ANNUAL PURCHASE AGREEMENT
                               FOR THE PURCHASE OF

                             PERFORMANCE CONTROLLERS

                             ("Purchase Agreement")

1.      DATE AND TERM

        This Purchase Agreement is made December 1, 1998, and shall apply to
        orders made according to this Purchase Agreement, from December 1, 1998
        and shall continue valid until December 1, 2000.

2.      PARTIES

<TABLE>
<CAPTION>
<S>     <C>
        (a)    Montgomery KONE Inc.,               (the Purchaser)

               One Montgomery Court
               Moline, Illinois, 61265 U.S.A.      (the Purchaser's primary place of business)

        (b)    Performance Control, L.L.C.,        (the Supplier)

               4220 Varsity Drive, Suite E
               Ann Arbor, Michigan 48108           (the Supplier's primary place of business)
</TABLE>

        Orders applicable to this Purchase Agreement may be made directly by the
        Purchaser or any of the companies listed in Appendix 7 ("Participating
        Units"), or subsequently added to the list by the Parties. Any
        Participating Unit shall establish its own ordering procedures with the
        Supplier.

        The Participating Unit and the Supplier shall always communicate
        directly regarding any specific Order.

3.      APPLICABLE TERMS

        The General Terms and Conditions of Purchase, attached as Appendix 5
        ("GTC"), shall apply and the application of any other general terms and
        conditions is specifically excluded.

Annual Purchase Agreement     Date:  December 1, 1998       Page 1 of 5

<PAGE>

13.     CONTRACT DOCUMENTS

        In the event of any conflict between the provisions of this document and
        any Appendix to this Purchase Agreement listed below, or between any two
        Appendices, this document shall govern and the Appendices shall be
        interpreted in their numbered order.

<TABLE>
<CAPTION>
<S>              <C>                       <C>                    <C>
        Appendix 1    Specification - NEMA 1       Dated  October 1, 1998
                      Specification - NEMA 12      Dated  October 1, 1998

        Appendix 2    Technical Specification
                      - "The Performance Control User's Guide"                      Dated 1998
                      - Wall Bracket mounting Instructions for Escalators        Dated 10/1/98
                      - Floor/Wall Bracket Mounting Instructions for Escalators  Dated 10/1/98
                      - Field Installation of Remote L.E.D. Indicator Light Kit  Dated 10/1/98
                      - Three Circuits to Guarantee Adequate Voltage to Motor
                           During Regenerative Power Mode                        Dated 10/1/98
                      - Drawing Numbers:     - 3134E01                           Dated 1/14/98
                                             -       DET 00, 10, 20, 30, 40, 50,
                                                     60, 70, 80, 90, 100 All
                                                     Dated 1/14/98
                                             - 05251N50.00                       Dated 7/16/98
                                             - 05251N57.00                       Dated 7/16/98
                                             - 05251N58.00                       Dated 7/16/98
                                             - 05251N59.00                       Dated 7/16/98

        Appendix 3    Testing
                      - Testing Procedures for Three Phase                       Dated 11/1/97
                      - Cold Test Procedures for Performance Controller          Dated 10/1/98
                      - Final Test Procedure for Performance Controller          Dated 10/1/98

        Appendix 4    Performance Bond - Not Required

        Appendix 5    General Terms and Conditions of the Purchase
                                                     Dated:  April 1, 1998    Pages:  12

        Appendix 6    Price List

        Appendix 7    Participating Units

        Appendix 8    Example of Purchase Order Form

        Appendix 9    Warranty

        Appendix 10   Special Conditions


14      PARTIES REPRESENTATIVES (GTC 7.2)

        For the Purchaser:         David J. Wells, Purchasing Manager, Branch Support

        For the Supplier:          Stephen L. Schulman, Managing Director
</TABLE>

Annual Purchase Agreement     Date:  December 1, 1998       Page 4 of 5

<PAGE>


15.     OTHER PROVISIONS

        The following additional clauses to the General Terms and Conditions may
        apply, as directed by the Purchase Order.

        [      Buy America Act (41 U.S.C. 10)                           ]
        [      U.S. Steel Act                                           ]
        [      Federal Acquisition Regulations                          ]
        [      Minority Business Utilization (MBE/WBE/DBE)              ]
        [      Special requirements per State and Local jurisdictions.  ]


Except as modified herein, the Purchase Agreement between the parties is hereby
ratified, approved and confirmed.

An instrument in writing, signed by the parties hereto, as amended, may only
further amend this Purchase Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Annual Purchase Agreement
as of the day and year first above written. The parties have executed this
Purchase Agreement in two identical copies, one for each party.


SIGNED: "SUPPLIER"                      SIGNED: "PURCHASER"
PERFORMANCE CONTROL, L.L.C.             MONTGOMERY KONE INC.
a Michigan limited liability company    a corporation


/s/ Stephen L. Shulman                      /s/ David J. Wells
Stephen L. Shulman                          David J. Wells
Managing Member                             Purchasing Manager, Branch Support

DATE: December 7, 1998                      DATE: 12/9/98


WITNESSES:

/s/ [illegible signature]                   /s/ Sandra L. Young


/s/ [illegible signature]                   /s/ James A. Robinson


Annual Purchase Agreement     Date:  December 1, 1998       Page 5 of 5


<PAGE>



APPENDIX 5:  GENERAL TERMS AND CONDITIONS OF PURCHASE ("GTC")

1          Definitions

           The following  capitalized  terms shall have the meanings assigned to
           them,  unless  a  different  definition  is  assigned  to them in the
           Purchase Agreement:

           "Delivery"

                            Completion   of  the  delivery  of  the   Equipment,
                            including  successful  completion  of the  specified
                            inspections  and tests to insure the equipment meets
                            the requirements set forth in the Purchase Agreement
                            for the quality and workmanship of the equipment.

           "Equipment"

                            The   materials,   equipment   and   all   necessary
                            documentation  to be delivered  to the  Purchaser by
                            the Supplier, including any specified services to be
                            performed in connection  with the Delivery,  such as
                            installation and testing of the Equipment. (GTC 3.1)

           "Supplier"

                            "Seller" as referenced on the individual  Montgomery
                            KONE Inc. Purchase Orders is same as "Supplier".

           "Purchaser"

                            "Buyer" as, referenced on the individual  Montgomery
                            KONE Purchase Orders is same as "Purchaser".

           "Purchase Agreement"

                            Contract  for the purchase of (goods or services) by
                            KONE Corporation, including its subsidiaries.

           "End  User"

                            Legal  entity   responsible   for  the  use  of  the
                            installed   product   furnished   by  KONE  and  its
                            subsidiaries.

           "Project Destination"

                            Installed  location of the product furnished by KONE
                            and its subsidiaries.

           "Participating Units"

                            Business unit (including international subsidiaries)
                            within KONE  Corporation  which  participates in the
                            purchase  of  goods  or  services   covered  by  the
                            Purchase Agreement.

2          PAYMENT

           2.1       Payment Terms

           Unless  otherwise  agreed  to in  Article  7 of the  Annual  Purchase
           Agreement,  payment shall   be  made within 40 days after delivery of
           material and receipt of invoice, (original and one copy), with prices
           and extended.  Supplier shall render  separate  invoices for each and
           every  shipment.  Supplier shall render a monthly  statement no later
           than the 5th of the  month  following  shipment  of  goods.  Under no
           circumstances  shall  Purchaser pay any late,  interest,  carrying or
           other  charges with respect to any amounts  invoiced to Purchaser for
           goods ordered under the Purchase Agreement.
<PAGE>

3          EQUIPMENT

           3.1       Scope of Delivery

           The Equipment shall be completed to meet the  Specification  attached
           to the Purchase Agreement ("Specification") and shall be delivered to
           the  Purchaser  within  the  period  allowed  for the  Delivery.  The
           Equipment shall be deemed to include any equipment and services which
           are necessary for the Delivery and the intended use of the Equipment,
           regardless  of whether or not it is  specifically  identified  in the
           specification.

           Individual  deliveries  may be changed by Purchaser from time to time
           to  correspond  with the progress of the projects for which goods are
           ordered hereunder. Purchaser may change the Delivery date to any date
           upon (i) thirty days  notice for those  portions of this order with a
           Delivery  date of six  months or less from date of the  order.  If no
           Delivery date is shown, Purchaser shall fix a Delivery date by giving
           Supplier (i) thirty days  notice for deliveries  required  within the
           six-month period  following said notice,  and (ii) sixty days  notice
           for deliveries  required beyond the six-month  period  following such
           notice.

           In accordance with Purchase  Order,  Supplier shall give Purchaser 24
           hours notice of all shipments.

           3.2       Modifications

           No change or modification of the Purchase  Agreement or General Terms
           and  Conditions  shall be made  without  Purchaser's  and  Supplier's
           specific written consent.

           The Purchaser  shall have the right to request the Supplier to modify
           the  Specification  at any time. Any adjustment to the Purchase Price
           and to the Delivery Time caused by the  modification  shall be agreed
           to via a written  change  order.  The rights and  obligations  of the
           parties   under  the   Purchase   Agreement   shall   extend  to  all
           modifications.

           3.3       Documentation

           The  Supplier   shall  provide  the  Purchaser   with   documentation
           concerning Equipment in accordance with the Purchase Agreement.  Upon
           a reasonable  request by the  Purchaser,  the Supplier  shall deliver
           additional  instructions and documentation to enable the orderly use,
           installation and servicing of the Equipment.

           The Purchaser shall have the right to use all documentation  that has
           been placed at his disposal,  for any authorized purpose and to place
           such documents at the disposal of  authorities,  the End User, or any
           other third party, as necessary in such connection.

           Supplier  shall accept  individual  Purchase  Orders and agree to the
           terms hereof   (i) signing and returning the  Acknowledgment  Copy of
           the Purchase  Order hereof,  or (ii)  furnishing  Purchaser  with any
           other writing  indicating  its  acceptance,  or (iii)  performance by
           Supplier in accordance with the Purchase Order.  However, the receipt
           from Supplier of any  acceptance or any document  purporting to be an
           acceptance of the Purchase Order, or receipt of goods shipped or work
           performed  under the Purchase  Order or payment  therefore,  does not
           constitute  an assent by Purchaser to any terms,  which are different
           from or additional to the  instructions,  Terms and Conditions on the
           Face  and  Reverse  Side  of the  Purchase  Order,  unless  expressly
           assented to in writing by Purchaser.  The Purchase Order is revocable
           at any time prior to  acceptance.  Without  limiting  the  foregoing,
           Purchaser's  receipt of any invoice  from  Supplier,  before or after
           Supplier's  delivery of goods  described  herein,  shall not obligate
           Buyer  to any  terms  in such  invoice  which  differ  from or are in
           addition to the terms contained herein.
<PAGE>

           3.4       Inspections and quality control

           Both the  Purchaser  and the End User shall be allowed free access to
           the  facilities  of the  Supplier  at all  reasonable  times  for the
           purpose of inspecting,  expediting,  or testing the Equipment and the
           quality thereof and witnessing tests which may have been agreed upon.
           The costs of carrying out of any tests and inspections shall be borne
           by the  Supplier.  The  cost  of  attending  shall  be  borne  by the
           attending party.

           In addition, if any goods furnished by Supplier shall fail to satisfy
           the  requirements  of  the  specifications,  or  shall  prove  to  be
           defective in any respect,  Purchaser may, at its option,  upon notice
           to Supplier,  (i) require Supplier to promptly correct or replace the
           same at  Supplier's  expense;  (ii)  correct or replace or arrange to
           correct or  replace  the same,  for which  Supplier  shall  reimburse
           Purchaser immediately upon demand; or (iii) cancel all or any portion
           of this order.  If Purchaser  elects to cancel,  Purchaser shall hold
           any  goods  in  its  possession   affected  by  the  cancellation  at
           Supplier's risk, to be disposed of in accordance with applicable law,
           and  Supplier  shall  refund  any  payments  made on  account  of the
           canceled  goods.  Furthermore,  in the event any goods  furnished  by
           Supplier  are or become  defective  in any respect  whatsoever  or if
           Supplier  breaches any of its  warranties or  obligations  hereunder,
           Supplier agrees to indemnify and hold harmless  Purchaser from any or
           all loss,  liability,  cost or  expense  (including  court  costs and
           reasonable  attorney's  fees and  expense) by reason of any injury or
           damage,  whether  direct or indirect,  consequential,  incidental  or
           otherwise,  including  all claims of such injury or damage to persons
           or  property,  caused by,  relating to or arising from such defect or
           breach.

           No  approval  of the  Supplier's  technical  documents  or  drawings,
           inspection,  testing of the Equipment,  or supervision of design work
           or manufacturing,  whether by the Purchaser or the End User, shall be
           construed  as  implying  any  limitation  on  the   obligations   and
           liabilities of the Supplier.

           3.5       Safety

           The  Equipment  shall include all  specified  safety  devices and the
           Supplier shall ensure that they fully satisfy the requirements of any
           applicable safety regulations and standards. If any additional safety
           devices are required,  due to a  non-compliance  with any regulations
           and standards, they shall be install at the cost of the Supplier.

           Whenever any work is performed at any facility of the Purchaser,  the
           Supplier shall comply with all applicable  safety  regulations of the
           Purchaser  and  shall  follow  any  other  instructions  given by the
           Purchaser concerning the safety.

           3.6       Compliance with other laws and regulations

           The Supplier shall also ensure that the Equipment fully complies with
           any other applicable laws and regulations in the end use location for
           the installed equipment.

           3.7       Change in Laws

           If any  modification  of the  Specification  is  necessary  due to an
           unanticipated  change  in laws  after  the  signing  of the  Purchase
           Agreement,  the Supplier shall request a  modification  to be made in
           accordance with Article 3.2.
<PAGE>

4          DELIVERY

           4.1       Shipping, Packing, Marking, & Storage

           All  shipments  are to be made as  directed  on the front page of the
           individual  Purchase  Order.  Notices  must be sent to  consignee.  A
           NOTICE  must be sent to  Consignee  covering  carload  and  truckload
           shipments  within 24 hours of the material  being  forwarded,  giving
           number of order,  kind of material,  shipper's  name,  car number and
           initials and routing.  Enclose shipping memorandum in each package or
           tack same inside each car door.  For less than carload and  truckload
           shipments,  indicate  order  numbers on all  material or packages and
           packing slips and Bills of Lading, in space provided on the blanks of
           the various railroad,  truck and express companies.  IMMEDIATELY upon
           shipping,  mail the  Purchaser  two (2) copies of tally and  shipping
           memorandum.

           The Equipment  shall be packed in a manner which is appropriate  with
           regard to the  means of  transport  to be used and the  nature of the
           Equipment  and in  accordance  with  any  instructions  given  in the
           Specification as to the manner, size, weight, etc. of the packing.

           The  Equipment  shall be  clearly  marked by the  Supplier  and carry
           information  concerning the identity of the recipient and the name of
           the place of  destination  together  with any  specific  instructions
           necessary for handling and storage.

           4.2       Early Delivery

           No  Equipment  should be  delivered  or  performed  prior to the time
           agreed in the Purchase  Agreement  as the earliest  time for delivery
           without the prior written consent of the Purchaser.

           4.3       Hold on Delivery

           Purchaser may direct  Supplier,  from time to time, to hold and store
           all or any part of the goods to be delivered  hereunder and  to await
           further delivery  instructions from Purchaser.  In the event Supplier
           holds and stores all or a substantial part of any completed order for
           longer  than  (180)  one  hundred  eighty  days,  Purchaser  will pay
           Supplier  a  storage  fee at a rate  comparable  to that  charged  by
           warehouseman  for  storing  similar  size and type  goods on  similar
           premises,  for the time the goods are stored  after the  initial  one
           hundred eighty days until Purchaser releases equipment for delivery.

           4.4       Delay by the Supplier

           If Supplier  shall fail or refuse to proceed  with this order,  or if
           Supplier  shall  fail  to  make  delivery  of all  items  within  the
           specified  times  agreed  upon in the  Purchase  Agreement  or on the
           Purchase  Order,  Purchaser shall have the right to cancel all or any
           part of this  order.  Time is of the  essence to this  contract.  The
           Supplier  agrees that if the goods  ordered are not  delivered at the
           time and in accordance with purchaser's  instructions,  and purchaser
           pays or  incurs  any  damages,  penalty  or other  charge  for a late
           delivery or performance under the terms of the aforesaid  contract(s)
           on account of supplier's  late delivery,  supplier shall  immediately
           indemnify and hold harmless purchaser therefore.

           4.5       Quantity

           The specific quantity ordered on each individual  Purchase Order must
           be  delivered  in full.  Delivery  of any  unauthorized  quantity  is
           subject to  Purchaser's  rejection,  and such goods  shall be held at
           Supplier's risk.  Purchaser may return such goods at Supplier's risk,
           and all transportation  charges to and from the original  destination
           shall be paid by Seller.
<PAGE>

           4.6       Transfer of Title

           The title to all Equipment or parts thereof shall be  transferred  to
           the  Purchaser  when  the  relevant  parts  have  been  obtained,  or
           otherwise identified and separated,  by the Supplier,  as parts to be
           used for the purposes of the Purchase Agreement.

           4.7       Transfer of Risk

           The Supplier  shall bear the risk of loss of the Equipment  until the
           Delivery  of  equipment  is  complete  and  written   acceptance   by
           Purchaser,  upon which the risk of loss shall be transferred from the
           Supplier to the Purchaser.

           4.8       Right to Withhold

           The  Purchaser  may deduct any amount owed by the  Supplier  from any
           payment of the Purchase Price. The Purchaser shall pay the undisputed
           amounts payable pursuant to the Purchase Agreement, however, disputed
           amounts  being  payable  only  after  the  final  settlement  of such
           disputes.

           4.9       Waiver

           No waiver by  Purchaser  of any breach of any  provision of the order
           shall  constitute a waiver of any other breach or provision.  No act,
           conduct or failure to act of Purchaser shall,  constitute a waiver of
           any  provision  contained  herein  unless  such waiver is in Writing,
           executed by Purchaser and delivered to Supplier.

5          OTHER RESPONSIBILITIES OF THE SUPPLIER

           5.1       Insurance

           Supplier  shall at all  times  and at  Supplier's  cost,  maintain  a
           Comprehensive  General  Liability Policy including bodily injury and,
           property  damage  coverage and  containing  a Broad Form  Contractual
           Liability  Endorsement which  specifically  cover the indemnity under
           paragraph  7.2 and the  obligation  Supplier has accepted  hereunder.
           This  Comprehensive  General  Liability  Policy shall be specifically
           endorsed to name Purchaser as an additional insured.

           5.2       Supply of Spare Parts

           The  Supplier  guarantees  the  availability  of spare  parts for the
           Equipment  for  at  least  ten  (10)  years  after  Delivery  of  the
           Equipment.

           5.3       Special Tools

           No charge shall be made for patterns,  pattern equipment,  jigs, dies
           and  fixtures or special  apparatus  used in the  manufacture  of the
           Equipment provided by the Supplier.

           5.4       Liability for Defects

           The Supplier  guarantees that the Equipment complies in every respect
           with the  requirements  of the Purchase  Agreement  and that they are
           free from any  defect  in  design,  materials,  or  workmanship.  Any
           non-compliance  appearing  during the period to time specified in the
           Purchase  Agreement  as the  period  starting  from the  Delivery  of
           Equipment  during which the Supplier  shall be liable for any defects
           in the  Equipment  ("Guarantee  Period"),  shall be  corrected by the
           Supplier  without  delay  and  without  any  additional  cost  to the
           Purchaser or the End User.
<PAGE>

           If any repair under the guarantee  obligation  is made  subsequent to
           the End User  having put the  Equipment  in  service,  the  guarantee
           period in respect of the affected Equipment shall be renewed starting
           from the date when the repair work was approved by the End User.

           Should  the  Supplier  refuse,  or fail,  to  fulfill  his  guarantee
           obligation to the Purchaser's, or End User's, satisfaction,  within a
           reasonable  period of time,  the Purchaser  shall be entitled to have
           repair or replacement carried out at the Supplier's expense. The same
           right  shall  accrue  to the  Purchaser,  if in case of  urgency  the
           Purchaser  finds it  inappropriate  to wait for the Supplier to carry
           out the work.

           The  Purchaser  shall  request  the  consent of the  Supplier  before
           carrying out the repair or replacement work, if time permits. If such
           work has been  carried out without the consent of the  Supplier,  the
           Supplier  will be  given  opportunity  to  inspect  the  repaired  or
           replaced  products to evidence the  applicability  of the  Supplier's
           guarantee liability to such work.

           The guarantee obligation for the Supplier shall not extend to defects
           proved  to  having  been  directly   caused  by  wrong  or  negligent
           operation, overloading or inadequate maintenance.

6          BONDS

           The performance bond, if required from the Supplier,  shall be issued
           by any acceptable surety in any agreed from, for the value set in the
           Purchase Agreement or Purchase Order to secure the performance of the
           obligations  of the  Supplier.  The  Performance  Bond shall be valid
           until the end of the Guarantee Period.

7.         LIABILITIES OF THE SUPPLIER

           7.1       Liability for Damages

           As the Purchaser's  international  operations  demand  promptness and
           reliability,  it is  understood  that the  Supplier  appreciates  and
           accepts the fact that he shall  fulfill all of his  obligations  with
           particular  care and that even a minor breach may cause  considerable
           damage to the End User. The Supplier shall particularly  undertake to
           fulfill his  obligations  in respect of the timeliness and quality of
           the Equipment.  Any direct costs incurred by the Purchaser due to any
           breach shall be compensated for in full by the Supplier.

           If Supplier fails or neglects to perform,  keep and observe any term,
           provision, warranty or condition contained in the Purchase Agreement,
           Purchaser  shall have,  in addition to any other  rights and remedies
           contained herein or in any other agreements between the parties,  all
           the rights of an  aggrieved  Purchaser  under the Uniform  Commercial
           Code of Illinois or other  applicable  law,  all of which  rights and
           remedies  shall be  cumulative,  and none  exclusive,  to the  extent
           permitted by law. Purchaser may, upon written notice to Supplier, set
           off  and  deduct  all or any  part of (i) any  obligations  owing  to
           Purchaser by Supplier hereunder, and/or (ii) any damages sustained by
           Purchaser  resulting  from any breach of this  agreement  by Supplier
           against any part of the price due under any and all agreements now or
           hereafter in effect between the parties.
<PAGE>

           7.2       Indemnification and Hold Harmless

           The Supplier shall defend,  indemnify and hold harmless the Purchaser
           and the End User against  losses and claims for injuries or damage to
           any person or property  which may arise out of or in  consequence  of
           the  performance  of any Purchase  Agreement or Purchase Order by the
           Supplier  and  against  all claims,  demands,  proceedings,  damages,
           costs,  charges,  and  expenses  in respect  thereof  or in  relation
           thereto. Provided that the Supplier's liability to indemnify and hold
           harmless the Purchaser as aforesaid shall be reduced  proportionately
           to the extent that the act or neglect of the Purchaser, his servants,
           or agents may have contributed to the said loss, injury, or damage.

           7.3       Patents

           Supplier  warrants that the goods  furnished  under this order do not
           infringe  any  patent  rights.  Supplier  shall  indemnify  and  hold
           harmless  Purchaser,  its affiliates and their customers from losses,
           expenses  (including  attorneys'  fees),  claims or  liability of any
           nature arising out of the infringement or alleged infringement of any
           patent  on  account  of the  manufacture,  sale  or use of any  goods
           furnished   hereunder   except  where  compliance  by  Supplier  with
           specifications   prescribed  by  and   originating   with   Purchaser
           constitutes the sole basis of infringement or  alleged  infringement.
           Supplier, at its expense,  agrees to defend any suit brought or claim
           asserted  against  Purchaser,  its affiliates and their  customers on
           account of any such  infringement or alleged  infringement upon being
           notified in writing thereof by Purchaser. If the use of such goods in
           enjoined,  Supplier shall at its expense make every reasonable effort
           to obtain  for  Purchaser,  its  affiliates  and their  customers,  a
           License to  continue to use such goods.  If after a  reasonable  time
           Supplier is unable or fails to obtain such license,  Supplier  shall,
           at  its  expense,   either   replace   such  goods  with   equivalent
           non-infringing  goods or modify such goods in a manner  acceptable to
           Purchaser so that they become  equivalent,  non-infringing  goods. If
           Supplier  fails or is unable to do any of the above,  Supplier  shall
           refund to Purchaser the money or other consideration paid therefor.

           7.4       Confidentiality

           All drawings and  technical  documents  submitted by the Purchaser to
           the Supplier  prior or  subsequent to the Purchase  Agreement,  shall
           remain the exclusive property of the Purchaser. They may not, without
           the Purchaser's  express written consent, be utilized by the Supplier
           or copied, reproduced, transmitted, or communicated to a third party.

           The Supplier shall, at the Purchaser's  request,  immediately  return
           any copies of the drawings or technical  documents held by him at the
           end of the Guarantee Period.

           The Supplier shall ensure that no information  regarding the Purchase
           Agreement  is brought to the  knowledge  of any third  party  without
           obtaining prior consent thereto from the Purchaser.

8          MISCELLANEOUS

           8.1       Notices

           Notices  shall be  deemed  to have been  validly  given if  delivered
           personally  in writing,  telexed,  sent by  registered  air mail,  or
           telefaxed,  followed by a letter copy,  to the addresses set forth in
           the Purchase  Agreement or to any other  address of which the Parties
           hereto may have  informed  to the other  Party.  A notice or document
           sent by registered  air mail shall be deemed to have been received on
           the 14th day after mailing.
<PAGE>

           8.2       The Representatives of the Parties

           All  communication  between the parties shall be affected through the
           representatives  named in the Purchase Agreement or their substitutes
           as  notified  from time to time by either  party to the other  party.
           However,   all   communication   concerning  any  specific  Order  or
           Participating   Unit  shall  be   affected   directly   between   the
           Participating Unit and the authorized representative of the Supplier.

           8.3       Amendments

           Amendments  to the Purchase  Agreement  shall only be made in writing
           with specific  reference to the Purchase  Agreement and therefore any
           waiver given by either  party to the other in any one instance  shall
           not be deemed an amendment of the Purchase Agreement.

           8.4       Entire Agreement

           The  Purchase  Agreement  and the  documents  listed in the  Purchase
           Agreement shall constitute the entire  agreement  between the parties
           and it shall precede any other document exchanged between the parties
           before  the date of the  Purchase  Agreement.  No  document  shall be
           deemed to be included in the  Purchase  Agreement  without a specific
           reference.

           8.5       Assignment and Subcontracting

           The Supplier may not transfer or assign the Purchase Agreement or any
           part of it without the prior written  consent of the  Purchaser.  The
           Purchaser  may  freely  assign  the  Purchase  Agreement  or any part
           thereof  to any  company  affiliated  with the  Purchaser  by  giving
           advance notice thereof to the Supplier.

           If the Supplier wishes to employ subcontractors,  the written consent
           of the Purchaser must be obtained before the  subcontracting  work is
           ordered.

           8.6       Termination

           In  addition  to any other  rights of  termination  specified  in the
           Purchase  Agreement,  the  Purchaser  has a right  to  terminate  the
           Purchase  Agreement  in the event  that the  Supplier  is in  serious
           breach of his obligations under the Purchase Agreement and has failed
           to remedy such  breach  within  thirty (30) days of a written  demand
           thereof by the Purchaser. The Equipment failing to meet the specified
           time and quality  requirements  shall always be  considered a serious
           breach of the obligations of the Supplier.

           Purchaser  may  cancel  all or any  part of this  order  at any  time
           without  notice of any kind,  after  acceptance  and before  complete
           delivery  is  made,  upon  the  happening  of any  of the  following:
           insolvency of the  Supplier,  however  induced;  the  application  by
           Supplier for the  appointment  of receiver,  trustee or custodian for
           Supplier or any part of its assets;  the  execution by Supplier of an
           assignment for the benefit of creditors;  Supplier becomes  insolvent
           or fails generally to pay its debts as such debts become due.
<PAGE>

           8.7       Excuse of Performance:  Cost of Performance

           The terms and  provisions of Section 2-615 of the Uniform  Commercial
           Code  notwithstanding,  the  occurrence or existence of the following
           events  and   circumstances   shall  not  excuse  Supplier  from  the
           performance  of any of its  obligations  hereunder:  (i) any  adverse
           change in the cost or availability of raw materials, supplies or work
           in  process  from the date of this order to the Date  Required;  (ii)
           fires,  floods,  explosions,  accidents or  breakdowns;  (iii) riots,
           strikes, slowdowns or other concerted acts of workmen, whether direct
           or  indirect;  and  (iv)  any  other  cause  similar  to  any  of the
           foregoing. Under no circumstances shall Purchaser pay or be liable to
           Supplier for a price in excess of the price  determined in accordance
           with Appendix 6 (Price List) of the Purchase  Agreement hereof due to
           an increase in  Supplier's  cost of  performance  between the date of
           this order and the time of Supplier's  performance thereof unless the
           Project  Designation space on the front page of the Purchase Order is
           completed  and  the  general   contractor(s)  or  owner(s,)  of  said
           Project(s) agree(s) to pay such increase.

           8.8       Force Majeure

           The  following  circumstances  shall  constitute  an  event  of Force
           Majeure,  provided they arise  subsequently  to the entering into the
           Purchase  Agreement and could not reasonably have been anticipated by
           the Supplier at the time: war, mobilization,  civil commotion, revolt
           or riot, government intervention, official strike, and acts of God.

           The Supplier may not invoke any events of Force Majeure unless he can
           prove that

           (a)        he has taken all reasonable steps to limit the effects and
                      to make good the time lost,  during and after the event of
                      Force Majeure,

           (b)        he has,  when the  circumstances  he  wishes  to invoke as
                      events of force  majeure have become known to him,  within
                      three (3) days given  written  notice to the  Purchaser of
                      the  nature  and  anticipated  consequences  of the  Force
                      Majeure.

           Under no circumstances  can a period longer than seven (7) days prior
           to the  written  notice be taken  into  account  as an event of Force
           Majeure, whether known to the Supplier or not.

           8.9       Applicable Law

           APPLICABLE  LAWS:  SEVERABILITY.   Supplier  shall  comply  with  the
           provisions of the Fair Labor  Standards Act of 1938, as amended,  the
           Occupational  Safety and Health Act of 1970, and all other applicable
           Federal,  state and local laws,  regulations,  rules and  ordinances.
           This  agreement  shall be interpreted  under the parties'  rights and
           remedies  governed  by  the  Uniform  Commercial  Code  of  Illinois.
           Wherever  possible,   each  provision  of  this  agreement  shall  be
           interpreted  in  such  manner  as to be  effective  and  valid  under
           applicable  law,  but if any  provision  of this  agreement  shall be
           prohibited by or invalid under  applicable  law, such provision shall
           be  ineffective  to the  extent of such  prohibition  or  invalidity,
           without invalidating the remainder of such provision or the remaining
           provisions of this agreement.

           8.10      Settlement of Disputes

           Solutions to any  disputes  arising in  connection  with the Purchase
           Agreement shall be negotiated in good faith between the parties. If a
           solution cannot be found in mutual  negotiations,  the disputes shall
           be  finally   settled   under  the  rules  of  American   Arbitration
           Association.

           In addition,  either party has a right to submit any dispute, or seek
           enforcement  of any provision of the Purchase  Agreement in the local
           court of the other  party at his  discretion,  shall take  precedence
           over any  arbitration  proceedings and decision of the court shall be
           final and binding to the parties.
<PAGE>

           8.11      Buy American Act

           If  required  by the  conditions  stated in the  Purchase  Agreement,
           Supplier  must comply with  provisions  of the Buy  American  Act (41
           U.S.C.  10)  including,  but  not  limited  to,  Federal  Acquisition
           Regulations 52.225-1,  52.225-3,  52.225-5, as applicable per project
           specification requirements.



<PAGE>



APPENDIX 7:  PARTICIPATING UNITS

<TABLE>
<CAPTION>
<S>       <C>                                                                     <C>

1)         Montgomery KONE Inc.,
           Elevator Division, McKinney, Texas

                     ....................  Mickey Meyers, Purchasing Manager
                                                            ....................  Phone:  972-547-1240



2)         Montgomery KONE Inc.
           Escalator Division, Moline, Illinois
                     ....................  Lynden Jensen, Materials Manager

                                                            ....................  Phone:  309-949-1102



3)         Montgomery KONE Inc.
           MAC Spares Center, Moline, Illinois
                     ....................  Charles Bailey, Purchasing Manager
                                                            ....................  Phone:  309-743-5463



4)         FHE Services, Inc./C.E. Elevators Corp., Long Island City, NY
                   ....................  Neil Mullane, President
                                                            ....................  Phone:  718-361-7200



5)         Montgomery KONE Inc., Modernization Support Team, Moline, IL
                   ....................  Brad Fleming, Manager, Modernization Support Team
                                                            ....................  Phone:  309-743-5655



6)         Montgomery KONE Inc. Branch Locations
                   ....................  Branch Managers



7)         Montgomery KONE Elevator Co. Limited, Canadian Branch Locations
                   ....................  Thomas Ronnholm, President, General Manager & CEO
                                                            ....................  Phone:  416-252-6151


</TABLE>


<PAGE>



APPENDIX 9:                    WARRANTY


           9.1  Supplier  warrants to  Purchaser  that any  product  provided by
           Supplier   hereunder  be  free  from   defects  in  material   and/or
           workmanship under normal use and operation during the warranty period
           stated  herein.  In  any  product  provided  hereunder  proves  to be
           defective in material and/or workmanship with in eighteen (18) months
           from date of delivery,  provided  conditions  of operation  have been
           normal at all times,  and that the product has not been  subjected to
           abnormal  stresses,  such  caused as  incorrect  primary  voltage and
           frequency or improper ventilation,  Supplier will correct such defect
           at  Supplier's  own expense   by repairing or replacing the defective
           product.

           9.2 Claims for defective  product shall be subject to verification by
           an authorized employee of the Supplier.

           9.3 Any replacement or repaired product furnished under this Warranty
           shall be warranted  by Supplier  for a new warranty  period and under
           the same warranty  conditions as applicable to the original  product,
           unless only a components was replaced.

           9.4 The foregoing Warranty does not apply to experimental,  prototype
           or developmental products.

           9.5  Supplier  shall  pay  transportation   charges  for  controllers
           returned to Supplier and  delivered to Purchaser  only if Supplier is
           responsible under the terms of this Warranty.  Purchaser shall notify
           supplier, in writing, of any intention to return an alleged defective
           product.  Purchaser  shall give such  advance  notification  to allow
           Purchaser to arrange for shipment, should Supplier so desire.

           9.6 Other than the Warranty contained herein and in 5.4 of Appendix 5
           (GTC),  Supplier  disclaims that any other warranty has been given to
           Purchaser, whether express or implied.




<PAGE>



APPENDIX 10:         SPECIAL CONDITIONS

           The following  modifications are made herein to Appendix,  5: General
           Terms and Conditions of Purchase ("GTC").

           10.1      Section 3.3 is modified by adding the following language:

                               "Notwithstanding   anything   to   the   contrary
                               contained  herein,  no term and  condition of any
                               individual  Purchase  Order shall modify any term
                               and/or condition applicable to Supplier under the
                               Purchase   Agreement,   including   by   way   of
                               illustration  and not  limitation  the  scope  of
                               Supplier's   obligations   for  delivery  or  the
                               Purchase  Prices for the Equipment.  In the event
                               of any conflict  between an  individual  Purchase
                               Order  and the  Purchase  agreement,  as  amended
                               herein,  the  amended  Purchase  Agreement  shall
                               control."

           10.2      Section 3.6 is amended to read as follows:

                               "The   Supplier   shall  also   ensure  that  the
                               Equipment   fully   complies   with   any   other
                               applicable  laws  and  regulations  of an end use
                               location  in the  United  States of  America  and
                               Canada for the installed equipment."

           10.3       Section  5.4 is  hereby  modified  by  amending  the  last
                      sentence thereof to read as follows:

                               "The guarantee  obligation for the Supplier shall
                               not  extend  to  defects   proven  to  have  been
                               directly    caused   by   wrong   or    negligent
                               installation,     operation,    overloading    or
                               inadequate maintenance."

           10.4      Section 7.4 is amended to read as follows:

                               "All drawings and technical  documents  submitted
                               by either the  Purchaser  to the  Supplier or the
                               Supplier    to   the    Purchaser    (hereinafter
                               "Submitting  Party")  shall remain the  exclusive
                               property of the Submitting  Party.  they may not,
                               without the Submitting  Party's  express  written
                               consent,  be  utilized  by the  other  party,  or
                               copied,  reproduced,  transmitted or communicated
                               to a third party.

                               The other party shall, at the Submitting  Party's
                               request,  immediately  return  any  copies of the
                               drawings or technical documents held by it at the
                               end of the Guarantee  Period.  Both parties shall
                               ensure that no information regarding the Purchase
                               Agreement  is  brought  to the  knowledge  of any
                               third party without  prior  consent  thereto from
                               the other party."

           10.5       The  following  language  shall be added as  Section  8.12
                      Logos:

                               "Purchaser   shall  provide  Supplier  with  silk
                               screen   of   Purchaser's   logo  for   cover  of
                               controller.  Supplier will provide, at no cost to
                               Purchaser,  covers on the Performance  Controller
                               with  Purchaser's  logo  in  lieu  of  Supplier's
                               standard cover and logo."