Andal Corp – ‘10-K’ for 9/30/97

As of:  Tuesday, 12/23/97   ·   For:  9/30/97   ·   Accession #:  70262-97-11   ·   File #:  1-06856

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SECURITIES AND EXCHANGE COMMISSION                
Washington, D. C.   20549                 

FORM 10-K                 
(MARK ONE)                                                                      

X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE   
ACT OF 1934 [FEE REQUIRED]                                            

For the fiscal year ended  September 30, 1997                                   

OR                

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]                                

For the transition period from        to                                        

Commission file number  1-6856                                        

ANDAL CORP.                 
(Exact name of registrant as specified in its charter)                

New York                                          13-2571394                    
(State or other jurisdiction of incorporation     (I. R. S. employer ID no.)    
or organization)                                                                

909 Third Avenue, New York, New York         10022                              
(Address of principal executive offices)     (Zip code)                         

Registrant's telephone number, including area code (212) 376-5545               

Securities registered pursuant to section 12(b) of the Act:                     

None                
(Title of class)                

Securities registered pursuant to Section 12(g) of the Act:                     

 Title of each class           Name of each exchange on which registered

Common Stock, $1.00 par value      None                                         

Indicate by check mark whether the registrant:  (1) has filed all     
reports required to be filed by Section 13 or 15(d) of the Securities Exchange  
Act of 1934 during the preceding 12 months (or for such shorter period that     
the registrant was required to file such reports), and (2) has been subject to  
such filing requirements for the past 90 days.  Yes    X    No                  

Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be contained,  
to the best of registrant's knowledge, in definitive proxy or information       
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K.  [ X  ]                                            

    Nonaffiliates of the Registrant hold approximately 52% of the Registrant's
common stock.  The aggregate market value of the shares of common equity held by
nonaffiliates of the Registrant as of December 12, 1997 was approximately       
$5,600,000.                                                                     

As of December 12, 1997, the number of outstanding shares of          
Registrant's Common Stock was 433,029 shares.                                   

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PART I                                                                          

Item 1.   Business                                                              

GENERAL                                                                         

 During the year ended September 30, 1997, Andal Corp. (the "Company" or
"Andal"), through its majority-owned Multi-Arc Inc. subsidiary ("Multi-Arc"),   
had been engaged in surface enhancement which is the utilization of advanced    
technologies to apply thin-film coatings of various metals, metal compounds,    
and other materials to base materials to enhance their hardness, wear and       
corrosion resistance, lubricity, and appearance.                                

On September 25, 1997, the Company's shareholders at a meeting of     
shareholders approved an Agreement and Plan of Merger (the "Agreement") dated   
as of June 9, 1997, between Bernex Inc. ("Bernex"), M-A Acquisition Corp.,      
Multi-Arc, and the Company.  The Agreement, in essence, represented a contract  
to sell Multi-Arc to Bernex for cash.  Bernex and M-A Acquisition Corp. are     
indirectly owned subsidiaries of Saurer AG, a publicly traded Swiss             
corporation.                                                                    

 The sale of Multi-Arc was completed on September 30, 1997.  Pursuant to
the Agreement, M-A Acquisition Corp. was merged into Multi-Arc; and Multi-Arc   
became the surviving corporation and also became wholly-owned by Bernex.  The   
Company recorded a gain of approximately $8.8 million from the sale.            

As a result of the merger, the Company received net proceeds of       
approximately $17.8 million of cash and may be entitled to receive additional   
cash from three escrow funds which were established at the time of closing, as  
described below.  As a result of the sale, the Company has no operating         
business.  The directors of the Company are currently considering whether the   
Company should be liquidated, function as an investment company, or seek to     
enter some other business activity.  A decision on the future direction of the  
Company is expected  to be made during fiscal 1998.                             

Net Proceeds from the Sale of Multi-Arc                                         

The 100% ownership of Multi-Arc was sold to Bernex for $29,200,000 in 
cash.  At the time of closing, Andal owned approximately 84% of Multi-Arc.  A   
reconciliation of Andal's 84% share of the gross proceeds to the amount of      
cash actually received by Andal at the closing is as follows:                   

                                                               000's

Andal share of gross proceeds--                                       
    approximately 84% ownership                              $24,517

Plus:                                                                 
Net payment received from Multi-Arc stock option holders    
    and minority shareholders pursuant to the Agreement          839

Less:                                                                 
Payments to Escrow accounts                                 
          Main Escrow Fund                                     (2,451)
          Tax Escrow Fund                                        (955)
          Expense Escrow Fund                                    (630)
                                                              --------
Net proceeds before amounts paid at closing                    21,320 

     Bonus payments to Multi-Arc management                    (1,965)

     Repayment of intercompany indebtedness to Multi-Arc       (1,390)

     Repayment of shareholder loan                                (97)
                                                              --------
Net cash received by Andal                                    $17,868 
                                                              ========
The Main Escrow Fund                                                            

  An escrow fund for a portion of the selling price of Multi-Arc, of which
Andal's share is approximately $2,451,000, was established at the closing to    
secure Bernex against breaches of representations and warranties and the        
covenants made by Multi-Arc and the Company in connection with the Agreement.   
This escrow fund (the "Main Escrow") may also be a source for payment of        
certain indemnifications for environmental and tax obligations, and also for    
payment to Multi-Arc minority shareholders who exercise their appraisal rights  
and obtain an award in excess of their pro rata share of the agreed to selling  
price of Multi-Arc.  Certain types of claims against the Main Escrow would      
have to aggregate $700,000 before such claims would be eligible for             
reimbursement from the fund, and then only the amount over $700,000 would be    
eligible.  By the terms of the Agreement, the Main Escrow terminates on March   
31, 1999.                                                                       

While the Company believes that its representations and warranties    
concerning Multi-Arc are accurate and that adequate provision has been made     
for all indemnifications, the Company has deferred recognition of the gain      
equal to the $2,451,000 until such time as the cash has been received.          

The Tax Escrow Fund                                                             

A second escrow fund (the "Tax Escrow") was established under the     
Agreement out of funds which would otherwise have been payable to Andal in the  
amount of $955,000 to indemnify Bernex against certain tax obligations of       
Andal to a taxing authority which have been assessed and which were contested   
by Andal and not paid.  If, by July 31, 2002, these tax claims have not been    
resolved entirely, Andal has agreed to pay $300,000 to Bernex out of this       
fund.  Under certain circumstances, Andal is entitled to use this fund for      
payment of certain taxes.                                                       

  The Company has established reserves in its financial statements related
to this tax obligation, and the Company has determined that it is not           
reasonably possible that the resolution of this contingency will have a         
material adverse impact upon income in future periods.  Nevertheless, the       
Company believes it prudent to defer recognition of the gain equal to this Tax  
Escrow Fund until such time as it is received in cash.                          

The Expense Escrow Fund                                                         

At the closing, an escrow fund of $750,000 (the "Expense Escrow") was 
established out of the proceeds otherwise payable to Andal and the minority     
shareholders of Multi-Arc to pay for the legal and other expenses of Andal and  
Multi-Arc relating to the sale.  At and soon after closing, a substantial       
portion of this fund was disbursed in payment of such expenses.  Recovery from  
the fund will not be material and will be recognized as income when received.   

  The escrow funds are in the possession of a commercial bank which serves
as escrow agent and are being invested in a money market fund pending their     
resolution.                                                                     

Election of Officers and Office Relocation                                      

    Effective with the sale of Multi-Arc, Messrs. Peter D. Flood and Walter N.
Kreil, Jr., Chairman and Chief Executive Officer, and Vice President and Chief  
Financial Officer, respectively, of the Company and of Multi-Arc, resigned as   
officers and directors of the Company, and the Company's corporate office was   
relocated back to its former premises in New York City.  On October 1, 1997,    
the remaining directors, consisting of Andrew J. Frankel and Alan N. Cohen,     
appointed new officers; and the directors resolved that the Company should      
once again absorb all of the costs of the New York City premises, including     
the cost of executive, administrative, and secretarial services, except that    
Messrs. Frankel and Cohen agreed to reimburse the Company for 25% of the lease, 
utility, office expense, and other costs to maintain the New York premises      
(excluding salary costs of all Company personnel).  This reimbursement          
represents a reimbursement for the personal use of the Company's facility by    
Messrs. Frankel and Cohen.                                                      

   The following officers were elected at the October 1, 1997 meeting of the
Board:                                                                          

 Andrew J. Frankel        Chairman and Chief Executive Officer
Alan N. Cohen            President                          
   Michael S. Huber         Senior Vice President, Chief Financial
            Officer, and Treasurer
Mary Lou Holcombe        Vice President and Secretary       

 See Item 10--Directors and Executive Officers of the Company, Item 11--
Executive Compensation, and Item 12--Security Ownership of Certain Beneficial   
Owners and Management included elsewhere herein.                                

Stockholders' Appraisal Rights                                                  

 In connection with the sale of Multi-Arc, certain shareholders of Andal
had indicated an interest in selling their shares in the Company or seeking     
appraisal rights, including the Small Business Administration of the Federal    
Government (the "SBA"), the beneficial owner of 8,672 shares of the Company's   
common stock.  In lieu of appraisal, on October 1, 1997, the Company purchased  
these shares from the SBA at a price of $25.00 per share.  Also, on October 1,  
1997, the directors of the Company authorized the Company to make additional    
incidental stock purchases from non-affiliates who make unsolicited inquiries   
at a price not to exceed $25.00 per share, so long as the aggregate purchases   
made would not reach a level where any such purchases could be considered part  
of a "going private transaction."  During the period October 1, 1997 through    
December 7, 1997, 14,330 shares were purchased by the Company.  The Company     
ceased purchasing its shares on December 8, 1997.  See Item 5--"Market for the  
Company's Common Equity and Related Stockholder Matters."                       

Item 2.   Properties                                                            

  The Company's executive office and only location is at 909 Third Avenue,
New York, New York.  The office occupies approximately 4,000 square feet of     
space under a lease requiring an annual rental payment of approximately         
$80,000.  The lease expires on September 29, 1998 and cannot be renewed.        

Item 3.   Legal Proceedings                                                     

 The Company is aware of several lawsuits which are pending involving it
or its inactive subsidiaries.  In the opinion of the Company's management,      
these lawsuits will not result in any material adverse effect on the Company's  
consolidated financial condition.                                               

Item 4.   Submission of Matters to a Vote of Security Holders                   

    An annual meeting of shareholders of Andal Corp. was held on September 22,
1997 and adjourned until September 25, 1997.  At this meeting, an election of   
directors was held and the approval of shareholders was sought of an Agreement  
and Plan of Merger with Bernex, Inc., M-A Acquisition Corp., and Multi-Arc Inc. 

 Proxies for this meeting were solicited pursuant to Regulation 14A, and
there was no opposing solicitation.  At the meeting of shareholders, the        
following directors of the Company were elected by the following votes:         

Director                      For                 Withheld  

Andrew J. Frankel             330,973             11,221    
Alan N. Cohen                 330,973             11,219    
Peter D. Flood                330,991             11,203    
Walter N. Kreil, Jr.          330,996             11,198    

Mr. Flood and Mr. Kreil resigned as directors on September 30, 1997.  

With respect to the approval of the Agreement and Plan of Merger, the 
Agreement was approved by the following vote:                                   

For       Against        Abstained      Brokers' Non-Vote             

332,341   9,835          18             0                             

PART II                 

Item 5.   Market for the Company's Common Equity and Related Stockholder Matters

     The Company's common stock was delisted from the American Stock Exchange in
October 1992.  During the period from November 1992 until September 1995, the   
Company's common stock was quoted on the NASDAQ OTC Bulletin Board by a market  
maker.  During the period September 1995 through September 1997, the Company's  
common stock had not been quoted on the NASDAQ OTC Bulletin Board or on any     
other established public market.  During the period that the Company's common   
stock was quoted on the NASDAQ OTC Bulletin Board, transactions in the stock    
were limited and sporadic and, in the Company's opinion, did not constitute an  
established public trading market.  The Company was made aware of the existence 
of a market-making activity in the Company's common stock on December 7, 1997;  
and, on December 8, 1997, the Board of Directors terminated its authorization   
of unsolicited stock purchases.  During the period October 1 through December   
12, 1997, the market maker has quoted a bid/ask range of $20--$30 per share.    
See Item 1--"Business--Stockholders' Appraisal Rights" for a discussion of      
recent purchases of the Company's common stock by the Company.                  

    As of December 12, 1997, the number of registered holders of the Company's
common stock was 1,108.                                                         

The Company has never paid a cash dividend on its common stock.       

Item 6.   Selected Financial Data                                               

The following table sets forth selected financial data as of          
the fiscal year-end of each respective year and for the year then               
ended:                                                                          

                 September 30,
                           1997     1996     1995     1994      1993
                          (Thousands of dollars, except per share amounts)

Operating revenues                  0        0        0        0         0      
Operating income (loss)          (417)  (1,953)  (1,333)  (1,768)   (1,375)     
Income (loss) from                                                              
continuing operations       (423)   3,390   (2,129)  (2,435)   (1,708)
Income (loss) from                                                              
discontinued operations   10,081    4,995    4,015    3,556       748 
Net income (loss)               9,658    8,385    1,886   (1,121)     (960)     
Income (loss) per share from                                                    
continuing operations      (0.95)    9.98    (6.45)   (7.38)    (5.18)
Net income (loss) per share     21.59    24.69     5.72    (3.40)    (2.91)     
Average number of common                                                        
shares outstanding (000)     447      340      330      330       330 
Total assets                   21,775    9,488    6,420    6,521     7,441      
Long-term obligations                                                           
(excluding current                                                    
maturities)                    0        0    6,364    7,364    14,720 
Shareholders' equity                                                            
(deficit)                 14,513    4,855   (5,098)  (6,984)   (5,863)
Book value (deficit)                                                            
per share at year end      32.44    10.85   (15.46)  (21.17)   (17.77)

   See Notes 2 and 6 of the Notes to Consolidated Financial Statements for a
description of the income (loss) from discontinued operations recorded in 1997, 
1996, and 1995.  Income from discontinued operations in 1994 and 1993 resulted  
from the operations of the Company's discontinued Multi-Arc business, after     
deduction of $419,000 and $527,000, respectively, of legal expenses and         
settlements on litigation related to the Company's discontinued construction    
operations.  The 1994 income from discontinued operations also included         
$69,000 of gain relating to the divestiture of Olsher Metals Corporation.       

Item 7.   Management's Discussion and Analysis of Financial Condition and       
Results of Operations                                       

Results of Operations                                                 

1997 vs. 1996                                                         

General and administrative expense declined from $1,953,000 in fiscal 
1996 to $417,000 in fiscal 1997.  The 1996 fiscal year expense included one-    
time charges of $441,000 of retirement costs and accruals for management        
signing bonuses of $300,000.  The remainder of the decline in expense from      
1996 to 1997 of approximately $800,000 resulted from a reduction of executive   
and administrative salaries, insurance costs, occupancy costs, and office       
expenses; all such reductions resulting from the retirement of the Company's    
then Chief Executive Officer and its then President in August of 1996 and the   
relocation of the Company's executive office.  In addition, the fiscal 1997 base
compensation of the Company's President and Chief Financial Officer was borne   
by Multi-Arc.  In 1996 the Company recorded a $6,009,000 one-time gain from     
the sale of its 61st Street property.  Interest expense in fiscal 1996 was      
$747,000, compared with only $6,000 in fiscal 1997, as the Company was able to  
repay substantially all of its debt by the end of fiscal 1996 with the          
proceeds from the sale of the 61st Street property.  Income from discontinued   
operations in fiscal 1996 was $4,995,000, representing $4,761,000 of equity in  
earnings of Multi-Arc (including a tax benefit of approximately $2,300,000      
relating to the recognition of the cumulative net benefit of net operating      
loss carryforwards) plus $234,000 from the Company's discontinued construction  
operations.  In fiscal 1997 the Company's equity in earnings in Multi-Arc       
declined to $1,337,000 as a result of a softening in Multi-Arc's business       
during the year; and the Company recorded a gain of $8,734,000 from the sale    
of Multi-Arc.                                                                   

1996 vs. 1995                                                         

General and administrative expense increased from $1,333,000 in fiscal
1995 to $1,953,000 in fiscal 1996, principally as a result of the one-time      
charges discussed above.  Interest expense was $833,000 in fiscal 1995,         
compared with $747,000 in fiscal 1996, reflecting lower levels of debt.  The    
Company's equity in earnings of Multi-Arc was $2,660,000 in fiscal 1995,        
compared with $4,761,000 in fiscal 1996.  The increase in 1996 was accounted    
for primarily by reduced pre-tax income of Multi-Arc, offset by the one-time    
tax benefit discussed above.                                                    

 Investment income for 1996 includes recognition of $232,000 of deferred
income on the collection of notes related to the sale of a minority interest    
in Multi-Arc and $42,000 of interest on said notes, offset by a writedown of    
$143,000 on the Company's investment in Integrated Brands Inc. ("Integrated").  

Effects of Inflation                                                  

Inflation has a minimal effect on Andal's operations.                 

Liquidity and Capital Resources                                       

  The Company had $17,875,000 of cash at September 30, 1997, substantially
all of which resulted from the sale of Multi-Arc; and it believes that income   
from its cash and investments will be sufficient to fund its operating cash     
needs for the foreseeable future.  The Company has no indebtedness.             

New Accounting Pronouncements                                         

   In the first quarter of fiscal 1998, the Company is required to adopt the
provisions of FASB 128, "Earnings per Share."  This pronouncement is not        
expected to have any impact on the reported amounts of earnings per share of    
the Company.                                                                    

Trends                                                                

 As a result of the disposition of Multi-Arc Inc. during the past fiscal
year, comparative historical financial information is not indicative of the     
Company's anticipated results of operations.  Income in future periods will be  
dependent upon releases of funds from the escrows (which income has been        
deferred) and the interest earned on the Company's cash and investments, less   
the cost of corporate office operations.                                        

Item 8.   Financial Statements and Supplementary Data                           

See Index to Financial Statements at page 20 below.                   

Item 9.   Changes in and Disagreements with Accountants on Accounting and       
Financial Disclosure                                        

Not applicable.                                                       

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PART III                

Item 10.  Directors and Executive Officers of the Company                       

The following table sets forth certain information regarding          
the Directors and executive officers of the Company as of                       
November 30, 1997.                                                              

Name                Age  Positions and Offices with the Company                 

Andrew J. Frankel   65   Chairman of the Board of Directors                     
and Chief Executive Officer   

Alan N. Cohen       66   President and Director                                 

Michael S. Huber    54   Senior Vice President, Chief Financial                 
Officer, and Treasurer        

Mary Lou Holcombe   53   Vice President and Secretary                           

  The Company's Directors are elected annually and hold office until their
successors are elected and qualified.                                           

 Andrew J. Frankel has been Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1971 (except for the period September    
1, 1996 through September 30, 1997, during which time he served as a Director). 
He served as a member of the Board of Directors of Integrated Brands Inc. from  
December 1985 until June 1993.                                                  

 Alan N. Cohen has been a Director of the Company since October 1979 and
served as President of the Company from October 1981 (except for the period     
September 1, 1996 through September 30, 1997).  Between January 1981 and        
October 1981, Mr. Cohen served as Vice Chairman of the Board of the Company.    
Mr. Cohen was a member of the Board of Directors of Integrated Brands Inc.      
from December 1985 until June 1993.  From December 1986 until September 1993,   
Mr. Cohen was Vice Chairman of the Board and Treasurer of Celtics, Inc., the    
general partner of the Boston Celtics Limited Partnership.                      

Michael S. Huber joined the Company in December 1987 as Senior Vice   
President, Chief Financial Officer, and Treasurer and has served in that        
position continuously (except for the period September 1, 1996 through          
September 30, 1997).                                                            

  Ms. Holcombe has been employed by the Company since 1970 (except for the
period September 1, 1996 through September 30, 1997) and served as Assistant    
Vice President and Secretary of the Company from August 1994 to September 1,    
1996.  Ms. Holcombe was re-elected Secretary on October 1, 1997.                

Item 11.  Executive Compensation                                                

The following table sets forth information concerning the compensation
for the past three fiscal years of the Chief Executive Officer of the Company   
and all other executive officers whose annual salary exceeded $100,000 for the  
year ended September 30, 1997.                                                  

SUMMARY COMPENSATION TABLE              

                      Annual Compensation     Long     All Other
                  ------------------------------ Term     Compensation
Name and                                 Other Annual Options  ($)              
Principal              Salary  Bonuses   Compensation SARs     (401K Plan       
Position          Year ($)     ($)       (1)          (#)      Contributions)   

Peter D. Flood    1997 250,000 1,510,000 (2)              0    4,750            
Chief Executive                                                                 
Officer and       1996 250,000   138,000 (2)              0    4,750            
President from                                                                  
September 1996    1995 250,000   151,000 (2)          2,500(3) 4,620            
to September 30,                                                                
1997 and Chief                                                                  
Executive of                                                                    
Multi-Arc                                                                       

Walter N. Kreil,  1997 149,350   580,000 (2)              0    4,750            
Jr.                                                                             
Senior Vice       1996 142,000    35,000 (2)              0    4,750            
President and                                                                   
Chief Financial   1995 135,200    50,000 (2)            500(3) 4,620            
Officer from                                                                    
September 1996                                                                  
to September 30,                                                                
1997 and Chief                                                                  
Financial                                                                       
Officer  of                                                                     
Multi-Arc                                                                       

Andrew J.         1997       0         0      0           0        0            
Frankel                                                                         
Chief Executive   1996 157,000         0 42,739           0        0            
Officer through                                                                 
August 1996       1995 244,000         0 33,333           0        0            

Alan N. Cohen     1997       0         0      0           0        0            
President                                                                       
through August    1996 157,000         0 16,000           0        0            
1996                                                                            
      1995 244,000         0 16,000           0        0

(1)  Other Annual Compensation includes professional services and     
supplemental life and accrued medical insurance, as follows:

     Andrew J. Frankel         Alan N. Cohen
 -------------------------     -------------
Professional Supplemental     Professional
Services    Insurance         Services
------------ ------------     ------------
1996      10,000          10,494          10,000            
1995      10,000           5,194          10,000            

(2)  Amounts were less than 10% of salary.                            

(3)  Options to acquire common stock of Multi-Arc Inc. at $205.13 per 
share.                                                      

The salaries of Messrs. Flood and Kreil were paid by and charged to   
Multi-Arc for all years.                                                        

  Certain bonuses paid to Messrs. Flood and Kreil were paid by and charged
to Andal as follows:                                                            

              Amounts Paid by Andal to
               -----------------------------------
Year                     Peter D. Flood Walter N. Kreil, Jr.          
               -------------- --------------------
1997                     $1,400,000(a)       $550,000(b)              
1996                              0                 0                 
1995                              0            15,000                 

   (a)  Consists of a bonus payment of $1,150,000 as a result of the sale of
      Multi-Arc, plus a bonus payment of $250,000 in connection with the
     1996 execution of an employment agreement.  In addition, in 1997,
      Multi-Arc paid a bonus of $110,000 to Mr. Flood in accordance with
the employment agreement.                                   

 (b)  Consists of a bonus payment of $500,000 as a result of the sale of
     Multi-Arc, plus a bonus payment of $50,000 in accordance with the
     1996 execution of an employment agreement.  In addition, in 1997,
        Multi-Arc paid a bonus of $30,000 to Mr. Kreil in accordance with an
incentive compensation plan.                                

  On September 30, 1997, Messrs Flood and Kreil exercised their options to
acquire common shares of Multi-Arc.  As a result of the Multi-Arc sale, they    
received net cash of $220,000 and $35,000, respectively, from the sale of       
their ownership in Multi-Arc resulting from the exercise of such options and    
from the sale of Multi-Arc's stock and debentures they had acquired in 1995     
(after deducting for payments required to exercise the options and repay loans  
made to them in 1995 to acquire the Multi-Arc shares and debentures).           

Stock Options                                                                   

   No stock options or stock appreciation rights were granted by the Company
during the fiscal year ended September 30, 1997 to the Chief Executive Officer  
of the Company and all other executive officers whose annual salary exceeded    
$100,000 for the fiscal year ended September 30, 1997.                          

 The following table sets forth information with respect to the exercise
during fiscal 1997 and the value as of September 30, 1997 of unexercised stock  
options and stock appreciation rights for the Chief Executive Officer and all   
other executive officers whose annual salary exceeded $100,000 for the fiscal   
year ended September 30, 1997.                                                  

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL                
YEAR END OPTION/SAR VALUES                

                                                      Value of
                                      Number of          Unexercised
                                       Unexercised        In-the-Money
            Shares                        Options/SARs at    Options/SARs at
            Acquired on                   Fiscal Year End    Fiscal Year End
             Exercise     Value            (#) Exercisable    ($) Exercisable/
Name          (#)          Realized($)      /Unexercisable     Unexercisable    

Peter D.                                                                        
Flood         0            0               2,000/3,000         45,500/68,250    

Walter N.                                                                       
Kreil, Jr.    0            0                 300/450            6,825/10,238    

Andrew J.                                                                       
Frankel       0            0                   0/0                   0/0        

Alan N. Cohen 0            0                   0/0                   0/0        

   The Company does not have a long term incentive compensation plan for its
executives.                                                                     

Pension Plan                                                                    

  Messrs. Frankel and Cohen were members of a noncontributory pension plan
of the Company which was terminated effective January 1, 1985.  Upon the        
termination of the plan, the Company purchased straight life annuity policies   
sufficient to pay each of the individuals upon their retirement at normal       
retirement age the benefits they had accrued under the plan up to January 1,    
1985.  The amounts payable annually at normal retirement of each of these       
persons are as follows:                                                         

                 Annual Benefit upon
Name                 Retirement         

Andrew J. Frankel            $61,402              
Alan N. Cohen                 36,988              

Compensation of Directors                                                       

Directors who are not employed by Andal are entitled to fees of $5,000
per annum plus $250 for each meeting of the Board they attend and $250 for      
each meeting of a committee of the Board they attend which is held on a day     
that the Board does not meet.  Directors are reimbursed for travel expenses     
incurred in attending Board and Committee meetings.                             

Employment Agreements                                                           

The Company does not have any employment agreements with its officers.
Pursuant to a retirement agreement between the Company and Messrs. Frankel and  
Cohen entered into on August 31, 1996, the Company is obligated to provide      
life and health insurance benefits to Messrs. Frankel and Cohen for the         
remainder of their lives and to provide health insurance benefits to Ms.        
Holcombe until age 65.  In fiscal 1996, the Company recorded a charge of        
$441,000 in connection with the retirement agreement.                           

Repricing of Options/SARs                                                       

 No stock options previously granted to the Company's executive officers
were repriced during the fiscal year ended September 30, 1997.                  

Additional Information with Respect to Compensation Committee Interlocks and    
Insider Participation in Compensation Decisions                                 

  The Company's Compensation Committee is comprised of Messrs. Frankel and
Cohen.  See "Security Ownership of Certain Beneficial Owners and Management"    
and "Certain Relationships and Related Transactions" for information with       
respect to transactions between these individuals and the Company and the       
percentage ownership of the Company by them.                                    

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION                   

Messrs. Frankel and Cohen comprise the Compensation Committee and are 
also Chief Executive Officer and President of the Company.  On October 1, 1997, 
they submitted the following report:                                            

REPORT OF THE COMPENSATION COMMITTEE OF THE                 
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION                

   The Company's compensation policies applicable to its executive
   officers are administered by the Compensation Committee (the "Committee")
of the Board of Directors.                                            

Base Salary                                                           

   The base salaries of the executive officers of the Company were
determined by employment contracts entered into in 1995.  On October  
1, 1997, the members of the Committee were elected as officers and    
agreed to accept salaries as Chairman of the Board and President of   
$100,000 each, less than they had earned in prior years.              

Bonuses                                                               

   The Committee reviewed and gave final approval for a bonus plan
for the Multi-Arc officers to encourage their promotion of the recent 
sale of Multi-Arc.                                                    

Respectfully submitted,                                               

Andrew J. Frankel                                                     

Alan N. Cohen                                                         

PERFORMANCE GRAPH                                                               

The following line graph compares the cumulative total return of the  
Company's common stock to the American Stock Exchange Market Value Index and    
the S&P 500 Index for the period October 1, 1992 to September 30, 1997.         

CUMULATIVE TOTAL RETURN                 
Andal Shares vs. Amex Indices and S&P 500                 

Measurement    Andal          AMEX MV        S & P 500                          
Period         Invested       Invested       Invested                           

9/30/92        100            100            100                                
9/30/93        0              122.21         109.84                             
9/30/94        32             121.79         110.75                             
9/30/95        36             144.6          139.88                             
9/30/96        0              151.7          164.51                             
9/30/97        400            191            226.73                             

Assumes $100 invested on September 30, 1992 in Andal Corp. Common               
Stock, the Amex Market Value Index, and the S&P 500 Index.                

The closing market price per share of the Company's common stock on   
September 30, 1997 has been assumed to be $25.00 per share for purposes of      
computing cumulative total return.  See Item 1--"Business--Stockholders'        
Appraisal Rights and Item 5--Market Value for the Company's Common Equity and   
Related Stockholder Matters" included elsewhere herein.                         

Item 12.  Security Ownership of Certain Beneficial Owners and Management        

  The following table sets forth information as of December 12, 1997, with
respect to all shareholders known by Andal to be the beneficial owners of more  
than 5% of its outstanding common stock, each director, and all officers and    
directors as a group.                                                           

Name and Address of      Amount and Nature of               Percent             
Beneficial Owner         Beneficial Ownership               of Class            

Frankhill Associates     124,437 shares         (1)                             
909 Third Avenue                                                                
Ninth Floor                                                                     
New York, NY   10022                                                            

Andrew J. Frankel          1,730                (1)                             
909 Third Avenue         124,437                (2)                             
Ninth Floor                2,019                (3)                             
New York, NY   10022         602                (4)                             
-------                       
           128,788 shares                      29.7%

Alan N. Cohen Family      47,500 shares         (1)                             
Company LLC                                                                     
909 Third Avenue                                                                
Ninth Floor                                                                     
New York, NY   10022                                                            

Alan N. Cohen             47,500                (9)                             
909 Third Avenue          27,712                (1)                             
Ninth Floor                4,250                (5)                             
New York, NY   10022      ------                                                
             79,462 shares                       18.4%

Builtland Partners        63,294 shares         (1)(6)                          
c/o Milstein Properties                                                         
1271 Avenue of the Americas                                                     
New York, NY   10020                                                            

Paul Milstein             99,337 shares         (7)(8)        22.9%             
c/o Milstein Properties                                                         
1271 Avenue of the Americas                                                     
New York, NY   10020                                                            

All officers and directors                                                      
as a group (4 persons)  209,010 shares          (10)          48.2%             

(1)  Direct record and beneficial ownership.                                    

(2)  As the managing general partner of, and a person designated to exercise    
voting power and investment power on behalf of, Frankhill Associates, 
the record holder of these shares.                                    

(3)  Held as co-trustee with his sister, with whom Mr. Frankel shares voting    
  power.  Mr. Frankel and his children have an interest in one-half of the
principal and income of the trust.                                    

(4)  Held as co-trustee with his wife of trusts for Mr. Frankel's three         
children.                                                             

(5)  Includes 4,250 shares held by a not-for-profit corporation of which Mr.    
Cohen is an officer and director.  Mr. Cohen disclaims beneficial     
ownership of such shares owned by the Corporation.                    

(6)  Builtland Partners is a New York General Partnership comprised of          
Seymour Milstein, Paul Milstein, and members of their respective      
families.                                                             

(7)  Includes all the shares owned by Builtland Partners, as well as shares     
wholly beneficially owned by Paul Milstein, directly and indirectly.  

(8)  Includes 4,845 shares owned by Milstein Family Foundation, Inc., a New     
  York not-for-profit corporation of which Mr. Milstein is president and a
director.  Mr. Milstein disclaims any beneficial interest in such     
shares.                                                               

(9)  As manager of the Alan N. Cohen Family Company, LLC, the record holder     
of these shares.                                                      

(10) Includes 650 shares issuable on exercise of stock options.                 

Item 13.  Certain Relationships and Related Transactions                        

    See Item 1--Business-Election of Officers and Office Relocation, Item 10--
Directors and Executive Officers of the Company, Item 11--Executive             
Compensation, and Item 12--Security Ownership of Certain Beneficial Owners and  
Management.                                                                     

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PART IV                 

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K      

(a)(1)    Financial Statements                                                  

     See Index to Financial Statements and Schedules at page 20 below.

(a)(2)    Financial Statement Schedules                                         

None.                                                       

(b)       Reports on Form 8-K                                                   

None.                                                       

(c)       Exhibits                                                              

         The following exhibits are filed herewith unless otherwise indicated:

      3(a) Restated Certificate of Incorporation of the Company as filed
            with the Secretary of State of New York on March 16, 1972 (the
           "Certificate of Incorporation") (incorporated by reference to
             Exhibit 3(a) to Company's Annual Report on Form 10-K for fiscal
year ended September 30, 1986).                   

        3(b) Certificate of Amendment of the Certificate of Incorporation as
          filed with the Secretary of State of New York on November 5,
          1979 (incorporated by reference to Exhibit 3(b) to Company's
            Annual Report on Form 10-K for fiscal year ended September 30,
1986).                                            

        3(c) Certificate of Amendment of the Certificate of Incorporation as
          filed with the Secretary of State of New York on October 22,
          1981 (incorporated by reference to Exhibit 3(c) to Company's
            Annual Report on Form 10-K for fiscal year ended September 30,
1986).                                            

        3(d) Certificate of Amendment of the Certificate of Incorporation as
          filed with the Secretary of State of New York on November 7,
          1983 (incorporated by reference to Exhibit 3(d) to Company's
            Annual Report on Form 10-K for fiscal year ended September 30,
1986).                                            

        3(e) Certificate of Amendment of the Certificate of Incorporation as
            filed with the Secretary of State of New York on April 8, 1987
    (incorporated by reference to Exhibit 4.5 to Company's
             Registration Statement on Form S-8 as filed with the Securities
and Exchange Commission on May 5, 1987).          

        3(f) Certificate of Amendment of the Certificate of Incorporation as
           iled with the Secretary of State of New York on June 15, 1993
            (incorporated by reference to Exhibit 3(f) to Company's Annual
            Report on Form 10-K for Fiscal Year ended September 30, 1993).

         3(g) By-laws of the Company (incorporated by reference to Exhibit 4.6
           to Company's Registration Statement on Form S-8 as filed with
     the Securities and Exchange Commission on May 5, 1987).

10(a) 1987 Stock Option Plan of the Company (incorporated by  
          reference to Exhibit 10(c) to the Company's Annual Report on
  Form 10-K for fiscal year ended September 30, 1987).

      10(b) Retirement Agreement between Andal Corp. and Andrew J. Frankel
      and Alan N. Cohen dated August 31, 1996 (incorporated by
           reference to Exhibit 10(a) to the Company's Current Report on
Form 8-K dated August 30, 1996).                  

   10(c) Agreement and Plan of Merger by and among Bernex, Inc., M-A
Acquisition Corp., Andal Corp., and Multi-Arc Inc.
             (incorporated by reference to Exhibit 10(a) to Company's report
   on Form 8-K as filed with the Securities and Exchange
Commission on October 15, 1997).                  

     10(d) First Amendment dated September 24, 1997 to the Agreement and
              Plan of Merger by and among Bernex, Inc., M-A Acquisition Corp.,
           Andal Corp., and Multi-Arc Inc. (incorporated by reference to
             Exhibit 10(b) to Company's report on Form 8-K as filed with the
      Securities and Exchange Commission on October 15, 1997).

      10(e) Second Amendment dated September 30, 1997 to the Agreement and
              Plan of Merger by and among Bernex, Inc., M-A Acquisition Corp.,
           Andal Corp., and Multi-Arc Inc. (incorporated by reference to
             Exhibit 10(c) to Company's report on Form 8-K as filed with the
      Securities and Exchange Commission on October 15, 1997).

     10(f) Escrow Agreement dated September 30, 1997 among Bernex, Inc.,
            Multi-Arc Inc., Andal Corp., as agent, and the Chase Manhattan
Bank as escrow agent.                             

      10(g) Andal Escrow Agreement dated September 30, 1997, among Bernex,
        Inc., Multi-Arc Inc., Andal Corp., as agent, and the Chase
Manhattan Bank as escrow agent.                   

        10(h) Expense Escrow Agreement dated September 30, 1997, among Bernex,
        Inc., Multi-Arc Inc., Andal Corp., as agent, and the Chase
Manhattan Bank as escrow agent.                   

27    Financial Data Schedule                                 

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Index to Financial Statements                 

Financial Statements                                                   Page     

Report of Independent Auditors                                           22     

Consolidated Balance Sheet--September 30, 1997 and September 30, 1996   F-1     

Consolidated Statement of Operations--Years ended September 30, 1997,           
1996, and 1995                                                     F-2

Consolidated Statement of Shareholders' Equity (Deficit)                        
--Years Ended September 30, 1997, 1996, and 1995                   F-3

Consolidated Statement of Cash Flows--Years Ended September 30,                 
1997, 1996, and 1995                                               F-4

Notes to Consolidated Financial Statements                              F-5     

  All schedules are omitted because they are not applicable, not required,
or the other information required to be set forth therein is included in the    
Consolidated Financial Statements or in the Notes thereto.                      

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SIGNATURES                

   Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this Report to be signed on its behalf  
by the undersigned, thereunto duly authorized.                                  

           ANDAL CORP.
            (Registrant)

                        By /s/ Andrew J. Frankel
                             Andrew J. Frankel
                                  Chairman of the Board of Directors

Dated:  December 23, 1997                                                       

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the          
registrant and in the capacities and on the dates indicated.                    

  Signatures                     Title                      Date

Principal Executive Officer:                                                    

/s/ Andrew J. Frankel      Chairman of the Board of          December 23, 1997  
(Andrew J. Frankel)     Directors, Chief Executive                        
Officer, President, and   
Director                  

Principal Financial Officer:                                                    

/s/ Michael S. Huber       Senior Vice President,            December 23, 1997  
(Michael S. Huber)      Chief Financial Officer,                          
and Treasurer             

Directors:                                                                      

/s/ Andrew J. Frankel      Director                          December 23, 1997  
(Andrew J. Frankel)                                                       

/s/ Alan N. Cohen          Director                          December 23, 1997  
(Alan N. Cohen)                                                           

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REPORT OF INDEPENDENT AUDITORS                

Board of Directors and Shareholders                                             
Andal Corp.                                                                     

We have audited the accompanying consolidated balance sheets of Andal Corp. and 
subsidiaries as of September 30, 1997 and 1996, and the related consolidated    
statements of operations, shareholders' equity (deficit) and cash flows or each 
of the three years in the period ended September 30, 1997.  These financial     
statements are the responsibility of the Company's management.  Our             
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We conducted our audits in accordance with generally accepted auditing          
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our provide a reasonable basis for our opinion.                 

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of Andal  
Corp. and subsidiaries at September 30, 1997 and 1996, in conformity with       
generally accepted accounting principles.                                       

                     ERNST & YOUNG LLP

New York, New York                                                              
December 2, 1997                                                                

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ANDAL CORP.  AND SUBSIDIARIES                 
CONSOLIDATED BALANCE SHEET                  

ASSETS                

                                                September 30
                                                 1997           1996
Current assets:                                                                 
Cash                                         $ 17,875,000   $     21,000    
Accounts and notes receivable                     191,000        402,000    
Other current assets                               36,000              0    
                                          -------------  -------------
Total current assets                        18,102,000        423,000 

Investment in Integrated Brands, Inc.               250,000        250,000      
Net assets of Multi-Arc Inc.                              0      8,450,000      
Escrow accounts receivable                        3,407,000              0      
Other assets                                         16,000        365,000      
                                          -------------  -------------
                                         $ 21,775,000   $  9,488,000
                                          =============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY                

Current liabilities:                                                            
Current portion of debt due shareholders     $          0   $     97,000    
Accounts payable                                  223,000        126,000    
Accrued expenses                                3,632,000      3,794,000    
                                          -------------  -------------
Total current liabilities                    3,855,000      4,017,000 

Deferred income                                   3,407,000        616,000      

Shareholders' equity (deficit):                                                 
Common shares, par value $20 per share,                                     
1,500,000 authorized, 447,359 issued         8,947,000      8,947,000 
Paid-in-capital                                25,995,000     25,995,000    
Deficit                                       (20,429,000)   (30,087,000)   
                                          -------------  -------------
Total shareholders' equity                  14,513,000      4,855,000 
                                          -------------  -------------
                                         $ 21,775,000   $  9,488,000
                                          =============  =============

See accompanying notes.               

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ANDAL CORP. AND SUBSIDIARIES                
CONSOLIDATED STATEMENT OF OPERATIONS                

                                   Year Ended September 30
                                          1997          1996          1995

Operating costs and expenses:                                                   

General and administrative expense   $ (417,000)   $(1,953,000) $(1,333,000)

Other income (expense):                                                         

Gain on sale of 61st Street property          0      6,009,000            0 
Interest expense                         (6,000)      (747,000)    (833,000)
Investment and other income                   0        150,000       37,000 
                                     -----------   ------------ ------------
Income (loss) from continuing operations                                        
before income taxes                    (423,000)     3,459,000   (2,129,000)
(Provision) benefit for income taxes            0        (69,000)           0   
                                     -----------   ------------ ------------
Income (loss) from continuing operations (423,000)     3,390,000   (2,129,000)  
Income from discontinued operations                                             
(net of income tax expense (benefit)                                        
of $(2,311,000) in 1996 and                                                 
$532,000 in 1995                      1,285,000      4,995,000    3,667,000 
Gain on sale of Multi-Arc Inc.                                                  
(net of income tax expense of                                               
$489,000 in 1997)                     8,796,000              0      348,000 
                                    ------------   ------------ ------------
Net income                            $ 9,658,000    $ 8,385,000  $ 1,886,000   
                                    ============   ============ ============
Income (loss) per common share:                                                 

Income (loss) from continuing operations  $ (.95)        $  9.98      $ (6.45)  
Income from discontinued operations         2.87           14.71        11.12   
Gain on sale of Multi-Arc Inc.             19.67            0.00         1.05   
                                       -------        -------      -------
Net income                                $21.59          $24.69      $  5.72   
                                       ======          ======      =======
See accompanying notes.               

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ANDAL CORP. AND SUBSIDIARIES
    CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

      Retained
Common     Paid-in-    Earnings      Treasury   
       Stock      Capital     (Deficit)     Stock        Total

Balance at                                                                      
Sept. 30, 1994  $7,410,000 $31,625,000 $(40,358,000) $(5,661,000) $(6,984,000)  
Net income 1995          0           0    1,886,000            0    1,886,000   
              ---------- ----------- ------------- ------------ ------------
Balance at                                                                      
Sept. 30, 1995   7,410,000  31,625,000  (38,472,000)  (5,661,000)  (5,098,000)  
Net income 1996          0           0    8,385,000            0    8,385,000   
Shares issued                                                                   
pursuant to                                                                     
retirement                                                                      
agreement        1,300,000  (1,153,000)           0            0      147,000   
Shares issued                                                                   
pursuant to                                                                     
retirement                                                                      
of debt            900,000     504,000            0            0    1,404,000   
Shares issued                                                                   
pursuant to                                                                     
employment                                                                      
agreement          150,000    (133,000)           0            0       17,000   
Issuance of                                                                     
Treasury Stock                                                                  
in connection                                                                   
with  above                                                                     
transactions      (813,000) (4,848,000)           0    5,661,000            0   
               ---------- ----------- ------------ ------------ ------------
Balance at                                                                      
Sept. 30, 1996   8,947,000  25,995,000  (30,087,000)           0    4,855,000   
Net income 1997          0           0    9,658,000            0    9,658,000   
              ----------- ----------- ------------ ------------ ------------
Balance at                                                                      
Sept. 30, 1997  $8,947,000 $25,995,000 $(20,429,000) $         0  $14,513,000   
              ========== =========== ============= ============ ============
See accompanying notes.               

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ANDAL CORP. AND SUBSIDIARIES                
CONSOLIDATED STATEMENT OF CASH FLOWS                

                                           Year Ended September 30
                               1997         1996          1995

Cash provided (used) by operations:                                             
Income (loss) from continuing operations                                      
before income taxes                   $  (423,000) $  3,390,000 $(2,129,000)
Adjustments to reconcile income (loss)                                        
from continuing operations to net cash                                      
provided (used) by operations                                               
Depreciation                                    0         8,000       9,000 
Write down of investment in Integrated          0       143,000           0 
Gain on sale of 61st Street property            0    (6,009,000)          0 
Other, net                                  7,000       121,000      41,000 
Change in operating assets and liabilities:                                 
Decrease in accounts receivable          211,000       306,000           0
(Increase) decrease in                                                    
   other current assets                  (36,000)       93,000       4,000
Increase (decrease) in accounts payable                                   
   and accrued liabilities                (66,000)      773,000    (379,000)
Cash provided (used) by discontinued                                      
   operations                             344,000        73,000    (294,000)
                                       ----------- ------------- -----------
Net cash provided (used) by operating                                         
activities before income taxes             37,000    (1,102,000) (2,748,000)
Income taxes paid                          (51,000)      (25,000)    (25,000) 
                                       ----------- ------------- -----------
Net cash provided (used) by                                                     
 operating activities                     (14,000)   (1,127,000) (2,773,000)
                                       -----------  ------------ -----------
Cash flows from financing activities:                                           
Advances from (repayments to)                                                 
 Multi-Arc Inc.                         (930,000)      643,000           0
Reductions of long term debt                     0      (543,000) (1,357,000) 
Decrease in debt due to shareholders       (97,000)            0           -  
                                        ----------- ------------- ------------
Net cash provided (used) by                                                     
financing activities                   (1,027,000)      100,000  (1,357,000)
                                      ------------ ------------- -----------
Cash flows from investing activities:                                           
Net proceeds from sale of                                                     
Multi-Arc Inc.                        18,895,000       468,000   2,671,000
Distributions from Multi-Arc Inc.                0             0     957,000  
Net proceeds from sale of                                                     
61st Street property                           0       529,000           0
Other, net                                       0             0      18,000  
                                      ------------ ------------- -----------
Net cash (used) by investing activities  18,895,000       997,000   3,646,000   
                                      ------------ ------------- -----------
(Decrease) increase in cash              17,854,000       (30,000)   (484,000)  
Cash at beginning of year                    21,000        51,000     535,000   
                                      ------------ ------------- -----------
Cash at end of year                     $17,875,000  $     21,000  $   51,000   
                                      ============ ============= ===========
See accompanying notes.               

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ANDAL CORP. AND SUBSIDIARIES                
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                 

Principles of Consolidation and Presentation                          

   The consolidated financial statements include the accounts of Andal Corp.
("Andal" or the "Company") and its subsidiaries, all of which subsidiaries are  
inactive and insignificant.  As discussed in Note 2, on September 30, 1997,     
the Company closed on the sale of its only operating business, Multi-Arc Inc.   
("Multi-Arc"); and, thereafter, its operations consist of the maintenance of a  
corporate executive and administrative office.  Accordingly, the consolidated   
financial statements for 1996 and 1995 have been reclassified to show the       
accounts of Multi-Arc as a discontinued operation.  (See Note 2.)               

Property and Equipment                                                

    Property and equipment are recorded at cost and depreciated over estimated
useful lives on a straight-line basis.  The Company's property and equipment is 
comprised of office furniture and equipment, all of which is fully depreciated. 

Stock Based Compensation                                              

  The Company accounts for its stock based compensation arrangements under
the provisions of APB 25, "Accounting for Stock Issued to Employees."           

Use of Estimates                                                      

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes.  Actual results could differ from those estimates.          

Income (Loss) per Share                                               

   Primary income (loss) per common share for all periods was computed based
on the average number of shares outstanding during each of the respective       
periods.  Fully diluted per share amounts are not shown for the periods, as     
the effects would be immaterial.                                                

  The average number of shares used in computing primary income (loss) per
share was   447,359 in 1997, 339,639 in 1996, and 329,859 in 1995.              

2.   SALE OF MULTI-ARC                                                          

 During the year ended September 30, 1997, Andal Corp. (the "Company" or
"Andal"), through its majority-owned Multi-Arc Inc. subsidiary ("Multi-Arc"),   
had been engaged in surface enhancement which is the utilization of advanced    
technologies to apply thin-film coatings of various metals, metal compounds,    
and other materials to base materials to enhance their hardness, wear and       
corrosion resistance, lubricity, and appearance.                                

On September 25, 1997, the Company's shareholders at a meeting of     
shareholders approved an Agreement and Plan of Merger (the "Agreement") dated as
of June 9, 1997, between Bernex Inc. ("Bernex"), M-A Acquisitions Corp., Multi- 
Arc, and the Company.  The Agreement, in essence, represented a contract to sell
Multi-Arc to Bernex for cash.  Bernex and M-A Acquisition Corp. are indirectly  
owned subsidiaries of Saurer AG, a publicly traded Swiss corporation.           

The sale of Multi-Arc was completed on September 30, 1997.  Pursuant  
to the Agreement, M-A Acquisition Corp. was merged into Multi-Arc; and Multi-   
Arc became the surviving corporation and also became wholly-owned by Bernex.    
The Company recorded a gain of approximately $8.8 million from the sale.        

As a result of the merger, the Company received net proceeds of       
approximately $17.8 million of cash and may be entitled to receive additional   
cash from three escrow funds which were established at the time of closing, as  
described below.  As a result of the sale, the Company has no operating         
business.  The directors of the Company are currently considering whether the   
Company should be liquidated, function as an investment company, or seek to     
enter some other business activity.  A decision on the future direction of the  
Company is expected  to be made by during fiscal 1998.                          

Net Proceeds from the Sale of Multi-Arc                                         

The 100% ownership of Multi-Arc was sold to Bernex for $29,200,000 in 
cash.  At the time of closing, Andal owned approximately 84% of Multi-Arc.  A   
reconciliation of Andal's 84% share of the gross proceeds to the amount of      
cash actually received by Andal at the closing is as follows:                   

                                                           000's

Andal share of gross proceeds--approximately 84% ownership   $24,517  

Plus:                                                                 
Net payment received from Multi-Arc stock option holders              
and minority shareholders pursuant to the Agreement              839  

Less:                                                                 
Payments to Escrow accounts                                           
    Main Escrow Fund                                         (2,451)
    Tax Escrow Fund                                            (955)
    Expense Escrow Fund                                        (630)
                                                            --------
Net proceeds before amounts paid at closing                   21,320  

    Bonus payments to Multi-Arc management                   (1,965)

    Repayment of intercompany indebtedness to Multi-Arc      (1,390)

    Repayment of shareholder loan                               (97)
                                                             -------
Net cash received by Andal                                    $17,868 
                                                              ========

The Main Escrow Fund                                                            

  An escrow fund for a portion of the selling price of Multi-Arc, of which
Andal's share is approximately $2,451,000, was established at the closing to    
secure Bernex against breaches of representations and warranties and the        
covenants made by Multi-Arc and the Company in connection with the Agreement.   
This escrow fund (the "Main Escrow") may also be a source for payment of        
certain indemnifications for environmental and tax obligations, and also for    
payment to Multi-Arc minority shareholders who exercise their appraisal rights  
and obtain an award in excess of their pro rata share of the agreed to selling  
price of Multi-Arc.  Certain types of claims against the Main Escrow would have 
to aggregate $700,000 before such claims would be eligible for reimbursement    
from the fund, and then only the amount over $700,000 would be eligible.  By    
the terms of the Agreement, the Main Escrow terminates on March 31, 1999.       

While the Company believes that its representations and warranties    
concerning Multi-Arc are accurate and that adequate provision has been made     
for all indemnifications, the Company has deferred recognition of the gain      
equal to the $2,451,000 until such time as the cash has been received.          

The Tax Escrow Fund                                                             

A second escrow fund (the "Tax Escrow") was established under the     
Agreement out of funds which would otherwise have been payable to Andal in the  
amount of $955,000 to indemnify Bernex against certain tax obligations of       
Andal to a taxing authority which have been assessed and which were contested   
by Andal and not paid.  If, by July 31, 2002, these tax claims have not been    
resolved entirely, Andal has agreed to pay $300,000 to Bernex out of this fund. 
Under certain circumstances, Andal is entitled to use this fund for payment of  
certain taxes.                                                                  

     The Company has established reserves in its financial statements related to
this tax obligation, and the Company has determined that it is not reasonably   
possible that the resolution of this contingency will have a material adverse   
impact upon income in future periods.  Nevertheless, the Company believes it    
prudent to defer recognition of the gain equal to this Tax Escrow Fund until    
such time as it is received in cash.                                            

The Expense Escrow Fund                                                         

At the closing, an escrow fund of $750,000 (the "Expense Escrow") was 
established out of the proceeds otherwise payable to Andal and the minority     
shareholders of Multi-Arc to pay for the legal and other expenses of Andal and  
Multi-Arc relating to the sale.  At and soon after closing, a substantial       
portion of this fund was disbursed in payment of such expenses.  Recovery from  
the fund will not be material and will be recognized as income when received.   

     The escrow funds are in the possession of a commercial bank which serves as
escrow agent and are being invested in a money market fund pending their        
resolution.                                                                     

3.   PURCHASE AND SALE OF THE UBC PROPERTY                                      

Prior to May 8, 1996, the Company, directly or through a wholly-owned 
subsidiary, UBC Virginia Corp. ("UBC Corp.) had owned an option (the "Option")  
to purchase a parcel of real estate (the "Property") located on 61st Street and 
First Avenue in New York City, which Option had been carried on the books of the
Company at nil value for many years.  The original cost of the Option was $1.5  
million.  UBC Corp. was merged into the Company in March 1996, after which time 
the Option became directly owned by the Company.                                

In 1990, the Option was pledged as security for a $5 million loan,    
hereafter referred to as the "Option Loan," made to the Company by Alan N.      
Cohen, who was then President and a Director of the Company, Paul Milstein,     
who was then a Director of the Company, and Frankhill Associates, a limited     
partnership of which Andrew J. Frankel, who was then Chairman of the Board and  
a Director of the Company, is a general partner (collectively, in such capacity,
the "Option Lenders").                                                          

The Option granted the Company the right to purchase the Property for 
approximately $3 million in cash and was exercisable only after the death of the
later to die of two of the principals of the corporation that granted the       
Option.  Such death occurred in 1995.  The Company did not have the cash        
required to exercise the Option, and it could not raise it through borrowing    
from unrelated parties or through the sale of assets other than the Option.     
However, under the terms of the Option Loan, the Company was obligated to       
exercise the Option.  Accordingly, the Option was exercised in October 1995;    
and the Company purchased the Property on May 8, 1996.  In order to make the    
purchase, on May 7, 1996, the Company borrowed $3.3 million (the "Demand Loan") 
from the Option Lenders evidenced by a demand note and secured by a mortgage    
on the Property.  The Demand Loan bore interest at 10% per annum.               

     The Company's failure to exercise the Option and pay the purchase price for
the Property would have resulted in an event of default under the Option Loan,  
which would have given the Option Lenders the right to exercise the Option on   
the Company's behalf and to declare the Option Loan immediately due and payable,
including all sums advanced by the Option Lenders in exercising the Option.  In 
addition, the Option Lenders would have had all of the remedies available to    
them under applicable law for secured lenders, including, without limitation,   
the public or private sale of the Property acquired by exercise of the Option.  

    Until January 1995, the Company had been under contract to sell the Option
to an unrelated real estate developer, who had contracted to purchase the Option
in 1984.  The developer was unable to obtain financing to consummate the        
purchase; and, as a result, the Company terminated the contract.  Upon          
termination of the contract, the Company attempted to sell the Option to various
other parties.  In addition, after the Company received the Option Notice from  
the Optionor, the Company made contact with several brokers who were not able to
identify a buyer.  The Company's attempts to sell the Option did not result in  
any bona fide offer from a third party to purchase the Option.                  

Once it was learned that the Option had become exercisable, the Option
Lenders expressed an interest in acquiring the Property in satisfaction of the  
amount outstanding on the Option Loan. In that event, the Company would no      
longer have been obligated with respect to the $3 million purchase price        
obligation due on the Option exercise.                                          

     The Board of Directors of the Company met on October 5, 1995 to discuss the
difficulties entailed in the Company's exercise of the Option, including the    
Company's lack of cash flow, diminished borrowing power, debt structure, and    
difficulties in raising funds through a private placement of Multi-Arc's        
common stock and subordinated debentures.  After discussion, the Board members  
who were not Option Lenders (Messrs. Flood and Glickman) authorized the officers
of the Company to engage an independent appraiser to conduct an appraisal of    
the Property, following which such Board members would seek to negotiate a      
transaction with the Option Lenders taking into account, in addition to the     
appraisal, all material circumstances relating to the Property, including,      
without limitation, the inability of the Company to raise sufficient funds      
required to exercise the Option, the time constraints within which the Company  
must exercise the Option, and the consequent probability that, without a sale   
to a related party, the Option would expire worthless.                          

  On November 21, 1995, the Company received a report from the independent
appraiser it had retained which concluded that the range for the market value   
of the Property was between $9.9 million and $11.9 million (before deducting    
the $3 million that would have to be paid to exercise the Option), depending    
on the ultimate cost of complying with zoning restrictions and other costs      
that would be incurred in the development of the Property.  The appraiser's     
conclusion was based on a number of assumptions, including the assumption that  
a sale would occur after a reasonable exposure in a competitive market under    
all conditions requisite for a fair sale, with the buyer and seller acting      
prudently, knowledgeably, for self-interest, and not under undue duress.        

 On March 4, 1996, at a special meeting of the Board of Directors of the
Company, appropriate officers of the Company were authorized and empowered to   
engage in negotiations with the Option Lenders to reach a definite agreement    
to sell the Option to them under terms and conditions that were outlined by     
the Board.  Although the parties were unable to reach a definitive agreement    
prior to May 8, 1996, the Company continued to negotiate with affiliates of the 
Option Lenders for the sale of the Property to them; and, on July 10, 1996, the 
Company entered into a contract to sell the Property to FAM, LLC ("FAM"), a     
Delaware limited liability company owned by Frankhill Associates, the Alan N.   
Cohen Family Company, LLC, a Delaware limited liability company, of which Alan  
N. Cohen is manager, and Builtland Associates, a New York general partnership,  
of which Paul Milstein is a general partner.  Builtland Associates is the       
managing director of FAM and, as such, controls its activities.                 

    On August 1, 1996, FAM purchased the Property for $9.1 million, paid for
as follows:                                                                     

        a)   Cancellation of the principal balance of the Option Loan in the
              amount of $5,571,285 (after adjustment for a restructuring which
              occurred in 1992) due to Frankhill Associates, the Alan N. Cohen
            Family Company, LLC, and Paul Milstein, and at closing held by
FAM.                                              

      b)   Cancellation of the Demand Loan of $3.3 million due Frankhill
         Associates, the Alan N. Cohen Family Company, LLC, and Paul
Milstein, and at closing held by FAM.             

c)   Cash payment to the Company of $228,715.               

In addition to the consideration outlined above, the Company was not  
required to pay unpaid interest of $283,000 on the Option Loan and Demand Loan  
and would have been entitled to additional consideration if, within one year    
from the date of sale to FAM, all or any portion of the Property was further    
transferred to a bona fide third party or if FAM entered into an agreement to   
transfer all or any portion of the Property to a bona fide third party and such 
transfer ultimately occurred.  In either of such events, the Company would have 
been entitled to 50% of the amount by which the "Net Proceeds" of the sale of   
all or any portion of the Property exceeds $10 million.  In no event could such 
additional consideration exceed $3 million.  As of August 1, 1997, FAM had not  
transferred or entered into any agreement to transfer the property to an        
independent third party. Accordingly, the Company is not entitled to any        
additional consideration.                                                       

The Company reported a gain of approximately $6 million from the sale.

4.   RETIREMENT AGREEMENT                                                       

   On August 31, 1996, Messrs. Andrew J. Frankel, then Chairman of the Board
of Directors, and Alan N. Cohen, then President of the Company, retired pursuant
to an agreement which provides that, in exchange for the issuance of 32,500     
common shares of the Company to each of them, they agreed to reimburse Andal for
the lease obligation of Andal's executive headquarters office in New York City  
and certain other costs of operation of that office, including the salary of    
Andal employees located there.  The Company agreed to maintain, at its own      
expense, health and life insurance benefits on Andal's New York employees and to
continue to pay the costs of a letter of credit guarantee by Mr. Frankel and Mr.
Cohen until September 29, 1998, at which time Andal would use its best efforts  
to replace the letters of credit guarantee with other security.  The Company    
intends to fund this outstanding letter of credit with an interest-bearing cash 
deposit of approximately $900,000, at which time the guarantors will be released
from their guarantee.  The Company recorded a charge of $441,000 in 1996 in     
connection with this Agreement.  In September 1996, Andal's executive office    
records were moved to Multi-Arc's facilities in Rockaway, New Jersey.           

In September 1997, as a result of the sale of Multi-Arc, the Company  
relocated its executive headquarters back to the New York City location; and,   
on October 1, 1997, Messrs. Frankel and Cohen reassumed their positions as      
Chairman and President, respectively, of the Company.  In addition, the Company 
reassumed all of the costs of the office, including executive, administrative,  
and secretarial expenses, except that Messrs. Frankel and Cohen agreed to       
reimburse the Company for 25% of the lease, utility, office expense, and other  
costs of maintaining the premises (excluding salary costs of all Company        
personnel), respecting their personal use of the premises.                      

5.   SALE OF MINORITY INTEREST IN MULTI-ARC INC.                                

In December 1994, Andal sold, for $500,000 approximately 2 1/2% of the
common stock of Multi-Arc to Multi-Arc's management; and Multi-Arc issued       
$500,000 of convertible subordinated debentures (convertible into approximately 
2% of Multi-Arc common stock) to such management, the proceeds of which were    
remitted to Andal as a return of capital.  Both the sale of the common stock and
the issuance of the debentures were funded through non-recourse loans of $1     
million made to the management by Multi-Arc utilizing Multi-Arc's revolving     
facility with First Union National Bank.  Because of the non-recourse nature of 
the loans, the gain on the sale of Multi-Arc common stock of approximately      
$396,000 was deferred until such time as the management loans were repaid,      
which occurred on September 30, 1997.                                           

    In June and September 1995, Andal sold, for $1,010,000, approximately 4.9%
of the common stock of Multi-Arc to certain foreign licensees and other         
investors; and Multi-Arc sold to such licensees and other investors $1,010,000  
of convertible subordinated debentures (convertible into approximately 3.8% of  
Multi-Arc common stock), the cash proceeds of which were remitted to Andal as a 
return of capital.  Approximately $450,000 of the common stock sold, and        
$450,000 principal amount of the debentures sold were evidenced by a promissory 
note which required monthly principal payments over three years plus interest at
6% per annum.  The unpaid balance of this note was $555,000 at September 30,    
1996.  An additional $153,000 of common stock and $153,000 principal amount of  
the debentures were sold on open account which was paid in October 1996.  The   
gain on these sales of Multi-Arc common stock was $800,000, of which $452,000   
was deferred.  In 1996, $232,000 of the deferred gain was included in investment
income.                                                                         

 The management loans and the balance of the promissory note were repaid
upon the sale of Multi-Arc (described in Note 2).  Accordingly, all deferred    
gains relating to the minority interest sales discussed above were realized at  
September 30, 1997.                                                             

6.   DISCONTINUED OPERATIONS                                                    

   The income (loss) from discontinued operations in 1997, 1996, and 1995 is
comprised of the following:                                                     

                                1997          1996        1995
  Gain on sale of Multi-Arc           $  8,796,000  $        0  $  348,000
  Reversal of reserve for income taxes           0           0     996,000
  Equity in earnings of Multi-Arc        1,275,000   4,761,000   2,660,000
Income from discontinued                                              
     construction operations                10,000     234,000      11,000
                                      ------------  ----------  ----------
                                       $10,081,000  $4,995,000  $4,015,000
                                       ===========  ==========  ==========

     On June 30, 1995, an appeals tribunal dismissed a claim against the Company
by a local taxing authority for income taxes relating to certain of its         
discontinued operations.  Income from discontinued operations for the year ended
September 30, 1995 includes the reversal of a reserve for income taxes, plus    
accrued interest, in the aggregate amount of $996,000.                          

     Construction operations consisted of construction subcontracting businesses
involved in wall, flooring, ceiling installation and plumbing, heating, and     
electrical subcontracting.  The Company commenced a program to discontinue these
businesses in 1981 which program was completed in 1983.  The income from        
discontinued construction operations for 1997, 1996, and 1995 is principally due
to claims, settlements, and miscellaneous income.                               

See Note 2 for a discussion of the sale of Multi-Arc.                 

7.   INTEGRATED BRANDS, INC.                                                    

   In December 1985, Andal purchased 46.5% of the common stock of Integrated
Brands, Inc. ("Integrated"), formerly Steve's Homemade Ice Cream, Inc.  Through 
a series of transactions, Andal's interest has been reduced to 3.5%.  In the    
fourth quarter of 1996, based on then current market conditions, the Company    
recorded a writedown of $143,000 of its investment in Integrated.               

8.   401(k) PLANS                                                               

  The Company maintains a defined contribution 401(k) savings plan for the
benefit of its employees.  Annual contributions to the plan are at the          
discretion of management and were insignificant for all periods presented.      

9.   DEBT DUE SHAREHOLDERS                                                      

     On August 31, 1996, Andal Corp. retired $1,404,000 of indebtedness owing to
Frankhill Associates, Alan N. Cohen, and Paul Milstein in exchange for 45,000   
shares of the Company's common stock which is reflected as a contribution of    
capital in the accompanying financial statements.  Frankhill Associates and     
Messrs. Cohen and Milstein had purchased the indebtedness from the Fleet Bank in
1994.  Subsequently, Peter D. Flood purchased a portion of such debt from       
Frankhill Associates and Messrs. Cohen and Milstein.  During fiscal 1996, the   
Company had repaid $543,000 of the debt in cash.  At September 30, 1996, $97,000
of the Fleet Assignee Debt was owing to Mr. Flood.  This amount was repaid to   
Mr. Flood on September 30, 1997.                                                

10.  CAPITAL SHARES                                                             

   At September 30, 1997, common shares reserved for future issuance were as
follows:                                                                        

Issuable under stock option plans       15,000              

Messrs. Frankel and Cohen retired on August 31, 1996 pursuant to an   
agreement which provided for the issuance of 32,500 common shares of the Company
to each of them (see Note 4).                                                   

  See Note 10 for a discussion of the 45,000 shares of common stock of the
Company issued in cancellation of the Fleet Assignee debt.                      

On August 31, 1996, the Company issued 7,500 common shares to Peter D.
Flood, pursuant to his employment agreement and recorded an expense of $17,000. 

11.  STOCK OPTIONS                                                              

    In 1987, Andal adopted a Stock Option Plan under which options covering up
to 15,000 shares of Andal common stock may be granted to eligible key employees.
ptions granted under the plan may be either "incentive stock options" or non-   
qualified options.  Under the plan, the purchase price per share for stock      
options granted must equal or exceed the market value of Andal's common stock at
the time of grant.  All options granted under the plan expire no later than five
years from the date of grant.  Options may not be exercised for a period of 24  
months after grant.  After 24 months, 40% of the option shares may be exercised;
after 36 months, 60% of such shares may be exercised; and, after 48 months, all 
of such shares may be exercised.  The options expire 60 months after grant.  The
Board of Directors or the Compensation Committee thereof may accelerate, in     
whole or in part, the time or times at which such options may be exercised.  In 
the case of incentive stock options, whether granted under this plan or any     
earlier plan of the Company, no more than $100,000 in value of shares           
(determined on the date of grant) may become exercisable by any single optionee 
during any calendar year.                                                       

   The plan also permits the granting of stock appreciation rights either at
the time that an option is granted or a later time under which an optionee may, 
instead of paying the option price and receiving the full number of shares      
covered by the exercised option, receive instead the then excess of the value of
the shares subject to the option over the option price.  Payment under a stock  
appreciation right may be in shares of stock (at current fair market value), or 
cash, or any combination thereof.                                               

   No options were converted or exercised under this plan in 1997, 1996, and
1995.                                                                           

     At September 30, 1997 and 1996, there were 6,125 shares reserved for future
grant of options.  At September 30, 1997, 3,550 shares were exercisable.  None  
were exercisable at September 30, 1996.  A summary of stock option transactions 
follows:                                                                        

1987 Stock Option Plan                

                                           Average Price per
           Number of Shares              Share

Options outstanding at                                                
September 30, 1993        8,930                 $ 11.15         
Canceled during 1994       (100)                $112.50         
-------       
Options outstanding at                                                
September 30, 1994        8,830                 $ 10.00         
Canceled during 1995     (8,830)                $ 10.00         
Granted during 1995       8,950                 $  2.25         
-------       
Options outstanding at                                                
September 30, 1995        8,950                 $  2.25         
Cancelled during 1996       (75)                $  2.25         
-------       
Options outstanding at                                                
September 30, 1997                                              
and 1996               8,875                 $  2.25      
=====       
12.  INCOME TAXES                                                               

   Andal and its subsidiaries file a consolidated federal income tax return,
and state and local tax returns are generally filed on a combined basis.        

The Company uses the liability method in accounting for income taxes. 
Under this method, deferred tax assets and liabilities are determined based on  
differences between financial reporting and tax basis of assets and liabilities 
and are measured using the enacted tax rates and laws that will be in effect    
when the differences are expected to reverse.                                   

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting   
purposes and the amounts used for income tax purposes.  Significant components  
of the Company's deferred tax assets and liabilities as of September 30, 1997   
and 1996 are as follows:                                                        

                                                     1997           1996
Deferred Tax Assets:                                                  
  Accruals and Reserves                           $ 1,218,000  $ 1,218,000
  Deferred Gain on Sale of Subsidiary Stock                 0      228,000
  Future Tax Benefit of NOL Carryforwards           5,184,000    7,297,000
  Future Tax Benefit of Credit Carryforwards          239,000       69,000
                                                   ------------ ------------
  Gross Deferred Tax Assets                         6,641,000    8,812,000
   Valuation Allowance                              (6,641,000)  (8,812,000)
                                                   ------------ ------------
  Net Deferred Taxes                              $         0  $         0
                                                  ===========  ===========

  The Company has provided a valuation allowance because it is more likely
than not that the net deferred tax assets will not be realized.                 

    The reconciliation of income taxes computed at the U. S. statutory rate to
income tax (expense) benefit applicable to continuing operations for the year   
ended September 30, 1997, 1996, and 1995 is:                                    

                              1997           1996           1995
Tax (expense) benefit at                                              
       U. S. statutory rate        $  (144,000)  $ 1,176,000    $(724,000)
Utilization of federal and state                                      
      net operating losses          2,311,000             0            0
 Other                                  4,000         4,000        3,000
 Change in valuation allowance     (2,171,000)   (1,111,000)     721,000
                                   ------------  ------------   ----------
 Income tax (expense) benefit     $         0   $    69,000    $       0

 At September 30, 1997, the Company had net operating loss carryforwards
("NOL's") for federal income tax purposes of approximately $13.3 million which  
expire in varying amounts through 2010.                                         

The gain on sale of Multi-Arc stock for income tax purposes was       
approximately $8.5 million.  The corresponding income tax liability on such sale
is approximately $489,000, which principally represents the federal alternative 
minimum taxes.  As part of the sales agreement, the Company and the acquirer may
elect to treat such stock sale as a sale of Multi-Arc assets, pursuant to       
Section 338(h)(10) of the Internal Revenue Code.  If such election were to be   
made, the acquirers have agreed to indemnify Andal for any federal or state     
income taxes due in excess of $170,000.  The Company's federal net operating    
loss carryforward would be reduced to approximately $4.6 million in the event of
such election.                                                                  

14.  LITIGATION                                                                 

The Company is aware of various lawsuits, claims, and administrative  
proceedings which are pending involving it or its subsidiaries.  In the opinion 
of the Company's management, these matters will not result in any material      
adverse effect on the Company's consolidated financial condition.               

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SECURITIES AND EXCHANGE COMMISSION                

Washington, D. C.   20549                 

EXHIBITS                

to                

ANNUAL REPORT ON FORM 10-K                  

FOR THE FISCAL YEAR ENDED                   

SEPTEMBER 30, 1997                  

ANDAL CORP.               

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EXHIBIT INDEX                                                                   

EXHIBIT   DESCRIPTION OF EXHIBIT                                                

3(a)      Restated Certificate of Incorporation of the Company as filed with the
         Secretary of State of New York on March 16, 1972 (the "Certificate of
 Incorporation") (incorporated by reference to Exhibit 3(a) to
        Company's Annual Report on Form 10-K for fiscal year ended September
30, 1986).                                                  

3(b)      Certificate of Amendment of the Certificate of Incorporation as filed 
with the Secretary of State of New York on November 5, 1979 
         (incorporated by reference to Exhibit 3(b) to Company's Annual Report
on Form 10-K for fiscal year ended September 30, 1986).     

3(c)      Certificate of Amendment of the Certificate of Incorporation as filed 
with the Secretary of State of New York on October 22, 1981 
         (incorporated by reference to Exhibit 3(c) to Company's Annual Report
on Form 10-K for fiscal year ended September 30, 1986).     

3(d)      Certificate of Amendment of the Certificate of Incorporation as filed 
with the Secretary of State of New York on November 7, 1983 
         (incorporated by reference to Exhibit 3(d) to Company's Annual Report
on Form 10-K for fiscal year ended September 30, 1986).     

3(e)      Certificate of Amendment of the Certificate of Incorporation as filed 
with the Secretary of State of New York on April 8, 1987    
       (incorporated by reference to Exhibit 4.5 to Company's Registration
   Statement on Form S-8 as filed with the Securities and Exchange
Commission on May 5, 1987).                                 

3(f)      Certificate of Amendment of the Certificate of Incorporation as filed 
with the Secretary of State of New York on June 15, 1993    
         (incorporated by reference to Exhibit 3(f) to Company's Annual Report
on Form 10-K for Fiscal Year ended September 30, 1993).     

3(g)      By-laws of the Company (incorporated by reference to Exhibit 4.6 to   
  Company's Registration Statement on Form S-8 as filed with the
Securities and Exchange Commission on May 5, 1987).         

10(a)     1987 Stock Option Plan of the Company (incorporated by reference to   
        Exhibit 10(c) to the Company's Annual Report on Form 10-K for fiscal
year ended September 30, 1987).                             

10(b)     Retirement Agreement between Andal Corp. and Andrew J. Frankel and    
     Alan N. Cohen dated August 31, 1996 (incorporated by reference to
          Exhibit 10(a) to the Company's Current Report on Form 8-K dated August
30, 1996).                                                  

10(c)     Agreement and Plan of Merger by and among Bernex, Inc., M-A           
       Acquisition Corp., Andal Corp., and Multi-Arc Inc. (incorporated by
       reference to Exhibit 10(a) to Company's report on Form 8-K as filed
     with the Securities and Exchange Commission on October 15, 1997).

10(d)     First Amendment dated September 24, 1997 to the Agreement and Plan of 
         Merger by and among Bernex, Inc., M-A Acquisition Corp., Andal Corp.,
     and Multi-Arc Inc. (incorporated by reference to Exhibit 10(b) to
          Company's report on Form 8-K as filed with the Securities and Exchange
Commission on October 15, 1997).                            

10(e)     Second Amendment dated September 30, 1997 to the Agreement and Plan   
     of Merger by and among Bernex, Inc., M-A Acquisition Corp., Andal
   Corp., and Multi-Arc Inc. (incorporated by reference to Exhibit
          10(c) to Company's report on Form 8-K as filed with the Securities and
Exchange Commission on October 15, 1997).                   

10(f)     Escrow Agreement dated September 30, 1997 among Bernex, Inc., Multi-  
    Arc Inc., Andal Corp., as agent, and the Chase Manhattan Bank as
escrow agent.                                               

10(g)     Andal Escrow Agreement dated September 30, 1997 among Bernex, Inc.,   
          Multi-Arc Inc., Andal Corp., as agent, and the Chase Manhattan Bank as
escrow agent.                                               

10(h)     Expense Escrow Agreement dated September, 1997 among Bernex, Inc.,    
          Multi-Arc Inc., Andal Corp., as agent, and the Chase Manhattan Bank as
escrow agent.                                               

27        Financial Data Schedule                                               

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EXHIBIT 10(f)                                                                   
-------------                                                                   
ESCROW AGREEMENT              

     This Escrow Agreement, dated September 30, 1997 (the "Closing Date"), among
Bernex Inc., a Delaware corporation ("Parent"),  Multi-Arc Inc., a Delaware     
corporation (the "Company"), Andal Corp., a New York corporation, as agent for  
the Company Shareholders (as defined below) ("Andal"), and The Chase Manhattan  
Bank, a New York banking corporation, as escrow agent ("Escrow  Agent").        

This is the Escrow Agreement referred to in the Agreement and Plan of 
Merger dated June 9, 1997, as amended September 24, 1997 and September 30, 1997 
(the "Merger Agreement") among Parent, M-A Acquisition Corp., Andal and the     
Company.                                                                        

     Pursuant to Article 12 of the Merger Agreement, Andal has been appointed as
agent for the Company Shareholders to act on behalf of the Company Shareholders 
in connection with the Merger Agreement and this Escrow Agreement.              

The parties, intending to be legally bound, hereby agree as follows:  

1.   Establishment of Escrow                                                    

(a)  Simultaneously with the execution of this Agreement, Parent is   
depositing with Escrow Agent into the "Andal Corp. Expense Escrow" account      
(Account No. 10649) an amount equal to Two Million Nine Hundred and Twenty      
Thousand Dollars ($2,920,000) in immediately available funds (as increased by   
any earnings thereon and as reduced by any disbursements, amounts withdrawn     
under Section 5(j), or losses on investments, the "Escrow Fund").  Escrow Agent 
acknowledges receipt thereof.                                                   

(b)  Escrow Agent hereby agrees to act as escrow agent and to hold,   
safeguard and disburse the Escrow Fund pursuant to the terms and conditions     
hereof.                                                                         

2.   Investment of funds                                                        

  Except as Parent and Andal may from time to time jointly instruct Escrow
Agent in writing, the Escrow Fund shall be invested from time to time until     
disbursement of the entire Escrow Fund, to the extent possible, in direct       
obligations of, or obligations fully guaranteed or insured by, the United States
of America, or interest bearing accounts of any bank or trust company           
incorporated under the laws of the United States of America or any state, which 
has combined capital and surplus of not less than $100,000,000, in each case    
having maturity of not more than one year after the date of acquisition thereof.
Escrow Agent is authorized to liquidate in accordance with its customary        
procedures any portion of the Escrow Fund consisting of investments to provide  
for payments required to be made under this Agreement.                          

3.   Claims                                                                     

    (a)  From time to time on or before March 31, 1999, Parent may give notice
(a "Notice") to Andal and Escrow Agent specifying in reasonable detail the      
nature and dollar amount of any claim (a "Claim") it may have under Section 2.8,
Section 7.13, Article 10,  Section 11.2 or Section 11.3 of the Merger Agreement.
If Andal gives notice to Parent and Escrow Agent disputing any Claim (a "Counter
Notice") within 30 days following receipt by Escrow Agent of the Notice         
regarding such Claim, such Claim shall be resolved as provided in Section 3(b). 
If no Counter Notice is received by Escrow Agent within such 30-day period, then
the dollar amount of damages claimed by Parent as set forth in its Notice shall 
be deemed established for purposes of this Escrow Agreement and the Merger      
Agreement and, at the end of such 30-day period, Escrow Agent shall pay to      
Parent the dollar amount claimed in the Notice from the Escrow Fund.  Escrow    
Agent shall not inquire into or consider whether a Claim complies with the      
requirements of the Merger Agreement.                                           

 (b)  If a Counter Notice is given with respect to a Claim, Escrow Agent
shall make payment with respect thereto only in accordance with (i) joint       
written instructions of Parent and Andal or (ii) a final non-appealable order of
a court of competent jurisdiction.                                              

4.   Termination of Escrow                                                      

   (a)  On March 31, 1999, Escrow Agent shall pay and distribute, subject to
Section 4(c), the remaining balance of the Escrow Fund to the shareholders of   
the Company (each, a "Company Shareholder" and, collectively, the "Company      
Shareholders") in such proportions and to the address set forth for each Company
Shareholder as set forth on Schedule I attached hereto, unless (i) any Claims   
are then pending, in which case an amount equal to the aggregate dollar amount  
of such Claims (as shown in the Notices of such Claims) shall be retained by    
Escrow Agent in the Escrow Fund (and the balance paid to the Company            
Shareholders as aforesaid), or (ii) Parent has given notice to Andal and Escrow 
Agent specifying in reasonable detail the nature of any other claim it may have 
under Section 2.8, Section 7.13, Article 10, Section 11.2 or Section 11.3 of the
Merger Agreement with respect to which it is unable to specify the amount of    
Damages, in which case the entire Escrow Fund shall be retained by Escrow Agent.

(b)  Following the distribution pursuant to paragraph (a) above, any  
portion of the Escrow Fund not distributed in accordance with clauses (i) or    
(ii) of such paragraph (a) shall be retained by Escrow Agent until it receives  
joint written instructions of Parent and Andal or a final non-appealable order  
of a court of competent jurisdiction, in which case, subject to any contrary    
direction in such instruction or order, the Escrow Agent shall distribute,      
subject to Section 4(c), such remaining portion of the Escrow Fund to the       
Company Shareholders in such proportions and to the address set forth for each  
Company Shareholder as set forth on Schedule I attached hereto.                 

   (c)  Notwithstanding the foregoing, no distribution of any portion of the
Escrow Fund shall be made to any Company Shareholder set forth on Schedule II   
attached hereto unless and until the Escrow Agent receives joint written        
instructions of Parent and Andal or a final non-appealable order of a court of  
competent jurisdiction, in either case, to the effect that distributions may be 
made to such Company Shareholder, in which case the Escrow Agent shall then     
deliver to such Company Shareholder all distributions, without interest, to     
which such Company Shareholder was theretofore entitled.  Pending any such      
distribution, Escrow Agent shall hold all amounts allocable to such Company     
Shareholders pursuant to paragraph (a) above, in accordance with Section 2 of   
this Agreement.                                                                 

  (d)  On the second business day following the seven month anniversary of
the date the entire Escrow Fund shall have been distributed, other than amounts 
held pursuant to Section 4(c) or otherwise, the Escrow Agent shall distribute   
such amounts held pursuant to Section 4(c) to the Company.                      

5.   Duties of Escrow Agent                                                     

    (a)  Escrow Agent shall not be under any duty to give the Escrow Fund held
by it hereunder any greater degree of care than it gives its own similar        
property and shall not be required to invest any funds held hereunder except as 
directed in this Agreement.  Uninvested funds held hereunder shall not earn or  
accrue interest.                                                                

    (b)  Escrow Agent shall not be liable, except for its own gross negligence
or willful misconduct and, except with respect to claims based upon such gross  
negligence or willful misconduct that are successfully asserted against Escrow  
Agent, the other parties hereto shall jointly and severally indemnify and hold  
harmless Escrow Agent (and any successor Escrow Agent) from and against any and 
all losses, liabilities, claims, actions, damages and expenses, including       
reasonable attorneys' fees and disbursements, arising out of and in connection  
with this Agreement.  Without limiting the foregoing, Escrow Agent shall in no  
event be liable in connection with its investment or reinvestment of any cash   
held by it hereunder in good faith, in accordance with the terms hereof,        
including, without limitation, any liability for any reasonable delays in the   
investment or reinvestment of the Escrow Fund, or any loss of interest incident 
to any such delays.                                                             

(c)  Escrow Agent shall be entitled to rely upon any order, judgment, 
certification, demand, notice, instrument or other writing delivered to it      
hereunder without being required to determine the authenticity or the           
correctness of any fact stated therein or the propriety or validity of the      
service thereof.  Escrow Agent may act in reliance upon any instrument or       
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in      
connection with the provisions hereof has been duly authorized to do so.  Escrow
Agent may conclusively presume that the undersigned representative of any party 
hereto which is an entity other than a natural person (or any successor         
representative whom Escrow Agent has received notice of in accordance with      
Section 8 of this Agreement) has full power and authority to instruct Escrow    
Agent on behalf of that party unless written notice to the contrary is delivered
to Escrow Agent.                                                                

     (d)  Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action    
taken or omitted by it in good faith in accordance with such advice.            

   (e)  Escrow Agent does not have any interest in the Escrow Fund deposited
hereunder but is serving as escrow holder only and having only possession       
thereof.  Any payments of income from this Escrow Fund shall be subject to      
withholding regulations then in force with respect to United States taxes.  The 
parties hereto will provide Escrow Agent with appropriate Internal Revenue      
Service Forms W-9 for tax identification number certification, or non-resident  
alien certifications.  This Section 5(e) and Section 5(b) shall survive         
notwithstanding any termination of this Agreement or the resignation of Escrow  
Agent.                                                                          

(f)  Escrow Agent makes no representation as to the validity, value,  
genuineness or the collectability of any security or other document or          
instrument held by or delivered to it.                                          

  (g)  Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with     
respect to any securities or other property deposited hereunder.                

   (h)  Escrow Agent (and any successor Escrow Agent) may at any time resign
as such by delivering the Escrow Fund to any successor Escrow Agent jointly     
designated by the other parties hereto in writing, or to any court of competent 
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and    
all further obligations arising in connection with this Agreement.  The         
resignation of Escrow Agent will take effect on the earlier of (a) the          
appointment of a successor (including a court of competent jurisdiction) or (b) 
the day which is 30 days after the date of delivery of its written notice of    
resignation to the other parties hereto.  If at that time Escrow Agent has not  
received a designation of a successor Escrow Agent, Escrow Agent's sole         
responsibility after that time shall be to retain and safeguard the Escrow Fund 
until receipt of a designation of successor Escrow Agent or a joint written     
disposition instruction by the other parties hereto or a final non-appealable   
order of a court of competent jurisdiction.                                     

(i)  In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow 
Fund or in the event that Escrow Agent is in doubt as to what action it should  
take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until  
Escrow Agent shall have received (i) a final non-appealable order of a court of 
competent jurisdiction directing delivery of the Escrow Fund or (ii) a written  
agreement executed by the other parties hereto directing delivery of the Escrow 
Fund, in which event Escrow Agent shall disburse the Escrow Fund in accordance  
with such order or agreement.  Any court order shall be accompanied by a legal  
opinion by counsel for the presenting party satisfactory to Escrow Agent to the 
effect that the order is final and non-appealable.  Escrow Agent shall act on   
such court order and legal opinion without further question.                    

  (j)  The parties hereto (other than Escrow Agent) shall pay Escrow Agent
compensation (as payment in full) for the services to be rendered by Escrow     
Agent hereunder in the amount set forth on Schedule III hereto and agree to     
reimburse Escrow Agent for all reasonable expenses, disbursements and advances  
incurred or made by Escrow Agent in performance of its duties hereunder         
(including reasonable fees, expenses and disbursements of its counsel).  Any    
such compensation and reimbursement to which Escrow Agent is entitled shall be  
borne 50% by Parent and 50% by the Company Shareholders .  Any fees or expenses 
of Escrow Agent or its counsel that are not paid as provided for herein may     
be taken from any property held by Escrow Agent hereunder.                      

  (k)  The other parties hereto authorize Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities     
depository it reasonably deems appropriate, including, without limitation, the  
Depositary Trust Company and the Federal Reserve Book Entry System.             

6.   Limited Responsibility                                                     

 This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto.  No implied duties or          
obligations shall be read into this agreement against Escrow Agent.  Escrow     
Agent shall not be bound by the provisions of any agreement among the other     
parties hereto (to which Escrow Agent is not a party) except this Agreement.    

7.   Ownership for Tax Purposes                                                 

    Parent and Andal agree that, for purposes of federal and other taxes based
on income, the Company Shareholders will be treated as the owner of the Escrow  
Fund in such proportions as set forth on Schedule I, and that the Company       
Shareholders will report all income, if any, that is earned on, or derived from,
the Escrow Fund as their income, in such proportions, in the taxable year or    
years in which such income is properly includible and pay any taxes attributable
thereto.                                                                        

8.   Notices                                                                    

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

Parent or the Company:                                                

Bernex Inc.                                       
c/o Saurer AG                                     
Schlassgasse 2                                    
CH- 9320 Arbon                                    
Switzerland                                       
Attention:  Ernst Kessler, Director               
Telephone No.:  41-71-447-5282                    
Facsimile No.:  41-71-447-5288                    

and                                                         

Bernex Inc.                                       
c/o Berna AG Olten                                
Industriestrasse 211                              
CH- 4600 Olten                                    
Switzerland                                       
  Attention:  Thomas Weilenmann, Chairman of the Board
Telephone No.:  41-62-287-8787                    
Facsimile No.:  41-62-287-8788                    

and                                                         

Bernex Inc.                                       
c/o Saurer Textile Systems Charlotte Inc.         
4200 Performance Road                             
P.O. Box 668027                                   
Charlotte, North Carolina   28266                 
Attention:  George E. Rickles III                 
Telephone No.: (704) 394-8111                     
Facsimile No.: (704) 394-1502                     

with a copy to:                                             

Akin, Gump, Strauss, Hauer & Feld, LLP            
2029 Century Park East, Suite 4150                
Los Angeles, California  90067                    
Attention:  Gary Apfel, Esq.                      
Telephone No.: 310-229-1040                       
Facsimile No.:  310-229-3870                      

Andal:                                                                

c/o Messrs. Andrew J. Frankel and Alan N. Cohen   
909 Third Avenue                                  
New York, New York   10022                        
Telephone No.:   (212) 376-5545                   
Facsimile No.:    (212) 376-5669                  

with copies to:                                             

Dillon, Bitar & Luther                            
53 Maple Avenue                                   
Morristown, New Jersey  07963                     
Attention: William F. Campbell, III, Esq.         
Telephone No.: (201) 539-3100                     
Facsimile No.:  (201) 292-2960                    

and                                                         

Paul, Weiss, Rifkind, Wharton & Garrison          
1285 Avenue of the Americas                       
New York, New York  10019-6064                    
Attention:     Neale Albert, Esq. and             
Alfred Youngwood, Esq.                                                
Telephone No.: (212) 373-3000                     
Facsimile No.:  (212) 373-2315                    

Escrow Agent:                                                         
The Chase Manhattan Bank                          
270 Park Avenue                                   
New York, New York  10017                         

Attention:  Mr. William Ponce                     
Telephone No.: (212) 789-4108                     
Facsimile No.:  (212) 270-4823                    

9.   Jurisdiction; Service of Process                                           

   Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the      
parties in the courts of the State of New York, County of New York, or, if it   
has or can acquire jurisdiction, in the United States District Court for the    
Southern District of New York, and each of the parties consents to the          
jurisdiction of such courts (and of the appropriate appellate courts) in any    
such action or proceeding and waives any objection to venue laid therein.       
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.                                      

10.  Counterparts                                                               

   This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original and all of which, when taken together, will be 
deemed to constitute one and the same.                                          

11.  Section Headings                                                           

 The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.                    

12.  Waiver                                                                     

     The rights and remedies of the parties to this Agreement are cumulative and
not alternative.  Neither the failure nor any delay by any party in exercising  
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,  
and no single or partial exercise of any such right, power, or privilege will   
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent        
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,  
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party   
will be applicable except in the specific instance for which it is given; and   
(c) no notice to or demand on one party will be deemed to be a waiver of any    
obligation of such party or of the right of the party giving such notice or     
demand to take further action without notice or demand as provided in this      
Agreement or the documents referred to in this Agreement.                       

13.  Exclusive Agreement and Modification                                       

This Agreement supersedes all prior agreements among the parties with 
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the    
agreement between the parties with respect to its subject matter.  This         
Agreement may not be amended except by a written agreement executed by the      
parties hereto.                                                                 

14.  Assignments, successors and no third-party rights                          

    Neither Parent nor Andal may assign any of its rights under this Agreement
without the prior consent of the other, except that Parent shall be entitled to 
assign this Agreement to any Affiliate of Parent, provided that such assigning  
party shall remain liable for all of its liabilities and obligations hereunder. 
Subject to the preceding sentence, this Agreement will apply to, be binding in  
all respects upon, and inure to the benefit of the successors and permitted     
assigns of the parties.  Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any    
legal or equitable right, remedy, or claim under or with respect to this        
Agreement or any provision of this Agreement.  This Agreement and all of its    
provisions and conditions are for the sole and exclusive benefit of the parties 
to this Agreement and their successors and assigns.                             

15.  Governing Law                                                              

This Agreement shall be governed by the laws of the State of New York,
without regard to conflicts of law principles.                                  

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

PARENT:   

 BERNEX INC.

By:       

                         Name: Thomas Weilenmann
                                Title:    Chairman ofthe Board

COMPANY:  

    MULTI-ARC INC.

By:       

                      Name: Peter D. Flood
                  Title: President

ANDAL:    

           ANDAL CORP., as Agent

By:       

                     Name: Peter D Flood
                                    Title: Chairman, President and CEO

   ESCROW AGENT:

              THE CHASE MANHATTAN BANK

By:       

       Name:

        Title:

                                        SCHEDULE I

Company Shareholders              

Name and Address                                                                
Percentage (%)                                                                  

                                       SCHEDULE II

Company Shareholders Subject to Section 4(c)              

                                      SCHEDULE III

Compensation of Escrow Agent              

Two thousand dollars ($2,000) plus a $25 fee for every check                    
issued by the Escrow Agent.                                                     

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EXHIBIT 10(g)                                                                   
-------------                                                                   
ANDAL ESCROW AGREEMENT              

     This Escrow Agreement, dated September 30, 1997 (the "Closing Date"), among
Bernex Inc., a Delaware corporation ("Parent"),  Multi-Arc Inc., a Delaware     
corporation (the "Company"), Andal Corp., a New York corporation ("Andal"), and 
The Chase Manhattan Bank, a New York banking corporation, as escrow agent       
("Escrow Agent").                                                               

     This is the Andal Escrow Agreement referred to in the Agreement and Plan of
Merger dated June 9, 1997, as amended September 24, 1997 and September 30, 1997 
(the "Merger Agreement") among Parent, M-A Acquisition Corp., Andal and the     
Company.                                                                        

The parties, intending to be legally bound, hereby agree as follows:  

16.  Establishment of Escrow                                                    

(a)  Simultaneously with the execution of this Agreement, Parent is   
depositing with Escrow Agent into the "Andal Corp. Escrow Agreement" account    
(Account No. 106-50-60) an amount equal to Nine Hundred Fifty Five Thousand     
Dollars ($955,000) in immediately available funds (as increased by any earnings 
thereon and as reduced by any disbursements, amounts withdrawn under Section    
5(j), or losses on investments, the "Andal Escrow Fund").  Escrow Agent         
acknowledges receipt thereof.                                                   

(b)  Escrow Agent hereby agrees to act as escrow agent and to hold,   
safeguard and disburse the Andal Escrow Fund pursuant to the terms and          
conditions hereof.                                                              

17.  Investment of funds                                                        

  Except as Parent and Andal may from time to time jointly instruct Escrow
Agent in writing, the Andal Escrow Fund shall be invested from time to time     
until disbursement of the entire Andal Escrow Fund, to the extent possible, in  
direct obligations of, or obligations fully guaranteed or insured by, the United
States of America, or interest bearing accounts of any bank or trust company    
incorporated under the laws of the United States of America or any state, which 
has combined capital and surplus of not less than $100,000,000, in each case    
having maturity of not more than one year after the date of acquisition thereof.
Escrow Agent is authorized to liquidate in accordance with its customary        
procedures any portion of the Andal Escrow Fund consisting of investments to    
provide for payments required to be made under this Agreement.                  

18.  Claims                                                                     

   (a)  From time to time on or before July 31, 2002, Parent may give notice
(a "Notice") to Andal and Escrow Agent specifying in reasonable detail the      
nature and dollar amount of any claim (a "Section 11.7 Claim") it may have under
Section 11.7(a) of the Merger Agreement.  If Andal gives notice to Parent and   
Escrow Agent disputing any Section 11.7 Claim (a "Counter Notice") within 30    
days following receipt by Escrow Agent of the Notice regarding such Section 11.7
Claim, such Section 11.7 Claim shall be resolved as provided in Section 3(c).   
If no Counter Notice is received by Escrow Agent within such 30-day period, then
the dollar amount of damages claimed by Parent as set forth in its Notice shall 
be deemed established for purposes of this Escrow Agreement and the Merger      
Agreement and, at the end of such 30-day period, Escrow Agent shall pay to      
Parent the dollar amount claimed in the Notice from the Andal Escrow Fund.      
Escrow Agent shall not inquire into or consider whether a Section 11.7 Claim    
complies with the requirements of the Merger Agreement.                         

  (b)  From time to time on or before July 31, 2002, Andal may give notice
(an "Andal Notice") to Parent and Escrow Agent specifying in reasonable detail  
the nature and dollar amount of (i) any taxes actually paid by it to the        
applicable taxing authority with respect to earnings on the Andal Escrow Fund of
which Andal is the owner pursuant to Section 7 hereof, including a calculation  
prepared by an independent accounting firm as to the amount of such taxes (a    
"Tax Claim") or (ii) either (A) taxes actually paid to New York City by Andal   
pursuant to Section 11.7(b) of the Merger Agreement or (B) taxes proposed to be 
paid to New York City by Andal pursuant to Section 11.7(b) of the Merger        
Agreement, together with written evidence in form and substance satisfactory to 
Parent in its sole reasonable discretion that upon such proposed payment, the   
full amount of the Second Assessment referred to in Section 11.7 of the Merger  
Agreement will have been paid in full (including all accrued interest through   
the date of payment) and notice of the New York City account to which any such  
proposed payment should be made (any such amount under this clause (ii) not to  
exceed $455,000) (a "NYC Repayment Claim").  If Parent gives notice to Andal and
Escrow Agent disputing any Tax Claim or NYC Repayment Claim (a "Parent Counter  
Notice") within 30 days following receipt by Escrow Agent of the Andal Notice   
regarding such Tax Claim or NYC Repayment Claim, as the case may be, such Tax   
Claim or NYC Repayment Claim shall be resolved as provided in Section 3(c).     
If no Parent Counter Notice is received by Escrow Agent within such 30-day      
period, then the dollar amount claimed by Andal as set forth in the Andal Notice
shall be deemed established for purposes of this Escrow Agreement and, at the   
end of such 30-day period, Escrow Agent shall pay the dollar amount claimed in  
the Andal Notice from the Andal Escrow Fund to Andal (in the case of a notice   
given pursuant to clause (ii)(A) above) or New York City to the account         
designated in the Andal Notice (in the case of a notice given pursuant to clause
(ii)(B) above).  Andal agrees to use to the fullest extent possible any and all 
deductions, tax credits, net operating loss carryforwards, and any other tax    
benefits available to it to minimize the amount of taxes payable pursuant to    
clause (i) of the first sentence of this Section 3(b).                          

    (c)  If a Counter Notice or Parent Counter Notice is given with respect to
a Section 11.7 Claim, a Tax Claim or a NYC Repayment Claim, as the case may be, 
Escrow Agent shall make payment with respect thereto only in accordance with (i)
joint written instructions of Parent and Andal or (ii) a final non-appealable   
order of a court of competent jurisdiction.                                     

19.  Termination of Escrow                                                      

       (a)  On July 31, 2002 (the "Distribution Date"), Escrow Agent shall
pay and distribute the sum of Three Hundred Thousand Dollars ($300,000) plus    
interest earned thereon in accordance with Section 2 from the date hereof       
through the Distribution Date (or, if less, the entire remaining balance of the 
Andal Escrow Fund) to Parent, and the remaining balance of the Andal Escrow     
Fund, if any, to Andal, unless the Escrow Agent shall have received joint       
written instructions from Parent and Andal to the effect that the entire        
remaining balance of the Andal Escrow Fund on the Distribution Date should be   
distributed to Andal, in which case the Andal Escrow Fund shall be disbursed in 
such manner (or such other manner specified in such joint written instructions).
Notwithstanding the foregoing, in the event that on the Distribution Date (i)   
any Section 11.7 Claims are pending, an amount equal to the aggregate dollar    
amount of such claims (as shown in the notices of such claims) shall be deducted
from the amount otherwise payable to Andal, and retained by Escrow Agent in the 
Andal Escrow Fund, (ii) any Tax Claims or NYC Repayment Claims are pending, an  
amount equal to the aggregate dollar amount of such claims (as shown in the     
notices of such claims) shall be deducted from the amount otherwise payable to  
Andal (with any remaining amount in dispute deducted from the amount otherwise  
payable to Parent), and retained by Escrow Agent in the Andal Escrow Fund or    
(iii) Parent has given notice to Andal and Escrow Agent specifying in reasonable
detail the nature of any other claim it may have under Section 11.7 of the      
Merger Agreement with respect to which it is unable to specify the amount of    
Damages, the entire amount of the Andal Escrow Fund otherwise payable to Andal  
shall be retained by Escrow Agent in the Andal Escrow Fund.                     

(b)  Following the distributions pursuant to paragraph (a) above, any 
portion of the Andal Escrow Fund not distributed in accordance with the second  
sentence of such paragraph (a) shall be retained by Escrow Agent until it       
receives joint written instructions of Parent and Andal or a final non-         
appealable order of a court of competent jurisdiction, in which case, subject to
any contrary direction in such instruction or order, the Escrow Agent shall     
distribute such remaining portion of the Andal Escrow Fund to Andal.            

20.  Duties of Escrow Agent                                                     

     (a)  Escrow Agent shall not be under any duty to give the Andal Escrow Fund
held by it hereunder any greater degree of care than it gives its own similar   
property and shall not be required to invest any funds held hereunder except as 
directed in this Agreement.  Uninvested funds held hereunder shall not earn or  
accrue interest.                                                                

    (b)  Escrow Agent shall not be liable, except for its own gross negligence
or willful misconduct and, except with respect to claims based upon such gross  
negligence or willful misconduct that are successfully asserted against Escrow  
Agent, the other parties hereto shall jointly and severally indemnify and hold  
harmless Escrow Agent (and any successor Escrow Agent) from and against any and 
all losses, liabilities, claims, actions, damages and expenses, including       
reasonable attorneys' fees and disbursements, arising out of and in connection  
with this Agreement.  Without limiting the foregoing, Escrow Agent shall in no  
event be liable in connection with its investment or reinvestment of any cash   
held by it hereunder in good faith, in accordance with the terms hereof,        
including, without limitation, any liability for any reasonable delays in the   
investment or reinvestment of the Andal Escrow Fund, or any loss of interest    
incident to any such delays.                                                    

(c)  Escrow Agent shall be entitled to rely upon any order, judgment, 
certification, demand, notice, instrument or other writing delivered to it      
hereunder without being required to determine the authenticity or the           
correctness of any fact stated therein or the propriety or validity of the      
service thereof.  Escrow Agent may act in reliance upon any instrument or       
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in      
connection with the provisions hereof has been duly authorized to do so.  Escrow
Agent may conclusively presume that the undersigned representative of any party 
hereto which is an entity other than a natural person (or any successor         
representative whom Escrow Agent has received notice of in accordance with      
Section 8 of this Agreement) has full power and authority to instruct Escrow    
Agent on behalf of that party unless written notice to the contrary is delivered
to Escrow Agent.                                                                

     (d)  Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action    
taken or omitted by it in good faith in accordance with such advice.            

(e)  Escrow Agent does not have any interest in the Andal Escrow Fund 
deposited hereunder but is serving as escrow holder only and having only        
possession thereof.  Any payments of income from this Andal Escrow Fund shall be
subject to withholding regulations then in force with respect to United States  
taxes.  The parties hereto will provide Escrow Agent with appropriate Internal  
Revenue Service Forms W-9 for tax identification number certification, or non-  
resident alien certifications.  This Section 5(e) and Section 5(b) shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow  
Agent.                                                                          

(f)  Escrow Agent makes no representation as to the validity, value,  
genuineness or the collectability of any security or other document or          
instrument held by or delivered to it.                                          

  (g)  Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with     
respect to any securities or other property deposited hereunder.                

   (h)  Escrow Agent (and any successor Escrow Agent) may at any time resign
as such by delivering the Andal Escrow Fund to any successor Escrow Agent       
jointly designated by the other parties hereto in writing, or to any court of   
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from  
any and all further obligations arising in connection with this Agreement.  The 
resignation of Escrow Agent will take effect on the earlier of (a) the          
appointment of a successor (including a court of competent jurisdiction) or (b) 
the day which is 30 days after the date of delivery of its written notice of    
resignation to the other parties hereto.  If at that time Escrow Agent has not  
received a designation of a successor Escrow Agent, Escrow Agent's sole         
responsibility after that time shall be to retain and safeguard the Andal Escrow
Fund until receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final non-appealable   
order of a court of competent jurisdiction.                                     

(i)  In the event of any disagreement between the other parties       
hereto resulting in adverse claims or demands being made in connection with the 
Andal Escrow Fund or in the event that Escrow Agent is in doubt as to what      
action it should take hereunder, Escrow Agent shall be entitled to retain the   
Andal Escrow Fund until Escrow Agent shall have received (i) a final non-       
appealable order of a court of competent jurisdiction directing delivery of the 
Andal Escrow Fund or (ii) a written agreement executed by the other parties     
hereto directing delivery of the Andal Escrow Fund, in which event Escrow Agent 
shall disburse the Andal Escrow Fund in accordance with such order or agreement.
Any court order shall be accompanied by a legal opinion by counsel for the      
presenting party satisfactory to Escrow Agent to the effect that the order is   
final and non-appealable.  Escrow Agent shall act on such court order and legal 
opinion without further question.                                               

     (j)  Andal shall pay Escrow Agent compensation (as payment in full) for the
services to be rendered by Escrow Agent hereunder in the amount set forth on    
Schedule I hereto and agree to reimburse Escrow Agent for all reasonable        
expenses, disbursements and advances incurred or made by Escrow Agent in        
performance of its duties hereunder (including reasonable fees, expenses and    
disbursements of its counsel).  Any fees or expenses of Escrow Agent or its     
counsel that are not paid as provided for herein may be taken from any property 
held by Escrow Agent hereunder, provided, that if Parent is entitled under the  
terms of the Merger Agreement or this Agreement to the amount of funds taken    
from the Andal Escrow Fund to satisfy such fees or expenses, Andal shall make   
payment to Parent of such amount at the time such portion of the Andal Escrow   
Fund would have otherwise been paid to Parent.                                  

  (k)  The other parties hereto authorize Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities     
depository it reasonably deems appropriate, including, without limitation, the  
Depositary Trust Company and the Federal Reserve Book Entry System.             

21.  Limited Responsibility                                                     

 This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto.  No implied duties or          
obligations shall be read into this agreement against Escrow Agent.  Escrow     
Agent shall not be bound by the provisions of any agreement among the other     
parties hereto (to which Escrow Agent is not a party) except this Agreement.    

22.  Ownership for Tax Purposes                                                 

    Parent and Andal agree that, for purposes of federal and other taxes based
on income, Andal will be treated as the owner of the Andal Escrow Fund and will 
report all income, if any, that is earned on, or derived from, the Andal Escrow 
Fund as its income in the taxable year or years in which such income is properly
includible and pay any taxes attributable thereto.                              

23.  Notices                                                                    

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

Parent or the Company:                                                

Bernex Inc.                                       
c/o Saurer AG                                     
Schlassgasse 2                                    
CH- 9320 Arbon                                    
Switzerland                                       
Attention:  Ernst Kessler, Director               
Telephone No.:  41-71-447-5282                    
Facsimile No.:  41-71-447-5288                    

and                                                         

Bernex Inc.                                       
c/o Berna AG Olten                                
Industriestrasse 211                              
CH- 4600 Olten                                    
Switzerland                                       
  Attention:  Thomas Weilenmann, Chairman of the Board
Telephone No.:  41-62-287-8787                    
Facsimile No.:  41-62-287-8788                    

and                                                         

Bernex Inc.                                       
c/o Saurer Textile Systems Charlotte Inc.         
4200 Performance Road                             
P.O. Box 668027                                   
Charlotte, North Carolina   28266                 
Attention:  George E. Rickles III                 
Telephone No.: (704) 394-8111                     
Facsimile No.: (704) 394-1502                     

with a copy to:                                             

Akin, Gump, Strauss, Hauer & Feld, LLP            
2029 Century Park East, Suite 4150                
Los Angeles, California  90067                    
Attention:  Gary Apfel, Esq.                      
Telephone No.: 310-229-1040                       
Facsimile No.:  310-229-3870                      

Andal:                                                                

c/o Messrs. Andrew J. Frankel and Alan N. Cohen   
909 Third Avenue                                  
New York, New York   10022                        
Telephone No.:   (212) 376-5545                   
Facsimile No.:    (212) 376-5669                  

with copies to:                                             

Dillon, Bitar & Luther                            
53 Maple Avenue                                   
Morristown, New Jersey  07963                     
Attention: William F. Campbell, III, Esq.         
Telephone No.: (201) 539-3100                     
Facsimile No.:  (201) 292-2960                    

and                                                         

Paul, Weiss, Rifkind, Wharton & Garrison          
1285 Avenue of the Americas                       
New York, New York  10019-6064                    
          Attention:     Neale Albert, Esq. and Alfred Youngwood, Esq.
Telephone No.: (212) 373-3000                     
Facsimile No.:  (212) 373-2315                    

Escrow Agent:                                                         

The Chase Manhattan Bank                          
270 Park Avenue                                   
New York, New York  10017                         

Attention:  Mr. William Ponce                     
Telephone No.: (212) 789-4108                     
Facsimile No.:  (212) 270-4823                    

24.  Jurisdiction; Service of Process                                           

   Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the      
parties in the courts of the State of New York, County of New York, or, if it   
has or can acquire jurisdiction, in the United States District Court for the    
Southern District of New York, and each of the parties consents to the          
jurisdiction of such courts (and of the appropriate appellate courts) in any    
such action or proceeding and waives any objection to venue laid therein.       
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.                                      

25.  Counterparts                                                               

   This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original and all of which, when taken together, will be 
deemed to constitute one and the same.                                          

26.  Section Headings                                                           

 The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.                    

27.  Waiver                                                                     

     The rights and remedies of the parties to this Agreement are cumulative and
not alternative.  Neither the failure nor any delay by any party in exercising  
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,  
and no single or partial exercise of any such right, power, or privilege will   
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent        
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,  
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party   
will be applicable except in the specific instance for which it is given; and   
(c) no notice to or demand on one party will be deemed to be a waiver of any    
obligation of such party or of the right of the party giving such notice or     
demand to take further action without notice or demand as provided in this      
Agreement or the documents referred to in this Agreement.                       

28.  Exclusive Agreement and Modification                                       

This Agreement supersedes all prior agreements among the parties with 
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the    
agreement between the parties with respect to its subject matter.  This         
Agreement may not be amended except by a written agreement executed by the      
parties hereto.                                                                 

29.  Assignments, successors and no third-party rights                          

    Neither Parent nor Andal may assign any of its rights under this Agreement
without the prior consent of the other, except that Parent shall be entitled to 
assign this Agreement to any Affiliate of Parent, provided that such assigning  
party shall remain liable for all of its liabilities and obligations hereunder. 
Subject to the preceding sentence, this Agreement will apply to, be binding in  
all respects upon, and inure to the benefit of the successors and permitted     
assigns of the parties.  Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any    
legal or equitable right, remedy, or claim under or with respect to this        
Agreement or any provision of this Agreement.  This Agreement and all of its    
provisions and conditions are for the sole and exclusive benefit of the parties 
to this Agreement and their successors and assigns.                             

30.  Governing Law                                                              

This Agreement shall be governed by the laws of the State of          
New York, without regard to conflicts of law principles.                        

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

PARENT:   

 BERNEX INC.

By:       

                          Name:  Thomas Weilenmann
                                  Title:     Chairman of the Board

COMPANY:  

    MULTI-ARC INC.

By:       

                       Name:    Peter D. Flood
                     Title:      President

ANDAL:    

 ANDAL CORP.

By:       

                          Name:     Peter D. Flood
                                       Title:    Chairman, President and CEO

   ESCROW AGENT:

              THE CHASE MANHATTAN BANK

By:       

       Name:

        Title:
                                    SCHEDULE I

Compensation of Escrow Agent              

Two Thousand Dollars ($2,000).                                                  

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EXHIBIT 10(h)                                                                   
-------------                                                                   

EXPENSE ESCROW AGREEMENT              

This Escrow Agreement, dated September 30, 1997 (the "Closing  Date"),
between Andal Corp., a New York corporation, as representative                  
("Representative") of the Company Shareholders (as defined below) ("Andal"), and
The Chase Manhattan Bank, a New York banking corporation, as escrow agent       
("Expense Escrow Agent").                                                       

    This is the Expense Escrow Agreement referred to in the Agreement and Plan
of Merger dated June 9, 1997 (the "Merger Agreement"), among BERNEX Inc. \      
("Parent"), M-A Acquisition Corp., Andal and Multi-Arc Inc. (the "Company").    

     Pursuant to Article 12 of the Merger Agreement, Andal has been appointed as
Representative of the Company Shareholders to act on behalf of the Company      
Shareholders in connection with this Expense Escrow Agreement.                  

The parties, intending to be legally bound, hereby agree as follows:  

    i.        Establishment of Escrow.    Simultaneously with the execution of
            this Agreement, Parent is depositing with Expense Escrow Agent
               into the "Andal Corp. Expense Account Agreement" account (Account
       No. 106-47-60) an amount equal to Seven Hundred and Fifty
            Thousand Dollars ($750,000) in immediately available funds (as
     increased by any earnings thereon and as reduced by any
               disbursements, amounts withdrawn under Section 5(j), or losses on
            investments, the "Expense Escrow Fund").  Expense Escrow Agent
acknowledges receipt thereof.                     

          (1)      Expense Escrow Agent hereby agrees to act as escrow
                     agent and to hold, safeguard and disburse the Expense
                        Escrow Fund pursuant to the terms and conditions hereof.

ii.       Investment Of Funds.  Except as Andal may from time to time 
               instruct Expense Escrow Agent in writing, the Expense Escrow Fund
           shall be invested from time to time until disbursement of the
           entire Expense Escrow Fund, to the extent possible, in direct
            obligations of, or obligations fully guaranteed or insured by,
               the United States of America, or interest bearing accounts of any
             bank or trust company incorporated under the laws of the United
            States of America or any state, which has combined capital and
        surplus of not less than $100,000,000, in each case having
              maturity of not more than one year after the date of acquisition
          thereof.  Expense Escrow Agent is authorized to liquidate in
         accordance with its customary procedures any portion of the
          Expense Escrow Fund consisting of investments to provide for
payments required to be made under this Agreement.

  iii.      Claims.    From time to time on or before the end of the three
         month period beginning on the Closing Date, any Third-Party
             Beneficiary (as defined below), including the Company, may give
              notice (a "Notice") to Andal and Expense Escrow Agent specifying
               in reasonable detail the nature and dollar amount of any claim (a
   "Claim") it may have against the Company, the Company
           Shareholders (as defined below) or Andal for payment of fees,
             disbursements or other expenses incurred in connection with the
              negotiation, execution or performance of the Merger Agreement or
            the Contemplated Transactions ("Expenses"), in the case of the
              Company, for the period ending at the Effective Time (as defined
          in the Merger Agreement).  Andal shall give notice within 15
          days following receipt by Andal of the Notice regarding such
             Claim to Expense Escrow Agent either (i) disputing any Claim (a
               "Counter Notice"),  in which case such Claim shall be resolved as
        provided in Section 3(b), or (ii) approving such Claim (an
            "Approval Notice"), in which case the dollar amount claimed by
              such Third-Party Beneficiary as set forth in its Notice shall be
              deemed established for purposes of this Expense Escrow Agreement
            and, prior to the end of the 5-day period following receipt by
              the Expense Escrow Agent of such Approval Notice, Expense Escrow
               Agent shall pay to such Third-Party Beneficiary the dollar amount
          claimed in the Notice from the Expense Escrow Fund.  Expense
             Escrow Agent shall not inquire into or consider the validity of
any Claim.                                        

   (1)       If a Counter Notice is given with respect to a Claim,
                    Expense Escrow Agent shall make payment with respect thereto
                 only in accordance with (i) joint written instructions of
                    the Third-Party Beneficiary who made such Claim and Andal or
                 (ii) a final non-appealable order of a court of competent
jurisdiction.                           

iv.       Termination Of Escrow.    On the date which next follows the
           final date of the three month period beginning on the Closing
             Date, Expense Escrow Agent shall pay and distribute, subject to
               Section 4(c), the remaining balance of the Expense Escrow Fund to
            the shareholders of the Company (each, a "Company Shareholder"
    and, collectively, the "Company Shareholders") in such
       proportions and to the address set forth for each Company
            Shareholder as set forth on Schedule I attached hereto, unless
               any Claims are then pending, in which case an amount equal to the
             aggregate dollar amount of such Claims (as shown in the Notices
              of such Claims) shall be retained by Expense Escrow Agent in the
      Expense Escrow Fund (and the balance paid to the Company
Shareholders as aforesaid).                       

         (1)       Following the distribution pursuant to paragraph (a) above,
                 any portion of the Expense Escrow Fund not distributed in
                   accordance with such paragraph (a) as a result of a pending
                 Claim of any Third-Party Beneficiary shall be retained by
            Expense Escrow Agent until it receives joint written
                   instructions of such Third-Party Beneficiary and Andal or a
          final non-appealable order of a court of competent
            jurisdiction, in which case, subject to any contrary
                  direction in such instruction or order, the Expense Escrow
             Agent shall distribute, subject to Section 4(c), such
                    remaining portion of the Expense Escrow Fund relating to the
            Claim of such Third-Party Beneficiary to the Company
               Shareholders in such proportions and to the address set
                   forth for each Company Shareholder as set forth on Schedule
I attached hereto.                      

   (2)       Notwithstanding the foregoing, no distribution of any
               portion of the Expense Escrow Fund shall be made to any
                    Company Shareholder set forth on Schedule II attached hereto
                  unless and until the Expense Escrow Agent receives written
                  instructions of Andal or a final non-appealable order of a
               court of competent jurisdiction, in either case, to the
             effect that distributions may be made to such Company
                 Shareholder, in which case the Expense Escrow Agent shall
                   then deliver to such Company Shareholder all distributions,
               without interest, to which such Company Shareholder was
             theretofore entitled.  Pending any such distribution,
                Expense Escrow Agent shall hold all amounts allocable to
                  such Company Shareholders pursuant to paragraph (a) above,
       in accordance with Section 2 of this Agreement.

  (3)       On the second business day following the seven month
                    anniversary of the date the entire Expense Escrow Fund shall
                  have been distributed, other than amounts held pursuant to
                 Section 4(c) or otherwise, the Expense Escrow Agent shall
                    distribute such amounts held pursuant to Section 4(c) to the
Company.                                

     v.        Duties Of Expense Escrow Agent.    Expense Escrow Agent shall not
          be under any duty to give the Expense Escrow Fund held by it
        hereunder any greater degree of care than it gives its own
            similar property and shall not be required to invest any funds
              held hereunder except as directed in this Agreement.  Uninvested
     funds held hereunder shall not earn or accrue interest.

          (1)       Expense Escrow Agent shall not be liable, except for its own
               gross negligence or willful misconduct and, except with
                 respect to claims based upon  gross negligence or willful
                 misconduct that are successfully asserted against Expense
                Escrow Agent, the other parties hereto shall jointly and
                  severally indemnify and hold harmless Expense Escrow Agent
                 (and any successor Expense Escrow Agent) from and against
                 any and all losses, liabilities, claims, actions, damages
              and expenses, including reasonable attorneys' fees and
                 disbursements, arising out of and in connection with this
                  Agreement.  Without limiting the foregoing, Expense Escrow
                Agent shall in no event be liable in connection with its
                   investment or reinvestment of any cash held by it hereunder
           in good faith, in accordance with the terms hereof,
            including, without limitation, any liability for any
                  reasonable delays in the investment or reinvestment of the
                    Expense Escrow Fund, or any loss of interest incident to any
such delays.                            

     (2)       Expense Escrow Agent shall be entitled to rely upon any
                  order, judgment, certification, demand, notice, instrument
                or other writing delivered to it hereunder without being
                    required to determine the authenticity or the correctness of
                   any fact stated therein or the propriety or validity of the
                  service thereof.  Expense Escrow Agent may act in reliance
             upon any instrument or signature believed by it to be
                 genuine and may assume that the person purporting to give
              receipt or advice or make any statement or execute any
                  document in connection with the provisions hereof has been
           duly authorized to do so.  Expense Escrow Agent may
                conclusively presume that the undersigned representative
                   of any party hereto which is an entity other than a natural
                   person (or any successor representative whom Expense Escrow
                    Agent has received notice of in accordance with Section 8 of
                this Agreement) has full power and authority to instruct
                   Expense Escrow Agent on behalf of that party unless written
                    notice to the contrary is delivered to Expense Escrow Agent.

    (3)       Expense Escrow Agent may act pursuant to the advice of
           counsel with respect to any matter relating to this
                 Agreement and shall not be liable for any action taken or
                   omitted by it in good faith in accordance with such advice.

    (4)       Expense Escrow Agent does not have any interest in the
                 Expense Escrow Fund deposited hereunder but is serving as
                   escrow holder only and having only possession thereof.  Any
                 payments of income from this Expense Escrow Fund shall be
             subject to withholding regulations then in force with
                respect to United States taxes.  The parties hereto will
              provide Expense Escrow Agent with appropriate Internal
               Revenue Service Forms W-9 for tax identification number
                  certification, or non-resident alien certifications.  This
                   Section 5(e) and Section 5(b) shall survive notwithstanding
               any termination of this Agreement or the resignation of
Expense Escrow Agent.                   

    (5)       Expense Escrow Agent makes no representation as to the
                 validity, value, genuineness or the collectability of any
           security or other document or instrument held by or
delivered to it.                        

         (6)       Expense Escrow Agent shall not be called upon to advise any
                   party as to the wisdom in selling or retaining or taking or
                    refraining from any action with respect to any securities or
other property deposited hereunder.     

    (7)       Expense Escrow Agent (and any successor Expense Escrow
               Agent) may at any time resign as such by delivering the
                 Expense Escrow Fund to any successor Expense Escrow Agent
                  jointly designated by the other parties hereto in writing,
                    or to any court of competent jurisdiction, whereupon Expense
                Escrow Agent shall be discharged of and from any and all
           further obligations arising in connection with this
                Agreement.  The resignation of Expense Escrow Agent will
              take effect on the earlier of (a) the appointment of a
                  successor (including a court of competent jurisdiction) or
                  (b) the day which is 30 days after the date of delivery of
              its written notice of resignation to the other parties
             hereto.  If at that time Expense Escrow Agent has not
                   received a designation of a successor Expense Escrow Agent,
                  Expense Escrow Agent's sole responsibility after that time
                shall be to retain and safeguard the Expense Escrow Fund
                  until receipt of a designation of successor Expense Escrow
               Agent or a joint written disposition instruction by the
                 other parties hereto or a final non-appealable order of a
court of competent jurisdiction.        

        (8)       In the event of any disagreement between the other parties
                   hereto resulting in adverse claims or demands being made in
                    connection with the Expense Escrow Fund or in the event that
                    Expense Escrow Agent is in doubt as to what action it should
                 take hereunder, Expense Escrow Agent shall be entitled to
                 retain the Expense Escrow Fund until Expense Escrow Agent
                shall have received (i) a final nonappealable order of a
                 court of competent jurisdiction directing delivery of the
                   Expense Escrow Fund or (ii) a written agreement executed by
                  the other parties hereto directing delivery of the Expense
              Escrow Fund, in which event Expense Escrow Agent shall
                disburse the Expense Escrow Fund in accordance with such
                    order or agreement.  Any court order shall be accompanied by
           a legal opinion by counsel for the presenting party
                   satisfactory to Expense Escrow Agent to the effect that the
               order is final and nonappealable.  Expense Escrow Agent
               shall act on such court order and legal opinion without
further question.                       

     (9)       The Company Shareholders shall pay Expense Escrow Agent
                compensation (as payment in full) for the services to be
                rendered by Expense Escrow Agent hereunder in the amount
               set forth on Schedule III hereto and agree to reimburse
         Expense Escrow Agent for all reasonable expenses,
              disbursements and advances incurred or made by Expense
           Escrow Agent in performance of its duties hereunder
                 (including reasonable fees, expenses and disbursements of
                   its counsel).  Any fees or expenses of Expense Escrow Agent
                   or its counsel that are not paid as provided for herein may
               be taken from any property held by Expense Escrow Agent
hereunder.                              

          (10)      The other parties hereto authorize Expense Escrow Agent, for
                 any securities held hereunder, to use the services of any
                 United States central securities depository it reasonably
             deems appropriate, including, without limitation, the
                   Depositary Trust Company and the Federal Reserve Book Entry
System.                                 

    vi.       Limited Responsibility.  This Agreement expressly sets forth all
            the duties of Expense Escrow Agent with respect to any and all
               matters pertinent hereto.  No implied duties or obligations shall
       be read into this agreement against Expense Escrow Agent.
              Expense Escrow Agent shall not be bound by the provisions of any
               agreement among the other parties hereto (to which Expense Escrow
Agent is not a party) except this Agreement.      

  vii.      Ownership For Tax Purposes.  For purposes of federal and other
             taxes based on income, the Company Shareholders will be treated
            as the owner of the Expense Escrow Fund in such proportions as
             set forth on Schedule I, and that the Company Shareholders will
            report all income, if any, that is earned on, or derived from,
              the Expense Escrow Fund as their income, in such proportions, in
        the taxable year or years in which such income is properly
includible and pay any taxes attributable thereto.

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

Andal:                                                      

c/o Messrs. Andrew J. Frankel and Alan N. Cohen   
909 Third Avenue                                  
New York, New York  10022                         
Telephone No.:  (212) 376-5545                    
Facsimile No.:   (212) 376-5669                   

with copies to:                                   

Dillon, Bitar & Luther                            
53 Maple Avenue                                   
Morristown, New Jersey 07963                      
Attention:  William F. Campbell, III, Esq.        
Telephone No.:  (201) 539-3100                    
Facsimile No.:   (201) 292-2960                   

and                                               

Paul, Weiss, Rifkind, Wharton & Garrison          
1285 Avenue of the Americas                       
New York, New York 10019                          
       Attention:  Neale Albert, Esq. and Alfred Youngwood, Esq.
Telephone No.:  (212) 173-3000                    
Facsimile No.:   (212) 373-2315                   

Expense Escrow Agent:                                       

The Chase Manhattan Bank                          
270 Park Avenue                                   
New York, New York 10017                          
Attention:  William Ponce                         
Telephone No.:  (212) 789-4108                    
Facsimile No.:   (212) 596-3109                   

ix.       Jurisdiction; Service Of Process.  Any action or proceeding 
        seeking to enforce any provision of, or based on any right
              arising out of, this Agreement may be brought against any of the
           parties in the courts of the State of New York, County of New
            York, or, if it has or can acquire jurisdiction, in the United
              States District Court for the Southern District of New York, and
             each of the parties consents to the jurisdiction of such courts
             (and of the appropriate appellate courts) in any such action or
        proceeding and waives any objection to venue laid therein.
              Process in any action or proceeding referred to in the preceding
        sentence may be served on any party anywhere in the world.

x.        Counterparts.  This Agreement may be executed in one or more
              counterparts, each of which, when taken together, will be deemed
to constitute one and the same.                   

     xi.       Section Headings.  The headings of sections in this Agreement are
   provided for convenience only and will not affect its
construction or interpretation.                   

     xii.      Waiver.  The rights and remedies of the parties to this Agreement
              are cumulative and not alternative.  Neither the failure nor any
             delay by any party in exercising any right, power, or privilege
       under this Agreement or the documents referred to in this
         Agreement will operate as a waiver of such right, power, or
             privilege, and no single or partial exercise of any such right,
             power, or privilege will preclude any other or further exercise
             of such right, power, or privilege or the exercise of any other
             right, power, or privilege.  To the maximum extent permitted by
       applicable law, (a) no claim or right arising out of this
             Agreement or the documents referred to in this Agreement can be
          discharged by one party, in whole or in part, by a waiver or
            renunciation of the claim or right unless in writing signed by
              the other party; (b) no waiver that may be given by a party will
           be applicable except in the specific instance for which it is
               given; and (c) no notice to or demand on one party will be deemed
               to be a waiver of any obligation of such party or of the right of
           the party giving such notice or demand to take further action
           without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.          

    xiii.     Exclusive Agreement and Modification.  This Agreement supersedes
        all prior agreements among the parties with respect to its
               subject matter and constitutes (along with the documents referred
             to in this Agreement) a complete and exclusive statement of the
            terms of the agreement between the parties with respect to its
            subject matter.  This Agreement may not be amended except by a
written agreement executed by the parties hereto. 

  xiv.      Assignments, Successors and Third-Party Rights.  Andal may not
             assign any of its rights under this Agreement without the prior
              consent of a majority of the Company Shareholders (not including
        Andal, solely for this purpose).  Subject to the preceding
       sentence, this Agreement will apply to, be binding in all
           respects upon, and inure to the benefit of the successors and
              permitted assigns of the parties.  This Agreement and all of its
              provisions and conditions are for the sole and exclusive benefit
            of the parties to this Agreement, their successors and assigns
             and any Person to whom the Company, the Company Shareholders or
             Andal owes Expenses, in the case of the Company, for the period
            ending at the Effective Time (each such Person, a "Third-Party
      Beneficiary").  Nothing expressed or referred to in this
           Agreement will be construed to give any Person other than the
             parties to this Agreement and the Third-Party Beneficiaries any
              legal or equitable right, remedy, or claim under or with respect
   to this Agreement or any provision of this Agreement.

   xv.       Governing Law.  This Agreement shall be governed by the laws of
       the State of New York, without regard to conflicts of law
principles.                                       

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

ANDAL:              

          ANDAL CORP., as Representative

By:                 
Name:   
Title:  

ESCROW AGENT:       

    THE CHASE MANHATTAN BANK

By:                 
Name:   
Title:  
                                    SCHEDULE I

Company Shareholders              

Name and Address                                   Percentage (%)               

                                       SCHEDULE II

Company Shareholders Subject to Section 4(c)              

[Company Shareholders who have not delivered                          
Certificates evidencing Shares or Rights]                             
                                      SCHEDULE III

Compensation of Expense Escrow Agent              

Three thousand five hundred dollars ($3,500) plus a $25 fee for                 
every check issued by the Expense Escrow Agent.                                 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		7/31/02		2		16
		3/31/99		2		15
		9/29/98		2		12
Filed on:		12/23/97		6
		12/12/97		1		3
		12/8/97		2
		12/7/97		2
		12/2/97		7
		11/30/97		3
		10/15/97		4		14			8-K
		10/1/97		2		12
For Period End:		9/30/97		1		17			8-K
		9/25/97		2		12
		9/24/97		4		16
		9/22/97		2					DEF 14A
		8/1/97		12
		6/9/97		2		17
		9/30/96		5		12			10-K,  NT 10-K
		9/1/96		3
		8/31/96		3		14
		8/30/96		4		14			8-K
		8/1/96		12
		7/10/96		12
		5/8/96		12
		5/7/96		12
		3/4/96		12
		11/21/95		12
		10/5/95		12
		9/30/95		5		12			10-K,  NT 10-K
		6/30/95		12					10-Q
		9/30/94		10
		9/30/93		4		14
		6/15/93		4		14
		10/1/92		3
		9/30/92		3
									List all Filings