AGREEMENT AND PLAN OF MERGER


                  AGREEMENT  AND PLAN OF MERGER,  dated as of February 16, 1999,
by and among Columbus McKinnon Corporation,  a New York corporation  ("Parent"),
GL Delaware,  Inc., a Delaware  corporation  and a  wholly-owned  subsidiary  of
Parent ("Sub"), G.L.  International Inc., a Delaware corporation (the "Company")
and Larco  Industrial  Services,  Ltd.  an Ontario  corporation  ("Larco"),  the
holders of all outstanding capital stock of the Company (the "GL Shareholders"),
and the holders of Non-Voting  Exchangeable Shares (the "Larco Shareholders") of
Larco  all of the  voting  stock  of  which  is  owned  by the  Company.  The GL
Shareholders  and the  Larco  Shareholders  are  sometimes  referred  to  herein
individually as a "Shareholder" and collectively as the "Shareholders".

                  WHEREAS,  the  Boards of  Directors  of Parent and Sub and the
Board of  Directors  of the  Company  and  Larco  and the  Shareholders  deem it
advisable  and in their best  interests to approve and  consummate  the business
combination  transaction  provided for in this agreement  ("Agreement") in which
Sub  would  merge  with and into the  Company  and the  Company  would  become a
wholly-owned subsidiary of Parent (the "Merger");

                  WHEREAS,  concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's and Sub's willingness to
enter into this Agreement,  the Shareholders are executing an agreement dated as
of the  date  hereof  regarding  voting  in  favor  of this  Agreement  ("Voting
Agreement");

                  WHEREAS,  for  accounting  purposes,  it is intended  that the
Merger shall be  accounted  for as a pooling of  interests  under United  States
generally accepted accounting principles ("GAAP");

                  WHEREAS, for Federal income tax purposes,  it is intended that
the Merger shall qualify as a reorganization  within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code"); and

                  NOW,  THEREFORE,  in  consideration  of the  foregoing and the
respective  representations,  warranties,  covenants  and  agreements  set forth
herein and in the Related Agreements (as hereinafter defined) the parties hereto
agree as follows:

                                    ARTICLE I

                                   THE MERGER

                  SECTION 1.01 The Merger;  Effective  Time of the Merger.  Upon
the terms and subject to the conditions of this Agreement and in accordance with
the Delaware General Corporation Law (the "DGCL"),  Sub shall be merged with and
into the Company at the Effective Time (as hereinafter defined).  Subject to the

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provisions of this  Agreement,  a  certificate  of merger (the  "Certificate  of
Merger") shall be duly prepared and properly  executed and thereafter duly filed
with the  Secretary of State of the State of Delaware,  as provided in the DGCL,
as soon as  practicable on or after the Closing Date (as  hereinafter  defined).
The Merger shall become  effective upon the filing of the  Certificate of Merger
with the Secretary of State of the State of Delaware or at such time  thereafter
as is provided in the Certificate of Merger (the "Effective Time").

                  SECTION  1.02   Closing.   The  closing  of  the  Merger  (the
"Closing")  will take place at 10:00 a.m.  on a date to be  specified  by Parent
which  shall be no later than the second  business  day after the earlier of (i)
early  termination  under the  Hart-Scott-Rodino  Antitrust  Improvements Act of
1976,  as amended  (the "HSR  Act") or (ii)  expiration  of the HSR Act  waiting
period,  provided that the other closing  conditions set forth in Article X have
been met or waived as  provided  in  Article X at or prior to the  Closing  (the
"Closing Date"), at the offices of Phillips,  Lytle,  Hitchcock,  Blaine & Huber
LLP, 3400 Marine Midland Center,  Buffalo, New York 14203 unless another date or
place is agreed to in writing by Parent and the Company.

                  SECTION 1.03 Effects of the Merger.  At the Effective Time (i)
the  separate  existence of the Sub shall cease and the Sub shall be merged with
and into the Company  (Sub and the Company are  sometimes  referred to herein as
the "Constituent  Corporations" and the Company is sometimes  referred to herein
as the  "Surviving  Corporation")  and  the  Surviving  Corporation  shall  be a
wholly-owned  subsidiary of Parent, (ii) the Certificate of Incorporation of the
Company shall be the Certificate of Incorporation of the Surviving  Corporation,
(iii) the By-laws of the Company as in effect immediately prior to the Effective
Time shall be the  By-laws  of the  Surviving  Corporation,  and (iv) the Merger
shall have all the effects provided by applicable law,  including Section 259 of
the DGCL.

                  SECTION  1.04   Directors   and  Officers  of  the   Surviving
Corporation.  From and after the Effective Time (i) Robert L.  Montgomery,  Jr.,
Lois H. Demler and Timothy T. Tevens  shall be the  directors  of the  Surviving
Corporation  and (ii) the present  officers of Sub shall be the  officers of the
Surviving  Corporation  until their  successors  shall have been duly elected or
appointed or qualified or until their earlier  death,  resignation or removal in
accordance with the Surviving  Corporation's  Certificate of  Incorporation,  as
amended, and By-laws, as amended.


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                                   ARTICLE II

                            CONVERSION OF SECURITIES

                  SECTION 2.01  Conversion of 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 of capital stock of the Constituent Corporations or Parent:

                  (a) Capital  Stock of Sub.  Each share of the common  stock of
Sub,  par value  $1.00 per  share  ("Sub  Common  Stock"),  which is issued  and
outstanding immediately prior to the Effective Time, shall be converted into and
shall become one fully paid and  nonassessable  share of common stock, par value
$.01 per share, of the Surviving Corporation.

                  (b) Cancellation of Treasury Stock. All shares of common stock
of the Company,  par value $.01 per share, (the "Company Common Stock") that are
owned by the Company as treasury  shares shall be canceled and retired and shall
cease to exist and no stock of Parent or other  consideration shall be delivered
in exchange therefor.

                  (c) Shares of Dissenting  Holders.  Notwithstanding any of the
provisions of this Agreement,  any issued and outstanding  shares of the Company
Common Stock held by a person who shall not have voted in favor of the Merger or
consented  thereto in writing  and who shall have  demanded  properly in writing
appraisal  of such  shares in  accordance  with  Section 262 of the DGCL and who
objects to the Merger and complies with all  provisions  of the DGCL  concerning
the right of such person to dissent from the Merger and demand appraisal of such
shares  ("Dissenting  Holder")  shall not be converted into the right to receive
the Merger Consideration (as hereinafter defined),  but shall from and after the
Effective Time represent only the right to receive such  consideration as may be
determined to be due to such Dissenting  Holder pursuant to the DGCL;  PROVIDED,
HOWEVER,  that shares of the Company Common Stock outstanding  immediately prior
to the  Effective  Time and held by a  Dissenting  Holder who  shall,  after the
Effective Time,  effectively withdraw the demand for appraisal or lose the right
of appraisal of such shares, in either case pursuant to the DGCL shall be deemed
to be converted,  as of the Effective Time, into the right to receive the Merger
Consideration  specified in Section 2.01(d),  without interest.  Nothing in this
Section 2.01(c) shall relieve any Shareholder of such  Shareholder's  obligation
under a voting  agreement which shall be entered into by the Shareholders in the
form and on substantially the same terms as Schedule 2.01(c) hereto (the "Voting
Agreement").


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                  (d) Exchange  Ratio for the Company  Common Stock.  Subject to
Section 2.02(e),  each issued and outstanding  share of the Company Common Stock
(other than shares to be canceled in accordance  with Section  2.01(b)) shall be
converted into the right to receive that number of fully paid and  nonassessable
shares of common stock,  par value $0.01 per share,  of Parent  ("Parent  Common
Stock"),  including  the  corresponding  number of rights  ("Parent  Rights") to
purchase shares of Parent Preferred Stock pursuant to the Rights Agreement dated
as of October 25, 1997,  as amended,  between  American  Stock  Transfer & Trust
Company,  as Rights  Agent  and  Columbus  McKinnon  Corporation  determined  by
dividing the Preliminary Aggregate Merger Consideration determined in accordance
with  Section  2.01(e)  below  ("the  Preliminary   Merger   Consideration")  by
4,562,833. The Preliminary Merger Consideration shall be subject to reduction by
virtue of the adjustment  provided for in Section 2.04 and, as so adjusted shall
be deemed  to be the  "Merger  Consideration".  All such  shares of the  Company
Common Stock 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  (or any cash in
lieu of  fractional  shares  of  Parent  Common  Stock)  to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance with
Section 2.02,  without  interest.  All  references  in this  Agreement to Parent
Common  Stock to be received  pursuant to the Merger  shall be deemed to include
Parent Rights.

                  The  determination  of the  exchange  ratio,  the  Preliminary
Aggregate Merger  Consideration and the Merger  Consideration are based upon the
representations,  warranties  and covenants of the Company and the  Shareholders
that the number of  outstanding  shares of Company  Common  Stock (as  hereafter
defined),  the  Exchangeable  Shares (as  hereafter  defined),  the  outstanding
Company Options (as hereafter  defined) and Larco Options (as hereafter defined)
are as represented in this Agreement and remain unchanged  through the Effective
Time,  except for the exchange of the  Exchangeable  Shares which shall occur as
provided in Section 5.04 hereof.

                  (e) Calculation of Preliminary Aggregate Merger Consideration.
The Preliminary Aggregate Merger Consideration shall be that number of shares of
Parent  Common Stock  determined  on the basis of the average  closing price per
share of Parent Common Stock on each of the days on which Parent Common Stock is
traded  beginning  on the day after the date of this  Agreement  and ending five
business days prior to the Closing  ("Closing  Price")  equal to the  difference
between: (A)(i) if the Closing Price is $27.25 or more the Preliminary Aggregate
Merger Consideration shall be 950,000 shares of Parent Common Stock; (ii) if the

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Closing  Price is equal to or greater than  $17.7418  but less than $27.25,  the
Preliminary  Aggregate  Merger  Consideration  shall be that number of shares of
Parent  Common  Stock  equal to  $25,887,500  divided by the product of: (A) the
Closing Price and (B) one plus the product of (x) .03096 and (y) the  difference
between  $27.25 and the Closing  Price;  (iii) if the Closing Price is less than
$17.7418 but greater than $15.00, the Preliminary Aggregate Merger Consideration
shall be that number of shares of Parent  Common  Stock equal to the quotient of
$20,000,000  divided by the Closing Price; and (iv) if the Closing Price is less
than $15.00, the Preliminary  Aggregate Merger  Consideration shall be 1,333,333
shares of Parent  Common  Stock;  and (B) that number of shares of Parent Common
Stock equal to $200,000 divided by the Closing Price.

                  Schedule 2.01(e) hereto shows examples of the determination of
the Preliminary Aggregate Merger Consideration at various Closing Prices.

                  SECTION 2.02  Exchange of Certificates.

                  (a) Exchange of Certificates. As of the Effective Time, Parent
shall make  available,  for the  benefit of the holders of shares of the Company
Common  Stock,  for exchange in  accordance  with this Article II,  certificates
representing the shares of Parent Common Stock issuable pursuant to Section 2.01
as the Preliminary  Merger  Consideration  in exchange for Company Common Stock.
Such shares of Parent Common Stock, together with any dividends or distributions
with respect thereto, if any, are sometimes  collectively  referred to herein as
the "Exchange Fund".

                  (b) Exchange  Procedures.  Prior to the Effective Time, Parent
shall  mail to each  holder of record of a  certificate  or  certificates  which
immediately  prior to the Effective Time represented  outstanding  shares of the
Company  Common  Stock (the  "Certificates")  whose  shares are to be  converted
pursuant to Section 2.01 into the right to receive the Merger  Consideration (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  Parent  and  shall be in such  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.  Immediately  after  the  Effective  Time,  upon  surrender  of a
Certificate  for  cancellation to Parent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a  certificate  representing  that number of whole shares of Parent Common Stock
which  such  holder  has  the  right  to  receive  as  the  Preliminary   Merger
Consideration, less the number of shares

<PAGE>

deposited  into  escrow  pursuant  to the  terms  of  Section  12.01(i)  without
interest,  pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of the Company Common Stock which is not  registered in the transfer  records of
the Company,  a certificate  representing  the proper number of shares of Parent
Common Stock may be issued to a transferee if the Certificate  representing such
Company  Common  Stock is  presented  to Parent,  accompanied  by all  documents
required  to  evidence  and  effect  such  transfer  and by  evidence  that  any
applicable   stock  transfer  taxes  have  been  paid.   Until   surrendered  as
contemplated by this Section 2.02, each Certificate  shall be deemed at any time
after  the  Effective  Time to  represent  only the right to  receive  upon such
surrender  the  Merger  Consideration  (or  the  cash  payment  in  lieu  of any
fractional shares of Parent Common Stock) as contemplated by this Section 2.02.

                  (c)  Distributions  with  Respect to  Unexchanged  Shares.  No
dividends or other distributions  declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the  holder of any  unsurrendered  Certificate  with  respect  to the
shares of Parent Common Stock represented  thereby until the holder of record of
such  Certificate  shall  surrender such  Certificate.  Subject to the effect of
applicable law, following surrender of any such Certificate, there shall be paid
to the record  holder of the  certificates  representing  whole shares of Parent
Common Stock issued in exchange therefor,  without interest,  (i) at the time of
such  surrender,  the amount of dividends or other  distributions  with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate  payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender  and a payment  date  subsequent  to  surrender  payable with
respect to such whole shares of Parent Common Stock.

                  (d) No Further  Ownership  Rights in the Company Common Stock.
The Merger  Consideration  (including any cash paid pursuant to Section 2.02(e))
issued upon the surrender for exchange of shares of the Company  Common Stock in
accordance  with the terms  hereof  shall be deemed to have been  issued in full
satisfaction  of all rights  pertaining  to such  shares of the  Company  Common
Stock. There shall be no further registration of transfers on the stock transfer
books of the  Surviving  Corporation  of the shares of the Company  Common Stock
which were  outstanding  immediately  prior to the Effective Time. If, after the
Effective Time, the Certificates are presented to the Surviving  Corporation for
any reason, they shall be canceled and exchanged as provided in this Article II.


<PAGE>

                  (e) No Fractional Shares. No certificate or scrip representing
fractional  shares of Parent Common Stock shall be issued upon the surrender for
exchange of the  Certificates,  and such  fractional  share  interests  will not
entitle the owner thereof to vote or to any rights of a  shareholder  of Parent;
however,  in lieu  thereof,  each owner who would  otherwise  be  entitled  to a
fraction  of a share,  will  upon the  surrender  of the  Certificates  relating
thereto, be issued a check by Parent representing the cash amount, if any, equal
to such fraction  multiplied by the Closing Price.  No interest shall be paid on
such  amount.  All shares of the Company  Common  Stock held by a holder will be
aggregated for purposes of computations of the Merger  Consideration (or cash in
lieu of fractional shares payable hereunder).

                  (f)  Anti-Dilution  Provision.  If  between  the  date of this
Agreement and the Effective Time the  outstanding  shares of Parent Common Stock
shall have been changed into a different  number of shares or a different class,
in both cases by reason of any stock  dividend,  subdivision,  reclassification,
recapitalization,  split-up,  combination  or exchange of shares,  Parent  shall
appropriately adjust the Preliminary Aggregate Merger Consideration.

                  (g) No  Liability.  Neither  Parent nor the  Company  shall be
liable to any  holder of shares of the  Company  Common  Stock or Parent  Common
Stock, as the case may be, for such shares,  Merger  Consideration (or dividends
or distributions  with respect thereto)  delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.

                  SECTION 2.03 Exchange  Ratio for Options.  As of the Effective
Time each outstanding option (a "Company Option") under the Company's 1997 Stock
Option Plan (the  "Company  Plan"),  to purchase  Company  Common Stock and each
outstanding  option (a "Larco Option") under Larco's 1997 Stock Option Plan (the
"Larco Plan") to purchase Non-Voting Exchangeable Shares ("Exchangeable Shares")
shall be assumed by Parent and  converted  into an option to purchase  shares of
Parent Common Stock,  as provided  below.  Following  the Effective  Time,  each
Company Option and Larco Option shall continue to have, and shall be subject to,
the same terms and  conditions  set forth in the  Company  Plan and Larco  Plan,
respectively, pursuant to which such Company Option or Larco Option was granted,
as in effect  immediately prior to the Effective Time, except that (i) each such
Company Option and Larco Option shall be  exercisable  for that number of shares
of Parent  Common Stock that the holder of such  Company  Option or Larco Option
would have  received  pursuant  to Section  2.01(d)  hereof,  after  taking into
account the adjustment, if any, provided in Section 2.04 hereof, if such Company
Option had been  exercised  or such  Larco  Option  had been  exercised  and the

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Exchangeable  Shares so received  exchanged for shares of Company  Common Stock,
all immediately prior to the Effective Time, rounded, in the case of any Company
Option other than any incentive  stock option and any Larco  Option,  up and, in
the case of any Company Option which is an incentive  stock option,  down to the
nearest whole share, if necessary, and (ii) the exercise price per share of such
Company Option or Larco Option,  shall be equal to the aggregate  exercise price
of such Company Option or Larco Option  immediately  prior to the Effective Time
divided by the number of shares of Parent  Common  Stock for which such  Company
Option or Larco Option shall be exercisable as determined in accordance with the
preceding clause (i),  rounded up to the next highest cent, if necessary.  It is
the  intention  of the  parties  that,  to the extent  that any  Company  Option
constitutes an incentive stock option  immediately  prior to the Effective Time,
such Company  Option shall  continue to qualify as an incentive  stock option to
the maximum extent  permitted by Section 422 of the Code, and that the amendment
of the Company  Options  provided by this Agreement shall satisfy the conditions
of Section 424(a) of the Code.

                  SECTION 2.04  Adjustment of Merger  Consideration.  The Merger
Consideration  shall be reduced if the consolidated  stockholders  equity of the
Company as of the date  immediately  preceding  the  Closing  Date  results in a
"Performance Deficit" as hereinafter determined.

                  (a) Final  Financial  Statement  Determination.  Parent  shall
cause  Ernst  & Young  LLP  ("E & Y"),  Parent's  independent  certified  public
accountants,  with the  assistance  of  Deloitte  & Touche  LLP,  the  Company's
independent certified public accountants,  as requested by E & Y, to prepare and
deliver to each of Parent and the Representative (as hereinafter defined) within
forty-five  (45) days  following  the  Closing,  a proposed  consolidated  final
balance sheet of the Company and its Subsidiaries (as hereinafter  defined),  as
of the close of business on the day preceding  the Closing Date ("Final  Balance
Sheet")  and profit and loss  statement  for the period  than ended  ("Final P&L
Statement").  The Final Balance Sheet and Final P&L Statement  shall be prepared
by E&Y in accordance with GAAP and applying the same  accounting  principles and
practices as the Company has applied in the preparation of audited, consolidated
financial  statements for the fiscal year ended March 31, 1998  (notwithstanding
that such Final  Balance  Sheet and Final P&L  Statement  will be for an interim
financial period) and shall not include footnote disclosure.  Preparation of the
Final   Balance   Sheet  and  Final  P&L  Statement  on  this  basis  will  mean
specifically,  among other things,  that accruals,  for example for reserves for
doubtful accounts  receivable,  taxes,  bonuses and health,  welfare and benefit
plans,  will be adjusted as if the Company's and the  Subsidiaries'  fiscal year
had ended as of the close of business on the day preceding the Closing Date with

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appropriate  year-end  type  adjustments  for  reserves  for  doubtful  accounts
receivable,  tax, bonus, health, welfare and benefit plans and similar accruals.
E & Y shall audit the Final Balance  Sheet and Final P&L Statement  with respect
to those  matters  requested by Parent for the purposes of expressing an opinion
on such  matters.  The  inventory  reflected  on the Final  Balance  Sheet shall
reflect the  inventory  of the Company and the  Subsidiaries  as of the close of
business on the day preceding the Closing Date and shall be determined  based on
the physical inventory  conducted before the Closing Date and observed by E & Y,
and rolled  forward to the close of  business on the day  preceding  the Closing
Date. In determining  stockholders' equity in the Final Balance Sheet, all costs
and  expenses  of the  Company  and  any of its  Subsidiaries  related  to  this
transaction  up to $500,000  ($200,000  of which shall be a fee paid to Cardinal
Investment Company, Inc.) will be added back.

                  (b) Disputes.  The Representative  shall have thirty (30) days
from the date of its receipt of the Final  Balance Sheet and Final P&L Statement
to raise any objection to the Final Balance  Sheet and Final P&L  Statement.  In
the event the  Representative  disputes the Final Balance Sheet or the Final P&L
Statement,  it shall notify  Parent in writing (the  "Dispute  Notice")  setting
forth the amount,  nature and basis of the dispute in reasonable detail.  Within
the thirty (30) days following the delivery of a Dispute  Notice to Parent,  the
parties shall use their best efforts to resolve such dispute. Upon their failure
to do so, Parent and the Representative shall, within ten (10) days from the end
of such 30 day  period,  refer the  dispute to a third  accounting  firm,  which
accounting  firm shall be in the first instance  Arthur  Anderson LLP, or in the
event such firm is unwilling or unable to serve in such capacity, to the firm of
PriceWaterhouseCoopers  LLP, or to any other firm as the  parties  may  mutually
select.  If Parent  and the  Representative  fail to agree  upon or  obtain  the
agreement  of an  accounting  firm to make a final  determination  of the  Final
Balance  Sheet and Final P&L  Statement,  the American  Arbitration  Association
shall,  upon the  request  of  either  Parent or the  Representative,  select an
independent  accounting  firm,  which  shall  be one of the  "Big  Five"  public
accounting firms with no existing or previous  relationship  with either Parent,
the  Company,  Larco  or any of the  Shareholders,  if  possible,  to make  such
determination.

                  The third accounting firm so selected shall be engaged jointly
by Parent and the  Representative  to decide the dispute within thirty (30) days
from its appointment. Parent and the Representative shall use their best efforts
to cooperate with such third  accounting firm in providing,  or providing access
to, any  documents or  witnesses  reasonably  requested by the third  accounting
firm. The decision of the third  accounting firm shall be final and binding upon

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the parties, and accordingly a judgment by a court of competent jurisdiction may
be entered in accordance therewith.  Such decision shall be set forth in writing
and  shall be  accompanied  by a copy of the Final  Balance  Sheet and Final P&L
Statement,  modified to the extent necessary to give effect to such decision.  A
copy thereof shall be delivered to each of Parent and the Representative.

                  (c) Performance Deficit. The performance deficit ("Performance
Deficit"),  if any,  shall  be an  amount  equal  to the  amount  by  which  the
consolidated  stockholders equity in the Final Balance Sheet (after any disputes
are resolved pursuant to Section 2.04(b)) is less than the sum of (i) $5,008,344
and (ii) $6,149 times the number of days between April 1, 1998 and the Effective
Time.

                  (d)  Adjustment.  Any  Performance  Deficit  shall  reduce the
Preliminary  Aggregate  Merger  Consideration by that number of shares of Parent
Common Stock determined by dividing the amount of the Performance Deficit by the
Closing Price (the "Reduction  Amount").  The Reduction  Amount shall not exceed
that number of shares equal to five percent  (5%) of the  Preliminary  Aggregate
Merger  Consideration.  To  give  effect  to any  reduction  in the  Preliminary
Aggregate  Merger  Consideration,  the GL  Shareholders  shall  deliver  written
instructions  to the Escrow Agent to deliver  from the Escrow  Deposit to Parent
for cancellation that number of shares of Parent Common Stock equal to 0.8527957
multiplied  by the  Reduction  Amount  (together  with  any  dividends  or other
distributions  in respect  thereof) and such reduction  shall be borne by all of
the GL  Shareholders  in proportion to the percentage of  outstanding  shares of
Company  Common  Stock  owned by each GL  Shareholder  immediately  prior to the
Effective  Time. The holders of the Company  Options and the Larco Options shall
have the number of shares of Parent Common Stock to be received upon exercise of
such options reduced as provided in Section 2.03.

                  (e)  Fees  and  Expenses.  The  fees  and  expenses  of  E & Y
hereunder  shall be borne by Parent.  The fees and expenses of Deloitte & Touche
LLP hereunder shall be borne by the Company.  The fees and expenses of the third
accounting  firm in connection  with the  resolution of disputes  above shall be
equally  shared  between  Parent on the one hand and  Shareholders  on the other
hand.

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                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent as follows:

                  SECTION 3.01 Organization. The Company and each Subsidiary (as
hereinafter  defined) is a corporation  duly organized,  validly existing and in
good standing under the jurisdiction of its  incorporation and has all requisite
power  and  authority,  corporate  and  other,  and all  necessary  governmental
approvals to own,  lease and operate its properties and to carry on its business
as now being  conducted,  except where the failure to be so organized,  existing
and in  good  standing  or to  have  such  power,  authority,  and  governmental
approvals  would  not have a  material  adverse  effect on the  Company  or such
Subsidiary,  as the  case  may be.  The  Company  and  each  Subsidiary  is duly
qualified or licensed to do business and in good  standing in each  jurisdiction
in which the  property  owned,  leased or  operated  by it or the  nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not have a material adverse effect. As used in this Agreement,  any reference to
any event,  change or effect being "material" or being "materially  adverse" to,
or having a "material  adverse  effect" on, or with  respect to an entity  means
such event,  change or effect is materially adverse to the condition  (financial
or  other),  properties,   assets  (including  intangible  assets),  liabilities
(including contingent liabilities), businesses, business prospects or results of
operations  of such entity and its direct and indirect  subsidiaries  taken as a
whole.  Gaffey,  Inc., an Oklahoma  corporation,  Gaffey, Inc. of Texas, a Texas
corporation,  Handling  Systems and  Conveyors,  Inc.,  a Delaware  corporation,
Larco,  an  Ontario  corporation  and  Larco  Material  Handling  Inc.,  an Ohio
corporation  are  sometimes  referred  to in this  Agreement  individually  as a
"Subsidiary" and collectively as the "Subsidiaries." The Subsidiaries, excluding
Larco, are sometimes referred to in this Agreement as the "US Subsidiaries".

                  SECTION  3.02  Capital  Stock;  Subsidiaries.   Schedule  3.02
accurately  sets forth with  respect to the  Company  and each  Subsidiary,  its
authorized  capital  stock,  its capital  stock issued and  outstanding  and its
capital stock held in treasury.  All the outstanding shares of the Company's and
each Subsidiary's capital stock are duly authorized,  validly issued, fully paid
and  non-assessable  and,  except as  disclosed  in Schedule  3.02,  free of any
preemptive  rights  with  respect  thereto.  Schedule  3.02  hereto sets forth a
complete and accurate  list showing the record and  beneficial  ownership of the
outstanding  capital  stock of the  Company  and each  Subsidiary.  There are no
bonds,  debentures,  notes or other  indebtedness  having  the right to vote (or

<PAGE>

convertible  into  securities  having the right to vote) on any matters on which
shareholders of the Company or any Subsidiary may vote ("Voting Debt") issued or
outstanding.  Except  as set  forth on  Schedule  3.02,  there  are no  options,
warrants,   calls,   subscriptions  or  other  rights  or  other  agreements  or
commitments of any character relating to the issued or unissued capital stock of
the Company or any  Subsidiary  or obligating  the Company or any  Subsidiary to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital  stock or Voting Debt of, or other equity  interests  in, the Company or
any Subsidiary or securities convertible into or exchangeable for such shares or
equity interests or obligating the Company or any Subsidiary to grant, extend or
enter  into  any such  option,  warrant,  call,  subscription  or  other  right,
agreement  or  commitment.  Schedule  3.02 lists the holders of all  outstanding
options,  the number of shares of capital stock of the Company or any Subsidiary
subject  to such  options,  the dates when such  options  are  exercisable,  the
exercise  price for such options and whether such  options are  incentive  stock
options  within the meaning of Section 422 of the Code.  Except as  disclosed in
Schedule 3.02, there are no outstanding  contractual  obligations of the Company
or any  Subsidiary  to  repurchase,  redeem or  otherwise  acquire any shares of
capital stock of the Company or any Subsidiary. Except for the Subsidiaries, the
Company does not have any ownership interest,  direct or indirect,  in any other
business  organization or entity.  The various Schedules  referred to in Article
III are collectively referred to as the "Disclosure Schedules."

                  SECTION 3.03  Authority.  The Company,  and holders of Company
Options  and  Larco  Options  and  Shareholders  have the  requisite  power  and
authority,  corporate and other,  to execute and deliver this  Agreement and the
other  agreements   contemplated  hereby  (the  "Related   Agreements")  and  to
consummate the  transactions  contemplated  hereby and thereby (other than, with
respect to the  Merger,  the  approval  and  adoption of this  Agreement  by the
holders of a majority of the  outstanding  shares of the Company  Common Stock).
The  execution,  delivery  and  performance  of this  Agreement  and the Related
Agreements  and the  consummation  of the Merger  and of the other  transactions
contemplated hereby and thereby have been duly and effectively authorized by all
necessary corporate action on the part of the Company and each Subsidiary and no
other  corporate  proceedings  on the part of the Company or any  Subsidiary are
necessary to authorize this Agreement or the Related Agreements or to consummate
the  transactions  contemplated  hereby and thereby (other than, with respect to
the Merger,  the  approval  and  adoption of this  Agreement by the holders of a
majority of the outstanding shares of the Company Common Stock).  This Agreement
and the Related Agreements have been duly executed and delivered by the Company,
the Shareholders,  the holders of Company Options and Larco Options, as the case

<PAGE>

may be, and constitute the valid and binding obligations of the Company, and the
Shareholders,  and the holders of Company Options and Larco Options, enforceable
against  each of them in  accordance  with their  respective  terms,  subject to
bankruptcy, insolvency, moratorium and other similar laws relating to creditors'
rights and the discretion of courts to award equitable  relief  ("Enforceability
Qualifications").

                  SECTION  3.04 No  Violation.  Except as set forth in  Schedule
3.04 or as  contemplated  by Section  3.05,  the  execution and delivery of this
Agreement and the Related  Agreements and the  consummation of the  transactions
contemplated  hereby  and  thereby  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 the loss of a material  benefit  under,  or the creation of a
lien,  pledge,  security  interest or other  encumbrance on the Company's or any
Subsidiary's properties or assets (any such conflict,  violation, default, right
of  termination,  cancellation  or  acceleration,  loss or  creation,  shall  be
referred to as a "Violation"),  pursuant to (i) any provision of the Certificate
of Incorporation,  as amended,  or By-laws,  as amended,  of the Company, or the
certificate of incorporation or other charter  document,  as the case may be, or
By-laws,  as amended, of any Subsidiary (ii) any provision of any loan or credit
agreement,  note,  mortgage,  indenture,  lease,  Benefit  Plans (as  defined in
Section 3.18) or other agreement,  obligation,  instrument,  permit, concession,
franchise  or license,  or (iii) any  judgment,  order,  decree,  statute,  law,
ordinance,  rule,  promulgation or regulation  ("Applicable Laws") applicable to
the Company,  any Subsidiary,  or any of the  Shareholders  or their  respective
properties or assets,  which Violation,  in the case of each of clauses (ii) and
(iii), would have a material adverse effect on the Company,  any Subsidiary,  or
the consummation of the transactions contemplated hereby.

                  SECTION 3.05  Consents and  Approvals.  No consent,  approval,
order or  authorization  of, or  registration,  declaration  or filing  with any
court,  administrative  or  regulatory  agency,  tribunal or commission or other
governmental agency,  authority or instrumentality,  federal, state, provincial,
county or municipal,  domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Company,  any Subsidiary,  any of the  Shareholders or
any of the holders of Company  Options or Larco Options in  connection  with the
execution  and  delivery of this  Agreement  and the Related  Agreements  or the
consummation  by the Company,  any  Subsidiary,  the  Shareholders or any of the
holders of Company  Options or Larco  Options of the  transactions  contemplated
hereby and thereby,  the failure to obtain  which would have a material  adverse

<PAGE>

effect on the Company or any Subsidiary or the  consummation of the transactions
contemplated hereby, except for:


                  (i)  the filing of a pre-merger  notification  report by the
Company under the HSR Act,

                  (ii)  the  filing  of the  Certificate  of  Merger  with the
Secretary  of State of the State of Delaware in  accordance  with Section 251 of
the  DGCL  and  the  filing  of the  appropriate  documents  with  the  relevant
authorities  of other  states in which the  Company  is  qualified  to  transact
business, and

                  (iii)  such filings,  authorization  orders and approvals as
may be  required  of  state  and  local  governmental  authorities  (the  "Local
Approvals") which are specified in Schedule 3.05 hereto.

                  SECTION 3.06 Financial  Statements.  The audited  consolidated
balance sheet of the Company and the  Subsidiaries as at March 31, 1998, and the
related  consolidated  statement of income,  changes in stockholder's equity and
cash flows for the fiscal year then ended  (including the notes thereto) and the
unaudited  consolidated  balance sheet of the Company and the Subsidiaries as at
December 31, 1998 and the related unaudited statement of income for the nine (9)
month period then ended  attached  hereto as Schedule  3.06  present  fairly the
financial  position  of such  entities as of such dates and the results of their
operations and changes in their  financial  position for such periods,  and have
been  prepared in  conformity  with  generally  accepted  accounting  principles
applied on a basis  consistent  with that of similar periods for preceding years
except that the  unaudited  consolidated  balance  sheet and statement of income
will not have the  usual  year end  adjustments  and  notes.  Copies of all such
financial  statements are attached to Schedule 3.06 hereto. The Balance Sheet of
the  Company as of March 31,  1998 is  referred  to herein as the "Base  Balance
Sheet",  and March 31,  1998 is referred  to herein as the "Base  Balance  Sheet
Date".  The books and  records of the Company  and the  Subsidiaries  accurately
reflect the basis for the  financial  condition and results of operations of the
Company and the Subsidiaries as set forth in the financial  statements  attached
as  Schedule  3.06  hereto.  The  Company  does  not  believe  that  it and  its
Subsidiaries will experience  materially  adverse financial  performance for the
quarter beginning on January 1, 1999.

                  SECTION 3.07 Absence of Certain  Changes or Events.  Since the
Base Balance Sheet Date except as specified in Schedule 3.07 hereto, neither the
Company  nor any  Subsidiary  has (i)  undergone  any  change  in its  condition
(financial or other), properties,  assets, liabilities,  business, operations or
prospects  except  changes in the  ordinary and usual course of its business and

<PAGE>

consistent with its past practice and which have not been, either in any case or
in the  aggregate,  materially  adverse to its  condition  (financial or other),
properties,  assets,  liabilities,   business,  operations  or  prospects;  (ii)
declared, set aside or paid any dividend or other distribution in respect of its
capital  stock or made any  direct or  indirect  redemption,  purchase  or other
acquisition of any shares of its capital stock or made any payment to any of its
shareholders except for employment compensation in the ordinary and usual course
of business and consistent  with past practice;  (iii) issued or sold any shares
of its capital  stock or any  options,  warrants or other rights to purchase any
such shares or any securities  convertible  into or exchangeable for such shares
or taken any action to reclassify or recapitalize or split up its capital stock;
(iv)  mortgaged,  pledged or subjected to any lien,  lease,  security  interest,
pledge, liability, claim, encumbrance or other restriction ("Liens"), any of its
properties  or assets;  (v) acquired or disposed of any interest in any material
asset or material property except the purchase of materials and supplies and the
sale  of  inventory  in the  ordinary  and  usual  course  of its  business  and
consistent with its past practice;  (vi) forgiven or canceled any debt or claim,
waived any right,  or,  except in the  ordinary and usual course of its business
and  consistent  with its past  practice,  incurred  or paid  any  liability  or
obligation;  (vii)  adopted  or  amended  any profit  sharing  plan,  agreement,
arrangement or practice for the benefit of any director,  officer or employee or
changed  the  compensation  (including  bonuses)  to be  paid  to any  director,
officer, or employee;  (viii) suffered any damage,  destruction or loss (whether
or not  covered  by  insurance)  which  has a  material  adverse  effect  on its
condition  (financial or other),  properties,  assets,  business,  operations or
prospects;  (ix) amended or  terminated  any material  contract,  agreement,  or
lease;  (x)  experienced  any material labor  difficulty or loss of employees or
customers; (xi) entered into any collective bargaining agreement;  (xii) sold or
granted or  transferred  to any party or parties any  contract  or  license,  or
granted  an  option to  acquire a  license,  to  manufacture  or sell any of the
products  of the Company or any  Subsidiary,  or to use any  trademark,  service
mark,  trade  name,  copyright,  patent  or  any  pending  application  for  any
foregoing,  or any trade  secret or know-how  of the Company or any  Subsidiary;
(xiii)  amalgamated,  merged,  consolidated  or entered  into any binding  share
exchange or other business  combination,  or acquired any stock, equity interest
or business of any other person or undertaken a corporate reorganization;  (xiv)
changed  the  accounting  methods or  practices  followed  by it;  (xv)  without
limiting the  generality of any of the foregoing,  entered into any  transaction
except in the ordinary and usual course of its business and consistent  with its
past  practice;  or (xvi)  agreed to,  permitted  or  suffered  any of the acts,
transactions  or other things  described in Subsections (i) through (xv) of this
Section 3.07.


<PAGE>

                  SECTION  3.08   Liabilities.   Neither  the  Company  nor  any
Subsidiary has any  liabilities or obligations of any nature,  whether  accrued,
absolute,  contingent  or  otherwise,  except (i) as set forth in the  unaudited
consolidated  balance sheet of the Company and its  Subsidiaries as December 31,
1998  included in Schedule  3.06 or  identified as such in Schedule 3.08 hereto;
and (ii) those  liabilities and obligations  incurred since December 31, 1998 in
the  ordinary  and usual  course of its  business  and  consistent,  in type and
amount, with its past practice and experience.

                  SECTION 3.09  Taxes.

                  (A) Company and US Subsidiaries:

                  Each of the Company  and the US  Subsidiaries  (including  any
predecessors)  has timely filed when due all Tax returns required to be filed by
it and has paid, or has made adequate provision for or set up in accordance with
generally accepted accounting  principles an adequate accrual or reserve for the
payment  of, all Taxes  required  to be paid in respect of all periods for which
returns have been filed or are due (whether or not shown as being due on any Tax
returns),  and has established an adequate accrual or reserve for the payment of
all Taxes payable in respect of any period for which no return has been filed or
is due,  and the Base  Balance  Sheet  reflects  in  accordance  with  generally
accepted accounting principles a reserve for all Taxes payable by the Company or
any of the US Subsidiaries  accrued through the Base Balance Sheet Date.  Except
as set forth in  Schedule  3.09,  no material  deficiencies  for Taxes have been
proposed,  asserted in writing or assessed  against the Company or any of the US
Subsidiaries,  and no audit of any of the Tax  returns of the  Company or any of
the US Subsidiaries is currently being conducted by any Taxing authority. Copies
of all  Tax  returns  required  to be  filed  by the  Company  and  each  of the
Subsidiaries  for each of the last five years,  together  with all schedules and
attachments thereto,  have been delivered by the Company to Parent.  Neither the
Company nor any of the US  Subsidiaries  is a party to, is bound by, and has any
obligation under any Tax sharing or similar  agreement.  For the purpose of this
Agreement,  the term  "Tax"  (including,  with  correlative  meaning,  the terms
"Taxes",  "Taxing",  and "Taxable") shall include,  whether disputed or not, all
Federal,  state,  local,  provincial,  municipal  and foreign  income,  profits,
franchise,  gross receipts,  payroll, sales, employment,  use, real and personal
property, capital gains, transfer, recording, license, value-added, withholding,
excise, goods and services, capital,  alternative, net worth and employer health
and other taxes, duties,  charges,  fees, levies,  imposts or similar charges in
the nature of a tax including  Canada Pension Plan and  provincial  pension plan
contributions,   unemployment   insurance  payments  and  workers'  compensation

<PAGE>

premiums,  together with any installments with respect thereto or assessments of
any nature  whatsoever  (whether payable  directly or by withholding),  together
with any and all information  reporting and estimated Tax,  interest,  fines and
penalties  and  additions  to Tax imposed  with  respect to such amounts and any
obligations  in respect  thereof  under any Tax  sharing,  Tax  allocation,  Tax
indemnity or similar  agreement as well as any obligations  arising  pursuant to
Treasury  Regulation  Section  1.1.502-6 or comparable  state,  local or foreign
provision.

                  (B) Larco:

                           (a)      Tax Filings.  Larco has  prepared and  filed
on time with all appropriate governmental bodies all Tax returns,  declarations,
remittances,  information  returns,  reports and other documents of every nature
required  to be filed by or on  behalf  of Larco in  respect  of any Taxes or in
respect of any other provision in any domestic or foreign  federal,  provincial,
municipal,  state,  territorial  or other taxing  statute for all fiscal periods
ending  prior to the date  hereof and will  continue  to do so in respect of any
fiscal  period  ending  on  or  before  the  Closing  Date.  All  such  returns,
declarations,  remittances, information returns, reports and other documents are
correct and complete in all  material  respects,  and no material  fact has been
omitted  therefrom.  No  extension  of time in which  to file any such  returns,
declarations, remittances, information returns, reports or other documents is in
effect.  All  Taxes  shown  on  all  such  returns,  or on  any  assessments  or
reassessments in respect of any such returns have been paid in full.

                           (b)      Taxes Paid. Larco has paid in full all Taxes
required  to be paid on or  prior  to the  date  hereof  and has  made  adequate
provision  in the Base  Balance  Sheet in  accordance  with  generally  accepted
accounting  principles  for the  payment  of all Taxes in  respect of all fiscal
periods  ending on or before the Base Balance  Sheet Date.  Larco will show as a
liability in the Final  Balance Sheet all Taxes payable in respect of all fiscal
periods ending on or before the Closing Date.

                           (c)   Reassessments   of   Taxes.    There   are   no
reassessments  of Larco's  Taxes that have been issued and are  outstanding  and
there are no outstanding issues which have been raised and communicated to Larco
by any governmental  body for any taxation year in respect of which a Tax return
of Larco has been audited.  No  governmental  body has  challenged,  disputed or
questioned Larco in respect of Taxes or of any returns, filings or other reports
filed under any statute providing for Taxes.  Larco is not negotiating any draft
assessment or reassessment with any governmental  body. The Company is not aware
of any  contingent  liabilities  for Taxes or any grounds for an  assessment  or

<PAGE>

reassessment  of  Larco,  including,  without  limitation,  unreported  benefits
conferred  on any  shareholder  of Larco,  other than as  disclosed  in the Base
Balance Sheet.  Neither Larco nor the Company has received any  indication  from
any governmental body that an assessment or reassessment of Larco is proposed in
respect of any Taxes,  regardless of its merits. Larco has not executed or filed
with any  governmental  body any  agreement or waiver  extending  the period for
assessment, reassessment or collection of any Taxes.

                           (d) Withholdings and Remittances.  Larco has withheld
from each payment made to any of its present or former  employees,  officers and
directors,  and to all persons who are  non-residents of Canada for the purposes
of the Income Tax Act (Canada) all amounts  required by law to be withheld,  and
furthermore, has remitted such withheld amounts within the prescribed periods to
the appropriate  governmental  body.  Larco has remitted all Canada Pension Plan
contributions,  provincial pension plan  contributions,  unemployment  insurance
premiums,  employer health taxes and other Taxes payable by it in respect of its
employees and has remitted such amounts to the proper  governmental  body within
the time required under the applicable legislation. Larco has charged, collected
and  remitted  on  a  timely  basis  all  Taxes  as  required  under  applicable
legislation on any sale, supply or delivery whatsoever, made by Larco.

                           (e)      Depreciable Property.  At the Closing  Date,
for purposes of the Income Tax Act (Canada), Larco will own depreciable property
of the prescribed classes and having  undepreciated  capital costs as set out in
Schedule 3.09.

                           (f)      Capital Gains.  Larco  will not at  any time
be deemed to have a capital gain pursuant to  subsection  80.03(2) of the Income
Tax Act  (Canada) as a result of any  transaction  or event  taking place in any
taxation year ending on or before the Closing Date.

                  SECTION 3.10 Title to and Condition of Real Estate.

                           (a)      All of  the real  property  presently owned,
occupied or used by the Company or any Subsidiary or in which the Company or any
Subsidiary  otherwise has an interest and the owners  thereof are  identified in
Schedule 3.10 hereto (the "Premises").  Except as set forth in the Environmental
Reports  (as  hereinafter  defined),  the  Premises,  all  improvements  located
thereon,  and the use thereof,  comply in all material respects with all zoning,
land use, environmental, building, health, safety and fire laws, by-laws, codes,
permits, licenses and certificates,  rules, orders, ordinances,  regulations and
all  restrictions  and  conditions  applicable to the Premises or the operations
conducted by the Company or any Subsidiary thereon. To the best knowledge of the

<PAGE>

Company there are no actions,  suits,  proceedings or investigations  pending or
threatened before any federal, state, provincial, foreign, municipal, regulatory
or  administrative  authority  affecting the Premises.  The Company,  any of the
Subsidiaries and, to the Company's knowledge,  the owners of the Leased Premises
(as hereinafter defined) are not in default with respect to any order, judgment,
injunction or decree of any court or other  governmental  authority with respect
to the Premises.  The improvements located on the Premises are in good condition
and are free from all latent and patent  structural  defects.  To the  Company's
knowledge,  all  mechanical  systems  serving the Premises,  including,  but not
limited to the heating,  ventilation, air conditioning,  plumbing and electrical
systems,  are in good working order.  To the Company's  knowledge,  the Premises
have adequate access to public streets. The improvements located on the Premises
do not  contain  asbestos  of any kind  whatsoever,  or urea  formaldehyde  foam
insulation.  To the  Company's  knowledge,  all  water,  sewer,  gas,  electric,
telephone and drainage  facilities and all other utilities  required for the use
and operations of the Company and each Subsidiary at the Premises are available,
and such utilities  enter the boundaries of such  facilities  through  adjoining
public  streets  or  easement  rights-of-way.  To  the  best  of  the  Company's
knowledge,  such public  utilities are all connected  pursuant to valid permits,
are all in good working order and are adequate to service the  operations of the
Premises  as  currently  conducted.  Except  as may be set  forth  in the  title
policies  described in Schedule  3.10-2,  neither the Company nor any Subsidiary
has any  knowledge  of any  pending  or  threatened  assessments  for  municipal
improvements which may affect or become a Lien on the Premises.

                  Schedule 3.10-1 hereto sets forth the legal description of the
Premises owned by the Company or any of the Subsidiaries ("Owned Premises"). All
loan and fee title  insurance  policies,  title  opinions,  title  searches  and
surveys  relating to the Owned  Premises in the Company's  possession  have been
delivered to Parent. The Company or a Subsidiary,  as the case may be, has good,
insurable  and  indefeasible  fee simple title to the Owned  Premises,  free and
clear of all mortgages,  Liens,  easements,  covenants or  rights-of-way  of any
nature whatsoever, except mortgages, Liens, easements, covenants,  rights-of-way
and other  encumbrances or restrictions  identified on Schedule  3.10-2,  hereto
("Permitted Encumbrances"),  and zoning restrictions,  none of which prohibit or
in any material  respect  interfere  with the  operations  of the Company or any
Subsidiary  on the  Owned  Premises  or  materially  detract  from its  value or
marketability.  Except as may be set forth in the title  policies  described  in
Schedule 3.10-2, all structures and other improvements on the Owned Premises are
within the lot lines and do not encroach on the  properties of any other person.
Except  as  otherwise  disclosed  in the  environmental  reports  identified  in
Schedule 3.11  ("Environmental  Reports"),  no portion of the Owned  Premises is

<PAGE>

located in a 100 year flood plain, flood hazard area or designated  conservation
or  wetlands  area,  is  in  an  area   designated  or  zoned  as  hazardous  or
environmentally  significant or sensitive in any official plan, zoning by-law or
other planning  instrument or is listed on the National Priorities List, CERCLIS
or any similar listing of contaminated  sites. Except as may be set forth in the
title  policies  described  in  Schedule  3.10-2,  neither  the  Company nor any
Subsidiary has received any written or, to the Company's knowledge,  oral notice
of  assessments  for public  improvements  against  the Owned  Premises  (or any
portion  thereof)  or any  written or oral  notice or order by any  Governmental
Entity any  insurance  company  which has issued a policy with respect to any of
the Owned Premises or any board of fire  underwriters  or other body  exercising
similar  functions  that (A) relates to violations  of building,  safety or fire
ordinances or  regulations,  (B) claims any defect or deficiency with respect to
any of the Owned  Premises  or (C)  requests  the  performance  of any  repairs,
alterations  or other work to or in any of the Owned  Premises or in the streets
bounding  the same.  There is no pending  condemnation,  expropriation,  eminent
domain or similar proceeding against the Company or any Subsidiary affecting all
or any portion of the Owned  Premises.  Except as set forth in Schedule  3.10-2,
none of the Owned Premises is subject to any leases (oral or written).

                  (b)  Any of the  Premises  not  owned  by the  Company  or any
Subsidiary  ("Leased  Premises")  are leased to the  Company  or its  Subsidiary
pursuant to leases ("Leases") that are valid and binding agreements, enforceable
in  accordance  with  their  respective  terms  subject  to  the  Enforceability
Qualifications  and are in full force and  effect.  Schedule  3.10-3  provides a
summary  of the  material  terms  of each  Lease.  The  Company  and each of the
Subsidiaries has performed all material  obligations required to be performed by
them to date  under the  Leases and are not in  material  breach in any  respect
thereunder,  and there has been no event which, with the giving of notice or the
lapse of time or both, would become a material breach  thereunder by the Company
or a Subsidiary.  To the knowledge of the Company,  no other party to any of the
Leases is in material breach thereunder.  Neither the Company nor any Subsidiary
has  received  any notice of default  under any of the Leases that have not been
cured,  and all rental and other payments due under each of the Leases have been
fully paid. To the knowledge of the Company, except as shown in Schedule 3.10-3,
none of the Leased  Premises  is subject  to any Lien,  easement,  right-of-way,
building or use restriction,  variance or reservation that materially interferes
with or impairs the use thereof in the usual and normal  conduct of the business
and operations of the Company or any of the Subsidiaries.


<PAGE>

                  SECTION 3.11 Environmental Compliance.

                  (a)  Definition  of  "Environmental  Laws".  As  used  in this
Agreement, the term "Environmental Laws" shall mean any and all applicable laws,
statutes, codes, rules, regulations,  ordinances,  by-laws, permits, directives,
orders,  codes  of  practice  and  judicial  and  administrative  law  decisions
applicable  to,  affecting  or  relating  to  the  protection,  preservation  or
remediation of the  environment or public health enacted,  issued,  promulgated,
published,  passed,  made,  decided or required by any United  States of America
federal,  state,  county  or  municipal  or any  Canadian  federal,  provincial,
regional or municipal legislative,  executive, judicial or regulatory authority,
as the case may be.  Because  some of the  Premises  are  located  in the United
States of America,  while other of the Premises are located in Canada, it is the
intent of the parties to this Agreement that the term "Environmental Laws" shall
include  any and all such  applicable  laws in any of the  jurisdictions  of the
United States of America or Canada in which the Premises are located, including,
but not limited to, the following:  (x) with reference to the laws of the United
States of America, (1) Comprehensive Environmental Response,  Compensation,  and
Liability   Act  of  1980,   as  amended  by  the   Superfund   Amendments   and
Reauthorization Act of 1986, 42 USCA 9601 ET SEQ., (2) Solid Waste Disposal Act,
as amended by the Resource  Conservation and Recovery Act of 1976, as amended by
the  Hazardous and Solid Waste  Amendments  of 1984,  42 USCA 6901 ET SEQ.,  (3)
Federal Water  Pollution  Control Act of 1972, as amended by the Clean Water Act
of 1977, as amended,  33 USCA 1251 ET SEQ., (4) Toxic Substances  Control Act of
1976, as amended,  15 USCA 2601 ET SEQ.,  (5)  Emergency  Planning and Community
Right-To-Know  Act of 1986, 42 USCA 11001 ET SEQ., (6) Clean Air Act of 1966, as
amended  by the  Clean Air Act  Amendments  of 1990,  42 USCA 7401 ET SEQ.,  (7)
National Environmental Policy Act of 1970, as amended, 42 USCA 4321 ET SEQ., (8)
Rivers and Harbors Act of 1899, as amended,  33 USCA 401 ET seq., (9) Endangered
Species Act of 1973, as amended,  16 USCA 1531 ET SEQ., (10) Occupational Safety
and Health Act of 1970,  as  amended,  29 USCA 651 ET SEQ.,  (11) Safe  Drinking
Water Act of 1974, as amended, 42 USCA 300(f) ET SEQ., (12) Pollution Prevention
Act of 1990, 42 USCA 13101 ET SEQ., (13) Oil Pollution Act of 1990, 33 USCA 2701
ET SEQ., and similar state and municipal laws in the  jurisdictions in which the
Premises are located; and (y) with reference to the laws of Canada, (1) Canadian
Environmental  Protection Act, R.S.C.  1985,  c.C-16,  as amended,  (2) Canadian
Environmental Assessment Act, S.C. 1992, c.37, as amended, (3) Transportation of
Dangerous  Goods Act,  1992,  S.C.  1992,  c.34, as amended,  (4) Fisheries Act,
R.S.C. 1995, c.F-14, as amended, (5) Environmental  Protection Act, R.S.O. 1990,
c.E.19,  (6) Ontario Water Resources Act,  R.S.O.  1990,  c.O.40,  (7) Dangerous
Goods  Transportation  Act,  R.S.O.  1990,  c.D.1,  (8)  Health  Protection  and
Promotion Act,  R.S.O.  1990,  c.H.7,  (9)  Occupational  Health and Safety Act,

<PAGE>

R.S.O.  1990, c.O.1, (10) Public Health Act, R.S.O. 1980, c. 409; all as amended
from time to time. The term  "Environmental  Laws" shall also include any rules,
regulations,  ordinances, permits, by-laws, orders, directives, and judicial and
administrative law decisions enacted, issued, promulgated, published, decided or
required by or under the laws  referred to in this Section  3.11(a),  as well as
any similar  laws  applicable  to,  affecting  or  relating  to the  protection,
preservation  or  remediation  of  the  environment  or  public  health  in  the
jurisdictions in which the Premises are located.

                  (b)  Definition of  "Environmental  Permits".  As used in this
Agreement,  the terms  "Environmental  Permits"  shall mean any and all permits,
licenses,   certificates,   approvals,   authorizations,   orders,   directives,
requirements,  consents or registrations  required by any Environmental  Laws in
connection with the ownership, construction,  equipping, use and/or operation of
the  business of the  Company  and the  Subsidiaries  or the  Premises,  for the
storage,   treatment,   generation,   transportation,    processing,   handling,
production,  recycling or disposal of Hazardous Substances or the sale, transfer
or conveyance of the Premises.

                  (c)  Definition  of  "Hazardous  Substance".  As  used in this
Agreement,  the term "Hazardous  Substance" shall mean, without limitation,  any
flammable,   explosive  or  radioactive   materials,   radon,   asbestos,   urea
formaldehyde foam insulation  polychlorinated  biphenyls,  petroleum,  petroleum
constituents,   petroleum  products,  methane,  hazardous  materials,  hazardous
wastes,  contaminants,  hazardous  or toxic  substances  or  related  materials,
pollutants,  and  toxic  pollutants,  as  defined,   prescribed,   regulated  or
controlled  in  any   Environmental   Law  including   without   limitation  the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 USCA Sections 9601, ET SEQ.), the Hazardous Materials Transportation
Act, as amended (49 USCA 1801, ET SEQ.,  the Solid Waste Disposal Act as amended
by the Resource  Conservation and Recovery Act, (42 USCA Section 6901, ET SEQ.),
the Toxic  Substances  Control Act, as amended (15 USCA Sections 2601, ET SEQ.),
the Federal Waters Pollution Control Act, as amended,  (33 USCA Sections 1251 ET
SEQ.), for the Premises located in Canada, the Canadian Environmental Protection
Act, R.S.C. 1988, c.15.3, and similar state, provisional, regional and municipal
laws in the  jurisdictions  in which the Premises  are  located,  as well as any
rules,  regulations,  ordinances,  permits and judicial and  administrative  law
decisions issued, promulgated,  published, decided or required thereunder by any
United  States of America  federal,  state,  county or municipal or any Canadian
federal,  provincial,  regional or municipal  executive,  judicial or regulatory
authority.


<PAGE>

                  (d) Definition of "Release".  As used in this  Agreement,  the
term  "Release"  shall  have the  same  meaning  as  given  to that  term in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended  (42 USCA  Section  9601,  ET  SEQ.),  and the  regulations  promulgated
thereunder.

                  (e) Definition of "Customer".  As used in this Agreement,  the
term  "Customer"  shall mean those  individuals,  corporations,  partnerships or
other entities or organizations  with whom the Company or any Subsidiary  enters
into contractual  arrangements and for whom the Company performs services on the
Customers'  Properties  pursuant to or in connection  with any such  contractual
arrangements.

                  (f)  Definition of  "Customers'  Properties".  As used in this
Agreement,   the  term  "Customers'  Properties"  shall  mean  any  real  estate
(including,  without  limitation,  any  improvements  thereon) owned,  operated,
leased or  otherwise  under the control of the  Company's  or any  Subsidiaries'
Customers.

                  (g) Except as otherwise  disclosed on Schedule  3.11 or in the
Environmental Reports:

                           (i)  Neither  the  Premises  nor,  to  the  Company's
                           knowledge,  any  property  adjacent  to or within the
                           immediate  vicinity  of the  Premises is being or has
                           been used in violation of any Environmental  Laws for
                           the storage, treatment,  generation,  transportation,
                           processing,  handling,  production or disposal of any
                           Hazardous  Substance  or as a landfill or other waste
                           management or disposal site or for military purposes.

                           (ii)  Underground  storage tanks are not and have not
                           been  located  on  the  Owned  Premises  nor,  to the
                           Company's knowledge, on the Leased Premises.

                           (iii) The soil, subsoil,  bedrock,  surface water and
                           groundwater   of  the  Owned  Premises  and,  to  the
                           Company's knowledge, the Leased Premises, are free of
                           Hazardous Substances,  other than any such substances
                           that  occur  naturally  or  are  in  compliance  with
                           Environmental Laws.

                           (iv) There has been no Release or threat of a Release
                           of any Hazardous  Substance on, at, under or from the
                           Owned  Premises  or,  to the  best  of the  Company's
                           knowledge,   the  Leased  Premises  or  any  property
                           adjacent to or within the  immediate  vicinity of the
                           Premises  which  through  soil,   subsoil,   bedrock,

<PAGE>

                           surface  water,  groundwater  or  airborne  migration
                           could  come to be  located  on,  at,  in or under the
                           Premises.  The Company has not  received  any form of
                           notice or inquiry from any federal, provincial, state
                           or local Governmental Entity or authority,  any prior
                           owner,  operator,  tenant,  subtenant,   licensee  or
                           occupant of the  Premises or any owner or operator of
                           property adjacent to or within the immediate vicinity
                           of the  Premises or any other person with regard to a
                           Release or the  threat of a Release of any  Hazardous
                           Substance on, at or from the Premises or any property
                           adjacent to or within the  immediate  vicinity of the
                           Premises.  The Company has not  received  any form of
                           notice or inquiry from any Customer  with regard to a
                           Release  or a threat  of a Release  of any  Hazardous
                           Substance on, at, under or from any of the Customers'
                           Properties  resulting  or  allegedly  resulting  from
                           activities  undertaken  thereon by the Company or any
                           Subsidiary.

                           (v)  All  Environmental  Permits  necessary  for  the
                           construction,  equipping, ownership, use or operation
                           of  the  business  of  the  Company  or  any  of  the
                           Subsidiaries  or the  Premises by the Company and the
                           Subsidiaries have been obtained and are in full force
                           and   effect  and  the   Company   and  each  of  the
                           Subsidiaries  is in  material  compliance  therewith.
                           (vi)  No  event  has  occurred  with  respect  to the
                           operations  of the Company or any  Subsidiary  or the
                           Owned  Premises or, to the Company's  knowledge,  the
                           Leased  Premises  which,  with the passage of time or
                           the giving of notice,  or the failure to give notice,
                           would  constitute  a violation  of or  non-compliance
                           with,   any   applicable    Environmental   Laws   or
                           Environmental Permits.

                           (vii)  All   wastes   generated,   stored,   handled,
                           transported,  treated, recycled or disposed of by the
                           Company  and each of the  Subsidiaries  on, at, in or
                           under  the  Premises  have  been  generated,  stored,
                           handled,  transported,  treated, recycled or disposed
                           of,  as the case may be, in  strict  compliance  with
                           Environmental Laws.

                           (viii) To the best of Company's knowledge,  no act or
                           omission of the Company or the  Subsidiaries at, upon

<PAGE>

                           or in any of the Customers' Properties has been or is
                           in violation of any applicable Environmental Law.

                           (ix)  There  are  no  agreements,   consent   orders,
                           decrees, judgments,  licenses or permit conditions or
                           other   orders   or   directives   of  any   federal,
                           provincial,  state  or  local  court,  administrative
                           tribunal, officers,  inspectors, or other official or
                           Governmental  Entity relating to the past, present or
                           future  construction,   equipping,   ownership,  use,
                           operation,   sale,  transfer  or  conveyance  of  the
                           business of the Company or the Premises which require
                           any change in the present  condition  of the business
                           of the Company or the  Premises or any notice,  work,
                           repairs,   construction,   containment,   clean   up,
                           investigations,  studies,  removal or remedial action
                           or capital  expenditures in order for the business of
                           the Company or the Premises to be in compliance  with
                           any Environmental Laws or Environmental Permits.

                           (x)  There  are no  charges,  prosecutions,  actions,
                           suits,  claims  or  proceedings,  pending  or, to the
                           Company's  knowledge,  threatened against the Company
                           or any  Subsidiary,  which could cause the incurrence
                           of  expenses or costs of any name or  description  or
                           which seek money damages, injunctive relief, remedial
                           action or  remedy  that  arise  out of,  relate to or
                           result  from (1)  environmental  conditions  at,  on,
                           under  or in  the  vicinity  of the  Premises,  (2) a
                           violation or alleged  violation of any  Environmental
                           Laws or non-compliance or alleged non-compliance with
                           any  Environmental  Permits,  (3) the presence of any
                           Hazardous  Substance  or a Release or the threat of a
                           release of any Hazardous Substance on, at or from the
                           Premises  or  property  adjacent  to  or  within  the
                           immediate  vicinity  of the  Premises  or  (4)  human
                           exposure   to  any   Hazardous   Substance,   noises,
                           vibrations  or  nuisances  of  whatever  kind  to the
                           extent  the same  arise  from the  businesses  of the
                           Company or any  Subsidiary  or the  condition  of the
                           Premises or the acquisition, construction, equipping,
                           ownership,   use,   operation,   sale,   transfer  or
                           conveyance  thereof,  or (5) to the  knowledge of the
                           Company, the Release, threat of Release or generation
                           of any Hazardous  Substance at, on, in or from any of
                           the Customers'  Properties  resulting from activities
                           undertaken    thereon   by   the   Company   or   the
                           Subsidiaries.

<PAGE>

                  SECTION 3.12 Title to and Condition of Properties  and Assets.
The material  tangible  assets owned or leased  (which  shall be  designated  as
leased on Schedule  3.12) by the Company or any  Subsidiary  including,  without
limitation, all machinery,  equipment,  fixtures,  furniture,  office equipment,
computer  equipment,  tooling  and  vehicles  are  listed  or  described  in the
Disclosure  Schedules (the "Fixed Assets").  The Company and each Subsidiary has
good and marketable  title to all of the properties and assets  reflected in the
Base Balance Sheet,  those listed in Schedule 3.12 hereto, and those used by the
Company or any Subsidiary,  subject to no Lien other than the Liens disclosed in
the Disclosure Schedules. Except as otherwise specified in Schedule 3.12 hereto,
the Fixed Assets are, in all material respects, in good condition and repair for
their current use,  reasonable wear and tear excepted and subject to replacement
in the ordinary course of business;  have been properly maintained,  and conform
with all  Applicable  Laws;  and the  Company  does not know of any  pending  or
threatened  change of any  Applicable  Laws or zoning or other law,  standard or
requirement with which any of such property would not conform.

                  SECTION 3.13 Proprietary  Rights;  Date Calculation.  Schedule
3.13 hereto  contains a brief  description of all patents,  trademarks,  service
marks,  trade  names,   copyrights   (including  any  pending  applications  and
registrations for any of the foregoing), inventions, trade secrets and any other
material  intellectual  or intangible  rights owned or used under license by the
Company or any Subsidiary other than standard off-the-shelf third party software
(collectively  referred to as "Proprietary  Rights"). The Proprietary Rights are
not subject to any outstanding licenses,  liens,  encumbrances,  claims or other
restrictions  or rights  of  others  and  there  are no  pending  or  threatened
challenges  against  the  Company  or a  Subsidiary  with  respect to any of the
Proprietary  Rights.  Schedule  3.13 hereto also includes a complete list of all
inventions for which patent applications have not yet been filed but as to which
the  Company or any  Subsidiary  may  hereafter  file patent  applications.  The
business of the Company and each of the  Subsidiaries  as  heretofore  conducted
does not  infringe or  constitute,  and has not  infringed  or  constituted,  an
unlawful  invasion of any rights of any person and no notice of any infringement
or invasion has been received by the Company or any Subsidiary.  The Company and
each  Subsidiary has the right to use all of the Proprietary  Rights,  including
without  limitation,  formulae,  trade secrets,  customer  lists,  processes and
know-how  used in  connection  with the  conduct  of its  business  and no other
intellectual  property  is used or  necessary  to be used in the  conduct of its
business. Neither the Company nor any Subsidiary has sold, licensed or otherwise
disposed  of any  Proprietary  Rights to any person or agreed to  indemnify  any
person for patent, trademark or copyright infringement.  Neither the Company nor
any Subsidiary has any obligation to pay any royalty,  fee or other compensation
to any person in respect of the Proprietary Rights.

<PAGE>

                  The computer  systems and software  used by the Company or the
Subsidiaries  and any other  equipment  or  products  used by the Company or the
Subsidiaries  that use software or embedded  chips (the  "Company's  Equipment")
will accurately accept,  create,  manipulate,  sort, store, output and otherwise
process   calendar-related  data  from,  into  and  between  the  twentieth  and
twenty-first  centuries and will operate before,  during and after the year 2000
without  error  relating  to  calendar-related  or "date" data  (including  data
received  from or passed  to other  computer  systems  or  programs),  including
without limitation error that relates to, or is the result of,  calendar-related
data  that  represents  or  refers to  different  centuries  or to more than one
century or that  reflects  the  existence of a leap year.  Without  limiting the
generality  of the  foregoing,  the  Company's  Equipment  will not,  because of
calendar-related   or  "date"  data  (including  without  limitation  data  that
represents or refers to different  centuries or to more than one century or that
reflects the  existence of a leap year),  cease  prematurely  or  abnormally  to
function  before  completing  its  intended  operation  or  generate  invalid or
incorrect results.  The Company's Equipment that is date aware is capable, or is
in the process of being made (and is scheduled  to be made)  capable on a timely
basis,  of storing  explicit  values  with  respect  to century  data and uses a
four-digit  year in all date data  elements,  whether  internal to the  software
logic, external at interfaces with other programs or stored on-line or off-line,
and recognizes and correctly  processes  dates for leap year. The next date when
the  manipulation  of  calendar-related  data could  cause any of the  Company's
Equipment to cease  prematurely or abnormally to function or to generate invalid
or incorrect results is at least 50 years from the date of this Agreement.

                  SECTION 3.14  Contracts; No Defaults; Major Clients.

                  (a) Schedule 3.14 attached  hereto  contains a true,  complete
and correct list and  description  of the following  contracts  and  agreements,
whether written or oral:

                           (i)      all loan agreements,  indentures,  mortgages
and guaranties to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or their respective property is bound;

                           (ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase  agreements to which the Company or any Subsidiary is a party
or by which the  Company  or any of the  Subsidiary  or any of their  respective
property is bound;

<PAGE>

                           (iii)   all   contracts,   agreements,   commitments,
purchase  orders to which the Company or any  Subsidiary  is a party or by which
any of their respective  property is bound (other than for product deliveries to
customers  in  the  normal   course  of  business  upon  the  Company's  or  any
Subsidiary's  standard terms) or other  understandings or arrangements which (A)
involve payments or receipts by any of them of not more than $25,000 in the case
of any single  contract,  agreement,  commitment,  understanding  or arrangement
under which full  performance  (including  payment) has not been rendered by all
parties thereto or (B) will, if not performed,  not materially  adversely affect
the condition  (financial or otherwise) or the properties,  assets,  business or
prospects of the Company or any Subsidiary;

                           (iv)      all  collective   bargaining  agreements,
employment  and  consulting  agreements,   non-competition   agreements,   trust
agreements,  executive  compensation  plans,  bonus,  401(k),  or profit-sharing
plans,  deferred  compensation  agreements,  pension  plans,  retirement  plans,
employee  stock  option  or stock  purchase  plans and group  life,  health  and
accident  insurance and other employee benefit plans,  agreements,  memoranda of
understanding,   arrangements  or  commitments  to  which  the  Company  or  any
Subsidiary is a party or by which the Company or any  Subsidiary or any of their
respective properties is bound;

                           (v)   all   material   agency,   distributor,   sales
representative  and similar agreements to which the Company or any Subsidiary is
a party;

                           (vi)  all  material  contracts,  agreements  or other
understandings or arrangements,  whether written or oral, between the Company or
any Subsidiary and any shareholder, employee, officer or director of the Company
or any Subsidiary;

                           (vii)  all  material  leases  of  personal   property
whether  operating,  capital  or  otherwise,  under  which  the  Company  or any
Subsidiary is lessor or lessee;

                           (viii) all  contracts,  agreements and other material
documents relating to disposal of waste (whether or not hazardous);

                           (ix)  all  return  policies  and  product  warranties
relating to products, goods or systems manufactured, distributed or installed by
the Company or any  Subsidiary  as the same are  currently in effect or may have
been in effect from time to time since  March 26, 1997 as well as any  exception
to such  policies,  all  cooperative  advertising  arrangements  and all rebate,
discount or allowance arrangements;


<PAGE>

                           (x)      all material contracts related to operation,
maintenance or management of the Premises;

                           (xi)  all   material   agreements   relating  to  the
licensing of intellectual  property under which the Company or any Subsidiary is
licensor or licensee.

                  (b) With respect to each  contract to which the Company or any
Subsidiary  is a  party  or  pursuant  to  which  it is  bound  (whether  or not
identified in Schedule 3.14):

                           (i)    such contract is a valid and binding agreement
of the Company or the Subsidiary  that is a party thereto,  enforceable  against
the Company or the Subsidiary and, to the Company's knowledge, the other parties
thereto  in   accordance   with  its  terms   subject   to  the   Enforceability
Qualifications;

                           (ii)  except  as  disclosed  in  Schedule  3.14,  the
Company and each of the Subsidiaries that is a party
thereto has fulfilled all material  obligations  required to have been performed
by it prior to the date hereof,  and neither the Company nor any  Subsidiary has
any reason to believe that it will not be able to fulfill,  when due, all of its
obligations  under such  contract  which remain to be  performed  after the date
hereof to the Closing;

                           (iii) except as disclosed in Schedule  3.14,  neither
the Company nor any of the  Subsidiary is in material  breach of such  contract,
and no event has  occurred  which with the  passage of time or giving  notice or
both would  constitute a default by the Company or any  Subsidiary,  result in a
loss of rights or result in the  creation  of any lien,  charge or  encumbrance,
thereunder or pursuant thereto;

                           (iv) to the  knowledge  of the  Company,  there is no
existing  material  breach  by any other  party to such  contract,  and,  to the
Company's  knowledge,  no event has  occurred  which with the passage of time or
giving of notice or both would constitute a default by such other party,  result
in a loss of rights or result in the creation of any lien, charge or encumbrance
thereunder or pursuant thereto;

                           (v)  neither  the  Company  nor  any   Subsidiary  is
restricted or, so far as the Company or any of the  Shareholders  now reasonably
foresees,  may be restricted in the future,  by such contract,  from carrying on
its respective business anywhere in the world;


<PAGE>

                           (vi) except as otherwise  disclosed in Schedule 3.14,
the  continuation,  validity and  effectiveness  of such  contract  would not be
affected by this Agreement and the transactions  contemplated hereby and, except
as disclosed  in Schedules  3.05 and 3.14,  such  contract  does not require the
consent or approval of any party  thereto in connection  with this  Agreement or
the transactions contemplated hereby;

                           (vii)  a  true,  correct  and  complete  copy of such
contract has been heretofore made available to Parent; and

                           (viii)  The  Company  has no reason to  believe  such
contract  will not be renewed  (if  renewable  under its terms) and  neither the
Company nor any Subsidiary has received any  notification  that such contract is
not likely to be renewed (if renewable under its terms).

                  (c)  Except as  disclosed  in  Schedules  3.05 and 3.14,  this
Agreement  and the  transactions  contemplated  hereby will not create a default
under or permit the  termination  of or otherwise  have any  materially  adverse
effect on any material contract of the Company or any Subsidiary.

                  (d) Schedule 3.14 hereto  includes a complete and correct list
of the ten (10) largest customers of the Company and each Subsidiary in terms of
revenue  recognized in respect of such customers  during the current fiscal year
showing  the amount of revenue  recognized  for each such  customer  during such
period.  Except as set forth in Schedule 3.14, the Company and the  Shareholders
have no reason to believe that any of the  customers so listed in Schedule  3.14
hereto will terminate or reduce in any material respect, or otherwise materially
and adversely change, the business or relationship between such customer and the
Company or any Subsidiary.

                  (e) Except as disclosed in  Schedules  3.14 and 3.16,  neither
the  Company  nor  any  Subsidiary  has  accrued  for a loss in  respect  of any
uncompleted  customer  contract nor is such an accrual warranted under generally
accepted accounting principles or anticipated based upon current information.

                  SECTION 3.15 Inventories;  Order Backlog. The inventory of the
Company and each Subsidiary consists of items of good and merchantable  quality,
salable  at normal  prices or usable  in the  ordinary  and usual  course of its
business,  subject to  reserves  for  obsolete  inventory.  The amounts at which
inventories are carried on the Base Balance Sheet and the Company's December 31,
1998  consolidated  balance  sheet and on the books of the  Company  reflect the
normal inventory  valuation policy of the Company and each Subsidiary of valuing
inventory  at the lower of cost or market  value in  accordance  with  generally
accepted accounting principles.

                                       1
<PAGE>

                  SECTION 3.16 Accounts  Receivable.  All accounts receivable of
the Company and each  Subsidiary  have arisen only through sales in the ordinary
course of  business  consistent  with past  practice  for goods sold or services
performed.  Except as set forth in Schedule 3.16, the accounts receivable of the
Company and each  Subsidiary  shown on the Base  Balance  Sheet and all accounts
receivable of the Company and each  Subsidiary  which have arisen  subsequent to
the Base Balance Sheet Date are good and  collectable  in the ordinary and usual
course of its business and are not subject to any claims or offsets.

                  SECTION  3.17 Labor  Matters.  Except as set forth in Schedule
3.19,  there are no  strikes,  arbitrations,  material  grievances,  other labor
disputes or union  organizational  drives or labor relations  board  proceedings
pending or, to the Company's  knowledge,  threatened  between the Company or any
Subsidiary  and  any of its  employees  or  union  representing  or  seeking  to
represent its  employees.  Except as described in Schedule 3.17 hereto,  neither
the Company nor any Subsidiary is party to any union,  collective  bargaining or
other similar  agreements or is under any current or  anticipated  obligation to
engage in collective bargaining with respect to any of its employees.  Except as
set forth in Schedule 3.17, the Company and each  Subsidiary has paid or accrued
in full  all  wages,  salaries,  commissions,  bonuses  and  other  compensation
(including  severance pay and vacation  benefits) for all services  performed by
its employees.  Neither the Company nor any Subsidiary is liable for any arrears
of wages or any payroll  taxes or any  penalties or other damages for failure to
comply  with any  applicable  foreign,  federal,  state,  foreign and local laws
relating to the  employment  of labor.  There is no pending or, to the Company's
knowledge,  threatened  claim or  proceeding  against  the Company or any of its
Subsidiaries relating to occupational health and safety,  workers' compensation,
employment standards,  human rights or pay equity legislation or to constructive
or wrongful dismissal.

                  SECTION 3.18  Other Employee Matters.

         A.       In General

                  (a)  "Controlled   Group".   For  purposes  of  this  Section,
"Controlled  Group" shall mean the Company and the Subsidiaries and any trade or
business, whether or not incorporated, which is part of a controlled group under
common  control or  affiliated  with the  Company  within the meaning of Section
4001(b)(1) of the Employee  Retirement  Income  Security Act of 1974, as amended
("ERISA"),  or Sections 414(b),  (c), (m) or (o) of the Code. Each member of the
Controlled Group is listed in Schedule 3.18(A)(a).


<PAGE>

                  (b)  Schedule  3.18(A)(b)  hereto sets forth the name,  title,
total annual compensation for the most recently completed fiscal year (including
bonus and commissions),  current base salary rate,  accrued bonus,  accrued sick
leave,  accrued  severance pay and accrued  vacation  benefits,  of each present
employee  of the  Company  and the  Subsidiaries  and each  other  member of the
Controlled Group.

                  (c) Except as disclosed in Schedule 3.18(A)(c) hereto, neither
the Company nor any other member of the Controlled Group maintains or is a party
to or contributes to, or is obligated to maintain or be a party to or contribute
to, or has ever  maintained  or been a party to or  contributed  to, nor entered
into an agreement with respect to, any compensation  plan, fund,  arrangement or
practice,  whether or not in writing and whether or not enforceable,  including,
without   limitation,   any   retirement,   deferred   compensation,   incentive
compensation,  pension,  profit sharing,  thrift,  stock bonus,  stock purchase,
stock grant, stock option, phantom stock or bonus program, which provides for or
promises  benefits to any  current or former  officer,  consultant,  director or
employee of the Company or of any other member of the Controlled  Group, that is
not a Welfare Plan (as  hereinafter  defined),  a Pension  Plan (as  hereinafter
defined) or an Employee Program (as hereinafter defined).

         B.  Company and U.S. Subsidiaries

                  (a) Delivery of Benefit Plan  Materials.  With respect to each
of the plans,  funds,  arrangements  or  practices,  set forth in the  schedules
identified  below  ("Benefit  Plans"),  the Company has heretofore  delivered to
Parent  true and  complete  copies of: (A) all plan  documents  relating  to the
Benefit Plan and all  amendments  thereto and, where  applicable,  related trust
agreements  and  group  annuity  contracts,  and  all  amendments  thereto,  and
insurance  policies,  certificates and related documents,  and current financial
statements,  (B) all material contracts relating to the Benefit Plan, including,
without  limitation,  insurance  contracts,  investment  management  agreements,
subscription and participation agreements and record keeping agreements;  (C) in
the case of a Pension Plan (as defined  below) which is a defined  benefit plan,


                                       3
<PAGE>

the three most recent  actuarial  reports or valuations  relating to the Benefit
Plan; (D) the most recent  Summary Plan  Description of the Benefit Plan and any
Summary of Material  Modifications or other writings furnished to employees with
respect to the Benefit Plan; (E) the three most recent annual returns/reports in
the Form 5500 series  relating to the Benefit Plan, and any amendments  thereto,
as filed with the Internal  Revenue  Service,  together with all  enclosures and
attachments   thereto,   including,   without   limitation,   audited  financial
statements, and related Summary Annual Reports; (F) with respect to each Pension
Plan (as  defined  below)  intended to qualify  under the Code,  the most recent
Internal Revenue Service  determination letter determining that the Benefit Plan
is qualified for federal  income tax purposes  under  Section  401(a) or Section
403(a) of the Code and that any  related  trust is exempt  from  taxation  under
Section  501(a) of the Code,  and complete  copies of the  application  for such
determination letter, including all correspondence, attachments and supplemental
materials and information furnished to the Internal Revenue Service with respect
to the Benefit Plan; and (G) any and all collective  bargaining agreements under
which the Benefit Plan is maintained.

                  (b) Employee  Welfare  Benefit  Plans.  Except as disclosed in
Schedule  3.18(B)(b)  hereto,  neither the  Company nor any other  member of the
Controlled  Group  directly  or  indirectly  maintains,  or  is a  party  to  or
contributes  to, or is obligated to maintain or be a party to or contribute  to,
or has  ever  maintained  or been a party to or  contributed  to,  any  employee
welfare benefit plan, fund, arrangement or practice,  whether or not in writing,
which  provides or  promises to provide  employee  benefits  including,  without
limitation,  benefits payable by reason of termination of employment (other than
benefits  provided by a Pension  Plan as defined  below) to  employees or former
employees  employed in the United  States by the Company or any other  member of
the  Controlled  Group or their  dependents  or  other  individuals,  including,
without limitation,  health, accident,  disability,  cafeteria,  dependent care,
employee assistance,  unemployment severance benefits,  fringe benefits, or life
insurance or other death  benefits,  or any "employee  welfare  benefit plan" as
defined in Section 3(1) of ERISA, whether formal or informal, written.

                  With  respect  to each plan,  fund,  arrangement  or  practice
listed in Schedule 3.18(B)(b) ("Welfare Plan"),  except as disclosed in Schedule
3.18(B)(b):  (A) the  Welfare  Plan is, and has at all times  been,  operated in
compliance  in all material  respects with its  governing  documents  (except as
otherwise required by applicable law), ERISA, the Code, all regulations, rulings
and announcements  promulgated or issued under ERISA and the Code, and all other
applicable  law,  including,  without  limitation,  the reporting and disclosure
requirements  of ERISA;  (B) neither the  Company,  nor any other  member of the
Controlled  Group,  nor  the  Welfare  Plan,  nor,  to  the  Company's  and  the
Shareholders' knowledge, any "party in interest" (as defined in Section 3(14) of
ERISA) or "disqualified  person" (as defined in Section 4975 of the Code),  nor,
to the Company's and the Shareholders'  knowledge, any fiduciary with respect to
the Welfare Plan,  nor, to the Company's and the  Shareholders'  knowledge,  any
other party, has engaged in any "prohibited  transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) other than a transaction  subject to a
statutory  or  administrative  exemption;  (C) all  contributions,  premiums  or


                                       4
<PAGE>

benefit payments required to be made to or on behalf of the Welfare Plan by law,
contract  or the terms of the  Welfare  Plan have been  made,  and all  expenses
relating  to  contributions,  premiums  or  benefit  payments  due or owing with
respect to the Welfare Plan have been properly accrued and reflected in the Base
Balance  Sheet;  (D) except for the processing of routine claims in the ordinary
course of  administration,  there is no pending,  or, the  Company's  knowledge,
anticipated or threatened  litigation,  arbitration,  or claim, by or against or
otherwise  involving the Welfare Plan or any fiduciary thereof in respect of the
Welfare Plan, nor is there any judgment,  decree,  injunction,  rule or order of
any court,  governmental  body,  commission,  agency or arbitrator,  outstanding
against or in favor of or otherwise  involving the Welfare Plan or any fiduciary
thereof in respect of the Welfare Plan; (E) the Welfare Plan is not a "voluntary
employees' beneficiary association" (as defined in Section 501(c)(9) of the Code
("VEBA"))  nor is there any related  trust or  arrangement  described in Section
501(c) of the Code which is intended to be exempt from  taxation  under  Section
501(a) of the Code; (F) the Welfare Plan, if funded,  and any related trust,  is
in compliance  with Sections 419 and 419(A) of the Code and, if intended to be a
VEBA, is in compliance with Section 501(c)(9) of the Code; (G) the Welfare Plan,
if a group health plan within the meaning of Section 607(1) of ERISA and Section
5000(b)(1) of the Code, is and at all times has been in compliance with Sections
601  through  608 of ERISA  and  Section  4980B  of the  Code;  (H)  there is no
"disqualified  benefit" (as such term is defined in Section 4976(b) of the Code)
which would subject the Company or any other member of the  Controlled  Group or
Parent or Sub to a tax under  Section 4976 of the Code;  (I) if the Welfare Plan
is intended to meet the requirements for tax favored  treatment under Subchapter
B of Chapter 1 of the Code, it meets such requirements; (J) the Welfare Plan may
be amended or  terminated  by Parent or the  Company on or at any time after the
Closing Date,  without liability to any person; (K) the Welfare Plan, if a group
health plan within the meaning of Section 706(a) of ERISA and Section 9832(a) of
the Code, is in  compliance  with Sections 701 through 707 of ERISA and Sections
4980D and 9801 through 9803 of the Code;  and (L) the  execution and delivery of
this Agreement and the consummation of the transactions  contemplated  hereunder
will not  result in any  obligation  or  liability  of the  Company or any other
member of the  Controlled  Group,  or of Parent or Sub to the Welfare Plan or to
any employee, former employee or other person.

                  Except as required  under Sections 601 through 608 of ERISA or
by other  applicable  law,  neither  the  Company  nor any  other  member of the
Controlled  Group provides or has ever provided  health benefits to any retiree,
other  former  employee or  dependent  or survivor of a retiree or other  former
employee.



<PAGE>

                  (c) Employee  Pension  Benefit  Plans.  Except as disclosed in
Schedule  3.18(B)(c)  hereto,  neither the  Company nor any other  member of the
Controlled  Group  directly  or  indirectly  maintains,  or  is a  party  to  or
contributes to, or is obligated to maintain,  be a party to or contribute to, or
has  ever  maintained  or  been a  party  to or  contributed  to,  any  deferred
compensation plan or any plan, fund, arrangement or practice,  whether formal or
informal, whether or not in writing, and whether or not legally binding, that is
or may be an  "employee  pension  benefit  plan" (as defined in Section  3(2) of
ERISA) or any "multiemployer plan" (as defined in Section 3(37) or 4001(a)(3) of
ERISA),  nor has the  Company  nor any other  current  or  former  member of the
Controlled  Group  withdrawn from any such  multiemployer  plan in a complete or
partial withdrawal within the meaning of Title IV of ERISA.

                  With  respect  to each plan,  fund,  arrangement  or  practice
listed in Schedule  3.18(B)(c)  ("Pension Plan"):  (A) each Pension Plan that is
intended to be qualified under Section 401(a) or 403(a) of the Code has received
a favorable  determination letter which is currently  effective,  and no fact or
circumstance  exists or has existed at any time which would adversely affect the
qualified status of the Pension Plan or any trust through which the Pension Plan
is  funded;  (B) the  Pension  Plan is, and at all times has been,  operated  in
compliance  in all material  respects with its  governing  documents  (except as
otherwise required by applicable law), ERISA, the Code, all regulations, rulings
and announcements  promulgated or issued under ERISA and the Code, and all other
applicable  law,  including,  without  limitation,  the reporting and disclosure
requirements  of ERISA;  (C) the Pension Plan has not  suffered an  "accumulated
funding  deficiency" (as defined in Section 302(a)(2) of ERISA or Section 412(a)
of the Code) whether or not waived;  (D) if the Pension Plan is subject to Title
IV of ERISA,  the present value of all accrued  benefits  under the Pension Plan
does not exceed the present  value of the assets of such Pension Plan  allocable
to such accrued benefits,  based upon reasonable actuarial  assumptions utilized
for the Pension  Plan in its most recent  actuarial  valuation;  (E) neither the
Company nor any other member of the Controlled Group, nor the Pension Plan, nor,
to the Company's and the  Shareholders'  knowledge,  any "party in interest" (as
defined in  Section  3(14) of ERISA) or  "disqualified  person"  (as  defined in
Section  4975  of  the  Code),  nor,  to the  Company's  and  the  Shareholders'
knowledge, any fiduciary with respect to the Pension Plan, nor, to the Company's
and the Shareholders' knowledge, any other party, has engaged in any "prohibited
transaction"  (as defined in Section  406 of ERISA or Section  4975 of the Code)
other than a transaction subject to statutory or administrative  exemption;  (F)
if the Pension Plan is subject to Title IV of ERISA,  it has not been subject to
a "reportable  event" (as defined in Section 4043(b) of ERISA), the reporting of



<PAGE>

which  has  not  been  waived  by  regulation;  (G) no  termination  or  partial
termination  of the Pension  Plan within the meaning of Section 4042 of ERISA or
Section  411(d)(3) of the Code has occurred,  and no condition exists that would
constitute  grounds for the  termination  or partial  termination of the Pension
Plan; (H) all material contributions,  premiums and benefit payments required to
be made to or on behalf of the Pension Plan by law, contract or the terms of the
Pension  Plan  have been  made,  and all  expenses  relating  to  contributions,
premiums or benefit  payments due or owing with respect to the Pension Plan have
been properly accrued and reflected in the Company's financial  statements as of
the  Closing  Date;  (I) except  for the  processing  of  routine  claims in the
ordinary course of administration,  there is no pending, or to the Company's and
the Shareholders' knowledge, anticipated or threatened litigation,  arbitration,
or claim by or against or otherwise  involving the Pension Plan or any fiduciary
thereof,  nor is there any judgment,  decree,  injunction,  rule or order of any
court, governmental body, commission, agency or arbitrator,  outstanding against
or in favor of or otherwise  involving the Pension Plan or any fiduciary thereof
in respect of the Pension  Plan;  (J) if the Pension Plan is subject to Title IV
of ERISA, all premiums due to the Pension Benefit Guaranty  Corporation ("PBGC")
for plan  termination  insurance have been paid in full on a timely basis, and a
variable  rate premium was not due as of the most recent  premium due date;  (K)
neither the Company nor any other member of the Controlled Group has incurred or
expects to incur, either directly or indirectly, any liability under Title IV of
ERISA,  including,  without  limitation,  any  withdrawal  liability  within the
meaning of Title IV of ERISA with respect to any multiemployer  plan (as defined
in Section  4001(a)(3) of ERISA),  but  excluding  liability for premiums to the
PBGC;  (L) the  Pension  Plan may be  amended  or  terminated  by  Parent or the
Surviving  Corporation on or at any time after the Closing Date without material
liability to any person;  and (M) the execution  and delivery of this  Agreement
and the consummation of the transactions  contemplated hereunder will not result
in any material  obligation or liability,  individually or in the aggregate,  of
the Company or any other member of the Controlled  Group, or of Parent or Sub to
the Pension Plan or to any employee, former employee or other person.

                  Neither  the Company  nor any other  member of the  Controlled
Group  maintains  an  "employee  stock  ownership  plan" (as  defined in Section
4975(e)(7) of the Code) or a tax credit  employee  stock  ownership plan (within
the meaning of Section 409(a) of the Code).

                  Neither  the Company  nor any other  member of the  Controlled
Group has any "leased  employees" (as defined in Section 414(n) of the Code) who
must be taken into  account for the  requirements  of Section  414(n)(3)  of the
Code.

<PAGE>

                  Nothing  in  this  Section  3.18(B)  applies  to the  Employee
Programs (as hereinafter defined in Section 3.18(C).

         C.       Larco:

                  (a) Schedule  3.18(C)(a) sets forth all the employee  benefit,
health,  welfare,  supplemental  unemployment benefits,  bonus, pension,  profit
sharing, deferred compensation,  stock compensation, stock purchase, retirement,
hospitalization insurance,  medical, dental, legal, disability and similar plans
or  arrangements or practices  relating to the employees  employed by Larco (the
"Employees") which are currently  maintained or were maintained,  at any time in
the last five calendar years (the "Employee Programs").

                  (b) All of the Employee Programs are and have been registered,
invested and  administered,  in all material  respects,  in accordance  with all
laws,  regulations,  orders or other  legislative,  administrative  or  judicial
promulgations  applicable to the Employee  Programs  ("Applicable  Laws") and in
accordance with all understandings,  written or oral, between the Company, Larco
and  the  Employees.   To  the  Company's  or  Larco's  knowledge,  no  fact  or
circumstance  exists that could  adversely  affect the  tax-exempt  status of an
Employee Program.

                  (c) All obligations  regarding the Employee Programs have been
satisfied,  there are no outstanding defaults or violations by any party thereto
and no taxes,  penalties or fees are owing or exigible under any of the Employee
Programs.

                  (d)  To  the  Company's  or  Larco's  knowledge,  no  Employee
Program, nor any related trust or other funding medium thereunder, is subject to
any pending  investigation,  examination  or other  proceeding,  action or claim
initiated by any governmental agency or  instrumentality,  or by any other party
(other than  routine  claims for  benefits),  and there exists no state of facts
which after notice or lapse of time or both could reasonably be expected to give
rise to any such investigation, examination or other proceeding, action or claim
or to affect the registration of any Employee Program required to be registered.

                  (e) All  contributions or premiums  required to be made by the
Company  and/or Larco under the terms of each Employee  Program or by Applicable
Laws have been made in a timely fashion in accordance  with  Applicable Laws and
the  terms  of the  Employee  Programs,  and none of the  Company  or any of the
Subsidiaries  has, and as of Closing will not have,  any  liability  (other than
liabilities accruing after the Closing Date) with respect to any of the Employee
Programs.  Contributions  or  premiums  will  be  paid  by the  Company  and the
Subsidiaries  on an accrual  basis for the period up to Closing  even though not
otherwise  required  to be made until a later date in respect of the period that
includes Closing.

<PAGE>

                  (f) No amendments  have been made to any Employee  Program and
no  improvements  to any Employee  Program have been promised and,  except where
required by  Applicable  Laws,  no  amendments  or  improvements  to an Employee
Program will be made or promised  after the date hereof and prior to the Closing
Date by the Company or Larco. There have been no improper  withdrawals,  and, to
the knowledge of the Company and Larco, there have been no improper applications
or transfers of assets from any Employee  Program or the trusts or other funding
media relating thereto.

                  (g) The  Company has  furnished  or made  available  to Parent
true,  correct and  complete  copies of all plan text  relating to the  Employee
Programs  as  amended  as  of  the  date  hereof   together   with  all  related
documentation  including,  without  limitation,  funding  agreements,  actuarial
reports,  (if any) funding and  financial  information  returns and  statements,
copies of material  correspondence with all regulatory  authorities with respect
to each  Employee  Program in the  possession  of the  Company or Larco and plan
summaries, booklets and personnel manuals.

                  (h) To the  knowledge  of the  Company  or Larco,  none of the
Employee  Programs  enjoys  any  special  tax  status  under the  Income Tax Act
(Canada) or under other applicable legislation, nor have any advance tax rulings
been sought or received in respect of the Employee  Programs.  All employee data
necessary  to  administer  each  Employee  Program  has  been  provided  or made
available  by the  Company to Parent  and,  to the  knowledge  of the Company or
Larco,  is true and correct as of the date  hereof and the  Company  will notify
Parent of any material  changes thereto  occurring prior to the Closing Date. To
the knowledge of the Company or Larco, no insurance policy or any other contract
or agreement  affecting any Employee  Program  requires or permits a retroactive
increase in premiums or payments due thereunder. The level of insurance reserves
held for the account of Larco under each insured  Employee Program is reasonable
and sufficient to provide for all incurred but unreported claims.

                  (i) Except as  disclosed in Schedule  3.18(C)(a),  none of the
Employee Programs provides benefits to retired employees or to the beneficiaries
or dependents of retired employees.

                  SECTION 3.19  Litigation  and Claims.  Except as summarized in
Schedule  3.19  hereto,  there is no  pending  or, to the  Company's  knowledge,
threatened  action,  suit,  proceeding,  claim,  investigation  or  notice by or
against  the  Company  or any of the  Subsidiaries  whether  or not  covered  by


<PAGE>

insurance, and there is no outstanding order, notice, writ, injunction or decree
of any court, government or governmental agency against or affecting the Company
or any of the  Subsidiaries.  The  resolution  of  the  matters  referred  to in
Schedule 3.19 will not have a material  adverse  effect on the Company or any of
the  Subsidiaries  taken as a whole.  To the Company's  knowledge,  there are no
incidents or occurrences (whether or not covered by insurance) of any kind which
may give rise to material claims against the Company or any of the Subsidiaries,
whether or not covered by insurance.

                  SECTION 3.20 Insurance.  Included in Schedule 3.20 hereto is a
list of all  policies  of  property,  fire,  liability,  life and other forms of
insurance,  and  indemnity  bonds,  carried  by the  Company  or any  Subsidiary
identifying the nature of risks covered and the amount of coverage in each case.
The amount of coverage  for each such  policy has been equal to or greater  than
the amount  required  by  contracts  entered  into by the  Company or any of the
Subsidiaries. All such policies are in full force. The Company believes that the
Company and each of the Subsidiaries are adequately insured against the kinds of
risks usually  incurred by  corporations  of similar size engaged in the same or
similar  business.  Since March 26, 1997,  the Company and each  Subsidiary  has
given due and  timely  notice of any  claim and of any  occurrence  known to the
Company  which  may  give  rise to a claim  which  may be  covered  by any  such
insurance and has otherwise  complied with the provisions of such policies.  The
liability  of the  Company  and  its  Subsidiaries  arising  out of the  lawsuit
referred to as number 5 on Schedule 3.19 is covered by the  Company's  insurance
coverage  subject to the deductible  and maximum  coverage set forth in Schedule
3.19.

                  SECTION 3.21 Compliance with Applicable  Laws. The Company and
each Subsidiary holds all permits, licenses,  variances,  exemptions, orders and
approvals of all  Governmental  Entities  which are material to the operation of
its business  (the  "Company  Permits").  The Company and each  Subsidiary is in
compliance  with the  terms of the  Company  Permits.  Except  as  disclosed  in
Schedule  3.21  hereto,  neither the Company nor any  Subsidiary  is in material
violation  of any  Applicable  Laws and no  notice  has been  received  from any
Governmental Entity alleging such violation.

                  SECTION 3.22 Warranty and Product Matters.

                  (a) Except as set forth on  Schedules  3.19 and 3.22 (i) there
has not been any "Products  Liability Claim" (as hereafter  defined) since March
26, 1997,  and, to the Company's  knowledge,  prior  hereto,  except for routine

<PAGE>

claims for warranty  repair and service;  (ii) since March 26, 1997, and, to the
Company's  knowledge,  prior  thereto,  there has not been any  product  recall,
rework,  retrofit or post-sale warning (collectively,  "Recalls") by the Company
or any Subsidiary  concerning any products made or distributed by any of them or
any  investigation or consideration of the Company or any Subsidiary  concerning
whether to  undertake or not to  undertake  any Recalls;  and (iii) there are no
material defects in design, manufacturing, materials, or workmanship, including,
without  limitation,  any  failure to warn which  involve  any  product  made or
distributed  by the Company or any  Subsidiary,  except for defects which are or
have been or may be  adequately  satisfied  and  remedied by  ordinary  warranty
repairs  and  replacements  and  without  any  obligation  of the Company or any
Subsidiary to pay material damages in connection therewith.

                  (b) For  purposes of this  Section  3.22,  the term  "Products
Liability Claim" 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 such  accident,  happening or event  otherwise  involving,  a
product  (including any parts or components)  made or distributed by the Company
or any Subsidiary on or prior to the Closing Date 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.

                  SECTION 3.23  Finders'  Fees.  Except as set forth in Schedule
3.23,  no person acting on behalf of the Company,  any  Subsidiary or any of the
Shareholders  has claims to, or is entitled to, under any contract or otherwise,
any payment as a broker,  finder or  intermediary in connection with the origin,
negotiation,  execution or consummation of the transactions provided for in this
Agreement or the Related Agreements.

                  SECTION  3.24  Transactions  with Certain  Persons.  Except as
disclosed on Schedule 3.24 hereto, no current or, to the Company's knowledge, no
former  director,  officer,  employee or shareholder of the Company,  any of the
Subsidiaries or any of their  Affiliates (as defined below) or family members or
trusts for the  benefit of any such  person or persons  has any  interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business  of the  Company  or any of the  Subsidiaries  and  there  have been no
transactions  between the Company and any current or, to the Company's knowledge
any former director, officer, employee or shareholder of the Company, any of the
Subsidiaries  or any of  their  Affiliates  except  employment  arrangements  as
disclosed in this Agreement or the Schedules  hereto. As used in this Agreement,
the word "Affiliate" shall have the same meaning as defined in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").


<PAGE>

                  SECTION 3.25 General Representation and Warranty. Neither this
Agreement nor any Schedule or other documents and information furnished by or on
behalf of the Company or the  Shareholders  in  connection  with this  Agreement
contains any untrue  statement of a material fact or omits to state any material
fact  necessary  to  make  the  statements   contained  herein  or  therein  not
misleading.


                                   ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Each of  Parent  and  Sub  represents  and  warrants  to the  Company  and  each
Shareholder as follows:

                  SECTION 4.01 Organization.  Each of Parent and the Significant
Subsidiaries (as hereinafter  defined) is a corporation duly organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization  and  has all  requisite  power  and  authority,
corporate  and all other  necessary  governmental  approvals  to own,  lease and
operate its properties and to carry on its business as now and heretofore  being
conducted  except  where the failure to be so  organized,  existing  and in good
standing or to have such power, authority,  and governmental approvals would not
have a material  adverse  effect on Parent.  Parent and each of its  Significant
Subsidiaries  is duly  qualified or licensed to do business and in good standing
in each  jurisdiction in which the property  owned,  leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary,  except where the failure to be so duly  qualified or licensed and in
good  standing  would not in the  aggregate  have a material  adverse  effect on
Parent. As used in this Agreement,  the Significant  Subsidiaries shall mean Sub
and each  other  subsidiary  of Parent  that is a  "significant  subsidiary"  as
described in Rule 12b-1 of the Exchange Act.

                  SECTION  4.02  Capital  Stock.  As of  the  date  hereof,  the
authorized  capital stock of Parent consists of: (i) 50,000,000 shares of Parent
Common Stock of which, as of August 14, 1998,  13,756,858 shares were issued and
outstanding  and no shares were held in treasury;  and (ii) 1,000,000  shares of
preferred  stock,  par value $1.00 per share,  of which,  as of August 14, 1998,
none were  issued and  outstanding.  As of August 14,  1998,  198,500  shares of
Parent  Common Stock were  reserved for issuance  upon  exercise of  outstanding
options  pursuant to Parent's  stock  options  plan  ("Parent  Stock  Plan") and
250,000  shares  of  Parent  Preferred  Stock  were  reserved  for  issuance  in
accordance  with Parent Rights  Agreement.  The authorized  capital stock of Sub
consists of 1000 shares of common stock, par value $1.00 per share, all of which


<PAGE>

are validly issued,  fully paid and nonassessable  and are owned by Parent.  All
outstanding  shares of Parent  Common  Stock and Sub Common  Stock are,  and all
shares of Parent Common Stock which are to be issued pursuant to the Merger will
be,  when  issued  in  accordance  with  the  respective  terms  thereof,   duly
authorized, validly issued, fully paid and, except as provided by Section 630 of
the New York Business Corporation Law ("NYBCL"),  non-assessable and free of any
preemptive rights with respect thereto. As of the date hereof, no Voting Debt of
Parent is  issued  or  outstanding.  Except  as set  forth  above and  except in
connection  with Parent Rights  Agreement and this  Agreement,  as of August 14,
1998 there are no existing  options,  warrants,  calls,  subscriptions  or other
rights or other  agreements  or  commitments  of any  character  relating to the
issued or unissued  capital stock or Voting Debt of Parent or obligating  Parent
to issue, transfer or sell or cause to be issued, transferred or sold any shares
of capital  stock or Voting Debt of, or other  equity  interests  in,  Parent or
securities  convertible into or exchangeable for such shares or equity interests
or obligating  Parent to grant,  extend or enter into any such option,  warrant,
call, subscription or other right, agreement or commitment.

                  SECTION  4.03  Corporate  Authority.  Parent  and Sub have all
requisite power and authority,  corporate and other, to execute and deliver this
Agreement  and  the  Related  Agreements  and  to  consummate  the  transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and the Related  Agreements and the  consummation of the Merger and of
the  other  transactions  contemplated  hereby  and  thereby  have been duly and
effectively  authorized by all necessary  corporate action on the part of Parent
or Sub and no other  corporate  proceedings  on the part of  Parent  and Sub are
necessary  to  authorize  this  Agreement  and  the  Related  Agreements  or  to
consummate the transactions  contemplated hereby and thereby. This Agreement and
the Related  Agreements have been duly executed and delivered by Parent and Sub,
as the case may be, and constitute  valid and binding  obligations of Parent and
Sub,  enforceable against each of them in accordance with their respective terms
subject to the Enforceability Qualifications.

                  SECTION  4.04 No  Violation.  Except as  described in Schedule
4.04 or as  contemplated  by Section  4.05,  the  execution and delivery of this
Agreement and the Related  Agreements and the  consummation of the  transactions
contemplated hereby and thereby will not result in any Violation pursuant to (i)
any provision of the Certificate of Incorporation,  as amended,  or By-laws,  as
amended, of Parent or the Certificate of Incorporation or By-laws of Sub or (ii)
any provision of any loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement,  obligation,  instrument,  permit,  concession,

<PAGE>

franchise,  license or (iii) any Applicable  Laws applicable to Parent or Sub or
their respective  properties or assets, which Violation,  in the case of each of
clauses (ii) and (iii),  would have a material  adverse  effect on Parent or the
transactions contemplated hereby.

                  SECTION 4.05  Consents and  Approvals.  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 and the Related
Agreements  by  Parent  and  Sub or the  consummation  by  Parent  or Sub of the
transactions  contemplated hereby and thereby, the failure to obtain which would
have a  material  adverse  effect  on Parent  or the  transactions  contemplated
hereby, except for:

                     (i)   the filing of a  pre-merger  notification  report by
Parent under the HSR Act,

                     (ii)  the   filing  of  such   documents   with,   and  the
qualification  with,  the  various  state  securities  authorities  under  state
securities or legal investment laws (the "Blue-Sky Laws"),  that may be required
in  connection  with  the  transactions  contemplated  by  this  Agreement  (the
"Blue-Sky Filings"),

                     (iii) the  filing  of the  Certificate  of Merger  with the
Secretary  of State of the State of Delaware in  accordance  with Section 251 of
the DGCL and the filing of appropriate  documents with the relevant  authorities
of other states in which Parent and Sub are qualified to transact business; and

                      (iv) the Local Approvals.

                  SECTION 4.06  SEC Filings; Financial Statements.

                  (a) Parent has filed all forms, reports and documents required
to be filed with the United States  Securities and Exchange  Commission  ("SEC")
since April 1, 1996, and has  heretofore  delivered or made available to Company
in the form filed with the SEC,  together with any amendments  thereto,  its (i)
Annual  Reports on Form 10-K for the fiscal years ended March 31, 1997 and 1998,
(ii)  all  proxy   statements   relating  to  Parent's   last  two  meetings  of
shareholders,  (iii) Quarterly  Report on Form 10-Q for the fiscal quarter ended
June 28, 1998, and (iv) all other reports or  registration  statements  filed by
Parent  with the SEC  since  January  1, 1998  (collectively,  the  "Parent  SEC
Reports").  The SEC Reports (i) were prepared  substantially  in accordance with
the  requirements  of the  Securities  Act of 1933, as amended (the  "Securities
Act") or the  Exchange  Act,  as the case may be, and the rules and  regulations
promulgated  under each of such  respective  acts,  and (ii) did not at the time
they were filed contain any untrue statement of a material fact or omit to state

<PAGE>

a material fact required to be stated  therein or necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading. Parent does not believe that it will experience materially
adverse financial performance for the quarter beginning on January 1, 1999.

                  (b) The financial statements,  including all related notes and
schedules,  contained  in the Parent SEC Reports (or  incorporated  by reference
therein) fairly present the  consolidated  financial  position of Parent and its
Subsidiaries as at the respective dates thereof and the consolidated  results of
operations  and cash  flows  of  Parent  and its  Subsidiaries  for the  periods
indicated in accordance with GAAP applied on a consistent  basis  throughout the
periods involved (except for changes in accounting  principles  disclosed in the
notes thereto) and subject in the case of interim financial statements to normal
year-end adjustments.

                  SECTION 4.07 Absence of Certain  Changes or Events.  Except as
disclosed  in the  Parent  SEC  Reports  filed  prior to the date  hereof and on
Schedule 4.07,  since December 31, 1998,  Parent and its  Subsidiaries  have not
incurred  any  material  liability,  except  in the  ordinary  course  of  their
businesses,  and  there  has not been  any  change,  or any  event  involving  a
prospective  change,  in  the  business,   financial  condition  or  results  of
operations of Parent and its Subsidiaries which has had, or is reasonably likely
to have, a Material  Adverse Effect on Parent,  and Parent and its  Subsidiaries
have conducted their  respective  businesses in the ordinary  course  consistent
with their past practices.

                  SECTION 4.08 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  4.09  Finders'  Fees.  No person  acting on behalf of
Parent or Sub has claims to, or is entitled to, under any contract or otherwise,
any payment as a broker,  finder or  intermediary in connection with the origin,
negotiation,  execution or consummation of the transactions provided for in this
Agreement or the Related Agreements.

                  SECTION 4.10 General Representation and Warranty. Neither this
Agreement nor any Schedule or other documents and information furnished by or on
behalf of Parent in connection with this Agreement contains any untrue statement
of a material  fact or omits to state any  material  fact  necessary to make the
statements contained herein or therein not misleading.

<PAGE>

                  SECTION 4.11 Environmental  Reports.  Parent and Sub represent
that they have engaged an  environmental  consultant to conduct an environmental
assessment  of the  Premises.  Parent  and Sub have  received  reports  from the
environmental  consultant  that identify  certain  environmental  conditions and
environmental  compliance  issues  at the  Premises.  Parent  and  Sub  will  be
responsible for all fees and expenses charged by such environmental consultant.

                  SECTION  4.12  Date  Calculation.  The  computer  systems  and
software used by Parent and any other  equipment or products used by Parent that
use  software or  embedded  chips (the  "Parent's  Equipment")  will  accurately
accept,   create,   manipulate,   sort,  store,  output  and  otherwise  process
calendar-related  data from,  into and between the  twentieth  and  twenty-first
centuries and will operate before,  during and after the year 2000 without error
relating to  calendar-related  or "date" data  (including  data received from or
passed to other  computer  systems or programs),  including  without  limitation
error  that  relates  to,  or is  the  result  of,  calendar-related  data  that
represents or refers to different  centuries or to more than one century or that
reflects the existence of a leap year.  Without  limiting the  generality of the
foregoing,  the Parent's  Equipment  will not,  because of  calendar-related  or
"date" data  (including  without  limitation  data that  represents or refers to
different  centuries or to more than one century or that  reflects the existence
of a leap year),  cease  prematurely or abnormally to function before completing
its intended  operation or generate invalid or incorrect  results.  The Parent's
Equipment is capable, or is in the process of being made (and is scheduled to be
made)  capable on a timely  basis,  of storing  explicit  values with respect to
century  data and uses a  four-digit  year in all date  data  elements,  whether
internal to the software  logic,  external at interfaces  with other programs or
stored on-line or off-line,  and recognizes  and correctly  processes  dates for
leap year. The next date when the  manipulation of  calendar-related  data could
cause any of the  Parent's  Equipment  to cease  prematurely  or  abnormally  to
function or to generate  invalid or incorrect  results is at least 50 years from
the date of this Agreement.

                  SECTION 4.13  Federal Income Tax Representations.

                  (a) Prior to the  Merger,  Parent  will be in  control  of Sub
within the meaning of Section  368(c) of the Internal  Revenue Code of 1986,  as
amended (the "Code").

                  (b) Parent has no present plan or  intention to cause  Company
to issue  additional  shares of its stock  that  would  result in Parent  losing
control of the Surviving Corporation within the meaning of Section 368(c) of the
Code.


<PAGE>

                  (c) Parent has no present plan or  intention to reacquire  any
of its stock issued in the Merger,  except for any escrowed  shares  pursuant to
Section 12.01(i).

                  (d) Parent has no present plan or  intention to liquidate  the
Surviving  Corporation;  to merge the Surviving Corporation with or into another
corporation;  to  sell  or  otherwise  dispose  of the  stock  of the  Surviving
Corporation  except  for  a  merger  with  or  transfers  of  stock  to  another
corporation  controlled by Parent; or to cause the Surviving Corporation to sell
or otherwise  dispose of any of its assets,  except for dispositions made in the
ordinary  course of business or transfers of assets to a corporation  controlled
by Parent.

                  (e) Following the Merger,  Parent's present intent is that the
Surviving  Corporation  will continue the historic  business of Company or use a
significant portion of the historic business assets of Company in a business.

                  (f) Parent does not own, nor has it owned during the past five
years, any shares of stock of Company.

                  (g) Each of Parent  and Sub is  undertaking  the  Merger for a
bona fide business  purpose and not merely for the  avoidance of federal  income
tax.

                  (h) Sub will have no liabilities assumed by Company,  and will
not transfer to Company any assets subject to liabilities, in the Merger.

                  (i) Neither Parent nor Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.

                  (j) The payment  under  Section  2.02(e) of this  Agreement of
cash in lieu of  fractional  shares of  Parent  Common  Stock is solely  for the
purpose  of  avoiding  the  expense  and  inconvenience  to  Parent  of  issuing
fractional shares and does not represent separately bargained-for consideration.

                  (k) As of the  Effective  Time,  the fair market  value of the
assets of Sub will exceed the sum of Sub's  liabilities plus the amount of other
liabilities, if any, to which Sub's assets are subject.

                  (l)  Parent has no present  plan or  intention  to settle at a
discount any  intercompany  indebtedness  existing between Company and Parent or
between Sub and Company.

                  (m) No stock of Sub will be issued in the Merger.

<PAGE>

                  (n) As of the Effective Time, the Parent Common Stock does not
constitute  nonqualified  preferred stock as defined in Section 351(g)(2) of the
Code.
                                    ARTICLE V

                       CERTAIN REPRESENTATIONS, WARRANTIES
                        AND COVENANTS OF THE SHAREHOLDERS

                  SECTION  5.01  Shareholder  Representations,   Warranties  and
Covenants.  Each of the  Shareholders  represents,  warrants  and  covenants  to
Parent, and to Sub as follows:

                  (i) such  Shareholder  is the sole and  exclusive  record  and
beneficial  owner of the  shares of the  Company  Common  Stock or  Exchangeable
Shares set forth opposite such Shareholder's name in Schedule 3.02 hereto,  free
and clear of any claims,  Liens,  pledges,  options,  rights of first refusal or
other encumbrances or restrictions of any nature whatsoever (other than pursuant
to the  Shareholders'  Agreement),  and,  except as set forth on  Schedule  3.02
hereto, there are no agreements,  arrangements or understandings with respect to
the Company any Subsidiary or securities issued by the Company or any Subsidiary
to which such Shareholder is a party;

                  (ii) except as specifically provided Section 5.04 with respect
to the  Exchangeable  Shares,  such  Shareholder  shall  not sell,  transfer  or
otherwise dispose of or in any way encumber any of such Shareholder's  shares of
the Company Common Stock or Exchangeable  Shares prior to the Effective Time and
shall take no action  inconsistent  with the approval and  consummation  of this
Agreement,  the Related Agreements and the transactions  contemplated hereby and
thereby;

                  (iii)  such  Shareholder  has all  necessary  legal  capacity,
right, power and authority to execute and deliver this Agreement and the Related
Agreements  executed by such  Shareholder  and to  consummate  the  transactions
contemplated  hereby and thereby,  and this Agreement and the Related Agreements
executed by such Shareholder  constitute  valid and binding  obligations of such
Shareholder  enforceable  against  such  Shareholder  in  accordance  with their
respective terms, and

                   (iv) the  execution  and delivery of this  Agreement  and the
Related  Agreements by such Shareholder and the consummation of the transactions
contemplated hereby and thereby will not result in any Violation pursuant to (A)
any provision of any note, bond, indenture,  mortgage, security agreement, lease
franchise,  permit,  agreement or other  instrument  or obligation to which such
Shareholder  is  a  party,  or  by  which  such   Shareholder  or  any  of  such

<PAGE>

Shareholder's  properties  or assets may be bound,  or result in the creation of
any material Lien, or other right of any third party of any kind whatsoever upon
the properties or assets of such  Shareholder  pursuant to the terms of any such
instrument or obligation,  which Violation would have a material  adverse effect
on such Shareholder's  ability to perform such  Shareholder's  obligations under
this Agreement or the Related  Agreements,  or (B) Applicable Laws applicable to
such Shareholder or such Shareholder's properties or assets.

                  SECTION 5.02  Restrictive  Legends.  The  Shareholders  hereby
acknowledge and agree that the transfer agent for Parent Common Stock shall have
the authority to place the legend,  substantially in the following form, on each
certificate representing shares of Parent Common Stock issued to any Shareholder
pursuant to the Merger:

                  "The sale, transfer or other disposition of shares represented
                  by this certificate is not permitted unless effected  pursuant
                  to an effective registration statement or compliance with Rule
                  145 of the Securities Act of 1933, as amended.

                  SECTION 5.03 Accredited  Investor Status.  Each Shareholder is
an  "accredited  investor"  as that term is defined in Rule  501(a)  promulgated
under the Securities Act.

                  SECTION 5.04 Exchangeable  Shares.  All the parties agree that
immediately  prior to the Effective  Time,  without the necessity of any further
action by any of the  parties  hereto,  all  Exchangeable  Shares  shall for all
purposes be thereupon  deemed to be exchanged for and converted  into the shares
of Company Common Stock into which they are exchangeable.


                                   ARTICLE VI

                  COVENANTS OF THE COMPANY AND THE SHAREHOLDERS

                  SECTION 6.01  Conduct of Business  Pending  Closing.  From the
date of this Agreement to the Closing Date:

                  (a) Negative Covenants. Except as otherwise expressly provided
by this Agreement or as Parent may otherwise consent to in writing,  the Company
shall  not and  shall  cause  each of the  Subsidiaries  not to,  engage  in any
activity or enter into any transaction  outside of the ordinary and usual course
of its business or which would be  inconsistent  with its past  practice or with
the terms of this  Agreement or which would render  inaccurate as of the Closing
Date any of the  representations  and  warranties set forth in Article III as if

<PAGE>

such  representations  and  warranties  were made at and as of the Closing Date.
Without  limiting the  generality  of the  foregoing,  the Company shall not and
shall  cause  each of the  Subsidiaries  not to,  do any of the  following:  (i)
undergo any change in its condition  (financial or other),  properties,  assets,
liabilities,  business or  operations  except  changes in the ordinary and usual
course of its business and consistent  with its past practice and which have not
been,  either  in  any  case  or in the  aggregate,  materially  adverse  to its
condition  (financial  or other),  properties,  assets,  liabilities,  business,
operations or prospects;  (ii) declare,  set aside, or pay any dividend or other
distribution  in respect  of its  capital  stock or make any direct or  indirect
redemption,  purchase or other acquisition of any shares of its capital stock or
make any payment to the Shareholders except payments of employment  compensation
in the ordinary and usual course of the Business  consistent with past practice;
(iii)  issue,  grant or sell any  shares of its  capital  stock or any  options,
warrants  or  other  rights  to  purchase  any  such  shares  or any  securities
convertible  into or  exchangeable  for  such  shares  or  take  any  action  to
reclassify  or  recapitalize  or split up its  capital  stock;  (iv)  except  as
provided in its agreements with lenders  identified in Schedule 3.05,  mortgage,
pledge or subject to any material Lien, lease,  security interest,  encumbrance,
or other  restriction,  any of its  properties or assets or to such  restriction
outside of the ordinary  course of its  business  whether or not  material;  (v)
acquire or dispose of any interest in any asset or property  except the purchase
of  materials  and  supplies and the sale of inventory in the ordinary and usual
course of its business and consistent  with its past  practice;  (vi) forgive or
cancel any debt or claim (other than accounts  receivable write offs in Schedule
3.16 or in the ordinary course of business),  waive any right, or, except in the
ordinary and usual course of its business and consistent  with its past practice
incur or pay any  liability  or  obligation;  (vii)  except as  required by this
Agreement,  adopt or amend any Employee Program, profit sharing plan, agreement,
arrangement or practice for the benefit of any director,  officer or employee or
change the compensation (including bonuses) to be paid to any director,  officer
or  employee;  (viii)  suffer any damage,  destruction  or loss  (whether or not
covered by insurance); (ix) amend or terminate any material contract,  agreement
or lease other than renewals in the ordinary course of business;  (x) experience
any material  labor  difficulty,  or loss of employees or customers;  (xi) enter
into any collective bargaining agreement; (xii) sell or grant or transfer to any
party or  parties  any  license,  or grant an  option to  acquire  a license  to
manufacture  or  sell  any  of  the  products  of  the  Company  or  any  of the
Subsidiaries,  or to use any  trademark,  service mark,  trade name,  copyright,
patent or pending  application for any of the foregoing,  or any trade secret or
know-how of the Company or any of the Subsidiaries;  (xiii) amalgamate, merge or


<PAGE>

consolidate  or enter  into a  binding  share  exchange  or any  other  business
combination  or acquire  any stock,  equity  interest  or  business of any other
person or  undertake  a  corporate  reorganization;  (xiv)  declare any bonus or
increase in the salary or  compensation  of any employee  except in the ordinary
course  of  business  consistent  with past  practices  or as  disclosed  in the
Disclosure  Schedules;  (xv) change the accounting methods or practices followed
by it; (xvi) amend its Certificate of  Incorporation  or By-Laws or those of any
of the  Subsidiaries  or (xvii)  without  limiting the  generality of any of the
foregoing, enter into any transaction except in the ordinary and usual course of
its business and consistent with its past practice;  (xviii) or agree to, permit
or suffer any of the acts, transactions or other things described in Subsections
(i) through (xvii) of this Section 6.01.

                  (b) Conduct of  Business.  The  Company  and the  Shareholders
shall each use their  reasonable  best  efforts to cause the Company and each of
the  Subsidiaries  to preserve intact its business  organization,  to retain its
present officers and employees and to preserve its good will with all suppliers,
customers, employees and others having business relations with it.

                  (c)  Access  to  Information.  The  Company  and  each  of the
Subsidiaries shall afford Parent and its representatives  access,  during normal
business hours and upon  reasonable  notice,  to all of the assets,  properties,
books,  records,  and agreements of the Company or any of the Subsidiaries,  and
shall furnish to Parent and its representatives all other information concerning
its business,  properties  and personnel as Parent may reasonably  request.  The
confidentiality  and other  obligations  of the  parties  referred to in Section
13.04 hereof shall be  applicable  to all such  information.  The Company  shall
cooperate with Parent in visiting or contacting  employees and customers of, and
persons  having  other  business  relationships  with the  Company or any of the
Subsidiaries  as Parent shall  specify  prior to the Closing.  The Company shall
also cooperate with Parent in an inspection of the Premises and all improvements
thereon, including, without limitation, an environmental audit of the Premises.

                  (d)  Transfers or  Restrictions.  No  Shareholder  shall sell,
transfer or otherwise  dispose of any of the shares of the Company  common stock
or any interest therein or subject the same to any Lien.

                  SECTION 6.02 Change in Representations and Warranties.  In the
event the Company or any Shareholder learns that any of the  representations and
warranties  of the Company or  Shareholders  contained in or referred to in this

<PAGE>

Agreement is or will become  inaccurate,  such party shall give prompt  detailed
written notice thereof to Parent.

                  SECTION 6.03 Acquisition  Proposals.  Until the earlier of (i)
May 30, 1999 or (ii) the  termination of this Agreement  pursuant to Article XI,
Shareholders,  the Company  and each of the  Subsidiaries  and their  respective
representatives will not initiate, solicit or encourage, directly or indirectly,
any  inquiries  or the  making  of any  proposal  or offer  (including,  without
limitation,  any proposal or offer to  shareholders of the Company) with respect
to a  merger,  consolidation,  binding  share  exchange  or any  other  business
combination  or similar  transaction  involving,  or any  purchase of all or any
significant portion of the assets or any equity securities of the Company or any
of the Subsidiaries (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal"),  engage in any negotiations  concerning,  or provide
any  confidential  information  or data to, or have any  discussions  with,  any
person relating to an Acquisition Proposal or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal.  Shareholders, the Company
and each of the Subsidiaries will terminate any existing activities,  discussion
or negotiations with any parties conducted heretofore with respect to any of the
foregoing.  Shareholders,  the Company and each of the Subsidiaries  will notify
Parent  promptly if any such  inquiries  or  proposals  are  received,  any such
information is requested,  or any such negotiations or discussions are sought to
be initiated or  continued.  The  Shareholders  represent and  acknowledge  that
compliance  with  Section  6.03 does not affect  the  fiduciary  obligations  of
directors of the Company because such  Shareholders  have agreed to vote for the
transactions contemplated hereby.

                  SECTION  6.04  Certain  Shareholder  Obligation  Efforts.  The
Shareholders  shall cause the Company to comply with its obligations  under this
Article VI from the date hereof through the Effective Time.

                  SECTION 6.05 Shareholders  Approval.  The Company shall call a
meeting  of its  shareholders  to be held as  promptly  as  practicable  for the
purpose of obtaining the requisite  shareholder  approval of this  Agreement and
the transactions  contemplated  hereby.  The Company will,  through its Board of
Directors, recommend to its shareholders approval of this Agreement.

                  SECTION  6.06 Rule 145  Affiliates.  Prior to the Closing Date
the Company shall deliver to Parent a letter  substantially in the form attached
hereto as Schedule 6.06(a), identifying all persons who may be, at the time this
Agreement  is  submitted  for  approval  to the  shareholders  of  the  Company,
"affiliates"  of the Company for purposes of Rule 145 under the Securities  Act.


<PAGE>

The Company shall cause each such person to deliver to Parent on or prior to the
Closing Date a written agreement, substantially in the form attached as Schedule
6.06(b) hereto.

                  SECTION  6.07  Parent's  Expenses.  In  the  event  that  this
Agreement is terminated because of a failure of the Shareholders to approve this
Agreement  (such  termination  being  referred to as a "Section 6.07 Event") and
Parent is not in material  violation of this Agreement,  then the Company shall,
within three  business days following  notification  by Parent to the Company of
the Section 6.07 Event,  reimburse Parent up to $200,000 for out-of-pocket  fees
and expenses incurred by Parent in connection with the transactions contemplated
by this Agreement. The existence of Parent's rights under this Section 6.07 does
not  constitute  an election of remedies or in any way limit or impair  Parent's
right to pursue any other  remedy  against  the Company or the  Shareholders  to
which  Parent may be  entitled  under this  Agreement,  at law or in equity,  or
otherwise.

                  SECTION 6.08 Company Options. Within 10 days after the date of
execution of this Agreement, the Company shall, if necessary,  amend the Company
Plan to provide that,  upon the  Effective  Time,  each Company  Option shall be
converted  into an option to  purchase  that  number of shares of Parent  Common
Stock that the holder of such Company  Option  would have  received had he fully
exercised his Company Option  immediately  prior to the Effective Time (assuming
such Company Option was then fully  exercisable),  subject to the adjustment set
forth in Section 2.04 hereof.  In  furtherance  of such  amendment,  the Company
shall also enter into an agreement  with each holder of a Company Option in form
and  substance  the same as  Schedule  6.08  hereto.  Such  agreements  shall be
delivered  to  Parent  within  10  days  after  the  date of  execution  of this
Agreement.

                  SECTION 6.09 Larco  Options.  Within 10 days after the date of
execution of this  Agreement,  the Company shall,  if necessary,  cause Larco to
amend the Larco Plan to provide that upon the  Effective  Time each Larco Option
shall be  converted  into an option to purchase  that number of shares of Parent
Common  Stock that the holder of such Larco  Option  would have  received had he
fully  exercised  his  Larco  Option  and  exchanged  his  Exchangeable   Shares
immediately  prior to the Effective  Time  (assuming  such Larco Option was then
fully exercisable),  subject to the adjustment set forth in Section 2.04 hereof.
In  furtherance of such  amendment,  the Company shall also cause Larco to enter
into an  agreement  with  each  holder  of a Larco  Option  in the same form and
substance as Schedule 6.09 hereto.  Such agreements shall be delivered to Parent
within 10 days after the date of execution of this Agreement.

<PAGE>

                  SECTION 6.10  Repayment of Debt.  At least five (5) days prior
to the Closing,  the Shareholders shall notify Parent of the amount necessary to
repay at the Closing all  indebtedness  for borrowed money of the Company or any
Subsidiary ("Debt").  If Parent elects to repay all Debt at the Closing,  Parent
will  arrange to have  representatives  of the lender or lenders  present to, or
will otherwise make provision for,  tender to Parent at the Closing  evidence of
the payment and discharge of the Debt and releases of all security  interests on
the assets of the Company and the Subsidiaries securing the Debt.

                  SECTION 6.11 SHAREHOLDER  AGREEMENTS.  THE SHAREHOLDERS  SHALL
TERMINATE OR AMEND THE STOCKHOLDER AGREEMENTS AND OTHER DOCUMENTS REFERRED TO IN
SCHEDULE  3.02(B)(1),  (B)(6)  AND  (B)(7)  IN  SUCH A  MANNER  AS  WILL  PERMIT
CONSUMMATION  OF THE  TRANSACTIONS  AS  CONTEMPLATED BY THIS AGREEMENT AND SHALL
PROVIDE PARENT COPIES OF DOCUMENTS EFFECTING SUCH TERMINATION OR AMENDMENT PRIOR
TO THE DAY OF CLOSING.

                                   ARTICLE VII

                               COVENANTS OF PARENT

                  SECTION 7.01 Conduct of Business  Pending the Closing.  Except
as otherwise provided in this Agreement, or as the Company may otherwise consent
to in writing,  Parent shall not, pending the Closing, engage in any activity or
enter into any transaction  which would render inaccurate as of the Closing Date
any of its representations and warranties set forth in this Agreement as if such
representations and warranties were made at and as of the Closing Date.

                  SECTION 7.02 Access to Information.  Upon  reasonable  notice,
Parent shall afford to representatives of the Company, reasonable access, during
normal  business  hours during the period prior to the  Effective  Time,  to its
properties,  books, contracts,  commitments and records and, during such period,
shall furnish all other  information  concerning  its business,  properties  and
personnel  as Company may  reasonably  request.  The  confidentiality  and other
obligations  of the  parties  referred  to in  Section  13.04  hereof  shall  be
applicable to all such  information.  The  investigation by and knowledge of the
Company and  furnishing of information to the Company shall not affect its right
to rely on the representations, warranties, covenants and agreements of Parent.

                  SECTION 7.03 Notice of Breach.  In the event Parent has actual
knowledge  prior to the  Effective  Time that the Company or a  Shareholder  has


<PAGE>

breached  any of its or his  representations  or  warranties  Parent  shall give
prompt written notice thereof to the Company.

                  SECTION  7.04  Mark  Kirkpatrick  Employment.   Following  the
Merger,  the Company will offer Mark Kirkpatrick  ("Kirkpatrick")  an employment
arrangement pursuant to which he would continue to be employed by the Company at
his current  salary for at least three months  following the Effective  Time. If
Kirkpatrick  continues his employment with the Company for at least three months
following  the Effective  Time,  he shall be paid a bonus of one month's  salary
upon termination of his employment.  Nothing in this paragraph will preclude the
Company from offering to extend the term of this employment arrangement.  Unless
Parent  notifies  the  Company  in writing  that it intends to account  for this
transaction  using the pooling method,  all unvested  Company Options shall vest
upon  termination  of  Kirkpatrick's  employment  with the  Company and shall be
exercisable,  in whole or in part,  at any time  within  six (6)  months of such
termination.

                  SECTION 7.05 Compliance with Post-Closing Obligations.  Parent
will timely comply with its post-closing obligations in this Agreement.

                  SECTION  7.06  Registration  of  Parent  Options.  As  soon as
reasonably  practicable  following  the  Closing,  Parent  will cause the Parent
Common Stock to be issued pursuant to Options and Larco Options to be registered
with the SEC pursuant to an appropriate Registration Statement.


                                  ARTICLE VIII

                             CERTAIN OTHER COVENANTS

                  SECTION  8.01  Legal  Conditions  to  Merger.  Subject  to the
limitations contained in Section 10.01(b),  Company, Parent and the Shareholders
will each take all  reasonable  actions  necessary to comply  promptly  with all
legal  requirements  which may be imposed on them with respect to this Agreement
(including  furnishing  all  information  (i)  required  under the HSR Act,  the
Securities  Act and the Exchange Act and (ii) the  Certificate of Merger and the
Local Approvals and approvals of or filings with any other  Governmental  Entity
and will  promptly  cooperate  with and  furnish  information  to each  other in
connection  with any such  requirements  imposed upon any of them in  connection
with the Merger.  Subject to the limitations contained in Section 10.01(b),  the
Company,  Parent  and the  Shareholders  will each take all  reasonable  actions
necessary  to obtain  (and will  cooperate  with each  other in  obtaining)  any
consent,  authorization,  order  or  approval  of,  or  any  exemption  by,  any
Governmental  Entity or other  public or private  third  party,  required  to be


<PAGE>

obtained or made by Parent or the Company in  connection  with the Merger or the
taking of any action  contemplated  thereby or by this  Agreement or the Related
Agreements.  Parent and the  Company  will make their HSR Act filing  within one
business  day after the signing of this  Agreement  and both agree to seek early
termination of the HSR Act waiting period as of the initial HSR Act filing.

                  SECTION 8.02 Pooling of Interests. The Company, Parent and the
Shareholders  will each use all  commercially  reasonable  efforts  to cause the
transactions  contemplated by this Agreement to be accounted for as a pooling of
interests in accordance with GAAP, and such accounting  treatment to be accepted
by  Parent  and  Parent's  independent  certified  public  accountants  and,  if
requested by Parent,  the SEC. In that connection each Shareholder,  in order to
preserve pooling treatment, represents he has not sold or transferred any shares
of  Company  Common  Stock or  Exchangeable  Shares  since  January  1, 1999 and
covenants that to the extent necessary to preserve pooling treatment he will not
do so and will not sell or transfer any shares of Parent  Common Stock until the
financial  results  covering at least 30 days of the combined  operations of the
Company and Parent have been published.

                  SECTION 8.03 Tax Treatment.  Parent,  Sub and the Company each
agree to treat the Merger as a reorganization within Section 368(a) of the Code.

                  SECTION  8.04  Escrow  Agreement.  Each  of  the  Shareholders
(including  spouses of the  Shareholders)  and Parent shall enter into an escrow
agreement  ("Escrow  Agreement") with the Escrow Agent (as hereinafter  defined)
within 10 days  after  the date  hereof on the same  terms as are  contained  in
Schedule 8.04 hereto ("Escrow Agreement").

                  SECTION 8.05 Market  Activity.  Parent will not repurchase any
of its capital stock prior to the Effective Time. Further, Parent shall give the
Company written notice of any "road shows" or unusual promotional  activities it
intends  to  undertake  prior  to  the  Effective  Time.  The  Company  and  the
Shareholders  shall not,  and shall  cause  their  affiliates  not to,  make any
transactions  in  securities of Parent or otherwise  take any actions that,  may
adversely  affect the market price of Parent Common Stock prior to the Effective
Time.

                  SECTION 8.06 Certain Employee  Benefit Matters.  Parent agrees
to the  following  with  respect to any  individual  who is an  employee  of the
Company  or its  Subsidiaries  on the  Closing  Date  (individually,  a "Company
Employee", and collectively, the "Company Employees"):

<PAGE>

                  (a) Service  before the Closing Date which was  performed  for
the Company,  a Subsidiary or a predecessor of either by a Company Employee will
be treated as service with Parent for  purposes of  determining  eligibility  to
participate in Parent's employee benefit plans; provided,  however, that nothing
contained  herein shall require Parent to provide for the  participation  by any
Company Employees in any such plan; and

                  (b)  Employees  affected  by  subparagraph  (a)  above who are
offered eligibility by Parent in one or more employee benefit plans sponsored by
Parent  will be eligible to  commence  participation  in such  plan(s) as of the
relevant  entry date  defined  in each such plan as of which  each such  Company
Employee satisfies all eligibility requirements for that plan.

                  (c) Service  before the Closing Date which was  performed  for
the Company,  a Subsidiary or a predecessor of either by a Company Employee will
be treated as service  with Parent for  purposes of  calculating  severance  pay
under Parent's severance pay plan;  provided,  however,  that such service shall
not be credited  under the Parent's  severance pay plan to the extent that it is
taken into account under any other severance arrangement.

                  SECTION  8.07  Consent  of  Lenders.   Parent  agrees  to  use
commercially reasonable efforts to obtain in a timely fashion the consent of the
lenders referred to in Section 10.02(f).


                                   ARTICLE IX

                       NON-COMPETITION AND NON-DISCLOSURE

                  SECTION 9.01 Non-competition and Non-disclosure. Following the
Closing Date and thereafter:

                  (a) each of Larry Di Stefano and Andy  Everett  agrees not to,
except  to the  extent  limited  in  Schedule  9.01A,  for a  period  of 5 years
following the Closing Date, engage or become interested, directly or indirectly,
as owner, employee,  partner,  through stock ownership (except ownership of less
than five percent  (5%) of the number of shares  outstanding  of any  securities
which are listed for trading on any securities exchange), investment of capital,
lending of money or property, rendering of services, or otherwise, whether alone
or in association with others, in the operation of any business or enterprise in
any way competitive to the business  heretofore  conducted by the Company or any
of its Subsidiaries anywhere in the world;

<PAGE>

                  (b) each of Larry Di Stefano  and Andy  Everett  agrees not to
solicit or accept orders for goods or services  competitive to those  heretofore
provided  or sold by the  Company  or any of its  Subsidiaries  from any then or
previous  customer of the Company or any of its Subsidiaries or otherwise induce
or attempt to induce any such  customer to reduce such  customer's  patronage of
the Company or any of its Subsidiaries;

                  (c) each of Larry Di Stefano  and Andy  Everett  agrees not to
solicit  any  employee of the  Company or any of its  Subsidiaries  to leave the
employ of the Company or any of its Subsidiaries;

                  (d) each of the Shareholders agrees not to use the names "GL",
"GL International",  "Gaffey", "Larco", "Handling Systems and Conveyors", "HSC",
or any variation thereof in any organization or enterprise or business; or

                  (e)  each  of  the   Shareholders   agrees  not  to   divulge,
communicate,  or utilize any  confidential  information  of or pertaining to the
business of Company or any of its Subsidiaries.

                  The  obligations  of Larry Di Stefano and Andy  Everett  under
this  Section  9.01(a)  are  expressly  subject  to the  terms of the  severance
agreements in Schedule 9.01A.

                  SECTION  9.02  Equitable  Remedies.  Each of the  Shareholders
specifically  acknowledges  and agrees  that the remedy at law for any breach of
any provision of this Article IX will be inadequate and that Parent, in addition
to any  other  relief  available  to it,  shall be  entitled  to  temporary  and
permanent injunctive relief without the necessity of proving actual damage.

                  SECTION 9.03 Severability. If any provision of this Article IX
shall  for any  reason be held to be  excessively  broad as to any  activity  or
subject,  it shall be construed,  by limiting and reducing it, to be enforceable
to the extent  compatible  with applicable law. If any provision in this Article
IX  shall,   notwithstanding  the  preceding   sentence,   be  held  illegal  or
unenforceable,  such illegality or  unenforceability  shall not affect any other
provision  of this Article IX but this  Agreement  shall be construed as if such
illegal or unenforceable provision had never been contained herein.

                  SECTION 9.04 No Waiver.  The rights of Parent and  obligations
of the  Shareholders set forth in this Article IX are in addition to, and not in
lieu of, all other rights and obligations provided by applicable law.


<PAGE>

                                    ARTICLE X

                                   CONDITIONS

                  SECTION 10.01 Conditions to Each Party's  Obligation To Effect
the Merger.  The  respective  obligation of the Company and Parent to effect the
Merger  shall be subject to the  satisfaction  prior to the Closing  Date of the
following conditions:

                  (a) Certain  Approvals.  Other than the filing provided for by
Section  1.01,  all  authorizations,   consents,  orders  or  approvals  of,  or
declarations  or filings with, or expirations of waiting periods imposed by, any
Governmental  Entity the failure to obtain  which would have a material  adverse
effect on Parent,  shall have been filed,  occurred or been obtained  including,
but not  limited  to, the HSR Act and the Local  Approvals  (and all  applicable
waiting periods, if any, including any extensions thereof,  under any Applicable
Laws,  including,  but not  limited  to,  the HSR Act,  shall  have  expired  or
terminated).

                  (b) Absence of Certain  Injunctions  and  Government  Actions.
There (i) shall not be in effect a temporary  restraining order or a preliminary
or  permanent  injunction  or other  order,  decree or ruling by a  Governmental
Entity which (A) restrains or prohibits the Merger or the consummation of all or
any of the other transactions contemplated hereby, or (B) prohibits or restricts
the ownership or operation by Parent (or any of its subsidiaries) of any portion
of its (or their) or the Company's or any Subsidiary's  business or assets which
is material to the business of such  entities,  or compels Parent (or any of its
subsidiaries)  to dispose of or hold  separate  any portion of its (or their) or
the Company's or any  Subsidiary's  business or assets which,  if required to be
disposed of, would be likely to materially  diminish the value of the Company or
any Subsidiary to Parent,  or would be likely to have a material  adverse effect
on Parent  following the Closing,  including the Surviving  Corporation,  or (C)
imposes  any  limitations  on the  ability of Parent or any of its  subsidiaries
effectively to control in any material respect the business and operation of the
Company  or any  Subsidiary,  or (D) is  otherwise  reasonably  likely to have a
material adverse effect on Parent or any of its subsidiaries;  or (ii) shall not
be pending before any Governmental Entity, any action or proceeding,  whether in
law or in equity or otherwise, brought by any Governmental Entity which seeks as
relief a result  described  in clause  (i) above;  or (iii)  shall not have been
promulgated or enacted by a Governmental Entity a statute,  rule,  regulation or
executive  order which has an effect  described  in clauses (i) (A),  (B) or (C)
above;  provided,  however, that (x) the parties shall use their best efforts to
litigate  against  the entry of, or to obtain the  lifting  of,  such  temporary
restraining order or preliminary or permanent  injunction or other  governmental


<PAGE>

action;  (y) in no event shall a party be obligated to take or accept or refrain
from taking any action if the taking,  acceptance or refraining from taking such
action is reasonably  likely to materially  diminish the value of the Company or
any Subsidiary to Parent; and (z) the existence of a temporary restraining order
as  described  in clause  (i) or the  pendency  of an action  or  proceeding  as
described in clause (ii) shall  operate only to delay the Closing until the 30th
day following the lifting of such temporary  restraining order or the conclusion
of such action or proceeding,  except that there shall be deemed to be a failure
of this  condition if such action or proceeding  shall not have  concluded,  the
parties  agreeing,  subject to the other provisions of this Agreement by May 30,
1999, to exercise their best efforts to close as soon as reasonably  practicable
following the lifting of any such temporary  restraining order or the conclusion
of any such action or proceeding.

                  SECTION  10.02  Conditions  to  Obligations  of  Parent.   The
obligations  of Parent to effect the Merger are subject to the  satisfaction  of
the following conditions unless waived by Parent.

                  (a)  Representations  and Warranties.  The representations and
warranties of the Company and the Shareholders set forth in this Agreement shall
be true and correct in all  material  respects as of the date of this  Agreement
and as of the Closing Date as though made on and as of the Closing Date,  except
as  otherwise  provided  in this  Agreement,  and Parent  shall have  received a
certificate  signed on behalf of the Company by the chief executive  officer and
the chief financial  officer of the Company to such effect and such  certificate
shall be deemed to be a  representation  and  warranty  of the  Company  and the
Shareholders only as of the time immediately preceding the Closing.

                  (b)   Performance   of   Obligations   of  the   Company   and
Shareholders.  The  Company  and  the  Shareholders  shall  have  performed  all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and Parent shall have received a certificate  signed on behalf
of the Company by the chief executive officer and the chief financial officer of
the Company to such effect.

                  (c) Affiliate Letters.  Parent shall have received the letters
and agreements contemplated by Section 6.06 hereof.

                  (d)  Opinions.  Parent shall have  received the opinions  from
counsel to the Company,  dated the Closing Date, in substantially  the same form
and substance as Schedule 10.02(d) hereto.

<PAGE>

                  (e) Dissenters.  No Shareholders shall have demanded appraisal
rights in respect of the Merger and not waived such appraisal rights.

                  (f)  Consent of  Lenders.  At or prior to the  Closing  Parent
shall have received, pursuant to its loan agreements with Fleet National Bank as
administrative  agent for a syndicate of lenders,  Fleet National Bank's consent
to this Agreement and the transactions contemplated hereby.

                  (g) Releases.  The  directors  and  executive  officers of the
Company and each  Subsidiary  shall each have  furnished  the Company  with duly
executed general  releases of liabilities and obligations of the Company,  other
than the Company's  obligations to provide  compensation  and employee  benefits
pursuant to arrangements  disclosed in the Schedules hereto. Such releases shall
be in the form attached hereto as Schedule 10.02(g).

                  (h) Certain  Authorizations.  Parent  shall have  received all
permits and other  authorizations  necessary  under the  Blue-Sky  Laws to issue
Parent Common Stock pursuant to this Agreement.

                  (i) Other Closing  Documents.  Parent shall have received,  on
and as of the Closing Date, the duly executed Certificate of Merger, the Related
Agreements and such other  agreements and instruments as Parent shall reasonably
request, in each case reasonably satisfactory in form and substance to Parent.

                  (j) Shareholder Approval.  This Agreement and the transactions
contemplated  hereby,  shall have been  approved and adapted by the  affirmation
vote of the holders of a majority of the  outstanding  shares of Company  Common
Shares.

                  (k) Exchangeable  Shares. All of the Exchangeable Shares shall
have been exchanged for shares of Company Common Stock.

                  (l)  Severance  Agreement.  Parent  shall  have  received  the
agreement of Andrew G. Everett and Larry  DiStefano to the  Severance  Agreement
attached hereto as Schedule 9.01A.

                  (m)  Discharge  of Debt.  If Parent  elects  to repay  Debt at
Closing  pursuant to Section  6.10,  then upon such  payment  Parent  shall have
received  from the lender or lenders  evidence of payment and  discharge  of the
Debt and releases of all security interests on the assets of the Company and the
Subsidiaries securing the Debt in form and substance reasonably  satisfactory to
Parent.

<PAGE>

                  (n)  Estoppel  Certificates.  The Company  shall have used all
reasonable   efforts  to  obtain  from  each  lessor  of  the  Leased   Premises
certificates  reasonably  satisfactory in form and substance to Parent regarding
the continuing  validity of the leases of the Leased Premises and the absence of
any breach or basis for termination thereof.

                  SECTION 10.03 Conditions of Obligations of the Company and the
Shareholders.  The obligation of the Company and the  Shareholders to effect the
Merger is subject to the satisfaction of the following  conditions unless waived
by the Company:

                  (a) Representations and Warranties.  The  representa-tions and
warranties  of Parent set forth in this  Agreement  shall be true and correct in
all  material  respects as of the date of this  Agreement  and as of the Closing
Date as through made on and as of the Closing Date, except as otherwise provided
by this Agreement,  and the Company shall have received a certificate  signed on
behalf of Parent by the chief executive  officer and the chief financial officer
of  Parent  to  such  effect  and  such  certificate  shall  be  deemed  to be a
representation and warranty of Parent only as of the time immediately  preceding
the Closing.

                  (b)  Performance of  Obligations of Parent.  Parent shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date,  and the Company shall have received a certificate
signed  on  behalf  of  Parent  by the  chief  executive  officer  and the chief
financial officer of Parent to such effect.

                  (c) Opinion.  The Company  shall have received an opinion from
Phillips,  Lytle,  Hitchcock,  Blaine & Huber LLP, counsel to Parent,  dated the
Closing Date, in substantially  the same form and substance as Schedule 10.03(c)
hereto.

                  (d)  Registration  Agreement.   The  Shareholders  shall  have
received the Registration Agreement duly executed by Parent on substantially the
same terms as set forth in Schedule 10.03(d) hereto.

                  (e) Other Closing Documents.  The Company shall have received,
on and as of the Closing Date,  the duly  executed  Certificate  of Merger,  the
Related  Agreements  and such other  agreements  and  instruments as the Company
shall  reasonably  request,  in each case  reasonably  satisfactory  in form and
substance to the Company.


<PAGE>


                                   ARTICLE XI

                            TERMINATION AND AMENDMENT

                  SECTION 11.01 Termination. This Agreement may be terminated at
any time prior to the Effective  Time,  whether  before or after approval of the
matters  presented  in  connection  with the Merger by the  Shareholders  of the
Company:

                  (a)  by mutual consent of Parent and the Company;

                  (b)  by  Parent  (i)  if  there  has  been  a  breach  of  any
representation,  warranty,  covenant or  agreement on the part of the Company or
the  Shareholders  set  forth  in  this  Agreement,  or  (ii)  if any  permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable;

                  (c) by the  Company  (i) if there  has  been a  breach  of any
representation,  warranty, covenant or agreement on the part of Parent set forth
in this Agreement, or (ii) if any permanent injunction or other order of a court
or other  competent  authority  preventing the  consummation of the merger shall
have become final or nonappealable;

                  (d) by either  Parent or the  Company if the Merger  shall not
have been consummated on or before May 30, 1999;

                  (e) by Parent if any required  approval of the Shareholders of
the Company  shall not have been obtained by reason of the failure to obtain the
required  vote at a duly held  meeting  of  Shareholders  or at any  adjournment
thereof however,  such  termination  shall not relieve the Company or any of the
Shareholders  of any  liability  for  violation of this  Agreement or any of the
Related Agreements.

                  (f) by Parent if, since  December  31, 1998,  there has been a
materially adverse change in the financial  condition,  operations,  business or
prospects of the Company;

                  (g) by the Company if, since December 31, 1998, there has been
a materially adverse change in the financial condition,  operations, business or
prospects of Parent.

                  SECTION  11.02  Effect  of  Termination.  In  the  event  of a
termination  of this  Agreement  by either the  Company or Parent as provided in
Section 11.01,  this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent or the Company or their respective
officers  or  directors  or the  Shareholders,  EXCEPT  (a) with  respect to the
penultimate sentence of Section 7.02 and Section 6.07 and (b) to the extent that


<PAGE>

such  termination  results  from  the  breach  by a party  hereto  of any of its
representations  and  warranties or a breach of its covenants or agreements  set
forth  in  this  Agreement  or  the  Related  Agreements.   Notwithstanding  the
foregoing,  but  subject  to  clause  (a) of this  Section  11.02  any party who
terminates  this  Agreement  as a result of an  unintentional  breach by another
party of a representation, warranty, covenant or agreement shall have no further
remedy with respect  thereto.  Nothing in this Section 11.02 shall  preclude the
availability of equitable relief.

                  SECTION  11.03  Amendment.  This  Agreement  may be amended by
Parent and the Company,  by action duly taken or authorized,  at any time before
or after approval of the matters  presented in connection with the Merger by the
Shareholders  or the  Shareholders of Parent,  but, after any such approval,  no
amendment  shall  be  made  which  by law  requires  further  approval  by  such
shareholders  without such further  approval.  This Agreement may not be amended
except by an instrument in writing signed on behalf of Parent and the Company.

                  SECTION 11.04  Extension; Waiver.

                  (a) Parent.  At any time prior to the Effective Time,  Parent,
by action duly taken,  may, to the extent legally  allowed,  (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 of the
other parties  hereto  contained  herein or in any document  delivered  pursuant
hereto and (iii) waive  compliance of the other  parties  hereto with any of the
agreements or conditions contained herein.

                  (b) The Company.  At any time prior to the Effective Time, the
Company,  by action duly taken,  may, to the extent legally allowed,  (i) extend
the time for the  performance of any of the obligations or other acts of Parent,
(ii) waive any  inaccuracies  in the  representations  and  warranties of Parent
contained  herein or in any document  delivered  pursuant hereto and (iii) waive
compliance  of  Parent  with  respect  to any of the  agreements  or  conditions
contained herein.

                  (c) Form of Waiver or Extension.  Any agreement on the part of
Parent or the Company hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party and no party
can assert a claim with respect to a matter so waived,  it being understood that
all  Shareholders  shall be deemed to have no rights with  respect to any matter
waived by the Company.


<PAGE>


                                   ARTICLE XII

                          SURVIVAL AND INDEMNIFICATION

                  SECTION  12.01   Survival  of   Representations,   Warranties,
Covenants and Agreements.

                  (a)  Survival.  The  representations,  warranties,  covenants,
agreements and  undertakings of the Company,  Larco, the Shareholders and Parent
in this  Agreement,  the  Related  Agreements  and in any  instrument  delivered
pursuant  to this  Agreement  and all  rights of Parent,  Sub and the  Surviving
Corporation and the Shareholders  with respect thereto shall survive the Closing
and the Merger and  continue  except to the extent  otherwise  provided  in this
Article XII.

                  (b)(i) Indemnity  Obligations of the  Shareholders.  Following
the Closing, each of the Shareholders hereby agrees to indemnify and hold Parent
and Sub  harmless  from and against,  and to reimburse  Parent and Sub for or in
respect  of, any and all losses,  damages,  deficiencies,  liabilities,  claims,
economic injury,  obligations,  expenses  (including,  without  limitation,  all
out-of-pocket  expenses,  reasonable  investigation expenses and reasonable fees
and  disbursements of accountants and counsel),  net of any tax benefit actually
realized and any insurance proceeds and other third party reimbursement actually
received (which Parent agrees in both cases to use its best efforts to pursue if
reasonably  available),  suffered or  incurred  by Parent or Sub  (collectively,
"Parent  Damages") arising out of, based upon, or by reason of (A) any breach of
any  representation or warranty of the Company or any of the Shareholders  which
is contained in this  Agreement,  or in any  Schedule or  certificate  delivered
pursuant  thereto;  (B) any  breach  or  nonfulfillment  of, or any  failure  to
perform, any of the covenants,  agreements or undertakings of the Company, Larco
or any of the  Shareholders  which are  contained  in or made  pursuant  to this
Agreement, which, as to the Company or Larco, occur prior to the Effective Time;
or (C) any claim for indemnification or advances made by any person by reason of
his service as an officer or director  of the Company or any  Subsidiary  or any
predecessor  against  the  Company or any  Subsidiary.  In order to provide  for
Shareholders  Indemnification  Threshold and Parent's Indemnification  Threshold
(each as  hereafter  defined),  the parties  agree that for the purposes of this
Article XII a  representation  shall be deemed false and a warranty,  agreement,
covenant or  undertaking  shall be deemed  breached or not fulfilled if the same
would  have  been  false,  breached  or not  fulfilled  had the  representation,
warranty,  agreement,  covenant or  undertaking  not been qualified by the words
"material", "materially", "in all material respects" or words of similar import.


<PAGE>

                  (b)(ii)  Indemnity   Obligations  of  Parent.   Following  the
Closing,  Parent hereby agrees to indemnify and hold the  Shareholders  harmless
from and against,  and to reimburse the  Shareholders  for or in respect of, any
and all losses,  damages,  deficiencies,  liabilities,  claims, economic injury,
obligations,   expenses  (including,   without  limitation,   all  out-of-pocket
expenses,   reasonable   investigation   expenses   and   reasonable   fees  and
disbursements  of  accountants  and  counsel),  net of any tax benefit  actually
realized and any insurance proceeds and other third party reimbursement actually
received  (which  Shareholders  agree in both cases to use their best efforts to
pursue, if reasonably available)  (collectively  "Shareholder Damages") suffered
or incurred by the Shareholders  arising out of, based upon, or by reason of (A)
any breach of any  representation  or warranty of Parent  which is  contained in
this  Agreement  or (B) any  breach or  non-fulfillment  of, or any  failure  to
perform,  any of the  covenants,  agreements or  undertakings  of Parent in this
Agreement. Any amounts owed by Parent to the Shareholders under this Article XII
shall be  allocated  among them in  accordance  with their  proportionate  share
("Proportionate Share") as set forth in Schedule 12.01(b)(ii) hereto.

                  (c)(i) Certain  Limitations on  Shareholders'  Indemnification
Obligations.  Subject to the remaining  provisions of this Section  12.01(c)(i),
notwithstanding  anything  to the  contrary  herein,  any claim by Parent or Sub
against  the  Shareholders  under  Article XII of this  Agreement  for breach of
representation  or warranty (other than for breach of the Unlimited  Warranties,
as hereafter  defined),  shall be payable by the Shareholders  only in the event
and to the extent that the accumulated amount of Parent Damages, for breaches of
representations  or  warranties  shall  exceed  $925,000 in the  aggregate  (the
"Shareholders'  Indemnification  Threshold");  and  that  at  such  time  as the
aggregate amount of Parent Damages for breaches of representations or warranties
shall exceed the Shareholders' Indemnification Threshold, the Shareholders shall
thereafter  be liable on a  dollar-for-dollar  basis for the full  amount of all
Parent  Damages,  for breach of  representation  or  warranty,  in excess of the
Shareholders'  Indemnification  Threshold, it being the intention of the parties
that  the  initial  $925,000  of  Parent  Damages  excluded  by  reason  of  the
Shareholders'  Indemnification  Threshold  would not be recoverable  against the
Shareholders but would be borne by Parent.  In no event shall the  Shareholders'
aggregate  liability  for  Parent  Damages,  for breach of  representations  and
warranties  (other  than  for  breach  of  the  Unlimited  Warranties),   exceed
$3,000,000 ("Ceiling Amount").

                  The   liability  of  any   Shareholder   for  a  breach  of  a
representation or warranty  contained in Article V (the "Unlimited  Warranties")
shall not be subject to the Shareholders'  Indemnification  Threshold, shall not


<PAGE>

count  against  the  Shareholders'  Indemnification  Threshold  and shall not be
limited by the Ceiling  Amount.  No  Shareholder  shall have any liability for a
breach of any  representation or warranty or covenant  contained in Article V by
any  other  Shareholder,  it  being  the  intention  of  the  parties  that  the
representations  and  warranties  and  covenants  in  Article V are  being  made
severally and not jointly and severally.

                  Subject to the immediately  preceding paragraph no Shareholder
shall be liable for more than such Shareholder's  Proportionate  Share of Parent
Damages.

                  (c)(ii)  Certain   Limitations  on  Parent's   Indemnification
Obligations.  Subject to the remaining provisions of this Section  12.01(c)(ii),
notwithstanding  anything to the contrary herein,  any claim by the Shareholders
against  Parent under Article XII of this  Agreement  shall be payable by Parent
only in the event and to the extent that the  accumulated  amount of Shareholder
Damages for breach of  representation  or warranty shall exceed in the aggregate
the amount of $925,000 (the "Parent's Indemnification  Threshold");  and that at
such  time  as the  aggregate  amount  of  Shareholder  Damages  for  breach  of
representation or warranty shall exceed the Parent's Indemnification  Threshold,
Parent  shall  thereafter  be liable on a  dollar-for-dollar  basis for the full
amount of all Shareholder Damages, for breach of representation or warranty,  in
excess of the Parent's Indemnification  Threshold, it being the intention of the
parties that the initial  $925,000 of Shareholder  Damages excluded by reason of
the Parent's  Indemnification  Threshold would not be recoverable against Parent
but would be borne by the  Shareholders.  In no event shall  Parent's  aggregate
liability for Shareholder Damages, for breach of representations and warranties,
exceed $3,000,000.

                  (d)  Duration.  Except in  respect of any claims for breach of
representation  or  warranty  as to which a notice  of  claim  for  Shareholders
Damages or Parent  Damages shall have been given prior to the First  Anniversary
of the Effective Time, all representations and warranties  contained in Articles
III and IV and all  rights  with  respect  thereto  shall  expire  on the  First
Anniversary of the Effective Time.

                  (e) Indemnification  Procedures.  In the event that subsequent
to the Effective  Time any person or entity  entitled to  indemnification  under
this Agreement (an "Indemnified  Party") receives notice of the assertion of any
claim,  or of the  commencement of any action or proceeding by any person who is
not a party to this Agreement or an Affiliate of a party (a "Third Party Claim")
against  such  Indemnified  Party,  against  which a party to this  Agreement is
required to provide indemnification under this Agreement (an "Indemnitor"),  the


<PAGE>

Indemnified Party shall give written notice thereof together with a statement of
any available  information  regarding such claim to the Indemnitor within thirty
(30) days after  receiving  written notice of such claim (or within such shorter
time as may be necessary to give the  Indemnitor  a  reasonable  opportunity  to
respond to and defend such claim).  The  Indemnitor  shall have the right,  upon
written notice to the  Indemnified  Party (the "Defense  Notice")  within thirty
(30) days after receipt from the Indemnitor of notice of such claim,  to conduct
at its expense the defense  against such claim in its own name,  or if necessary
in the name of the Indemnified Party;  provided,  however,  that the Indemnified
Party  shall have the right to  approve  the  defense  counsel  selected  by the
Indemnitor,  which approval shall not be unreasonably withheld, and in the event
the Indemnitor and the  Indemnified  Party cannot agree upon such counsel within
ten days after the Defense Notice is provided, then the Indemnitor shall propose
an alternate  defense  counsel,  who shall be subject  again to the  Indemnified
Party's  reasonable  approval.  The  Indemnified  Party  shall  take all  action
reasonably necessary to preserve all rights and defenses of the Indemnitor until
the earlier of: (i) the Indemnitor's assumption of the defense of such claim, or
(ii) thirty (30) days after the Indemnitor's  receipt of the notice of the Third
Party Claim.

                  In the  event  that  the  Indemnitor  shall  fail to give  the
Defense Notice, it shall be deemed to have elected not to conduct the defense of
the subject claim, and in such event the Indemnified  Party shall have the right
to  conduct  such  defense  in good  faith.  If an offer is made to settle  such
subject  claim,  and the  Indemnified  Party desires to accept and agree to such
offer, the Indemnified  Party will give written notice to the Indemnitor to that
effect.  The  Indemnitor  must either  consent to such firm offer within fifteen
(15)  calendar  days after its receipt of such notice,  or the  Indemnitor  must
assume the contest or defense of such claim;and in the event that the Indemnitor
does not  consent to such firm offer and  assumes the contest or defense of such
claim, then the maximum liability of the Indemnified Party as to such claim will
not exceed any amount  that the  Indemnified  Party  would have had to pay under
such  settlement  offer and the  balance of any such claim shall be borne by the
Indemnitor  regard-less of any limitations  imposed under  subsection  (c)(i) or
(c)(ii),  as the case may be, and any Parent Damages or Shareholder  Damages, as
the case may be, in excess of such settlement  offer shall not count towards the
limitations set forth in subsection  (c)(i) or (c)(ii),  as the case may be. The
Indemnitor  will not enter into any settlement of such claim,  if as a result of
such settlement or cessation,  (i) injunctive or other equitable relief would be
imposed against the Indemnified  Party,  (ii) such settlement or cessation would
lead to liability or create any financial or other obligation on the part of the


<PAGE>

Indemnified   Party  for  which  the  Indemnified   Party  is  not  entitled  to
indemnification hereunder, (iii) such settlement includes a written admission of
guilt,  or (iv) such  settlement  results  in a material  interference  with the
business,  operations,  assets or  condition  (financial  or  otherwise)  of the
Indemnified Party, unless any of the consequences  described in (i), (ii), (iii)
or (iv) above was part of, or was included in, the original settlement offer.

                  In the event that the  Indemnitor  does  elect to conduct  the
defense of the subject claim, the Indemnified Party will cooperate with and make
available to the Indemnitor  such  assistance and materials as may be reasonably
requested by it, all at the expense of the Indemnitor, and the Indemnified Party
shall have the right at its expense to  participate  in the defense  assisted by
counsel  of  its  own  choosing  and at  its  own  expense,  provided  that  the
Indemnified  Party shall have the right to compromise  and settle the claim only
with the prior  written  consent of the  Indemnitor,  which consent shall not be
unreasonably  withheld or  delayed.  Without  the prior  written  consent of the
Indemnified  Party,  which shall not be  unreasonably  withheld or delayed,  the
Indemnitor  will not enter into any settlement of any Third Party Claim or cease
to defend against such claim,  if pursuant to or as a result of such  settlement
or cessation,  (i) injunctive or other equitable relief would be imposed against
the Indemnified Party, (ii) such settlement or cessation would lead to liability
or create any financial or other obligation on the part of the Indemnified Party
for which the Indemnified  Party is not entitled to  indemnification  hereunder,
(iii)  such  settlement  includes  a written  admission  of guilt,  or (iv) such
settlement  results in a material  interference  with the business,  operations,
assets or condition (financial or otherwise) of the Indemnified Party.

                  The  Indemnitor  shall not be  entitled  to  control,  and the
Indemnified  Party shall be entitled to have sole control  over,  the defense or
settlement  of any claim to the extent that claim seeks an order,  injunction or
other equitable relief against the Indemnified Party which, if successful, could
materially interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified  Party (and the reasonable cost of
such  defense  shall  constitute  an amount for which the  Indemnified  Party is
entitled to  indemnification  hereunder).  If an offer is made to settle a Third
Party Claim,  which offer the  Indemnitor  is not permitted to settle under this
Section without the consent of the Indemnified Party, and the Indemnitor desires
to accept and agree to such offer,  the  Indemnitor  will give written notice to
the Indemnified  Party to that effect. If the Indemnified Party fails to consent
to such firm offer within 15 calendar days after its receipt of such notice, the
Indemnified  Party  shall  continue  to contest or defend such Third Party Claim


<PAGE>

and, in such event,  the maximum  liability of the  Indemnitor  as to such Third
Party Claim will not exceed the amount of such settlement  offer and without the
prior written consent of the Indemnitor, which consent shall not be unreasonably
withheld or delayed, the Indemnified Party will not enter into any settlement of
any Third Party Claim or cease to defend  against such claim,  if pursuant to or
as a result of such  settlement or cessation,  (i) injunctive or other equitable
relief would be imposed against the Indemnitor,  (ii) such settlement includes a
written  admission  of guilt,  or (iii)  such  settlement  results in a material
interference with the business,  operations,  assets or condition  (financial or
otherwise) of the Indemnitor,  unless such consequence described in (i), (ii) or
(iii) above was part of, or was included in, the original settlement offer.

                  Any judgment  entered or settlement  agreed upon in the manner
provided herein shall be binding upon the Indemnitor and  Indemnified  Party, if
necessary, and each party will comply with such settlement.

                  The Indemnitor shall be subrogated to the Indemnified  Party's
rights of recovery to the extent of any Parent Damages or  Shareholder  Damages,
as the case may be,  reimbursed by the Indemnitor.  The Indemnified  Party shall
execute and  deliver  such  instruments  and papers as are  necessary  to assign
without  recourse  such  rights and assist in the  exercise  thereof,  including
access to books and records of such party.

                  (f)  Remedies.  With the  exception of  contribution  and cost
recovery  actions  authorized  under the  Comprehensive  Environmental  Response
Compensation  and Liability Act of 1980, as amended by the Superfund  Amendments
and Reauthorization Act of 1986, 42 USCA 9601, ET. SEQ., as amended, and similar
state laws,  each party hereto shall not be liable or  responsible in any manner
whatsoever to the other party,  whether for  indemnification or otherwise,  with
respect  to  any  matter  arising  out  of the  representations,  warranties  or
covenants of this Agreement or any Schedule hereto or any opinion or certificate
delivered in connection  herewith except for (i) equitable relief, (ii) pursuant
to  remedies  expressly  provided  for  elsewhere  in this  Agreement  and (iii)
indemnification  and other  rights  provided in this  Article  XII, all of which
provide the exclusive  remedy of the parties  hereto after the  Effective  Time.
Nothing in this  Agreement  shall  operate to limit any  remedies of the parties
with respect to any breach or violation of any of the Related Agreements.

                  (g) Appointment of  Representative.  Each of the  Shareholders
hereby appoints Marshall B. Payne as such  Shareholder's  exclusive agent to act
on such  Shareholder's  behalf with respect to any and all claims  arising under
this Agreement. In such representative capacity, Marshall B. Payne or any person


<PAGE>

who shall succeed him in such  representative  capacity is sometimes referred to
in this Agreement as the  "Representative."  The Representative  shall take, and
the Shareholders agree that the  Representative  shall take, any and all actions
which such  Representative  believes  are  necessary or  appropriate  under this
Agreement for and on behalf of the Shareholders, as fully as if the Shareholders
were  acting on their own  behalf,  including,  without  limitation,  defending,
consenting  to,  compromising  or  settling  all claims  for  Parent  Damages or
Shareholder Damages, conducting negotiations with Parent and its representatives
regarding such claims,  taking any and all actions  specified in or contemplated
by Article XII of this  Agreement  and engaging  counsel,  accountants  or other
representatives  in connection with the foregoing matters provided  however,  on
any matter for which a Shareholder is solely liable, such as a breach of Article
V, such  Shareholder  may elect to represent  himself or herself alone,  outside
this  Section  12.01(g).  Parent  shall have the right to rely upon all  actions
taken or omitted to be taken by the  Representative  pursuant to this Agreement,
all of which  actions or  omissions  shall be legally  binding  upon each of the
Shareholders.  In the event of a dispute among the Shareholders  with respect to
any action to be taken by the  Representative on the Shareholders'  behalf,  the
Representative  shall be fully  entitled to act as directed by the  Shareholders
who  received  a majority  of the Parent  Common  Stock  included  in the Merger
Consideration  and such  action of the  Representative  shall be  binding on all
Shareholders.

                           (i)  Each Shareholder hereby authorizes and  empowers
the  Representative  to execute any other  notice,  waiver,  or other  direction
required hereunder on behalf of such Shareholder pursuant to this Agreement.

                           (ii) The Shareholders  jointly and severally agree to
indemnify and save the  Representative  harmless from all loss,  cost,  damages,
fees and expenses, including, but not limited to attorney's fees and court costs
suffered or incurred by the  Representative  in connection  with this  Agreement
other than as a result of the  Representative's  own gross  negligence or wilful
misconduct.

                           (iii) The Shareholders  agree that the Representative
shall be protected in acting upon any written notice, request,  waiver, consent,
certificate,  receipt, opinion of counsel,  authorization,  power of attorney or
other paper or document  which the  Representative  in good faith believes to be
(a) genuine and what it purports to be and (b) in  compliance  with the terms of
this Agreement.

<PAGE>

                           (iv) The Shareholders  agree that the  Representative
shall not be liable to the  Shareholders  for anything which the  Representative
may do or refrain from doing in connection herewith, except the Representative's
own gross negligence or willful misconduct.

                           (v) The Representative may consult with legal counsel
in the event of any  dispute or question  as to the  construction  of any of the
provisions   hereof  or  the   Representative's   duties   hereunder,   and  the
Representative  shall incur no liability and shall be fully  protected in acting
in accordance with this Agreement and the reasonable opinion and instructions of
such counsel.

                           (vi) The Representative's  duties are not intended to
create  any  fiduciary  or  other  duty on the part of the  Representative  with
respect to the Shareholders.  The  Representatives  has no implied duties to the
Shareholders.

                           (vii) The  Shareholders  shall be responsible for all
costs or expenses of the Representative.

                  (h)  Arbitration.   Notwithstanding  anything  herein  to  the
contrary, in the event that there shall be a dispute among the parties after the
Closing  concerning  the  obligations of the parties under this Article XII, the
parties agree that such dispute shall be submitted to binding arbitration in New
York City, New York before a single arbitrator jointly agreed to by the parties,
in accordance with the rules of the American Arbitration Association.  Any award
issued as a result of such  arbitration  shall be final and binding  between the
parties thereto,  and shall be enforceable by any court having jurisdiction over
the party against whom enforcement is sought.

                  (i) Escrow. Parent and the Shareholders  acknowledge that, out
of the shares of Parent  Common  Stock to be issued to the  Shareholders  in the
Merger,  the Exchange  Agent on behalf of the  Shareholders  shall and is hereby
authorized  by and on their behalf as their agent to deposit  into escrow,  with
the Escrow Agent named in the Escrow  Agreement,  a number of shares equal to 5%
of the Preliminary Aggregate Merger Consideration (such deposit,  being referred
to as the "Escrow Deposit"), with each Shareholder being deemed to have received
such shares of Parent Common Stock and having  thereupon  transferred  into such
Escrow  Deposit  that number of shares of Parent  Common  Stock  (rounded to the
nearest  whole  number  of  shares  of  Parent  Common  Stock to  eliminate  any
fractional shares) equal to such Shareholder's Proportionate Share of the Escrow
Deposit.  The Shareholders  authorize the Exchange Agent to register such Shares
of Parent Common Stock in the name of the Escrow Agent.  Other than with respect
to a Shareholder's Unlimited Warranties,  Parent and the Shareholders agree that


<PAGE>

Parent Damages shall be satisfied first out of the shares of Parent Common Stock
held in the Escrow  Deposit,  as further  provided under the terms of the Escrow
Agreement.  For purposes  hereof,  each share of Parent Common Stock returned to
Parent in settlement of any Parent Damages under the Escrow  Agreement  shall be
valued at the Closing  Market  Price.  At such time as the  aggregate  amount of
Parent  Damages which have been  definitively  resolved in favor of Parent shall
exceed the value of Parent  Common Stock then  remaining in the Escrow  Deposit,
each of the  Shareholders  shall  thereafter be jointly and severally  liable to
Parent for the amount of such excess (for purposes  hereof,  an "Excess Claim"),
subject to the limitations  herein. Any liability of the Shareholders for Parent
Damages for an Excess Claim may be satisfied by the  Shareholder  either through
(A) the delivery of shares of Parent  Common Stock to Parent,  such shares to be
valued as set forth above or (B) a cash payment to Parent equal to the amount of
the Excess Claim.

                           (i)      Environmental Reports.  Notwithstanding any-
thing to the  contrary  in this  Agreement,  neither  Parent,  Sub,  nor  anyone
claiming  through  Parent or Sub shall be entitled to make any claim against the
Shareholders  with  respect  to  the  environmental  matters  disclosed  in  the
Environmental   Reports  and  no  amounts   incurred  in  connection  with  such
environmental  matters  will count  against  the  Shareholders'  Indemnification
Threshold.


                                  ARTICLE XIII

                                  MISCELLANEOUS

                  SECTION 13.01  Notices.  All notices and other  communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied  (which is  confirmed)  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):

                           if to Parent or Sub, to
                           Columbus McKinnon Corporation
                           140 James Audubon Parkway
                           Amherst, New York  14228
                           Attention:  Robert L. Montgomery, Jr.


<PAGE>

                           with a copy to

                           Frederick G. Attea, Esq.
                           Phillips, Lytle, Hitchcock, Blaine & Huber LLP
                           3400 Marine Midland Center
                           Buffalo, New York  14203

                           and

                           if to the Company, to

                           G.L. International Inc.
                           2350 Airport Freeway, Suite 380
                           Bedford, Texas  76022
                           Attention:  Andy Everett

                           with a copy to

                           Richard L. Waggoner, Esq.
                           Gardere & Wynne, L.L.P.
                           1601 Elm Street
                           Suite 3000
                           Dallas, Texas  75201

                           If to the Representative, to

                           Marshall B. Payne
                           500 Crescent Court
                           Suite 250
                           Dallas, Texas   75201

                           with a copy to

                           Richard L. Waggoner, Esq.
                           Gardere & Wynne, L.L.P.
                           1601 Elm Street
                           Suite 3000
                           Dallas, Texas  75201


                  SECTION 13.02 Interpretation. When a reference is made in this
Agreement to Sections,  such  reference  shall be to a Section of this Agreement
unless  otherwise  indicated.  The 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".  For purposes of this Agreement (i) the Company
shall be deemed to "know", "have knowledge of" or "best knowledge of" any matter
known by an executive  officer or  Shareholder  of the Company;  and (ii) Parent


<PAGE>

shall be deemed to "know", "have knowledge of" or "best knowledge of" any matter
known by an executive officer or Shareholder of Parent.

                  SECTION 13.03 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 13.04 Entire Agreement;  No Third Party Beneficiaries;
Schedules.  This Agreement (including the documents and the instruments referred
to herein or reasonably  contemplated hereby) and the Confidentiality  Agreement
dated April 27, 1998 entered into by Parent and the Company (a)  constitute  the
entire  agreement and supersedes all prior agreements and  understandings,  both
written and oral,  among the parties with respect to the subject  matter hereof,
and (b) are not  intended  to, and shall not,  confer upon any person other than
the parties hereto any rights or remedies  hereunder.  Inclusion of or reference
to matters in a schedule does not constitute an admission of what is material or
the materiality of such matter.

                  SECTION  13.05 Action by the  Shareholders.  The  Shareholders
hereby  irrevocably  authorize and appoint the Representative as their agent and
attorney  who  may  on  behalf  of  the  Shareholders  make  any  amendments  or
modifications   of  this  Agreement  and  all  other  agreements  and  documents
contemplated  hereby and to waive inaccuracies of representations and warranties
or performance or compliance  with any of the provisions  herein  contained that
such agent believes in such agent's sole discretion,  to be in the best interest
of the Shareholders.

                  SECTION 13.06  Governing Law. This Agreement shall be governed
and  construed in  accordance  with the  internal  laws of the State of New York
without regard to any applicable conflicts of law.

                  SECTION 13.07  Assignment.  Neither this  Agreement nor any of
the rights, interests or obligations hereunder shall be assigned or delegated by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written  consent of the other parties,  except that Parent may assign,  in
its  sole  discretion,  any  or all of its  rights,  interests  and  obligations
hereunder to any direct or indirect wholly-owned  subsidiary of Parent or to any
person to whom it  transfers  by  operation  of law;  agreement  or  otherwise a
substantial  portion of the  business or assets of the  Company.  Any  purported
assignment  or  delegation  in violation of this Section 13.07 shall be null and


<PAGE>

void.  Subject to the preceding  sentence,  this Agreement will be binding upon,
inure to the benefit of and be enforceable  by the parties and their  respective
successors and assigns.

                  SECTION 13.08 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 terms and  provisions of this  Agreement  will
nevertheless  remain in full force and effect so long as the  economic  or legal
substance of the transactions  contemplated hereby is not affected in any manner
materially  adverse to any party hereto.  Upon any such  determination  that any
term or other provision is invalid,  illegal or incapable of being enforced, the
parties  hereto will  negotiate in good faith to modify this  Agreement so as to
effect  the  original  intent  of the  parties  as  closely  as  possible  in an
acceptable  manner,  to the  end  that  the  transactions  contemplated  by this
Agreement are consummated to the extent possible.

                  SECTION 13.09 Publicity. Parent and the Company shall promptly
consult  with  each  other  as to the form and  substance  thereof  prior to the
release or issuance of any press release or other public  disclosure  related to
this Agreement,  the Merger or any other transactions  contemplated  hereby. The
Shareholders,  Parent  and the  Company  agree not to  release or issue any such
press release or other public disclosure without the approval of the Company and
Parent unless otherwise required by applicable law.

                  SECTION 13.10 Enforcement of the Agreement. The parties hereto
agree that  irreparable  damage would result in the event that any  provision of
this  Agreement  is not  performed  in  accordance  with  specific  terms  or is
otherwise  breached.  It is  accordingly  agreed that the parties hereto will be
entitled to equitable  relief  including an injunction or injunctions to prevent
breaches of this Agreement and to enforce  specifically the terms and provisions
hereof.

                  Section  13.11  Consent To  Jurisdiction.  Except as otherwise
provided in Section 12.01(h),  any action,  suit or proceeding arising out of or
relating to this  Agreement or any of the Related  Agreements  may be brought in
any  Supreme  Court of the State of New York or in any  United  States  District
Court in New York,  in each case  having  situs in New York City and each of the
Shareholders, the Company and Parent hereby irrevocably submits to the exclusive
jurisdiction  of any of such courts for the purpose of any such action,  suit or
proceeding (or if any such court refuses to exercise jurisdiction, such suit may
be  commenced  in any other  court that will  assert  jurisdiction.  Each of the
Shareholders  hereby irrevocably  appoints the firm of Gardere & Wynne,  L.L.P.,
with an office at 1601 Elm Street,  Suite 3000,  Dallas,  Texas  75201,  as such

<PAGE>

Shareholder's   agent  to  receive  on  behalf  of  such  Shareholder  and  such
Shareholder's  property,  service of copies of the summons and complaint and any
other process which may be served in any such action,  suit or proceeding or any
arbitration  proceeding as provided in Section 12.01(h) hereto. Such service may
be made by mailing  or  delivering  a copy of such  process to such firm at such
firm's above address,  and each Shareholder  hereby  irrevocably  authorizes and
directs each such firm to accept such service on such  Shareholder's  behalf. If
and to the extent that service of any summons, complaint or other process cannot
for any  reason  be  effected  upon such firm as  herein  above  provided,  each
Shareholder further  irrevocably  consents to the service of any and all process
in any such actions, suit, proceeding or arbitration by the mailing of copies of
such process to such  Shareholder in the same manner  specified in Section 13.01
of this  Agreement  for the giving of  notices.  Nothing in this  Section  shall
affect the right of Parent, Sub or Surviving  Corporation to serve legal process
in any other  manner  permitted  by law or affect  the right of  Parent,  Sub or
Surviving  Corporation to bring any action,  suit or proceeding against any such
Shareholder  or  such  Shareholder's  properties  in the  courts  of  any  other
jurisdiction.

                     [rest of page intentionally left blank]



<PAGE>


                  IN  WITNESS  WHEREOF,  each of the  parties  hereto  have duly
executed this Agreement as of the date first above written.

                          COLUMBUS McKINNON CORPORATION


                          By /s/ Robert L. Montgomery
                             ------------------------
                             Robert L. Montgomery, Executive
                               Vice President


                          GL DELAWARE, INC.


                          By /s/ Robert L. Montgomery
                             ------------------------
                             Robert L. Montgomery, Treasurer


                          G. L. INTERNATIONAL INC.


                          By /s/ Larry Di Stefano
                             ------------------------
                             Larry Di Stefano, President


                         LARCO INDUSTRIAL SERVICES, LTD.


                         By /s/ Larry Di Stefano
                            ----------------------------
                            Larry Di Stefano, President


                         SHAREHOLDERS:

                         GL PARTNERS, L.P.
                         By Cardinal Holding Corporation
                         Sole General Partner


                        By: /s/ Marshall B. Payne
                            ----------------------------
                            Marshall B. Payne, President

                            /s/ Andy Everett
                            ----------------------------
                            Andy Everett

                            /s/ Larry DiStefano
                            ----------------------------
                            Larry DiStefano

                            /s/ Dominic Stefano
                            ----------------------------
                            Dominic DiStefano

                            /s/ Steven DiStefano
                            ----------------------------
                            Steven DiStefano

                            /s/ Cesare Cagnin
                            ----------------------------
                            Cesare Cagnin