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                                                                    EXHIBIT 10.6

         THIS SHAREHOLDER AGREEMENT made and entered into as of the 23rd day of
April, 1996 among:

                  (a) Meade Instruments Corp., a California corporation 
         (the "Company");

                  (b) John Diebel, a resident of the State of California acting
         in his individual capacity (in such capacity being "Diebel"), and also
         acting as the trustee (in such capacity being the "Diebel Trustee") of
         the Diebel Living Trust u/d/t dated January 12, 1995 (the "Diebel
         Trust"), Steve Murdock, a resident of the State of California acting in
         his individual capacity (in such capacity being "Murdock"), Steve
         Murdock and Tracie Elaine Murdock as trustees (in such capacity being
         collectively the "Murdock Trustees") of the Murdock 1986 Trust u/d/t
         dated October 23, 1986 , 1986 (the "Murdock Trust") Ron Ezra, a
         resident of the State of California ("Ezra") and Joseph A. Gordon, Jr.,
         a resident of the State of California ("Gordon"; and together with
         Diebel, the Diebel Trustee, Murdock, the Murdock Trustees, and Ezra
         being sometimes hereinafter referred to individually as a "Founder" and
         collectively as the "Founders"); and

                  (c) Churchill ESOP Capital Partners, A Minnesota Limited
         Partnership ("CECP"; and together with it successors and assigns and
         transferees being sometimes hereinafter referred to individually as a
         "Holder" and collectively as the "Holders"; and together with the
         Founders being sometimes hereinafter referred to individually as a
         "Shareholder" and collectively as the "Shareholders").

                                   WITNESSETH

         WHEREAS, the Founders own beneficially and/or of record the issued and
outstanding shares of the Company's Series A Common Stock, no par value (the
"Series A Common Stock") set forth opposite their names on Exhibit A attached
hereto and incorporated herein by reference; and

     WHEREAS, the Company and CECP have entered into a Securities Purchase
Agreement (the "Purchase Agreement;" capitalized terms not otherwise defined
herein being used herein as therein defined) dated of even date with this
Agreement pursuant to which CECP will purchase 1,000 shares of the Company's
Series A Preferred Stock, no par value (the "Preferred Stock") and Warrants
permitting CECP to acquire 1,000,000 shares of the Series A Common Stock; and

     WHEREAS, the Founders and CECP deem it in their best interest and the best
interest of the Company to provide for the corporate governance of the Company
and desire to enter into this Agreement in order to effectuate that purpose; and


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         WHEREAS, the Founders and CECP further desire to establish certain
rights with respect to the sale, assignment, transfer, encumbrance or other
disposition of the shares of Common Stock and to provide for certain other
rights and obligations in respect thereof as hereinafter provided.

     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, CECP, the Founders and
the Company, intending to be legally bound, agree as follows:

1.       Corporate Governance.

                  (a) Charter and Bylaws; etc. The Company's Charter and Bylaws
         as in effect on the date hereof are attached hereto as Exhibits B and
         C, respectively. The Charter and Bylaws may be amended in any manner
         permitted thereunder and under the California General Corporation Law
         ("Cal Code") except that neither the Charter nor the Bylaws shall be
         amended in any manner that would conflict with, or be inconsistent
         with, the provisions of this Agreement.

                  (b) Board of Directors. The Founders and CECP agree that:

                           (i) So long as CECP's rights to have a Purchaser's
                      Representative to or on the Company's board of directors
                      have not terminated in accordance with the Purchase
                      Agreement, CECP shall be entitled to designate one
                      director; provided, however, that at any time and from
                      time to time, CECP, by written notice to Diebel (or his
                      successor appointed by the Founders holding a majority of
                      the Voting Stock held by the Founders (such holders being
                      the "Majority Founders")), may elect not to designate its
                      director, in which event CECP agrees to vote its shares of
                      Voting Stock for an additional director designated by the
                      Majority Founders.

                           (ii) In addition to its rights under subsection (i)
                      above but only so long as the Preferred Stock is
                      outstanding, CECP shall be entitled to designate the
                      majority of the directors upon the happening and
                      continuation of a Specified Event of Non-Compliance in
                      accordance with the Purchase Agreement and the Company's
                      Charter.

         Each Founder and CECP shall retain at all times the right to vote such
         person's shares of the Company's Voting Stock, in that person's sole
         discretion, on all matters other than those set forth in subsections
         (i) and (ii) of this Section (b) or in Section 1(e) that are at any
         time presented for a vote to Company's stockholders generally. If CECP
         elects not to exercise its right to designate a director at any time,
         then CECP 


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         may subsequently change its election by giving written notice to the
         Founders, whereupon the Founders, if necessary to elect CECP's
         designee, shall cause one of their designated directors to resign and,
         if necessary to elect CECP's designee, CECP and the Founders agree to
         call a special meeting of the Company's stockholders to elect a
         director designated by CECP at the earliest time permitted by the
         Company's Charter and Bylaws.

                  (c) Initial Board of Directors.  As of the date hereof, the 
         Company's board of directors consists of the following members:

                      John Diebel
                      Steve Murdock
                      Joseph A. Gordon, Jr.,

         each of whom shall hold his or her office until the 1997 annual meeting
         of stockholders (or such earlier time as may otherwise be provided in
         the Charter) at which time directors shall be nominated and elected in
         the manner provided in the Charter, Bylaws, Cal Code and this
         Agreement.

                  (d) Covenant to Vote. Each Founder and Holder shall appear in
         person or by proxy at any annual or special meeting of stockholders of
         the Company for the purpose of obtaining a quorum and shall vote his,
         her, or its shares of Voting Stock upon any matter submitted to a
         stockholders' vote in a manner so as to be consistent and not in
         conflict with, and to implement, the terms of this Agreement including,
         without limitation:

                           (i) each Founder hereby covenants to vote all of that
                  Founder's shares of Voting Stock in accordance with this
                  Section 1 for the election of directors designated by CECP;
                  and

                           (ii) CECP hereby covenants to vote all of CECP's
                  shares of Voting Stock in accordance with this Section 1 for
                  the election of one or more directors designated by the
                  Majority Founders.


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                  (e)      Certain Corporate Matters. Each Founder agrees with 
         CECP that, so long as the CECP's rights to have a Purchaser's 
         Representative to or on the Company's board of directors have not been 
         terminated in accordance with the Purchase Agreement:

                           (i) if any of the following actions proposed to be
                  taken by the Company would constitute an Event of
                  Non-Compliance (other than after the redemption of the
                  Preferred Stock), then the Company's taking of such action
                  requires the affirmative prior vote of the Purchaser's
                  Representative and that such Founder will not take any action
                  as a director of the Company or otherwise with respect to any
                  of such actions that does not receive the Purchaser's
                  Representative's affirmative vote:

                                   (A) the Company's making of any Distribution;

                                   (B) the Company's merger or consolidation
                           with any other person or the Company's sale, lease,
                           exchange or other disposition of its property and
                           assets;

                                   (C) the Company's commencement of a
                           voluntary case under Title 11 of the United States
                           Code as from time to time in effect, or the Company's
                           authorization of the commencement of such a voluntary
                           case;

                                   (D) the Company's seeking of relief as a
                           debtor under any applicable law, other than said
                           Title 11, of any jurisdiction relating to the
                           liquidation or reorganization of debtors or to the
                           modification or alteration of the rights of
                           creditors, or the Company's consenting to or
                           acquiescing in such relief;

                                   (E) the Company's making an assignment for 
                           the benefit of, or entering into a composition with, 
                           its creditors, or the Company's appointment or 
                           consenting to the appointment of a receiver or other
                           custodian for all or a substantial part of its 
                           property. or

                                   (F) the Company's issuance of any capital 
                           stock; and

                           (ii) agrees that if: (A) a Specified Event of
                  Non-Compliance occurs and is continuing; (B) CECP has
                  exercised its rights under the Company's Charter to designate
                  a majority of the Company's directors; and (C) CECP notifies
                  the Founders in writing (such notice being the "CECP Sale
                  Notice") that CECP desires that the Company be sold, then such
                  Founder shall affirmatively vote
                                            

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                      his shares of Voting Stock in favor of a Qualifying Sale
                      unless, within the 30 day period immediately following
                      CECP's written presentation to the Founders and the
                      Company of a bona fide Qualifying Sale offer, the Company
                      redeems the Preferred Stock in full for the Preferred
                      Stock Redemption Price and pays the Repurchase Price for
                      the Warrants and the Warrant Stock in full, in each case
                      in immediately available funds; provided, however, that
                      the Fair Market Value used in the computation of the
                      Repurchase Price shall be determined simultaneously with
                      the determination of the Appraised Value and through the
                      same appraisal procedures used in the determination of
                      such Appraised Value.

2.       Co-Sale Rights.

                      (a) Rights. Except for Permitted Transfers, no Shareholder
         (such Shareholder being a "Selling Shareholder") shall sell, transfer
         or otherwise dispose of any or all of his shares of the Company's
         Common Stock to any person (a "Purchaser") unless each other
         Shareholder who is not a Selling Shareholder (individually, a "Co-Sale
         Offeree" and collectively, the "Co-Sale Offerees") is given an
         opportunity to sell or otherwise dispose to the Purchaser on a pro-rata
         basis such Co-Sale Offeree's shares of Common Stock and Warrants (for
         purposes of this Section 2, each Warrant shall be treated as the number
         of shares of Common Stock for which it is exercisable) in accordance
         with the provisions of this Section 2. A Co-Sale Offeree's pro rata
         share shall be equal to the product of (M) the fraction, the numerator
         of which is the number of shares of Common Stock held by such Co-Sale
         Offeree, and the denominator of which is the aggregate number of shares
         of Common Stock owned by the Selling Shareholder and the Co-Sale
         Offerees participating in such sale, multiplied by (N) the number of
         shares of Common Stock to be sold in the contemplated sale, with the
         Warrant being considered to represent the number of shares of Common
         Stock for which it is exercisable.

                      (b) Offer. Prior to the consummation by the Selling
         Shareholder of any sale or other disposition of all or a portion of
         such Selling Shareholder's shares of Common Stock, the Selling
         Shareholder shall cause the bona fide offer from the Purchaser to
         purchase or otherwise acquire such shares from the Selling Shareholder
         to be reduced to writing (the "Co-Sale Offer") and shall deliver
         written notice of the Co-Sale Offer, together with a true copy of the
         Co-Sale Offer, to each Co-Sale Offeree. Each Co-Sale Offer shall
         include an offer to purchase or otherwise acquire from each Co-Sale
         Offeree, such Co-Sale Offeree's Common Stock at the same time, at the
         same price (except for a reduction equal to the aggregate exercise
         price for the Warrants) and on the same terms as apply to the sale or
         other disposition by the Selling Shareholder to the Purchaser and
         according to the terms and subject to the conditions of this Agreement.

                      (c) Acceptance Notice. If a Co-Sale Offeree desires to 
         accept the Co-Sale


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         Offer with respect to its shares of Common Stock, such Co-Sale Offeree
         shall do so by delivering to the Selling Shareholder a written notice
         stating such Co-Sale Offeree's irrevocable acceptance of the Co-Sale
         Offer with respect to such Co-Sale Offeree's shares of Common Stock
         (the "Co-Sale Acceptance Notice"), which Co-Sale Acceptance Notice
         shall be delivered to the Selling Shareholder within 20 days after the
         delivery of the Co-Sale Notice to such Co-Sale Offeree. Such Co-Sale
         Acceptance Notice shall constitute such Co-Sale Offeree's agreement to
         sell such Co-Sale Offeree's shares of the Company's Common Stock to the
         Purchaser. In addition, such Co-Sale Acceptance Notice shall include a
         written undertaking of the Co-Sale Offeree to cooperate in making
         arrangements reasonably satisfactory to the Purchaser regarding
         delivery of such documents as shall be reasonably required to transfer
         the shares of Common Stock that the Purchaser agrees to sell pursuant
         to the Co-Sale Offer. If a Co-Sale Offeree does not deliver a Co-Sale
         Acceptance Notice to the Selling Shareholder in accordance with the
         provisions of this Section 2(c), such Co-Sale Offeree shall be deemed
         to have irrevocably rejected the Co-Sale Offer.

                  (d) Consummation. If there is a decrease in the price to be
         paid by the Purchaser for the shares of the Common Stock to be sold
         from the price set forth in the Co-Sale Offer, which decrease is
         acceptable to the Selling Shareholder, or other material change in
         terms which are less favorable to the Selling Shareholder but which are
         acceptable to the Selling Shareholder, the Selling Shareholder shall
         notify the Co-Sale Offerees of such decrease or other material change
         in terms, and each Co-Sale Offeree shall have five business days from
         the date of receipt of the notice of such decrease to rescind its
         previously delivered Acceptance Notice. The Selling Shareholder shall
         act as agent for the Co-Sale Offerees in connection with such sale or
         other disposition and shall cause to be remitted promptly to each of
         the Co-Sale Offerees the total consideration of the shares sold by such
         Co-Sale Offeree pursuant thereto, which consideration shall be in the
         same form as the consideration received by the Selling Shareholder and
         shall be net of such Co-Sale Offeree's applicable portion of the
         expenses of such sale or other disposition, as provided in Section 2(e)
         below and net of the aggregate exercise price of the Warrants which
         shall be remitted to the Company. The Selling Shareholder shall
         furnish, or shall cause to be furnished, promptly such other evidence
         of the consummation and time of consummation of such sale or other
         disposition and the terms thereof as shall be reasonably requested. If
         the Selling Shareholder does not complete such sale or other
         disposition, the Selling Shareholder shall return to the Co-Sale
         Offerees all documents (including stock assignments and stock
         certificates, if any) and powers-of-attorney which the Co-Sale Offerees
         delivered to the Selling Shareholder pursuant to the terms of this
         Section 2 or otherwise in connection with such sale or other
         disposition.

                  (e) Expenses. Each Co-Sale Offeree shall bear such Co-Sale
         Offeree's pro rata share (based upon the ratio of the number of shares
         of Common Stock sold by such Co-Sale Offeree bears to the aggregate
         number of shares of Common Stock sold 


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         in such transaction by all of the Company's stockholders) of the
         reasonable expenses incurred by the Selling Shareholder in connection
         with any sales or other dispositions of such Co-Sale Offeree's shares
         of Common Stock made pursuant to the co-sale rights set forth herein.

                  (f) Assignability. The rights granted to CECP under this
         Section 2 shall be assignable by CECP only to a person acquiring the
         number of CECP's shares of Common Stock at least equal to the CECP
         Floor Amount on the date of CECP's transfer to such person.

                  (g) Cumulative Rights. The obligations and rights of the
         Founders set forth in this Section 2 are in addition to the obligations
         and rights of the Founders set forth in Section 4 but the Offeree
         Founders' rights under Section 4 are exercisable prior to the
         Shareholders' exercise of their rights under this Section 2.

                  (h) Termination. The obligations and rights set forth in this
         Section 2 shall terminate upon the consummation of a Qualified Public
         Sale and shall terminate with respect to any shares of Common Stock
         transferred by a Selling Shareholder and any Co-Sale Offeree to any
         person after compliance with this Section.

3.       Founders' Repurchase Option.

                  (a) Repurchase Option. If CECP exercises its right under
         Section 9.1 of the Purchase Agreement to put its Warrant Stock to the
         Company and the Company cannot pay the Repurchase Price for CECP's
         Warrant Stock in immediately available funds because of a Statutory
         Restriction or a Specified Credit Agreement Restriction, then CECP,
         within 10 Business Days after what would have been the Put Closing
         Date, shall give notice (a "Repurchase Offer Notice") in writing to the
         Founders, setting forth the number of Rescinded Put Shares and the
         Repurchase Price thereof. The Founders, subject to the terms and
         conditions hereinafter set forth, shall have the irrevocable right and
         option (the "Repurchase Option") to purchase all, but not less than
         all, of the Rescinded Put Shares at the Repurchase Price thereof. Each
         Founder may subscribe to any number of the Rescinded Put Shares;
         subject, however to adjustment as hereinafter provided. A Founder
         ("Repurchase Subscribing Founder") may exercise the Repurchase Option
         by depositing with CECP within 30 days of the date of such Repurchase
         Offer Notice (such period being the "Repurchase Subscription Period")
         an acceptance of the Repurchase Option (a "Repurchase Subscription"),
         which acceptance shall be binding and irrevocable. Each Repurchase
         Subscription shall state the maximum number of Rescinded Put Shares to
         be purchased by the Repurchase Subscribing Founder, up to the total
         number of Rescinded Put Shares. At the end of the Repurchase
         Subscription Period, CECP shall prepare a list of Repurchase
         Subscriptions, showing the maximum number of Rescinded Put Shares to be
         purchased pursuant to each Repurchase Subscription, and


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         the total maximum number of Rescinded Put Shares to be purchased
         pursuant to all Repurchase Subscriptions and shall deliver a copy of
         such list to each Founder and the Company. If the total maximum number
         of Rescinded Put Shares to be purchased pursuant to all Repurchase
         Subscriptions is equal to or greater than the number of Rescinded Put
         Shares and (i) if each Repurchase Subscribing Founder shall have
         subscribed for at least his pro rata share based upon the ownership
         interests of the Repurchase Subscribing Founders, then each Repurchase
         Subscribing Founder shall be deemed to have purchased the number of
         shares that would be purchased by each Repurchase Subscribing Founder
         if such Repurchase Subscribing Founder purchased his pro rata share of
         the Rescinded Put Shares, or (ii) if one or more Repurchase Subscribing
         Founders shall have subscribed to less than his pro rata share, then
         such Repurchase Subscribing Founders shall be deemed to have subscribed
         to their actual subscription and the shares in excess of such
         Repurchase Subscribing Founder's actual subscriptions shall be
         allocated to the oversubscribing Repurchase Subscribing Founders (in
         each case, proportionate to the oversubscribing Repurchase Subscribing
         Founders' respective pro rata shares) first to all of the
         oversubscribing Repurchase Subscribing Founders up to the maximum
         number of shares specified in their respective Repurchase Subscriptions
         and thereafter to only those oversubscribing Repurchase Subscribing
         Founders whose respective Repurchase Subscriptions have not been
         accepted up to the maximum number of shares specified therein. For
         purposes of this Section, a Founder's pro rata share shall be the ratio
         that such Founder's ownership interest in the Company bears to the
         total ownership interests of all of the Founders.

                  (b) Purchase of Shares by Founders. Each Repurchase
         Subscribing Founder's Repurchase Subscription shall be accompanied by a
         deposit, in immediately available funds, of the Repurchase Price of the
         Rescinded Put Shares subject to such Repurchase Subscribing Founder's
         Repurchase Subscription; provided, however, that if such Founder's
         Repurchase Subscription is for more than his pro rata share, then his
         required deposit is limited to his pro rata share of the aggregate
         Repurchase Price. At the end of the Repurchase Subscription Period,
         CECP shall notify each Repurchase Subscribing Founder of the number of
         Rescinded Put Shares purchased by such Repurchase Subscribing Founder,
         the aggregate Repurchase Price thereof and the amount of any additional
         payment to be made by such Repurchase Subscribing Founder over his
         deposit and CECP shall return the excess amount of such Repurchase
         Subscribing Founder's deposit to him. Within 5 days after such notice,
         each Repurchase Subscribing Founder shall pay, in immediately available
         funds, the remainder of the Repurchase Price, if any, for the Rescinded
         Put Shares purchased by him.

                  (c) Failure to Exercise Repurchase Option. Unless all
         Rescinded Put Shares are purchased pursuant to Repurchase Subscriptions
         delivered to CECP in accordance with this Section 3, then the Founders
         and the Repurchase Subscribing


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         Founders shall be deemed to have failed to have exercised the
         Repurchase Option and the Founders' and the Repurchase Subscribing
         Founders' rights hereunder shall terminate at the end of the Repurchase
         Subscription Period without further action on the part of CECP.

                  (d) Notice Requirements. CECP shall give Repurchase Offer 
         Notices to the Founders in accordance with the terms of this Agreement.
         Repurchase Subscriptions in response to an Repurchase Offer Notice
         shall be deemed made when received by CECP.

                  (e) Termination. The rights and obligations set forth in this 
         Section 3 shall terminate upon the consummation of a Qualified Public
         Sale.

4.       Right of First Refusal.

                  (a) Right of First Refusal. In the event a Founder ("Offeror
         Founder") proposes to sell, exchange or otherwise dispose of all or any
         part of the Offeror Founder's Common Stock ("Offered Shares") or
         interest therein, whether for cash or other consideration, and has
         received a bona fide offer from a third party to purchase the Offered
         Shares, then the Offeror Founder shall, within ten business days
         thereof, deliver to the other Founder's (individually an "Offeree
         Founder" and collectively the "Offeree Founders") written notice (the
         "Option Notice") setting forth in detail the circumstances of such
         event, and the Offeree Founders shall have a right of first refusal to
         purchase the Offered Shares at the price and upon the terms and
         conditions set forth in the Option Notice.

                  (b) Purchase of Offered Shares. Within 30 days after receipt
         of the Option Notice by the Offeree Founders, the Offeree Founders may
         elect to purchase the Offered Shares pro rata based on their stock
         ownership interests in the Company on the terms and conditions provided
         in the Option Notice. If all of the Offeree Founders do not elect to
         purchase their pro rata share of the Offered Shares, each Offeree
         Founder desiring to purchase a portion of the Offered Shares remaining
         in excess of his portionate share thereof shall be entitled to purchase
         that proportion of the Offered Shares which remains unpurchased as his
         stock ownership interest in the Company bears to the interest of all
         other Offeree Founder's desiring to purchase portions of such Offered
         Shares in excess of their proportionate shares thereof. If one or more
         of the Offeree Founders elect to purchase all of the Offered Shares
         during such 30 days period, the Offeror Founder shall sell the Offered
         Shares to the Offeree Founder(s), and shall not be required to provide
         to any Holder the co-sale rights under Section 2 hereof. If the Offeree
         Founders do not elect to purchase all of the Offered Shares within the
         30-day period, the Offeror may transfer the Offered Shares to the third
         party upon the terms and conditions described in the Option Notice;
         provided that the Offeror Founder must provide the co-sale rights in
         Section 2 hereof


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         to all of the Shareholders.

                  (c) Termination. The rights and obligations set forth in this 
         Section 4 shall terminate upon the consummation of a Qualified Public
         Sale.

5.       Right of Repurchase Upon a Founder's Death.

                  (a) Mandatory Sale and Purchase.  If any Founder's employment
         with the Company terminates as a result of his death, then the
         representative(s) of the estate of the deceased Founder (hereinafter
         called the "Representative") or the respective trustee(s) of the Diebel
         Trust, the Murdock Trust or any other Permitted Trust (hereinafter
         called the "Trustee") shall sell to the Company, and the Company shall,
         subject to any limits then imposed by the Company's lenders, purchase
         from the Representative or such Trustee, the number of shares of Common
         Stock owned by the deceased Founder (and/or, in the case of Murdock,
         Diebel or any other Founder who has transferred shares of Common Stock
         to a Permitted Trust, owned by the Trustees of the respective Murdock
         Trust, the Diebel Trust or such Permitted Trust) in accordance with
         this Section 5 (such shares being the "Deceased Founder's Shares").

                  (b) Purchase Price. The purchase price for the Deceased
         Founder's Shares (the "Purchase Price") shall be the Repurchase Price
         thereof except that the Fair Market Value to be used in determining the
         Repurchase shall be determined in accordance with the Founder Appraisal
         Procedures set forth in Section 6(j) hereof. The Purchase Price shall
         be paid by check to the Representative or Trustee within ten days of
         the later of (A) the Company's receipt of the life insurance proceeds
         from the Policies maintained on the deceased Founder's life as
         contemplated by Section 5(c) of this Agreement and (B) the
         determination of the Founder Fair Market Value. Notwithstanding the
         foregoing, if the proceeds from such Policies (after deducting a
         reasonable reserve for any tax likely to be borne by the Company
         attributable to the proceeds of such Policies) ("Available Proceeds")
         are less than the Purchase Price, the Available Proceeds shall be used
         to purchase that number of shares equal to the product of (X) the
         Available Proceeds times (Y) the number of the Deceased Founder's
         Shares divided by the Purchase Price.

                  (c) Life Insurance.

                      (i)  Subject to the provisions of Section 5(c)(v):

                                  (A) The Company shall apply for and become the
                           owner and beneficiary of life insurance policies on 
                           the life of each Founder in the amount set forth on 
                           Exhibit D attached to this Agreement 
                           (the "Policies"); and


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                                  (B) So long as a Founder continues to be 
                           employed by the Company (or, in the case of the
                           Murdock Trust, the Diebel Trust or any Permitted
                           Trust, Murdock, Diebel or the Founder who has
                           established the Permitted Trust, as the case may be,
                           continues to be employed by the Company) and while
                           this Agreement shall be in effect, the Company
                           shall: (1) use its best efforts to maintain such
                           Policies in full force and effect; (2) not exercise
                           any powers of ownership by canceling any such
                           Policy, by changing the named beneficiary, by
                           assigning ownership or by otherwise changing the
                           nature or amounts of the Policies; provided,
                           however, that the board of directors may increase
                           the amounts of such Polices to no more than what the
                           Repurchase Price of such Founder's Deceased
                           Founder's Shares would be based upon the most
                           current annual appraisal conducted for the ESOP; and
                           (3) pay the premiums on all such Policies within 30
                           days after each such premium shall become due and
                           payable and may, in its discretion, apply any
                           dividends declared on the policies to the payment of
                           such premiums.

                  (ii) To the extent permitted by any Credit Agreement and
         permissible under California law, the Company shall use Available
         Proceeds to satisfy its obligation to repurchase the Deceased Founder's
         Shares of the deceased Founder, as applicable (except that in the case
         of the Policies purchased on the life of Murdock, Diebel or other
         Founder who has established a Permitted Trust, the proceeds shall be
         used to purchase the shares of Common Stock owned by the Murdock Trust,
         the Diebel Trust or the Permitted Trust, respectively).

                  (iii) If the Available Proceeds of any Policy are insufficient
         or unavailable to repurchase the relevant Deceased Founder's Shares in
         full, then the full amount of Available Proceeds shall be used to
         repurchase the number of such Deceased Founder's Shares calculated in
         accordance with Section 5(b) pro rata from the holders thereof or such
         other percentages as may be agreed upon by the Representative and the
         Trustee. Any shares of Common Stock unavailable to be repurchased shall
         no longer be subject to repurchase by the Company but shall remain
         subject to the other terms and conditions of this Agreement. For
         purposes of this Section, the relevant Representative's or Trustee's
         pro rata share shall be the ratio that such person's ownership interest
         in the Company bears to the total ownership interests of such
         Representative and Trustee.

                  (iv) If any proceeds remain from the Policies after the
         payment of the obligations of the Company as set forth in this Section
         5, such proceeds


                                       11
<PAGE>   12
                  shall be retained by the Company and used to pay other
                  redemption costs and, thereafter, for general corporate
                  purposes.

                           (v)   Notwithstanding the foregoing, the Company's
                  board of directors retains its right to terminate or cancel
                  the Policies on the lives of all, but not less than all, of
                  the then currently employed Founders or reduce the Policies on
                  the lives of all, but not less of all, of the then currently
                  employed Founders proportionate to the amount of the Policies
                  then in effect.

                  (c)      Termination of Obligation to Buy and Sell. The 
         obligations of the Representatives, the Murdock Trust, the Diebel
         Trust, any Permitted Trust or the Trustee to sell their Common Stock
         set forth in this Section 5 of this Agreement and the obligation of the
         Company to buy in accordance with such Section shall terminate upon one
         of the following events:

                           (i)   A Qualified Public Sale of the Company's Common
                  Stock;

                           (ii)  A reorganization, merger, or consolidation of
                  the Company with one or more entities (except for a
                  transaction, the purpose of which is to change the domicile of
                  the Company), as a result of which the Company goes out of
                  existence or becomes a subsidiary of another entity (which
                  shall be deemed to occur if another entity or group of
                  entities acting in concert shall own, directly or indirectly,
                  more than 50% of the aggregate voting power of all outstanding
                  equity securities of the Company); or

                           (iii) A sale of all or substantially all of the 
                  Company's assets.

6.       Miscellaneous.

                  (a)      Governing Law. All matters relating to the 
         interpretation, construction, validity and enforcement of this
         Agreement shall be governed by the internal laws of the State of
         California without giving effect to any choice or conflict of law
         provision or rule (whether of the State of California or any other
         jurisdiction) that would cause the application of laws of any
         jurisdiction other than the State of California.

                  (b)      Legended Certificates.  The certificates evidencing 
         the Common Stock and Preferred Stock shall be legended to disclose the
         existence of the rights set forth in this Agreement.

                  (c)      Entire Agreement. This Agreement and exhibits hereto
         contain the entire agreement between the parties relating to me subject
         matter hereof and supersede all prior agreements and understandings
         with respect to such subject matter, and the parties hereto have made
         no agreements, representations or warranties relating 


                                       12
<PAGE>   13
         to the subject matter of this Agreement which are not set forth herein.

                  (d) Amendments. No amendment or modification of this Agreement
         shall be deemed effective unless made in writing and signed by all of
         the parties hereto.

                  (e) No Waiver. No term or condition of this Agreement shall be
         deemed to have been waived, nor shall there be any estoppel to enforce
         any provisions of this Agreement, except by a statement in writing
         signed by the party against whom enforcement of the waiver or estoppel
         is sought. Any written waiver shall not be deemed a continuing waiver
         unless specifically stated, shall operate only as to the specific term
         or condition waived and shall not constitute a waiver of such term or
         condition for the future or as to any act other than that specifically
         waived.

                  (f) Binding Effect. This Agreement shall become effective upon
         CECP's exercise in full of its Warrant and, after becoming effective,
         shall be binding upon, and inure to the benefit of, the parties hereto
         and their respective successors, assigns and personal representatives
         except as otherwise expressly stated herein. Until all of the rights
         and obligations arising under Sections 1, 2, 3, 4 and/or 5 hereof are
         terminated in accordance with their respective terms, no sale,
         transfer, assignment, exchange or other disposition of shares of Common
         Stock shall be made by any Shareholder to any person unless such person
         shall agree in writing to be bound by the then applicable provisions of
         this Agreement. The rights of CECP hereunder are afforded to it as a
         holder of Series A Common Stock.

                  (g) Counterparts. This Agreement may be simultaneously
         executed in any number of counterparts, and such counterparts executed
         and delivered, each as an original, shall constitute but one and the
         same instrument.

                  (h) Severability. To the extent any provision of this
         Agreement shall be invalid or unenforceable, it shall be considered
         deleted herefrom and the remainder of such provision and of this
         Agreement shall be unaffected and shall continue in full force and
         effect.

                  (i) Captions and Headings. The captions and paragraph headings
         used in this Agreement are for convenience of reference only, and shall
         not affect the construction or interpretation of this Agreement or any
         of the provisions hereof.

                  (j) Certain Definitions. In addition to the terms defined
         elsewhere in this Agreement, for purposes of this Agreement, the
         following terms shall have the meanings ascribed to them in this
         subsection:

                      "Appraised Value" shall mean the appraised value of
                  the Company as determined by an appraiser (the "Independent
                  Appraiser") selected in


                                       13
<PAGE>   14
         accordance with the procedures set forth in this definition. Within 30
         days after CECP delivers the CECP Sale Notice, CECP shall select an
         appraiser (the "CECP Appraiser") and notify the Founders in writing
         (such notice being the "CECP Appraiser Notice") of CECP's selection. If
         the Majority Founders do not notify CECP in writing of their objection
         (such objection being the "Founder Objection") to such selection within
         15 days after receipt of the CECP Appraiser Notice, then the CECP
         Appraiser shall be deemed to be the Independent Appraiser and the
         appraised value determined by the CECP Appraiser shall be the Appraised
         Value. If the Majority Founders timely object to the CECP Appraiser,
         then, within 15 days after the delivery of the Founder Objection, the
         Majority Founders shall select an Appraiser (the "Founder Appraiser")
         and notify CECP in writing (such notice being the "Founder Appraiser
         Notice") of the selection of the Founder Appraiser; provided, however,
         that if the Majority Founders fail to timely select the Founder
         Appraiser, then the CECP Appraiser shall be deemed to be the
         Independent Appraiser and the appraised value determined by the CECP
         Appraiser shall be the Appraised Value. If CECP does not notify the
         Founders in writing of its objection (such objection being the "CECP
         Objection") to such selection within 15 days after receipt of the
         Founder Appraiser Notice, then the Founder Appraiser shall be deemed to
         be the Independent Appraiser and the appraised value determined by the
         Founder Appraiser shall be the Appraised Value. If CECP timely objects
         to the Founder Appraiser, then the CECP Appraiser and the Founder
         Appraiser shall meet to select the Independent Appraiser within 15 days
         after CECP's delivery of the CECP Objection. If the CECP Appraiser and
         the Founder Appraiser cannot agree upon the Independent Appraiser
         within 30 days after CECP's delivery of the CECP Objection to the
         Founder Appraiser, then the selection of the Independent Appraiser
         shall be submitted to the Chief Judge of the United States District
         Court for the District of Minnesota. Appraised Value shall then be
         determined by the Independent Appraiser within 30 days after its
         selection, and the determination of the Independent Appraiser shall be
         conclusive and binding upon the Company, the Founders and CECP. All
         expenses of the Founder Appraiser, the CECP Appraiser and the
         Independent Appraiser shall be borne by the Company.

                  "Common Stock" shall mean the Company's Series A Common Stock,
         and Series B Common Stock.

                  "Founder Appraisal Procedures" shall mean the procedures set
         forth in this definition. For a period of 60 days after the date on
         which any Founder's employee status with the Company is terminated as a
         result of his death (the "Negotiation Period"), the Representative, any
         applicable Trustee and the Company agree to negotiate in good faith to
         reach agreement upon the Fair


                                       14
<PAGE>   15
         Market Value. In the event that the Representative, the applicable
         Trustee and the Company are unable to agree upon the Fair Market Value
         by the end of the Negotiation Period, the Fair Market Value shall be
         determined for purposes of Section 5 by an appraiser (the "Independent
         Appraiser") selected in accordance with the following procedures:

                                    (a) Within 30 days after the end of the
                           Negotiation Period, the Company shall select an
                           appraiser (the "Company Appraiser") and notify the
                           Representative and applicable Trustee in writing
                           (such notice being the "Company Appraiser Notice") of
                           the Company's selection. If the Representative or
                           such Trustee does not notify the Company in writing
                           of its objection (such objection being the "Estate
                           Objection") to such selection within 15 days after
                           receipt of the Company Appraiser Notice, then the
                           Company's Appraiser shall be deemed to be the
                           Independent Appraiser and the fair market value
                           determined by the Company Appraiser shall be the Fair
                           Market Value.

                                    (b) If the Representative or the applicable
                           Trustee timely objects to the Company Appraiser,
                           then, within 15 days after the delivery of the Estate
                           Objection, the objecting person (or, if both the
                           Representative and the Trustee timely object, then
                           the Representative and the Trustee jointly) shall
                           select an Appraiser (the "Estate Appraiser") and
                           notify the Company in writing (such notice being the
                           "Estate Appraiser Notice") of the selection of the
                           Estate Appraiser; provided, however, that if the
                           objecting person(s) fail to timely select the Estate
                           Appraiser, then the Company Appraiser shall be deemed
                           to be the Independent Appraiser and the appraised
                           value determined by the Company Appraiser shall be
                           the Fair Market Value.

                                    (c) If the Company does not notify the
                           Representative and the applicable Trustee in writing
                           of its objection (such objection being the "Company
                           Objection") to such selection within 15 days after
                           receipt of the Estate Appraiser Notice, then the
                           Estate Appraiser shall be deemed to be the
                           Independent Appraiser and the fair market value
                           determined by the Estate Appraiser shall be the Fair
                           Market Value.

                                    (d) If the Company timely objects to the
                           Estate Appraiser, then the Company Appraiser and the
                           Estate Appraiser shall meet to select the Independent
                           Appraiser within 15 days after the Company's delivery
                           of the Company Objection. If the Company Appraiser
                           and the Estate Appraiser cannot agree upon the
                           Independent Appraiser within 30 days after the
                           Company's delivery of the Company Objection to the
                           Estate Appraiser, then the selection of the
                           Independent Appraiser shall 


                                       15
<PAGE>   16
                           be submitted to Judicial Arbitration Mediator 
                           Services, Inc./ENDISPUTE in Orange County,
                           California.

                                    (e) In all cases, the Independent Appraiser
                           shall determine the Fair Market Value within 30 days
                           after its selection, and the determination of the
                           Independent Appraiser shall be conclusive and binding
                           upon the Company, the Representative and the Trustee.

                                    (f) All expenses of the Company Appraiser
                           shall be borne by the Company, all expenses of the
                           Estate Appraiser shall be borne pro rata by the
                           Representative and the Trustee and all expenses of
                           the Independent Appraiser shall be borne equally by
                           the Company, the Representative and the Trustee.

                           "Qualifying Sale" shall mean any merger,
                  consolidation, liquidation or sale of the Company's assets or
                  transaction involving the sale of at least a majority of the
                  shares of the Company's issued and outstanding capital stock
                  that CECP proposes be accepted by the Company and/or the
                  holders of the shares of the Company's stock, as the case may
                  be, where the consideration payable in such transaction is
                  based upon a value of the Company equal to at least 85% of the
                  Company's Appraised Value.

                           "Permitted Transfers" shall mean: (a) any transfer by
                  a Founder of shares of Common Stock, without consideration, to
                  the trustee of a trust (a "Permitted Trust" for the benefit of
                  such Founder and the family members of such Founder where such
                  Founder is the initial trustee and such trust is revocable and
                  the trustee agrees to be bound by the terms of this Agreement;
                  provided, however, that the grantor Founder's rights under
                  this Agreement shall not inure to the benefit of such
                  Permitted Trust except as provided in Sections 2, 3 or 5 but
                  the grantor Founder's obligations under this Agreement shall
                  be binding upon such Permitted Trust to the same extent as
                  binding upon the grantor Founder at the time of transfer; (b)
                  any transfer by a Shareholder or a Permitted Trust of shares
                  of Common Stock through a Public Sale so long as all of the
                  Shareholders have had an opportunity to participate in such
                  Public Sale; (c) any transfer by CECP of Rescinded Put Shares
                  to a Repurchase Subscribing Founder pursuant to Section 3 or
                  of any transfer to any person of Rescinded Put Shares that
                  were not timely repurchased by the Founders in accordance with
                  Section 3; (d) any transfer by CECP of shares of Common Stock
                  to the Company pursuant to Section 9.1 or 9.3 of the Purchase
                  Agreement; and (e) any transfer by an Offeror Founder of
                  Offered Shares to the Offeree Founders pursuant to Section 5.

                           "Specified Credit Agreement Restriction" shall mean
                  any Credit


                                       16
<PAGE>   17
                  Agreement Restriction which prohibits the Company from paying 
                  the Repurchase Price of the shares of Warrant Stock put to the
                  Company pursuant to Section 9.1 of the Purchase Agreement at
                  any time after the principal of, and accrued interest on, the
                  Term Note (or any Refinancing Indebtedness in respect thereof)
                  has been paid in full and no event of default has occurred and
                  is continuing on the then applicable Credit Agreement or would
                  result from such payment.

                           "Voting Stock" shall mean the Company's capital stock
                  that is entitled to participate in the election of directors
                  and shall include the Company's Series A Common Stock and the
                  Company's Series B Common Stock.

                  (k) Notices. Any notice provided for in this Agreement will be
         in writing and will be deemed properly delivered if either personally
         delivered or sent by overnight courier or telecopier or mailed
         certified or registered mail, return receipt requested, postage
         prepaid, to the recipient at the address specified below:

                           (i)   if to a CECP, at CECP's address for notices 
                  under the Purchase Agreement;

                           (ii)  if to any other Holder, at such Holder's 
                  address on the stock transfer books of the Company;

                           (iii) if to the Company or any Founder, at:

                              16542 Millikan Avenue
                              Irvine, CA 92714

         and thereafter at such other address, notice of which is given in
         accordance with the provisions of this Section 6(k). Any such notice
         shall be effective (A) if delivered personally or by telecopy, when
         received, (B) if sent by overnight courier, when receipted for, and (C)
         if mailed, three (3) days after being mailed as described above.

                  (l) Prior Agreement Superseded. This Agreement hereby
         supersedes in its entirety the Amended and Restated Stock Transfer and
         First Refusal Agreement dated as of January 31, 1995 by and among the
         Shareholders ("Prior Agreement"). Upon the execution of this Agreement
         by the parties, the Prior Agreement shall no longer be of any force or
         effect.


                                       17
<PAGE>   18
         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date set forth in the first paragraph hereof.

                                       Meade Instruments Corp.

                                       By: /s/ JOHN DIEBEL
                                           -------------------------------------
                                       Its: Chairman and Chief Executive Officer


                                       /s/ JOHN DIEBEL
                                       -----------------------------------------
                                       John Diebel


                                       /s/ JOHN DIEBEL
                                       -----------------------------------------
                                       John Diebel in his capacity as a
                                       trustee of the Diebel Living Trust
                                       created under Agreement dated
                                       January 12, 1995.


                                       /s/ STEVE MURDOCK
                                       -----------------------------------------
                                       Steve Murdock


                                       /s/ STEVE MURDOCK
                                       -----------------------------------------
                                       Steve Murdock in his capacity as a
                                       trustee of the Murdock 1986 Trust
                                       under Agreement dated October 23, 1986.


                                       /s/ RON EZRA
                                       -----------------------------------------
                                       Ron Ezra


                                       /s/ JOSEPH A. GORDON, JR.
                                       -----------------------------------------
                                       Joseph A. Gordon, Jr.



                                       18
<PAGE>   19
                                 Churchill ESOP Capital Partners,
                                 A Minnesota Limited Partnership

                                  By: Churchill Capital Investment Partners,
                                     A Minnesota Limited Partnership
                                     Its: General Partner

                                       By: Churchill Capital, Inc.
                                       Its: General Partner

                                         By: /s/ ROBERT L. DAVIS
                                            ---------------------------------
                                             Its: Vice President



                                       19
<PAGE>   20
                                  EXHIBIT A TO
                              SHAREHOLDER AGREEMENT

                               FOUNDERS AND SHARES

<TABLE>
<CAPTION>
         Founder                             Shares
         -------                             ------
<S>                                          <C>
John Diebel directly and as a beneficiary
  of the Diebel Trust.                       1,275,000


Steve Murdock directly and as a beneficiary
  of the Murdock Trust.                        762,500


Ron Ezra                                       295,000


Joseph A. Gordon, Jr.                          167,500
</TABLE>

                                                                                

                                        1
<PAGE>   21
                                  EXHIBIT D TO
                              SHAREHOLDER AGREEMENT

                       INSURANCE POLICIES FOR SHAREHOLDERS

<TABLE>
Person Upon Whose Life the
Policy is to be Issued      Amount of Policy
<S>                         <C>           
John C. Diebel               $ 9,630,000.00

Steve Murdock                $ 4,965,000.00

Ron Ezra                     $ 1,534,000.00

Joseph A. Gordon             $   871,000.00
</TABLE>

                                                                                

                                        1