Primex Technologies Inc – ‘PREM14A’ on 11/29/00

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Preliminary Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Primex Technologies Inc                               78    453K 

Document Table of Contents

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SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT 

REG. SEC.240.14A-101                                                            

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES 
EXCHANGE ACT OF 1934

Filed by the Registrant [X]                                                     

Filed by a Party other than the Registrant [ ]                                  

Check the appropriate box:                                                      

                                                                [Download Table]
                                                                                    
[X]  Preliminary Proxy Statement                                                    
[ ]  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ]  Definitive Proxy Statement                                                     
[ ]  Definitive Additional Materials                                                
[ ]  Soliciting Material Pursuant to sec.240.14a-12                                 

PRIMEX TECHNOLOGIES, INC. 
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[ ]  No fee required.                                                           

[X]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.   

(1)  Title of each class of securities to which transaction applies:    

      Common stock, par value $1.00 per share, of Primex Technologies, Inc.,
      options to acquire shares of common stock, stock appreciation rights
        linked to shares of common stock and restricted stock units related to
shares of common stock.                                       

(2)  Aggregate number of securities to which transaction applies:       

      10,440,413 shares of common stock (including deferred shares), options
        to acquire and stock appreciation rights linked to 1,587,618 shares of
      common stock and 41,650 restricted stock units relating to shares of
common stock.                                                 

(3)  Per unit price or other underlying value of transaction computed   
       pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):    

 Each share of common stock and each restricted stock unit will be
      converted into the right to receive $32.10 as a result of the merger
        described in this proxy statement. For the purposes of calculating the
      filing fee, each option to acquire and each stock appreciation right
linked to shares of common stock have been deemed exercised or
     converted into the shares of common stock subject to such option or
right.                                                        

 The underlying value of the transaction is equal to $387,436,760,
       determined by adding (i) $335,137,257 payable to holders of shares of
         common stock, (ii) $50,962,538 payable to option holders and holders of
      stock appreciation rights and (iii) $1,336,965 payable to holders of
        restricted stock units. In accordance with Exchange Act Rule 0-11, the
       filing fee equals one-fiftieth of one percent of the underlying value
of the transaction.                                           

(4)  Proposed maximum aggregate value of transaction:                   

$387,436,760                                                    

(5)  Total fee paid:                                                    

$77,487                                                         

[ ]  Fee paid previously with preliminary materials.                            

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   

(1)  Amount Previously Paid:                                            

        ------------------------------------------------------------------------

(2)  Form, Schedule or Registration Statement No.:                      

        ------------------------------------------------------------------------

(3)  Filing Party:                                                      

        ------------------------------------------------------------------------

(4)  Date Filed:                                                        

        ------------------------------------------------------------------------

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PRIMEX TECHNOLOGIES, INC. 
10101 NINTH STREET NORTH, 
ST. PETERSBURG, FLORIDA 
33716-3807

                                                                            [--]

Dear Shareholder:                                                               

We invite you to attend a special meeting of shareholders of Primex   
Technologies, Inc., to be held at [--], local time, on [--], 2001, at [--], St. 
Petersburg, Florida.                                                            

 At the special meeting, we will ask you to approve the merger agreement
that we entered into on November 9, 2000 with General Dynamics Corporation      
pursuant to which our company would be merged with a wholly owned subsidiary of 
General Dynamics. If we complete the merger, you will receive $32.10 in cash,   
without interest, for each share of Primex common stock you own, and Primex will
become a 100% owned subsidiary of General Dynamics.                             

The Board of Directors carefully reviewed and considered the terms and
conditions of the proposed merger. Based on its review, the Board of Directors  
has determined that the terms of the merger agreement and the merger are in the 
best interests of Primex and its shareholders. In making this determination, the
Board of Directors considered, among other things, the oral opinion given by    
Goldman, Sachs & Co., the Company's financial advisor, on November 8, 2000      
(confirmed in writing on November 9, 2000) to the effect that, as of that date  
and on the basis of and subject to the assumptions, limitations and             
qualifications set forth in its written confirmation, the $32.10 per share to be
received in the merger is fair, from a financial point of view, to our          
shareholders. The written confirmation of the Goldman, Sachs & Co. opinion is   
attached as Appendix B to the attached proxy statement and should be read       
carefully in its entirety.                                                      

     THE BOARD OF DIRECTORS HAS APPROVED THE MERGER AND RECOMMENDS THAT YOU VOTE
"FOR" THE APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.              

Your vote is very important. We cannot complete the merger unless the 
conditions to closing are satisfied, including approval of the merger agreement 
by the affirmative vote of the holders of more than two-thirds of the           
outstanding shares of our common stock. Failure to vote will have the same      
effect as a vote against approval of the merger agreement. Only holders of our  
stock of record at the close of business on [--] are entitled to notice of and  
to vote at the special meeting or at any adjournments or postponements.         

     WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD. If you hold your shares in      
"street name", you should instruct your broker how to vote in accordance with   
your voting instruction form.                                                   

  The accompanying proxy statement explains the proposed merger and merger
agreement and provides specific information concerning the special meeting.     
Please read these materials carefully.                                          

              Sincerely,

                    JAMES G. HASCALL
                             Chairman of the Board and
                           Chief Executive Officer

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                                                                            [--]

PRIMEX TECHNOLOGIES, INC. 
10101 NINTH STREET NORTH
ST. PETERSBURG, FLORIDA 
33716-3807

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 

To the Shareholders of Primex Technologies, Inc.:                               

  The special meeting of shareholders of Primex Technologies, Inc. will be
held at [--], St. Petersburg, Florida, on [--], 2001, at [--], local time, for  
the purposes of considering and voting upon a proposal to approve the Agreement 
and Plan of Merger, dated as of November 9, 2000, among General Dynamics        
Corporation, Mars Acquisition Corporation and Primex. In the merger, each       
outstanding share of common stock, $1.00 par value per share, of Primex (other  
than certain shares held directly or indirectly by General Dynamics or Primex)  
will be converted into the right to receive $32.10 in cash, without interest.   
The merger agreement is more fully described in the accompanying proxy statement
and is attached as Appendix A to the proxy statement. No other matters, except  
upon appropriate motion a shareholder vote to adjourn or postpone the special   
meeting, may be brought before the special meeting.                             

    Primex's Board of Directors has fixed the close of business on [--] as the
record date for determining shareholders entitled to notice of and to vote at   
the special meeting and any adjournment or postponement of the meeting. A list  
of shareholders entitled to vote at the special meeting will be available for   
examination at Primex's headquarters, during ordinary business hours, from the  
date of the proxy statement until the special meeting.                          

     The accompanying proxy statement describes the proposed merger, the actions
to be taken in connection with the merger and additional information about the  
parties involved and their interests. Please give all this information your     
careful attention.                                                              

  THE BOARD OF DIRECTORS OF PRIMEX RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT.                                               

WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS 
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON. YOU  
MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED  
IN THE ATTACHED PROXY STATEMENT. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING,
INCLUDING ANY ADJOURNMENT OR POSTPONEMENT, MAY REVOKE SUCH SHAREHOLDER'S PROXY  
AND VOTE PERSONALLY ON THE MERGER AGREEMENT TO BE CONSIDERED AT THE SPECIAL     
MEETING. EXECUTED PROXIES WITH NO INSTRUCTIONS INDICATED THEREON WILL BE VOTED  
"FOR" APPROVAL OF THE MERGER AGREEMENT.                                         

PLEASE DO NOT SEND YOUR SHARE CERTIFICATES AT THIS TIME.              

                                       By Order of the Board of Directors,

                  GEORGE H. PAIN
             Secretary

The proxy statement is dated [--] and is first being mailed to Primex's 
shareholders on or about [--].

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
QUESTIONS AND ANSWERS ABOUT THE MERGER......................    1 
SUMMARY.....................................................    2 
THE SPECIAL MEETING.........................................    6 
  General...................................................    6 
  Record date and quorum requirement........................    6 
  Voting procedures; Required vote; Revocability of proxy...    7 
  Adjournments or postponements.............................    7 
THE PARTIES.................................................    8 
  Primex Technologies, Inc. ................................    8 
  General Dynamics Corporation..............................    8 
  Mars Acquisition Corporation..............................    8 
SPECIAL FACTORS.............................................    9 
  Background of the merger..................................    9 
  Recommendation of our Board of Directors; Reasons for the       
     merger.................................................   10 
  Opinion of Goldman, Sachs & Co. ..........................   10 
  Interests of Primex directors and executive officers......   17 
  Effects of the merger.....................................   20 
  Federal income tax consequences...........................   21 
  Dissenters' rights........................................   21 
  Approvals.................................................   21 
  Source of funds...........................................   22 
THE MERGER AGREEMENT........................................   23 
  The merger................................................   23 
  Effective time of the merger..............................   23 
  Payment for shares........................................   23 
  Representations and warranties............................   24 
  Covenants.................................................   24 
  Indemnification...........................................   26 
  Termination...............................................   26 
  No solicitation of transactions...........................   26 
  Termination fee payable to General Dynamics...............   27 
  Employee benefit matters..................................   28 
  Conditions to the merger..................................   29 
  Expenses..................................................   29 
  Amendment and waiver......................................   29 
OWNERSHIP OF THE COMPANY....................................   30 
  5% shareholders...........................................   30 
  Directors and executive officers..........................   31 
PRICE RANGE OF COMMON STOCK AND DIVIDENDS...................   32 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS...   32 
ADDITIONAL INFORMATION......................................   34 
  Solicitation of proxies/costs.............................   34 
  Other matters.............................................   34 
  Shareholder proposals.....................................   34 
  Voting procedures.........................................   34 
WHERE YOU CAN FIND MORE INFORMATION.........................   35 
APPENDIX A Merger agreement.................................  A-1 
APPENDIX B Fairness opinion.................................  B-1 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHAT AM I VOTING FOR?                                              

  A: We are asking for your vote to approve the merger agreement that we
    entered into on November 9, 2000 with General Dynamics Corporation
  pursuant to which our company will be merged with a wholly owned
subsidiary of General Dynamics.                               

Q: WHAT WILL I RECEIVE IN THE MERGER?                                 

  A: If we complete the merger, you will receive $32.10 in cash for each
share of Primex common stock you own.                         

Q: WHAT DO I NEED TO DO NOW?                                          

   A: After carefully reading and considering the information contained in
     this proxy statement, please complete, date and sign your proxy and
        return it in the enclosed return envelope as soon as possible, so that
your shares may be represented at the special meeting.        

        If you sign and send in your proxy and do not indicate how you want to
   vote, we will count your proxy in favor of approval of the merger
agreement.                                                    

    If you abstain from voting or do not vote, it will count as a vote
against the approval of the merger agreement.                 

       The special meeting will take place on [--], 2001. You may attend the
      special meeting and vote your shares in person rather than voting by
proxy.                                                        

Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?          

      A: Yes. You can change your vote at any time before your proxy is voted at
       the special meeting. You can do this in one of three ways. First, you
         can attend the special meeting and vote in person. Second, you can send
    a written notice stating that you would like to revoke your proxy.
        Third, you can complete and submit a new proxy. If you chose either of
       these final two methods, you must submit your notice of revocation or
     your new proxy to Primex's solicitation agent, Georgeson & Company,
    Inc., at the following address so that your notice or new proxy is
      received by the solicitation agent prior to the close of business on
[--]:                                                         
     Georgeson Shareholder Communications Inc.
     17 State Street
    New York, New York 10004
     Telephone: (800) 223-2064

  Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME", WILL MY BROKER VOTE MY
SHARES?                                                         

    A: Your broker will vote your shares only if you provide instructions as
   to how to vote. You should follow the directions provided by your
      broker regarding how to instruct your broker to vote your shares. If
      you do not provide your broker with instructions on how to vote your
    shares, it will count as a vote against the approval of the merger
agreement.                                                    

Q: AM I ENTITLED TO DISSENTERS' RIGHTS?                               

      A: Under Virginia law, Primex shareholders are not entitled to dissenters'
      rights, rights of appraisal or similar rights in connection with the
merger.                                                       

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                        

A: No. After the merger is completed, you will receive written      
         instructions for exchanging your stock certificates. Please do not send
in your stock certificates with your proxy.                   

Q: WHO CAN HELP ANSWER MY QUESTIONS?                                  

   A: If you have any questions about the merger or if you need additional
  copies of this proxy statement or the enclosed proxy, you should
contact:                                                      

     Georgeson Shareholder Communications Inc.
     17 State Street
    New York, New York 10004
     Telephone: (800) 223-2064

     Primex Technologies, Inc.
    10101 Ninth Street North
     St. Petersburg, Florida 33716
    Attention: Gail Wilson
     Telephone: (727) 578-8144

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SUMMARY 

This summary highlights selected information from this proxy statement
relating to the proposed merger and may not contain all of the information that 
may be important to you. To understand the merger and related matters fully and 
for a more complete description of the legal terms of the merger, you should    
read carefully this entire proxy statement and the attached documents. Where    
appropriate, items in this summary include a cross reference directing you to a 
more complete description included elsewhere in this proxy statement.           

THE SPECIAL MEETING 

TIME AND PLACE OF THE SPECIAL MEETING                                           

The special meeting of our shareholders will be held on [--], 2001, at
[--], local time, at [--], St. Petersburg, Florida.                             

PURPOSE OF THE SPECIAL MEETING                                                  

At the special meeting, our shareholders will consider and vote on a  
proposal to approve the merger agreement, dated November 9, 2000, among General 
Dynamics Corporation, Mars Acquisition Corporation and Primex Technologies,     
Inc., which we refer to as "Primex" or the "Company". Under the merger          
agreement, the Company will be merged with a wholly owned subsidiary of General 
Dynamics, with the Company as the surviving corporation in the merger. Each     
outstanding share of our common stock, par value $1.00 per share, other than    
certain shares held directly or indirectly by General Dynamics or the Company,  
will be converted automatically into the right to receive $32.10 in cash,       
without interest. See "THE MERGER AGREEMENT -- The merger" beginning on page 23.

RECORD DATE AND QUORUM                                                          

Our Board of Directors has fixed the close of business on [--], as the
record date for determining shareholders entitled to notice of, and to vote at, 
the special meeting and any adjournments or postponements. Each holder of record
of shares of our common stock at the close of business on the record date is    
entitled to one vote for each share then held on each matter submitted to a vote
of shareholders. At the close of business on the record date, [--] shares of our
common stock were outstanding. The holders of a majority of the outstanding     
shares of common stock must be present in person or represented by proxy to     
constitute a quorum for the transaction of business at the special meeting. See 
"THE SPECIAL MEETING -- Record date and quorum requirement" beginning on page 6.

REQUIRED VOTE AND PROXIES                                                       

The affirmative vote of the holders of more than two-thirds of the    
outstanding shares of our common stock is required to approve the merger        
agreement. A failure to vote or a vote to abstain generally will have the same  
effect as a vote cast against approval of the merger agreement. Brokers who hold
shares as nominees will not have discretionary authority to vote such shares in 
the absence of instructions from the beneficial owners, and a broker non-vote   
will have the same effect as a vote against approval of the merger agreement.   

    Shareholders are requested to promptly complete, date, sign and return the
accompanying proxy card. A shareholder may revoke a proxy at any time prior to  
its exercise. See "THE SPECIAL MEETING -- Voting procedures; Required vote;     
Revocability of proxy" beginning on page 7.                                     

THE PARTIES 

THE COMPANY                                                                     

   Primex provides a variety of munitions, propellants, satellite propulsion
systems and electronic products to the U.S. government and its allies, as well  
as domestic and international industrial customers. The Company had             
approximately 2400 employees as of October 31, 2000.                            

   Our headquarters are located at 10101 Ninth Street North, St. Petersburg,
Florida 33716. Our general telephone number at the headquarters is (727)        
578-8100.                                                                       

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GENERAL DYNAMICS CORPORATION                                                    

General Dynamics is engaged in business aviation, information systems,
shipbuilding and marine systems and combat systems. Shares of common stock of   
General Dynamics are listed on the New York Stock Exchange under the ticker     
symbol "GD".                                                                    

The headquarters of General Dynamics are located at 3190 Fairview Park
Drive, Falls Church, Virginia 22041. General Dynamics' general telephone number 
at the headquarters is (703) 876-3000.                                          

MARS ACQUISITION CORPORATION.                                                   

  Mars Acquisition Corporation is a newly-formed corporation organized and
existing under the laws of Delaware. General Dynamics directly owns 100% of Mars
Acquisition Corporation. Mars Acquisition Corporation was organized solely for  
the purpose of entering into the merger agreement with the Company and has not  
conducted any business operations.                                              

SPECIAL FACTORS 

BACKGROUND OF THE MERGER                                                        

  For a description of the events leading to the approval of the merger by
our Board of Directors and the reasons for such approval, you should refer to   
"SPECIAL FACTORS -- Background of the merger" beginning on page 9 and           
"-- Recommendation of our Board of Directors; Reasons for the merger" beginning 
on page 10.                                                                     

RECOMMENDATION OF OUR BOARD OF DIRECTORS                                        

   On November 8, 2000, our Board of Directors approved the merger agreement
and recommended that our shareholders approve the merger agreement by unanimous 
vote of those directors present. In connection with the foregoing, our Board of 
Directors determined that the merger is in the best interests of the Company and
its shareholders. In connection with its recommendation, our Board of Directors 
relied upon, among other things, the fairness opinion of the Company's financial
advisor, Goldman, Sachs & Co. See "SPECIAL FACTORS -- Recommendation of our     
Board of Directors; Reasons for the merger" beginning on page 10 and "-- Opinion
of Goldman, Sachs & Co." beginning on page 10.                                  

     OUR BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT.                                                        

OPINION OF THE FINANCIAL ADVISOR                                                

Goldman, Sachs & Co. provided its oral opinion on November 8, 2000    
(confirmed in writing on November 9, 2000) to our Board of Directors that, as of
that date, the merger consideration was fair from a financial point of view to  
our shareholders (other than General Dynamics and its subsidiaries).            

The full text of the written confirmation of the Goldman, Sachs & Co. 
opinion, which sets forth assumptions made, matters considered and limitations  
on the review undertaken in connection with the opinion, is attached as Appendix
B and incorporated by reference into this proxy statement. The opinion of       
Goldman, Sachs & Co. does not constitute a recommendation as to how you should  
vote with respect to the merger agreement. We urge you to read the opinion in   
its entirety. See "SPECIAL FACTORS -- Opinion of Goldman, Sachs & Co." beginning
on page 10.                                                                     

REASONS FOR THE MERGER                                                          

  The principal purpose of the merger is to enable General Dynamics to own
all of the equity interests in the Company and provide you the opportunity to   
receive liquidity for your shares at a premium cash price over the market prices
at which the common stock generally traded prior to the announcement of the     
merger agreement. See "SPECIAL FACTORS -- Recommendation of our Board of        
Directors; Reasons for the merger" beginning on page 10.                        

INTERESTS OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS                            

     In considering the recommendation of our Board of Directors with respect to
the merger agreement, you should be aware that some of our directors and        
executive officers have interests in connection with the merger that are        
different from, or in addition to, the interests of other Company               

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shareholders. These interests exist because of change in control agreements that
the executive officers have with the Company and rights that the executive      
officers and directors have under the Company's compensation and benefits plans.
In addition, the merger agreement requires General Dynamics to indemnify        
directors and executive officers of the Company for events occurring before the 
merger, including events that are related to the merger. See "SPECIAL           
FACTORS -- Interests of Primex directors and executive officers" beginning on   
page 17 and "THE MERGER AGREEMENT -- Indemnification" beginning on page 26.     

FEDERAL INCOME TAX CONSEQUENCES                                                 

     The receipt of the cash merger consideration by a holder of our shares will
be a taxable transaction for U.S. federal income tax purposes. We urge you to   
consult your tax advisors to determine the effect of the merger under applicable
federal, state, local and foreign tax laws. See "SPECIAL FACTORS -- Federal     
income tax consequences" beginning on page 21.                                  

RIGHTS OF DISSENTING SHAREHOLDERS                                               

Under Virginia law, the Company's shareholders are not entitled to any
dissenters' rights, rights of appraisal or similar rights in connection with the
merger.                                                                         

APPROVALS                                                                       

  The obligation of each of General Dynamics and the Company to consummate
the merger is subject to the expiration or early termination of the required    
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976   
and receipt of any other material regulatory approval. See "SPECIAL             
FACTORS -- Approvals" beginning on page 21.                                     

SOURCE OF FUNDS                                                                 

  General Dynamics has informed us that the aggregate merger consideration
(including the cancellation of outstanding options and stock appreciation       
rights) of approximately $354 million will be financed through its cash on hand,
existing lines of credit or other sources of funds (or a combination of such    
sources).                                                                       

THE MERGER AGREEMENT

THE MERGER                                                                      

The merger agreement provides that, subject to satisfaction of various
conditions, Mars Acquisition Corporation will be merged with and into the       
Company. Following the merger, the separate existence of Mars Acquisition       
Corporation will cease, and the Company will continue as the surviving          
corporation. As of the effective time of the merger, each of our issued and     
outstanding shares, other than certain shares held directly or indirectly by    
General Dynamics or the Company, will, by virtue of the merger, be canceled and 
converted into the right to receive $32.10 in cash, without interest. See "THE  
MERGER AGREEMENT -- The merger" beginning on page 23.                           

EFFECTIVE TIME OF THE MERGER AND PAYMENT FOR SHARES                             

  The effective time of the merger will occur no later than three business
days following the satisfaction or waiver of the conditions to the merger       
contained in the merger agreement. See "THE MERGER AGREEMENT -- Conditions to   
the merger" beginning on page 29. Detailed instructions with regard to the      
surrender of share certificates, together with a letter of transmittal, will be 
forwarded to shareholders by the paying agent promptly following the effective  
time of the merger. Shareholders should not submit their certificates to the    
paying agent until they have received such materials. The paying agent will send
payment of the merger consideration to you as promptly as practicable following 
receipt by the paying agent of your certificates and other required documents.  
No interest will be paid or accrued on the cash payable upon the surrender of   
certificates. See "THE MERGER AGREEMENT -- Payment for shares" beginning on page
23.                                                                             

You should not send any share certificates to us at this time.        

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CONDITIONS TO THE MERGER                                                        

   Each party's obligation to complete the merger is subject to satisfaction
of a number of conditions, including with respect to one or both parties:       

 - the merger agreement shall have been approved by holders of more than
two-thirds of the outstanding shares of our common stock;         

- the expiration or termination of the waiting period under the       
     Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of
any other material regulatory approvals;                          

 - the absence of any injunction or other legal restraint preventing the
closing of the merger;                                            

   - the representations and warranties of the Company, on the one hand, and
       General Dynamics and Mars Acquisition Corporation, on the other hand, are
true and correct (subject, in most cases, to certain materiality  
standards) as of the effective time of the merger (unless any such
representation or warranty refers to some other time); and        

 - performance by the Company, on the one hand, and General Dynamics and
       Mars Acquisition Corporation, on the other hand, in all material respects
of their respective covenants.                                    

 Any or all of the conditions that have not been satisfied may be waived
(other than conditions that are required by law, such as approval of the merger 
agreement by our shareholders, certain regulatory approvals and the absence of  
injunctions enjoining the merger). See "THE MERGER AGREEMENT -- Conditions to   
the merger" beginning on page 29. Even if our shareholders approve the merger   
agreement, we cannot assure you that the merger will be completed.              

TERMINATION                                                                     

     The merger agreement contains provisions addressing the circumstances under
which the Company or General Dynamics may terminate the merger agreement. In    
addition, the merger agreement provides that, in several circumstances, the     
Company may be required to pay General Dynamics a termination fee of $10        
million. For a more complete discussion, see "THE MERGER                        
AGREEMENT -- Termination" beginning on page 26 and "-- Termination fee payable  
to General Dynamics" beginning on page 27.                                      

EXPENSES                                                                        

   All fees and expenses incurred in connection with the merger will be paid
by the party incurring such fees or expenses.                                   

SECURITY OWNERSHIP OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS                   

  At the close of business on the record date, our directors and executive
officers owned and were entitled to vote, in the aggregate, [--], or            
approximately [--]%, of the outstanding shares of our common stock. To our      
knowledge, all of our directors and executive officers intend to vote their     
beneficially owned shares which are eligible to be voted on the merger agreement
proposal in favor of approval of the merger agreement. See "OWNERSHIP OF THE    
COMPANY -- Directors and executive officers" beginning on page 31.              

MARKET PRICES OF COMMON STOCK                                                   

    Currently, shares of our common stock are listed for trading on The Nasdaq
National Market. As a result of the merger, we will become a wholly owned       
subsidiary of General Dynamics, and our shares will cease to trade on any public
trading market. The closing price of our common stock on [--], was $[--] per    
share.                                                                          

    On the record date, there were approximately [--] holders of record of our
common stock.                                                                   

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THE SPECIAL MEETING 

GENERAL                                                                         

     This proxy statement is being delivered to you in connection with a special
meeting of shareholders to be held on [--], 2001, at [--], local time, at [--], 
St. Petersburg, Florida. The purpose of the special meeting is for our          
shareholders to consider and vote upon a proposal to approve the Agreement and  
Plan of Merger dated as of November 9, 2000, among the Company, General Dynamics
and Mars Acquisition Corporation. Each copy of this proxy statement is          
accompanied by a proxy card or a voting instruction card furnished in connection
with the solicitation of proxies or voting instructions by our Board of         
Directors for use at the special meeting. This proxy statement is being mailed  
on or about [--], to our shareholders of record on [--].                        

Our Board of Directors has determined that the merger and the merger  
agreement are in the best interest of the Company and its shareholders and has  
approved the merger and the merger agreement by unanimous vote of the directors 
present. ACCORDINGLY, OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE  
"FOR" APPROVAL OF THE MERGER AGREEMENT. See "SPECIAL FACTORS -- Background of   
the merger" beginning on page 9 and "-- Recommendation of our Board of          
Directors; Reasons for the merger" beginning on page 10.                        

    Shareholders are requested to promptly complete, date, sign and return the
accompanying proxy card. Return of an executed proxy with no instructions       
indicated thereon will result in the applicable shares being voted "FOR"        
approval of the merger agreement. A vote to abstain or a failure to return a    
properly executed proxy card or to vote at the special meeting will have the    
effect of a vote "AGAINST" approval of the merger agreement.                    

RECORD DATE AND QUORUM REQUIREMENT                                              

Our Board of Directors has fixed the close of business on [--] as the 
record date for the determination of shareholders entitled to notice of and to  
vote at the special meeting. Each holder of record of common stock at the close 
of business on the record date is entitled to one vote for each share then held 
on each matter submitted to a vote of shareholders. Of those shares of common   
stock outstanding as of the record date, approximately [--] shares were held in 
the Primex Technologies, Inc. Retirement Investment Management Experience Plan, 
which we refer to as the "PRIME Plan", by Boston Safe Deposit and Trust Company,
N.A., as the trustee. In addition, approximately [--] shares were held in the   
Olin Corporation Contributing Employee Ownership Plan, which we refer to as the 
"CEOP", by the State Street Bank and Trust Company, as the trustee. Each        
individual participating in the PRIME Plan or the CEOP is entitled to instruct  
the trustee how to vote all shares of common stock credited to the participant's
account as of the record date. Shares of common stock held in the PRIME Plan and
the CEOP for which voting instructions are not received from PRIME Plan or CEOP 
participants, respectively, will be voted by the trustee in the same proportion 
as shares of common stock for which the trustee has received instructions.      

     The holders of a majority of the outstanding shares entitled to vote at the
special meeting must be present in person or represented by proxy to constitute 
a quorum for the transaction of business. Abstentions and shares referred to as 
"broker or nominee non-votes" that are represented at the special               
meeting -- shares held by brokers or nominees as to which instructions have not 
been received from the beneficial owners or other persons entitled to vote and  
for which the broker or nominee does not have discretionary voting power on a   
particular matter -- are counted for purposes of determining the presence or    
absence of a quorum for the transaction of business. If less than a majority of 
outstanding shares are represented at the special meeting, the special meeting  
will be adjourned to a time, date and place designated by our management.       

 SHAREHOLDERS SHOULD NOT FORWARD ANY SHARE CERTIFICATES WITH THEIR PROXY
CARDS. IN THE EVENT THE MERGER IS COMPLETED, SHARE CERTIFICATES SHOULD BE       
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL, 
WHICH WILL BE SENT TO SHAREHOLDERS BY THE PAYING AGENT, PROMPTLY AFTER THE      
EFFECTIVE TIME OF THE MERGER.                                                   

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VOTING PROCEDURES; REQUIRED VOTE; REVOCABILITY OF PROXY                         

   Approval of the merger agreement will require the affirmative vote of the
holders of more than two-thirds of the outstanding shares of our common stock.  
Except for shares held by PRIME Plan and CEOP participants, a failure to vote or
a vote to abstain will have the same effect as a vote cast against approval of  
the merger agreement. Brokers and, in many cases, nominees will not have        
discretionary power to vote on the merger proposal to be presented at the       
special meeting. Accordingly, beneficial owners of shares should instruct their 
brokers or nominees on how to vote. A broker or nominee non-vote will have the  
same effect as a vote against approval of the merger agreement. If no           
instructions are indicated on a properly executed proxy, such proxy will be     
voted as the proxy provides. A shareholder may revoke a proxy at any time prior 
to its exercise.                                                                

A shareholder may revoke a proxy by delivering to the Company's       
solicitation agent, Georgeson & Company, Inc., either (1) a written notice of   
revocation or (2) a duly executed proxy bearing a later date. Such notice or new
proxy must be received by the solicitation agent prior to the close of business 
on [--]. A shareholder may also revoke a proxy by attending the special meeting 
and voting in person. The presence of a shareholder at the special meeting will 
not in and of itself automatically revoke such shareholder's proxy. The address 
of the Company's solicitation agent is Georgeson Shareholder Communications     
Inc., 17 State Street, New York, New York 10004.                                

ADJOURNMENTS OR POSTPONEMENTS                                                   

Although it is not expected, the special meeting may be adjourned or  
postponed for the purpose of soliciting additional proxies or for other reasons 
as determined by our Board of Directors. Any adjournment or postponement may be 
made without notice, including by an announcement made at the special meeting,  
by approval of the holders of a majority of the voting power represented by the 
outstanding shares of the Company's common stock present in person or           
represented by proxy at the special meeting, whether or not a quorum exists. Any
signed proxies received by the Company will be voted in favor of an adjournment 
or postponement in these circumstances unless a written note on the proxy by the
shareholder directs otherwise. Any adjournment or postponement of the special   
meeting for the purpose of soliciting additional proxies or for other reasons   
will allow the Company's shareholders who have already sent in their proxies to 
revoke them at any time prior to their use.                                     

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THE PARTIES 

PRIMEX TECHNOLOGIES, INC.                                                       

   We are Primex Technologies, Inc. In this proxy statement, we refer to our
company as "Primex", the "Company", "we" or "us". We were organized under the   
laws of the Commonwealth of Virginia in May 1996 and have been publicly owned   
since December 31, 1996, when Olin Corporation made a distribution to its       
shareholders of all the outstanding shares of our common stock. The Company     
provides a variety of ordnance and aerospace products and services to the U.S.  
government, friendly foreign governments and domestic and international         
commercial and industrial customers. Our business operations are organized into 
two segments that correspond to our primary products and services. Through our  
Ordnance and Tactical Systems ("Ordnance") segment, the Company designs and     
manufactures tank and other large and medium caliber ammunition for U.S. and    
friendly foreign government customers. These products are used in ships,        
aircraft, tanks and fighting vehicle based weapons and other applications.      
Additionally, the Ordnance segment manufactures precision metal components and  
provides explosive load, assemble and pack services for a variety of tactical   
missile and rocket programs. The Ordnance segment also designs and produces     
shaped charge warheads and control actuator systems that are used in various    
weapons. Ball Powder(R) propellant, which is sold to U.S. and friendly foreign  
militaries, commercial ammunition manufacturers and sporting and recreational   
customers, is also manufactured by the Ordnance segment. The Aerospace and      
Electronics ("Aerospace") segment designs and manufactures electronic products  
utilized primarily in aeronautic applications, as well as rocket engines and    
electronic products used in space applications. The Aerospace segment also      
produces solid propellant products used in munitions dispensing and inflation   
devices.                                                                        

  Our principal executive offices are located at 10101 Ninth Street North,
St. Petersburg, Florida 33716. Our general telephone number at that location is 
(727) 578-8100.                                                                 

GENERAL DYNAMICS CORPORATION                                                    

  General Dynamics Corporation is a Delaware corporation formed in 1952 as
successor to the Electric Boat Company. The primary businesses of General       
Dynamics focus on business aviation, information systems, shipbuilding, marine  
systems and land and amphibious combat systems.                                 

    General Dynamics' principal executive offices are located at 3190 Fairview
Park Drive, Falls Church, Virginia 22041. Their general telephone number at that
location is (703) 876-3000.                                                     

MARS ACQUISITION CORPORATION                                                    

  Mars Acquisition Corporation is a newly-formed corporation organized and
existing under the laws of Delaware. General Dynamics directly owns all the     
outstanding shares of capital stock of Mars Acquisition Corporation. Mars       
Acquisition Corporation was organized solely for the purpose of entering into   
the merger agreement with the Company and has not conducted any business        
operations.                                                                     

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SPECIAL FACTORS 

BACKGROUND OF THE MERGER                                                        

In January 2000, we received an unsolicited indication of interest to 
acquire the Company from a financial investor. At the February 29, 2000 meeting 
of our Board of Directors, in order to adequately respond to the offer, the     
Board of Directors decided to explore the possibility of a strategic transaction
between the Company and certain potential industry and financial partners. The  
Company engaged Goldman, Sachs & Co. to conduct a review of such strategic      
possibilities, including contacting a number of potential partners to solicit   
interest in a strategic transaction with the Company. Following the completion  
of the review in April 2000 and based upon the responses and indications of     
interest received by the Company as a result of the contacts, our Board of      
Directors decided not to pursue any strategic transaction at such time.         

In September 2000, James G. Hascall, our Chairman and Chief Executive 
Officer, J. Douglas DeMaire, our President, and two other executive officers of 
the Company met with Nicholas D. Chabraja, Chairman and Chief Executive Officer 
of General Dynamics, and other officers and employees of General Dynamics, at a 
meeting unrelated to a strategic transaction between General Dynamics and the   
Company.                                                                        

  In early October 2000, Mr. Chabraja telephoned Mr. Hascall and indicated
that General Dynamics might be interested in pursuing a strategic transaction   
with the Company and also indicated that he would be in further contact with Mr.
Hascall.                                                                        

On October 18, 2000, Mr. Chabraja and Arthur J. Veitch, a Senior Vice 
President of General Dynamics, met with Mr. Hascall and Mr. DeMaire to discuss  
General Dynamics' interest in the Company. On October 19, 2000, the Company     
received an offer letter from General Dynamics indicating that General Dynamics 
was prepared to make an all-cash offer to acquire the Company, subject to a     
number of conditions, including the completion of a due diligence review. In    
response to the offer letter, Mr. Hascall indicated to Mr. Chabraja that he     
would present the offer contained in the General Dynamics offer letter to the   
Company's Board of Directors meeting scheduled for November 8, 2000. We also    
contacted our financial and legal advisors, including Goldman, Sachs & Co. and  
Cravath, Swaine & Moore, in connection with the proposed transaction. Mr.       
Hascall also individually apprised each of the Company's directors concerning   
the offer from General Dynamics. The Company then invited General Dynamics to   
conduct its due diligence investigation.                                        

    From late October 2000 through early November 2000, representatives of the
Company, General Dynamics and their respective advisors met or spoke on numerous
occasions regarding the business and financial condition of the Company and the 
status of General Dynamics' due diligence investigation. Representatives of the 
Company, General Dynamics and their respective advisors also engaged in         
negotiations concerning the merger agreement and other related documents during 
this period. The Company and General Dynamics reached a definitive agreement on 
the terms and conditions of the merger and the merger agreement by November 8,  
2000.                                                                           

     At a Board of Directors meeting held on November 6, 2000, General Dynamics'
Board of Directors considered and approved the merger and other related         
transactions by unanimous vote.                                                 

     On November 8, 2000, our Board of Directors convened to consider the merger
and related transactions. At the meeting, (1) Mr. Hascall reported on the       
background to the merger and merger negotiations, (2) our outside counsel,      
Cravath, Swaine & Moore, described the terms of the proposed transaction, as    
well as the fiduciary obligations of directors in considering the proposed      
transaction, and (3) our financial advisor, Goldman, Sachs & Co., reported on   
the financial aspects of the merger and delivered an oral opinion (confirmed in 
writing on November 9, 2000) to the effect that, as of November 8, 2000 and on  
the basis of and subject to the assumptions, limitations and qualifications set 
forth in its written confirmation, the $32.10 per share to be received in the   
merger was fair, from a financial point of view, to our shareholders. On the    
evening of November 8, 2000, our Board of Directors approved the merger and     
related transactions by unanimous vote of those present.                        

On the morning of November 9, 2000, the merger agreement and related  
agreements were executed and delivered, and the transaction was publicly        
announced jointly by General Dynamics and us.                                   
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RECOMMENDATION OF OUR BOARD OF DIRECTORS; REASONS FOR THE MERGER                

    OUR BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST INTEREST OF
THE COMPANY AND OUR SHAREHOLDERS. ACCORDINGLY, OUR BOARD OF DIRECTORS HAS, BY A 
UNANIMOUS VOTE OF DIRECTORS PRESENT, APPROVED THE MERGER AGREEMENT AND THE      
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND RECOMMENDS THAT OUR       
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.                       

  In deciding to approve the merger and related transactions, our Board of
Directors considered a variety of factors, including (1) the lack of day-to-day 
liquidity faced by many of our shareholders in holding their shares, (2) the    
premium that the merger price represented to current and historical market      
values and various other valuations of the Company, (3) the opinion rendered by 
Goldman, Sachs & Co. regarding the fairness of the merger consideration, from a 
financial point of view, to the holders of shares of our common stock, (4) the  
ability of our Board of Directors to enter into discussions with other parties  
in the event that a possible superior proposal is made to the Company, (5) the  
range of alternative strategies or transactions which might be available to us  
and the prices at which those transactions might be implemented, (6) the absence
of any financing condition to General Dynamics' obligations to close the        
transaction and the ability of General Dynamics to pay the merger consideration 
and (7) the likelihood of satisfying the regulatory and other conditions to     
closing the merger.                                                             

  In deciding to approve the merger and related transactions, our Board of
Directors considered the various factors discussed above. Our Board of Directors
did not, however, assign any relative or specific weights to those factors, and 
individual directors may have given different weight to different factors.      

OPINION OF GOLDMAN, SACHS & CO.                                                 

On November 8, 2000, Goldman, Sachs & Co. gave us its oral opinion    
(confirmed in writing on November 9, 2000) that as of such date, based upon and 
subject to the considerations set forth in its written confirmation, the $32.10 
per share in cash to be received by the holders of shares of our common stock   
(other than General Dynamics and its subsidiaries) pursuant to the merger       
agreement was fair from a financial point of view to such holders.              

You should consider the following when reading the discussion of the  
opinion of Goldman, Sachs & Co. below:                                          

- The written confirmation of the opinion of Goldman, Sachs & Co. is  
   attached as Appendix B to this proxy statement and is incorporated by
reference. We urge you to read it carefully.                      

     - The Goldman, Sachs & Co. opinion was necessarily based upon conditions as
they existed and could be evaluated on November 8, 2000. Although 
       subsequent developments may affect its opinion, Goldman, Sachs & Co. does
not have any obligation to update, revise or reaffirm its opinion.

- The Goldman, Sachs & Co. opinion does not address the merits of the 
       proposed merger and the other business strategies considered by our Board
   of Directors, nor does it address our Board of Directors' decision to
proceed with the proposed merger.                                 

    - The Goldman, Sachs & Co. opinion does not constitute a recommendation as
     to how you should vote on the proposal to approve the merger agreement.

Although Goldman, Sachs & Co. evaluated the fairness, from a financial
point of view, to the holders of our common stock (other than General Dynamics  
and its subsidiaries) of the $32.10 per share to be received as merger          
consideration pursuant to the merger agreement, the consideration itself was    
determined through arm's length negotiations between our senior management and  
counsel and the senior management and counsel of General Dynamics. We did not   
provide specific instructions to, or place any limitation on, Goldman, Sachs &  
Co. with respect to the procedures to be followed or factors to be considered by
Goldman, Sachs & Co. in performing its analyses or providing its opinion.       

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    In connection with its opinion, Goldman, Sachs & Co. reviewed, among other
things:                                                                         

- the merger agreement;                                               

    - our annual reports to shareholders on Form 10-K for the four years ended
December 31, 1999;                                                

   - certain of our interim reports to shareholders and quarterly reports on
Form 10-Q;                                                        

- certain other communications from us to our shareholders; and       

    - certain internal financial analyses and forecasts for us prepared by our
management.                                                       

Goldman, Sachs & Co. also held discussions with members of our senior 
management regarding their assessment of our past and current business          
operations, financial conditions and future prospects. In addition, Goldman,    
Sachs & Co.:                                                                    

   - compared certain financial and stock market information for the Company
     with similar information for certain other companies, the securities of
which are publicly traded;                                        

   - reviewed the financial terms of certain recent business combinations in
     the aerospace and defense industry specifically and in other industries
generally;                                                        

  - reviewed the reported price and trading activity for our common stock;
and                                                               

   - performed such other studies and analyses as it considered appropriate.

   Goldman, Sachs & Co. relied upon the accuracy and completeness of all the
financial and other information discussed with or reviewed by it and assumed    
such accuracy and completeness for purposes of rendering its opinion. Goldman,  
Sachs & Co. did not make an independent evaluation or appraisal of the assets   
and liabilities of the Company or any of its subsidiaries and was not furnished 
with any such evaluation or appraisal. Goldman, Sachs & Co. solicited from third
parties indications of interest in acquiring all of the Company, or engaging in 
a business combination or any other strategic transaction with the Company,     
through April 2000. Subsequent to that process, Goldman, Sachs & Co. was not    
requested to solicit and did not solicit interest from third parties with       
respect to any acquisition of, or strategic transaction with, the Company.      

Goldman, Sachs & Co., as part of its investment banking business, is  
continually engaged in the valuation of businesses and their securities in      
connection with mergers and acquisitions, negotiated underwritings, competitive 
biddings, secondary distributions of listed and unlisted securities, private    
placements and valuations for estate, corporate and other purposes. Goldman,    
Sachs & Co. is familiar with the Company, having acted as its financial advisor 
in connection with, and having participated in certain of the negotiations      
leading to, the merger agreement. Goldman, Sachs & Co. has also from time to    
time provided investment banking services to General Dynamics, including having 
acted as agent for General Dynamics' commercial paper program and common stock  
repurchase plan and as General Dynamics' financial advisor in connection with   
its acquisitions of Lockheed Martin Corporation's Armament and Defense division 
in January 1997, Lucent Technologies' Advanced Technology Systems division in   
October 1997 and Ceridian Corporation's Computing Devices International division
in January 1998. Goldman, Sachs & Co. may also provide investment banking       
services to General Dynamics in the future. Goldman, Sachs & Co. provides a full
range of financial advisory and securities services and, in the course of its   
normal trading activities, may from time to time effect transactions and hold   
securities, including derivative securities, of the Company or General Dynamics 
for its own account and the accounts of customers.                              

     We have agreed to pay Goldman, Sachs & Co. a customary transaction fee upon
completion of the merger. The fee will be equal to 1.125% of the aggregate      
consideration paid in the merger, including the amount of our indebtedness to be
assumed or repaid by General Dynamics and its subsidiaries. If the merger is    
completed, as expected, at the price of $32.10 per share of our common stock,   
Goldman, Sachs & Co. would be entitled to receive a transaction fee of          
approximately $5.8 million (based on an underlying value of equity of           
approximately $354 million and indebtedness of $165 million as of October 1,    
2000). We have also agreed to indemnify Goldman, Sachs & Co. against various    
liabilities, including various liabilities under the federal securities laws.   

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The following is a summary of the material financial analyses used by 
Goldman, Sachs & Co. in connection with reaching its opinion and does not       
purport to be a complete description of the analyses performed by Goldman, Sachs
& Co. The following quantitative information, to the extent it is based on      
market data, is based on market data as it existed at or about November 8, 2000 
and is not necessarily indicative of current market conditions. You should      
understand that the order of analyses and the results of such analyses described
does not represent the relative importance or weight given to such analyses by  
Goldman, Sachs & Co. The summary of financial analyses includes information     
presented in tabular format. In order to understand fully the financial analyses
used by Goldman, Sachs & Co., these tables must be read together with the text  
of each summary. The tables alone do not describe completely the financial      
analyses.                                                                       

Comparison of selected transactions in the aerospace and defense industry   

Goldman, Sachs & Co. reviewed publicly available information for seven
acquisitions in the aerospace and defense industry completed since August 1992. 
This analysis demonstrates how selected financial data about the merger compares
to that of recent transactions in the aerospace and defense industry. Goldman,  
Sachs & Co. selected the following acquisitions for comparison:                 

                                                        [Enlarge/Download Table]

CLOSING                                                                      TRANSACTION  
DATE     ACQUIRING COMPANY               ACQUIRED COMPANY                       VALUE     
-------  -----------------               ----------------                  ---------------
                                                                           ($ IN MILLIONS)
                                                                                          
05/2000  Alcoa Inc.                      Cordant Technologies Inc.             $2,965     
11/1998  Primex Technologies, Inc.       CMS Group                                123     
10/1997  Carlyle Group                   United Defense, L.P.                     850     
02/1997  Hughes Electronics Corporation  Alliant Techsystems Inc. (Marine         141     
                                         Systems Business)                                
12/1996  General Dynamics Corporation    Lockheed Martin Corporation              450     
                                         (Armaments and Defense Systems                   
                                         Businesses)                                      
03/1995  Alliant Techsystems Inc.        Hercules Incorporated (Aerospace         440     
                                         Business)                                        
08/1992  Hughes Aircraft Company         General Dynamics Corporation             450     
                                         (Missile Business)                               

 The transaction value for each selected acquisition was measured as the
total equity consideration to be paid to the acquired company's shareholders,   
plus indebtedness assumed by the acquiring company. Goldman, Sachs & Co.        
calculated for each selected acquisition the transaction value as a multiple of:

  - acquired company sales for the latest twelve-month period prior to the
       announcement of the transaction for which financial results were publicly
available;                                                        

- acquired company earnings before interest, taxes, depreciation and  
      amortization, which we refer to as "EBITDA", for the latest twelve-month
     period prior to the announcement of the transaction for which financial
results were publicly available; and                              

     - acquired company earnings before interest and taxes, which we refer to as
     "EBIT", for the latest twelve-month period prior to the announcement of
  the transaction for which financial results were publicly available.

   Goldman, Sachs & Co. derived corresponding multiples for the merger based
on the merger consideration of $32.10 per share of our common stock and         
management's estimates of 10.4 million shares of our common stock issued and    
outstanding, 1.6 million shares of our common stock subject to options at a     
weighted average exercise price of $19.95 per share and indebtedness of $164.8  
million as of October 1, 2000.                                                  

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  The following table sets forth the results of this analysis and compares
the multiples derived for the selected acquisitions to the corresponding        
multiples for the merger:                                                       

                                                        [Enlarge/Download Table]

                                                SELECTED ACQUISITIONS      THE MERGER
                                            -----------------------------  ----------
                                               RANGE       MEAN    MEDIAN            
                                            -----------    ----    ------            
                                                                                     
Ratio of transaction value to:                                                       
  Acquired company's sales for the latest                                            
     twelve-month period prior to                                                    
     announcement.......................... 0.3 -  1.3x    0.8x     0.8x      1.0x   
  Acquired company's EBITDA for the latest                                           
     twelve-month period prior to                                                    
     announcement.......................... 2.9 -  9.4x    6.1x     6.7x      6.7x   
  Acquired company's EBIT for the latest                                             
     twelve-month period prior to                                                    
     announcement.......................... 5.9 - 12.0x    8.6x     8.8x     10.0x   

Discounted cash flow analyses                                               

   Goldman, Sachs & Co. performed discounted cash flow analyses to determine
the implied enterprise value of the Company and the implied equity value per    
share of our common stock:                                                      

     - utilizing the Company's management projections as of October 23, 2000 for
the remainder of year 2000 through year 2004 and discounting those
projections to the end of October 2000; and                       

     - assuming the Company's management estimates as of October 1, 2000 of 10.4
    million shares of our common stock issued and outstanding, 1.6 million
 shares of our common stock subject to options at a weighted average
    exercise price of $19.95 per share and indebtedness of $164.8 million.

    Goldman, Sachs & Co. applied discount rates ranging from 9.0% to 13.0% per
year and terminal value multiples of management-estimated 2004 EBITDA ranging   
from 4.0x to 6.0x to the Company's estimated future cash flows. The range for   
discount rates was chosen by Goldman, Sachs & Co. based on estimates of cost of 
capital ranges that could be applicable. Based on these discount rates and      
terminal value multiples, Goldman, Sachs & Co. derived implied enterprise values
for the Company ranging from $416.5 million to $636.3 million. Goldman, Sachs & 
Co. applied the same discount rates and terminal value multiples to derive      
implied equity values per share of our common stock ranging from $23.64 to      
$41.99.                                                                         

  In addition, Goldman, Sachs & Co. applied changes in annual sales growth
ranging from (2.0)% to 2.0% and changes in annual EBIT margin of (2.0)% to 2.0% 
to the Company's estimated future cash flows. Based on these changes in sales   
growth and EBIT margins, Goldman, Sachs & Co. derived implied enterprise values 
for the Company ranging from $409.6 million to $644.5 million. Goldman, Sachs & 
Co. applied the same changes in sales growth and EBIT margins to derive implied 
equity values per share of our common stock ranging from $23.06 to $42.68.      

Comparison of selected aerospace/defense companies                          

 Goldman, Sachs & Co. reviewed and compared financial information of the
Company to corresponding financial information, ratios and public market        
multiples of selected publicly traded companies that operate in the aerospace   
and defense industry, either as major U.S. defense contractors, selected defense
subcontractors, European defense contractors, shipbuilders, controls and        
avionics companies, or parts and services companies. This analysis demonstrates 
how the public market values our Company relative to other publicly traded      
companies in the aerospace and defense industry. Goldman, Sachs & Co. selected  
for comparison the                                                              

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following publicly traded companies which have operations that may be considered
similar to the operations of the Company:                                       

                                                        [Enlarge/Download Table]

                                                                       EQUITY MARKET   
                                                                       CAPITALIZATION  
INDUSTRY SEGMENT                           SELECTED COMPANIES        AS OF NOV. 8, 2000
----------------                           ------------------        ------------------
                                                                      ($ IN MILLIONS)  
                                                                                       
Major U.S. defense contractors   Boeing Company (The)                     $58,322      
                                 Lockheed Martin Corporation               13,176      
                                 Northrop Grumman Corporation               5,671      
                                 Raytheon Company                          11,475      
Selected defense subcontractors  Alliant Techsystems Inc.                 $   841      
                                 Harris Corporation                         2,113      
                                 L-3 Communications Holdings, Inc.          2,244      
                                 Teledyne Technologies Incorporated           677      
                                 TRW Inc.                                   4,763      
European defense contractors     Alvis PLC                                $   157      
                                 BAE Systems PLC                           16,592      
                                 Rheinmetall AG                               296      
                                 Rolls-Royce                                4,129      
Shipbuilders                     Litton Industries, Inc.                  $ 2,523      
                                 Newport News Shipbuilding Inc.             1,487      
Controls and avionics companies  Meggitt PLC                              $   872      
                                 Moog Inc.                                    271      
                                 Woodward Governor Company (The)              461      
Parts and services companies     AAR Corp.                                $   299      
                                 Aviall, Inc.                                 133      
                                 Aviation Sales Company                        49      
                                 Barnes Group Inc.                            345      
                                 Doncasters PLC                               185      
                                 Fairchild Corporation (The)                  152      
                                 Kellstrom Industries, Inc.                    48      
                                 Parker-Hannifin Corporation                4,523      
                                 Triumph Group, Inc.                          406      

 All equity market capitalization data is based on the closing price per
share on November 8, 2000 and the number of shares of common stock issued and   
outstanding, as disclosed in the latest publicly available financial statements.
For reference, the equity market capitalization of the Company as of November 8,
2000 was $322 million.                                                          

     For General Dynamics, the Company and each selected company, Goldman, Sachs
& Co. calculated and compared, among other things:                              

- each company's closing price per share on November 8, 2000 as a     
percentage of its 52-week high closing price per share;           

- multiples of enterprise value to EBITDA for the latest twelve-month 
     period prior to the announcement of the transaction for which financial
results were publicly available; and                              

    - multiples of stock price to earnings per share, which we refer to as the
"P/E multiples", for the year 2000 and 2001.                      

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                                                        [Enlarge/Download Table]

                                                                          GENERAL                      
                                           SELECTED COMPANY             DYNAMICS AT       THE COMPANY  
                                   --------------------------------    NOV. 8, 2000     AT NOV. 8, 2000
                                       RANGE        MEDIAN    MEAN     CLOSING PRICE     CLOSING PRICE 
                                   -------------    ------    -----    -------------    ---------------
                                                                                                       
PERCENTAGE OF NOVEMBER 8,                                                                              
  2000 CLOSING SHARE PRICE TO                                                                          
  52-WEEK HIGH:                                                              97%               97%     
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors...     85%-  96%       94%       92%                                    
Selected defense                                                                                       
  subcontractors.................     60%-  98%       84%       83%                                    
European defense contractors.....     63%-  84%       69%       71%                                    
Shipbuilders.....................     95%-  98%       96%       96%                                    
Controls and avionics                                                                                  
  companies......................     85%-  99%       86%       90%                                    
Parts and services companies.....     16%- 100%       66%       64%                                    
-------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE MULTIPLES OF                                                                          
  EBITDA FOR LAST 12 MONTHS:                                               10.1x              6.3x     
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors...    7.2x- 13.1x    11.3x     10.8x                                    
Selected defense                                                                                       
  subcontractors.................    5.4x- 13.5x     8.8x      9.2x                                    
European defense contractors.....    3.3x-  8.9x     7.1x      6.6x                                    
Shipbuilders.....................    6.7x-  7.7x     7.2x      7.2x                                    
Controls and avionics                                                                                  
  companies......................    5.7x- 10.8x     6.0x      7.5x                                    
Parts and services companies.....    5.2x-  9.9x     6.9x      7.1x                                    
-------------------------------------------------------------------------------------------------------
CALENDARIZED P/E MULTIPLES FOR                                                                         
  2000:                                                                    17.3x             12.7x     
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors...    9.0x- 31.2x    23.5x     21.8x                                    
Selected defense                                                                                       
  subcontractors.................    9.2x- 29.1x    20.7x     19.8x                                    
European defense contractors.....    8.6x- 15.4x    12.9x     12.5x                                    
Shipbuilders.....................   11.6x- 18.1x    14.8x     14.8x                                    
Controls and avionics                                                                                  
  companies......................   10.6x- 13.6x    13.2x     12.5x                                    
Parts and services companies.....    7.3x- 11.7x    10.7x     10.2x                                    
-------------------------------------------------------------------------------------------------------
CALENDARIZED P/E MULTIPLES FOR                                                                         
  2001:                                                                    15.7x             10.9x     
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors...    8.3x- 26.2x    18.8x     18.0x                                    
Selected defense                                                                                       
  subcontractors.................    9.0x- 24.0x    20.6x     17.4x                                    
European defense contractors.....    6.7x- 22.9x    10.6x     12.7x                                    
Shipbuilders.....................   10.6x- 11.2x    10.9x     10.9x                                    
Controls and avionics                                                                                  
  companies......................   10.0x- 12.2x    11.9x     11.4x                                    
Parts and services companies.....    3.1x- 10.4x     9.9x      8.3x                                    
-------------------------------------------------------------------------------------------------------

    Earnings per share data was based on median estimates of the Institutional
Broker's Estimate System, known as IBES. Goldman, Sachs & Co. adjusted this data
to compare the companies on a standardized calendar-year basis.                 

Historical stock trading analysis                                           

    Goldman, Sachs & Co. reviewed the historical trading prices and volume for
our common stock. In addition, Goldman, Sachs & Co. compared the per share      
consideration to be received by our shareholders pursuant to the merger         
agreement to the price of our common stock at various times. Such analysis      
indicated                                                                       

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that the $32.10 per share in cash, without interest, to be paid to our          
shareholders pursuant to the merger agreement represented:                      

  - a premium of 3.5% to the $31.00 per share closing price on November 8,
2000, the day prior to announcement of the transaction;           

  - a premium of 8.8% to the $29.50 per share closing price on November 1,
2000, one week prior to announcement of the transaction;          

  - a premium of 10.9% to the $28.94 per share closing price on October 9,
2000, four weeks prior to announcement of the transaction;        

 - a premium of 35.2% to the $23.75 per share closing price on August 9,
2000, three months prior to announcement of the transaction;      

    - a premium of 62.5% to the $19.75 per share closing price on May 9, 2000,
six months prior to announcement of the transaction;              

   - a premium of 54.7% to the $20.75 per share closing price on November 9,
1999, twelve months prior to announcement of the transaction;     

    - a discount of 0.1% to the 52-week high closing price of $32.13 per share
on November 6, 2000; and                                          

   - a premium of 77.1% to the 52-week low closing price of $18.13 per share
on May 26, 2000.                                                  

Present value of potential future prices of the Company stock               

    Goldman, Sachs & Co. calculated the present value of a share of our common
stock plus dividends at the end of the year 2000 through the year 2004 using    
assumed P/E multiples ranging from 7.0x to 13.0x. The range of P/E multiples was
chosen by Goldman, Sachs & Co. with reference to the multiples at which our     
common stock has historically traded. The present values were calculated using  
management earnings per share estimates for the year 2000 through 2004 and      
assuming that the Company would continue to pay a regular quarterly dividend of 
$0.075 per share of common stock, which would be reinvested at 12% per annum.   
The projected future dividends and share prices were discounted to November 1,  
2000 at a rate of 12%.                                                          

     The following table sets forth the estimated present value per share of our
common stock plus dividends for the year 2000 through 2004, based on P/E        
multiples ranging from 7.0x to 13.0x:                                           

                                                                [Download Table]

                                                 P/E MULTIPLES       
                                           --------------------------
                                            7.0x     10.0x     13.0x 
                                           ------    ------    ------
                                                                     
2000.....................................  $17.51    $25.01    $32.52
2001.....................................   18.51     26.32     34.13
2002.....................................   20.69     29.33     37.97
2003.....................................   21.83     30.87     39.90
2004.....................................   24.38     34.42     44.46

* * * 

The preparation of a fairness opinion is a complex process involving  
various determinations as to the most appropriate and relevant methods of       
financial analysis and the application of these methods to the particular       
circumstances and, therefore, is not necessarily susceptible to partial analysis
or summary description. Selecting portions of the analyses or of the summary set
forth above, without considering the analysis as a whole, could create an       
incomplete view of the processes underlying the Goldman, Sachs & Co. opinion. In
arriving at its fairness determination, Goldman, Sachs & Co. considered the     
results of all such analyses and did not attribute any particular weight to any 
factor or analysis considered by it; rather, Goldman, Sachs & Co. made its      
determination as to fairness on the basis of its experience and professional    
judgment after considering the results of all such analyses. In addition, in    
performing the analyses, Goldman, Sachs & Co. made numerous assumptions with    
respect to industry performance, general business, economic, market and         
financial conditions and other matters. No company or transaction used in the   
above analyses is directly comparable to                                        

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us or the merger. The analyses were prepared solely for the purposes of Goldman,
Sachs & Co. providing its opinion to our Board of Directors as to the fairness  
of the merger consideration and do not propose to be appraisals or necessarily  
reflect the prices at which businesses or securities may actually be sold.      
Analyses based on forecasts of future results are not necessarily indicative of 
actual future results, which may be significantly more or less favorable than   
suggested by such analyses. Because such analyses are inherently subject to     
uncertainty, being based upon numerous factors or events beyond the control of  
the parties or their respective advisors, none of the Company, Goldman, Sachs & 
Co. or any other person assumes responsibility if future results are materially 
different from those forecast. As described above, the opinion of Goldman, Sachs
& Co. to our Board of Directors was among many factors taken into consideration 
by our Board of Directors in making its determination to approve the merger     
agreement.                                                                      

INTERESTS OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS                            

     When you consider the recommendations of our Board of Directors, you should
be aware that our directors and executive officers may have interests in the    
merger that are different from, or in addition to, the interest of other Company
shareholders. The Company's Board of Directors was aware of these interests and 
considered them when it approved the merger agreement. These interests are      
summarized below.                                                               

Executive agreements                                                        

     The Company is a party to an executive agreement with each of its executive
officers named below:                                                           

                                                                [Download Table]

EXECUTIVE OFFICER                                      TITLE               
-----------------                                      -----               
                                                                           
Hascall, James G. ...................  Chairman and Chief Executive Officer
DeMaire, J. Douglas..................  President                           
Wilson, Michael S. ..................  Executive Vice President and        
                                       President, Ordnance and Tactical    
                                       Systems Division                    
Fischer, John E. ....................  Vice President and Chief Financial  
                                       Officer                             
Pain, George H. .....................  Vice President, General Counsel and 
                                       Secretary                           
Curley, Stephen C. ..................  Vice President and Treasurer        
Picker, Jackson C. ..................  Vice President, Human Resources and 
                                       Administration                      

     Each executive agreement provides certain benefits to the executive officer
in the event the officer's employment with the Company is terminated under any  
of the following circumstances:                                                 

   - the officer's employment is terminated by the Company without cause (as
defined in the executive agreement);                              

    - the officer terminates his own employment for certain specified reasons,
including a reduction in the officer's base salary, a reduction in
     responsibilities or position with the Company, relocation of his office
       under certain circumstances or the failure of the Company to maintain the
officer's level of participation in certain benefits plans; or    

   - in the case of Messrs. Hascall, DeMaire, Fischer, Pain and Picker only,
   the officer terminates his employment with the Company for any reason
  within the 90-day period immediately following the expiration of the
       six-month period immediately following a change in control (as defined in
the executive agreement).                                         

The following payments and benefits are provided to the officer if his
employment is terminated under the circumstances described above:               

- a lump sum payment (referred to as the "executive severance") in an 
 amount equal to the sum (or, in the case of termination following a
 change in control, three times the sum) of (1) twelve months of the
  officer's then current monthly salary and (2) an amount equal to the
 greater of the average annual bonus payout to the officer under the
Company's Incentive Compensation Plan over the three years        

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   immediately preceding the officer's termination or the officer's then
   current target bonus under the Company's Incentive Compensation Plan;

  - a lump sum payment equal to the amount (or, in the case of a change in
     control, three times the amount) contributed or credited by the Company
to the officer's accounts in all defined contribution plans of the
     Company during the twelve months preceding the officer's termination of
employment;                                                       

  - the officer will continue to enjoy coverage under all Company medical,
  dental and life insurance plans for an additional one year following
       termination of employment (three years, if the termination occurs after a
change in control);                                               

   - the officer will be entitled, at the Company's expense, to outplacement
 counseling and associated services in accordance with the Company's
      customary practice at the time (or, if a change in control has occurred,
 in accordance with such practice immediately prior to the change in
     control) with respect to its senior executives who have been terminated
other than for cause;                                             

 - if the officer has an accrued vested benefit under Olin Corporation's
     qualified pension plan as of the date of the change in control, and the
      officer at age 55 would not qualify for subsidized early retirement from
 Olin Corporation under the provisions of Olin Corporation's pension
plans, then the officer will receive a lump sum payment (on a net 
      after-tax basis) from the Company immediately upon the change in control
to compensate the officer for the lost subsidy; and               

  - in the event any excise taxes are imposed on the officer under Section
   4999 of the Internal Revenue Code, an additional amount such that the
      officer retains a net payment equal to that which he would have received
if no excise taxes were imposed.                                  

The merger will be considered a change in control for purposes of the 
executive agreements.                                                           

  The executive agreement for Mr. Hascall is dated as of November 2, 1999.
The executive agreements for Messrs. DeMaire, Fischer, Pain and Picker are dated
as of February 29, 2000. Each of the foregoing executive agreements was amended 
as of November 8, 2000 to provide that:                                         

    - the termination of employment (whether voluntary or involuntary) of each
       officer effective immediately following the completion of the merger will
     be treated for all purposes of the executive agreement as a termination
   after a change in control (as such terms are defined in the executive
     agreement) entitling the officer to receive the executive severance and
the other payments and benefits described above;                  

    - the termination of employment (whether voluntary or involuntary) of each
       officer effective immediately following the completion of the merger will
     be treated for purposes of the Company's Incentive Compensation Plan as
    an involuntary termination without cause, entitling them to receive an
immediate distribution of his account balances under that plan;   

    - each officer will be entitled to receive full payment, at the completion
  of the merger, of all amounts payable under the executive agreement;

- notwithstanding anything to the contrary in the Company's Incentive 
      Compensation Plan, General Dynamics and the Company each agree that each
officer will be entitled to receive under the Company's Incentive 
      Compensation Plan at the completion of the merger an amount equal to the
   sum of the officer's account balance as of the date of termination of
       employment and the amount of the officer's annual bonus payable under the
    Company's Incentive Compensation Plan for the year 2000, to the extent
   the year 2000 bonus has not already been added to the account balance
previously paid to the officer; and                               

- each officer will have the opportunity, for so long as the Company  
      continues to provide medical coverage generally to its active employees,
 to participate in the employee benefit plan or plans providing such
medical coverage on the same basis as (or to purchase the medical 
   coverage provided under such plans) the Company's then current active
   employees, at the same cost that the Company charges its then current
active employees, if any, for such medical coverage.              

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    Each of Messrs. Curley and Wilson (assuming their employment is terminated
immediately following the completion of the merger), and each of Messrs.        
Hascall, DeMaire, Fischer, Pain and Picker, upon their termination of employment
immediately following the completion of the merger, will be entitled to receive 
the change in control and termination payments pursuant to his executive        
agreement, as described above, and pursuant to certain of the Company's benefit 
plans, as described below under "Benefit plans". Pursuant to the merger         
agreement, each of Messrs. Hascall, DeMaire, Fischer, Pain and Picker, the      
Company and General Dynamics agreed that the cash amounts that would be payable 
to each of the officers at the completion of the merger (not including any      
amounts payable as reimbursement for excise taxes or gross-up payments          
attributable thereto) shall be as follows, subject to the adjustments provided  
below:                                                                          

                                                        [Enlarge/Download Table]

                                                                     ESTIMATED YEAR 2000
EXECUTIVE                                          AGGREGATE AMOUNT    DECLARED BONUS   
---------                                          ----------------  -------------------
                                                                                        
DeMaire, J. Douglas...............................    $3,253,000          $487,000      
Fischer, John E. .................................    $2,487,000          $266,000      
Hascall, James G. ................................    $5,224,000          $974,000      
Pain, George H. ..................................    $2,704,000          $266,000      
Picker, Jackson C. ...............................    $2,257,000          $221,000      

 The foregoing aggregate amounts for each officer will not be subject to
change except to the extent solely required to reflect the following:           

- actual year 2000 declared bonuses under the Company's Incentive     
Compensation Plan that are different from the Company's good faith
     estimates of the year 2000 declared bonuses (listed in the table above)
used to determine the foregoing amounts; or                       

- the merger is not completed in January 2001.                        

The foregoing agreements by each executive officer will not impair his
rights in respect of any other benefits to be provided under his executive      
agreement.                                                                      

Benefit plans                                                               

   In addition to the executive agreements, certain of the Company's benefit
and compensation plans provide for the acceleration or increase of benefits in  
the event of a change in control of the Company. The merger will be treated as a
change in control under these plans. The following summarize the benefits       
payable under these plans, subject to the completion of the merger, taking into 
account recent amendments to the plans, if any, made in connection with the     
merger agreement.                                                               

Pursuant to the Company's Incentive Compensation Plan:                

    - if the merger is completed on or before December 31, 2000, the aggregate
amount of the year 2000 declared bonuses will be based on actual  
       performance during the year 2000, and each participant who is eligible to
      receive a year 2000 declared bonus will receive a non-prorated full-year
       declared bonus for the year 2000 based on actual performance for the year
2000;                                                             

     - each participant's account balance will not be immediately distributed as
a result of the merger;                                           

  - the Company will make distributions ordinarily payable in 2001 to each
    participant no later than March 15, 2001, and, except in the case of a
      termination of employment by the Company other than for cause, or by the
Company due to retirement, disability or death, the remaining     
     undistributed portion of each participant's account balance, determined
       immediately following that 2001 distribution, will be distributed to each
  participant in three equal annual installments on each of the first,
second and third anniversaries of the completion of the merger;   

- notwithstanding the foregoing, at the sole discretion of General    
      Dynamics, participants may be allowed to elect, in lieu of receiving the
       undistributed portion of their account balance over the three-year period
 described above and continuing to be eligible for future bonuses in
   respect of periods following the completion of the merger, if any, to
receive their account balance within a reasonable period of       

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     time following the completion of the merger with the understanding that
       the electing participants would not be eligible to participate in a bonus
     program, if any, in the future, and with the further understanding that
       General Dynamics may provide a bonus program to those participants who do
not make such an election;                                        

- any additional bonuses payable in respect of performance periods    
     commencing after the completion of the merger will be at the discretion
of the surviving corporation; and                                 

  - the distribution of the account balances in connection with the merger
       will not be taken into account for purposes of determining benefits under
the Company's PRIME Plan or Restoration Bonus Plan.               

  Pursuant to the Company's Restoration Bonus Plan, upon the completion of
the merger, participants will receive an immediate distribution of a bonus for  
the year in which the merger is completed, pro-rated through the date of        
completion of the merger.                                                       

Pursuant to the Company's Stock Plan for Nonemployee Directors, upon a
change in control of the Company, all shares and other amounts credited under   
the plan to a director's stock and cash accounts will promptly be distributed to
such director.                                                                  

     Under the Company's 1996 Long-Term Incentive Plan, which we refer to as the
1996 LTIP, and 2000 Long-Term Incentive Plan, which we refer to as the 2000     
LTIP, upon a change in control of the Company, all stock options and stock      
appreciation rights then outstanding under each of these plans will become      
immediately and fully exercisable, notwithstanding any vesting requirements     
contained in the plans or the individual grant. In addition, each participant in
these plans holding an option to acquire shares of Company common stock will    
also be deemed to hold a stock appreciation right related to such option (unless
a stock appreciation right has already been granted with respect to such        
option), in which case the participant may elect to exercise either the option  
or the related stock appreciation right (but not both). The deemed stock        
appreciation rights will be exercisable on the same terms and conditions as the 
related option. All restrictions and conditions of all restricted stock and     
restricted stock units granted under the plans will, upon a change in control,  
be deemed satisfied as of the date of the change in control and will be paid in 
cash, and all performance awards under the 1996 LTIP and 2000 LTIP will become  
vested, deemed earned in full, and promptly paid upon a change in control.      
Pursuant to grants and awards previously made under the 1996 LTIP and 2000 LTIP,
each of Messrs. Hascall, DeMaire, Fischer, Pain and Picker will be entitled to  
receive the following amounts (not including any amounts payable as             
reimbursement for excise taxes or gross-up payments attributable thereto):      

                                                                [Download Table]

EXECUTIVE                                              AGGREGATE AMOUNT
---------                                              ----------------
                                                                       
DeMaire, J. Douglas..................................     $2,237,000   
Fischer, John E. ....................................     $1,021,000   
Hascall, James G. ...................................     $3,729,000   
Pain, George H. .....................................     $1,021,000   
Picker, Jackson C. ..................................     $  754,000   

Directors and officers insurance                                            

See "THE MERGER AGREEMENT -- Indemnification" on page 26 below.       

EFFECTS OF THE MERGER                                                           

As a result of the merger, our public shareholders will not have an   
opportunity to continue their equity interest in the Company as an ongoing      
corporation and, therefore, will not share in the future earnings and potential 
growth of the Company. Upon consummation of the merger, our shares of common    
stock will no longer be traded on The Nasdaq National Market, and the           
registration of our shares of common stock under the Securities Exchange Act of 
1934 (the "Exchange Act") will be terminated. Furthermore, following the merger 
we will no longer be a reporting company under the Exchange Act.                

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FEDERAL INCOME TAX CONSEQUENCES                                                 

This section discusses the material United States federal income tax  
consequences of the merger to our shareholders whose shares of our common stock 
are surrendered in the merger in exchange for the right to receive cash         
consideration of $32.10 per share, without interest. The discussion below       
applies only to shareholders that hold our shares as capital assets at the time 
of the merger, and the discussion may not apply to shareholders that are subject
to special tax rules, such as financial institutions, insurance companies,      
dealers in securities, persons that mark-to-market their securities, persons    
that hold our shares as part of a "straddle", "hedge" or "synthetic security    
transaction" (including a "conversion" transaction), persons with a "functional 
currency" other than the U.S. dollar, retirement plans and tax-exempt           
organizations, shareholders who acquired our shares pursuant to the exercise of 
stock options, pursuant to participation in an employee stock purchase plan or  
otherwise as compensation or shareholders that are nonresident alien            
individuals, foreign corporations, foreign partnerships, foreign trusts or      
foreign estates. The discussion below is based upon federal income tax laws as  
now in effect and interpreted and does not take into account possible changes in
these tax laws or interpretations, any of which may be applied retroactively.   
The discussion does not include any description of the tax laws of any state,   
local or foreign government that may be applicable to our shareholders.         

   THIS SECTION DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT
MAY BE RELEVANT TO A SPECIFIC SHAREHOLDER IN LIGHT OF SUCH SHAREHOLDER'S        
PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. EACH SHAREHOLDER SHOULD      
CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF  
THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL,      
FOREIGN AND OTHER TAX LAWS OR CHANGES TO THOSE LAWS.                            

    For federal income tax purposes, our shareholders generally will recognize
capital gain or capital loss equal to the difference between the cash received  
by the shareholder pursuant to the merger and such shareholder's adjusted tax   
basis in the shares surrendered pursuant to the merger. If, at the time of the  
merger, a noncorporate shareholder's holding period for our shares is more than 
one year, any gain recognized generally will be subject to federal income tax at
a maximum rate of 20%.                                                          

    Consideration received by our shareholders in the merger may be subject to
backup withholding at a 31% rate. Backup withholding generally will apply only  
if the shareholder fails to furnish a correct social security number or other   
taxpayer identification number or otherwise fails to comply with applicable     
backup withholding rules and certification requirements. Corporations generally 
are exempt from backup withholding. Any amounts withheld under the backup       
withholding rules will be allowed as a credit against the shareholder's federal 
income tax liability and may entitle the shareholder to a refund, provided the  
shareholder furnishes specified required information to the Internal Revenue    
Service.                                                                        

DISSENTERS' RIGHTS                                                              

Under Virginia law, the Company's shareholders are not entitled to    
dissenters' rights, rights of appraisal or similar rights in connection with the
merger.                                                                         

APPROVALS                                                                       

  We have given necessary notices to the U.S. federal government under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and have requested an early
termination of the required waiting period.                                     

    Other than the filing described above, we are not aware of any significant
government or regulatory approvals that need to be obtained, or waiting periods 
with which we need to comply, to complete the merger. If we discover that other 
approvals or waiting periods are required, we will seek to obtain or comply with
them. If any approval or action is needed, however, we may not be able to obtain
it. Even if we could obtain the approval, conditions may be placed on it that   
could cause us or General Dynamics to abandon the merger even if we receive     
shareholder approval.                                                           

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SOURCE OF FUNDS                                                                 

  General Dynamics has informed us that the aggregate merger consideration
(including payments to be made in connection with the cancellation of options   
and stock appreciation rights) of approximately $354 million to be paid to our  
shareholders (and option and stock appreciation right holders) will be financed 
through cash on hand, existing lines of credit or other sources of funds (or a  
combination of such sources). As of October 1, 2000, General Dynamics had in    
excess of $500 million of aggregate committed availability under its lines of   
credit.                                                                         

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THE MERGER AGREEMENT

 This is a summary of the material provisions of the merger agreement, a
copy of which is attached as Appendix A to this proxy statement. You should     
refer to the full text of the merger agreement for details of the merger and the
terms and conditions of the merger agreement.                                   

THE MERGER                                                                      

When the merger occurs, Mars Acquisition Corporation, a wholly owned  
subsidiary of General Dynamics, will be merged with and into the Company. The   
Company will survive the merger and will be wholly owned by General Dynamics.   

  In the merger, each share of our common stock (except for certain shares
held directly or indirectly by General Dynamics or the Company) outstanding     
immediately before the merger will be converted into the right to receive $32.10
in cash, without interest. Each shareholder (other than General Dynamics) will  
no longer have any rights with respect to the shares of our common stock, except
for the right to receive the merger consideration and any declared and unpaid   
dividend with respect to such common stock.                                     

EFFECTIVE TIME OF THE MERGER                                                    

The completion of the merger will take place no later than the third  
business day following the date when the last of the conditions to the merger is
satisfied or waived, or at any other time, date or place to which General       
Dynamics and we mutually agree. On the closing of the merger, we will cause     
articles of merger to be filed with the Virginia State Corporation Commission,  
and General Dynamics will cause a certificate of merger to be filed with the    
Delaware Secretary of State. The merger will become effective upon our filing of
articles of merger with the Virginia State Corporation Commission or such later 
date or time as may be set forth in such articles of merger.                    

PAYMENT FOR SHARES                                                              

As soon as reasonably practicable following the effective time of the 
merger, General Dynamics is required to deposit, or cause to be deposited, with 
its paying agent the total merger consideration.                                

  As soon as reasonably practicable after the effectiveness of the merger,
General Dynamics' paying agent will mail to each holder of record of our common 
stock a letter of transmittal and instructions for the surrender of share       
certificates to the paying agent for the merger consideration. After            
surrendering to the paying agent for cancellation a share certificate, together 
with a properly completed letter of transmittal and all other documents and     
materials required by the paying agent to be delivered in connection therewith, 
the holder of such share certificate will be entitled to receive an amount equal
to the merger consideration with respect to the shares represented by such      
certificate. Each surrendered share will be canceled. No interest will be paid  
or accrued on the merger consideration.                                         

In the event of a transfer of ownership of any shares of our stock not
registered in the transfer records of the Company, the merger consideration will
be paid to the transferee if the certificate representing such stock is         
presented to the paying agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that all applicable stock transfer     
taxes have been paid.                                                           

   You should not send in your share certificates until you receive a letter
of transmittal. All cash paid upon the surrender of share certificates in       
accordance with the merger agreement will be deemed to have been paid in full   
satisfaction of all rights pertaining to the shares, other than any rights      
pertaining to any declared and unpaid dividends on Company common stock.        

   If your stock certificate has been lost, stolen or destroyed, you will be
entitled to obtain payment only by signing an affidavit and, if required by     
General Dynamics, posting a bond in an amount sufficient to protect General     
Dynamics against claims related to your share certificate.                      

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REPRESENTATIONS AND WARRANTIES                                                  

   The merger agreement contains customary representations and warranties by
us relating to:                                                                 

- our corporate organization and similar corporate matters;           

  - authorization, execution, delivery, performance and enforceability of,
  and required consents, approvals and authorizations relating to, the
merger agreement and related matters;                             

- our capital structure and our subsidiaries;                         

    - the accuracy of our reports and financial statements filed with the SEC;

- liabilities;                                                        

  - the absence of certain material adverse changes since October 1, 2000;

- litigation and compliance by us and our subsidiaries with laws and  
permits;                                                          

  - our and our subsidiaries' material contracts, including any government
contracts;                                                        

- our and our subsidiaries' tax returns and other tax matters;        

- our and our subsidiaries' employee benefit plans;                   

- environmental matters affecting us and our subsidiaries;            

- title to all properties and assets owned by us and our subsidiaries;

    - intellectual property necessary for our or our subsidiaries' operations;

- labor matters affecting us and our subsidiaries;                    

- amendment to our shareholder rights agreement;                      

- state takeover laws; and                                            

- brokers' fees with respect to the merger.                           

     The merger agreement also contains customary representations and warranties
by General Dynamics and Mars Acquisition Corporation relating to:               

- corporate organization and similar corporate matters;               

  - authorization, execution, delivery, performance and enforceability of,
  and required consents, approvals and authorizations relating to, the
merger agreement and related matters;                             

     - adequate cash resources to pay the merger consideration and consideration
to be received by the holders of Company stock options and stock  
appreciation rights; and                                          

     - absence of capital ownership in the Company by General Dynamics or any of
its subsidiaries.                                                 

COVENANTS                                                                       

   General Dynamics and we have agreed to use our respective best efforts to
do all things to consummate and make effective the transactions contemplated by 
the merger agreement.                                                           

     We have agreed that during the period from the date of the merger agreement
until the closing of the merger, we will, and will cause our subsidiaries to:   

     - provide General Dynamics and its representatives reasonable access to our
  premises, properties, books, records, contracts and other documents;

     - promptly advise General Dynamics of any material development affecting us
or our subsidiaries; and                                          

    - use our best efforts to preserve our business organization intact in all
     material respects and to maintain certain material Company programs and
contracts.                                                        

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We have also agreed that during the period from the date of the merger
agreement until the closing of the merger, we will not, and will cause our      
subsidiaries not to, with certain exceptions:                                   

     - amend our articles of incorporation or by-laws or file any certificate of
 designation or similar instrument with respect to any shares of our
authorized but unissued capital stock;                            

     - authorize or effect any stock split or combination or reclassification of
shares of our capital stock;                                      

   - declare or pay any dividend or distribution with respect to our capital
     stock (other than the regular quarterly dividend of $0.075 per share of
       our common stock and dividends payable by our subsidiaries to us or other
subsidiaries);                                                    

     - issue or authorize the issuance of any shares of our capital stock (other
   than in connection with the exercise of certain currently outstanding
       stock options) or any other securities exercisable or exchangeable for or
convertible into shares of our capital stock;                     

- repurchase, redeem or otherwise acquire for value any shares of our 
      capital stock or any other securities exercisable or exchangeable for or
convertible into shares of our capital stock;                     

- merge or consolidate with any entity;                               

    - sell, lease or otherwise dispose of any of our capital assets other than
 sales, leases or other dispositions of machinery, equipment, tools,
      vehicles and other operating assets no longer required in our operations
     made in the ordinary course of business, consistent with past practice;

   - liquidate, dissolve or effect any recapitalization or reorganization in
any form;                                                         

 - acquire any interest in any business or enter into any joint venture;

  - create, incur, assume or suffer to exist any indebtedness for borrowed
  money (including capital lease obligations), other than indebtedness
  existing prior to the date of the merger agreement, borrowings under
       existing credit lines in the ordinary course of business, consistent with
past practice, and intercompany indebtedness among us and our     
      subsidiaries arising in the ordinary course of business, consistent with
past practice;                                                    

 - create, incur, assume or suffer to exist any lien (other than certain
  permitted liens) affecting any of our material assets or properties;

- except as required by changes in generally accepted accounting      
      principles, change any of the accounting principles or practices used by
    us or revalue in any material respect any of our assets or properties,
other than write-downs of inventory or accounts receivable in the 
ordinary course of business, consistent with past practice;       

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

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

   - enter into any contract or commitment or engage in any transaction with
any affiliated person or entity (other than the Company or our    
     subsidiaries) or enter into any contract or commitment or engage in any
transaction with any unaffiliated person or entity which, to our  
      knowledge, is reasonably likely to have a material adverse effect on our
and our subsidiaries' business, financial condition, operations or
  results of operations or our ability to consummate the merger and to
perform our obligations under the merger agreement;               

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   - make any material tax election or settle or compromise any material tax
liability, except in the ordinary course of business;             

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

   - settle or compromise any material pending or threatened suit, action or
proceeding.                                                       

 In addition, General Dynamics and we have agreed to give all notices to
third parties and governmental entities and use our respective best efforts to  
obtain all required consents and approvals. General Dynamics and we have also   
agreed to promptly make a filing under the Hart-Scott-Rodino Antitrust          
Improvements Act of 1976 and use our respective best efforts to obtain early    
termination of the applicable waiting periods. In the event either party becomes
subject to any order or injunction which prohibits the transactions contemplated
by the merger agreement, each party will use its best efforts to overturn or    
lift such order or injunction. The foregoing will not require General Dynamics  
to enter into any agreement or consent decree requiring it or its subsidiaries  
to divest or hold separate any assets or take any other action which is         
reasonably likely to have a material adverse effect on the business, financial  
condition, operations or results of operations of General Dynamics or its       
subsidiaries, taken as a whole.                                                 

INDEMNIFICATION                                                                 

   The merger agreement provides that General Dynamics will ensure that each
current and former officer and director of the Company or any of our            
subsidiaries will continue to be indemnified for his or her acts or omissions   
occurring at or prior to the consummation of the merger to the fullest extent   
permitted by law. In addition, the merger agreement requires General Dynamics to
maintain the directors and officers insurance policies of the Company (or       
equivalent policies) for at least six years after the consummation of the       
merger. General Dynamics, however, will not be required to pay premiums which on
an annual basis exceed 200% of the current annual premium of such policies.     

TERMINATION                                                                     

   The merger agreement may be terminated, whether before or after receiving
shareholder approval, and the merger may be abandoned by mutual consent or as   
follows:                                                                        

- the merger is not consummated by March 31, 2001;                    

     - a court or governmental agency issues a final, nonappealable order or any
other action that prohibits consummation of the merger;           

- approval of our shareholders is not obtained at our shareholder's   
meeting; or                                                       

   - the other party breaches or fails to perform, as applicable, any of its
       representations and warranties or covenants in a manner that would breach
       a condition to the merger, and such breach or failure has gone unremedied
for 30 days following notice.                                     

 In addition, General Dynamics may terminate the merger agreement if our
Board of Directors has withdrawn or amended, in any manner adverse to General   
Dynamics, its recommendation and approval of the merger agreement.              

NO SOLICITATION OF TRANSACTIONS                                                 

We have agreed to immediately cease any discussions or negotiations   
conducted prior to the date of the merger agreement with any parties other than 
General Dynamics with respect to any acquisition proposal. We and our           
subsidiaries have agreed not to, and to use our best efforts to cause our       
respective directors, officers, employees, agents and representatives not to,   
(1) initiate or solicit any inquiries with respect to, or the making of, any    
acquisition proposal or (2) engage in any negotiations with, furnish any        
information to or enter into any                                                

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agreement with any party relating to any acquisition proposal. Our Board of     
Directors, however, may, in response to an acquisition proposal that the board  
determines in good faith is reasonably likely to lead to a superior proposal,   
furnish information with respect to us and our subsidiaries to the person making
such acquisition proposal pursuant to a confidentiality agreement and           
participate in discussions regarding such proposal.                             

Under the merger agreement, "acquisition proposal" means any bona fide
proposal from any person that if consummated would result in such person        
acquiring beneficial ownership of more than 20% of the consolidated assets of,  
or more than 20% of the voting power in, us and our subsidiaries, taken as a    
whole, pursuant to a merger, consolidation or other business combination, sale  
of shares of capital stock, sale of assets, tender or exchange offer or similar 
transaction involving us or any of our subsidiaries.                            

Under the merger agreement, "superior proposal" means any bona fide   
proposal from any person that (1) if consummated, would result in such person   
acquiring beneficial ownership of more than 50% of the consolidated assets of,  
or more than 50% of the voting power in, us and our subsidiaries, taken as a    
whole, pursuant to a merger, consolidation or other business combination, sale  
of shares of capital stock, sale of assets, tender or exchange offer or similar 
transaction involving us or any of our subsidiaries and (2) our Board of        
Directors, after consultation with its outside legal counsel and financial      
advisers, determines in its good faith business judgment is superior from a     
financial view to our shareholders and is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other aspects of such  
proposal.                                                                       

We are not, however, prohibited from taking and disclosing to our     
shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act or 
from making any disclosure or recommendation, including a withdrawal or adverse 
amendment of our Board of Directors' recommendation of the merger, to our       
shareholders if our Board of Directors, after consultation with outside counsel,
determines in good faith that failure to so disclose or recommend would be      
inconsistent with applicable law.                                               

TERMINATION FEE PAYABLE TO GENERAL DYNAMICS                                     

     We have agreed to pay General Dynamics a $10 million termination fee in the
event that each of the following conditions is satisfied:                       

- a third party makes, or announces an intention to make a takeover   
proposal to acquire more than 20% of our and our subsidiaries'    
    consolidated assets or 20% or more of the voting power in the Company;

 - thereafter, (1) General Dynamics or the Company terminates the merger
      agreement because our shareholders fail to approve the merger agreement,
       (2) General Dynamics terminates the merger agreement because our Board of
      Directors withdraws or adversely amends its recommendation of the merger
     with General Dynamics or (3) General Dynamics or the Company terminates
       the merger agreement after March 31, 2001, and a shareholder vote has not
taken place by such date; and                                     

  - the Company enters into a third party acquisition agreement or a third
    party acquisition is consummated within 12 months of such termination.

Under the merger agreement, "third party acquisition" means:          

   - the acquisition of the Company by a person other than General Dynamics;

  - the acquisition by any person other than General Dynamics of more than
50% of the consolidated assets of the Company;                    

  - the acquisition by any person other than General Dynamics of more than
50% of the voting power in the Company and our subsidiaries;      

 - adoption by the Company of a plan of liquidation or declaration of an
      extraordinary dividend of cash or property constituting more than 50% of
the consolidated assets of the Company; or                        

 - purchase by the Company of more than 50% of its outstanding shares of
common stock.                                                     

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EMPLOYEE BENEFIT MATTERS                                                        

Subject to applicable collective bargaining agreements, until (or in  
respect of the period ending on) December 31, 2001:                             

     - General Dynamics will cause to be maintained for the employees and former
 employees of the Company and its subsidiaries, benefits and benefit
       levels, that are, in the aggregate, substantially similar to benefits and
     benefit levels provided by the Company and its subsidiaries through any
pension or welfare plan or fringe benefit program (including, for 
     example, sick pay, vacation pay and tuition reimbursement) prior to the
   completion of the merger, other than bonus, incentive or equity-based
     compensation plans or arrangements. The foregoing will not prohibit any
     change in benefits or benefit levels adopted prior to the completion of
      the merger and effective on or after the completion or the merger or any
      other change in benefits that would have been made by the Company in the
ordinary course during 2001 to reflect market conditions for the  
provision of these benefits; and                                  

- General Dynamics and its subsidiaries, including the surviving      
      corporation in the merger, will provide severance benefits and severance
       compensation to the employees and former employees of the Company and its
  subsidiaries that, in the aggregate, are not less favorable than the
   severance benefits and severance compensation provided by the Company
under a benefit plan to such employees immediately prior to the   
completion of the merger.                                         

 General Dynamics will honor, and cause the surviving corporation in the
merger to honor, in accordance with their respective terms, all of the Company's
employee benefit, compensation, employment, severance and termination plans,    
programs, policies and arrangements, including any rights or benefits arising as
a result of the transactions contemplated by the merger agreement, either alone 
or in combination with any other event.                                         

   Solely for purposes of eligibility and vesting under the employee benefit
plans of General Dynamics and its subsidiaries, including the surviving         
corporation, any current or former employees of the Company and its subsidiaries
after the completion of the merger will be credited with their years of service 
with the Company and its subsidiaries (and any predecessor entities) before the 
completion of the merger, to the same extent as such employees were entitled,   
before the completion of the merger, to credit for such service under any       
similar benefit plan of the Company and its subsidiaries.                       

   General Dynamics will, and will cause the surviving corporation and their
respective representatives to, afford any officer (as of the completion of the  
merger) of the Company and any of his or her representatives reasonable access, 
upon reasonable notice, to such books and records of the Company and the        
surviving corporation as are reasonably required by such officer to determine   
amounts owing to such officer under any benefit plan of the Company and its     
subsidiaries.                                                                   

     In addition, for purposes of the Company's Incentive Compensation Plan, the
Company will be permitted to continue to accrue its annual bonuses under its    
Incentive Compensation Plan in accordance with past practice, and will be       
permitted to determine the amount of the year 2000 declared bonuses and allocate
such year 2000 declared bonuses to participants' accounts under the Incentive   
Compensation Plan in accordance with past practice and based on actual          
performance during the year 2000. All determinations and allocations in respect 
of the year 2000 declared bonuses will be made in accordance with the foregoing 
by the Company management as constituted prior to the completion of the merger. 
The Company may communicate information in respect of the year 2000 declared    
bonuses at any time as it may determine advisable or appropriate in its sole    
discretion. Subject to General Dynamics' and our compliance with the foregoing  
and the terms of the Incentive Compensation Plan, as amended, General Dynamics  
or the Company may terminate our Incentive Compensation Plan.                   

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CONDITIONS TO THE MERGER                                                        

    The obligations of General Dynamics and the Company to complete the merger
are subject to the satisfaction or waiver of various conditions, including the  
following:                                                                      

- obtaining the required approval of our shareholders;                

- the expiration or termination of the waiting period under the       
Hart-Scott-Rodino Antitrust Improvements Act of 1976;             

- obtaining of all other material regulatory approvals; and           

    - the absence of any law, order or injunction preventing the completion of
the merger.                                                       

  Each party's obligation to complete the merger is further subject to the
satisfaction or waiver of the following additional conditions:                  

- accuracy of the other party's representations and warranties in all 
 material respects as of the effective time of the merger or if such
   representation or warranty relates to an earlier date, then as of the
earlier date; and                                                 

- performance by the other party in all material respects of its      
      obligations under the merger agreement required to be performed by it at
or prior to the consummation of the merger.                       

EXPENSES                                                                        

The merger agreement provides that all fees and expenses incurred in  
connection with the merger will be paid by the party incurring such fees or     
expenses, whether or not the merger is consummated.                             

AMENDMENT AND WAIVER                                                            

The merger agreement may be amended only by written agreement of the  
parties. After our shareholders approve the plan of merger, however, no         
amendment may be made without the approval of our shareholders to the extent    
such approval is required under Virginia law. Any party may waive its rights    
under the merger agreement only in writing. Any such amendment or waiver may be 
made at any time before the completion of the merger.                           

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OWNERSHIP OF THE COMPANY

5% SHAREHOLDERS                                                                 

The following table sets forth certain information regarding actual,  
beneficial and voting ownership of the Company's equity at [--] as to each      
person known by the Company to beneficially own, within the meaning of the      
Exchange Act, 5% or more of the outstanding shares of our common stock. This    
information is based on the Company's records and on reports filed by the       
following persons with the U.S. Securities and Exchange Commission ("SEC").     

                                                        [Enlarge/Download Table]

TITLE OF CLASS OF BENEFICIAL OWNER                  AMOUNT AND NATURE OF                  
NAME AND ADDRESS OF BENEFICIAL OWNER                BENEFICIAL OWNERSHIP  PERCENT OF CLASS
------------------------------------                --------------------  ----------------
                                                                                          
Common Stock                                                                              
  Neuberger Berman, LLC............................      [1,280,661]           [    ]%    
  605 Third Avenue                                                                        
  New York, NY 10158                                                                      
Common Stock                                                                              
  Boston Safe Deposit & Trust Company, N.A.........      [1,112,307(a)]        [    ]%    
  [--]                                                                                    
  [--]                                                                                    
Common Stock                                                                              
  State Street Bank and Trust Company..............        [845,506(b)]        [    ]%    
  225 Franklin Street                                                                     
  Boston, MA 02110                                                                        
Common Stock                                                                              
  Artisan Partners Limited Partnership.............        [675,200]           [    ]%    
  1000 North Water Street, Suite 1770                                                     
  Milwaukee, WI 53202                                                                     
Common Stock                                                                              
  Putnam Investments Management, Inc. .............        [605,250]           [    ]%    
  One Post Office Square                                                                  
  Boston, MA 02109                                                                        

---------------                                                                 
(a) As trustee for the Company's PRIME Plan. These shares will be voted as      
   described in "THE SPECIAL MEETING -- Record date and quorum requirement" on
page 6 above.                                                           

(b) As trustee for the CEOP. These shares will be voted as described in "THE    
SPECIAL MEETING -- Record date and quorum requirement" on page 6 above. 

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DIRECTORS AND EXECUTIVE OFFICERS                                                

 The following table sets forth the number of shares of our common stock
beneficially owned, within the meaning of the Exchange Act, by all directors and
executive officers of the Company as of the record date. Unless otherwise       
indicated in the footnotes below, each person had sole voting and investment    
power with respect to such shares (other than any unissued shares, the ownership
of which has been imputed to such owner).                                       

                                                        [Enlarge/Download Table]

NAME OF BENEFICIAL OWNER                            NUMBER OF SHARES(A)   PERCENT OF CLASS
------------------------                            --------------------  ----------------
                                                                                          
S.C. Curley........................................        [58,826]                 *     
J.D. DeMaire.......................................       [194,142]              [1.9]%   
J.E. Fischer.......................................        [94,106]                 *     
J.G. Hascall.......................................       [360,806]              [3.5]%   
D. Lasky...........................................         [5,883]                 *     
B. Martinez........................................           [600]                 *     
W.B. Mitchell......................................         [3,892]                 *     
G.H. Pain..........................................        [93,648]                 *     
J.C. Picker........................................        [71,153]                 *     
R.H. Rau(b)........................................        [22,900]                 *     
A.W. Ruggiero......................................         [2,150]                 *     
L.E. Salomon.......................................             [0]                 *     
M.S. Wilson........................................       [129,668]              [1.2]%   
Directors and executive officers of the Company as                                        
  a group (13 persons).............................     [1,037,774]             [10.0]%   

---------------                                                                 
*  Less than 1%.                                                              

(a) Excluded from this table are shares of our common stock credited to deferred
accounts pursuant to certain compensation arrangements in the amounts of
  [7,514] shares for Mr. Martinez, [7,745] for Mr. Mitchell, [8,889] for Mr.
   Rau, [8,926] for Mr. Ruggiero and [6,098] for Mr. Salomon. Such shares have
no voting power.                                                        

(b) Includes [21,000] shares of our common stock held by a trust in which Mr.   
  Rau is co-trustee with shared voting and investment power and in which his
  children are beneficiaries. Also includes [900] shares of our common stock
  held by a trust in which his stepchildren are beneficiaries and his spouse
is trustee. Mr. Rau disclaims beneficial ownership of such [900] shares.

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PRICE RANGE OF COMMON STOCK AND DIVIDENDS 

   Our common stock is listed on The Nasdaq National Market under the symbol
"PRMX". The following table sets forth, for the periods indicated, dividends and
the high and low sales prices per share of our common stock as reported on the  
consolidated reporting system of The Nasdaq National Market. For current price  
information, shareholders are urged to consult publicly available sources.      

                                                                [Download Table]

                                                                         DIVIDENDS
CALENDAR PERIOD                                           HIGH    LOW    DECLARED 
---------------                                          ------  ------  ---------
                                                                                  
1997                                                                              
  First Quarter......................................... $10.56  $ 8.00   $0.075  
  Second Quarter........................................  12.00    8.88    0.075  
  Third Quarter.........................................  17.50   11.00    0.075  
  Fourth Quarter........................................  18.88   15.38    0.075  
1998                                                                              
  First Quarter.........................................  24.75   15.63    0.075  
  Second Quarter........................................  26.88   20.00    0.075  
  Third Quarter.........................................  25.94   15.75    0.075  
  Fourth Quarter........................................  22.00   14.03    0.075  
1999                                                                              
  First Quarter.........................................  24.75   20.00    0.075  
  Second Quarter........................................  23.00   17.25    0.075  
  Third Quarter.........................................  22.50   18.75    0.075  
  Fourth Quarter........................................  30.44   19.13    0.075  
2000                                                                              
  First Quarter.........................................  23.00   19.25    0.075  
  Second Quarter........................................  23.00   18.00    0.075  
  Third Quarter.........................................  30.63   21.25    0.075  
  Fourth Quarter [(through [--])].......................  33.38   26.25    0.075  

 On [--], the most recent practicable date prior to the printing of this
proxy statement, the closing price of our common stock as reported on the       
consolidated reporting system of The Nasdaq National Market was [--]. As of the 
record date, there were approximately [--] holders of record of our common      
stock.                                                                          

The foregoing amounts have been restated, as appropriate, to reflect a
stock dividend paid in March 1999 by the Company to holders of shares of its    
common stock.                                                                   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

    Certain information contained herein should be considered "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act  
of 1995. Such information is subject to a number of risks and uncertainties. The
preparation of forward-looking statements requires the use of estimates of      
future revenues, expenses, activity levels and economic and market conditions,  
many of which are outside our control. Specific factors that could cause actual 
results to differ materially from those set forth in the forward-looking        
statements include: demand for commercial powder; international business        
opportunities; ammunition lot acceptance; timing of contract funding; changing  
economic and political conditions in the United States and in other countries;  
changes in governmental laws and regulations surrounding various matters, such  
as environmental remediation, contract pricing and international trading        
restrictions; changes in governmental spending and budgetary policies, such as  
reductions in the level of defense spending and redirection of U.S. Department  
of Defense program funding; production and pricing levels of important raw      
materials; lower than anticipated levels of plant utilization resulting in      
production inefficiencies and higher costs, whether related to the delay of new 
product introductions, improved production processes or equipment or labor      
relations issues; difficulties or delays in the development, production, testing
and marketing of products; product margins and                                  

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customer product acceptance; unforeseen difficulties associated with the        
integration of acquired businesses; and costs and effects of legal and          
administrative cases, proceedings, settlements and investigations involving the 
Company. Other factors and assumptions not identified above are also involved in
the preparation of forward-looking statements, and the failure of such other    
factors and assumptions to be realized may also cause actual results to differ  
materially from those discussed. We assume no obligation to update such         
estimates to reflect actual results, changes in assumptions or changes in other 
factors affecting such estimates.                                               

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ADDITIONAL INFORMATION

SOLICITATION OF PROXIES/COSTS                                                   

     The Company is making this proxy solicitation. We will bear the cost of the
solicitation of proxies. We have retained Georgeson & Company, Inc. to          
coordinate the solicitation of proxies. Georgeson & Company will solicit proxies
by personal interview, mail, telephone or telegram and will request brokerage   
houses and other custodians, nominees and fiduciaries to forward solicitation   
material to the beneficial owners of the common stock held of record by such    
persons. The Company will pay Georgeson & Company a customary fee covering its  
services, expected to be approximately $7,500, and will reimburse Georgeson &   
Company for payments made to brokers and other nominees for their expenses in   
forwarding solicitation material. Further solicitation may be made by our       
directors, officers and employees personally, by telephone or otherwise, but    
they will not be specifically compensated for these services.                   

OTHER MATTERS                                                                   

    Pursuant to Virginia law and the Company's by-laws, no action may be taken
at the special meeting except for actions contemplated by this proxy statement, 
including the vote on the merger agreement and any motion to adjourn the special
meeting.                                                                        

SHAREHOLDER PROPOSALS                                                           

  If we complete the merger, we will no longer have public shareholders or
any public participation in our shareholder meetings. If we do not complete the 
merger, we intend to hold our next annual shareholder meeting on May 8, 2001. In
that case, if you are still a shareholder as of the record date of such meeting,
you would continue to be entitled to attend and participate in our shareholder  
meetings. Our by-laws require a shareholder who intends to nominate directors or
propose new business at any annual meeting to provide advance notice of such    
intended action as well as certain additional information. Assuming we hold our 
annual meeting on May 8, 2001, this by-laws provision requires shareholders to  
provide us with notice of their intent to nominate directors or propose new     
business at an annual meeting not less than 90 days prior to such annual        
meeting. In accordance with federal securities laws, proposals to be submitted  
by shareholders for consideration at our next annual meeting and inclusion in   
our 2001 annual proxy statement must have been received by us at our executive  
offices in St. Petersburg, Florida, not later than November 14, 2000. SEC rules 
establish standards as to which shareholder proposals are required to be        
included in a proxy statement for an annual meeting. We will only consider      
proposals for inclusion in our proxy statement for an annual meeting that       
satisfy the requirements of applicable SEC rules.                               

VOTING PROCEDURES                                                               

The shares represented by all valid proxies received will be voted as 
specified in the proxies. Where specific choices are not indicated, the shares  
represented by all valid proxies received will be voted "FOR" approval of the   
merger agreement as recommended by our Board of Directors. Except for PRIME Plan
and CEOP participants, a failure to vote or a vote to abstain will have the same
effect as a vote cast "AGAINST" approval of the merger agreement. In addition,  
brokers who hold ordinary shares as nominees will not have discretionary        
authority to vote such shares in the absence of instructions from the beneficial
owners and a broker non-vote will have the same effect as not voting for or a   
vote "AGAINST" the merger agreement.                                            

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WHERE YOU CAN FIND MORE INFORMATION 

    We file reports, proxy statements and other information with the SEC under
the Exchange Act. Please call the SEC at 1-800-SEC-0330 for further information 
on the public reference rooms. You may read and copy this information at the    
following locations of the SEC:                                                 

                                                                [Download Table]
                                                                              
 Public Reference Room  New York Regional Office     Chicago Regional Office  
450 Fifth Street, N.W.    7 World Trade Center           Citicorp Center      
       Room 1024               Suite 1300            500 West Madison Street  
Washington, D.C. 20549  New York, New York 10048           Suite 1400         
                                                  Chicago, Illinois 60661-2511

You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,    
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide  
web site that contains reports, proxy statements and other information about    
issuers, including the Company and General Dynamics, who file electronically    
with the SEC. The address of that site is http://www.sec.gov. You can also      
inspect reports, proxy statements and other information about us at the offices 
of The Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.  

The SEC allows us to "incorporate by reference" information into this 
document. This means that we can disclose important information to you by       
referring you to another document we filed with the SEC. The information        
incorporated by reference is considered to be a part of this document, except   
for any information that is superseded by information that is included directly 
in this document.                                                               

    This document incorporates by reference the documents listed below that we
have previously filed with the SEC. It contains important information about the 
Company and its financial condition.                                            

                                                                [Download Table]

SEC FILING                                                   PERIOD                 
----------                                                   ------                 
                                                                                    
Annual Proxy Statement...................................... Filed March 14, 2000   
Annual Report on Form 10-K.................................. Filed March 20, 2000   
Quarterly Report on Form 10-Q............................... Filed May 8, 2000      
Quarterly Report on Form 10-Q............................... Filed August 7, 2000   
Quarterly Report on Form 10-Q............................... Filed November 2, 2000 
Schedule 14A containing Rule 14a-12 material................ Filed November 9, 2000 
Current Report on Form 8-K.................................. Filed November 13, 2000

    We incorporate by reference additional documents that we may file with the
SEC between the date of this document and the date of the special meeting.      

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You can obtain any of the documents incorporated by reference in this 
document through us or from the SEC through the SEC's web site at the address   
provided above. Documents incorporated by reference are available from us       
without charge, excluding any exhibits to those documents unless the exhibit is 
specifically incorporated by reference into those documents. You can obtain     
documents incorporated by reference in this document by requesting them in      
writing to:                                                                     

Gail Wilson 
Corporate Communications
Primex Technologies, Inc. 
10101 Ninth Street North
St. Petersburg, Florida 33716 

  If you would like to request documents, please do so by [--] in order to
receive them before the special meeting.                                        

                                       By Order of the Board of Directors,

                  GEORGE H. PAIN
             Secretary

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                                                                      APPENDIX A

AGREEMENT AND PLAN OF MERGER
AMONG 
GENERAL DYNAMICS CORPORATION, 
MARS ACQUISITION CORPORATION
AND 
PRIMEX TECHNOLOGIES, INC. 

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TABLE OF CONTENTS 

                                                                [Download Table]

DESCRIPTION                                                                  PAGE
-----------                                                                  ----
                                                                                 
ARTICLE 1       THE MERGER..................................................  A-1
  Section 1.1   The Merger..................................................  A-1
  Section 1.2   The Closing.................................................  A-1
  Section 1.3   Effective Time..............................................  A-1
  Section 1.4   Effects of the Merger.......................................  A-1
  Section 1.5   Articles of Incorporation and Bylaws........................  A-1
  Section 1.6   Directors...................................................  A-1
  Section 1.7   Officers....................................................  A-2
  Section 1.8   Conversion of Company Common Stock..........................  A-2
  Section 1.9   Stock Options; Equity-Based Awards..........................  A-2
  Section 1.10  Conversion of Acquisition Corporation Common Stock..........  A-3
  Section 1.11  Dissenters' Rights..........................................  A-3
ARTICLE 2       STOCKHOLDER APPROVAL........................................  A-3
  Section 2.1   Company Actions.............................................  A-3
  Section 2.2   SEC Comments................................................  A-4
ARTICLE 3       PAYMENT.....................................................  A-4
  Section 3.1   Surrender of Certificates...................................  A-4
  Section 3.2   Paying Agent; Certificate Surrender Procedures..............  A-4
  Section 3.3   Transfer Books..............................................  A-4
  Section 3.4   Termination of Payment Fund.................................  A-5
  Section 3.5   Lost Certificates...........................................  A-5
  Section 3.6   No Rights as Stockholder....................................  A-5
  Section 3.7   Withholding.................................................  A-5
  Section 3.8   Escheat.....................................................  A-5
ARTICLE 4       REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............  A-5
  Section 4.1   Organization................................................  A-5
  Section 4.2   Authorization of Transaction; Enforceability................  A-6
  Section 4.3   Noncontravention; Consents..................................  A-6
  Section 4.4   Capitalization..............................................  A-6
  Section 4.5   Company Reports; Proxy Statement............................  A-7
  Section 4.6   No Undisclosed Liabilities..................................  A-8
  Section 4.7   Absence of Material Adverse Change..........................  A-8
  Section 4.8   Litigation and Legal Compliance.............................  A-8
  Section 4.9   Contract Matters............................................  A-8
  Section 4.10  Tax Matters................................................. A-10
  Section 4.11  Employee Benefit Matters.................................... A-11
  Section 4.12  Environmental Matters....................................... A-14
  Section 4.13  Title....................................................... A-15
  Section 4.14  Intellectual Property Matters............................... A-15
  Section 4.15  Labor Matters............................................... A-15
  Section 4.16  Rights Agreement............................................ A-15
  Section 4.17  State Takeover Laws......................................... A-16
  Section 4.18  Brokers' Fees............................................... A-16
  Section 4.19  Representations and Warranties.............................. A-16

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                                                                [Download Table]

DESCRIPTION                                                                  PAGE
-----------                                                                  ----
                                                                                 
ARTICLE 5       REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION.... A-16
  Section 5.1   Organization................................................ A-16
  Section 5.2   Authorization of Transaction; Enforceability................ A-16
  Section 5.3   Noncontravention; Consents.................................. A-17
  Section 5.4   Adequate Cash Resources..................................... A-17
  Section 5.5   No Capital Ownership in the Company......................... A-17
ARTICLE 6       COVENANTS................................................... A-17
  Section 6.1   General..................................................... A-17
  Section 6.2   Notices and Consents........................................ A-17
  Section 6.3   Interim Conduct of the Company.............................. A-17
  Section 6.4   Preservation of Organization................................ A-19
  Section 6.5   Full Access................................................. A-19
  Section 6.6   Notice of Developments...................................... A-19
  Section 6.7   Nonsolicitation of Acquisition Proposals.................... A-19
  Section 6.8   Indemnification............................................. A-20
  Section 6.9   Public Announcements........................................ A-21
  Section 6.10  Preservation of Programs and Agreements..................... A-21
  Section 6.11  Actions Regarding Antitakeover Statutes..................... A-22
  Section 6.12  Defense of Orders and Injunctions........................... A-22
  Section 6.13  Employee Benefit Matters.................................... A-22
  Section 6.14  Standstill Provisions....................................... A-23
ARTICLE 7       CONDITIONS TO THE CONSUMMATION OF THE MERGER................ A-23
  Section 7.1   Conditions to the Obligations of Each Party................. A-23
  Section 7.2   Conditions to the Obligation of the Company................. A-24
  Section 7.3   Conditions to the Obligation of the Parent Corporation and       
                the Acquisition Corporation................................. A-24
  Section 7.4   Frustration of Closing Conditions........................... A-24
ARTICLE 8       TERMINATION, AMENDMENT AND WAIVER........................... A-24
  Section 8.1   Termination................................................. A-24
  Section 8.2   Effect of Termination....................................... A-25
  Section 8.3   Termination Fee............................................. A-25
ARTICLE 9       MISCELLANEOUS............................................... A-26
  Section 9.1   Nonsurvival of Representations.............................. A-26
  Section 9.2   Remedies.................................................... A-26
  Section 9.3   Successors and Assigns...................................... A-26
  Section 9.4   Amendment................................................... A-26
  Section 9.5   Extension and Waiver........................................ A-26
  Section 9.6   Severability................................................ A-26
  Section 9.7   Counterparts................................................ A-27
  Section 9.8   Descriptive Headings........................................ A-27
  Section 9.9   Notices..................................................... A-27
  Section 9.10  No Third Party Beneficiaries................................ A-27
  Section 9.11  Entire Agreement............................................ A-28
  Section 9.12  Construction................................................ A-28
  Section 9.13  Submission to Jurisdiction.................................. A-28
  Section 9.14  Governing Law............................................... A-28

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TABLE OF DEFINED TERMS

                                                                [Download Table]
                                                                                
Acquisition Corporation..................................... Preamble           
Acquisition Proposal........................................ Section 6.7(b)     
Antitrust Laws.............................................. Section 4.3        
Certificate................................................. Section 3.1        
Closing..................................................... Section 1.2        
Closing Date................................................ Section 1.2        
Code........................................................ Section 4.10(f)    
Coli Policy................................................. Section 4.11(j)    
Company..................................................... Preamble           
Company Common Stock........................................ Section 1.8(a)     
Company Disclosure Letter................................... Article 4          
Company Material Adverse Effect............................. Section 4.1        
Company Plans............................................... Section 4.11(a)    
Company SEC Documents....................................... Section 4.5(a)     
Company Stock-Based Award................................... Section 1.9(a)(ii) 
Company Stockholder Approval................................ Section 2.1(a)     
Company Stockholders Meeting................................ Section 2.1(a)     
Confidentiality Agreement................................... Section 6.5        
Delaware Act................................................ Section 1.1        
Effective Time.............................................. Section 1.3        
Employee Pension Benefit Plan............................... Section 4.11(a)    
Employee Welfare Benefit Plan............................... Section 4.11(a)    
Employees................................................... Section 6.13(a)    
Environmental Law........................................... Section 4.12(b)    
ERISA....................................................... Section 4.11(a)    
Government Contract......................................... Section 4.9(b)     
Government Subcontract...................................... Section 4.9(b)     
Hazardous Materials......................................... Section 4.12(c)    
HSR Act..................................................... Section 4.3        
Indemnified Parties......................................... Section 6.8(a)     
Intellectual Property....................................... Section 4.14(b)    
Lien........................................................ Section 4.3        
Merger...................................................... Section 1.1        
Merger Consideration........................................ Section 1.8(a)     
Option Consideration........................................ Section 1.9(a)(iii)
Parent Corporation.......................................... Preamble           
Parent Corporation Disclosure Letter........................ Article 5          
Parent Corporation Material Adverse Effect.................. Section 6.2        
Paying Agent................................................ Section 3.1        
Payment Fund................................................ Section 3.2(a)     
Permitted Liens............................................. Section 4.13       
Proxy Statement............................................. Section 2.1(b)     
Rights Agreement............................................ Section 4.16       

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                                                                [Download Table]
                                                                             
SAR.........................................................  Section 1.9(a) 
SEC.........................................................  Section 2.1(b) 
Securities Act..............................................  Section 4.5(a) 
Securities Exchange Act.....................................  Section 1.9(d) 
Stock Option................................................  Section 1.9(a) 
Stock Plans.................................................  Section 1.9(a) 
Subsidiary..................................................  Section 1.8(c) 
Superior Proposal...........................................  Section 6.7(b) 
Surviving Corporation.......................................  Section 1.1    
Taxes.......................................................  Section 4.10(a)
Tax Returns.................................................  Section 4.10(a)
Termination Fee.............................................  Section 8.3(a) 
Third Party Acquisition.....................................  Section 8.3(b) 
Virginia Act................................................  Section 1.1    

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AGREEMENT AND PLAN OF MERGER

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

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

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

ARTICLE 1 

THE MERGER

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

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

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

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

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

  Section 1.6  Directors.  The directors of the Acquisition Corporation at
the Effective Time will be the initial directors of the Surviving Corporation   
and will hold office from the Effective Time until their respective             

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successors are duly elected or appointed and qualified in the manner provided in
the articles of incorporation and bylaws of the Surviving Corporation or as     
otherwise provided by law.                                                      

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

Section 1.8  Conversion of Company Common Stock.                      

      (a) Subject to the provisions of Section 1.8(b), each share of the
Company's Common Stock, par value $1.00 per share (the "Company Common
 Stock"), issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock held in the treasury of the
Company, held by any Subsidiary of the Company or held by the Parent  
     Corporation or any Subsidiary of the Parent Corporation) will, by virtue of
 the Merger and without any action on the part of the holder thereof, be
     canceled and converted into the right to receive, upon the surrender of the
   certificate formerly representing such share, $32.10 in cash (the "Merger
Consideration"). In the event that, subsequent to the date of this    
  Agreement but prior to the Effective Time, (i) the outstanding shares of
 Company Common Stock are changed into a different number of shares or a
  different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, combination, exchange,       
 recapitalization or similar transaction, or (ii) there is any dividend,
  other than the regular quarterly dividend of $0.075 per share of Company
 Common Stock, the Merger Consideration into which each share of Company
   Common Stock will be converted as a result of the Merger will be adjusted
appropriately.                                                        

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

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

Section 1.9  Stock Options; Equity-Based Awards                       

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

        (ii) The Company will take all necessary actions to cause each right
    of any kind, whether vested or unvested, contingent or accrued, to acquire
   or receive shares of Company Common Stock or to receive benefits measured
 by the value of a number of shares of Company Common Stock, that may be
held, awarded, outstanding, credited, payable or reserved for issuance
under the Stock Plans (including,                                     

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

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

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

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

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

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

ARTICLE 2 

STOCKHOLDER APPROVAL

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

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

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

         (c) include in the Proxy Statement (i) subject to Section 6.7(d), the
recommendation of the Board of Directors of the Company that the      
     stockholders of the Company vote in favor of the approval of this Agreement
     and the transactions contemplated hereby and (ii) the written opinion dated
     as of the date of this Agreement of Goldman, Sachs & Co., financial advisor
to the Board of Directors of the Company, to                          

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   the effect that as of the date of this Agreement the Merger Consideration
is fair to the stockholders of the Company, other than the Parent     
Corporation and its affiliates, from a financial point of view.       

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

ARTICLE 3 

PAYMENT 

     Section 3.1  Surrender of Certificates.  From and after the Effective Time,
each holder of a certificate that immediately prior to the Effective Time       
represented outstanding shares of Company Common Stock (a "Certificate") will be
entitled to receive in exchange therefor, upon surrender thereof to a paying    
agent (the "Paying Agent") to be designated by the Parent Corporation prior to  
the Effective Time with approval of the Company, which approval shall not be    
unreasonably withheld, the Merger Consideration into which the shares of Company
Common Stock evidenced by such Certificate were converted pursuant to the       
Merger. No interest will be payable on the Merger Consideration to be paid to   
any holder of a Certificate irrespective of the time at which such Certificate  
is surrendered for exchange.                                                    

Section 3.2  Paying Agent; Certificate Surrender Procedures.          

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

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

    Section 3.3  Transfer Books.  The stock transfer books of the Company will
be closed at the Effective Time and no transfer of any shares of Company Common 
Stock will thereafter be recorded on any of the stock transfer books. In the    
event of a transfer of ownership of any Company Common Stock prior to the       
Effective Time that is not registered in the stock transfer records of the      
Company at the Effective Time, the Merger Consideration into which such Company 
Common Stock has been converted in the Merger will be paid to the transferee in 
accordance with the provisions of Section 3.2(b) only if the Certificate is     
surrendered as provided in Section 3.2 and accompanied by all documents required
to evidence and effect such transfer and by evidence of payment of any          
applicable stock transfer taxes.                                                

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

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

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

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

Section 3.8  Escheat.  Neither the Parent Corporation, the Acquisition
Corporation nor the Company will be liable to any former holder of Company      
Common Stock for any portion of the Merger Consideration delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law. 
In the event any Certificate has not been surrendered for the Merger            
Consideration prior to the sixth anniversary of the Closing Date, or prior to   
such earlier date as of which such Certificate or the Merger Consideration      
payable upon the surrender thereof would otherwise escheat to or become the     
property of any governmental entity, then the Merger Consideration otherwise    
payable upon the surrender of such Certificate will, to the extent permitted by 
applicable law, become the property of the Surviving Corporation, free and clear
of all rights, interests and adverse claims of any person.                      

ARTICLE 4 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

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

     Section 4.1  Organization.  The Company and each of its Subsidiaries is (a)
a corporation duly organized and validly existing under the laws of the         
jurisdiction of its incorporation, (b) has all requisite power and authority to 
own, lease and operate its properties and to carry on its business as presently 
being conducted, and (c) is in good standing under the laws of the jurisdiction 
of its incorporation and is duly qualified to conduct business as a foreign     
corporation in each other jurisdiction where such qualification is required,    
except, in the case of clauses (b) and (c) above, where such failure,           
individually or in the aggregate, is not reasonably likely to have a material   
adverse effect on the business, financial condition, operations or results of   
operations of the Company and its Subsidiaries taken as a whole (other than     
changes or effects resulting from occurrences relating to the economy in        
general, the securities markets in general or the Company's industry in         

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general and not specifically relating to the Company) or the ability of the     
Company to consummate the Merger and to perform its obligations under this      
Agreement (a "Company Material Adverse Effect"). The Company has delivered to   
the Parent Corporation correct and complete copies of its articles of           
incorporation and bylaws, as presently in effect, and, upon request, will make  
available to the Parent Corporation after the date of this Agreement correct and
complete copies of the articles of incorporation and bylaws, as presently in    
effect, of each of its Subsidiaries.                                            

Section 4.2  Authorization of Transaction; Enforceability.  Subject to
obtaining the Company Stockholder Approval, the Company has full corporate power
and authority and has taken all requisite corporate action to enable it to      
execute and deliver this Agreement, to consummate the Merger and the other      
transactions contemplated hereby and to perform its obligations hereunder. The  
Board of Directors of the Company, at a meeting thereof duly called and held,   
has duly adopted resolutions, by more than the required vote, approving this    
Agreement, the Merger and the other transactions contemplated hereby,           
determining that the terms and conditions of this Agreement, the Merger and the 
other transactions contemplated hereby are in the best interests of the Company 
and its stockholders and recommending that the Company's stockholders approve   
this Agreement. The foregoing resolutions of the Board of Directors of the      
Company have not been modified, supplemented or rescinded and remain in full    
force and effect as of the date of this Agreement. In connection with its       
adoption of the foregoing resolutions, the Board of Directors of the Company    
received the written opinion of Goldman, Sachs & Co., financial advisor to the  
Board of Directors of the Company, dated as of the date of this Agreement, to   
the effect that, as of such date, the Merger Consideration is fair to the       
stockholders of the Company, other than the Parent Corporation and its          
affiliates, from a financial point of view. The foregoing opinion has not been  
modified, supplemented or rescinded prior to the date of this Agreement. The    
Company will deliver to the Parent Corporation promptly after the date of this  
Agreement correct and complete copies of the foregoing resolutions and opinion. 
Assuming due execution and authorization by the Parent Corporation and the      
Acquisition Corporation, this Agreement constitutes the valid and legally       
binding obligation of the Company, enforceable against the Company in accordance
with its terms and conditions.                                                  

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

Section 4.4  Capitalization.                                          

         (a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 60,000,000 shares of Company Common Stock and 
  10,000,000 shares of Preferred Stock, par value $1.00 per share, none of
which shares of Preferred Stock have been issued. As of the close of  
business on                                                           

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     November 3, 2000, 10,401,241 shares of Company Common Stock were issued and
outstanding, 129,480 shares of Company Common Stock were reserved for 
restricted stock grants or awards (including stock grants or awards to
 non-employee directors), no shares were held by the Company as treasury
     shares and 1,641,732 shares were reserved for issuance upon the exercise of
outstanding Stock Options. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable.                                 

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

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

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

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

Section 4.5  Company Reports; Proxy Statement.                        

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

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

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the extent required by changes in United States generally accepted    
   accounting principles or (iii) in the case of unaudited interim financial
statements, normal recurring year-end audit adjustments.              

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

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

    Section 4.6  No Undisclosed Liabilities.  The Company and its Subsidiaries
have no liabilities or obligations (whether absolute or contingent, liquidated  
or unliquidated, or due or to become due) except for (a) liabilities and        
obligations referenced (whether by value or otherwise) or reflected in the      
Company SEC Documents, (b) liabilities and obligations incurred in the ordinary 
course of business, consistent with past practice, since October 1, 2000, and   
(c) other liabilities and obligations which, individually or in the aggregate,  
are not reasonably likely to have a Company Material Adverse Effect.            

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

Section 4.8  Litigation and Legal Compliance.                         

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

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

Section 4.9 Contract Matters.                                         

        (a) Neither the Company nor any of its Subsidiaries is in default or
   violation of (and no event has occurred which with notice or the lapse of
time or both would constitute a default or violation) of any term,    
  condition or provision of any note, mortgage, indenture, loan agreement,
 other evidence of indebtedness, guarantee, license, lease, agreement or
   other contract, instrument or contractual obligation to which the Company
   or any of its Subsidiaries is a party or by which any of their respective
     assets is bound, except for any such default or failure which, individually
  or in the aggregate, is not reasonably likely to have a Company Material
Adverse Effect.                                                       

         (b) With respect to each contract, agreement, bid or proposal between
the Company or any of its Subsidiaries and any domestic or foreign    
government or governmental agency, including any facilities           

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

      (c) To the Company's knowledge, neither the Company nor any of its
Subsidiaries, any of the respective directors, officers, employees,   
     consultants or agents of the Company or any of its Subsidiaries is or since
January 1, 1997 has been under administrative, civil or criminal      
    investigation, indictment or information by any government or governmental
agency or any audit or an investigation by the Company or any of its  
   Subsidiaries with respect to any alleged act or omission arising under or
relating to any Government Contract or Government Subcontract.        

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

 (e) Since January 1, 1997, neither the Company nor any of its
     Subsidiaries has been debarred or suspended from participation in the award
   of contracts with the United States government or any other government or
 governmental agency (excluding for this purpose ineligibility to bid on
     certain contracts due to generally applicable bidding requirements). To the
Company's knowledge, there exists no facts or                         

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     circumstances that would warrant the institution of suspension or debarment
 proceedings or the finding of nonresponsibility or ineligibility on the
 part of the Company, any of its Subsidiaries or any of their respective
    directors, officers or employees. No payment has been made by or on behalf
     of the Company or any of its Subsidiaries in connection with any Government
   Contract or Government Subcontract in violation of applicable procurement
 laws, rules and regulations or in violation of, or requiring disclosure
    pursuant to, the Foreign Corrupt Practices Act, as amended, except for any
such violation or failure to disclose which, individually or in the   
aggregate, is not reasonably likely to have a Company Material Adverse
Effect.                                                               

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

Section 4.10  Tax Matters.                                            

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

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

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

     (d) Except for Liens for current Taxes not yet due and payable or
    which are being contested in good faith, there is no Lien affecting any of
the assets or properties of the Company or any of its Subsidiaries    

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 that arose in connection with any failure or alleged failure to pay any
Tax, except for Liens which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.          

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

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

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

Section 4.11  Employee Benefit Matters.                               

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

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

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

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

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

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

       (vi) the Company has made available and will continue to make
  available to the Parent Corporation, upon its request, correct and
  complete copies of the plan documents and most recent summary plan
    descriptions, the most recent determination letter received from the
Internal Revenue                                                

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 Service, the most recent Form 5500 Annual Report, the most recent
       actuarial report, the most recent audited financial statements, and all
related trust agreements, insurance contracts and other funding 
      agreements that implement such Company Plan (but excluding the failure
to make available any such document which is not material). The 
     valuation summaries provided by the Company to the Parent Corporation
       reasonably represent the assets and liabilities attributable to Company
     Plans calculated in accordance with the Company's past practices, but
     excluding any failure which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect;    

             (vii) no Company Plan which is an Employee Pension Benefit Plan has
      been amended in any manner which would require the posting of security
        under Section 401(a)(29) of the Code or Section 307 of ERISA, except any
      such action which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect;               

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

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

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

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

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

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

   (i) no such Employee Pension Benefit Plan (other than any
      Multiemployer Plan) has been completely or partially terminated (other
    than any termination which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect), no
    reportable event (as defined in Section 4043 of ERISA) for which the
     30-day reporting requirement has not been waived, as to which notices
would be required to be filed with the Pension Benefit Guaranty 
Corporation, has occurred but has not yet been so reported (but 
        excluding any failure to report which, individually or in the aggregate,
        is not reasonably likely to have a Company Material Adverse Effect), and
      no proceeding by the Pension Benefit Guaranty Corporation to terminate
      such Employee Pension Benefit Plan (other than any Multiemployer Plan)
has been instituted;                                            

        (ii) there have been no non-exempt prohibited transactions (as
  defined in Section 406 of ERISA and Section 4975 of the Code) with
  respect to such plan, no fiduciary has any liability for breach of
       fiduciary duty or any other failure to act or comply in connection with
   the administration or investment of the assets of such plan, and no
action, suit, proceeding, hearing or, to the                    

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        Company's knowledge, investigation with respect to the administration or
        the investment of the assets of such plan (other than routine claims for
    benefits) is pending or, to the Company's knowledge, threatened, but
     excluding, from each of the foregoing, events or circumstances which,
     individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect; and                            

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

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

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

      (e) No Company Plan contains any provision that would prohibit the
transactions contemplated by this Agreement, would give rise to any   
  severance, termination or other payments as a result of the transactions
  contemplated by this Agreement (alone or together with the occurrence of
   any other event), or would cause any payment, acceleration or increase in
benefits provided by any Company Plan as a result of the transactions 
  contemplated by this Agreement (alone or together with the occurrence of
    any other event), but excluding from this paragraph (e) any payment or any
     benefit, acceleration or increase to directors and employees, as to the top
    tier employees in the amounts (based on the Company's good faith estimates
   as of the date of this Agreement) and to the individuals specifically set
   forth in, and as to other employees in the aggregate amount (based on the
Company's good faith estimates as of the date of this Agreement)      
    specifically set forth in, the Company Disclosure Letter and excluding any
  non-employee or non-director payment or benefit acceleration or increase
which is not material.                                                

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

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

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

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

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

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

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

(iii) there are no loans against such policies.       

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Section 4.12  Environmental Matters.                                  

       (a) Except for matters which, individually or in the aggregate, are
  not reasonably likely to have a Company Material Adverse Effect: (i) the
  Company and its Subsidiaries are, and, to the Company's knowledge, since
January 1, 1997 have been in compliance in all respects with all      
   Environmental Laws (as defined in Section 4.12(b)) in connection with the
ownership, use, maintenance and operation of their owned, operated or 
  leased real property used by them and otherwise in connection with their
  operations, (ii) neither the Company nor any of its Subsidiaries has any
  liability, whether contingent or otherwise, under, or for any violations
 of, any Environmental Law, (iii) no notices of any violation or alleged
     violation of, non-compliance or alleged noncompliance with or any liability
  under, any Environmental Law have been received by the Company or any of
   its Subsidiaries since January 1, 1997 that are currently outstanding and
unresolved as of the date of this Agreement, and, to the Company's    
   knowledge, there are no other outstanding notices that are unresolved for
which the Company or any of its Subsidiaries have responsibility, (iv)
     there are no administrative, civil or criminal writs, injunctions, decrees,
  orders or judgments outstanding or any administrative, civil or criminal
actions, suits, claims, proceedings or, to the Company's knowledge,   
     investigations pending or, to the Company's knowledge, threatened, relating
   to compliance with or liability under any Environmental Law affecting the
  Company or any of its Subsidiaries, (v) the Company and its Subsidiaries
  possess valid environmental permits required by any Environmental Law in
     connection with the ownership, use, maintenance and operation of its owned,
operated and leased real property, and (vi) to the knowledge of the   
    Company, no material changes or alterations in the practices or operations
of the Company or any of its Subsidiaries as presently conducted are  
     anticipated to be required in the future in order to permit the Company and
  its Subsidiaries to continue to comply in all material respects with all
     applicable Environmental Laws. The Company Disclosure Letter sets forth the
  amount reserved as of October 1, 2000 by the Company for compliance with
all Environmental Laws.                                               

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

      (c) The term "Hazardous Materials" as used in this Agreement means
     each and every element, compound, chemical mixture, contaminant, pollutant,
material, waste or other substance (i) that is defined, determined or 
  identified as hazardous or toxic under any Environmental Law or (ii) the
spilling, leaking, pumping, pouring, emitting, emptying, discharging, 
injecting, storing, escaping, leaching, dumping, discarding, burying, 
   abandoning or disposing into the environment of which is prohibited under
  any Environmental Law. Without limiting the generality of the foregoing,
the term will include (i) "hazardous substances" as defined in the    
  Comprehensive Environmental Response, Compensation, and Liability Act of
1980, and regulations promulgated thereunder, each as amended, (ii)   
    "extremely hazardous substance" as defined in the Superfund Amendments and
   Reauthorization Act of 1986, or Title III of the Superfund Amendments and
Reauthorization Act and regulations promulgated thereunder, each as   
     amended, (iii) "hazardous waste" as defined in the Solid Waste Disposal Act
  and regulations promulgated thereunder, each as amended, (iv) "hazardous
     materials" as defined in the Hazardous Materials Transportation Act and the
regulations promulgated thereunder, each as amended,                  

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(v) "chemical substance or mixture" as defined in the Toxic Substances
  Control Act and regulation promulgated thereunder, each as amended, (vi)
petroleum and petroleum products and byproducts and (vii) asbestos.   

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

Section 4.14  Intellectual Property Matters.                          

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

         (b) The term "Intellectual Property" as used in this Agreement means,
collectively, patents, patent disclosures, trademarks, service marks, 
logos, trade names, copyrights and mask works, and all registrations, 
     applications, reissuances, continuations, continuations-in-part, revisions,
     extensions, reexaminations and associated good will with respect to each of
the foregoing, computer software (including source and object codes), 
computer programs, computer data bases and related documentation and  
materials, data, documentation, trade secrets, confidential business  
     information (including ideas, formulas, compositions, inventions, know-how,
manufacturing and production processes and techniques, research and   
    development information, drawings, designs, plans, proposals and technical
data, financial, marketing and business data and pricing and cost     
   information) and all other intellectual property rights (in whatever form
or medium).                                                           

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

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

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

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

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

ARTICLE 5 

REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION

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

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

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

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

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

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

ARTICLE 6 

COVENANTS 

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

Section 6.2  Notices and Consents.  Each of the parties prior to the  
Closing Date will give all notices to third parties and governmental entities   
and will use its respective best efforts to obtain all third party and          
governmental consents and approvals that are required in connection with the    
transactions contemplated by this Agreement. Within five business days following
the execution and delivery of this Agreement, each of the parties will file a   
Notification and Report Form and related material with the Federal Trade        
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, will use its respective best efforts to obtain early         
termination of the applicable waiting period and will make all further filings  
pursuant thereto or any other Antitrust Law that may be necessary, proper or    
advisable. The foregoing two sentences will not be deemed to require the Parent 
Corporation to enter into any agreement, consent decree or other commitment     
requiring the Parent Corporation or any of its Subsidiaries to divest or hold   
separate any assets (including any assets of the Company or any of its          
Subsidiaries) or to take any other action which, individually or in the         
aggregate, is reasonably likely to have a material adverse effect on the        
business, financial condition, operations or results of operations of the Parent
Corporation and its Subsidiaries taken as a whole (other than changes or effects
resulting from occurrences relating to the economy in general, the securities   
markets in general or the Parent Corporation's industry in general and not      
specifically relating to the Parent Corporation) (a "Parent Corporation Material
Adverse Effect").                                                               

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

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business, consistent with past practice, and in accordance with such covenant   
will not, and will not cause or permit any of its Subsidiaries to:              

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

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

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

(d) merge or consolidate with any entity;                   

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

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

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

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

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

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

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

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

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

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

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

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

(q) commit to do any of the foregoing.                      

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

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

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

Section 6.7  Nonsolicitation of Acquisition Proposals.                

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

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

        (c) The term "Superior Proposal" as used in this Agreement means any
  bona fide proposal, in writing, made by a party that (i) if consummated,
    would result in such party acquiring beneficial ownership of more than 50%
    of the consolidated assets (determined based on book or fair market value)
of, or more than 50% of the voting power in, the Company and its      
Subsidiaries, taken as a whole, pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of  
assets, tender or exchange offer or similar transaction involving the 
Company or any of its Subsidiaries, including any single or multi-step
    transaction or series of related transactions that is structured to permit
such party to acquire such beneficial ownership, and (ii) the Board of
     Directors of the Company, after consultation with its outside legal counsel
    and financial advisers, determines in its good faith business judgment (x)
  is superior from a financial view to the stockholders of the Company and
(y) is reasonably capable of being completed, taking into account all 
legal, financial, regulatory and other aspects of such proposal.      

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

Section 6.8  Indemnification.                                         

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

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

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

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the most advantageous policies of directors and officers liability    
insurance and fiduciary liability insurance obtainable for an annual  
premium equal to the foregoing amount.                                

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

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

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

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

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

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

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

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the new agreement and the anticipated detriments of such termination, is        
reasonably likely to have a Company Material Adverse Effect.                    

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

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

Section 6.13  Employee Benefit Matters.                               

         (a) Subject to applicable collective bargaining agreements, until (or
    in respect of the period ending on ) December 31, 2001, Parent Corporation
    shall cause to be maintained for the employees and former employees of the
     Company and its Subsidiaries (the "Employees"), benefits and benefit levels
    which are, in the aggregate, substantially similar to benefits and benefit
    levels as provided by the Company and its Subsidiaries through any Company
    Plan that is an Employee Pension Benefit Plan, an Employee Welfare Benefit
Plan, or a fringe benefit program (providing, for example, sick pay,  
vacation pay and tuition reimbursement) prior to the Effective Time.  
 Notwithstanding the foregoing, without limitation, this Section 6.13(a)
    shall not apply to any bonus, incentive, or equity-based compensation plan
  or arrangement. Further, subject to Section 6.3(k), this Section 6.13(a)
   shall not prohibit any change in benefits or benefit levels adopted prior
   to the Effective Time and effective on or after the Effective Time or any
   other change in benefits (such as a change in vendor, co-pay, deductible,
 lifetime maximum, etc.) that would have been made by the Company in the
   ordinary course during the 2001 year to reflect market conditions for the
provision of these benefits.                                          

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

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

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

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

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

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

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

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

ARTICLE 7 

CONDITIONS TO THE CONSUMMATION OF THE MERGER

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 8 

TERMINATION, AMENDMENT AND WAIVER 

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

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

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

        (c) by the Parent Corporation if (i) the Company has breached any of
   its representations, warranties or covenants set forth in this Agreement,
     which breach (A) would give rise to the failure of a condition set forth in
Section 7.3 and (B) is not cured within 30 days after the date written
  notice of such breach is given by the Parent Corporation to the Company,
(ii) the Board of Directors of the Company                            

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  has withdrawn or amended in any manner adverse to the Parent Corporation
and the Acquisition Corporation its recommendation and approval of the
   Merger, (iii) the Company Stockholder Approval has not been obtained at a
meeting duly called for such purpose or (iv) the Merger has not been  
consummated on or before March 31, 2001; or                           

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

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

Section 8.3  Termination Fee.                                         

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

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

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

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

and 

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

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

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

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

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

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

ARTICLE 9 

MISCELLANEOUS 

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

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

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

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

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

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

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

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

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

                                                                [Download Table]


                                                                          
If to the Parent                                                          
Corporation:                General Dynamics Corporation                  
                            3190 Fairview Park Drive                      
                            Falls Church, VA 22041-4523                   
                            Attention:       David A. Savner, Esq.        
                                             Senior Vice President and    
                                             General Counsel              
                            Facsimile No.:   (703) 876-3125               
With a copy (which will                                                   
not constitute notice) to:  Jenner & Block                                
                            One IBM Plaza, 40th Floor                     
                            Chicago, IL 60611                             
                            Attention:       Charles J. McCarthy, Esq.    
                            Facsimile No.:   (312) 840-7745               

If to the Company:          Primex Technologies, Inc.                     
                            10101 9th Street North                        
                            St. Petersburg, FL 33716                      
                            Attention:       George H. Pain, Esq.         
                                             Vice President and           
                                             General Counsel              
                            Facsimile No.:   (727) 578-8286               
With a copy (which will                                                   
not constitute notice) to:  Cravath, Swaine & Moore                       
                            825 Eighth Avenue                             
                            New York, NY 10019                            
                            Attention:       Robert I. Townsend, III, Esq.
                            Facsimile No.:   (212) 474-3700               

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

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

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

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

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

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

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

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

                                GENERAL DYNAMICS CORPORATION

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

                                MARS ACQUISITION CORPORATION

                            By: /s/ ARTHUR J. VEITCH
                                            ------------------------------------
                        Arthur J. Veitch
                 President

                             PRIMEX TECHNOLOGIES, INC.

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

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                                                                      APPENDIX B

[Form of Fairness Opinion]

November 9, 2000                                                                

Board of Directors                                                              
Primex Technologies, Inc.                                                       
10101 Ninth Street North                                                        
St. Petersburg, FL 33716                                                        

Gentlemen:                                                                      

You have requested our opinion as to the fairness from a financial point of view
to the holders (other than General Dynamics Corporation ("Parent") and its      
subsidiaries) of the outstanding shares of Common Stock, par value $1.00 per    
share (the "Shares"), of Primex Technologies, Inc. (the "Company") of the $32.10
per Share in cash proposed to be paid by Parent in the Merger (as defined below)
pursuant to the Agreement and Plan of Merger, dated as of November 9, 2000,     
among Parent, Mars Acquisition Corporation ("Mars"), a wholly-owned subsidiary  
of Parent, and the Company (the "Agreement"). The Agreement provides for a      
merger of Mars with and into the Company (the "Merger") pursuant to which each  
outstanding Share (other than Shares owned by Parent or any subsidiary of Parent
or the Company) will be converted into the right to receive $32.10 in cash.     

Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with  
mergers and acquisitions, negotiated underwritings, competitive biddings,       
secondary distributions of listed and unlisted securities, private placements   
and valuations for estate, corporate and other purposes. We are familiar with   
the Company, having acted as its financial advisor in connection with, and      
having participated in certain of the negotiations leading to, the Agreement. We
also have provided certain investment banking services to Parent from time to   
time, including having acted as agent on Parent's commercial paper program and  
its common stock repurchase plan and as financial advisor to Parent in          
connection with its acquisitions of Lockheed Martin Corporation's Armament and  
Defense Division in January 1997, Lucent Technologies' Advanced Technology      
Systems division in October 1997 and Ceridian Corporation's Computing Devices   
International division in January 1998. We may also provide investment banking  
services to Parent in the future. Goldman, Sachs & Co. provides a full range of 
financial advisory and securities services and, in the course of its normal     
trading activities, may from time to time effect transactions and hold          
securities, including derivative securities, of the Company or Parent for its   
own account and for the accounts of customers.                                  

In connection with this opinion, we have reviewed, among other things, the      
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the four years ended December 31, 1999; certain interim reports to  
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other   
communications from the Company to its stockholders; and certain internal       
financial analyses and forecasts for the Company prepared by its management. We 
also have held discussions with members of the senior management of the Company 
regarding their assessment of the past and current business operations,         
financial condition and future prospects of the Company. In addition, we have   
reviewed the reported price and trading activity for the Shares, compared       
certain financial and stock market information for the Company with similar     
information for certain other companies the securities of which are publicly    
traded, reviewed the financial terms of certain recent business combinations in 
the aerospace and defense industry specifically and in other industries         
generally and performed such other studies and analyses as we considered        
appropriate.                                                                    

We have relied upon the accuracy and completeness of all of the financial and   
other information discussed with or reviewed by us and have assumed such        
accuracy and completeness for purposes of rendering this opinion. In addition,  
we have not made an independent evaluation or appraisal of the assets and       
liabilities of the Company or any of its subsidiaries and we have not been      
furnished with any such evaluation or appraisal.                                

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Primex Technologies, Inc.                                                       
November 9, 2000                                                                
Page  2                                                                         

We solicited preliminary indications of interest from potential buyers of the   
Company through April 2000. Subsequent to this process, we were not requested to
solicit, and did not solicit, interest from other parties with respect to the   
acquisition of or other business combination with the Company. Our advisory     
services and the opinion expressed herein are provided for the information and  
assistance of the Board of Directors of the Company in connection with its      
consideration of the transaction contemplated by the Agreement and such opinion 
does not constitute a recommendation as to how any holder of Shares should vote 
with respect to the Agreement and the transactions contemplated thereby.        

Based upon and subject to the foregoing and based upon such other matters as we 
consider relevant, it is our opinion that as of the date hereof the $32.10 per  
Share in cash to be received by the holders (other than Parent and its          
subsidiaries) of Shares pursuant to the Agreement is fair from a financial point
of view to such holders.                                                        

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[FORM OF PROXY] 

PRIMEX TECHNOLOGIES, INC. 

SPECIAL MEETING OF SHAREHOLDERS 

[--], 2001

PROXY 

THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PRIMEX
TECHNOLOGIES, INC. FOR
THE SPECIAL MEETING OF SHAREHOLDERS ON [--], 2001 

 The undersigned appoints [--], [--] and [--], and each of them, with full
power of substitution in each, the proxies of the undersigned, to represent the 
undersigned and vote all shares of Primex Technologies, Inc. common stock which 
the undersigned may be entitled to vote at the Special Meeting of Shareholders  
to be held on [--], 2001, and at any adjournment or postponement thereof, as    
indicated on the reverse side, hereby revoking all proxies heretofore given with
respect to such shares.                                                         

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE PROPOSAL.                                                      

(Continued, and to be signed and dated, on the reverse side.)                   

                           PRIMEX TECHNOLOGIES, INC.
      [--]

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To approve an Agreement and Plan of Merger, providing for the merger of Mars    
Acquisition Corporation with and into the Company, with the Company being the   
surviving corporation.                                                          

  FOR [ ]   AGAINST [ ]   ABSTAIN [ ]         PLAN TO ATTEND:   YES [ ]   NO [ ]

                                            In their discretion, the Proxies
                                            are authorized to vote upon such
                                              other matters as may properly come
                                     before the meeting or any
                                       adjournment or postponement
                    thereof.

                                                                [Download Table]
                                               
Change of address or comments: Mark here       
and indicate changes to the name and           
address as printed to the left.             [ ]

                                                   The signature on this Proxy
                                                 should correspond exactly
                                                   with the shareholder's name
                                                  as printed to the left. In
                                                    the case of joint tenancies,
                                                    co-executors or co-trustees,
                                                 both should sign. Persons
                                            signing as attorney,
                                                executor, administrator,
                                                  trustee or guardian should
                                              give their full title.

                                                    Dated: ---------------, 200_
                                       ---------------
                                                   Signature

                                                                [Download Table]
                                                                               
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE              VOTES MUST BE     
ENCLOSED POSTAGE PREPAID ENVELOPE.)                          INDICATED (X) IN  
                                                             BLACK OR BLUE INK.

Dates Referenced Herein   and   Documents Incorporated by Reference

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