
<PAGE>

                          AGREEMENT AND PLAN OF MERGER

                                     AMONG

                              MAXXIM MEDICAL, INC.,

                              MMI ACQUISITION CORP. 

                                      AND

                               CIRCON CORPORATION

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                      PAGE
<S>                                                                   <C>
ARTICLE I   The Offer ..............................................    2

     SECTION 1.01.  The Offer ......................................    2
     SECTION 1.02.  Company Actions ................................    3

ARTICLE II  The Merger .............................................    5

     SECTION 2.01.  The Merger .....................................    5
     SECTION 2.02.  Closing ........................................    5
     SECTION 2.03.  Effective Time .................................    6
     SECTION 2.04.  Effects of the Merger ..........................    6
     SECTION 2.05.  Certificate of Incorporation and Bylaws ........    6
     SECTION 2.06.  Directors ......................................    6
     SECTION 2.07.  Officers .......................................    7

ARTICLE III  Effect of the Merger on the Capital Stock of the 
             Constituent Corporations; Payment of Merger 
             Consideration .........................................    7

     SECTION 3.01.  Effect on Capital Stock ........................    7
     SECTION 3.02.  Payment of Merger Consideration ................    8

ARTICLE IV  Representations and Warranties of the Company ...........  10

     SECTION 4.01.  Organization, Standing and Corporate Power ......  10
     SECTION 4.02.  Subsidiaries ....................................  10
     SECTION 4.03.  Capital Structure ...............................  11
     SECTION 4.04.  Authority; Noncontravention .....................  12
     SECTION 4.05.  SEC Documents; Financial Statements .............  14
     SECTION 4.06.  Information Supplied ............................  14
     SECTION 4.07.  Absence of Certain Changes or Events ............  15
     SECTION 4.08.  Litigation; Investigation .......................  15
     SECTION 4.09.  Contracts .......................................  16
     SECTION 4.10.  Compliance with Laws ............................  16
     SECTION 4.11.  Absence of Changes in Benefit Plans; Labor 
                    Relations .......................................  18
     SECTION 4.12.  ERISA Compliance ................................  19
     SECTION 4.13.  Taxes ...........................................  21
     SECTION 4.14.  No Excess Parachute Payments ....................  21
     SECTION 4.15.  Intellectual Property ...........................  22
     SECTION 4.16.  State Takeover Statutes .........................  25
     SECTION 4.17.  Rights Agreement ................................  25
     SECTION 4.18.  Brokers; Schedule of Fees and Expenses ..........  25
     SECTION 4.19.  Opinion of Financial Advisor ....................  26
     SECTION 4.20.  Annual Meeting ..................................  26
     SECTION 4.21.  Products Liability ..............................  26
     SECTION 4.22. Insurance ........................................  27

ARTICLE V  Representations and Warranties of Parent and Sub .........  28

     SECTION 5.01.  Organization, Standing and Corporate Power ......  28
     SECTION 5.02.  Authority; Noncontravention .....................  28
     SECTION 5.03.  Information Supplied ............................  29
     SECTION 5.04.  Interim Operations of Sub .......................  30
     SECTION 5.05.  Brokers .........................................  30
     SECTION 5.06.  Financing .......................................  30

ARTICLE VI  Covenants ...............................................  30

     SECTION 6.01.  Covenants of the Company ........................  30
     SECTION 6.02.  No Solicitation .................................  33
</TABLE>

                                       i
<PAGE>

                               TABLE OF CONTENTS
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                      PAGE
<S>                                                                   <C>
ARTICLE VII  Additional Agreements ..................................  36

     SECTION 7.01.  Stockholder Approval; Preparation of Proxy 
                    Statement .......................................  36
     SECTION 7.02.  Access to Information ...........................  37
     SECTION 7.03.  State Takeover Laws .............................  37
     SECTION 7.04.  Reasonable Efforts ..............................  38
     SECTION 7.05.  Company Stock Options ...........................  39
     SECTION 7.06.  Directors .......................................  39
     SECTION 7.07.  Fees and Expenses ...............................  40
     SECTION 7.08.  Indemnification .................................  41
     SECTION 7.09.  Certain Litigation ..............................  42
     SECTION 7.10.  Rights Agreement ................................  42
     SECTION 7.11.  Notification of Certain Matters .................  42

ARTICLE VIII  Conditions ............................................  43

     SECTION 8.01.  Conditions to Each Party's Obligation To Effect      
                    the Merger ......................................  43

ARTICLE IX  Termination and Amendment ...............................  43

     SECTION 9.01.  Termination .....................................  43
     SECTION 9.02.  Effect of Termination ...........................  45
     SECTION 9.03.  Amendment .......................................  45
     SECTION 9.04.  Extension; Waiver ...............................  46

ARTICLE X  Miscellaneous ............................................  46

     SECTION 10.01.  Nonsurvival of Representations, Warranties and
                     Agreements .....................................  46
     SECTION 10.02.  Notices ........................................  46
     SECTION 10.03.  Interpretation .................................  48
     SECTION 10.04.  Counterparts ...................................  48
     SECTION 10.05.  Entire Agreement; No Third Party Beneficiaries .  48
     SECTION 10.06.  Governing Law ..................................  48
     SECTION 10.07.  Publicity ......................................  48
     SECTION 10.08.  Assignment .....................................  49
     SECTION 10.09.  Enforcement ....................................  49
     SECTION 10.10.  Severability ...................................  49
</TABLE>


                                      ii

<PAGE>

                   AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER dated as of November 21, 1998, by and among 
Maxxim Medical, Inc., a Delaware corporation ("Parent"), MMI Acquisition 
Corp., a Delaware corporation and a wholly owned subsidiary of Parent 
("Sub"), and Circon Corporation, a Delaware corporation (the "Company").

     WHEREAS, in furtherance of the acquisition of the Company by Parent on 
the terms and subject to the conditions set forth in this Agreement, Parent 
proposes to cause Sub to make a tender offer (as it may be amended from time 
to time as permitted under this Agreement, the "Offer") to purchase all the 
outstanding shares of Common Stock, par value $.01 per share, of the Company 
(together with any associated Rights (as defined in the Rights Agreement (as 
defined)), the "Company Common Stock"; the shares of Company Common Stock 
being hereinafter collectively referred to as the "Shares"), at a purchase 
price (the "Offer Price") of $15 per Share, net to the seller in cash, 
without interest thereon, upon the terms and subject to the conditions set 
forth in this Agreement and in Annex A attached hereto (the "Offer 
Conditions");

     WHEREAS, the respective Boards of Directors of Parent, Sub and the 
Company have approved the Offer and the merger of Sub with and into the 
Company (the "Merger") upon the terms and subject to the conditions set forth 
in this Agreement and the Offer Conditions, whereby each issued and 
outstanding Share, other than Shares owned directly or indirectly by Parent 
or the Company and Dissenting Shares (as defined in Section 3.01(d)), will be 
converted into the right to receive the price per Share paid in the Offer; and

     WHEREAS, Parent, Sub and the Company desire to make certain 
representations, warranties, covenants and agreements in connection with the 
Offer and the Merger and also to prescribe various conditions to the Offer 
and the Merger.

     NOW, THEREFORE, in consideration of the foregoing and the mutual 
covenants and agreements herein contained, and intending to be legally bound 
hereby, Parent, Sub and the Company hereby agree as follows:


                                   ARTICLE I

                                   THE OFFER

     SECTION I.1.  THE OFFER. 

          (1)  Subject to the provisions of this Agreement and the 
satisfaction or waiver of the conditions set forth in Annex A, as promptly as 
practicable but in no event later than five business days after the date of 
the public announcement by Parent and the Company of this Agreement, Sub 
shall, and Parent shall cause Sub to, commence the Offer.  The initial 
scheduled expiration date for the Offer shall be January 5, 1999.  Sub shall 
be obligated to, and Parent shall cause Sub to, accept for payment, and pay 
for as promptly as practicable after the expiration of the Offer all Shares 
validly tendered pursuant to the Offer and not withdrawn subject only to the 
conditions set forth in Exhibit A (the "Offer Conditions") (any of which may 
be waived in whole or in part by Sub in its sole discretion, provided that, 
without the consent of the Company, Sub shall not waive the Minimum Condition 
(as defined in Exhibit A)) and to the terms and conditions of this Agreement. 
Sub expressly reserves the right to modify the terms of the Offer, except 
that, without the consent of the Company, Sub shall not (i) reduce the number 
of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to the 
Offer Conditions, (iv) except as provided in the next sentence, extend the 
Offer, (v) change the form of consideration payable in the Offer or (vi) 
amend any other term of the Offer in any manner adverse to the holders of the 
Shares.  Notwithstanding the foregoing, Sub may, without the consent of the 
Company, (A) extend the Offer, if at the initial scheduled or extended 
expiration date of the Offer any of the Offer Conditions shall not be 
satisfied or waived, until such time as such conditions are satisfied or 
waived, (B) extend the Offer for any period required by any rule, regulation, 
interpretation or position of the Securities and Exchange Commission (the 
"SEC") or the staff thereof applicable to the Offer and (C) extend the Offer 
on one or more occasions for an aggregate period of not more than 10 business 
days beyond the latest expiration date that would otherwise be permitted 
under clauses (A) or (B) of this sentence, if on such expiration date there 
shall not have been tendered at least 90% of the outstanding Shares.

<PAGE>

          (2)  On the date of commencement of the Offer, Parent and Sub shall 
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 
14D-1") with respect to the Offer, which shall contain an offer to purchase 
and a related letter of transmittal and summary advertisement (such Schedule 
14D-1 and the documents included therein pursuant to which the Offer will be 
made, together with any supplements or amendments thereto, the "Offer 
Documents").  Parent and Sub agree that the Offer Documents shall comply as 
to form in all material respects with the Securities Exchange Act of 1934, as 
amended (the "Exchange Act"), and the rules and regulations promulgated 
thereunder and the Offer Documents, on the date first published, sent or 
given to the Company's stockholders, shall not contain any untrue statement 
of a material fact or omit to state any material fact required to be stated 
therein or necessary in order to make the statements therein, in light of the 
circumstances under which they were made, not misleading, except that no 
representation or warranty is made by Parent or Sub with respect to 
information supplied by the Company or any of its stockholders specifically 
for inclusion or incorporation by reference in the Offer Documents.  Each of 
Parent, Sub and the Company agree promptly to correct any information 
provided by it for use in the Offer Documents if and to the extent that such 
information shall have become false or misleading in any material respect, 
and Parent and Sub further agree to take all steps necessary to cause the 
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer 
Documents as so corrected to be disseminated to the Company's stockholders, 
in each case as and to the extent required by applicable federal securities 
laws.  The Company and its counsel shall be given reasonable opportunity to 
review and comment upon the Offer Documents prior to their filing with the 
SEC or dissemination to the stockholders of the Company.  Parent and Sub 
agree to provide the Company and its counsel any comments Parent, Sub or 
their counsel may receive from the SEC or its staff with respect to the Offer 
Documents promptly after the receipt of such comments.

          (3)  Parent shall provide or cause to be provided to Sub on a 
timely basis the funds necessary to accept for payment, and pay for, any 
Shares that Sub becomes obligated to accept for payment, and pay for, 
pursuant to the Offer.

     SECTION I.2.  COMPANY ACTIONS. 

          (1)  The Company hereby approves of and consents to the Offer and 
represents that the Board of Directors of the Company, at a meeting duly 
called and held, duly and unanimously adopted resolutions approving this 
Agreement, the Offer and the Merger (including but not limited to the 
approval for purposes of section 203 of the Delaware General Corporation Law 
(the "DGCL") hereinafter referred to as the "203 Approval"), determining, as 
of the date of such resolutions, that the terms of the Offer and the Merger 
are fair to, and in the best interests of, the Company's stockholders, 
recommending that the Company's stockholders accept the Offer, tender their 
shares pursuant to the Offer and approve this Agreement (if required) and 
approving the acquisition of Shares by Sub pursuant to the Offer and the 
other transactions contemplated by this Agreement.  The Company believes that 
each of its directors currently intends to tender all Shares (other than 
Shares, if any, held by such person that, if tendered, could cause such 
person to incur liability under the provisions of Section 16(b) of the 
Exchange Act) owned by such person pursuant to the Offer.

          (2)  On the date the Offer Documents are filed with the SEC, the 
Company shall file with the SEC a Solicitation/Recommendation Statement on 
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as 
supplemented or amended from time to time, the "Schedule 14D-9") containing, 
subject to the terms of this Agreement, the recommendation described in 
paragraph (a) and shall mail the Schedule 14D-9 to the stockholders of the 
Company.  The Schedule 14D-9 shall comply as to form in all material respects 
with the requirements of the Exchange Act and the rules and regulations 
promulgated thereunder and, on the date filed with the SEC and on the date 
first published, sent or given to the Company's stockholders, shall not 
contain any untrue statement of a material fact or omit to state any material 
fact required to be stated therein or necessary in order to make the 
statements therein, in light of the circumstances under which they were made, 


                                      -2-
<PAGE>

not misleading, except that no representation or warranty is made by the 
Company with respect to information supplied by Parent or Sub specifically 
for inclusion or incorporation by reference in the Schedule 14D-9.  Each of 
the Company, Parent and Sub agrees promptly to correct any information 
provided by it for use in the Schedule 14D-9 if and to the extent that such 
information shall have become false or misleading in any material respect, 
and the Company further agrees to take all steps necessary to amend or 
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended 
or supplemented to be filed with the SEC and disseminated to the Company's 
stockholders, in each case as and to the extent required by applicable 
federal securities laws.  Parent and its counsel shall be given reasonable 
opportunity to review and comment upon the Schedule 14D-9 prior to its filing 
with the SEC or dissemination to stockholders of the Company.  The Company 
agrees to provide Parent and its counsel any comments the Company or its 
counsel may receive from the SEC or its staff with respect to the Schedule 
14D-9 promptly after the receipt of such comments.

          (3)  In connection with the Offer and the Merger, the Company shall 
cause its transfer agent to furnish Sub promptly with mailing labels 
containing the names and addresses of the record holders of Shares as of a 
recent date and of those persons becoming record holders subsequent to such 
date, together with copies of all lists of stockholders, security position 
listings and computer files and all other information in the Company's 
possession or control regarding the beneficial owners of Shares, and shall 
furnish to Sub such information and assistance (including updated lists of 
stockholders, security position listings and computer files) as Parent may 
reasonably request in communicating the Offer to the Company's stockholders.  
Subject to the requirements of applicable law, and except for such steps as 
are necessary to disseminate the Offer Documents and any other documents 
necessary to consummate the Merger, Parent and Sub and their agents shall 
hold in confidence the information contained in any such labels, listings and 
files, will use such information only in connection with the Offer and the 
Merger and, if this Agreement shall be terminated, will deliver, and will use 
their reasonable efforts to cause their agents to deliver, to the Company all 
copies and any extracts or summaries from such information then in their 
possession or control.

                                 ARTICLE II

                                 THE MERGER

     SECTION II.1.  THE MERGER.  Subject to the last two sentences of this 
Section 2.01, upon the terms and subject to the conditions set forth in this 
Agreement, and in accordance with the DGCL, Sub shall be merged with and into 
the Company at the Effective Time (as defined in Section 2.03).  Following 
the Effective Time, the separate corporate existence of Sub shall cease and 
the Company shall continue as the surviving corporation (the "Surviving 
Corporation") and shall succeed to and assume all the rights and obligations 
of Sub in accordance with the DGCL.  At the election of Parent, to the extent 
that any such action would not cause a failure of a condition to the Offer or 
the Merger, (i) any direct or indirect wholly owned subsidiary (as defined in 
Section 10.03) of Parent may be substituted for and assume all of the rights 
and obligations of Sub as a constituent corporation in the Merger or (ii) the 
Company may be merged with and into Sub with Sub continuing as the Surviving 
Corporation with the effects set forth above and in Section 2.04.  In either 
such event, the parties agree to execute an appropriate amendment to this 
Agreement in order to reflect the foregoing.

     SECTION II.2.  CLOSING.  The closing of the Merger will take place at 
10:00 a.m. (New York time) on a date to be specified by Parent or Sub, which 
shall be no later than the second business day after satisfaction or waiver 
of the conditions set forth in Article VIII (the "Closing Date"), at the 
offices of Skadden, Arps, Slate, Meagher & Flom LLP, unless another date, 
time or place is agreed to in writing by the parties hereto.

     SECTION II.3.  EFFECTIVE TIME.  Subject to the provisions of this 
Agreement, as soon as practicable on or after the Closing Date, the parties 
shall file with the Delaware Secretary of State a certificate of merger or 
other appropriate documents (in any such case, the "Certificate of Merger") 
executed in accordance with the relevant provisions of the DGCL and shall 
make all other filings or recordings required under the DGCL.  The Merger 
shall become effective at such time as the Certificate of Merger is duly 
filed with the Delaware Secretary of State, or at such other time as Sub and 
the Company shall agree should be specified in the Certificate of Merger (the 
time the Merger becomes effective being hereinafter referred to as the 
"Effective Time").

                                      -3-
<PAGE>

     SECTION II.4.  EFFECTS OF THE MERGER.  The Merger shall have the effects 
set forth in Section 259 of the DGCL.

     SECTION II.5.  CERTIFICATE OF INCORPORATION AND BYLAWS. 

          (1)  The Certificate of Incorporation of the Company as in effect 
immediately prior to the Effective Time shall be amended as of the Effective 
Time so that Article fourth thereof shall read in its entirety as follows:

          "The total number of shares of stock which the Corporation shall 
have the authority to issue is 1,000."

As so amended, such certificate of incorporation shall be the certificate of 
incorporation of the Surviving Corporation, until thereafter changed or 
amended, subject to Section 7.08, as provided therein or by applicable law.

          (2)  The Bylaws of the Company as in effect immediately prior to 
the Effective Time, shall be the bylaws of the Surviving Corporation, until 
thereafter changed or amended, subject to Section 7.08, as provided therein 
or by applicable law.

     SECTION II.6.  DIRECTORS.  The directors of Sub immediately prior to the 
Effective Time shall be the directors of the Surviving Corporation, until the 
earlier of their resignation or removal or their respective successors are 
duly elected and qualified, as the case may be.

     SECTION II.7.  OFFICERS.  The officers of the Company immediately prior 
to the Effective Time shall be the officers of the Surviving Corporation, 
until the earlier of their resignation or removal or their respective 
successors are duly elected and qualified, as the case may be.


                                   ARTICLE III

  EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; 
                        PAYMENT OF MERGER CONSIDERATION

     SECTION III.1.  EFFECT ON CAPITAL STOCK.  As of the Effective Time, by 
virtue of the Merger and without any action on the part of the holder of any 
Shares or any shares of capital stock of Sub:

          (1)  CAPITAL STOCK OF SUB.  Each issued and outstanding share of 
capital stock of Sub shall be converted into and become one fully paid and 
nonassessable share of Common Stock, par value $.01 per share, of the 
Surviving Corporation.

          (2)  CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK.  Each 
Share that is owned by the Company or by any subsidiary of the Company and 
each Share that is owned by Parent, Sub or any other subsidiary of Parent 
shall automatically be canceled and retired and shall cease to exist, and no 
consideration shall be delivered in exchange therefor.

          (3)  CONVERSION OF SHARES.  Subject to Section 3.01(d), each issued 
and outstanding Share (other than Shares to be canceled in accordance with 
Section 3.01(b)) shall be converted into the right to receive from the 
Surviving Corporation in cash, without interest, the price per share paid in 
the Offer (the "Merger Consideration").  As of the Effective Time, all such 
Shares shall no longer be outstanding and shall automatically be canceled and 
retired and shall cease to exist, and each holder of a certificate 
representing any such Shares shall cease to have any rights with respect 
thereto, except the right to receive the Merger Consideration, without 
interest.

          (4)  SHARES OF DISSENTING STOCKHOLDERS.  Notwithstanding anything 
in this Agreement to the contrary, any issued and outstanding Shares held by 
a person (a "Dissenting Stockholder") who objects to the Merger and complies 
with all the provisions of Delaware law concerning the right of holders of 
Shares to dissent from the Merger and require appraisal of their Shares 
("Dissenting Shares") shall not be converted as described in Section 3.01(c), 
but shall be converted into the right to receive such consideration as may be 
determined to be due to such Dissenting Stockholder pursuant to Delaware law. 
 If, after the Effective Time, such Dissenting Stockholder withdraws his 
demand for appraisal or fails to perfect or otherwise loses his right to 
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed to be 
converted as of the Effective Time into the right to receive the Merger 


                                      -4-
<PAGE>

Consideration, without interest.  The Company shall give Parent (i) prompt 
notice of any demands for appraisal of Shares received by the Company or the 
receipt by the Company of any documents or instruments with respect to 
stockholder's rights of appraisal pursuant to the DGCL and (ii) the 
opportunity to participate in and direct all negotiations and proceedings 
with respect to any such demands.  The Company shall not, without the prior 
written consent of Parent, make any payment with respect to, or settle, offer 
to settle or otherwise negotiate, any such demands.

     SECTION III.2.  PAYMENT OF MERGER CONSIDERATION. 

          (1)  PAYING AGENT.  Prior to the Effective Time, Parent shall 
designate a bank or trust company to act as paying agent in the Merger (the 
"Paying Agent"), and, from time to time on, prior to or after the Effective 
Time, Parent shall make available, or cause the Surviving Corporation to make 
available, to the Paying Agent cash in amounts and at the times necessary for 
the prompt payment of the Merger Consideration upon surrender of certificates 
representing Shares as part of the Merger pursuant to Section 3.01 (it being 
understood that any and all interest earned on funds made available to the 
Paying Agent pursuant to this Agreement shall be turned over to Parent).

          (2)  SURRENDER OF CERTIFICATES.  As soon as reasonably practicable 
after the Effective Time, the Paying Agent shall mail to each holder of 
record of a certificate or certificates that immediately prior to the 
Effective Time represented Shares (the "Certificates"), (i) a letter of 
transmittal (which shall specify that delivery shall be effected, and risk of 
loss and title to the Certificates shall pass, only upon delivery of the 
Certificates to the Paying Agent and shall be in a form and have such other 
provisions as Parent may reasonably specify) and (ii) instructions for use in 
effecting the surrender of the Certificates in exchange for the Merger 
Consideration.  Upon surrender of a Certificate for cancellation to the 
Paying Agent or to such other agent or agents as may be appointed by Parent, 
together with such letter of transmittal, duly executed, and such other 
documents as may reasonably be required by the Paying Agent, the holder of 
such Certificate shall be entitled to receive in exchange therefor the amount 
of cash into which the Shares theretofore represented by such Certificate 
shall have been converted pursuant to Section 3.01, and the Certificate so 
surrendered shall forthwith be canceled.  In the event of a transfer of 
ownership of Shares that is not registered in the transfer records of the 
Company, payment may be made to a person other than the person in whose name 
the Certificate so surrendered is registered, if such Certificate shall be 
properly endorsed or otherwise be in proper form for transfer and the person 
requesting such payment shall pay any transfer or other taxes required by 
reason of the payment to a person other than the registered holder of such 
Certificate or establish to the satisfaction of the Surviving Corporation 
that such tax has been paid or is not applicable.  Until surrendered as 
contemplated by this Section 3.02, each Certificate shall be deemed at any 
time after the Effective Time to represent only the right to receive upon 
such surrender the amount of cash, without interest, into which the Shares 
theretofore represented by such Certificate shall have been converted 
pursuant to Section 3.01.  No interest will be paid or will accrue on the 
cash payable upon the surrender of any Certificate.

          (3)  NO FURTHER OWNERSHIP RIGHTS IN SHARES.  All cash paid upon the 
surrender of Certificates in accordance with the terms of this Article III 
shall be deemed to have been paid in full satisfaction of all rights 
pertaining to the Shares theretofore represented by such Certificates.  At 
the Effective Time, the stock transfer books of the Company shall be closed, 
and there shall be no further registration of transfers on the stock transfer 
books of the Surviving Corporation of the Shares.  If thereafter Certificates 
are presented to the Surviving Corporation or the Paying Agent for any 
reason, they shall be canceled and exchanged as provided in this Article III.

          (4)  NO LIABILITY; TERMINATION OF FUND.  At any time following six 
months after the Effective Time, the Surviving Corporation shall be entitled 
to require the Paying Agent to deliver to it any funds (including any 
interest received with respect thereto) which had been made available to the 
Paying Agent and which have not been disbursed to holders of Certificates, 
and thereafter such holders shall be entitled to look to the Surviving 
Corporation (subject to abandoned property, escheat, or other similar Laws) 
only as general creditors thereof with respect to the Merger Consideration 
payable upon due surrender of their Certificates, without any interest 
thereon.  None of Parent, Sub, the Company or the Paying Agent shall be 
liable to any person in respect of any cash delivered to a public official 
pursuant to any applicable abandoned property, escheat or similar law.  


                                      -5-
<PAGE>

          (5)  LOST, STOLEN OR DESTROYED CERTIFICATES.  In the event any 
certificates evidencing Shares shall have been lost, stolen or destroyed, the 
Paying Agent shall pay to such holder the Merger Consideration required 
pursuant to Section 3.01, in exchange for such lost, stolen or destroyed 
certificates, upon the making of an affidavit of that fact by the holder 
thereof with such assurances as the Paying Agent, in its discretion and as a 
condition precedent to the payment of the Merger Consideration, may 
reasonably require of the holder of such lost, stolen or destroyed 
certificates.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to Parent and Sub as follows:

     SECTION IV.1.  ORGANIZATION, STANDING AND CORPORATE POWER.  Each of the 
Company and its subsidiaries (as defined in Section 10.03) is a corporation 
duly organized, validly existing and in good standing under the laws of the 
jurisdiction in which it is organized and has all requisite corporate power 
and authority to carry on its business as now being conducted.  Each of the 
Company and its subsidiaries is duly qualified or licensed to do business and 
is in good standing in each jurisdiction in which the nature of its business 
or the ownership, leasing or operation of its properties makes such 
qualification or licensing necessary, other than in such jurisdictions where 
the failure to be so qualified or licensed individually or in the aggregate 
would not have a material adverse effect (as defined in Section 10.03) on the 
Company.  The Company has delivered to Parent complete and correct copies of 
the certificate of incorporation and by-laws of the Company and each of its 
subsidiaries, in each case as amended to the date hereof.

     SECTION IV.2.  SUBSIDIARIES.  Exhibit B to this Agreement lists as to 
each subsidiary (as defined in Section 10.03) of the Company, the number of 
shares of capital outstanding and the holders of securities of such capital 
stock.  All the outstanding shares of capital stock of, or other equity 
interests in, each such subsidiary have been validly issued and are fully 
paid and nonassessable and are owned directly or indirectly by the Company, 
free and clear of all pledges, claims, liens, charges, encumbrances and 
security interests of any kind or nature whatsoever (collectively, "Liens") 
and free of any other restriction (including any restriction on the right to 
vote, sell or otherwise dispose of such capital stock or other ownership 
interests).  Other than with respect to the subsidiaries listed on Exhibit B 
and as set forth in Section 4.02 of the confidential memorandum of the 
Company as of the date hereof delivered to Parent (the "Disclosure 
Schedule"), the Company does not directly or indirectly own any securities or 
other beneficial ownership interests in any other entity (including through 
joint ventures or partnership arrangements), or have any investment in any 
other person.

     SECTION IV.3.  CAPITAL STRUCTURE.  The authorized capital stock of the 
Company consists of 50,000,000 shares of Company Common Stock and 1,000,000 
shares of preferred stock, par value $.01 per share ("Preferred Stock").  At 
the close of business on November 20, 1998, (i) 13,440,490 shares of Company 
Common Stock and no shares of Preferred Stock were issued and outstanding, 
(ii) no shares of Company Common Stock were held by the Company in its 
treasury, (iii) 960,881 shares of Company Common Stock were reserved for 
issuance pursuant to outstanding Stock Options under Stock Option Plans (as 
defined in Section 7.04) and 226,767 shares of Company Common Stock were 
reserved for issuance pursuant to outstanding warrants described in Schedule 
4.03 (the "Warrants"), and (iv) shares of Series A Participating Preferred 
Stock, par value $.01 per share (the "Series A Preferred Stock") were 
reserved for issuance in connection with the Company's Preferred Shares 
Rights Agreement dated August 14, 1996 (the "Rights Agreement").  The "In the 
Money Value" of a Stock Option or a Warrant means the product of (x) the 
number of shares subject to such Stock Option or Warrant, multiplied by (y) 
the excess (if any) of the Offer Price over the exercise price thereof.  The 
aggregate In-the-Money Value of all Stock Options and Warrants on November 
20, 1998 was $2,680,696.  Except as set forth above, no shares of capital 
stock or other voting securities of the Company were issued, reserved for 
issuance or outstanding.  All outstanding shares of capital stock of the 
Company are, and all shares which may be issued pursuant to the Stock Option 
Plans will be, when issued in accordance with the terms thereof, duly 
authorized, validly issued, fully paid and nonassessable and not subject to 
preemptive rights.  There are no bonds, debentures, notes or other 


                                      -6-
<PAGE>

indebtedness of the Company having the right to vote (or convertible into 
securities having the right to vote) on any matters on which stockholders of 
the Company may vote.  Except as set forth above, there are no securities, 
options, warrants, calls, rights, commitments, agreements, arrangements or 
undertakings of any kind to which the Company or any of its subsidiaries is a 
party, or by which the Company or any of its subsidiaries are bound, 
obligating the Company or any of its subsidiaries to issue, deliver or sell, 
or cause to be issued, delivered or sold, additional shares of capital stock 
or other voting securities of the Company or any of its subsidiaries or 
obligating the Company or any of its subsidiaries to issue, grant, extend or 
enter into any such security, option, warrant, call, right, commitment, 
agreement, arrangement or undertaking.  The Company is not a party to any 
voting agreement with respect to the voting of any of its securities or the 
securities of any of its subsidiaries.  There are not any outstanding 
contractual obligations of the Company or any of its subsidiaries to 
repurchase, redeem or otherwise acquire any shares of capital stock of the 
Company or any of its subsidiaries.  Following the consummation of the 
Merger, there will not be outstanding any rights, warrants, options or other 
securities entitling the holder thereof to purchase, acquire or otherwise 
receive any shares of the capital stock of the Company (or any other 
securities exercisable for or convertible into such Shares).

     SECTION IV.4.  AUTHORITY; NONCONTRAVENTION.  The Company has the 
requisite corporate power and authority to enter into this Agreement and, 
subject to, if required by law, approval of the Merger by an affirmative vote 
of the holders of a majority of the Shares (the "Company Stockholder 
Approval"), to consummate the transactions contemplated by this Agreement.  
The execution and delivery of this Agreement by the Company and the 
consummation by the Company of the transactions contemplated by this 
Agreement have been duly authorized by all necessary corporate action on the 
part of the Company, subject, in the case of this Agreement, to the Company 
Stockholder Approval if such approval is required by law.  This Agreement has 
been duly executed and delivered by the Company and constitutes a valid and 
binding obligation of the Company, enforceable against the Company in 
accordance with its terms.  The Company Stockholder Approval is the only vote 
of the holders of any class or series of the Company's capital stock which is 
necessary to approve this Agreement and the transactions contemplated hereby. 
The execution and delivery of this Agreement do not, and the consummation of 
the transactions contemplated by this Agreement and compliance with the 
provisions of this Agreement will not, conflict with, or result in any 
violation of, or default (with or without notice or lapse of time, or both) 
under, or give rise to a right of termination, cancellation or acceleration 
of any obligation or to loss of a material benefit under, or result in the 
creation of any Liens in or upon any of the properties or assets of the 
Company or any of its subsidiaries under any provision of (i) the Certificate 
of Incorporation or Bylaws of the Company (each as amended) or the comparable 
organizational documents of any of its subsidiaries, (ii) except as set forth 
in Section 4.04 of the Disclosure Schedule, any loan or credit agreement, 
note, bond, mortgage, indenture, lease or other agreement, instrument, 
permit, concession, franchise or license applicable to the Company or any of 
its subsidiaries or any of their respective properties or assets or (iii) 
subject to the governmental filings and other matters referred to in the 
second following sentence, any (A) statute, law, ordinance, rule or 
regulation or (B) judgment, order or decree applicable to the Company or any 
of its subsidiaries or any of their respective properties or assets, other 
than, in the case of clauses (ii) and (iii), any such conflicts, violations, 
defaults, rights or Liens that individually or in the aggregate would not (x) 
have a material adverse effect on the Company, (y) impair the ability of the 
Company to perform its obligations under this Agreement or to carry on its 
business as currently conducted or (z) prevent or materially delay the 
consummation of any of the transactions contemplated by this Agreement.  
Neither the execution and delivery of this Agreement nor the consummation of 
the transactions contemplated hereby will breach, or with notice, the passage 
of time or otherwise result in a breach of, any of the Company's obligations 
under the agreement dated November 9, 1998 between the Company, the Circon 
Shareholders Committee and the other signatories thereto.  No consent, 
approval, order or authorization of, or registration, declaration or filing 
with, any Federal, state or local government or any court, administrative 
agency or commission or other governmental authority or agency, domestic or 
foreign (a "Governmental Entity"), is required by or with respect to the 
Company or any of its subsidiaries in connection with the execution and 
delivery of this Agreement by the Company or the consummation by the Company 


                                      -7-
<PAGE>

of the Merger or the transactions contemplated by this Agreement, except for 
(1) the filing of a premerger notification and report form by the Company 
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended 
(the "HSR Act") and filings under similar laws of certain foreign 
jurisdictions as may be required ("Foreign Filings"), (2) the filing with the 
SEC and the Nasdaq Stock Market, Inc. of (A) the Schedule 14D-9, (B) a proxy 
statement relating to the Company Stockholder Approval, if such approval is 
required by law (as amended or supplemented from time to time, the "Proxy 
Statement") and (C) such reports under Section 13(a) of the Exchange Act as 
may be required in connection with this Agreement and the transactions 
contemplated by this Agreement, (3) the filing of the Certificate of Merger 
with the Delaware Secretary of State and appropriate documents with the 
relevant authorities of other states in which the Company is qualified to do 
business and (4) such other consents, approvals, orders, authorizations, 
registrations, declarations and filings the failure of which to be obtained 
or made would not, individually or in the aggregate, have a material adverse 
effect on the Company or prevent or materially delay the consummation of any 
of the transactions contemplated by this Agreement or impair the ability of 
the Company to carry on its business as presently conducted.

     SECTION IV.5.  SEC DOCUMENTS; FINANCIAL STATEMENTS.  The Company has 
filed all required reports, schedules, forms, statements and other documents 
with the SEC since January 1, 1996 (the "SEC Documents").  As of their 
respective dates, the SEC Documents complied in all material respects with 
the requirements of the Securities Act of 1933 (the "Securities Act"), or the 
Exchange Act, as the case may be, and the rules and regulations of the SEC 
promulgated thereunder applicable to such SEC Documents, and none of the SEC 
Documents at the time they were filed contained any untrue statement of a 
material fact or omitted to state a material fact required to be stated 
therein or necessary in order to make the statements therein, in light of the 
circumstances under which they were made, not misleading.  The financial 
statements of the Company included in the SEC Documents complied as to form 
in all material respects with applicable accounting requirements and the 
published rules and regulations of the SEC with respect thereto, have been 
prepared in accordance with generally accepted accounting principles ("GAAP") 
(except, in the case of unaudited statements, as permitted by Form 10-Q of 
the SEC) applied on a consistent basis during the periods involved (except as 
may be indicated in the notes thereto) and fairly presented the financial 
position of the Company and its consolidated subsidiaries as of the dates 
thereof and the results of its operations and cash flows for the periods then 
ended (subject, in the case of unaudited statements, to normal year-end audit 
adjustments and the absence of footnotes).  Except as set forth in the Filed 
SEC Documents (as defined in Section 4.07) or as incurred in the ordinary 
course of business consistent with past practice since the date of the most 
recent financial statements included in the Filed SEC Documents, neither the 
Company nor any of its subsidiaries has any material liabilities or 
obligations of any nature (whether accrued, absolute, contingent or 
otherwise) which would be required under GAAP to be set forth on a 
consolidated balance sheet of the Company and its subsidiaries taken as a 
whole.

     SECTION IV.6.  INFORMATION SUPPLIED.  None of the information supplied 
or to be supplied by the Company specifically for inclusion or incorporation 
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or the Proxy 
Statement or (iii) the information to be filed by the Company in connection 
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the 
"Information Statement"), will, in the case of the Offer Documents, the 
Schedule 14D-9 and the Information Statement, at the respective times the 
Offer Documents, the Schedule 14D-9 and the Information Statement are filed 
with the SEC or first published, sent or given to the Company's stockholders, 
contain any untrue statement of a material fact or omit to state any material 
fact required to be stated therein or necessary in order to make the 
statements therein, in light of the circumstances under which they are made, 
not misleading.  The Schedule 14D-9 and the Information Statement will comply 
as to form in all material respects with the requirements of the Exchange Act 
and the rules and regulations thereunder, except that no representation or 
warranty is made by the Company with respect to statements made or 
incorporated by reference therein based on information supplied by Parent or 
Sub specifically for inclusion or incorporation by reference therein.


                                      -8-
<PAGE>

     SECTION IV.7.  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Since December 31, 
1997 the Company and its subsidiaries have conducted their respective 
businesses only in the ordinary course consistent with past practice, and 
there has not been (i) any material adverse change (as defined in Section 
10.03) in the Company, (ii) any declaration, setting aside or payment of any 
dividend or other distribution (whether in cash, stock or property) with 
respect to any of the Company's capital stock (other than the Rights issued 
or to be issued pursuant to the Rights Agreement), (iii) any split, 
combination or reclassification of any of its capital stock or any issuance 
or the authorization of any issuance of any other securities in respect of, 
in lieu of or in substitution for shares of its capital stock, (iv) except as 
set forth in Section 4.07 of the Disclosure Schedule, (w) any granting by the 
Company or any of its subsidiaries to any director or officer of the Company 
or its subsidiaries of any increase in compensation, except in the ordinary 
course of business consistent with prior practice or as required under 
employment agreements in effect as of December 31, 1997, (x) any granting by 
the Company or any of its subsidiaries to any director, officer or employee 
of any stock options, (y) any granting by the Company or any of its 
subsidiaries to any officer of any increase in severance or termination pay, 
or (z) any entry by the Company or any of its subsidiaries into any 
employment, severance, termination or similar agreement with any officer, 
director or employee, (v) any damage, destruction or loss, whether or not 
covered by insurance, that individually or in the aggregate would exceed 
$100,000, (vi) any change in accounting methods, principles or practices or 
(vii) any tax election.

     SECTION IV.8.  LITIGATION; INVESTIGATION.  Except as set forth in 
Section 4.08 of the Disclosure Schedule, there is no suit, action or 
proceeding or investigation by or before any court or administrative agency 
or arbitral tribunal pending or, to the knowledge of the Company, threatened 
against or affecting the Company or any of its subsidiaries as to which there 
is a reasonable likelihood of an adverse determination that individually or 
in the aggregate would have a material adverse effect on the Company, nor is 
there any judgment, decree, injunction, rule or order of any Governmental 
Entity or arbitrator outstanding against, or, to the knowledge of the 
Company, investigation by any Governmental Entity involving, the Company or 
any of its subsidiaries that individually or in the aggregate would have a 
material adverse effect on the Company.

     SECTION IV.9.  CONTRACTS.  Except as disclosed in the Company's annual 
report on form 10-K for the year ended December 31, 1997 and quarterly 
reports on Form 10-Q for calendar quarters in 1998 (the "Filed SEC 
Documents") and as set forth in item A of Section 4.09 of the Disclosure 
Schedule, there are no contracts or agreements that are of a nature required 
to be filed as an exhibit under the Exchange Act and the rules and 
regulations promulgated thereunder.  Except as set forth in item B of Section 
4.09 of the Disclosure Schedule, neither the Company nor any of its 
subsidiaries is in violation of nor in default under (nor does there exist 
any condition, event or occurrence which upon the passage of time or the 
giving of notice or both would cause such a violation of or default under) 
any lease, permit, concession, franchise, license or any other contract, 
agreement, arrangement or understanding to which it is a party or by which it 
or any of its properties or assets is bound, except for violations or 
defaults that individually or in the aggregate would not have a material 
adverse effect on the Company.  Except as set forth in item C of Section 4.09 
of the Disclosure Schedule, as of the date hereof, the Company is not bound 
by any contract, agreement, arrangement or understanding with any affiliate 
of the Company that is currently in effect other than (i) agreements that are 
disclosed in the Filed SEC Documents or (ii) agreements in an aggregate 
amount not to exceed $150,000.  Except as set forth in item D of Section 4.09 
of the Disclosure Schedule, the Company is not a party to or otherwise bound 
by any agreement or covenant not to compete or by any agreement or covenant 
restricting in any material respect the development, marketing or 
distribution of the Company's products and services.


                                      -9-
<PAGE>

     SECTION IV.10.  COMPLIANCE WITH LAWS. 

          (1)  Except as set forth in Section 4.10 of the Disclosure 
Schedule, each of the Company and its subsidiaries are in compliance with all 
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees 
and orders of any Governmental Entity (collectively, "Legal Provisions") 
applicable to their business or operations, except for instances of possible 
noncompliance that individually or in the aggregate would not have a material 
adverse effect on the Company or prevent or materially delay the consummation 
of the Merger or the transactions contemplated by this Agreement.  Each of 
the Company and its subsidiaries has in effect all Federal, state, local and 
foreign governmental approvals, authorizations, certificates, filings, 
franchises, licenses, notices, permits and rights, including but not limited 
to all authorizations under Environmental Laws (as hereinafter defined), the 
applicable regulations adopted by the U.S. Food and Drug Administration and 
the U.S. Food, Drug and Cosmetic Act, and the regulations thereunder 
("Permits"), necessary for it to own, lease or operate its properties and 
assets and to carry on its business as now conducted, and there has not 
occurred any material default under, or violation of, any such Permit.

          (2)  The term "Environmental Laws" means any Federal, state or 
local or foreign statute, ordinance, rule, regulation, policy, permit, 
consent, approval, license, judgment, order, decree or injunction ("Laws") 
relating to pollution or protection of the environment including, but not 
limited to: (A) Releases (as defined in 42 U.S.C. Section 9601(22)) or 
threatened Releases of Hazardous Material (as hereinafter defined) into the 
environment, (B) the generation, treatment, storage, disposal, use, handling, 
manufacturing, transportation or shipment of Hazardous Material,  (C) the 
health or safety of employees in the workplace environment or of persons 
exposed to Hazardous Materials, or (D) any laws requiring record keeping, 
notification, disclosure and reporting requirements related to Hazardous 
Material or endangered species, wildlife and plants and the management and 
use of natural resources.  The term "Hazardous Material" means (1) hazardous 
substances (as defined in 42 U.S.C. Section 9601(14)), (2) petroleum, 
including crude oil and any fractions thereof, (3) natural gas, synthetic gas 
and any mixtures thereof, (4) asbestos and/or asbestos containing material, 
(5) PCBs or materials containing PCBs and (6) any material regulated as a 
medical waste or infectious waste, pollutant or contaminant.

          (3)  There have been no Releases of Hazardous Material in, on, 
under or affecting any of the current or previously owned or leased 
properties of the Company or any of its subsidiaries or any surrounding site, 
and there has been no disposal on any such properties of any Hazardous 
Material in a manner that has led, or could reasonably be anticipated to lead 
to a Release, except in each case for those which individually or in the 
aggregate would not have a material adverse effect on the Company.  The 
Company and its subsidiaries have not received any written notice of, or 
entered into any order, settlement or decree relating to: (A) any violation 
of any Environmental Laws or the institution or pendency of any suit, action, 
claim, proceeding or investigation by any Governmental Entity or any third 
party in connection with any alleged violation of Environmental Laws, (B) the 
response to or remediation of Hazardous Material at or arising from any of 
the Company's properties or any subsidiary's properties or at any property to 
which the Company transported or arranged for transportation of Hazardous 
Materials or (C) payment for, response to or remediation of Hazardous 
Material at or arising from any of the Company's properties or any 
subsidiary's properties, except in each case for any such notices, orders, 
settlements or decrees which individually or in the aggregate would not have 
a material adverse effect on the Company.


                                     -10-
<PAGE>

     SECTION IV.11.  ABSENCE OF CHANGES IN BENEFIT PLANS; LABOR RELATIONS.  
Except as required to comply with applicable laws or to make changes which do 
not, individually or in the aggregate, have a material financial impact on 
the Company or the Plans (as defined below), since December 31, 1997, there 
has not been any adoption or amendment (or any agreement to adopt or to 
amend) any deferred compensation and any incentive compensation, stock 
purchase, stock option or other equity compensation plan, program, agreement 
or arrangement; any severance or termination pay, medical, surgical, 
hospitalization, life insurance or other "welfare" plan, fund or program 
(within the meaning of section 3(1) of the Employee Retirement Income 
Security Act of 1974, as amended ("ERISA")); any profit-sharing, stock bonus 
or other "pension" plan, fund or program (within the meaning of section 3(2) 
of ERISA); any employment, termination, severance or similar agreement; or 
any other employee benefit plan, fund, program, agreement or arrangement, in 
each case, that is sponsored, maintained or contributed to or required to be 
contributed to by the Company or by any trade or business, whether or not 
incorporated (an "ERISA Affiliate"), that together with the Company would be 
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or 
to which the Company or an ERISA Affiliate is party, whether written or oral, 
ffor the benefit of any employee or former employee of the Company or any 
Subsidiary (collectively, the "Benefit Plans" and each Benefit Plan that is 
subject to Section 302 or Title IV of ERISA or Section 412 of the Internal 
Revenue Code of 1986, as amended (the "Code"), a "Pension Plan").  Except as 
set forth in Section 4.11 of the Disclosure Schedule, neither the Company, 
any Subsidiary nor any ERISA Affiliate has any commitment or formal plan, 
whether legally binding or not, to create any additional employee benefit 
plan or modify or change any existing Plan that would affect any employee or 
former employee of the Company or any Subsidiary, except as required to 
comply with applicable law.  Except as set forth on Section 4.11 of the 
Disclosure Schedule, (i) there exist, as of the date hereof, no employment, 
consulting, severance, termination or indemnification agreements, 
arrangements or understandings between the Company or any of its 
subsidiaries, and any current employee, officer or director of the Company, 
(ii) there are no collective bargaining or other labor union agreements to 
which the Company or any of its subsidiaries is a party or by which the 
Company or any of its subsidiaries is bound and (iii) during the last 3 
years, neither the Company nor any of its subsidiaries has encountered any 
labor union organizing activity, nor had any actual or threatened employee 
strikes, work stoppages, slowdowns or lockouts.  Except as set forth in 
Section 4.11 of the Disclosure Schedule, since the enactment of the Worker 
Adjustment and Retraining Notification Act (the "WARN Act"), the Company has 
not effectuated a "plant closing" or "mass layoff" (as defined in the WARN 
Act or any similar state, local or foreign law or regulation) affecting any 
site of employment or one of more facilities or operating units within any 
site of employment or facility of the Company or its subsidiaries, without 
complying with the WARN Act or similar state, local or foreign law or 
regulation.  In addition, except as set forth in Section 4.11 of the 
Disclosure Schedule, none of the Company's employees has suffered an 
"employment loss" (as defined in the WARN Act or any similar state, local or 
foreign law or regulation) during the ninety day period prior to the date of 
this Agreement.

     SECTION IV.12.  ERISA COMPLIANCE. 

          (1)  Section  4.12(i) of the Disclosure Schedule contains a list of 
all Benefit Plans.  The Company has made available to Parent true, complete 
and correct copies of (1) each Benefit Plan (or, in the case of any unwritten 
Benefit Plans, descriptions thereof), (2) the most recent annual report on 
Form Series 5500 filed with the Internal Revenue Service with respect to each 
Benefit Plan (if any such report was required), (3) the most recent summary 
plan description for each Benefit Plan for which such summary plan 
description is required, (4) each trust agreement and group annuity contract 
relating to any Benefit Plan and (5) the most recent determination letter 
received from the Internal Revenue Service with respect to each Benefit Plan 
intended to be qualified under the Code. 

          (2)  Except as set forth in Section 4.12(ii) of the Disclosure 
Schedule, each Benefit Plan has been operated and administered in all 
material respects in accordance with its terms and applicable law, including 
but not limited to ERISA and the Code.


                                     -11-
<PAGE>

          (3)  No liability under Title IV or section 302 or ERISA has been 
incurred by the Company or any ERISA Affiliate that has not been satisfied in 
full, and no condition exists that presents a material risk to the Company or 
any ERISA Affiliate of incurring any such liability, other than liability for 
premiums due the Pension Benefit Guaranty Corporation (which premiums have 
been paid when due and owing).

          (4)  Except as set forth in Section 4.12(iv) of the Disclosure 
Schedule, with respect to each Pension Plan, the present value of accrued 
benefits under such plan, based upon the actuarial assumptions used for 
funding purposes in the most recent actuarial report prepared by such plan=s 
actuary with respect to such plan did not exceed, as of its latest valuation 
date, the then current value of the assets of such plan allocable to such 
accrued benefits.

          (5)  Except as set forth in Section 4.12(v) of the Disclosure 
Schedule, no Pension Plan is a Plan described in Section 4063(1) of ERISA.  
With respect to any Benefit Plan that is a "multiemployer pension plan" as 
defined in Section 3(37) of ERISA, (i) neither the Company nor any ERISA 
Affiliate has made or suffered a "complete withdrawal" or a "partial 
withdrawal," as such terms are respectively defined in sections 4203 and 4205 
of ERISA (or any liability resulting therefrom has been satisfied in full), 
(ii) no event has occurred that presents a material risk of a partial 
withdrawal, (iii) neither the Company nor any ERISA Affiliate has any 
contingent liability under section 4204 of ERISA, and (iv) such Benefit Plan 
is not in reorganization and no circumstances exist that present a material 
risk that any such plan will go into reorganization.  With respect to any 
Benefit Plan that is  a "multiemployer pension plan," the aggregate 
withdrawal liability  of  the Company and its ERISA Affiliates, computed as 
if a complete withdrawal by the Company and the ERISA Affiliates had occurred 
under each such Plan on the date hereof, would not exceed $500,000.

          (6)  All Pension Plans have been the subject of determination or 
opinion letters, as applicable from the Internal Revenue Service to the 
effect that such Pension Plans are qualified and exempt from Federal income 
taxes under Sections 401(a) and 501(a), respectively, of the Code, and no 
such letter has been revoked nor has any event occurred since the date of its 
most recent letter or application therefor that would adversely affect its 
qualification (unless the effect of such event is correctable under any 
available IRS correction program) or materially increase its costs.

          (7)  Except as set forth in Section 4.12(vii) of the Disclosure 
Schedule, neither the Company, nor any of its subsidiaries, nor any Commonly 
Controlled Entity has maintained, contributed or been obligated to contribute 
to any Benefit Plan that is subject to Title IV of ERISA.

          (8)  Section 4.12(viii) of the Disclosure Schedule lists all 
outstanding Stock Options as of November 20, 1998, showing for each such 
option: (1) the number of shares issuable, (2) the number of vested shares, 
(3) the date of expiration and (4) the exercise price.

          (9)  Except as set forth in Section 4.12(ix) of the Disclosure 
Schedule, the consummation of the Merger or the Offer will not (a) entitle 
any current or former employee or officer of the Company or any subsidiary to 
severance pay, unemployment compensation retention bonus or other similar 
payments, (b) accelerate the term of payment or vesting, or increase the 
amount of compensation or benefits due to any such employee or officer or (c) 
require the Company or any ERISA Affiliate to fund or make or make any 
payments to any trust or other funding vehicle in respect of any Benefit Plan.

         (10)  There are no pending or, to the knowledge of the Company, 
anticipated or threatened claims by or on behalf of any Benefit Plan, by any 
employee or beneficiary covered under any such Benefit Plan, or otherwise 
involving any such Benefit Plan (other than routine claims for benefits) 
which would have a material adverse plan effective on the Company or its 
subsidiaries.


                                     -12-
<PAGE>
         (11)  The deduction of any amount payable pursuant to the terms of 
the Benefit Plans will not be subject to disallowance under Section 162(m) of 
the Code.

     SECTION IV.13.  TAXES.  Each of the Company and its subsidiaries has 
timely filed all material tax returns and reports required to be filed by it, 
correct and complete, and has paid, or established adequate reserves for, all 
taxes required to be paid by it.  No material deficiencies for any taxes have 
been proposed, asserted or assessed against the Company which have not been 
fully paid or satisfied, and no requests for waivers of the time to assess 
any such taxes are pending.  The Federal income tax returns of the Company 
and each of its subsidiaries consolidated in such returns have been examined 
by and settled with the United States Internal Revenue Service for all years 
through the fiscal year ended December 31, 1995.  The statute of limitations 
on assessment or collection of any Federal income taxes due from the Company 
or any of its subsidiaries has expired for all taxable years of the Company 
or such subsidiaries through the fiscal year ended December 31, 1995.  As 
used in this Agreement, "taxes" shall include all Federal, state, local and 
foreign income, property, sales, excise and other taxes, tariffs or 
governmental charges of any nature whatsoever.

     SECTION IV.14.  NO EXCESS PARACHUTE PAYMENTS.  Except as set forth in 
Section 4.14 of the Disclosure Schedule, no amount that could be received 
(whether in cash or property or the vesting of property) as a result of any 
of the transactions contemplated by this Agreement by any employee, officer 
or director of the Company or any of its subsidiaries who is a "disqualified 
individual" (as such term is defined in proposed Treasury Regulation Section 
1.28OG-1) under any employment, severance or termination agreement, other 
compensation arrangement or Benefit Plan currently in effect would be an 
"excess parachute payment" (as such term is defined in Section 28OG(b)(1) of 
the Code).  No disqualified individual is entitled to receive any additional 
payment from the Company or any of its subsidiaries, the Surviving 
Corporation or any other person (a "Parachute Gross-Up Payment") in the event 
that the excise tax of Section 4999(a) of the Code is imposed on such person. 
 The Board of Directors of the Company has not granted to any officer, 
director or employee of the Company any right to receive any Parachute 
Gross-Up Payment.

     SECTION IV.15.  INTELLECTUAL PROPERTY.  

          (1)  The Company and its subsidiaries own, or are validly licensed 
or otherwise have the right to use, free and clear or all liens, all patents, 
patent rights, trademarks, trade secrets, trademark rights, trade names, 
trade name rights, service marks, service mark rights, copyrights, Internet 
domain names, designs, logos, slogans, and general intangibles of like 
nature, Software (as defined below), "mask works" (as defined under 17 USC 
Section 901), technology, trade secrets and other confidential information, 
know-how, proprietary processes, formulae, algorithms, models, and 
methodologies, rights of publicity and privacy relating to the use of the 
names, likenesses and biographical information of real persons and other 
proprietary intellectual property rights (collectively "Intellectual Property 
Rights") which are used or held for use in the business of the Company 
provided, however, the Company does not give any representation as to the 
Intellectual Property Rights of any third party.  For purposes of this 
Section 4.15, "Software" means any and all (i) computer programs, whether in 
source code or object code form, (ii) databases and compilations, and (iii) 
all documentation, including user manuals and training materials, relating to 
any of the foregoing.

          (2)  Schedule 4.15(b) sets forth, for the Intellectual Property 
Rights owned or licensed by Company or any subsidiary, a complete and 
accurate list of all material U.S. and foreign (i) patents and patent 
applications; (ii) trademark registrations (including Internet domain 
registrations), trademark applications, and material unregistered trademarks; 
(iii) copyright and mask work registrations, copyright and mask work 
applications; and (iv) all Software.

          (3)  Schedule 4.15(c) sets forth a complete and accurate list of 
all agreements, whether oral or written, and whether between the Company or 
any subsidiaries and third parties or inter-corporate, (other than licenses 
of readily available commercial software programs having an acquisition price 
of less than $10,000) to which Company or any subsidiary is a party or 
otherwise bound, (i) granting or obtaining any right to use or practice any 
rights under any Intellectual Property Right or (ii) restricting the 


                                     -13-
<PAGE>

Company's or any subsidiary's rights to use any Intellectual Property Right, 
including but not limited to license agreements, development agreements, 
distribution agreements, settlement agreements, consent to use agreements, 
and covenants not to sue (collectively, the "Intellectual Property 
Agreements").  The Intellectual Property Agreements are valid and binding 
obligations of all parties thereto, enforceable in accordance with their 
terms, and there exists no event or condition which will result in a 
violation or breach of, or constitute (with or without due notice of lapse of 
time or both) a default under any such Intellectual Property Agreement by (i) 
the Company or any subsidiary, or (ii) to the knowledge of the Company, any 
third party.  No royalties, honoraria or other fees are payable by Company or 
any subsidiary to any third parties for the use of  or right to use any 
Intellectual Property Right except pursuant to the Intellectual Property 
Agreements.

          (4)  Except as set forth in Schedule 4.15(b) or 4.15(d):

               (1)  The Company or a subsidiary is listed in the records of 
the appropriate United States, state, or foreign registry as the sole current 
owner of record for each application and registration listed on Section 
4.15(b) of the Disclosure Schedule.

               (2)  The Intellectual Property Rights owned by Company or any 
subsidiary and, to the Company's knowledge, any Intellectual Property Right 
used by Company or any subsidiary, are subsisting and are valid and 
enforceable.

               (3)  There are no settlements, forebearances to sue, consents, 
judgments, or orders or similar obligations (other than the Intellectual 
Property Agreements) which (a) restrict Company's or any subsidiary's rights 
to use any Intellectual Property Right, (b) restrict Company's or any 
subsidiary's business in order to accommodate a third party's intellectual 
property rights or (c) permit third parties to use any Intellectual Property 
Right owned or controlled by the Company or any subsidiary.

               (4)  To the Company's knowledge, the conduct of Company's and 
any subsidiary's business as currently and heretofore conducted does not 
infringe upon (either directly or indirectly such as through contributory 
infringement or inducement to infringe) any Intellectual Property Right owned 
or controlled by any third party.

               (5)  Company and each subsidiary takes reasonable measures to 
protect the secrecy of its confidential technology, trade secrets, know-how, 
proprietary processes, formulae, algorithms, models, and methodologies 
(collectively "Trade Secrets"), including requiring its employees and other 
parties having access thereto to execute written non-disclosure agreements.  
To the Company's knowledge since December 31, 1997, no Trade Secret has been 
disclosed or authorized to be disclosed to any third party other than 
pursuant to a non-disclosure agreement.  With respect to any non-disclosure 
agreement relating to its Trade Secrets, the Company is not, and to the 
Company's knowledge the other party is not, in breach or default thereof.

               (6)  With respect to the Software set forth in Section 4.15(b) 
of the Disclosure Schedule which Company purports to own, such Software was 
either developed (a) by employees of Company or any subsidiary within the 
scope of their employment or (b) by independent contractors who have assigned 
their rights to Company or any subsidiary pursuant to written agreements.  
Each agreement in which the Company or any subsidiary has licensed products 
containing owned software to third parties contains provisions (y) limiting 
the Company's or its subsidiary's liability to the amount of the fees paid 
pursuant to the agreement; or (z) disclaiming any warranties as to the 
performance of functionality of the software, other than stating that the 
software would perform in accordance with its documentation and/or 
specifications.  

               (7)  The Company's Intellectual Property Rights will not be 
adversely affected because of the consummation of the Offer and the Merger.

               (8)  No claim of any infringement, misappropriation, 
unauthorized use or dilution of any Intellectual Property Rights of any third 
party has been made or asserted against the Company or any of its 
subsidiaries in respect of the operation of the Company's or any subsidiary's 
business.  


                                     -14-
<PAGE>

               (9)  To the knowledge of the Company, no person is infringing 
the rights of the Company or any subsidiary with respect to any Intellectual 
Property Right.  Neither the Company nor any subsidiary has licensed, or 
otherwise granted, to any third party, any material rights in or to any 
Intellectual Property Rights.

     SECTION IV.16.  STATE TAKEOVER STATUTES.  The Board of Directors of the 
Company has approved the Offer, the Merger and this Agreement, and such 
approval is sufficient to render inapplicable to the Offer, the Merger, this 
Agreement and the transactions contemplated by this Agreement the provisions 
of Section 203 of the DGCL to the extent, if any, such Section is applicable 
to the Offer, the Merger, this Agreement and the transactions contemplated by 
this Agreement.

     SECTION IV.17.  RIGHTS AGREEMENT.  The Board of Directors of the Company 
has adopted resolutions providing that the Rights Agreement shall be amended, 
and the Rights Agreement shall be so amended, within two business days 
following the date hereof, to (i) render the Rights Agreement inapplicable to 
the Offer, the Merger, this Agreement and the acquisition of Shares by Sub 
pursuant to the Offer, (ii) ensure that (y) none of Parent, Sub or any of 
their respective affiliates is an Acquiring Person (as defined in the Rights 
Agreement) pursuant to the Rights Agreement solely by virtue of the execution 
of this Agreement, commencement and consummation of the Offer, the 
acquisition of Shares by Sub pursuant to the Offer and the consummation of 
the Merger and (z) a Distribution Date or a Shares Acquisition Date (as such 
terms are defined in the Rights Agreement) does not occur by reason of the 
Offer, the Merger, the execution of this Agreement, the acquisition of the 
Shares by Sub pursuant to the Offer, or the consummation of the Merger and 
(iii) provide that the Final Expiration Date (as defined in the Rights 
Agreement) shall occur immediately prior to the Effective Time, and such 
amendment will not be further amended by the Company without the prior 
consent of Parent in its sole discretion.

     SECTION IV.18.  BROKERS; SCHEDULE OF FEES AND EXPENSES.  No broker, 
investment banker, financial advisor or other person, other than Bear, 
Stearns & Co. Inc., the fees and expenses of which will be paid by the 
Company, is entitled to any broker's, finder's, financial advisor's or other 
similar fee or commission in connection with the transactions contemplated by 
this Agreement based upon arrangements made by or on behalf of the Company.  
The Company has furnished to Parent true and complete copies of all 
agreements under which any such fees or expenses are payable and all 
indemnification and other agreements related to the engagement of the persons 
to whom such fees are payable.

     SECTION IV.19.  OPINION OF FINANCIAL ADVISOR.  The Company has received 
the opinion of Bear, Stearns & Co. Inc., dated the date hereof, to the effect 
that, as of such date, the consideration to be received in the Offer and the 
Merger by the Company's stockholders is fair to the Company's stockholders 
from a financial point of view, a signed copy of which opinion is currently 
being delivered to Parent.

     SECTION IV.20.  ANNUAL MEETING.  No shareholder of the Company has given 
the notice required under the Company's By-laws to present at the Company's 
November 24, 1998 Annual Meeting of Shareholders any business not set forth 
in the notice to shareholders relating to such meeting and as a result the 
only business that may be conducted at such meeting in accordance with this 
Agreement and the Company's By-laws are the items specifically set forth in 
the notice relating to the Annual Meeting.

     SECTION IV.21.  PRODUCTS LIABILITY.  (1)  Except as set forth in Section 
4.21 of the Disclosure Schedule,  (i) there is no notice, demand, claim 
action, suit inquiry, hearing, proceeding, notice of violation or 
investigation of a civil, criminal or administrative nature by or before any 
court or governmental or other regulatory or administrative  agency, 
commission or authority pending against or involving the Company or any of 
its Subsidiaries (past or present) or concerning any product relating to the 
businesses of the Company and its Subsidiaries (past or present which is 
pending or threatened, relating to or resulting from an alleged defect in 
design, manufacture, materials or workmanship of any product designed, 


                                     -15-
<PAGE>

manufactured, distributed, or sold by or on behalf of the Company or any of 
its Subsidiaries (past or present), or any alleged failure to warn, or from 
any alleged breach of express or implied warranties or representations, (ii) 
since December 31, 1997 there has not been any Occurrence (as defined in this 
Section 4.21 herein); (iii) during the last five years, there has not been 
any product recall or post-sale warning (collectively, "Recalls") by the 
Company or any of its Subsidiaries (past or present) concerning any products 
relating to the businesses of the Company and its Subsidiaries (past or 
present) which were designed, manufactured, distributed, or sold by the 
businesses of the Company and its Subsidiaries (past or present), or to the 
best of the Company's knowledge, after due inquiry, any investigation or any 
action that would require the consideration by the Company's corrective 
action committee, made by any person or entity concerning whether to 
undertake or not to undertake any Recalls.  For purposes of this Section 4.21 
and Section 4.22, the term "Occurrence" shall mean any accident, happening or 
event which is caused or allegedly caused by any alleged hazard or alleged 
defect in manufacture, design, materials or workmanship including, without 
limitation, any alleged failure to warn or any breach of express or implied 
warranties or representations with respect to, or any accident, happening or 
event otherwise involving, a product (including any parts or components) 
relating to the businesses of the Company and its Subsidiaries (past or 
present) designed, manufactured, distributed, or sold by or on behalf of the 
Company and its Subsidiaries (past or present) which results or is alleged to 
have resulted in injury or death to any person or damage to or destruction of 
property, or other consequential damages, at any time.

     SECTION IV.22. INSURANCE.  Section 4.22 of the Disclosure Schedule 
contains a complete and accurate list of:  (i) all primary, excess and 
umbrella policies of general liability, fire, products liability, completed 
operations, employers' liability, workers' compensation, bonds and other 
forms of insurance owned or held by or on behalf of and/or providing 
insurance coverage to the Company as of August 1, 1998, including the 
following information for each such policy:  type(s) of insurance coverage 
provided; name of insurer; effective dates; policy number; per occurrence and 
annual aggregate deductibles or self-insured retentions; per occurrence and 
annual aggregate limits of liability; the extent, if any, to which the limits 
of liability have been invaded or exhausted; and (ii) all claims and lawsuits 
in excess of $100,000 made or filed since December 31, 1997 with respect to 
the businesses of the Company or its subsidiaries, and the total number and 
amount of all claims and lawsuits, including the following information:  
names of claimants/plaintiffs; event or accident; nature of the claim and 
product involved, if any; and amount paid to satisfy, compromise or otherwise 
dispose of the claim or lawsuit and the source of such payment.  All current 
policies set forth on Schedule 4.21 are in full force and effect, and with 
respect to all policies, all premiums currently payable or previously due and 
payable with respect to all periods up to and including the date of Closing 
have been paid, and no notice of cancellation or termination has been 
received with respect to any such policy.  To the Company's knowledge, all 
such policies are sufficient for compliance with all requirements of law and 
of all agreements to which the Company or any of its subsidiaries is a party; 
are valid, outstanding, collectible and enforceable policies; provide 
adequate insurance coverage; will remain in full force and effect through the 
respective dates set forth in Schedule 4.22 without the payment of additional 
premiums.  None of such policies contains a provision that would permit the 
termination, limitation, lapse, exclusion, or change in the terms of coverage 
(including, without limitation, a change in the limits of liability) by 
reason of consummation of the transactions contemplated by this Agreement.  
The Company has not been refused any insurance with respect to its products 
or operations, nor has any coverage been limited by any insurance carrier to 
which the Company has applied for any such insurance or with which they have 
carried insurance during the last 3 years.

                                  ARTICLE V

            REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

       Parent and Sub represent and warrant to the Company as follows:


                                     -16-
<PAGE>


     SECTION V.1.  ORGANIZATION, STANDING AND CORPORATE POWER.  Each of 
Parent and Sub is a corporation duly organized, validly existing and in good 
standing under the laws of the jurisdiction in which it is incorporated and 
has all requisite corporate power and authority to carry on its business as 
now being conducted.  Each of Parent and Sub is duly qualified or licensed to 
do business and is in good standing in each jurisdiction in which the nature 
of its business or the ownership, leasing or operation of its properties 
makes such qualification or licensing necessary, other than in such 
jurisdictions where the failure to be so qualified or licensed individually 
or in the aggregate would not have a material adverse effect on Parent.  
Parent has delivered to the Company complete and correct copies of its 
Certificate of Incorporation and By-Laws and the Certificate of Incorporation 
and By-Laws of Sub, in each case as amended to the date hereof.

     SECTION V.2.  AUTHORITY; NONCONTRAVENTION.  Parent and Sub have all 
requisite corporate power and authority to enter into this Agreement and to 
consummate the transactions contemplated by this Agreement.  The execution 
and delivery of this Agreement and the consummation of the transactions 
contemplated by this Agreement have been duly authorized by all necessary 
corporate action on the part of Parent and Sub.  This Agreement has been duly 
executed and delivered by Parent and Sub, and constitutes a valid and binding 
obligation of each such party, enforceable against each such party in 
accordance with its terms.  The execution and delivery of this Agreement do 
not, and the consummation of the transactions contemplated by this Agreement 
and compliance with the provisions of this Agreement will not, conflict with, 
or result in any violation of, or default (with or without notice or lapse of 
time, or both) under, or give rise to a right of termination, cancellation or 
acceleration of any obligation or to loss of a material benefit under, or 
result in the creation of any Lien upon any of the properties or assets of 
Parent or Sub under, any provision of (i) the Certificate of Incorporation or 
By-Laws of Parent or Sub, (ii) any loan or credit agreement, note, bond, 
mortgage, indenture, lease or other agreement, instrument, permit, 
concession, franchise or license applicable to Parent or Sub or their 
respective properties or assets or (iii) subject to the governmental filings 
and other matters referred to in the following sentence, any (A) statute, 
law, ordinance, rule or regulation or (B) judgment, order or decree 
applicable to Parent or Sub or their respective properties or assets, other 
than, in the case of clauses (ii) and (iii), any such conflicts, violations, 
defaults, rights or Liens that individually or in the aggregate would not (x) 
have a material adverse effect on Parent, (y) impair in any material respect 
the ability of each of Parent and Sub to perform its obligations under this 
Agreement, as the case may be, or (z) prevent or materially delay the 
consumma-tion of any of the transactions contemplated by this Agreement.  No 
consent, approval, order or authorization of, or registration, declaration or 
filing with, any Governmental Entity is required by or with respect to Parent 
or Sub in connection with the execution and delivery of this Agreement by 
Parent and Sub or the consummation by Parent and Sub of the transactions 
contemplated by this Agreement, except for (1) Foreign Filings and the filing 
of a premerger notification and report form under the HSR Act, (2) the filing 
with the SEC of (A) the Offer Documents and (B) such reports under Sections 
13(a), 13(d) and 16(a) of the Exchange Act as may be required in connection 
with this Agreement and the transactions contemplated by this Agreement (3) 
the filing of the Certificate of Merger with the Delaware Secretary of State 
and appropriate documents with the relevant authorities of other states in 
which the Company is qualified to do business and (4) such other consents, 
approvals, orders, authorizations, registrations, declarations and filings as 
may be required under the "blue sky" laws of various states, the failure of 
which to be obtained or made would not, individually or in the aggregate, 
have a material adverse effect on Parent or prevent or materially delay the 
consummation of any of the transactions contemplated by this Agreement.

     SECTION V.3.  INFORMATION SUPPLIED.  None of the information supplied or 
to be supplied by Parent or Sub specifically for inclusion or incorporation 
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the 
Information Statement or (iv) the Proxy Statement will, in the case of the 
Offer Documents, the Schedule 14D-9 and the Information Statement, at the 
respective times the Offer Documents, the Schedule 14D-9 and the Information 
Statement are filed with the SEC or first published, sent or given to the 
Company's stockholders, or, in the case of the Proxy Statement, at the time 
the Proxy Statement is first mailed to the Company's stockholders or at the 
time of the Stockholders Meeting, contain any untrue statement of a material 


                                     -17-
<PAGE>

fact or omit to state any material fact required to be stated therein or 
necessary in order to make the statements therein, in light of the 
circumstances under which they are made, not misleading.  The Offer Documents 
will comply as to form in all material respects with the requirements of the 
Exchange Act and the rules and regulations thereunder, except that (other 
than with respect to the Proxy Statement) no representation or warranty is 
made by Parent or Sub with respect to statements made or incorporated by 
reference therein based on information supplied by the Company specifically 
for inclusion or incorporation by reference therein.

     SECTION V.4.  INTERIM OPERATIONS OF SUB.  Sub was formed solely for the 
purpose of engaging in the transactions contemplated hereby, has engaged in 
no other business activities and has conducted its operations only as 
contemplated hereby.

     SECTION V.5.  BROKERS.  No broker, investment banker, financial advisor 
or other person, other than Donaldson, Lufkin & Jenrette, the fees and 
expenses of which will be paid by Parent, is entitled to any broker's, 
finder's, financial advisor's or other similar fee or commission in 
connection with the transactions contemplated by this Agreement based upon 
arrangements made by or on behalf of Parent or Sub.

     SECTION V.6.  FINANCING.  At the expiration of the Offer and the 
Effective Time, Parent and Sub will have available all the funds necessary 
for the acquisition of all Shares pursuant to the Offer and to perform their 
respective obligations under this Agreement, including without limitation 
payment in full for all shares of Company Common Stock validly tendered into 
the Offer or outstanding at the Effective Time.


                                  ARTICLE VI

                                   COVENANTS

     SECTION VI.1.  COVENANTS OF THE COMPANY. 

          (1)  CONDUCT OF THE BUSINESS BY THE COMPANY.  The Company shall, 
and shall cause its subsidiaries to, carry on their respective businesses in 
the ordinary course consistent with the manner as heretofore conducted and 
use commercially reasonable efforts to (x) preserve intact their current 
business organization, (y) keep available the services of their current 
officers and employees and (z) preserve their relationships with customers, 
suppliers, licensors, licensees, distributors and others having business 
dealings with them.  Without limiting the generality of the foregoing, other 
than as set forth in Section 6.01 of the Disclosure Schedule or as otherwise 
contemplated by this Agreement, the Company shall not, and shall not permit 
any of its subsidiaries to, without Parent's prior written consent (which 
shall not be unreasonably withheld):

               (1)  other than dividends and distributions by a direct or 
indirect wholly owned subsidiary of the Company to its parent or pursuant to 
the Rights Agreement, (x) declare, set aside or pay any dividends on, or make 
any other distributions (whether in cash, stock or property), in respect of, 
any of its capital stock, (y) split, combine or reclassify any of its capital 
stock or issue or authorize the issuance of any other securities in respect 
of, in lieu of or in substitution for shares of its capital stock (other than 
the issuance of shares of Company Common Stock upon the exercise of Stock 
Options outstanding on the date of this Agreement and in accordance with 
their present terms) or (z) purchase, redeem or otherwise acquire any shares 
of capital stock of the Company or any of its subsidiaries or any other 
securities thereof or any rights, warrants or options to acquire any such 
shares or other securities;

               (2)  issue, deliver, sell, pledge or otherwise encumber any 
shares of its capital stock or any shares of capital stock of its 
subsidiaries, any other voting securities or any securities convertible into, 
or any rights, warrants or options to acquire, any such shares, voting 
securities or convertible securities (other than (y) pursuant to the Rights 
Agreement or (z) the issuance of shares of Company Common Stock upon the 
exercise of Stock Options and Warrants outstanding on the date of this 
Agreement and in accordance with their present terms);

               (3)  amend its Certificate of Incorporation, By-Laws or other 
comparable charter or organizational documents or those of any of its 
subsidiaries;


                                     -18-
<PAGE>

               (4)  acquire or agree to acquire (including, without 
limitation, by merger, consolidation or acquisition of stock or assets) any 
business, including through the acquisition of any interest in any 
corporation, partnership, joint venture, association or other business 
organization or division thereof;

               (5)  sell, lease, license, mortgage or otherwise encumber or 
otherwise dispose of any of its material properties or assets, other than in 
the ordinary course of business consistent with past practice;

               (6)  incur any indebtedness for borrowed money or guarantee 
any such indebtedness of another person, issue or sell any debt securities or 
warrants or other rights to acquire any debt securities of the Company or any 
of its subsidiaries, or guarantee any debt securities of another person, 
other than short-term bank financing in the ordinary course of business 
consistent with past practice; or make any loans, advances or capital 
contributions to, or investments in, any other person, other than in the 
ordinary course of business consistent with past practice and in any event 
not in excess, individually or in the aggregate, of $100,000       ;

               (7)  make any material capital expenditure, individually or in 
the aggregate, in excess of $25,000;

               (8)  except as required to comply with applicable law (in 
which case the Company will notify Parent) (A) adopt, enter into, terminate 
or amend in any material respect any employment, severance or similar 
contract, collective bargaining agreement or Benefit Plan, (B) increase in 
any manner the compensation or fringe benefits of, or pay any bonus to, any 
director, officer or employee (except for normal increases of cash 
compensation or cash bonuses in the ordinary course of business consistent 
with past practice), (C) pay any benefit not provided for under any Benefit 
Plan or any other benefit plan or arrangement of the Company or its 
subsidiaries, (D) increase in any manner the severance or termination pay of 
any officer or employee, (E) grant any awards under any bonus, incentive, 
performance or other compensation plan or arrangement or Benefit Plan 
(including the grant of stock options, stock appreciation rights, stock based 
or stock related awards, performance units or restricted stock or the removal 
of existing restrictions in any Benefit Plans or agreements or awards made 
thereunder), (F) take any action to fund or in any other way secure the 
payment of compensation or benefits under any employee plan, agreement, 
contract or arrangement or Benefit Plan or (G) take any action to accelerate 
the vesting of, or cash out rights associated with, any Stock Options or 
other benefits;

               (9)  enter into any agreement of a nature that would be 
required to be filed as an exhibit to Form 10-K under the Exchange Act;

              (10)  except as required by GAAP, make any material change in 
accounting methods, principles or practices;

              (11)  make any tax election, make a claim for any Tax Refund or 
enter into any settlement or compromise with respect to any material tax 
liability; 

              (12)  amend or terminate any material contract in a manner 
materially detrimental to the Company, or waive, release, assign or settle 
any material rights or claims;

              (13)  hire or fire or agree to hire any officers;

              (14)  take any action that may reasonably be expected to result 
in (i) any of the representations and warranties by the Company becoming 
untrue in any material respect (ii) any breach of the Company's covenants 
under this Agreement or (iii) any of the conditions of the Offer set forth in 
Exhibit A not being satisfied; or

              (15)  authorize any of, or commit or agree to take any of, the 
foregoing actions.


                                     -19-
<PAGE>

     SECTION VI.2.  NO SOLICITATION. 

          (1)  The Company shall not, nor shall it permit any of its 
subsidiaries to, nor shall it authorize or permit any of its officers, 
directors or employees or any investment banker, financial advisor, attorney, 
accountant or other representative or agent retained by it or any subsidiary 
to, directly or indirectly, (i) solicit, initiate or encourage the submission 
of any Takeover Proposal (as defined below), (ii) participate in any 
discussions or negotiations regarding, or furnish to any person any nonpublic 
information with respect to, or take any other action designed or reasonably 
likely to facilitate any inquiries or the making of any proposal that 
constitutes, or may reasonably be expected to lead to a Takeover Proposal, or 
(iii) except as specifically provided in Section 6.02 and provided that the 
Company shall have first complied with all its obligations under this Section 
6.02 and Section 7.07(b), enter into any agreement with respect to any 
Takeover Proposal or approve or resolve to approve any Takeover Proposal.  
Upon execution of this Agreement, the Company will cease any existing 
activities, discussions or negotiations with any parties conducted with 
respect to any of the foregoing.  Notwithstanding the foregoing, if, at any 
time prior to the acceptance for payment of Shares pursuant to the Offer, the 
Board of Directors of the Company determines in good faith after consultation 
with outside counsel, that such action may reasonably be required to 
discharge the Board of Director's fiduciary duties to the Company's 
stockholders under applicable law, the Company may, in response to an 
unsolicited Takeover Proposal, which constitutes a Superior Proposal made 
subsequent to the date hereof, and subject to compliance with Section 
6.02(c), (x) furnish information with respect to the Company to any person 
that has submitted a Takeover Proposal that constitutes a Superior Proposal 
pursuant to a customary confidentiality agreement in form and substance 
reasonably satisfactory to Parent and (y) participate in discussions and 
negotiations regarding such Takeover Proposal that which constitutes a 
Superior Proposal.  Without limiting the foregoing, it is understood that any 
violation of the restrictions set forth in the preceding sentence by any 
director or officer of the Company or any subsidiary or any investment 
banker, financial advisor, attorney, accountant or other authorized 
representative or agent of the Company or any subsidiary shall be deemed to 
be a breach of this Section 6.02(a) by the Company.  For purposes of this 
Agreement, "Takeover Proposal" means any proposal or offer from any person in 
each case, in writing, relating to any direct or indirect acquisition or 
purchase of a substantial amount of assets of the Company and its 
subsidiaries, taken as a whole (other than the purchase of the Company's 
products in the ordinary course of business), or more than a 30% interest in 
the total voting securities of the Company or any tender offer or exchange 
offer that if consummated would result in any person beneficially owning 30% 
or more of any class of equity securities of the Company or any merger, 
consolidation, business combination, sale of substantially all assets, 
recapitalization, liquidation, dissolution or similar transaction involving 
the Company, other than the transactions contemplated by this Agreement.

          (2)  Except as set forth in this Section 6.02, neither the Board of 
Directors of the Company nor any committee thereof shall (i) withdraw or 
modify, or propose to withdraw or modify, in a manner adverse to Parent, the 
approval or recommendation by such Board of Directors or such committee of 
the Offer, the Merger or this Agreement, (ii) approve or recommend, or 
propose to approve or recommend, any Takeover Proposal, (iii) cause the 
Company to enter into any letter of intent, agreement in principle, 
acquisition agreement or other similar agreement (each, an "Acquisition 
Agreement") related to any Takeover Proposal or (iv) resolve to take any of 
the foregoing actions.  Notwithstanding the foregoing, in the event that 
prior to the acceptance for payment of Shares pursuant to the Offer the Board 
of Directors of the Company determines in good faith, after consultation with 
outside counsel, that such action may reasonably be required to discharge the 
Board of Director's fiduciary duties to the Company's stockholders under 
applicable law, the Board of Directors of the Company may, in response to an 
unsolicited Superior Proposal (as defined below) (subject to the following 


                                     -20-
<PAGE>

proviso), (x) withdraw or modify its approval or recommendation of the Offer, 
the Merger or this Agreement or (y) approve or recommend any such Superior 
Proposal; provided, that in the case of this clause (y), such approval or 
recommendation shall occur only at a time that is after the later of (i) the 
fifth business day following Parent's receipt of written notice advising 
Parent that the Board of Directors of the Company has received a Superior 
Proposal, specifying the material terms of such Superior Proposal and 
identifying the person making such Superior Proposal and (ii) in the event of 
any amendment to the price or any material term of a Superior Proposal, three 
business days following Parent's receipt of written notice containing the 
material terms of such amendment, including any change in price (it being 
understood that each further amendment to the price or any material terms of 
a Superior Proposal shall necessitate an additional written notice to Parent 
and additional three business day period prior to which the Company can take 
the actions set forth in clause (y) above).  All notices referred to in the 
prior sentence shall include a copy of any such Takeover Proposal or Superior 
Proposal.  For purposes of this Agreement, a "Superior Proposal" means any 
bona fide Takeover Proposal made by a third party (i) that is on terms which 
the Board of Directors of the Company determines in its good faith judgment 
(based on the written opinion of the Company's financial advisors as to the 
financial terms of such Superior Proposal and after consultation with the 
Company's legal advisors) to be more favorable to the Company's stockholders 
than the Offer and the Merger and (ii) for which financing, to the extent 
required, is available pursuant to definitive agreements with respect thereto.

          (3)  In addition to the obligations of the Company set forth in 
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly 
advise Parent orally and in writing of any request for nonpublic information 
(except requests not of a transactional or financial nature by companies with 
established commercial relationships with the Company, made in the ordinary 
course of business and not in connection with a possible Takeover Proposal) 
or of any Takeover Proposal the material terms and conditions of such request 
or Takeover Proposal and the identity of the person making such request or 
Takeover Proposal.  The Company will promptly inform Parent of any material 
change in the details (including amendments or proposed amendments) of any 
such request or Takeover Proposal.

          (4)  Nothing contained in this Agreement shall prohibit the Company 
from taking and disclosing to its stockholders a position contemplated by 
Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making 
any disclosure to the Company's stockholders if, in the good faith judgment 
of the Board of Directors of the Company, after consultation with outside 
counsel, failure so to disclose would be inconsistent with applicable law; 
provided, however, neither the Company nor its Board of Directors nor any 
committee thereof shall, except as permitted by Section 6.02(b), withdraw or 
modify, or propose to withdraw or modify, its position with respect to the 
Offer, the Merger or this Agreement or approve or recommend, or propose to 
approve or recommend, a Takeover Proposal.

     SECTION VI.3.  CERTAIN ACTIONS.  The Company will not take any action at 
the November 24, 1998 Annual Meeting of Shareholders other than the election 
of the directors set forth in the Company's definitive proxy statement dated 
November 13, 1998, and the ratification of the Company's auditors.  Except 
for the election of those directors set forth in the Company's definitive 
proxy statement dated November 13, 1998 at the Company's Annual Meeting to be 
held on November 24, 1998 and as contemplated in Section 7.06 and for the 
election of Lester Hill to the Board of Directors, should the Board of 
Directors determine to do so, the Company will not take any action to modify, 
change the composition or increase the size of the Board of Directors of the 
Company.

                                   ARTICLE VII

                              ADDITIONAL AGREEMENTS

SECTION VII.1.  Stockholder Approval; Preparation of Proxy Statement. 

          (1) If the Company Stockholder Approval is required by law, the 
Company shall, as soon as practicable following the expiration of the Offer, 
duly call, give notice of, convene and hold a meeting of its stockholders 
(the "Stockholders Meeting") for the purpose of obtaining the Company 
Stockholder Approval.  The Company shall, through its Board of Directors, 
recommend to its stockholders that the Company Stockholder Approval be given. 


                                     -21-
<PAGE>

Notwithstanding the foregoing, if Parent, Sub or any other subsidiary of 
Parent shall acquire at least 90% of the outstanding Shares, the parties 
shall take all necessary and appropriate action to cause the Merger to become 
effective as soon as practicable after the expiration of the Offer without a 
Stockholders Meeting in accordance with Section 253 of the DGCL.

          (2)  If the Company Stockholder Approval is required by law, the 
Company shall, as soon as practicable following the expiration of the Offer, 
prepare and file a preliminary Proxy Statement with the SEC and shall use its 
best efforts to respond to any comments of the SEC or its staff and to cause 
the Proxy Statement to be mailed to the Company's stockholders as promptly as 
practicable after responding to all such comments to the satisfaction of the 
staff.  The Company shall notify Parent promptly of the receipt of any 
comments from the SEC or its staff and of any request by the SEC or its staff 
for amendments or supplements to the Proxy Statement or for additional 
information and will supply Parent with copies of all correspondence between 
the Company or any of its representatives, on the one hand, and the SEC or 
its staff, on the other hand, with respect to the Proxy Statement or the 
Merger.  If at any time prior to the Stockholders Meeting there shall occur 
any event that should be set forth in an amendment or supplement to the Proxy 
Statement, the Company shall promptly prepare and mail to its stockholders 
such an amendment or supplement.

          (3)  Parent agrees to cause all Shares purchased pursuant to the 
Offer and all other Shares owned by Parent or any subsidiary of Parent to be 
voted in favor of the Company Stockholder Approval.

     SECTION VII.2.  ACCESS TO INFORMATION.  The Company shall, and shall 
cause each of its subsidiaries to, afford to Parent and to the officers, 
employees, accountants, counsel and other representatives of Parent 
reasonable access, during normal business hours during the period prior to 
the Effective Time, to all their properties, books, contracts, commitments 
and records and, during such period, the Company shall, and shall cause each 
of its subsidiaries to, make available promptly to Parent upon request (a) a 
copy of each report, schedule, registration statement and other document 
filed or received by it during such period pursuant to the requirements of 
the federal or state securities laws or the federal tax laws, or state, local 
or foreign tax laws and (b) all other information concerning its business, 
properties and personnel as Parent may reasonably request (including the 
Company's outside accountants' work papers).  Except as otherwise agreed to 
by the Company, and notwithstanding termination of this Agreement, the terms 
of the Confidentiality Agreement dated May 21, 1998, between Parent and the 
Company (the "Confidentiality Agreement") shall apply to all information 
about the Company which has been furnished under this Agreement by the 
Company to Parent or Sub.

     SECTION VII.3.  STATE TAKEOVER LAWS.  Notwithstanding any other 
provision in this Agreement, in no event shall the Section 203 Approval be 
withdrawn, revoked or modified by the Board of Directors of the Company.  If 
any state takeover statute other than Section 203 of the DGCL becomes or is 
deemed  to become applicable to the Company, the Offer, the Merger or this 
Agreement, the Company shall take all reasonable action necessary to render 
such statute inapplicable to all of the foregoing.

     SECTION VII.4.  REASONABLE EFFORTS. 

          (1)  Upon and subject to the terms and subject to the conditions 
set forth in this Agreement, each of the parties agrees to use all reasonable 
efforts to take, or cause to be taken, all actions, and to do, or cause to be 
done, and to assist and cooperate with the other parties in doing, all things 
necessary, proper or advisable to consummate and make effective, in the most 
expeditious manner practicable, the Offer, the Merger and the other 
transactions contemplated by this Agreement, including using reasonable 
efforts to take the following actions: (i) the taking of all reasonable acts 
necessary to cause the Offer Conditions to be satisfied, (ii) the obtaining 
of all necessary actions or nonactions, waivers, consents and approvals from 
Governmental Entities and the making of all necessary registrations and 
filings (including filings with Governmental Entities, if any) and the taking 
of all reasonable steps as may be necessary to avoid an action or proceeding 
by any Governmental Entity including, but not limited to, all filings under 
the HSR Act which are required in connection with the transactions 


                                      -22-
<PAGE>

contemplated by this Agreement.  Each party shall cooperate with the other 
party in connection with the other party's filings under the HSR Act 
including taking all reasonable actions to cause early termination of all 
applicable waiting periods, (iii) the obtaining of all necessary consents, 
approvals or waivers from third parties, (iv) the defending of any lawsuits 
or other legal proceedings, whether judicial or administrative, challenging 
this Agreement or the consummation of the transactions contemplated hereby, 
including seeking to have any stay or temporary restraining order entered by 
any court or other Governmental Entity vacated or reversed, and (v) the 
execution and delivery of any additional instruments necessary to consummate 
the transactions contemplated by, and to fully carry out the purposes of, 
this Agreement.  In connection with and without limiting the foregoing, but 
subject to the terms and conditions hereof, the Company and its Board of 
Directors shall, if any state takeover statute or similar statute or 
regulation is or becomes applicable to the Offer, the Merger, this Agreement 
or any other transactions contemplated by this Agreement, use all reasonable 
efforts to ensure that the Offer, the Merger and the other transactions 
contemplated by this Agreement may be consummated as promptly as practicable 
on the terms contemplated by this Agreement and otherwise to minimize the 
effect of such statute or regulation on the Offer, the Merger, this Agreement 
and the other transactions contemplated by this Agreement.

          (2)  The Company shall give prompt notice to Parent, and Parent 
shall give prompt notice to the Company, of (i) any representation or 
warranty made by it contained in this Agreement that is qualified as to 
materiality becoming untrue or inaccurate in any respect or any such 
representation or warranty that is not so qualified becoming untrue or 
inaccurate in any material respect or (ii) the failure by it to comply with 
or satisfy in any material respect any covenant, condition or agreement to be 
complied with or satisfied by it under this Agreement; provided, however, 
that no such notification shall affect the representations, warranties, 
covenants or agreements of the parties or the conditions to the obligations 
of the parties under this Agreement.


     SECTION VII.5.  COMPANY STOCK OPTIONS. 

          (1)  Each option granted to an employee of the Company or its 
subsidiaries or a member of the Board of the Company (an "Optionee") to 
acquire Shares ("Company Stock Option") that is outstanding immediately prior 
to the commencement of the Offer, whether or not then vested or exercisable, 
shall, effective as of the commencement of the Offer, become fully 
exercisable subject to the last sentence of this paragraph.  Upon the 
commencement of the Offer, the Board of the Company or an appropriate 
committee thereof shall provide notice to each Optionee that any Company 
Stock Option not exercised within 15 days (10 days in the case of Company 
Stock Options granted under the Company 1995 Directors Stock Option Plan) 
from the date of such notice shall thereupon be cancelled.  The notice may 
provide each Optionee with an opportunity to avoid the tendering of the 
exercise price and receiving in lieu thereof an amount per option share equal 
to the excess, if any, of the Offer Price over the exercise price of the 
Option.  Notwithstanding anything to the contrary set forth in this Section 
7.05, any such acceleration, exercise or cancellation shall be conditioned 
upon the effectiveness of the Merger.

          (2) Prior to the commencement of the Offer, the Company shall (i) 
obtain any consents from holders of Company Stock Options and (ii) amend the 
terms of its equity incentive plans or arrangements, in each case as is 
necessary to give effect to the provisions of paragraph (a) of this Section 
7.05 and to ensure that at the Effective Time no holder of any Company Stock 
Option shall have the right to purchase or receive any Shares.

     SECTION VII.6.  DIRECTORS.  Promptly upon the acceptance for payment of, 
and payment for, Shares by Sub pursuant to the Offer, Sub shall be entitled 
to designate such number of directors on the Board of Directors of the 
Company as will give Sub, subject to compliance with Section 14(f) of the 
Exchange Act, a majority of such directors, and the Company shall, at such 
time, cause Sub's designees to be so elected by its existing Board of 
Directors; provided, however, that in the event that Sub's designees are 
elected to the Board of Directors of the Company, until the Effective Time 
such Board of Directors shall have at least two directors who are directors 
of the Company on the date of this Agreement and who are not officers of the 
Company or any of its subsidiaries (the "Independent Directors") and; 
provided further that, in such event, if the number of Independent Directors 
shall be reduced below two for any reason whatsoever, the remaining 


                                     -23-
<PAGE>

Independent Director shall designate a person to fill such vacancy who shall 
be deemed to be an Independent Director for purposes of this Agreement or, if 
no Independent Directors then remain, the other directors of the Company on 
the date hereof shall designate two persons to fill such vacancies who shall 
not be officers or affiliates of the Company or any of its subsidiaries, or 
officers or affiliates of Parent or any of its subsidiaries, and such persons 
shall be deemed to be Independent Directors for purposes of this Agreement.  
The Company shall, if requested by the Parent, also cause directors 
designated by the Parent to constitute at least a majority of (i) each 
committee of the Company's Board of Directors, (ii) each board of directors 
(or similar body) of each subsidiary of the Company, and (iii) each committee 
(or similar body) of each such board.  Subject to applicable law, the Company 
shall take all action requested by Parent necessary to effect any such 
election, including mailing to its stockholders the Information Statement 
containing the information required by Section 14(f) of the Exchange Act and 
Rule 14f-1 promulgated thereunder, and the Company agrees to make such 
mailing with the mailing of the Schedule 14D-9 (provided that Sub shall have 
provided to the Company on a timely basis all information required to be 
included in the Information Statement with respect to Sub's designees).  

In connection with the foregoing, the Company will promptly, at the option of 
Parent, either increase the size of the Board of Directors of the Company, 
any subsidiary or any committee thereof and/or obtain the resignation of such 
number of current directors or committee members as is necessary to enable 
Sub's designees to be elected or appointed to, and to constitute a majority 
of such boards and committees as provided above.

     SECTION VII.7.  FEES AND EXPENSES. 

          (1)  All fees and expenses incurred in connection with the Offer, 
the Merger, this Agreement and the transactions contemplated by this 
Agreement shall be paid by the party incurring such fees or expenses, whether 
or not the Offer or the Merger is consummated.

          (2)  The Company shall pay, or cause to be paid, in same day funds 
to Parent the sum of (x) all of Parent=s reasonable out-of-pocket expenses 
incurred or to be incurred in connection with the Offer, the Merger or this 
Agreement or the preparation therefor such amount not to exceed $3,000,000 
(the "Expenses"), and (y) $8,800,000 (the "Termination Fee") if (i) the 
Company terminates this Agreement pursuant to Section 9.01(e), or (ii) prior 
to termination of this Agreement, a Takeover Proposal (whether or not such 
Takeover Proposal constitutes a Superior Proposal) shall have been received 
and within twelve months of such termination such proposal is consummated or 
the Company enters into an agreement to consummate or approves or recommends 
to its stockholders such proposal.  The payment shall be made in the case of 
a termination described in clause (i) immediately prior to termination and in 
the case of a termination described in clause (ii) concurrently with the 
earlier of any such recommendation or the consummation of any such 
transaction by the Company.  The Company shall pay, or cause to be paid, in 
same day funds to Parent all of Parent's Expenses if Parent or Sub shall 
terminate this Agreement pursuant to Section 9.01(c), such payment to be made 
promptly upon such termination.

     SECTION VII.8.  INDEMNIFICATION. 

          (1)  From and after the consummation of the Offer, Parent will, and 
will cause the Surviving Corporation to, fulfill and honor in all respects 
the obligations of the Company pursuant to (i) each indemnification agreement 
in effect at such time between the Company and each person who is or was a 
director or officer of the Company at or prior to the Effective Time and (ii) 
any indemnification provisions under the Company's Certificate of 
Incorporation or By-laws as each is in effect on the date hereof (the persons 
to be indemnified pursuant to the agreements or provisions referred to in 
clauses (i) and (ii) of this Section 7.08(a) shall be referred to as, 
collectively, the "Indemnified Parties").  In the event of any such claim, 
action, suit, proceeding or investigation (whether arising before or after 
the Effective Time), (i) any counsel retained by the Indemnified Parties for 
any period after the Effective Time must be reasonably satisfactory to the 
Surviving Corporation, (ii) after the Effective Time, the Surviving 
Corporation shall pay the reasonable fees and expenses of such counsel 
PROVIDED, HOWEVER, that the Surviving Corporation shall not be liable for any 
settlement effected without its written consent (which consent shall not be 


                                     -24-
<PAGE>

unreasonably withheld); and PROVIDED, FURTHER, that the Indemnified Parties 
as a group may retain only one law firm to represent them with respect to any 
single action unless there is, under applicable standards of professional 
conduct, a conflict on any significant issue between the positions of any two 
or more Indemnified Parties.   The Certificate of Incorporation and By-laws 
of the Surviving Corporation shall contain the provisions with respect to 
indemnification and exculpation from liability set forth in the Company's 
Certificate of Incorporation and By-laws on the date of this Agreement, which 
provisions shall not be amended, repealed or otherwise modified for a period 
of six years after the Effective Time in any manner that would adversely 
affect the rights thereunder of any Indemnified Party.

          (2)  This Section 7.08 shall survive the consummation of the Merger 
at the Effective Time, is intended to be for the benefit of, and enforceable 
by, the Company, Parent, the Surviving Corporation and each Indemnified Party 
and such Indemnified Party's heirs and representatives, and shall be binding 
on all successors and assigns of Parent and the Surviving Corporation.

     SECTION VII.9.  CERTAIN LITIGATION.  The Company agrees that it shall 
not settle any litigation against the Company or any of its directors by any 
stockholder of the Company relating to the Offer, the Merger or this 
Agreement or any Takeover Proposal made by another party whether before or 
after the date of this Agreement without the prior written consent of Parent 
(not to be unreasonably withheld). 

     SECTION VII.10.  RIGHTS AGREEMENT.  Except as provided above or as 
requested in writing by Parent, the Board of Directors of the Company shall 
not (a) amend the Rights Agreement or (b) take any action with respect to, or 
make any determination under, the Rights Agreement, including a redemption of 
the Rights or any action to facilitate a Takeover Proposal.

     SECTION VII.11.  NOTIFICATION OF CERTAIN MATTERS.  The Company shall 
give prompt notice to Parent, of (i) the occurrence or non-occurrence of any 
event the occurrence or non-occurrence of which would cause any 
representation or warranty contained in this Agreement to be untrue or 
inaccurate in any material respect, and (ii) any failure by the Company to 
satisfy any covenant condition or agreement to be complied with or satisfied 
by it hereunder; provided however that the delivery of any notice pursuant to 
this Section shall not limit or otherwise affect the representations, 
warranties and covenants set forth in this Agreement or the remedies 
available hereunder or under applicable law.

                                 ARTICLE VIII

                                  CONDITIONS

     SECTION VIII.1.  CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE 
MERGER.  The respective obligation of each party to effect the Merger shall 
be subject to the satisfaction or waiver prior to the Closing Date of the 
following conditions:

          (1)  COMPANY STOCKHOLDER APPROVAL.  If required by applicable law, 
the Company Stockholder Approval shall have been obtained.

          (2)  NO INJUNCTIONS OR RESTRAINTS.  No statute, rule, regulation, 
executive order, decree, temporary restraining order, preliminary or 
permanent injunction or other order issued by any court of competent 
jurisdiction or other Governmental Entity or other legal restraint or 
prohibition preventing the consummation of the Merger shall be in effect; 
provided, however, that each of the parties shall have used reasonable 
efforts to prevent the entry of any such injunction or other order and to 
appeal as promptly as possible any injunction or other order that may be 
entered.

          (3)  PURCHASE OF SHARES.  Sub shall have previously accepted for 
payment and paid for Shares pursuant to the Offer.


                                     -25-
<PAGE>

                                     ARTICLE IX

                              TERMINATION AND AMENDMENT

     SECTION IX.1.  TERMINATION.  This Agreement may be terminated at any 
time prior to the Effective Time, whether before or after approval of the 
terms of this Agreement by the stockholders of the Company:

          (1)  by mutual written consent of Parent and the Company;

          (2)  by either Parent or the Company:

               (1)  if (x) Sub shall not have accepted for payment any Shares 
pursuant to the Offer prior to February 26, 1999 (the "Deadline Condition") 
as a result of the failure, occurrence or existence of any of the conditions 
set forth in Exhibit A to this Agreement or (y) the Offer shall have 
terminated or expired in accordance with its terms without Sub having 
accepted for payment any Shares pursuant to the Offer; provided, however, 
that the right to terminate this Agreement pursuant to this Section 
9.01(b)(i) shall not be available to any party whose failure (including, in 
the case of Parent, a failure by Sub) to perform any of its obligations under 
this Agreement results in the failure of the satisfaction of any such 
conditions; provided, that if the Offer is extended pursuant to clause C of 
the last sentence of Section 1.01(a) to a date later than the date of the 
Deadline Condition, the date of the Deadline Condition shall automatically be 
extended to the first business day following the extended expiration date of 
the Offer.

               (2)  if any Governmental Entity shall have issued an order, 
decree or ruling or taken any other action permanently enjoining, restraining 
or otherwise prohibiting the acceptance for payment of, or payment for, 
Shares pursuant to the Offer or the Merger on the terms contemplated in this 
Agreement and such order, decree or ruling or other action shall have become 
final and nonappealable;

               (3)  by Parent or Sub if prior to the purchase of Shares 
pursuant to the Offer, any of the material representations and warranties of 
the Company set forth in this Agreement shall not be true and correct in any 
material respect, as of the date of this Agreement, or if the Company shall 
have failed to perform in any material respect any obligation or to comply in 
any material respect with any agreement or covenant of the Company to be 
performed or complied with by it under this Agreement; or;

               (4)  by Parent or Sub if either Parent or Sub is entitled to 
terminate the Offer as a result of the occurrence of any event set forth in 
paragraphs (d), (e), (f) or (g) of Exhibit A to this Agreement;

               (5)  by the Company in connection with entering into a 
definitive agreement with respect to a Superior Proposal, in accordance with 
Section 6.02(b), provided that the Company has complied with all provisions 
thereof, including the notice provisions therein and that the Company has 
made the payments pursuant to Section 7.07(b); or

               (6)  by the Company if prior to the purchase of Shares 
pursuant to the Offer, any of the material representations and warranties of 
the Parent or Sub set forth in this Agreement shall not be true and correct 
in any material respect, at the date of this Agreement, or if the Parent or 
Sub shall have failed to perform in any material respect any obligation or to 
comply with in any material respect any agreement or covenant of  Parent or 
Sub to be performed or complied with by them under this Agreement; or

               (7)  By Parent or Sub if (i) a tender offer for any securities 
of the Company shall have been commenced or publicly proposed to be made by 
another person (including the Company or its subsidiaries or affiliates), 
(ii) any person or group (as defined in Section 13(d)(3) of the Exchange 
Act), other than Parent and Sub and other than any person or group which 
prior to the date hereof has publicly disclosed beneficial ownership of 10% 
or more of the outstanding voting securities of the Company (a "Significant 
Shareholder") shall have acquired directly or indirectly beneficial ownership 
of 10% or more of the outstanding voting securities of the Company or any of 
its subsidiaries, whether through the acquisition of securities, the exercise 


                                     -26-
<PAGE>

of rights under options, warrants or similar instruments, the formation of a 
group, or otherwise, or (iii) any Significant Shareholder or group that 
together would constitute a Significant Shareholder shall have beneficially 
acquired additional voting securities of the Company, whether through the 
acquisition of securities, the exercise of rights under options, warrants or 
similar instruments, the formation of a group or otherwise, representing 2% 
or more of the outstanding voting securities of the Company; provided that in 
Parent's reasonable judgment any such event described in clause (ii) or (iii) 
makes the successful completion of the Offer unlikely or materially more 
burdensome to Parent or Sub.

     SECTION IX.2.  EFFECT OF TERMINATION.  In the event of a termination of 
this Agreement by either the Company or Parent or Sub as provided in Section 
9.01, this Agreement shall forthwith become void and there shall be no 
liability or obligation on the part of Parent, Sub or the Company or their 
respective officers or directors, except with respect to the last sentence of 
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section 
7.02, Section 7.07, this Section 9.02 and Article X; provided, however, that 
nothing herein shall relieve any party for liability for fraud or for breach 
of the provisions of this Agreement.

     SECTION IX.3.  AMENDMENT.  This Agreement may be amended by the parties 
hereto, by duly authorized action taken, at any time before or after 
obtaining the Company Stockholder Approval, but, after the purchase of Shares 
pursuant to the Offer, no amendment shall be made which decreases the Merger 
Consideration and, after the Company Stockholder Approval, no amendment shall 
be made which by law requires further approval by such stockholders without 
obtaining such further approval.  This Agreement may not be amended except by 
an instrument in writing signed on behalf of each of the parties hereto.  
Following the election or appointment of Sub's designees pursuant to Section 
7.06 and prior to the Effective Time, the affirmative vote of a majority of 
the Independent Directors then in office shall be required by the Company to 
(i) amend or terminate this Agreement by the Company, (ii) exercise or waive 
any of the Company's rights or remedies under this Agreement, (iii) extend 
the time for performance of Parent and Sub's respective obligations under 
this Agreement or (iv) take any action to amend or otherwise modify the 
Company's Certificate of Incorporation or By-laws (or similar governing 
instruments of the Company's subsidiaries) in violation of Section 7.08 
hereof.

     SECTION IX.4.  EXTENSION; WAIVER.  At any time prior to the Effective 
Time, the parties hereto, by action taken or authorized by their respective 
Boards of Directors, may, to the extent legally allowed, subject to Section 
9.03, (i) extend the time for the performance of any of the obligations or 
other acts of the other parties hereto, (ii) waive any inaccuracies in the 
representations and warranties contained herein or in any document delivered 
pursuant hereto or (iii) waive compliance with any of the agreements or 
conditions contained herein.  Any agreement on the part of a party hereto to 
any such extension or waiver shall be valid only if set forth in a written 
instrument signed on behalf of such party.  The failure of any party to this 
Agreement to assert any of its rights under this Agreement or otherwise shall 
not constitute a waiver of those rights.


                                    ARTICLE X

                                   MISCELLANEOUS

     SECTION X.1.  NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 
 None of the representations and warranties in this Agreement or in any 
instrument delivered pursuant to this Agreement shall survive the Effective 

Time or, in the case of the Company, shall survive the acceptance for payment 
of, and payment for, Shares by Sub pursuant to the Offer.  This Section 10.01 
shall not limit any covenant or agreement of the parties which by its terms 
contemplates perfor-mance after the Effective Time, including Section 7.08.

     SECTION X.2.  NOTICES.  All notices and other communications hereunder 
shall be in writing and shall be deemed given if delivered personally, 
telecopied (which is confirmed), sent by overnight courier (providing proof 
of delivery) or mailed by registered or certified mail (return receipt 
requested) to the parties at the following addresses (or at such other 
address for a party as shall be specified by like notice):


                                     -27-
<PAGE>
          (1)  if to Parent or Sub, to

               Maxxim Medical, Inc.
               10300 49th Street North
               Clearwater, Florida 34622
               Attention:  Kenneth W. Davidson
               Telecopy No.:  813-561-2180

               with a copy to:
               
               Skadden, Arps, Slate, Meagher & Flom LLP
               919 Third Avenue
               New York, New York 10022-3897
               Attention:  Michael E. Gizang
               Telecopy No.:  212-735-2000
               
               and

          (2)  if to the Company, to

               Circon Corporation
               6500 Hollister Avenue
               Santa Barbara, California 93117
               Attention:  George A. Cloutier
               Telecopy No.:  805-968-8174

               with a copy to:

               Wilson, Sonsini, Goodrich & Rosati
               650 Page Mill Road
               Palo Alto, California 94304
               Attention:  Robert Jack
               Telecopy No.:  650-493-6811
               
     SECTION X.3.  INTERPRETATION.  When a reference is made in this 
Agreement to an Article or a Section, such reference shall be to an Article 
or a Section of this Agreement unless otherwise indicated.  The table of 
contents and headings contained in this Agreement are for reference purposes 
only and shall not affect in any way the meaning or interpretation of this 
Agreement.  Whenever the words "include", "includes" or "including" are used 
in this Agreement, they shall be deemed to be followed by the words "without 
limitation".  The phrase "made available" in this Agreement shall mean that 
the information referred to has been made available if requested by the party 
to whom such information is to be made available.  As used in this Agreement, 
the term "subsidiary" of any person means another person, an amount of the 
voting securities, other voting ownership or voting partnership interests of 
which is sufficient to elect at least a majority of its Board of Directors or 
other governing body (or, if there are no such voting interests, 50% or more 
of the equity interests of which) is owned directly or indirectly by such 
first person.  As used in this Agreement, "material adverse change" or 
"material adverse effect" means, when used in connection with the Company or 
Parent, as the case may be, any change or effect that is materially adverse 
to the business, properties, assets, liabilities, financial condition or 
results of operations of such entity and its subsidiaries taken as a whole.

     SECTION X.4.  COUNTERPARTS.  This Agreement may be executed in two or 
more counterparts, all of which shall be considered one and the same 
agreement and shall become effective when two or more counterparts have been 
signed by each of the parties and delivered to the other parties, it being 
understood that all parties need not sign the same counterpart.

     SECTION X.5.  ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.  This 
Agreement and the Confidentiality Agreement (a) constitute the entire 
agreement and supersede all prior agreements and understandings, both written 
and oral, among the parties with respect to the subject matter hereof, and 
(b) except as provided in Sections 7.05 and 7.08 hereof, are not intended to 
confer upon any person other than the parties hereto any rights or remedies 
hereunder.

     SECTION X.6.  GOVERNING LAW.  This Agreement shall be governed by, and 
construed in accordance with, the laws of the State of Delaware without 
regard to any applicable conflicts of law.


                                     -28-
<PAGE>
     SECTION X.7.  PUBLICITY.  Except as otherwise required by law (including 
Rule 14d-9 promulgated under the Exchange Act), court process or the rules of 
the NYSE or the Nasdaq National Market or as contemplated or provided 
elsewhere herein, for so long as this Agreement is in effect, neither the 
Company nor Parent shall, or shall permit any of its subsidiaries to, issue 
or cause the publication of any press release or other public announcement 
with respect to the transactions contemplated by this Agreement without the 
consent of the other party, which consent shall not be unreasonably withheld.

     SECTION X.8.  ASSIGNMENT.  Neither this Agreement nor any of the rights, 
interests or obligations hereunder shall be assigned by any of the parties 
hereto (whether by operation of law or otherwise) without the prior written 
consent of the other parties, except that Sub may assign, in its sole 
discretion, any or all of its rights, interests and obligations hereunder to 
Parent or to any direct or indirect wholly owned subsidiary of Parent.  
Subject to the preceding sentence but without relieving any party hereof of 
any obligation hereunder, this Agreement will be binding upon, inure to the 
benefit of and be enforceable by the parties and their respective successors 
and assigns.

     SECTION X.9.  ENFORCEMENT.  The parties agree that irreparable damage 
would occur in the event that any of the provisions of this Agreement were 
not performed in accordance with their specific terms or were otherwise 
breached.  It is accordingly agreed that the partes shall be entitled to an 
injunction or injunctions to prevent breaches of this Agreement and to 
enforce specifically the terms and provisions of this Agreement in any court 
of the United States located in the State of Delaware or in any Delaware 
state court, this being in addition to any other remedy to which they are 
entitled at law or in equity.  In addition, each of the parties hereto (a) 
consents to submit itself to the personal jurisdiction of any court of the 
United States located in the State of Delaware or of any Delaware state court 
in the event any dispute arises out of this Agreement or the transactions 
contemplated by this Agreement, (b) agrees that it will not attempt to deny 
or defeat such personal jurisdiction by motion or other request for leave 
from any such court and (c) agrees that it will not bring any action relating 
to this Agreement or the transactions contemplated by this Agreement in any 
court other than a court of the United States located in the State of 
Delaware or a Delaware state court.

     SECTION X.10.  SEVERABILITY.  If any term or other provision of this 
Agreement is invalid, illegal or incapable of being enforced by any rule of 
law or public policy, all other conditions and provisions of this Agreement 
shall nevertheless remain in full force and effect.  Upon such determination 
that any term other provision is invalid, illegal or incapable of being 
enforced, the parties hereto shall negotiate in good faith to modify this 
Agreement so as to effect the original intent of the parties as closely as 
possible to the fullest extent permitted by applicable law in an acceptable 
manner to the end that the transactions contemplated hereby are fulfilled to 
the extent possible. 

IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to 
be signed by their respective officers thereunto duly authorized as of the 
date first written above.

                                       MAXXIM MEDICAL, INC.


                                       By: /s/ Kenneth W. Davidson
                                          -------------------------------------
                                          Name:   Kenneth W. Davidson
                                          Title:  Chairman of the Board,
                                                  President & Chief
                                                  Executive Officer


                                       MMI ACQUISITION CORP.


                                       By: /s/ Kenneth W. Davidson
                                          -------------------------------------
                                          Name:   Kenneth W. Davidson
                                          Title:  President


                                       CIRCON CORPORATION


                                       By: /s/ George Cloutier
                                          -------------------------------------
                                          Name:   George A. Cloutier
                                          Title:  Chief Executive Officer


                                     -29-
<PAGE>

                                   EXHIBIT A

                            CONDITIONS OF THE OFFER


     Notwithstanding any other term of the Offer or this Agreement, Sub shall 
not be required to accept for payment or, subject to any applicable rules and 
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act 
(relating to Sub's obligation to pay for or return tendered Shares after the 
termination or withdrawal of the Offer), to pay and may delay the acceptance 
for payment of or the payment for any Shares tendered pursuant to the Offer 
and may amend or terminate the Offer, consistent with the terms of the Merger 
Agreement unless (i) there shall have been validly tendered and not withdrawn 
prior to the expiration of the Offer such number of Shares that would 
constitute at least a majority of the outstanding Shares, determined on a 
fully diluted basis (the "Minimum Condition"), and (ii) any waiting period 
under the HSR Act applicable to the purchase of Shares pursuant to the Offer 
shall have expired or been terminated.  Furthermore, Sub shall not be 
required to accept for payment or, subject as aforesaid, to pay for any 
Shares not theretofore accepted for payment or paid for, and may, in 
accordance with Section 9.01, terminate this Agreement or, amend the Offer 
with the consent of the Company, if, upon the scheduled expiration date of 
the Offer and before the acceptance of such Shares for payment or the payment 
therefor, any of the following conditions exists:

          (1)  there shall be instituted or pending by any Governmental 
Entity any suit, action or proceeding (i) challenging the acquisition by 
Parent or Sub of any Shares under the Offer, seeking to restrain or prohibit 
the making or consum-mation of the Offer or the Merger, (ii) seeking to 
prohibit or materially limit the ownership or operation by the Company, 
Parent or any of Parent's subsidiaries of a material portion of the business 
or assets of the Company or Parent and its subsidiaries, taken as a whole, or 
to compel the Company or Parent to dispose of or hold separate any material 
portion of the business or assets of the Company or Parent and its 
subsidiaries, taken as a whole, in each case as a result of the Offer or the 
Merger or (iii) seeking to impose material limitations on the ability of 
Parent or Sub to acquire or hold, or exercise full rights of ownership of, 
any Shares to be accepted for payment pursuant to the Offer including, 
without limitation, the right to vote such Shares on all matters properly 
presented to the stockholders of the Company or (iv) seeking to prohibit 
Parent or any of its subsidiaries from effectively controlling in any 
material respect any material portion of the business or operations of the 
Company or (v) seeking to obtain from the Company any damages that could 
reasonably be expected to have a material adverse effect on the Company;

          (2)  there shall be any statute, rule, regulation, judgment, order 
or injunction enacted, entered, enforced, promulgated or deemed applicable to 
the Offer or the Merger, by any Governmental Entity or court, other than the 
application to the Offer or the Merger of applicable waiting periods under 
the HSR Act, that would result in any of the consequences referred to in 
clauses (i) through (v) of paragraph (a) above;

          (3)  this Agreement shall have been terminated in accordance with 
its terms;

          (4)  (i)  the Board of Directors of the Company or any committee 
thereof shall have withdrawn or modified its approval or recommendation of 
the Offer or the Merger or its adoption of this Agreement, or approved or 
recommended any Takeover Proposal, (ii) the Company shall have entered into 
any agreement with respect to any Takeover Proposal in accordance with 
Section 6.02(b) of this Agreement or (iii) the Board of Directors of the 
Company or any committee thereof shall have resolved to take any of the 
foregoing actions;

          (5)  in the event any of the material representations and 
warranties of the Company set forth in this Agreement shall not be true and 
correct in any material respect, at the date of this Agreement, or if the 
Company shall have failed to perform in any material respect any obligation 
or to comply in any material respect with any agreement or covenant of the 
Company to be performed or complied with by it under this Agreement;


                                      A-1
<PAGE>

          (6)  there shall have occurred (1) any general suspension of 
trading in, or limitation on prices for, securities on the New York Stock 
Exchange for a period in excess of three hours (excluding suspensions or 
limitations resulting solely from physical damage or interference with such 
exchanges not related to market conditions), (2) a declaration of a banking 
moratorium or any suspension of pay-ments in respect of banks in the United 
States (whether or not mandatory) by any Governmental Entity, (3) any 
limitation or proposed limitation (whether or not mandatory) by any United 
States governmental authority or agency that has a material adverse effect 
generally on the extension of credit by banks or other financial 
institutions, (4) any change in general financial, bank or capital market 
conditions such that banks are unwilling to extend credit to borrowers 
similar to Parent generally or (5) any decline in either the Dow Jones 
Industrial Average or the Standard & Poor's Index of 500 Industrial Companies 
in excess of 20% from the close of business on the date hereof;

          (7)  there shall have occurred any events or changes which 
constitute or which are reasonably likely to constitute, individually or in 
the aggregate, a material adverse change in the condition of the Company 
(financial or otherwise);

          (8)  (i) a tender offer for any securities of the Company shall 
have been commenced or publicly proposed to be made by another person 
(including the Company or its subsidiaries or affiliates), (ii) any person or 
group (as defined in Section 13(d)(3) of the Exchange Act), other than Parent 
and Sub and other than any person or group which prior to the date hereof has 
publicly disclosed beneficial ownership of 10% or more of the outstanding 
voting securities of the Company (a "Significant Shareholder"), shall have 
acquired directly or indirectly beneficial ownership of 10% or more of the 
outstanding voting securities of the Company or any of its subsidiaries, 
whether through the acquisition of securities, the exercise of rights under 
options, warrants or similar instruments, the formation of a group, or 
otherwise, or (iii) any Significant Shareholder of group that together would 
constitute a Significant Shareholder shall have beneficially acquired 
additional voting securities of the Company, whether through the acquisition 
of securities, the exercise of rights under options, warrants or similar 
instruments, the formation of a group or otherwise, representing 2% or more 
of the outstanding voting securities of the Company; provided that in 
Parent's reasonable judgment any such event described in clause (ii) or (iii) 
makes the successful completion of the Offer unlikely or materially more 
burdensome to Parent or Sub.

which, in the reasonable judgment of Parent or Sub, in its sole discretion, 
make it inadvisable to proceed with such acceptance of Shares for payment or 
the payment therefor.

     The foregoing conditions are for the sole benefit of Parent and Sub and 
(except for the Minimum Condition) may, subject to the terms of this 
Agreement, be waived by Parent and Sub in whole or in part at any time and 
from time to time in their sole discretion.  The failure by Parent or Sub, at 
any time to exercise any of the foregoing rights shall not be deemed  a 
waiver of any right and all such rights may be asserted at any time or from 
time to time.  Terms used but not defined herein shall have the meanings 
assigned to such terms in the Agreement to which this Exhibit A is a part.





                                     A-2
<PAGE>


                                   EXHIBIT B

                                 SUBSIDIARIES

                              Citrus Canada Inc.

                                  Circon GmbH

                          Circon Export Corporation

                            Cabot Technology Corp.

                                  Circon S.A.






























                                      B-1
