DATED 29 JULY 1997








                          (1)      LUCAS Automation and Control Engineering GmbH

                          (2)      ASSEMBLY TECHNOLOGIE & AUTOMATION GMBH

                          (3)      LUCAS Industries plc






                                A G R E E M E N T


                                 relating to the

                    Sale and Purchase of the German Assets of

                          Lucas Assembly & Test Systems









BOESEBECK DROSTE
Rechtsanwalte
Berliner Allee 48
40212 Dusseldorf
Tel. 0211-13680
Fax 0211-324439

                                       1
<PAGE>

                                    CONTENTS


1.   Definitions
2.   Sale of the Activity
3.   Transfer of the Assets
4.   The Consideration
5.   Further Assurance and the Contracts
6.   Debtors
7.   The Transferring Employees
8.   Costs and Expenses
9.   Warranties
10.  Indemnity and Liabilities
11.  Product Liability and Product Warranty
12.  Post Completion Covenants
13.  Licence of Licensed Intellectual Property
14.  Risk
15.  Exclusions
16.  Condition Precedent
17.  Merger Control
18.  Continuing Services and Subrent
19.  Inspection of Documents
20.  Assignment Prohibited
21.  Survival of Certain Provisions
22.  Governing Law
23.  Counterparts
24.  Severability
25.  Notices and other Communications
26.  No Third Party Benefits
27.  Modification
28.  Waiver of Provisions


                                       2
<PAGE>


SCHEDULE 1   The Leased Assets
SCHEDULE 2   The Plant, Machinery and Equipment
SCHEDULE 3   The Property
SCHEDULE 4   Transferring Employees
SCHEDULE 5   Intellectual Property Agreements
SCHEDULE 6   Assignment of Debtors
SCHEDULE 7   Bonds, Guarantees and Indemnities
SCHEDULE 8   Memoranda of Understanding
SCHEDULE 9   Competing Activities


                                       3
<PAGE>

THIS AGREEMENT is made on 29 July 1997

BETWEEN

(1)  THE VENDOR LUCAS Automation and Control Engineering GmbH, Karl-Mand-Strasse
     2a, 56070 Koblenz, Germany,  registered with the Commercial Register of the
     County Court of Koblenz under registration number HRB 5258

(2)  THE  PURCHASER  ASSEMBLY  TECHNOLOGIE  & AUTOMATION  GMBH whose  registered
     office is at Karl-Mand-Strasse 2, 56070 Koblenz-Rheinhafen

(3)  LUCAS Industries plc,  whose  registered  office  is at Stratford, Solihull
     B90 4LA, England


RECITALS

(A)  The Vendor carries on the Activity at the Property (as each such expression
     is defined below)

(B)  Members of the Lucas Group (as defined  below) carry on businesses  similar
     to that of the Activity in England and the United States of America.

(C)  Members of the Lucas  Group are to sell the  businesses  referred to in (B)
     above to the  Purchaser  or members of the  Purchaser's  Group (as  defined
     below) on terms similar to those contained in this Agreement.

(D)  The  Vendor  has agreed to sell the  Activity  and the  Assets (as  defined
     below) to the Purchaser on the terms and conditions  hereinafter  appearing
     and in the Umbrella Agreement (as defined below).

(E)  Lucas Industries plc enters into this Agreement for giving jointly with the
     Vendor the restrictive covenants in addition to the Vendor 


                                       4
<PAGE>

(F)  The Umbrella  Agreement  regulates  the terms and  conditions  on which the
     Activity and the businesses referred to in (B) above are to be sold.


                                       5
<PAGE>

NOW THIS AGREEMENT WITNESSES as follows:-


1.   DEFINITIONS

     In this  Agreement  (which  expression  shall  include the  Recitals of and
     Schedules to this  Agreement)  except where  inconsistent  with the subject
     matter or context:-

     1.1  The following words and expressions shall bear the following  meanings
          respectively:-

          "the Accruals"                Any liability of the Vendor  relating to
                                        the Activity  which falls  to be settled
                                        after the Completion  Date in the course
                                        of carrying  on the  Activity in respect
                                        of  a  period  of time  which  commences
                                        before  the  Completion  Date  and  ends
                                        after such Date  

          "the Activity"                The  business  of the design manufacture
                                        and  implementation of assembly line and
                                        testing   equipment   with    associated
                                        materials  handling  and production con-
                                        trol systems  (and the provision of ser-
                                        vices related thereto) primarily for the
                                        automotive  components  industry carried
                                        on by the Vendor at or from the Property

          "the Amounts Recoverable      Any and  all amounts recoverable  on the
          on Contracts"                 Customer  Contracts in  accordance  with
                                        their respective terms together with the
                                        work-in-


                                       6
<PAGE>

                                        progress  which  is  the subject  of the
                                        Customer Contract in question in respect
                                        of which  the amount is recoverable,  as
                                        at the Completion Date

          "the Assets"                  The  assets specified  in clause 2.1 and
                                        the  Intellectual Property  and the Know
                                        How

          "Assumed Liabilities"         The obligations  and  liabilities  to be
                                        assumed by the Purchaser as described in
                                        clause 10.1

          "Bids"                        Any and all bids or tenders for the sale
                                        of  goods  or  services  of the Activity
                                        which are open as at the Completion Date

          "Business Unit"               Any part of a member of the  Lucas Group
                                        or the  activities  of such a  member in
                                        either case in respect of which separate
                                        management   accounts  have  customarily
                                        been prepared  by the Lucas Group or the
                                        relevant member

          "Competitor"                  Any of  the  following companies  or any
                                        Subsidiary  or Holding Company of any of
                                        them  or any  other  Subsidiary  of such
                                        Holding Company, namely:-

                                        Aixin  Seiki Co.  Limited,  Robert


                                       7
<PAGE>

                                        Bosch  GmbH,   GM's  Delphi   Automotive
                                        Systems, ITT  Industries,   Nippondenso,
                                        Siemens, Stanadyne,   Zexel, Sundstrand,
                                        Parker  Hannifin,  Allied Signal,  Moog,
                                        Hamilton Standard,  Rolls-Royce,  Valeo,
                                        Delco, Motorola and Denso

          "Completed Contract"          Any  contract  or  arrangement   for the
                                        supply  of  goods  or   services  by the
                                        Vendor  or  any  previous  owner  of the
                                        Activity in relation to the Activity:-

                                        (i)  pursuant  to  which  the  supply of
                                        the relevant   goods   or  services  was
                                        completed    within    the   two   years
                                        immediately   preceding  the  Completion
                                        Date  and   in  respect  of   which  any
                                        warranty,   guarantee,   maintenance  or
                                        similar  obligation,  liability  or com-
                                        mitment  (a  "Warranty")  given  by  the
                                        Vendor (or such  previous owner) remains
                                        outstanding   and   has  not  expired by
                                        the Completion Date; or

                                        (ii) pursuant  to  which  the supply  of
                                        the relevant goods or services  has been
                                        completed  and  under which the customer
                                        has prior to the  Completion Date made a
                                        claim  under any  Warranty  relating  to


                                       8
<PAGE>

                                        such goods or services

          "Completion"                  Completion of the Umbrella Agreement and
                                        the English  Sale Agreement  (as defined
                                        in the  Umbrella Agreement)  and  the US
                                        Sale   Agreement   (as  defined  in  the
                                        Umbrella  Agreement) and "the Completion
                                        Date"  shall  be  construed  in the same
                                        manner as in the English  Sale Agreement
                                        (as so defined)

          "the Consideration"           The  consideration for the Assets hereby
                                        agreed  to  be  sold  as  determined  in
                                        accordance with the Umbrella Agreement

          "the Contracts"               Any  and  all   current  contracts   and
                                        arrangements of the Vendor or any member
                                        of the Lucas Group  (including,  without
                                        limitation, current contracts assumed by
                                        the Vendor  or any  other  member of the
                                        Lucas Group to which any  previous owner
                                        of  the   Activity  is  party)  relating
                                        wholly  to the  Activity  (or where  any
                                        current  contracts  and arrangements  of
                                        the  Vendor  or any  other member of the
                                        Lucas Group  relate  in part only to the
                                        Activity  then such part shall be deemed
                                        to be  included  within  the definition)
                                        entered into before 


                                       9
<PAGE>

                                        the Completion Date (including,  without
                                        limitation,  the Customer Contracts, the
                                        Supplier Contracts,  and the  agreements
                                        relating to the Leased Assets) and which
                                        then remain (in whole or in part)  to be
                                        performed  by the  Vendor,  or any other
                                        member  of the  Lucas Group,  including,
                                        without  limitation,  the Completed Con-
                                        tracts  and  those  contracts  where any
                                        warranty,   guarantee,   maintenance  or
                                        other similar obligations,  liability or
                                        commitment remains to be carried  out by
                                        any member of the Lucas Group,  or where
                                        any payment obligations of any member of
                                        the Lucas Group have not been  satisfied
                                        provided  always  that  this  definition
                                        excludes:-

                                        (i)   contracts or  arrangements  to the
                                        extent  they  relate   to  the  Excluded
                                        Assets  or  to the Excluded  Liabilities
                                        (other  than  the  Excluded  Liabilities
                                        referred   to   in  clauses  10.2.9  and
                                        10.2.10);

                                        (ii)  Group Sharing Arrangements; and

                                        (iii) contracts  of  employment  of  any
                                        employees  of any  member  of  


                                       10
<PAGE>

                                        the Lucas Group

          "control"                     The possession,  direct or indirect,  of
                                        the  power   to  direct   or  cause  the
                                        direction    of  the   management    and
                                        policies  of a company,  whether through
                                        the ownership  of voting securities,  by
                                        contract or otherwise

          "the Creditors"               The book  and  other  debts owing by the
                                        Vendor in connection  with the  Activity
                                        to  or in respect  of  trade  creditors,
                                        trade   bills  payable   and  any  other
                                        amounts  to  creditors  of the Vendor in
                                        respect   of   the    Activity   at  the
                                        Completion Date (and whether or not then
                                        due  and  payable)   including   without
                                        limitation:

                                        (i)   the Accruals;

                                        (ii)  any amounts owed by the Vendor  to
                                        any  member   of  the  Lucas  Group   in
                                        respect  of  the  Activity   or  by  the
                                        Activity  to another  Business Unit  (in
                                        each   and  any  such  case  on  current
                                        account)  but excluding  (for the avoid-
                                        ance  of  doubt)   any   Lucas  Internal
                                        Funding, and

                                        (iii) any  amounts  owing  to  creditors
                                        under the Group Sharing  Arrangements to
                                        the extent they 


                                       11
<PAGE>

                                        relate to the Activity

          "the Customer Contracts"      Any and all uncompleted  purchase orders
                                        from  customers  which were accepted  by
                                        the Vendor prior to the  Completion Date
                                        which  relate to the Activity  and which
                                        then remain to be performed  in whole or
                                        in part

          "the Debtors"                 The book  and  other debts  owing to the
                                        Vendor in  connection  with the Activity
                                        by or in respect of trade  debtors,  and
                                        any other amounts owing to the Vendor by
                                        debtors in connection  with the Activity
                                        at the  Completion Date  (whether or not
                                        then due and payable)  including without
                                        limitation   any  amounts  owed  by  any
                                        member of the Lucas Group to the  Vendor
                                        in  respect  of the Activity  or owed to
                                        the  Activity  by another  Business Unit
                                        (in  each and any  such  case on current
                                        account)   but    excluding   (for   the
                                        avoidance  of doubt)  any Lucas Internal
                                        Funding

          "the Disclosure Letter"       has the meaning given to that expression
                                        in the Umbrella Agreement

          "DTI Competitor"              Any of  the  following companies  or any
                                        Subsidiary or Holding 


                                       12
<PAGE>

                                        Company of any  of  them  or  any  other
                                        Subsidiary   of  such  Holding  Company,
                                        namely:-

                                        Giddings   &   Lewis,   Thyssen,  Bosch,
                                        Western   Atlas,    B&K,   Elcon,   ABB,
                                        Ingersoll  Rand,   Mohwald,  Meidenscha,
                                        Mecclec, Stiwa, Teim Techneck and Knoell

          "the Excluded Assets"         The assets,  rights, claims and benefits
                                        excluded  from the sale to the Purchaser
                                        as set out in clause 2.5

          "the Excluded Liabilities"    The liabilities  to be  retained  by the
                                        Vendor as set out in clause 10.2

          "Final Completion Statement"  shall  have  the  meaning given  to that
                                        expression in the Umbrella Agreement

          "the Goodwill"                The goodwill of the Vendor in connection
                                        with the Activity

          "Group Sharing Arrangements"  Any and  all contracts  or  arrangements
                                        relating   to  the supply  of  goods  or
                                        services to the Vendor in respect of the
                                        Activity and the  supply  of the same or
                                        similar  goods  or  services  to another
                                        member  of the  Lucas  Group  or another
                                        Business  Unit  from the  same supplier,
                                        but excluding the Master Lease


                                       13
<PAGE>

          "the Guarantor"               DT Industries, Inc. of Corporate Centre,
                                        Suite  2-300,    1949   East   Sunshine,
                                        Springfield, MO 65804

          "Holding Company"             Holding  Company  as defined  in Section
                                        736 of the Companies Act 1985

          "Intellectual Property        The  licenses   briefly   described   in
          Agreements"                   Schedule 5 in  the  agreed  terms  which
                                        are to be entered into on Completion

          "Know How"                    All  inventions,  designs,   techniques,
                                        formulas,    technical   drawings    and
                                        specifications,      market     studies,
                                        consultants'     reports,    competitive
                                        samples, engineering  prototypes,  trade
                                        secrets,  secret   processes  and  other
                                        confidential information which are owned
                                        by the Lucas Group and which:-

                                        (i)   relates   exclusively    to    the
                                        Activity  and which are not used  by any
                                        other member  of the Lucas Group  or any
                                        Business Unit  other than  the Activity;
                                        or

                                        (ii)  are to be licensed  to  the  Lucas
                                        Group   at   or   following   Completion
                                        pursuant    to   the    terms    of  the
                                        Intellectual Property Agreements,

                                        but excluding any of the same  


                                       14
<PAGE>

                                        which  are  expressly  retained  by  any
                                        member of  the  Lucas  Group  under  the
                                        LAO  Agreement   or   the   Intellectual
                                        Property  Agreements  or  sold  pursuant
                                        to the English Sale  Agreement or the US
                                        Sale   Agreement   (as  defined  in  the
                                        Umbrella  Agreement) and  excluding  the
                                        Unregistered Intellectual Property

          "the LAO Agreement"           The  agreement   in  the  Agreed   Terms
                                        between Lucas Limited  trading as "Lucas
                                        Aftermarket  Operations"   and  Assembly
                                        Technology & Test  Limited  relating  to
                                        the   relationship  which   will   exist
                                        between those parties after Completion

          "the Leased Assets"           Those  assets  not  owned  by the Vendor
                                        which are used in the Activity which are
                                        the subject of hire or hire  purchase or
                                        leasing agreements brief  particulars of
                                        which assets and  agreements  are listed
                                        in Schedule 1

          "Licence"                     The licence of the Licensed Intellectual
                                        Property granted  by the  Vendor  to the
                                        Purchaser  on  Completion   pursuant  to
                                        clause 13

          "Licensed Intellectual        The unregistered trade marks,


                                       15
<PAGE>

          Property"                     design rights, copyrights,  know how and
                                        other intellectual property rights which
                                        are owned by the Lucas Group and which:

                                        (i)   do not relate  exclusively  to the
                                        Activity   in  that  they  are  used  by
                                        another  member  of  the Lucas  Group or
                                        any Business Unit  but immediately prior
                                        to Completion have to  some  extent also
                                        been  used  by the Vendor  in connection
                                        with the Activity; and

                                        (ii)  the Purchaser will require use  of
                                        in order to carry on the Activity in the
                                        same manner  after  Completion  as  that
                                        carried  on  by  the  Vendor immediately
                                        prior to Completion; and

                                        (iii) are not the  subject matter of the
                                        Intellectual  Property Agreements or the
                                        LAO Agreement

          "Lucas Aftermarket            Lucas Limited trading  as  "Lucas After-
          Operations"                   market Operations"

          "the Lucas Central Treasury"  The  Lucas  Automotive   GmbH   Treasury
                                        Department,    Carl-Spaeter-Strasse   8,
                                        56070 Koblenz

          "the Lucas Group"             Lucas Varity  and any company which is a
                                        Subsidiary or Subsidiary 


                                       16
<PAGE>

                                        Undertaking of Lucas Varity for the time
                                        being and from time to time

          "Lucas Internal Funding"      All monies  due to or from the  Activity
                                        from  or to the  Lucas  Central Treasury
                                        which  is   either   quasi  capital   or
                                        otherwise  owed  on  capital account  or
                                        which  had  the  Lucas Central  Treasury
                                        been a bank  would  have amounted  to an
                                        overdraft

          "LucasVarity"                 LucasVarity   plc,   registered   number
                                        3207774

          "Master Lease"                The Master Hiring Agreement (Number 139)
                                        dated 17 February  1997 and made between
                                        (1)  Lucas  Deutschland GmbH,  (2) Lucas
                                        Automotive  GmbH,  (3)  LACE  GmbH,  (4)
                                        Lucas Kfz  Ausrustung GmbH and (5) Lease
                                        Plan Deutschland GmbH relating to (inter
                                        alia) the vehicles listed in Schedule 1

          "MOUs"                        The Memoranda  of  Understanding entered
                                        into by the Vendor  or  any other member
                                        of  the  Lucas  Group in  respect of the
                                        Activity  including  without  limitation
                                        those listed in Schedule 8


                                       17
<PAGE>

          "Net Current Assets Value"    shall have  the  meaning  given  to that
                                        expression in the Umbrella Agreement

          "the Plant, Machinery         The   fixed  and   moveable   plant  and
          and Equipment"                machinery,  tooling  computer  equipment
                                        and equipment (including vehicles) owned
                                        by the Vendor with an  original cost per
                                        item  in  excess  of (pound)5,000  which
                                        is/are used in  the Activity  and  which
                                        are listed in Schedule 2  and such other
                                        machinery tooling  furniture  and equip-
                                        ment  owned by the Vendor located at the
                                        Property  and  used  primarily   in  the
                                        Activity

          "the Prepayments"             Each of the payments  made in advance by
                                        or on behalf of the Vendor  prior to the
                                        Completion   Date   in  the  course   of
                                        carrying on the Activity in respect of a
                                        period  of time  which commences  before
                                        the  Completion Date and ends after such
                                        Date but excluding  (a) any such payment
                                        to the  extent  the Purchaser  does  not
                                        acquire the benefit thereof or otherwise
                                        benefit  from  such  payment   following
                                        Completion  and (b) any such payment  to
                                        the  extent  it is not reflected  in the
                                        Net Current Assets Value


                                       18
<PAGE>

          "the Project Prepayments"     Any advance payments or deposits  on any
                                        contracts  costs   made  or  paid  by  a
                                        customer to the Vendor

          "the Property"                The properties  described  in Schedule 3
                                        Part 1

          "the Property Lease           The Property  Lease  Agreement contained
          Agreement"                    in Schedule 3, Part 2

          "the Purchaser's German       Fiedler &  Forster,  Opernplatz 2, 60313
          Solicitors"                   Frankfurt am Main

          "the Purchaser's Group"       The Guarantor and any company:-

                                        (i)   which  is  a  Subsidiary   of  the
                                        Guarantor; or

                                        (ii)  over which the Guarantor has  con-
                                        trol  within   the  meaning  defined  in
                                        this Agreement

                                        for the time being and from time to time

          "the Records"                 All such records, lists of customers and
                                        suppliers, accounts and other  documents
                                        relating  exclusively to the Activity to
                                        enable  the  Purchaser   effectively  to
                                        carry  on the same in succession  to the
                                        Vendor

          "the Specified Shared IP"     All  management   manuals,   instruction
                                        manuals,   Health  and  Safety  manuals,
                                        disaster recovery


                                       19
<PAGE>

                                        procedures, Project Introduction Manage-
                                        ment systems  and other  similar manuals
                                        and the copyright  and know how  therein
                                        owned by the Lucas Group and used in the
                                        Activity  and by any other Business Unit
                                        or  member  of  the  Lucas  Group,   but
                                        specifically   excluding  any  technical
                                        information  contained  therein  used in
                                        the design,  manufacture or  implementa-
                                        tion of assembly line and testing equip-
                                        ment

          "the Stock"                   All stocks, including  raw materials and
                                        components,   spare   parts,   operating
                                        supplies,  maintenance  and  non product
                                        stock,  finished goods, bought-in-goods,
                                        packaging    materials,   packages   and
                                        products   in  intermediate   stages  of
                                        completion   (save    where   the   same
                                        constitutes  Amounts  Recoverable  under
                                        Contracts) owned by the  Vendor  for use
                                        or sale in connection  with the Activity
                                        and  any  of the  same   which   are  or
                                        incorporates goods or materials supplied
                                        by a supplier subject to  reservation of
                                        title  in  each  case  at the Completion
                                        Date

          "Subsidiary"                  subsidiary  as defined in section 736 


                                       20
<PAGE>

                                        of the English Companies Act 1985

          "Subsidiary Undertaking"      subsidiary   undertaking  as defined  in
                                        section 258 Companies Act 1985

          "the Supplier Contracts"      Any and all contracts  and  arrangements
                                        which  were   entered  into  before  the
                                        Completion  Date by or on behalf  of the
                                        Vendor with suppliers  for the supply to
                                        the  Vendor  of goods  or   services  in
                                        connection  with the Activity which then
                                        remain  to be performed,  in whole or in
                                        part,  but excluding  the Group  Sharing
                                        Arrangements

          "Taxation"                    Any  tax  and any  duty,  impost levy or
                                        governmental charge in the nature of tax
                                        whether  domestic  or  foreign  and  any
                                        fine,   penalty  or  interest  connected
                                        therewith   including  corporation  tax,
                                        income tax,  trade tax, value added tax,
                                        customs, excise and import duties, stamp
                                        duty  and any  other  payment whatsoever
                                        which  the Vendor is or may be or become
                                        bound to make to any person  as a result
                                        of any  enactment relating to any of the
                                        foregoing

          "the Transferring Employees"  Those  employees  of the  Vendor 


                                       21
<PAGE>

                                        who are employed  in connection with the
                                        Activity  at  the  Completion Date whose
                                        names  and  positions  are  set  out  in
                                        Schedule 4  and  any other person who is
                                        actively engaged  as  an employee of the
                                        Vendor and working exclusively   in  the
                                        Activity   at   Completion   and   whose
                                        remuneration was paid by the Activity in
                                        the   period   up  to  Completion   (but
                                        excluding for the avoidance of doubt any
                                        person  whom  the Vendor  or  any  other
                                        member of the Lucas Group has treated as
                                        a  consultant,  agency  worker  or  con-
                                        tractor)

          "the Umbrella Agreement"      An agreement in the Agreed Terms entered
                                        into on the same  date as this Agreement
                                        between the parties  hereto  and certain
                                        other members of the Lucas Group and the
                                        Purchaser's Group

          "Unregistered Intellectual    The unregistered  trade  marks,  service
          Property"                     marks,  design  rights,   copyright  and
                                        other intellectual property rights which
                                        are owned by the Lucas Group and which:-

                                        (i)  are  to be  licensed  to  the Lucas
                                        Group   at   or   following   Completion
                                        pursuant   to  the   terms  of  the Int-


                                       22
<PAGE>

                                        ellectual Property Agreements; or

                                        (ii)   relate   exclusively   to   the
                                        Activity and are not used by any other
                                        member  of  the  Lucas  Group  or  any
                                        Business Unit other than the Activity,

                                        but  excluding  any such  intellectual
                                        property  rights  which are  expressly
                                        retained  by any  member  of the Lucas
                                        Group under the LAO  Agreement  or the
                                        Intellectual  Property  Agreements  or
                                        sold  pursuant  to  the  English  Sale
                                        Agreement or the US Sale Agreement (as
                                        defined in the Umbrella Agreement) and
                                        excluding the Know How

          "the Vendor's Solicitors"     BOESEBECK    DROSTE    Rechtsanwalte  of
                                        Berliner Allee 48, 40212 Dusseldorf

     1.2  References in this  Agreement to statutes or any  statutory  provision
          shall include any statutory  modification,  re-enactment  or extension
          thereof and any orders, regulations,  instruments or other subordinate
          legislation made thereunder, in each case in force at the date of this
          Agreement.

     1.3  In this Agreement:-

          1.3.1  the masculine gender shall  include the feminine and neuter and
                 the singular number shall include the plural and vice versa

          1.3.2  references to persons shall include bodies corporate, unincorp-
                 orated associations and partnerships


                                       23
<PAGE>

          1.3.3  the  expression  "the Vendor" shall include  its successors  in
                 title; and

          1.3.4  the headings contained in this document are  inserted for  con-
                 venience only and shall not affect its construction

     1.4  Whenever a document is  referred to as being "in the Agreed  Terms" it
          shall be in the form  agreed  and  initialled  by or on  behalf of the
          Vendor and the Purchaser

     1.5  Except where the contrary is stated,  any reference herein to a clause
          or  Schedule  or party is to a clause of or  Schedule or party to this
          Agreement  and  any  reference  within  a  clause  or  Schedule  to  a
          sub-clause,  paragraph  or other  sub-division  is a reference to such
          sub-clause, paragraph or other sub-division so numbered or lettered in
          that clause or Schedule. The Schedules form part of this Agreement and
          shall have the same force and  effect as if  expressly  set out in the
          body of this Agreement


2.   SALE AND PURCHASE OF THE ACTIVITY

     2.1  The Vendor shall sell free from all charges, liens, other encumbrances
          or  third  party  claims  (except   reservation  of  title  claims  by
          suppliers) and the Purchaser shall purchase as at and with effect from
          Completion  the  Activity  on a going  concern  basis  comprising  (in
          addition to the assets referred to in clause 2.2) only:-

          2.1.1  the benefit  of the Contracts  (subject to the burden attaching
                 thereto);

          2.1.2  the benefit of the Amounts Recoverable under Contracts;

          2.1.3  the Goodwill;

          2.1.4  the Plant, Machinery and Equipment;

          2.1.5  the Records;

          2.1.6  the Stock;

          2.1.7  the Debtors and the benefit of the Prepayments;


                                       24
<PAGE>

          2.1.8  the Know How and the Unregistered Intellectual Property;

          2.1.9  all  sales  data,  catalogues,  brochures,  literature,  forms,
                 mailing lists, art work,  photographs and advertising material,
                 in whatever form  or  media,  owned by the Vendor  and relating
                 exclusively  to the Activity  (but subject to the provisions of
                 clause 6 of the Umbrella Agreement);

          2.1.10 all  permits,  approvals,  and  qualifications  issued  by  any
                 governmental  unit,  agency,  board,  body  or  instrumentality
                 held  by the Vendor  and relating  exclusively  to the Activity
                 (but only  to the extent  that the same are  assignable  by the
                 Vendor without any third party's consent)

          2.1.11 all other tangible  and intangible assets  of whatsoever nature
                 owned by the Vendor and exclusively employed in the Activity at
                 Completion and not used by any member of the Lucas Group or any
                 Business Unit  other than the Activity  and  which  do not form
                 part of the Excluded Assets; and all other assets  owned by the
                 Vendor  to  the  extent  that  they  are reflected in the Final
                 Completion  Statement  and the value thereof is included in the
                 Net Current Assets Value; and

          2.1.12 the benefit  of all the Vendor's rights  against  third parties
                 (including  any  claims,  causes  of action,  chosen in action,
                 rights of recovery  and rights  of set-off)  (a) in  connection
                 with  guarantees,  warranties  (express or implied),  covenants
                 and  representations  given  by  such  third parties concerning
                 the  Activity  and  any  of the Assets  to the extent only that
                 such  rights  relate  to  liabilities  assumed   or  the  Plant
                 Machinery and Equipment  or the Stock acquired by the Purchaser
                 hereunder and (b) under completed  or other operative contracts
                 save  to the extent that those rights are required  in order to
                 defend,  mitigate  or perform any  of the Excluded  Liabilities
                 or any matter in respect of which the Lucas Group has  retained
                 liability  or  responsibility,  in  each  case  insofar as such
                 benefit is capable of assignment

                 save  to the extent that any  of the same  are comprised within
                 the Excluded Assets.


                                       25
<PAGE>

     2.2  With  regard to the  Property,  the  Vendor  herewith  assigns  to the
          accepting Purchaser the Property Lease Agreement set out in Schedule 3
          Part 1 and 2. In case of any conflict between the conditions  referred
          to in  Schedule  3 and the  other  provisions  of this  Agreement  the
          provisions of Schedule 3 shall prevail.

     2.3  At Completion the Vendor shall deliver  possession to the Purchaser of
          any stocks held by the Vendor on  consignment  from others  solely for
          the purpose of, or which is used  exclusively  in, the  Activity.  The
          Purchaser  shall assume all the Vendor's  obligations  with respect to
          such consignment stock.


     2.4  The Purchaser  shall pay the Creditors in accordance with the Vendor's
          normal business  practice in relation to the Activity and in any event
          within 90 days immediately following Completion, without any deduction
          or set off for whatsoever reason, unless the Purchaser has a bona fide
          and genuine reason for disputing  whether a particular  debt is due or
          delaying  payment  thereof and gives notice thereof and of the reasons
          for disputing or delaying  payment to the Vendor as soon as reasonably
          practicable.  The Purchaser  shall  indemnify  the Vendor  against all
          expenses  costs loss damage and liability  incurred by the Vendor as a
          result  of any  failure  or  delay  by the  Purchaser  in  paying  the
          Creditors.

     2.5  It is agreed  that this  Agreement  does not  include  the sale of any
          assets or rights of the  Vendor  nor any assets or rights of any other
          member of the Lucas Group other than those specifically referred to in
          clause 2.1, the Property, or those assets or rights expressly referred
          to elsewhere in this  Agreement  as being sold  hereunder  and without
          limiting  the  generality  of the  foregoing  there shall be expressly
          excluded and excepted  from the said sale and purchase (and nothing in
          this  Agreement  shall  operate  to  sell  or  transfer)  any  of  the
          following:-

          2.5.1  the benefit to the Vendor of this Agreement;

          2.5.2  ownership of the Leased Assets;


                                       26
<PAGE>

          2.5.3  any   trademarks,   trade names,   products'  names,   patents,
                 copyrights,   registered  designs  and  any  other intellectual
                 property  rights of the Vendor or any other member of the Lucas
                 Group or Business Unit or (save as  expressly permitted by this
                 Agreement,  the Intellectual Property Agreements,  the Umbrella
                 Agreement  or  the  LAO  Agreement) any rights to use the same,
                 other than the Unregistered Intellectual Property  and the Know
                 How;

          2.5.4  any right  to  use  the names "Lucas" or  "LucasVarity"  or the
                 Lucas Group  diagonal  flash  or  any  other similar trade mark
                 or  other  distinctive  Lucas  Group  get-up  save  as provided
                 herein and in the Umbrella Agreement or the LAO Agreement;

          2.5.5  the cash received  in respect  of the Project  Prepayments  and
                 all cash  and cash  equivalents  in the Lucas Group's hands  or
                 any cash  in the Lucas Group's bank accounts  at Completion and
                 the benefit of any  payments  in advance  made by the Vendor in
                 relation  to the Activity  which are excluded  from the Prepay-
                 ments;

          2.5.6  all cheques  and negotiable  instruments  issued  in favour  of
                 the Lucas Group prior  to  Completion  (save to the extent that
                 any such cheque  or negotiable instrument  constitutes  payment
                 for any of the Debtors sold hereunder which appears as an asset
                 in the Final Completion Statement and is taken  into account in
                 calculating the Net Current Assets Value);

          2.5.7  any insurance claim made by or available to the Lucas Group and
                 all unearned premiums under insurance  policies or other rights
                 to refunds thereunder attributable to any period of time except
                 to the extent reflected  in the Final Completion Statement  and
                 the Net Current  Assets Value or reflected in the values agreed
                 and  allocated  to  the  fixed  assets  as  shown  in Part 2 of
                 Schedule 3 to the Umbrella Agreement;

          2.5.8  the benefit  of the insurance policy held  by Lucas Deutschland
                 GmbH relating to employees' pension entitlements;


                                       27
<PAGE>

          2.5.9  any  other claim  made  by or  available  to the Lucas Group in
                 respect  of an event occurring  prior  to Completion other than
                 those the benefit of which is sold to the  Purchaser  by clause
                 2.1.12;

          2.5.10 any  telephone,  facsimile,  telex,  e-mail,  Internet,  shared
                 network  and  related facilities,  post office box numbers  and
                 addresses owned by the Vendor and relating to the Activity

          2.5.11 corporation tax losses  and the benefit  of any claims made  or
                 to be made  for repayment  of any taxation or tax allowance  of
                 the  Vendor  or  any  other  company  in  the  Lucas  Group  in
                 relation  to  the  Activity in respect of the period  prior  to
                 Completion  except  to the extent  that  the same are reflected
                 in the Net Current Assets Value;

          2.5.12 any Lucas Internal Funding;

          2.5.13 the benefit  of all contracts  or  arrangements  excluded  from
                 the definition  of "the  Contracts"   pursuant  to  clause 1.1.
                 (other than those relating to the Transferring Employees).

     2.6  If any of the Assets to be sold  hereunder  by the Vendor are owned by
          any  other  member  of the  Lucas  Group  or  any of the  Transferring
          Employees  is employed by any such other  member or there is any other
          obligation  of the  Vendor  hereunder  which is only  capable of being
          satisfied  by or with the  assistance  of any such other  member,  the
          Vendor  shall not be deemed to be in breach of this  Agreement so long
          as the Vendor procures,  to the extent  necessary,  compliance by such
          other member with the terms and conditions of this Agreement which the
          Vendor  hereby   undertakes  to  do.  Such  other  member  and,  where
          appropriate,  its employees,  shall have the benefit of any exclusions
          of  liability  contained  herein in  relation  to the  Assets  and any
          indemnity  given by the Purchaser  herein to the Vendor in relation to
          the Assets, the Activity or the Transferring  Employees. If any member
          of the Lucas Group other than the Vendor is or was party to any of the
          Contracts, the Completed Contracts or the MOUs the relevant provisions
          of clauses 5 and 9 shall apply to such Contract, 


                                       28
<PAGE>

          Completed  Contract  or MOU (as the case may be) as if the Vendor were
          party  thereto and  references  in those  clauses to the Vendor shall,
          where  appropriate,  be construed as references to the relevant member
          of the Lucas  Group.  Accordingly,  the  relevant  member of the Lucas
          Group shall be entitled to benefit from the obligations undertaken and
          indemnities  given by the  Purchaser  in  relation  to that  Contract,
          Completed Contract or MOU under those clauses.

     2.7  Insofar as tooling used in the Activity is owned by a third party (and
          title to which  accordingly does not pass to the Purchaser  hereunder)
          the  Vendor  assigns  to the this  accepting  Purchaser  effective  at
          Completion  whatever  right title or interest  (if any) it may have in
          such  tooling to the extent the same is  assignable.  (A complete  and
          accurate list of all such third party tooling  arrangements is set out
          in the Disclosure Letter)

     2.8  Where any of the  Assets  (including  packaging  comprised  within the
          Stock)  to be  sold  hereunder  by the  Vendor  comprise  advertising,
          promotional  and other  written  material  bearing the "Lucas"  and/or
          "LucasVarity"  name or the Lucas Group  diagonal mark or other similar
          trade mark or other  distinctive  Lucas Group get up the provisions of
          the Umbrella Agreement regarding the same shall apply.

     2.9  The Vendor  agrees  that the  Purchaser  may (to the  extent  that the
          Vendor can grant any such right) for a period of twelve  months  after
          Completion  represent itself as carrying on the Activity in succession
          to the Vendor but this  agreement  shall not grant or imply (and shall
          specifically  exclude) any right on the part of the Purchaser (save to
          the extent  granted  herein or in the  Umbrella  Agreement  or the LAO
          Agreement)  in the names or mark  "Lucas" or  "LucasVarity"  or in the
          Lucas Group  diagonal  flash or any other  similar  trademark or other
          distinctive Lucas Group get-up or in the goodwill attaching thereto.


3.   TRANSFER OF THE ASSETS

     3.1  The Vendor and the  Purchaser  agree that the  ownership of the Assets
          shall be  transferred  to the  Purchaser  as at and with  effect  from
          Completion Date.


                                       29
<PAGE>

     3.2  In the event that the legal  effective  transfer  of the Assets is not
          possible to be effective on Completion Date for whatever reason,  then
          it is agreed as between the parties that all transfers shall be deemed
          to have occurred upon Completion Date, provided, however, that nothing
          contained  in this  Agreement  sets forth  anything  to the  contrary.
          Clause 3.7 and clause 3.8 remain unaffected.

     3.3  Insofar  as the  Assets  to be sold  concern  rights  these  shall  be
          assigned by the Vendor to the Purchaser,  who accepts such  assignment
          effective as of Completion Date.

     3.4  Insofar  as there  are  retentions  of title,  then it is agreed  that
          transfer  shall be effected  not of the  ownership,  but of the future
          interest rights to acquire ownership effective as of Completion Date.

     3.5  Transfer of ownership shall be effective on Completion  Date.  Insofar
          as the  Purchaser  does  not  receive  Assets  in  whole or in part on
          Completion Date, then it shall be entitled to take any such items into
          possession.

     3.6  Insofar as items sold are not in the direct  possession of the Vendor,
          the transfer is substituted by the Vendor  surrendering  all rights to
          regain possession of the property in favour of the Purchaser effective
          as of Completion Date. In particular the right to possession regarding
          the Assets being in possession of customers or  Transferred  Employees
          and title to such Assets is transferred to the Purchaser.

     3.7  Insofar as the Vendor receives or has received Assets after Completion
          Date, it receives them on behalf and on account of the  Purchaser.  It
          is agreed  that title to such goods shall  immediately  pass on to the
          Purchaser.  The Vendor will keep such goods  separated and will direct
          all  deliveries  to the  Purchaser or as the  Purchaser  may otherwise
          specify.

     3.8  The  parties  are  obliged  to take any steps and give all  assistance
          necessary or required to allow the timely execution of the transfer of
          the Assets within the scope of this Agreement. In the event the timely
          execution  of such  transfer is for  whatever  reason  impossible  the
          parties  are  obliged  to take any  steps  and to 


                                       30
<PAGE>

          give all assistance necessary to complete and execute such transfer as
          soon as practically possible.


4.   THE CONSIDERATION

     4.1  The purchase  price for the Assets shall be  determined  in accordance
          with the Umbrella Agreement.

     4.2  The parties  hereto intend that Section 1 para. 1a of the German Value
          Added Tax Act shall apply to the  transfer of the  Activity  hereunder
          and accordingly:-

          4.2.1  the  Vendor  and the  Purchaser  shall each give notice of such
                 transfer to the tax authorities (Finanzbehorden);

          4.2.2  the  Vendor  shall  on  or  as soon as  practicable  after  the
                 Completion Date deliver  to the Purchaser an invoice evidencing
                 the Fixed Price Element  and the Net  Current Assets Value  (as
                 defined in the Umbrella Agreement)  insofar  as they relate  to
                 the Activity without charging value added tax;

          4.2.3  the  Vendor   and  the  Purchaser   shall  use  all  reasonable
                 endeavours  to secure that pursuant  to the provisions referred
                 to  above  the  sale  of the Activity hereunder  is treated  as
                 neither  a  supply  of goods  nor a supply  of services for the
                 purposes of Value Added Tax;

          4.2.4  if Value Added Tax is chargeable on the sale  hereunder  or any
                 part thereof then the  Purchaser  agrees that  such Value Added
                 Tax shall be in addition to the Consideration and the Purchaser
                 shall  (against production of tax invoices in respect  thereof)
                 and a written ruling from the tax authorities  (Steuerbehorden)
                 that  Value  Added  Tax is so chargeable  pay the amount of any
                 such Value Added Tax and any  penalty  or interest incurred  by
                 the Vendor  for late payment thereof  (provided that in respect
                 of any penalty or interest only the reason such Value Added Tax
                 was payable was due to an act, omission or intention of, or the
                 circumstances of the Purchaser,  such payment  by the Purchaser
                 to be made forthwith  on request  by the Vendor  or  if  sooner


                                       31
<PAGE>

                 delivery  by the Vendor  to the  Purchaser  of tax invoices  in
                 respect  thereof.  The  Purchaser  shall  have no liability  in
                 respect of penalties  and interest relating  to Value Added Tax
                 to the extent  they arise due to an  unreasonable delay (in any
                 case not exceeding 2 Business Days (as defined in the  Umbrella
                 Agreement))  in  passing  on  to  the  German  tax  authorities
                 (Steuerbehorden)  a payment made by the Purchaser in respect of
                 Value Added Tax.

     4.3  With regard to the operation of the Activity by the Vendor:-

          4.3.1  all Value Added Tax  payable in respect  of goods and  services
                 supplied  or deemed  to be  supplied  by the Vendor  before the
                 Completion  Date and all interest payable thereon and penalties
                 attributable thereto  shall be paid  to the tax authorities  by
                 the Vendor and the Vendor  shall be entitled  to receive and to
                 retain for its own benefit all reimbursement or credit from the
                 tax authorities  for Value Added Tax borne  by  the  Vendor  on
                 goods and services supplied to the Vendor prior thereto and any
                 payments received in respect of Value Added Tax overpaid to the
                 tax authorities (Steuerbehorden) prior thereto; and

          4.3.2  without prejudice  to the provisions  of this  Agreement  as to
                 discharge of the relevant liability the Purchaser shall give to
                 the Vendor all  necessary  and reasonable co-operation  for the
                 purposes  of preparing any VAT return  relating to the Activity
                 in respect of any prescribed accounting period  of  the  Vendor
                 beginning  before  the  Completion Date  or for the purpose  of
                 determining  the  Vendor's liability to the tax authorities  in
                 respect  of the Activity  or for the purpose of  answering  any
                 questions raised by the tax authorities for the period prior to
                 the  Completion  Date,  such co-operation  to include providing
                 reasonable access  to or  at  the Vendor's  expense  copies  of
                 relevant documentation  (which the Vendor shall be permitted to
                 use  and divulge  to the extent that it is required so to do so
                 as to enable the Vendor to comply  with its obligations  to the
                 tax   authorities)   and  allowing  reasonable  access  to  the
                 Transferring Employees.  In the event that the Purchaser should
                 transfer 


                                       32
<PAGE>

                 the Activity to another person the Purchaser shall procure (or,
                 if the transfer  takes place  more  than three years  after the
                 date  of this  Agreement,  shall use  reasonable  endeavours to
                 procure  that  the  person  to whom the Activity is transferred
                 enters  into  a  similar  obligation   to  provide   reasonable
                 co-operation  and assistance to the Vendor (either  directly or
                 indirectly through the Purchaser) as is set out in this clause.

     4.4  The Purchaser  warrants to the Vendor that it is duly  registered  for
          the purposes of value added tax under the Value Added Tax Act.


5.   FURTHER ASSURANCE AND THE CONTRACTS

     5.1  The  Vendor  hereby  agrees  and  declares  that  it  will  after  and
          notwithstanding Completion execute and deliver any other documents and
          take any other steps as shall reasonably be required from time to time
          by  the  Purchaser,  at  the  Purchaser's  expense,  to  vest  in  the
          Purchaser,  or as it may direct,  the Assets  (other than the Property
          which is  governed  by the  provisions  of  Schedule 3 and the Debtors
          which are governed by clause 6.1) on the terms of this Agreement.

     5.2  Save to the extent  otherwise  provided in clause 11.1.2 the Purchaser
          will at and from Completion at its own expense assume and undertake to
          perform and  discharge  when due or when  required to be performed the
          Vendor's  liabilities and obligations under the Contracts and shall be
          bound  by all  the  terms,  conditions,  obligations  and  liabilities
          arising from,  in connection  with or related to the Contracts and the
          Purchaser shall keep the Lucas Group indemnified against all expenses,
          costs, loss, damage, and liability arising therefrom.  For the purpose
          of this  Agreement,  all Bids which are  accepted by  customers  after
          Completion shall be deemed to be Contracts.

     5.3  Insofar as the benefit (subject to the burden) of the Contracts cannot
          effectively be  transferred  by the Vendor to the Purchaser  except by
          way of an agreement of novation with or consent to the assignment from
          the person, firm or company concerned:-


                                       33
<PAGE>

          5.3.1  the  Vendor  and the Purchaser  shall co-operate  and use their
                 reasonable efforts to procure  that the Contracts be novated or
                 assigned as aforesaid as soon as reasonably practicable;

          5.3.2  in every novation  or assignment  as  aforesaid  the  Purchaser
                 shall undertake to indemnify the Vendor  against all  expenses,
                 costs,  loss,  damage  and liability arising by reason of or in
                 connection with  the   non-performance  or  the  defective   or
                 negligent performance by the Purchaser of the Contracts;

          5.3.3  unless  and  until  all  such  Contracts  shall  be  novated or
                 assigned as aforesaid:

                 5.3.3.1  the Vendor shall continue its corporate  existence and
                          shall hold  the benefit  of every such Contract  which
                          requires to be novated or assigned but  which  has not
                          been novated  or assigned,  in trust for the Purchaser
                          as from Completion and shall account  to the Purchaser
                          accordingly  (whether in respect  of any sums or other
                          benefits received by it in respect thereof) and other-
                          wise act at the  reasonable direction of the Purchaser
                          and  as  its  agent  in  all matters relating  thereto
                          subject  to the  Purchaser securing  the Vendor to its
                          reasonable satisfaction,  and indemnifying and holding
                          the  Vendor  harmless  against,  any expenses,  costs,
                          loss, damage, or liability, which it may have  brought
                          against it  or suffer or incur  as a consequence,  but
                          subject to clause 5.5 and;

                 5.3.3.2  the Purchaser  shall at its own cost  and expense with
                          effect from Completion carry out perform and  complete
                          all  of the Vendor's obligations  under every Contract
                          which  has  not  been novated or  assigned  as a  sub-
                          contractor of the Vendor and where sub contracting  is
                          not possible the Purchaser shall perform the contracts
                          in accordance with their terms and conditions as agent
                          for the Vendor.


                                       34
<PAGE>

     5.4  If the Vendor has before Completion  sub-contracted the performance of
          any Contracts to any person,  the Purchaser shall on Completion assume
          responsibility  for the  relevant  sub-contract  and on  behalf of the
          relevant  customer seek or accept  delivery or  performance  from such
          person of the goods or other  products or services in respect of which
          such  contract  was  made  and  shall  make  the  same  available  for
          collection by such customer.

     5.5  Any fee,  charge  or  financial  penalty  levied  by a third  party in
          respect of a novation or  assignment  of any Contract or in connection
          with the  termination of any existing  Contract to permit  novation or
          assignment to take place will be shared  equally by the Vendor and the
          Purchaser  provided  that neither the Vendor nor the  Purchaser  shall
          agree to pay any such fee,  charge or  financial  penalty  without the
          prior  written  consent of the other of them (such  consent  not to be
          unreasonably  withheld or delayed).  The  Purchaser  shall procure the
          execution of any  guarantees  by any member of the  Purchaser's  Group
          required by such third party as a  condition  of any such  novation or
          assignment. If any other party to a Contract makes a claim against the
          Vendor or the Purchaser  alleging that the sale of the Activity to the
          Purchaser or the  provision of this  Agreement  constitute a breach of
          such contract,  the Vendor and the Purchaser shall consult with regard
          to such claim and neither of them shall  accept the claim  without the
          prior written consent of the other (not to be unreasonably withheld or
          delayed). Any liability,  costs and expenses incurred by the Vendor or
          the  Purchaser as a result of any such claim shall be borne equally by
          the Vendor and the Purchaser.

     5.6  Lucas and the  Purchaser  shall  co-operate  and use their  reasonable
          efforts to procure that as soon as  practicable  following  Completion
          Lease Plan  Deutschland  GmbH  ("Lease  Plan") enters into a new lease
          directly with the Purchaser on the same or similar terms as the Master
          Lease in respect of the  vehicles  listed in  Schedule 1 and that such
          vehicles are thereby  excluded from the Master  Lease.  If required by
          Lease Plan,  the  Purchaser  shall  procure that the Guarantor and any
          other member of the  Purchaser's  Group enters into an agreement  with
          Lease Plan to guarantee  the  Purchaser's  obligations  under such new
          lease.  Prior to such new lease being granted:-


                                       35
<PAGE>

          5.6.1  Lucas shall hold the benefit  of the Master Lease  in trust for
                 the Purchaser  to the extent it relates  to the vehicles listed
                 in Schedule 1; and

          5.6.2  the Purchaser shall at its own cost and expense perform  Lucas'
                 obligations  under  the  Master  Lease  with  respect  to those
                 vehicles as agent for Lucas and shall indemnify  and hold Lucas
                 harmless against  all  charges,  payments,   penalties,  costs,
                 expenses, liabilities or losses which Lucas may incur or suffer
                 under  the  Master Lease  following  the  Completion Date  with
                 respect to those vehicles, but subject to clause 5.5.

     5.7  The  Vendor  agrees  to assign to the  Purchaser  all right  title and
          interest  which the Vendor has (if any) in respect of the MOUs and the
          Purchaser   agrees  to  perform  and  discharge  all  obligations  and
          liabilities  which the  Vendor  has (if any) in  respect  of the MOUs.
          Accordingly,  the Purchaser  agrees that the provisions of clauses 5.2
          to 5.5 shall mutatis mutandis apply in respect of such MOUs as if they
          were Contracts.


6.   DEBTORS

     6.1  The Vendor shall when the  Consideration has been paid pursuant to the
          terms of the Umbrella  Agreement if requested by the  Purchaser and at
          the  Purchaser's  cost  assign to the  Purchaser  the  benefit  of the
          Debtors  (or any of  them) in the  form of the  assignment  set out in
          Schedule 6

     6.2  The Purchaser will collect the Debtors in a manner consistent with the
          way in which debts of the Activity were  collected by the Vendor prior
          to Completion  and will not issue  proceedings  for recovery of any of
          the  Debtors  without  first  giving the  Vendor 7 days prior  written
          notice and, if required by the Vendor, the Purchaser will re-assign to
          the Vendor at the  Vendor's  expense  the benefit of any Debtor for an
          amount  equal to the face  value of such  Debtor  (less  any  specific
          provision  or reserve  included in the Final  Completion  Statement in
          respect of such Debtor).


                                       36
<PAGE>

     6.3  Any sums received by the Vendor after the Completion  Date in relation
          to any of the  Debtors  (other  than any  Debtors  re-assigned  to the
          Vendor  pursuant to clause 6.2) shall belong to the  Purchaser and the
          Vendor shall pay the same to the Purchaser as soon as practicable  and
          in any event within 7 days of receipt of the same by the Vendor.


7.   THE TRANSFERRING EMPLOYEES

     7.1  With regard to the  Transferring  Employees:- 

          7.1.1  The parties acknowledge and agree that pursuant to section 613a
                 of the German Civil Code the  contracts  of  employment  of the
                 Transferring Employees  will  be  transferred  and  have effect
                 after Completion  as if  originally  made between the Purchaser
                 and the Transferring Employees; and

          7.1.2  upon or as soon as practicable  after Completion the Vendor and
                 the Purchaser will make a joint  announcement  to the Transfer-
                 ring Employees  in the Agreed Terms  regarding  the transfer of
                 their contracts  of  employment as referred  to in clause 7.1.1
                 such announcements shall contain a time period during which the
                 Transferring Employees  shall notify  should they object to the
                 transfer of their employment relationship.

     7.2  The Vendor shall indemnify and keep indemnified the Purchaser  against
          any liability or claim  (whether for redundancy  payments,  protective
          awards,  damages for  wrongful  dismissal or  compensation  for unfair
          dismissal,  salary or otherwise  howsoever)  against the  Purchaser in
          connection  with any act or omission of the Vendor or any other member
          of  the  Lucas  Group  relating  to  the  employment  of  any  of  the
          Transferring Employees prior to the Completion Date or the termination
          of the employment of any of the  Transferring  Employees by the Vendor
          or any other  member of the Lucas Group prior to the  Completion  Date
          and for which the  Purchaser  is liable and for all costs and expenses
          reasonably  incurred  by the  Purchaser  in  settling,  contesting  or
          dealing with any such  liability or claim PROVIDED THAT such indemnity
          shall not 


                                       37
<PAGE>

          apply to any such  liability,  claim,  costs or expenses to the extent
          that they are provided for in the Net Current Assets Value.

     7.3  Save as provided in clause 7.2 the Purchaser  shall indemnify and keep
          indemnified the Vendor and every company in the Lucas Group against:-

          7.3.1  any  liability or claim by a Transferring Employee  whether for
                 redundancy payments  protective awards,  pension or  retirement
                 and/or  death  benefits,  damages  for  wrongful  dismissal  or
                 compensation for unfair dismissal (including  claims in any way
                 relating to or  based  upon pension,  retirement  and/or  death
                 benefits)  or  otherwise  howsoever  in  connection   with  the
                 employment of the Transfering Employees,  any objection  of any
                 of the Transferring Employees to the transfer of his employment
                 or  the  termination   of  his  employment   by  the  Purchaser
                 following the Completion Date;

          7.3.2  all  liabilities and claims incurred by the Vendor or the Lucas
                 Group  or  made  against  the  Vendor  or  the  Lucas  Group in
                 connection  with  the  termination  of the  employment  of  any
                 Transferring  Employee   who  refuses   to  transfer  with  the
                 Activity to the Purchaser on Completion  or arising as a result
                 of  any constructive dismissal claim by any of the Transferring
                 Employees following an  objection  of any such  employee to the
                 identity of the Purchaser; and

          7.3.3  all costs  and  expenses reasonably incurred  by the  Vendor in
                 settling, contesting or dealing with any such claim.

     7.4  The  Purchaser  enters  into  all  pension  expectancy  rights  of the
          Transferring Employees. The Vendor represents that the pension schemes
          of Lucas  Automotive  GmbH attached to the  Disclosure  Letter are the
          only pension schemes - except for the statutory pension  contributions
          to the German state authorities - applicable and existing in favour of
          the Transferring Employees. The Vendor shall instruct "Deutsche Herold
          AG" to work out within 28 days the amount of a  provision  for accrued
          pension  expectancy  rights  of  Transferring  Employees  prior to the
          Completion Date for insertion in the Final


                                       38
<PAGE>

          Completion  Statement.  Unless the  Purchaser  shall notify the Vendor
          within 30 days after its receipt of the amount determined by "Deutsche
          Herold  AG" that it does not  accept and agree with the amount it will
          become  binding  in  accordance  with  clause 3.4 to clause 3.9 of the
          Umbrella  Agreement.  If within  the  aforesaid  period of 30 days the
          Purchaser  shall  notify the Vendor  that it does not accept and agree
          with the amount  determined  by "Deutsche  Herold AG" then the parties
          shall instruct  Gradmann & Holler GmbH,  Dusseldorf,  as third pension
          expert to decide the  procedure  and the amount  inserted in the Final
          Completion  Statement as provision for pension  expectancy  rights for
          the Transferring  Employees  finally and binding for all parties.  The
          costs of Gradmann & Holler GmbH shall be shared in accordance with the
          respective prevailing of the parties.


     7.5  The Purchaser  shall for a period of 12 months from  Completion at the
          Vendor's  request make available to the Vendor and allow the Vendor to
          take copies of those of the Records  which relate to the  Transferring
          Employees'  employment  prior to  Completion.  The  Vendor  will for a
          period of 12 months after Completion provide the Purchaser with copies
          of such  information and documents not comprised within the Records as
          the Purchaser may reasonably  require in relation to the  Transferring
          Employees' employment prior to Completion.

     7.6  The  Purchaser  covenants  with the  Vendor  for the  benefit  of each
          Transferring  Employee  that should the  Purchaser  dismiss any of the
          Transferring  Employees  for reasons of  redundancy  until 31 December
          1998,  the Purchaser  will make  payments to each of the  Transferring
          Employees so dismissed  which are no less  favourable to such Employee
          than  those set out in the  Severance  Policy  section  of the pack of
          employment particulars annexed to the Disclosure Letter.


8.   COSTS AND EXPENSES

     Each  party to this  Agreement  shall  bear its own costs and  expenses  in
     connection with this Agreement and the negotiations  leading  thereto.  For
     the  avoidance of doubt the  Purchaser  shall pay all stamp duty payable in
     connection with this Agreement, any 


                                       39
<PAGE>

     instrument  executed  pursuant hereto or to the Umbrella  Agreement and the
     purchase by it of the Assets and the Activity and will indemnify the Vendor
     against any stamp duty and related  penalties and interests (if any) it has
     to pay in  connection  with  this  Agreement  or  any  instrument  executed
     pursuant hereto before enforcing its rights thereunder.


9.   WARRANTIES

     The Vendor and the  Purchaser  agree that the  provisions  of the  Umbrella
     Agreement  shall  apply with  regard to the  Warranties  (as defined in the
     Umbrella  Agreement)  and shall be the only  remedy of the  Purchaser.  The
     right to withdraw is excluded for the Purchaser.


10.  INDEMNITY AND LIABILITES

     10.1 The  Purchaser  agrees  that it will  assume  and  undertakes  to pay,
          perform and discharge when due or required to be performed:-

          10.1.1 the Creditors in accordance with clause 2.4;

          10.1.2 the Contracts, and the Bids in accordance with clause 5 and any
                 liabilities  or obligations  of the Vendor  arising  out of any
                 Completed   Contract   (including,   without  limitation,   any
                 obligations  or  liabilities  arising  out  of  a breach by the
                 Vendor prior to Completion of any of its obligations under  any
                 such Contracts, MOU's or Completed Contracts);

          10.1.3 all the Vendor's obligations  to return any Project Prepayments
                 to customers of the Activity;

          10.1.4 the  Vendor's obligations  in respect of goods sold,  leased or
                 otherwise  disposed  of  or  manufactured  (in whole or in part
                 only)  by the Vendor (or any previous owner of the Activity) or
                 services performed by the Vendor (or any previous  owner of the
                 Activity) in relation to the Activity  prior to  Completion  in
                 accordance with clause 11;

          10.1.5 the  Vendor's  obligations  in  respect   of  the  Transferring
                 Employees  in  accordance  with  clause 7,  including  (without
                 limitation) the liabilities of 


                                       40
<PAGE>

                 the Vendor for unpaid  accrued  holiday pay to the Transferring
                 Employees;

          10.1.6 any  liabilities  of  the  Vendor   relating  to  the  Activity
                 (including,   without limitation,  any  liability  relating  to
                 Taxation) to the extent that (a) provisions or reserve therefor
                 has been made  and is reflected in the Net Current Assets Value
                 or (b) the subject matter thereof  is  otherwise  taken account
                 of, or reflected,  in the calculation of the Net Current Assets
                 Value;

          10.1.7 any obligations,  liabilities,  losses,  damages, claims, costs
                 and expenses  arising from or relating to the matters  referred
                 to in the following paragraphs of the Disclosure Letter:-

                 10.1.7.1 Part A paragraph 9  (Litigation)  regarding  only  the
                          problems encountered in the Philippines with Hartridge
                          smoke meters;

                 10.1.7.2 Part A  paragraph 10.2  (Action by Robert Bosch GmbH);
                          and

          10.1.8 any other liabilities or obligations of the Vendor or any other
                 member of the Lucas Group relating to the Activity agreed to be
                 assumed by the Purchaser  under this Agreement  or the Umbrella
                 Agreement

     10.2 The  Purchaser   shall  not  assume,   and  the  Vendor  shall  remain
          responsible for, the following  liabilities arising out of the conduct
          of the  Activity by the Vendor or any other  member of the Lucas Group
          before Completion:

          10.2.1 any  liability  of the Vendor for borrowed money (other than in
                 respect of the Leased Assets);

          10.2.2 any Lucas Internal Funding;

          10.2.3 any  liability  of the Vendor  to Taxation  in  respect  of the
                 Activity  save to the extent  the same is included  within  the
                 Assumed  Liabilities or is otherwise agreed to be discharged by
                 the Purchaser under this Agreement or the Umbrella Agreement;


                                       41
<PAGE>

          10.2.4 any liability of the Vendor arising under clause 7.2 in respect
                 of the Transferring Employees  and the  liability  of the Lucas
                 Group to pay any divestment bonus to any Transferring Employees
                 in connection with the sale of the Activity hereunder;

          10.2.5 any liability  of the Vendor in respect of defective goods sold
                 or  services supplied  by the Vendor which is to be retained by
                 the Vendor in accordance with clause 11.1.2;

          10.2.6 any criminal liability of the Vendor arising out of a breach of
                 statutory duty or laws applicable to the Activity by the Vendor
                 prior to the Completion Date;

          10.2.7 any liability  of the Purchaser  for which  the  Vendor is held
                 liable in accordance with section 419 of the German Civil Code;

          10.2.8 any liability  of the Vendor for social security  contributions
                 save to the extent  provided  for within the Net Current Assets
                 Value;

          10.2.9 any liabilities arising from a breach of laws applicable to the
                 Activity  by the Vendor  or  other  members  of the Lucas Group
                 prior to Completion which:-

                    (a)  automatically  attach to the  Purchaser by operation of
                         law; and

                    (b)  are  material  in the  context  of the  Activities  (as
                         defined in the Umbrella Agreement)  taken  as  a whole;
                         and

                    (c)  are not Assumed Liabilities; and

                    (d)  do not  relate to the  Transferring Employees  (who are
                         dealt with in clause 7).


                                       42
<PAGE>

                         but  excluding  (for  avoidance  of  doubt)   any  such
                         liabilities incurred by the Purchaser as a result of or
                         relating to any act or omission  of any  member  of the
                         Purchaser's Group following Completion; and

          10.2.10 any  other  liabilities  of  the Vendor or any other member of
                  the  Lucas Group  arising  out of the conduct of the  Activity
                  by the Vendor  or  any other  member of the Lucas Group before
                  Completion and which:


                    (a)  are not comprised within the Assumed Liabilities and

                    (b)  do not relate to any breach of laws  to the extent such
                         liabilities are dealt with in clause 10.2.9.

     10.3 The  Purchaser  hereby  undertakes  to indemnify and hold harmless the
          Lucas Group from and against any and all expenses, costs, loss, damage
          and  liability  which the Lucas Group may suffer or incur  directly or
          indirectly in respect of or arising out of:-

          10.3.1  the  Assumed  Liabilities  or  the  failure  or  delay  by the
                  Purchaser in  paying,  performing  or  discharging the Assumed
                  Liabilities; or

          10.3.2  the  operation  of  the  Activity  by  the Purchaser after the
                  Completion Date.

     10.4 The Purchaser will use all reasonable  endeavours (including procuring
          the giving of guarantees by the Guarantor  where  required) to procure
          that on or as soon as practical  after  Completion  each member of the
          Lucas  Group  is  released  from  its  liability  (whether  actual  or
          contingent)  in respect of those  bonds,  guarantees,  guarantees  and
          indemnities  given by any of them before  Completion in respect of the
          Activity which are listed in Schedule 7 or which are identified in the
          Disclosure  Letter.  The Purchaser  will  indemnify the Lucas Group in
          full against any and all expenses,  costs,  loss, damage and liability
          which the Lucas Group may suffer or incur  directly or  indirectly  in
          respect of 


                                       43
<PAGE>

          or  otherwise  arising  out of any claim or other  demand  made on the
          Lucas Group  (whether made before or after  Completion)  in respect of
          the bonds,  guarantees or indemnities given by any member of the Lucas
          Group  before  Completion  in  respect of the  Activity  and listed in
          Schedule 7 or identified in the Disclosure Letter or in respect of any
          other bonds,  guarantees or indemnities  given by the Lucas Group, but
          in  their  case  only to the  extent  that the  underlying  obligation
          constitutes an Assumed Liability.

     10.5 The Vendor  hereby  undertakes  to  indemnify  and hold  harmless  the
          Purchaser  against  any and all  expenses,  costs,  loss,  damage  and
          liability  which  the  Purchaser  may  suffer  or  incur  directly  or
          indirectly in respect of or arising out of the Excluded Liabilities or
          failure or delay by the Vendor in paying,  performing  or  discharging
          the Excluded Liabilities in accordance with clause 10.2

     10.6 Before any party  makes any  payment  or offers any other  remedy to a
          third  party or takes  any  other  remedial  or  corrective  action in
          respect of matters for which it is entitled to an  indemnity  from any
          other party  hereto  under the terms of this clause 10 it shall give a
          reasonable  opportunity  to  such  other  party,  to  verify  and,  if
          appropriate,  remedy the  default,  defect,  omission or other  matter
          giving  rise to the claim in  question  subject  always to such  third
          party allowing the same.

     10.7 In the event that this Agreement requires or entitles any party to pay
          or receive a payment of or in respect  of  Taxation  and the  relevant
          legislation  provides that payment must be made to or by another party
          to this  Agreement  the  relevant  parties  shall make such  adjusting
          payments between themselves and at such times as are necessary to give
          effect to the intention expressed in this Agreement.


11.  PRODUCT LIABILITY AND PRODUCT WARRANTY

     11.1 Without  prejudice to the  generality  of any other  provision of this
          Agreement the Purchaser shall be liable:-


                                       44
<PAGE>

          11.1.1 (save in relation to products the subject  of the LAO Agreement
                 which  shall be governed  by the terms  of that  agreement)  to
                 carry out in accordance with its terms any warranty,  guarantee
                 or  other similar obligation  or  commitment  ("Warranty  Work"
                 which  expression  includes  any  materials  supplied,   labour
                 involved and any costs or other expenses incurred):-

                 11.1.1.1 given  or  undertaken  by the Vendor  (or any previous
                          owner of the Activity)  in respect  of any goods sold,
                          leased or otherwise disposed of, or in respect  of any
                          services performed, under any contract entered into or
                          assumed by  the  Vendor  (or any previous owner of the
                          Activity)  prior to the Completion Date in relation to
                          or in contemplation of the Activity; or

                 11.1.1.2 given  or  undertaken  by the Purchaser  in respect of
                          goods  sold,  leased  or  otherwise disposed of, or in
                          respect  of  services  performed,   by  the  Purchaser
                          following  the  Completion  Date   which   incorporate
                          products manufactured or purchased  by the Vendor  (or
                          any previous owner of the Activity)  prior thereto  or
                          work in progress of the Vendor at Completion; and

          11.1.2 for all loss  damage or  liability  (other than  Warranty Work)
                 arising  out of any  defective  goods  sold leased or otherwise
                 disposed of or defective or  negligent services provided by the
                 Vendor  (or any previous owner of the Activity)  in respect  of
                 the Activity prior to Completion  whether under any Contract or
                 any  other  contract  entered  into  by  the  Vendor  prior  to
                 Completion  in relation to  or in contemplation of the Activity
                 or  arising  out  of defective goods bought in or  manufactured
                 (in whole or in part)  by the Vendor  and sold  subsequently by
                 the Purchaser and whether or  not  the claim  is  made  against
                 the Lucas Group or the Purchaser,  unless the event or incident
                 (which for the avoidance  of the doubt  shall  not  include the
                 actual sale, lease, disposal or provision of 


                                       45
<PAGE>

                 goods or  services  by the Vendor (or any previous owner of the
                 Activity)) giving rise to any such liability occured before the
                 Completion Date in which  event such loss,  liability or damage
                 shall be borne by the Vendor.

     11.2 The  Purchaser  shall  indemnify  the Lucas  Group  against all costs,
          expenses,  loss,  damage or liability arising out of any breach by the
          Purchaser of the provisions of clause 11.1. The Vendor shall indemnify
          the Purchaser's  Group against all costs,  expenses,  loss,  damage or
          liability  arising  out of a failure  by the Vendor to  discharge  its
          obligations under clause 11.1.2.


12.  POST COMPLETION COVENANTS

     12.1 For the purposes of assuring to the  Purchaser the full benefit of the
          Activity and the Goodwill and in consideration of the Agreement of the
          Purchaser  to buy the  Assets on the terms of this  Agreement  and the
          Umbrella  Agreement Lucas hereby undertakes to the Purchaser that they
          will not and agree to procure  that no other member of the Lucas Group
          will,  either alone or in  conjunction  with or on behalf of any other
          person:-

          12.1.1 anywhere  in the  world  for the period from  Completion  to 31
                 December  2000 be engaged  or (save as the  holder of shares or
                 other  securities  in any  company which are  quoted, listed or
                 otherwise  dealt  in on a  recognised stock exchange  or  other
                 securities  market  which  confer not more than 5% of the votes
                 which  could  be  cast  at  a  general meeting  of  the company
                 concerned) directly or indirectly be concerned or interested in
                 any trade  or  business which involves the sale or distribution
                 of goods which are  competitive  as specified in clause 12.4 or
                 the provision of services in relation to the design,  installa-
                 tion or use of such competitive goods ("Competing Services") to
                 a person who is not  a member  of the Lucas Group  and which in
                 any such case actually  competes  with  the  Activity  as it is
                 carried on at Completion;

          12.1.2 for a period  of one year  from Completion  without  the  prior
                 written  consent  of the Guarantor make any offer of employment
                 to any  


                                       46
<PAGE>

                 engineer, designer, assembler or other senior employee included
                 within the  Transferring Employees while such employee  remains
                 employed by any member of the Purchaser's Group;

          12.1.3 for a period of three years from  Completion  without the prior
                 written consent  of  the  Guarantor  solicit  the  services  of
                 (whether as an  employee  or  otherwise)  or attempt  to entice
                 away any engineer, designer, assembler or other senior employee
                 included within the Transferring Employees  while such employee
                 remains employed by any member of the Purchaser's Group;

          12.1.4 for the period  from  Completion  to 31  December  2000  either
                 personally or by any agent directly or indirectly either on its
                 own account or for any other person solicit in competition with
                 the  Activity the custom  of any person who is not a member  of
                 the Lucas Group in respect  of goods  which are  competitive as
                 specified in clause 12.4 or in respect of Competing Services if
                 such  person  was  within  twelve  months  prior to  or  at the
                 Completion  Date a  customer  of the  Vendor  in respect of the
                 Activity;

          12.1.5 for the period from Completion to 31 December 2000 interfere or
                 seek  to  interfere with  the continuance  of  supplies  to the
                 Purchaser (or in the terms relating to such suppliers) from any
                 persons  who had been  supplying  materials  or services to the
                 Vendor  in  respect  of  the Activity  within the twelve months
                 prior to the Completion Date; or

          12.1.6 save as may be required  by law  or the regulations  of the New
                 York Stock Exchange or the London Stock Exchange  Limited for a
                 period of five years  from Completion  reveal to any person any
                 of  the  trade  secrets,  secret  or  confidential  operations,
                 processes  or  dealings or any other  confidential  information
                 concerning  the  Assets  or  the  Activity  including  (without
                 limitation)  customer  lists  and  names,   sales  targets  and
                 statistics, market share statistics, surveys and reports so far
                 as the same have  come  to the Vendor's  knowledge  before  the
                 Completion 


                                       47
<PAGE>

                 Date  but so that  this  restriction  shall cease  to apply  to
                 information which otherwise than through default  of any member
                 of the Lucas Group becomes available to the public generally.

     12.2 Nothing in clause 12.1 shall  prevent the Lucas Group or any member of
          it:-

          12.2.1 from continuing to carry on or developing its business known as
                 the Lake Center Model Shop or from continuing or developing any
                 of its other existing businesses  provided they do not actually
                 compete  with  the  Activities   as  they  are  carried  on  at
                 Completion  or from operating in-house engineering  and testing
                 facilities for any member of the Lucas Group;

          12.2.2 from providing consultancy  and  other services  in relation to
                 the  design,  manufacture  and/or  use of engine or engine fuel
                 systems testing  or assembly equipment  to its own customers or
                 third  parties  licensed  by  the  Lucas  Group  (excluding the
                 Activities) to manufacture product;

          12.2.3 from selling or supplying assembly or testing equipment in sup-
                 port  of products  designed,  developed or  distributed  by the
                 Lucas Group to any customer in connection with an agreement for
                 the  supply  of  product  by the  Lucas Group  or to a licensed
                 manufacturer of Lucas Group  products to whom any member of the
                 Lucas Group is providing technical assistance;

          12.2.4 from acquiring, holding or operating any business or the shares
                 or  other  securities   of  any  company   (including,  without
                 limitation,  shares which are quoted, listed or otherwise dealt
                 in on a recognised stock exchange or other  securities  market)
                 or group of companies or participating in any joint venture:-

                 12.2.4.1 where an incidental  part  of  the  activities of such
                          business company,  group of companies or joint venture
                          comprises   a   business   which  either  supplies  is
                          competitive  goods (as described  in  clause 12.4)  or
                          which provides Competing 


                                       48
<PAGE>

                          Services and which actually competes with the Activity
                          as it is carried on at Completion; and

                 12.2.4.2 where the principal  purpose  of such  acquisition  or
                          participation  is  not  to acquire or participate in a
                          business which is competitive as so described;

                          provided  that the relevant  member of the Lucas Group
                          shall  within  12  months  after  acquiring  any  such
                          business,  company or group of companies offer to sell
                          to the Guarantor such incidental  part which  competes
                          with the Activity and the Guarantor and such member of
                          the Lucas Group shall negotiate  in good  faith with a
                          view to  agreeing  terms for such sale  (but shall not
                          be obliged to conclude  such sale  if mutually accept-
                          able terms cannot be agreed); or

          12.2.5 from carrying on any of the activities contemplated  by the LAO
                 Agreement  or by the  Intellectual Property Agreements  or from
                 enjoying or  exercising  any benefits  or rights granted to any
                 member of the Lucas Group pursuant thereto.

     12.3 Nothing in clause 12.1 shall prevent:-

          12.3.1 Lucas Electrical  and  Electronic Systems AVSD  facility or any
                 successor  to its  business  or  Varity Perkins Limited  or any
                 successor  to its business  from  providing testing services to
                 third parties in relation to engine or engine fuel systems; or

          12.3.2 Lucas TVS Limited  or  any  member  of  the  Lucas  Group  from
                 operating  under  any  licenses or  agreements  which have been
                 entered into before the date hereof  and are referred to in the
                 Disclosure Letter; or

          12.3.3 the companies or Business  Units listed in column 1 of Schedule
                 9  from  distributing  the  products  listed  in  column  2  of
                 Schedule 9  on  behalf  of  the  entities listed in column 3 of
                 Schedule 9.


                                       49
<PAGE>

     12.4 For the purposes of the  foregoing  provisions of this clause 12 goods
          referred to as being competitve shall mean equipment designed to carry
          out any of the  following:  internal  combustion  engine  assembly  or
          testing,   motor   vehicle   transmission   assembly,   motor  vehicle
          transmission testing, internal combustion engine fuel systems assembly
          or testing and assembly or testing of automotive  brake components and
          automotive air conditioning compressors.


13.  LICENCE OF LICENSED INTELLECTUAL PROPERTY

     13.1 On Completion the Vendor grants to the Purchaser (so far as it is able
          to  grant  the  same  and  subject  to  clause   12.3)  a   perpetual,
          irrevocable, non-exclusive, worldwide licence, free of royalty, to use
          the Licensed Intellectual Property (including, without limitation, the
          Specified  Shared IP) for the purpose of  enabling  the  Purchaser  to
          continue  with the  Activity  after  Completion  in the same manner as
          carried on by the Vendor immediately prior to Completion.

     13.2 Subject to clause 13.3 the Purchaser may assign or sub-licence  any of
          the rights  granted  under this clause 13 to any person  PROVIDED THAT
          any  assignee  first  enters  into a direct  covenant  with the Vendor
          agreeing to be bound by the provisions of this clause 13 in respect of
          the Licence.  Accordingly,  references in this clause to the Purchaser
          shall be construed as being references to any such assignee  following
          any such assignment.

     13.3 The Licence  shall  immediately  terminate  with  respect  only to the
          Specified  Shared IP if within the three years  immediately  following
          Completion:-

          13.3.1 there is a change of control  of the Purchaser  or any  Holding
                 Company of the Purchaser to a Competitor; or

          13.3.2 the Purchaser or any receiver,  manager,  administrator, admin-
                 istrative  receiver  or  liquidator  of the Purchaser sells the
                 whole  or  substantially  the  whole  of  the  Activity   to  a
                 Competitor; or

          13.3.3 the Purchaser purports  to assign  or sub-licence  any  of  the
                 rights granted under the Licence to a Competitor.


                                       50
<PAGE>

     13.4 Upon  termination of the Licence with respect to the Specified  Shared
          IP the Purchaser or any relevant assignee shall cease to be authorised
          to use the  Specified  Shared  IP and  shall  forthwith  return to the
          Vendor all originals and copies of all documents and other information
          (in whatever form) comprising,  relating to or recording the Specified
          Shared IP.

     13.5 The Purchaser shall notify the Vendor in writing before commencing any
          proceedings  against  any  infringer  of  the  Licensed   Intellectual
          Property but shall not be required to obtain the  Vendor's  consent to
          the issue of any such  proceedings  except to the  extent  that  under
          applicable  law the Vendor is required to be joined as a party to such
          proceedings and if the Vendor is so required the following  provisions
          will apply:-

          13.5.1 the Vendor's  prior  written consent to being joined as a party
                 shall be  required  which consent  shall  not  be  unreasonably
                 withheld or delayed;

          13.5.2 the Purchaser shall have  the full conduct  of such proceedings
                 at its own expense and shall keep  the  Vendor informed  of all
                 material developments in relation thereto;

          13.5.3 the Purchaser  shall indemnify  the Vendor  against  all costs,
                 expenses, damages or other liability incurred or suffered by or
                 awarded against the Vendor as a result of or in connection with
                 such proceedings; and

          13.5.4 subject to compliance by the Purchaser  with the  provisions of
                 clause 13.5.3 all damages or other  relief  obtained  from such
                 proceedings  shall  belong  to or be  for  the  benefit  of the
                 Purchaser.

     13.6 If at any time after  Completion  the  Vendor  grants a licence of any
          Licensed  Intellectual  Property to a DTI Competitor which will enable
          such DTI  Competitor  to compete with the  Purchaser in respect of the
          Activity and such DTI Competitor  does so compete,  the Vendor and the
          Purchaser will negotiate in good faith a reasonable royalty to be paid
          by the  Vendor to the  Purchaser  having  regard  (inter  alia) to the
          extent  to  which  such  DTI  Competitor  does so  compete  and to the
          contribution which prior to Completion the Business Unit 


                                       51
<PAGE>

          known  as  LATS  made to the  creation  of the  Licensed  Intellectual
          Property in question.


14.  RISK

     At  Completion  the Vendor shall cease to hold  insurance  coverage for the
     Assets,  the Leased  Assets and the Activity and risk in the Assets and the
     Leased Assets shall pass to the Purchaser at the Completion Date.


15.  EXCLUSIONS

     Except as otherwise specifically provided in this Agreement or the Umbrella
     Agreement  the Lucas Group will not be liable under this  Agreement for any
     personal injury,  death,  loss or damage of any kind whatsoever (other than
     death  or  personal   injury   resulting  from  its   negligence)   whether
     consequential  or otherwise  (including but not limited to loss of profits)
     arising  from any defect in the Assets and save as provided in the Umbrella
     Agreement  the Vendor  hereby  excludes  in  relation to the Assets and the
     Activity  all  conditions,  warranties,  representations,   guarantees  and
     stipulations  express or implied,  statutory,  customary or otherwise which
     but for such  exclusion  would or might  subsist in favour of the Purchaser
     except that such exclusion will not apply to any implied condition that the
     Vendor  has or will  have the  right to sell any  goods  being  sold by the
     Vendor when the property is to pass,  subject to any  retention of title in
     favour of a third party or to any statements made fraudulently.


16.  CONDITION PRECEDENT

     This  Agreement  will  become  binding  forthwith  upon  the  English  Sale
     Agreement (as defined in the Umbrella  Agreement) and the US Sale Agreement
     (as  defined  in the  Umbrella  Agreement)  being  completed  in  escrow in
     accordance with their terms and the terms of the Umbrella Agreement.


17.  MERGER CONTROL

     The Purchaser has established that only a post-merger notification with the
     Federal Cartel Office  (Bundeskartellamt) is required. The parties will use
     their best  endeavours  to prepare all  information  required to enable the
     Purchaser to file the notification.


                                       52
<PAGE>

18.  CONTINUING SERVICES AND SUBRENT

     18.1 The Vendor will  procure  that Lucas Car Braking  Systems  (LCBS) will
          continue  to  provide   services   such  as   purchasing,   telephone,
          switchboard,  salaries,  personal  administration,  IT/IS, etc. at the
          current level of charges of DM 10,500.00  plus statutory VAT per month
          until 31 December 1998.  Payments are to be made by the Purchaser on a
          monthly basis.

     18.2 The Vendor furthermore procures that LCBS will continue to subrent the
          existing  TEC  facilities  at the  current  rent of DM  9,900.00  plus
          statutory VAT, in case LCBS has opted for VAT, until 31 December 1998.
          Payments  are to be made by the  Purchaser  on a  monthly  basis.  The
          provision  of  section  568 of the  German  Civil  Code  is  expressly
          excluded should the Purchaser  continue to use the facilities after 31
          December 1998.  The monthly rent of DM 9,900.00 shall increase  should
          the  rental  costs  for LCBS  for  "Hall 5" be  increased  in the same
          proportion as the rental costs for LCBS increase.


19.  INSPECTION OF DOCUMENTS

     The Vendor shall for a period of three years after Completion afford to the
     authorised  representatives  of the Purchaser all reasonable  facilities to
     inspect records held or retained by the Vendor or its professional advisers
     (which are not privileged) relating exclusively to the Activity and to make
     copies  of the  same or  extracts  therefrom  at the  Purchaser's  cost and
     expense.  The Purchaser agrees to maintain at the registered  office of the
     Purchaser, and allow the Vendor at its costs and expenses at all reasonable
     times access to and to take copies of the Records insofar as they relate to
     the period prior to Completion, for a period of 6 years from Completion.


20.  ASSIGNMENT PROHIBITED

     The benefit of this Agreement may not be assigned by the Vendor without the
     prior  written  consent of the  Purchaser or by the  Purchaser  without the
     prior  written  consent  of the  Vendor  save that any party may assign the
     benefit of this  Agreement to any Subsidary or Holding  company of it or to
     any other  Subsidary  of its  Holding  Company if any  assignment  does not
     increase the  liability of any party under this  Agreement.  If at 


                                       53
<PAGE>

     any time  thereafter such assignee shall cease to be so connected with such
     assignor,  it shall  prior  to so  ceasing  re-assign  the  benefit  of the
     Agreement to such assignor.


21.  SURVIVAL OF CERTAIN PROVISIONS

     This Agreement  shall remain in force and effect after the Completion  Date
     in respect of any matters covenants or conditions which shall not have been
     done observed or performed prior thereto and all representations warranties
     obligations of and  indemnities  given by the parties shall (except for any
     obligations   fully   performed)   continue   in  full   force  and  effect
     notwithstanding  Completion,  subject  to the  provisions  of the  Umbrella
     Agreement.


22.  GOVERNING LAW

     22.1 This Agreement  shall be governed by English Law except for clauses 3,
          and 12 as well as the transfer of the Transferring Employees and their
          pension expectancy rights which shall be governed by German law.

     22.2 The parties  hereby submit to the  non-exclusive  jurisdiction  of the
          English Courts.


23.  COUNTERPARTS

     This  Agreement  may be executed in any number of  counterparts  and by the
     several  parties  hereto on  separate  counterparts  each of which  when so
     executed and delivered shall be an original but all the counterparts  shall
     together constitute one document.


24.  SEVERABILITY

     The parties  expressly  agree that it is not the  intention of any party to
     violate any public policy,  statutory or common laws,  rules,  regulations,
     treaties or decisions of any government or agency thereof. If any provision
     of  this  Agreement  is  judicially  or  administratively   interpreted  or
     constructed as being so in violation,  such provision  shall be inoperative
     and the remainder of this  Agreement  shall remain binding upon the parties
     thereto.


                                       54
<PAGE>

25.  NOTICES AND OTHER COMMUNICATIONS

     All  notices,  demands or requests  provided  for or  permitted to be given
     pursuant  to this  Agreement  must be in  writing  and  shall  be  given in
     accordance with the Umbrella Agreement.


26.  NO THIRD PARTY BENEFITS

     Except as otherwise provided in this Agreement and the Umbrella  Agreement,
     this  Agreement  is intended and agreed to be solely for the benefit of the
     parties hereto and their permitted assigns and no third party shall accrued
     any benefit,  claim or right of any kind whatsoever  pursuant to, under, by
     or through this Agreement.


27.  MODIFICATION

     The parties to this Agreement may, by mutual  written  consent  executed by
     the  authorised  officers  of the  Purchaser  and  the  Vendor,  modify  or
     supplement  this Agreement in such manner as may be mutually agreed upon by
     them in writing.


28.  WAIVER OF PROVISION

     The terms,  covenants,  indemnities and conditions of this Agreement may be
     waived  only  by  a  written  instrument  executed  by  the  party  waiving
     compliance.  The failure of any party at any time to require performance of
     any  provisions  hereof shall in no manner affect the right at a later date
     to enforce the same. No waiver by any party of any condition, or the breach
     of any other  provision,  term,  covenant or  indemnity  of this  Agreement
     whether by conduct or  otherwise,  in any one or more  instances,  shall be
     deemed to be or  construed  as a further or  continuing  waiver of any such
     condition  or of the  breach  of any other  provision,  term,  covenant  or
     indemnity of this Agreement.

     AS WITNESS the hands of the duly authorised  representatives of the parties
     to this Agreement the day and year first above written


                                       55
<PAGE>

     The following  page  contains a list of Exhibits and  Schedules  which have
been  intentionally  omitted by the  Registrant  pursuant to Item  601(b)(2)  of
Regulation S-K.

     A  copy  of any  omitted  Exhibit  or  Schedule  will  be  provided  to the
Securities and Exchange Commission upon request.

<PAGE>

SCHEDULE 1     -    THE LEASED ASSETS
SCHEDULE 2     -    THE PLANT, MACHINERY AND EQUIPMENT
SCHEDULE 3     -    THE PROPERTY
SCHEDULE 4     -    TRANSFERRING EMPLOYEES
SCHEDULE 5     -    INTELLECTUAL PROPERTY AGREEMENTS
SCHEDULE 6     -    ASSIGNMENT OF DEBTORS
SCHEDULE 7     -    BONDS, GUARANTEES AND INDEMNITIES
SCHEDULE 8     -    MEMORANDA OF UNDERSTANDING
SCHEDULE 9     -    COMPETING ACTIVITIES


<PAGE>

SIGNED by /s/ James Zigel
          ------------------
for and on behalf of LUCAS AUTOMATION
& CONTROL ENGINEERING GmbH
in the presence of:- /s/ Mary K. Krigbaum



SIGNED by /s/ James Zigel
          ------------------
for and on behalf of the LUCAS INDUSTRIES PLC
in the presence of:- /s/ Mary K. Krigbaum



SIGNED by /s/ Bruce P. Erdel
          ------------------
for and on behalf of ASSEMBLY TECHNOLOGIE
& AUTOMATION GmbH
in the presence of:- /s/ Rita Deckard