content: SECURITIES AND EXCHANGE COMMISSION
  
                                     Washington, D.C.  20549
  
                                                            
  
                                            FORM 8-K
  
                                         CURRENT REPORT
  
                               Pursuant to Section 13 and 15(d) of
                               the Securities Exchange Act of 1934
  
  
  Date of Report (Date of earliest event reported):    April 15, 1996          
  
  
  
                                  HALIFAX CORPORATION                          
  (Exact name of registrant as specified in charter)
  
  
  
  
            Virginia                  2-84160-W             54-0829246        
  (State or other jurisdiction        (Commission           (IRS Employer
   of incorporation)                   File Number         Identification No.)
  
  
  
  
   5250 Cherokee Avenue,  Alexandria, Virginia                        22312   
  (Address of principal executive offices)                          (Zip Code)
  
  
  
  
  Registrant's telephone number, including area code:     (703) 750-2202     
  
  
  
                                 Not Applicable                                 
      (Former name or former address, if changed since last report)
  
  
  
  <PAGE>
  Item 2.  Acquisition or Disposition of Assets
  
        (a) In accordance with a Plan of Merger ("Plan") attached as
  Exhibit A hereto which was duly adopted by the board of directors
  of both parties to the merger, CMS Automation, Inc. ("CMS"), a
  Virginia corporation, merged into CMSA Acquisition Corporation
  ("CMSA"), a Virginia corporation wholly owned by Halifax
  Corporation, a Virginia corporation.  CMS merged into CMSA on the
  following basis.  Pursuant to the Plan, each issued and
  outstanding share of CMS common stock was converted into, and
  become exchangeable for, the number of shares of validly issued,
  fully paid and nonassessable common stock of Halifax equal to a
  conversion ratio meaning a fraction, the numerator of which is
  139,630 and the denominator of which is equal to the sum of the
  number of shares of CMS issued and outstanding on the effective
  date of the merger plus the number of shares that would be
  represented by the conversion of $450,000 worth of debt to
  equity.  In this regard, CMS shareholders who held promissory
  notes of CMS in the amount of $450,000 converted said debt to
  equity in CMS.  In addition to the initial issuance of 139,630
  shares of Halifax stock to CMS shareholders which was based on
  the net equity value of CMS, Halifax stock will be awarded
  annually for three (3) years subsequent to the merger to the CMS
  shareholders on a pro-rata basis, excluding Halifax stock issued
  as a result of the conversion of debt to equity, having a value
  equal to one-third of the net after tax income of CMSA operating
  as a wholly owned subsidiary of Halifax.
  
        The assets acquired included accounts receivable and the
  inventory and equipment used in conducting and operating the
  business of CMS which consists of computer systems integration
  including wide area and local area networking, consulting,
  application development and training.
  
        Closing of the transaction took place on April 1, 1996 with
  a Certificate of Merger issued by the State Corporation
  Commission of Virginia effective April 9, 1996.
  
  Item 7.  Financial Statements and Exhibits
  
        (a) & (b) It is impracticable to provide the required
  financial statements and pro forma financial information at the
  time of the filing of this report.  Said financial statements and
  information will be filed as soon as available but not later than
  60 days from the date of this report.
  
        (c) Attached as Exhibit A is a copy of the plan of acquisi-
  tion as contained in the Agreement and Plan of Reorganization
  entered into by the parties.
  
  
  
  <PAGE>
  
                                    SIGNATURES
  
        Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned thereunto duly authorized.
  
  
                                                   HALIFAX CORPORATION  
                                                    (Registrant)
  
  
  
  Date:    April 15, 1996                   By:                           
                                               Howard C. Mills, President        
                                                  & Chief Executive Officer
  
  
  Date:     April 15, 1996                  By:                            
                                               Richard J. Smithson
                                               Vice President & Treasurer
                                                
  
  <PAGE>
                                         
                       AGREEMENT AND PLAN OF REORGANIZATION
  
  AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 1, 1996,
  by and among HALIFAX CORPORATION, a Virginia corporation
  ("Parent"), CMSA ACQUISITION CORPORATION, a Virginia corporation
  and a wholly-owned subsidiary of Parent ("Sub").  CMS AUTOMATION,
  INC., a Virginia corporation (the "Target") (Sub and Target being
  hereinafter collectively referred to as (the "Constituent
  Corporations") and those individuals who are shareholders of the
  Target on the Closing Date ("Shareholders").
  
                                    ARTICLE III
  
                                  PLAN OF MERGER
  
  3.1 Conversion of Target Shares in the Merger. Pursuant to this
  Agreement, at the Effective Time, by virtue of the Merger and
  without any action on the part of any holder of any capital
  stock of Target; each issued and outstanding share of Target
  Common Stock, other than Target Dissenting Shares (as defined in
  Section 3.4 hereof), shall be converted into, and become
  exchangeable for, the number of shares of validly issued, fully
  paid and nonassessable common stock of Parent ("Parent Common
  Stock") equal to the Conversion Ratio.  In this Agreement, the
  term "Conversion Ratio" means a fraction, the numerator of which
  is equal to 139,630 and the denominator of which is equal to the
  sum of the number of shares of Target Common Stock issued and
  outstanding as of the Closing plus the number of shares that
  would be represented by the conversion of $450,000 of debt to
  equity.  In this regard, prior to Closing, Shareholders who hold
  promissory notes of the Target in the amount of $450,000
  (hereafter sometimes separately referred to as "Converting
  Shareholders") shall convert the notes to Target equity. The
  consideration referred to in this Section 3.1, together with any
  cash payments in lieu of fractional shares as provided herein,
  and the Contingent Additional Purchase Price Consideration set
  forth in Section 3.6 hereof is hereinafter referred to as the
  "Merger Consideration."
  
  3.2 Status of Sub Shares. At the Effective Time, by virtue of the
  Merger and without any action on the part of any holder of any
  capital stock of Sub, each issued and outstanding share of common
  stock of Sub shall continue unchanged and remain outstanding as a
  share of common stock of the Surviving Corporation.
  
  3.3 Exchange of Company Capital Stock Certificates. (a) On or
  prior to the Closing Date, Parent shall deposit with the Escrow
  Agent (as that term is defined below) the certificates
  representing shares of Parent Common Stock required to effect the
  exchange referred to in Section 3.3(b) below. Parent shall also
  deposit with the Escrow Agent the cash payment in lieu of
  fractional shares referred to in Section 3.3(d) below. Shares of
  Parent Common Stock into which shares of Target Common Stock
  shall be converted in the Merger shall be deemed to have been
  issued at the Effective Time and the Shareholders shall have full
  voting rights with respect to such shares immediately following
  the Effective Time.  In addition, the Shareholders shall be
  entitled to receive any dividends or other distributions with a
  record date after the Effective Time.
  
  (b) From and after the Effective Time, each holder of a
  certificate which immediately prior to the Effective Time
  represented outstanding shares of Target Common Stock, other than
  shares with respect to which dissenters' rights, if any, are
  granted by reason of the Merger under the VGCL, shall be entitled
  to receive in exchange therefor, upon delivery thereof to
  Williams, Mullen, Christian & Dobbins (the "Escrow Agent"), and
  following the period of the Escrow, a certificate or certificates
  representing the number of whole shares of Parent Common Stock
  into which such holder's shares of Target Common Stock were
  converted pursuant to Section 3.1 and cash in lieu of any
  fractional shares of such Parent Common Stock pursuant to Section
  3.3(d). From and after the Effective Time, Parent shall be
  entitled to treat the certificates which immediately prior to the
  Effective Time represented shares of Target Common Stock and
  which have not yet been surrendered for exchange as evidencing
  the ownership of the number of full shares of Parent Common Stock
  into which the shares of Target Common Stock represented by such
  certificates shall have been converted pursuant to Section 3.1,
  notwithstanding the failure to surrender such certificates.
  However, notwithstanding any other provision of this Agreement,
  until holders or transferees of certificates which immediately
  prior to the Effective Time represented shares of Target Common
  Stock have surrendered them for exchange as provided herein, no
  dividends shall be paid with respect to any shares represented by
  such certificates and no payment for fractional shares shall be
  made.  Such dividends or other distributions with a record date
  after the Effective Time shall be held by the Escrow Agent in
  trust for the benefit of such holders of undelivered
  certificates.  Upon surrender of a certificate which immediately
  prior to the Effective Time represented outstanding shares of
  Target Common Stock, there shall be paid to the holder of such
  certificate the amount of any dividends which theretofore became
  payable, but which were not paid by reason of the foregoing, with
  respect to the number of whole shares of Parent Common Stock
  represented by the certificate or certificates issued upon such 
  
  (c) As soon as practicable after the Effective Time, the Escrow
  Agent shall mail to each holder of record of a certificate or
  certificates that immediately prior to the Effective Time
  represented outstanding shares of Target Common Stock
  (collectively, the "Target Certificates") (i) a form letter of
  transmittal (which shall specify that delivery shall be effected,
  and risk of loss and title to Target Certificates shall pass,
  only upon actual delivery of Target Certificates to the Escrow
  Agent) and (ii) instructions for use in effecting the surrender
  of Target Certificates in exchange for certificates representing
  shares of Parent Common Stock. Upon surrender of Target
  Certificates for cancellation to the Escrow Agent, together with
  a duly executed letter of transmittal and such other documents as
  the Escrow Agent shall reasonably require and following the
  period of the Escrow, the holder of such Target Certificates
  shall receive in exchange therefor a certificate representing
  that number of whole shares of Parent Common Stock into which the
  shares of Target Common Stock represented by Target Certificates
  so surrendered shall have been converted pursuant to the
  provisions of Section 3.1 less any adjustments pursuant to
  Section 4.5 hereof, and Target Certificates so surrendered shall
  forthwith be canceled. Notwithstanding the foregoing, neither the
  Escrow Agent nor any party hereto shall be liable to a holder of
  shares of Target Common Stock for any shares of Parent Common
  Stock or dividends or distributions thereon delivered to a public
  official pursuant to applicable escheat laws.
  
  (d) Notwithstanding any other provision of this Agreement, no
  certificates or scrip for fractional shares of Parent Common
  Stock shall be issued upon the surrender for exchange of Target
  Certificates pursuant to this Article III in the Merger and no
  Parent Common Stock dividend, stock split or interest shall
  relate to any fractional security, and such fractional interests
  shall not entitle the owner thereof to vote or to any other
  rights of a security holder. In lieu of any such fractional
  shares, each holder of Target Common Stock who would otherwise
  have been entitled to a fraction of a share of Parent Common
  Stock upon surrender of Target Certificates for exchange pursuant
  to this Article III, shall be entitled to receive from the Escrow
  Agent a cash payment in lieu of such fractional share equal to
  such fraction multiplied by the Valuation Price of $7.00 per
  share of Parent Common stock.
  
  3.4 Dissenting Shares. Notwithstanding anything to the contrary
  contained in this Agreement or the Merger Agreement, holders of
  shares of Target Common Stock with respect to which dissenters'
  rights, if any, are granted by reason of the Merger under the
  VGCL and who do not vote in favor of the Merger and otherwise
  comply with the VGCL ("Target Dissenting Shares"), shall not be
  entitled to shares of Parent Common Stock pursuant to Section
  3.1, unless and until the holder thereof shall have failed to
  perfect or shall have effectively withdrawn or lost such
  holder's right to dissent from the Merger under the VGCL, and
  shall be entitled to receive only the payment provided for
  pursuant to the VGCL. If any such holder shall have failed to
  perfect or shall have effectively withdrawn or lost such holder's
  dissenters' rights under the VGCL, such holder's Target
  Dissenting Shares shall thereupon be deemed to have been
  converted into and to have become exchangeable for, as of the
  Effective Time, the right to receive the Merger Consideration.
  
  3.5 Closing of Transfer Books. From and after the Effective Time,
  the stock transfer books of Target shall be closed and no
  transfer of shares of Target Common Stock shall thereafter be
  made. If, after the Effective Time, Target Certificates are
  presented to Parent, they shall be canceled and exchanged for the
  Merger Consideration in accordance with the procedures set forth
  in this Article III.
  
  3.6 Contingent Additional Purchase Price Consideration. (a) In
  addition to the Parent Common Stock transferred to Shareholders
  at Closing, on or before May 31, 1997, 1998, and 1999, Parent
  shall deliver to the Shareholders shares of Parent Common Stock
  having a value, as determined by the then current market value of
  the Parent Common Stock, equal to one-third of the net after tax
  income of Sub (Formerly Target) operating as a wholly owned
  subsidiary of Parent for each of the tax years ending March 31,
  1997, 1998 and 1999.  Such additional shares of Parent Common
  Stock shall be distributed among the Shareholders on a pro rata
  basis, based on the Shareholders holdings as of the date of
  Closing and set forth in Exhibit A hereto; provided, however,
  that for the purposes of determining a Shareholder's pro rata
  share, any shares of Target received by such Shareholders as a
  result of converting a promissory note into equity of Target
  prior to the Merger pursuant to Article III hereof shall not be
  included.  For the purposes of this paragraph only, the first
  period for calculating the additional consideration shall
  commence January 1, 1996 and continue through March 31, 1997. 
  The two remaining periods shall consist of twelve month intervals
  beginning April 1, 1997 and April 1998, respectively. 
  Notwithstanding the foregoing, the parties hereto agree that (i)
  for the purposes of determining the additional shares of Parent
  Common Stock due to the Shareholders for the period ending March
  31, 1997, the fair market value of the Parent Common Stock shall
  be deemed to be $7.00 per share and (ii) for the purposes of
  determining the additional shares of Parent Common Stock due to
  the Shareholders for the periods ending March 31, 1998 and 1999,
  the fair market value of the Parent Common Stock shall not exceed
  $10.00 per share or be less than $6.00 per share. 
  Notwithstanding anything contained herein to the contrary, in the
  event that a distribution of shares of Parent Common Stock
  pursuant to this Section 3.6, in combination with shares
  previously distributed pursuant to Article III, would increase
  the number of outstanding shares of Parent Common Stock by more
  than 20.0% of the number of outstanding shares of Parent Common
  Stock outstanding immediately before the Closing, Parent may
  deliver in lieu of additional shares of Parent Common Stock, to
  the Shareholders a cash payment equal to the value of the shares
  of Parent Common Stock they would have received pursuant hereto.
  (b) Sub's after-tax net income shall be determined by Parent's
  accounting firm.  For purposes of calculating the Contingent
  Additional Purchase Price Consideration the following factors
  will be in effect:
  
        (i) Sub's tax liability will be calculated as if Sub was an
  independent entity and the tax rate of the Sub will be no more
  than Parent's overall corporate tax rate.
  
        (ii) Sub will get the benefit of any allowable tax-loss
  carry forward from Target.
  
        (iii) For purposes of calculating additional consideration
  none of the Parent corporate overhead will be assigned to Sub
  other than costs transferred from Sub to Parent.
  
        (iv) Only Sub operating debt will be assigned to Sub.
  
        (v) Future acquisitions of similar companies will not affect
  additional consideration calculations.
  
  (c) Parent shall notify the Shareholders in writing no later than 
  May 31 of each year of the accountant's determination of Sub's
  after-tax net income and of the number of additional shares, if
  any, that the Shareholders are entitled to receive.  Such notice
  shall include a copy of the accountants calculations.  The
  Shareholders shall then have 30 days to deliver to Parent a
  written notice disputing the accountant's calculations.  In the
  event the Shareholders deliver such a notice, such dispute shall
  be submitted for arbitration in accordance with Section 10.8
  hereof.
  
  3.7 Closing. The closing (the "Closing") of the transactions
  contemplated by this Agreement shall take place (a) at the
  offices of Target at 10:00 a.m., local time on April 1, 1996, or
  the second business day immediately following the date on which
  the last of the conditions set forth in Article VII hereof is
  fulfilled or waived, or (b) at such other time and place and on
  such other date as Parent and Target shall agree (the "Closing
  Date").
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text: SECURITIES AND EXCHANGE COMMISSION
  
                                     Washington, D.C.  20549
  
                                                            
  
                                            FORM 8-K
  
                                         CURRENT REPORT
  
                               Pursuant to Section 13 and 15(d) of
                               the Securities Exchange Act of 1934
  
  Date of Report (Date of earliest event reported):    April 15, 1996          
  
                                  HALIFAX CORPORATION                          
  (Exact name of registrant as specified in charter)
  
            Virginia                  2-84160-W             54-0829246        
  (State or other jurisdiction        (Commission           (IRS Employer
   of incorporation)                   File Number         Identification No.)
  
   5250 Cherokee Avenue,  Alexandria, Virginia                        22312   
  (Address of principal executive offices)                          (Zip Code)
  
  Registrant's telephone number, including area code:     (703) 750-2202     
  
                                 Not Applicable                                 
      (Former name or former address, if changed since last report)
  Item 2.  Acquisition or Disposition of Assets
  
        (a) In accordance with a Plan of Merger ("Plan") attached as
  Exhibit A hereto which was duly adopted by the board of directors
  of both parties to the merger, CMS Automation, Inc. ("CMS"), a
  Virginia corporation, merged into CMSA Acquisition Corporation
  ("CMSA"), a Virginia corporation wholly owned by Halifax
  Corporation, a Virginia corporation.  CMS merged into CMSA on the
  following basis.  Pursuant to the Plan, each issued and
  outstanding share of CMS common stock was converted into, and
  become exchangeable for, the number of shares of validly issued,
  fully paid and nonassessable common stock of Halifax equal to a
  conversion ratio meaning a fraction, the numerator of which is
  139,630 and the denominator of which is equal to the sum of the
  number of shares of CMS issued and outstanding on the effective
  date of the merger plus the number of shares that would be
  represented by the conversion of $450,000 worth of debt to
  equity.  In this regard, CMS shareholders who held promissory
  notes of CMS in the amount of $450,000 converted said debt to
  equity in CMS.  In addition to the initial issuance of 139,630
  shares of Halifax stock to CMS shareholders which was based on
  the net equity value of CMS, Halifax stock will be awarded
  annually for three (3) years subsequent to the merger to the CMS
  shareholders on a pro-rata basis, excluding Halifax stock issued
  as a result of the conversion of debt to equity, having a value
  equal to one-third of the net after tax income of CMSA operating
  as a wholly owned subsidiary of Halifax.
  
        The assets acquired included accounts receivable and the
  inventory and equipment used in conducting and operating the
  business of CMS which consists of computer systems integration
  including wide area and local area networking, consulting,
  application development and training.
  
        Closing of the transaction took place on April 1, 1996 with
  a Certificate of Merger issued by the State Corporation
  Commission of Virginia effective April 9, 1996.
  
  Item 7.  Financial Statements and Exhibits
  
        (a) & (b) It is impracticable to provide the required
  financial statements and pro forma financial information at the
  time of the filing of this report.  Said financial statements and
  information will be filed as soon as available but not later than
  60 days from the date of this report.
  
        (c) Attached as Exhibit A is a copy of the plan of acquisi-
  tion as contained in the Agreement and Plan of Reorganization
  entered into by the parties.
  SIGNATURES
  
        Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned thereunto duly authorized.
  
                                                   HALIFAX CORPORATION  
                                                    (Registrant)
  
  Date:    April 15, 1996                   By:                           
                                               Howard C. Mills, President        
                                                  & Chief Executive Officer
  
  Date:     April 15, 1996                  By:                            
                                               Richard J. Smithson
                                               Vice President & Treasurer
  AGREEMENT AND PLAN OF REORGANIZATION
  
  AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 1, 1996,
  by and among HALIFAX CORPORATION, a Virginia corporation
  ("Parent"), CMSA ACQUISITION CORPORATION, a Virginia corporation
  and a wholly-owned subsidiary of Parent ("Sub").  CMS AUTOMATION,
  INC., a Virginia corporation (the "Target") (Sub and Target being
  hereinafter collectively referred to as (the "Constituent
  Corporations") and those individuals who are shareholders of the
  Target on the Closing Date ("Shareholders").
  
                                    ARTICLE III
  
                                  PLAN OF MERGER
  
  3.1 Conversion of Target Shares in the Merger. Pursuant to this
  Agreement, at the Effective Time, by virtue of the Merger and
  without any action on the part of any holder of any capital
  stock of Target; each issued and outstanding share of Target
  Common Stock, other than Target Dissenting Shares (as defined in
  Section 3.4 hereof), shall be converted into, and become
  exchangeable for, the number of shares of validly issued, fully
  paid and nonassessable common stock of Parent ("Parent Common
  Stock") equal to the Conversion Ratio.  In this Agreement, the
  term "Conversion Ratio" means a fraction, the numerator of which
  is equal to 139,630 and the denominator of which is equal to the
  sum of the number of shares of Target Common Stock issued and
  outstanding as of the Closing plus the number of shares that
  would be represented by the conversion of $450,000 of debt to
  equity.  In this regard, prior to Closing, Shareholders who hold
  promissory notes of the Target in the amount of $450,000
  (hereafter sometimes separately referred to as "Converting
  Shareholders") shall convert the notes to Target equity. The
  consideration referred to in this Section 3.1, together with any
  cash payments in lieu of fractional shares as provided herein,
  and the Contingent Additional Purchase Price Consideration set
  forth in Section 3.6 hereof is hereinafter referred to as the
  "Merger Consideration."
  
  3.2 Status of Sub Shares. At the Effective Time, by virtue of the
  Merger and without any action on the part of any holder of any
  capital stock of Sub, each issued and outstanding share of common
  stock of Sub shall continue unchanged and remain outstanding as a
  share of common stock of the Surviving Corporation.
  
  3.3 Exchange of Company Capital Stock Certificates. (a) On or
  prior to the Closing Date, Parent shall deposit with the Escrow
  Agent (as that term is defined below) the certificates
  representing shares of Parent Common Stock required to effect the
  exchange referred to in Section 3.3(b) below. Parent shall also
  deposit with the Escrow Agent the cash payment in lieu of
  fractional shares referred to in Section 3.3(d) below. Shares of
  Parent Common Stock into which shares of Target Common Stock
  shall be converted in the Merger shall be deemed to have been
  issued at the Effective Time and the Shareholders shall have full
  voting rights with respect to such shares immediately following
  the Effective Time.  In addition, the Shareholders shall be
  entitled to receive any dividends or other distributions with a
  record date after the Effective Time.
  
  (b) From and after the Effective Time, each holder of a
  certificate which immediately prior to the Effective Time
  represented outstanding shares of Target Common Stock, other than
  shares with respect to which dissenters' rights, if any, are
  granted by reason of the Merger under the VGCL, shall be entitled
  to receive in exchange therefor, upon delivery thereof to
  Williams, Mullen, Christian & Dobbins (the "Escrow Agent"), and
  following the period of the Escrow, a certificate or certificates
  representing the number of whole shares of Parent Common Stock
  into which such holder's shares of Target Common Stock were
  converted pursuant to Section 3.1 and cash in lieu of any
  fractional shares of such Parent Common Stock pursuant to Section
  3.3(d). From and after the Effective Time, Parent shall be
  entitled to treat the certificates which immediately prior to the
  Effective Time represented shares of Target Common Stock and
  which have not yet been surrendered for exchange as evidencing
  the ownership of the number of full shares of Parent Common Stock
  into which the shares of Target Common Stock represented by such
  certificates shall have been converted pursuant to Section 3.1,
  notwithstanding the failure to surrender such certificates.
  However, notwithstanding any other provision of this Agreement,
  until holders or transferees of certificates which immediately
  prior to the Effective Time represented shares of Target Common
  Stock have surrendered them for exchange as provided herein, no
  dividends shall be paid with respect to any shares represented by
  such certificates and no payment for fractional shares shall be
  made.  Such dividends or other distributions with a record date
  after the Effective Time shall be held by the Escrow Agent in
  trust for the benefit of such holders of undelivered
  certificates.  Upon surrender of a certificate which immediately
  prior to the Effective Time represented outstanding shares of
  Target Common Stock, there shall be paid to the holder of such
  certificate the amount of any dividends which theretofore became
  payable, but which were not paid by reason of the foregoing, with
  respect to the number of whole shares of Parent Common Stock
  represented by the certificate or certificates issued upon such 
  
  (c) As soon as practicable after the Effective Time, the Escrow
  Agent shall mail to each holder of record of a certificate or
  certificates that immediately prior to the Effective Time
  represented outstanding shares of Target Common Stock
  (collectively, the "Target Certificates") (i) a form letter of
  transmittal (which shall specify that delivery shall be effected,
  and risk of loss and title to Target Certificates shall pass,
  only upon actual delivery of Target Certificates to the Escrow
  Agent) and (ii) instructions for use in effecting the surrender
  of Target Certificates in exchange for certificates representing
  shares of Parent Common Stock. Upon surrender of Target
  Certificates for cancellation to the Escrow Agent, together with
  a duly executed letter of transmittal and such other documents as
  the Escrow Agent shall reasonably require and following the
  period of the Escrow, the holder of such Target Certificates
  shall receive in exchange therefor a certificate representing
  that number of whole shares of Parent Common Stock into which the
  shares of Target Common Stock represented by Target Certificates
  so surrendered shall have been converted pursuant to the
  provisions of Section 3.1 less any adjustments pursuant to
  Section 4.5 hereof, and Target Certificates so surrendered shall
  forthwith be canceled. Notwithstanding the foregoing, neither the
  Escrow Agent nor any party hereto shall be liable to a holder of
  shares of Target Common Stock for any shares of Parent Common
  Stock or dividends or distributions thereon delivered to a public
  official pursuant to applicable escheat laws.
  
  (d) Notwithstanding any other provision of this Agreement, no
  certificates or scrip for fractional shares of Parent Common
  Stock shall be issued upon the surrender for exchange of Target
  Certificates pursuant to this Article III in the Merger and no
  Parent Common Stock dividend, stock split or interest shall
  relate to any fractional security, and such fractional interests
  shall not entitle the owner thereof to vote or to any other
  rights of a security holder. In lieu of any such fractional
  shares, each holder of Target Common Stock who would otherwise
  have been entitled to a fraction of a share of Parent Common
  Stock upon surrender of Target Certificates for exchange pursuant
  to this Article III, shall be entitled to receive from the Escrow
  Agent a cash payment in lieu of such fractional share equal to
  such fraction multiplied by the Valuation Price of $7.00 per
  share of Parent Common stock.
  
  3.4 Dissenting Shares. Notwithstanding anything to the contrary
  contained in this Agreement or the Merger Agreement, holders of
  shares of Target Common Stock with respect to which dissenters'
  rights, if any, are granted by reason of the Merger under the
  VGCL and who do not vote in favor of the Merger and otherwise
  comply with the VGCL ("Target Dissenting Shares"), shall not be
  entitled to shares of Parent Common Stock pursuant to Section
  3.1, unless and until the holder thereof shall have failed to
  perfect or shall have effectively withdrawn or lost such
  holder's right to dissent from the Merger under the VGCL, and
  shall be entitled to receive only the payment provided for
  pursuant to the VGCL. If any such holder shall have failed to
  perfect or shall have effectively withdrawn or lost such holder's
  dissenters' rights under the VGCL, such holder's Target
  Dissenting Shares shall thereupon be deemed to have been
  converted into and to have become exchangeable for, as of the
  Effective Time, the right to receive the Merger Consideration.
  
  3.5 Closing of Transfer Books. From and after the Effective Time,
  the stock transfer books of Target shall be closed and no
  transfer of shares of Target Common Stock shall thereafter be
  made. If, after the Effective Time, Target Certificates are
  presented to Parent, they shall be canceled and exchanged for the
  Merger Consideration in accordance with the procedures set forth
  in this Article III.
  
  3.6 Contingent Additional Purchase Price Consideration. (a) In
  addition to the Parent Common Stock transferred to Shareholders
  at Closing, on or before May 31, 1997, 1998, and 1999, Parent
  shall deliver to the Shareholders shares of Parent Common Stock
  having a value, as determined by the then current market value of
  the Parent Common Stock, equal to one-third of the net after tax
  income of Sub (Formerly Target) operating as a wholly owned
  subsidiary of Parent for each of the tax years ending March 31,
  1997, 1998 and 1999.  Such additional shares of Parent Common
  Stock shall be distributed among the Shareholders on a pro rata
  basis, based on the Shareholders holdings as of the date of
  Closing and set forth in Exhibit A hereto; provided, however,
  that for the purposes of determining a Shareholder's pro rata
  share, any shares of Target received by such Shareholders as a
  result of converting a promissory note into equity of Target
  prior to the Merger pursuant to Article III hereof shall not be
  included.  For the purposes of this paragraph only, the first
  period for calculating the additional consideration shall
  commence January 1, 1996 and continue through March 31, 1997. 
  The two remaining periods shall consist of twelve month intervals
  beginning April 1, 1997 and April 1998, respectively. 
  Notwithstanding the foregoing, the parties hereto agree that (i)
  for the purposes of determining the additional shares of Parent
  Common Stock due to the Shareholders for the period ending March
  31, 1997, the fair market value of the Parent Common Stock shall
  be deemed to be $7.00 per share and (ii) for the purposes of
  determining the additional shares of Parent Common Stock due to
  the Shareholders for the periods ending March 31, 1998 and 1999,
  the fair market value of the Parent Common Stock shall not exceed
  $10.00 per share or be less than $6.00 per share. 
  Notwithstanding anything contained herein to the contrary, in the
  event that a distribution of shares of Parent Common Stock
  pursuant to this Section 3.6, in combination with shares
  previously distributed pursuant to Article III, would increase
  the number of outstanding shares of Parent Common Stock by more
  than 20.0% of the number of outstanding shares of Parent Common
  Stock outstanding immediately before the Closing, Parent may
  deliver in lieu of additional shares of Parent Common Stock, to
  the Shareholders a cash payment equal to the value of the shares
  of Parent Common Stock they would have received pursuant hereto.
  (b) Sub's after-tax net income shall be determined by Parent's
  accounting firm.  For purposes of calculating the Contingent
  Additional Purchase Price Consideration the following factors
  will be in effect:
  
        (i) Sub's tax liability will be calculated as if Sub was an
  independent entity and the tax rate of the Sub will be no more
  than Parent's overall corporate tax rate.
  
        (ii) Sub will get the benefit of any allowable tax-loss
  carry forward from Target.
  
        (iii) For purposes of calculating additional consideration
  none of the Parent corporate overhead will be assigned to Sub
  other than costs transferred from Sub to Parent.
  
        (iv) Only Sub operating debt will be assigned to Sub.
  
        (v) Future acquisitions of similar companies will not affect
  additional consideration calculations.
  
  (c) Parent shall notify the Shareholders in writing no later than 
  May 31 of each year of the accountant's determination of Sub's
  after-tax net income and of the number of additional shares, if
  any, that the Shareholders are entitled to receive.  Such notice
  shall include a copy of the accountants calculations.  The
  Shareholders shall then have 30 days to deliver to Parent a
  written notice disputing the accountant's calculations.  In the
  event the Shareholders deliver such a notice, such dispute shall
  be submitted for arbitration in accordance with Section 10.8
  hereof.
  
  3.7 Closing. The closing (the "Closing") of the transactions
  contemplated by this Agreement shall take place (a) at the
  offices of Target at 10:00 a.m., local time on April 1, 1996, or
  the second business day immediately following the date on which
  the last of the conditions set forth in Article VII hereof is
  fulfilled or waived, or (b) at such other time and place and on
  such other date as Parent and Target shall agree (the "Closing
  Date").