Andal Corp – ‘10-K’ for 9/30/95

As of:  Tuesday, 1/16/96   ·   For:  9/30/95   ·   Accession #:  70262-96-16   ·   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, 1995                                   
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 or organization)(I. R. S.         
employer ID no.)                                                                

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                    

5 1/2% Convertible Subordinated Debentures due 1997     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.  [   ]                                             

Non-affiliates of the Registrant hold approximately 36% of the        
Registrant's common stock.  There is currently no established trading market    
for such stock.  See Item 5 within.                                             

   As of December 29, 1995, the number of outstanding shares of Registrant's
Common Stock was 329,859 shares.                                                

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PART I                                                                          

Item 1.   Business                                                              

GENERAL                                                                         

Andal Corp. (the "Company" or "Andal"), through its Multi-Arc Inc.    
subsidiary ("Multi-Arc"), is engaged in surface enhancement which is the        
utilization of advanced technologies to apply thin-film coatings of various     
metals, metal compounds, and other substances to base materials to enhance      
their hardness, wear and corrosion resistance, lubricity, and appearance.       
Multi-Arc owns and operates seven coating centers in the United States, one in  
Canada, and one in England, and has royalty or equity interests or to which it  
licenses technology in 25 coating centers in Europe, Japan, India, Korea,       
Taiwan, Singapore, People's Republic of China, Brazil, and Argentina.  These    
centers offer coating services on a fee basis to manufacturers and end-users    
of industrial tools, components, and other products.  Multi-Arc also engages    
in the design, manufacture, assembly, and sale of proprietary coating           
equipment systems to manufacturers and large volume end-users of tools,         
consumer products, and other products that benefit from surface enhancement,    
as well as to its own joint venture coating centers.  See Note 20 of the Notes  
to Consolidated Financial Statements included elsewhere in this Report for      
certain segment information, including revenues, operating profit (loss) and    
identifiable assets, and other information about foreign operations of the      
Company for each of the three years in the period ending September 30, 1995.    

UBC Option                                                                      

  The Company, through a wholly-owned subsidiary, UBC Virginia Corp. ("UBC
Corp."), owns an option (the "Option") to purchase a parcel of real estate      
(the "UBC Property") located on 61st Street and First Avenue in New York City,  
which Option has been carried on the books of the Company at nil value for      
many years.  The Option grants the Company the right to purchase the UBC        
Property for approximately $3 million in cash and is exercisable only after     
the death of the later to die of two of the principals of the corporation that  
granted the Option.  The Option expires 91 (ninety-one) days after the Company  
has been given formal notice of such death by the Optionor (the "Option         
Notice").  The Company was given formal notice of such death on September 22,   
1995.  The Company does not have the $3 million of cash that is required to     
exercise the Option, and it does not believe it will be able to raise such a    
sum through borrowings from unrelated parties or through the sale of assets     
other than the Option.  However, under the terms of the loan described below,   
the Company is obligated to exercise the Option.  Accordingly, on October 13,   
1995 the Company gave the Optionor formal notice of its election to exercise    
the Option; and the parties have agreed that the transaction must be closed on  
or before February 27, 1996.                                                    

 The capital stock of UBC Corp. was pledged as security for a $5 million
loan, hereafter referred to as the "UBC Loan," made to the Company in 1990 by   
Alan N. Cohen, 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, Chairman of the Board and a Director    
of the Company, is a general partner (collectively, in such capacity, the "UBC  
Lenders").                                                                      

As of September 30, 1995, the principal balance of the loan, after    
adjustment for a restructuring which occurred in 1992, is $5,571,285 which is   
due and payable on the earlier of March 31, 1997, or the day after certain      
other indebtedness to shareholders of the Company, including the individuals    
mentioned above, has been paid in full.                                         

  The capital stock of UBC Corp. also serves as security (second lien) for
a $2,043,000 loan (hereafter referred to as the "Fleet Assignee Loan")          
outstanding as of September 30, 1995 ($1,793,000 as of December 29, 1995)       
between the Company and certain of its directors and a stockholder who was      
formerly a director.                                                            

The Company's failure to pay the $3 million purchase price for the UBC
Property will result in an event of default under the UBC Loan, which will      
give the UBC Lenders the right to exercise the Option on the Company's behalf   
and to declare the loan immediately due and payable, including all sums         
advanced by the UBC Lenders in exercising the Option.  In addition, the UBC     
Lenders will have all of the remedies available to them under applicable law    
for secured lenders, including, without limitation, the public or private sale  
of the UBC Property acquired by exercise of the Option.  Default under the UBC  
Loan will also result in default under the Fleet Assignee Loan.                 

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 has 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, which brokers have not been able to identify a buyer.  To date, the    
Company has not received a bona fide offer from a third party for the Option.   

  The UBC Lenders have expressed an interest in acquiring the UBC Property
in satisfaction of the amount outstanding on the UBC Loan.  In that event, the  
Company would no longer be obligated with respect to the $3 million purchase    
price obligation due on the UBC 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 (see "Sale of Minority Interest in     
Multi-Arc Inc." included elsewhere in this Report).  After discussion, the      
Board members who are not UBC Lenders (Messrs. Flood and Glickman) authorized   
the officers of the Company to engage an independent appraiser to conduct an    
appraisal of the UBC Property, following which such Board members would seek    
to negotiate a transaction with the UBC Lenders taking into account, in         
addition to the appraisal, all material circumstances relating to the UBC       
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 will 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 UBC 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 UBC 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.                                                             

 The members of the Company's Board of Directors who are not UBC Lenders
and the UBC Lenders are each considering the results of the appraisal.  The     
Company expects that formal negotiations between the Company and the UBC        
Lenders will commence in early January 1996.                                    

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 credit facility with First Fidelity Bank.  Because of     
the non-recourse nature of the loans, the gain of approximately $396,000 on     
the sale of the Multi-Arc common stock to its management has been deferred      
until such time as the management loans are repaid.                             

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.  These debentures bear interest at 6% and are payable on   
December 15, 2004.  Approximately $450,000 of the proceeds of the common stock  
sold, and $450,000 principal amount of the debentures sold are evidenced by a   
promissory note which requires monthly principal payments over three years,     
plus interest at 6% per annum.  An additional $153,000 of common stock and      
$153,000 principal amount of the debentures were sold on open account.  The     
gain on these sales of Multi-Arc common stock was $800,000, of which $452,000   
was deferred and will be recognized as the amounts are collected.               

The Company had agreed, in principal, to a total $3.5 million in stock
sales and $3.5 million of Multi-Arc debenture issuances to its foreign          
licensees and other investors.  However, the offer was not fully subscribed;    
and the unsubscribed portion of the offer has been withdrawn.                   

Other                                                                           

In November 1994, Multi-Arc India Ltd. ("India") completed an initial 
public offering and was listed on the Bombay Stock Exchange which reduced the   
Company's interest in India from 40% to 21%.  Andal recorded a pretax gain of   
$85,000 as a result of this transaction.                                        

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.                     

In September 1995, the Company refinanced the debt of its subsidiary, 
Multi-Arc (UK) Ltd.,  with First Fidelity Bank N. A.  The new credit            
facilities consist of a five-year term loan in the principal amount of Pounds   
Sterling1,500,000 repayable in quarterly installments of Pounds Sterling54,000  
commencing in December 1995 and a final installment of Pounds Sterling474,000   
due in September 2000.  Proceeds of the term loan were used to repay            
outstanding indebtedness to Siemens Financial Services and the Bank of          
Scotland, to advance an inter-corporate loan to Multi-Arc Inc., and for         
acquisition of new equipment.  In addition to the term loan, First Fidelity     
has extended a Pounds Sterling250,000 overdraft facility for working capital    
purposes.                                                                       

The Company currently owns 352,700 shares, or approximately 3% of the 
outstanding Class A common stock of Integrated Brands Inc., formerly named      
Steve's Homemade Ice Cream, Inc. ("Integrated"), a company which markets,       
distributes, and sells a variety of branded frozen dessert products and         
franchises ice cream parlors, dip shops, and family-style restaurants           
throughout the United States and certain foreign countries.                     

The Company was incorporated in New York in 1966 and maintains its    
principal executive offices at 909 Third Avenue, New York, New York   10022.    
Its telephone number is (212) 376-5545.                                         

SURFACE ENHANCEMENT                                                             

Surface enhancement is the exploitation of a variety of technological 
processes to produce new or changed surface properties of materials by the      
deposition of thin films only microns thick (a micron is one millionth of a     
meter).                                                                         

 The electric arc technology utilized by Multi-Arc in its Physical Vapor
Deposition ("PVD") process (ION BONDR) was originally developed in the Soviet   
Union, and Multi-Arc acquired a patent and know-how license from the former U.  
S. S. R. in 1979.  Multi-Arc also employs a Chemical Vapor Deposition ("CVD")   
process.                                                                        

   Multi-Arc first introduced the ION BONDR process on a commercial basis in
the United States in 1981 and has continually improved and enhanced the         
original technology.  Initially, the principal application of the ION BONDR     
process was the coating of metal cutting tools, such as drills, used in         
metal-working industries to increase the useful life and productivity of such   
tools.  However, Multi-Arc has been successful in developing additional         
commercial applications for its processes, including the coating of metal       
forming tools, such as dies, molds and punches, jewelry, carbide inserts,       
plastic injection molds and screws, and medical instruments and implants.       
Multi-Arc has also effected improvements in CVD technology which it employs     
for the coating of steel and carbide aterials.                                  

Multi-Arc derives revenues from (i) the nine coating centers owned and
operated by Multi-Arc located in the United States, Canada, and England, and    
the 5 coating centers in which it has varying royalty or equity interests or    
to which it licenses technology located in Europe, Japan, India, Korea,         
Taiwan, Singapore, People's Republic of China, Brazil, and Argentina, all of    
which coating centers perform coating services on a fee basis; (ii) the         
design, manufacture, assembly, and sale of proprietary coating equipment        
systems to coating centers and to manufacturers of, and large volume end-users  
of, tools and other industrial products, such as component parts requiring a    
high degree of wear resistance; (iii) royalties paid by system purchasers for   
licenses to use the coating technology which the systems employ; and (iv)       
research and development contracts.                                             

Sales and Marketing                                                             

Multi-Arc's coating systems and services are marketed throughout the  
United States by its own sales personnel, through independent sales             
representatives, and through the use of direct marketing catalogues and the     
display of its products at trade shows.  Sales personnel at each of the         
coating centers are involved in marketing the services performed at such        
centers.                                                                        

Competition                                                                     

 There are several manufacturers in the United States, Europe, and Japan
which produce coating equipment utilizing a PVD process; and Multi-Arc          
anticipates that additional PVD technologies will be developed as the surface   
enhancement industry develops.  Moreover, there are numerous manufacturers of   
CVD equipment which compete with the CVD systems manufactured by Multi-Arc, as  
well as with its PVD systems in certain applications.  There are also several   
technologies other than the PVD and CVD processes, some of which involve        
surface enhancement, which are currently being used by numerous other firms to  
extend the useful lives and productivity of metal-cutting tools and other       
items.                                                                          

   Although there are several companies which operate coating centers in the
United States that utilize PVD or CVD technology, only one is a significant     
national and international competitor of the Company.  The Company also         
competes with numerous coating centers in the United States that employ         
technologies other than PVD and CVD.                                            

 The Company competes in the manufacture of coating systems primarily on
the basis of quality and technical innovation, as well as price.  In the        
operating of coating centers, quality, price, and service are the principal     
competitive factors.                                                            

Backlog                                                                         

  The approximate dollar amount of Multi-Arc's backlog of coating systems,
ancillary equipment, and coating services orders at September 30, 1995 and      
1994 was $390,000 and $1,707,000, respectively.  The decline in backlog is due  
to the timing of equipment sales.  The Company believes that all of its         
backlog orders at September 30, 1995 will be shipped within the Company's       
current fiscal year.                                                            

Patents and Trademarks                                                          

Multi-Arc has been issued a number of patents.  Although the Company  
considers these patent rights to be significant, it believes that its           
competitive position and its continued operations are more dependent on its     
technical knowledge, its processes, and its research and development programs,  
than on patent protection.  The Company intends to continue to apply for        
patent protection with respect to new inventions in order to protect its        
competitive position.  The Company has registered several trademarks, the       
principal ones being "Multi-ArcR" and "ION BONDR".  Although these trademarks   
afford Multi-Arc a degree of recognition in the industry and are valuable       
assets, the Company does not regard them as material to its overall business.   

Research and Development                                                        

Multi-Arc is engaged in ongoing research and development in connection
with new and existing products.  Research and development expenditures have     
been expensed as incurred and amounted to $1,628,000, $1,400,000, and           
$1,222,000 for fiscal 1995, 1994, and 1993, respectively.  In addition, the     
Company has research and development agreements with several licensees          
pursuant to which each company makes known to the others the results of         
research undertaken by it in the field of surface enhancement.                  

Environmental Considerations                                                    

Compliance with Federal, state, and local provisions which have been  
enacted or adopted regulating the discharge of materials into the environment,  
or otherwise relating to the protection of the environment, is not expected to  
have a material effect on the Company's capital expenditures, earnings, or      
competitive position.                                                           

Employees                                                                       

 As of September 30, 1995, Multi-Arc employed approximately 325 persons,
none of whom are covered by collective bargaining agreements.  Multi-Arc        
believes that its relationship with its employees is good.                      
Item 2.   Properties                                                            

 The Company's executive office is located in approximately 3,800 square
feet of leased space at  909 Third Avenue, New York, New York.                  

Multi-Arc's administrative offices and Northeast Coating Center are   
located in a 20,400 square foot building located in Rockaway, New Jersey.  The  
building, which the Company has an option to purchase, at market value, leases  
for a base rent of $226,900 per year.  The seven other coating centers which    
are owned and operated by the Company in the United States and Canada occupy    
leased facilities containing an aggregate of approximately 88,000 square feet,  
at an aggregate annual rental of approximately $605,000.  In addition, the      
Company leases a 25,000 square foot coating facility in the United Kingdom for  
Pounds Sterling32,250 (approximately $51,000) per year.                         

All of the foregoing facilities are suitably equipped and adequate for
their current use.                                                              

Item 3.   Legal Proceedings                                                     

  In August 1982, National States Electric Corp. ("NSEC"), a subsidiary of
the Company then engaged in the electrical contracting business, commenced an   
action in the New York Supreme Court, County of New York, against LFO           
Construction Company ("LFO") for breach of contract.  The action arose out of   
a subcontract agreement between NSEC and LFO in connection with a New York      
City construction project for which LFO served as construction manager.  LFO,   
in response, asserted various counterclaims and set-offs against NSEC; and, in  
October 1982, LFO and two other parties commenced an action in the same court   
against NSEC, the Company, and Andrew J. Frankel, Chairman of the Board of the  
Company, in which the plaintiffs essentially realleged the counterclaims and    
set-offs.  These actions were tried in October 1992.  The court dismissed the   
claims against the Company and Mr. Frankel on the merits and with prejudice;    
but the jury returned a verdict against NSEC for approximately $3.8 million,    
including interest and costs; and a judgement was entered on the verdict in     
November 1992. LFO and its associates appealed from that part of the judgement  
which dismissed the action against the Company and Mr. Frankel.  NSEC, in       
turn, appealed from the judgement against it.  In April 1994, the Appellate     
Division affirmed the dismissal of the claims against the Company and Mr.       
Frankel.  In addition, the Court struck the award for damages against NSEC and  
remanded the matter to the trial court for a new trial as to damages.  In       
January 1995, NSEC settled the issue of damages with LFO by assigning to LFO    
its only asset which consisted of a claim it had against the New York City      
Transit Authority for work it performed for the Authority many years ago.  The  
claim has been carried on the books of NSEC at no value; and, accordingly, the  
settlement did not result in any loss to the Company.                           

The Company, as successor to Circle Industries Corp. ("Circle"), its  
former subsidiary engaged in the installation of flooring, is a defendant in    
an action before the Supreme Court, New York County, commenced in May 1983 by   
Manhattan Plaza Associates against Circle and others alleging negligent         
installation of flooring and installation of defective flooring resulting in    
damages allegedly in excess of $5 million.  The Company has filed an answer     
denying liability, asserting defenses and cross-claiming against Masonite       
Corporation, the manufacturer of the flooring.  In June 1994, a similar action  
against the Company was settled for a cash payment by the Company of            
approximately $100,000.  The Company cannot determine what effect the outcome   
of the aforementioned legal proceeding will have on the Company's financial     
position, results of operations, or liquidity.  No liability has been accrued   
for this matter, as it is not considered probable that a liability has been     
incurred.                                                                       

The Company is aware of various other lawsuits, claims, and           
administrative roceedings which are pending involving it and 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          
position.                                                                       

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

None.                                                                 

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PART II       

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

Although the Company's common stock is listed on the NASD OTC Bulletin
Board, transactions in and quotations of the stock have been limited and        
sporadic and, in the Company's opinion, do not constitute an established        
public trading market.  The following table sets forth the range of high and    
low bid prices per share of the common stock as reported by the Pink Sheets     
and the NASD OTC Bulletin Board.  Such quotations reflect inter-dealer prices   
without retail mark-up, mark-down, or commission and may not necessarily        
represent actual prices.                                                        

          BID PRICES
                          High           Low
FISCAL 1995                                                 

First Quarter                    $2.50               $2.00  
Second Quarter                   $2.25               $2.25  
Third Quarter                    $2.25               $2.25  
Fourth Quarter                   $2.25               $2.25  

FISCAL 1994                                                 

First Quarter                    $2.00               $2.00  
Second Quarter                   $2.00               $2.00  
Third Quarter                    $3.00               $2.00  
Fourth Quarter                   $3.00               $2.00  

As of December 29, 1995, the number of registered holders of the      
Company's common stock was 1,145.                                               

 The Company has never paid a cash dividend on its common stock and does
not anticipate paying such dividends in the foreseeable future.                 

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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,
                         1995      1994      1993       1992      1991
                    (Thousands of dollars, except per share amounts)

Operating revenues         $30,383   $27,077   $24,887    $20,834   $41,892     
Inc. (loss) from operations  2,414     1,627       832     (1,048)   (1,926)    
Income (loss) from continuing                                                   

operations                  879      (771)     (433)    (2,733)  (21,865) 
Income (loss) from                                                              
discontinued operations   1,007      (350)     (527)    (2,067)   (2,000) 
Net income (loss)            1,886    (1,121)     (960)    (4,800)  (23,865)    
Income (loss) per share from                                                    

continuing operations       2.67     (2.34)    (1.31)     (8.29)   (66.29)  
Net income (loss) per share   5.72     (3.40)    (2.91)    (14.55)   (72.35)    
Average number of common shares                                                 

outstanding (000)           330       330       330        330       330  
Total assets               $23,625   $20,457   $23,475    $24,282   $29,544     
Long-term obligations (excluding                                                

current maturities)      17,585    16,141    18,721     20,398     7,715  
Shareholders' equity                                                            
(deficit)                (5,098)   (6,984)   (5,863)    (4,903)     (103) 
Book value (deficit) per share at                                               

year end                 (15.46)   (21.17)   (17.77)    (14.86)    (0.31) 

   See Item 7.  "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources," Notes 1, 12, and   
13 of the Notes to Consolidated Financial Statements, and Report of             
Independent Auditors regarding the basis of presentation of this financial      
data.                                                                           

See Note 5 of the Notes to Consolidated Financial Statements for a    
description of the income (loss) from discontinued operations recorded in       
1995, 1994, and 1993.  The loss from discontinued operations in 1992 relates    
to a $1,852,000 loss on disposal of the Company's investment in preferred       
stock, common stock, and promissory notes due from Olsher Metals Corporation    
("OMC") and a $215,000 loss for the Company's equity share of OMC's loss for    
1992.   The loss from discontinued operations for 1991 consists of a provision  
of $640,000 for expected losses on discontinued construction operations and     
$1,360,000 resulting principally from a judgement against the Company relating  
to its discontinued flooring installation business.                             

In September 1991, after an evaluation of its investment in Multi-Arc,
giving consideration to its historical operating performance and general        
economic conditions, particularly in the automobile industry, the Company       
recorded a write-off of the balance of its goodwill in the amount of            
$16,781,000.                                                                    

  On June 18, 1991, the Company completed the sale of substantially all of
the assets and liabilities of its wholly-owned subsidiary, Salem Tube, Inc.     
("Salem").  The sales price included a $700,000 subordinated promissory note    
due in equal quarterly installments beginning on September 30, 1994.  The       
selling price of the net assets of Salem was approximately $700,000 in excess   
of Andal's carrying value at June 18, 1991.  This gain was deferred and was to  
be recognized as the subordinated note payments were received.  On August 4,    
1994, the purchaser of Salem filed a voluntary petition for bankruptcy under    
Chapter 11 of the Federal Bankruptcy Code.  In June 1995, the Bankruptcy Court  
approved Salem's Plan of Reorganization.  Under the Plan, Andal received        
$100,000 in June 1995, is scheduled to receive $50,000 in December 1995, and    
may receive another $70,000 at an unspecified time in the future, depending on  
the recovery of certain preference payments.  All recoveries have been and      
will be, when and if received, credited to discontinued operations.             

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

Results of Operations                                                 

1995 vs. 1994                                                         

A summary of business segment information for the three fiscal years  
ended September 30, 1995 is provided in Note 20.  All note references in this   
discussion and analysis are to the Notes to Consolidated Financial Statements   
included elsewhere in this Report.                                              

Andal's consolidated revenues, entirely attributable to Multi-Arc, for
the year ended September 30, 1995 were $30.4 million compared with $27.1        
million in 1994.  The increase was the result of both higher coating services   
revenues of approximately $1.9 million or 8% and higher revenues from           
equipment sales of $1.4 million.  Coating services revenues benefitted          
particularly from an increase of $830,000 or 29% in the United Kingdom which    
reflected better economic conditions and significantly improved market          
penetration.  Coating service revenues in the United States rose as a result    
of moderately better economic conditions.  Equipment sales (which approximated  
12% of 1995 revenues) were up because of increased system deliveries with       
sales in the United States, Taiwan, and India.  Royalty and commission income   
decreased $106,000 from the prior year which reflects the final effects of      
Multi-Arc's restructuring of its European licensee arrangements.  Equity in     
foreign joint ventures provided income of $53,000 in 1995 compared with a loss  
of $16,000 in 1994.  The 1995 amount  includes income from Multi-Arc India      
Ltd. ("India") of $163,000 offset by a loss from Multi-Arc's Singapore joint    
venture of $110,000. Earnings in India are up as a result of increased demand   
for decorative products.                                                        

Income (loss) from continuing operations was $879,000 in 1995 compared
with $(771,000) in 1994.                                                        

Operating profits of Multi-Arc increased $1.4 million in 1995 which is
attributable to an increase in coating services operating revenues which        
contributed $1,050,000 in additional operating profits, principally from        
Multi-Arc (UK) Ltd.  The improved operating income in the coating services      
business is the direct result of higher volume, slightly improved margins, and  
lower depreciation expense.  Operating profits from equipment sales rose        
approximately $570,000 due to higher sales and consistent margins with the      
prior year.  Equity in earnings of foreign affiliates rose $69,000 over prior   
year entirely due to improved results in India.  Operating profit was           
adversely effected by the lower royalty and commission income and increased     
spending of $228,000 on research and development.                               

Selling, general, and administrative expenses rose $767,000 from the  
prior year.  Approximately $582,000 of the increase related to higher           
personnel costs at Multi-Arc due to continued expansion of its selling and      
marketing efforts.  Multi-Arc's administrative costs also increased $421,000    
due to additional personnel, higher volume, and higher incentive compensation   
expense related to higher profitability.  Andal's general corporate expenses    
declined  $436,000 as the result of lower rent, depreciation, insurance, and    
legal costs, principally related to the prior year's financial restructuring.   

During 1995, the Company sold approximately 7.4% of its interest in   
Multi-Arc to management, foreign licensees, and other investors for cash and    
notes and recognized a gain of $348,000 on the transaction (see Note 3).  In    
addition to this gain, a gain of $396,000 related to the portion of this sale   
to management has been deferred as the sales were financed by non-recourse      
loans.  Another $452,000 of gain has also been deferred relating to sales made  
to foreign investors with deferred payment arrangements.  The minority          
interest in net income of Multi-Arc resulted in a first-time charge of          
$152,000 for 1995.                                                              

In November 1994, Multi-Arc India Ltd. completed an initial public    
offering on the Bombay stock exchange which reduced Multi-Arc's interest in     
India from 40% to 21%; and the Company recorded a pretax gain of $85,000 on     
this transaction (see Note 4).  Investment and other income increased to        
$37,000 from a loss of $756,000 in 1994.  The 1994 amount was adversely         
impacted by the loss of $766,000 on the sale of a substantial portion of the    
Company's interest in Integrated's stock (see Note 7).                          

  Interest expense for 1995 was $1.8 million compared with $1.6 million in
1994.  The increase was a function primarily of higher interest rates.          
Although debt levels have increased from the prior year, such increase          
principally occurred in the fourth quarter.                                     

Operating revenues and operating income attributable to foreign       
operations rose $1.0 million and $494,000, respectively, over 1994 principally  
as a result of a substantial improvement in operations in the United Kingdom.   

1994 vs. 1993                                                         

  Andal's consolidated revenues for the year ended September 30, 1994 were
$27.1 million compared with $24.9 million in 1993.  The increase was the        
result of higher coating services revenues of $3.3 million or 15% which         
reflects improved economic conditions in North America and the United Kingdom.  
Revenues from equipment sales, which comprised 8% of total revenue in 1994,     
declined $875,000 from the prior year due to fewer system deliveries,           
particularly export sales in the fourth quarter.  Royalty and commission        
income decreased $82,000 from the prior year which reflects the effects of      
Multi-Arc's restructuring of its European licensee arrangements.  Equity in     
foreign joint ventures was a loss of $16,000 in 1994 which includes income      
from Multi-Arc India Ltd. of $95,000 and a loss from Multi-Arc's Singapore      
joint venture of $111,000.  (See Note 4.)                                       

  Income (loss) from continuing operations was $(771,000) in 1994 compared
with $(433,000) in 1993.                                                        

Operating profits of Multi-Arc increased $1.1 million in 1994 which is
directly attributable to the increase in coating services operating revenues    
which contributed $1.4 million in additional operating profits, as well as      
improved margins in coating center services which contributed $700,000 of       
increased operating profits in 1994.  The improved margins in the coating       
center business are the result of higher revenues, improved operating           
efficiency, and continued emphasis on cost reduction.  Operating profit was     
adversely effected by the lower royalty and commission income, equity losses,   
and higher spending on research and development of $178,000.  Operating         
profits from equipment sales remained flat despite a decline in revenues.  In   
1993, such profits had been adversely affected as the Company wrote off         
$343,000 of deferred costs in anticipation of the restructuring of its          
European licensee royalty arrangements.                                         

  Selling, general, and administrative expenses rose $1.1 million from the
prior year.  Approximately $360,000 of the increase related to increased        
personnel costs at Multi-Arc due to expanded sales and marketing efforts.       
Multi-Arc's administrative costs also increased $400,000 due to some            
additional personnel, the effects of higher volume, and higher incentive        
compensation expense related to improved profitability.  Andal's general        
corporate expenses rose $384,000, from higher legal expenses ($353,000          
compared with $119,000) principally related to restructuring activities in the  
fourth quarter.                                                                 

  Investment and other income declined $920,000 as a result of the loss of
$766,000 on the sale of a substantial portion of the Company's interest in      
Integrated's stock (see Note 7), compared with a gain of $60,000 on the sale    
of Integrated's stock in 1993 and a gain of $77,000 in 1993 on forgiveness of   
debt in the United Kingdom (see Note 12).  Equity in earnings of Integrated     
decreased to nil from $234,000 in 1993.  Effective June 23, 1993, the Company   
began to account for its ownership of Integrated by the cost method (see Note   
7).                                                                             

Operating revenues and operating income attributable to foreign       
operations in 1994 rose $282,000 and $153,000, respectively, over 1993 due to   
an increase in coating center revenues in the United Kingdom and Canada of      
approximately 18% offset, in part, by the fact that 1993 included the           
first-time sale of equipment in the United Kingdom with no similar sales in     
1994.                                                                           

Effects of Inflation                                                  

Inflation has a minimal effect on Andal's operations.                 

Liquidity and Capital Resources                                       

Cash decreased $293,000 during 1995 as cash provided by operating     
activities of $2.1 million and financing activities of $803,000 were offset by  
cash used by investing activities of $3.2 million.                              

Cash flow provided by operating activities of $2.1 million in 1995    
compared with $3.6 million in 1994 and $2.1 million in 1993.  In 1995, the      
Company benefitted from income from continuing operations before income taxes   
of $933,000 which was an improvement of $1.7 million over the prior year.       
However, in 1995, receivables increased $954,000 over the prior year,           
primarily related to the timing of the collection of equipment sales            
receivables and a decrease of $200,000 in inventories due to September          
deliveries.  In 1994, the Company realized cash from a decrease of $1.1         
million in accounts receivable, primarily due to the collections of equipment   
sales receivables, offset by an increase of $459,000 in inventories, both       
related to timing.  In 1993, the Company sustained a substantial increase in    
accounts receivable over the prior year, again primarily due to the timing of   
equipment sales, offset by reductions in inventories and high levels of         
current liabilities which were also related to timing. Also, in 1994, the       
Company recorded non-cash losses of $766,000 from the sale of Integrated's      
stock (see Note 7) and, in 1993, wrote off $343,000 of deferred expenses in     
anticipation of the reorganization of its European licensing arrangements.      
The Company's operating costs continue to bear a very high level of             
depreciation and amortization charges.                                          

 Cash flow from operating activities in 1995 includes the adverse effect
of $309,000 of cash used by discontinued operations to fund legal costs,        
offset by proceeds of $141,000 from the settlement of a construction claim.     
Cash flow from operating activities in 1994 includes the adverse effect of      
$747,000 of cash used by discontinued operations to fund legal costs, offset    
by proceeds of $500,000 from the sale of the Company's remaining investment in  
OMC (see Note 5), compared with $386,000 of cash used by discontinued           
operations in 1993 to fund legal costs.                                         

 Cash flow provided by financing activities of $803,000 in 1995 reflects
new long term debt of $3.9 million which is comprised of proceeds from the      
refinancing of the debt of Multi-Arc (UK) Ltd. of $2.4 million and borrowings   
on Multi-Arc's revolving credit facilities of $1.5 million.  (See Note 12.)     
Of the latter borrowing, $1.0 million was loaned to the management of           
Multi-Arc Inc. for its participation in the Company's sale of a minority        
interest in Multi-Arc Inc. (see Note 3).  The sale of minority interest in      
Multi-Arc Inc. generated proceeds of $1.7 million. During 1995, the Company     
retired $3.0 million of long term debt, of which $786,000 related to            
Multi-Arc's U. S. term loan with First Fidelity Bank and the retirement of      
debt in the United Kingdom in connection with the refinancing of Multi-Arc      
(UK) Ltd.  Multi-Arc also negotiated modifications to the agreement covering    
its revolving credit facility and term loan which made certain financial        
covenants less restrictive with respect to its cash flow.                       

   Cash flow used by financing activities of $1,979,000 in 1994 reflects the
Company's continued reduction of debt levels in both the United States and the  
United Kingdom.  In September 1994, Multi-Arc obtained a $6.0 million term      
loan from First Fidelity Bank, N. A.; and the proceeds were ultimately used to  
retire a substantial portion of Andal's bank indebtedness (see Note 12).  In    
1993, the Company benefitted from the favorable effect of interest deferrals    
on restructured debt of $460,000.                                               

 Cash flow used by investing activities of $3.2 million in 1995 includes
$3 million of capital expenditures and net investments of $211,000 in           
Multi-Arc's foreign joint ventures.  Cash flow used by investing activities of  
$910,000 in 1994 includes approximately $2.0 million of capital expenditures    
and net investments of $188,000 in Multi-Arc's foreign joint ventures, net of   
dividends in Multi-Arc India Ltd.  Also during 1994, the Company received       
$1,661,000 of cash from the sale of 2,129,500 shares of Integrated (see Note    
7).  Cash flow used by investing activities of $1.5 million in 1993 included    
approximately $1.3 million of capital expenditures which included funds for     
the elimination of freon from the Multi-Arc process in accordance with          
government environmental regulations.  Also during 1993, the Company received   
$134,000 of cash from the sale of 65,000 shares of Integrated and invested      
$176,000 in a Multi-Arc joint venture in Singapore.                             

The Company's only source of cash flow, other than from the sale of   
capital assets, is Multi-Arc.  Pursuant to the terms of the 1994 restructuring  
of Multi-Arc and of Multi-Arc's term loan and revolving credit facility with    
First Fidelity Bank, Multi-Arc is not permitted to pay dividends or make loans  
to Andal, except that Multi-Arc is permitted to pay cash to Andal to the        
extent that it utilizes any of Andal's federal, state, and local net operating  
loss carry forwards for income tax purposes.  However, such payments cannot     
exceed $1 million per year for fiscal 1995 and 1996, after which no further     
payments are permitted (See Notes 1, 12, and 13 for additional information      
regarding the 1994 restructuring of Multi-Arc and of the Company's senior       
indebtedness).  Andal could also raise cash by making sales of the remaining    
Integrated stock it owns, as market conditions permit (approximately $440,000   
at the current market value); and, in fiscal 1996, Andal expects to receive     
approximately $750,000 from the 1995 sales of Multi-Arc stock and debentures    
(see Note 3).                                                                   

The Company's fiscal 1996 cash requirements are estimated to be $2    
million for operating cash needs, $3 million for the required exercise of the   
UBC Option described in Notes 1 and 2, and $1 million for principal payments    
on shareholder debt as described in Note 13.  In addition, the Company may      
also require cash to fund litigation costs related to discontinued operations   
and/or to make payments to creditors who have yet to make payment demands.  As  
discussed in Note 2, the Company is currently negotiating to restructure its    
indebtedness to shareholders by selling the UBC Option to them.  Unless the     
Company can accomplish a restructuring of its indebtedness to its shareholder   
lenders which will allow it to meet its fiscal 1996 cash needs, either through  
the sale of the UBC Option to them or otherwise, there may be no alternative    
to the Company other than to enter into bankruptcy proceedings.  (See Notes 1,  
12, and 13 of the Notes to Consolidated Financial Statements and Report of      
Independent Auditors included elsewhere in this report.)                        

Item 8.   Financial Statements and Supplementary Data                           

See Index to Financial Statements and Schedules at page 33  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, 1995.                  

Name              Age   Positions and Offices with the Company      

Andrew J. Frankel        63   Chairman of the Board of Directors                
                 and Chief Executive Officer

Alan N. Cohen            64   President and Director                            

Michael S. Huber         52   Senior Vice President, Chief Financial Officer    
   and Treasurer

Walter N. Kreil, Jr.     48   Vice President, Chief Accounting Officer,         
    and Controller

Peter D. Flood           52   Director                                          

Carl D. Glickman         69   Director                                          

  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.  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
has been President of the Company since October 1981.  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 Boston Celtics Limited Partnership.       

Michael S. Huber joined the Company in December, 1987 as Senior Vice  
President, Chief Financial Officer, and Treasurer.  From June 1991 through      
October 1992, Mr. Huber was also employed as an officer and director of Salem   
Tube, Inc., the company that purchased the assets and certain liabilities of    
the subsidiary of the Company that formerly bore that name; and he served as a  
financial consultant to that company, pursuant to a consulting agreement from   
November 1992 to June 1994.  Mr. Huber was separately compensated by Salem for  
such employee and consulting activities.  Mr. Huber devotes approximately       
one-third of his time to the affairs of the Company.                            

Walter N. Kreil, Jr. was elected a Vice President of the Company in   
September 1987 and serves as the Company's Controller and Chief Accounting      
Officer and as Vice President and Chief Financial Officer of Multi-Arc.  Mr.    
Kreil joined the Company as Assistant Vice President and Controller in June     
1984.                                                                           

   Peter D. Flood has been a Director of the Company since December 1985 and
the Chief Executive Officer of Multi-Arc since March 1981.                      

  Carl D. Glickman has been a Director of the Company since May 1981.  Mr.
Glickman is presently, and has been for more than the past five years, a        
private investor.  He is president of the Glickman Organization and serves as   
a member of the Board of Directors of the following companies:  The Bear        
Stearns Companies, Inc.; Continental Health Affiliates; Franklin Holdings,      
Inc.; Alliance Tyre and Rubber Company; Custodial Trust Company; Infu Tech      
Inc.; Lexington Corp. Properties; Jerusalem Economic Corp.; and Office Max      
Inc.                                                                            

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, 1995.                                                  

SUMMARY COMPENSATION TABLE              
Annual Compensation                 

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

Andrew J. Frankel   1995  244,000       0        33,333       0         0       
Chief Exec. Off.    1994  144,000       0        27,858       0         0       
             1993  120,000       0        27,557       0         0

Alan N. Cohen       1995  244,000       0        16,000       0         0       
President           1994  144,000       0        13,720       0         0       
             1993  120,000       0        13,264       0         0

Peter D. Flood      1995  250,000 151,000            (2)  2,500(3)   4,620      
CEO of Multi-Arc    1994  250,000  85,000            (2)      0      4,620      
              1993  250,000  33,000            (2)      0      2,248

WalterN.Kreil,Jr.   1995  135,200  50,000            (2)    500(3)   4,620      
CFO of Multi-Arc    1994  132,600  24,000            (2)      0      4,620      
              1993  130,000  12,000            (2)      0      2,248

No other bonuses, restricted stock awards, long term incentive plan   
payouts, or other compensation was awarded or paid to the named executives      
during the periods indicated.                                                   

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

   Andrew J. Frankel             Alan N. Cohen
Professional   Supplemental        Professional   
Services       Insurance           Services       
1995      10,000         5,194               10,000                   
1994      10,000         4,007               10,000                   
1993      10,000         6,090               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.                                                                          

Stock Options                                                                   

   No stock options or stock appreciation rights were granted by the Company
during the fiscal year ended September 30, 1995 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, 1995.                          

   In December 1995, Multi-Arc Inc. granted options to purchase 2,500 shares
and 500 shares, respectively, of its common stock to Messrs. Flood and Kreil.   
The exercise price of the options is $205.13 per share.  The options become     
exercisable 20% per year, and the options expire ten years from date of grant.  

   The following table sets forth information with respect to the individual
grants of stock options made during fiscal 1995 to the Chief Executive Officer  
and all other executive officers whose annual salary exceeded $100,000 for the  
fiscal year ended September 30, 1995:                                           

OPTION/SAR GRANTS IN LAST FISCAL YEAR                 

                                                       Potential
                                                        Realizable
                                                      Value of
                                                            Assumed Annual
                                                            Rates of Stock
                   Individual Grants               Price
             -------------------------------------------- Appreciation
                                                        for Option
                                                  Term
                Number of   Percent of                       ---------------
Securities  Total                           
underlying  Options/SARs Exercise           
Option/SARs Granted to   of Base            
Granted (#) Employees in Price    Expiration
Name              (1)         Fiscal Year  ($/Sh)   Date       5% ($)  10% ($)  

Andrew J. Frankel       0                0        0          0      0        0  
Alan N. Cohen           0                0        0          0      0        0  
Peter D. Flood      2,500 (1)          50%  $205.13 12/16/2004$322,513          
$817,310                                                                        
WalterN.Kreil,Jr.     500 (1)          10%  $205.13 12/16/2004 $64,503          
$163,462                                                                        

(1)  Options to purchase common stock of Multi-Arc Inc.               

 The following table sets forth information with respect to the exercise
during fiscal 1995 and the value as of September 30, 1995 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, 1995.                                                  

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

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

Andrew J. Frankel           0        0              0/0                  0/0    
Alan N. Cohen               0        0              0/0                  0/0    
Peter D. Flood              0        0      7,500/5,000(1)               0/0    
                                            0/2,500(2)               0/0
WalterN.Kreil,Jr.           0        0            0/750(1)               0/0    
                                              0/500(2)               0/0

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

(1)  Options on Andal Corp. common stock.                             
(2)  Options on Multi-Arc Inc. common stock.                          

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.  During 1995, these directors have served and     
currently serve without compensation.  Directors are reimbursed for travel      
expenses incurred in attending Board and Committee meetings.  Mr. Glickman was  
paid $12,000 during fiscal 1995 for consulting services.                        

Employment Agreement                                                            

Mr. Flood is employed by the Company as President and Chief Executive 
Officer of Multi-Arc under an employment agreement expiring on September 30,    
1999 under which he is entitled to receive a base salary of $250,000 per year   
plus incentive compensation equal to 7-1/2% of the first $2,000,000 of annual   
pretax income of Multi-Arc in excess of $1,000,000 and 5% thereafter.           

Repricing of Options/SARs                                                       

   As reflected in the following table, the Executive Committee approved the
repricing of stock options previously granted to Peter D. Flood and Walter N.   
Kreil, Jr.  The Committee took these actions because the decline in the market  
price of the Company's common stock during 1992-1995 caused the pre-existing    
options held by these individuals to be so far "out of the money" as to         
provide little, if any, incentive, as there was no prospect for long-term       
reward.  The repriced options were granted at the market value of the           
Company's stock at time of grant.                                               

TEN-YEAR OPTION/SAR REPRICINGS                

      Market
                                    Price of  Exercise            Length
of                                                                              
                                      Stock at  Price at            Original
                                    Time of   Time of             Option
Term                                                                            
     Number of     Repricing Repricing
Remaining at                                                                    
                       Options/SAR's or        or        New       Date of
              Repriced or   Amendment Amendment Exercise
Repricing or                                                                    
Name              Date    Amended (#)   ($)       ($)       Price ($)           
Amendment                                                                       

Peter D. Flood    7/8/92          5,000    $10.00    $32.50    $10.00 47        
Months                                                                          
CEO of Multi-Arc  7/25/95         5,000     $2.25    $10.00     $2.25 24        
Months                                                                          

WalterN.Kreil,Jr. 7/8/92            500    $10.00   $122.50    $10.00  8        
Months                                                                          
CFO of Multi-Arc  7/8/92            250    $10.00   $112.50   $112.50 18        
Months                                                                          
          7/25/95           750     $2.25    $10.00     $2.25 24
Months                                                                          

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

 The Company's Compensation Committee is comprised of Andrew J. Frankel,
Chairman of the Board of Directors and Chief Executive Officer of the Company   
and a principal shareholder, and Alan N. Cohen, Director and President of the   
Company and a principal shareholder.  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                   

On October 5, 1995, the Compensation Committee submitted the following
report concerning compensation paid to executive officers during 1995:          

Messrs. Frankel and Cohen, who comprise the Compensation    
Committee and are also, respectively, the Chief Executive Officer     
and President of the Company, increased their 1995 salary by          
$100,000 each to $244,000 each per annum.  The $100,000 increase has  
been deferred and is payable on January 1, 1997.  Interest on the     
deferred compensation accrues at the rate of 7% per annum.  Such      
salaries were not, they believe, reflective of their true worth to    
the Company but were the most the Company could afford to pay them    
in its strained financial circumstances.  Except as an indication of  
the continuing financial problems of the Company, there was not       
intended to be any relationship between their compensation and their  
performance.                                                          

  Pursuant to an employment agreement which expires on September
30, 1999, the salary of Mr. Flood, the Chief Executive Officer of     
Multi-Arc, was not changed in 1995.  The salary of Mr. Kreil, Vice    
President and Chief Financial Officer of Multi-Arc, was increased 2%  
for 1995.  In view of the limited resources of the Company, a more    
substantial increase which might have been warranted could not be     
considered.                                                           

A bonus of $151,000 was awarded to Mr. Flood pursuant to his
employment agreement.  A bonus of $35,000 was awarded to Mr. Kreil    
in accordance with Multi-Arc's Corporate Management Incentive Plan    
which provides for a bonus pool to be divided proportionally based    
on normal compensation, among three of Multi-Arc's senior executives  
(other than Mr. Flood).  The pool is calculated at 1 1/2% of          
earnings before interest and taxes up to $1 million, plus 2% of such  
earnings between $1 to $2 million, plus 2 1/2% of such earnings over  
$2 million.  Mr. Kreil also received a special bonus of $15,000 from  
Andal in recognition for his efforts in refinancing Multi-Arc Inc.    

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 and          
Industrial                                                                      
Service Company Indices for the period October 1, 1990 to September 30, 1995.   

CUMULATIVE TOTAL RETURN                 
Andal Shares vs. Amex Indices                 

Measurement Period   Andal Invested   AMEX MV Invested  AMEX Ind. Invested      

9/30/90               $100.00            $100.00             $100.00
9/30/91                 15.91             124.19               92.92
9/30/92                  5.68             124.89               96.72
9/30/93                  0.00             152.63              138.39
9/30/94                  1.82             152.11              128.39
9/30/95                  2.05             180.59              156.55

Assumes $100 invested on September 30, 1990 in Andal Corp. Common Stock, the    
Amex                                                                            
Market Value Index and the Amex Industrial Service Company Index.               

Item 12.  Security Ownership of Certain Beneficial Owners and Management        

  The following table sets forth information as of November 30, 1995, 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               77,215 shs. (1) (13)        23.4%            
c/o Andal Corp.                                                                 
909 Third Avenue                                                                
New York, NY   10022                                                            

Andrew J. Frankel                   1,730           (1)                         
c/o Andal Corp.                    77,215      (2) (13)                         
909 Third Avenue                    2,019           (3)                         
New York, NY   10022                  498           (4)                         
------    
                       81,462 shs.                 24.7%

Alan N. Cohen                      29,825      (1) (13)                         
c/o Andal Corp.                     4,250           (5)                         
909 Third Avenue                   ------                                       
New York, NY   10022               34,075 shs.                 10.3%            

Peter D. Flood                      4,114 shs.      (9)         1.2%            
c/o Multi-Arc Inc.                                                              
200 Roundhill Drive                                                             
Rockaway, NJ   07866                                                            

Carl D. Glickman                    1,750 shs.                  0.5%            
c/o Andal Corp.                                                                 
909 Third Avenue                                                                
New York, NY   10022                                                            

Builtland Partners                 63,294 shs.   (1)(6)        19.2%            
c/o Milstein Properties                                                         
1271 Avenue of the Americas                                                     
New York,, NY   10020                                                           

Paul Milstein                      84,337 shs.   (7)(8)        25.6%            
c/o Milstein Properties                                                         
1271 Avenue of the Americas                                                     
New York, NY   10020                                                            

Troster Singer Division            35,405 shs.     (11)        10.7%            
of Spear, Leeds & Kellogg                                                       
115 Broadway                                                                    
New York, New York  10006                                                       

All officers and directors                                                      
as a group (8 persons)            121,561 shs.     (12)        36.8%            

(1)  Direct record and beneficial ownership.                                    

(2)  As a general partner of, or person designated to exercise voting power or  
   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 a trust 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)  Consists of 4,114 shares owned of record and beneficially by Mr. Flood.    

(10) Not used                                                                   

(11) Beneficial ownership based upon information obtained from the company      
during December 1995.                                                 

(12) Includes the shares owned directly or indirectly by the officers and       
  directors of the Company as set forth in the table, plus shares owned by
officers not named in the table.                                      

(13) Includes 278 shares issuable upon conversion of debentures.                

Item 13.  Certain Relationships and Related Transactions                        

On July 5, 1990, the Company borrowed an aggregate of $5 million from 
Messrs. Alan N. Cohen, 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, Chairman of the Board and a director    
of the Company, is a general partner (collectively, in such capacity, the "UBC  
Lenders").  The proceeds of the loan (the "UBC Loan") were used to reduce       
then-outstanding indebtedness and for general corporate and working capital     
purposes.                                                                       

  The UBC Loan is secured by a pledge of the capital stock of UBC Virginia
Corp. ("UBC Corp."), a subsidiary of the Company which holds an option (the     
"Option") to purchase a parcel of real estate located at 61st Street and First  
Avenue in New York City (the "UBC Property").  In addition, the Company paid    
the UBC Lenders a $50,000 commitment fee and issued to them an aggregate of     
25,000 warrants, each entitling the holder to purchase one share of the         
Company's common stock at an exercise price of $80.00 per share.  The closing   
market price of Andal's common stock on July 5, 1990 was $65.00 per share.  The 
warrants were exercisable from December 31, 1990 until July 5, 1995, at which   
time they lapsed unexercised.                                                   

  In May 1992, the Company restructured the UBC Loan, as well as its loans
with Chemical Bank and Fleet Bank, most of which were originally made over 15   
years ago and were used for general corporate purposes.  Under the terms of     
such restructuring, the interest rate on all such loans was reduced to the prime
rate; and interest accrued from October 1, 1991 through March 31, 1993 of       
$571,285 on the UBC Loan was deferred and added to the principal.  Since March  
31, 1993, the aggregate principal balance of the UBC Loan has been $5,571,285.  
The UBC Loan is due and payable on the earlier of March 31, 1997, or the day    
after the Company's bank loans have been paid in full.  In addition to requiring
prepayment of the UBC Loan in the event of a sale of the Company's interest in  
the UBC Property, the restructuring agreement also requires prepayments of such 
loans if the Company obtains cash recoveries on various claims and litigations  
relating to its discontinued construction contracting operations or if the      
Company's cash flow from operations exceeds a specified amount.                 

In connection with the 1992 restructuring, the banks consented to the 
Company's grant to the UBC Lenders of a second lien on those assets of the      
Company which serve as collateral for the bank loans; and the UBC Lenders       
consented to the Company's grant to the banks of a second lien on the stock of  
UBC Corp.                                                                       

In March 1994, after discussions initiated by Fleet Bank, which had   
indicated that it desired to dispose of its portion of the Company's bank       
loans, Frankhill Associates, Alan N. Cohen, and Paul Milstein (collectively, in 
such capacity, the "Fleet Assignees") each purchased a one-third interest in the
Company's indebtedness to Fleet Bank (the "Fleet Indebtedness"), which          
indebtedness totalled $3,042,000.  The terms of such indebtedness did not       
change as a result of this purchase.  In November 1994, Peter D. Flood, a       
director of the Company and Chief Executive Officer of Multi-Arc Inc.,          
purchased an aggregate of 6.4% of the Fleet Indebtedness from Frankhill         
Associates, Alan N. Cohen, and Paul Milstein.                                   

In September 1994, in order to facilitate the restructuring and       
refinancing of Multi-Arc, the Fleet Assignees agreed to yield their lien on     
Multi-Arc's assets and to defer the approximately $1.6 million payment to which 
they would have otherwise been entitled; and Chemical Bank agreed to accept a   
$255,000 discount for payment in full to it of the Company's outstanding debt.  
In consideration for the concessions agreed to by the Fleet Assignees, the      
Company's Board of Directors (Messrs. Frankel and Cohen not voting) approved a  
payment of $255,000 by the Company to the Fleet Assignees.  The May 1992        
Restructuring Agreement was amended to provide for principal payments on the    
Fleet Assignee debt at the rate of $250,000 per quarter beginning March 31,     
1995, with the remaining principal balance becoming due on March 31, 1997.  The 
payment that was due on September 30, 1995 was made on October 24, 1995.        
Furthermore, Andal is required to make prepayments to the extent that it sells  
any of its capital assets or receives capital distributions from Multi-Arc.     
The UBC Loan continues to be due and payable on the earlier of March 31, 1997,  
or the day after the Fleet Assignee debt has been paid in full.                 

Andal's remaining obligation to Chemical Bank consists of $941,000 of 
aggregate liability under outstanding letters of credit issued by Chemical      
Bank in connection with an appeal bond and in connection with its discontinued  
real estate development activities.  Because of Andal's inability to fund the   
liabilities represented by the letters of credit, in order to secure the        
release of collateral held by Chemical Bank so that Multi-Arc could obtain its  
term loan and revolving credit facility from First Fidelity Bank, Messrs.       
Andrew J. Frankel, Paul A. Milstein, and Alan N. Cohen each personally          
guaranteed one-third of the letter of credit liabilities, for which Andal has   
agreed to pay to Messrs. Frankel, Milstein, and Cohen an aggregate annual       
guarantee fee equal to 2% of the letters of credit outstanding.                 

See Item 1.  Business.  General.  for a discussion of the 1995        
developments concerning the UBC Property and the possible sale of it to the UBC 
Lenders in satisfaction of the UBC Loan.                                        

 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 2% of Multi-  
Arc common stock) to such management.  Both the sale of the common stock and    
the issuance of the debentures were funded through non-recourse loans made to   
its management by Multi-Arc using Multi-Arc's revolving credit facility with    
First Fidelity Bank.  The management loans included $500,000 and $100,000,      
respectively, to Peter D. Flood, a Director of the Company and Chief Executive  
Officer of Multi-Arc, and Walter N. Kreil, Jr., an officer of the Company and   
Vice President and Chief Financial Officer of Multi-Arc.  These loans bear      
interest at 8.35% and are repayable on December 15, 2004, or upon termination   
of employment.  The loans are secured by common stock and debentures of Multi-  
Arc.  The Notes evidencing these loans are pledged by Multi-Arc to First        
Fidelity Bank.                                                                  

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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 33 below.

(a)(2)    Financial Statement Schedules                                         

     See Index to Financial Statements and Schedules at page 33 below.

(b)  Reports on Form 8-K                                                        

The Company did not file any reports on Form 8-K for the quarter ended
September 30, 1995.                                                   

(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  
  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).         

4(a) Indenture dated as of September 15, 1972 between the Company and 
    Manufacturers Hanover Trust Company, as Trustee, relating to the
      Company's 5 1/2% convertible subordinated debentures due September
    15, 1997 (incorporated by reference to Exhibit 4(a) to Company's
  Annual Report on Form 10-K for fiscal year ended September 30,
1986).                                                      

4(b) First Supplemental Indenture dated as of January 12, 1982 between
        the Company and United States Trust Company of New York, as Trustee,
        relating to the Company's 5 1/2% convertible subordinated debentures
        due September 15, 1997 (incorporated by reference to Exhibit 4(b) to
        Company's Annual Report on Form 10-K for fiscal year ended September
30, 1986).                                                  

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)     Option Agreement dated as of August 1, 1982 between         
              Schnurmacher Corp. and the Company (incorporated by reference to
              Exhibit 10(v) to Company's Annual Report on Form 10-K for fiscal
year ended September 30, 1986).                   

10(c)     Lease dated May 11, 1988, containing an Option to Purchase, 
           between Roundhill Associates and the Company (incorporated by
            reference to Exhibit 10(ag) to Company's Annual Report on Form
10-K for fiscal year ended September 30, 1988).   

10(d)     Intercreditor Agreement among Frankhill Associates, Paul    
         Milstein, Alan N. Cohen, and Andal Corp. dated July 5, 1990
           (incorporated by reference to Exhibit 10(ac) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1990).                                            

   10(e)     Stock Pledge Agreement among Andal Corp., Frankhill Associates,
 Paul Milstein, and Alan N. Cohen dated July 5, 1990
           (incorporated by reference to Exhibit 10(ad) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1990).                                            

10(f)     Warranty Agreement among Andal Corp., Frankhill Associates, 
 Paul Milstein, and Alan N. Cohen dated July 5, 1990
           (incorporated by reference to Exhibit 10(ae) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1990).                                            

10(g)     Restructuring Agreement, Amendment, Guarantee, and Security 
             Agreement dated May 27, 1992 ("Restructuring Agreement") by and
             among Andal Corp., certain subsidiaries of Andal Corp., Norstar
      Bank, Manufacturers Hanover Trust Company, Manufacturers
               Hanover Trust Company as agent for the banks, Alan N. Cohen, Paul
         Milstein, Frankhill Associates, and the Bank of New York as
            collateral agent for the Lenders (incorporated by reference to
           Exhibit 10(t) to the Company's Annual Report on Form 10-K for
the year ended September 30, 1992).               

10(h)     First Amendment to the Restructuring Agreement dated June 5,
               1992 (incorporated by reference to Exhibit 10(s) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1992).                                            

10(i)     Plan of Restructuring adopted by the Board of Directors and 
            Andal Corp. as approved by the Shareholders on August 16, 1994
          (incorporated by reference to Exhibit 10(j) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1994).                                            

10(j)     Loan and Security Agreement dated September 30, 1994 by and 
          between First Fidelity Bank, N.A. and Scientific Coatings of
         Illinois, Inc., Scientific Coatings, Inc., and SCI Coatings
            Southwest, Inc. (incorporated by reference to Exhibit 10(k) to
         the Company's Annual Report on Form 10-K for the year ended
September 30, 1994).                              

 10(k)     Subordination Agreement dated September 30, 1994 of Multi-Arc
               Inc. as debtor and Andal Corp. as subordinated lender in favor of
             First Fidelity Bank, N.A. (incorporated by reference to Exhibit
            10(l) to the Company's Annual Report on Form 10-K for the year
ended September 30, 1994).                        

10(l)     Security Agreement dated September 30, 1994 by and between  
              First Fidelity Bank, N.A. and Vagle Technology, Inc., Multi-Arc,
          Inc. (a Minnesota corporation), Multi-Arc Inc., Multi-Arc of
        Ohio, Inc., and S. C. I. Coatings Limited (incorporated by
          reference to Exhibit 10(m) to the Company's Annual Report on
Form 10-K for the year ended September 30, 1994). 

10(m)     Amendment dated September 30, 1994 to the Restructuring     
           Agreement, Amendment, Guarantee, and Security Agreement dated
            May 27, 1992 among Andal Corp. and certain subsidiaries, Fleet
          Bank, Chemical Bank, Alan N. Cohen, Paul Milstein, Frankhill
      Associates, and The Bank of New York as collateral agent
          (incorporated by reference to Exhibit 10(m) to the Company's
         Annual Report on Form 10-K for the year ended September 30,
1994).                                            

   10(n)     Multi-Arc Inc., Andal Corp., and United States Trust Company of
           New York, Trustee.  Second Supplemental Indenture dated as of
           September 30, 1994 5 1/2% Convertible Subordinated Debentures
         due 1997 (incorporated by reference to Exhibit 10(o) to the
     Company's Annual Report on Form 10-K for the year ended
September 30, 1994).                              

 10(o)     Pledge and Security Agreement dated September 30, 1994 by and
              among Andal Corp. and First Fidelity Bank, N.A. (incorporated by
          reference to Exhibit 10(p) to the Company's Annual Report on
Form 10-K for the year ended September 30, 1994). 

10(p)     Form of Multi-Arc Inc. 6% Convertible Subordinated Debenture
due December 15, 2004.                            

10(q)     Form of Multi-Arc Inc. Stockholders Agreement dated June 15,
1995.                                             

10(r)     1994 Multi-Arc Inc. Stock Option Plan.                      

  10(s)     Loan Agreement dated September 21, 1995 between First Fidelity
Bank N. A. and Multi-Arc (UK) Ltd.                

  10(t)     Overdraft Facility Agreement between First Fidelity Bank N. A.
and Multi-Arc (UK) Ltd. dated September 21, 1995. 

10(u)     61st Street Option Exercise.                                

22   Subsidiaries of the Company                                      

24(a)     Consent of Kelly Graham Myska & Partners.                   

24(b)     Consent of KPMG Peat Marwick.                               

24(c)     Consent of BDO Seidman.                                     

27   Financial Data Schedule                                          

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Index to Financial Statements and Schedules                 

Financial Statements                                                      Page  

Report of Independent Auditors on Financial Statements                      36  

Consolidated Balance Sheet--September 30, 1995 and September 30, 1994      F-1  

Consolidated Statement of Operations--Years ended September 30, 1995,           
1994, and 1993                                                             F-2  

Consolidated Statement of Shareholders' Equity (Deficit)                        
   --Years Ended September 30, 1995, 1994, and 1993                      F-3

Consolidated Statement of Cash Flows--Years Ended September 30, 1995,           
1994, and 1993                                                             F-4  

Notes to Consolidated Financial Statements                                 F-6  

  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:  January 5, 1996                                                         

   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         January 5, 1996  
(Andrew J. Frankel)        Directors, Chief Executive                     
       Officer, and Director

Principal Financial Officer:                                                    

/s/ Michael S. Huber          Senior Vice President,           January 5, 1996  
(Michael S. Huber)         Chief Financial Officer,                       
and Treasurer 

Principal Accounting                                                            
Officer:                                                                        

/s/ Walter N. Kreil, Jr.      Vice President, Chief            January 5, 1996  
(Walter N. Kreil, Jr.)     Accounting Officer, and                        
Controller          

Directors:                                                                      

/s/ Alan N. Cohen             Director                         January 5, 1996  
(Alan N. Cohen)                                                           

/s/ Peter D. Flood            Director                         January 5, 1996  
(Peter D. Flood)                                                          

/s/ Carl D. Glickman          Director                         January 5, 1996  
(Carl D. Glickman)                                                        

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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, 1995 and 1994, 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, 1995. 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 did not audit the financial statements of certain consolidated   
subsidiaries, which statements reflect total assets constituting 26% in 1994    
and total revenues constituting 16% in 1994 and 1993 of the related             
consolidated totals. The financial statements of Steve's Homemade Ice Cream,    
Inc. (an equity method investee in 1993) also have not been audited by us.      
Those statements were audited by other auditors whose reports have been         
furnished to us and our opinion, insofar as it relates to the amounts included  
for such subsidiaries and investee, is based solely on the reports of other     
auditors.                                                                       

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 audits and the reports of other    
auditors provide a reasonable basis for our opinion.                            

In our opinion, based on our audits and the reports of other auditors, 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, 1995 and 1994, and the consolidated results of    
their operations and their cash flows for each of the three years in the        
period ended September 30, 1995, in conformity with generally accepted          
accounting principles.                                                          

The accompanying consolidated financial statements have been prepared assuming  
the Company will continue as a going concern. As more fully described in Notes  
1 and 2, the Company has incurred losses in 1994 and 1993 and has a working     
capital deficiency and a shareholders' deficit at September 30, 1995. In        
addition, the Company is obligated under one of its loan agreements to          
exercise an option it holds on certain property, for which the Company          
currently does not have sufficient resources. These conditions raise            
substantial doubt about the Company's ability to continue as a going concern.   
The consolidated financial statements do not include any adjustment to reflect  
the possible future effects on the recoverability and classification of assets  
or the amounts and classification of  liabilities that may result from the      
possible inability of the Company to continue as a going concern.               

As described in Note 17, in 1994 the Company changed its method of accounting   
for income taxes.                                                               

                 ERNST & YOUNG LLP
November 15, 1995                                                               
except for Note 12 as to which the date is                                      
January 5, 1996                                                                 

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ANDAL CORP. AND SUBSIDIARIES                                                    
CONSOLIDATED BALANCE SHEET                                                      

ASSETS                
                                           September 30,
                                       1995           1994
Current assets:                                                                 
Cash                                   $     850,000   $  1,143,000         
Accounts receivable                        4,998,000      4,028,000         
Inventories                                1,073,000      1,254,000         
Prepaid expenses                             307,000        317,000         
Other current assets                         906,000        216,000         
                                 ------------  -------------
Total current assets                    8,134,000      6,958,000      

Investments in joint ventures                1,268,000        842,000           
Property and equipment                      10,789,000      9,732,000           
Loans due from Multi-Arc Inc. management     1,000,000              0           
Other assets                                 2,434,000      2,925,000           
                                 ------------   ------------
                                $23,625,000    $20,457,000
                                 ============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                

Current liabilities:                                                            
Short term borrowings, including                                            
current portion of long term debt    $  1,206,000   $  1,425,000      
Current portion of debt due                                                 
shareholders                            1,250,000        750,000      
Accounts payable                           1,606,000      1,764,000         
Other accrued expenses                     5,106,000      5,834,000         
                                -------------  -------------
Total current liabilities               9,168,000      9,773,000      

Long-term debt                               7,886,000      6,952,000           
Debt due shareholders                        6,364,000      7,364,000           
Other deferred income                        1,430,000      1,527,000           
Convertible subordinated debentures          3,335,000      1,825,000           
Minority interest in Multi-Arc Inc.            540,000              0           

Shareholders' equity (deficit):                                                 
Common shares, par value $20 per share,                                     
1,500,000 authorized                                                      
and 370,496 issued                      7,410,000      7,410,000      
Paid-in-capital                           31,625,000     31,625,000         
Deficit                                  (38,472,000)   (40,358,000)        
Less 40,637 common shares                                                   
held in treasury, at cost              (5,661,000)    (5,661,000)     
                                -------------   ------------
Total shareholders' equity                                            
(deficit)                           (5,098,000)    (6,984,000)  
                                 ------------   ------------
                                $23,625,000    $20,457,000
                                ===========    ===========

See accompanying notes.                                                         

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ANDAL CORP. AND SUBSIDIARIES                                                    
CONSOLIDATED STATEMENT OF OPERATIONS                                            

                   Year Ended September 30
                          1995         1994         1993
Operating revenues:                                                             
Trade sales                         $30,015,000  $26,672,000  $24,384,000   
Royalties and commissions               315,000      421,000      503,000   
Equity in net income (loss) of                                              

foreign joint ventures                53,000      (16,000)           0
                                  ------------ ------------ ------------
                                  30,383,000   27,077,000   24,887,000
Operating costs and expenses:                                                   

Cost of revenues                     15,545,000   13,466,000   13,052,000   
Depreciation expense                  1,907,000    2,234,000    2,336,000   
Selling, general and                                                        
administrative expenses           10,517,000    9,750,000    8,667,000
                                  ------------ ------------ ------------
                                  27,969,000   25,450,000   24,055,000

Income from operations                  2,414,000    1,627,000      832,000     
Other income (expense):                                                         

Gain on sale of minority interest                                           
in Multi-Arc Inc.                    348,000            0            0
Minority interest in net income                                             
of Multi-Arc Inc.                   (152,000)           0            0
Gain from initial public offering of                                        
Multi-Arc India Ltd.                  85,000            0            0
Investment and other income, net         37,000      (756,000)    164,000   
Interest expense                     (1,799,000)   (1,625,000) (1,663,000)  
                                  ------------  ------------ -----------
                                   (1,481,000)   (2,381,000) (1,499,000)
Equity in net income of                                                         
Integrated Brands Inc.                       0             0     234,000  
                                   -----------  ------------ -----------
Income (loss) from continuing                                                   

operations before income taxes         933,000      (754,000)   (433,000) 
Provision for income taxes             (54,000)      (17,000)          0  
                                   -----------  ------------ -----------
Inc. (loss) from continuing operations    879,000      (771,000)   (433,000)    
Income (loss) from discontinued                                                 
operations                            1,007,000      (350,000)   (527,000)  
                                   -----------  ------------ -----------
Net income (loss)                      $1,886,000   $(1,121,000)  $(960,000)    
                                   ==========   ============  ==========

Income (loss) per common share:                                                 

Income (loss) from                                                          
    continuing operation                $2.67        $(2.34)     $(1.31)
Income (loss) from                                                    
    discontinued operations              3.05         (1.06)      (1.60)
                                        -----        -------     -------
 Net income (loss)                      $5.72        $(3.40)     $(2.91)
                                        =====        =======     =======
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, 1992    $7,399,000 $31,636,000 $(38,277,000) $(5,661,000)         
$(4,903,000)                                                                    
Effects of                                                                  
reverse split       11,000     (11,000)           0            0        
0                                                                               
Net loss for 1993          0           0     (960,000)           0          
(960,000)                                                                       
Balance at                                                                      

Sept. 30, 1993     7,410,000  31,625,000  (39,237,000)  (5,661,000)         
(5,863,000)                                                                     
Net loss for 1994          0           0   (1,121,000)           0          
(1,121,000)                                                                     
Balance at                                                                      

Sept. 30, 1994     7,410,000  31,625,000  (40,358,000)  (5,661,000)         
(6,984,000)                                                                     
Net income for 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)                                                                    

See accompanying notes.               

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ANDAL CORP. AND SUBSIDIARIES          
CONSOLIDATED STATEMENT OF CASH FLOWS                                            

                                  Year Ended September 30,
                            1995        1994        1993
Cash provided (used) by operations:                                             
Income (loss) from continuing                                               
operations before income taxes     $  933,000  $ (754,000) $ (433,000)
Adjustments to reconcile income                                             

(loss) from continuing operations                                     

to net cash provided by operations                                    

Depreciation                        1,907,000   2,234,000   2,336,000 
Gain on sale of minority                                              
  interest in Multi-Arc Inc.        (348,000)          0           0
Minority interest in net                                              
  income of Multi-Arc Inc.           152,000           0           0
Amortization of patents,                                              
  trademarks, and license rights     192,000     186,000     760,000
Equity in net (income) loss                                           

  of foreign joint ventures          (53,000)     16,000           0
Equity in (income) of Integrated            0           0    (234,000)
Deferred income accrued                64,000      40,000     153,000 
Amortization of deferred income      (149,000)    (95,000)   (156,000)
Provision (credit) for bad debts      (16,000)     42,000      71,000 
Losses (gains) on investment                                          
   transactions                             0     766,000    (137,000)
Gain from initial public offering of                                  
  Multi-Arc India Ltd.               (85,000)          0           0
Other, net                             28,000      39,000     112,000 

Change in operating assets and                                              
liabilities:                                                          
(Increase) decrease in accounts                                       
   receivable                        (954,000)  1,127,000  (1,755,000)
Decrease (increase) in                                                
 inventories                         200,000    (459,000)    605,000
Decrease (increase) in other current                                  
    assets                             76,000      60,000     (22,000)
Increase in accounts payable                                          
  and accrued liabilities            369,000     634,000   1,200,000
Cash (used) by discontinued                                           
   operations                        (168,000)   (247,000)   (386,000)
Income taxes paid                     (87,000)    (34,000)    (29,000)
                                  ------------ ----------- -----------
Net cash provided by operating                                        
  activities                       2,061,000   3,555,000   2,085,000

Cash flows from financing activities:                                           
Proceeds from long-term debt           3,870,000   6,162,000      50,000    
Loans to Multi-Arc management         (1,000,000)          0           0    
Proceeds from sale of common stock                                          
and debentures of Multi-Arc Inc.       1,714,000           0           0    
Additions to principal for                                                  
interest deferral                           0           0     460,000 
Deferred financing costs                (126,000)          0           0    
Reductions of long-term debt          (3,024,000) (7,743,000)   (996,000)   
Decrease in debt due within                                                 
one year                             (631,000)   (398,000)   (130,000)
                                   ----------- ----------- -----------
Net cash provided (used) by                                                 
financing activities                  803,000  (1,979,000)   (616,000)
                                   ----------- ----------- -----------

Cash flows from investing activities:                                           
Reduction of (investment in)                                                
affiliated companies                 (211,000)  1,459,000     (42,000)
Gross additions to property                                                 
and equipment                      (2,964,000) (1,999,000) (1,268,000)
Other, net                                18,000    (370,000)   (222,000)   
                                   ----------- ----------- -----------
Net cash (used) by                                                          
investing activities               (3,157,000)   (910,000) (1,532,000)
                                   ----------- ----------- -----------
Increase (decrease) in cash               (293,000)    666,000     (63,000)     
Cash at beginning of year                1,143,000     477,000     540,000      
                                   ----------- ----------- -----------
Cash at end of year                     $  850,000  $1,143,000    $477,000      
                                  ==========  ==========    ========

See accompanying notes.                                                         

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ANDAL CORP. AND SUBSIDIARIES                                                    
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                 

Basis of Presentation                                                 

  The accompanying consolidated financial statements have been prepared on
a going concern basis which contemplates the realization of assets and the      
liquidation of liabilities in the ordinary course of business.  Andal Corp.     
(the "Company" or "Andal") has incurred losses in 1994 and 1993 and has a       
working capital deficiency of $1,034,000 and a shareholders' deficit of         
$5,098,000 at September 30, 1995.  The Company's only source of cash flow,      
other than from the sale of capital assets, is Multi-Arc.  Pursuant to the      
terms of the 1994 restructuring of Multi-Arc and of Multi-Arc's term loan and   
revolving credit facility with First Fidelity Bank, Multi-Arc is not permitted  
to pay dividends or make loans to Andal, except that Multi-Arc is permitted to  
pay cash to Andal to the extent that it utilizes any of Andal's federal, state, 
and local net operating loss carry forwards for income tax purposes.  However,  
such payments cannot exceed $1 million per year for fiscal 1995 and 1996, after 
which no further payments are permitted (see Note 12 for additional information 
regarding the restructuring of Multi-Arc).  Andal could also raise cash by      
making sales of the remaining Integrated stock it owns, as market conditions    
permit (approximately $440,000 at the current market value) and, in fiscal 1996,
expects to receive approximately $750,000 for the 1995 sales of Multi-Arc stock 
and debentures (see Note 3).                                                    

The Company's fiscal 1996 cash requirements are estimated to be $2    
million for operating cash needs, $3 million for the required exercise of the   
Option described in Note 2, and $1 million for principal payments on            
shareholder debt as described in Note 13.  In addition, the Company may also    
require cash to fund litigation costs related to discontinued operations and/or 
to make payments to creditors who have yet to make payment demands.  As         
discussed in Note 2, the Company is currently negotiating to restructure its    
indebtedness to shareholders by selling the Option to them.  Unless the Company 
can accomplish a restructuring of its indebtedness to its shareholder lenders   
which will allow it to meet its fiscal 1996 cash needs, either through the sale 
of the UBC Option to them or otherwise, there may be no alternative to the      
Company other than to enter into bankruptcy proceedings.  The accompanying      
consolidated financial statements do not include any adjustments relating to    
the possible effect on the recoverability and classification of assets or the   
amounts and classification of liabilities that may be necessary should the      
Company be unable to continue as a going concern.                               

Principles of Consolidation                                           

   The consolidated financial statements include the accounts of Andal Corp.
and its subsidiaries.  Foreign affiliates in which Andal owns 20% to 50% are    
accounted for using the equity method.  Andal's remaining operating business    
is Multi-Arc.  All significant intercompany transactions and accounts are       
eliminated in consolidation.                                                    

Inventories                                                           

Inventories are stated at lower of cost (determined principally by the
first-in, first-out method) or market.                                          

Property and Equipment                                                

Property and equipment are recorded at cost and depreciated over      
estimated useful lives on a straight-line basis.                                

Revenue and Deferred Income                                           

   Revenue is recognized when it is earned.  In the case of Multi-Arc system
sales, the point for revenue recognition normally corresponds to the date when  
the system is shipped to the customer.  To the extent the Company sells         
coating systems or license rights to its joint ventures, a proportionate        
percentage of the profit on these is deferred and subsequently amortized into   
revenue.  Such amortization offsets the related depreciation or license rights  
expense recorded by the corresponding joint venture company.                    

Research and Development Expenses                                     

  Research and development expenditures ($1,628,000 in 1995, $1,400,000 in
1994, and $1,222,000 in 1993) are charged to cost of revenues as incurred.      

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 anti-dilutive.                                             

  The average number of shares used in computing primary income/(loss) per
share was 329,859 in each of 1995, 1994, and 1993.                              

2.   UBC OPTION                                                                 

  The Company, through a wholly-owned subsidiary, UBC Virginia Corp. ("UBC
Corp."), owns an option (the "Option") to purchase a parcel of real estate      
(the "UBC Property") located on 61st Street and First Avenue in New York City,  
which Option has been carried on the books of the Company at nil value for many 
years.  The Option grants the Company the right to purchase the UBC Property for
approximately $3 million in cash and is exercisable only after the death of     
the later to die of two of the principals of the corporation that granted the   
Option.  The Option expires 91 (ninety-one) days after the Company has been     
given formal notice of such death by the Optionor.  The Company was given       
formal notice of such death on September 22, 1995.  The Company does not have   
the $3 million of cash that is required to exercise the Option, and it does not 
believe it will be able to raise such a sum through borrowings from unrelated   
parties or through the sale of assets other than the Option.  However, under    
the terms of the loan described below, the Company is obligated to exercise the 
Option.  Accordingly, on October 13, 1995 the Company gave the Optionor formal  
notice of its election to exercise the Option; and the parties have agreed that 
the transaction must be closed on or before February 27, 1996.                  

 The capital stock of UBC Corp. was pledged as security for a $5 million
loan, hereafter referred to as the "UBC Loan," made to the Company in 1990 by   
Alan N. Cohen, 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, Chairman of the Board and a Director of 
the Company, is a general partner (collectively, in such capacity, the "UBC     
Lenders").                                                                      

As of September 30, 1995, the principal balance of the loan, after    
adjustment for a restructuring which occurred in 1992, is $5,571,285 which is   
due and payable on the earlier of March 31, 1997, or the day after certain other
indebtedness to shareholders of the Company, including the individuals          
mentioned above, has been paid in full.                                         

  The capital stock of UBC Corp. also serves as security (second lien) for
a $2,043,000 loan (hereafter referred to as the "Fleet Assignee Loan")          
outstanding as of September 30, 1995 between the Company and certain of its     
directors and a stockholder who was formerly a director.                        

The Company's failure to pay the $3 million purchase price for the UBC
Property will result in an event of default under the UBC Loan, which will      
give the UBC Lenders the right to exercise the Option on the Company's behalf   
and to declare the loan immediately due and payable, including all sums         
advanced by the UBC Lenders in exercising the Option.  In addition, the UBC     
Lenders will have all of the remedies available to them under applicable law    
for secured lenders, including, without limitation, the public or private sale  
of the UBC Property acquired by exercise of the Option.  Default under the UBC  
Loan will also result in default under the Fleet Assignee Loan.                 

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 has 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     
have not been able to identify a buyer.  To date, the Company has not received  
a bona fide offer from a third party for the option.                            

  The UBC Lenders have expressed an interest in acquiring the UBC Property
in satisfaction of the amount outstanding on the UBC Loan.  In that event, the  
Company would no longer be obligated with respect to the $3 million purchase    
price obligation due on the UBC 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 (see "Sale of Minority Interest in     
Multi-Arc Inc." included elsewhere in this Report).  After discussion, the      
Board members who are not UBC Lenders (Messrs. Flood and Glickman) authorized   
the officers of the Company to engage an independent appraiser to conduct an    
appraisal of the UBC Property, following which such Board members would seek to 
negotiate a transaction with the UBC Lenders taking into account, in addition   
to the appraisal, all material circumstances relating to the UBC 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 will 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 UBC Property was between $9.9 million and $11.9 million (before deducting
the $3 million that would have to be paid to exercise the UBC Option), depending
on the ultimate cost of complying with zoning restrictions and other costs that 
would be incurred in the development of the UBC 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.        

 The members of the Company's Board of Directors who are not UBC Lenders
and the UBC Lenders are each considering the results of the appraisal.  The     
Company expects that formal negotiations between the Company and the UBC        
Lenders will commence in early January 1996.                                    

3.   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 Fidelity Bank.  These loans bear interest from 6% to 8.35%  
and are repayable on December 15, 2004 or upon termination of employment.  The  
loans are secured by common stock and debentures of Multi-Arc.  The Notes       
evidencing these loans are pledged by Multi-Arc to First Fidelity Bank.         
Because of the non-recourse nature of the loans, the gain on the sale of Multi- 
Arc common stock of approximately $396,000 has been deferred until such time as 
the management loans are repaid.                                                

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.  These debentures bear interest at 6% and are payable on   
December 15, 2004.  Approximately $450,000 of the common stock sold, and        
$450,000 principal amount of the debentures sold are evidenced by a promissory  
note which require monthly principal payments over three years plus interest at 
6% per annum.  An additional $153,000 of common stock and $153,000 principal    
amount of the debentures were sold on open account.  The gain on these sales of 
Multi-Arc common stock was $800,000, of which $452,000 was deferred and will be 
recognized as the amounts are collected.                                        

The Company had agreed, in principal, to a total $3.5 million in stock
sales and $3.5 million of Multi-Arc debenture issuances to its foreign          
licensees and other investors.  However, the offer was not fully subscribed;    
and the unsubscribed portion of the offer has been withdrawn.                   

4.   MULTI-ARC JOINT VENTURES                                                   

In 1993, Multi-Arc acquired a 29% interest in Multi-Arc Scientific    
Coatings (S) Pte. Ltd. ("Singapore"), a joint venture which commenced           
operations in August 1993.  Multi-Arc's share of Singapore's net income (loss), 
recorded on the equity method, for the years ended September 30, 1995 and 1994  
was $(110,000) and $(111,000), respectively.  During fiscal 1995, the Company   
invested an additional $247,000 in cash and converted a long term receivable of 
$77,000 into equity.  At September 30, 1995, Investments in Affiliates include  
the Company's investment in Singapore of $293,000 ($79,000 at September 30,     
1994).                                                                          

Multi-Arc had a 40% equity interest in Multi-Arc India Ltd. ("India") 
which has a fiscal year end of March 31.  In November 1994, India completed an  
initial public offering and was listed on the Bombay Stock Exchange.  As a      
result of this transaction, Multi-Arc's interest in India was reduced to 21%    
and the Company recorded a pretax gain of $85,000.   Multi-Arc's share of       
India's net income (loss), recorded on the equity method, for the years ended   
September 30, 1995, 1994, and 1993 was $163,000 $95,000, and $-0-,              
respectively.  During fiscal 1995, the Company received $36,000 of dividends in 
cash.  During fiscal 1994, the Company made additional equity investments in    
India of $218,000 in cash and received $30,000 of dividends in cash.  At        
September 30, 1995, Investments in Affiliates includes Andal's investment in    
India of $975,000 ($763,000 at September 30, 1994).                             

5.   DISCONTINUED OPERATIONS                                                    

   The income (loss) from discontinued operations in 1995, 1994, and 1993 is
comprised of the following:                                                     

                            1995          1994          1993

 Gain on divestiture of OMC       $        0    $  69,000     $        0
Reversal of reserve for                                               
      income taxes                   996,000            0              0
Income (loss) on discontinued                                         
     construction operations           11,000     (419,000)      (527,000)
                                   ----------    ----------     ----------
                                   $1,007,000    $(350,000)     $(527,000)
                                   ==========    ==========     ==========

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.  The 1995 amount    
also includes income of $141,000 related to settlement of a construction claim  
and legal expenses of $130,000.                                                 

Construction operations consisted of construction subcontracting      
businesses involved in wall, flooring and 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  
loss on discontinued construction operations for 1994 and 1993 is due to legal  
expenses incurred and settlements on litigation related to those businesses.    

At September 30, 1993, the Company's remaining investment in Olsher   
Metals Corporations ("OMC") consisted of 19.5% of OMC's common stock valued at  
$431,000 which approximated its share of the underlying book value of OMC.  In  
January 1994, the Company sold its remaining investment in OMC for $500,000 in  
cash.  The proceeds were used to repay debt.  The gain on this transaction has  
been included in income (loss) from discontinued operations.                    

6.   SALE OF SALEM TUBE, INC.                                                   

  On June 18, 1991, the Company completed the sale of substantially all of
the assets and liabilities of its wholly-owned subsidiary, Salem Tube,          
Inc.("Salem").  The sales price included a $700,000 subordinated promissory     
note due in equal quarterly installments beginning on September 30, 1994.  The  
selling price of the net assets of Salem was approximately $700,000 in excess of
Andal's carrying value at June 18, 1991.  This gain was deferred and was to be  
recognized as the subordinated note payments were received.  On August 4, 1994, 
the purchaser of Salem filed a voluntary petition for bankruptcy under Chapter  
11 of the Federal Bankruptcy Code.  In June 1995, the Bankruptcy Court approved 
Salem's Plan of Reorganization.  Under the Plan, Andal received $100,000 in     
June 1995, is scheduled to receive $50,000 in December 1995, and may receive    
another $70,000 at an unspecified time in the future, depending on the recovery 
of certain preference payments.  All recoveries have been and will be, when and 
if received, credited to discontinued operations.                               

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%.  At          
September 30, 1995 and 1994, Other Assets includes Andal's investment in        
Integrated of $393,000.                                                         

On June 22, 1993, the Company's Chairman and President resigned as    
directors of Integrated and the Company was not in a position to exercise       
significant influence over the operating and financial policies of              
Integrated's.  Accordingly, on June 23, 1993, the Company began to account for  
its then 21% ownership of the common stock of Integrated by the cost method.    

In August 1993, the Company sold 65,000 shares of Integrated stock for
$134,000 in cash and recorded a gain of $60,000 on the transaction.  During     
1994, the Company disposed of 129,500 shares of Integrated in various           
transactions for $161,000 in cash and recorded a net gain of $14,000.  In an    
additional transaction in August 1994, the Company sold 2,000,000 shares of     
Integrated for $1,500,000 in cash and recorded a loss of $780,000.  All         
proceeds were used to repay debt.                                               

8.   ACCOUNTS RECEIVABLE                                                        

Receivables consist of the following:                                 

                                       September 30,

                                1995                1994
    Accounts receivable               $5,096,000          $4,142,000
Allowance for doubtful                                      
          accounts                        (98,000)           (114,000)
                                       -----------         -----------
                                      $4,998,000          $4,028,000
                                      ==========          ==========

9.   INVENTORIES                                                                

Inventories consist of the following:                                 

                                         September 30,

                                 1995               1994
    Raw materials and supplies         $  820,000         $1,198,000
    Work in progress                      253,000             56,000
                                       ----------         ----------
                                       $1,073,000         $1,254,000
                                       ==========         ==========

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10.  PROPERTY AND EQUIPMENT                                                     

Property and equipment consist of the following:                      

                                         September 30,
                                 1995               1994

Building and leasehold                                      
        improvements                    $ 2,521,000        $ 2,987,000
     Furniture and equipment             24,098,000         23,403,000
                                         ------------       ------------
                                         26,619,000         26,390,000
Less accumulated                                            
depreciation and                                      
           amortization                  (15,830,000)       (16,658,000)
                                         ------------       ------------
                                        $10,789,000        $ 9,732,000
                                        ===========        ===========
   Substantially all property and equipment at September 30, 1995 is pledged
as collateral pursuant to loan agreements.                                      

In addition to property owned, the company leases various operating   
facilities and equipment.  Rent expense under operating leases was $1,321,000,  
$1,305,000, and $1,457,000  for the three years ended September 30, 1995,       
1994, and 1993, respectively.                                                   

The aggregate minimum rental commitments under operating leases as of 
September 30, 1995 for each of the fiscal years ended September 30 are as       
follows:  1996, $1,130,000; 1997, $1,016,000; 1998, $758,000; 1999, $501,000;   
2000, $234,000, and $95,000 thereafter.                                         

11.  401K PLANS                                                                 

   The Company maintains several defined contribution 401K savings plans for
the benefit of its employees.  Annual contributions to the plans are at the     
discretion of management.  Aggregate expense related to all plans amounted to   
$294,000 in 1995, $225,000 in 1994, and $97,000 in 1993.                        

12.  CREDIT FACILITIES AND LONG TERM DEBT                                       

Long term debt consists of the following:                             

                                 September 30,
                                 1995           1994
First Fidelity Bank, N. A.                                            
   U. S. -Term loan                     $ 5,214,000    $ 6,000,000
   Revolving credit facility              1,500,000              0
   U. K. - Term loan                      2,370,000              0
Siemens Financial Services                          0      1,766,000  
Bank of Scotland                                    0        358,000  
Capital Leases                                      0        123,000  
Other                                           8,000         70,000  
                                         ------------    -----------
                                          9,092,000      8,317,000
Less current portion                       (1,206,000)    (1,365,000) 
                                          -----------    -----------

                                         $7,886,000     $6,952,000
                                         ==========     ==========
In September 1995, the Company refinanced the debt of its subsidiary, 
Multi-Arc (UK) Ltd., with First Fidelity Bank N. A.  The new credit facilities  
consist of a five-year term loan in the principal amount of Pounds              
Sterling1,500,000 repayable in quarterly installments of Pounds Sterling        
54,000 commencing in December 1995 and a final installment of Pounds Sterling   
474,000 due in September 2000.  Proceeds of the term loan were used to repay    
outstanding indebtedness to Siemens Financial Services and Bank of Scotland,    
to advance an inter-corporate loan to Multi-Arc Inc., and for acquisition of    
new equipment.  In addition to the term loan, First Fidelity has extended a     
Pounds Sterling250,000 overdraft facility for working capital purposes.  At     
September 30, 1995, no borrowings had been made under this facility.            

During 1994, the Company's Board of Directors (and subsequently the   
shareholders) approved a Plan of Restructuring that caused substantially all    
of the assets and liabilities of its Multi-Arc Scientific Coatings division to  
be transferred to Multi-Arc Inc.  In connection with the restructuring, Multi-  
Arc Inc. assumed the Company's obligations under its 5 1/2% convertible         
subordinated debentures due in 1997 and the related indenture (see Note 14).    
The debentures continue to be convertible into Andal common stock.  Also, in    
connection with the restructuring, Multi-Arc Inc. obtained a $6 million term    
loan repayable in equal monthly installments over seven years from First        
Fidelity Bank, N.A. with interest at 8.36%.  Proceeds of the term loan were     
used to retire intercompany indebtedness to Andal; and Andal, in turn, applied  
a substantial portion of the proceeds to the prepayment of its bank             
indebtedness to Chemical Bank.  In addition to the term loan, First Fidelity    
Bank has extended a $4 million revolving credit facility, due March 31, 1997,   
to Multi-Arc for working capital purposes.  Borrowings under this facility are  
limited based on specified percentages of eligible receivables and inventories, 
and bear interest at the prime rate.  At September 30, 1995, Multi-Arc had an   
additional $1,550,000 available under this facility.                            

Andal's remaining obligation to Chemical Bank consists of $941,000 of 
aggregate liability under outstanding letters of credit issued by Chemical      
Bank in connection with an appeal bond and in connection with its discontinued  
real estate development activities.  Because of Andal's inability to fund the   
liabilities represented by the letters of credit, in order to secure the        
release of collateral held by Chemical Bank so that Multi-Arc could obtain its  
term loan and revolving credit facility from First Fidelity Bank, Messrs.       
Andrew J. Frankel, Paul A. Milstein, and Alan N. Cohen each personally          
guaranteed one-third of the letter of credit liabilities, for which Andal has   
agreed to pay to Messrs. Frankel, Milstein, and Cohen an aggregate annual       
guarantee fee equal to 2% of the letters of credit outstanding.                 

In July 1993, Multi-Arc (UK) Ltd. rescheduled its debt due Siemens    
Financial Services into a fixed rate, five-year term loan repayable in equal    
monthly installments with interest at 7-3/8% and, in connection therewith,      
received forgiveness of debt in the amount of $77,000 which was recorded as     
income in 1993.                                                                 

Substantially all of the Company's assets serve as collateral for the 
various term loans and lines of credit.  The various term loan agreements       
require the Company to maintain compliance with certain financial ratios and    
other covenants.  As of September 30, 1995, the Company was in compliance with  
or has obtained waivers of all such covenants for which it was not in           
compliance.  The agreement covering the U. S. term loan and revolving credit    
facility has been modified to make certain financial covenants less restrictive.

The aggregate annual maturities of long term debt during the next five
fiscal years (including the debt due shareholders) are:  1996, $2,456,000;      
1997, $9,062,000; 1998, $1,198,000; 1999, $1,198,000; and 2000, $1,198,000.     
Interest paid during the fiscal years ended September 30, 1995, 1994, and 1993  
amounted to $1,631,000, $1,650,000, and $1,125,000, respectively.               

13.  DEBT DUE SHAREHOLDERS                                                      

Debt due shareholders consists of:                                    

                       September 30,
                    1995              1994

UBC Lenders                       $5,571,000        $5,571,000        
Fleet Assignees                    2,043,000         2,543,000        
                           -----------       -----------

                           7,614,000         8,114,000
Less current portion              (1,250,000)         (750,000)       
                           -----------       -----------

                          $6,364,000        $7,364,000
                          ==========        ==========

 On July 5, 1990, Andal borrowed an aggregate of $5 million from Alan N.
Cohen, Paul Milstein, and a partnership controlled by Andrew J. Frankel,        
collectively referred to as the "UBC  Lenders."  Messrs. Frankel and Cohen are  
officers, directors, and principal shareholders; and Mr. Milstein is a          
principal shareholder and former director of Andal.  The proceeds of the        
loan were used to reduce current indebtedness and for general corporate and     
working capital purposes.                                                       

  The loan is secured by a pledge of the stock of a subsidiary which holds
Andal's option to purchase a parcel of real estate located at 61st Street and   
First Avenue in New York City (the "UBC Property") and must be prepaid in the   
event of a sale of the Company's interest in that property.  (See Note 2.)  In  
connection with the loan, the Company paid the UBC Lenders a $50,000            
commitment fee and issued to them an aggregate of 25,000 warrants, each         
entitling the holder to purchase one share of common stock for $80.00 per       
share.  The closing market price of Andal's common stock on July 5, 1990 was    
$65.00 per share.  The warrants were exercisable from December 31, 1990 until   
July 5, 1995 at which time they lapsed unexercised.  The Company agreed to pay  
the UBC Lenders' expenses incurred in connection with the loans and to          
indemnify the UBC Lenders against any claims which may be asserted against them 
by reason of the loans.                                                         

   In May 1992, the Company restructured this indebtedness.  Under the terms
of the restructuring, the interest rate was reduced from 2 1/2% over the prime  
rate to the prime rate; and interest accrued from October 1, 1991 through       
March 31, 1993 was deferred and added to principal.  The principal amount of the
loans and all accrued and unpaid interest has been rescheduled to be payable on 
the earlier of March 31, 1997 or the day after the Company's obligations to     
banks have been paid in full.  In addition to prepayment in the event of a sale 
of the Company's interest in the UBC Property (see Note 2), the restructuring   
agreement also requires prepayments if the Company obtains cash recoveries on   
various claims and litigations relating to its discontinued construction        
operations and/or if the Company's cash flow from operations exceeds a          
specified amount.                                                               

In consideration for the restructuring, the banks consented to the    
Company granting to the UBC Lenders a second lien on all of the assets of the   
Company which serve as collateral for the bank loans; and the UBC Lenders       
consented to the Company's granting to the banks a second lien on the stock of  
the subsidiary of the Company which holds the Company's interest in the UBC     
Option.                                                                         

In March 1994, after discussions initiated by Fleet Bank, which had   
indicated that it desired to dispose of its portion of the Company's bank       
loans, Frankhill Associates, Alan N. Cohen, and Paul Milstein (collectively, in 
such capacity, the "Fleet Assignees") each purchased a one-third interest in the
Company's indebtedness to Fleet Bank (the "Fleet Indebtedness"), which          
indebtedness totalled $3,042,000.  The terms of such indebtedness did not       
change as a result of this purchase.  In November 1994, Peter D. Flood, a       
director of the Company and Chief Executive Officer of Multi-Arc Inc.,          
purchased an aggregate of 6.4% of the Fleet Indebtedness from Frankhill         
Associates, Alan N. Cohen, and Paul Milstein.                                   

As part of the restructuring, Andal has renegotiated the repayment    
schedule on $2,543,000 due to the Fleet Assignees.  Principal payments on this  
debt, at the rate of $250,000 per quarter, did not begin until March 31, 1995,  
with the remaining principal balance becoming due on March 31, 1997.  The       
payment that was due on September 30, 1995 was made on October 24, 1995.        
Furthermore, Andal is required to make prepayments to the extent that it sells  
any of its capital assets or receives capital distributions from Multi-Arc.     
The Fleet Indebtedness bears interest at 1% over the prime rate payable         
quarterly.  The UBC Loans continue to be due and payable on the earlier of      
March 31, 1997 or the day after the Fleet Assignee debt has been paid in full.  

 In order to facilitate the restructuring, the Fleet Assignees agreed to
yield their lien on Multi-Arc's assets and to defer the approximately $1.6      
million payment to which they would have otherwise been entitled; and Chemical  
Bank agreed to accept a $255,000 discount for payment in full to it of the      
Company's outstanding debt.  In consideration for the concessions agreed to by  
the Fleet Assignees, the Company's Board of Directors (Messrs. Frankel and      
Cohen not voting) approved a payment of $255,000 by the Company to the Fleet    
Assignees.                                                                      

See Notes 1 and 2 for a discussion of the potential sale of the UBC   
Property to the UBC Lenders in satisfaction of the UBC Loan.                    

14.  CONVERTIBLE SUBORDINATED DEBT                                              

  Convertible subordinated debt at September 30, 1995 and 1994 consists of
$1,825,000 of Andal's 5 1/2% convertible subordinated debentures due in 1997    
and, at September 30, 1995, $1,510,000 of Multi-Arc's 6% convertible            
subordinated debentures due in 2004 (see Note 3).                               

Andal's 5 1/2% convertible subordinated debentures are (i) at Andal's 
election, redeemable (with accrued interest) at 100% of the principal amount;   
and (ii) convertible into one common share for each $450.00 of principal amount,
subject to usual anti-dilution provisions, or a total of 4,056 common shares    
at September 30, 1995.  All sinking fund requirements have been met.  (See Note 
12.)                                                                            

 The Multi-Arc debentures are convertible into approximately 5.7% of the
common stock of Multi-Arc Inc. at any time after September 30, 1996.            

15.  CAPITAL SHARES                                                             

   At September 30, 1995, common shares reserved for future issuance were as
follows:                                                                        

     Issuable under stock option plans                          15,000
Issuable upon conversion of convertible                     
          subordinated debentures                                4,056

16.  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.  Options 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 30 months after grant.  After 30 months, 40% of the   
option shares may be exercised; after 42 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 1995, 1994, and
1993.                                                                           

At September 30, 1995, there were 6,050 shares (6,170 at September 30,
1994) reserved for future grant of options.  At September 30, 1995 and 1994,    
none of the outstanding options were exercisable.  A summary of stock option    
transactions follows:                                                           

1987 Stock Option Plan                

                                           Average Price per
           Number of Shares              Share

Options outstanding at                                                          
September 30, 1992                11,630                   $ 41.80        
Cancelled during 1993             (2,700)                  $143.52        
Options outstanding at                                                          
September 30, 1993                 8,930                   $ 11.15        
Cancelled during 1994               (100)                  $112.50        
Options outstanding at                                                          
September 30, 1994                 8,830                   $ 10.00        
Cancelled during 1995             (8,830)                  $ 10.00        
Granted during 1995                8,950                   $  2.25        
Options outstanding at                                                          
September 30, 1995                 8,950                   $   2.25       

In December, 1994, Multi-Arc adopted the Multi-Arc Inc. 1994 Incentive
and Non-Statutory Stock Option Plan (the "Multi-Arc Plan") under which options  
covering up to 5,000 shares of Multi-Arc common stock may be granted to by      
employees.  Under the Plan, the purchase price per share for stock options      
granted must equal or exceed the market value of Multi-Arc's stock at time of   
grant.  Options may be exercised at the rate of 20% per annum.  The options     
expire ten years after date of grant.                                           

  During 1995, Multi-Arc Inc. granted options for 5,000 shares to eligible
employees at $205.13 per share.  No further shares are available for grant      
under the Multi-Arc Plan.                                                       

17.  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   
provision (credit) for income taxes principally represents federal taxes in     
1994 and state and local taxes for each of the years ended September 30, 1995,  
1994, and 1993.                                                                 

The Company has adopted the provisions of the Financial Accounting    
Standards Board Statement No. 109, "Accounting for Income Taxes," effective     
October 1, 1993.  As permitted by the Statement, prior years' financial         
statements have not been restated to reflect the change in accounting method.   
There was no cumulative effect on the Company's financial statements as of      
October 1, 1993 for adopting Statement No. 109.                                 

 Under Statement No. 109, the liability method is used 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.  Prior to  
the adoption of Statement No. 109, income tax expense was determined using the  
deferred method.  Deferred tax expense was based on items of income and         
expense that were reported in different years in the financial statements and   
tax returns and were measured at the tax rate in effect in the year the         
difference originated.                                                          

 At September 30, 1995, the Company had net operating loss carryforwards
("NOL's") for federal income tax purposes of approximately $31.5 million which  
expire in varying amounts in years 1995 through 2008.  In addition, the         
Company's subsidiary in the United Kingdom had unrelieved corporation tax       
losses of approximately $2.8 million.                                           

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, 1995 and 1994 are as follows:                                               

                                         1995             1994
Deferred Tax Assets:                                                  

  Accruals and Reserves                        $ 3,074,000      $2,514,300
  Installment Note                                 258,000         279,600
  Deferred Gain on Sale of Subsidiary Stock        181,000               0
  Future Tax Benefit of NOL Carryforwards       13,329,000      13,354,200
  Future Tax Benefit of Credit Carryforwards       564,000         473,000
                                               ------------     ----------

  Gross Deferred Tax Assets                     17,406,000      16,621,100

                                               ------------     ----------
Deferred Tax Liabilities:                                             
  Fixed Assets and Intangibles                   1,053,000         354,000
  Foreign income                                   498,000         167,000
  Investment in Foreign Joint Ventures             124,000               0
                                                -----------     ----------

  Deferred Tax Liabilities                       1,675,000         521,000
                                                -----------     ----------
  Net Deferred Tax Assets                       15,731,000      16,100,100
   Valuation Allowance                          (15,731,000)    (16,100,100)

                                                ------------    ------------
  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 for the year ended September 30, 1995 and 1994 is:        

                          1995          1994

Tax expense (benefit) at                                              
U. S. statutory rate             $317,000    $(387,000)     
State taxes, net of federal                                           
benefit                            46,000            0      
Utilization of federal and state                                      
net operating losses             (300,000)     551,300      
Foreign earnings permanently                                          
reinvested                        (16,000)    (145,000)     
Other items                              7,000       (2,300)          

Income tax expense (benefit)          $ 54,000     $(17,000)          

18.  LITIGATION                                                                 

  In August 1982, National States Electric Corp. ("NSEC"), a subsidiary of
the Company then engaged in the electrical contracting business, commenced an   
action in the New York Supreme Court, County of New York, against LFO           
Construction Company ("LFO") for breach of contract.  The action arose out of   
a subcontract agreement between NSEC and LFO in connection with a New York City 
construction project for which LFO served as construction manager.  LFO, in     
response, asserted various counterclaims and set-offs against NSEC; and, in     
October 1982, LFO and two other parties commenced an action in the same court   
against NSEC, the Company, and Andrew J. Frankel, Chairman of the Board of the  
Company, in which the plaintiffs essentially realleged the counterclaims and    
set-offs.  These actions were tried in October 1992.  The court dismissed the   
claims against the Company and Mr. Frankel on the merits and with prejudice;    
but the jury returned a verdict against NSEC for approximately $3.8 million,    
including interest and costs; and a judgement was entered on the verdict in     
November 1992.  LFO and its associates appealed from that part of the judgement 
which dismissed the action against the Company and Mr. Frankel.  NSEC, in turn, 
appealed from the judgement against it.  In April 1994, the Appellate Division  
affirmed the dismissal of the claims against the Company and Mr. Frankel.  In   
addition, the Court struck the award for damages against NSEC and remanded the  
matter to the trial court for a new trial as to damages.  In January 1995, NSEC 
settled the issue of damages with LFO by assigning to LFO its only asset which  
consisted of a claim it had against the New York City Transit Authority for     
work it performed for the Authority many years ago.  The claim has been carried 
on the books of NSEC at no value; and, accordingly, the settlement did not      
result in any loss to the Company.                                              

The Company, as successor to Circle Industries Corp. ("Circle"), its  
former subsidiary engaged in the installation of flooring, is a defendant in an 
action before the Supreme Court, New York County, commenced in May 1983 by      
Manhattan Plaza Associates against Circle and others alleging negligent         
installation of flooring and installation of defective flooring resulting in    
damages allegedly in excess of $5 million.  The Company has filed an answer     
denying liability, asserting defenses and cross-claiming against Masonite       
Corporation, the manufacturer of the flooring.  In June 1994, a similar action  
against the Company was settled for a cash payment by the Company of            
approximately $100,000.  The Company cannot determine what effect the outcome   
of the aformentioned legal proceeding will have on the Company's financial      
position, results of operations, or liquidity.  No liability has been accrued   
for this matter, as it is not considered probable that a liability has been     
incurred.                                                                       

The Company is aware of various other lawsuits, claims, and           
administrative proceedings which are pending involving it and 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          
position.                                                                       

19.  QUARTERLY FINANCIAL DATA (UNAUDITED)                                       

  Quarterly results of operations for the fiscal years ended September 30,
1995 and 1994 are summarized in the following table:                            

                         First       Second      Third      Fourth
                          Quarter     Quarter     Quarter    Quarter
            (Thousands of Dollars,
               except per Share Amounts)

1995                                                                            
Operating revenues              $6,507      $8,404      $7,753     $7,719       
Income (loss) from operations      277       1,069         542        526       
Income (loss) from                                                              
continuing operations           (81)        595         241        124    
Net income (loss)                 (192)        696       1,273        109       
Income (loss) per common share:                                                 
Income (loss) from                                                    
 continuing operations     (.24)       1.80         .73        .38
Net income (loss)            (.58)       2.11        3.86        .33  

1994                                                                            
Operating revenues              $5,897      $7,833      $6,942     $6,405       
Income (loss) from operations      147         978         501          1       
Income (loss) from                                                              
continuing operations          (231)        591         111     (1,242)   
Net income (loss)                 (553)        591          91     (1,250)      
Income (loss) per common share:                                               
Income (loss) from                                                    
  continuing operations     (.70)       1.79         .34      (3.77)
Net income (loss)           (1.68)       1.79         .28      (3.79) 

 In the fourth quarter of 1995, the Company recorded additional gains of
$160,000 on the sale of minority interest in Multi-Arc Inc. and additional      
minority interest in the net income of Multi-Arc Inc. of $93,000.               

   In the fourth quarter of 1994, the Company recorded a loss of $780,000 on
the sale of Integrated stock (see Note 6) and incurred $218,000 of legal        
expenses in connection with restructuring activities.                           

20.  INDUSTRY SEGMENT INFORMATION                                               

Andal, through its Multi-Arc Inc. subsidiary, is engaged in surface   
enhancement, the business of coating materials, primarily metals.  Multi-Arc    
is also engaged in the design, manufacture, assembly, and sale of proprietary   
coating equipment systems.                                                      

Operating profit (loss) is computed as total revenue less operating   
expenses.  The computation includes other income but excludes interest          
expense, general  corporate overhead, and income taxes.  Identifiable assets by 
industry are those assets that are used in Andal's operations in each industry  
segment.                                                                        

  Export sales of coating system equipment amounted to $2,630,000 in 1993,
principally to the Far East.                                                    

The following table sets forth information on the effects of foreign  
operations (principally in the United Kingdom) as of and for the years ended    
September 30, 1995, 1994, and 1993:                                             

             September 30,
            1995      1994      1993
            (Thousands of Dollars)

Revenues                          $5,255    $4,268    $3,986                    
Operating profits                  1,363       869       713                    
Identifiable assets                6,463     5,352     5,467                    
Capital expenditures               1,411       340       193                    
Depreciation and amortization        547       622       615                    

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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, 1995                

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).         

4(a)      Indenture dated as of September 15, 1972 between the Company and      
    Manufacturers Hanover Trust Company, as Trustee, relating to the
      Company's 5 1/2% convertible subordinated debentures due September
    15, 1997 (incorporated by reference to Exhibit 4(a) to Company's
  Annual Report on Form 10-K for fiscal year ended September 30,
1986).                                                      

4(b)      First Supplemental Indenture dated as of January 12, 1982 between     
        the Company and United States Trust Company of New York, as Trustee,
        relating to the Company's 5 1/2% convertible subordinated debentures
        due September 15, 1997 (incorporated by reference to Exhibit 4(b) to
        Company's Annual Report on Form 10-K for fiscal year ended September
30, 1986).                                                  

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)     Option Agreement dated as of August 1, 1982 between Schnurmacher      
        Corp. and the Company (incorporated by reference to Exhibit 10(v) to
        Company's Annual Report on Form 10-K for fiscal year ended September
30, 1986).                                                  

10(c)     Lease dated May 11, 1988, containing an Option to Purchase, between   
      Roundhill Associates and the Company (incorporated by reference to
     Exhibit 10(ag) to Company's Annual Report on Form 10-K for fiscal
year ended September 30, 1988).                             

10(d)     Intercreditor Agreement among Frankhill Associates, Paul Milstein,    
      Alan N. Cohen, and Andal Corp. dated July 5, 1990 (incorporated by
      reference to Exhibit 10(ac) to the Company's Annual Report on Form
10-K for the year ended September 30, 1990).                

10(e)     Stock Pledge Agreement among Andal Corp., Frankhill Associates, Paul  
   Milstein, and Alan N. Cohen dated July 5, 1990 (incorporated by
      reference to Exhibit 10(ad) to the Company's Annual Report on Form
10-K for the year ended September 30, 1990).                

10(f)     Warranty Agreement among Andal Corp., Frankhill Associates, Paul      
   Milstein, and Alan N. Cohen dated July 5, 1990 (incorporated by
      reference to Exhibit 10(ae) to the Company's Annual Report on Form
10-K for the year ended September 30, 1990).                

10(g)     Employment Agreement dated as of January 1, 1991, by and between the  
    Company and Peter D. Flood (incorporated by reference to Exhibit
        10(x) to the Company's Annual Report on Form 10-K for the year ended
September 30, 1991).                                        

10(h)     Restructuring Agreement, Amendment, Guarantee, and Security           
   Agreement dated May 27, 1992 ("Restructuring Agreement") by and
   among Andal Corp., certain subsidiaries of Andal Corp., Norstar
    Bank, Manufacturers Hanover Trust Company, Manufacturers Hanover
       Trust Company as agent for the banks, Alan N. Cohen, Paul Milstein,
      Frankhill Associates, and the Bank of New York as collateral agent
      for the Lenders (incorporated by reference to Exhibit 10(t) to the
     Company's Annual Report on Form 10-K for the year ended September
30, 1992).                                                  

10(i)     First Amendment to the Restructuring Agreement dated June 5, 1992     
       (incorporated by reference to Exhibit 10(s) to the Company's Annual
Report on Form 10-K for the year ended September 30, 1992). 

10(j)     Plan of Restructuring adopted by the Board of Directors and Andal     
Corp. as approved by the Shareholders on August 16, 1994.   

10(k)     Loan and Security Agreement dated September 30, 1994 by and between   
        First Fidelity Bank, N.A. and Scientific Coatings of Illinois, Inc.,
Scientific Coatings, Inc., and SCI Coatings Southwest, Inc. 

10(l)     Subordination Agreement dated September 30, 1994 of Multi-Arc Inc.    
      as debtor and Andal Corp. as subordinated lender in favor of First
Fidelity Bank, N.A.                                         

10(m)     Security Agreement dated September 30, 1994 by and between First      
      Fidelity Bank, N.A. and Vagle Technology, Inc., Multi-Arc, Inc. (a
        Minnesota corporation), Multi-Arc Inc., Multi-Arc of Ohio, Inc., and
S. C. I. Coatings Limited.                                  

10(n)     Amendment dated September 30, 1994 to the Restructuring Agreement,    
   Amendment, Guarantee, and Security Agreement dated May 27, 1992
    among Andal Corp. and certain subsidiaries, Fleet Bank, Chemical
     Bank, Alan N. Cohen, Paul Milstein, Frankhill Associates, and The
Bank of New York as collateral agent.                       

10(o)     Multi-Arc Inc., Andal Corp., and United States Trust Company of New   
       York, Trustee.  Second Supplemental Indenture dated as of September
 30, 1994 5 1/2% Convertible Subordinated Debentures due 1997.

10(p)     Pledge and Security Agreement dated September 30, 1994 by and among   
Andal Corp. and First Fidelity Bank, N.A.                   

22        Subsidiaries of the Company                                           

24(a)     Consent of Kelly Graham Myska & Partners.                             

24(b)     Consent of KPMG Peat Marwick.                                         

24(c)     Consent of BDO Seidman.                                               

27        Financial Data Schedule                                               

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EXHIBIT 10(p)                                                                   

No. A-(Number)                                       $(Amount #)              

MULTI-ARC INC.                
Rockaway, New Jersey                
Issue Date:  September 15, 1995                 

6% Convertible Subordinated Debenture                 
Due December 15, 2004                 

Multi-Arc Inc., a Delaware corporation (the "Corporation"), for value 
received, promises to pay to (Name) or registered assigns, the sum of (Amount 
Written) Dollars ($(Amount #)) on December 15, 2004 upon presentation and     
surrender of this Debenture at the office of the Corporation in Rockaway, New 
Jersey, and to pay interest at the rate of six percent (6%) per annum semi-   
annually on the first day of January and July of each year, computed from the 
Issue Date, until payment of the principal amount of this Debenture has been  
made.  Payment of principal and interest shall be made at the offices of the  
Corporation, in lawful money of the United States of America, and shall be    
mailed to the registered owner or owners hereof at the  address appearing on  
the books of the Corporation.                                                 

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1.   The Debenture.  This Debenture is one of a duly authorized issue 
of $4,000,000 of debentures of the Corporation designated as its 6%           
Convertible Subordinated Debentures due December 15, 2004 (the "Debentures")  
and issued in denominations of $1,000, all of like date, tenor and maturity,  
except variations necessary to express the number and payee of each debenture 
and except for the Issue Date.                                                

2.   Equal Rank.  All debentures of this issue and series rank equally
and ratably without priority over one another.                                

3.   Conversion.  The holder or holders of this Debenture may convert,
at any time prior to the maturity hereof,  after September 30, 1996 (or at    
any time before that date if the Corporation shall then have sold in a        
registered public offering at least $5,000,000 of its Common Stock) the       
principal amount of this Debenture into common stock of the Corporation at the
conversion ratio of $266.6667 of debenture principal for one share of common  
stock, or at the adjusted conversion price (as provided for herein) in effect 
at the time of the conversion; provided that if the Corporation has called    
this Debenture for redemption, the right to convert shall terminate at the    
close of business on the second business day prior to the day fixed as the    
date for the redemption.                                                      

  To convert this Debenture, the holder or holders must surrender the same
at the office of the Corporation, accompanied by a written notice of          
conversion and by a written instrument of transfer in a form satisfactory to  
the Corporation, properly completed and executed by the registered holder or  
holders hereof or a duly authorized attorney.                                 

The shares to be delivered upon conversion of this Debenture are to be
repurchased by the Corporation from its parent Andal Corp. pursuant to that   
certain  Contingent Repurchase Agreement dated December 16, 1994 between the  
Corporation and Andal Corp. which the Corporation acknowledges has been       
entered into for the benefit of the holder hereof.                            

4.   Fractional Shares.  The Corporation shall convert this debenture 
into fractional shares to at least the fifth decimal place rounded even.  No  
cash shall be paid in lieu of any remaining fraction.                         

5.   Adjustments to Conversion Ratio.  If the Corporation at any time 
pays to the holders of its common stock a dividend in common stock, the       
 number of shares of common stock issuable upon the conversion of this Debenture
shall be proportionally increased, effective at the close of business on the  
record date for determination of the holders of the common stock entitled to  
the dividend.                                                                 

If the Corporation at any time subdivides or combines in a larger or  
smaller number of shares its outstanding shares of common stock, then the     
number of shares of common stock issuable upon the conversion of this         
Debenture shall be proportionally increased in the case of a subdivision and  
decreased in the case of a combination, effective in either case at the close 
of business on the date that the subdivision or combination becomes           
effective.                                                                    

If the Corporation is recapitalized, consolidated with or merged into 
any other corporation, or sells or conveys to any other corporation all or    
substantially all of its property as an entity, provision shall be made as    
part of the terms of any such transaction so that the holder or holders of    
this Debenture may receive, in lieu of the common stock otherwise issuable to 
them upon conversion hereof, at the same conversion ratio, the same kind and  
amount of securities or assets as may be distributable upon the               
recapitalization, consolidation, merger, sale, or conveyance with respect to  
the common stock.                                                             

6.   Subordination.                                                   

(a)  Anything herein or in the Debenture to the contrary    
notwithstanding, the indebtedness evidenced by the Debenture and the payment  
of principal of and interest on the Debenture shall be subordinate and junior 
in right of payment, to the extent and in the manner hereinafter set forth,   
to all Senior Indebtedness of the Corporation, as defined herein, whether     
outstanding at the date of this Agreement or incurred after the date of this  
Agreement:                                                                    

           (i)    The indebtedness evidenced by this Debenture shall not
     have any claim to the assets of the Corporation on a parity with or prior
   to the claim of the Senior Indebtedness,  and,  unless  and  until  the
   Senior Indebtedness shall have been fully paid and satisfied, no holder
of the  Debenture will  (a)  take,  demand or receive, and the      
 Corporation will not make, give or permit, directly or indirectly, by
set-off, redemption, purchase or in any other manner, any payment or
 security for the whole or any part of the principal of or interest on
the indebtedness  evidenced  by  the  Debenture;  provided, however,
that so long as no default or event of default with respect to any  
 Senior Indebtedness has occurred and is continuing, and so long as no
  default hereunder has occurred and is continuing, payments of interest
    on the Debenture may be made when due or within ten (10) days in advance
thereof, in accordance with the terms hereof;  or  (b)  commence any
proceeding  to enforce payment of the indebtedness evidenced by this
Debenture, or join with any other creditors of the Corporation in   
   commencing any proceeding against the Corporation under any bankruptcy,
reorganization,  readjustment of debt, dissolution, receivership or 
liquidation proceeding or otherwise exercise any remedies otherwise 
permitted by applicable law upon a default hereunder.               

    (ii)   In the event of any insolvency or bankruptcy proceedings,
 and   any receivership,  liquidation, reorganization or other similar
  proceedings in connection therewith, relative to the Corporation or to
its creditors, as such, or to its property, and in the event of any 
proceedings for voluntary or involuntary liquidation, dissolution or
   other winding-up of the Corporation whether or not involving insolvency
    or bankruptcy, then the holders of Senior Indebtedness shall be entitled
  to receive payment in full of all principal and interest on all Senior
Indebtedness  before  the  holder  of  the Debenture are entitled to
receive any payment on account of principal or interest upon the    
   Debenture, and to that end,  the holders  of Senior Indebtedness  shall
 be entitled to receive for application in payment thereof any payment
 or distribution of any kind or character, whether in cash or property
or securities, which may be payable or deliverable in any such      
 proceedings in respect of  the  Debenture,  except  securities  which
are subordinate and junior in right of payment to the payment of all
Senior Indebtedness then outstanding;                               

         (iii)  In the event that this Debenture is declared due and
        payable before its expressed maturity because of the occurrence of
         a default hereunder (under circumstances when the provisions of the
         foregoing clause (ii)  shall  not be  applicable),  the holders  of
          the Senior Indebtedness  shall  be  entitled  to  receive payment in
          full of all principal and interest on all Senior Indebtedness before
         the holders of  the Debenture is entitled to receive any payment on
  account of the principal or interest upon the Debenture; and

       (iv)   If any payment or distribution or security, or the
        proceeds of any thereof, is collected or received by any holder of
          the Debenture in respect of any of the indebtedness evidenced by the
         Debenture prior to the full  payment and satisfaction of the Senior
   Indebtedness, and such collection or receipt is not expressly
       permitted under this Agreement, such holder of the Debenture will
         forthwith deliver the same, in precisely the form received  (except
          for  the  endorsement  or assignment of such holder of the Debenture
          where necessary), to the holders of Senior Indebtedness, or to their
        representative or representatives to be turned over to the holders
        of Senior Indebtedness, for application as a payment on account of
        the Senior Indebtedness, and unless so delivered by such holder of
          the Debenture, the same shall be held in trust by such holder of the
      Debenture as the property of the holders of Senior Indebtedness.

  (b)  The holder of the Debenture undertakes and agrees for the
benefit of each holder of Senior Indebtedness to execute, verify, deliver and 
file any proofs of claim, consents, assignments or other instruments which    
 any holder of Senior Indebtedness may at any time require in order to prove and
realize upon any rights or claims pertaining to the Debenture and to          
effectuate the full benefit of the subordination contained herein; and upon   
failure of the holder of any Debenture so to do, any such holder of Senior    
Indebtedness shall be deemed to be irrevocably appointed the agent and        
attorney-in-fact of the holder of the Debenture to execute, verify,  deliver  
and file any such proofs of claim,  consents, assignments or other            
instrument.                                                                   

       (c)  Without the necessity of any reservation of rights against the
holder of the Debenture, without notice to or further assent by any holder of 
the Debenture,  without affecting the liabilities and obligations hereunder   
of any holder of the Debenture and without affecting the subordination        
provisions provided for herein, any present or future holder of Senior        
Indebtedness may modify or amend the terms of such Senior Indebtedness or any 
security  or  guaranty therefor  (including  but not  limited to extending    
the time of payment) and may increase the amount of such Senior Indebtedness  
 and may release,  sell or exchange such security or guaranty and otherwise deal
freely with the Corporation and any other party obligated to such Holder with 
respect to such Senior Indebtedness.                                          

    (d)  No present or future holder of Senior Indebtedness shall be
prejudiced in his right to enforce subordination of the Debenture by any act  
or failure to act or delay in acting on the part of the Corporation or such   
holder.  The provisions of this Section are solely for the purpose of         
defining the relative rights of the holders of Senior Indebtedness on the one 
hand and the holder of the Debenture on the other hand, and nothing herein    
shall impair as between the Corporation and the holder of the Debenture the   
obligation of the Corporation, which is unconditional and absolute, to pay to 
the holder thereof the principal, premium, if any, and interest thereon in    
 accordance with its terms, nor shall anything therein prevent the holder of the
 Debenture from exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder subject to the rights under this Section of  
holders of Senior Indebtedness to receive cash,  property or securities       
otherwise payable or deliverable to holder of the Debenture.                  

  (e)  The Corporation agrees, for the benefit of the holders of
Senior Indebtedness, that in the event that the Debenture is declared due and 
payable before its expressed maturity because of the occurrence of a default  
hereunder (i) the Corporation will give prompt notice in writing of such      
happening to the holders of Senior Indebtedness and (ii) absent the written   
consent of the holder of such Senior Indebtedness to the Corporation all      
Senior Indebtedness shall forthwith become immediately due and payable upon   
demand regardless of the expressed maturity thereof.                          

       (f)  Subject to the payment in full of all Senior Indebtedness, the
holder of the Debenture shall be subrogated to the rights of the holders of   
Senior Indebtedness to receive payments or distributions of cash, property or 
securities of the Corporation applicable to the Senior Indebtedness until the 
principal of, premium, if any, and interest on the Debenture shall be paid in 
full and no such payments or distributions to the holder of the Debenture of  
cash, property or securities otherwise distributable to the holders of the    
Senior Indebtedness shall, as between the Corporation, its  creditors,  other 
than  the  holders  of  Senior Indebtedness, and the holder of the Debenture, 
be deemed to be a payment by the Corporation to or on account of the          
Debenture.  It is understood that these subordination provisions are and are  
intended solely for the purpose of defining the relative rights of the holder 
of the Debenture, on the one hand, and the holders of the Senior              
Indebtedness, on the other hand.  Nothing contained herein is  intended to or 
shall impair, as between the Corporation, its creditors, other than the       
holders of Senior Indebtedness, and the holder of the Debenture, the          
obligation of the Corporation, which is unconditional and absolute, to pay to 
the holder of the Debenture the principal of, premium, if any, and interest on
the Debenture as and when the same shall become due and payable in accordance 
with its terms, or to affect the relative rights of the holder of the         
Debenture and creditors of the Corporation, other than the holders of the     
Senior Indebtedness.                                                          

(g)  The term "Senior Indebtedness" shall mean the principal of (and  
premium, if any) and unpaid interest on (i) indebtedness of the Corporation,  
whether outstanding on the date of execution of this Debenture or thereafter  
created, incurred or assumed, which is (a) for money borrowed or (b)          
evidenced by a note, debenture or other similar instrument given in connection
with the acquisition of any property or assets, including securities, (ii) any
indebtedness of others  of  the  kinds  described  in  the  preceding  clause 
(i) guaranteed by the Corporation or for which the Corporation is otherwise   
liable, and (iii) amendments, modifications, renewals, extensions and         
refundings  of  any  such  indebtedness,  including  without limitation, the  
FFB Indebtedness; provided, however, that the term shall not include any      
indebtedness of the character described in clauses (i) or (ii) above, or any  
amendment, increases, renewal, extension  or  refunding  of  any  such        
indebtedness  if  in  the instrument creating or evidencing the same or       
pursuant to which the same  is  outstanding,  it  is  expressly  provided     
that  such indebtedness, or such amendment, renewal, extension or refunding   
thereof is not senior in right of payment to the Debenture.                   

      (h) The term "FFB Indebtedness" shall mean the indebtedness of the
Corporation to First Fidelity Bank, N.A. ("FFB") under a Guaranty and         
Suretyship Agreement- NJ - Corporation dated September 30, 1994 by the        
Corporation and others in favor of FFB, pursuant to which, inter alia, the    
Corporation guaranteed all the then existing and thereafter incurred          
indebtedness of Scientific Coatings of Illinois, Inc., Scientific Coatings,   
Inc. and SCI Coatings Southwest, Inc. to FFB.                                 

7.   Default.  If any of the following events occur ("Event of        
Default"), the entire unpaid principal amount of, and accrued and unpaid      
interest on, this Debenture shall immediately be due and payable:             

(a)  The Corporation fails to pay any interest on this Debenture when 
      it is due and payable, and the failure continues for a period of
30 days;                                                  

(b)  The Corporation fails to pay the principal of this Debenture at  
its maturity;                                             

(c)  The Corporation commences any voluntary proceeding under any     
       bankruptcy, reorganization, arrangement, insolvency, readjustment
        of debt, receivership, dissolution, or liquidation law or statute,
        of any jurisdiction, whether now or subsequently in effect; or the
    Corporation is adjudicated insolvent or bankrupt by a court of
     competent jurisdiction; or the Corporation petitions or applies
for, acquiesces in, or consents to, the appointment of any
        receiver or trustee of the Corporation or for all or substantially
all of its property or assets; or the Corporation makes an
     assignment for the benefit of its creditors; or the Corporation
      admits in writing its inability to pay its debts as they mature;
or                                                        

 (d)  There is commenced against the Corporation any proceeding relating
to the Corporation under any bankruptcy, reorganization,  
  arrangement, insolvency, readjustment of debt, receivership,
      dissolution, or liquidation law or statute, of any jurisdiction,
       whether now or subsequently in effect, and the proceeding remains
       undismissed for a period of 60 days or the Corporation by any act
    indicates its consent to, approval of, or acquiescence in, the
        proceeding; or a receiver or trustee is appointed for the Corpora-
     tion or for all or substantially all of its property or assets,
    and the receivership or trusteeship remains undischarged for a
 period of 60 days; or a warrant of attachment, execution or
   similar process is issued against any substantial part of the
       property or assets of the Corporation, and the warrant or similar
       process is not dismissed or bonded within 60 days after the levy.

8.   Redemption.  This Debenture may be redeemed at any time on or    
after October 1, 1996, prior to maturity, as a whole at any time or in part   
from time to time, at the office of the Corporation, upon the notice referred 
to below, at the following redemption prices (expressed in common percentages 
of the principal amount of this Debenture) together with accrued interest to  
the date of redemption:                                                       

If Redeemed During                                 Percentage       
12 Month Period                                  of Principal       
Beginning                                              Amount       

December 16, 1995 . . . . . . . . . . . . . . . . . . . . 106       
December 16, 1996 . . . . . . . . . . . . . . . . . . . . 105       
December 16, 1997 . . . . . . . . . . . . . . . . . . . . 104       
December 16, 1998 . . . . . . . . . . . . . . . . . . . . 104       
December 16, 1999 . . . . . . . . . . . . . . . . . . . . 103       
December 16, 2000 . . . . . . . . . . . . . . . . . . . . 103       
December 16, 2001 . . . . . . . . . . . . . . . . . . . . 102       
December 16, 2002 . . . . . . . . . . . . . . . . . . . . 102       
December 16, 2003 . . . . . . . . . . . . . . . . . . . . 101       

9.   Notice of redemption, etc.  Notice of redemption shall be mailed 
to the holder of the Debenture not less than 30 nor more than 60 days prior   
to the date fixed for redemption at their last addresses as they appear upon  
the records of the Corporation.  If this Debenture is redeemed in part, the   
Corporation shall, without charge to the holder or holders hereof, either (1) 
execute and deliver to the holder or holders a debenture for the unredeemed   
balance of the principal amount hereof, or (2) make note hereon of the        
principal amount called for redemption and redeemed, upon surrender of this   
Debenture at the office of the Corporation.  Following the date fixed for     
redemption, interest shall be payable only on the portion of this Debenture   
not called for redemption.                                                    

10.  Exchange.  The holder of this Debenture may, at any time on or   
before the date of its maturity or the date fixed for its redemption, by      
surrendering this Debenture to the Corporation at its office, exchange this   
Debenture and/or any other of the Debentures for another debenture or         
debentures of a like principal amount and of like tenor, date and maturity in 
denominations of $1,000 or any multiple of that amount.                       

11.  Transfer.  This Debenture may be transferred only at the office  
of the Corporation by the surrender hereof for cancellation, and upon the     
payment of any stamp tax or other governmental charge connected with the      
transfer.  If this Debenture is transferred, a new debenture or debentures of 
like tenor, date and maturity shall be issued to the transferee.              

 12.  Registered owner.  The Corporation may treat the person or persons
whose name or names appear hereon as the absolute owner or owners of this     
Debenture for the purpose of receiving payment of, or on account of, the      
principal and interest due on this Debenture and for all other purposes, and  
it shall not be affected by any notice to the contrary.                       

13.  Corporate obligation.  The holder or holders of this Debenture   
shall not have any recourse for the payment in whole or of any part of the    
principal or interest on this Debenture against any incorporator, or present  
or future stockholder of the Corporation by virtue of any law, or by the      
enforcement of any assessment, or otherwise, or against any officer or        
director of the Corporation by reason of any matter prior to the delivery of  
this Debenture, or against any present or future officer or director of the   
Corporation.  The holder of this Debenture, by the acceptance hereof and as   
a part of the consideration for this Debenture, expressly agree that the      
Debenture is an obligation solely of the Corporation and expressly release    
all claims and waive all liability against the foregoing persons in connection
with this Debenture.                                                          

IN WITNESS WHEREOF, the Corporation has signed and sealed this  6%    
Convertible Subordinated Debenture due December 16, 2004 this 15th day of     
September, 1995.                                                              

    MULTI-ARC INC.

Corporate                     /s/ Peter D. Flood                      
Seal                        Peter D. Flood, President             

              /s/ Walter N. Kreil, Jr.
                     Walter N. Kreil, Jr., Secretary

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF             
1933, AS AMENDED (THE "SECURITIES ACT").  THE HOLDER HEREOF, BY PURCHASING    
THIS SECURITY, AGREES FOR THE BENEFIT OF MULTI-ARC INC. (THE "COMPANY")       
THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY: (1)  
TO THE COMPANY (UPON REPURCHASE THEREOF OR OTHERWISE), (2) SO LONG AS THIS    
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE   
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE      
MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT 
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN 
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE   
144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH THE MEANING OF        
REGULATION S UNDER THE SECURITIES ACT, PROVIDED THAT THERE ARE NO DIRECTED    
SELLING EFFORTS IN THE UNITED STATES AND OTHER ADDITIONAL CONDITIONS OF       
 REGULATION S FOR RESALES HAVE BEEN SATISFIED, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATIONIN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES   
ACT, (5) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS  
OF THE SECURITIES ACT, AND SUBJECT TO THE RECEIPT BY THE COMPANY OF AN        
OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE          
REGISTRATION UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE        
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE   
WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.            

THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE                 
SECURITIES REPRESENTED BY THIS CERTIFICATE AND/OR THE RIGHTS OF THE HOLDER OF 
SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO THE    
TERMS AND CONDITIONS OF AN AMENDED AND RESTATED STOCKHOLDERS'                 
AGREEMENT DATED AS OF MAY 15, 1995, AS AMENDED, AMONG MULTI-ARC INC. AND      
CERTAIN HOLDERS OF OUTSTANDING COMMON STOCK OF SUCH CORPORATION, OUTSTANDING  
CONVERTIBLE SUBORDINATED DEBENTURES OR STOCK OPTIONS.  COPIES OF SUCH         
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY ANY HOLDER OF 
THIS CERTIFICATE ADDRESSED TO THE SECRETARY OF MULTI-ARC INC.                 

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EXHIBIT 10(q)                                                                   

MULTI-ARC INC.              
AMENDED AND RESTATED              
STOCKHOLDERS' AGREEMENT               

   This AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT dated May 15,
1995 Multi-Arc Inc., a Delaware corporation (the "Corporation"), and Andal Corp.
("Andal"), Peter D. Flood, Walter N. Kreil, Jr., Multi-Arc India Ltd. and the   
stockholders listed on Exhibit A hereto  (collectively, the "Stockholders").    

WHEREAS, the Corporation is a corporation duly organized and
existing under the laws of the State of Delaware having issued and outstanding  
100,000 shares of common stock $0.01 par value (the "Common Stock") and each of 
the Stockholders owns that number of shares of Common Stock and the principal   
amount of 6% Convertible Subordinated Debentures due December 16, 2004 of the   
Corporation (the "Debentures") and the employee stock options (the "Options")   
set forth opposite its or his name on Schedule I attached hereto; and           

        WHEREAS, Mr. Flood and Mr. Kreil have on December 16, 1994 purchased
their shares of Common Stock from Andal and their Debentures from the           
Corporation on the express condition that this Agreement be entered into; and   

        WHEREAS, it is deemed to be in the best interests of the Corporation
and the Stockholders that provision be made for the continuity and stability    
of the business and policies of the Corporation and, to that end, the           
Corporation and the Stockholders hereby set forth their agreement with respect  
to the shares of Common Stock owned by the Stockholders; and                    

WHEREAS, all Stockholders and the Corporation entered into a
Stockholders Agreement dated December 16, 1994 and desire to amend and restate  
that Agreement to permit the extension from April 15, 1995 to June 15, 1995     
the time for completion of an offering of Common Stock and Debentures.          

      NOW, THEREFORE, in consideration of the premises and of the mutual
consents and obligations hereinafter set forth, the parties hereto hereby       
agree as follows:                                                               

       SECTION 1.  Definitions.  As used herein, the following terms shall
have the following respective meanings:                                         

   (a)  Affiliate shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under  
common control with, any Stockholder.                                           

  (b)  Eligible Group  shall mean any Stockholder Group except a
Selling Group or a Group which includes a Stockholder as to whom or which an    
Event of Option shall have occurred.                                            

        (c)  Event of Option shall mean the occurrence of one or more of the
following events:                                                               

         (i) a Stockholder shall be declared bankrupt or a receiver,
executor, administrator, guardian, legal committee or other legal custodian of  
his or its property (including any Stock owned by such Stockholder) shall be    
appointed; provided, however that no appointment of any executor or             
administrator of the property of a Stockholder who is an individual, upon the   
death of such Stockholder, shall be deemed an Event of Option as to any Stock   
owned by such Stockholder until and unless such executor or administrator, or   
any successor thereof, shall have disposed of such Stock other than by          
transferring it to a member or members of the Group of such Stockholder, which  
member or members shall have agreed in writing, at the time of such transfer,   
to be bound by and to comply with, to the same extent as the Stockholder as a   
result of whose death such Stock was distributed, all applicable provisions of  
this Agreement and to be deemed a member of such Stockholder's Group;           

      (ii)  a Stockholder shall Sell any Stock in violation of
Section 2, 3 or 5;                                                              

   (iii)  a Stockholder who became a Stockholder only by virtue of
being an Affiliate ceases to be an Affiliate (in a manner other than as         
contemplated by Section l(c)(i)) while it owns any Stock; or                    

 (iv)  a writ of attachment or levy or other court order shall
prevent a Stockholder from exercising his or its voting and other rights with   
respect to any Stock.                                                           

An Event of Option shall be deemed to be continuing until the procedures set    
forth in Section 4 with respect to the Stock affected thereby have been         
exhausted.                                                                      

    (d)  Fair Value shall mean, as of the date of determination, the
fair value of each share of Common Stock determined in good faith by a majority 
of the Board of Directors of the Corporation which may be on the basis, in the  
case of Common Stock, of $205.13 a share plus or minus net income or net loss   
per share from October 1, 1994.                                                 

(e)  Group shall mean:                                      

         (i)  In the case of a Stockholder who is an individual, (A)
such Stockholder, (B) the spouse, parents, siblings and lineal descendants of   
such Stockholder, (C) a trust for the benefit of any of the foregoing and (D)   
any corporation or partnership controlled by such Stockholder;                  

          (ii)  In the case of a Stockholder which is a partnership, (A)
such partnership and any of its limited or general partners, (B) any            
corporation or other business organization to which such partnership shall sell 
all or substantially all of its assets or with which it shall be merged and (C) 
any Affiliate of such partnership;                                              

         (iii)  In the case of a Stockholder which is a corporation, (A)
any of its subsidiaries, (B) any corporation or other business organization to  
which it shall sell all or substantially all of its assets or with which it     
shall be managed, (C) any Affiliate of the corporation and (D) any officer of   
such corporation; and                                                           

       (iv)  In the case of any Investor or Stockholder which is a
trust, (A) such trust and (B) the beneficiaries of such trust.                  

      (f)  Prohibited Transferee shall mean any individual, corporation,
firm or other legal entity receiving or holding any Stock, directly or          
indirectly, as the result of the occurrence of an Event of Option.              

       (g)  Proportionate Percentage shall mean the pro rata percentage of
a class of Stock (A) being offered by a Selling Group pursuant to Section 3     
which each Eligible Group shall be entitled to purchase, if any, or (B) which   
each Eligible Group shall be entitled to purchase from the Stockholder as to    
which an Event of Option has occurred, his or its representatives or assigns,   
or the Prohibited Transferee, as the case may be.  Such pro rata percentage, as 
to each Eligible Group, shall be the percentage figure which expresses the      
ratio, based upon voting power, assuming full conversion of Debentures and/or   
full exercise of Options, between the number of shares of Common Stock that     
would then be outstanding owned by such Eligible Group and the aggregate number 
of such shares of Common Stock that would be owned by all Eligible Groups.      

     (h)  Sell as to any Security, shall mean to sell, or in any other
way directly or indirectly transfer, assign, distribute, encumber or otherwise  
dispose of, either voluntarily or involuntarily.                                

       (i)  Selling Group shall mean a Group of a Stockholder proposing to
Sell its Security, or which has delivered a notice of intention to Sell,        
pursuant to Section 3.                                                          

       (j)  Securities shall mean (1) the presently issued and outstanding
shares of Common Stock, (2) any additional shares of capital stock hereafter    
issued and outstanding and (3) any securities or options which may be           
converted into or exercised for shares of capital stock of the Corporation      

       (k)  Stockholders shall mean those persons identified on Schedule I
attached hereto as the holders of Securities and shall include any other        
person who agrees in writing with the parties hereto to be bound by and to      
comply with all applicable provisions of this Agreement as contemplated by      
Sections 2(b) and 2(c).                                                         

     SECTION 2.  Limitations on Sales of Securities -- General.   Each
Stockholder, and each member of the Group of such Stockholder, hereby agrees    
that he or it shall not at any time during the term of this Agreement Sell any  
Securities except:                                                              

(a)   by sale in accordance with Sections 3 and 6;            

(b)   by pledge which creates a mere security interest in the 
Securities; provided, that the pledgee thereof shall agree in writing in        
advance with the parties hereto to be bound by and comply with all applicable   
provisions of this Agreement to the same extent as if it were the Stockholder   
making such pledge; or                                                          

(c)   by transfer to another member of the Group to which such
Stockholder belongs; provided, that the recipient of such Securities shall      
agree in writing with the parties hereto to be bound by and to comply with all  
applicable provisions of this Agreement and to be deemed a member of such       
Group; or                                                                       

    (d)   by pledge or other transfer to First Fidelity Bank, National
Association ("First Fidelity") pursuant to the Loan and Security Agreement      
dated September 30, 1994 with First Fidelity or any Agreement entered into in   
connection therewith or any revision or substitution thereof; or                

 (e)  by a sale made prior to June 15, 1995 provided the purchaser shall
agree to become a party to this Agreement.                                      

   (f)  by surrender to the Corporation in satisfaction of any note given to
enable the purchase of the Securities by the members of management of the       
Corporation.                                                                    

 SECTION 3.  Procedures on Sale of Stock.  Except as otherwise
expressly provided herein, each Stockholder and each member of the Group to     
which such Stockholder belongs hereby agrees that it or he shall not Sell any   
Securities except in accordance with the following procedures:                  

     (a)  The Selling Group shall first deliver to the Corporation and
each Eligible Group a written notice, which shall be irrevocable for a period   
of 10 days after delivery thereof, offering all or any part of the Securities   
owned by the Selling Group at the purchase price and on the terms specified     
therein, whereupon (i) first, the Corporation shall have the right and option to
purchase all of the Securities so offered at the purchase price and on the      
terms stated in the notice of intention to Sell (such acceptance to be made by  
the delivery of a written notice to the Selling Group and each Eligible Group   
within the 10-day period after delivery of the aforesaid notice of intention to 
Sell); and (ii) second, if and only if the Corporation shall have failed to     
accept or shall have rejected in writing the foregoing offer, each Eligible     
Group shall have the right and option (subject to the provisions of Section     
3(e)), to accept its Proportionate Percentage or some portion thereof of the    
Securities so offered at the purchase price and on the terms stated in the      
notice of intention to Sell, such acceptance to be made by the delivery of a    
written notice to the Selling Group within a 10-day period after the            
Corporation's failure to accept or rejection in writing of the foregoing offer. 

       (b)  If any Eligible Group shall fail to accept, or shall reject in
writing, or only partly accept the offer made pursuant to Section 3(a), then,   
upon the earlier of the expiration of such 10-day period or the receipt of      
written notices of acceptance, or written rejections of such offer, from all    
Eligible Groups, the Selling Group's then remaining Securities formerly         
subject to such offer shall be reoffered to the remaining Eligible Groups, if   
any, which accepted their Proportionate Percentage of such offer for an         
additional 5-day period.  Such subsequent offer shall be on the terms and       
subject to acceptance in the manner provided in Section 3(a), except that the   
Eligible Groups receiving such subsequent offer shall have the further right    
and option to offer, in any written notice of acceptance, to purchase any of    
such Securities not purchased by other Eligible Groups, in which case such      
Securities not accepted by the other Eligible Groups shall be deemed to have    
been offered to and accepted by the Eligible Groups which exercised their       
further right and option, pro rata in accordance with their respective          
Proportionate Percentages, and on the above-described terms and conditions.     

     (c)  Sales of Securities under the terms of Sections 3(a) and (b)
above shall be made at the offices of the Corporation on a mutually satisfactory
business day within 15 days after the expiration of the aforesaid periods.      
Delivery of certificates or other instruments evidencing such Stock duly        
endorsed for transfer to the Corporation or members of the Eligible Groups, as  
applicable, shall be made on such date against payment of the purchase price    
therefor.                                                                       

  (d)  If effective acceptance shall not be received pursuant to
Sections 3(a) and (b) above with respect to all or any part of the Securities   
offered for sale pursuant to the aforesaid written notice, then the Selling     
Group may sell all or any part of the remaining Securities so offered for sale  
at a price not less than the price, and on terms not more favorable to the      
purchaser thereof than the terms, stated in the written notice of intention to  
Sell, at any time within 120 days after the expiration of the offer required by 
Sections 3(a) and (b) above.  In the event the remaining Securities are not     
sold by the Selling Group during such 120-day period, the right of the Selling  
Group to Sell such remaining Securities shall expire and the obligations of     
this Section 3 shall be reinstated; provided, however, that in the event the    
Selling Group determines, at any time during such 120-day period, that the sale 
of all or any part of the remaining Securities on the terms set forth in the    
written notice of intention to Sell is impractical, the Selling Group can       
terminate the offer and reinstate the procedure provided in this Section 3      
without waiting for the expiration of such 120-day period.                      

 (e)  Notwithstanding Sections 3(a) and 3(b), if the Selling Group holds
shares originally sold to management of the Corporation, Eligible Groups        
holding stock issued to the other management shall have the first option to     
purchase such shares.                                                           

  (f)  Notwithstanding Sections 3(a) and 3(b), Andal may deliver shares to
the Corporation pursuant to that certain Contingent Purchase Agreement dated    
December 16, 1994.                                                              

(g)  Notwithstanding Sections 3(a) and 3(b), all Stockholders may sell
shares  pursuant to the offering described in Section 13, hereof.               

        SECTION 4.  Event of Option.  (a) If an Event of Option shall occur,
each Eligible Group shall have the right and option to give the Corporation     
and the Stockholder (or his representatives or assigns) as to which such Event  
of Option has occurred, or the Prohibited Transferee, as the case may be, notice
of its election to have the Fair Value of the Securities held determined,       
whereupon the Stockholders shall cause such determination to be made with       
reasonable promptness.  Upon the completion of such determination, each         
Eligible Group shall have the right and option for a period of 10 days after    
such determination, to purchase from such Stockholder, his representatives or   
assigns, or the Prohibited Transferee, as the case may be, for cash, and at the 
Fair Value, its Proportionate Percentage (but not less than its Proportionate   
Percentage) of the Securities as to which such Event of Option has occurred,    
which option shall be exercised by delivery to the Corporation, during such 10- 
day period, of a written notice of election to purchase such Securities,        
whereupon the Corporation shall forthwith transmit any written notice of        
election to purchase delivered pursuant to this Section 4(a) to the Stockholder 
as to which such Event of Option has occurred, its representatives or assigns,  
or the Prohibited Transferee, as the case may be, but failure of the            
Corporation so to transmit any such notice shall in no way invalidate such      
notice; provided, however, that the Eligible Groups delivering such notice of   
election to purchase shall have the further right and option to purchase, in    
any such written notice of election to purchase, any such Stock not purchased   
by other Eligible Groups, in which case such Stock not accepted by the other    
Eligible Groups shall be deemed to have been offered to and accepted by the     
Eligible Groups which exercised their option hereunder, pro rata in accordance  
with their respective Proportionate Percentages, and on the above--described    
terms and conditions.                                                           

     (b)  Sales of Securities effected under the terms of Section 4(a)
shall be made at the offices of the Corporation on a mutually acceptable        
business day within 15 days after the expiration of the period referred to in   
Section 4(a).  Delivery of certificates or other instruments evidencing such    
Securities duly endorsed for transfer shall be made on such date against        
payment of the purchase price therefor.                                         

    (c)  If any Securities as to which an Event of Option shall have
occurred shall not be purchased in accordance with Section 4(a) for any reason  
other than failure of the owner thereof to comply with the provisions of this   
Agreement, such Securities shall thereupon cease to be subject to this          
Agreement; provided, however, that if such Securities are thereafter acquired   
by a member of any Group, they shall once again be deemed to be subject to this 
Agreement.                                                                      

     (d)  So long as a Stockholder belonging to an Eligible Group complies
with the provisions of this Section 4, the provisions of Section 3 shall not    
apply to the sale of Stock being effected pursuant to this Section 4.           

  SECTION 5.  Right of Co-Sale.  In the event any Stockholder or
member of the Group to which such Stockholder belongs receives a bona fide      
offer from a third party which is not an Affiliate to purchase from such        
Stockholder or member of the Group of such Stockholder an amount of stock, when 
aggregated with contemporaneous offer amount to not less than 20% of the Common 
Stock then outstanding, assuming full conversion of Debentures or exercise of   
Options for a specified price payable in cash or otherwise and on specified     
terms and conditions (a "Section 5 Offer"), such Stockholder or member of such  
Group shall promptly forward a copy of the Section 5 Offer to the Corporation,  
and to the other Stockholders.  Each such Stockholder or member of such Group   
shall not sell any such Securities to the Section 5 Offeror unless the terms of 
the Section 5 Offer are extended to the other Stockholders on a pro rata basis  
(being the ratio, based upon voting power, between the number of such shares    
owned by such Stockholder or member of such Group and all Stockholders).  Such  
other Stockholders shall have 20 days from the date of the foregoing offer to   
accept such offer.  Before the Stockholder or member of the Group who had       
received the Section 5 Offer extends such Section 5 Offer to the other          
Stockholders pursuant to this Section 5, such Stockholder or member of such     
Group shall first comply with the provisions of Section 3.                      

     SECTION 6.  Board of Directors.  At such time as Andal holds less
than 90% of the Common Stock, the Board of Directors of the Corporation shall   
consist of eight members and shall include:                                     

   (i)  four directors who shall be designated by Andal;

         (ii)  one director who shall be designated by Peter D. Flood;

        (iii)  three directors who shall be non-management affiliated,
non-Andal affiliated Stockholders who shall be designated in the first          
instance by the Board as a whole and then determined by the three outgoing      
directors.                                                                      

All Stockholders agree to vote all shares held by them at any Annual or         
Special Meeting of Shareholders for such nominees and this Agreement is         
intended to be specifically enforceable should a dispute arise.                 

      SECTION 7.  Legend on Stock Certificates.  Each certificate of the
signatories hereto representing Securities shall bear the following legend,     
until such time as the Securities represented thereby are no longer subject to  
the provisions hereof:                                                          

"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE                  
SECURITIES REPRESENTED BY THIS CERTIFICATE AND/OR THE RIGHTS OF THE HOLDER OF   
SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO THE      
TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF DECEMBER 16,      
1994, AMONG MULTI-ARC INC. AND CERTAIN HOLDERS OF OUTSTANDING COMMON STOCK OF   
SUCH CORPORATION, OUTSTANDING CONVERTIBLE SUBORDINATED DEBENTURES OR            
STOCK OPTIONS.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN  
REQUEST MADE BY ANY HOLDER OF THIS CERTIFICATE ADDRESSED TO THE SECRETARY OF    
MULTI-ARC INC."                                                                 

All of the Securities are presently pledged.  The foregoing legend will be      
placed on the certificates representing these pledged shares upon their release 
by the pledgee.                                                                 

     SECTION 8.  Duration of Agreement.  The rights and obligations of
each Stockholder under this Agreement shall terminate as to such Stockholder    
upon the earlier to occur of (i) the transfer of all Stock owned by the Group   
of which such Stockholder is a member in accordance with this Agreement, (ii)   
on the tenth anniversary of the date hereof or (iii) the consummation of an     
underwritten public offering of the Corporation's Common Stock registered       
pursuant to the Securities Act of 1933, as amended.                             

      SECTION 9.  Severability; Governing Law.  If any provision of this
Agreement shall be determined to be illegal and unenforceable by any court of   
law, the remaining provisions shall be severable and enforceable in accordance  
with their terms. This Agreement shall be governed by, and construed in         
accordance with, the laws of the State of New Jersey.                           

        SECTION 10.  Benefits of Agreement.  This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors    
and assigns, legal representatives and heirs.                                   

        SECTION 11.  Notices.  All notices, advices and communications to be
given or otherwise made to any party to this Agreement, or to the Group of any  
such party, shall be deemed to be sufficient if contained in a written          
instrument delivered in person or duly sent by first class registered or        
certified mail, postage prepaid, addressed to such party at the address set     
forth below or at such other address as may hereafter be designated in writing  
by the addressee:                                                               

If to the Corporation:                                      

Multi-Arc Inc.                                              
200 Roundhill Drive                                         
Rockaway, New Jersey  07866                                 

If to the Stockholders:                                     

At their respective addresses set forth in Schedule I       
attached hereto                                             

or to such other address or addresses as shall have been designated by notice   
in writing to the parties hereto.                                               

All such notices, advices and communications shall be deemed to have been       
received (a) in the case of personal delivery, on the date of such delivery     
and (b) in the case of mailing, on the third business day following such        
mailing.                                                                        

  SECTION 12.  Modification.  Except as otherwise provided herein,
neither this Agreement nor any provision hereof can be modified, changed,       
discharged or terminated except by an instrument in writing signed by the party 
against whom the enforcement of any modification, change, discharge or          
termination is sought or by the agreement of holders of 90% in voting power,    
assuming conversion of all outstanding Debentures and exercise of all           
outstanding Options, of all shares of Common Stock subject to this Agreement;   
provided, however that no modification or amendment shall be effective to       
reduce the percentage of the shares of Common Stock the consent of the holders  
of which is required under this Section 12, and provided that no modifications  
shall be made prior to June 15, 1995.                                           

SECTION 13.  Offering by Prospectus.  Andal agrees to offer to
licensees of Multi-Arc Inc. 17,062.5 shares (7/8th of 19,500 shares) of         
Multi-Arc Inc. Common Stock and Multi-Arc Inc. agrees to offer to such licensees
$3,500,000 principal amount of its Debentures by offering by prospectus and in  
connection therewith Mr. Flood agrees to reoffer to management of Multi-Arc     
Inc. 975 shares of Common Stock and $200,000 principal amount of the            
Debentures.  The offering price of the Common Stock shall be $205.1282 per      
share and the Debentures will be offered at par.  The offering shall be         
conducted as soon as practical and close no later than June 15, 1995.  Each     
purchaser in such offering, as a condition of their purchase, shall first agree 
in writing to become a party to this Agreement and Schedule I hereto shall      
thereupon be revised.                                                           

SECTION 14.  Captions.  The captions herein are inserted for  
convenience only and shall not define, limit, extend or describe the scope of   
this Agreement or affect the construction hereof.                               

     SECTION 15.  Nouns and Pronouns.  Whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or 
neuter forms, and the singular form of names and pronouns shall include the     
plural and vice versa.                                                          

      SECTION 16.  Jurisdiction.  Each party hereto hereby irrevocably and
unconditionally submits to the nonexclusive jurisdiction of any New Jersey      
State court and Federal court of the United States of America sitting in the    
State of New Jersey, and any appellate court from any thereof, in any action or 
proceeding arising out of or relating to this Agreement.                        

SECTION 17.  Merger Provision.  This Agreement constitutes the entire 
agreement among the parties pertaining to the subject matter hereof and         
supersedes all prior and contemporaneous agreements and understandings of the   
parties in connection therewith.                                                

      SECTION 18.  Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of  
which taken together shall constitute one and the same instrument.              

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

    MULTI-ARC INC.

            By: /s/ Peter D. Flood
                       Peter D. Flood, President

   ANDAL CORP.

                  By: /s/ Walter N. Kreil, Jr.
                  Walter N. Kreil, Jr.
                           Vice President and Controller

        /s/ Peter D. Flood
    Peter D. Flood

              /s/ Walter N. Kreil, Jr.
          Walter N. Kreil, Jr.

          MULTI-ARC INDIA LTD.

By:       
Name:     
Title:    

                THE STOCKHOLDERS LISTED ON
      EXHIBIT A HERETO

           By:/s/ Peter D. Flood
          Peter D. Flood
            Attorney-in-Fact

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SCHEDULE I              

Name and              Common                                                    
Address               Stock               Debentures               Options      

Andal Corp.           94,562.50                    0                     0      
909 Third Avenue                                                                
New York, NY 10022                                                              

Peter D. Flood         2,193.75             $450,000                 2,500      
31 Old Armstead Road                                                            
Chester, NJ 07930                                                               

Walter N. Kreil, Jr.     243.75            $  50,000                   500      
875 Bradford Avenue                                                             
Westfield, NJ  07090                                                            

Multi-Arc India Ltd.   1,218.75            $ 250,000                     0      
17, Kadamgirl Complex                                                           
Hanuman Road                                                                    
Vlle Parle (East)                                                               
Bombay - 400 057                                                                
India                                                                           

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EXHIBIT 10(r)                                                                   

INCENTIVE STOCK OPTION AGREEMENT                                                

This INCENTIVE STOCK OPTION AGREEMENT, dated as of June 15, 1995,     
between MULTI-ARC INC., a Delaware corporation (the "Corporation"), having is   
principal place of business at 200 Roundhill Drive, Rockaway, New Jersey 07866  
and (Name), an employee of the Corporation or its subsidiary (herein            
"Employee") residing at (Address).                                              

The Corporation desires, by affording the Employee an opportunity to  
purchase shares of its Common Stock $.01 Par Value (the "Common Stock"), to     
provide the Employee with an added incentive to continue in the employ of the   
Corporation and to continue and increase the Employee's efforts in that         
connection.  This Incentive Stock Option Agreement (this "Agreement") is being  
entered into pursuant to the Multi-Arc Inc. 1994 Incentive and Non-Statutory    
Stock Option Plan (the "Plan") and is subject to the provisions thereof,        
including the determinations to be made by the Board of Directors of the        
Corporation (the "Board") pursuant to the Plan.                                 

In consideration of the mutual covenants hereinafter set forth and for
other good and valuable consideration, the parties hereto hereby agree as       
follows:                                                                        

1.  Grant.     The Corporation with the approval and direction of the 
Board irrevocably grants the employee the right and option (the "Option") to    
purchase all or any part of an aggregate of Two Hundred (200) shares of Common  
Stock on the terms and conditions herein set forth.  This Option shall be an    
Incentive Stock Option.                                                         

 2.  Price.     The purchase price of the shares of Common Stock covered
by the Option shall be $205.1282 per share, being the fair market value of the  
Common Stock on the date hereof.                                                

  3.  Time of Exercise.    The term of the Option shall be for a period of
ten (10) years from the date hereof, subject to earlier termination as          
provided in this Agreement.  Except as provided in Paragraphs 5 and 6 hereof,   
the Option may not be exercised unless the Employee shall at the time of        
exercise be an employee of the Corporation.  Neither the Option nor any rights  
related to the Option shall be exercisable for a period of one year from the    
date hereof when twenty percent (20%) of the Option shall become exercisable,   
except that if the Employee shall die, retire or become disabled then the       
Option shall be fully exercisable commencing upon such event.  An additional    
twenty percent (20%) of the Option shall become exercisable each of the four    
successive anniversaries of the date hereof until the Option shall be fully     
exercisable.   Notwithstanding the foregoing, no Option may be exercised        
prior to October 1, 1996.                                                       

  4.  No Transfer.    The Option shall not be transferable by the Employee
otherwise than by Will or the laws of descent and distribution, and the Option  
may be exercised during his lifetime only by the Employee.  The Option may not  
be assigned, transferred (except as aforesaid), pledged or hypothecated in any  
way (whether by operation of law or otherwise) and shall not be subject to      
execution, attachment or similar process.  Any attempted assignment, transfer,  
pledge, hypothecation or other disposition of the Option contrary to the        
provisions hereof and the levy of any attachment or similar process upon the    
Option shall be null and void and without effect.                               

  5.  Termination.    In the event the employment of the Employee shall be
terminated by reason of retirement (or early retirement pursuant to any         
pension or profit sharing retirement plan provided by the Corporation or any    
50% or more owned subsidiary (a "Subsidiary") or disability, the Option may be  
exercised by the Employee at any time within thirty (30) days after such date   
(or one year after such date if the Employee is disabled within the meaning of  
Internal Revenue Code Section 22(e)(3)), but in no event after the expiration   
of ten (10) years from the date hereof, and only if and to the extent that he   
was entitled to exercise the Option at the date of his retirement (or early     
retirement)).  The Option shall not be affected (i) by any change of duties or  
position so long as the Employee continues to be an employee of the             
Corporation or a Subsidiary or (ii) by any temporary leave of absence that      
does not sever the employment relationship, which leave of absence is           
approved, if for a period of not more than three months, by an officer of the   
Corporation, or if for a period of more than three months, by the Board.        

6.  Death of Employee.   If the Employee shall die while entitled to  
exercise the Option, the Option may be exercised by the legatee or legatees of  
the Option under the Employee's Will, the personal representative or            
distributees of the Employee to the extent that the Option would otherwise      
have been exercisable by the Employee at any time within a period of one (1)    
year after the date of the Employee's death, but this provision shall not       
otherwise extend the ten (10) year duration of the Option.                      

7.  Anti-Dilution Adjustments.     In the event of any change in the  
outstanding Common Stock of the Corporation by reason of stock dividends,       
stock splits, recapitalizations, mergers, consolidations, combinations or       
exchanges of shares, split-ups, split-offs, liquidations or other similar       
changes in capitalization, or any distributions to common stockholders other    
than cash dividends, the numbers, class and prices of shares covered by this    
Option shall be appropriately adjusted by the Board of Directors, whose         
determination shall be conclusive; provided, however, that no such adjustment   
shall give the Employee any additional benefits under the Option.               

  8.  Corporate Transactions.  Notwithstanding the provisions of Paragraph
7, if any "corporate transaction" as defined in Section 1.425-1 of the          
Treasury Regulations promulgated under the Internal Revenue Code of 1986        
occurs after the date of this Agreement, and in connection with such corporate  
transaction, the Corporation and another corporation enter into an agreement    
providing for the issuance of substitute stock options in exchange for the      
Option or the assumption of the Option, in either case giving the Employee the  
right to purchase the largest whole number of shares of Common Stock of the     
Corporation or of any other corporation at the lowest option price permitted    
by said Section 1.425-1, the Option shall be deemed to provide for the          
purchase of such number of shares of Common Stock at such option price as       
shall be agreed upon by the Corporation and such other corporation, and the     
term "Corporation" herein shall mean the issuer of the stock then covered by    
the Option and the term "Common Stock" shall mean such stock.                   

9.  No Employment Agreement.  This Agreement does not confer upon the 
Employee any right to continue in the employ of the Corporation nor does it     
interfere in any way with the right of the Corporation or the right of the      
Employee to terminate the employment of the Employee at any time.               

   10.  Restrictions.  The obligation of the Corporation to sell and
deliver shares of Common Stock with respect to the Option shall be subject to   
(i) all applicable laws, rules, regulations and such approvals by any           
governmental agencies as may be required, including the effectiveness of a      
registration statement under the Securities Act of 1933, as amended and (ii)    
the condition that the shares of Common Stock to be received upon exercise of   
the Option shall have been duly listed, upon official notice of issuance, on a  
stock exchange (to the extent that the Common Stock of the Corporation is then  
listed on any such stock exchange).  In the event that the shares shall be      
delivered otherwise than in accordance with an applicable registration          
statement, the Corporation's obligation to deliver the shares is subject to     
the further condition that the Employee will execute and deliver to the         
Corporation an undertaking in form and substance satisfactory to the            
Corporation that (i) it is the Employee's intention to acquire and hold such    
shares for investment and not for resale or distribution, (ii) the shares will  
not be sold without registration or exemption from the requirement of           
registration under the Securities Act and (iii) the Employee will indemnify     
the Corporation for any costs, liabilities and expenses which it may sustain    
by reason of any violation of the Securities Act or any other law regulating    
the sale or purchase of securities occasioned by any act on his part with       
respect to such shares.  The Corporation may require that any certificate or    
certificates evidencing shares issued pursuant to the Plan bear a restrictive   
legend intended to effect compliance with the Securities Act or any other       
applicable regulatory measures, and stop transfer instructions with respect to  
the certificates representing the shares may be given to the transfer agent.    

11.  Exercise.  Subject to the terms and conditions of this   
Agreement, the Option may be exercised only by written notice delivered to the  
Corporation at its principal business office, attention of the Chief Financial  
Officer, of intention to exercise such Option and by making payment of the      
purchase price of such shares against delivery of a certificate or              
certificates therefor as hereinafter provided.  Such written notice shall:      

    (a)  state the election to exercise the Option and the number of
shares in respect of which it is being exercised; 

  (b)  fix a date not less than seven (7) business days from the
          date such notice is received by the Corporation for delivery
        of the certificate or certificates for said shares and the
payment of the purchase price therefor, and       

    (c)  be signed by the person or persons so exercising the Option
          and in the event the Option is being exercised by any person
          or persons other than the Employee, be accompanied by appro-
    priate proof of the right of such person or persons to
exercise the Option.                              

On the date fixed in said written notice, a certificate or certificates for     
the shares as to which the Option shall have been so exercised, registered in   
the name of the person or persons so exercising the Option, shall be issued by  
the Corporation and delivered to or upon the order of such person or persons    
against payment in full at the above-mentioned address of the purchase price    
of said shares in cash, by check or by surrender or delivery to the             
Corporation of shares of the Corporation's Common Stock with a fair market      
value equal to or less than the Option price, plus cash equal to any            
difference.  All shares issued as provided herein will be fully paid and        
nonassessable.  The Employee shall not have any of the rights of the            
stockholder with respect to the shares of Common Stock subject to the Option    
until the certificate evidencing such shares shall be issued to him upon the    
due exercise of the Option.                                                     

       12.  Option to Repurchase.  So long as the Corporation's Common Stock
is neither listed for trading nor traded in the over-the-counter market, the    
Corporation shall have the right to repurchase any and all shares of Common     
Stock acquired upon exercise of the option at such time as the Employee         
terminates his employment or the Employee's employment with the Corporation or  
any subsidiary is terminated for any reason (including death or disability)     
and this option shall continue for thirty (30) days after the date of           
termination or the date of any exercise of the stock option, whichever is       
later.  The repurchase price shall be fair market value.  A legend to this      
effect shall be conspicuously noted of each certificate for shares acquired     
pursuant to this Agreement.                                                     

   13.  Availability of Shares.   The Corporation shall at all times
during the term of the Option reserve and keep available or contract for the    
availability of  such number of shares of Common Stock as will be sufficient    
to satisfy the requirements of this Agreement, shall pay all original issue     
taxes with respect to the issue of shares pursuant hereto and all other fees    
and expenses necessarily incurred by the Corporation in connection therewith    
and will from time to time use its best efforts to comply with all laws and     
regulations which in the opinion of counsel for the Corporation shall be        
applicable thereto.                                                             

      14.  Fair Market Value.   As used herein, the "fair market value" of
a share of Common Stock shall be:                                               

         (a)  if the Common Stock is listed on a national securities
              exchange, the closing price of the Common Stock on the
     Composite Tape on the trading day immediately
preceding such given date;              

        (b)  if the Common Stock is traded on the over-the-counter
              market, the average of the bid and the asked price for
       the Common Stock as reported by the Wall Street
          Journal at the close of trading on the trading day
  immediately preceding such given date, and

      (c)  if the Common Stock is neither listed on a national
             securities exchange or traded on the over-the-counter
           market, such value as the Board in good faith shall
           determine, which determination shall be conclusive.

15.  Repurchase Option.   If the Employee is not employed by the      
Company on the date of exercise, or if subsequent to the date of exercise the   
employee ceases to be employed by the Company, the Company shall have the       
option for thirty (30) days from the later of (1) the date of termination, or   
(2) the date of exercise of the option (such later date being the "Repurchase   
Date") to elect to repurchase the Option Shares at the fair market value of     
the shares on the Repurchase Date.                                              

    16.  The Plan.  The Option is granted pursuant to the terms of the
Plan, which terms are incorporated herein by reference, and the Option shall    
in all respects be interpreted in accordance with the Plan.  The Board of       
Directors shall interpret and construe the Plan and this Agreement, and the     
Board's interpretations and determinations shall be conclusive and binding on   
the parties hereto and any other person claiming an interest hereunder with     
respect to any issue arising hereunder or thereunder.                           

    17.   Governing Law.  This Agreement has been entered into and shall
be construed in accordance with the laws of the State of New Jersey.            

  IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and sealed by its duly authorized officers and the Employee has        
hereunder set his hand, all as of the day and year first above written.         

ATTEST:                            MULTI-ARC INC.                               

/s/ Walter N. Kreil, Jr.            By:/s/ Peter D. Flood                       
Walter N. Kreil, Jr., Secretary        Peter D. Flood, President                

EMPLOYEE  

                          ____________________________________
(Name)    

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EXHIBIT 10(s)                                                                   

First Fidelity Bank NA                                                          
London Branch                                                                   
1 Bishopsgate                                                                   
London EC2N 3AB                                                                 
ENGLAND                                                                         
Telephone: 0171-621 1477                                                        
Telex: 883432                                                                   
Facs: 0171-929 4644                                                             

The Directors of                                                                
Multi-Arc (U.K.) Limited                                                        
Number One Industrial Estate                                                    
Unit 36, Medomsley Road                                                         
Consett                                                                         
County Durham                                                                   
DH8 6TS                                                                         

Date: 21st September 1995                                                       

Dear Sirs                                                                       

We are pleased to advise you that First Fidelity Bank N.A. (the "Bank") (which  
expression shall include its successors, transferees and assigns) is agreeable  
to making available to Multi-Arc (U.K.) Limited, a company incorporated in      
England and Wales under registered number 1665506 (the "Borrower") and having   
an address at Number One Industrial Estate, Unit 36, Medomsley Road, Consett,   
County Durham, DH8 6TS a loan facility of a principal amount of                 
Pounds Sterling1,500,000 by way of a single cash advance (the "Loan Facility")  
on the following terms and subject to the following conditions:                 

1.   DEFINITIONS                                                                

In this Agreement:-                                                   

"Agreement" means the agreement resulting from the Borrower           
countersigning this letter;                                                     

 "Bank Basis" means a calculation made on the basis of the actual number
of days elapsed or, as the case may be, to elapse and a 365 day year;           

"Borrowed Money" means Indebtedness incurred in respect of (I) money
borrowed or raised, (ii) any bond, note, loan stock, debenture, bill of         
exchange, commercial paper or similar instrument (including share capital       
carrying a right to a preferential dividend redeemable at the option of         
shareholders or the issuer thereof at any time), (iii) acceptance or            
documentary credit facilities, (iv) rental payments under leases and hire-      
purchase agreements so far as attributable to payments of capital (in all cases 
whether in respect of land, buildings, machinery, equipment or otherwise)       
entered into primarily as a method of raising finance or of financing the       
acquisition of the asset the subject thereof, (v) obligations under conditional 
or instalment sale agreements or any other obligation to pay the deferred       
purchase or construction price of assets or services, except trade accounts     
arising in the normal course of day-to-day trading, and (vi) all other          
Indebtedness under any arrangement entered into primarily as a method of        
raising finance (and not in the normal course of, and as part of, day-to-day    
trading) and which is not referred to in the foregoing paragraphs of this       
definition and for the purposes of Clause 11.1(1) as shown in the latest        
accounts of the Borrower delivered pursuant to this Agreement. PROVIDED THAT    
Borrowed Money expressed in or calculated by reference to a currency other than 
Sterling shall be converted into Sterling by reference to the rate of exchange  
used for the conversion of such currency in the preparation of the relevant     
accounts or, if the relevant currency was not thereby involved, by reference to 
such rate of exchange or approximate rate of exchange ruling on the date of     
such determination as the Bank may in its absolute discretion determine or      
approve;                                                                        

 "Business Day" means a day on which commercial banks are open in London
for transactions of the type of business contemplated by this Agreement;        

"Capital Expenditure" means capital expenditure as determined in      
accordance with generally accepted accounting principles and bases and as       
shown in the relevant accounts of the Borrower delivered pursuant to this       
Agreement for the relevant period;                                              

"Cash Flow" means, in respect of the Borrower and the period being    
measured, net income (including for the avoidance of doubt interest received)   
after adding back Debt Payments, depreciation and any other non-cash charges,   
less capital expenditure all as shown in the relevant accounts of the Borrower  
delivered pursuant to this Agreement;                                           

 "Charge over Shares" means the charge over shares to be entered into by
the Guarantor in favour of the Bank in form and substance satisfactory to the   
Bank;                                                                           

   "Current Assets" means, at any time, the assets of the Borrower which, in
accordance with generally accepted accounting principles and bases, are         
classified as such in the latest accounts of the Borrower delivered pursuant to 
this Agreement, after deducting all reserves properly deductible in respect of  
such assets (again as shown in the latest accounts of the Borrower delivered    
pursuant to this Agreement);                                                    

"Current Liabilities" means, at any time, the aggregate of the        
liabilities of the Borrower falling due within one year of the date of          
computation as shown in the latest accounts of the Borrower delivered pursuant  
to this Agreement;                                                              

   "Current Ratio" means the ratio of Current Assets to Current Liabilities;

   "Dangerous Substances" means any radioactive emissions and any natural or
artificial substances (whether in solid or liquid form or in the form of a gas  
or vapour and whether alone or in combination with any other substances) capable
of causing harm to man or any other living organism supported by the            
environment, or damaging the environment or public health or welfare, including 
any controlled, special, hazardous, toxic, radioactive or dangerous waste;      

"Debt Payments" means in respect of the Borrower and the period being 
measured, interest accruing pursuant to the Overdraft Facility, interest        
accruing pursuant to the terms hereof and all payments of principal due and/or  
made hereunder together with all and any interest, commission, fees or other    
similar financing costs accruing or, as the case may be, incurred and all       
payments of principal due and/or made under or in connection with any Borrowed  
Money, all as shown in the relevant accounts of the Borrower delivered pursuant 
to this Agreement;                                                              

"Debt Service Coverage Ratio" means the ratio of Cash Flow to Debt    
Payments of the Borrower;                                                       

"Environmental Law" means all laws, regulations, codes of practice,   
circulars, guidance notices and the like binding on the Borrower, (whether of   
the United Kingdom or elsewhere and including any directive of the European     
Community which is so binding) concerning the protection of human health or the 
environment or the conditions of the workplace or the generation,               
transportation, storage, treatment or disposal of Dangerous Substances;         

"Environmental Licences" means any permit, licence, authorisation,    
consent or other approval required by any Environmental Law;                    

  "Event of Default" means any one of the events specified in Clause 12 or
any event which with the passing of time or the giving of notice or the making  
of any determination, formation of any opinion or fulfilment of any other       
condition would constitute such an event;                                       

   "Finance Documents" means this Agreement, the Overdraft Facility, each of
the Security Documents, any certificates or notices given pursuant to any of    
the same and any other document as between any of the Borrower, the Guarantor   
and the Bank designated as such by the Bank;                                    

  "Fixed Rate" means the fixed rate of interest which the Bank is prepared
to offer the Borrower in connection with the Loan Facility and which is         
notified to the Borrower prior to the latest time for the issue of the Notice   
of Drawing or, prior to the date on which a Notice of Fixed Interest Rate       
Selection is to take effect (as applicable);                                    

"Guarantor" means Multi-Arc, Inc;                                     

  "Indebtedness" includes any obligation whether as principal or as surety
for the payment or repayment of money, whether present or future, actual or     
contingent;                                                                     

"Interbank Rate" means in relation to any Interest Period the rate    
(rounded upwards if necessary to 4 decimal places) at which the Bank is         
offered deposits of Sterling by leading banks in the London Interbank Market at 
or about 11.00 a.m. (London time) on the first day of such Interest Period for  
a period equal to such Interest Period and in an amount comparable with the     
amount to be outstanding during such Interest Period;                           

   "Interest Payment Date" in relation to any Interest Period means the last
day of such Interest Period;                                                    

"Interest Period" means:                                              

(A)  if the fixed interest rate option is chosen in the Notice of     
Drawing, a period ending on each Repayment Date with the first such period      
commencing on the date the Loan is made and each subsequent Interest Period     
commencing forthwith upon the expiry of the previous Interest Period; or        

(B)  in relation to the period after a Notice of Fixed Interest Rate  
Selection has been given to the Bank, a period ending on each subsequent        
Repayment Date with the first such period commencing on the date the Notice of  
Fixed Interest Rate Selection is to take effect and each subsequent Interest    
Period commencing forthwith upon the expiry of the previous Interest Period; or 

(C)  if the variable interest rate option is chosen in the Notice of  
Drawing and no Notice of Fixed Interest Rate Selection has been given to the    
Bank, subject as provided below, a period of three months, but so that:-        

      (1)  the first Interest Period shall commence on the date the Loan
is made;                                                                        

     (2)  each subsequent Interest Period will commence forthwith upon
the expiry of the previous Interest Period;                                     

     (3)  if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next          
succeeding Business Day unless such succeeding Business Day falls in another    
calendar month in which event the Interest Period shall end upon the            
immediately preceding Business Day; and                                         

   (4)  if any Interest Period would otherwise end after the Final
Repayment Date, it shall be shortened so as to end on the Final Repayment       
Date.                                                                           

 "Loan" means the Pounds Sterling1,500,000 to be lent to the Borrower in
accordance with Clause 5, or, where the context so requires, the principal      
amount thereof outstanding from time to time;                                   

"Margin" means one and one half per cent (1-1/2%) per annum;          

   "MLA Cost Rate" means in relation to any Interest Period, the cost to the
Bank of complying with all reserve, special deposit, capital adequacy,          
solvency, liquidity ratios or other requirements of or imposed by the Bank of   
England or any other governmental or regulatory authority for the time being    
attributable to the Loan (rounded up if necessary to 4 decimal places) as       
conclusively determined by the Bank;                                            

 "Mortgage Debenture" means the mortgage debenture to be entered into by
the Borrower in favour of the Bank in form and substance satisfactory to the    
Bank;                                                                           

"Notice of Drawing" means a notice requesting drawing substantially in
the form set out in the Schedule;                                               

 "Notice of Fixed Interest Rate Selection" means a notice to be given to
the Bank no later than two Business Days prior to an Interest Payment Date to   
take effect on that Interest Payment Date and stating that the Borrower wishes  
to switch to the Fixed Rate for the remainder of the term of the Loan.          

 "Overdraft Facility" means the overdraft facility to be entered into by
the Borrower and the Bank together with an ancillary letter from the Bank to    
the Borrower setting out further details pursuant to which an overdraft         
facility is to be made available to the Borrower by the Bank;                   

  "Multi-Arc. Inc Guarantee" means the guarantee to be given by Multi-Arc,
Inc in favour of the Bank for the obligations of the Borrower to the Bank       
hereunder and under the Overdraft Facility;                                     

 "Multi-Arc (U.K.) Limited Guarantee" means the guarantee to be given by
the Borrower in favour of the Bank for the obligations of the Guarantor to the  
Bank under the SC Guarantee;                                                    

"Permitted Encumbrance" means any Security Interest (or in the case of
(b) only, any lien):-                                                           

 (a)  created or outstanding with the prior written consent of the Bank;

 (b)  arising by operation of law (and not as a result of any default or
omission on the part of the Borrower) in the ordinary course of business and    
securing obligations not more than three months overdue;                        

 (c)  arising under any retention of title arrangements (other than "all
moneys" retention of title arrangements) entered into in the ordinary course    
of trading and not entered into primarily for the purpose of securing any       
Indebtedness;                                                                   

(d)  over goods or documents of title to goods arising in the ordinary
course of trading in connection with documentary credit transactions where      
such Security Interest secures only so much of the acquisition cost or selling  
price (and amounts incidental thereto) of such goods and products which is      
required to be paid within 180 days after the date upon which the same was      
first incurred;                                                                 

   (e)  on assets acquired after the date of this Agreement, or on assets of
a body corporate which becomes a Subsidiary by acquisition after the date of    
this Agreement, provided that:                                                  

   (i)  any such Security Interest is in existence prior to such acquisition
and is not created in contemplation of such acquisition; and                    

   (ii) the amount secured by such Security Interest does not exceed, at any
time, the maximum amount secured or agreed to be secured by it (in accordance   
with the original terms on which such Security Interest was created) as at      
the date of acquisition;                                                        

(iii) such Security Interest is discharged within a period of 3       
months after the acquisition; and                                               

(iv) no guarantee is given by the Borrower in respect of such Security
Interest or the amount secured by it;                                           

(f)  securing Indebtedness incurred to refinance other Indebtedness   
permitted to be secured under paragraphs (a) to (e) above inclusive and/or      
this paragraph (f), provided that the aggregate principal amount of the         
Indebtedness secured by such Security Interest is not increased and such        
Security Interest does not extend to any assets other than those which were     
subject to the original Security Interest securing the refinanced Indebtedness; 

"Repayment Date" means the date falling 90 days after the date of     
drawdown of the Loan and each date falling three months after the previous      
Repayment Date, and the "Final Repayment Date" shall mean the date falling five 
years after the date of drawdown of the Loan;                                   

"SC Borrowers" means all and each of Scientific Coatings of Illinois, 
Inc., Scientific Coatings, Inc. and SCI Coatings Southwest, Inc;                

"SC Facility Agreement" means the Loan and Security Agreement dated 30
September 1994 and made between the Bank and the SC Borrowers;                  

 "SC Guarantee" means the guarantee dated 30 September 1994, as the same
is or has been varied, amended, supplemented, substituted, novated or assigned  
from time to time given by Vagle Technology, Inc and the Guarantor in favour of 
the Bank for the obligations of the SC Borrowers under, inter alia, the SC      
Facilities;                                                                     

"Security Documents" means the Mortgage Debenture, the Charge over    
Shares, the Multi-Arc, Inc Guarantee, any interest rate hedging agreement from  
time to time entered into by the Borrower, any certificates or notices given    
pursuant to any of the same and any other document designated as such by the    
Bank;                                                                           

"Security Interest" means any mortgage, charge, pledge, lien,         
encumbrance, conditional sale or other title retention agreement, trust         
arrangement, preferential right or other agreement or arrangement the economic  
or commercial effect of which is similar to security or any other security      
interest whatsoever, howsoever created or arising;                              

 "Sterling" or "Pounds Sterling" means the lawful currency of the United
Kingdom;                                                                        

 "subsidiary" and "subsidiary undertaking" shall have the meanings given
to them by Sections 736 and 258 (respectively) of the Companies Act 1985 (as    
amended);                                                                       

"Tangible Net Worth" means the aggregate of the amounts paid-up or    
credited as paid-up on the Borrower's issued share capital and the amount of    
the consolidated capital and revenue reserves of the Borrower (including any    
share premium account, merger reserve, capital redemption reserve, revaluation  
reserve and retained earnings) and the balance on the Borrower's profit and     
loss account all as shown by the latest accounts of the Borrower delivered      
pursuant to this Agreement from time to time but after:-                        

(i)  deducting any amount shown in respect of goodwill (including     
goodwill arising on consolidation), patents, trade marks, copyrights, brands,   
research and development expenditure and other intangible assets;               

  (ii) deducting any amounts distributed or proposed to be distributed out
of the profits accrued prior to the date of such financial statements to the    
extent that such distribution is not provided for therein;                      

(iii) excluding any sums set aside or otherwise reserved or provided  
for losses, taxation or expenses;                                               

(iv) excluding any amounts as in the opinion of the auditors of the   
Borrower for the time being are attributable to any write ups of fixed assets   
in the books of the Borrower made after the date hereof; and                    

 (v)  making such adjustments to reflect any variations which shall have
occurred since the date of such financial statements:-                          

   (a) in the amounts paid up or credited as paid up on the issued
share capital of the Borrower (including any share premium account, merger      
reserve, capital redemption reserve, revaluation reserve and retained           
earnings); and                                                                  

(b)  to reflect any changes in generally accepted accounting
principles and bases and the application of standards and practices since then  
as may be appropriate in the opinion of the auditors for the time being         
of the Borrower;                                                                

   Headings in this Agreement are inserted for convenience only and shall be
ignored in construing this Agreement.                                           

Expressions herein defined shall have the same meanings herein.       

   Unless the context otherwise requires, words denoting the singular number
only shall include the plural and vice versa and words denoting persons shall   
include companies, corporations and partnerships and vice versa.                

  References to Clauses and Schedules are to be construed as references to
Clauses of and Schedules to this Agreement unless the context otherwise         
requires.                                                                       

A time of day is a reference to London time.                          

Any reference in this Agreement to an agreement or document shall be  
construed as a reference to that agreement or document as the same may have     
been, or may from time to time be, varied, amended, supplemented, substituted,  
novated or assigned.                                                            

References in this Agreement to statutes and/or statutory provisions  
shall be construed as referring to such statutes or statutory provisions as     
respectively replaced, amended, extended, consolidated or re-enacted from time  
to time and shall include any order, regulation, instrument or other            
subordinate legislation made under the relevant statute or statutory provisions.

2. PURPOSE                                                                      

  The Borrower undertakes to the Bank that the Loan Facility shall only be
applied in and towards the refinancing of term debt from Siemens Financial      
Services Limited, The Governor and Company of The Bank of Scotland, Derwentside 
District Council and British Coal Enterprise Limited, the purchase of equipment 
from Multi-Arc, Inc on arms length terms, the making of a loan by the Borrower  
to Multi-Arc Inc and/or the refinancing of term debt from British Steel.        

3. AMOUNT                                                                       

   Subject to the terms and conditions of this Agreement, the Bank agrees to
make available to the Borrower the Loan Facility.                               

4. CONDITIONS PRECEDENT                                                         

The rights of the Borrower under this Agreement to draw down the Loan 
Facility are conditional upon the Bank having received, in form and substance   
satisfactory to it, all of the following:-                                      

(A)   a copy, certified by a director of the Borrower to be true,     
complete and up to date, of the memorandum and articles of association,         
certificate of incorporation and any certificates of incorporation on change of 
name of the Borrower;                                                           

   (B)  a copy, certified by a director of the Borrower to be true, complete
and up to date, of minutes of the meeting(s) of the board of directors of the   
Borrower at which valid resolutions were adopted approving the Finance          
Documents to which it is a party and all the other documents relating thereto   
and authorising a person or persons to sign and deliver (or execute as a deed,  
if appropriate) the Finance Documents to which it is a party and to sign and    
deliver or despatch all other such documents and all notices, communications or 
documents to be given by it pursuant to or in connection with such Finance      
Documents;                                                                      

(C)   a copy, certified by a director of the Guarantor to be true,    
complete and up to date, of minutes of the meeting(s) of the board of           
directors of the Guarantor at which valid resolutions were adopted approving    
the Finance Documents to which it is a party and all the other documents        
relating thereto and authorising a person or persons to sign and deliver (or    
execute as a deed, if appropriate) the Finance Documents to which it is a party 
and to sign and deliver or despatch all other such documents and all notices,   
communications or documents to be given by it pursuant to or in connection with 
such Finance Documents;                                                         

  (D)  a list of names and specimen signatures, certified as aforesaid, of
each of the persons referred to in Clauses 4(B) and 4(C);                       

(E)  a certificate signed by a director of the Borrower stating, inter
alia, that the signing of the Finance Documents to which it is a party is       
within its corporate powers and will not cause any limitation on its borrowing  
or other powers or on the right of its directors to exercise any such powers    
(whether contained in its constitutional documentation or in any agreement or   
instrument or imposed by statute or regulation or otherwise) to be exceeded;    

(F)  the Security Documents and the Multi-Arc (U.K.) Limited Guarantee
duly executed by the parties thereto (except the Bank) and all documents        
required to be delivered to the Bank pursuant to the Security Documents,        
including without limitation all documents of title and all insurance policies; 

   (G)  relevant bank mandates and other forms required for the operation of
any account of the Borrower;                                                    

(H)  evidence that satisfactory insurance cover (including public     
liability cover and terrorism risk) in respect of the assets of the Borrower    
has been taken out and that the premium payments are up to date and that the    
Bank is a joint insured under all such insurance or the Bank's interest as      
mortgagee has been noted on the policy(ies) and full details of such insurance; 

(I)  the initial fee payable pursuant to Clause 13.1;                 

(J)  written confirmation from the Borrower's auditors that they are  
aware that the Bank will be relying on the Borrower's audited financial         
statements from time to time for the purposes hereof; and                       

(K)  such other documents and information as the Bank may require.    

DRAWING THE LOAN                                                                

Subject to:-                                                          

   (1)  the conditions set out in Clause 4 having been fulfilled by no later
than 11.00 am on the second Business Day preceding the date on which the Loan   
is to be drawn;                                                                 

(2)  no Event of Default having occurred; and                         

 (3)  the Bank having received a Notice of Drawing by no later than 9.30
a.m. on the second Business Day preceding the date on which the Loan is to be   
drawn (or such later time as the Bank may agree), duly completed and signed by  
the Borrower together with evidence showing that the Loan will be used for one  
or more of its agreed purposes and the amounts of the loan to be used for each  
of such purposes in form and substance satisfactory to the Bank,                

the Bank shall, upon and subject to the terms and conditions of this            
Agreement, make available the Loan by way of a single drawing on the day and    
to the person(s) specified in such Notice of Drawing, or if such day is not a   
Business Day on the next succeeding Business Day, provided that if the Loan     
shall not have been drawn down on or prior to 30th October 1995 the obligation  
of the Bank to make the Loan available hereunder shall be cancelled.            

6.   INTEREST                                                                   

6.1  (A)  The rate of interest applicable to each Interest Period shall be the  
rate determined by the Bank to be the aggregate of (I) the Margin and (ii) the  
Fixed Rate, if the fixed interest rate option has been chosen in the Notice of  
Drawing or a Notice of Fixed Interest Rate Selection has been given to the      
Bank, or the aggregate of (I) the Margin, (ii) the Interbank Rate, and (iii)    
the MLA Cost Rate if the variable interest rate option has been chosen in the   
Notice of Drawing and no Notice of Fixed Interest Rate Selection has been given 
to the Bank;                                                                    

(B)  Interest on the Loan at the rate(s) aforesaid shall be calculated
for each Interest Period on the Bank Basis, shall accrue from day to day and    
be paid on each Repayment Date (in the case of the fixed interest rate option)  
or on each Interest Payment Date (in the case of the variable interest rate     
option); and                                                                    

(C)  On repayment or prepayment of the Loan in whole or in part, all  
interest accrued and unpaid on the amount to be repaid or prepaid shall be      
paid by the Borrower to the Bank.                                               

6.2  If any sum due and payable by the Borrower hereunder is not paid on the    
due date therefor or if any sum due and payable by the Borrower under any       
judgment of any court in connection herewith is not paid on the date of such    
judgment, such unpaid sum shall bear interest until the obligation of the       
Borrower to pay any such sum is discharged in full at the rate per annum which  
is determined by the Bank to be the aggregate of (1) the Margin, (2) Midland    
Bank plc's base rate from time to time and (3) two per cent (2%) with such      
interest being compounded monthly in arrear on the last day of each calendar    
month.                                                                          

7.   ALTERNATIVE INTEREST RATES                                                 

7.1  Notwithstanding anything to the contrary herein contained, if the          
variable interest rate option has been chosen in the Notice of Drawing and      
prior to the commencement of any Interest Period relating thereto, the Bank     
shall have determined that:-                                                    

(A)  by reason of circumstances affecting the London Interbank Market 
adequate and fair means do not exist for ascertaining the Interbank Rate        
applicable to such Interest Period pursuant to Clause 6.1; or                   

   (B)  deposits in Sterling are not or will not be available to the Bank in
the London Interbank Market in sufficient amounts in the ordinary course of     
business to fund the Loan for such Interest Period,                             

then the Bank shall as soon as practicable give written notice of such          
determination or notice to the Borrower.                                        

7.2  In the case of Clause 7.1 if the Loan has not yet been advanced it shall   
not be so advanced and if the Loan has been advanced the liability of the Bank  
to maintain the Loan shall cease except, in each case, in accordance with the   
following provisions of this Clause 7.                                          

7.3  During the period of thirty days from the date of any such notice given    
pursuant to Clause 7.1 the Bank shall establish (in consultation with the       
Borrower) an alternative basis (in this Clause 7 referred to as the "Substitute 
Basis") for funding the Loan (including but without limiting the generality     
hereof, agreeing a suitable alternative length of Interest Period and agreeing  
the fixing of an alternative interest rate to be substituted for the rate which 
would otherwise have been fixed pursuant to Clause 6). The Substitute Basis     
shall reflect all costs to the Bank of making available the Loan and the        
Margin and shall be computed in a manner and for a period as similar to those   
provided in Clause 6.1 as is reasonably possible.                               

7.4  If the Bank shall agree such Substitute Basis with the Borrower it shall   
again be open to the Borrower (subject to all the other terms of this           
Agreement) to request that the Loan be made or to request that the Bank         
maintain the Loan, as the case may be, and the Borrower shall, until the        
circumstances specified above no longer exist, pay interest on the Loan on such 
Substitute Basis.  In default of agreement upon a mutually acceptable           
Substitute Basis within 30 days of the notice referred to in Clause 7.1 the     
Bank shall be discharged from any further obligation to make available the Loan 
or to maintain the Loan, as the case may be, and if the Loan shall be           
outstanding, the Borrower shall repay forthwith to the Bank the Loan together   
with interest thereon to the date of repayment at a rate equal to the           
Bank's cost of funding the same and all other amounts payable to the Bank       
hereunder.                                                                      

7.5  The certificates, confirmations and determinations of the Bank as to any   
of the matters referred to in this Clause 7 shall, save for manifest error, be  
conclusive and binding on the Borrower.                                         

8.   REPAYMENT                                                                  

   Subject as otherwise provided in this Agreement, the Borrower shall repay
the Loan by twenty quarterly instalments. The first nineteen instalments will   
be of Pounds Sterling54,000 and paid on the first nineteen Repayment Dates with 
the final instalment of Pounds Sterling474,000 being paid on the Final          
Repayment Date. Each instalment is to be paid on a Repayment Date, and the      
Borrower shall ensure that the Loan, together with all interest accrued thereon 
is repaid, on the Final Repayment Date.                                         

9.   PREPAYMENT                                                                 

9.1  The Borrower may on giving thirty days' written notice at any time prepay  
(upon payment to the Bank of the sum of Pounds Sterling10,000 (the "Prepayment  
Fee") (other than where prepayment is effected pursuant to Clause 7.4 and/or    
Clause 14) and subject to Clause 16.1) the whole of the Loan together with      
interest thereon accrued to the date of prepayment, such notice specifying the  
date and the amount of the prepayment and (where appropriate) accompanied by    
the Prepayment Fee and evidence satisfactory to the Bank that all               
authorisations, consents and approvals, if any, necessary for such prepayment   
have been obtained.                                                             

9.2  Any notice of intended prepayment pursuant to this Clause 9 shall be       
irrevocable and it shall be obligatory for the Borrower to make the prepayment  
in accordance with such notice.                                                 

9.3  The Borrower shall not be entitled to prepay the Loan or any part thereof  
otherwise than in accordance with the provisions of this Agreement. Any amount  
prepaid may not be reborrowed.                                                  

10.  REPRESENTATIONS AND WARRANTIES                                             

The Borrower represents and warrants to the Bank on each date that any
amount remains outstanding, or capable of being drawn down, under any of the    
Finance Documents as follows:-                                                  

 (A)  it is duly incorporated and validly existing under the laws of the
jurisdiction in which it is incorporated as a limited liability company and is  
duly authorised and empowered under the said laws to own its assets and to      
carry on its business and it has the power to execute, deliver and perform and  
has taken all necessary corporate action to authorise the execution and         
delivery of and the performance of its obligations under the Finance Documents  
to which it is a party and all other documents referred to herein or therein to 
which it is a party;                                                            

 (B)  each of the Finance Documents to which it is a party has been duly
executed on its behalf and constitutes its legal, valid and binding obligations 
enforceable in accordance with its terms and the execution and performance of   
all of such documents will not breach, conflict with or contravene any          
provisions of any law, statute, rule, regulation, agreement, indenture,         
undertaking, memorandum and articles of association or other constitutional     
documentation or any other instrument binding upon it or on any of its assets   
or give cause for acceleration of any of its Indebtedness or result in the      
existence of or oblige it to create any Security Interest (other than as        
created by the Security Documents) over all or any of its present or future     
revenues, assets or properties;                                                 

 (C)  it is not in default under any agreement, instrument, arrangement,
obligation or duty to which it is a party or by which it is or may be bound     
and there is no action, litigation, lawsuit or proceeding taking place or       
pending or threatened against or affecting it before any court, judicial,       
administrative, arbitral or governmental body or agency which in any such case  
could result in any material adverse change in its financial condition, assets, 
business or operations taken as a whole;                                        

(D)  all actions, licences, consents, exemptions and registrations    
(including, without limitation filings with all governmental or any other       
regulatory body, authority, bureau or agency and any consents or approvals      
required for the execution of, or the performance by the Borrower of its        
obligations under, the Finance Documents to which it is a party) required for   
the validity, performance and enforceability of the Finance Documents to which  
it is a party have been obtained and are in full force and effect and any       
condition contained therein or otherwise applicable thereto has been fulfilled  
or complied with;                                                               

 (E)  all its obligations and liabilities under the Finance Documents to
which it is a party constitute its direct, unconditional and general            
obligations and rank ahead in point of security and priority of all its other   
present and future Indebtedness and liabilities (with the exception of any      
obligations which are mandatorily preferred by law and not by contract);        

 (F)  all the factual information provided by it, any of its officers or
any person on its behalf to the Bank in connection with this Agreement and any  
of the matters referred to in Clause 2 is true and accurate in all material     
respects and it is not aware of any material facts or circumstances that have   
not been disclosed to the Bank and which, if disclosed, could adversely affect  
the decision of a person considering whether or not to provide finance to the   
Borrower on the terms and subject to the conditions of this Agreement;          

(G)  its latest audited accounts give a true and fair view of its     
financial condition as at the date to which such accounts are made up;          

(H)  no Dangerous Substance has been used, disposed of, generated,    
stored, transported, dumped, deposited, buried or omitted at, on, from or       
under any premises (whether or not owned, leased, occupied or controlled by the 
Borrower) in circumstances where this might result in a liability on the        
Borrower, which, if proven, might in the opinion of the Bank have a material    
adverse affect on its ability to perform its obligations under the Finance      
Documents;                                                                      

(I)  all requisite Environmental Licences have been obtained and all  
Environmental Licences and other applicable Environmental Law have at all       
times been complied with;                                                       

(J)  no Event of Default has occurred; and                            

   (K)  the Borrower has no trading subsidiaries or subsidiary undertakings.

11.  COVENANTS AND UNDERTAKINGS                                                 

11.1 Positive Covenants                                                         

 The Borrower covenants and undertakes with the Bank that so long as any
amount remains outstanding, or capable of being drawn down or any liability to  
the Bank subsists, under any of the Finance Documents it shall:-                

 (A)  ensure that each of its financial years ends on 30th September and
it shall furnish to the Bank within 90 days of the end of each of their         
respective financial years a copy of its and the Guarantor's respective audited 
financial statements (consolidated in the case of the Guarantor) prepared in    
accordance with generally accepted accounting principles and bases in its place 
of incorporation consistently applied, audited by a firm of auditors acceptable 
to the Bank and representing a true and fair view of its financial position at  
the date of such statements and the results of its operations for the period    
ended on such date together with a certificate from the auditors confirming     
that the Borrower is in compliance with the covenant contained in Clauses       
II.I(H), (1), (J), (K) and (L);                                                 

   (B)  furnish to the Bank within 20 days of the end of each calender month
a copy of its and the Guarantor's respective internal monthly management        
accounts certified by its finance director (or the Guarantor's finance          
director, as appropriate) as representing a true and fair view of its financial 
position at the date of such accounts and the results of its operations for the 
period ended on such date together with an aged receivables analysis in such    
format as the Bank may require certified by its finance director as             
representing a true and fair view of the receivables of the Borrower for the    
period(s) in question;                                                          

(C)  promptly furnish to the Bank such additional financial or other  
information as the Bank may from time to time reasonably require;               

(D)  comply with all lawful and applicable laws (including all        
Environmental Law) and regulations of all governmental and regulatory           
authorities relating to or affecting any of the Borrower's assets and/or its    
business and will obtain and promptly renew from time to time and comply with   
the terms of all consents, approvals, authorisations, licences (including all   
Environmental Licences) and/or exemptions which may be necessary to enable it   
properly to operate its business and to carry out its obligations under each of 
the Finance Documents;                                                          

 (E)  notify the Bank in writing promptly on becoming aware of any Event
of Default with a description of any steps which it is taking or considering    
taking in order to remedy or mitigate the effect of the Event of Default or     
otherwise in connection with it;                                                

(F)  notify the Bank promptly, and in any event within 14 days of its 
becoming aware of the same, in writing of any litigation or proceeding which    
is commenced, pending or threatened in respect of the Borrower, where the       
litigation concerned could result in a liability of more than Pounds Sterling   
25,000 on the part of the Borrower;                                             

(G)  ensure that at all times it is able to pay its debts as they fall
due and that any obligation owed to a creditor of the Borrower is met on the    
due date therefor or within any applicable originally agreed credit period or   
otherwise within time limits customarily adhered to by the Borrower;            

   (H)  ensure that Debt Service Coverage Ratio shall not be less than 1.5:1
for any twelve month period ending on 31 March, 30 June, 30 September and 31    
December:                                                                       

  (I)  ensure that the ratio of Borrowed Money to Tangible Net Worth shall
not at any time be greater than 2:1;                                            

  (J)  ensure that its Capital Expenditure does not, in any financial year
of the Borrower, exceed Pounds Sterling350,000 in aggregate, without the prior  
written consent of the Bank;                                                    

(K)  ensure that the Current Assets exceed the Current Liabilities, at
all times, by a minimum of Pounds Sterling25; and                               

(L)  ensure that Tangible Net Worth is at all times in excess of      
Pounds Sterling800,000.                                                         

11. 2     Negative Covenants                                                    

 The Borrower covenants and undertakes with the Bank that so long as any
amount remains outstanding, or capable of being drawn down or any liability to  
the Bank subsists, under any of the Finance Documents it shall not:-            

  (A)  without the prior written consent of the Bank, create or attempt to
create or permit to subsist any Security Interest of any kind, other than any   
Permitted Encumbrances, over the whole or any part of its respective            
undertaking, property, assets or revenues save as permitted pursuant to the     
Mortgage Debenture;                                                             

  (B)  carry out any business other than the business it presently carries
out at the date hereof, nor shall it make or permit any change in the scope or  
nature of its business or cease to carry on its business;                       

   (C)  sell, transfer, assign, lease, charter, lend or otherwise dispose of
or part with possession or the ownership of or any interest in any of its       
property, assets, revenues or undertaking or any part thereof save in the       
ordinary course of business and shall not enter into or undertake any invoice   
discounting or factoring arrangements;                                          

(D)  it shall not issue any shares, debentures or other securities    
without the prior written consent of the Bank;                                  

(E)  enter into banking or other credit facility arrangements of      
whatsoever nature or any interest rate or other exchange or hedging agreement   
other than with the Bank or otherwise incur any Indebtedness in relation to     
Borrowed Money (excluding for this purpose rental payments under leases and     
hire-purchase agreements provided that the cost of any assets the subject of    
such leases or hire purchase agreements purchased in any one financial year of  
the Borrower when aggregated with the cost of any other such assets purchased   
in that financial year does not exceed Pounds Sterling350,000) other than under 
the Finance Documents;                                                          

   (F)  acquire, establish or permit to subsist any subsidiary or subsidiary
undertaking or acquire any interest in, enter into or form any partnership or   
joint venture without the prior written consent of the Bank and shall not       
permit any dormant subsidiary or subsidiary undertaking to carry out any        
activity or take any action which would result in such subsidiary or subsidiary 
undertaking ceasing to be dormant;                                              

 (G)  amend its memorandum or articles of association in any way without
the prior written consent of the Bank; or                                       

   (H)  make any loans to, grant credit to, grant indemnities in respect of,
or guarantees in support of, or invest in, any third party otherwise than in    
the ordinary course of its trading activities or, in the case of loans, to      
Multi-Arc, Inc provided that no Event of Default has occurred prior to the      
making of any such loan.                                                        

12.  EVENTS OF DEFAULT                                                          

In the event that:-                                                   

   (A)  the Borrower shall fail to pay any sum required to be paid under any
Finance Document in the case of principal or interest on the due date           
therefor or in the case of any other payment within 7 Business Days of the due  
date therefor; or                                                               

 (B)  the Borrower or the Guarantor shall default in the due performance
or observance of any other covenant, undertaking, condition or provision on     
its part contained in any Finance Document and such default is not capable of   
remedy, or if in the opinion of the Bank capable of remedy, shall not have been 
remedied to the satisfaction of the Bank within10 days of the earlier of the    
Bank serving notice on the Borrower or the Guarantor requiring the same to be   
remedied and the Borrower or the Guarantor becoming aware of the same; or       

  (C)  any representation, warranty or statement made or deemed to be made
by the Borrower in or pursuant to any Finance Document to which it is a         
party (including in any certificate or notice made or delivered pursuant        
thereto) and which the Bank considers to be material shall be untrue or         
incorrect in any material respect when made or repeated or if any event occurs  
as a result of which any such representation, warranty or statement if repeated 
at any time hereafter with reference to the facts subsisting at the time of     
such repetition, would be untrue or incorrect in any material respect; or       

    (D)  any other Borrowed Money exceeding in aggregate Pounds Sterling25,000
of the Borrower shall by reason of breach or default become due and payable     
prior to its stated maturity or due date or if any such Borrowed Money is not   
paid at the maturity thereof or due date therefor (or within any originally     
stated applicable grace period therefor) or, if payable on demand, is not paid  
on demand or if the Borrower fails to pay when due any amount payable by it     
under any present or future guarantee or indemnity in respect of Borrowed Money 
or if any Security Interest in respect of Borrowed Money created by it becomes  
enforceable and steps are taken to enforce the same; or                         

(E)  any Event of Default (as defined in the SC Facility Agreement)   
occurs; or                                                                      

(F)  the Borrower or the Guarantor becomes insolvent or applies for or
consents to or suffers the appointment of a liquidator, administrator,          
receiver, administrative receiver, encumbrancer, trustee in bankruptcy or       
similar official of the whole or any part of its assets, business, property,    
revenues or undertaking or a petition for the appointment of an administrator   
or liquidator of the Borrower or the Guarantor is presented (and not, unless    
the same has been advertised, withdrawn within 21 days of presentation) or the  
Borrower or the Guarantor takes any proceedings under any law, regulation or    
procedure for adjustment, deferment or rescheduling of its indebtedness or any  
part thereof or makes or enters into a general assignment or arrangement or     
composition with or for the benefit of its creditors or a moratorium shall be   
declared on any of its indebtedness or any creditor of the Borrower or the      
Guarantor exercises a contractual right to take over the financial              
management of the Borrower or the Guarantor (as applicable) or the Borrower or  
the Guarantor is unable to pay its debts as defined in section 123 Insolvency   
Act 1986 or the Borrower or the Guarantor fails generally to pay its debts as   
and when they fall due or if proceedings are commenced or threatened against    
the Borrower or the Guarantor which, if adversely determined, would result in a 
liability on the part of the Borrower or the Guarantor (as applicable) in       
excess of Pounds Sterling25,000 or any similar event or occurrence shall take   
place under the laws of any other jurisdiction applicable to the Borrower or    
the Guarantor; or                                                               

(G)  an order is made or resolution is passed for the winding-up,     
liquidation or dissolution of the Borrower or the Guarantor or if analogous     
proceedings are taken or the Borrower or the Guarantor stops or threatens to    
stop payments generally or the Borrower or the Guarantor ceases or threatens to 
cease to carry on its business or any part thereof or the Borrower or the       
Guarantor merges, consolidates or amalgamates with or into any other company,   
corporation or entity; or                                                       

(H)  it becomes unlawful or impossible or contrary to the terms of any
consent, authority or other permission for the Borrower or the Guarantor to     
perform or to continue to perform any of its obligations under any of the       
Finance Documents to which it is a party or if any of such documents ceases to  
be in full force and effect or ceases to constitute the legal, valid and        
binding obligations of the Borrower or the Guarantor, as applicable,            
enforceable in accordance with its respective terms;                            
or                                                                              

(I)  any event or series of events (including without limitation any  
adverse change in the business, assets or financial condition of the Borrower   
or the Guarantor) shall occur giving reasonable grounds in the opinion of the   
Bank for the belief that the Borrower (or, as the case may be, the Guarantor)   
will not, or will not be able, to perform or comply with any of its obligations 
expressed to be assumed by it under or in connection with any of the Finance    
Documents to which it is a party; or                                            

(J)  if any governmental authority or any person or entity acting or  
purporting to act under any governmental authority shall have taken any action  
in order to condemn, seize or appropriate, or to assume custody or control of   
the Borrower or of all or any substantial part of the property or assets of the 
Borrower or shall have taken any action to curtail the authority in the overall 
conduct of its business or operations of the Borrower; or                       

  (K)  if the Bank shall reasonably consider any of its security under the
Security Documents shall be in jeopardy; or                                     

   (L)  if the audited financial statements of the Borrower or the Guarantor
delivered pursuant to Clause 11. I (A) are qualified to the effect that they    
do not or may not give a true and fair view of the financial position of the    
Borrower; or                                                                    

 (M)  if the Borrower ceases to be a subsidiary of Multi-Arc, Inc, or if
Multi-Arc, Inc at any time owns (legally and beneficially) less than            
ninety-nine per cent of the issued share capital of the Borrower;               

then in any such case and at any time thereafter while such event is  
continuing, the Bank may by written notice to the Borrower:-                    

   (1)  declare that the obligations of the Bank to make or, as the case may
be, maintain the Loan shall be cancelled, whereupon the same shall be           
cancelled; and/or                                                               

(2)  declare the whole or any part of the principal of and interest   
relating to the Loan and any other sums payable under the Finance Documents to  
be due and payable, whereupon the same shall become immediately due and payable 
together with accrued interest thereon to the date of actual payment; and/or    

(3)  declare the Loan shall henceforth be repayable on demand; and/or 

  (4)  direct enforcement of, or take any other action in relation to, any
of the Security Documents in accordance with its terms;                         

 (5)  apply the rate of interest referred to in Clause 6.2 to all or any
part of the principal amount of the Loan, any accrued interest and any other    
sums payable under the Finance Documents; or                                    

(6)  waive the Event of Default.                                      

13.  FEES AND EXPENSES                                                          

13.1 The Borrower will pay to the Bank an initial fee of Pounds Sterling7,500   
on the date the Loan is drawndown pursuant to Clause 5.                         

13.2 The Borrower shall reimburse the Bank promptly on demand (and without      
prejudice to such obligations and notwithstanding the other provisions of this  
Agreement authorises the Bank to deduct the same from any account of the        
Borrower with the Bank from time to time to the extent that any of the          
following are outstanding) and on a full indemnity basis, for all reasonable    
fees and all expenses (including but not limited to all legal, travel and other 
out-of-pocket expenses and all V.A.T. thereon) incurred by the Bank in          
connection with the preparation, negotiation, completion, execution and, where  
applicable, registration and filing of the Finance Documents and all documents  
in connection herewith and therewith and with granting waivers under or         
agreeing amendments to or variations in any of the same or in protecting any of 
its rights hereunder or thereunder or in suing for or recovering any sums due   
to it or in the preservation or enforcement of any of its rights                
under this Agreement or any of the above mentioned documents connected          
herewith.                                                                       

13.3 The Borrower shall reimburse the Bank on demand in respect of liability    
to all stamp, registration and other like duties and taxes (including all       
VAT), if any, in each case payable in connection with the execution, delivery   
and performance of the Finance Documents and all other documents in connection  
therewith whether by the Borrower or the Bank or any other party thereto and    
whether arising as a result of an election or otherwise or in connection with   
the enforcement of any of the Finance Documents and all such other documents    
and will indemnify the Bank from any and all liabilities with respect to or     
resulting from any delay or omission to pay such duties or taxes.               

13.4 Upon the occurrence of any Event of Default the Borrower shall reimburse   
the Bank for any subsequent operating and/or management charges or costs of     
the Bank relating to the Finance Documents, the matters contemplated thereby    
and the Loan, as determined by the Bank.                                        

14.  CHANGES IN CIRCUMSTANCES                                                   

14.1 If after the date of this Agreement by reason of (1) the introduction of   
or any change in law or in its interpretation, administration or application    
and/or (other than a general change in the rates of taxation of income in the   
United Kingdom or elsewhere) (2) compliance with any new request, directive or  
requirement of whatsoever nature, from or requirement of any central bank or    
other fiscal, monetary or competent authority (whether or not having the force  
of law):-                                                                       

  (A)  there is any increase in the cost to the Bank of agreeing to issue,
make, fund or maintain or of issuing, making, funding or maintaining all or     
any part of the Loan or any unpaid sums due to it under any of the Finance      
Documents; or                                                                   

 (B)  the Bank suffers a reduction in the amount of any payment received
or receivable by it or forgoes any interest or other return on or in relation   
to the Loan or suffers a reduction in return on capital as a result of having   
entered into any of the Finance Documents and performed its obligations         
thereunder; or                                                                  

(C)  the Bank becomes liable to make any payment on or calculated by  
reference to the amount of any sum received or receivable by it or owed to it   
under any of the Finance Documents (other than tax on its overall net income or 
profits),                                                                       

 then the Borrower shall from time to time promptly on demand pay to the
Bank amounts sufficient to indemnify the Bank against, as the case may be, any  
such cost, reduction, forgoing or liability provided always and it is hereby    
agreed that:-                                                                   

   (i)  the Bank shall promptly notify the Borrower of the happening of such
event giving reasonable details of how such cost, reduction or liability has    
been calculated and attributed to the Loan Facility or the Overdraft Facility;  
and                                                                             

  (ii) at any time after receipt of notice under paragraph (i) and so long
as the circumstances giving rise to such cost, reduction, forgoing or           
liability continue, the Borrower may on giving the Bank not less than five      
Business Days' irrevocable notice, cancel the Bank's obligation to make or, as  
the case may be, to maintain the Loan and repay the whole (but not part only)   
of the Loan together with all interest and other sums payable by the Borrowers  
to the Bank pursuant to any of the Finance Documents but excluding, for the     
avoidance of doubt, the Prepayment Fee.                                         

14.2 In the event that by reason of any change in applicable law, regulation    
or regulatory requirement or in the interpretation or application thereof       
after the date hereof the Bank shall be of the opinion that it has become       
unlawful, illegal or otherwise prohibited for the Bank to maintain or give      
effect to all or any of its obligations as contemplated by any of the Finance   
Documents, the Bank shall give notice to the Borrower to that effect and        
thereupon, the liability of the Bank to make or, as the case may be, to         
maintain the Loan shall cease and the Borrower shall repay to the Bank on or    
before the latest day (being, if possible, the last day of any Interest Period) 
permitted by such law, regulation or regulatory requirement the whole of the    
Loan, together with all interest and other sums payable by the Borrower to the  
Bank pursuant to any of the Finance Documents but                               

15.  PAYMENTS                                                                   

15.1 For the purposes of this Agreement, any payment to be made by the          
Borrower shall be made in Sterling in cleared immediately available funds not   
later than 11.00 a.m. on the due date to the account of the Borrower at First   
Fidelity Bank N.A., London Branch (or to any other account at such bank and     
place which the Bank may from time to time specify).                            

15.2 All sums received by the Bank under any of the Finance Documents, whether  
in respect of principal, interest, fees, costs or otherwise, shall be received  
in full without any set-off or counter-claim by the Borrower free and clear of  
and without any deduction or withholding for or on account of any present or    
future income or other taxes, levies, imposts, duties, charges or withholdings  
of any nature whatsoever. In the event that any such deduction or withholding   
from any payment for the account of the Bank under any of the Finance Documents 
shall be required or in the event that any payment on or in relation to any     
amount received by the Bank on account of tax or otherwise shall be required to 
be made, in each case under any present or future law, directive, regulation    
or practice, then the Borrower shall forthwith pay to the Bank such additional  
amounts as will result (after the making of such deduction, withholding or      
payment) in the receipt and retention by the Bank of the same amount which      
would otherwise have been received and retained by it pursuant to such Finance  
Document had no such deduction, withholding or payment been made.               

15.3 If any sum becomes due for payment pursuant to any Finance Document on a   
day which is not a Business Day, such payment shall be made on the next         
succeeding Business Day unless such Business Day falls in a new calendar month  
in which event such payment shall be made on the immediately preceding Business 
Day and the amount of any interest or other fee shall, if not already taken     
into account, be adjusted accordingly.                                          

15.4 In the case of a partial payment under any Finance Document, the Bank may  
appropriate such amount in satisfaction of the obligations of the Borrower in   
such order as it shall in its absolute discretion think fit and any such        
appropriation shall override any appropriation made by the Borrower or any      
guarantor.                                                                      

15.5 If the Borrower or any Guarantor pays any increased amount under Clause    
15.2 and the Bank actually receives or is granted a credit against or           
remission for any income or corporation tax payable by it, the Bank shall, to   
the extent that it can do so without prejudice to the retention of the full     
amount of such credit or remission, reimburse to the Borrower or Guarantor (as  
applicable) such amount of such credit or remission as the Bank shall in its    
sole opinion have concluded to be applicable to such deduction or withholding.  
Nothing herein contained shall affect the right of the Bank to arrange its tax  
affairs as it thinks fit and in particular, the Bank shall be under no          
obligation to claim relief from any tax on its corporate profits or similar tax 
liability in respect of the imposition of such tax and, if the Bank does claim  
any such relief, it shall be under no obligation to claim the same in priority  
to any other claims, reliefs, credits or deductions available to it and shall   
not in any event be obliged to disclose any matter relating to its tax affairs  
or computations to any person.                                                  

15.6 The Bank warrants to the Borrower that it is a person recognised by the    
Inland Revenue as carrying on through its London Branch a bona fide banking     
business in the United Kingdom for the purpose of S.349(3) of the Income and    
Corporation Taxes Act 1985 and which brings any interest payable under this     
Agreement into account as a trading receipt of that business.                   

15.7 If, otherwise than as a result of the introduction of or any change in     
the interpretation or application of any law or regulation or practice of the   
Inland Revenue after the date of this Agreement, the Bank is not or ceases to   
be a person as specified in Clause 15.6, the Borrower shall not be liable to    
pay to or for the account of, the Bank any increased sum under Clause 15.2.     

15.8 The provisions of Clause 15.5 shall apply to the payment of interest       
pursuant to the Overdraft Facility and/or any of the Security Documents.        

16.  PAYMENT AND CURRENCY INDEMNITIES                                           

16.1 The Borrower shall on demand by the Bank indemnify the Bank for all        
amounts as the Bank may certify to be necessary to compensate it for all        
costs, expenses, liabilities and losses sustained or incurred by it as a result 
of (I) any default in payment by any of the Borrower of any sum under any of    
the Finance Documents when due, (2) any failure (by reason of any breach or     
default of any of the Borrower) to borrow in accordance with Clause 5, (3) the  
happening of any Event of Default and/or (4) any repayment or prepayment        
of the Loan or any part thereof otherwise than on the Final Repayment Date (if  
the fixed rate option has been chosen in the Notice of Drawing or any Notice of 
Fixed Interest Rate Selection), or on an Interest Payment Date (if the variable 
rate option has been chosen in the Notice of Drawing) relative thereto,         
(including in each case but not limited to any losses or expenses sustained or  
incurred in liquidating or re-deploying deposits from third parties acquired to 
effect or maintain any amounts paid or carried by the Bank, loss of interest    
and/or loss of Margin). The certificate of the Bank as to the aforesaid amounts 
shall, save for any manifest error, be conclusive.                              

16.2 Any payment or payments made to the Bank in a currency (the currency in    
which the relevant payment is being made is hereinafter referred to as the      
"Relevant Currency") other than the currency in which it is expressed to be due 
hereunder (the "Due Currency") shall only constitute a discharge to the         
Borrower to the extent of the Due Currency amount which the Bank is able, on    
the date or dates of receipt by the Bank of such payment or payments in the     
Relevant Currency (or, in the case of any such date which is not a Business     
Day, on the next succeeding Business Day) to purchase with the amounts so       
received by the Bank on such date or dates. If the amount of Due Currency which 
the Bank is so able to purchase falls short of the Due Currency amount          
originally due to the Bank under this Agreement the Borrower shall immediately  
reimburse the Bank in the Due Currency any such shortfall and shall indemnify   
the Bank against any direct loss or damage arising as a result of a failure to  
make such reimbursement. This indemnity shall constitute a separate and         
independent obligation from the other obligations contained in this Agreement.  

16.3 If the Borrower is or becomes bound to pay any increased amount under      
clause 15.2 or to make any payment under Clause 14.1 for the account of the     
Bank then, so long as such obligation continues, it shall be entitled at any    
time on giving to the Bank not less than 7 days' notice (which shall be         
irrevocable) to prepay the whole (but not part only) of the Loan together with  
accrued interest and any other amount payable under this Agreement but subject  
always to Clauses 16.1 and 16.2.                                                

17.  SET-OFF                                                                    

The Borrower hereby authorises the Bank to apply any credit balance   
(whether matured or unmatured) to which it is entitled on any of its accounts   
with the Bank, including without limitation the Accounts, in or towards         
satisfaction of any sum due to the Bank by the Borrower under any of the        
Finance Documents. For this purpose, the Bank is hereby authorised in the name  
of the Borrower to do all acts (including breaking time deposits) and to sign   
all documents as may be required to effect such application. The Bank shall not 
be obliged to exercise any right conferred or acknowledged by this Clause 17    
and nothing expressed or implied in any of the Finance Documents shall in any   
way affect any rights which the Bank may have under applicable law.             

18.  ACCOUNTS                                                                   

The Bank shall open and maintain on its books in accordance with its  
normal practice a loan account evidencing the amounts from time to time         
advanced by and owing to it hereunder which loan account shall be prima facie   
evidence of such amounts.                                                       

19.  WAIVERS                                                                    

No delay or omission of the Bank in exercising any right, power or    
privilege under any of the Finance Documents shall operate to impair such       
right, power or privilege or be construed as a waiver thereof and any single or 
partial exercise of any such right, power or privilege shall not preclude any   
other or future exercise thereof or the exercise of any other right, power or   
privilege. The rights and remedies provided under any of the Finance            
Documents are cumulative and not exclusive of any rights or remedies provided   
by law.                                                                         

20.  ASSIGNMENT                                                                 

20.1 This Agreement shall be binding upon and enure for the benefit of the      
Borrower, the Bank and their respective successors.                             

20.2 The Borrower shall not assign or transfer any of its rights and/or         
obligations under any of the Finance Documents.                                 

20.3 The Bank at any time may transfer all or any part of its rights, benefits  
and obligations under the Finance Documents by assigning to any one or more     
other banks (each of which is hereinafter in this Clause 20 called an "Assignee 
Bank") all or any part of the Bank's rights and benefits thereunder provided    
that (I) such Assignee Bank shall agree to perform that percentage of the       
Bank's obligations hereunder as corresponds to that percentage of the Bank's    
rights and benefits so assigned to the Assignee Bank and (2) such Assignee Bank 
shall, by delivery of such undertaking or agreement as the Bank may approve,    
have become bound by the terms of the Finance Documents, and in such            
circumstances the Bank may, if it so determines, act as agent for itself and    
the Assignee Bank for the purposes of the Finance Documents subject to receipt  
of appropriate indemnities and the Bank entering into such appropriate          
documentation with the Assignee Bank and the Borrower as the Bank may require.  
Notice of any such transfer shall promptly be given to the Borrower and the     
Borrower shall execute such documents as the Bank shall require in order        
to give effect to any such transfer. For this purpose and for the purpose of    
entering into any contractual arrangements with any person in relation to the   
matters contemplated by this Agreement the Bank may disclose to a potential     
Assignee Bank or any such person such information about the Borrower and its    
assets and condition as the Borrower shall have made available to the Bank      
hereunder or as shall be known to the Bank otherwise howsoever. The Bank shall  
consult with the Borrower prior to any such transfer.                           

20.4 If the Bank transfers its right, benefits and obligations under the        
Finance Documents as provided in Clause 20.3, all references in the Finance     
Documents to the Bank shall thereafter be construed as references to the Bank   
and its Assignee Bank(s) to the extent of their respective participations, if   
any, and the Borrower shall thereafter look only to the Assignee Bank(s) (to    
the exclusion of the Bank) in respect of that proportion of the Bank's          
obligations thereunder as corresponds to such Assignee Bank's respective        
participation therein and accordingly such Bank's maximum liability hereunder   
shall be appropriately reduced and the Assignee Bank shall proportionately      
assume a maximum liability equivalent to such reduction in such Bank's maximum  
liability.                                                                      

21.  NOTICES                                                                    

21.1 Save as otherwise provided herein, each notice, request, demand or other   
communication to be given or made under this Agreement shall be given in        
writing delivered personally or by letter by first class mail, or facsimile to  
the address or facsimile number of the addressee set out below:-                

 (1)  in the case of the Bank, if by facsimile to it at 0171929 4644 and
if delivered personally or by letter to it at London Branch, 1 Bishopsgate,     
London, EC2N 3AB, in each case marked for the attention of Ian G. Morrison,     
Vice President;                                                                 

 (2)  in the case of the Borrower, if by facsimile to it at 01207 590254
and if delivered personally or by letter to it at Number One, Industrial        
Estate, Unit 36, Medomsley Road, Consett, County Durham, DH8 6TS,               

       or at any other numbers or addresses or marked for the attention of
such other person as the parties hereto may from time to time notify to each    
other.                                                                          

21.2 Any notice, request, demand or other communication to be given or made     
under this Agreement shall be deemed to have been delivered, in the case of     
any notice, request, demand or other communication given or made by personal    
delivery or facsimile, on despatch to the correct facsimile number or delivery  
to the correct address unless delivered outside normal business hours when it   
shall be deemed to be delivered on the next Business Day and, in the case of    
any notice, request, demand or other communication given or made by letter, two 
Business Days after being posted by first class mail, provided that any notice, 
request, demand or other communication to be made or delivered by the           
Borrower to the Bank shall only be effective when received by the Bank.         

22.  PARTIAL INVALIDITY                                                         

22.1 In the case that one or more of the provisions contained in this           
Agreement should prove to be invalid, illegal or unenforceable in any respect,  
the validity, legality and enforceability of the remaining provisions hereof    
shall not in any way be affected or impaired thereby.                           

23.  GOVERNING LAW                                                              

23.1 The law of England and Wales is the law applicable to this Agreement.      

Please confirm your agreement to and acceptance of the terms and conditions     
set out above on the attached copy of this letter. The offer of the Facilities  
shall lapse and shall be deemed to have been withdrawn if the Borrower does not 
agree and accept the terms hereof within 5 Business Days of the date of this    
Agreement.                                                                      

Yours faithfully                                                                
/s/                                                                             
duly authorised for n behalf of                                                 
FIRST FIDELITY BANK N.A.                                                        

We hereby acknowledge our agreement to and acceptance of the terms and          
conditions set out in the letter of which the above is a true copy.             
/s/                                                                             
duly authorised for and on behalf of                                            
MULTI-ARC (U.K.) LIMITED                                                        

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SCHEDULE                
Notice of Drawdown                
[On the headed notepaper of Multi-Arc (U.K.) Limited]                 

To:  First Fidelity Bank N.A.                                                   

Dear Sirs,                                                                      

1.   We refer to the facility agreement (as from time to time amended, varied,  
novated or supplemented) (the "Facility Agreement") dated        1995 and made  
between Multi-Arc (U.K.) Limited as Borrower and First Fidelity Bank N.A. as    
Bank. Terms used herein shall have the meanings ascribed to them in the         
Facility Agreement unless the context otherwise requires.                       

2.   We hereby give you notice that, pursuant to the Facility Agreement and on  
[date of proposed Advance], we wish to borrow the amount of [      ] pounds     
([     ]) upon the terms and subject to the conditions contained therein.       

3.   Of the amount referred to in paragraph 2 above [Pounds Sterling       ] is 
to be used to [specify each purpose] and we attach [specify evidence to be      
attached] as evidence that such amount is to be used for each one of the        
purposes set out in  Clause 2 of the Facility Agreement.                        

4.   The amount referred to in paragraph 2 should be credited to the account    
of [specify account(s) into which such amount is to be transferred] for value   
on [date of proposed drawdown].                                                 

5.   We hereby elect for [the fixed interest rate option/the variable interest  
rate option] referred to in the Facility Agreement.                             

6.   We confirm that, at the date hereof, the representations and warranties    
set out in Clause 10 of the Facility Agreement are true and no Event of         
Default has occurred.                                                           

Yours sincerely                                                                 

/s/                                                                             
for and on behalf of                                                            
Multi-Arc (U.K.) Limited                                                        

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EXHIBIT 10(t)                                                                   
OVERDRAFT FACILITY                                                              

FIRST FIDELITY BANK                                                             

FIRST FIDELITY BANK N.A                 

To   FIRST FIDELITY BANK N.A.                                                   
London Branch                                                         
1 Bishopsgate                                                         
London EC2N 3AB                                                       
(hereinafter referred to as "the Bank")                               

WE   MULTI-ARC (U.K.) LIMITED                                                   

of Number One Industrial Estate, Unit 36, Medomsley Road, Consett, County       
Durham DH8 6TS.                                                                 

(hereinafter called "we") in consideration of your from time to time granting   
or continuing to make available credit or other banking facilities and          
accommodation to us ("the Facility") hereby undertake and agree with you as     
follows:                                                                        

Unless otherwise agreed in writing between us in respect of any other specific  
facility:-                                                                      

1.   In respect of any overdraft or part thereof made available pursuant to     
the Facility, you shall be entitled in your sole discretion to call in amounts  
outstanding under the Facility and/or to cancel the Facility (or any part       
thereof) and/or to issue legal proceedings in respect of the Facility without   
first having made demand on us.                                                 

2.   You shall be entitled to your sole discretion and as conclusively          
determined by you at any time from time to time increase or decrease the        
Facility limit (including multiple currency facility limits).                   

3.   We will pay to you interest on the amount from time to time outstanding    
under the Facility for the relevant interest period as determined by you at     
the rate determined by you being the aggregate of:                              

(a)  either    (i)  A margin of 1 5% per annum above the rate (as     
conclusively determined by you in accordance with your normal procedures) at    
which the Bank is offered deposits in currency of the Facility at or about      
11:00 a.m. London time on the relevant dealing day on or before the             
commencement of the relevant interest period (as determined by you by banks in  
the London interbank market for deposits in tho currency of the Facility of     
similar amount and for a similar interest period as that of the Facility; or    
at your option; or                                                              

 (ii) the base rate of the Bank from time to time as
conclusively certified by you "Base Rate") plus a margin of 1.5% per annum;     

AND                                                                             

(b)  the rate reflecting the cost to you (as determined by you) of    
complying with the existing requirements of the Bank of England or other        
regulatory authority affecting mandatory liquid assets, special deposits,       
reserve, capital adequacy or other requirements of whatever nature and          
attributable to the Facility (rounded up, if necessary, to four decimal         
places) including any reduction in the rate of return on your capital           
resources. A certificate by you as to the amount of such cost shall be          
conclusive in the absence of manifest error.                                    

  All interest payable shall accrue from day to day and shall be
calculated on the basis of a 360 day year (save in the case of pounds sterling  
a 365 day year) for the actual number of days elapsed and shall be paid in the  
currency of the Facility.  Interest shall be due and payable and debited to     
our account on a monthly basis.                                                 

4.   We will pay to you interest on any amount due hereunder which is not paid  
on the due date for payment therefore for the period from such due date up to   
tho date of actual receipt by you (as well after judgment as before) on demand  
at the rate of 2% per annum above the aggregate interest rate and cost to you   
referred to in Clause 3 above (as conclusively determined by you) for such      
periods as you may select. Upon expiry of each such period such rate shall be   
recalculated on the same basis save that unpaid interest accrued during the     
previous periods shall be added to the amount in respect of which we are in     
default.                                                                        

5.   We agree to indemnify you upon demand for all costs, charges and expenses  
(including legal fees) incurred by you in connection with the drafting,         
preparation negotiation and execution of this Agreement and any documents       
relative thereto and of any amendment, variation or extension thereof or the    
granting of any waiver or consent under this Agreement and the presentation     
and enforcement or attempted enforcement of your rights and powers under this   
Agreement.                                                                      

6.   The terms and conditions of this Agreement are in addition to and not in   
substitution for any other agreements between us and you.                       

7.   All sums payable by us hereunder shall be paid in the currency of the      
Facility or such other currency as you may from time to time direct in          
immediately available funds to the account maintained in respect of the         
Facility or such other account at such ;bank as you may from time to time       
specify and without any set-off or counterclaim whatsoever and, save as         
required by law, without any deduction or withholding for or on account of any  
present or future taxes, levies, imposts, duties, charges or withholdings of    
any nature whatsoever. We shall pay all present or future taxes or similar      
charges due with respect to such payments which may be imposed by any           
competent fiscal authority, except taxes on your overall income. If any such    
deduction or withholding has to be made by law from any such payment we will    
pay to you an increased amount so that after any deduction or withholding you   
receive and retain a net amount equal to the amount which you would have        
received and retained had no such deduction or withholding been made.           

8.   We hereby irrevocably authorise you (but without obligation on your part)  
in the event of non-payment of any amounts when due hereunder at any time       
without demand and without further notice to set off any credit balance in any  
currency standing upon any of our account with you or at any of your branches   
or any of your subsidiary, holding or associated companies or any of the        
subsidiaries of First Fidelity Bancorporation in or towards payment of any      
amount due to you hereunder and in our name to do all such acts and to sign     
all such documents as may be required to effect such application. Where such    
set-off requires the conversion of one currency into another, such conversion   
shall be calculated at the spot rate as conclusively determined by you for      
purchasing one currency with the other.                                         

9.   Statements of account shall be issued on written application or by         
arrangement with the Bank. Failure by us to object to a statement of account    
within thirty days after receipt thereof shall be deemed approval of all        
entries contained therein and in the absence of any such objections the         
statement of account shall be final and binding on us.                          

10.  The certificate signed by one of your duly authorised officers as to any   
of the matters referred to in this Agreement including the balance of an        
account or the amount owing by us to you shall save for manifest error, be      
conclusive and binding on us.                                                   

11.  We hereby irrevocably appoint the following as our agent to accept         
service of all legal process issued out of the High Court of Justice in London  
in any local action or proceedings against us/our assets arising out of or in   
connection with any transaction or dealing between us and you:                  

Name:                                                                 
Address:                                                              
Telex:  Fax:                                                          
("the Service Agent")                                                 

  We agree that any notice demand or other legal communication to be given
hereunder and any legal process shall be sufficiently served if delivered to    
the Service Agent at its address stated in this Agreement or such other         
address in England as we may have notified to you for such purpose.             

This Agreement is to be governed by and construed in accordance with the laws   
of England and we hereby submit to the non-exclusive jurisdiction of the        
English courts.                                                                 

EXECUTION by Company                                                            
EXECUTED as a deed and delivered by                                             
the Customer pursuant to a resolution                                           
of its board of directors duly passed                                           
dated                                                                           
by                                                                              
                      Director /s/ John Alan Stevenson
                             John Alan Stevenson
 Director or
                        Secretary /s/ Walter N. Kreil, Jr.
                              Walter N. Kreil, Jr.

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EXHIBIT 10(u)                                                                   
UBC VIRGINIA CORPORATION                
c/o Andal Corp.                 
909 Third Avenue                
New York, New York   10022                

      October 13, 1995

CERTIFIED MAIL -                                                                
RETURN RECEIPT REQUESTED                                                        

Schnurmacher Corp.                                                              
1114 First Avenue                                                               
New York, New York   10021                                                      
Attn:  Ira J. Weinstein                                                         

Notice of Exercise of Option            
Pursuant to Section 1.3 of              
Option Agreement dated as of            
August 1, 1982 covering                 
1110 First Avenue, New York,            
New York (the "Option Agreement")       

Gentlemen:                                                                      

   The undersigned is the optionee under the Option Agreement.  We
are in receipt of your letter dated September 22, 1995 advising of the death    
of Irwin Schnurmacher, the later to die of Adolph and Irwin Schnurmacher.       

     This letter constitutes notice to you of our election to exercise
the option to purchase 1110 First Avenue, New York, New York (the "Premises")   
pursuant to Section 1.3 of the Option Agreement and, in furtherance thereof,    
enclosed is our good certified check payable to your order in the amount of     
$10,000, representing the "Option Exercise Payment" required to be remitted to  
you together with this letter pursuant to the terms of the Option Agreement.    

 We understand from your letter that you would prefer to close
title to the Premises during the month of February, 1996.  We are agreeable     
and would propose February 27, 1996 at a time and place to be agreed on.        

     Since the closing will occur more than thirty (30) days after the
date of this letter (as now required by the Option Agreement), we would         
appreciate it if you would agree to waive such thirty (30) day provision by     
signing a copy of this letter.                                                  

 We also want to advise you of the possibility that the Option
Agreement and Lease may be assigned before the closing to Messrs. Paul          
Milstein and Alan Cohen and Frankhill Associates, a limited partnership, in     
which case the assignees will assume all of our obligations under the Lease     
and Option Agreement and Contract of Sale annexed thereto.  In that event, we   
will give notice of such assignment to you not later than thirty (30) days      
prior to February 27, 1996, together with executed counterparts of the          
Transferee and Transferor Questionnaires required for filing with the           
Department of Taxation and Finance in furtherance of the New York State Real    
Property Transfer Gains Tax.                                                    

   If the foregoing is satisfactory, please execute a copy of this
letter to evidence (a) your acknowledgment that the option has been duly        
exercised by the undersigned, (b) your agreement to the waiver of the thirty    
(30) day provision of the Option Agreement and the Contract of Sale, and (c)    
your agreement that in the event of assignment of the Lease and Option          
Agreement to Messrs. Milstein and Cohen and Frankhill Associates, and their     
assumption of the obligations thereunder, the assignees may properly            
consummate the closing under the Option Agreement.                              

Very truly yours,   

    UBC VIRGINIA CORPORATION

      By:  /s/  Michael S. Huber
             Name:  Michael S. Huber
                   Title:  Senior Vice President

Accepted and agreed to this                                                     
25 day of October, 1995.                                                        

SCHNURMACHER CORP.                                                              

By:  /s/  Ira J. Weinstein                                                      
Name:  Ira J. Weinstein                                               
Title:  President                                                     

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UBC VIRGINIA CORPORATION              
c/o Andal Corp.                 
909 Third Avenue                
New York, New York   10022                

      October 23, 1995

CERTIFIED MAIL -                                                                
RETURN RECEIPT REQUESTED                                                        

Schnurmacher Corp.                                                              
1114 First Avenue                                                               
New York, New York   10021                                                      
Attn:  Ira J. Weinstein                                                         

Gentlemen:                                                                      

   By letter dated October 13, 1995 (the "Letter of Exercise") the
undersigned exercised an option to purchase 1110 First Avenue, New York, New    
York, pursuant to Section 1.3 of that certain Option Agreement dated as of      
August 1, 1982 between Schnurmacher Corp., as Optionor, and National Kinney     
Corp., as Optionee.  Capitalized terms used but not otherwise defined herein    
shall have the respective meanings ascribed thereto in the Letter of Exercise.  

 In the Letter of Exercise, the undersigned advised you of the
possibility that the Option Agreement and Lease may be assigned before the      
closing to Messrs. Paul Milstein and Alan Cohen and Frankhill Associates, a     
limited partnership (collectively, the "Permitted Assignees"), and requested    
your agreement that the Permitted Assignees may properly consummate the         
closing under the Option Agreement and/or the Contract of Sale annexed          
thereto.                                                                        

   We understand that you have consented to such assignment and to
the closing of such acquisition by the Permitted Assignees, conditioned upon    
our agreement to assume all liability under the New York State Real Property    
Transfer Gains Tax (the "Gains Tax") which Schnurmacher Corp. may suffer or     
incur on the sale of the Premises pursuant to the Option Agreement and/or the   
Contract of Sale annexed thereto solely by reason of such assignment, and/or    
by reason of the assignment of the Option Agreement to the undersigned by       
National Kinney Corp., including, without limitation, all Gains Tax due on any  
consideration which may be paid to the undersigned by the Permitted Assignees   
for and/or on account of such assignment.                                       

  This letter will serve to evidence our agreement to assume all
such Gains Tax liability.                                                       

   Please evidence your acceptance of the foregoing by executing a
copy of this letter where indicated below and return the same to the            
undersigned by hand-delivery.                                                   

Thank you for your consideration.                           

       Very truly yours,

              UBC VIRGINIA CORPORATION

                By:  /s/  Michael S. Huber
                       Name:  Michael S. Huber
                             Title:  Senior Vice President

Accepted and agreed to this                                                     
25 day of October, 1995.                                                        

SCHNURMACHER CORP.                                                              

By:  /s/  Ira J. Weinstein                                                      
Name:  Ira J. Weinstein                                               
Title:  President                                                     

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EXHIBIT 22                                                                      

SUBSIDIARIES OF THE COMPANY                 

                    State or Other
                     Jurisdiction of
                      Incorporation or
Name                                  Organization                    

Andal Corp. (parent)                          New York                          
Cathedral Equity Corp.                      Delaware                        
Circle Acoustics Corp.                      New York                        
National States Electric Corp.           Delaware                     
Wadif Corp.                              New York                     
Salem Liquidating Corp.                     Delaware                        
Uris Mechanical Maintenance, Inc.           New York                        
UBC Westfair Corporation                    New York                        
UBC Virginia Corporation                    New York                        
Multi-Arc Inc.                              Delaware                        
Multi-Arc Scientific Coatings, Inc.      New Jersey                   
Multi-Arc, Inc.                          Minnesota                    
Multi-Arc India Limited                  India                        
Multi-Arc (U. K.) Ltd.                   United Kingdom               
Multi-Arc Management Corp.               New Jersey                   
Multi-Arc Scientific                                                  
Coatings(S)Pte Ltd.                    Singapore                  
Vagle Technology, Inc.                   Michigan                     
SCI Coatings Southwest, Inc.           Texas                      
Scientific Coatings, Inc.              Michigan                   
Multi-Arc Inc.                         Canada                     
Scientific Coatings of                                            
Illinois, Inc.                      Michigan                

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EXHIBIT 24(a)                                                                   
Kelly Graham Myska & Partners                                                   
Chartered Accountants                                                           

We consent to the use of our reports on the statement of earnings, financial    
position and changes in cash position for the fiscal year ended September 30,   
1995 of Multi-Arc Inc. included in the Annual Report of Form 10-K of Andal      
Corporation and the Registration Statement S-8 of Andal Corporation which       
incorporates such Annual Report by reference.                                   

Cambridge, Ontario                                                              
November 3, 1995                                                                
/s/ Kelly Graham Myska & Partners                                               
Chartered Accountants                                                           

211 Water Street North, P.O. Box 880, Cambridge, Ontario N1R 5X9                
Telephone (519)623-1870  FAX (519) 623-9490                                     

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Kelly Graham Myska & Partners                                                   
Chartered Accountants                                                           

AUDITORS' REPORT                

TO   THE SHAREHOLDER OF                                                         
MULTI-ARC INC.                                                        

WE HAVE AUDITED THE FINANCIAL POSITION OF MULTI-ARC INC. AS AT                  
SEPTEMBER                                                                       
30, 1995 AND THE STATEMENTS OF OPERATIONS, RETAINED EARNINGS AND                
CHANGES IN CASH POSITION FOR THE YEAR THEN ENDED. 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 AUDIT.                                                             

WE CONDUCTED OUR AUDIT IN ACCORDANCE WITH GENERALLY ACCEPTED                    
AUDITING STANDARDS.  THOSE STANDARDS REQUIRE THAT WE PLAN AND                   
PERFORM AN AUDIT TO OBTAIN REASONABLE ASSURANCE 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.                                                         

IN OUR OPINION, THESE FINANCIAL STATEMENTS PRESENT FAIRLY, IN ALL               
MATERIAL RESPECTS, THE FINANCIAL POSITION OF THE COMPANY AS AT                  
SEPTEMBER 30, 1995 AND THE RESULTS OF ITS OPERATIONS AND THE CHANGES            
IN                                                                              
ITS CASH POSITION FOR THE YEAR THEN ENDED IN ACCORDANCE WITH                    
GENERALLY                                                                       
CCEPTED ACCOUNTING PRINCIPLES.                                                  

CAMBRIDGE, ONTARIO                                                              
/s/KELLY GRAHAM MYSKA & PARTNERS                                                
NOVEMBER 2, 1995                                                                
CHARTERED ACCOUNTANTS                                                           

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EXHIBIT 24(b)                                                                   
KPMG                                                                            
Maybrook House        Tel +44 (0)191 232 8815                                   
27 Grainger Street    Fax +44 (0)191 232 3391                                   
Newcastle upon Tyne                                                             
NEl 5JT                                                                         

Private & confidential                                                          

WN Kreil Esq                                                                    
Mlllti-Arc Scientific Coatings                                                  
200 Roundhill Drive                                                             
Rockaway                                                                        
NJ 07866                                                                        
United States of America                                                        

14 December 1995                                                                

Dear Sir                                                                        

Multi-Arc (UK) Limited                                                          

Our ref pbm/32 1                                                                

Contact Paul Moran                                                              
Tel 0191 2328815                                                                

On 14 December 1994 we gave our consent to the use of our audit reports for     
the purposes of the 1994 filing requirements of Andal. These audit reports      
were issued on the financial statements of Multi-Arc (UK) Limited for the year  
ended 30 September 1994 and were contained in our letter of 14 December 1994.   
We hereby confirm that we consent to the use of these reports for the purposes  
of the 1995 filing requirements of Andal.                                       

Yours faithfully                                                                
/s/KPMG                                                                         
KPMG                                                                            

KPMG is registered         by the Institute of     business is 8 Salisbury      
to carry on audit work and Chartered Accountants inSquare, London EC4Y 8BB      
authorized to carry on     England and Wales. The  where a list of partners'    
investment business        principal place of      names is open to             
                                 inspection.

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EXHIBIT 24(c)                                                                   
BDO Seidman, LLP                                                                
Accountants and Consultants                                                     
330 Madison Avenue                                                              
New York, New York   10017                                                      
Telephone:  (212) 885-8000                                                      
Fax:  (212) 697-1299                                                            

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                 

Andal Corp.                                                                     
New York, New York                                                              

We hereby consent to the incorporation by reference in the Form 10K of Andal    
Corp. of our report dated March 26, 1993, expect to Note 1 which is as of       
April                                                                           
9, 1993, relating to the consolidated financial statements and schedules of     
Steve's Homemade Ice Cream, Inc. appearing in the Company's Annual Report on    
Form                                                                            
10-K for the year ended January 2, 1993.                                        

/s/  BDO Seidman, LLP                                                           
BDO Seidman, LLP                                                                

December 21, 1995                                                               

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/16/04		19		20
		12/15/04		2		19
		12/16/03		19
		12/16/02		19
		12/16/01		19
		12/16/00		19
		12/16/99		19
		9/30/99		5
		12/16/98		19
		12/16/97		19
		9/15/97		6		17
		3/31/97		2		15			10-Q
		1/1/97		5
		12/16/96		19
		10/1/96		19		22
		9/30/96		15		19			10-K,  NT 10-K
		2/27/96		2		26
Filed on:		1/16/96
		1/5/96		8		9
		12/29/95		1		3			NT 10-K
		12/21/95		32
		12/16/95		19
		11/30/95		5
		11/21/95		2		14
		11/15/95		9
		11/3/95		29
		11/2/95		30
		10/24/95		5		15
		10/23/95		27
		10/13/95		2		27
		10/5/95		2		14
For Period End:		9/30/95		1		30			NT 10-K
		9/22/95		2		26
		9/21/95		6
		9/15/95		18
		7/5/95		5		15
		6/30/95		2		14			10-Q
		6/15/95		6		22
		5/15/95		19		20
		4/15/95		20
		3/31/95		5		15			10-Q
		12/16/94		19		20
		10/1/94		20
		9/30/94		2		20
		8/16/94		6		17
		8/4/94		4		14
		10/1/93		15
		9/30/93		6		17
		6/23/93		4		14
		6/22/93		14
		6/15/93		6		17
		4/9/93		32
		3/31/93		5		15
		3/26/93		32
		1/2/93		32
		9/30/92		6		17
		6/5/92		6		17
		5/27/92		6		17
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