Document:

PROMISSORY NOTE
$150,000                                                  Dated:  June 30, 1999

                  FOR  VALUE  RECEIVED,  the  undersigned,   Jack  Stinnett,  an
individual residing at _____________________  (the "Borrower"),  HEREBY PROMISES
TO PAY to the order of Morris  Material  Handling,  Inc.  (the  "Lender") on the
dates set forth herein the principal  amount of ONE HUNDRED FIFTY  THOUSAND U.S.
DOLLARS  (US$150,000)  in lawful  money of the United  States of America  ("U.S.
Dollars" or "US$") and in same day funds or by certified check.

                                   ARTICLE I.

                                   DEFINITIONS

                  SECTION 1.1.  Certain Defined Terms. As used in this Note, the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

     "Board" means the Board of Directors of the Lender.

     "Borrower" has the  meaning  specified  in the  recital  of parties to this
          Note.

     "Business Day" means a day of the year on which  banks are not  required or
          authorized to close in Milwaukee, Wisconsin.

     "Employment Agreement" means the Employment  Agreement between the Borrower
          and the Lender  dated  January  27, 1999 which sets forth the terms of
          the Borrower's employment with the Lender.

     "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
          from time to time, and the regulations  promulgated and rulings issued
          thereunder.

     "Lender" has the meaning specified in the recital of parties to this Note.

     "LoanDocuments"  means this Note and the Security  Agreement,  in each case
          as amended or modified from time to time.

     "Prime Rate" means [Rate].

     "Security  Agreement"  means a pledge,  assignment  and security  agreement
          entered  into  by the  Borrower  for the  benefit  of the  Lender,  in
          substantially  the form of Exhibit A hereto,  as such agreement may be
          amended or modified from time to time.

     "Termination  Date"  means the earlier of (a) June 30, 2009 or (b) the date
          the Loan becomes due and payable hereunder  pursuant to Section 2.4 or
          5.1.

     SECTION 1.2.  Computation of Time Periods.  In this Note in the computation
of periods of time from a specified  date to a later  specified  date,  the word
"from" means "from and  including"  and the words "to" and "until" each mean "to
but excluding."

     SECTION 1.3.  Other  Terms.  All other terms not defined in this Note shall
have the meaning assigned such terms in the Employment Agreement.

                                   ARTICLE II.

                          AMOUNT AND TERMS OF THE LOAN

     SECTION  2.1.  The Loan.  The Lender  agrees,  on the terms and  conditions
hereinafter  set forth,  to make a loan (the "Loan") to the Borrower on the date
hereof in the amount set forth above in U.S. Dollars and in same day funds.

     SECTION  2.2.  Repayment.  The  Borrower  shall repay the unpaid  principal
amount of the --------- Loan on the Termination Date.

     SECTION  2.3.  Interest.  The  Borrower  shall pay  interest  on the unpaid
principal  amount of this Note from the date of this Note  until this Note shall
be paid in full at a rate per  annum  equal  at all  times  to the  Prime  Rate,
payable in arrears and in a lump sum on the Termination Date.

     SECTION  2.4.  Mandatory  Prepayments.  The  Borrower  shall,  on the  next
succeeding  Business Day following the Borrower's  failure to be in the Lender's
employ (x) as a result of a termination of employment  for Cause,  (y) by reason
of the  Borrower's  death or a  resignation  of  employment  other than for Good
Reason or (z) as a result of the Borrower  giving Lender  notice of  non-renewal
under Section 1.1 of the Employment Agreement,  prepay the outstanding principal
amount of the Loan and pay accrued  interest to the date of such  prepayment  on
the entire principal  amount of the Loan  outstanding as of such date;  provided
however that the Borrower  shall be  considered  to be in the Lender's  "employ"
during any period of the Borrower's Disability.

     SECTION 2.5. Voluntary Prepayments. The Borrower may prepay, in whole or in
part,  the principal  amount of this Note and any interest  thereon at any time,
without penalty.

     SECTION  2.6.  Payments  and  Computations.  The  Borrower  shall make each
payment hereunder not later than 3:00 P.M.  (Milwaukee time) on the day when due
in U.S.  Dollars to the Lender at its address referred to in Section 6.2 in same
day funds. All computations of interest shall be made by the Lender on the basis
of a year of 365 or 366 days,  as the case may be,  in each case for the  actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest is payable.

     SECTION 2.7. Payment on Non-Business  Days.  Whenever any payment under any
Loan Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest.

                                  ARTICLE III.

                              CONDITIONS OF LENDING

     SECTION 3.1. Conditions Precedent to the Loan. The obligation of the Lender
to make the Loan  hereunder  is subject  to the  conditions  precedent  that the
Lender  shall have  received  on or before the date of such Loan the  following,
dated such day, in form and substance satisfactory to the Lender:

     (a)  The Security Agreement, together with:

     (i)  financing  statements,  in proper  form for filing  under the  Uniform
Commercial  Code of all  jurisdictions  that the  Lender may deem  necessary  or
desirable  in order to perfect the  security  interests  created by the Security
Agreement,

     (b)  the Lender shall have  received  such other  approvals or documents as
          the Lender may reasonably request.

                                   ARTICLE IV.

                            COVENANTS OF THE BORROWER

     SECTION  4.1.  Affirmative  Covenants.  So long as this Note  shall  remain
unpaid, the Borrower will, unless the Lender shall otherwise consent in writing:

     (a) Compliance  with Laws,  Etc.  Comply in all material  respects with all
applicable  laws,  rules,  regulations  and orders,  such compliance to include,
without  limitation,  paying  before  the  same  become  delinquent  all  taxes,
assessments  and  governmental  charges  imposed  upon the  Borrower or upon the
property of the Borrower except to the extent contested in good faith.

     (b)  Reporting Requirements. Furnish to the Lender:

     (i) as soon as  possible  and in any  event  within  five  days  after  the
occurrence  of each Event of Default  and each event  which,  with the giving of
notice  or  lapse  of  time,  or both,  would  constitute  an Event of  Default,
continuing on the date of such  statement,  a statement of the Borrower  setting
forth  details  of such  Event of  Default  or event  and the  action  which the
Borrower has taken and proposes to take with respect thereto; and

     (ii)  such  other  information  respecting  the  condition  or  operations,
financial  or  otherwise,  of the  Borrower  as the Lender may from time to time
reasonably request.

                                   ARTICLE V.

                                EVENTS OF DEFAULT

     SECTION 5.1. Events of Default.  If any of the following events ("Events of
Default") shall occur and be continuing:

     (a) The Borrower  shall fail to pay any  principal of, or interest on, this
Note or any other  amount  under any other  Loan  Document,  including,  but not
limited to, any mandatory prepayments, within 30 days after the same becomes due
and payable;

     (b) The Borrower shall fail to perform or observe (i) any term, covenant or
agreement contained in Section 4.1 or (ii) any other term, covenant or agreement
contained  in any Loan  Document on the part of the  Borrower to be performed or
observed if such  failure  shall  remain  unremedied  for 30 days after  written
notice thereof shall have been given to the Borrower by the Lender;

     (c) The  Borrower  shall  admit in writing his  inability  to pay his debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any  proceeding  shall be  instituted  by or  against  the  Borrower  seeking to
adjudicate  the  Borrower  bankrupt  or  insolvent,   or  seeking   liquidation,
protection, relief, or composition of the Borrower or of his debts under any law
relating to bankruptcy, insolvency or relief of debtors, or seeking the entry of
an order for relief for the Borrower or for any substantial part of his property
and, in the case of any such proceeding instituted against the Borrower (but not
instituted by the Borrower),  either such proceeding shall remain undismissed or
unstayed  for a  period  of 30  days,  or any  of the  actions  sought  in  such
proceeding  (including,  without  limitation,  the entry of an order for  relief
against the Borrower or for any substantial part of his property) shall occur;

     (d) Any  judgment  or order for the  payment of money in excess of $100,000
shall be rendered  against the Borrower and either (i)  enforcement  proceedings
shall have been  commenced by any creditor  upon such  judgment or order or (ii)
there  shall  be any  period  of 10  consecutive  days  during  which  a stay of
enforcement  of such  judgment  or  order,  by  reason  of a  pending  appeal or
otherwise, shall not be in effect;

     (e) Any provision of the Security Agreement after delivery thereof pursuant
to  Section  3.1  shall for any  reason  cease to be valid  and  binding  on the
Borrower,

     (f) The Security  Agreement after delivery  thereof pursuant to Section 3.1
shall for any reason (other than pursuant to the terms  thereof) cease to create
a valid  security  interest  in any of the  collateral  purported  to be covered
thereby;

     (g) The Borrower shall die; or

     (h) The Borrower shall be terminated for Cause,  resign without Good Reason
or provide notice of non-renewal under Section 1.1 of the Employment Agreement;
then, and in any such event, the Lender may, by notice to the Borrower,  declare
this Note,  all interest  thereon and all other  amounts  payable under the Loan
Documents  to be  forthwith  due and  payable,  whereupon  this  Note,  all such
interest  and all such amounts  shall  become and be forthwith  due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower;  provided, that in the event of the
death of the  Borrower or in the event of an actual or deemed  entry of an order
for relief with respect to the Borrower under the Federal  Bankruptcy Code, this
Note, all such interest and all such amounts shall  automatically  become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.

                                   ARTICLE VI.

                                  MISCELLANEOUS

     SECTION 6.1.  Amendments,  Etc. No amendment or waiver of any  provision of
this Note, nor consent to any departure by the Borrower therefrom,  shall in any
event be effective  unless the same shall be in writing and signed by the Lender
and then any such  waiver or consent  shall be  effective  only in the  specific
instance and for the specific purpose for which given.

     SECTION 6.2. Notices,  Etc. All notices and other  communications  provided
for hereunder shall be in writing (including telecopier,  telegraphic,  telex or
cable communication) and mailed,  telecopied,  telegraphed,  telexed,  cabled or
delivered,  if to the  Borrower,  at its address as  indicated in the recital of
parties  to  this  Note;  and if to the  Lender,  at its  address  at  Chartwell
Investments  Inc.,  Attn:  Michael  Shein;  or, as to each party,  at such other
address and to such other  individual  as shall be designated by such party in a
written notice to the other party.  All such notices and  communications  shall,
when mailed,  telecopied,  telegraphed,  telexed or cabled,  be  effective  when
deposited  in  the  mails,  telecopied,  delivered  to  the  telegraph  company,
confirmed by telex answerback or delivered to the cable company, respectively.

     SECTION 6.3. No Waiver;  Remedies.  No failure on the part of the Lender to
exercise,  and no delay in  exercising,  any right under any Loan Document shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies  provided in the Loan Documents are cumulative and not
exclusive of any remedies provided by law.

     SECTION  6.4.  Binding  Effect.  This Note  shall (a) be  binding  upon the
Borrower and his personal representatives, estate, heirs, devisees, legatees and
assigns,  (b) inure to the  benefit of the  Borrower  and his assigns and (c) be
binding  upon  and  inure  to the  benefit  of the  Lender  and  its  respective
successors  and assigns,  except that the  Borrower  shall not have the right to
assign his rights  hereunder or any interest  herein  without the prior  written
consent of the Lender.

     SECTION 6.5.  Governing  Law. This Note shall be governed by, and construed
in accordance with, the laws of the State of New York.

     IN WITNESS  WHEREOF,  the  Borrower  has executed and the Lender has caused
this Note to be executed by its officer thereunto duly authorized, in each case,
as of the date first above written.

                                                     /s/Jack Stinnett
                                                     Jack Stinnett, as Borrower

CONSENTED TO AND ACKNOWLEDGED:
MORRIS MATERIAL HANDLING, INC.
as Lender

By:      ________________________________
         Name:
         Title:

<PAGE>

                            Form of Spousal Consent

         The  undersigned,  spouse of Jack  Stinnett,  a holder of  interests in
Niles L.L.C., a Delaware limited  liability  company (the "Company"),  executing
the foregoing  Promissory  Note and Pledge,  Assignment and Security  Agreement,
hereunto  subscribes  her name in evidence of her  agreement  and consent to the
pledge of interests of the Company referred to in the foregoing  Promissory Note
and Pledge,  Assignment  and  Security  Agreement,  and to all other  provisions
thereof.

         Effective as of June 30, 1999.

                                                              Name:SHARE PURCHASE AGREEMENT

         THIS SHARE  PURCHASE  AGREEMENT,  dated as of December __, 1999, by and
among  3016117  NOVA  SCOTIA  ULC a  Nova  Scotia  unlimited  liability  company
("Seller"),  MORRIS MATERIAL HANDLING,  INC., a Delaware corporation ("Parent"),
and MagneTek  Mondel  Holding  ULC, a Nova Scotia  unlimited  liability  company
("Buyer").

                                   WITNESSETH:

         WHEREAS,  Buyer desires to purchase from Seller,  and Seller desires to
sell to Buyer, all of the issued and outstanding shares in the capital of Mondel
ULC,  a  Nova  Scotia  unlimited  liability  company  (the  "Company"),  all  in
accordance with the terms and conditions herein set forth;

         AND WHEREAS,  Parent is a party to this  Agreement  for the purposes of
making  certain  representations,  warranties,  covenants and  indemnities  with
Seller for the benefit of Buyer;

         NOW,  THEREFORE,  in consideration of the premises contained herein and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1
                                   DEFINITIONS

     1.   Definitions. For purposes of this Agreement, the following terms shall
          have the meanings set forth below:

1.1      Defined Terms.

     "Adjusted Closing Balance Sheet" has the meaning set forth in Section 2.3.5
          hereof.

         "Affiliate" (and, with a correlative meaning, "Affiliated") means, with
respect to any Person,  any other Person that  directly,  or through one or more
intermediaries,  controls or is  controlled  by or is under common  control with
such first  Person,  and, if such a Person is an  individual,  any member of the
immediate family (including parents, spouse and children) of such individual and
any trust whose principal  beneficiary is such individual or one or more members
of such immediate  family and any Person who is controlled by any such member or
trust.  As used in  this  definition,  "control"  (including,  with  correlative
meanings,   "controlled   by"  and  "under  common  control  with")  shall  mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies  (whether through  ownership of securities or partnership
or other ownership interests or by contract). For greater certainty, the parties
acknowledge  that (i)  Parent  shall be  deemed to be the  ultimate  controlling
Person of the Company and the Seller and (ii) MagneTek,  Inc. shall be deemed to
be the ultimate  controlling Person of Buyer, for the purposes of this Agreement
and the definition of Affiliate.

         "Agreement"  means this Share  Purchase  Agreement,  as the same may be
amended, supplemented or otherwise modified from time to time.

         "Applicable   Law"  means  with   respect  to  any  Person,   property,
transaction,  event or other matter, any law, rule, statute, regulation,  order,
judgment,   decree,  treaty  or  other  requirement  having  the  force  of  law
(collectively,  "Law")  relating  to or  applicable  to such  Person,  property,
transaction,  event  or  other  matter.  Applicable  Law  also  includes,  where
appropriate,  any  interpretation  of Law (or any part  thereof)  by any  Person
having   jurisdiction   over  it,  or  charged   with  its   administration   or
interpretation.

         "April  Balance  Sheet"  means the  balance  sheet of the Company as of
April 30, 1999, prepared to reflect the elimination of intercompany accounts and
the  Excluded  Liabilities,  a true and  complete  copy of which is  attached as
Exhibit A hereto.

        "Base Purchase Price" has the meaning set forth in Section 2.2.1 hereof.

         "Benefit Plan" means any Employee Plan or Employee Benefit Plan.

         "Business" means the business and operations of the Company.

          "Business  Days"  means any day other than a  Saturday  or Sunday or a
          statutory or bank holiday in Ontario or Nova Scotia.

        "Business Employees" has the meaning set forth in Section 3.7(a) hereto.

         "Buyer" has the meaning set forth in the recitals hereto.

         "Buyer Indemnitees" has the meaning set forth in Section 7.2 hereof.

         "Cash" means cash and cash equivalents.

         "Certificate" has the meaning set forth in Section 7.2 hereof.

         "Claimed Amount" has the meaning set forth in Section 7.4.2 hereof.

         "Claim Notice" has the meaning set forth in Section 7.4.2 hereof.

          "Class A  Preferred  Shares"  means the  shares in the  capital of the
          Company  described  as  Class  A  Preferred  Shares  in the  Company's
          constating documents.

          "Closing" means the consummation of the purchase,  assignment and sale
          of the Shares as contemplated hereby.

      "Closing Balance Sheet" has the meaning set forth in Section 2.3.2 hereof.

         "Closing Date" means the date of this Agreement.

         "Closing  Equity"  means  the  difference  between  the  value  of  the
Company's  total  assets  and its  total  liabilities  (excluding  the  Excluded
Liabilities),  as shown on the  Estimated  Closing  Balance  Sheet or the  Final
Closing Balance Sheet or the Adjusted Closing Balance Sheet, as applicable.

         "Closing  Place" means the offices of Blake,  Cassels & Graydon,  Suite
2300,  Commerce Court West,  Toronto,  Ontario,  M5L 1A9, or such other place as
Seller, Parent and Buyer may agree.

         "Common Shares" means shares in the capital of the Company described as
common shares in the Company's constating documents.

         "Code" means the Internal  Revenue  Code of 1986,  as amended,  and the
regulations promulgated thereunder, as in effect from time to time.

         "Contracts" has the meaning set forth in Section 3.5 hereof.

       "Controlling Party" has the meaning set forth in Section 7.4.1(b) hereof.

         "Damages" has the meaning set forth in Section 7.2 hereof.

          "Disclosure  Schedule"  means the  disclosure  schedule  delivered  by
          Seller and Parent to Buyer on the date hereof.

          "Dollars"  or "$" means the lawful  currency  of the United  States of
          America, unless otherwise indicated.

          "Effective  Time" means the end of business in the Province of Ontario
          on the Closing Date.

         "Employee  Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA, that is sponsored or contributed to by the Company in the
United States of America or any ERISA Affiliate  thereof  covering  employees or
former employees of the Company.

         "Employee  Pension  Benefit  Plan" means any employee  pension  benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA,
other than a Multiemployer  Plan covering  employees or former  employees of the
Company in the United States of America.

         "Employee  Plan" means any benefit  arrangement  or agreement  covering
employees,  former employees,  officers,  former officers,  directors and former
directors  of the  Company and the  beneficiaries  of any of them that is not an
Employee Benefit Plan,  including (i) each  employment,  consulting or change of
control  agreement;  (ii) each  arrangement  providing  for  retirement,  health
(including  retiree health),  disability or fringe benefits,  insurance coverage
(including any self-insured arrangements), (iii) each bonus, incentive, deferred
bonus, incentive or performance pay arrangement, (iv) each arrangement providing
any  termination  allowance,  severance  or similar  benefits,  (v) each  equity
compensation  plan;  (vi)  each  deferred   compensation  plan  and  (vii)  each
compensation  policy and practice  maintained by the Company,  but excluding any
arrangement  established  pursuant to statute and  maintained by a  Governmental
Authority.

         "Encumbrances" means mortgages,  security interests,  pledges,  claims,
liens,   easements,   rights  of  way,  restrictions,   encroachments,   leases,
occupancies,  tenancies,  options;  pre-emptive  purchase  rights  and any other
adverse interests or rights of others.

         "Environmental Laws" mean any applicable statute, enactment, ordinance,
rule,  regulation,  decision,  common law, judgment,  decree, permit or license,
whether local, state, provincial, territorial or national, in force or effect as
of the Closing:

         (a) relating to emissions,  discharges,  spills, releases or threatened
releases of Hazardous Substances into air, water, or land;

         (b)  relating  to the  use,  treatment,  storage,  disposal,  handling,
manufacturing or shipment of Hazardous Substances;

         (c) relating to noise, odor, wetlands, pollution,  contamination or any
injury or threat of injury to persons or property;

         (d)      relating to the regulation of storage tanks; or

         (e) otherwise  relating to protection,  investigation or restoration of
human health and safety, the environment, or natural resources.

         "Environmental  Liabilities"  means all Liabilities,  whether currently
existing or arising  hereafter,  but in either such case  relating to or arising
from  conditions  existing  prior to the  Effective  Time,  which arise under or
relate to any Environmental Laws.

        "Environmental Surveys"has the meaning set forth in Section 3.12 hereof.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
          amended.

         "ERISA Affiliate" means any other Person or entity under common control
with the Company  within the meaning of Section  414(b),  (c), (m) or (o) of the
Code and the regulations thereunder.

          "Estimated Closing Balance Sheet" has the meaning set forth in Section
          2.3.1 hereof.

          "Estimated  Purchase Price" has the meaning set forth in Section 2.2.2
          hereof.

         "Excluded Liabilities" means (i) all Liabilities for Taxes that are the
responsibility of Seller pursuant to Section 6.1(d); (ii) all Liabilities of the
Company  that  are not  attributable  or  related  to the  Business;  (iii)  any
liability  for any claim  relating  to the  existence  or alleged  existence  of
asbestos in or in connection  with any products sold at any time by the Company;
(iv) any  Liability  for any payment to be made under any  severance,  change of
control,  termination,  stay and pay or similar  agreement  or plan  between the
Company and any Business Employee and (v) any Liability arising from or relating
to the Company's having conducted  business under any unregistered trade name or
under any name other than its legal corporate name.

          "Final  Closing  Balance  Sheet" has the  meaning set forth in Section
          2.3.2 hereof.

         "Financial  Statements"  mean: (a) the financial  statements  listed on
Section 3.8 of the Disclosure  Schedule,  including the April Balance Sheet; and
(b) the interim  unaudited  financial  statements  of the Company for the months
commencing  November 1, 1998  through the month ended  immediately  prior to the
Closing (to the extent such statements for the month ended  immediately prior to
the Closing are reasonably available),  true and complete copies of all of which
(except those for periods not yet available) have previously been made available
to the Buyer.

         "GAAP" means generally accepted accounting  principles in effect in the
United States of America at the time of determination  as consistently  applied,
except as expressly contemplated herein.

         "Governmental Authority" means any court or federal, state, provincial,
municipal or other governmental authority, department, commission, board, agency
or instrumentality.

         "Group  Health Plan" means any group health plan, as defined in Section
5000(b)(1) of the Code.

         "Hazardous  Substance"  means (i) any substance  listed,  classified or
regulated  pursuant to any Environmental Law, including any petroleum product or
by-product,  asbestos-containing  material,  lead-containing  paint or plumbing,
polychlorinated biphenyls,  di-ocytl phthalates ("DOPs"),  radioactive materials
or  radon,  or (ii) any  solid,  liquid,  gas,  odor,  heat,  sound,  vibration,
radiation or combination of them that may impair the natural environment, injure
or damage  property  or plant or animal life or harm or impair the health of any
individual.

         "HSRA" means the Hart-Scott-Rodino  Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder, as in effect from time to time.

        "Improvements" has the meaning set forth in Section 3.3.3(b)(iv) hereof.

      "Indemnified Person" has the meaning set forth in Section 8.4.1(a) hereof.

     "Indemnifying Person" has the meaning set forth in Section 7.4.1(a) hereof.

         "Information  Technology" means computer  software,  computer firmware,
computer  hardware (whether general or specific  purpose),  and other similar or
related items of automated, computerized, and/or software system(s).

     "Intellectual  Property Transfer Agreement" means the Intellectual Property
Transfer Agreement, to be entered into by and between MHE Technologies, Inc. and
the Company at the Closing.

          "Intellectual  Property  Rights"  has the meaning set forth in Section
          3.6(a) hereof.

         "Intercompany  Accounts"  means all  intercompany  accounts  except for
intercompany trade receivables  accrued by the Company in the ordinary course of
business.

         "IRS" means the Internal Revenue Service.

     "Knowledge  of Buyer"  means the  knowledge,  after due  inquiry,  of David
Reiland, John P. Colling, Jr. and Samuel A. Miley.

         "Knowledge  of  Seller  and  Parent"  means  the  knowledge,  after due
inquiry, of Mike Birch, Scott Pastorius, Brenda Mayhew, and the actual knowledge
of David Smith and Jack Stinnett.

         "Letter of Credit" has the meaning set forth in Section 6.4 hereof.

         "Liabilities"  means all obligations,  indebtedness,  commitments,  and
other  items,  whether  direct or indirect,  absolute,  accrued,  contingent  or
otherwise.

     "License  Agreement" means the License  Agreement to be entered into by and
between the Company and MHE Technologies, Inc. at the Closing.

         "Licenses" mean the licenses,  authorizations,  permits,  approvals and
other authorizations  issued by any Governmental  Authority owned or held by the
Company or by Seller or Parent in connection with the ownership and operation of
the Business,  together with any renewals,  extensions or modifications  thereof
and additions thereto between the date hereof and the Closing.

      "Management Employees" has the meaning set forth in Section 3.7(a) hereof.

         "Material  Adverse  Effect"  means a  change  in,  or  effect  on,  the
operations,  affairs,  prospects,  financial  condition,  results of operations,
assets,  liabilities,  reserves  or  any  other  aspect  of the  Company  or the
Business,  taken as a whole,  that could  reasonably  be expected to result in a
material  adverse effect on, or a material adverse change in, the Company or the
Business,  or a material adverse effect on Buyer's ownership of the Shares after
the Closing Date.

          "Multiemployer Plan" means a multiemployer plan, as defined in Section
          3(37) and 4001(a)(3) of ERISA.

         "Multiple  Employer Plan" means any Employee  Benefit Plan sponsored by
more than one employer,  within the meaning of Sections 4063 or 4064 of ERISA or
Section 413(c) of the Code.

         "Neutral Auditors" has the meaning set forth in Section 2.3.5 hereof.

         "Noncompetition  Agreement"  means the  Noncompetition  Agreement to be
entered  into by and  between  Parent  and the  Company  concurrently  with this
Agreement.

         "Permitted  Encumbrances"  mean: (i) Encumbrances for Taxes not yet due
and payable or that the taxpayer is contesting in good faith through appropriate
proceedings;  (ii) as to the use of the real estate  assets used by the Company,
any  easements  or  reservations  of, or rights  of others  for,  rights of way,
highway and railroad crossings,  sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning restrictions which do not materially
interfere  with the  operation  of the  Business;  (iii) in the case of non-real
estate  assets,  any  security  interest  disclosed  in  Section  3.3.1  of  the
Disclosure  Schedule;  (iv)  liens  created by  statute  securing  the claims of
materialmen,  landlords  and like  Persons  incurred in the  ordinary  course of
business  for sums not yet  delinquent;  (v)  purchase  money  liens  and  liens
securing  rental  payments  under  capital lease  arrangements  and disclosed in
Section 3.3.1 of the Disclosure Schedule;  (vi) liens securing borrowed money to
be released at or prior to the Closing  and  disclosed  in Section  3.3.1 of the
Disclosure  Schedule;  and (vii) other  liens set forth in Section  3.3.1 of the
Disclosure Schedule.

         "Person" means any natural person,  corporation,  partnership,  limited
liability company, firm, joint venture, joint-stock company, trust, association,
unincorporated  entity of any kind,  trust,  governmental  or regulatory body or
other entity.

         "Products" has the meaning set forth in Section 3.15 hereof.

         "Purchase Price" has the meaning set forth in Section 2.2.1 hereof.

         "Reference  Rate" means the borrowing  rate in effect from time to time
under  the  Restated  Credit  Agreement,  dated  as of June  20,  1997,  between
MagneTek, Inc., as Borrower, NationsBank of Texas, N.A., as Agent, certain other
banks as Co-Agents, and certain Lenders thereunder.

         "Representatives" has the meaning set forth in Section 6.1.1 hereof.

         "Resolution Period" has the meaning set forth in Section 2.3.4 hereof.

         "Response" has the meaning set forth in Section 7.4.2(b) hereof.

         "Seller" has the meaning set forth in the Preamble hereof.

         "Seller Indemnitees" has the meaning set forth in Section 8.3 hereof.

         "Seller Returns" has the meaning set forth in Section 6.1(b) hereof.

         "Shares" means all the issued and outstanding Common Shares and Class A
Preferred Shares of the Company.

         "Subsidiary"  means, as to any Person, any corporation or other entity,
whether now existing or hereafter organised or acquired,  of which a majority of
the securities or other ownership interests having ordinary voting power for the
election of directors or other Persons  performing  similar functions are at the
time owned by such Person and/or one or more Subsidiaries of such Person.

         "Supply  Agreement" means the Supply Agreement,  dated the date hereof,
to be entered into by and between Parent and the Company.

         "Tax" or "Taxes" means (A) taxes,  charges,  fees, levies,  imposts and
other assessments,  including, but not limited to, all income, sales, use, goods
and services,  value added,  capital,  capital  gains,  alternative,  net worth,
transfer,  profits,  withholding,  payroll,  employer health, excise, franchise,
real property and personal property taxes, and any other taxes,  customs duties,
fees,  assessments or similar charges in the nature of a tax including  Canadian
Pension Plan and provincial  pension plan  contributions,  employment  insurance
payments and workers' compensation premiums, together with all installments with
respect thereto, and any interest, fines, additions and penalties imposed by any
Governmental  Authority in connection with amounts  described in this clause (A)
and (B) any liability for payment of amounts  described in clause (A) whether as
a  result  of  transferee  liability,  of  being  a  member  of  an  affiliated,
consolidated,  combined or unitary  group for any period,  or otherwise  through
operation of law.

         "Tax Letter of Credit" has the meaning set forth in Section 6.4 hereof.

          "Tax  Indemnification  Release Provision" has the meaning set forth in
          Section 7.2 hereof.

         "Tax Return"  means any return,  declaration,  report,  or  information
return or statement  relating to Taxes,  including  any  schedule or  attachment
thereto and any amendment thereof.

       "Third Party Claim" has the meaning set forth in Section 7.4.1(a) hereof.

         "Unresolved Changes" has the meaning set forth in Section 2.3.5 hereof.

"Year  2000  Compliant"  means,  with  respect  to the  Company's  products  and
Information Technology,  that they are designed to be used prior to, during, and
after the  calendar  Year 2000 A.D.,  and that during each such time period they
will accurately receive, provide and process date/time data (including,  but not
limited to,  calculating,  comparing and sequencing)  from, into and between the
twentieth and  twenty-first  centuries,  including the years 1999 and 2000,  and
leap year calculations and will not malfunction,  cease to function,  or provide
invalid or incorrect  results as a result of date/time  data, to the extent that
other products and Information Technology, used in combination with the products
and Information  Technology being acquired,  properly  exchanges  date/time data
with them.

1.2 Accounting Terms. All terms of an accounting nature not specifically defined
herein shall have the respective meanings given to them under GAAP.

1.3 Exhibits and  Schedules.  The following  Exhibits and Schedules  attached to
this  Agreement are  incorporated  herein and shall be considered a part of this
Agreement  for the  purposes  stated  herein,  except  that in the  event of any
conflict  between  any of the  provisions  thereof  and  the  provisions  of the
Agreement, the provisions in this Agreement shall prevail:

         Exhibits

                  Exhibit A    -   April Balance Sheet
                  Exhibit B    -   Form of Letter of Credit
                  Exhibit C        Form of Tax Letter of Credit

         Schedules

                  Schedule 1   -   Disclosure Schedule
                  Schedule 2       Allocation of Purchase Price for U.S. Taxes

1.4 Other  Definition  Provisions.  The  masculine  form of words  includes  the
feminine  and the neuter and vice  versa,  and,  unless  the  context  otherwise
requires,  the singular  form of words  includes the plural and vice versa.  The
words  "herein,"  "hereof,"  "hereunder"  and other words of similar import when
used in this  Agreement  refer  to this  Agreement  as a  whole,  and not to any
particular section or subsection.

ARTICLE 2
                       PURCHASE OF SHARES; PURCHASE PRICE

2. Purchase of the Shares, Purchase Price and Method of Payment.

2.1 Purchase of the Shares.  In accordance with the terms and upon  satisfaction
of the  conditions  contained in this  Agreement,  at the Closing,  Seller shall
sell,  assign,  transfer,  convey and  deliver  to Buyer,  free and clear of all
Encumbrances, and Buyer shall purchase from Seller, the Shares.

2.2      Consideration.

2.2.1 Purchase Price.  The aggregate base purchase price for the Shares shall be
Three Million Dollars  ($3,000,000) (the "Base Purchase Price"),  which shall be
subject to  adjustment  as described in Section  2.2.2 and Section 2.3 below (as
adjusted, the "Purchase Price").

2.2.2 Payment of Purchase  Price at Closing.  At the Closing,  the Base Purchase
Price shall be adjusted:  (a) upward by the amount, if any, by which the Closing
Equity as calculated in accordance with the Estimated  Closing Balance Sheet (as
defined below) exceeds  $2,551,772.00 or (b) downward by the amount,  if any, by
which the Closing Equity as calculated in accordance with the Estimated  Closing
Balance Sheet is less than $2,551,772.00 (as adjusted,  the "Estimated  Purchase
Price").  At the  Closing,  Buyer shall pay to Seller on account of the Purchase
Price an amount  equal to the  Estimated  Purchase  Price by wire  transfer,  in
immediately available funds, pursuant to wire transfer instructions delivered to
Buyer by Seller at least three (3)  Business  Days prior to the  Closing,  or by
certified check, at Seller's sole option.

2.3      Purchase Price Adjustment.

2.3.1 Estimated  Closing Balance Sheet. No later than three (3) Business Days or
earlier than ten (10) Business Days prior to the Closing Date,  Seller shall, in
consultation with Buyer, prepare an estimated balance sheet of the Company as of
the Effective Time (the "Estimated  Closing Balance Sheet") and a calculation of
estimated  Closing  Equity as of the  Effective  Time  based on the  assets  and
liabilities of the Company as reflected on the Estimated Closing Balance Sheet.

2.3.2 Final Closing Balance Sheet. As soon as practicable, but in no event later
than sixty (60) days following the Closing,  Seller shall, in consultation  with
Buyer,  prepare a balance  sheet of the  Company as of the  Effective  Time (the
"Final  Closing  Balance  Sheet" and  collectively  with the  Estimated  Closing
Balance Sheet,  the "Closing Balance Sheet") and a calculation of Closing Equity
as of the Effective  Time,  as  calculated in accordance  with the Final Closing
Balance Sheet. The Final Closing Balance Sheet and calculation of Closing Equity
shall be  prepared  so that they  present  fairly the  Closing  Equity as of the
Effective Time using practices and procedures consistent with the preparation of
the  Financial  Statements  and in  accordance  with  GAAP;  provided,  that all
Intercompany Accounts,  Excluded Liabilities and any refunds in respect of Taxes
for the period prior to the Closing,  will be excluded  therefrom  (it being the
understanding that Intercompany Accounts have been eliminated in accordance with
Section 3.20 hereof).  In addition,  the Final  Closing  Balance Sheet will only
include  intercompany trade receivables that are excluded from the definition of
Intercompany  Accounts if and to the extent such receivables have been collected
prior to the date the Final Closing Balance Sheet is required to be prepared.

2.3.3  Access.  During the  preparation  of the  Closing  Balance  Sheet and the
calculation of Closing Equity in connection therewith, and throughout the period
of any review or dispute  within the  contemplation  of this  Section  2.3:  (a)
Seller shall, until the Closing,  and Buyer shall, after the Closing,  cause the
Company  to  provide  Buyer or  Seller,  as  applicable,  and  their  respective
authorized   representatives  with  access  to  all  relevant  books,   records,
workpapers  and employees of the Company as may  reasonably be requested by such
party;  and (b) Seller and Buyer shall cooperate fully with each other and their
respective  authorized  representatives  in connection with such preparation and
review,  including  the  provision  to one  another  on a  timely  basis  of all
information reasonably requested in connection with such preparation and review.

2.3.4  Delivery  and Review.  Seller shall  deliver a copy of the Final  Closing
Balance Sheet to Buyer promptly after it has been prepared and in no event later
than sixty  (60) days  after the  Closing.  After  receipt of the Final  Closing
Balance  Sheet,  Buyer shall have  thirty (30) days to review the Final  Closing
Balance Sheet,  together with the workpapers  used in the  preparation  thereof.
Unless Buyer delivers  written notice to Seller on or prior to the thirtieth day
after the  receipt  of the  Final  Closing  Balance  Sheet  stating  that it has
objections to the Final  Closing  Balance  Sheet or the  calculation  of Closing
Equity made in  accordance  therewith  (and setting  forth the disputed  items),
Buyer shall be deemed to have accepted and agreed to the Final  Closing  Balance
Sheet and the calculation of Closing Equity made pursuant  thereto.  If Buyer so
notifies  Seller of its  objections  to the Final  Closing  Balance  Sheet,  the
parties shall, within thirty (30) days (or such longer period as the parties may
agree) following such notice (the "Resolution Period"), attempt to resolve their
differences  and any  resolution  by them as to any  disputed  amounts  shall be
final, binding and conclusive.

2.3.5  Resolution.  Any amounts  remaining in dispute at the  conclusion  of the
Resolution Period (the "Unresolved  Changes") shall be submitted to a nationally
recognized United States accounting firm that has not advised Buyer or Seller in
the past five (5) years (such firm being referred to as the "Neutral  Auditors")
within ten (10) days after the expiration of the Resolution  Period.  Each party
agrees to execute, if requested by the Neutral Auditors, a reasonable engagement
letter with the Neutral Auditors. All fees and expenses relating to the work, if
any, to be  performed by the Neutral  Auditors  shall be borne pro rata by Buyer
and  Seller  in  proportion  to the  allocation  of  the  dollar  amount  of the
Unresolved  Changes made by the Neutral  Auditors such that the prevailing party
or  parties  pays a lesser  proportion  of the fees and  expenses.  The  Neutral
Auditors  shall act as an arbitrator to  determine,  based on the  provisions of
this  Section  2.3,  only  the  Unresolved   Changes.   The  Neutral   Auditors'
determination  of the Unresolved  Changes shall be made within  forty-five  (45)
days of the submission of the Unresolved Changes thereto,  shall be set forth in
a written  statement  delivered to Buyer,  on the one hand,  and Seller,  on the
other hand,  and shall be final,  binding  and  conclusive.  The term  "Adjusted
Closing  Balance Sheet",  as used in this  Agreement,  shall mean the definitive
Closing Balance Sheet agreed to (or deemed agreed to) by Buyer, on the one hand,
and Seller,  on the other hand, under Section 2.3 or, if Unresolved  Changes are
submitted to the Neutral  Auditors,  such  definitive  Closing Balance Sheet, as
adjusted to reflect the determination of the Neutral Auditors under this Section
2.3.5.

2.3.6  Post-Closing  Adjustments.  If and to the  extent the  Closing  Equity as
calculated in  accordance  with the Adjusted  Closing  Balance Sheet exceeds the
Closing Equity as calculated in accordance  with the Estimated  Closing  Balance
Sheet,  then  Buyer  shall pay an amount  equal to such  excess  (together  with
interest on such amount,  from the Closing  Date to the date of payment,  at the
Reference  Rate in effect on such  date,  without  compounding)  to Seller as an
adjustment to the Purchase  Price.  If and to the extent that the Closing Equity
as calculated in accordance with the Adjusted Closing Balance Sheet is less than
the Closing  Equity as  calculated  in  accordance  with the  Estimated  Closing
Balance Sheet, then Seller shall pay an amount equal to such shortfall (together
with interest on such amount,  from the Closing Date to the date of payment,  at
the Reference Rate in effect on such date,  without  compounding) to Buyer as an
adjustment to the Purchase Price. If the amount of post-Closing  adjustments are
agreed to (or deemed agreed to) by Buyer,  on the one hand,  and Seller,  on the
other  hand,  before  or during  the  Resolution  Period,  then  payment  of any
adjustment  shall be made within five (5)  Business  Days after the date of such
agreement (or deemed  agreement).  If there are Unresolved Changes at the end of
the  Resolution  Period,  then (a) the minimum amount which the parties agree is
owed  pursuant to this Section 2.3.6 shall be paid within five (5) Business Days
after the end of the  Resolution  Period and any  additional  amounts owing with
respect to the  Unresolved  Changes  shall be paid within five (5) Business Days
after the resolution  thereof by the Neutral Auditors or (b) in all other cases,
any and all  payments  shall be made  within  five (5)  Business  Days after the
resolution of the Unresolved  Changes by the Neutral Auditors.  Any payment made
to any party pursuant to this Section 2.3.6 shall be (i) net of any  obligations
identified,  as of such  date,  as owed by such  party  under  Article X of this
Agreement and (ii) paid by wire  transfer of  immediately  available  funds to a
bank account specified by the party to which such payment is owed.

ARTICLE 3
     REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE BUSINESS

3. Representations and Warranties Relating to the Company and the Business. Each
of Seller and Parent  hereby  represents  and warrants to Buyer that,  as of the
date hereof:

3.1      Organization and Standing; Capitalization.

3.1.1    Organization and Standing. The Company:

(a) is an unlimited  liability company duly organized and validly existing under
the laws of Nova Scotia;

(b) has full  corporate  power  and  authority  and all  governmental  Licenses,
authorizations,  consents  and  approvals  required  to own,  lease  and use its
properties and to conduct the Business as now being conducted and to perform the
obligations  required to be  performed  by it hereunder  and to  consummate  the
transactions contemplated hereby; and

(c) is duly qualified to do business in every  jurisdiction  in which the nature
of its business requires such qualification.

3.1.2    Capitalization; Corporate Structure.

(a) The authorized  capital of the Company consists of 100,000,000 Common Shares
and  2,600,000  Class A  Preferred  Shares,  of which  8,600  Common  Shares and
2,600,000 Class A Preferred Shares are issued and  outstanding.  The Shares have
been duly  authorized  and issued and are  validly  outstanding,  fully paid and
nonassessable and were not issued in violation of any preemptive or other rights
or  in  violation  of  any  Applicable  Laws,  the  Memorandum  or  Articles  of
Association or other constating documents of the Company.

(b) The  Shares are held as  indicated  on Section  3.1.2(b)  of the  Disclosure
Schedule. Seller is the sole owner of record and beneficial owner of, all of the
Shares and Seller will, as of the Closing, have the full and unrestricted right,
power and  authority to sell and  transfer the Shares to Buyer.  At the Closing,
Seller shall deliver to Buyer duly  endorsed  certificates  evidencing  Seller's
ownership  of the Shares.  Upon  delivery of such Shares to Buyer and payment by
Buyer to Seller of the  consideration  therefor,  Buyer  will  acquire  good and
marketable  title to and complete  ownership of the Shares free and clear of all
Encumbrances.

(c)  There are not  currently,  and as of the  Closing  there  will not be,  any
outstanding (i)  subscriptions,  options,  warrants,  rights of first refusal or
other rights to purchase  from the Company or Seller any shares of capital stock
of the  Company or (ii) any  securities  convertible  into or  exchangeable  for
shares of capital  stock of the Company.  There is no contract,  right or option
outstanding  requiring the Company to redeem or repurchase  any of its shares of
capital stock and there are no  preemptive  rights with respect to any shares of
capital stock of the Company.

(d)      The Company has no Subsidiaries.

(e) The corporate  records and minute books of the Company contain  complete and
accurate minutes of all meetings of and corporate actions or written resolutions
of the directors,  committees of directors and shareholders of the Company.  All
such meetings were duly called and held,  all such  corporate  actions were duly
taken,  and all such  resolutions  duly  passed  or  validly  signed.  The share
certificates,  register of transfers,  registers of shareholders  and directors,
and other similar records of the Company are complete, accurate and current.

(f) Section 3.1.2(f) of the Disclosure Schedule lists all business,  fictitious,
trade or other names under which the  Company is  currently  conducting,  or has
historically conducted, business.

3.2 No  Contravention.  The  performance of the Company under this Agreement and
its execution and delivery of, and performance  under, any other documents to be
executed in connection  herewith do not and will not, after the giving of notice
or the  lapse of time:  (a)  conflict  with or  violate  any  provisions  of the
Memorandum  or Articles of  Association  or other  constating  documents  of the
Company;  (b) subject to  obtaining  the  consents  listed on Section 3.2 of the
Disclosure  Schedule and taking the actions referenced in Section 4.3.2,  result
in the breach of any of the terms of, constitute a default under,  conflict with
or result in the  termination  or  alteration  of, any  Contract or agreement to
which the Company is a party or by which the Company or any of its properties is
bound; or (c) subject to obtaining the consents and taking the actions listed on
Section  3.2 of the  Disclosure  Schedule  and  complying  with  the  HSRA,  the
Investment Canada Act (Canada) and the Competition Act (Canada),  as applicable,
to the Knowledge of Seller and Parent, contravene or conflict with or constitute
a violation of any License or  Applicable  Law binding upon or applicable to the
Company, the Business or the Shares.

3.3      Tangible Assets.

3.3.1  Title.  The  Company  has good and  valid  title  to, or a good and valid
leasehold  interest in, all of the  tangible  assets and  properties  it owns or
uses. Except for Permitted  Encumbrances or as disclosed on Section 3.3.1 of the
Disclosure  Schedule,  the Company holds title to each such asset free and clear
of all Encumbrances.  To the Knowledge of Seller and Parent,  the landlord named
on each real property lease (collectively, the "Leases") to which the Company is
a party has good and valid fee simple title in the real property subject to such
Lease,  subject to no  exceptions  that affect or may  reasonably be expected to
affect the use or operation of such real property by the Company.

3.3.2 Asset Rights.  At the Closing,  all of the rights,  properties  and assets
necessary for using,  owning,  operating and  conducting  the Business  shall be
either: (a) owned by the Company; or (b) licensed or leased to the Company under
one of the  Contracts or one of the  agreements  to be entered into  pursuant to
this Agreement.

3.3.3    Condition of Assets.

(a) All of the Company's  tangible  assets and  properties are in good operating
condition and repair,  ordinary wear and tear excepted, and are adequate for the
uses to which they are currently  put and no properties or assets  necessary for
the conduct of the Business as currently conducted by the Company are in need of
replacement,  maintenance or repair except for routine replacement,  maintenance
and repair.

With  respect to the real  property  owned or leased by the  Company  (the "Real
Property"):

(i) all Real  Property is in  compliance  with all  Applicable  Laws  (including
without limitation laws relating to parking, zoning and land use) and public and
private covenants and restrictions;

(ii) there are no zoning, building code, occupancy restriction or other land-use
regulation proceedings or any proposed change in any Applicable Laws which could
detrimentally  affect the use or operation of any parcel of Real  Property,  nor
has  Seller  or the  Company  received  any  notice  of any  special  assessment
proceedings  affecting any parcel of Real Property, or applied for any change to
the zoning or land use status of any parcel of Real Property;

(iii) all water, sewer, gas, electric, telephone and drainage facilities and all
other  utilities  required  by law or for the normal use and  operation  of each
parcel of Real  Property as  currently  used or operated by the Business are (X)
installed to the property  lines of such parcel and (Y) adequate to service such
parcel of Real  Property as  improved  and to permit  full  compliance  with all
Applicable Laws; and

(iv) to the Knowledge of Seller and Parent, except as disclosed on Section 3.3.3
of the  Disclosure  Schedule,  there are no latent  defects or adverse  physical
conditions  affecting  any  parcel of Real  Property  or any of the  facilities,
buildings,  structures,  erections,  improvements,  fixtures,  fixed  assets and
personal property of a permanent nature affixed, annexed or attached to, located
on or forming part of such Real  Property  (collectively,  the  "Improvements").
Except as disclosed on Section 3.3.3 of the Disclosure Schedule,  no repairs are
required to be made, or based upon current condition of the  Improvements,  will
be  required  to be made to the  Improvements  in order to permit the Company to
conduct  its  business  as  currently  conducted  or in order to comply with any
Contract.

3.4  Licenses.  The  Company  has the  Licenses  listed  on  Section  3.4 of the
Disclosure Schedule, which constitute all of the Licenses and other governmental
authorizations  required to conduct the Business as  currently  conducted by the
Company or as the  Business is  contemplated  to be  conducted as of the date of
this Agreement.

3.5      Contracts.

(a) All contracts,  leases,  instruments and employment and other  agreements to
which  the  Company  is a party  (other  than all  purchase  orders  made in the
ordinary course of business and any agreement for which the Company's  aggregate
obligation  after the Closing does not exceed  $25,000 or which is cancelable by
the Company: (x) on sixty (60) days or less notice; (y) without Liability to the
Company  or the  Buyer)  (the  "Contracts")  are  listed on  Section  3.5 of the
Disclosure  Schedule.  With respect to each Lease, Section 3.5 of the Disclosure
Schedule  sets forth the location of the real property  leased  pursuant to such
Lease,  the monthly rental payments due under such Lease, the expiration date of
the Lease, and a brief description of the activities conducted by the Company on
such real property.  True and complete  copies of each Contract have  heretofore
been provided to Buyer.

(b) Neither the Company nor, to the  Knowledge  of Seller and Parent,  any other
party  thereto,  is in default  under any Contract and no event,  occurrence  or
condition  exists,  which,  with the giving of notice or the lapse of time,  may
reasonably be expected to result in a default thereunder.

(c) The  Company  has  not  granted  any  release  or  waiver  under  any of the
Contracts.

(d) The  Contracts  are each in full force and effect and valid and  binding and
enforceable against the Company and, to the Knowledge of Seller and Parent, each
other party thereto,  in accordance with their respective terms,  except as such
enforceability  may be limited by  bankruptcy,  insolvency,  moratorium or other
laws relating to or affecting creditors' rights generally.

(e) Subject to obtaining the consents set forth on Section 3.2 of the Disclosure
Schedule,  the transfer of the Shares  contemplated  by this  Agreement will not
result  in any  default,  penalty  or  modification  to  any  of the  Contracts,
including, without limitation, the leases to which the Company is a party.

3.6      Intellectual Property Rights.

(a) Section 3.6(a) of the Disclosure  Schedule sets forth a complete and correct
list of each patent,  patent application and invention,  trademark,  trade name,
trademark  or trade name  registration  or  application,  copyright or copyright
registration or application for copyright registration,  servicemark, brand mark
or brand name or any pending  application related thereto, or any material trade
secret,  proprietary know-how,  programs or processes or any similar rights, and
each license or licensing  agreement for any of the  foregoing  used or owned by
the Company,  or which will be used or owned by the Company  after giving effect
to the transfer  pursuant to the Intellectual  Property Transfer  Agreement,  or
relating to the Company or the Business (collectively the "Intellectual Property
Rights").

(b) There is no pending nor, to the  Knowledge of Seller and Parent,  threatened
claim against the Company or, in the case of Intellectual  Property Rights to be
transferred  to the  Company  pursuant  to the  Intellectual  Property  Transfer
Agreement, against MHE Technologies,  in either case that may involve a claim of
misappropriation,  infringement,  or other  violation of any patent,  trademark,
copyright,  trade secret or other intellectual  property right of any Person, or
that may challenge or question the validity of any of the Intellectual  Property
Rights,  nor is the  Company  or MHE  Technologies  aware of any facts  that may
reasonably be expected to give rise to any such claim. No Intellectual  Property
Right is subject to any  outstanding  order,  judgment,  decree,  stipulation or
agreement  that,  after  giving  effect to the  Intellectual  Property  Transfer
Agreement,  would  restrict  the use  thereof by the  Company  or the  licensing
thereof by the Company to any Person.  MHE  Technologies has the right to assign
the  Intellectual  Property  Rights  to  the  Company  as  contemplated  by  the
Intellectual  Property  Transfer  Agreement,  including the right to sue for and
recover from past and future  violations in  connection  with or related to such
Intellectual  Property  Rights.  To the  Knowledge  of Seller and Parent,  after
giving effect to the transfer  pursuant to the  Intellectual  Property  Transfer
Agreement,  the current use of the  Intellectual  Property Rights by the Company
does not conflict  with,  infringe upon or violate any patent,  patent  license,
patent application,  trademark,  tradename, trademark or tradename registration,
copyright, copyright registration, service mark, brand mark or brand name or any
pending application relating thereto, or any trade secret, know-how, programs or
processes, or any similar rights, of any Person.

(c) After giving effect to the transfer  pursuant to the  Intellectual  Property
Transfer Agreement, the Company owns or has the right to use without payment the
entire right, title and interest,  free and clear of all Encumbrances other than
Permitted  Encumbrances,  in, to and under,  all  Intellectual  Property  Rights
listed  on  Section  3.6(a) of the  Disclosure  Schedule.  No other  inventions,
processes,  computer programs,  know-how, formulae, trade secrets, patents, chip
designs, mask works, trademarks, trade names, brand names, copyrights,  licenses
or  applications  for any of the  foregoing  are  necessary  for the  unimpaired
continued  operation  of the  Business  in the  manner  that  the  Business  has
heretofore  been conducted or is proposed to be conducted as of the date of this
Agreement.  Section 3.6(c) of the Disclosure  Schedule lists all licenses of any
Intellectual  Property  Rights to or by the Company,  after giving effect to the
transfer  pursuant  to  the  Intellectual   Property  Transfer  Agreement.   All
agreements  relating to the  Intellectual  Property Rights are in full force and
effect after giving effect to the transfer pursuant to the Intellectual Property
Transfer Agreement.

3.7      Employees; Plans.

(a) Attached  hereto as Section 3.7(a) of the  Disclosure  Schedule is a list of
all  salaried  employees  of the Company with an annual base salary in excess of
$70,000,  indicating  the  positions  that such  employees  currently  hold (the
"Management  Employees",  and together with all other  employees of the Company,
the "Business Employees").  Section 3.7(a) of the Disclosure Schedule also lists
each employment  agreement,  consulting  agreement,  severance pay, continuation
pay,  termination pay and similar agreement between the Company and any Business
Employee.  Except as set forth on Section 3.7(a) of the Disclosure Schedule,  no
Business Employee is on disability or extended leave.

(b) The  Company  does  not  sponsor,  maintain,  contribute  to,  or  have  any
obligation to contribute to, any Employee  Plan,  except as set forth in Section
3.7(b) of the  Disclosure  Schedule.  Seller has made true and correct copies of
all governing  instruments  and related  agreements  pertaining to each Employee
Plan  available to Buyer,  including,  in the case of any Employee  Plan not set
forth in writing,  a written  description  thereof.  Each Employee Plan has been
maintained in accordance  with all  Applicable  Laws and with the  provisions of
such Employee Plan in all material respects.

(c) Schedule 3.7(c) of the Disclosure  Schedule lists each Employee Benefit Plan
and Employee Pension Benefit Plan copies of which have been provided to Buyer or
its affiliates, that the Company contributes to or maintains. Each such Employee
Benefit Plan,  each such Employee  Pension  Benefit Plan and each related trust,
insurance  contract,  or  fund  complies  in  form  and in  operation  with  the
applicable  requirements of ERISA,  the Code, and any other Applicable Law. With
respect to each Benefit Plan which is an Employee  Pension Benefit Plan, (i) all
contributions  which are due have been paid to each such Benefit  Plan,  (ii) no
event has occurred and no condition has existed that has adversely affected,  or
is likely to adversely  affect the  application  and/or  receipt of a favourable
determination  by the IRS in respect of such Benefit  Plan,  and (iii) as of the
last day of the most recent  prior plan year,  the market  value of assets under
each such Benefit Plan (other than any  Multiemployer  Plan) equaled or exceeded
the present value of Liabilities  thereunder  (determined in accordance with the
then current funding assumptions).

(d) With respect to each Benefit  Plan that the Company  maintains,  (x) no such
Benefit  Plan  which  is an  Employee  Pension  Benefit  Plan  (other  than  any
Multiemployer  Plan) has been  completely  or partially  terminated  or been the
subject of a Reportable  Event (as defined in ERISA),  as to which notices would
be required to be filed with the Pension Benefit Guaranty Corporation  ("PBGC"),
and no  proceeding  by the  PBGC to  terminate  any such  Benefit  Plan has been
instituted,  (y) no action,  suit,  proceeding,  hearing or  investigation  with
respect  to the  qualification  or  registration  of  such  Benefit  Plan or the
administration  or the  investment of the assets of any such Benefit Plan (other
than routine  claim for  benefits) is pending or, to the Knowledge of Seller and
Parent,  threatened, and (z) neither the Company nor any of its ERISA Affiliates
has  incurred any  liability  to the PBGC (other than PBGC premium  payments) or
otherwise under Title IV of ERISA,  including but not limited to, any withdrawal
liability to any  Multiemployer  Plan with respect to any such Benefit Plan that
is subject to ERISA or the Code.

(e) No  transaction  prohibited  by Section 406 of ERISA or Section  4975 of the
Code has  occurred  with respect to any Benefit Plan that is subject to ERISA or
the Code  which  transaction  has or can  reasonably  be  expected  to cause the
Company or any of its ERISA  Affiliates to incur any Liability under ERISA,  the
Code or otherwise, excluding transactions effected pursuant to and in compliance
with a statutory  or  administrative  exemption.  Except as disclosed on Section
3.7(c) of the  Disclosure  Schedule,  neither  the  Company nor any of its ERISA
Affiliates has any current or projected  liability in respect of post-employment
or  post-retirement  health or medical or life  insurance  benefits for retired,
former or current employees of the Company,  except as required under Applicable
Law. Other than as described in Section 3.7(c) of the  Disclosure  Schedule,  no
employee or former  employee of the Company or any of its ERISA  Affiliates will
become  entitled  to any bonus,  retirement,  severance  or  similar  benefit or
enhanced benefit (including  acceleration of vesting or exercise of an incentive
award) as a result of the transactions  contemplated hereby. With respect to any
Benefit  Plan,  to the  Knowledge of Seller and Parent no event or  circumstance
exists which  would,  either  singularly  or in the  aggregate,  have a Material
Adverse Effect.

(f) The Company has not made, or acquiesced in the making of, any  amendments to
any of the  Employee  Plans  which  are  not  disclosed  in the  documents  made
available  to  Buyer.  All  obligations  of the  Company  (including  fiduciary,
funding,  investment and administration obligations) required to be performed in
connection with the Employee Plans or the funding agreements  therefor have been
performed in a timely fashion in accordance with the terms of the Employee Plans
and Applicable  Laws.  Where  required,  the Employee Plans are duly  registered
under the Income Tax Act (Canada) and applicable pension standards  legislation.
There are no taxes owing in respect of the  Employee  Plans.  There have been no
improper  withdrawals,  or  applications  of, the assets  held in respect of the
Employee  Plans by the Company.  No promises of benefit  improvements  under the
Employee Plans have been made except as may be required under  Applicable  Laws,
and to the Knowledge of the Seller and Parent, there are no outstanding disputes
concerning the assets held in respect of any of the Employee Plans.

(g) All  contributions or premiums required to be paid by the Company in respect
of the Employee Plans have been paid in a timely fashion in accordance  with the
terms of the Employee Plans and the Applicable Laws. All employee  contributions
to the Employee Plans required to be made by way of authorized payroll deduction
have been  properly  withheld  by the  Company  and  fully  paid out in a timely
fashion in accordance  with the terms of the Employee  Plans and the  Applicable
Laws. There are no taxes owing in respect of the Employee Plans.

(h) All reports and other disclosures relating to the Employee Plans required by
this  Agreement,  or by any  Applicable  Laws, to be filed or  distributed on or
before the execution of this Agreement have been filed or distributed.  All such
reports and disclosures required by this Agreement, or by any applicable laws or
regulations,  to be filed or  distributed on or before the Closing Date shall be
so filed or distributed.

(i) The  Employee  Plans  are fully  funded  both on an  ongoing  basis and on a
solvency basis using  actuarial  methods and  assumptions  contained in the most
recent  actuarial  report  required to be prepared and filed with the applicable
pension regulatory authority.  All employee data respecting any Employee Plan is
correct.  None  of the  Employee  Plans  is the  subject  of any  investigation,
proceeding, action or claim and to the Knowledge of the Seller and Parent, there
exists  no state of facts  which  after  notice  or lapse of time or both  could
reasonably be expected (i) to give rise to any such  investigation,  proceeding,
action or claim, or (ii) to affect the registration of the Employee Plans.

(j) The Company is not a party to or bound by any  collective  agreement  and is
not  currently  conducting  negotiations  with  any  labour  union  or  employee
association.  To the  Knowledge of Seller and Parent,  prior to the date of this
Agreement,  there has been no attempt to  organize,  certify  or  establish  any
labour  union or  employee  association  in  relation  to any  employees  of the
Company.  There are no  existing  or, to the  Knowledge  of Seller  and  Parent,
threatened labour strikes or disputes, grievances, controversies or other labour
troubles affecting the Company or the Business.

(k) The Company has complied with all  Applicable  Laws relating to  employment,
including those relating to wages, hours,  collective  bargaining,  occupational
health and safety,  workers'  hazardous  materials,  employment  standards,  pay
equity and workers'  compensation.  There are no outstanding  charges or, to the
Knowledge of the Seller and Parent  complaints  against the Company  relating to
unfair labour practices or discrimination  or under any legislation  relating to
employees.  The Company has paid in full all  amounts  owing under the  Workers'
Compensation Act (Ontario) or comparable  provincial  legislation.  There are no
charges or orders outstanding  against the Company under the Occupational Health
and Safety Act (Ontario).

3.8      Financial Statements.

(a) True and complete copies of the Financial  Statements  listed on Section 3.8
of the  Disclosure  Schedule,  including the April Balance Sheet and monthly and
year to date unaudited financial  statements through the month ended immediately
prior to the  Closing  Date (to the extent such  statements  for the month ended
immediately prior to the Closing Date are reasonably available), have heretofore
been made available to Buyer.

(b) Except as disclosed on Section 3.8 of the Disclosure  Schedule,  each of the
Financial Statements listed on Section 3.8 of the Disclosure Schedule:

(i) has  been  prepared  based  on the  books  and  records  of the  Company  in
accordance with GAAP and the Company's normal accounting  practices,  consistent
with past  practice  and with each  other,  and  presents  fairly the  financial
position and results of operations of the Company, as of the dates set forth and
for the periods indicated therein, in conformity with GAAP consistently  applied
throughout  the  periods  covered  thereby  (subject,  in the  case  of  interim
statements,  to the lack of footnotes, and customary year-end audit adjustments,
provided  any  such  adjustments  are  not,  individually  or in the  aggregate,
material);

(ii) contains and reflects all necessary adjustments,  accruals,  provisions and
allowances for a fair presentation of the Company's  financial condition and the
results of its operations for the periods covered by such financial statement;

(iii) to the extent  applicable,  contains and reflects adequate  provisions for
all  reasonably  anticipated  liabilities  for all Taxes  (other  than  Excluded
Liabilities) with respect to the periods then ended and all prior periods;

(iv) with  respect to  contracts  and  commitments  for the sale of goods or the
provision of services by the Company,  contains and reflects  adequate  reserves
for all  reasonably  anticipated  losses  and  costs and  expenses  in excess of
expected receipts; and

(v) has been certified by a responsible financial officer of the Company.

(c) Except as set forth in Section 3.8(c) of the Disclosure Schedule,  there are
no Liabilities of the Company other than: (i) Liabilities disclosed on the April
Balance Sheet, (ii) Liabilities specifically disclosed and identified as such on
the Disclosure  Schedule,  and (iii) Liabilities  incurred since the date of the
April Balance Sheet in the ordinary course of business.

3.9  Absence of Certain  Changes.  Except as set forth on in Section  3.9 of the
Disclosure Schedule, since the date of the April Balance Sheet, the Business has
been  conducted in the ordinary  course and  consistent  with past  practice and
there has not been:

(a) any  event,  occurrence,  state of  circumstances  or facts or change in the
Company or in the Business  that has had or that may be  reasonably  expected to
have, either alone or together, a Material Adverse Effect;

(b) (i) any change in any  Liabilities  of the  Company  reflected  in the April
Balance  Sheet or that  should be  reflected  as a  Liability  on the  Company's
balance sheet that has had, or will have, a Material Adverse Effect; or (ii) any
incurrence,  assumption or guarantee of any  indebtedness  for borrowed money by
the Company in connection with the Business or otherwise;

(c) any (i) payments by the Company in  satisfaction  of any  Liabilities of the
Company related to the Business,  other than in the ordinary course of business,
or the guarantee by the Company of any indebtedness of any other Person; or (ii)
creation,  assumption  or  sufferance  of the existence of (whether by action or
omission) any  Encumbrance  on any assets  reflected on the April Balance Sheet,
other than Permitted Encumbrances;

(d) any change by the Company in its accounting principles, methods or practices
or in the manner it keeps its books and  records or any change by the Company of
its current  practices with regards to sales,  receivables,  payables or accrued
expenses;

(e) any (i) single  capital  expenditure  or  commitment in excess of $25,000 or
(ii) group of related capital expenditures or commitments in an aggregate amount
in excess of $50,000;

(f) any loan to or guarantee or  assumption  of any loan or obligation on behalf
of any director, officer,  stockholder or employee of the Company, except travel
advances occurring in the ordinary course of business; or

(g) any payment,  discharge or  satisfaction  of any Liabilities of the Company,
other than  payments,  discharges  or  satisfactions  in the ordinary  course of
business.

3.10     Litigation; Compliance.

(a) Except as set forth on Section 3.10(a) of the Disclosure Schedule, there are
no  lawsuits,   civil,  criminal  or  administrative  actions,  suits,  demands,
hearings, arbitrations, governmental investigations or claims pending or, to the
Knowledge of Seller and Parent,  threatened,  by or against the Company, nor, to
the Knowledge of Seller and Parent,  is there any reasonable  basis for any such
claim or proceeding.

(b)  Except as set forth on  Section  3.10(b) of the  Disclosure  Schedule,  the
Company has not violated or infringed,  and is not in violation or  infringement
of, any material Applicable Law. The Company has historically been and currently
is in compliance  with the  requirements of all Applicable  Laws,  including all
Applicable  Laws  relating to the  importing or exporting of products from their
country of origin.

(c) No outstanding unsatisfied writ, rule, injunction, judgment, award, order or
decree has been rendered against or affecting the Company or the Business.

3.11     Taxes.

(a)  Except as set forth in Section  3.11 of the  Disclosure  Schedule,  all Tax
Returns  required to be filed by or on behalf of the Company have been  properly
and accurately  prepared and timely filed. All Taxes shown to be due and payable
on such Tax Returns, and all other Taxes of or with respect to the Company which
are due and payable, have been timely paid.

(b) Except as set forth in Section 3.11 of the Disclosure Schedule,  the Company
has withheld  from each payment made to any of its present or former  employees,
officers and directors,  direct or indirect  shareholders  and all other persons
all amounts  required by law to be  withheld,  and has  remitted  such  withheld
amounts within the prescribed periods to the appropriate  governmental body. The
Company has remitted all Canada Pension Plan  contributions,  provincial pension
plan contributions,  employment  insurance  premiums,  employer health taxes and
other Taxes payable by it in respect of its employees to the proper governmental
body within the time required under the applicable legislation.

(c) Except as set forth in Section 3.11 of the Disclosure Schedule,  the Company
is not a party to or bound by a Tax sharing,  Tax  indemnity,  Tax allocation or
similar agreement and is not bound by any closing agreement, offer in compromise
or similar agreement with respect to Taxes.

(d) Except as set forth in Section 3.11 of the Disclosure Schedule, there are no
present or pending  disputes,  audits or other adjustments with respect to Taxes
relating to the Company and, to the Knowledge of Seller and Parent,  there is no
basis upon which a Tax  authority  could impose a liability  for Taxes for which
the  Company  could be held  liable in excess of those  shown on the Tax Returns
previously filed and Taxes incurred in the ordinary course of business since the
date of such Tax  Returns  and  included  as a  liability  on the Final  Closing
Balance Sheet to be prepared by Seller  pursuant to Section  2.3.2.  None of the
transactions  contemplated by this Agreement are anticipated to give rise to any
liability for Taxes of the Company.  Neither the Company nor its  affiliates has
received  notice that the Company is or may be subject to Tax in a  jurisdiction
in which it has not filed or does not currently file Tax Returns.  No action has
been  taken  inconsistent  with past  practice  that  would  have the  effect of
deferring any Tax liability  with respect to the Company from any taxable period
(or portion  thereof)  ending on or before or including  the Closing Date to any
subsequent taxable period. The Company does not have and has not had a permanent
establishment in any country other than Canada and the United States.  Except as
set forth in Section  3.11 of the  Disclosure  Schedule,  the Company has at all
times complied with the contemporaneous documentation requirements under section
247(4) of the Income Tax Act (Canada).

(e) Except as set forth in Section 3.11 of the Disclosure Schedule, at all times
during its existence,  for United States  federal and  applicable  United States
state and local income tax  purposes,  the Company has been  "disregarded  as an
entity  separate from its owner"  within the meaning of United  States  Treasury
Regulation  ss.  301.7701-3(b)(2)(i)(C),  and has not  made  an  election  to be
treated otherwise for any income tax purposes.

3.12  Environmental  Matters.  Except as disclosed in the environmental  surveys
(the "Environmental  Surveys") a description of which is set out in Section 3.12
of the Disclosure Schedule:  (a) the Company is, and at all times since February
16, 1995 has been, in compliance  with all  applicable  Environmental  Laws; (b)
there are no asbestos-containing  materials,  polychlorinated  biphenyls,  DOPs,
urea  formaldehyde  foam  insulation,  incinerators,  underground or aboveground
storage  tanks,  septic  systems or tanks or cesspools  located on real property
owned or leased by the Company;  (c) the properties currently owned or leased by
the Company  (including  soils,  groundwater,  surface water,  building or other
structures)  are  not  contaminated  with  any  Hazardous  Substances;  (d)  the
properties  formerly owned or leased by the Company were not  contaminated  with
Hazardous  Substances during the period of the Company's ownership or lease; (e)
the Company is not subject to liability for any Hazardous  Substance disposal or
contamination  on any  third  party  property;  (f) the  Company  has  not  been
associated with any release or threat of release of any Hazardous Substance; (g)
the Company has not received any notice,  demand,  letter, claim, or request for
information alleging that the Company may be in violation of or liable under any
Environmental  Law;  (h) the  Company  is not  subject to any  orders,  decrees,
injunctions or other  arrangements  with any  Governmental  Authority and is not
subject to any  indemnity or other  agreement  with any third party  relating to
liability under any  Environmental  Law; (i) the Company has not been identified
as a  potentially  responsible  party under any  Environmental  Laws for cleanup
liability  with respect to the  emission,  discharge or release of any Hazardous
Substance  and  (j)  to  the  Knowledge  of  Seller  and  Parent,  there  are no
circumstances  or  conditions  involving  the Company that could  reasonably  be
expected to result in any claims or  Liabilities  pursuant to any  Environmental
Law.  This Section 3.12 sets forth the sole and  exclusive  representations  and
warranties of Seller with respect to environmental, health and safety matters.

3.13 Insurance. Section 3.13 of the Disclosure Schedule contains a complete list
of all  policies of insurance  currently  in force  covering the Business or the
Company.

3.14 Brokers. No investment bank, broker, finder, agent or other advisor will be
entitled to any fee, commission or reimbursement of expenses from the Company or
Buyer  or any  of  Buyer's  Affiliates  upon  consummation  of or  otherwise  in
connection with the transactions contemplated by this Agreement.

3.15 Product  Warranty  and Product  Liability.  Section 3.15 of the  Disclosure
Schedule contains a true,  correct and complete copy of the standard warranty or
warranties  provided in  connection  with the sale of the  Products  (as defined
below).  Except as set forth or  described  on  Section  3.15 of the  Disclosure
Schedule,  there is no outstanding  warranty for any Product that differs in any
material respect from such standard  warranties and there is no Company practice
or custom not set forth in writing that expands such standard warranties. Except
as set forth on Section 3.15 of the Disclosure Schedule,  none of Seller, Parent
or the Company has received notice,  since January 1, 1998, from any customer to
the effect that such customer has experienced  product quality  problems of such
significance that it has reason to believe a concession of over $50,000 would be
required in order to resolve such customer's concerns.  Each of the Products is,
and at all times up to and including  the sale of such Product has been,  (i) in
compliance with all Applicable Laws, and (ii) in conformity with all promises or
affirmations of fact made on the packaging or  instructions  for such Product or
in  connection  with  its  sale.  Except  as set  forth on  Section  3.15 of the
Disclosure  Schedule,  on the date of this Agreement,  to the extent required by
Applicable Law or by a customer,  all of the Company's  Products have been rated
and approved by Underwriters  Laboratories or the analogous foreign body, as the
case may be. The Company is in  compliance  in all  material  respects  with all
requirements relating to such ratings and approvals,  and none of Seller, Parent
or the Company has received  any notice that such  ratings or  approvals  may be
revoked or  withdrawn.  None of the Company's  products,  either as currently or
historically  manufactured  or  sold,  contains  asbestos.  Section  3.15 of the
Disclosure  Schedule sets forth a description of all warranty  claims  processed
since January 1, 1998 and all customer concessions,  in each case that have been
recorded in amounts exceeding, in any one such claim or concession, $50,000. The
defined term  "Products"  as used in this  Agreement  means any and all products
designed,  manufactured,  distributed or sold by the Company or that are subject
to ongoing warranty by the Company. The word products as otherwise used includes
all products historically manufactured or sold by the Company.

3.16  Affiliate  Transactions.  Except  as  described  on  Section  3.16  of the
Disclosure Schedule, other than sales of Products by the Company in the ordinary
course of  business  and  consistent  with  past  practice,  there  have been no
transactions  between the Company,  on the one hand, and Seller or Parent or any
of their or the  Company's  Affiliates,  on the  other  (collectively,  "Related
Parties"), since January 1, 1997. As of the Closing Date, other than obligations
to the Company  arising  from sales of  Products by the Company in the  ordinary
course of business, there are no obligations between the Company and any Related
Party.

3.17 Customers. Section 3.17 of the Disclosure Schedule sets forth a list of the
ten (10)  largest  customers  of, and the ten (10) largest  suppliers  providing
goods and services to, the Business,  for the 12-month  period ended October 31,
1999, together with the approximate dollar amounts of goods or services provided
to or by such Persons  during each such period and a summary  description of the
goods or services provided.  Neither the Company nor Seller has received written
notice from any such vendor or customer of such vendor's or customer's intent to
reduce or discontinue its business with the Company.

3.18 Backlog. As of December 7, 1999, the Company's sales order backlog was U.S.
$822,887.55,  as set forth on Section 3.18 of the Disclosure  Schedule.  Neither
the Company nor Seller has received  written notice from any customer  listed on
Section 3.18 of the Disclosure  Schedule of such customer's  intent to terminate
any sales order listed on Section 3.18 of the Disclosure Schedule.

3.19 Year 2000.  All of the  Company's  Products  and, to the extent used in the
manufacture  of such Products,  all of its  Information  Technology  (including,
without  limitation,  all  non-customized  off-the-shelf  software  used  in the
manufacture of such Products) is Year 2000 Compliant. To the Knowledge of Seller
and Parent,  all of the Company's  Information  Technology  (including,  without
limitation, non-customized off-the-shelf software) that is used in the operation
of the Business but is not Information Technology used in the manufacture of the
Company's Products (which is addressed in the preceding sentence),  is Year 2000
Compliant.

3.20 Satisfaction of Intercompany Accounts. Parent has paid or caused to be paid
all  Intercompany  Accounts  due and owing by Parent  or its  Affiliates  to the
Company,  and the Company has paid all  Intercompany  Accounts  due and owing to
Parent and its Affiliates. All applicable withholding Taxes with respect to such
payments have been withheld and remitted to the proper taxing  authorities  on a
timely basis.

ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES
                                   OF SELLERS

4.  Representations  and  Warranties  of Seller and  Parent.  Each of Seller and
Parent represents and warrants to Buyer that, as of the date hereof:

4.1 Organization  and Standing.  Nova Scotia is an unlimited  liability  company
duly organized and validly  existing under the laws of Nova Scotia and Parent is
a corporation duly organized and validly existing under the laws of the State of
Delaware;  each of Seller and Parent has full corporate  power and authority and
all governmental  licenses,  authorizations,  consents and approvals required to
own,  lease and use its properties and to conduct its business and operations as
now being conducted and to perform the  obligations  required to be performed by
it hereunder and to consummate the transactions contemplated hereby.

4.2  Authorization  and  Binding  Obligations.   The  execution,   delivery  and
performance by Seller and Parent of this Agreement and the other documents to be
executed and delivered by each of them in connection herewith have been duly and
validly  authorized  and,  upon  execution  thereof,  will be duly  executed and
delivered  by Seller  or  Parent,  as the case may be,  and  constitute  or will
constitute  (assuming,  in each case,  the due  execution  by the other  parties
thereto)  the legal,  valid and binding  agreement of each of Seller and Parent,
enforceable in accordance with its terms,  except as such  enforceability may be
limited by applicable  bankruptcy,  insolvency,  fraudulent  conveyance or other
similar  laws  relating to or  affecting  creditors'  rights  generally  and the
exercise of judicial discretion in accordance with general equitable principles.

4.3      No Contravention; Consents.

4.3.1  No  Contravention.  The  execution,  delivery  and  performance  of  this
Agreement and the other documents to be executed in connection  herewith by each
of Seller  and Parent do not and will not,  after the  giving of notice,  or the
lapse of time:  (i) conflict with or violate any provisions of the Memorandum or
Articles of  Association,  or the  Certificate of  Incorporation  or Bylaws,  as
appropriate,  or other formative  documents of Seller or Parent, as the case may
be;  (ii)  subject  to  obtaining  the  consents  listed in  Section  3.2 of the
Disclosure  Schedule,  result in the breach of any of the terms of, constitute a
default under,  conflict with or result in the  termination or alteration of any
contract or any license or permit to which either Seller or Parent is a party or
by which either Seller or Parent or any of its properties is bound;  or (iii) to
the Knowledge of Seller and Parent,  contravene or conflict with or constitute a
violation of any Applicable Law.

4.3.2 Consent.  Other than compliance  with the HSRA, the Investment  Canada Act
(Canada)  and the  Competition  Act  (Canada),  and except for the  consents and
actions listed on Section 3.2 of the Disclosure  Schedule,  no consent,  waiver,
authorization  or approval  from,  or filing of any notice or report  with,  any
Governmental  Authority  or other Person is  necessary  in  connection  with the
execution,  delivery or performance by Seller or Parent of this Agreement or any
of the documents or transactions contemplated hereby.

4.4 Tax Status.  Seller is not a non-resident  of Canada for purposes of Section
116 of the Income Tax Act (Canada).  No Tax will be required to be withheld from
any payments to be made to Seller pursuant to this Agreement.

4.5 Brokers.  Any fee, commission or reimbursement of expenses of any investment
bank, broker, finder, agent or other advisor,  including but not limited to Bank
of New York,  in respect of Seller,  Parent or the Company,  shall be payable by
Seller or Parent,  as the case may be,  upon  consummation  of or  otherwise  in
connection with the transactions contemplated by this Agreement.

ARTICLE 5
                     REPRESENTATIONS AND WARRANTIES OF BUYER

5. Representations and Warranties of Buyer. Buyer hereby represents and warrants
to Seller and Parent that:

5.1  Organization and Standing.  Buyer is a corporation duly organized,  validly
existing and in good standing under the laws of the State of Delaware. Buyer has
full   corporate   power   and   authority   and  all   governmental   licenses,
authorizations,  consents  and  approvals  required  to own,  lease  and use its
properties and to conduct its business and operations as now being conducted and
to perform the  obligations  required to be  performed  by it  hereunder  and to
consummate  the  transactions  contemplated  hereby.  Buyer,  on or prior to the
Closing Date, will be qualified to do business in all jurisdictions in which the
nature of the business conducted,  or immediately thereafter to be conducted, by
it, makes such  qualification  necessary or where  failure to do so would have a
material adverse effect on its business, financial condition or operations.

5.2  Authorization  and  Binding  Obligations.   The  execution,   delivery  and
performance  by Buyer of this  Agreement and the other  documents to be executed
and  delivered  by Buyer in  connection  herewith  have  been  duly and  validly
authorized and, upon execution  thereof,  will be duly executed and delivered by
Buyer,  and  constitute  or will  constitute  (assuming,  in each case,  the due
execution by each of the other parties  thereto),  the legal,  valid and binding
agreement of Buyer  enforceable  in  accordance  with its terms,  except as such
enforceability may be limited by applicable bankruptcy,  insolvency,  fraudulent
conveyance  or  other  similar  laws  affecting  or  relating  to  or  affecting
creditors'  rights  generally  and  the  exercise  of  judicial   discretion  in
accordance with general equitable principles.

5.3      No Contravention; Consents.

5.3.1  No  Contravention.  The  execution,  delivery  and  performance  of  this
Agreement and other documents to be executed in connection  herewith by Buyer do
not and will not,  after the giving of notice or the lapse of time: (a) conflict
with or violate any provisions of the  Certificate of  Incorporation,  bylaws or
other  formative  documents of Buyer;  (b) subject to obtaining the consents and
taking the actions  referenced in Section 5.3.2,  result in the breach of any of
the  terms  of,  constitute  a  default  under,  conflict  with or result in the
termination  or alteration of, any contract or license to which Buyer is a party
or by which Buyer or any of its properties is bound;  or (c) to the Knowledge of
Buyer, violate any Applicable Law.

5.3.2 Consents.  Other than compliance with the HSRA, the Investment  Canada Act
(Canada) and the Competition Act (Canada), no consent, waiver,  authorization or
approval  from,  or  filing  of any  notice or  report  with,  any  Governmental
Authority  or other  Person  is  necessary  in  connection  with the  execution,
delivery or  performance  by Buyer of this  Agreement or any of the documents or
transactions contemplated hereby.

5.4 Brokers.  Any fee, commission or reimbursement of expenses of any investment
bank,  broker,  finder,  agent or other  advisor in  respect  of Buyer  shall be
payable  by Buyer upon  consummation  of or  otherwise  in  connection  with the
transactions contemplated by this Agreement.

5.5      Litigation; Compliance.

(a) There are no lawsuits,  civil,  criminal or administrative  actions,  suits,
demands or claims pending,  or to the Knowledge of Buyer,  threatened against or
affecting Buyer or any of its Affiliates before or by any Governmental Authority
that would affect Buyer's  ability to consummate the  transactions  contemplated
hereby;

(b) Neither Buyer nor any of its Affiliates is in default under, or in violation
of, any  Applicable  Law that would affect  Buyer's  ability to  consummate  the
transactions contemplated hereby; and

(c) no writ, rule, injunction,  award, order or decree has been rendered against
or affecting  Buyer or any of its  Affiliates or any of its assets or properties
that would affect Buyer's  ability to consummate the  transactions  contemplated
hereby.

5.6 Financial  Capacity.  Buyer has all funds on hand to satisfy and perform all
of Buyer's obligations under this Agreement and the documents to be executed and
exchanged at Closing.

5.7  Sophistication;  Due Diligence.  Buyer hereby certifies and represents that
(i)  it is  experienced,  sophisticated  and  knowledgeable  in  the  making  of
investments,  (ii) has had access to the Company and the Business,  and (iii) is
not  relying  on any  representation  relating  to the  Company  other  than the
representations and warranties contained in this Agreement or in any certificate
or legal opinion delivered pursuant hereto.

5.8 Purchase for Investment.  Buyer is acquiring the Shares for its own account,
for  investment  purposes  only,  and  not  with  a view  to,  or  for,  resale,
distribution or granting a participation therein, in whole or in part.

ARTICLE 6
                            COVENANTS OF THE PARTIES

6.       Covenants of the Parties.

6.1      Tax Matters.

(a) Tax  Treatment.  Buyer,  Seller and Parent agree that they shall,  and shall
cause  their  Affiliates  to,  treat  the sale of the  Shares  pursuant  to this
Agreement as a sale of the assets of the Company for all United States  federal,
state and local income tax purposes. The parties agree to file all United States
Tax Returns in a manner consistent with such treatment.

(b)      Preparation of Tax Returns.

(i) Seller and Parent  covenant  to prepare at their own  expense and deliver to
Buyer any and all Tax Returns  relating to a Tax  reporting  period ending on or
prior to the Closing Date ("Seller  Returns").  In addition to and not by way of
limitation on the  foregoing,  Seller  Returns  shall  include all  Pennsylvania
income, franchise and sales and use Tax Returns for all periods that ended prior
to the  Closing  Date and for which  such  Seller  Returns  have not been  filed
(including but not limited to all Pennsylvania sales and use Tax Returns for all
open  periods).  With  respect to any Seller  Returns that are not due as of the
Closing Date,  Seller and Parent shall deliver such Seller  Returns to Buyer not
later than the earlier of (A) fifteen  (15) days prior to the date on which such
return is required  to be filed and (B) one hundred and twenty  (120) days after
the Closing Date. With respect to any Seller Return that is due but has not been
filed as of the Closing Date, such Seller Returns shall be submitted to Buyer in
draft form within  ninety (90) days after the Closing Date  (provided  that such
time period shall be extended for so long as Seller is negotiating in good faith
with the relevant taxing authority and provides copies of all  communications to
or from such taxing authority to Buyer),  together with Seller's  calculation of
all applicable penalties, additions to Tax, interest and other amounts owed with
respect to such Seller  returns,  for  Buyer's  review and  approval  (not to be
unreasonably withheld).

(ii) Upon Buyer's review and approval of any Seller Returns and (if  applicable)
Seller's  calculations  of other  amounts  owing,  such Seller  Return  shall be
submitted to Buyer in final form,  accompanied by a cheque from Seller or Parent
made payable to the  applicable  taxing  jurisdiction  in an amount equal to all
Taxes and other  amounts  payable as  provided  in such  Seller  Return  and, if
applicable,  such agreed calculations of other amounts owing (the amount of such
cheque shall be based on an assumption that such Seller Return will be filed and
the related  Taxes paid ten (10) days from the date Buyer  receives  such Seller
Return and cheque). Provided such final Seller Return and cheque are in the form
and amounts  agreed to by Buyer,  Buyer  shall  cause such  Seller  Return to be
executed by the appropriate  corporate officer and shall file such Seller Return
and remit the payment received from Seller. Delivery of such final Seller Return
by Seller or Parent to Buyer shall constitute a  representation  and warranty by
Seller that such Seller Return is complete and accurate.

(iii) In the event  Seller  does not  deliver a Seller  Return  within  the time
prescribed  herein,  Buyer may,  but shall not be required to, cause such Seller
Return to be prepared and filed and cause to be paid the related Taxes and other
amounts  owing  with  respect  thereto,  upon  which  Seller  and  Parent  shall
immediately  reimburse  Buyer for all such Taxes and other  amounts,  as well as
costs,  charges  (including  reasonable  professional  fees),  and other amounts
incurred in connection with the operation of this Section 6.1(b).

(iv) Buyer's approval, execution,  preparation,  filing, payment or other action
with  respect  to  any  Seller  Return  shall  not in any  way  reduce  Seller's
obligations  under this  Agreement,  and in accordance  with Sections 6.1(d) and
7.2(c)  Seller  and  Parent  shall  indemnify,  defend  and hold  Buyer  and its
Affiliates  (including  the Company)  harmless from and against all Damages with
respect to any such  Seller  Return,  whether  prepared  by or at the request of
Seller, Parent, Buyer or their Affiliates.

(c) Cooperation. The parties hereto agree to furnish or cause to be furnished to
one another,  upon request,  as promptly as  practicable,  such  information and
assistance  relating to the Company and the Business as is reasonably  necessary
for the filing of all Tax Returns,  and making of any election related to Taxes,
the  preparation for any audit by any taxing  authority,  and the prosecution or
defense of any claim, suit or proceeding relating to any Tax Return. The parties
hereto  shall  cooperate  with each  other in the  conduct of any audit or other
proceeding,  including  the filing of any amended Tax Returns,  related to Taxes
involving  the  Business  and each shall  execute  and  deliver  such  powers of
attorney and other  documents  as are  necessary to carry out the intent of this
Section 6.1(c).  Seller and Parent also shall provide such  information to Buyer
and the Company as reasonably requested by Buyer and the Company for the purpose
of  enabling  the  Company  to  comply  with the  contemporaneous  documentation
requirements under section 247(4) of the Income Tax Act (Canada).

(d) Responsibility for Payment.  Subject to Liabilities for Taxes for the period
prior to Closing which have been  reflected in the  calculation  of the Purchase
Price, Seller shall pay as and when due, and Seller and Parent shall jointly and
severally  indemnify,  defend and hold the Buyer and its Affiliates  (including,
following  the Closing,  the  Company)  harmless  from and against,  any and all
Liabilities  for Taxes and related  Damages  (as  defined in Section  7.2) of or
relating to the Company or Seller,  and reasonable  professional  fees and other
reasonable  out-of-pocket  costs  associated  with such Taxes (i)  accrued  with
respect to all  taxation  periods  ending on or before the  Closing  Date,  (ii)
accrued with respect to or attributable to the Business during all periods up to
and including the Closing Date  (including  but not limited to Taxes relating to
any transactions  between the Company and any other Person occurring at or prior
to Closing)  whether or not such  periods  are  taxation  periods,  or (iii) are
incurred  and become  payable as a result of the  transfer  of the Shares to the
Buyer contemplated by this Agreement (including but not limited to any transfer,
documentary,  sales,  use or other  Taxes with  respect to the  transfer  of the
Shares to Buyer,  and any  recording or filing fees with respect  thereto).  The
amounts  described in the preceding  sentence are Excluded  Liabilities  and are
subject to  indemnification  under Sections 7.2(c) and 7.2(d). The obligation of
Seller and  Parent to  indemnify  Buyer and its  Affiliates  under this  Section
6.1(d) shall not be reduced by reason of any disclosure or representation  made,
or  information  provided,  to  Buyer  or its  Affiliates  and  representatives,
including but not limited to disclosure  information  provided in the Disclosure
Schedule.

(e)  Allocation of Purchase  Price.  For United State  federal,  state and local
income tax purposes,  the Purchase  Price shall be allocated in accordance  with
Schedule  2.  Each of the  parties  hereto  agrees to  report  the  transactions
contemplated  hereby  for  United  States  federal,  state and local  income Tax
purposes in accordance with such allocation of the Purchase Price.

6.2      Regulatory Filings.

6.2.1  Cooperation.  The parties shall  cooperate in the timely and  expeditious
preparation and prosecution of any filings with any federal,  state,  provincial
or local  authorities  that may be required in connection with the  transactions
contemplated by this Agreement.

6.2.2 Certain Filings.  Within thirty (30) days after the execution and delivery
of this Agreement,  Buyer and Seller shall file, or cause to be filed,  with the
appropriate  Canadian authorities any and all reports or notifications which are
required  to  be  filed  under  the  Investment  Canada  Act  (Canada)  and  the
Competition Act (Canada).  Seller,  Parent and Buyer shall furnish to each other
such  information  as may be  necessary  and such  assistance  as the  other may
reasonably  request in connection with the preparation and filing of all notices
and filings referenced in this Section 6.2.2

6.3 Employee  Matters.  The parties agree that,  until January 1, 2000, when the
Business  Employees in the United  States are  integrated  into Buyer's  benefit
plans and payroll  system,  Parent  shall  continue to provide  benefits and pay
payroll for such Business Employees.  Buyer agrees that, within thirty (30) days
of receiving a summary of the  expenses  incurred by Parent in  connection  with
providing  such benefits and payroll from the Effective  Time until December 31,
1999, it shall reimburse Parent fully for all such expenses.

6.4 Collateral Agreements.  Concurrently with the execution and delivery of this
Agreement,  (a) Buyer and Parent, or any of their respective Subsidiaries as the
same shall designate,  shall each execute and deliver the following  agreements:
(i) the Supply Agreement,  (ii) the Intellectual  Property  Transfer  Agreement,
(iii) the Noncompetition Agreement and (iv) the License Agreement and (b) Parent
shall deliver (i) an irrevocable letter of credit in the amount of $350,000 from
Canadian Imperial Bank of Commerce for the benefit of Buyer and the Company,  in
the form  attached as Exhibit B hereto  (the  "Letter of  Credit"),  and (ii) an
irrevocable  letter of credit in the amount of $650,000 from  Canadian  Imperial
Bank of  Commerce  for the benefit of Buyer,  in the form  attached as Exhibit C
hereto (the "Tax Letter of Credit").

6.5 Refunds in Respect of Audits/Taxes.  If Seller or its Affiliates  receives a
refund of Taxes  (including  interest)  in respect of the Company for the period
prior to the Closing,  such refund shall be paid immediately to the Company.  If
Buyer or the Company  receives such refund  (whether from Seller or  otherwise),
Buyer shall cause to be remitted to Seller an amount equal to the amount of such
refund,  net of any Taxes  incurred or to be incurred by Buyer or its Affiliates
(including the Company) by virtue of such refund.

ARTICLE 7
                                 INDEMNIFICATION

7.       Indemnification.
7.1 Survival.  The  representations  and  warranties of the parties set forth in
this  Agreement  (or in any document  delivered in  connection  herewith)  shall
survive  the  Closing  Date and,  except as set forth in the  remainder  of this
Section  7.1,  terminate  on the close of business on the date which is eighteen
(18) months after the Closing Date. The representations and warranties contained
in Section  3.11 shall  survive the  Closing  Date until the  expiration  of the
normal  reassessment  period under  Applicable Laws (as the same may be extended
from time to time after  consultation  with  Seller  and  Parent),  except  that
representations  and  warranties  of Seller in  connection  with any Tax  matter
relating  to the  Company  which are based on  misrepresentation  or fraud shall
continue  in  full  force  indefinitely.   The  representations  and  warranties
contained  in Section 3.12 shall  survive the Closing Date and  terminate on the
close  of  business  on  the  fifth   anniversary   of  the  Closing  Date.  The
representations  and  warranties  contained  in  Sections  3.1 and 4.1 shall not
expire and shall  remain in full force and effect  without any time  limitation.
The covenants and agreements of the parties  contained in this Agreement (and in
any document  delivered in connection  herewith)  shall remain  operative and in
full force and effect without any time  limitation,  except as any such covenant
or agreement  shall be limited in duration by the express  terms  thereof.  If a
notice is given  with  respect  to a bona  fide  claim in  accordance  with this
Article  VIII before  expiration  of such  periods,  then  (notwithstanding  the
subsequent  expiration  of  such  time  period)  the  representation,  warranty,
covenant or agreement applicable to such claim shall survive until, but only for
purposes of, the resolution of such claim.

7.2 Indemnification by Seller and Parent.  Subject to the limitations  contained
in Section 7.5 and Section 7.6,  Seller and Parent shall  jointly and  severally
indemnify,  defend  and  hold  harmless,  Buyer  and  its  officers,  directors,
employees,  agents and Affiliates (the "Buyer  Indemnitees"),  from and against,
and pay or reimburse  the Buyer  Indemnitees  for, any and all  obligations  and
other Liabilities,  monetary damages, fines, fees, penalties,  losses (excluding
diminution in value of any asset) and  reasonable  expenses  (including  without
limitation  reasonable  amounts paid in  settlement,  court costs and reasonable
fees and expenses of attorneys),  excluding consequential damages (except to the
extent included in monetary damages paid or payable by the Buyer  Indemnitees to
third  parties)  (collectively,  "Damages")  incurred by the Buyer  Indemnitees,
relating to or arising from:

     (a) any  breach  by  either  Seller  or  Parent  at any  time of any of its
covenants or agreements contained in this Agreement;

(b) any inaccuracy or  misrepresentation  in or breach of any  representation or
warranty of Seller or Parent contained in this Agreement;

(c)      any Excluded Liability; and

(d) without limiting the generality of Section 7.2(c) above, and for purposes of
delineating the scope of the Tax Letter of Credit,  Excluded Liabilities include
all  Liabilities  of the  Company  in  respect of Taxes for the period up to the
Closing,  including but not limited to the matters  described in Section 3.11 of
the Disclosure Schedule.

The  indemnification  obligations  of Seller and Parent  under this  Section 7.2
shall be  secured  by the Letter of Credit.  In  addition,  the  indemnification
obligations  of Seller and Parent under  Section  7.2(d) shall be secured by the
Tax Letter of Credit.  For greater certainty,  the parties  acknowledge that the
Letter  of  Credit  shall  not be  replaced  by Parent at the end of its term if
Parent is in compliance with those  financial  covenants set forth in the Credit
Agreement  between  Parent and others and Canadian  Imperial Bank of Commerce as
administrative agent and collateral agent for the banks identified therein dated
March 30, 1998 as amended August 28, 1998 and August 2, 1999 as in effect on the
date hereof (the "Credit  Agreement"),  which  covenants  are the subject of the
detailed  compliance  certificate  that is required to be  delivered by Parent's
Chief  Executive  Officer under the Credit  Agreement as of the date hereof (the
"Certificate").  Compliance  with  the  foregoing  financial  covenants  will be
evidenced by the  Certificate  actually  delivered to the agent under the Credit
Agreement,  if both the financial covenants and form of required Certificate are
unchanged  from the date hereof,  and otherwise will be evidenced by a pro forma
Certificate  prepared as though such covenants and required Certificate remained
in effect.  Parent will provide Buyer with copies of the  Certificate  regularly
prepared as and when it is provided to the agent under the Credit Agreement.

The  parties  acknowledge  that the Tax Letter of Credit is not  required  to be
replaced at the end of its term if the Tax Indemnification  Release Provision is
satisfied.  For the purposes of this Agreement, the "Tax Indemnification Release
Provision"  is satisfied if, as of the quarter  preceding the  expiration of the
term of the Tax  Letter  of  Credit,  Buyer  is  reasonably  satisfied  that all
liabilities  of the Company in respect of Taxes for the period  prior to Closing
including but not limited to those matters  described in Schedule 3.11(d) of the
Disclosure Schedule have been resolved and that all Taxes of the Company for the
period  prior to the  Closing  have been paid by or on  behalf  of  Parent.  The
parties further  acknowledge that Parent may replace the Letter of Credit or the
Tax  Letter  of Credit  with  substantially  similar  letters  of credit  from a
recognized  financial  institution upon the expiration of the Credit  Agreement,
which  agreement  is  scheduled  to expire on or about the last  business day of
March, 2003.

7.3 Buyer's Indemnification. Subject to the limitations contained in Section 7.5
and Section 7.7, Buyer shall indemnify, defend and hold harmless, each of Seller
and Parent and their respective Affiliates (the "Seller Indemnitees"),  from and
against,  and pay or reimburse the Seller  Indemnitees for, all Damages incurred
by the Seller Indemnitees, relating to or arising from:

     (a) Buyer's breach of any of its covenants or agreements  contained in this
Agreement;

(b) any inaccuracy or  misrepresentation  in or breach of any  representation or
warranty of Buyer contained in this Agreement; and

(c) except for the Excluded Liabilities,  any Liabilities of the Company arising
from and after the Closing Date.

7.4      Method of Asserting Claims.

7.4.1    Third Party Claims.

(a) A Person seeking  indemnification  under this Article VIII (an  "Indemnified
Person") shall give written notification to the Person from whom indemnification
is  sought  (the  "Indemnifying  Person")  of the  commencement  of any  suit or
proceeding relating to a third party claim or any other assertion of Liabilities
by a third party (a "Third  Party  Claim")  which the  Indemnified  Person has a
reasonable   basis  to  believe   may  give  rise  to  any   Damages  for  which
indemnification  pursuant to this Article VIII may be sought.  Such notification
shall be given  within  ten (10)  Business  Days  after the  Indemnified  Person
receives notice of such Third Party Claim, and shall describe the nature of, and
(to the extent known by the Indemnified Person) the facts constituting the basis
for,  such Third Party Claim and the amount of the  claimed  Damages;  provided,
however,  that no delay on the part of the  Indemnified  Person in notifying the
Indemnifying  Person shall relieve the  Indemnifying  Person of any Liability or
obligation  hereunder  except to the extent of any Damages  caused by or arising
out of such delay.  Such notice shall be  accompanied  by copies of all material
relevant  documentation with respect to such Third Party Claim,  including,  but
not limited to, any  summons,  complaint or other  pleading  which may have been
served, any written demand or any other documentation.

(b)  Within  thirty  (30)  days  after  delivery  of  such   notification,   the
Indemnifying  Person may, upon written notice thereof to the Indemnified Person,
assume control of the defense of such suit or proceeding with counsel reasonably
satisfactory to the Indemnified  Person. If the Indemnifying  Person does not so
assume  control of such  defense,  the  Indemnified  Person  shall  control such
defense.  The party not controlling such defense (the  "Non-Controlling  Party")
may participate  therein at its own expense.  The party controlling such defense
(the "Controlling  Party") shall keep the  Non-Controlling  Party advised of the
status of such suit or proceeding and the defense  thereof and shall consider in
good  faith  recommendations  made by the  Non-Controlling  Party  with  respect
thereto. The Non-Controlling Party shall furnish the Controlling Party with such
information  as it may have with respect to such suit or  proceeding  (including
copies of any summons,  complaint or other pleading that may have been served on
such party and any written  claim,  demand,  invoice,  billing or other document
evidencing or asserting the same) and shall otherwise  cooperate with and assist
the  Controlling  Party  in  the  defense  of  such  suit  or  proceeding.   The
Indemnifying  Person shall not agree to any  settlement  of, or the entry of any
judgment  arising from,  any such suit or  proceeding  without the prior written
consent of the Indemnified Person,  which shall not be unreasonably  withheld or
delayed.  The  Indemnified  Person shall not agree to any  settlement of, or the
entry of any judgment  arising  from,  any such suit or  proceeding  without the
prior  written  consent  of  the  Indemnifying   Person,   which  shall  not  be
unreasonably withheld or delayed.

(c) With respect to the indemnity  obligation of Seller and Parent under Section
7.2(d), the parties acknowledge that Buyer shall, or shall cause the Company, to
notify Seller and Parent of any developments with respect to the Company's Taxes
for the period prior to Closing,  including not limited to any developments with
respect to the matters set forth in Section 3.11 of the Disclosure Schedule. The
parties further acknowledge that Parent and Seller have the right to communicate
with  Governmental  Authorities  with respect to such Tax matters from and after
the  Closing  Date prior to formal  demands  by any  Governmental  Authority  in
respect of Taxes of or related the Company for the period prior to the Closing.

(d) Notwithstanding the foregoing provisions of this Section 7.4.1, in the event
a  Third-Party  Claim is made  against  an  Indemnified  Person as to which such
Indemnified  Person is entitled to seek  indemnification  hereunder and (i) such
Indemnified Person reasonably  concludes that the Indemnifying  Person lacks the
financial and personnel  resources to vigorously defend such Indemnified Person,
or that the  Indemnifying  Person is not diligently  defending such  Indemnified
Person,  or (ii) if there is a reasonable  probability  that a Third Party Claim
may materially and adversely affect an Indemnified Person other than as a result
of money  damages  or money  payments,  then in each such  case the  Indemnified
Person may elect to retain the  defense  of such  Third-Party  Claim and will be
entitled  to be  reimbursed  by the  Indemnifying  Person  for  the  Indemnified
Person's reasonable  expenses incurred in such defense,  such expenditures to be
reimbursed promptly after submission of invoices therefor.

7.4.2  Indemnification  Claims by the Parties. In order to seek  indemnification
under this Article VII, an Indemnified Person shall give written notification (a
"Claim Notice") to the Indemnifying  Person which contains (i) a description and
the amount, if known (the "Claimed  Amount"),  including the basis therefor,  of
any  Damages  incurred by the  Indemnified  Person,  (ii) a  statement  that the
Indemnified  Person is entitled to  indemnification  under this  Article VII for
such Damages and a reasonable  explanation  of the basis  therefor,  and (iii) a
demand  for  payment  in the amount of such  Damages,  if known,  subject to the
limitations contained in this Article VII.

7.5      Limitations; Sole Recourse..

7.5.1 Sole Recourse.  The parties  hereto  expressly  acknowledge  that the sole
recourse  of the  parties  for any breach of this  Agreement  subsequent  to the
Closing,  or the inaccuracy of any  representation or warranty in this Agreement
by the other party, is that set forth in Section 6.1 and this Article VII.

7.6 Limitation on Obligations  of Seller and Parent.  The  obligations of Seller
and Parent under Section 7.2 shall be subject to the following limitations:

(a) the  aggregate  Liability  of  Seller  and  Parent  to  indemnify  the Buyer
Indemnitees  pursuant  to  Section  7.2(b) of this  Agreement  shall not  exceed
$2,500,000;

(b) Each of Seller and Parent shall have no  obligation  to indemnify  the Buyer
Indemnitees  pursuant to Section 7.2(b) of this  Agreement  unless and until the
aggregate amount of Damages incurred by the Buyer Indemnitees  exceeds $100,000,
after which time Seller and Parent shall collectively be liable to indemnify the
Buyer  Indemnitees  fully for all Damages  incurred by the Buyer  Indemnitees in
excess of $100,000;

(c) The  obligations  of Seller and Parent to  indemnify  the Buyer  Indemnitees
pursuant to Sections  7.2(a),  7.2(c) and 7.2(d) of this Agreement  shall not be
subject to any cap or other limitation; and

(d)  the  fact  that  any  Excluded   Liability  is  the  subject  matter  of  a
representation or warranty that has terminated,  or for which indemnification is
limited  as set  forth in this  Section  7.6,  shall  not limit or affect in any
respect of the indemnification  obligations of Seller and Parent with respect to
such Excluded Liability.

7.7 Limitation on Buyer's  Obligations.  Buyer's  obligations  under Section 7.3
shall be subject to the following limitations:

(a) the  aggregate  Liability  of  Buyer to  indemnify  the  Seller  Indemnitees
pursuant to Section 7.3(b) of this Agreement shall not exceed $2,500,000;

(b) Buyer shall have no obligation to indemnify the Seller Indemnitees  pursuant
to Section  7.3(b) of this  Agreement  unless and until the aggregate  amount of
Damages incurred by the Seller  Indemnitees  exceeds $100,000,  after which time
Buyer shall be liable to indemnify the Seller  Indemnitees fully for all Damages
incurred by the Seller Indemnitees in excess of $100,000.

ARTICLE 8
                                  MISCELLANEOUS

8.       Miscellaneous.

8.1  Retention  of  Records.  After  the  Closing  Date,  copies  of all  books,
management,  contracts and records of Seller and its Affiliates  relating to the
Company prior to the Closing Date shall, for a period of six years following the
Closing Date, be made available  promptly,  at the written request of Seller and
at Seller's expense, to Seller and its authorized  representatives,  accountants
and attorneys for any reasonable business purpose.

8.2 Assignment. No party hereto may assign or transfer its rights or obligations
arising under this  Agreement,  without the prior  written  consent of the other
party  hereto,  which  consent  shall not be  unreasonably  withheld;  provided,
however,  that Seller  shall be  permitted  to assign its right to receive  cash
under this Agreement to one or more of its Affiliates, and provided further that
Buyer shall be permitted to assign its rights  hereunder in connection  with any
sale  of the  Business  or a  division  of  Buyer  that  operates  the  Business
subsequent to the date hereof.  This  Agreement  shall be binding upon and shall
inure to the benefit of the respective successors and assigns of the parties.

8.3 Notice. All notices and other communications provided for herein shall be by
facsimile  transmission,  or  in  writing  and  telecopied,  or  delivered  by a
nationally  recognized  overnight delivery service, to the intended recipient at
the telephone number, telecopier number, or "Address for Notices" specified:

If to Buyer to:                     MagneTek, Inc.
                                    26 Century Boulevard
                                    Nashville, Tennessee 37214
                                    Attention:  Samuel A. Miley, Esq.
                                    Telephone:  (615) 316-5260
                                    Telecopy:  (615) 316-5192

with a copy to:                     Gibson, Dunn & Crutcher LLP
                                    333 South Grand Avenue
                                    Los Angeles, California  90071
                                    Attention: Jennifer Bellah Maguire, Esq.
                                    Telephone: (213) 229-7986
                                    Telecopy: (213) 229-7520

If to Parent or Seller:             Morris Material Handling, Inc.

                                    4915 South Howell Avenue
                                    Milwaukee, Wisconsin 53207
                                    Attention:  President
                                    Telephone:  (414) 764-6200
                                    Telecopier:  (414) 486-6144

with a copy to:                     Morris Material Handling, Inc.

                                    315 West Forest Hill Ave
                                    Oak Crest, Wisconsin 53184-2999
                                    Attention:  President
                                    Telephone:  (414) 486-6100
                                    Telecopier:  (414) 486-6146

and a copy to:                      Blake, Cassels & Graydon
                                    Commerce Court West, Suite 2300
                                    Toronto, Ontario
                                    M5L 1A9
                                    Attention:  Managing Partner
                                    Telephone: (416) 863-2400
                                    Telecopier: (416) 863-2653

or, as to any party,  at such other  telecopier  number,  or address as shall be
designated by such party in a notice to the other  parties.  Except as otherwise
provided in this Agreement, all notices and other communications hereunder shall
be  deemed to have  been  duly  given  when  transmitted  by  telecopier  or, if
delivered by overnight delivery service, one Business Day after mailing.

8.4      Entire Agreement.

8.4.1 Other  Agreements.  This  Agreement,  together  with the  Exhibits and the
Disclosure  Schedule  hereto and all other  agreements  entered into pursuant to
this  Agreement,  contain the entire  understanding  between the parties  hereto
concerning the subject  matter hereof,  and supersedes and terminate any and all
prior  representations,   warranties,  undertakings,  covenants  and  agreements
between the parties.

8.4.2  Modification.  This  Agreement may not be changed,  modified,  altered or
terminated except by an agreement in writing executed by Buyer and Seller.

8.5 Third  Parties.  Except as expressly  set forth herein  (including,  without
limitation, the provisions of Article VIII), nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any Person or entity
other than the parties  hereto and their  successors or permitted  assigns,  any
rights or remedies under or by reason of this Agreement.

8.6 Captions. Captions and descriptive headings are for convenience of reference
only and  shall not  control  or  affect  the  meaning  or  construction  of any
provisions of this Agreement.

8.7 Waiver.  No waiver of a breach of, or default  under,  any provision of this
Agreement shall be deemed a waiver of such provision or of any subsequent breach
or default of the same or similar nature or of any other  provision or condition
of this Agreement.

8.8  Rights  Cumulative.  Except as set forth  herein,  all  rights,  powers and
remedies  herein  given to Buyer,  Seller  and  Parent  are  cumulative  and not
alternative, and are in addition to all statutes or rules of law.

8.9 Governing Law;  Submission to Jurisdiction.  This Agreement,  and the rights
and obligations of Buyer, Seller and Parent hereunder,  shall be governed by and
construed  in  accordance  with the  internal  laws of the  Province  of Ontario
applicable to contracts  made and to be performed  therein.  Each of the parties
hereto submits to the  jurisdiction of any state or federal court sitting in the
Province of Ontario,  in any action or proceeding  arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and  determined  in such  court.  Each of Buyer,  Seller and Parent
agree to appoint and maintain an agent for service of process in the Province of
Ontario and each of the parties hereto hereby waives any defense of inconvenient
forum to the  maintenance  of any action or proceeding so brought and waives any
bond,  surety,  or other security that might be required of any other party with
respect thereto.

8.10 Attorney for Service.  Seller and Parent irrevocably appoint Blake, Cassels
and Graydon,  Box 25 Commerce  Court West,  Toronto,  Ontario M5L 1A9, and Buyer
irrevocably  appoints McMillan Binch, Royal Bank Plaza, Suite 3800, South Tower,
Toronto,  Ontario M5J 2J7, as their respective  authorized attorney and agent to
accept and  acknowledge,  for and on behalf of the respective  attorning  party,
service or any and all process in the  Province of Ontario,  Canada in any suit,
agrees that service of process upon such attorney and agent by delivering a copy
thereof,  addressed to the  respective  attorney,  in care of such  attorney and
agent, at the above address,  shall be  conclusively  deemed to have come to the
notice of the respective  attorning party at the time of such delivery and shall
constitute  in every  respect  valid and  effective  personal  service  upon the
respective  attorning  party at the time of such  delivery,  and that failure by
such  attorney  and  agent to give  notice  of such  service  to the  respective
attorning  party shall not affect the  validity or effect of such service or any
judgment  or order based  thereon or arising  therefrom.  Each of the  attorning
parties  irrevocably  authorizes  and directs such  attorney and agent to accept
service on its behalf and agrees to appear in such suit,  action or  proceeding.
Each of the  attorning  parties  further  agrees  to take all  action  as may be
necessary  to confirm and continue in full force and effect the  appointment  of
such  attorney  and agent for so long as a party to the  Agreement  continues to
have obligations outstanding in respect of the Agreement.

8.11 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance, is held invalid, such invalidity shall not affect
any other provision  which can be given effect without the invalid  provision or
application, and to this end the provisions hereof shall be severable.

8.12 Costs,  Expenses,  Etc. Except as expressly provided elsewhere herein, each
of Seller,  Parent,  the  Company  and Buyer  shall bear all costs and  expenses
incurred by it and its respective  Affiliates in connection  with this Agreement
and in the preparation for and  consummation  of the  transactions  provided for
herein.

8.13  Specific  Performance.  Seller and Buyer  hereby agree that Buyer shall be
entitled, in addition to any other remedies or damages available to Buyer in the
event  of any  breach  of this  Agreement  by  Seller  or  Parent,  to  specific
performance of the  obligations  of Seller or Parent,  as the case may be, under
this Agreement.

8.14  Counterparts.  This Agreement may be executed in any number of counterpart
copies,  each of which shall be deemed an  original,  but which  together  shall
constitute  a single  instrument.  This  Agreement  may be executed by facsimile
signatures.

<PAGE>

8.15 Further Assurances.  Subject to the terms and conditions of this Agreement,
each of the  parties  hereto  agrees  to  execute  and  deliver  all such  other
documents,  certificates  and agreements and to take, or cause to be taken,  all
actions,  and to do, or cause to be done,  anything else that may  reasonably be
deemed necessary to perfect and give effect to the transactions  contemplated by
this Agreement.

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

                                MORRIS MATERIAL HANDLING, INC.

                                By:
                                Name:
                                Title:

                                3016117 NOVA SCOTIA ULC

                                By:
                                Name:
                                Title:

                                By:
                                Name:
                                Title:

                                MAGNETEK MONDEL HOLDING, ULC

                                By:
                                Name:
                                Title:

                                By:
                                Name:
                                Title:

<PAGE>

                                    Exhibit A

                               April Balance SheeT

<PAGE>
                                    EXHIBIT B

                            FORM OF LETTER OF CREDIT

<PAGE>

                                    EXHIBIT C

                          FORM OF TAX LETTER OF CREDIT

<PAGE>

                                    SCHEDULE 1

                               Disclosure schedule

<PAGE>

                                   SCHEDULE 2

                    ALLOCATION OF PURCHASE PRICE FOR U.S. TAX

<PAGE>

                            SHARE PURCHASE AGREEMENT

                                  BY AND AMONG

                             3016117 NOVA SCOTIA ULC

                                       AND

                           MAGNETEK MONDEL HOLDING ULC

                                       AND

                         MORRIS MATERIAL HANDLING, INC.,

                          Regarding the sale of all the
                            shares in the capital of
                                   Mondel ULC

                                   dated as of

                              December _____, 1999

<PAGE>
<TABLE>
<CAPTION>

                                  TABLE OF CONTENTS
                                                                                                             Page
                                       -i-

<S>     <C>                                                                                                     <C>
ARTICLE 1         DEFINITIONS....................................................................................1
1.                Definitions....................................................................................1

         1.1      Defined Terms..................................................................................1
         1.2      Accounting Terms...............................................................................8
         1.3      Exhibits and Schedules.........................................................................8
         1.4      Other Definition Provisions....................................................................9
ARTICLE 2         PURCHASE OF SHARES; PURCHASE PRICE.............................................................9
2.                Purchase of the Shares, Purchase Price and Method of Payment...................................9
         2.1      Purchase of the Shares.........................................................................9
         2.2      Consideration..................................................................................9
                  2.2.1    Purchase Price........................................................................9
                  2.2.2    Payment of Purchase Price at Closing..................................................9
         2.3      Purchase Price Adjustment......................................................................9
                  2.3.1    Estimated Closing Balance Sheet.......................................................9
                  2.3.2    Final Closing Balance Sheet..........................................................10
                  2.3.3    Access...............................................................................10
                  2.3.4    Delivery and Review..................................................................10
                  2.3.5    Resolution...........................................................................10
                  2.3.6    Post-Closing Adjustments.............................................................11
ARTICLE 3         REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE BUSINESS.......................12
3.                Representations and Warranties Relating to the Company and the Business.......................12
         3.1      Organization and Standing; Capitalization.....................................................12
                  3.1.1    Organization and Standing............................................................12
                  3.1.2    Capitalization; Corporate Structure..................................................12
         3.2      No Contravention..............................................................................13
         3.3      Tangible Assets...............................................................................13
                  3.3.1    Title................................................................................13
                  3.3.2    Asset Rights.........................................................................13
                  3.3.3    Condition of Assets..................................................................13
         3.4      Licenses......................................................................................14
         3.5      Contracts.....................................................................................14
         3.6      Intellectual Property Rights..................................................................15
         3.7      Employees; Plans..............................................................................16
         3.8      Financial Statements..........................................................................19
         3.9      Absence of Certain Changes....................................................................19
         3.10     Litigation; Compliance........................................................................20
         3.11     Taxes.........................................................................................20
         3.12     Environmental Matters.........................................................................21
         3.13     Insurance.....................................................................................22
         3.14     Brokers.......................................................................................22
         3.15     Product Warranty and Product Liability........................................................22
         3.16     Affiliate Transactions........................................................................23
         3.17     Customers.....................................................................................23
         3.18     Backlog.......................................................................................23
         3.19     Year 2000.....................................................................................23
         3.20     Satisfaction of Intercompany Accounts.........................................................23
ARTICLE 4         REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................24
4.                Representations and Warranties of Seller and Parent...........................................24
         4.1      Organization and Standing.....................................................................24
         4.2      Authorization and Binding Obligations.........................................................24
         4.3      No Contravention; Consents....................................................................24
                  4.3.1    No Contravention.....................................................................24
                  4.3.2    Consent..............................................................................24
         4.4      Tax Status....................................................................................25
         4.5      Brokers.......................................................................................25
ARTICLE 5         REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................25
5.                Representations and Warranties of Buyer.......................................................25
         5.1      Organization and Standing.....................................................................25
         5.2      Authorization and Binding Obligations.........................................................25
         5.3      No Contravention; Consents....................................................................25
                  5.3.1    No Contravention.....................................................................25
                  5.3.2    Consents.............................................................................26
         5.4      Brokers.......................................................................................26
         5.5      Litigation; Compliance........................................................................26
         5.6      Financial Capacity............................................................................26
         5.7      Sophistication; Due Diligence.................................................................26
         5.8      Purchase for Investment.......................................................................26
ARTICLE 6         COVENANTS OF THE PARTIES......................................................................27
6.                Covenants of the Parties......................................................................27
         6.1      Tax Matters...................................................................................27
         6.2      Regulatory Filings............................................................................29
                  6.2.1    Cooperation..........................................................................29
                  6.2.2    Certain Filings......................................................................29
         6.3      Employee Matters..............................................................................29
         6.4      Collateral Agreements.........................................................................29
         6.5      Refunds in Respect of Audits/Taxes............................................................29
ARTICLE 7         INDEMNIFICATION...............................................................................30
7.                Indemnification...............................................................................30
         7.1      Survival......................................................................................30
         7.2      Indemnification by Seller and Parent..........................................................30
         7.3      Buyer's Indemnification.......................................................................31
         7.4      Method of Asserting Claims....................................................................32
                  7.4.1    Third Party Claims...................................................................32
                  7.4.2    Indemnification Claims by the Parties................................................33
         7.5      Limitations; Sole Recourse....................................................................33
                  7.5.1    Sole Recourse........................................................................33
         7.6      Limitation on Obligations of Seller and Parent................................................33
         7.7      Limitation on Buyer's Obligations.............................................................34
ARTICLE 8         MISCELLANEOUS.................................................................................34
8.                Miscellaneous.................................................................................34
         8.1      Retention of Records..........................................................................34
         8.2      Assignment....................................................................................34
         8.3      Notice........................................................................................34
         8.4      Entire Agreement..............................................................................36
                  8.4.1    Other Agreements.....................................................................36
                  8.4.2    Modification.........................................................................36
         8.5      Third Parties.................................................................................36
         8.6      Captions......................................................................................36
         8.7      Waiver........................................................................................36
         8.8      Rights Cumulative.............................................................................36
         8.9      Governing Law; Submission to Jurisdiction.....................................................36
         8.10     Attorney for Service..........................................................................36
         8.11     Severability..................................................................................37
         8.12     Costs, Expenses, Etc..........................................................................37
         8.13     Specific Performance..........................................................................37
         8.14     Counterparts..................................................................................37
         8.15     Further Assurances............................................................................38
</TABLE>

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