successors and assigns,  shall be
entitled to injunctive relief, including the issuance of a temporary restraining
order or a  preliminary  or permanent  injunction  to prohibit the breach of any
provision of this  Agreement,  or to maintain the status quo pending the outcome
of any  judicial  proceeding  which may be  initiated,  in addition to any other
remedies it might have, whether at law or in equity.

     9.4 Public Releases. Purchaser and Sellers shall consult with each other as
to the form and substance of any press release  related to this Agreement or the
transactions  contemplated  hereby,  and shall consult with each other as to the
form and  substance  of other  public  disclosures  related  thereto;  provided,
however,  that nothing  contained  herein  shall  prohibit any party hereto from
making any disclosure  which it deems  necessary in light of applicable  laws or
regulations with reasonable advance notice to the other parties.

    9.5 Duty to Act  Reasonably.  Purchaser and Sellers shall act  reasonably in
their  dealings among and between  themselves in connection  with this Agreement
and the transactions contemplated by this Agreement.

    9.6    Knowledge.  As used in this Agreement, Sellers will be deemed to have
"knowledge"  of a  particular  fact or other  matter  if: (a) any Seller is then
actually  aware of such fact or other matter;  or (b) CHARLES R.  ANDERSON,  the
Chief  Executive  Officer of HHI, is then  actually  aware of such fact or other
matter.

                                   ARTICLE 10
                                   TERMINATION

    10.1   Termination Events.  This Agreement may, by notice given prior to or 
at the Closing, be terminated:

           (a) by  either  Purchaser  or  Sellers  if a  material  breach of any
provision  of this  Agreement  has been  committed  by the other  party and such
breach has not been waived;  provided,  however,  that the  non-breaching  party



shall first give at least 14 calendar days prior  written  notice of such breach
to the party in breach and if the party in breach shall cure such default within
such 14 calendar day period,  then, and in that event, the notice of termination
shall be of no effect;

           (b) (i) by Purchaser if any of the  conditions  in 6.2 (subject to 
6.2.19) have not been  satisfied as of the Closing  Date or if  satisfaction  of
such a condition  is or becomes  impossible  (other than  through the failure of
Purchaser to comply with its obligations under this Agreement) and Purchaser has
not waived such condition on or before the Closing Date; or (ii) by Sellers,  if
any of the  conditions in 6.3 has not been  satisfied as of the Closing Date or
if satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their  obligations  under this  Agreement)
and Sellers have not waived such condition on or before the Closing Date;

           (c) By Purchaser, if HHI petitions or applies to any tribunal for the
appointment of a trustee or receiver of HHI, or of any  substantial  part of the
assets of HHI, or commences any proceeding relating to HHI under any bankruptcy,
reorganization,  arrangement,  insolvency,  readjustment of debt, dissolution or
liquidation law of any jurisdiction whether now or hereafter in effect;

           (d) By  Purchaser  if any petition or  application  is filed,  or any
proceedings  are  commenced  against  HHI or any order is entered  appointing  a
trustee or receiver, or adjudicating HHI bankrupt or insolvent, or approving the
petition at any such proceedings;

           (e) By Purchaser if any order is entered in any proceedings against 
HHI decreeing the dissolution of HHI;

           (f) By Sellers or Purchaser,  if a court of competent jurisdiction in
the United  States or any state  thereof or other  United  States  governmental,
regulatory or administrative  body shall have issued an order,  decree or ruling
or taken any other  action  (which  order,  decree,  ruling or other  action the
parties agree to use their best efforts through appeals and otherwise to vacate)
temporarily or permanently  restraining,  enjoining or otherwise prohibiting the
transactions  completed by this Agreement or an action or proceeding  before any
court or  governmental  body is pending  or  threatened  wherein an  unfavorable
judgment or decree or order would (i) prevent the carrying out of this Agreement
or any of the  transactions  contemplated  thereby;  (ii)  declare  unlawful the
transactions contemplated by this Agreement; or (iii) cause such transactions to
be rescinded.




           (g)    by mutual consent of Purchaser and Sellers;

           (h) by either  Purchaser  or Sellers if the Closing has not  occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its  obligations  under this Agreement) on or before August
31, 1997, or such later date as the parties may agree upon; or

           (i) by either Purchaser or Sellers if, prior to the scheduled Closing
Date or the mutually agreed upon extension thereof,  Purchaser and Sellers shall
have failed to mutually agree in good faith upon an appropriate reduction in the
Purchase  Price  pursuant to Section  6.2.19 to the extent that any "failures to
satisfy or comply" as defined therein shall cumulatively exceed $1,000,000.

    10.2 Effect of  Termination.  If this Agreement is terminated  pursuant to 
10.1,  all  further  obligations  of  the  parties  under  this  Agreement  will
terminate, except that the obligations in 9.2 will survive.


                                   ARTICLE 11
                                  MISCELLANEOUS

    11.1  Integration.  Other than for that  certain  NON-DISCLOSURE  AGREEMENT,
dated April 25, 1996 between  Purchaser and HHI, this  Agreement  (including all
Schedules  hereto,  which are hereby  incorporated  as though fully set forth in
this  Agreement)   supersedes  any  and  all  other  prior  and  contemporaneous
agreements,  oral or written,  between the  parties  hereto with  respect to the
subject matter hereof,  including the letter of intent dated August 8, 1996 from
Purchaser to the  President of HHI,  and contains the entire  agreement  between
such parties with respect to the transactions  contemplated hereby. No course of
dealing  between or among persons  having any interest in this Agreement will be
deemed effective to change any provision of this Agreement.

    11.2  Amendments.  This Agreement shall not be modified or amended except by
an instrument in writing signed by or on behalf of all of the parties hereto.

    11.3 Successor;  Assignment. This Agreement and all of the provisions hereof
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors and permitted  transferees  and  assignees.  Neither this
Agreement nor any interest  herein may directly or indirectly be  transferred or
assigned by any party,  in whole or in part,  without the written consent of the
other parties,  except that  Purchaser may effect any such  assignment to any of
its  affiliates,  but any such  assignment  shall not relieve  Purchaser  of its
duties and obligations under this Agreement.

    11.4 Notices and Legal Process.  Notices and other  communications and legal
process required or permitted under this Agreement shall be in writing and shall
be personally delivered,  transmitted by telecopier,  telex, overnight delivery,



or cable or  transmitted by postage  prepaid,  registered or certified mail with
return receipt requested, as elected by the party giving such notice,  addressed
as follows:

           (a)    If to Purchaser:    Clopay Corporation
                                      312 Walnut Street, Suite 1600
                                      Cincinnati, Ohio  45202-4036
                                      Attn:  David B. Lopez, Esq.

                  with copy to:       Blau, Kramer, Wactlar & Lieberman
                                      100 Jericho Quadrangle
                                      Jericho, New York  11753
                                      Attn:  Edward I. Kramer, Esq.

           (b)    If to any or all    Harris D. Bass, Esq.,
                  of the Sellers:     Anderson, Ablon, Lewis & Gale, LLP
                                      The Equitable Building
                                      3435 Wilshire Boulevard, Suite 2000
                                      Los Angeles, California  90010-2006

    Sellers hereby agree that for purposes of all  notifications by Purchaser to
any or all of Sellers,  notice served by Purchaser or HHI upon HARRIS D. BASS at
the address stated above shall be effective  notification  to each and every one
of Sellers.

    Notices  shall be deemed to have been given:  (a) on the third  business day
after posting,  if mailed,  (b) on the date of receipt if delivered  personally,
(c) on the next business day after  transmission  if  transmitted by telecopier,
telex,  overnight  delivery or cable and  appropriate  evidences of receipt have
been received,  (d) or on the date shown in the Return Receipt Card signed by an
employee or authorized agent of the party to be served, if sent by registered or
certified  mail. Any party hereto may change its address for purposes  hereof by
notice to the other parties hereto.

    11.5  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts.  All such counterparts  together shall constitute one and the same
instrument,  and each  counterpart  shall be deemed  an  original  document  and
enforceable without reference to any other counterpart(s).

    11.6  Captions.  The  captions or headings  of the  various  paragraphs  and
subparagraphs  hereof  and  on the  Schedules  hereto  are  for  convenience  of
reference  only,  and  shall not  affect  the  meaning  or  construction  of any
provision hereof or of any such Schedules.

    11.7  Parties in Interest.  Nothing in this  Agreement,  whether  express or
implied, is intended to confer any rights or remedies under or by reason of this



Agreement on any persons other than the parties to it  (including  the Purchaser
Group,  as defined in 7.1.1,  and the Seller  Group,  as defined in 7.1.2) and
their  respective  successors  and  assigns,  nor is anything in this  Agreement
intended  to relieve or  discharge  the  obligation  or  liability  of any third
persons to any party to this  Agreement,  nor shall any provision give any third
persons  any right of  subrogation  or action  over or against any party to this
Agreement. Without limiting the foregoing, nothing in this Agreement,  expressed
or implied,  shall confer upon any existing or former  employee of HHI any legal
representative  thereof  or any  collective  bargaining  agent,  any  rights  or
remedies,  including,  without limitation,  any right to employment or continued
employment  for any specified  period,  or to any benefits of any nature or kind
whatsoever under or by reason of this Agreement.

    11.8  Severability;  Construction.  In the  event  any  provision  hereof is
determined to be invalid or unenforceable, the remaining provisions hereof shall
be deemed severable and shall remain in full force and effect. Words and phrases
defined in the plural  shall also be used in the  singular and vice versa and be
construed in the plural or singular as  appropriate  and apparent in the context
used. Unless specifically defined herein,  accounting terms shall be given their
usual  meaning and effect as defined or used in  generally  accepted  accounting
principles.



    11.9   Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.

    IN WITNESS WHEREOF,  each of the parties hereto has caused this Agreement to
be executed as of the day and year first above written.

SELLERS:                                  PURCHASER:

THE PAUL M. HALOPOFF TRUST                CLOPAY CORPORATION

By:/s/Marcia Kay Radelet                  By:/s/ George A. Strutz, Jr.
   Marcia Kay Radelet, Co-Trustee            George A. Strutz, Jr., President

By:/s/ Timothy P. Halopoff
   Timothy P. Halopoff, Co-Trustee

THE HALOPOFF IRREVOCABLE TRUST,
DATED FEBRUARY 21, 1991

By:/s/ Timothy P. Halopoff
     Timothy P. Halopoff, Trustee




THE HALOPOFF FAMILY TRUST,
DATED OCTOBER 14, 1985

By:/s/ Marcia Kay Radelet
   Marcia Kay Radelet, Trustee

Solely with respect to Sections 7.1 and 9.3
(Indemnities and Non-Competition Covenant)

/s/ Marcia Kay Radelet
Marcia Kay Radelet, Individually






                                 FIRST AMENDMENT
                                       TO
                            STOCK PURCHASE AGREEMENT


     THIS FIRST  AMENDMENT  TO STOCK  PURCHASE  AGREEMENT  made this 30th day of
June, 1997 between CLOPAY CORPORATION, a Delaware corporation ("Purchaser"), and
MARCIA KAY  RADELET  and  TIMOTHY P.  HALOPOFF,  as  Co-Trustees  of THE PAUL M.
HALOPOFF TRUST, dated September 30, 1975, TIMOTHY P. HALOPOFF, as Trustee of THE
HALOPOFF  IRREVOCABLE TRUST, dated February 21, 1991, and MARCIA KAY RADELET, as
Trustee  of THE  HALOPOFF  FAMILY  TRUST,  dated  October  14,  1985  (together,
"Sellers"), and MARCIA KAY RADELET, individually.


                                    RECITALS


     WHEREAS,  Purchaser,  Sellers and MARCIA KAY RADELET entered into a certain
STOCK PURCHASE AGREEMENT,  dated June 4, 1997, (the "Stock Purchase Agreement");
and

     WHEREAS,  Purchaser,  Sellers  and MARCIA KAY  RADELET  desire to amend the
STOCK PURCHASE AGREEMENT in part as hereinafter provided.

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and  covenants
herein contained and for other good and valuable consideration,  the receipt and
adequacy  of which the  parties  each  acknowledge,  the  parties  each agree as
follows:

                                  DECLARATIONS

     1.   Section 1.2 of the Stock Purchase Agreement is hereby amended in its 
entirety as follows:

          "1.2 Purchase Price.  The purchase price agreed upon for the Shares as
     of May 31, 1996 was  $39,500,000,  based upon the net asset value of HHI as
     shown on the May 31,  1996  Financial  Statements  as defined  in  4.12.1,
     subject to adjustment  for the net asset value effect of the sale by HHI of
     certain  excluded  assets  identified  in Schedule  1.2(a)  (the  "Excluded
     Assets")  to  one  or  more  of  the  Sellers  as  provided  in  6.2.9(a).
     Accordingly,  the  purchase  price to be paid to Sellers as of the  Closing
     Date  for the  Shares  (the  "Purchase  Price")  shall  be  $39,500,000.00,
     adjusted as follows:




               (a) if the difference between (i) the Closing Net Asset Value (as
     that term is defined in  4.12.4) of HHI as of the Closing  Date (after the
     sale  of all of the  Excluded  Assets  to one or  more  of the  Sellers  as
     provided  in  6.2.9(a))  and (ii) the net asset value of HHI as of May 31,
     1996 (as shown on the May 31,  1996  Financial  Statements)  is a  positive
     number,  then plus such  difference;  or if such  difference  is a negative
     number, then less such difference; and

               (b)  subject to the "Purchase Price Adjustment", if any, provided
     for in  2.4.

     [To illustrate the parties'  understanding  of the method of calculation of
     the Purchase  Price,  Schedule  1.2(b)  provides an example of the Purchase
     Price  calculation,  including the  calculation of the Unadjusted  Purchase
     Price, as stated in 2.1 below.]"

     2.   Section 1.3 of the Stock Purchase Agreement is hereby amended in its 
entirety as follows:

          "1.3 Closing; Closing Date Payments of Unadjusted Purchase
          Price; Escrow.

               1.3.1 The closing of the transactions  herein  contemplated  (the
     "Closing")  shall occur on Tuesday,  July 1, 1997,  ("the Closing Date") at
     the  offices  of  Anderson,  Ablon,  Lewis  &  Gale,  LLP in  Los  Angeles,
     California,  unless the parties hereto agree in writing to a different date
     and location. The effective time of the sale and purchase of the Shares and
     the effective time of the Closing shall be as of the opening of business on
     the Closing Date.

               1.3.2     At the Closing:

                    (a) Purchaser shall deliver to the escrow agent (the "Escrow
     Agent")  under the  escrow  agreement  among  the  Escrow  Agent,  Sellers,
     Purchaser  and MARCIA KAY  RADELET  (the  "Escrow  Agreement")  in the form
     attached hereto as Schedule 1.3.2 and entered into on or before the Closing
     Date,  the  sum  of  Four  Million  Two  Hundred  Fifty  Thousand   Dollars
     ($4,250,000.00),  (the "Escrow Funds") in immediately  available U.S. funds
     ("Immediately  Available  Funds"),  by wire  transfer to an escrow  account
     ("Escrow Account") in the name of the Escrow Agent; and

                    (b)  Purchaser  shall  deliver to Sellers the balance of the
     Unadjusted  Purchase Price in Immediately  Available Funds by wire transfer



     to a bank  account,  designated  in writing at least two (2) business  days
     prior to the Closing Date, by Sellers; and

                    (c) Sellers  shall  deliver  certificates  representing  the
     Shares,  duly  endorsed  in blank,  or  accompanied  by stock  powers  duly
     executed  in blank,  in proper  form for  transfer  to  Purchaser  with all
     signatures notarized, unless executed or endorsed at the Closing."

     3.  Section 2.1.1 of the Stock Purchase Agreement is hereby amended in its
entirety as follows:

          "2.1.1 "Unadjusted Purchase Price" means a calculation of the Purchase
     Price  (determined  in  accordance  with  1.2)  on the  basis  of the 1996
     Financial  Statements as defined in 4.12.3 (less the  $2,774,540 net asset
     value of CASI,  including the Excluded Stock, as of September 30, 1996, but
     not otherwise adjusted for the net asset value effect of the sale by HHI of
     the Excluded Assets to the Sellers as provided in 6.2.9(a)). Purchaser and
     Sellers hereby agree that the Unadjusted Purchase Price is $38,031,199,  as
     computed in Schedule 1.2(b)."

     4.   Section 2.4 of the Stock Purchase Agreement is hereby amended in its 
entirety as follows:

          "2.4 Purchase Price Adjustment. If the Gross Margin (i.e., the Net 
     Sales less Cost of Goods Sold) of HHI for the period from October 1, 1996
     through the Closing Date, as reflected in the Closing  Statements, is less
     than Twenty and Eight-Tenths percent (20.8%), then the Purchase Price shall
     be adjusted downwards,  but not to exceed a maximum  adjustment  of Eight 
     Million  One Hundred Fifty One Thousand Two Hundred Thirty Five Dollars 
     ($8,151,235.00), as provided in Schedule 2.4, such Purchase Price 
     adjustment referred to as the "Purchase Price Adjustment." For purposes of
     this 2.4, "Gross Margin", "Net  Sales" and "Cost of Goods  Sold" will be
     calculated  and  determined consistent with the accounting methods,  
     procedures and practices reflected in the 1996 Financial Statements."

     5.  Section 7.1.1(e)(ii) of the Stock Purchase Agreement is hereby amended
in its entirety as follows:

     "(ii)  any Environmental Claim arising with respect to the matters 
     identified on Schedule 7.1.1(e); and"

     6.  A new Section 7.1.1(g) is hereby added to the Stock Purchase Agreement,
which reads in its entirety as follows:



          "(g) Notwithstanding anything to the contrary contained hereinabove in
     Section  7.1.1(a),  Sellers  shall  have no  obligation  to  indemnify  the
     Purchaser  Group, or any of them, for any Claims and Losses which arise out
     of or based upon any or all of the following matters:

               (i)  lost customers and/or lost sales; and

               (ii) change of mix of customers  (including,  large versus small)
     and/or sales (retail and wholesale sales versus manufacturing); and

               (iii)     profit overstatements arising from deferred spending
     (including reduction of spending for supplies), depreciation and other 
     impact of deferred investment (including re: the "sandwich door"), and 
     spring and hardware price reductions for The Home Depot; and

               (iv)change in pricing structure for the Holmes Door division;and

               (v)  loss of employment of Gary Singley; and

               (vi) employee relations (i.e., extensive employee turnover at
     Tempe, and unionization threat at Holmes Door division); and

               (vii)    the salability and technical performance of the 
     "Clypenglyde" product line, except as provided in Section 4.30.4.

     7. Purchaser  hereby agrees that the matters listed in Section  7.1.1(g) of
the Stock Purchase  Agreement as hereinabove stated shall not constitute or give
rise to a breach by Sellers  under or pursuant to Sections 6.1 and/or 6.2 of the
Stock Purchase Agreement.

     8.   Except as herein expressly amended, the Stock Purchase Agreement is 
and shall remain in full force and effect.

     IN WITNESS  WHEREOF,  each of the  parties  hereto  has  caused  this First
Amendment to the Stock Purchase  Agreement to be executed as of the day and year
first above written.

SELLERS:                                   PURCHASER:

THE PAUL M. HALOPOFF TRUST                 CLOPAY CORPORATION

By: /s/ Marcia Kay Radelet                 By:/s/ George A. Strutz, Jr.
   Marcia Kay Radelet, Co-Trustee             George A. Strutz, Jr., President

By:/s/Timothy P. Halopoff
   Timothy P. Halopoff, Co-Trustee


                        SIGNATURES CONTINUED ON NEXT PAGE






                      SIGNATURES CONTINUED FROM PRIOR PAGE




THE HALOPOFF IRREVOCABLE TRUST,
DATED FEBRUARY 21, 1991

By:/s/ Timothy P. Halopoff
   Timothy P. Halopoff, Trustee


THE HALOPOFF FAMILY TRUST,
DATED OCTOBER 14, 1985

By:/s/Marcia Kay Radelet
   Marcia Kay Radelet, Trustee

Solely with respect to Sections 7.1 and 9.3
(Indemnities and Non-Competition Covenant)

/s/ Marcia Kay Radelet
Marcia Kay Radelet, Individually