DATED: July 29, 1997






                (1) LUCAS AUTOMATION & CONTROL ENGINEERING, INC.

                            (2) LUCAS INDUSTRIES plc

                      (3) ASSEMBLY TECHNOLOGY & TEST, INC.




                                A G R E E M E N T


                                 relating to the

                Sale and Purchase of the United States Assets of

                          Lucas Assembly & Test Systems





Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601-1293
Tel:  (312) 368-2181
Fax:  (312) 236-7516
Attention:  Mary K. Krigbaum







<PAGE>

                               TABLE OF CONTENTS

                                                                          Page
1.       DEFINITIONS .................................................      2
         1.1      Specific Terms .....................................      2
         1.2      Statutory References ...............................     20
         1.3      Interpretation .....................................     20

2.       SALE AND PURCHASE OF THE BUSINESS ...........................     21
         2.1      The Assets .........................................     21
         2.2      Real Property; Intellectual Property and Know-How ..     23
         2.3      Consigned Inventory ................................     23
         2.4      Payment of Payables by Purchaser ...................     24
         2.5      Excluded Assets ....................................     24
         2.6      Performance by Other Members of Lucas Group ........     26
         2.7      Third Party Tooling ................................     27
         2.8      Assets with Proprietary Markings ...................     27
         2.9      Limited Use of Name ................. ..............     27
         2.10     Waiver of Compliance with Bulk Sales Laws ..........     27

3.       THE CONSIDERATION ...........................................     28
         3.1      Purchase Price .....................................     28
         3.2      Allocation of Purchase Price .......................     28
         3.3      Sales Tax ..........................................     28

4.       CLOSING .....................................................     28

5.       FURTHER ASSURANCE AND THE CONTRACTS .........................     29
         5.1      Further Assurances .................................     29
         5.2      Performance and Indemnification re Contracts .......     29
         5.3      Contracts Requiring Novation or Consent ............     29
         5.4      Sub-Contractors ....................................     30
         5.5      Expenses of Assignment .............................     31
         5.6      Letters of Credit ..................................     31
         5.7      Assignment of MOUs .................................     32

6.       RECEIVABLES .................................................     32
         6.1      Collection of Receivables ..........................     32
         6.2      Remittance of Receivables Collected by Seller ......     32

7.       THE TRANSFERRING EMPLOYEES ..................................     32
         7.1      Offer of Employment ................................     32
         7.2      Welfare Benefit Plans ..............................     33
         7.3      Indemnification for Severance Obligations ..........     33


                                       i
<PAGE>

         7.4      Records of Transferring Employees ..................     33
         7.5      Workers Compensation Claims ........................     33

8.       COSTS AND EXPENSES ..........................................     34

9.       INDEMNITY AND LIABILITIES ...................................     35
         9.1      Assumption of Liabilities ..........................     35
         9.2      Excluded Liabilities ...............................     38
         9.3      Environmental Liability ............................     40
         9.4      Indemnity by Purchaser .............................     42
         9.5      Release from Guarantees ............................     42
         9.6      Indemnity by Seller ................................     42
         9.7      Procedure ..........................................     43
         9.8      Special Provision Regarding Taxes ..................     43

10.      PRODUCT LIABILITY AND PRODUCT WARRANTY ......................     43
         10.1     Assumption of Obligations ..........................     43
         10.2     Indemnification ....................................     44

11.      POST CLOSING COVENANTS ......................................     45
         11.1     Non-Competition; Non-Solicitation; 
                  Non-Interference ...................................     45
         11.2     Exceptions .........................................     47
         11.3     Modification .......................................     49
         11.4     Severability .......................................     49
         11.5     Description of Competitive Goods ...................     49

12.      LICENSE OF LICENSED INTELLECTUAL PROPERTY ...................     49
         12.1     Grant of License ...................................     49
         12.2     No Assignment Without Consent ......................     50
         12.3     Termination of License .............................     50
         12.4     Effect of Termination ..............................     50
         12.5     Infringement of Licensed Intellectual Property .....     50
         12.6     Subsequent Licenses of Licensed Intellectual 
                  Property ...........................................     51

13.      RISK OF LOSS AND TITLE ......................................     52
         13.1     General ............................................     52
         13.2     Tornado Damage .....................................     52

14.      EXCLUSIONS ..................................................     53

15.      COMPLIANCE WITH HSR ACT .....................................     53


                                       ii
<PAGE>

16.      INSPECTION OF DOCUMENTS .....................................     54

17.      ASSIGNMENT PROHIBITED .......................................     54

18.      SURVIVAL OF CERTAIN PROVISIONS ..............................     54

19.      GOVERNING LAW ...............................................     55

20.      COUNTERPARTS ................................................     55

21.      SEVERABILITY ................................................     55

22.      NOTICES AND OTHER COMMUNICATIONS ............................     56

23.      NO THIRD PARTY BENEFICIARIES ................................     56

24.      MODIFICATION ................................................     56

25.      WAIVER OF PROVISIONS ........................................     56



                                    SCHEDULES

SCHEDULE 1        -        The Leased Assets
SCHEDULE 2        -        The Machinery and Equipment
SCHEDULE 3        -        The Real Property
SCHEDULE 4        -        Transferring Employees
SCHEDULE 5        -        Intellectual Property Agreements
SCHEDULE 6        -        Intentionally Omitted
SCHEDULE 7        -        Pensions
SCHEDULE 8        -        Registered Intellectual Property
SCHEDULE 9        -        Part 1:  Trade Mark Assignment
                           Part 2:  Patent Assignment
                           Part 3:  Assignment of Unregistered Intellectual 
                                    Property
                           Part 4:  Assignment of Know-How
SCHEDULE 10       -        Forward Exchange Currency Contracts
SCHEDULE 11       -        Bills of Exchange
SCHEDULE 12       -        Letters of Credit
SCHEDULE 13       -        Bonds, Guarantees and Indemnities
SCHEDULE 14       -        Memoranda of Understanding
SCHEDULE 15       -        Expired Patents
SCHEDULE 16       -        Competing Activities


                                      iii
<PAGE>

                                    AGREEMENT


     THIS AGREEMENT is made on July 29, 1997, BETWEEN LUCAS AUTOMATION & CONTROL
ENGINEERING,  INC., a Virginia corporation  ("Seller"),  whose executive offices
are located at 1000 Lucas Way, Hampton,  Virginia,  ASSEMBLY  TECHNOLOGY & TEST,
INC., a Delaware corporation ("Purchaser"),  whose executive offices are located
at Corporate Centre, Suite 2-300, 1949 East Sunshine, Springfield, Missouri, and
LUCAS  INDUSTRIES plc, whose registered  office is at Stratford Road,  Solihull,
B90 4LA England ("Lucas").

                                    RECITALS:

     A.   The Seller  carries  on the Business  at the Real Property  and Leased
Real Property (as each such term is defined below).

     B.   Members  of the Lucas Group  (as defined below)  carry  on  businesses
similar to that of the Business in Germany and England.

     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 Seller has agreed to sell the Business 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 enters into this Agreement  for the sole purpose  of  making the
covenants set forth in Section 11 of this Agreement.


<PAGE>

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

     G.   The Purchaser  is  acquiring  substantially  all  the  assets  of  the
Business,  which assets  comprise more than 75% of the  Business.  The Purchaser
intends to continue to operate the Business as a going concern.


                                   AGREEMENTS

     In  consideration of the mutual covenants and agreements of the parties and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:-

1.   DEFINITIONS.

     1.1.  Specific  Terms.  In this  Agreement  (which  term shall  include the
Recitals of and Schedules to this Agreement), except where inconsistent with the
subject matter or context,  the following words and  expressions  shall have the
following meanings respectively:


"the Accruals"                              Any liability of the Seller relating
                                            to  the  Business  which  is  to  be
                                            settled  after the Closing  Date  in
                                            the  course   of  carrying   on  the
                                            Business  in respect  of a period of
                                            time  which  commences   before  the
                                            Closing  Date  and  ends  after such
                                            date

"the Amounts Recoverable on Contracts"      The  amounts  recoverable   by   the
                                            Seller  on  the  Customer  Contracts
                                            in accordance with  their respective
                                            terms together with the  


                                       2
<PAGE>

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

"the Assets"                                The assets  specified in clause 2.1,
                                            the  Real  Property  to  be sold and
                                            purchased or otherwise dealt with in
                                            accordance with this Agreement,  and
                                            the  Intellectual  Property  and the
                                            Know-How   to  be  dealt   with   in
                                            accordance with this Agreement

"Assumed Liabilities"                       The obligations  and liabilities  to
                                            be assumed by Purchaser as described
                                            in clause 9.1

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

"the Business"                              The  business  of the design,  manu-
                                            facture   and   implementation    of
                                            assembly line and testing  equipment
                                            with  associated  materials handling
                                            and production control systems  (and
                                            the  provision  of services  related
                                            thereto)    primarily     for    the
                                            automotive  components industry car-
                                            ried on by the Seller at or from the
                                            Real Property  and  the  Leased Real
                                            Property


                                       3
<PAGE>

"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 financial statements
                                            have customarily  been prepared   by
                                            the  Lucas  Group  or  the  relevant
                                            member

"Closing"                                   Consummation  of  the  sale and pur-
                                            chase  contemplated  hereunder  pur-
                                            suant to clause 4  and  "the Closing
                                            Date"  shall  be  construed  as  the
                                            opening  of business on the date  on
                                            which Closing takes place

"the Code"                                  The  Internal Revenue Code  of 1986,
                                            as amended

"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 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
                                            Seller or any 


                                       4
<PAGE>

                                            previous  owner  of  the Business in
                                            relation to the Business:

                                            (i)   pursuant  to which the  supply
                                                  of  the   relevant  goods   or
                                                  services was completed  within
                                                  the   two   years  immediately
                                                  preceding the Closing Date and
                                                  in   respect   of   which  any
                                                  warranty,   guarantee,   main-
                                                  tenance or similar obligation,
                                                  liability  or  commitment   (a
                                                  "Warranty")   given   by   the
                                                  Seller   (or   such   previous
                                                  owner) remains outstanding and
                                                  has not expired by the Closing
                                                  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  Closing Date
                                                  made   a   claim   under   any
                                                  Warranty   relating   to  such
                                                  goods or services

"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 Seller  or  any
                                            member  of  the  Lucas  Group   (in-
                                            cluding, without


                                       5
<PAGE>

                                            limitation,    current     contracts
                                            assumed  by the Seller  or any other
                                            member  of the Lucas Group  to which
                                            any  previous owner  of the Business
                                            is a party) relating wholly  to  the
                                            Business  (or where any current con-
                                            tracts   and  arrangements   of  the
                                            Seller  or any other member  of  the
                                            Lucas Group  relate  only in part to
                                            the Business then such part shall be
                                            deemed  to  be  included  within the
                                            definition) entered into  before the
                                            Closing  Date   (including,  without
                                            limitation,  the Customer Contracts,
                                            the Supplier Contracts,  the  agree-
                                            ments relating  to the Leased Assets
                                            and   Leased   Real   Property,  and
                                            forward exchange currency  contracts
                                            referred  to  in  Schedule 10)   and
                                            which then remain (in  whole  or  in
                                            part)  to be performed by the Seller
                                            or any  other  member  of the  Lucas
                                            Group, including without limitation,
                                            the  Completed  Contracts  and those
                                            current  contracts  where  any  war-
                                            ranty,  guarantee,  maintenance   or
                                            other similar obligation,  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,  how-
                                            ever,  excluded from this definition
                                            are:


                                       6
<PAGE>

                                            (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 clause  9.2(j)
                                                  and (k));

                                            (ii)  Group  Sharing   Arrangements;
                                                  and

                                            (iii) contracts of employment of any
                                                  employees of any member of 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 Customer Contracts"                    Any  and  all  uncompleted  purchase
                                            orders  from  customers  which  were
                                            accepted by the Seller prior  to the
                                            Closing  Date  which  relate  to the
                                            Business and which then remain to be
                                            performed in whole or in part 

"DTI 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:
                                            Giddings  &  Lewis,  Thyssen, Bosch,
                                            Western  Atlas,  B&K,  Elcon,   ABB,
                                            Ingersoll Rand, 


                                       7
<PAGE>

                                            Mohwald, Meidenscha, Mecelec, Stiwa,
                                            Teim Techneck and Knoell

"Economic Value Added Bonus Scheme"         The bonus scheme  operated   by  the
                                            Seller in respect of  the  Business,
                                            details  of which are  contained  in
                                            Section  2   of   Annex  3   to  the
                                            Disclosure Letter

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

"ERISA"                                     The   Employee   Retirement   Income
                                            Security Act of 1974, as amended

"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 Seller as set out in clause 9.2

"Expired Patent"                            A granted patent  (a)  which  at the
                                            Closing Date  has lapsed  and cannot
                                            be revived or (b) of  which  at  the
                                            Closing Date  the term  has  expired
                                            and cannot be extended, and which in
                                            either case is listed  as an expired
                                            patent in Schedule 14


                                       8
<PAGE>

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

"the Goodwill"                              The goodwill and going concern value
                                            of the Seller in connection with the
                                            Business

"Group Sharing Arrangements"                Any and all  contracts  or  arrange-
                                            ments  relating  to  the  supply  of
                                            goods  or services  to the Seller in
                                            respect  of  the  Business  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

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

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

"Intellectual Property"                     The Registered Intellectual Property
                                            and  the  Unregistered  Intellectual
                                            Property

"Intellectual Property Agreements"          The licenses  briefly  described  in
                                            Schedule 5 in the Agreed Terms which
                                            are to be entered into on Closing

"Intellectual Property Assignments"         Assignments   of   the  Intellectual
                                            Property and 


                                       9
<PAGE>

                                            Know-How set forth  in  the  form or
                                            forms set forth  in Parts 1 to 4  of
                                            Schedule 9

"the Inventory"                             All   inventory,    including    raw
                                            materials   and  components,   spare
                                            parts,  operating  supplies,   main-
                                            tenance   and   non-product   stock,
                                            finished goods, packaging materials,
                                            packages   and  products  in  inter-
                                            mediate stages of completion (except
                                            where the same  constitutes  Amounts
                                            Recoverable  under Contracts)  owned
                                            by  the  Seller  for  use or sale in
                                            connection  with the Business at the
                                            Closing Date

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

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

                                            (ii)  are  to  be  licensed  to  the
                                                  Lucas  Group  at  or following
                                                  Closing 


                                       10
<PAGE>

                                                  pursuant  to the terms  of the
                                                  Intellectual  Property  Agree-
                                                  ments

                                            but excluding  any of the same which
                                            are expressly retained by any member
                                            of  the Lucas Group  under  the  LAO
                                            Agreement    or   the   Intellectual
                                            Property  Agreements  and  excluding
                                            the    Unregistered     Intellectual
                                            Property

"the LAO Agreement"                         The agreement in  the  Agreed  Terms
                                            between 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 Seller
                                            which are used  in the Business  and
                                            which  are  the  subject  of a lease
                                            (whether a true lease or a financing
                                            lease), which are listed in Schedule
                                            1,   excluding   the   Leased   Real
                                            Property

"the Leased Real Property"                  The real property commonly  known as
                                            12841 Stark Road, Livonia, Michigan,
                                            12921 Stark Road, Livonia, Michigan,
                                            and the parking lot adjacent  to the
                                            Real Property leased  from  the City
                                            of Saginaw, Michigan

"the Letters of Credit"                     The  letters  of  credit  listed  in
                                            Schedule 12


                                       11
<PAGE>

"License"                                   The   license    of   the   Licensed
                                            Intellectual Property granted by the
                                            Seller  to  the Purchaser on Closing
                                            pursuant to clause 12

"Licensed Intellectual Property"            The unregistered trade marks, design
                                            rights,  copyright,  know  how   and
                                            other  intellectual property  rights
                                            which are owned by the  Lucas  Group
                                            and which:

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

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

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

"Lucas Central Treasury"                    The LucasVarity Treasury  Department
                                            presently  based   at  672  Delaware
                                            Avenue, Buffalo, New York


                                       12
<PAGE>

"the Lucas Group"                           LucasVarity and any company which is
                                            a  Subsidiary  or Subsidiary  Under-
                                            taking of LucasVarity  for  the time
                                            being and from time to time

"Lucas Internal Funding"                    All   monies  due  to  or  from  the
                                            Business  from  or  to 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

"the Machinery and Equipment"               The  fixed  and moveable  machinery,
                                            tooling,   computer   equipment  and
                                            equipment    (including    vehicles)
                                            owned by the Seller with an original
                                            cost per item  in excess  of (pound)
                                            5,000 which are used in the Business
                                            and which are set forth  in Schedule
                                            2 and such other machinery, tooling,
                                            furniture and equipment owned by the
                                            Seller located  at the Real Property
                                            or the Leased Real Property and used
                                            exclusively   or  primarily  in  the
                                            Business

"MOUs"                                      The   memoranda   of   understanding
                                            entered  into   by  the  Seller   in
                                            respect  of the Business,


                                       13
<PAGE>

                                            including without limitation,  those
                                            listed in Schedule 14

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

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

                                            (i)   the Accruals;

                                            (ii)  any amounts owed by the Seller
                                                  to  any  member  of  the Lucas
                                                  Group   in  respect   of   the
                                                  Business,  or  by the Business
                                                  to  another  Business Unit (in
                                                  each and any  case  on current
                                                  account),  but  excluding  any
                                                  Lucas Internal Funding; and

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

"Person"                                    An     individual,      partnership,
                                            corporation,


                                       14
<PAGE>

                                            joint   stock   company,  trust   or
                                            unincorporated organization

"the Prepayments"                           Each of the payments made in advance
                                            by  or on behalf of the Seller prior
                                            to the Closing Date in the course of
                                            conducting  the Business  in respect
                                            of a period of time which  commences
                                            before  the  Closing  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 Closing,
                                            and  (b) any  such  payment  to  the
                                            extent  it is not  reflected  in the
                                            Net Current Assets Value

"the Project Prepayments"                   Any  advance payments or deposits on
                                            any  Contracts  made  or  paid  by a
                                            customer to the Seller

"the Purchaser's Attorney's"                Dickstein  Shapiro  Morin & Oshinsky
                                            LLP,   2101    L    Street,    N.W.,
                                            Washington, D.C. 20037-1526

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

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


                                       15
<PAGE>

                                            (ii)  over  which the Guarantor  has
                                                  control  within  the   meaning
                                                  defined in this Agreement

                                                  for  the  time  being and from
                                                  time to time

"the Real Property"                         The  three parcels  of  real  estate
                                            described in Schedule 3, Part 1, and
                                            the improvements thereon

"the Receivables"                           The accounts  receivable  and  other
                                            debts owing  to  the  Seller in con-
                                            nection with the  Business  by or in
                                            respect of  account  debtors,  trade
                                            bills  receivable (including without
                                            limitation  those bills  of exchange
                                            listed in Schedule 11) and any other
                                            amounts  owing  to  the  Seller   by
                                            debtors   in   connection  with  the
                                            Business   at   the   Closing   Date
                                            (whether  or  not then due  and pay-
                                            able) including (without limitation)
                                            any  amounts  owed  by any member of
                                            the  Lucas  Group  to  the Seller in
                                            respect  to the  Business or owed to
                                            the  Business  by  another  Business
                                            Unit   (in  each  and  any  case  on
                                            current account),  but excluding any
                                            Lucas Internal Funding

"the Records"                               All such records, lists of customers
                                            and suppliers,  accounts  and  other
                                            documents  relating  exclusively  to
                                            the Business to enable


                                       16
<PAGE>

                                            the Purchaser effectively  to  carry
                                            on  the  same  in  succession to the
                                            Seller

"Registered Intellectual Property"          All  registered  patents  and   reg-
                                            istered trade marks and applications
                                            for the same specified in Schedule 8
                                            owned by the Lucas Group

"the Seller's Attorneys"                    Rudnick & Wolfe,  203  North LaSalle
                                            Street, Chicago, Illinois 60601

"the Specified Shared IP"                   All management manuals,  instruction
                                            manuals, Health  and Safety manuals,
                                            disaster  recovery procedures,  Pro-
                                            ject Introduction Management systems
                                            and other similar manuals   and  the
                                            copyright and know how therein owned
                                            by the Lucas Group and  used  in the
                                            Business  and  by any other Business
                                            Unit or member of the  Lucas  Group,
                                            but specifically excluding any tech-
                                            nical information contained  therein
                                            used in the design, manufacture  and
                                            implementation of assembly  line and
                                            testing equipment

"Subsidiary"                                subsidiary as defined in Section 736
                                            of the Companies Act 1985

"Subsidiary Undertaking"                    subsidiary undertaking as defined in


                                       17
<PAGE>

                                            Section 258  of  the  Companies  Act
                                            1985

"the Supplier Contracts"                    Any and all  contracts  and arrange-
                                            ments which were entered into before
                                            the Closing Date by  or on behalf of
                                            the Seller  with  suppliers  for the
                                            supply  to  the  Seller  of goods or
                                            services  in  connection  with   the
                                            Business  which  then  remain  to be
                                            performed,  in whole or in part, but
                                            excluding the Group Sharing Arrange-
                                            ments

"Taxes"                                     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, advance corporation
                                            tax, income tax,  capital gains tax,
                                            inheritance  tax,  capital  transfer
                                            tax,  development  land  tax,  value
                                            added  tax,   customs,   excise  and
                                            import duties,  stamp duty and stamp
                                            duty  reserve  tax   and  any  other
                                            payment whatsoever  which the Seller
                                            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 Seller  who
                                            are employed in connection with  the
                                            Business at close of business on the
                                            Closing Date whose


                                       18
<PAGE>

                                            names  and  positions  are set forth
                                            in Schedule 4 and any  other  person
                                            who   is  actively  engaged   as  an
                                            employee  of  the Seller and working
                                            exclusively   in  the  Business   at
                                            Closing  and whose remuneration  was
                                            paid  by the Business  in the period
                                            up  to  Closing  (but  excluding any
                                            person whom the Seller  or any other
                                            member   of  the  Lucas  Group   has
                                            treated   as  a  consultant  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 Property"        The unregistered  trade  marks, ser-
                                            vice 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
                                                  Closing pursuant  to the terms
                                                  of the  Intellectual  Property
                                                  Agreements; or

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


                                       19
<PAGE>

                                                  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  and  excluding the
                                                  Know How

     1.2.  Statutory  References.  References  in this  Agreement to statutes or
any statutory  provisions shall include any statutory  amendment,  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.  Interpretation.

           (a) In this Agreement:

               (i)   the  masculine gender shall include the feminine and neuter
           and the singular number shall include the plural and vice versa;

               (ii)  references   to   persons   shall   include    individuals,
           unincorporated  associations,   partnerships,   corporations, limited
           liability companies, trusts or other entities;

               (iii) the expression "the Seller" shall include its successors in
           title; and

               (iv)  the  headings  contained in this Agreement are inserted for
           convenience only and shall not affect its construction.


                                       20
<PAGE>

           (b) 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 Seller and the Purchaser.

           (c) 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 forth in the body of this Agreement.


2.   SALE AND PURCHASE OF THE BUSINESS.

     2.1.  The  Assets.  The Seller shall sell,  free from all  charges,  liens,
other encumbrances or third party claims, and the Purchaser shall purchase as at
and with effect from  Closing all of the Seller's  right,  title and interest in
and to the Business on a going concern basis consisting of only the following in
addition to the assets referred to in clause 2.2:

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

           (b) the benefit of the Amounts Recoverable under Contracts;

           (c) the Goodwill;

           (d) the Machinery and Equipment;

           (e) the Records;

           (f) the Inventory;


                                       21
<PAGE>

           (g) the Receivables and the benefit of the Prepayments;

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

           (i) all telephone, facsimile, telex, e-mail, Internet and post office
     box numbers and addresses  owned by the Seller and relating  exclusively to
     the Business  (but only to the extent that the same are  assignable  by the
     Seller without any third party's consent;  and subject to the provisions of
     clause 6 of the Umbrella Agreement);

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

           (k) all other tangible and  intangible  assets of  whatsoever  nature
     owned by the Seller and which are  exclusively  used in the Business at the
     Closing and not used by any member of the Lucas Group or any Business  Unit
     other than the Business  and which do not form part of the Excluded  Assets
     and all  other  assets  owned by the  Seller  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

          (l) the  benefit of all the  Seller's rights  against  third  parties
     (including  any  claims,  causes of  action,  choses in  action,  rights of
     recovery  and  rights  of  set-off)  (i)  in  connection  with  guarantees,
     warranties  (express or implied),  covenants and  representations  given by
     such third parties concerning the Business and any of the Assets and to the
     extent  only  that  such  rights  relate  to  liabilities  assumed,  or the
     Machinery and


                                       22
<PAGE>

     Equipment or Inventory  acquired,  by the Purchaser  hereunder,  (ii) 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,  and (iii) in respect of  infringement of the
     Expired Patents before the date of expiration or lapse of the same, in each
     case insofar as such benefit is capable of assignment

except to the extent  any of the  foregoing  are  included  within the  Excluded
Assets.

     2.2.  Real  Property;  Intellectual  Property and Know-How.  With regard to
the Property, the Intellectual Property and the Know-How:

           (a) the  Seller  shall  sell,  by  Corporate  Warranty Deed,  and the
     Purchaser  shall buy the Real Property  subject to the terms hereof and the
     conditions of sale set out in Schedule 3, Part 2; and

           (b) the Seller shall sell and the Purchaser will buy the Intellectual
     Property  and  the   Know-How   pursuant  to  the   Intellectual   Property
     Assignments,  but  without  prejudice  to such rights as are granted to the
     Purchaser  in relation  thereto  under this  Agreement  and/or the Umbrella
     Agreement, including without limitation in respect of the US Warranties (as
     defined in the Umbrella Agreement),

and 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
control.

     2.3.  Consigned  Inventory.  At  the  Closing,  the  Seller  shall  deliver
possession to the Purchaser of any inventory  held by the Seller on  consignment
from others  solely for the  purposes of, or which is used  exclusively  in, the
Business.  The Purchaser shall assume all the Seller's  obligations with respect
to such consigned inventory.


                                       23
<PAGE>

     2.4.  Payment  of  Payables  by  Purchaser.  The  Purchaser  shall  pay the
Payables in accordance with Seller's normal business practice in relation to the
Business and in any event within 90 days after Closing, 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 Seller as soon as reasonably  practicable.  The  Purchaser  shall
indemnify  the Seller  against any and all  expenses,  costs,  loss,  damage and
liability  incurred  by the Seller as a result of or  related to any  failure or
delay by the Purchaser in paying the Payables.

     2.5.  Excluded  Assets.  It is agreed that this  Agreement does not include
the sale of any assets or rights of the Seller,  nor any assets or rights of any
other  member of the Lucas  Group other than those  specifically  referred to in
clauses 2.1 and 2.2 or rights expressly  referred to elsewhere in this Agreement
as being sold hereunder.  Without limiting the generality of the foregoing,  the
following  shall be  expressly  excluded  and  excepted  from the said  sale and
purchase  (and nothing in this  Agreement  shall operate to transfer) any of the
following:

           (a) the benefit to the Seller of this Agreement;

           (b) ownership of the Leased Assets and Leased Real Property;

           (c) any  trademarks,  trade  names,  products'  names, patents, copy-
     rights,  registered designs and any other  intellectual  property rights of
     the  Seller or any other  member of the  Lucas  Group or  Business  Unit or
     (except 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 Intellectual Property and the Know-How;


                                       24
<PAGE>

           (d) 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 insignia except as provided herein,  in the Umbrella  Agreement
     or in the LAO Agreement;

           (e) the cash received in respect of the Project  Prepayments  and all
     cash and cash  equivalents  in the Lucas  Group's hand or any cash in Lucas
     Group's bank accounts at Closing and the benefit of any payments in advance
     made by the Seller in relation to the Business  which are excluded from the
     Prepayments;

           (f) all  checks  and  negotiable  instruments issued  in favor of any
     member of the Lucas Group  prior to Closing  (except to the extent that any
     such check or negotiable instrument constitutes part payment for any of the
     Receivables  sold hereunder  appearing as an asset in the Final  Completion
     Statement and is taken into account in  calculating  the Net Current Assets
     Value;

           (g) the insurance claim with respect to the damage to the Leased Real
     Properties  in  Livonia,  Michigan  caused by the storm or tornado in early
     July, 1997, and any other 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;

           (h) any other claim  made  by  or  available  to  the Lucas Group  in
     respect of an event  occurring prior to Closing other than those being sold
     to the Purchaser pursuant to clause 2.1(l) hereof;

           (i) corporation tax losses and the benefit  of any claims made  or to
     be made for refunds of income taxes or any other taxes or tax  allowance of
     the Seller or any other


                                       25
<PAGE>

     member of the Lucas Group in relation to the Business for any period ending
     on or prior to Closing  except to the extent that the same are reflected in
     the Net Current Assets Value;

           (j) any Lucas Internal Funding; and

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

     2.6.  Performance by Other Members of Lucas Group.  If any of the Assets to
be sold hereunder by the Seller 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 Seller  hereunder which is only capable of
being  satisfied by or with the assistance of any such other member,  the Seller
shall not be deemed to be in breach of this  Agreement  provided that the Seller
obtains, to the extent necessary, compliance by such other member with the terms
and conditions of this Agreement which the Seller 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 Seller in relation to the Assets,
the  Business or the  Transferring  Employees.  If any member of the Lucas Group
other than the  Seller 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,  Completed  Contract or MOU (as the case may be) as if the Seller
were party thereto and  references  in those clauses to the Seller 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.


                                       26
<PAGE>

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

     2.8.  Assets with Proprietary Markings.  Where any of the Assets (including
packaging  included in the Inventory) to be sold hereunder by the Seller contain
advertising,  promotional or 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 trade dress,  the  provisions of the Umbrella
Agreement regarding the same shall apply.

     2.9.  Limited Use of Name. The Seller agrees that the Purchaser may (to the
extent that the Seller can grant any such  right) for a period of twelve  months
after Closing  represent itself as carrying on the Business in succession to the
Seller  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, in the Umbrella  Agreement or in 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  trade  dress or in the
goodwill attaching thereto.

     2.10. Waiver of Compliance  with Bulk Sales Laws.  The parties hereby waive
compliance  with the provisions of any  applicable  bulk sales law in connection
with the transfer of the Assets  hereunder.  The Seller shall indemnify and hold
Purchaser  harmless from and against any  liabilities  and expenses which may be
asserted by third parties  against the  Purchaser as a result of  non-compliance
with such  provisions  (excluding,  however,  any  liabilities  which  have been
specifically assumed pursuant to clause 9.1).


                                       27
<PAGE>

3.   THE CONSIDERATION.

     3.1.  Purchase Price. The purchase price for the Assets shall be determined
in accordance with the Umbrella Agreement.

     3.2.  Allocation  of  Purchase  Price.  The  Consideration  and the Assumed
Liabilities  shall be allocated for tax purposes to and among the Assets and the
covenants in a manner set forth in the  Umbrella  Agreement.  The parties  shall
report this  transaction for federal,  state,  local and foreign tax purposes in
accordance with the provisions of the Umbrella Agreement, and shall not take any
position or action inconsistent therewith upon examination of any tax return, in
any refund claim,  in any  litigation,  investigation  or  otherwise;  provided,
however,  that if, in any audit of any tax return of the Seller or the Purchaser
by a taxing  authority,  the allocations are finally  determined to be different
from the allocation determined pursuant to the Umbrella Agreement, the Purchaser
and the Seller may (but shall not be  obligated  to) take any position or action
consistent with the allocations as finally determined in such audit.

     3.3.  Sales Tax. The  Purchaser  shall  furnish  the  Seller  with a resale
exemption certificate prior to the Closing so that the Seller is not required to
remit  sales tax with  respect  to the  Inventory  and any other  goods held for
resale.  If the Purchaser fails to furnish such  certificate to the Seller prior
to the Closing,  the Purchaser  shall pay to the Seller at the Closing all sales
taxes  which are owed with  respect to the sale to the  Purchaser  of any of the
Assets held for resale.  The Purchaser and the Seller shall each bear 50% of the
first $10,000 of any other sales tax and all transfer  taxes due with respect to
the purchase of the Assets. Any such sales taxes and transfer taxes in excess of
$10,000 shall be borne solely by the Purchaser.


4.   CLOSING.

     The Closing of the  transactions  contemplated  pursuant to this  Agreement
shall be determined in accordance with the Umbrella Agreement.


                                       28
<PAGE>

5.   FURTHER ASSURANCE AND THE CONTRACTS.

     5.1.  Further  Assurances.  The Seller  hereby  agrees and declares that it
will,  after and  notwithstanding  the  Closing,  execute  and deliver any other
documents  and take any other steps as may be  reasonably  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 Real Property which is governed by
the  provisions of Schedule 3 and the  Intellectual  Property and Know How which
are  governed by the  Intellectual  Property  Assignments)  on the terms of this
Agreement.

     5.2.  Performance and  Indemnification  re Contracts.  Except to the extent
otherwise  provided  in  clause  10.1(b),  the  Purchaser  shall at and from the
Closing, at its own expense,  assume and undertake to perform and discharge when
due or when required to be performed the  liabilities  and obligations of Seller
or any other member of the Lucas Group 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 purposes of this Agreement,  all Bids which are accepted
by customers after the Closing shall be deemed to be Contracts.

     5.3.  Contracts Requiring Novation or Consent. In the event that any of the
Contracts are not assignable by the Seller to the Purchaser  except by way of an
agreement of novation with or consent to the assignment from any party thereto:

           (a) the  Seller  and  the Purchaser  shall  cooperate  and use  their
     reasonable  efforts to procure that the Contracts be novated or assigned as
     soon as reasonably practicable;

           (b) in  connection  with every  novation or consent as  aforesaid the
     Purchaser shall indemnify and hold the Seller harmless from and against all
     expenses, costs, loss,


                                       29
<PAGE>

     damage  and  liability  arising  by  reason  of or in  connection  with the
     non-performance or the defective or negligent  performance by the Purchaser
     of such Contracts;

           (c) unless and until all such Contracts have been novated or assigned
     as aforesaid:

               (i)   the Seller 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 yet been novated or assigned,  in trust
           for the  Purchaser  from  Closing and shall  account to the Purchaser
           accordingly  (whether  in  respect  of  any  sums  or  other benefits
           received  by  it  in  respect  thereof)  and  otherwise  act  at  the
           reasonable direction of the Purchaser and as its agent in all matters
           relating thereto subject to the Purchaser securing the Seller, to its
           reasonable  satisfaction  and  indemnifying  and  holding  the Seller
           harmless against,  any expenses,  costs,  loss, damage, or liability,
           which it may be brought against it or which it may suffer or incur as
           a result or consequence, but subject to clause 5.5; and

               (ii)  the  Purchaser  shall,  at its own  cost and  expense  with
           effect from the  Closing,  carry out, perform and complete all of the
           Seller's  obligations  under  every such Contract  which has not been
           novated  or  assigned  as a  subcontractor  of the Seller and,  where
           subcontracting  is not  possible,  the  Purchaser  shall perform  the
           contracts in accordance  with their terms and conditions as agent for
           the Seller.

     5.4.  Sub-Contractors.  If the Seller has before the Closing sub-contracted
the  performance of any Contracts to any Person,  the Purchaser shall on Closing
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 


                                       30
<PAGE>

of which such Contract was made and shall make the same available for collection
by such customer.

     5.5.  Expenses of Assignment.  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 in order to permit
novation shall be shared equally by the Seller and the Purchaser;  provided that
neither the Seller 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 obtain
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 Seller or the  Purchaser
alleging  that the sale of the Business to the  Purchaser or the  provisions  of
this  Agreement  constitute  a  breach  of such  Contract,  the  Seller  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 Seller or the Purchaser as a result of any such claim shall be borne equally
by the Seller and the Purchaser.

     5.6.  Letters of Credit. The Seller has previously obtained the issuance of
letters of credit, including the Letters of Credit, to customers of the Business
to secure the  repayment of deposits and Project  Prepayments  made by customers
with  Seller  in the event  Seller  does not  fulfill  its  obligations  to such
customers and to suppliers for purchase of inventory made in the ordinary course
of  business.  If any of such letters of credit are  outstanding  on the Closing
Date ("Seller's L/C's"), the Purchaser will provide to the Seller at the Closing
a back-to-back  letter of credit issued by a bank  reasonably  acceptable to the
Seller in the same amount as the undrawn  portion of  Seller's  L/C's  providing
that the Seller may draw  against such letter of credit from time to time at any
time after any Seller L/C's are drawn upon and in the same  aggregate  amount as
the draws on such Seller's L/C's.


                                       31
<PAGE>

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


6.   RECEIVABLES.

     6.1.  Collection of Receivables. The Purchaser will collect the Receivables
in a manner  consistent  with the way in which the  receivables  of the Business
were collected by the Seller prior to Closing and Purchaser  shall not institute
proceedings  for  recovery of any of the  Receivables  without  first giving the
Seller 7 days prior written notice and, if required by the Seller, the Purchaser
will re-assign to the Seller, at the Seller's sole cost and expense, the benefit
of any  Receivables  for an amount  equal to the face  value of such  Receivable
(less any  specific  provision  or  reserve  included  in the  Final  Completion
Statement in respect of such Receivable).

     6.2.  Remittance of Receivables  Collected by Seller.  Any sums received by
the Seller after the Closing Date in relation to any of the  Receivables  (other
than any  Receivables  reassigned  to the Seller  pursuant to Section 6.1) shall
belong to the  Purchaser  and the Seller shall pay the same to the  Purchaser as
soon as practicable  and in any event within 7 days after receipt of the same by
Seller.


7.   THE TRANSFERRING EMPLOYEES.

     7.1.  Offer of Employment. The Purchaser will offer continued employment to
all  Transferring  Employees at the same or better salary or wage rates and with
benefits as set forth on Schedule 7.1.  This  provision is not meant to create a
contract of  employment,  and,  except as otherwise  expressly  provided in this
Agreement,  the Purchaser  may terminate the  employment 


                                       32
<PAGE>

or change the terms and  conditions  of  employment of any employee at such time
and under such circumstances as the Purchaser deems appropriate.

     7.2.  Welfare Benefit Plans.  The Purchaser shall provide  employee welfare
benefit  plans  to  the  Transferring  Employees  of  the  Business  who  accept
employment with the Purchaser with benefits as set forth on Schedule 7.1 without
such Transferring Employees being subject to any waiting period or any exclusion
for pre-existing conditions.

     7.3.  Indemnification  for  Severance  Obligations.   The  Purchaser  shall
indemnify  and hold the  Seller  and every  member of the Lucas  Group  harmless
against (a) any liability or claim for severance  arising in connection with the
termination of the employment of any of the Transferring Employees by the Seller
or the  Purchaser  (including  severance  claims in any way relating to or based
upon  constructive  termination  of  employment),  (b) any  damages  arising  in
connection  with the  termination of the  employment of any of the  Transferring
Employees by the Purchaser (including  liabilities or claims in any way relating
to or based upon constructive termination of employment),  and (c) all costs and
expenses  reasonably  incurred by the Seller in settling,  contesting or dealing
with any such liability or claim.

     7.4.  Records of Transferring  Employees. The Purchaser shall, for a period
of 12 months after the Closing and at Seller's  request,  make  available to the
Seller  and  allow  the  Seller  to  copy  those  Records  which  relate  to the
Transferring  Employees'  employment prior to the Closing. The Seller will for a
period of 12 months  after  Closing  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 Closing (but excluding any information or documents  relating to any pension,
retirement and/or death benefits of the Transferring Employees).

     7.5.  Workers  Compensation  Claims. The Purchaser shall cooperate with the
Seller in  resolving  the  Seller's  Workers  Comp Claims (as defined in Section
9.2(h)) on an efficient and


                                       33
<PAGE>

economic basis.  Such cooperation  shall include,  but not by way of limitation,
making employees of the Purchaser available in order to investigate,  defend and
resolve the  Seller's  Workers Comp  Claims,  deal with the persons  making such
Claims and working with the Seller's workers compensation insurance carrier, all
subject to the Seller's supervision and control.

     7.6.  Vesting Under Qualified Retirement Plans. Effective as of the Closing
Date,  participants in either the Lucas Industries,  Inc. Savings Plan ("Savings
Plan") or the Lucas  Industries  Retirement  Account  Plan For Hourly  Employees
("Hourly  Plan") who become  employees  of the  Purchaser or an affiliate of the
Purchaser  after  Closing will become fully vested in their  accrued  retirement
benefits  under the Hourly Plan or the Savings Plan.  Participants  in the Lucas
Industries  Retirement  Account Plan (the "Salaried  Plan") will receive forward
service  credit for purposes of vesting under the terms of the Salaried Plan for
the  continuous  period of service  with the  Purchaser  or an  affiliate of the
Purchaser beginning as of the Closing Date.

     7.7.  Provision  of Records.  For a period of five years from the  Closing,
Purchaser  shall  provide the  administrator  of the Salaried  Plan with records
relating to the period of employment of any  participant in the Savings Plan who
is entitled to receive  forward  service  credit for  purposes of vesting  under
Section 7.6.

     7.8.  No  Additional  Covenants.   Seller  makes  no  additional  covenants
regarding  the  treatment  of  employees  under the terms of any other  employee
benefit plan disclosed to Purchaser pursuant to the Disclosure Letter.


8.   COSTS AND EXPENSES.

     Except as otherwise  expressly  provided in this  Agreement,  each party to
this  Agreement  shall bear its own costs and expenses in  connection  with this
Agreement and the negotiations leading thereto.


                                       34
<PAGE>

9.   INDEMNITY AND LIABILITIES.

     9.1.  Assumption  of  Liabilities.  As  additional  consideration  for  the
purchase of the Assets, at the Closing, the Purchaser shall assume and undertake
to pay,  perform and  discharge  when due or when  required to be performed  the
following:

           (a) the Payables in accordance with Section 2.4;

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

           (c) all the Seller's obligations to return any Project Prepayments to
     customers of the Business;

           (d) bills for real estate taxes on the Real  Property rendered  after
     the Closing;

           (e) federal,  state and local income tax withholding, social security
     tax  contributions  (both by employer and  employee) and  unemployment  tax
     contributions  with respect to wages and salaries earned on or prior to the
     Closing  Date but not payable  until  after the Closing  Date to the extent
     such  withholding  and  contributions  are  reflected  or  included  in the
     determination  of the Net Current Assets Value and in the Final  Completion
     Statement;

           (f) the  Seller's  obligations  in respect of goods  sold,  leased or
     otherwise  disposed  of or  manufactured  (in whole or in part only) by the
     Seller (or any previous


                                       35
<PAGE>

     owner of the Business) or services performed by the Seller (or any previous
     owner of the  Business)  in  relation to the  Business  prior to Closing in
     accordance with clause 10;

           (g) the Seller's obligations in respect of the Transferring Employees
     in accordance  with clause 7, and the  liabilities of the Seller for unpaid
     accrued  holiday pay to the  Transferring  Employees and any and all of the
     Seller's  obligations for the financial year of the Seller in which Closing
     occurs with respect to the Economic Value Added Bonus Scheme;

           (h) any  liabilities  of   the  Seller  relating   to   the  Business
     (including,  without  limitation,  any liability  relating to Taxes) to the
     extent  that  (i)  provision  or  reserve  therefor  has  been  made and is
     reflected  in the Net Current  Assets  Value,  or (ii) the  subject  matter
     thereof is otherwise  taken account of, or reflected in, the calculation of
     the Net Current Assets Value; and

           (i) 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:

               (A)  Part A paragraph 6.2 (the Toyota letter of intent);

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

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

               (D)  Part  A  paragraph  14.2  (Liabilities  relating  to  Joseph
           Spalding); and


                                       36
<PAGE>

               (E)  Part A paragraph 14.2  (Tornado damage  to Livonia premises)
           on the basis that the cost of effecting  the repairs will be included
           in the Final Completion  Statement as a liability without taking into
           account any insurance proceeds receivable with respect thereto;

           (j) any  liabilities  of Seller under Article IV of the Agreement for
     the  Sale  and  Purchase  of  Assets  dated  June 11,  1991  between  Lucas
     Industries  Inc.,  a Michigan  corporation,  and The Allen  Group  Inc.,  a
     Delaware corporation now known as Allen Telecom Inc., Lucas Industries Inc.
     having assigned all its rights and obligations  under said Agreement to the
     Seller;

           (k) any liabilities of Seller under the following license agreements:

               (i)   Know-How  and License  Agreement  dated  December  31, 1988
                     originally  made between  Translift  AG and The Allen Group
                     Inc.,  and currently in the names of Digitron AG  and Lucas
                     Industries Inc.;

               (ii)  the  Agreements  dated February 26 and 28, 1991  originally
                     made between FrigoFrance, The Allen Group Inc. and Rapidfil
                     Corporation; and

               (iii) the Monorail  License dated February 16, 1996 between Riley
                     & Associates and Lucas Industries Inc.;

           (l) any other liabilities  or  obligations of the Seller or any other
     member of the Lucas Group relating to the Business  agreed to be assumed by
     the Purchaser under this Agreement or the Umbrella Agreement


                                       37
<PAGE>

(hereinafter collectively referred to as the "Assumed Liabilities").

     9.2.  Excluded  Liabilities. The Purchaser shall not assume, and the Seller
shall remain  responsible  for,  the  following  liabilities  arising out of the
conduct of the  Business  by the Seller or any other  member of the Lucas  Group
before Closing:

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

           (b) any Lucas Internal Funding;

           (c) any liability  of the Seller with  respect to Taxes in respect of
     the Business  except 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;

           (d) any liability  or  obligation  of the Seller with  respect to any
     employee  benefit  plan  (within  the  meaning of  Section  3(3) of ERISA),
     employment, severance or other similar contract, stock purchase plan, stock
     option plan, stock  appreciation  plan,  fringe benefit plan, bonus plan or
     any other deferred  compensation  agreement,  plan, policy or other funding
     arrangement  sponsored,  maintained or contributed to by the Seller,  other
     than the bonus  plan  included  in the  Assumed  Liabilities  and except as
     otherwise provided in Section 7.3;

           (e) federal, state and local income tax withholding,  social security
     tax  contributions  (both by employer and  employee) and  unemployment  tax
     contributions  with respect to (i) wages and  salaries  paid on or prior to
     the Closing  Date,  and (ii) wages and  salaries  earned on or prior to the
     Closing Date which are payable after the Closing Date,


                                       38
<PAGE>

     to the extent such  withholding  and  contributions  are not  reflected  or
     included on the Final Completion Statement as an Assumed Liability;

           (f) employee  discrimination,  wrongful  discharge  and unfair  labor
     practice  claims  arising out of the conduct of the  Business by the Seller
     prior to the Closing Date;

           (g) any liability of the Seller in respect of defective goods sold or
     services  supplied  by the Seller  which is to be retained by the Seller in
     accordance with clause 10.1(b);

           (h) any and all  liability  relating  to or  arising  out of  workers
     compensation  claims  relating  to the  Business  to the extent such claims
     result from or arise out of  occurrences  prior to the Closing  (whether or
     not such claims are filed prior to the Closing) (the "Seller's Workers Comp
     Claims");

           (i) any criminal liability  of the Seller  arising out of a breach of
     statutory  duty or laws  applicable  to the Business by the Seller prior to
     the Closing Date;

           (j) any liabilities  arising from a breach of laws  applicable to the
     Business by the Seller or other members of the Lucas Group prior to Closing
     which:

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

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

               (iii) are not Assumed Liabilities; and


                                       39
<PAGE>

               (iv)  do  not relate to  environmental  matters  (which are dealt
                     with in clause 9.3),

     but excluding 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 Closing; and

           (k) any other liabilities  of the  Seller or any other  member of the
     Lucas Group arising out of the conduct of the Business by the Seller or any
     other member of the Lucas Group before Closing and which:

               (i)   are not comprised within the Assumed Liabilities; and

               (ii)  do  not  relate to any  breach of laws to the  extent  such
                     liabilities are dealt with in clause 9.2(i); and

               (iii) do not  relate to  environmental  matters  (which are dealt
                     with in clause 9.3).

     9.3.  Environmental  Liability.  The  Purchaser  shall not assume,  and the
Seller shall indemnify the Purchaser against any and all expenses,  costs, loss,
damages and liability (excluding  consequential or economic loss) arising out of
(i)  any  claims  made  by any  unaffiliated  third  party  seeking  damages  or
injunctive relief relating to environmental  matters affecting the Real Property
or the Leased Real Property under applicable  Environmental  Laws (as defined in
the Umbrella  Agreement) or the common law, or (ii) any orders or other official
actions of any federal,  state or other  government body or authority  regarding
correction,  removal, abatement,  remediation or clean-up in respect of the Real
Property or Leased Real Property  under the  Environmental  Laws, if and only to
the extent that such claims,  orders or official  actions result from and relate
to the conduct of the  Business  prior to Closing or the  condition  of the Real
Property or Leased Real Property at the Closing Date, PROVIDED THAT:


                                       40
<PAGE>

           (a) the total  amount  payable  by the Seller  under  this  clause in
               respect of any such  claims,  orders or  official  actions to the
               extent they result  from or relate to the  condition  of the Real
               Property or Leased Real Property before it was acquired or leased
               by the Lucas Group or arise from or relate to any act or omission
               of any previous  owner of the Business  before the Lucas Group (a
               "Predecessor's   Liability")  shall  (when  aggregated  with  any
               payments  made for breach of the  Warranties  (as  defined in the
               Umbrella  Agreement) and any payments made pursuant to equivalent
               clauses in the other Sale  Agreements (as defined in the Umbrella
               Agreement)) not exceed fifty percent of the Consideration; and

           (b) the Seller shall not be liable to the Purchaser  pursuant to this
               Agreement  in  respect  of any such  claims,  orders or  official
               actions  relating to or resulting from a Predecessor's  Liability
               unless  written  notice of the claim,  order or  official  action
               (together  with  reasonable  details  thereof)  is  given  by the
               Purchaser  to the  Seller  within  the  three  years  immediately
               following  the  Closing  Date  and  any  proceedings,  orders  or
               official actions against the Seller in respect thereof are issued
               and served on the Seller  within 9 months  after such  notice has
               been so given; and

           (c) the  liability  of the  Seller  under  this  clause  shall not be
               increased as a result of any change in law of any federal,  state
               or other  governmental  body or  authority  occurring  after  the
               Closing Date; and

           (d) the Seller shall not be liable in respect of any claim brought by
               the  Purchaser  under this clause 9.3 unless the liability of the
               Seller in relation  thereto shall (when added to the liability of
               Lucas  Limited  in respect  of claims  made under the  equivalent
               provisions  of the  English  Sale  Agreement  (as  defined in the
               Umbrella Agreement)) exceed (pound)25,000.


                                       41
<PAGE>

     9.4.  Indemnity by Purchaser.  The Purchaser hereby undertakes to indemnify
and hold the Lucas Group harmless 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:

           (a) the Assumed Liabilities  or the failure or delay by the Purchaser
     in paying, performing or discharging the Assumed Liabilities;

           (b) the operation of the Business after the Closing Date; or

           (c) the Purchaser's failure to comply with any applicable  provisions
     of the Worker Adjustment and Retraining Notification Act.

     9.5.  Release  from  Guarantees.  The  Purchaser  will  use all  reasonable
efforts  (including  procuring the giving of  guarantees by the Guarantor  where
required) to procure that on or as soon as practical  after  Closing each member
of the Lucas Group is released from its liability (whether actual or contingent)
in respect  of those  bonds,  guarantees  and  indemnities  given by any of them
before  Closing in respect of the  Business  which are listed in  Schedule 13 or
which are identified in the Disclosure  Letter. The Purchaser will indemnify the
Lucas Group  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  otherwise  arising out of any claim or other  demand made on the Lucas Group
(whether  made before or after  Closing) in respect of the bonds,  guarantees or
indemnities  given by any member of the Lucas Group before Closing in respect of
the Business and listed in Schedule 13 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 the underlying obligation constitutes
an Assumed Liability.

     9.6.  Indemnity by Seller.  The Seller  hereby  undertakes to indemnify and
hold harmless the Purchaser  against any and all expenses,  costs,  loss, damage
and liability which the


                                       42
<PAGE>

Purchaser  may suffer or incur  directly or  indirectly in respect of or arising
out of the Excluded Liabilities or the failure or delay by the Seller in paying,
performing or discharging  the Excluded  Liabilities  in accordance  with clause
9.2.

     9.7.  Procedure.  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 9 or  otherwise  under this  Agreement 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.

     9.8.  Special  Provision Regarding Taxes.  In the event that this Agreement
requires or  entitles  any party to pay or receive a payment of or in respect of
Taxes 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.


10.  PRODUCT LIABILITY AND PRODUCT WARRANTY.

     10.1. Assumption of  Obligations.  Without  limiting  the generality of any
other provision of this Agreement, the Purchaser shall be liable:

           (a) (except 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,  labor  involved  and any  other  costs  and  expenses
     incurred):


                                       43
<PAGE>

               (i)   given or undertaken by the Seller (or any previous owner of
           the  Business)  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 Seller (or any previous owner
           of the  Business)  prior to the  Closing Date in  connection  with or
           related to the Business; or

               (ii)  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  Closing  Date  which
           incorporate products  manufactured  or  purchased by the Seller prior
           thereto or work in progress of the Seller at Closing; and

           (b) 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 Seller (or any previous
     owner of the Business) in connection with the Business prior to the Closing
     whether under any Contract or any other contract entered into by the Seller
     (or any previous owner of the Business) prior to the Closing in relation to
     or in  contemplation  of the  Business  or arising out of  defective  goods
     bought  in or  manufactured  (in  whole or in part) by the  Seller  (or any
     previous owner of the Business) 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 doubt shall not
     include the actual sale, lease,  disposal or provision of goods or services
     by the Seller (or any previous owner of the  Business))  giving rise to any
     such liability  occurred  before the Closing Date in which event such loss,
     liability or damage shall be borne by the Seller.

     10.2. Indemnification.  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 10.1.  The Seller shall  indemnify
the Purchaser's Group against all costs,  


                                       44
<PAGE>

expenses,  loss,  damage or liability  arising out of a failure by the Seller to
discharge its obligations under clause 10.1(b).


11.  POST CLOSING COVENANTS.

     11.1. Non-Competition; Non-Solicitation; Non-Interference.

           (a) For the purposes of assuring to the Purchaser the full benefit of
     the Business 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 it will not and it
     agrees to procure  that no other  member of the Lucas  Group  will,  either
     alone or in conjunction with or on behalf of any other person:

               (i)  anywhere  in  the  world  for the  period  from  Closing  to
           December 31, 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 recognized  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  11.5 or the provision  of services in relation to the design,
           installation 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 Business as it is carried on at
           Closing;

               (ii)  for  a period of one year from  Closing  without  the prior
           written consent of the Guarantor  make any offer of employment to any
           engineer,  designer,  assembler  or  other  senior  employee included
           within the Transferring


                                       45
<PAGE>

           Employees  while such employee  remains employed by any member of the
           Purchaser's Group;

               (iii) for a period of three years from Closing  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;

               (iv)  for  the  period  from Closing  to December 31, 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
           Business  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 11.5 or in respect of  Competing  Services  if such person was
           within twelve months  prior to or  at the Closing Date  a customer of
           the Seller in respect to the Business;

               (v)   for the period from Closing  to December 31, 2000 interfere
           or seek  to  interfere  with  the  continuance  of  supplies  to  the
           Purchaser  (or in  the  terms  relating to such  supplies)  from  any
           persons who had been  supplying  materials  or services to the Seller
           in respect  of  the  Business  within  the twelve months prior to the
           Closing Date; or

               (vi)  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 Closing  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 Business  including  (without limitation)  customer  lists and
           names, sales targets and statistics, market share statistics, surveys
           and reports so far as 


                                       46
<PAGE>

           the same have come to the Seller's knowledge  before the Closing 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.

     11.2. Exceptions.  Nothing in clause 11.1  shall prevent the Lucas Group or
any member of it:

           (a) 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
     Business  as it is  carried  on  at  Closing  or  from  operating  in-house
     engineering and testing facilities for any member of the Lucas Group;

          (b) from  providing  consulting  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;

          (c) from selling or supplying assembly or testing equipment in support
     of products  designed,  developed or  distributed by the Lucas Group to any
     customer in connection with an agreement for the supply of a 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;

          (d) 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  recognized  stock
     exchange or other securities market) or group of companies or participating
     in any joint venture:


                                       47
<PAGE>

               (i)   where  an  incidental   part  of  the  activities  of  such
           business,  company,  group of companies, or joint venture comprises a
           business  which either  supplies  competitive goods (as  described in
           clause 11.5) or which provides Competing  Services and which actually
           competes with the Business as it is carried on at Closing; and

               (ii)  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 Business
     and the  Guarantor  and such member of the Lucas Group shall  negotiate  in
     good faith with a view to agreeing  upon the terms for such sale (but shall
     not be obligated to close such sale if mutually  acceptable terms cannot be
     agreed upon); or

           (e)   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;

Nothing in clause 11.1 shall prevent:

           (i)   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

           (ii)  Lucas TVS Limited  or any member  of the Lucas Group other than
     the Business 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


                                       48
<PAGE>

           (iii) the companies  or Business Units listed in column 1 of Schedule
     16 from  distributing  the  products  listed in column 2 of  Schedule 16 on
     behalf of the entities listed in column 3 of Schedule 16.

     11.3. Modification.  Lucas  hereby  agrees  that  each of the  restrictions
contained in clause 11.1 above is reasonable but if any such  restriction  shall
be found to be void but would be valid if some part  thereof were deleted or the
period or the area of application reduced such restriction shall apply with such
modification as may be necessary to make it valid and effective.

     11.4. Severability.  Each  undertaking  contained  in clause 11.1  shall be
construed as a separate  undertaking and if any one or more of such undertakings
is  held  to be  against  the  public  interest  or  unlawful  or in any  way an
unreasonable  restraint of trade the remaining  undertakings  shall  continue in
full force and effect and shall bind Lucas.

     11.5. Description of Competitive Goods.  For the purposes  of the foregoing
provisions of this clause 11 goods referred to as being  competitive  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.


12.  LICENSE OF LICENSED INTELLECTUAL PROPERTY.

     12.1. Grant of License.  On Closing the Seller 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  license,  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
Business  after  Closing  in  the  same  manner  as  carried  on by  the  Seller
immediately prior to Closing.


                                       49
<PAGE>

     12.2. No Assignment Without Consent.  Subject to clause 12.3, the Purchaser
may assign or sub-license  any of the rights granted under this clause 12 to any
Person  PROVIDED THAT any assignee first enters into a direct  covenant with the
Seller  agreeing to be bound by the  provisions  of this clause 12 in respect of
the License.  Accordingly,  references in this clause to the Purchaser  shall be
construed  as  being  references  to  any  such  assignee   following  any  such
assignment.

     12.3. Termination of License.  The License shall immediately terminate with
respect  only to the  Specified  Shared IP if  within  three  years  immediately
following Closing:

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

           (b) the  Purchaser  or  any  receiver,   trustee,   administrator  or
     liquidator of the Purchaser sells the whole or  substantially  the whole or
     the Business to a Competitor; or

           (c) the Purchaser purports to assign or sub-license any of the rights
     granted under the License to a Competitor.

     12.4. Effect of Termination.  Upon termination  of the License with respect
to the Specified  Shared IP, the Purchaser or any relevant  assignee shall cease
to be authorized to use the Specified  Shared IP and shall  forthwith  return to
the Seller all originals and copies of all documents and other  information  (in
whatever form) comprising, relating to or recording the Specified Shared IP.

     12.5. Infringement of Licensed Intellectual Property.  The Purchaser  shall
notify the Seller in writing  before  commencing  any  proceedings  against  any
infringer  of the  Licensed  Intellectual  Property but shall not be required to
obtain the Seller's consent to the  commencement of any such proceedings  except
to the extent that under applicable law the Seller 


                                       50
<PAGE>

is required to be joined as a party to such  proceedings and if the Vendor is so
required the following provisions shall apply:

           (a) the  Seller's  prior  written  consent to being joined as a party
               shall  be  required,  which  consent  shall  not be  unreasonably
               withheld or delayed;

           (b) the Purchaser shall have full conduct of such  proceedings at its
               own  expense and shall keep the Seller  informed of all  material
               developments in relation thereto;

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

           (d) subject to  compliance by the  Purchaser  with the  provisions of
               clause  12.5.(c),  all damages or other relief obtained from such
               proceedings  shall  belong  to or  be  for  the  benefit  of  the
               Purchaser.

     12.6. Subsequent  Licenses of Licensed  Intellectual  Property.  If at  any
time after  Closing  the Seller  grants a license of any  Licensed  Intellectual
Property to a DTI  Competitor  which will enable such DTI  Competitor to compete
with the  Purchaser in respect of the Business and such DTI  Competitor  does so
compete,  the Seller and the Purchaser will negotiate in good faith a reasonable
royalty to be paid by the Seller 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 Closing the  Business  Unit known as LATS made to the creation of
the Licensed Intellectual Property in question.


                                       51
<PAGE>

13.  RISK OF LOSS AND TITLE.

     13.1. General.  Upon  Closing,  the Seller  shall cease  to hold  insurance
coverage for the Assets,  the Leased  Assets,  the Leased Real  Property and the
Business and risk of damage to, loss or  destruction  of the Assets,  the Leased
Real  Property and the Leased  Assets shall pass to the Purchaser at the Closing
Date.  All of Seller's  right,  title and interest in the Assets (except for the
Real Property, which is dealt with in Schedule 3) shall pass to the Purchaser on
the terms of the Agreement at the Closing Date.

     13.2. Tornado Damage.

           (a) As  provided in clause 9.1,  the  Purchaser assumes and agrees to
     perform all  obligations  which the Seller may have under the leases of the
     Leased Real Property in Livonia,  Michigan (the "Affected  Properties")  in
     respect of damage  caused by the storm or tornado  which  occurred in early
     July 1997.  The Purchaser  undertakes to effect such repairs as required by
     such leases in a cost efficient manner.

           (b) The  cost  of effecting  such  repairs  shall  be  included  as a
     liability  in  the  Final  Completion   Statement  as  provided  in  clause
     9.1(i)(E).

           (c) The  Purchaser shall  cooperate  with the Seller in pursuing  the
     claim for insurance for effecting  such repairs to the Affected  Properties
     and the  related  loss of  business  claim and shall  make the  Purchaser's
     employees  available after Closing,  without charge to the Seller,  for the
     purpose  of  assisting  the  Seller  in  completing   and  compiling   such
     information  as may be requested by the  insurance  carrier with respect to
     such  claims.  The  Purchaser  shall  permit the  Seller and its  insurance
     carrier and any  insurance  adjuster  involved in  evaluating  the casualty
     claim access to the Affected  Properties to assess the damage thereto.  Any
     amounts  recovered  by the  Seller in respect of the cost of repairs to the
     Affected  Properties or loss of business under such insurance  claims shall
     be retained by the Seller.


                                       52
<PAGE>

14.  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.  Except as provided in the Umbrella Agreement,  the Seller
makes no  representations  or warranties  regarding the Assets and the Business.
Except as otherwise provided in this Agreement,  Purchaser  understands,  agrees
and  acknowledges  that the Assets and the Business are being purchased and sold
on an "AS IS,  WHERE  IS"  basis.  ALL  IMPLIED  WARRANTIES  EXISTING  UNDER ANY
APPLICABLE  LAW WITH  RESPECT  TO THE ASSETS OR TO THE SALE  THEREOF  ARE HEREBY
EXPRESSLY  DISCLAIMED  AND  NEGATED BY THE  SELLER.  PARTICULARLY,  BUT  WITHOUT
LIMITING THE  FOREGOING,  THE SELLER  HEREBY  NEGATES AND  DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY AND ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND ANY IMPLIED  WARRANTY OF  CONFORMITY TO MODELS OR SAMPLES OF MODELS.
PURCHASER AND THE SELLER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO
BE EFFECTIVE,  THE DISCLAIMERS OF IMPLIED  WARRANTIES  CONTAINED IN THIS SECTION
ARE  "CONSPICUOUS"  DISCLAIMERS  FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR
ORDER.


15.  COMPLIANCE WITH HSR ACT.

     The Seller and the Purchaser have filed Notification and Report Forms under
the  Hart-Scott-Rodino  Antitrust  Improvements Act of 1976 (the "HSR Act") with
the Federal Trade Commission ("FTC") and the Department of Justice ("DOJ").  The
fees for filing such  Notification and Report Forms were paid and shall be borne
by the Purchaser. All waiting


                                       53
<PAGE>

periods,  including  any  extensions  thereof,  applicable  to the  transactions
contemplated  by this Agreement under the HSR Act have expired or been waived or
otherwise terminated.


16.  INSPECTION OF DOCUMENTS.

     The Seller  shall for a period of three years  after the Closing  afford to
the authorized  representatives  of the Purchaser all  reasonable  facilities to
inspect  records  held or  retained by the Seller or its  professional  advisers
(excluding any privileged  records) relating  exclusively to the Business and to
make  copies  of the same or  extracts  therefrom  at the  Purchaser's  cost and
expense.  The  Purchaser  agrees to maintain at its principal  executive  office
within the United  States,  and allow the Seller at its cost and  expense at all
reasonable  times  access to and permit the Seller to make copies of the Records
insofar as such  Records  relate to the period prior to the Closing for a period
of 6 years from the Closing.


17.  ASSIGNMENT PROHIBITED.

     The benefit of this Agreement may not be assigned by the Seller without the
prior written  consent of the  Purchaser or by the  Purchaser  without the prior
written consent of the Seller save that any party may assign the benefit of this
Agreement to any Subsidiary or Holding Company or to any other Subsidiary of its
Holding  Company if any assignment  does not increase the liability of any party
under this Agreement.  If at any time thereafter such assignee shall cease to be
so  connected  with such  assignor,  it shall prior to so ceasing  reassign  the
benefit of the Agreement to such assignor.


18.  SURVIVAL OF CERTAIN PROVISIONS.

     This  Agreement  shall remain in force and effect after the Closing 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 any indemnities given by the 


                                       54
<PAGE>

parties shall survive (except for any obligations  fully performed) and continue
in full force and effect notwithstanding  Closing,  subject to the provisions of
the Umbrella Agreement.


19.  GOVERNING LAW.

     The validity,  construction and  enforceability  of this Agreement shall be
governed in all respects by the laws of England  without  regard to its conflict
of laws  rules  except  that the  provisions  of this  Agreement  regarding  the
transfer of the Real  Property and the  provisions of Sections 7 and 11 shall be
governed by the laws of the State of Michigan (or, where relevant, ERISA and the
Code) without regard to its conflict of laws rules. The parties hereby submit to
the non-exclusive jurisdiction of the courts of Michigan.


20.  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 such  counterparts  shall  together
constitute one document.


21.  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 hereto.


                                       55
<PAGE>

22.  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.


23.  NO THIRD PARTY BENEFICIARIES.

     Except as otherwise provided in this Agreement and the Umbrella  Agreement,
nothing in this Agreement,  expressed or implied, is intended to confer upon any
person,  other  than the  parties  hereto  and their  successors  and  permitted
assigns, any rights or remedies under or by reason of this Agreement.


24.  MODIFICATION.

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


25.  WAIVER OF PROVISIONS.

     The terms,  covenants,  representations,  warranties and conditions of this
Agreement  may be waived  only by a  written  instrument  executed  by the party
waiving  compliance.  The  failure  of  either  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 either party of any  condition,  or
breach of any provision, term, covenant, representation or warranty contained in
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,
representation or warranty of this Agreement.


                                       56
<PAGE>

     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
by their  duly  authorized  representatives  on or as of the day and year  first
above written.

                                        SELLER:

                                        LUCAS AUTOMATION & CONTROL  ENGINEERING,
                                        INC., a Virginia corporation


                                        By: /s/ James Zigel
                                            ------------------------------------
                                            James Zigel, Secretary


                                        PURCHASER:

                                        ASSEMBLY TECHNOLOGY & TEST, INC.


                                        By: /s/ Bruce P. Erdel
                                            ------------------------------------
                                            Name: Bruce P. Erdel
                                            Its:  Director


                                        LUCAS INDUSTRIES plc


                                        By: /s/ James Zigel
                                            ------------------------------------
                                            Name: James Zigel
                                            Its:  duly appointed attorney for
                                                  and on behalf of the Company


                                       57
<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 Machinery and Equipment
Schedule 3     -    The Real Property
Schedule 4     -    Transferring Employees
Schedule 5     -    Intellectual Property Agreements
Schedule 6     -    Intentionally Omitted
Schedule 7     -    Purchaser's Employee Benefit and Welfare Plans
Schedule 8     -    Registered Intellectual Property
Schedule 9     -    Part 1:  Trade Mark Assignment
                    Part 2:  Patent Assignments
                    Part 3:  Assignment of Unregistered Intellectual Property
                    Part 4:  Assignment of Know-How
Schedule 10    -    Foward Exchange Currency Contracts
Schedule 11    -    Bills of Exchange
Schedule 12    -    Letters of Credit
Schedule 13    -    Bonds, Guaranties and Indemnities
Schedule 14    -    Memoranda of Understanding
Schedule 15    -    Expired Patents
Schedule 16    -    Competing Activities