Autozone Inc – ‘8-K’ for 6/29/98 – EX-2.1

As of:  Thursday, 7/2/98   ·   For:  6/29/98   ·   Accession #:  1011908-98-3   ·   File #:  1-10714

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4     11K 
 2: EX-2.1      Agreement and Plan of Merger                          68±   290K 
 3: EX-99.1     Press Release                                          1      7K 

EX-2.1   —   Agreement and Plan of Merger
Exhibit Table of Contents

EX-2.1
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                                       EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER                

by and among                

AutoZone, Inc., a Nevada corporation,               

Chief Auto Parts Inc., a Delaware corporation,                

and               

Orange Sub, Inc., a Delaware corporation                

Dated as of: May 11, 1998               

EX-2.1
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TABLE OF CONTENTS               

                                              Page

ARTICLE I  DEFINITIONS                                          1               

1.1. DEFINED TERMS                                         1          

ARTICLE II.THE MERGER                                          12               

2.1   THE MERGER                                          12          
2.2. EFFECT OF THE MERGER.                                12          
2.3. DISSENTING SHARES                                    13          
2.4. PAYING AGENT AND SURRENDER OF SHARES                 13          
2.5. STOCKHOLDERS TO HAVE NO FURTHER RIGHTS               14          
2.6. COMPANY STOCK OPTIONS AND COMPANY WARRANTS           14          
2.7. STOCKHOLDERS MEETING OR STOCKHOLDERS CONSENT         15          
2.8. CLOSING OF THE COMPANY'S TRANSFER BOOKS              15          
2.9. CHARTER DOCUMENTS; DIRECTORS; OFFICERS               16          

ARTICLE III.  ESCROW AGREEMENT; NET WORTH ADJUSTMENT           16               

3.1. ESCROW AGREEMENT                                     16          
3.2. NET WORTH ADJUSTMENT                                 16          

ARTICLE IV.CLOSING                                             17               

4.1. CLOSING                                              17          
4.2. DELIVERIES AT CLOSING                                17          
4.3. CLOSING COSTS                                        18          

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY       18               

5.1. ORGANIZATION OF THE COMPANY                          18          
5.2. SUBSIDIARIES                                         18          
5.3. AUTHORIZATION                                        19          
5.4. ABSENCE OF CERTAIN CHANGES OR EVENTS                 19          
5.5. PERSONAL PROPERTY LEASES                             22          
5.6. FACILITIES:  OWNED AND LEASED                        22          
5.7. CONTRACTS AND COMMITMENTS                            23          
5.8. ABSENCE OF BREACHES AND DEFAULTS.                    25          
5.9. PERMITS, CONSENTS AND APPROVALS                      25          
5.10. NO CONFLICT OR VIOLATION                            25          
5.11. FINANCIAL STATEMENTS                                26          
5.12  LITIGATION                                          26          
5.13. LABOR MATTERS                                       26          
5.14. BOOKS AND RECORDS                                   27          
5.15. COMPLIANCE WITH LAW                                 27          
5.16. NO OTHER AGREEMENTS TO SELL ASSETS OR                           
CAPITAL STOCK OF THE COMPANY                     27 
5.17. PROPRIETARY RIGHTS                                  27          
5.18. EMPLOYEE BENEFIT PLANS                              28          
5.19. TAX MATTERS                                         30          
5.20. PURCHASE COMMITMENTS AND OUTSTANDING BIDS           32          
5.21. PAYMENTS                                            32          
5.22. COMPLIANCE WITH ENVIRONMENTAL LAWS                  32          
5.23. BANKING RELATIONSHIPS                               34          
5.24. SEC DOCUMENTS; UNDISCLOSED LIABILITIES              34          
5.25. MATERIAL MISSTATEMENTS OR OMISSIONS                 34          

ARTICLE VI.REPRESENTATIONS AND WARRANTIES OF THE PARENT AND                     
THE PURCHASER                                       34    

6.1. ORGANIZATION                                         34          
6.2. AUTHORIZATION                                        34          
6.3. CONSENTS AND FILINGS                                 35          
6.4. NO CONFLICT OR VIOLATION                             35          

ARTICLE VII.ADDITIONAL AGREEMENTS AND COVENANTS OF THE                          
COMPANY, THE PURCHASER AND THE PARENT                          35               

7.1. FURTHER ASSURANCES                                   35          
7.2. NO SOLICITATION                                      36          
7.3. NOTIFICATION OF CERTAIN MATTERS                      36          
7.4. ACCESS TO INFORMATION                                37          
7.5. CONDUCT OF BUSINESS                                  37          
7.6. BOOKS AND RECORDS; TAX MATTERS                       38          
7.7. FACILITY LEASES                                      39          
7.8. FIRST QUARTER 1998 FORM 10-Q                         39          

ARTICLE VIII.CONDITIONS TO THE OBLIGATIONS OF THE COMPANY,                      
THE PARENT AND THE PURCHASER                                   40               

8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE              
TRANSACTIONS                                         40     
8.2. CONDITIONS TO THE PARENT'S AND THE PURCHASER'S                   
OBLIGATIONS TO EFFECT THE TRANSACTIONS               40     
8.3. CONDITIONS TO THE COMPANY'S OBLIGATIONS TO EFFECT                
THE TRANSACTIONS                                     41     

ARTICLE IX.SURVIVAL OF REPRESENTATIONS AND WARRANTIES;                          
INDEMNIFICATIONS                                    42    

9.1. SURVIVAL OF REPRESENTATIONS, ETC.                    42          
9.2. INDEMNIFICATIONS                                     42          

ARTICLE X. MISCELLANEOUS                                       44               

10.1. TERMINATION                                         44          
10.2. ASSIGNMENT                                          45          
10.3. NOTICES                                             46          
10.4. ENTIRE AGREEMENT; AMENDMENTS;                                   
EXTENSIONS AND WAIVERS                            46  
10.5. MULTIPLE COUNTERPARTS                               47          
10.6. INVALIDITY                                          47          
10.7. TITLES                                              47          
10.8. PUBLICITY                                           47          
10.9. CONFIDENTIAL INFORMATION                            47          
10.10. CUMULATIVE REMEDIES                                48          
10.11. GOVERNING LAW; JURISDICTION                        49          

EX-2.1
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AGREEMENT AND PLAN OF MERGER                

AGREEMENT AND PLAN OF MERGER, dated as of this 11th day     
of May, 1998 (this "Agreement"), is by and among AutoZone, Inc.,                
a Nevada corporation (the "Parent"), Chief Auto Parts Inc., a                   
Delaware corporation (the "Company"), and Orange Sub, Inc., a                   
Delaware corporation (the "Purchaser").                                         

RECITALS                

A.   The respective Boards of Directors of the Parent, the  
Purchaser and the Company have approved the acquisition of the                  
Company pursuant to the terms of this Agreement.                                

     B.   In furtherance of such acquisition, the respective Boards of
Directors of the Parent, the Purchaser and the Company have                     
approved the merger of the Purchaser with and into the Company                  
(the "Merger"), in accordance with the General Corporation Law of               
the State of Delaware (the "Delaware Law"), pursuant to which the               
Company will be the surviving corporation in the Merger.                        

    C.   Pursuant to the Merger, each Share (as defined below) shall
be converted into the right to receive the Initial Merger                       
Consideration (as defined below), subject to possible adjustment                
as provided in Article III hereof.                                              

D.   The holders of a majority of the outstanding shares of 
common stock of the Company, $.01 par value ("Company Common                    
Stock"), have approved the Merger and have entered into a                       
Stockholders Agreement dated as of the date hereof (the                         
"Stockholders Agreement") whereby such holders have agreed to                   
vote all of the shares of Company Common Stock held by such                     
holders in favor of the Merger and the terms and provisions of                  
the Agreement (including without limitation Section 9.2 hereof)                 
and have agreed to execute the Escrow Agreement (as defined                     
below) on or prior to the Effective Date.                                       

AGREEMENT               

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

ARTICLE I.                
DEFINITIONS               
1.1. Defined Terms                                                    

.  As used herein, the terms below shall have the           
following meanings.  Any of such terms, unless the context                      
otherwise requires, may be used in the singular or plural,                      
depending upon the reference.                                                   

"1997 Indenture" shall mean the Indenture dated as of       
May 28, 1997 between the Company and First Trust National                       
Association, as trustee.                                                        

"Accounting Firm"  shall have the meaning set forth in      
Section 3.2 hereof.                                                   

"Action" shall mean any action, claim, suit,                
litigation, proceeding, labor dispute, arbitral action,                         
governmental audit, inquiry, criminal prosecution, investigation                
or unfair labor practice charge or filed complaint.                             

"Affiliate" shall have the meaning set forth in the         
Exchange Act.                                                                   

"Aggregate Escrow Amount" shall mean $6,000,000.            

"Agreement" shall mean this Agreement and Plan of           
Merger dated as of May 11, 1998 by and among the Parent, the                    
Company and the Purchaser.                                                      

"Assets" shall mean any right, title and interest of        
the Company in and to the business, properties, assets and rights               
of any kind, whether tangible or intangible, real or personal and               
constituting, or used or useful in connection with, or related                  
to, the Company or in which the Company has any interest,                       
including without limitation any right, title and interest of the               
Company in and to the following:                                                

(a)  all accounts and notes receivable (whether current     
or noncurrent), refunds, deposits, prepayments or prepaid                       
expenses (including without limitation any prepaid insurance                    
premiums) of the Company;                                                       

(b)  all Contract Rights, to the extent transferable;       

(c)  all Leases;                                            

(d)  all Leasehold Estates, to the extent transferable;     

(e)  all Leasehold Improvements;                            

(f)  all Fixtures and Equipment;                            

(g)  all Inventory;                                         

(h)  all Books and Records;                                 

(i)  all Proprietary Rights;                                

(j)  all Permits;                                           

(k)  all computers and software of the Company;             

(l)  all Insurance Policies;                                

(m)  all Real Property;                                     

(n)  all supplies, sales literature, promotional            
literature, customer, supplier and distributor lists, art work,                 
display units, telephone and fax numbers and purchasing records                 
of the Company;                                                                 

(o)  all rights under or pursuant to all warranties,        
representations and guarantees made by suppliers in connection                  
with the Assets or services furnished to the Company pertaining                 
to the Business or affecting the Assets, to the extent such                     
warranties, representations and guarantees are assignable;                      

(p)  all deposits and prepaid expenses of the Company;      

(q)  all claims, causes of action, choices in action,       
rights of recovery and rights of set-off of any kind of the                     
Company, against any person or entity, including without                        
limitation any liens, security interests, pledges or other rights               
to payment or to enforce payment in connection with products                    
delivered by the Company on or prior to the Effective Date;                     

(r)  all goodwill related to the Business; and              

(s)  cash.                                                  

"Benefit Arrangement" means any material benefit            
arrangement that is not an Employee Benefit Plan, including (i)                 
any employment or consulting agreement, (ii) any arrangement                    
providing for insurance coverage or/workers' compensation                       
benefits, (iii) any incentive bonus or deferred bonus                           
arrangement, (iv) any arrangement providing termination                         
allowance, severance, or similar benefits, (v) any equity                       
compensation plan, (vi) any deferred compensation plan and (vii)                
any compensation policy and practice.                                           

"Books and Records" shall mean (a) all records and          
lists of the Company pertaining to the Assets, (b) all records                  
and lists pertaining to the Business or customers, suppliers or                 
Personnel, and (c) all books, ledgers, files, reports, plans,                   
drawings and operating records of every kind maintained by the                  
Company.                                                                        

"Business" shall mean the Company's business of selling     
automotive parts, including new and remanufactured hard parts,                  
accessories and maintenance items.                                              

"Certificate of Merger" shall mean that certain             
Certificate of Merger dated as of the Effective Date relating to                
the Merger to be filed with the Secretary of State of the State                 
of Delaware on the Effective Date.                                              

"Certificates" shall have the meaning set forth in          
Section 2.4 hereof.                                                             

"CERCLA" shall mean the Comprehensive Environmental         
Response, Compensation and Liability Act (42 U.S.C.  9601 et                    
seq.).                                                                          

"Claim" shall have the meaning set forth in Section         
9.2(c) hereof.                                                                  

"Claim Expiration Date" shall have the meaning set          
forth in the Escrow Agreement.                                                  

"Claim Notice" shall have the meaning set forth in          
Section 9.2(c) hereof.                                                          

"Clause A Amount" shall have the meaning set forth in       
Section 2.2(a) hereof.                                                          

"Clause B Amount" shall have the meaning set forth in       
Section 2.2(a) hereof.                                                          

"Closing" shall mean the closing of the Transactions on     
and as of the Effective Date.                                                   

"Closing Balance Sheet" shall mean the unaudited            
balance sheet of the Company as of the close of business on the                 
Effective Date, prepared on a basis consistent with the Company's               
past practice in prior periods and in accordance with GAAP.                     

"Closing Balance Sheet Amount" shall mean Total Assets,     
as set forth on the Closing Balance Sheet, less Total                           
Liabilities, as set forth on the Closing Balance Sheet, excluding               
the impact (if any) on Total Assets or Total Liabilities from                   
(i) any exercise of any Company Stock Options and/or Company                    
Warrants listed on Schedule 5.1(b) and the collection of any                    
outstanding stockholder notes receivable listed on Schedule                     
5.1(c) (including any tax effect related thereto) and (ii) the                  
difference between (x) the amount of the accrual associated with                
the Deferred Compensation Plan for deferred compensation to be                  
paid to the employees set forth on Schedule 5.18(c) (which amount               
shall accrue at a rate of $98,000 per month) and (y) the amount                 
that the Company pays or is obligated to pay under the Deferred                 
Compensation Plan to such employees on the Effective Date (which                
amount shall not exceed $1.2 million in the aggregate).                         

"Code" shall mean the Internal Revenue Code of 1986, as     
amended, and the rules and regulations thereunder.                              

"Commission" shall mean the Securities and Exchange         
Commission.                                                                     

"Company" shall mean Chief Auto Parts Inc., a Delaware      
corporation.                                                                    

"Company Common Stock" shall have the meaning set forth     
in Recital D.                                                                   

"Company SEC Documents" shall have the meaning set          
forth in Section 5.24 hereof.                                                   

"Company Stock Options" shall mean the options to           
purchase Company Common Stock issued pursuant to the Company                    
Stock Option Plans.                                                             

"Company Stock Option Plans" shall mean the Company's       
1997 Employee Option Plan, as amended, and the Company's 1994                   
Executive Option Plan, as amended.                                              

"Company Warrants" shall mean the warrants for the          
purchase of Company Common Stock  issued on June 27, 1994.                      

"Confidential Information" shall have the meaning set       
forth in Section 10.9(b) hereof.                                                

"Constituent Corporations" shall have the meaning set       
forth in Section 2.1 hereof.                                                    

"Contract" shall mean any agreement, contract, note,        
loan, evidence of indebtedness, purchase, order, letter of                      
credit, indenture, security or pledge agreement, franchise                      
agreement, covenant not to compete, employment agreement,                       
license, instrument, obligation or commitment to which the                      
Company is a party or is bound or to which any of the Assets are                
subject, whether oral or written, express or implied, but                       
excluding all Leases.                                                           

"Contract Rights" shall mean all of the rights and          
obligations under the Contracts of the Company.                                 

"Copyrights" shall mean registered copyrights,              
copyright applications and unregistered copyrights.                             

"Court Order" shall mean any judgment, award, decision,     
consent decree, injunction, ruling, writ or order of any federal,               
state or local court or governmental agency, department or                      
authority that is binding on any person or its property under                   
applicable law.                                                                 

"Damages" shall have the meaning set forth in Section       
9.2(a)(iii) hereof.                                                             

"Default" shall mean (i) a breach of or default under       
any Contract or Lease, (ii) the occurrence of an event that with                
the passage of time or the giving of notice or both would                       
constitute a breach of or default under any Contract or Lease, or               
(iii) the occurrence of an event that with or without the passage               
of time or the giving of notice or both would give rise to a                    
right of termination, renegotiation or acceleration under any                   
Contract or Lease.                                                              

"Deferred Compensation Plan" shall mean the Company's       
1994 Executive Target Bonus Plan.                                               

"Delaware Law" shall have the meaning set forth in          
Recital B.                                                                      

"Dissenting Shares" shall mean Shares held by any           
Stockholder who becomes entitled to the payment of the fair value               
for his/her/its Shares under the Delaware Law if the Delaware Law               
provides for such payment in connection with the Merger.                        

"Effective Date" shall have the meaning set forth in        
Section 2.1 hereof.                                                             

"Employee Benefit Plan" means any employee benefit          
plan, as defined in Section 3(3) of ERISA.                                      

"Employee Plans" shall have the meaning set forth in        
Section 5.18(a) hereof.                                                         

"Encumbrance" shall mean any claim, lien, pledge,           
option, charge, easement, security interest, deed of trust,                     
mortgage, right-of-way, encroachment, building or use                           
restriction, conditional sales agreement, encumbrance or other                  
right of third parties, whether voluntarily incurred or arising                 
by operation of law, and includes, without limitation, any                      
agreement to give any of the foregoing in the future, and any                   
contingent sale or other title retention agreement or lease in                  
the nature thereof.                                                             

"Environmental Condition" shall mean the existence of,      
or introduction into the environment of, any Hazardous Substance                
under any Facility or any asset currently or previously owned,                  
leased or operated by the Company during the period the Company                 
owned, operated or leased such Facility or asset, which                         
constitutes a violation of Environmental Law as in effect on the                
date of this Agreement, regardless of when such event occurred,                 
as a result of which the Company has or may become liable to any                
Person or has or may become responsible for any environmental                   
remediation, or by reason of which any Facility or any asset                    
currently owned, leased or operated by the Company has or may                   
become subject to any Encumbrance under any Environmental Law.                  

"Environmental Laws" shall mean all Regulations which       
regulate or relate to the protection, clean-up and restoration of               
the environment; the use, treatment, storage, transportation,                   
generation, manufacture, processing, distribution, handling or                  
disposal of, or emission, discharge or other release or                         
threatened release of Hazardous Substances; the preservation or                 
protection of waterways, groundwater, drinking water, air,                      
wildlife, plants or other natural resources, or the health and                  
safety of persons or property;  and compensation for personal                   
injury, property damage or damages to natural resources resulting               
from a release or threatened release of Hazardous Substances.                   
Environmental Laws shall include RCRA, CERCLA, the Clean Water                  
Act, Safe Drinking Water Act, Atomic Energy Act, Toxic Substances               
Control Act, Clean Air Act, Oil Pollution Act of 1990, and the                  
Hazardous Materials Transportation Act, and all other analogous                 
or related Regulations, each as amended.                                        

"ERISA" shall mean the Employee Retirement Income           
Security Act of 1974, as amended.                                               

"ERISA Affiliate" shall have the meaning set forth in       
Section 5.18 hereof.                                                            

"Escrow Agreement" shall mean that certain Escrow           
Agreement dated as of the Effective Date by and among the                       
Company, the Purchaser, the Parent, the Majority Holders, the                   
Stockholders Representatives and the Escrow Agent, substantially                
in the form of Exhibit A attached hereto.                                       

"Escrow Account" shall mean the account maintained by       
the Escrow Agent for the deposit of funds described in Section                  
2.3 pursuant to the terms of the Escrow Agreement.                              

"Escrowed Funds" shall have the meaning ascribed to         
such term in the Escrow Agreement.                                              

"Exchange Act" shall mean the Securities Exchange Act       
of 1934, as amended, and the rules and regulations promulgated                  
thereunder.                                                                     

"Facilities" shall mean all of the plants, offices,         
manufacturing facilities, stores, warehouses, improvements,                     
administration buildings, and all real property and related                     
facilities of the Company as identified or listed on Schedule                   
5.6(a) or Schedule 5.6(b).                                                      

"Facility Leases" shall mean all of the leases of           
Facilities listed on Schedule 5.6(a).                                           

"Financial Statements" shall mean the Fiscal Year-End       
Financial Statements and the Interim Financial Statements.                      

"Fiscal Year-End Balance Sheet" shall mean each of the      
audited balance sheets of the Company dated December 28, 1997,                  
December 29, 1996 and December 31, 1995, together with notes                    
thereon, prepared in accordance with GAAP and previously                        
delivered to the Purchaser and the Parent and attached hereto as                
Schedule 1.1(a).                                                                

"Fiscal Year-End Financial Statements" shall mean the       
Fiscal Year-End Balance Sheets and the audited statements of                    
operations and income, changes in stockholders' equity and cash                 
flow of the Company for each of the periods ended December 28,                  
1997, December 29, 1996 and December 31, 1995, prepared in                      
accordance with GAAP and previously delivered to the Purchaser                  
and attached hereto as Schedule 1.1(a).                                         

"Fixtures and Equipment" shall mean all of the              
furniture, fixtures, furnishings, machinery, automobiles, trucks,               
spare parts, supplies, equipment, tooling, molds, patterns, dies                
and other tangible personal property owned by the Company,                      
wherever located and including any such Fixtures and Equipment in               
the possession of any supplier of the Company, including all                    
warranty rights with respect thereto.                                           

"Fully Diluted Number" means the sum of (i) the number      
of Shares, (ii) the number of shares of Company Common Stock                    
issuable upon the exercise of Outstanding Options and (iii) the                 
number of shares of Company Common Stock issuable upon the                      
exercise of Outstanding Warrants.                                               

"GAAP" shall mean generally accepted accounting             
principles in the United States of America, as in effect from                   
time to time, consistently applied.                                             

"Hazardous Substance" shall mean any quantity of            
asbestos in any form, urea formaldehyde, PCB's, radon gas, crude                
oil or any fraction thereof, all forms of natural gas, petroleum                
products or by-products, any radioactive substance, any toxic,                  
infectious, reactive, corrosive, ignitable or flammable chemical                
or chemical compound defined as a hazardous substance, material                 
or waste for purposes of any Environmental Law, whether solid,                  
liquid or gas.                                                                  

"Holder" means a Stockholder, a holder of record of         
Outstanding Options on the Effective Date or a holder of record                 
of Outstanding Warrants on the Effective Date.                                  

"HSR Act" shall mean the Hart-Scott-Rodino Antitrust        
Improvements Act of 1976, as amended, and the rules and                         
regulations promulgated thereunder.                                             

"Indemnity Basket" shall mean $1,000,000.                   

"Initial Merger Consideration" shall mean (A) the sum       
of (i) $66,819,250 plus (ii) the aggregate exercise or strike                   
price of all Outstanding Options and Outstanding Warrants plus                  
(iii) the aggregate cash proceeds received by the Company from                  
the date of this Agreement to (but not including) the Effective                 
Date upon the exercise of Company Stock Options and Company                     
Warrants plus (iv) the aggregate cash proceeds received by the                  
Company in respect of the principal or interest owing on the                    
promissory note(s) payable to the Company by the Promissory Note                
Stockholders from the date of this Agreement to and including the               
Effective Date divided by (B) the Fully Diluted Number, rounded                 
up to the nearest cent ($0.01).                                                 

"Insurance Policies" shall mean the insurance policies      
related to the Company or the Assets as listed on Schedule                      
5.7(a)(xiii).                                                                   

"Interim Balance Sheet" shall mean the unaudited            
balance sheet of the Company dated the Interim Balance Sheet                    
Date, together with notes thereon, prepared in accordance with                  
GAAP and previously delivered to the Purchaser and the Parent and               
attached hereto as Schedule 1.1(a).                                             

"Interim Balance Sheet Amount" shall mean Total Assets,     
as set forth on the Interim Balance Sheet, less Total                           
Liabilities, as set forth on the Interim Balance Sheet.                         

"Interim Balance Sheet Date" shall mean March 29, 1998.     

"Interim Financial Statements" shall mean the Interim       
Balance Sheet and the unaudited statements of operations and                    
income, changes in stockholders' equity and cash flow of the                    
Company for the thirteen weeks ended on the Interim Balance Sheet               
Date, prepared in accordance with GAAP and previously delivered                 
to the Purchaser and attached hereto as Schedule 1.1(a).                        

"Inventory" shall mean (a) all of the inventories of        
the Company within the Facilities of the Company held for resale                
in the ordinary course of the Business to the customers of the                  
Company, (b) all office supplies and similar materials of the                   
Company located in the Facilities of the Company, and (c) all of                
the raw materials, work in process, spare parts, finished                       
products, wrapping, supply and packaging items, employee uniforms               
and similar items of the Company, in the Facilities of the                      
Company or wherever otherwise located.                                          

"knowledge" or any similar phrase herein with respect       
to the Company shall mean, as of the date of this Agreement, the                
actual knowledge of the persons listed on Schedule 1.1(b) after                 
reasonable diligence and shall mean, after the date of this                     
Agreement, the actual knowledge of the persons listed in Schedule               
1.1(c) after reasonable diligence.                                              

"Landlord Consent" shall have the meaning set forth in      
Section 7.7 hereof.                                                             

"Leased Real Property" shall mean all property leased       
by the Company pursuant to the Facility Leases.                                 

"Leasehold Estates" shall mean all of the rights and        
obligations of the Company as lessee under the Leases listed on                 
Schedule 5.6(a).                                                                

"Leasehold Improvements" shall mean all leasehold           
improvements situated in or on the Leased Real Property leased                  
under the Leases.                                                               

"Leases" shall mean all of the existing leases with         
respect to the personal or real property of the Company as listed               
on Schedules 5.5 and 5.6(a) and all other leases relating to the                
Assets that are not required to be scheduled pursuant to this                   
Agreement.                                                                      

"Liabilities" shall mean any direct or indirect             
liability, indebtedness, obligation, commitment, expense, claim,                
deficiency, guaranty or endorsement of or by any person of any                  
type, whether accrued, absolute, contingent, matured, unmatured                 
or other.                                                                       

"Majority Holders" shall mean TCW Special Credits Fund      
V - The Principal Fund, a California limited partnership, TCW                   
Special Credits Fund IV, a California limited partnership, TCW                  
Special Credits Plus Fund, a California limited partnership, TCW                
Special Credits Trust IV, TCW Special Credits Trust IV-A, David                 
H. Eisenberg, Thomas A. Hough, Mary M. Mahon, William V. Pantuso,               
Larry L. Buresh, Harold S. Eastman and Redon Forest.                            

"Material Adverse Effect" or "Material Adverse Change"      
shall mean any material adverse effect or change in the condition               
(financial or other), Liabilities or operations of the Company,                 
the Business and/or the Assets or on the ability of the Company                 
or the Stockholders to consummate the Transactions, or any event                
or condition which would, with the passage of time, constitute a                
"Material Adverse Effect" or "Material Adverse Change."                         

"Material Contract" shall have the meaning set forth in     
Section 5.7 hereof.                                                             

"Merger" shall have the meaning set forth in Recital B.     

"Net Worth Adjustment" shall mean zero ("0"), if the        
Closing Balance Sheet Amount equals or exceeds the Interim                      
Balance Sheet Amount, and otherwise shall mean the amount by                    
which the Interim Balance Sheet Amount exceeds the Closing                      
Balance Sheet Amount.                                                           

"Net Worth Basket" shall mean $3,000,000.                   

"Ordinary course of business" or "ordinary course" or       
any similar phrase shall mean the ordinary course of the Business               
and consistent with the past practice of the Company.                           

"OSHA" shall mean the Federal Occupational Safety &         
Health Act.                                                                     

"Outstanding Options" shall have the meaning set forth      
in Section 2.6(a) hereof.                                                       

"Outstanding Warrants" shall have the meaning set forth     
in Section 2.6(b) hereof.                                                       

"Owned Real Property" shall mean all real property          
owned in fee by the Company, including without limitation all                   
rights, easements and privileges appertaining or relating                       
thereto, all buildings, Fixtures and Equipment, and improvements                
located thereon and all Facilities thereon, if any.                             

"Parent" shall mean AutoZone, Inc., a Nevada                
corporation.                                                                    

"Patents" shall mean all patents and patent                 
applications and registered design and registered design                        
applications.                                                                   

"Paying Agent" shall mean the bank or trust company         
designated by the Parent to serve as the agent of the Parent for                
providing cash in exchange for the Shares.                                      

"Permits" shall mean all licenses, permits, franchises,     
approvals, authorizations, consents or orders of, or filings                    
with, any governmental authority, whether foreign, federal, state               
or local, or any other person, necessary for the past, present or               
anticipated conduct of, or relating, to the operation of the                    
Business.                                                                       

"Permitted Encumbrances" shall mean:  (x) with respect      
to any personal property, minor liens or Encumbrances that in the               
aggregate are not substantial in amount relative to the value and               
use of such personal property, do not materially detract from the               
value of the personal property subject thereto or interfere with                
the present use and have not arisen other than in the ordinary                  
course of business, and (y) with respect to any real property,                  
(i) materialmen's, mechanics', carriers', workmen's, repairmen's                
or other like liens arising in the ordinary course of business                  
for amounts not yet due or which are being contested in good                    
faith by appropriate proceedings; (ii) liens for current taxes                  
not yet due or any taxes being contested in good faith by                       
appropriate proceedings; and (iii) any other Encumbrances and                   
other matters affecting title to such real property, which do not               
(A) breach any covenant, representation or warranty of the                      
Company in this Agreement, (B) adversely affect the use or value                
of such real property, (C) render title to such real property                   
unmarketable, (D) constitute an Encumbrance in the nature of a                  
mortgage, deed of trust, UCC financing statement or other similar               
lien or (E) constitute a lease, sublease or other occupancy                     
agreement that gives any third party any right to occupy or use                 
all or any portion of such real property.                                       

"Personal Property Leases" shall mean all personal          
property leases listed on Schedule 5.5.                                         

"Personnel" shall have the meaning set forth in Section     
5.4(b) hereof.                                                                  

"Pro Rata Portion" shall mean, with respect to any          
Holder in connection with the distribution of any Escrowed Funds,               
(A) the sum of (i) the number of Shares owned of record by such                 
Holder on the Effective Date, (ii) the number of shares of                      
Company Common Stock issuable upon the exercise of Outstanding                  
Options held of record by such Holder on the Effective Date and                 
(iii) the number of shares of Company Common Stock issuable upon                
the exercise of Outstanding Warrants held of record by such                     
Holder on the Effective Date multiplied by (B) the amount of                    
Escrowed Funds to be distributed divided by (C) the Fully Diluted               
Number, rounded up to the nearest whole cent ($0.01).                           

"Promissory Note Stockholders" shall mean those             
stockholders of the Company listed on Schedule 5.1(c).                          

"Proposed Acquisition Transaction" shall have the           
meaning set forth in Section 7.2(a) hereof.                                     

"Proprietary Rights" shall mean all of the Copyrights,      
Patents, Trademarks, technology rights and licenses, computer                   
software (including without limitation any source or object codes               
therefor or documentation relating thereto), trade secrets,                     
franchises, know-how, inventions, designs, specifications, plans,               
drawings and intellectual property rights of the Company.                       

"Purchaser" shall mean Orange Sub, Inc., a Delaware         
corporation.                                                                    

"Purchaser Common Stock" shall mean the Common Stock,       
$.01 par value per share, of the Purchaser.                                     

"RCRA" shall mean the Resource Conservation & Recovery      
Act (42 U.S.C.  6901 et seq.).                                                  

"Refund Request" shall have the meaning set forth in        
Section 2.4 hereof.                                                             

"Regulations" shall mean any laws, statutes,                
ordinances, code, regulations, rules, notice requirements, court                
decisions, agency guidelines, principles of law and orders of any               
foreign, federal, state or local government and any other                       
governmental department or agency, including without limitation                 
Environmental Laws, energy, motor vehicle safety, public utility,               
zoning, building and health codes, occupational safety and health               
and laws respecting employment practices, employee documentation,               
terms and conditions of employment and wages and hours.                         

"Release" shall mean and include any spilling, leaking,     
pumping, pouring, emitting, emptying, discharging, injecting,                   
escaping, leaching, dumping, migrating within the environment or                
disposing into the environment or the workplace of any Hazardous                
Substance, and otherwise as defined in any Environmental Law.                   

"Representative" shall mean any officer, director,          
principal, attorney, agent, employee or other representative.                   

"Seagoville Facility" shall mean the Company's              
distribution center located at 1515 Wade Drive, Seagoville,                     
Texas.                                                                          

"Securities Act" shall mean the Securities Act of 1933,     
as amended, and the rules and regulations promulgated thereunder.               

"Severance Plan" shall mean the Company's Severance         
Plan in the Event of a Change of Control.                                       

"Shares" shall mean all of the shares of Company Common     
Stock issued and outstanding immediately prior to the Effective                 
Date.                                                                           

"Shearson Tax Sharing Agreement" shall mean the Tax         
Sharing Agreement made as of the 1st day of January, 1988 by and                
between Shearson Lehman Brothers Holdings, Inc., a Delaware                     
corporation, and the Company.                                                   

"Stockholders" shall mean the record holders of Shares      
on the Effective Date.                                                          

"Stockholders Agreement" shall have the meaning set         
forth in Recital D.                                                             

"Stockholders Consent" shall have the meaning set forth     
in Section 2.7 hereof.                                                          

"Stockholders Meeting" shall have the meaning set forth     
in Section 2.7 hereof.                                                          

"Stockholders Representatives" shall mean Stephen A.        
Kaplan and Richard Masson.                                                      

"Subsidiary" shall mean (a) any corporation in an           
unbroken chain of corporations beginning with the Company if each               
of the corporations other than the last corporation in the                      
unbroken chain then owns stock possessing 50% or more of the                    
total combined voting power of all classes of stock in one of the               
other corporations in such chain, (b) any partnership in which                  
the Company is a general partner, or (c) any partnership in which               
the Company possesses a 50% or greater interest in the total                    
capital or total income of such partnership.                                    

"Surviving Corporation" shall have the meaning set          
forth in Section 2.1 hereof.                                                    

"Tax" or "Taxes" means any federal, state, local, or        
foreign income, gross receipts, license, payroll, employment,                   
excise, severance, stamp, occupation, premium, windfall profits,                
environmental (including taxes under Code Section 59A), custom                  
duties, capital stock, franchise, profits, withholding, social                  
security (or similar), unemployment, disability, real property,                 
personal property, sales, use, service, transfer, registration,                 
value added, alternative or add-on minimum, estimated, ad                       
valorum, net worth or other tax, fee, tariff or assessment of any               
kind whatsoever, including any interest, penalty, or addition                   
thereto, whether disputed or not.                                               

"Tax Return" means any return, declaration, report,         
claim for refund, or information return or statement relating to                
Taxes, including any schedule or attachment thereto, and                        
including any amendment thereof.                                                

"Total Assets" shall mean the sum of current assets (       
including cash, cash equivalents, trade accounts receivable,                    
other accounts receivable less allowance for doubtful accounts,                 
income tax refund receivable, merchandise inventories, deferred                 
income taxes, prepaid and other current assets), property and                   
equipment (less accumulated depreciation and amortization),                     
goodwill, deferred income taxes and other assets.                               

"Total Liabilities" shall mean the sum of current           
liabilities (including accounts payable, current portion of long-               
term debt, current portion of obligations under capital leases,                 
trade accounts payable, accrued salaries, benefits and related                  
taxes, accrued taxes excluding payroll and other accrued current                
liabilities), long-term debt (less current portion), obligations                
under capital leases (less current portion) and other noncurrent                
liabilities.                                                                    

"Trademarks" shall mean registered trademarks,              
registered service marks, trademark and service mark applications               
and unregistered trademarks and service marks.                                  

"Transaction Documents" shall mean this Agreement, the      
Escrow Agreement, the Stockholders Agreement and the letter                     
agreement among the parties hereto dated as of the date of this                 
Agreement.                                                                      

"Transactions" shall mean the Merger and the other          
transactions contemplated by the Transaction Documents.                         

ARTICLE II.               
THE MERGER                

2.1. The Merger                                                       

As soon as is practicable after the satisfaction or         
waiver of the conditions contained herein, the parties hereto                   
will cause the Merger to be consummated by filing with the                      
Secretary of State of the State of Delaware the Certificate of                  
Merger (the time of such filing being the "Effective Date").  At                
the Effective Date, in accordance with this Agreement and the                   
Delaware Law, the Purchaser shall be merged with and into the                   
Company, the separate existence of the Purchaser (except as may                 
be continued by operation of law) shall cease, and the Company                  
shall continue as the surviving corporation under the corporate                 
name it possesses immediately prior to the Effective Date.  The                 
Purchaser and the Company are sometimes referred to herein as the               
"Constituent Corporations," and the Company is sometimes referred               
to herein as the "Surviving Corporation."                                       

2.2. Effect of the Merger.                                            

(a)  Except for Dissenting Shares and except as set         
forth in the last sentence of this paragraph (a), each Share                    
shall automatically be converted into the right to receive the                  
Initial Merger Consideration, subject to possible adjustment as                 
provided in Article III hereof.  Notwithstanding the foregoing                  
sentence, the Shares held of record by each Promissory Note                     
Stockholder shall be converted without any action on the part of                
such Promissory Note Stockholder into the right to receive an                   
amount equal to the greater of $0 or the following amount:  (A)                 
the product of (i) the number of Shares held of record by such                  
Promissory Note Stockholder and (ii) the Initial Merger                         
Consideration (the foregoing product is referred to herein as the               
"Clause A Amount") minus (B) the sum of (i) the aggregate                       
principal amount owing to the Company under the outstanding                     
promissory note(s) of such Promissory Note Stockholder plus (ii)                
the accrued interest owing with respect to such promissory                      
note(s) as of the Effective Date (the foregoing sum is referred                 
to herein as the "Clause B Amount").                                            

(b)  Each Share held in treasury by the Company or          
owned by the Purchaser, the Parent or any direct or indirect                    
subsidiary of the Purchaser, the Parent or the Company, shall be                
canceled and retired, and no payment shall be made with respect                 
thereto.                                                                        

(c)  Each share of Purchaser Common Stock issued and        
outstanding immediately prior to the Effective Date shall be                    
converted into and become one validly issued, fully paid and                    
nonassessable share of Common Stock of the Surviving Corporation.               

(d)  At and after the Effective Date, the Surviving         
Corporation shall possess all the rights, privileges, powers and                
franchises of a public as well as of a private nature, and be                   
subject to all the restrictions, disabilities and duties of each                
of the Constituent Corporations; and all and singular rights,                   
privileges, powers and franchises of each of the Constituent                    
Corporations, and all property, real, personal and mixed, and all               
debts due to either the Constituent Corporations on whatever                    
account, as well as for stock subscriptions and all other things                
in action or belonging to each of the Constituent Corporations,                 
shall be vested in the Surviving Corporation, and all property,                 
rights, privileges, powers and franchises, and all and every                    
other interest shall be thereafter as effectually the property of               
the Surviving Corporation as they were of the Constituent                       
Corporations, and the title to any real estate vested by deed or                
otherwise, in either of the Constituent Corporations, shall not                 
revert or be in any way impaired; but all rights of creditors and               
all liens upon any property of either of the Constituent                        
Corporations shall be preserved unimpaired, and all debts,                      
liabilities and duties of the Constituent Corporations shall                    
thenceforth attach to the Surviving Corporation, and may be                     
enforced against it to the same extent as if said debts and                     
liabilities had been incurred by it.                                            

2.3. Dissenting Shares.                                               

The holders of Dissenting Shares, if any, shall be          
entitled to payment for such Shares only to the extent permitted                
by and in accordance with the provisions of Section 262 of the                  
Delaware Law.  Notwithstanding the foregoing, if, in accordance                 
with such Section of the Delaware Law, any holder of Dissenting                 
Shares shall forfeit such right to payment of the fair value of                 
such Shares, such Shares shall thereupon be deemed to have been                 
converted into and to have become exchangeable for, as of the                   
Effective Date, the right to receive the Initial Merger                         
Consideration that such holder would have received under Section                
2.2(a) hereof.  In such event, such holder of Dissenting Shares                 
shall, as of the later of the Effective Date or the occurrence of               
such event, deliver his certificate or certificates representing                
such Dissenting Shares to the Company, and upon surrender of such               
certificate or certificates, the Company shall issue and deliver                
to such holder the Initial Merger Consideration that such holder                
would have been entitled under Section 2.2(a) hereof.                           

2.4. Paying Agent and Surrender of Shares                             

From and after the Effective Date, each holder of a         
certificate which immediately prior to the Effective Date                       
represented outstanding Shares (the "Certificates") shall be                    
entitled to receive in exchange therefor cash in the amount equal               
to the product of the number of Shares represented by the                       
Certificate or Certificates and the Initial Merger Consideration.               
As soon as practicable (and in no event later than 10 days after                
the Effective Date), the Paying Agent shall mail to each                        
Stockholder:  (i) a letter of transmittal (which shall specify                  
that delivery shall be effected, and risk of loss and title to                  
such Stockholder's Certificates shall pass, only upon delivery of               
such Certificates to the Paying Agent and shall be in such form                 
and have such other provisions as the Paying Agent may reasonably               
specify) and (ii) instruments for use in effecting the surrender                
of such Certificates in exchange for that portion of the Initial                
Merger Consideration into which the Shares represented by such                  
Certificates have been converted.  Upon surrender of a                          
Certificate to the Paying Agent, together with such letter of                   
transmittal, duly executed, the holder of such Certificate shall                
be entitled to receive in exchange therefor, cash (in the form of               
a bank or certified check) in the amount equal to the product of                
the number of Shares represented by the Certificate or                          
Certificates and the Initial Merger Consideration.  No interest                 
will be paid or accrued on the cash payable upon the surrender of               
the Certificates.  If the payment is to be made to a person other               
than the person in whose name a surrendered Certificate is                      
registered, it shall be a condition of payment that (x) the                     
Certificate so surrendered shall be properly endorsed or                        
otherwise in proper form for transfer and that (y) the person                   
requesting payment shall pay any transfer or other taxes required               
by reason of the payment to a person other than the registered                  
holder of the Certificate surrendered or establish to the                       
satisfaction of the Parent or the Paying Agent that such tax has                
been paid or is not applicable.  After the Effective Date, until                
surrendered in accordance with the provisions of this Section                   
2.4, a Certificate shall represent only the right to receive the                
Initial Merger Consideration in cash multiplied by the number of                
Shares represented by such Certificate, without any interest                    
thereon.  On or after the 30th day following the Effective Date,                
the Surviving Corporation may by written request require the                    
Paying Agent to remit to the Surviving Corporation (on terms                    
reasonably satisfactory to the Paying Agent) (a "Refund Request")               
any funds deposited by the Parent that (i) have not been applied                
prior to any Refund Request to make payments in respect of                      
Certificates, Company Stock Options or Company Warrants, or (ii)                
are not required at the time of such Refund Request to permit the               
Paying Agent to make payment to the holders of any Certificates                 
that have been surrendered by the date of such Refund Request or                
in respect of any Company Stock Options or Company Warrants for                 
which payment is pending, but with respect to which no such                     
payment has yet been made at the time of such Refund Request;                   
provided however, that notwithstanding the repayment of any funds               
pursuant to a Refund Request, the Surviving Corporation shall                   
make available to the Paying Agent any and all additional funds                 
sufficient from time to time to make payments required pursuant                 
to Sections 2.4 and 2.6.                                                        

2.5. Stockholders to Have No Further Rights                           

At and after the Effective Date, the holder of a            
Certificate shall cease to have any rights as a stockholder of                  
the Company, except for (i) the right to surrender such                         
Certificate in exchange for the amount of Initial Merger                        
Consideration to which such holder is entitled under this                       
Agreement and (ii) the rights available under Delaware Law for                  
Dissenting Shares.  In no event shall the holder of a Certificate               
have any rights as a stockholder of the Surviving Corporation.                  

2.6. Company Stock Options and Company Warrants                       

(a)  Subject to the second sentence of this paragraph       
(a), each of the Company Stock Options that are outstanding as of               
the Effective Date (the "Outstanding Options"), shall be                        
converted without any action on the part of the holder thereof                  
into the right to receive, as of the Effective Date, an amount                  
equal to the product of (i) the number of shares of Company                     
Common Stock subject to such Outstanding Option (irrespective of                
whether such Outstanding Option is then exercisable) and (ii) the               
amount by which the Initial Merger Consideration exceeds the                    
exercise or strike price per share of Company Common Stock                      
subject to such Outstanding Option immediately prior to the                     
Effective Date.  Notwithstanding the foregoing, if any holder of                
Outstanding Options is a Promissory Note Stockholder, and if the                
Shares held of record by such Promissory Note Stockholder were                  
converted into the right to receive $0 pursuant to Section 2.2(a)               
hereof, then the amount that such Promissory Note Stockholder                   
shall be entitled to receive pursuant to the foregoing sentence                 
shall be decreased by the amount by which such Promissory Note                  
Stockholder's Clause B Amount exceeds such Promissory Note                      
Stockholder's Clause A Amount.  The Company shall use                           
commercially reasonable efforts to cause all holders of                         
Outstanding Options to surrender to the Paying Agent their option               
award agreements for cancellation, and thereupon such holders                   
shall receive the requisite cash consideration (if any), subject                
to applicable withholding taxes, if any.                                        

(b)  Subject to the second sentence of this paragraph       
(b), each of the Company Warrants that remain outstanding as of                 
the Effective Date (the "Outstanding Warrants"), shall be                       
converted without any action on the part of the holder thereof                  
into the right to receive, as of the Effective Date, an amount                  
equal to the product of (i) the number of shares of Company                     
Common Stock subject to such Outstanding Warrant (irrespective of               
whether such Outstanding Warrant is then exercisable) and                       
(ii) the amount by which the Initial Merger Consideration exceeds               
the exercise or strike price per share of Company Common Stock                  
subject to such Outstanding Warrant immediately prior to the                    
Effective Date. Notwithstanding the foregoing, if any holder of                 
Outstanding Warrants is a Promissory Note Stockholder, and if the               
Shares held of record by such Promissory Note Stockholder were                  
converted into the right to receive $0 pursuant to Section 2.2(a)               
hereof, then the amount that such Promissory Note Stockholder                   
shall be entitled to receive pursuant to the foregoing sentence                 
shall be decreased by the amount by which such Promissory Note                  
Stockholder's Clause B Amount exceeds such Promissory Note                      
Stockholder's Clause A Amount.  The Company shall use                           
commercially reasonable efforts to cause all holders of                         
Outstanding Warrants to surrender to the Paying Agent their                     
warrant agreements for cancellation, and thereupon such holders                 
shall receive the requisite cash consideration (if any), subject                
to applicable withholding taxes, if any.                                        

2.7. Stockholders Meeting or Stockholders Consent                     

The Company shall take all action necessary, in             
accordance with applicable law and the Fourth Restated                          
Certificate of Incorporation and Bylaws of the Company, to call a               
special meeting of the holders of Company Common Stock (the                     
"Stockholders Meeting") or to seek a written consent of the                     
requisite holders of Company Common Stock (the "Stockholders                    
Consent") as promptly as practicable for the purpose of                         
considering and taking action to authorize this Agreement                       
(including without limitation Section 9.2 hereof), the Merger and               
the Escrow Agreement contemplated hereby pursuant to the Delaware               
Law.  Subject to its fiduciary duties, as determined by the                     
directors of the Company after consultation with and based upon                 
the advice of outside legal counsel (who may be the Company's                   
regularly engaged outside legal counsel), in connection with the                
receipt by the Company of a Proposed Acquisition Transaction that               
the Board of Directors of the Company reasonably determines in                  
good faith will be more favorable to its stockholders than the                  
Merger and is supported by committed financing that the Board of                
Directors reasonably believes can be funded, as committed, the                  
Board of Directors of the Company will recommend that holders of                
Company Common Stock vote in favor of and approve the Merger,                   
this Agreement (including without limitation Section 9.2 hereof)                
and the Escrow Agreement at the Stockholders Meeting or pursuant                
to the Stockholders Consent, as applicable.  At the Stockholders                
Meeting or pursuant to the Stockholders Consent, as applicable,                 
all of the shares of Company Common Stock then owned by the                     
Parent, the Purchaser or any other subsidiary of the Parent, or                 
with respect to which the Parent, the Purchaser or any other                    
subsidiary of the Parent holds the power to direct the voting,                  
will be voted in favor of approval of the Merger, this Agreement                
(including without limitation Section 9.2 hereof) and the Escrow                
Agreement.  The vote required for approval of the Merger, this                  
Agreement (including without limitation Section 9.2 hereof) and                 
the Escrow Agreement is the affirmative vote of the holders of a                
majority of the outstanding shares of Company Common Stock.  The                
Company shall take all action, in accordance with applicable law                
and the Fourth Restated Certificate of Incorporation and Bylaws                 
of the Company, to provide written notice to holders of Company                 
Common Stock who did not vote in favor of the Merger, this                      
Agreement (including without limitation Section 9.2 hereof) or                  
the Escrow Agreement of the results of the vote obtained pursuant               
to the Stockholders Meeting or Stockholders Consent, as                         
applicable.                                                                     

2.8. Closing of the Company's Transfer Books                          

After the close of business on the Effective Date,          
the stock transfer books of the Company shall be closed and no                  
transfer of Shares shall be made thereafter.  In the event that,                
after the Effective Date, Certificates are presented to the                     
Surviving Corporation, they shall be canceled and exchanged for                 
the Initial Merger Consideration as provided in Section 2.4.                    

2.9. Charter Documents; Directors; Officers                           

Upon the Effective Date, (i) the Certificate of             
Incorporation and the Bylaws of the Purchaser shall be the                      
Certificate of Incorporation and Bylaws of the Surviving                        
Corporation, until thereafter amended as provided therein and                   
under the Delaware Law, (ii) the directors of the Purchaser                     
immediately prior to the Effective Date will be the initial                     
directors of the Surviving Corporation, until their successors                  
are elected and qualified, and (iii) the officers of the Company                
immediately prior to the Effective Date will be the initial                     
officers of the Surviving Corporation, until their successors are               
elected and qualified.                                                          

ARTICLE III.                
ESCROW AGREEMENT; NET WORTH ADJUSTMENT                

3.1. Escrow Agreement                                                 

In order to establish a procedure for the                   
satisfaction of any claims by the Parent or Purchaser for payment               
pursuant to Section 3.2 hereof, for indemnification pursuant to                 
Section 9.2 hereof and/or for payment pursuant to the letter                    
agreement among the parties dated as of the date of this                        
Agreement, the Company, the Majority Holders and the Stockholders               
Representatives shall enter into the Escrow Agreement with the                  
Purchaser and the Parent, pursuant to which the Aggregate Escrow                
Amount shall be held in escrow for a period of eighteen months                  
(unless extended pursuant to the terms of the Escrow Agreement in               
connection with a pending Claim) from the Effective Date.                       

If any Escrowed Funds are to be distributed to Holders      
in accordance with the provisions of Section 7 of the Escrow                    
Agreement, each Holder shall receive that portion of the Escrowed               
Funds equal to such Holder's Pro Rata Portion in accordance with                
the provisions of Section 7 of the Escrow Agreement.                            

3.2. Net Worth Adjustment                                             

(a)  Preparation of Closing Balance Sheet. As promptly      
as practicable after the Effective Date, the Company will prepare               
and deliver to the Stockholders Representatives the Closing                     
Balance Sheet and a calculation of the Net Worth Adjustment.  The               
Company will use all reasonable efforts to have such Closing                    
Balance Sheet and calculation of the Net Worth Adjustment                       
prepared and delivered within 60 days following the Effective                   
Date.                                                                           

(b)  Calculation of Net Worth Adjustment. In the event      
the Stockholders Representatives dispute the calculation of the                 
Net Worth Adjustment that arises within 29 days of the delivery                 
of the Closing Balance Sheet pursuant to the foregoing paragraph                
(a) of this Section, such calculation shall be determined by                    
Deloitte & Touche LLP (the "Accounting Firm").  The Accounting                  
Firm shall calculate the Net Worth Adjustment within 30 days of                 
the notification by the Stockholders Representatives of a dispute               
in such calculation by the Parent.  In the event that there is a                
difference in the Net Worth Adjustment, as calculated by the                    
Parent, and the Net Worth Adjustment, as calculated by the                      
Accounting Firm, then the Net Worth Adjustment, shall be equal to               
that calculated by the Accounting Firm.                                         

(c)  Payments to be Made. Within 30 business days of        
the date of delivery of the Closing Balance Sheet to the                        
Stockholders Representatives pursuant to paragraph (a) of this                  
Section (or, in the event of a dispute described in paragraph (b)               
of this Section, within 10 business days of the date of                         
calculation of the Net Worth Adjustment by the Accounting Firm),                
the following shall occur:                                                      

(i)  if the Net Worth Adjustment exceeds the Net Worth      
Basket and does not exceed the Net Worth Basket by more than the                
Escrowed Funds, the Escrow Agent shall pay the amount by which                  
the Net Worth Adjustment exceeds the Net Worth Basket to the                    
Purchaser by wire transfer of immediately available funds from                  
the Escrow Account to an account designated by the Purchaser;                   

(ii) if the Net Worth Adjustment exceeds the Net Worth      
Basket by more than the Escrowed Funds, the Escrow Agent shall                  
pay all of  the Escrowed Funds to the Purchaser by wire transfer                
of immediately available funds from the Escrow Account to an                    
account designated by the Purchaser; or                                         

(iii)     if the Net Worth Adjustment is less than or       
equal to the Net Worth Basket, no amounts shall be paid by the                  
Escrow Agent from the Escrow Account in connection with any Net                 
Worth Adjustment.                                                               

ARTICLE IV.               
CLOSING               

4.1. Closing                                                          

Upon the terms and subject to the conditions set          
forth herein, the Closing shall be held at 7:00 a.m. local time                 
on the Effective Date at the offices of Latham & Watkins, 633                   
West Fifth Street, Suite 4000, Los Angeles, California 90071,                   
unless the parties hereto otherwise agree.                                      

4.2. Deliveries at Closing                                            

At the Closing the following actions shall be taken:      

(a)  Delivery of Initial Merger Consideration.  The         
Parent will deposit with the Paying Agent the aggregate Initial                 
Merger Consideration.                                                           

(b)  Delivery of Aggregate Escrow Amount.  The Parent       
will deposit the Aggregate Escrow Amount with the Escrow Agent.                 

(c)  Certificate of Merger.  The Certificate of Merger      
will be filed with the Secretary of State of the State of                       
Delaware.                                                                       

(d)  Escrow Agreement.  The Company, the Parent, the        
Escrow Agent, the Majority Holders and the Stockholders                         
Representatives and the Escrow Agent will enter into the Escrow                 
Agreement.                                                                      

(e)  Company Certificates; Opinions.  The Company will      
deliver the certificates, opinions of counsel and other items                   
described in Article VIII or as otherwise reasonably required by                
the Purchaser and the Parent and such other evidence of the                     
performance of all the covenants and the satisfaction of all                    
conditions required of the Company by this Agreement and as the                 
Purchaser and the Parent shall reasonably require.                              

(f)  Purchaser and Parent Certificates; Opinions.  The      
Purchaser and the Parent will deliver the certificates, opinions                
of counsel and other items described in Article VIII or as                      
otherwise reasonably required by the Company and such other                     
evidence of the performance of all the covenants and the                        
satisfaction of all conditions required of the Purchaser and the                
Parent by this Agreement and as the Company shall reasonably                    
require.                                                                        

4.3. Closing Costs                                                    

(a)  The Company.  The Company shall pay the following      
fees and costs of the Company:  (i) one-half of any escrow fees                 
and costs; and (ii) the legal, professional, accounting and                     
consulting fees incurred by the Company related to the                          
negotiation and consummation of the transactions contemplated                   
hereby.  The Company shall not pay or become obligated to pay any               
fees or costs incurred by the Company's stockholders in                         
connection with the Transactions.                                               

(b)  The Parent.  The Parent shall pay (i) one-half of      
any escrow fees and costs; (ii) documentary transfer Taxes, if                  
any; (iii) the fees and costs of recording or filing any                        
conveyancing instruments; (iv) all costs of applying for new                    
Permits, if any; (v) the due diligence, legal, other professional               
and consultant fees incurred by the Parent and the Purchaser; and               
(vi) the cost of the filing(s) required of the parties under the                
HSR Act.                                                                        

ARTICLE V.                
REPRESENTATIONS AND WARRANTIES OF THE COMPANY               

The Company hereby represents and warrants to the           
Purchaser and the Parent that  the following representations and                
warranties are, as of the date hereof, and will be, as of the                   
Effective Date, true and correct:                                               

5.1. Organization of the Company                                      

(a) The Company is a corporation duly organized,            
validly existing and in good standing under the laws of the State               
of Delaware.  The Company has full corporate power and authority                
to conduct the Business as it is presently being conducted and to               
own and lease its properties and Assets.  The Company is duly                   
qualified to do business as a foreign corporation and in good                   
standing in each jurisdiction where the character of its                        
properties owned or leased or the nature of its activities make                 
such qualification necessary, except where the failure to be so                 
qualified or in good standing would not have a Material Adverse                 
Effect.  Schedule 5.1(a) contains a true, correct and complete                  
list of all jurisdictions in which the Company is qualified to do               
business as a foreign corporation.  Copies of the Fourth Restated               
Certificate of Incorporation and Bylaws of the Company and all                  
amendments thereto, heretofore delivered to the Purchaser are                   
accurate and complete as of the date hereof.                                    

(b) The capitalization of the Company is set forth on       
Schedule 5.1(b) hereto.  All of the outstanding shares of capital               
stock of the Company are duly authorized, validly issued, fully                 
paid and non-assessable.  Except for the Company Stock Options                  
and the Company Warrants listed on Schedule 5.1(b), there are no                
other outstanding subscriptions, calls, commitments, warrants or                
options for the purchase of shares of any capital stock or other                
securities of the Company or any securities convertible into or                 
exchangeable for shares of capital stock or other securities                    
issued by the Company, or any other commitments of any kind for                 
the issuance of additional shares of capital stock or other                     
securities issued by the Company.  Schedule 5.1(c) hereto lists                 
all outstanding notes or other obligations of stockholders of the               
Company and of holders of Company Stock Options and Company                     
Warrants that are payable to the Company, including the principal               
and interest owing as of the date of such schedule.                             

5.2. Subsidiaries                                                     

The Company has no Subsidiaries and has no direct or        
indirect stock or other equity or ownership interest (whether                   
controlling or not) in any corporation, association, partnership,               
joint venture or other entity other than ownership of all of the                
outstanding capital stock of Cap Merger Sub, Inc., a Delaware                   
corporation which has never conducted any business and has never                
had any assets or liabilities.                                                  

5.3. Authorization                                                    

The Company has all requisite corporate power and           
authority to own, lease and operate the Assets, to conduct the                  
Business as it is presently being conducted and to execute and                  
deliver the Transaction Documents.  The Company has all requisite               
power and authority to consummate the Transactions and to perform               
its obligations under the Transaction Documents, and no other                   
corporate proceedings on the part of the Company are necessary to               
authorize the Transaction Documents and the Transactions.  The                  
execution and delivery of the Transaction Documents by the                      
Company and the consummation by the Company of the Transactions                 
have been duly approved by the Board of Directors of the Company                
and its stockholders.  The Agreement has been duly executed and                 
delivered by the Company and, assuming due execution and delivery               
by the Parent and the Purchaser, is a legal, valid and binding                  
obligation of the Company enforceable against it in accordance                  
with its terms, and each of the other Transaction Documents will                
be, as of the Effective Date, duly executed and delivered by the                
Company and, assuming due execution and delivery by the Parent,                 
the Purchaser and the Escrow Agent, as applicable, will be a                    
legal, valid and binding obligation of the Company enforceable                  
against it in accordance with its terms, in each case except as                 
such enforceability may be limited by (i) bankruptcy, insolvency,               
moratorium, reorganization and other similar laws affecting                     
creditors' rights generally and (ii) the general principals of                  
equity, regardless of whether asserted in a proceeding in equity                
or at law.   The Stockholders Agreement is, and the Escrow                      
Agreement will be, assuming due execution and delivery by the                   
Parent, the Purchaser and the Escrow Agent, as applicable, a                    
legal, valid and binding obligation of the Majority Holders,                    
enforceable against the Majority Holders in accordance with its                 
terms, except as such enforceability may be limited by (i)                      
bankruptcy, insolvency, moratorium, reorganization and other                    
similar laws affecting creditors' rights generally and (ii) the                 
general principals of equity, regardless of whether asserted in a               
proceeding in equity or at law.   The Majority Holders                          
beneficially own and own of record at least 85% of the                          
outstanding shares of Company Common Stock, and on and as of the                
date of the Stockholders Meeting or the Stockholders Consent, as                
applicable, will beneficially own and will own of record at least               
85% of the outstanding shares of Company Common Stock on and as                 
of such date.                                                                   

5.4. Absence of Certain Changes or Events                             

Except as set forth on Schedule 5.4 and as                  
contemplated by the Transactions, since the Interim Balance Sheet               
Date, there has not been any:                                                   

(a)  Material Adverse Change;                               

(b)  (i) increase in the compensation payable or to         
become payable by the Company to any of its current or former                   
officers, or, except for normal periodic increases in the                       
ordinary course of business, to any of its current or former                    
employees or agents (collectively, "Personnel"), (ii) grant,                    
payment or accrual (contingent or otherwise) for or to the credit               
of any current or former officer or, except in the ordinary                     
course of business and, in the case of a payment, which has been                
accrued for, of any other employee or agent of the Company with                 
respect to any bonus, incentive compensation, service award or                  
other like benefit, (iii) adoption, creation or amendment of any                
Employee Benefit Plan, Benefit Arrangement or Employee Plan by                  
the Company, (iv) employment agreement (written or verbal) made                 
by the Company to which the Company is a party, except agreements               
for employment created through offer letters in the ordinary                    
course of business to new employees which employment is "at                     
will,"  or (v) other change in employment terms for any of the                  
officers of the Company or, except in the ordinary course of                    
business, of any of the employees or agents of the Company;                     

(c)  sale, lease, assignment or transfer of any of the      
Assets, other than (i) (x) to persons that are not Affiliates,                  
(y) for fair consideration and (z) in the ordinary course of                    
business or (ii) (w) to persons that are not Affiliates, (x) for                
fair consideration, (y) outside of the ordinary course of                       
business and (z) not in excess of $1,000,000 in the aggregate;                  

(d)  cancellation, compromise, waiver or release of any     
rights or claims (or series of related rights or claims) either                 
(i) involving an Affiliate of the Company, (ii) involving a                     
concession by the Company of more than $1,000,000 per fiscal                    
quarter in the aggregate; or (iii) outside the ordinary course of               
business and involving a concession by the Company of more than                 
$500,000 in the aggregate;                                                      

(e)  amendment, cancellation or termination of any          
Contract (i) involving an Affiliate of the Company,                             
(ii) involving payments in excess of $1,000,000 in the aggregate,               
or (iii) that are otherwise material to the Company;                            

(f)  capital expenditure or the execution of any Lease      
(other than a Facility Lease), Contract, license, sublease or                   
sublicense (or series of related Contracts, Leases (other than a                
Facility Lease), subleases, licenses and sublicenses) or any                    
incurring of liability therefor (i) involving an Affiliate of the               
Company, (ii) in the ordinary course of business and involving                  
payments in excess of $500,000 individually, or (iii) outside the               
ordinary course of business of the Company and involving payments               
in excess of $500,000 in the aggregate;                                         

(g)  the execution of any Facility Lease (or a series       
of Facility Leases) or any incurring of Liability therefor                      
(i) involving an Affiliate of the Company, (ii) outside of the                  
ordinary course of business, or (iii) with respect to more than                 
25 new locations (including relocations but excluding renewals)                 
during any fiscal quarter;                                                      

(h)  delay or failure to repay when due any material        
obligation of the Company;                                                      

(i)  failure to operate the Business in the ordinary        
course of business so as to use commercially reasonable efforts                 
to preserve the business intact, to keep available to the Company               
the services of Personnel, and to preserve for the Company the                  
goodwill of the suppliers, customers, distributors and others                   
having business relations with the Company;                                     

(j)  material change in accounting methods or practices     
by the Company, other than as required by GAAP;                                 

(k)  material revaluation by the Company of any of the      
Assets, other than as required by GAAP, including without                       
limitation, writing off notes or accounts receivable other than                 
in the ordinary course of business;                                             

(l)  damage, destruction or loss (whether or not            
covered by insurance) that has a Material Adverse Effect or that                
may reasonably be expected to have a Material Adverse Effect;                   

(m)  material mortgage, pledge or other encumbrance of      
any of the Assets, other than in the ordinary course of business                
and not in excess of $500,000 in the aggregate;                                 

(n)  any declaration, setting aside for payment or          
payment of any dividend or distribution in respect of any capital               
stock of the Company or any redemption, purchase, or other                      
acquisition of the Company's equity securities or any bonus, fee                
or other payment, or any other transfer of the Assets to or on                  
behalf of any stockholders of the Company, any Affiliate of the                 
Company or any Affiliate of any stockholders of the Company,                    
including, but not limited to, any payment of principal of or                   
interest on any debt owed to any stockholder or Affiliate of the                
Company or any payment of a bonus, fee or other payment to any                  
stockholder or Affiliate of the Company as an employee of the                   
Company, except in the ordinary course of business;                             

(o)  issuance by the Company of, or commitment of the       
Company to issue, any shares of stock or other equity securities                
or obligations or securities convertible into or exchangeable for               
shares of stock or other equity securities, except for the                      
issuance of Company Common Stock pursuant to the exercise of                    
outstanding Company Stock Options and Company Warrants in                       
accordance with the terms thereof and except as provided for in                 
Schedule 7.5(h);                                                                

(p)  indebtedness incurred by the Company for borrowed      
money or any commitment to borrow money entered into by the                     
Company, or any loans or guarantees made or agreed to be made by                
the Company, except (i) to non-Affiliates in the ordinary course                
of business as permitted by the 1997 Indenture or (ii) to non-                  
Affiliates outside of the ordinary course of business not in                    
excess of $500,000 in the aggregate;                                            

(q)  Liabilities incurred involving $500,000 or more or     
otherwise material to the Business except in the ordinary course                
of business, or any material increase or material change in any                 
assumptions underlying or methods of calculating any bad debt,                  
contingency or other reserves;                                                  

(r)  payment, discharge or satisfaction of any material     
Liabilities other than the payment, discharge or satisfaction in                
the ordinary course of business of Liabilities reflected or                     
reserved against on the Interim Balance Sheet (other than debt                  
principal repayment or interest payment) or incurred in the                     
ordinary course of business since the Interim Balance Sheet Date                
(other than debt principal or interest repayment);                              

(s)  capital investment in, any loan to, or any             
acquisition of the securities or assets of any other person (i)                 
involving an Affiliate of the Company, (ii) involving more than                 
$1,000,000 in the aggregate, or (iii) outside the ordinary course               
of business of the Company;                                                     

(t)  grant of any license or sublicense of any rights       
under or with respect to any Proprietary Rights of the Company                  
except in the ordinary course of business and not in excess of                  
$100,000 in the aggregate;                                                      

(u)  loan to, or other agreement with any Personnel         
outside the ordinary course of business giving rise to any claim                
or right on its part against the person or on the part of the                   
person against it;                                                              

(v)  charitable or other capital contribution made or       
pledged by the Company, except in the ordinary course of business               
and not in excess of $250,000 in the aggregate;                                 

(w)  agreement by the Company or any of its Personnel       
having apparent authority to bind the Company to do any of the                  
foregoing;                                                                      

(x)  agreement for the payment of any underwriting or       
financial advisory fees; or                                                     

(y)  other event or condition of any character that         
individually or in the aggregate has a Material Adverse Effect,                 
or any event or condition (other than events or conditions                      
affecting the economy generally) known to the Company that it is                
reasonable to expect will, individually or in the aggregate, have               
a Material Adverse Effect in the future.                                        

Notwithstanding the foregoing provisions of this Section 5.4,                   
since the Interim Balance Sheet Date, there has not been an                     
agreement to sell, lease, assign, transfer or otherwise dispose                 
of the Seagoville Facility or to refinance any of the Company's                 
indebtedness set forth on the Interim Balance Sheet.                            

5.5. Personal Property Leases                                         

Schedule 5.5 contains a complete and accurate list          
of each Lease pursuant to which the Company leases personal                     
property (x) providing for lease payments in excess of $1,000,000               
and (y) not cancelable (without Liability) within 60 calendar                   
days (the "Personal Property Leases").  Except as set forth on                  
Schedule 5.5, the Company owns free and clear of any                            
Encumbrances, except for Permitted Encumbrances, or leases or has               
rights to use, all Assets used in the Business that constitute                  
personal property.                                                              

5.6. Facilities:  Owned and Leased                                    

Schedule 5.6(a) contains a complete and accurate            
list of all Leases pursuant to which the Company leases real                    
property.  Schedule 5.6(b) contains a complete and accurate list                
of all Owned Real Property.  The Company has made available to                  
the Parent and the Purchaser with accurate and complete copies of               
title reports covering the Owned Real Property in its possession.               
The Company has good and marketable fee simple title to all Owned               
Real Property free and clear of all Encumbrances, except for                    
Permitted Encumbrances.  The Company enjoys peaceful and                        
undisturbed possession of all Owned Real Property, subject to                   
Permitted Encumbrances.                                                         

(a)  Actions.  There are no pending or, to the              
knowledge of the Company, threatened (in writing), condemnation                 
proceedings, administrative proceeding, or other Actions that are               
material to the Company relating to any Facility or any Owned                   
Real Property.                                                                  

(b)  Leases or Other Agreements.  Except for Facility       
Leases listed on Schedule 5.6(b) and as contemplated by the                     
Transactions, there are no material leases, subleases, licenses,                
occupancy agreements, options, rights, concessions or other                     
agreements, written or oral, granting to any person the right to                
purchase, use or occupy any Facility or any Owned Real Property.                

(c)  Facility Leases and Leased Real Property.  Except      
as contemplated by the Transactions, with respect to each                       
Facility Lease, the Company has, and upon consummation of the                   
Merger, the Company will have at the Closing, an unencumbered                   
interest in the Leasehold Estate.  The Company enjoys peaceful                  
and undisturbed possession of all the Leased Real Property,                     
subject to the rights of the fee owners and sublessees, the                     
Company has in all material respects performed all the                          
obligations required to be performed by it through the date                     
hereof under the Facility Leases.                                               

(d)  Certificate of Occupancy.  All Facilities              
currently operating have received all required material approvals               
of governmental authorities (including without limitation                       
material Permits and certificates of occupancy or other similar                 
certificates permitting lawful occupancy of the Facilities)                     
required in connection with the operation thereof and have been                 
operated and maintained in all material respects in accordance                  
with applicable Regulations.                                                    

(e)  Utilities.  All Facilities currently operating are     
supplied with utilities (including without limitation water,                    
sewage, disposal, electricity, gas and telephone) and other                     
material services necessary for the operation of such Facilities                
as currently operated, and, to the knowledge of the Company,                    
there is no condition which would reasonably be expected to                     
result in the termination of the present access from any Facility               
to such utility services.                                                       

(f)  Improvements, Fixtures and Equipment.  The             
improvements constructed on the Facilities, including without                   
limitation all Leasehold Improvements, and all Fixtures and                     
Equipment and other tangible assets owned, leased or used by the                
Company at the Facilities are (i) structurally sound with no                    
known material defects, (ii) in acceptable operating condition                  
and repair in all material respects, subject to ordinary wear and               
tear, (iii) not in need of maintenance, repair or correction                    
except for ordinary routine maintenance and repair, the cost of                 
which would not be material, and (iv) in conformity, in all                     
material respects, with all applicable Regulations.  None of the                
improvements (separate from the Facility) is subject to any                     
commitment or other agreement for their sale or use by any                      
Affiliate of the Company or third parties.                                      

(g)  No Special Assessment.  The Company has received       
no notice and is not aware of any material special assessment                   
relating to any Facility or any portion thereof and, to the                     
knowledge of the Company, there is no pending or threatened (in                 
writing) material special assessment.                                           

5.7. Contracts and Commitments                                        

(a)  Contracts.  Except for Contracts listed on             
Schedule 5.7 or listed as exhibits to the Company's Annual Report               
on Form 10-K for the year ended December 28, 1997 (the foregoing                
contracts are referred to herein as the "Material Contracts"),                  
the Company is not a party to, or bound by, any Contract of any                 
kind to be performed after the date of this Agreement which are                 
of the following types:                                                         

(i)  Contracts involving expenditures or          
Liabilities (other than Facility Leases or Personal Property                    
Leases) (x) entered into in the ordinary course of business in                  
excess of $1,000,000 individually or (y) entered into outside of                
the ordinary course of business in excess of $500,000                           
individually;                                                                   

(ii) Employment contracts, severance agreements or
other contracts involving employment other than "at will"                       
employment or involving annual salary and/or bonus payments,                    
severance payments or the creation of any Liability to make                     
payments in excess of $75,000 or material to the Business, to                   
which any current or former Personnel or stockholder of the                     
Company is a party;                                                             

(iii)     Labor or union contracts;               

(iv) any agreement (or group of related           
agreements) for the purchase or sale of Inventory, including,                   
without limitation, any customer or vendor contracts, (x) in                    
excess of $250,000 individually for agreements (other than                      
purchase orders) entered into on or prior to the date of this                   
Agreement or entered into outside of the ordinary course of                     
business after the date of this Agreement, (y) in excess of                     
$750,000 individually for agreements (other than purchase orders)               
entered into in the ordinary course of business or (z) in excess                
of $3,000,000 individually for purchase orders entered into after               
the date of this Agreement in the ordinary course of business;                  

(v)  Distribution, franchise, license, technical  
assistance, commission, consulting, agency or advertising                       
contracts related to the Assets or the Business, except for those               
providing for payments of less than (x) $250,000 individually for               
those contracts entered into on or prior to the date of this                    
Agreement or outside of the ordinary course of business or (y)                  
$750,000 individually for those contracts entered into in the                   
ordinary course of business after the date of this Agreement;                   

(vi) Options with respect to any real property    
with respect to which the Company is the grantor thereunder or                  
options with respect to any personal property with respect to                   
which the Company is the grantor thereunder having a book value                 
in excess of $250,000 individually;                                             

(vii)     Promissory notes, loans, agreements,    
indentures, evidences of indebtedness, letters of credit,                       
guarantees, or other instruments relating to an obligation to pay               
money of the Company, (x) in excess of $500,000 individually for                
those instruments entered into on or prior to the date of this                  
Agreement, whether the Company shall be the borrower, lender or                 
guarantor thereunder or whereby any Assets are pledged (excluding               
credit provided by the Company in the ordinary course of business               
to purchasers of its products), (y) other than to non-Affiliates                
in the ordinary course of business after the date of this                       
Agreement as permitted by the 1997 Indenture or (z) other than to               
non-Affiliates outside of the ordinary course of business after                 
the date of this Agreement not in excess of $500,000 in the                     
aggregate;                                                                      

(viii)    other than as contemplated by the       
Transactions, Contracts containing covenants limiting the freedom               
of the Company or any officer, director or stockholders of the                  
Company, to (i) engage in any line of business which is                         
competitive with the Business, or (ii) compete with any person;                 

(ix) any agreement (or group of related           
agreements) concerning a partnership or joint venture with any                  
other person;                                                                   

(x)  any agreement of the Company with any of its 
directors, officers, stockholders or employees or any member of                 
any such person's immediate family (x) providing for the                        
furnishing of material services by, (y) providing for the rental                
of material real or personal property from, or (z) otherwise                    
requiring material payments to (other than for services as                      
officers, directors or employees of the Company), any such person               
or any corporation, partnership, trust or other entity in which                 
any such person has a substantial interest as a stockholders,                   
officer, director, trustee or partner;                                          

(xi) any Contract with the United States, any     
state or local government or any agency or department thereof,                  
other than standard data subscription or licensing agreements in                
the ordinary course of business (except for employment training                 
contracts);                                                                     

(xii)     any other agreement (or group of related
agreements) under which the consequences of a default or                        
termination could reasonably be expected to have a Material                     
Adverse Effect; and                                                             

(xiii)    any insurance policy.                   

Notwithstanding the foregoing provisions of this Section 5.7,                   
there are no Contracts for the sale, lease, assignment, transfer                
or other disposition of the Seagoville Facility or to refinance                 
any of the Company's indebtedness set forth on the Interim                      
Balance Sheet.                                                                  

The Company has delivered to the Parent true, correct and                       
complete copies of all of the Contracts listed on Schedule 5.7,                 
including all amendments and supplements thereto.                               

5.8. Absence of Breaches and Defaults.                                

All of the Material Contracts, Facility Leases and      
Personal Property Leases to which the Company is party are valid,               
binding and enforceable against the Company in accordance with                  
their terms (except as such enforceability may be limited by (i)                
bankruptcy, insolvency, moratorium, reorganization and other                    
similar laws affecting creditor's rights generally and (ii) the                 
general principles of equity, regardless of whether asserted in a               
proceeding in equity or at law).  The Company has fulfilled, or                 
taken all action necessary to enable it to fulfill when due, all                
of its material obligations under each Material Contract,                       
Facility Lease and Personal Property Lease.   To the Company's                  
knowledge, (w) all parties to such Material Contracts, Facility                 
Leases and Personal Property Leases have complied in all material               
respects with the provisions thereof, (x) no party is in material               
Default thereunder and (z) no written notice of any claim of                    
material Default has been given to the Company.  The Company has                
no reason to believe that the products and services called for by               
any unfinished Material Contract cannot be supplied in all                      
material respects in accordance with the terms of such Contract,                
including time specifications, and has no reason to believe that                
any unfinished Material Contract will, upon performance by the                  
Company, result in a material loss to the Company.  With respect                
to any Facility Lease, the Company has not received any notice of               
cancellation or termination under any material option or right                  
reserved to the lessor, nor any written notice of material                      
Default, thereunder, except for Defaults that might result from                 
the consummation of the Transactions.                                           

5.9. Permits, Consents and Approvals                                  

(a)  There are no material Permits used in the              
operation of the Business or otherwise held by the Company.  The                
Company has, and at all times has had, all Permits required under               
any Regulation (including Environmental Laws) in the operation of               
the Business or in the ownership of its Assets, and owns or                     
possesses such Permits free and clear of all Encumbrances, except               
such Permits the failure of which to obtain would not have a                    
Material Adverse Effect.  The Company is not in Default, nor has                
the Company received any notice of any claim of Default, with                   
respect to any such material Permit.  Except as otherwise                       
governed by law, all such Permits are renewable by their terms or               
in the ordinary course of business without the need to comply                   
with any special qualification procedures or to pay any amounts                 
other than routine filing fees and except as set forth on                       
Schedule 5.9, will not be materially and adversely affected by                  
the completion of the Transactions.  No present or former                       
stockholders, director, officer or employee of the Company or any               
Affiliate thereof, or any other person, firm, corporation or                    
other entity, owns or has any proprietary, financial or other                   
interest (direct or indirect) in any Permit which the Company                   
owns, possesses or uses.                                                        

(b)  Other than in connection with or in compliance         
with the provisions of the HSR Act, and except as disclosed on                  
Schedule 5.9 hereto, no notice to, declaration, filing or                       
registration with, or Permit from, any domestic or foreign                      
governmental or regulatory body or authority, or any other person               
or entity (other than approval by the Stockholders), is required                
to be made or obtained by the Company in connection with the                    
execution, delivery or performance of this Agreement and the                    
consummation of the Transactions.  Except as set forth on                       
Schedule 5.9, (a) none of the rights of the Company in the                      
Material Contracts, the Personal Property Leases or material                    
Permits will be impaired by reason of the consummation of the                   
Transactions, and (b) except as contemplated by the Transactions,               
all of the rights of the Company in the Material Contracts and                  
the Personal Property Leases will be enforceable by the Company                 
after the Closing to the same extent as if such Transactions had                
not been consummated.                                                           

5.10.     No Conflict or Violation                                    
Except as set forth on Schedule 5.10, neither the       
execution, delivery or performance of this Agreement nor the                    
consummation of the Transactions, nor compliance by the Company                 
with any of the provisions hereof, will (a) violate or conflict                 
with any provision of the Fourth Restated Certificate of                        
Incorporation or Bylaws of the Company, (b) violate, conflict                   
with, or result in or constitute a Default under, or result in                  
the termination of, or accelerate the performance required by, or               
result in a right of termination or acceleration under, or result               
in the creation of any Encumbrance upon any of the Assets under,                
any of the terms, conditions or provisions of any Contract,                     
indebtedness, note, bond, indenture, security or pledge                         
agreement, commitment, license, Lease (except for Facility                      
Leases), franchise, Permit, agreement, or other instrument or                   
obligation (i) to which the Company is a party or (ii) by which                 
the Assets are bound, (c) violate any Regulation or Court Order,                
(d) impose any Encumbrance on the Assets or the Business, except                
in the case of each of clauses (b), (c) and (d) above, for such                 
violations, Defaults, terminations, accelerations or creations of               
Encumbrances which, in the aggregate would not have a Material                  
Adverse Effect.                                                                 

5.11.     Financial Statements                                        

The Financial Statements (a) are in accordance with         
the books and records of the Company, (b) have been prepared in                 
accordance with GAAP throughout the periods covered thereby, and                
(c) fairly and accurately present the Assets, Liabilities                       
(including all reserves), financial position, stockholders'                     
equity, cash flow and results of operations of the Company as of                
the respective dates thereof and the results of operations and                  
changes in cash flows for the periods then ended.  The Fiscal                   
Year-End Financial Statements have been examined by Price                       
Waterhouse LLP, independent certified public accountants, whose                 
report thereon is included with such Fiscal Year-End Financial                  
Statements.                                                                     

5.12.     Litigation                                                  

Except as set forth on Schedule 5.12 or except for          
such Actions described in Section 7.1 hereof, there are no                      
Actions pending, or to the knowledge of the Company, threatened                 
(in writing) (a) against, related to or affecting (i) the                       
Company, the Business or the Assets (including with respect to                  
Environmental Laws), (ii) any Employee Plan of the Company or any               
trust or other funding instrument, fiduciary or administrator                   
thereof, (iii) any officers or directors of the Company as such,                
or (v) the Transactions or before or by any federal, state,                     
municipal or other governmental department, commission, board,                  
bureau, agency or instrumentality, domestic or foreign, any of                  
the foregoing of which would reasonably be expected to result in                
Damage to the Company in excess of $1.0 million individually or                 
in the aggregate, (b) seeking to delay, limit or enjoin the                     
Transactions, (c) that involve the risk of criminal liability of                
the Company, or (d) in which the Company is a plaintiff,                        
including any derivative suits brought by or on behalf of the                   
Company which involve claims in excess of $500,000 individually                 
or in the aggregate, except for collection suits which involve                  
claims in excess of $1,000,000 individually or $2,000,000 in the                
aggregate.  The Company is not in Default with respect to or                    
subject to any Court Order, and there are no material unsatisfied               
judgments against the Company, the Business or the Assets.                      
Except as set forth on Schedule 5.12, there are no Court Orders                 
or agreements with, or liens by, any governmental authority or                  
quasi-governmental entity relating to any Environmental Law which               
regulate, obligate, bind or in any way affect the Company or any                
Facility.                                                                       

5.13.     Labor Matters                                               

Except as set forth on Schedule 5.13, the Company is        
not a party to any labor agreement with respect to its employees                
with any labor organization, union, group or association and                    
there are no employee unions (nor any other similar labor or                    
employee organizations).  Except as set forth on Schedule 5.13,                 
in the past five years, the Company has not experienced any                     
attempt by organized labor or its representatives to make the                   
Company conform to demands of organized labor relating to its                   
employees or to enter into a binding agreement with organized                   
labor that would cover the employees of the Company.  Except as                 
set forth on Schedule 5.13, there is no labor strike or labor                   
disturbance pending or, to the knowledge of Company, threatened                 
against the Company nor is any grievance currently being                        
asserted, and in the past five years the Company has not                        
experienced a work stoppage or other labor difficulty. Except as                
set forth on Schedule 5.13, there is no unfair labor practice                   
charge or complaint against the Company pending before the                      
National Labor Relations Board or any other domestic or foreign                 
governmental agency and, to the knowledge of the Company, there                 
are no facts or information which would give rise thereto.                      

5.14.     Books and Records                                           

The Company has made and kept Books and Records and         
accounts, which, in reasonable detail, accurately and fairly                    
reflect the activities of the Company.  The minute books of the                 
Company accurately and adequately reflect all action previously                 
taken by the stockholders, board of directors and committees of                 
the board of directors of the Company.  The copies of the stock                 
book records of the Company heretofore delivered to the Purchaser               
and the Parent are true, correct and complete, and accurately                   
reflect all transactions effected in the stock of the Company                   
through and including the date hereof.                                          

5.15.     Compliance with Law                                         

Except as set forth on Schedule 5.15, neither the           
Company nor the conduct of the Business have violated or have                   
failed or are failing to be in compliance with all Regulations                  
and Court Orders relating to the Assets or the Business or                      
operations of the Company, except where the violation or failure                
to comply, individually or in the aggregate, would not have a                   
Material Adverse Effect. Except as set forth on Schedule 5.15,                  
the Company, in the conduct of the Business, is in conformity                   
with all energy, public utility, zoning, building and health                    
codes, regulations and ordinances, OSHA and Environmental Laws                  
and all other foreign, federal, state, and local governmental and               
regulatory requirements applicable to the conduct of the                        
Business, except where such violation or failure to comply,                     
individually or in the aggregate, would not have a Material                     
Adverse Effect. Except as set forth on Schedule 5.15, the Company               
has received no notice to the effect that, or otherwise been                    
advised in writing that, the Company is not in compliance with                  
any such Regulations or Court Orders which non-compliance could,                
individually or in the aggregate, have a Material Adverse Effect.               
The Company has no reason to anticipate that any existing                       
circumstances are likely to result in violations of any of the                  
foregoing which failure or violation could, individually or in                  
the aggregate, have a Material Adverse Effect.                                  

5.16.     No Other Agreements to Sell Assets or Capital               
Stock of the Company                                                            

None of the Company, its officers, directors or             
Affiliates nor, to the knowledge of the Company, its                            
Stockholders, have any commitment or legal obligation, absolute                 
or contingent, to any other person or firm, other than as                       
contemplated by the Transactions, to sell, assign, transfer or                  
effect a sale of any of the Assets (other than inventory or real                
property in the ordinary course of business), to sell or effect a               
sale of the capital stock of the Company other than Company Stock               
Options and Company Warrants, to effect any merger,                             
consolidation, liquidation, dissolution or other reorganization                 
of the Company, or to enter into any agreement or cause the                     
entering into of an agreement with respect to any of the                        
foregoing.                                                                      

5.17.     Proprietary Rights                                          

(a)  Proprietary Rights.  Schedule 5.17 lists all of        
the Copyrights and Trademarks of the Company.  Schedule 5.17 also               
sets forth:  (i) for each registered Trademark, the application                 
serial number or registration number, the class of goods covered                
and the expiration date for each country in which a Trademark has               
been registered, (ii) for each registered Copyright, the number                 
and date of filing for each country in which a Copyright has been               
filed, and (iii) for each registered service mark, the service                  
mark serial number or the service mark registration number, the                 
service mark class of goods covered and the service mark                        
expiration date for each country in which a service mark has been               
registered.  There are no Patents or pending patent applications                
owned, controlled, created or used by or on behalf of the Company               
in which the Company has any interest.                                          

(b)  Royalties and Licenses.  Schedule 5.17 identifies      
any Proprietary Rights that any third party owns and that the                   
Company uses or proposes to use in the Business, and specifies                  
whether such use is or will be pursuant to license, sublicense,                 
agreement or permission.                                                        

(c)  Ownership.  Except as disclosed on Schedule 5.17,      
the Company owns or possesses adequate and enforceable licenses                 
or otherwise has the sole right to use all of the Proprietary                   
Rights used by or on behalf of the Company without any conflict                 
with or infringement of the rights of others.  All of the                       
Proprietary Rights are valid and enforceable rights of the                      
Company and, upon the Closing will be valid and enforceable                     
rights of the Company, and will not cease to be valid and in full               
force and effect by reason of the execution, delivery and                       
performance of this Agreement or the consummation of the                        
Transactions.  All registered designs and Trademarks listed on                  
Schedule 5.17 have been duly issued and all of the other                        
Proprietary Rights exist, are registered and are subsisting.                    
None of the Proprietary Rights is involved in any pending or                    
threatened (in writing) litigation. Except as disclosed on                      
Schedule 5.17, to the Company's knowledge, no other firm,                       
corporation, partnership, association, business organization or                 
person (i) has the right to use any of the Trademarks or other                  
such Proprietary Rights of the Company on the goods on which they               
are now being used either in identical form or in such near                     
resemblance thereto as to be likely, when applied to the goods of               
any such person, to cause confusion with such Trademarks or other               
Proprietary Rights or to cause a mistake or to deceive, (ii) has                
notified the Company that it is claiming any ownership of or                    
right to use such Proprietary Rights, or (iii) is infringing upon               
any Proprietary Rights in any way.  The use of the Proprietary                  
Rights by the Company does not and, upon the consummation of the                
Transactions, the use of the Proprietary Rights by the Company                  
will not, conflict with, infringe upon or otherwise violate the                 
rights of any third party in or to such Proprietary Rights, and                 
no Action has been instituted against or notices received by the                
Company that are presently outstanding alleging that the                        
Company's use of the Proprietary Rights infringes upon or                       
otherwise violates any rights of a third party in or to such                    
Proprietary Rights.  There are not any restrictions on the rights               
of the Company, and it is reasonably expected that after the                    
Closing there will not be, any restrictions on the Company's                    
right, to sell products or services provided, by the Company in                 
connection with the Business.  No breach of the provisions of                   
this Section 5.17(c) shall constitute a breach of this Agreement                
unless all such breaches are reasonably likely to result in                     
Damages to the Company or the Parent in excess of $500,000.                     

5.18.     Employee Benefit Plans                                      

(a)  Schedule 5.18(a) sets forth a true and complete        
list of all Employee Benefit Plans and all Benefit Arrangements                 
(i) which are maintained, contributed to or required to be                      
contributed to by the Company or any entity that, together with                 
the Company as of the relevant measuring date under ERISA, is or                
was required to be treated as a single employer under Section 414               
of the Code ("ERISA Affiliate") or under which the Company or any               
ERISA Affiliate may incur any liability, and (ii) which cover the               
employees, former employees, directors or former directors of the               
Company or any ERISA Affiliate ("Employee Plans").                              

(b)  A true and complete copy of each written Employee      
Plan that covers employees or former employees of the Company,                  
including each amendment thereto and any trust agreement,                       
insurance contract, collective bargaining agreement, or other                   
funding or investment arrangements for the benefits under such                  
Employee Plan, has been made available to Purchaser.  In                        
addition, with respect to each such Employee Plan that is an                    
Employee Benefit Plan, the Company has made available to                        
Purchaser the three most recently filed Federal Forms 5500, the                 
most recent summary plan description (including any summaries of                
material modifications), the most recent IRS determination                      
letter, if applicable, and all other material employee                          
communications with respect to each such Employee Benefit Plan.                 

(c)  Except as set forth on Schedule 5.18(c):               

(i)  neither the Company nor any ERISA Affiliate  
sponsors or, since January 1, 1993, has sponsored, maintained,                  
contributed to or incurred an obligation to contribute to any                   
Employee Benefit Plan regulated under Title IV of ERISA,                        
including any "multiemployer plan," as defined in Sections 3(37)                
and 4001(a)(3) of ERISA, and neither the Company nor any ERISA                  
Affiliate has any Liability under or pursuant to any Employee                   
Benefit Plan regulated under Title IV of ERISA;                                 

(ii) neither the Company  nor any ERISA Affiliate 
sponsors or has previously sponsored, maintained, contributed to                
or incurred an obligation to contribute to any Employee Benefit                 
Plan that provides or will provide benefits described in Section                
3(1) of ERISA to any former employee or retiree of the Company or               
any ERISA Affiliate, except as required under Part 6 of Title I                 
of ERISA and Section 4980B of the Code;                                         

(iii)     there has been no "prohibited           
transaction," as defined in Section 406 of ERISA or Section 4975                
of the Code (other than any such transaction which is exempt                    
under Section 408 of ERISA or 4975 of the Code, respectively),                  
with respect to any Employee Plan, which could result, directly                 
or indirectly, in any material liability of the Company or any of               
the ERISA Affiliates;                                                           

(iv) all Employee Plans that cover or have covered
employees or former employees of the Company have been maintained               
and operated, and currently are, in compliance in all material                  
respects with their terms, the requirements prescribed by any and               
all applicable laws (including ERISA and the Code), orders, or                  
governmental rules and regulations in effect with respect                       
thereto, and the Company and its ERISA Affiliates have performed                
all material obligations required to be performed by them under,                
are not in any material respect in default under or in violation                
of, and have no knowledge of any default or violation by any                    
other party to, any of the Employee Plans;                                      

(v)  each Employee Plan that covers or has covered
employees or former employees of the Company and is intended to                 
qualify under Section 401(a) of the Code and each trust                         
established pursuant to each such Employee Plan that is intended                
to qualify under Section 501(a) of the Code is the subject of a                 
favorable determination letter from the IRS, a copy of which has                
been delivered to Purchaser, and nothing has occurred which may                 
reasonably be expected to impair such determination or otherwise                
adversely affect the tax-qualified status of such Employee Plan;                

(vi) the Company and its ERISA Affiliates have    
made full and timely payment of all amounts required to be                      
contributed under the terms of each Employee Plan and applicable                
law or required to be paid as expenses under such Employee Plan;                

(vii)     there is no contract, agreement,        
Employee Benefit Plan or Benefit Arrangement covering any former                
employee, director or agent of the Company that provides for the                
payment by the Company of any amount that would not be deductible               
under Section 162(a)(1) or 404 of the Code or that would be an                  
"excess parachute payment," within the meaning of Section 280G of               
the Code;                                                                       

(viii)    no employee, former employee, director  
or agent of the Company will accrue or receive additional                       
benefits, service or accelerated rights to payments of benefits                 
under any Employee Plan or become entitled to severance,                        
termination allowance or similar payments as a direct result of                 
the transactions contemplated by this Agreement (Schedule 5.18(c)               
sets forth, for each employee or director, the maximum amount of                
such benefit, payment or allowance payable to such employee or                  
director pursuant to the Company's Severance Plan which amount                  
shall not exceed $4,156,000 in the aggregate for all employees                  
and directors plus additional severance payments payable pursuant               
to the Company's Severance Plan to such employees and directors                 
as a result of normal and customary salary increases after the                  
date of such schedule in the ordinary course of business payable                
to such employees and directors);                                               

(ix) other than claims for benefits in the        
ordinary course, there is no material claim, suit, action,                      
dispute, arbitration or legal, administrative or other                          
proceeding, including any governmental investigation or audit or                
voluntary compliance resolution or closing agreement program                    
proceeding, pending, or, to the knowledge of the Company,                       
threatened, alleging any breach of the terms of any Employee Plan               
or of any fiduciary duty thereunder or violation of any                         
applicable law with respect to any such Employee Plan;                          

(x)  with respect to any Employee Plan that is    
self-funded (in whole or in part), no material claims have been                 
made that have not yet been paid and, to the best knowledge of                  
the Company, no injury, illness or other medical condition has                  
been incurred with respect to which material claims may be made                 
pursuant to such Employee Plan;                                                 

(xi) the Company does not maintain or have any    
obligation to contribute to any "voluntary employees' beneficiary               
association," within the meaning of Section 501(c)(9) of the                    
Code.                                                                           

5.19.     Tax Matters                                                 
(a)  Filing of Tax Returns.  The Company and any            
affiliated group of which the Company is now or was a common                    
parent or member have timely filed with the appropriate taxing                  
authorities all Tax Returns and information returns required to                 
be filed.  Such Tax Returns and information returns as filed are                
complete and accurate in all material respects.  Except as                      
specified on Schedule 5.19, none of the Company or any group of                 
which the Company is now or was a member has requested any                      
extension of time within which to file Tax Returns in respect of                
any Taxes.  The Company has made available to Purchaser true and                
complete copies of (i) the federal, state, local and foreign Tax                
Returns of the Company for the years ended December 28, 1997,                   
December 29, 1996 and December 31, 1995, and (ii) all examination               
reports and statements of deficiencies assessed against or agreed               
to by the Company since January 1, 1990.                                        

(b)  Payment of Taxes.  All material Taxes due from the     
Company, or for which it could be liable, in respect of periods                 
beginning before the Effective Date have been or will be timely                 
paid or an adequate reserve has been established therefor, as set               
forth on Schedule 5.19 or the Interim Financial Statements of the               
Company, and the Company has no material Liability for Taxes in                 
excess of the amounts so paid or reserves so established.  All                  
Taxes that the Company is required by law to withhold or collect                
have been duly withheld or collected and have been timely paid                  
over to the appropriate governmental authorities to the extent                  
due and payable.                                                                

(c)  Audits, Investigations or Claims.  Except as set       
forth on Schedule 5.19, (i), no deficiencies for Taxes for which                
the Company is or may be liable have been claimed, proposed or                  
assessed by any taxing or other governmental authority;                         
(ii) there are no pending or threatened audits, assessments or                  
other Actions for or relating to any Liability in respect of                    
Taxes for which the Company is or may be liable; (iii) there are                
no matters under discussion with any governmental authorities, or               
known to the Company, with respect to such Taxes that are likely                
to result in an additional material Liability of the Company for                
Taxes; and (iv) no extension of a statute of limitations relating               
to Taxes is in effect with respect to the Company.  Audits of                   
federal, state, local and foreign Tax Returns by the relevant                   
taxing authorities have been completed for the periods set forth                
on Schedule 5.19 and, except as set forth in such Schedule, the                 
Company has not been notified that any taxing authority intends                 
to audit a Tax return for any other period.                                     

(d)  Liens.  There are no Encumbrances for Taxes (other     
than for current Taxes not yet due and payable) on any of the                   
Assets.                                                                         

(e)  Tax Elections.  Except as set forth on                 
Schedule 5.19, the Company (i) has not consented at any time                    
under Section 341(f)(1) of the Code to have the provisions of                   
Section 341(f)(2) of the Code apply to any disposition of any the               
Assets; (ii) has not agreed, nor is it required, to make any                    
adjustment under Section 481(a) of the Code by reason of a change               
in accounting method or otherwise; (iii) has not made an                        
election, nor is it required, to treat any of the Assets as owned               
by another Person pursuant to the provisions of Section 168(f) of               
the Internal Revenue Code of 1954, as in effect immediately                     
before the enactment of the Tax Reform Act of 1986  or as tax-                  
exempt bond financed property or tax-exempt use property within                 
the meaning of Section 168 of the Code; or (iv) has not made any                
of the foregoing elections, nor is it required, to apply any of                 
the foregoing rules under any comparable state, local or foreign                
Tax provision.  The Company does not own any property of a                      
character, the indirect transfer of which pursuant to this                      
Agreement would give rise to any material documentary, stamp or                 
other transfer Tax.                                                             

(f)  Prior Affiliated Groups.  Except as set forth on       
Schedule 5.19, the Company is not nor has it ever been a member                 
of an affiliated group of corporations within the meaning of                    
Section 1504 of the Code.                                                       

(g)  Tax Sharing Agreements.  Except as set forth on        
Schedule 5.19, the Company is not nor has it ever been a party to               
any Tax-sharing agreement or similar arrangement (including any                 
indemnity arrangement) with respect to or involving the Company,                
and after the Effective Date, the Company will not be bound by                  
any such Tax-sharing agreement or similar arrangement entered                   
into prior to the Effective Date or have any Liability thereunder               
for amounts due in respect of periods prior to the Effective                    
Date.                                                                           

(h)  Partnerships.  Except as set forth on Schedule         
5.19, the Company has no interest in nor is it subject to any                   
joint venture, partnership, or other arrangement or contract                    
which is treated as a partnership for federal income tax                        
purposes, and the Company is not a successor to any other Person                
by way of merger, reorganization or similar transaction.                        

(i)  U.S. Real Property Holding Corporations.  The          
Company is not, and was not on any "determination date" as                      
defined in Treasury Regulation Section 1.897-2(c) during the five-              
year period ending on the Effective Date, a United States real                  
property holding corporation as defined in Section 897(c)(2) of                 
the Code.                                                                       

(j)  Federal Income Tax Refund.  The federal income tax     
refund of $4.5 million included as an asset on the Interim                      
Balance Sheet has been paid in full by the Internal Revenue                     
Service, and the Company is entitled to retain the full amount of               
such refund.                                                                    

5.20.     Purchase Commitments and Outstanding Bids                   

There are no orders or commitments for the purchase         
of supplies by the Company not made in the ordinary course of                   
business.  As of the date of this Agreement, there are no claims                
against the Company to return material amounts of merchandise by                
reason of alleged overshipments, defective merchandise or                       
otherwise, or of merchandise in the hands of customers under an                 
understanding that such merchandise would be returnable.   There                
is no outstanding bid, proposal, Contract or unfilled order which               
relates to the Assets which will or would, if accepted, have a                  
Material Adverse Effect, individually or in the aggregate.                      

5.21.     Payments                                                    

To its knowledge, the Company has not (i) directly        
or indirectly, paid or delivered any fee, commission or other sum               
of money or item or property, however characterized, to any                     
finder, agent, client, customer, supplier, government official or               
other party, in the United States or any other country, which is                
in any manner related to the Business, Assets or operations of                  
the Company, which is illegal under any federal, state or local                 
laws of the United States (including without limitation the U.S.                
Foreign Corrupt Practices Act) or any other country having                      
jurisdiction, (ii) participated, directly or indirectly, in any                 
boycotts or other similar practices affecting any of its actual                 
or potential customers, (iii) established or maintained any                     
unrecorded fund or asset for any purpose or made any false                      
entries on the Books and Records of the Company for any reason.                 

5.22.     Compliance With Environmental Laws                          

Except as set forth on Schedule 5.22:                       

(a)  there are no Hazardous Substances being used,          
generated, treated, stored, transported or disposed on, under,                  
about or from any Facility or any asset currently or previously                 
owned, leased or operated by the Company during the period the                  
Company owned, operated or leased such Facility or asset, other                 
than lubricants and small quantities of other Hazardous                         
Substances constituting inventory or supplies used in the                       
ordinary course of the operation of the Facilities and such                     
assets, and then only in compliance with all Environmental Laws,                
nor have Hazardous Substances been used, generated, treated,                    
stored, transported or disposed of on, under, about or from any                 
Facilities or assets previously owned, operated or leased by the                
Company during the period the Company owned, operated or leased                 
such Facilities or assets which would create an Environmental                   
Condition likely to result in a Material Adverse Effect;                        

(b)  each of the Facilities, any assets currently or        
previously owned, leased or operated by the Company, have at all                
times when owned, leased or operated by the Company been owned,                 
leased and operated in substantial compliance with all                          
Environmental Laws and in a manner that will not give rise to any               
material liability on the part of the Parent or the Company under               
any Environmental Law;                                                          

(c)  to the Company's knowledge, (i) no prior owner,        
lessee or operator of any Facility or any assets currently or                   
previously owned, leased or operated by the Company, operated any               
of such assets in a manner that would give rise to any material                 
Liability under any Environmental Law; and (ii) except as                       
provided in Section 5.26(a) above, there has been no Hazardous                  
Substance used, generated, treated, stored, transported, disposed               
of or otherwise located on, about or from any Facility or any                   
asset currently or previously owned, leased or operated by the                  
Company;                                                                        

(d)  true, complete and correct copies of all               
environmental assessments, audits, reports, surveys and                         
engineering and/or soil tests, including any drafts, in the                     
Company's possession or control which have been conducted with                  
respect to any of the Facilities or any assets currently or                     
previously owned, leased or operated by the Company have                        
previously been made available to the Parent;                                   

(e)  the Company has not received any uncured notice        
that it or any other Person is or was claimed to be in violation                
of, or in non-compliance with, the conditions of any Permit                     
relating to, or the provisions of, any Environmental Law with                   
respect to any Facility or any assets currently or previously                   
owned, leased or operated by the Company nor is the Company aware               
of any information which could provide the basis for such notice;               

(f)  there is no pending or threatened Action against       
the Company under any Environmental Law, nor any basis for any                  
such Action likely to result in a Material Adverse Effect;                      

(g)  the Company has not released any other Person from     
any claim with respect to the Facilities or any assets currently                
or previously owned, leased or operated by the Company under any                
Environmental Law nor has it waived any rights concerning any                   
Environmental Condition;                                                        

(h)  there are no consent decrees, judgments, judicial      
or administrative orders or arguments with, or liens by, any                    
governmental authority or quasi-governmental authority relating                 
to any Environmental Law which regulate, obligate, bind or in any               
way affect the Company's operations;                                            

(i)  the Company does not manufacture or distribute any     
product in the state of California which requires the warning                   
mandated by the California Safe Drinking Water and Toxic                        
Enforcement Act of 1986, also known as Proposition 65, California               
Health & Safety Code 25249.5 et seq.;                                           

(j)  there are no Environmental Conditions in any way       
relating to the Facilities or any assets currently or previously                
owned, leased or operated by the Company likely to result in a                  
Material Adverse Effect;                                                        

(k)  to the knowledge of the Company, there is not now      
nor has there ever been in the past, any underground or                         
aboveground storage tanks or associated piping at any Facility or               
asset where the installation, use, maintenance, repair, testing,                
closure or removal of such tank or pipeline was not in compliance               
with all Environmental Laws and there has been no release from                  
any such tank or pipeline;                                                      

(l)  the Company is not, singularly or collectively, a      
party, whether as a direct signatory or as successor, assign or                 
third party beneficiary, or otherwise bound, to any Lease or                    
other Contract under which the Company is obligated by or                       
entitled to the benefits of, directly or indirectly, any                        
representation, warranty, indemnification, covenant, restriction                
or other undertaking concerning Environmental Conditions; and                   

(m)  to the knowledge of the Company, the Company has       
given all notices and warnings, made all reports, and has kept                  
and maintained all records required by and in compliance with all               
Environmental Laws as to all matters the failure of which is                    
likely to result in a Material Adverse Effect.                                  

5.23.     Banking Relationships                                       

As soon as practicable after the date of this               
Agreement (but in no event later than 20 days thereafter), the                  
Company will provide to the Parent Schedule 5.23 which will set                 
forth a complete and accurate description of all arrangements                   
that the Company has with any banks, savings and loan                           
associations or other financial institutions providing for                      
checking accounts, safe deposit boxes, borrowing arrangements,                  
and certificates of deposit or otherwise, indicating in each case               
account numbers, if applicable, and the person or persons                       
authorized to act or sign on behalf of the Company in respect of                
any of the foregoing.                                                           

5.24.     SEC Documents; Undisclosed Liabilities                      

The Company has been subject to the reporting               
requirements of Section 13 of the Exchange Act for at least 90                  
days and has timely filed all required reports, schedules, forms,               
statements and other documents required to be filed under the                   
Securities Act and the Exchange Act with the Commission since                   
May 28, 1997 (the "Company SEC Documents").  As of their                        
respective dates, the Company SEC Documents complied in all                     
material respects with the requirements of the Securities Act or                
the Exchange Act, as the case may be, and the rules and                         
regulations of the Commission promulgated thereunder applicable                 
to such Company SEC Documents.  Except to the extent that                       
information contained in any Company SEC Document has been                      
revised or superseded by a later filed Company SEC Document, none               
of the Company SEC Documents contains any untrue statement of a                 
material fact or omits to state any material fact required to be                
stated therein or necessary in order to make the statements                     
therein, in light of the circumstances under which they were                    
made, not misleading.  The historical financial statements the                  
Company included in the Company SEC Documents comply as to form                 
in all material respects with applicable accounting requirements                
and the published rules and regulations of the SEC with respect                 
thereto.                                                                        

5.25.     Material Misstatements Or Omissions                         

No representation or warranty by the Company in this        
Agreement (including without limitation the Schedules and all                   
exhibits hereto),  the other Transaction Documents and all                      
certificates and other documents to be delivered to the Parent or               
Purchaser at Closing pursuant to the Transaction Documents                      
contains or will contain any untrue statement of a material fact,               
or omits or will omit to state any material fact necessary to                   
make the statements or facts contained therein, in light of the                 
circumstances under which they were made, not misleading.                       

ARTICLE VI.               
REPRESENTATIONS AND WARRANTIES OF               
THE PARENT AND THE PURCHASER                

The Purchaser and the Parent hereby represent and           
warrant to the Company that, the following representations and                  
warranties are, as of the date hereof, and will be, as of the                   
Effective Date, true and correct:                                               

6.1. Organization                                                     

Each of the Parent and the Purchaser is a                   
corporation duly organized, validly existing and in good standing               
under the laws of its state of incorporation.  The Parent has                   
full corporate power and authority to conduct its business as it                
is presently being conducted and to own and lease its properties.               

6.2. Authorization                                                    

The Parent and the Purchaser have all requisite             
corporate power and authority to execute and deliver the                        
Transaction Documents.  Each of the Parent and the Purchaser has                
all requisite power and authority to consummate the Transactions                
and to perform its obligations under the Transaction Documents                  
and no other corporate proceedings on the part of the Parent or                 
the Purchaser are necessary to authorize the Transaction                        
Documents and the Transactions.  The execution and delivery of                  
the Transaction Documents by the Parent and the Purchaser and the               
consummation by the Parent and the Purchaser of the Transactions                
have been duly approved by the board of directors of each of the                
Parent and the Purchaser and the stockholder of the Purchaser.                  
This Agreement has been duly executed and delivered by the Parent               
and the Purchaser and is a legal, valid and binding obligation of               
the Parent and the Purchaser enforceable against them in                        
accordance with its terms, and each of the other Transaction                    
Documents will be, as of the Effective Date, duly executed and                  
delivered by the Parent and the Purchaser and will be a legal,                  
valid and binding obligation of the Parent and the Purchaser                    
enforceable against them in accordance with its terms, in each                  
case except as such enforceability may be limited by (i)                        
bankruptcy, insolvency, moratorium, reorganization and other                    
similar laws affecting creditors' rights generally and (ii) the                 
general principals of equity, regardless of whether asserted in a               
proceeding in equity or at law.                                                 

6.3. Consents and Filings                                             

Other than in connection with or in compliance with         
the provisions of the HSR Act, no notice to, declaration, filing                
or registration with, or permit from, any domestic or foreign                   
governmental or regulatory body or authority, or any other person               
or entity, is required to be made or obtained by the Parent or                  
the Purchaser in connection with the execution, delivery or                     
performance of this Agreement and the consummation of the                       
Transactions.                                                                   

6.4. No Conflict or Violation                                         

Neither the execution, delivery or performance of           
this Agreement by the Parent or the Purchaser nor the                           
consummation of the Transactions, nor compliance by the Parent or               
the Purchaser with any of the provisions hereof, will (a) violate               
or conflict with any provision of the Articles of Incorporation                 
or Bylaws of the Parent or the Certificate of Incorporation or                  
Bylaws of the Purchaser, (b) violate, conflict with, or result in               
or constitute a Default under, or result in the termination of,                 
or accelerate the performance required by, or result in a right                 
of termination or acceleration under, or result in the creation                 
of any Encumbrance upon any of the assets of the Parent under,                  
any of the terms, conditions or provisions of any contract,                     
indebtedness, note, bond, indenture, security or pledge                         
agreement, commitment, license, lease, franchise, permit,                       
agreement, or other instrument or obligation (i) to which the                   
Parent or the Purchaser is a party or (ii) by which the Parent's                
assets are bound, (c) violate any Regulation or Court Order, (d)                
impose any Encumbrance on the Parent's assets, except in the case               
of each of clauses (b), (c) and (d) above, for such violations,                 
Defaults, terminations, accelerations or creations of                           
Encumbrances which, in the aggregate would not have a material                  
adverse effect on the financial condition or results of                         
operations of the Parent and its subsidiaries, taken as a whole.                

ARTICLE VII.                
ADDITIONAL AGREEMENTS AND COVENANTS OF THE COMPANY,               
THE PURCHASER AND THE PARENT                
7.1. Further Assurances                                               

Upon the terms and subject to the conditions                
contained herein, each of the parties hereto agree: (a) to                      
cooperate with one another in determining whether any filings are               
required to be made with or Consents or Permits required to be                  
obtained from, any governmental authority in any jurisdiction                   
under any Regulation or any lender, lessor or other third party                 
in connection with the Contracts, the Proprietary Rights and                    
Leases, or otherwise, prior to the Effective Date in connection                 
with the consummation of the Transactions and cooperate in making               
any such filings promptly and in seeking timely to obtain any                   
such Consents and Permits; (b) to make their respective filings                 
promptly and any other required or requested submissions under                  
the HSR Act; (c) use all commercially reasonable efforts to                     
defend all Actions challenging this Agreement or the consummation               
of the Transactions and use all commercially reasonable efforts                 
to lift or rescind any injunction or restraining order or other                 
Court Order adversely affecting the ability of the parties to                   
consummate the Transactions; and (d) to use all commercially                    
reasonable efforts to take, or cause to be taken, all actions and               
to do, or cause to be done, all other things necessary, proper or               
advisable to consummate and make effective the Transactions.                    

7.2. No Solicitation                                                  

(a)  No Solicitation.  From the date hereof through the     
Effective Date or the earlier termination of this Agreement, the                
Company shall not, directly or indirectly (whether on its own or                
through its Representatives), enter into, solicit, initiate or                  
continue any discussions or negotiations with, or encourage or                  
respond to any inquiries or proposals by, or participate in any                 
negotiations with, or provide any information to, or otherwise                  
cooperate in any other way with, any corporation, partnership,                  
person or other entity or group, other than the Purchaser, the                  
Parent and their respective Representatives, concerning any sale                
of all or a portion of the Assets (except in the ordinary course                
of business) or the Business, or of any shares of capital stock                 
of the Company, or any merger, consolidation, liquidation,                      
dissolution or similar transaction involving the Company (each                  
such transaction being referred to herein as a "Proposed                        
Acquisition Transaction"); provided, however, that consistent                   
with its fiduciary obligations under applicable law as advised by               
outside legal counsel, the Company may participate in any                       
discussions or negotiations regarding, and may furnish to any                   
other person information with respect to, any of the foregoing.                 
The Company hereby represents that it is not now engaged in                     
discussions or negotiations with any party other than the                       
Purchaser and the Parent with respect to any of the foregoing.                  
The Company shall notify the Purchaser and the Parent promptly                  
(orally and in writing) if any such written offer, or any inquiry               
or contact with any person with respect thereto, is made and                    
shall provide the Purchaser and the Parent with a copy of such                  
offer and shall keep the Purchaser and the Parent informed on the               
status of any negotiations regarding such offer.  The Company                   
agrees not to release any third party from, or waive any                        
provision of, any confidentiality or standstill agreement to                    
which the Company is a party.                                                   

(b)  Notification.  The Company will immediately notify     
the Purchaser and the Parent if any discussions or negotiations                 
are sought to be initiated, any inquiry or proposal is made, or                 
any information is requested with respect to any Proposed                       
Acquisition Transaction and notify the Purchaser and the Parent                 
of the terms of any proposal which it may receive in respect of                 
any such Proposed Acquisition Transaction, including without                    
limitation the identity of the prospective purchaser or                         
soliciting party.  The Company shall also provide the Purchaser                 
and the Parent with a copy of any offer and shall keep the                      
Purchaser and the Parent informed on the status of any                          
negotiations regarding such offers.  The Company agrees not to                  
release any third party from, or waive any provision of, any                    
confidentiality or standstill agreement to which the Company is a               
party.                                                                          

7.3. Notification of Certain Matters                                  

From the date hereof through the Closing, the               
Company shall give prompt notice to the Purchaser and the Parent                
of (a) the occurrence, or failure to occur, of any event which                  
occurrence or failure would be likely to cause any representation               
or warranty contained in this Agreement or in any exhibit or                    
schedule hereto to be untrue or inaccurate in any material                      
respect and (b) any material failure of the Company or any of its               
Affiliates, or of any of their respective stockholders or                       
Representatives, to comply with or satisfy any covenant,                        
condition or agreement to be complied with or satisfied by it                   
under this Agreement or any exhibit or schedule hereto; provided,               
however, that such disclosure shall not be deemed to cure any                   
breach of a representation, warranty, covenant or agreement or to               
satisfy any condition.  If the senior officers of Purchaser or                  
the Parent are or become aware of any event listed in (a) or (b)                
above, the Parent and the Purchaser shall give prompt written                   
notice thereof to the Company; it being understood that such                    
senior officers' awareness of such event shall not limit, reduce                
or affect any Liability or obligation the Company may have to the               
Purchaser or the Parent as a result of such event.  The Company                 
shall promptly notify the Purchaser and the Parent of any                       
Default, the threat or commencement of any Action, or any                       
development that occurs before the Closing that could in any way                
result in a Material Adverse Change.                                            

7.4. Access to Information                                            

From the date hereof through the Effective Date, the        
Purchaser and the Parent intend to conduct a review of the                      
business and financial condition of the Company.  In connection                 
with such review:                                                               

(a)  The Company shall, and shall cause its                 
Representatives to afford the Purchaser's and the Parent's                      
Representatives complete access at all reasonable times to the                  
Assets for the purpose of inspecting the same (including physical               
and engineering inspections of the improvements on or which                     
constitute a portion of any Facility, but not including "Phase I"               
or "Phase II" inspections), and to the officers, employees,                     
agents, attorneys, accountants, properties, Books and Records,                  
Leases and Contracts of the Company, and shall furnish the                      
Purchaser, the Parent and their Representatives all financial,                  
operating and other data and information as the Purchaser, the                  
Parent or their Affiliates, through their respective                            
Representatives, may reasonably request, including an unaudited                 
balance sheet and the related statements of income, retained                    
earnings and cash flow for each month from the date hereof                      
through the Effective Date within 30 calendar days after the end                
of each month which financial statements shall (a) be true,                     
correct and complete, (b) be in accordance with the books and                   
records of the Company and (c) accurately and materially set                    
forth the Assets, Liabilities and financial condition, results of               
operations and other information purported to be set forth                      
therein in accordance with GAAP.                                                

(b)  The Parent shall have the right to (i) review any      
"Phase I Reports," "Phase II Reports" or other reports on each                  
Facility that have been prepared prior to the date of this                      
Agreement or that may be prepared after the date of this                        
Agreement and (ii)  inspect records, reports, Permits,                          
applications, monitoring results, studies, correspondence, data                 
and any other information or documents relevant to Environmental                
Conditions regarding each Facility.                                             

The Parent's and the Purchaser's right to have access,      
as more fully described in the foregoing paragraphs (a) and (b),                
shall be conducted at the Parent's sole cost and expense; it                    
being understood that the Parent shall, for example, pay the                    
salaries, fees and expenses of its employees, consultants and                   
other Representatives but shall not, for example, be required to                
pay any salaries, fees or costs of any employees, consultants or                
other Representatives retained by the Company to monitor,                       
accompany or assist the Parent in such access.                                  

7.5. Conduct of Business                                              

From the date hereof through the Closing, the               
Company shall, except as contemplated by the Transactions, or as                
consented to by the Purchaser and the Parent in writing, operate                
the Business in the ordinary course and will not take any action                
inconsistent with this Agreement or with the consummation of the                
Transactions.  Without limiting the generality of the foregoing,                
the Company shall not, except as specifically contemplated by                   
this Agreement or as consented to by the Purchaser and the Parent               
in writing:                                                                     

(a)  change or amend the Fourth Restated Certificate of     
Incorporation or Bylaws of the Company;                                         

(b)  acquire by merger or consolidation with, or merge      
or consolidate with, or purchase substantially all of the assets                
of, or otherwise acquire any material assets or business of any                 
corporation, partnership, association or other business                         
organization or division thereof;                                               

(c)  declare, set aside, make or pay any dividend or        
other distribution in respect of the capital stock of the                       
Company;                                                                        

(d)  enter into, renew, modify or revise any agreement      
or transaction with any of its Affiliates;                                      

(e)  make any loans or advances to any partnership,         
firm or corporation, or, except for expenses incurred in the                    
ordinary course of business, any individual;                                    

(f)  other than as provided in Schedule 5.15, fail to       
comply in any material respect with all Regulations applicable to               
the Company, the Assets and the Business;                                       

(g)  intentionally do any other act which would cause       
any representation or warranty of the Company in this Agreement                 
to be or become untrue in any material respect;                                 

(h)  issue, repurchase or redeem or commit to issue,        
repurchase or redeem, any shares of the capital stock of the                    
Company, any options or other rights to acquire such stock or any               
securities convertible into or exchangeable for such stock,                     
except for the issuance of Company Common Stock pursuant to the                 
exercise of outstanding Company Stock Options and Company                       
Warrants in accordance with the terms thereof other than as set                 
forth in Schedule 7.5(h);                                                       

(i)  make any payment of any kind to or on behalf of        
any Affiliate or any officer or director of such Affiliate or                   
become obligated to make any such payment, pursuant to any                      
agreement between the Company and such Affiliate or otherwise;                  
provided, however, that the Company shall be entitled to make or                
become obligated to make (i) salary payments pursuant to                        
agreements in effect on the date of this Agreement or                           
reimbursement of expenses in the ordinary course of business,                   
(ii) deferred compensation payments pursuant to the Company's                   
Deferred Compensation Plan to the employees set forth on Schedule               
5.18(c) and not in excess of the respective individual amounts                  
set forth on such schedule which amounts shall not exceed $1.2                  
million in the aggregate; and (iii) severance payments in                       
accordance with statement set forth in the parenthetical                        
contained in paragraph (viii) of Section 5.18(c); and, provided,                
further, that the Company shall be entitled to become obligated                 
to make payments (but shall not be permitted to make any such                   
payments until the earlier of the Effective Date and February 28,               
1999) under its Staff Incentive Plan so long as such obligations                
(or payments with respect thereto) do not exceed $2.0 million in                
the aggregate;                                                                  

(j)  enter into any agreement, or otherwise become          
obligated, to do any action prohibited hereunder; and                           

(k)  enter into any agreement or become obligated to        
pay any underwriting or financial advisory fees.                                

7.6. Books and Records; Tax Matters                                   

(a)  Books and Records.  Each party agrees that it will     
cooperate with and make available to the other parties, during                  
normal business hours, the Books and Records, information and                   
employees (without substantial disruption of employment) retained               
and remaining in existence after the Effective Date which are                   
necessary or useful in connection with any tax inquiry, audit,                  
investigation or dispute, any litigation or investigation or any                
other matter requiring any such Books and Records, information or               
employees for any reasonable business purpose.  The party                       
requesting any such Books and Records, information or employees                 
shall bear all of the out-of-pocket costs and expenses, including               
attorneys' fees, but excluding reimbursement for salaries and                   
employee benefits, reasonably incurred in connection with                       
providing such Books and Records, information or employees.  All                
information received pursuant to Section 7.6(a) shall be subject                
to the terms of Section 10.9 hereof.                                            

(b)  Tax Elections.  The Company shall make no new          
elections with respect to Taxes that affect the Company or the                  
Assets or any changes in current elections with respect to Taxes                
affecting the Company or the Assets, without, in each instance,                 
the prior written consent of the Parent, which consent shall not                
be unreasonably withheld.                                                       

(c)  Termination of Existing Tax-Sharing Agreements.        
All Tax-sharing agreements or similar agreements or arrangements                
with respect to or involving the Company shall be terminated                    
prior to the Effective Date except for the Shearson Tax Sharing                 
Agreement.                                                                      

(d)  Conveyance Taxes.  The Parent and the Company          
shall cooperate in the preparation, execution and filing of all                 
returns, questionnaires, applications or other documents                        
regarding any real property transfer or gains, sales, use,                      
transfer, value added, stock transfer and stamp taxes, any                      
transfer, recording, registration and other fees, and any similar               
taxes which become payable in connection with the Transactions                  
that are required or permitted to be filed on or before the                     
Effective Date.                                                                 

7.7. Facility Leases                                                  

The Company shall use commercially reasonable efforts       
to obtain all consents, waivers, assignments and approvals from                 
the landlords party to each Facility Lease that are necessary for               
the consummation of the Transactions in order for the Company to                
continue to conduct its Business at each Facility governed by                   
such Facility Lease after the Effective Date in the same manner                 
as such Business is conducted by the Company prior to the                       
Effective Date and in order to obtain the full benefits of each                 
Facility Lease (each, a "Landlord Consent").  The Parent shall                  
use commercially reasonable efforts to cooperate in obtaining                   
such Landlord Consents.                                                         

7.8. First Quarter 1998 Form 10-Q                                     

The Company shall timely file with the Commission           
its Quarterly Report on Form 10-Q for the quarter ended on the                  
Interim Balance Sheet Date.  The financial statements (other than               
the footnotes set forth therein) contained in such Form 10-Q                    
shall be the same as the Interim Financial Statements (other than               
the footnotes set forth therein); the footnotes set forth in such               
financial statements shall be the same as the footnotes set forth               
in the Interim Financial Statements in all material respects; and               
such Form 10-Q shall not contain any information with respect to                
any events subsequent to the Interim Balance Sheet Date that are                
not included in the Interim Financial Statements, other than                    
information, if any, with respect to the parties' execution of                  
this Agreement.                                                                 

ARTICLE VIII.               
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY,               
THE PARENT AND THE PURCHASER                

8.1. Conditions to Each Party's Obligation to Effect the              
Transactions                                                                    

The respective obligations of the Company, the              
Purchaser and the Parent to consummate the Transactions are                     
subject to the satisfaction, on or prior to the Effective Date,                 
of each of the following conditions:                                            

(a)  HSR Act.  Any waiting period (and any extension        
thereof) applicable to the consummation of the Merger under the                 
HSR Act shall have expired or been terminated.                                  

(b)  No Proceedings or Litigation.  No Action by any        
governmental authority or other person shall have been instituted               
or threatened which questions the validity or legality of the                   
Transactions and which could reasonably be expected to materially               
damage any party hereto, if the Transactions are consummated.                   
There shall not be any Regulation or Court Order instituted or                  
threatened that prevents or enjoins the Transactions.                           

(c)  Regulatory Compliance and Approval.  All material      
Permits, consents, approvals and waivers from governmental                      
authorities necessary to the consummation of the Transactions and               
for the operation of the Business by the Company after the                      
consummation of the Transactions and the ownership of the Assets                
by the Company after the consummation of the Transactions shall                 
have been obtained.  Each party hereto shall be satisfied that                  
all material approvals required to be obtained by any other party               
hereto under any Regulations to carry out the Transactions shall                
have been obtained by such other party and that each other party                
hereto shall have materially complied with all Regulations                      
applicable to the Transactions.                                                 

8.2. Conditions to the Parent's and the Purchaser's                   
Obligations to Effect the Transactions                                          

The obligation of each of the Parent and the                
Purchaser to consummate the Transactions are subject to the                     
satisfaction, on or prior to the Effective Date, of each of the                 
following conditions:                                                           

(a)  Representations, Company Warranties and                
Performance of Obligations.  All representations and warranties                 
made in this Agreement by the Company that are qualified as to                  
materiality shall be true and correct at and as of the date of                  
this Agreement and at and as of the Effective Date, and all                     
representations and warranties made in this Agreement by the                    
Company that are not qualified as to materiality shall be true                  
and correct in all material respects at and as of the date of                   
this Agreement and at and as of the Effective Date.  The Company                
shall have performed and complied with in all material respects                 
each agreement, covenant and obligation required by this                        
Agreement to be so performed or complied with at or prior to                    
Closing.                                                                        

(b)  Assignments and Consents.  Except for Landlord         
Consents, all consents, approvals, assignments and waivers from                 
third parties necessary to the consummation of the Transactions                 
and for the operation of the Business by the Company after the                  
consummation of the Transactions and the ownership of the Assets                
by the Company after the consummation of the Transactions shall                 
have been obtained.  Each of the Parent and the Purchaser shall                 
be satisfied that all approvals required to be obtained by the                  
Company from third parties (other than Landlords Consents) to                   
carry out the Transactions shall have been obtained.                            

(c)  Material Adverse Change.  There shall have been no     
Material Adverse Change since the Interim Balance Sheet Date.                   

(d)  Dissenting Shares.  None of the Parent, the            
Company nor the Purchaser shall be obligated to pay cash to all                 
holders of Dissenting Shares in an amount in excess of 10% of the               
aggregate Initial Merger Consideration provided to all other                    
Stockholders pursuant to Section 2.2(a) hereof.                                 

(e)  Company Opinion.  The Purchasers and the Parent        
shall have received an opinion from Gibson, Dunn & Crutcher LLP,                
counsel to the Company, dated the Effective Date and                            
substantially in the form of Exhibit B attached hereto, and from                
the General Counsel of the Company, dated the Effective Date and                
substantially in the form of Exhibit C attached hereto.                         

(f)  Tax Certificates.  The Company shall have              
delivered the certificate described in Treasury Regulation                      
Section 1.1445-5(b)(4)(iii), and any other certificates required                
under Code Section 1445 or similar state law or regulations to                  
eliminate any obligation of the Parent or the Purchaser to                      
withhold any portion of the Initial Merger Consideration or                     
Aggregate Escrow Amount.                                                        

(g)  Minutes, Transfer Records, Etc.  The Company shall     
have made available to the Parent and the Purchaser the originals               
of the minutes of all meetings of the Board of Directors of the                 
Company, of any committees thereof and of the stockholders of the               
Company since January 1, 1993 and shall have made available to                  
the Parent and the Purchaser originals of the stock transfer                    
records of the Company.                                                         

(h)  Officers' and Secretary's Certificates.  The Chief     
Executive Officer and Chief Financial Officer of the Company                    
shall have certified, as of the Effective Date, to the reasonable               
satisfaction of the Parent and the Purchaser, that the conditions               
to the Parent's and the Purchaser's obligations in Sections 8.1                 
and 8.2 have been satisfied on and as of the Effective Date.  The               
Secretary or Assistance Secretary of the Company shall have                     
certified, as of the Effective Date, to the reasonable                          
satisfaction of the Parent and the Purchaser, as to (i) the                     
Fourth Restated Certificate of Incorporation of the Company, (ii)               
the Bylaws of the Company, (iii) the resolutions of the Company                 
and its stockholders with respect to the Transactions, (iv) the                 
incumbency of the officers executing each of the Transaction                    
Documents on behalf of the Company and (v) the full legal name,                 
address and number of shares of Company Common Stock held of                    
record by each Stockholder and the full legal name, address, and                
number of shares of Company Common Stock issuable upon the                      
exercise of Outstanding Options and Outstanding Warrants held by                
each holder of Company Stock Options and Company Warrants, as                   
applicable.                                                                     

8.3. Conditions to the Company's Obligations to Effect the            
Transactions                                                                    

The obligation of the Company to consummate the             
Transactions are subject to the satisfaction, on or prior to the                
Effective Date, of each of the following conditions:                            

(a)  Representations, Purchaser and Parent Warranties       
and Performance of Obligations.  All representations and                        
warranties made in this Agreement by the Purchaser and the Parent               
that are qualified as to materiality shall be true and correct at               
and as of the date of this Agreement and at and as of the                       
Effective Date, and all representations and warranties made in                  
this Agreement by the Purchaser and the Parent that are not                     
qualified as to materiality shall be true and correct in all                    
material respects at and as of the date of this Agreement and at                
and as of the Effective Date. The Purchaser and the Parent shall                
have performed and complied with in all material respects each                  
agreement, covenant and obligation required by this Agreement to                
be so performed or complied with at or prior to Closing.                        

(b)  Parent and Purchaser Opinions.  The Company shall      
have received an opinion from Latham & Watkins, counsel to the                  
Parent and the Purchaser, dated the Effective Date and                          
substantially in the form of Exhibit D attached hereto, and from                
the General Counsel of the Parent and/or Schreck Morris, the                    
Parent's special Nevada counsel, dated the Effective Date and                   
substantially in the form of Exhibit E attached hereto.                         

(c)  Officers' and Secretary's Certificates.  The Chief     
Executive Officer and Chief Financial Officer of the Parent shall               
have certified, as of the Effective Date, to the reasonable                     
satisfaction of the Company, that the conditions to the Company's               
obligations set forth in Sections 8.1 and 8.3 have been satisfied               
on and as of the Effective Date.  The Secretary or Assistant                    
Secretary of each of the Parent and the Purchaser shall have                    
certified, as of the Effective Date, to the reasonable                          
satisfaction of the Company, as to (i) the Articles of                          
Incorporation of the Parent and the Purchaser, as applicable,                   
(ii) the Bylaws of the Parent and the Purchaser, as applicable,                 
(iii) the resolutions of the Parent and the Purchaser, as                       
applicable, with respect to the Transactions, and (iv) the                      
incumbency of the officers executing each of the Transaction                    
Documents on behalf of the Parent and the Purchaser, as                         
applicable.                                                                     

ARTICLE IX.               
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATIONS                

9.1. Survival of Representations, Etc.                                

All statements contained in any Schedule or in any          
certificate, schedule, exhibit or instrument or conveyance                      
delivered by or on behalf of the parties pursuant to this                       
Agreement or in connection with the Transactions shall be deemed                
to be representations and warranties by the parties hereunder.                  
The representations, warranties, covenants and agreements of the                
Company, the Purchaser and the Parent contained herein shall                    
survive the consummation of the Transactions and the Effective                  
Date, without regard to any investigation made by any of the                    
parties hereto, for a period of eighteen months following the                   
Effective Date.                                                                 

9.2. Indemnifications                                                 

(a)  (i)  The Holders.  The Holders shall indemnify,        
save and hold harmless the Purchaser and the Parent and their                   
respective Affiliates and Representatives from and against any                  
and all Damages arising from (A) any breach of any representation               
or warranty or the inaccuracy of any representation made by the                 
Company in or pursuant to the Transaction Documents (including                  
without limitation any a breach or inaccuracy of any                            
representation or warranty relating to CERCLA, any equivalent                   
state statute or any other Environmental Law); and (B) any breach               
of any covenant or agreement made by the Company in or pursuant                 
to the Transaction Documents; provided, however, that the Parent                
and the Purchaser shall not be entitled to assert a claim on                    
account of the indemnity contained in clauses (i) and (ii) of                   
this paragraph unless and until the aggregate amount of Damages                 
with respect to all claims asserted under such clauses (i) and                  
(ii) exceeds the Indemnity Basket (in which case the Holders                    
shall be liable to the Parent and the Purchaser for Damages in                  
excess of the Indemnity Basket that have accrued).                              
Notwithstanding the foregoing provisions of this Section                        
9.2(a)(i), in no instance shall the Holders be liable for                       
payments pursuant to Section 3.2, Damages on account of the                     
indemnity contained in this Section 9.2(a)(i) and for payments                  
pursuant to the letter agreement among the parties dated as of                  
the date of this Agreement in the aggregate in excess of the                    
Escrowed Funds.  The parties hereby acknowledge and agree that                  
the Escrowed Funds constitutes the sole remedy, at law or in                    
equity, that the Parent or the Purchaser may have against the                   
Holders pursuant to Sections 3.2, 9.2(a)(i) and pursuant to the                 
letter agreement among the parties dated as of the date of this                 
Agreement.                                                                      

(ii) By the Purchaser and the Parent.  The        
Purchaser and the Parent, jointly and severally, shall indemnify                
and save and hold harmless the Holders and their respective                     
Affiliates and Representatives from and against any and all                     
Damages incurred in connection with, arising out of, resulting                  
from or incident to (A) any breach of any representation or                     
warranty or the inaccuracy of any representation made by the                    
Purchaser or the Parent in or pursuant to the Transaction                       
Documents; or (B) any breach of any covenant or agreement made by               
the Purchaser or the Parent in or pursuant to the Transaction                   
Documents; provided, however, that the Holders shall not be                     
entitled to assert a claim on account of the indemnity contained                
in clauses (i) and (ii) of this paragraph unless and until the                  
aggregate amount of Damages with respect to all claims asserted                 
under such clauses (i) and (ii) exceeds the Indemnity Basket (in                
which case the Purchaser and the Parent shall be liable to the                  
Holders for Damages in excess of the Indemnity Basket that have                 
accrued).  Notwithstanding the foregoing provisions of this                     
Section 9.2(a)(ii), in no instance shall the Purchaser and/or the               
Parent be liable for Damages on account of the indemnity                        
contained in this Section 9.2(a)(ii) in the aggregate in excess                 
of $6,000,000.                                                                  

(iii)     For purposes of this Agreement,         
"Damages" shall mean any and all costs, losses, Taxes,                          
Liabilities, obligations, damages, lawsuits, deficiencies,                      
claims, demands and expenses (whether or not arising out of                     
third-party claims), including interest, penalties, costs of                    
mitigation, losses in connection with any Environmental Law                     
(including any clean-up or remedial action), lost profits,                      
diminution in value and other losses resulting from any shutdown                
or curtailment of operations, damages to the environment,                       
reasonable attorneys' fees and all reasonable amounts paid in                   
investigation, defense or settlement of any of the foregoing.                   
"Damages" are not limited to matters asserted by third parties                  
against the Holders, the Company, the Purchaser  or the Parent,                 
but include Damages incurred or sustained by the Holders, the                   
Company, the Purchaser or the Parent in the absence of third                    
party claims.                                                                   

(b)  Cooperation.  Each indemnified party shall             
cooperate in all reasonable respects with each indemnifying party               
and its Representatives (including without limitation its                       
attorneys) in the investigation, trial and defense of any lawsuit               
or action and any appeal arising therefrom; provided, however,                  
that such indemnified party may, at its own cost, participate in                
negotiations, arbitrations and the investigation, trial and                     
defense of such lawsuit or action and any appeal arising                        
therefrom.  The parties shall cooperate with each other in any                  
notifications to insurers.                                                      

(c)  Defense of Claims.  If a claim for Damages (a          
"Claim") is to be made by a party entitled to indemnification                   
hereunder against the indemnifying party, the party claiming such               
indemnification shall, subject to Section 9.1 hereof, give                      
written notice (a "Claim Notice") to the indemnifying party as                  
soon as practicable after the party entitled to indemnification                 
becomes aware of any fact, condition or event which may give rise               
to Damages for which indemnification may be sought under this                   
Section 9.2.  Such Claim Notice shall specify the nature and                    
amount of the Claim asserted, if actually known to the party                    
entitled to indemnification hereunder.  If any lawsuit or                       
enforcement action is filed against any party entitled to the                   
benefit of indemnity hereunder, written notice thereof shall be                 
given to the indemnifying party as promptly as practicable (and                 
in any event within fifteen (15) calendar days after the service                
of the citation or summons).  The failure of any indemnified                    
party to give timely notice hereunder shall not affect rights to                
indemnification hereunder, except to the extent that the                        
indemnifying party demonstrates actual damage caused by such                    
failure.  After such notice, if the indemnifying party shall                    
acknowledge in writing to the indemnified party that the                        
indemnifying party shall be obligated under the terms of its                    
indemnity hereunder in connection with such lawsuit or action,                  
then the indemnifying party shall be entitled, if it so elects at               
its own cost, risk and expense, (i) to take control of the                      
defense and investigation of such lawsuit or action, (ii) to                    
employ and engage attorneys of its own choice to handle and                     
defend the same unless the named parties to such action or                      
proceeding (including any impleaded parties) include both the                   
indemnifying party and the indemnified party and the indemnified                
party has been advised in writing by counsel that there may be                  
one or more legal defenses available to such indemnified party                  
that are different from or additional to those available to the                 
indemnifying party, in which event the indemnified party shall be               
entitled, at the indemnifying party's cost, risk and expense, to                
separate counsel of its own choosing, and (iii) to compromise or                
settle such Claim, which compromise or settlement shall be made                 
only with the written consent of the indemnified party, such                    
consent not to be unreasonably withheld.  If the indemnifying                   
party fails to assume the defense of such Claim within fifteen                  
(15) calendar days after receipt of the Claim Notice, the                       
indemnified party against which such Claim has been asserted will               
(upon delivering notice to such effect to the indemnifying party)               
have the right to undertake, at the indemnifying party's cost and               
expense, the defense, compromise or settlement of such claim on                 
behalf of and for the account and risk of the indemnifying party;               
provided, however, that such Claim shall not be compromised or                  
settled without the written consent of the indemnifying party,                  
which consent shall not be unreasonably withheld.  In the event                 
the indemnified party assumes the defense of the Claim, the                     
indemnified party will keep the indemnifying party reasonably                   
informed of the progress of any such defense, compromise or                     
settlement.  The indemnifying party shall be liable for any                     
settlement of any action effected pursuant to and in accordance                 
with this Section 9.2 and for any final judgment (subject to any                
right of appeal), and the indemnifying party agrees to indemnify                
and hold harmless an indemnified party from and against any                     
Damages by reason of such settlement or judgment.                               

(d)  Brokers and Finders.  No agent, broker, investment     
banker, financial advisor or other person or entity is or will be               
entitled to any broker's or finder's fee or any other commission                
or similar fee in connection with any of the Transactions.  Each                
party hereto agrees to hold the other parties hereto harmless                   
from and against any and all claims, liabilities or obligations                 
with respect to any such fee or commission or expenses related                  
thereto asserted by any person or entity with respect to any such               
fee or commission or expenses related thereto asserted by any                   
entity or person on the basis of any act or statement alleged to                
have been made by any party hereto or any of their respective                   
Representatives or Affiliates.                                                  

(e)  Representatives.  No individual Representative of      
any party shall be personally liable for any Damages under the                  
provisions contained in this Section 9.2.  Nothing herein shall                 
relieve either party of any Liability to make any payment                       
expressly required to be made by such party pursuant to this                    
Agreement.                                                                      

ARTICLE X.                
MISCELLANEOUS               

10.1.     Termination                                                 

(a)  Termination.  This Agreement may be terminated at      
any time prior to Closing:                                                      

(i)  By mutual written consent of the Purchaser,  
the Parent and the Company;                                                     

(ii) By the Purchaser or the Parent if there is   
(A) a material breach of any representation or warranty set forth               
in Article V hereof or any covenant or agreement to be complied                 
with or performed by the Company pursuant to the terms of this                  
Agreement, or (B) the failure of a condition set forth in Section               
8.1 or 8.2 hereof to be satisfied (and such condition is not                    
waived in writing by the Purchaser and the Parent) on or prior to               
February 11, 1999 (and, in the case of Section 8.1(c), in which                 
the ability to satisfy such condition is controlled by the                      
Company), or the occurrence of any event which results or would                 
result in the failure of a condition set forth in Section 8.1 or                
8.2 hereof  to be satisfied on or prior to such date (and, in the               
case of Section 8.1(c), in which the ability to satisfy such                    
condition is controlled by the Company); provided that the                      
Purchaser and the Parent may not terminate this Agreement prior                 
to such date if (x) the Company has not had an adequate                         
opportunity to cure such failure or (y) the Company has the right               
to terminate this Agreement under clause (iii) of this Section                  
10.1(a); or                                                                     

(iii)     By the Company if there is (A) a        
material breach of any representation or warranty set forth in                  
Article VI hereof or of any covenant or agreement to be complied                
with or performed by the Purchaser or the Parent pursuant to the                
terms of this Agreement, or (B) the failure of a condition set                  
forth in Section 8.1 or 8.3 hereof to be satisfied (and such                    
condition is not waived in writing by the Company) on or prior to               
February 11, 1999 (and in, the case of Section 8.1(c), in which                 
the ability to satisfy such condition is controlled by the Parent               
or the Purchaser), or the occurrence of any event which results                 
or would result in the failure of a condition set forth in                      
Section 8.1 or 8.3 hereof to be satisfied on or prior to such                   
date (and in, the case of Section 8.1(c), in which the ability to               
satisfy such condition is controlled by the Parent or the                       
Purchaser); provided that, the Company may not terminate this                   
Agreement prior to such date if (x) the Purchaser or the Parent                 
has not had an adequate opportunity to cure such failure or (y)                 
the Purchaser or the Parent has the right to terminate this                     
Agreement under clause (ii) of this Section 10.1(a).                            

(b)  In the Event of Termination.  In the event of          
termination of this Agreement:                                                  

(i)  Each party will redeliver all documents, work
papers and other material of any other party relating to the                    
Transactions, whether so obtained before or after the execution                 
hereof, to the party furnishing the same;                                       

(ii) This Agreement shall be void, except for the 
provisions of this Section 10.1 and of Section 10.9 hereof which                
shall continue in full force and effect; and                                    

(iii)     Notwithstanding the foregoing any       
willful or intentional breach of any representation, warranty,                  
covenant or agreement set forth in this Agreement by any party to               
this Agreement, prior to the Effective Date, shall not limit or                 
restrict the availability of specific performance or other                      
injunctive relief to the extent that specific performance or such               
other relief would otherwise be available to a party hereunder.                 

10.2.     Assignment                                                  

Neither this Agreement nor any of the rights or         
obligations hereunder may be assigned by any party without the                  
prior written consent of the other party; except that the                       
Purchaser or the Parent may, without such consent, assign all                   
such rights and obligations to a wholly owned subsidiary (or a                  
partnership controlled by the Purchaser or the Parent) or                       
subsidiaries of the Purchaser or the Parent or to a successor in                
interest to the Purchaser or the Parent which shall assume all                  
obligations of the Purchaser or the Parent, as the case may be,                 
under this Agreement.  Subject to the foregoing, this Agreement                 
shall be binding upon and inure to the benefit of the parties                   
hereto and their respective successors and permitted assigns, and               
no other person shall have any right, benefit or obligation under               
this Agreement as a third party beneficiary or otherwise.                       

10.3.     Notices                                                     

All notices, requests, demands and other                    
communications which are required or may be given under this                    
Agreement shall be in writing and shall be deemed to have been                  
duly given when received if personally delivered; when                          
transmitted if transmitted by telecopy, electronic or digital                   
transmission method; the day after it is sent, if sent for next                 
day delivery to a domestic address by recognized overnight                      
delivery service (e.g., Federal Express); and upon receipt, if                  
sent by certified or registered mail, return receipt requested.                 
In each case notice shall be sent to:                                           

If to the Company, addressed to:                            

Chief Auto Parts Inc.                             
One Lincoln Centre, Suite 200                     
5400 LBJ Freeway                                  
Dallas, Texas 75240-6223                          
Attention:  Mary M. Mahon, Esq.                   
Telecopy No.:  (972) 341-2317                     

With a copy to:                                             

Gibson, Dunn & Crutcher LLP                                 
200 Park Avenue                                             
New York, New York  10166-0193                              
Attention: Conor D. Reilly, Esq.                            

Telecopy No.:  (212) 351-5247                     

If to the Purchaser or the Parent, addressed to:            

AutoZone, Inc.                                    
123 South Front Street                            
Memphis, Tennessee  38103                         
Attention:  Harry L. Goldsmith, Esq.              
Telecopy No.:  (901) 495-8316                     

With a copy to:                                             

Latham & Watkins                                  
633 West Fifth Street, Suite 4000                 
Los Angeles, California  90071                    
Attention:  Eva Herbst Davis, Esq.                
Telecopy No.:  (213) 891-8763                     

or to such other place and with such other copies as either party               
may designate as to itself by written notice to the others.                     

10.4.     Entire Agreement; Amendments; Extensions and Waivers        

This Agreement, together with all exhibits and              
Schedules hereto (including the other Transaction Documents), and               
the letter agreement among the parties hereto dated as of the                   
date of this Agreement constitute the entire agreement among the                
parties pertaining to the subject matter hereof and supersedes                  
all prior agreements, understandings, negotiations and                          
discussions, whether oral or written, of the parties.  This                     
Agreement may not be amended except by an instrument in writing                 
signed on behalf of each of the parties hereto.  No amendment,                  
extension, supplement, modification or waiver of this Agreement                 
shall be binding unless executed in writing by the party to be                  
bound thereby.  No waiver of any of the provisions of this                      
Agreement shall be deemed or shall constitute a waiver of any                   
other provision hereof (whether or not similar), nor shall such                 
waiver constitute a continuing waiver unless otherwise expressly                
provided.                                                                       

10.5.     Multiple Counterparts                                       

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

10.6.     Invalidity                                                  

In the event that any one or more of the provisions         
contained in this Agreement, the other Transaction Documents or                 
in any other instrument referred to herein, shall, for any                      
reason, be held to be invalid, illegal or unenforceable in any                  
respect, then to the maximum extent permitted by law, such                      
invalidity, illegality or unenforceability shall not affect any                 
other provision of this Agreement, the other Transaction                        
Documents or any other such instrument.                                         

10.7.     Titles                                                      

The titles, captions or headings of the Articles and        
Sections herein are for convenience of reference only and are not               
intended to be a part of or to affect the meaning or                            
interpretation of this Agreement.                                               

10.8.     Publicity                                                   

Except as required by law, no party hereto shall            
issue any press release or make any public statement regarding                  
the Transactions, without prior written approval of the other                   
party; provided, however, that in the case of announcements,                    
statements, acknowledgments or revelations which either party is                
required by law to make, issue or release, the making, issuing or               
releasing of any such announcement, statement, acknowledgment or                
revelation by the party so required to do so by law shall not                   
constitute a breach of this Agreement if such party shall have                  
given, to the extent reasonably possible, not less than two (2)                 
business days prior notice to the other party, and shall have                   
attempted, to the extent reasonably possible, to clear such                     
announcement, statement, acknowledgment or revelation with the                  
other party.  Each party hereto agrees that it will not                         
unreasonably withhold any such consent or clearance.  The Parent                
may, at its discretion, issue or make a press release or public                 
announcement after the Closing.                                                 

10.9.     Confidential Information                                    

(a)  No Disclosure.  The parties acknowledge that the       
Transactions are of a confidential nature and shall not be                      
disclosed except to consultants, advisors and Affiliates, or as                 
required by law, until such time as the parties make a public                   
announcement regarding the Transactions as provided in Section                  
10.8 hereof.                                                                    

(b)  Preservation of Confidentiality.  In connection        
with the negotiation of this Agreement, the preparation for the                 
consummation of the Transactions, and the performance of                        
obligations hereunder, the Purchaser and Parent acknowledge that                
they will have access to confidential information relating to the               
Company, the Company acknowledges that it will have access to                   
confidential information relating to the Purchaser, in each case,               
including technical, manufacturing or marketing information,                    
ideas, methods, developments, improvements, business plans, trade               
secrets, statistical data, diagrams, drawings, specifications or                
other proprietary information relating thereto, together with all               
analyses, compilations, studies or other documents, records or                  
data prepared by the Company, the Purchaser, or the Parent, as                  
the case may be, or their respective Representatives which                      
contain or otherwise reflect or are generated from such                         
information ("Confidential Information").  The term "Confidential               
Information" does not include information received by one party                 
in connection with the Transactions which (i) is or becomes                     
generally available to the public other than as a result of a                   
disclosure by such party or its Representatives, (ii) which such                
party can demonstrate was within such party's possession prior to               
its being furnished to such party by or on behalf of the other                  
party in connection with the Transactions; provided that the                    
source of such information was not known by such party to be                    
bound by a confidentiality agreement with or other contractual,                 
legal or fiduciary obligation of confidentiality to the other                   
party or any other Person with respect to such information or                   
(iii) becomes available to such party on a non-confidential basis               
from a source other than the other party or any of their                        
respective Representatives; provided that such source is not                    
bound by a confidentiality agreement with or other contractual,                 
legal or fiduciary obligation of confidentiality to the other                   
party or any other Person with respect to such information.                     

(c)  Each party shall treat all Confidential                
Information of the other party as confidential, preserve the                    
confidentiality thereof and not disclose any such Confidential                  
Information, except to its Representatives who need to know such                
Confidential Information in connection with the Transactions.                   
Each party shall use all reasonable efforts to cause its                        
Representatives to treat all such Confidential Information of the               
other party as confidential, preserve the confidentiality thereof               
and not disclose any such Confidential Information.  Each party                 
shall be responsible for any breach of this Agreement by any of                 
its Representatives.  If, however, Confidential Information is                  
disclosed, the party responsible for such disclosure shall                      
immediately notify the other party in writing and take all                      
reasonable steps required to prevent further disclosure.                        

(d)  Until the Closing or the termination of this           
Agreement, all Confidential Information shall remain the property               
of the party who originally possessed such information.  In the                 
event of the termination of this Agreement for any reason, each                 
party shall, and shall cause its Representatives to, return to                  
the other party all Confidential Information (including all                     
copies, summaries and extracts thereof) furnished to such party                 
by the other party in connection with the Transactions.                         

(e)  If one party or any of its Representatives is          
requested or required (by oral questions, interrogatories,                      
requests for information or documents in legal proceedings,                     
subpoena, civil investigative demand or other similar process) or               
is required by operation of law to disclose any Confidential                    
Information, such party shall provide the other party with prompt               
written notice of such request or requirement, which notice                     
shall, if practicable, be at least 48 hours prior to making such                
disclosure, so that the other party may seek a protective order                 
or other appropriate remedy and/or waive compliance with the                    
provisions of this Agreement.  If, in the absence of a protective               
order or other remedy or the receipt of such a waiver, such party               
or any of its Representatives are nonetheless, in the opinion of                
counsel, legally compelled to disclose Confidential Information,                
then such party may disclose that portion of the Confidential                   
Information which such counsel advises is legally required to be                
disclosed; provided that such party uses its reasonable efforts                 
to preserve the confidentiality of the Confidential Information,                
whereupon such disclosure shall not constitute a breach of this                 
Agreement.                                                                      

(f)  This Section 10.9 shall survive termination of         
this Agreement and shall remain in effect for eighteen months                   
after the date hereof.                                                          

10.10.    Cumulative Remedies                                         

All rights and remedies of either party hereto are          
cumulative of each other and of every other right or remedy such                
party may otherwise have at law or in equity, and the exercise of               
one or more rights or remedies shall not prejudice or impair the                
concurrent or subsequent exercise of other rights or remedies.                  

10.11.    Governing Law; Jurisdiction                                 

IT IS THE PARTIES' INTENT THAT THIS AGREEMENT SHALL         
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS               
OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF                       
CONFLICTS OF LAW), EXCEPT WITH RESPECT TO MATTERS OF LAW                        
CONCERNING THE INTERNAL CORPORATE AFFAIRS OF ANY CORPORATE ENTITY               
WHICH IS A PARTY TO OR THE SUBJECT OF THIS AGREEMENT, AND AS TO                 
THOSE MATTERS THE LAW OF THE JURISDICTION UNDER WHICH THE                       
RESPECTIVE ENTITY DERIVES ITS POWERS SHALL GOVERN.                              

(Signature Page Follows)                

EX-2.1
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IN WITNESS WHEREOF, the parties hereto have executed        
this Agreement as of the date first written above.                              

"COMPANY"                                                                       

CHIEF AUTO PARTS INC.,                                                          
a Delaware corporation                                                          

By /s/ David H. Eisenberg                                                       
-----------------------------                                         
Name:  David H. Eisenberg                                                 
Title:  President and Chief Executive Officer                             

"PURCHASER"                                                                     

ORANGE SUB, INC.                                                                
a Delaware corporation                                                          

By /s/ Timothy D. Vargo                                                         
---------------------------------                                       
Name:  Timothy D. Vargo                                                   
Title:  President                                                         

By /s/ Harry L. Goldsmith                                                       
--------------------------------                                        
Name:  Harry L. Goldsmith                                                       

"PARENT"                                                                        

AUTOZONE, INC.,                                                                 
a Nevada corporation                                                            

By /s/ Timothy D. Vargo                                                         
-----------------------------                                         
Name:  Timothy D. Vargo                                                   
Title:  President                                                         

By  /s/ Harry L. Goldsmith                                                      
-----------------------------                                         
Name: Harry L. Goldsmith                                                  
Title:  Sr. Vice President                                                

EX-2.1
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INDEX OF EXHIBITS AND SCHEDULES               

[Note:    Exhibits and schedules have been omitted from this copy               
of this Agreement filed with the Securities and Exchange                        
Commission pursuant to Rule 601(b)(2) of Regulation S-K.                        
Schedules and exhibits will be provided supplementally to the                   
Commission upon request.]                                                       

EXHIBITS                                                                        
-------------                                                                   

Exhibit A Form of Escrow Agreement between the Company, the                     
Purchaser, the Parent, the Majority Holders, the            
Stockholders Representatives and the Escrow Agrent.         

Exhibit B Form of opinion from Gibson, Dunn & Crutcher LLP,                     
counsel to the Company.                                     

Exhibit C Form of opinion from General Counsel of the Company.                  

Exhibit D Form of opinion from Latham & Watkins, counsel to the                 
Parent and Purchaser.                                       

Exhibit E Form of opinion from General Counsel of the Parent                    
and/or Schreck Morris, the Parent's special Nevada          
counsel.                                                    

SCHEDULES                                                                       
-----------------                                                               

Schedule 1.1(a)     Audited Balance Sheets of the Company dated                 
 December 28, 1997, December 29, 1996, and
December 31, 1995.                      

Schedule 1.1(b)     Company personnel with knowledge prior to                   
execution of agreement.                 

Schedule 1.1(c)     Company personnel with knowledge after                      
execution of agreement.                 

Schedule 5.1(a)     States in which Company is qualified to do                  
business                                

Schedule 5.1(b)     Capitalization of the Company; Company                      
         Outstanding Stock Options and/or Company Warrants

Schedule 5.1(c)     Outstanding Stockholder Notes                               

Schedule 5.4        Certain Changes or Events                                   

Schedule 5.5        Personal Property Leases                                    

Schedule 5.6(a)     Leased Facilities                                           

Schedule 5.6(b)     Owned Facilities                                            

Schedule 5.7        Material Contracts                                          

Schedule 5.9        Permits, Consents and Approvals                             

Schedule 5.10       Conflicts or Violations                                     

Schedule 5.12       Litigation                                                  

Schedule 5.13       Labor Matters                                               

Schedule 5.15       Compliance with Law                                         

Schedule 5.17       Proprietary Rights                                          

Schedule 5.18(a)    Employee Benefit Plans and Benefit                          
Arrangements                            

Schedule 5.18(c)    Deferred Compensation Plan Accrual; ERISA Matters           

Schedule 5.19       Tax Matters                                                 

Schedule 5.22       Environmental Matters                                       

Schedule 5.23       Banking Matters                                             

Schedule 7.5(h)     Issuance of Company Stock Options and Warrants              

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		2/28/99		3
		2/11/99		3					SC 13G,  SC 13G/A
		7/10/98
Filed on:		7/2/98							10-Q/A
For Period End:		6/29/98
		5/11/98		1		3			8-K
		3/29/98		3
		12/28/97		3		5
		5/28/97		3
		12/29/96		3		5
		12/31/95		3		5
		6/27/94		3
		1/1/93		3
									List all Filings