Document:

ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     THIS  ASSIGNMENT  AND  ASSUMPTION  AGREEMENT  is made and entered into this
________  day  of  June,  2000,  by  and  among (i) HILTON HOTELS CORPORATION, a
Delaware  corporation,  and  FLAMINGO  HILTON RIVERBOAT CASINO, L.P., a Missouri
limited  partnership  and  assignee by assignment from Hilton Hotels Corporation
(collectively,  "Assignor"),  (ii)  ISLE  OF  CAPRI  CASINOS,  INC.,  a Delaware
                 --------
corporation  ("Assignee"),  and  (iii)  IOC-KANSAS  CITY,  INC.,  a  Missouri
               --------
corporation  and  affiliate  of  Assignee  ("Operating  Assignee").
                                             --------------------

Recitals

     A.     The  Port  Authority of Kansas City, Missouri (the "Port Authority")
                                                                --------------
and  Hilton  Hotels  Corporation  ("HHC") are parties to an Amended and Restated
                                    ---
Lease  Agreement  dated  as  of  August  21,  1995,  as  thereafter amended (the
"Lease"),  a  true, correct and complete copy of which is attached as SCHEDULE A
hereto.

     B.     The  interest  of  HHC  under  the  Lease Agreement was assigned (i)
pursuant  to  that  certain  Lessee's  Assignment and Assumption Agreement dated
August 9, 1996 by and between HHC and Hilton Kansas City Corporation, a Missouri
corporation ("HKCC"), whereby HHC transferred all its right, title, and interest
              ----
in  and  to  the  Lease  to  HKCC;  and  (ii)  pursuant  to that certain Blanket
Conveyance,  Bill  of Sale, and Assignment and Assumption Agreement dated August
9,  1996  by  and  between  HKCC  and  Flamingo  Hilton  Riverboat  Casino, L.P.
("Flamingo Hilton"), whereby HKCC transferred all its right, title, and interest
         --------
in  and  to  the  Lease  to  Flamingo  Hilton.

     C.     Assignor  now  desires  to  assign and transfer all right, title and
interest  in  the  Lease  to  Assignee,  while  remaining liable for any and all
liabilities and obligations previously accrued or hereafter accruing pursuant to
the  Lease.

     D.     Assignee desires to accept such assignment, and thereafter to assign
and transfer to Operating Assignee all right, title and interest in the Lease
held by Assignee.

                                 Agreement

     NOW,  THEREFORE,  in  consideration  of  the  above  premises,  the  mutual
covenants  and  agreements  stated herein and stated in the Asset Sale Agreement
dated  as  of  February 8, 2000, by and among Assignor, as sellers, and Assignee
and  Operating  Assignee, as purchasers (the "Asset Sale Agreement"), as well as
                                              --------------------
other  good  and  valuable  consideration,  the  receipt  of  which  is  hereby
acknowledged,  the  parties  hereto  agree  as  follows:

1.     ASSIGNMENT.  Effective  upon  (a)  the  consummation  of the transactions
       ----------
contemplated  by  the Asset Sale Agreement, (b) the execution of the Consent (as
defined  below),  and  (c)  the  issuance  of  a  license by the Missouri Gaming
Commission  to  Operating  Assignee to conduct gaming operations on the property
which  is  subject  to  the  Lease  (collectively, the "Closing"), Assignor does
hereby irrevocably assign, transfer, sell, deliver and convey unto Assignee, its
successors  and assigns, all of Assignor's right, title and interest in and
to  the  Lease,  as  of  the  close  of business on the day on which the Closing
occurs,  free and clear of any lien, charge, claim or encumbrance, except as set
forth  on  Schedule B attached hereto and incorporated herein by this reference.
Subject  to  and upon the occurrence of the Closing, Assignee hereby accepts the
assignment  of the Lease pursuant to the terms of this Assignment and Assumption
Agreement.  The  parties hereto acknowledge and agree that this Assignment ( and
Assumption  Agreement  shall not become effective and shall be of no legal force
or  effect  unless  and  until  the  Closing  occurs.

2.     ASSUMPTION OF LIABILITIES.
       -------------------------
(a)     Assignee  hereby  assumes  responsibility  to  faithfully and punctually
perform,  satisfy  and  discharge  all  of  the  duties,  obligations,  terms,
conditions,  covenants and liabilities arising or accruing after the date of the
Closing  that  Assignor  is  otherwise  bound to perform, discharge or otherwise
satisfy under the Lease, including without limitation, pursuant to Section 18.04
     (B)  (viii)  (b) and (c) of the Lease regarding (i) the use of the "Demised
Premises"  (as  that  term  is  defined  in  the  Lease)  in accordance with the
restrictions set forth in the Lease and (ii) the payment of "Rent" (as that term
is  defined  in  the Lease). Assignor does hereby agree to indemnify, defend and
hold  Assignee  harmless  from any loss (including without limitation attorneys'
fees  and  costs),  claim  or  cause  of  action arising or accruing under or in
connection  with  any of the following: (i) the Lease based upon events, acts or
omissions  that  occurred  on or before the date of the Closing; (ii) any future
written  assignments executed and delivered by and between Assignor and Assignee
based  upon events, acts or omissions that occurred on or before the date of the
Closing;  or (iii) the failure of Assignor to perform its obligations under this
Assignment  and  Assumption  Agreement. Assignee does hereby agree to indemnify,
defend  and  hold  Assignor harmless from any loss (including without limitation
attorneys'  fees  and costs), claim or cause of action arising or accruing under
or  in  connection  with  any of the following: (i) the Lease based upon events,
acts  or  omissions that occurred after the date of the Closing; (ii) any future
written  assignments executed and delivered by and between Assignee and Assignor
based  upon  events,  acts  or  omissions  that  occurred  after the date of the
Closing; or (iii) the failure of Assignee or Operating Assignee to perform their
respective  obligations  under  this  Assignment  and  Assumption  Agreement.

(b)     Notwithstanding any other provision of this Assignment and Assumption
Agreement to the contrary, Assignor shall remain liable to the Port Authority in
connection with the performance of all liabilities and obligations under the
Lease to the same extent as if this Assignment and Assumption Agreement had not
been executed. The foregoing sentence does not, however, in any way relieve (i)
Assignee or Operating Assignee from the liabilities and obligations that each
owes to Assignor which are set forth in this Assignment and Assumption Agreement
or (ii) Assignor from the liabilities and obligations that it owes to Assignee
and Operating Assignee which are set forth in this Assignment and Assumption
Agreement.

3.     FURTHER  ASSIGNMENT  TO  OPERATING  SUBSIDIARY  OF  ASSIGNEE.
       ------------------------------------------------------------

(a)     Subject  to  the  occurrence  of  the  Closing,  Assignee  does  hereby
irrevocably  assign, transfer, sell, deliver and convey unto Operating Assignee,
its  successors  and  assigns,  all  its right, title and interest in and to the
Lease, as of the close of business on the day the Closing occurs, free and clear
     of any lien, charge, claim or encumbrance, except asset forth on SCHEDULE B
attached  hereto  and incorporated herein by this reference. Subject to and upon
the  occurrence of the Closing, Operating Assignee hereby accepts the assignment
of  the Lease pursuant to the terms of this Assignment and Assumption Agreement.
<PAGE>

(b)     Assignor hereby acknowledges and consents to the assignment, transfer,
sale, delivery and conveyance by Assignee to Operating Assignee of all right,
title and interest in the Lease that has been assigned to Assignee pursuant to
Section 1 of this Assignment and Assumption Agreement.

(c)     Operating Assignee hereby assumes responsibility to faithfully and
punctually perform, satisfy and discharge all of the duties, obligations, terms,
conditions, covenants and liabilities arising or accruing after the date of the
Closing that Assignee is otherwise bound to perform, discharge or otherwise
satisfy under the Lease (as a result of the terms and conditions of this
Assignment and Assumption Agreement), including without limitation, pursuant to
Section 18.04 (B) (viii) (b) and (c) of the Lease regarding (i) the use of the
"Demised Premises" (as that term is defined in the Lease) in accordance with the
restrictions set forth in the Lease and (ii) the payment of the "Rent" (as that
term is defined in the Lease). Assignor does hereby agree to indemnify, defend
and hold Operating Assignee harmless from any loss (including without limitation
attorneys' fees and costs), claim or cause of action arising or accruing under
or in connection with any of the following: (i) the Lease based upon events,
acts or omissions that occurred on and before the date of the Closing; (ii) any
future written assignments executed and delivered by and between Assignor and
Assignee based upon events, acts or omissions that occurred on or before the
date of the Closing; or (iii) the failure of Assignor to perform its obligations
under this Assignment and Assumption Agreement. Operating Assignee does hereby
agree to indemnify, defend and hold Assignor harmless from any loss (including
without limitation attorneys' fees and costs), claim or cause of action arising
or accruing under or in connection with any of the following: (i) the Lease
based upon events, acts or omissions that occurred after the date of the
Closing; (ii) any future written assignments by and between Operating Assignee
and Assignor based upon events, acts or omissions that occurred after the date
of the Closing; or (iii) the failure of Operating Assignee or Assignee to
perform their respective obligations under this Assignment and Assumption
Agreement.

(d)     Notwithstanding any other provision of this Assignment and Assumption
Agreement to the contrary, Assignee shall remain liable to the Port Authority
and Assignor in connection with the performance of all liabilities and
obligations under the Lease to the same extent as if the further assignment
pursuant to this Section 3 had not been made. The foregoing sentence does not,
however, in any way relieve (i) Assignor from the liabilities and obligations
that it owes to Assignee and Operating Assignee which are set forth in this
Assignment and Assumption Agreement or (ii) Assignee or Operating Assignee from
the liabilities and obligations that each owe to Assignor which are set forth in
this Assignment and Assumption Agreement.

<PAGE>

4.     REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  OF  ASSIGNOR.
       ----------------------------------------------------------
(a)     Assignor,  as  of  the  date  of  the Closing, does hereby represent and
warrant  to  Assignee  and  Operating  Assignee  as  follows:

(i)     Assignor  has  complete  and  unrestricted  power and authority to sell,
assign,  and  transfer  all  its  right,  title  and  interest  in  the Lease as
contemplated  by  this  Assignment  and  Assumption  Agreement,  and  such sale,
assignment and transfer does not and will not require the consent or approval of
any  third party or government entity, except for the prior written consent
of the Port Authority, which written consent is set forth in the Acknowledgment,
Consent  and  Estoppel  Certificate (the "Consent") attached hereto as Exhibit 1
and  incorporated  herein  by  reference.

(ii)     Neither the execution and delivery of this Assignment and Assumption
Agreement nor compliance with the terms hereof on the part of Assignor will
violate the Articles of Incorporation or Bylaws, or the Certificate of Limited
Partnership or Partnership Agreement, as the case may be, of Assignor, breach
any governmental law, statute or regulation, or conflict with or result in the
breach of any of the terms, conditions or provisions of any agreement or
instrument to which Assignor is a party or by which it is or may be bound, or
constitute a default thereunder, or result in the creation or imposition of any
lien, claim, charge, or encumbrance. Except as set forth in SCHEDULE C attached
hereto and incorporated herein by this reference, Assignor has no knowledge of
any fact or condition regarding or involving the Demised Premises (as defined in
the Lease) or any of Assignor's duties and obligations under the Lease that
constitute a violation or breach of any law, statute, ordinance, regulation,
order, contract or other agreement including, without limitation, environmental
laws and regulations.

(iii)     Assignor has all necessary corporate power and authority to enter into
this Assignment and Assumption Agreement, and has taken all corporate action
necessary to make this Assignment and Assumption Agreement enforceable upon
Assignor in accordance with its terms.

(iv)     A true, correct and complete copy of the Lease, and all amendments
thereto, are attached hereto as SCHEDULE A. The Lease has not been amended or
modified, except as set forth on SCHEDULE A attached hereto and incorporated
herein by this reference. The Lease, as amended or modified, is in full force
and effect and constitutes the legal, valid and binding obligation of all of the
parties thereto and is enforceable in accordance with its terms.

<PAGE>
(v)     Except as set forth in SCHEDULE D attached hereto and incorporated
herein by this reference, no event has occurred and no condition exists that,
with the giving of notice or the lapse of time or both, could constitute a
default by Assignor under the Lease or, to Assignor's best knowledge after due
and diligent inquiry, by the Port Authority. Assignor has no present intention
to bring an action or otherwise attempt to enforce any alleged nonperformance or
breach of any provision of the Lease. Except as set forth in SCHEDULE E attached
hereto and incorporated herein by this reference, Assignor has no existing
defenses or offsets against the enforcement of the Lease by the Port Authority,
and knows of no other parties who are not signatories to the Lease who possess
or may assert rights under or in connection with the Lease.

(vi)     Except as set forth in SCHEDULE F attached hereto and incorporated
herein by this reference, the Lease and the Development Agreement dated as of
March 12, 1993 by and between the Port Authority and HHC (the "Development
                                                              ------------
Agreement"),as thereafter amended, are the only agreements, written or oral,
     -------
entered into between the Port Authority and Assignor.

(b)     Assignor  covenants  and  agrees  as  follows:

(i)     Assignor has not and will not assign the whole or any part of its right,
     title  and  interest  hereby  assigned  to  any person other than Assignee.

(ii)     Assignor shall forthwith notify Assignee and Operating Assignee in
writing of any default (or any event or occurrence that, but for the giving of
notice or the passage of time, or both, would constitute a default) under the
Lease of which it has knowledge or any assertion made to Assignor by any other
party to the Lease that circumstances have arisen that may pen-nit or result in
a breach or the cancellation of the Lease.

5.     REPRESENTATIONS  AND  WARRANTIES  OF  ASSIGNEE.
       ----------------------------------------------

(a)     Assignee,  as  of  the  date  of  the Closing, does hereby represent and
warrant  to  Assignor  as  follows:

(i)     Assignee  has  complete  and  unrestricted  power and authority to sell,
assign,  and transfer its right, title and interest in the Lease as contemplated
by  this  Assignment  and  Assumption  Agreement.

(ii)     Neither the execution and delivery of this Assignment and Assumption
Agreement nor compliance with the terms hereof on the part of Assignee will
violate the Articles of Incorporation or Bylaws of Assignee, breach any
governmental law, statute or regulation, or conflict with or result in the
breach of any of the terms, conditions or provisions of any agreement or
instrument to which Assignee is a party or by which it is or may be bound, or
constitute a default thereunder, or result in the creation or imposition of any
lien, claim, charge or encumbrance.

(iii)     Assignee has all necessary corporate power and authority to enter into
this Assignment and Assumption Agreement and has taken all corporate action
necessary to make this Assignment and Assumption Agreement enforceable upon
Assignee in accordance with its terms.
<PAGE>

(b)     Assignee covenants and agrees that Assignee will not assign the whole or
     any  part of its right, title and interest hereby assigned to any person or
entity  other  than Operating Assignee, without the prior written consent of the
Port  Authority  and Assignor, which consent shall not be unreasonably withheld.
Assignor  acknowledges  and  agrees that, for purposes of this subsection (b) of
this  Section 5, consent shall be deemed "unreasonably withheld" if the proposed
assignee,  in  the  Assignor's  reasonable  opinion,  is  financially capable of
performing and satisfying in full each of its respective obligations pursuant to
the  Lease  and  Assignor  withholds  its  consent.

6.     REPRESENTATIONS  AND WARRANTIES OF OPERATING ASSIGNEE.Operating Assignee,
       ------------------------------------------------------
as of the date of the Closing, does hereby represent and warrant to the Assignor
as  follows:

(a)     Neither  the  execution  and  delivery of this Assignment and Assumption
Agreement nor compliance with the terms hereof on the part of Operating Assignee
will  violate  the  Articles  of  Organization  or  Operating  Agreement of
Operating  Assignee,  breach  any  governmental  law,  statute or regulation, or
conflict  with  or  result  in  the  breach  of  any of the terms, conditions or
provisions of any agreement or instrument to which Operating Assignee is a party
or by which it is or may be bound, or constitute a default thereunder, or result
in  the  creation  or  imposition  of  any  lien,  claim, charge or encumbrance.

(b)     Operating Assignee has all necessary corporate power and authority to
enter into this Assignment and Assumption Agreement, and has taken all corporate
action necessary to make this Assignment and Assumption Agreement enforceable
upon Operating Assignee in accordance with its terms.

7.     FURTHER  ACTION.
       ---------------

(a)     Assignor,  Assignee and Operating Assignee agree that each shall execute
and  deliver,  or  cause  to  be  executed and delivered from time to time, such
instruments,  documents, agreements, consents and assurances and take such other
action  as  the  other parties reasonably may require to more effectively assign
and  transfer  to  and  vest  in  such  parties  the  rights and assets assigned
hereunder. Assignor, Assignee and Operating Assignee agree to promptly remit and
send  to such parties any and all payments, funds, assets, notices, reports
and  other  documents  and  information  received  by  each party, its agents or
representatives as a direct or indirect result of its rights in, or with respect
to,  the  Lease.

(b)     If any right or asset hereby assigned or transferred shall for any
reason be nonassignable or not enforceable by Assignee or Operating Assignee,
Assignor shall take such action to enforce the same or to obtain the benefits
thereof for Assignee and/or Operating Assignee as Assignee or Operating Assignee
may reasonably direct, but at the sole expense and risk of Assignee and
Operating Assignee, and Assignor will deliver to Operating Assignee any amounts
received by it on account of any such claim, right or chose in action after
deducting any reasonable expenses incurred by Assignor in taking such action
that have not been paid or reimbursed by Assignee or Operating Assignee

8.     GENERAL.
       -------

(a)     This  Assignment  and  Assumption  Agreement  cancels and supersedes all
previous  agreements  (other  than  the  Asset  Sale  Agreement) relating to the
subject  matter  of  this  Assignment and Assumption Agreement, written or oral,
between  the  parties  hereto  and, together with the relevant provisions of the
Asset  Sale  Agreement,  contains the entire understanding of the parties hereto
and  shall  not  be  amended,  modified or supplemented in any manner whatsoever
except  as otherwise provided herein or in writing signed by each of the parties
hereto.
<PAGE>

(b)     Neither this Assignment and Assumption Agreement, nor any of the rights,
duties or obligations of Assignor hereunder, may be assigned either voluntarily
or by operation of law or otherwise delegated by Assignor without the prior
written consent of the Assignee and Operating Assignee, and any attempted
assignment that is not in conformity herewith shall be null and void. This
Assignment and Assumption Agreement shall be binding upon, and inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors and permitted assigns.

(c)     This Assignment and Assumption Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which shall constitute one agreement which is binding upon all the parties
hereto, notwithstanding that all parties are not signatories to the same
counterpart.

(d)     Any notice, request, consent or communication under this Assignment and
Assumption Agreement shall be effective only if it is in writing and personally
delivered or sent by (i) certified mail, postage prepaid, (ii) nationally
recognized express delivery service with delivery confirmed or (iii) telexed or
telecopies with receipt confirmed, addressed as follows:
If to Assignor:

          Name:                               With Copy To:
          ----                                ------------

Flamingo Hilton Riverboat Casino, L.P.        Park Place Entertainment Corp.
c/o Hilton Hotels Corporation                 3930 Howard Hughes Pkwy.
9336 Civic Center Drive                       Las Vegas, NV 89109
Beverly Hills, CA 902 10                      ATTN: Clive S. Cummis
ATTN: Thomas E. Gallagher                     Executive Vice President and
Executive Vice President,                     General Counsel
General Counsel and Secretary                 FAX: 702-699-5107
FAX: 310-205-7677                             and to
                                              Scott LaPorta
                                              Executive Vice President and
                                              Chief Financial Officer
                                              FAX: 702-699-5190

<PAGE>

If to Assignee:

     Name:
     ----

Isle of Capri Casinos, Inc.
2200 Corporate Blvd., N.W., Suite 310
Boca Raton, FL 33431
ATTN:               Allan Solomon
               Executive Vice President and General Counsel
               FAX:  561-995-6665

If to Operating Assignee:

     Name:
     -----

IOC-KANSAS CITY, INC.
C/o Isle of Capri Casinos, Inc.
2200 Corporate Blvd., N.W., Suite 310
Boca Raton, FL 33431
ATTN:               Allan Solomon
               Executive Vice President and General Counsel
               FAX:  561-995-6665

or  such  other persons and/or addresses as shall be furnished in writing by any
such  party, and shall be deemed to have been given as of the date so personally
delivered  or  received.

(e)     This  Assignment and Assumption Agreement and all rights and obligations
of  the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Missouri applicable to agreements made
and  to  be  performed entirely within such State, including all matters of
enforcement,  validity  and  performance.

(f)     Assignor, Assignee and Operating Assignee acknowledge and agree that the
provisions set forth in the Consent pertaining or otherwise applicable to
Assignor, Assignee and/or Operating Assignee, as the case may be, are true and
correct and will be relied upon by the Port Authority in executing and
delivering the Consent, and Assignor, Assignee and Operating Assignee agree to
be bound by such applicable provisions of the Consent.

(g)     Assignor, Assignee and Operating Assignee acknowledge and agree that the
Port Authority shall be a third party beneficiary of this Assignment and
Assumption Agreement, and shall have the right to enforce any such terms and
conditions hereof in such capacity.

<PAGE>
                                SIGNATURE PAGE TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     IN WITNESS WHEREOF, the parties hereto have each caused this Assignment and
Assumption  Agreement  to  be  duly  executed as of the day and year first above
written.

                                                  ASSIGNOR:

                                                  HILTON HOTELS CORPORATION

                                                  By:
                                                  Print Name:
                                                  Title:

<PAGE>
                                SIGNATURE PAGE TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     IN WITNESS WHEREOF, the parties hereto have each caused this Assignment and
Assumption  Agreement  to  be  duly  executed as of the day and year first above
written.

                                             FLAMINGO HILTON RIVERBOAT
                                             CASINO, L.P.

                                             By: Hilton Kansas City Corp.,
                                             General Partner

                                             By:
                                             Print Name:
                                             Title:

<PAGE>
                                SIGNATURE PAGE TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     IN WITNESS WHEREOF, the parties hereto have each caused this Assignment and
Assumption  Agreement  to  be  duly  executed as of the day and year first above
written.

                                                  ASSIGNEE:

                                                  ISLE OF CAPRI CASINOS, INC.

                                                  By:
                                                  Print Name:
                                                  Title:

<PAGE>
                                SIGNATURE PAGE TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     IN WITNESS WHEREOF, the parties hereto have each caused this Assignment and
Assumption  Agreement  to  be  duly  executed as of the day and year first above
written.

                                                  OPERATING ASSIGNEE:

                                                  IOC-KANSAS CITY, INC.

                                                  By:
                                                  Print Name:
                                                  Title:

<PAGE>
                                 ACKNOWLEDGMENT
                                 --------------

STATE OF                         )
                              )ss.
COUNTY OF                         )

     BEFORE ME, a Notary Public in and for the County and State aforesaid,
personally appeared __________________, as ____________________ of Hilton Hotels
Corporation, a Delaware corporation, who is known to me to be the same person
who executed the foregoing instrument on behalf of said corporation and
acknowledged the execution of the same as the free and voluntary act and deed of
said corporation.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal this ____ day of  __________________, 2000.

Notary Public

My Commission Expires:

<PAGE>
                                 ACKNOWLEDGMENT
                                 --------------

STATE OF                         )
                              )ss.
COUNTY OF                         )

     BEFORE ME, a Notary Public in and for the County and State aforesaid,
personally appeared _________________________, ____________________________ of
Hilton Kansas City Corp., the corporate general partner of Flamingo Hilton
Riverboat Casino, L.P., a Missouri limited partnership, who is known to me to be
the same person who executed the foregoing instrument on behalf of said
corporation as general partner of said limited partnership and acknowledged the
execution of the same as the free and voluntary act and deed of said
corporation, as general partner of said limited partnership.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal this _______ day of  _____________________, 2000.

Notary Public

My Commission Expires:

<PAGE>
                                 ACKNOWLEDGMENT
                                 --------------

STATE OF                         )
                              )ss.
COUNTY OF                         )

     BEFORE ME, a Notary Public in and for the County and State aforesaid,
personally appeared _________________, as _________________ of Isle of Capri
Casinos, Inc., a Delaware corporation, who is known to me to be the same person
who executed the foregoing instrument on behalf of said corporation and
acknowledged the execution of the same as the free and voluntary act and deed of
said corporation.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal this _____ day of __________________, 2000.

Notary Public

My Commission Expires:

<PAGE>
                                 ACKNOWLEDGMENT
                                 --------------

STATE OF                         )
                              )ss.
COUNTY OF                         )

     BEFORE ME, a Notary Public in and for the County and State aforesaid,
personally appeared ____________________, ___________________ of IOC-KANSAS
CITY, INC., a Missouri corporation, who is known to me to be the same person who
executed the foregoing instrument on behalf of said corporation, as sole member
of said limited liability company, and acknowledged the execution of the same as
the free and voluntary act and deed of said corporation, as sole member of said
limited liability company.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal this _____ day of  _______________, 2000.

Notary Public

My Commission Expires:

<PAGE>
                                   SCHEDULE A
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

           ATTACHED HERETO AND FOLLOWING THIS PAGE IS A COMPLETE COPY
                  OF THE LEASE AND ALL AMENDMENTS TO THE LEASE

<PAGE>
                                   SCHEDULE B
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

LIENS, CHARGES, CLAIMS AND ENCUMBRANCES TO THE LEASE

1.     Those liens and encumbrances, if any, granted pursuant to any of the
documents executed and/or delivered in connection with the $21,185,000.00 of
Port Authority Revenue Bonds (Riverfront Park Project), Series 1995A, dated
December 15, 1995, issued by the Port Authority under and pursuant to their
certain Trust Indenture dated as of January 9, 1996, by and between the Port
Authority and Boatmen's Trust Company, as Trustee (the "Bond Issuance
                                                             --------
Transaction").
-----------

2.     To the extent that Assignor's rights under the Lease are dependent upon
Assignor's rights to the real property and improvements covered by the Lease and
Assignor's rights in and thereto are subject to those liens and encumbrances
listed as exceptions on Schedule B to that certain ALTA Commitment issued by
Assured Quality Title Insurance Company, Commitment No. MJ26420, with an
effective date of April 5, 1999.

3.     All ongoing performance obligations of Assignor under the Lease that have
not yet been performed as of the date of the Closing.

<PAGE>
                                   SCHEDULE C
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

                       NO KNOWLEDGE OF A VIOLATION OR BREACH

Assignor has no knowledge of any fact or condition under the Lease that would
constitute a violation or breach of any law, contract or agreement except that
the gravel valet parking lot which Assignor leases from the Port Authority was
not constructed to, and does not currently comply with, the building code
requirements of Kansas City, Missouri.

<PAGE>
                                   SCHEDULE D
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

                          DEFAULT(S) UNDER THE LEASE

Assignor has no knowledge of any fact or condition under the Lease that would
constitute a default by Assignor under the Lease except that the gravel valet
parking lot which Assignor leases from the Port Authority was not constructed
to, and does not currently comply with, the building code requirements of Kansas
City, Missouri.

<PAGE>
                                   SCHEDULE E
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

            NO DEFENSES AND OFFSETS AGAINST ENFORCEMENT AND NO OTHER
                                   SIGNATORIES

                                      NONE

<PAGE>
                                   SCHEDULE F
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

OTHER AGREEMENTS BETWEEN ASSIGNOR AND THE PORT AUTHORITY

1.     Non-Exclusive Access Easement Agreement dated August 18, 1995, by and
among KCP&L Co., HHC, HKCC and the Port Authority.

2.     Those certain agreements, certificates, documents and instruments
delivered by HHC and/or HKCC in connection with the closing of the Bond Issuance
Transaction, including, but not limited, to, certain closing certificates, that
certain Continuing Disclosure Agreement dated January 9, 1996, and that certain
Acknowledgment and Attornment Agreement dated as of December 1, 1995.

3.     Cooperative Agreement dated August 18, 1995 by and among HKCC, the Port
Authority and the City of Kansas City, Missouri.

4.     Social/Minority Grant Escrow Agreement dated as of November 4, 1996 by
and among Flamingo Hilton, the Port Authority, and Boatmen's Trust Company (the
"Trust Company").
-----------------

5.     Problem Gaming Grant Escrow Agreement dated as of November 4,1996 by and
among Flamingo Hilton, the Port Authority and the Trust Company.

6.     Development Rights Memorandum dated August 21, 1995 by and between the
Port Authority and HHC.

<PAGE>
                                    EXHIBIT 1
                    ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                   ------------------------------------------------
                                       TO
                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                       -----------------------------------
                                (LEASE AGREEMENT)

     This Acknowledgment, Consent Estoppel Certificate and Agreement
("AGREEMENT") is entered into as of ________________, 2000 between the Port
Authority of Kansas City, Missouri, a body politic created and formed by the
City of Kansas City, Missouri (the "PORT AUTHORITY") and Isle of Capri Casinos,
Inc., a Delaware corporation ("ASSIGNEE"), and IOC-Missouri, Inc., a Missouri
corporation and affiliate of Assignee ("OPERATING ASSIGNEE").  The Port
Authority, Assignee and Operating Assignee state and agree as follows:

     1.     Acknowledgment and Consent.  Pursuant to Article XVII of the Amended
            --------------------------
and Restated Lease dated as of August 21, 1995 by and between Port Authority and
Hilton Hotels Corporation, a Delaware corporation, as thereafter amended (the
"LEASE"), the Port Authority hereby acknowledges and consents to the foregoing
Assignment and Assumption Agreement dated 5 2000 (the "ASSIGNMENT AND ASSUMPTION
AGREEMENT") by and among (i) Hilton Hotels Corporation and Flamingo Hilton
Riverboat Casino, L.P., a Missouri limited partnership, (collectively,
"ASSIGNOR"), (ii) Assignee, and (iii) Operating Assignee; provided, however, the
Port Authority does not and shall not release Assignor from, and Assignor shall
continue to be liable for, the performance, discharge and satisfaction of all
obligations, terms, conditions, covenants and liabilities of Assignor under the
Lease. The Port Authority specifically acknowledges and consents to the
assignment, transfer, sale, delivery and conveyance by Assignee to Operating
Assignee of all right, title and interest in the Lease that has been assigned to
Assignee pursuant to Section 1 of the Assignment and Assumption Agreement;
provided, however, the  Port Authority does not and shall not release Assignee
from the performance, discharge and satisfaction of all obligations, terms,
conditions, covenants and liabilities of Assignee under the Assignment and
Assumption Agreement. The Port Authority hereby specifically acknowledges and
agrees that pursuant to Section 18.04 (B) (viii) (c) of the Lease, Assignee and
Operating Assignee have provided the Port Authority with satisfactory assurances
that Assignee and Operating Assignee have the experience in operating gaming
enterprises similar to that conducted by Assignor under the Lease, sufficient to
enable Assignee and Operating Assignee to so comply with all of the terms,
covenants and conditions of the Lease and successfully operate the "Demised
Premises" (as such term is defined in the Lease) for such use.

     2.     Payments to Operating Assignee.  The Port Authority agrees to pay to
            ------------------------------
the Operating Assignee any and all amounts that it would, in the absence of the
Assignment and Assumption Agreement, otherwise be required to pay to the
Assignor under the Lease.

     3.     Attornment.  The Assignee and Operating Assignee each agree that it
            ----------
shall be liable to the Port Authority for the performance, discharge and
satisfaction of all obligations, terms, conditions, covenants and liabilities of
Assignor under the Lease.

     4.     Representations  and  Warranties of Assignee and Operating Assignee.
            -------------------------------------------------------------------
Assignee  and  Operating  Assignee each hereby certify, represent and warrant to
the  Port Authority, as follows: (i) Assignee and Operating Assignee are solvent
and  are  not  a  party  o  any  assignment  for the benefit of their respective
creditors  or  to any bankruptcy proceedings; (ii) the transactions contemplated
by  the  Assignment and Assumption Agreement shall not cause the Assignee or the
Operating Assignee to become insolvent or to not be able to pay its debts as the
same  become  due;  and  (iii)  Assignee  and Operating Assignee are financially
capable  of  performing  and  satisfying  in  full  their respective obligations
pursuant  to  the  Assignment  and  Assumption  Agreement  and  the  Lease.
<PAGE>

5.     Estoppel.  Pursuant  to  Section  24.02  of the Lease, the Port Authority
       --------
hereby  certifies,  represents  and warrants to Assignor, Assignee and Operating
Assignee  that  as  of  the  date  of  the  execution  of  this  Agreement:

     (a)     A  true, correct and complete copy of the Lease, and all amendments
thereto,  are  attached  hereto as SCHEDULE A. The Lease has not been amended or
modified,  except  as  set  forth on SCHEDULE A attached hereto and incorporated
herein  by  this  reference.

     (b)     The  Lease, as amended or modified, is in full force and effect and
constitutes  the  legal,  valid  and  binding  obligation of, and is enforceable
against,  the  Port  Authority  in  accordance  with  its  terms.

     (c)     The Rent (as such term is defined in the Lease) payable by Assignor
under the Lease presently consists of the Minimum Net Rent, the Percentage Rent,
and the Additional Rent (as those terms are defined in the Lease). The Rent
payable by Assignor under the Lease has been paid up through October 18, 1999,
except for the Percentage Rent and the Additional Rent which cannot presently be
calculated. The Minimum Net Rent now payable annually under the Lease is Two
Million Dollars ($2,000,000).  In addition, the Riverfront Park Grant (as
defined in the Lease) now payable annually under the Lease is One Million
Dollars ($1,000,000).

     (d)     The  expiration  of  the  current  term of the Lease is October 18,
2006,  and  there are eight (8) separate renewal periods of five (5) years each,
of  the  term  of the Lease. No event has occurred or condition currently exists
that  would prevent Assignee or Operating Assignee from exercising its option to
extend  the  term  of  the  Lease  for  any or all of the aforementioned renewal
periods.

     (e)     To  the  best  knowledge of the officer executing this Agreement on
behalf  of  the  Port  Authority,  Assignor is not default in performance of any
covenant,  agreement or condition contained in the Lease, except as specifically
set  forth  on  SCHEDULE  B  attached  hereto  and  incorporated  herein by this
reference.

     (f)     Except  as set forth on SCHEDULE C attached hereto and incorporated
herein  by  this  reference, no event has occurred and no condition exists that,
with  the  giving  of  notice  or  the lapse of time or both, could constitute a
default  by  the  Port  Authority.

     (g)     The  Port  Authority has no present intention to bring an action or
otherwise  attempt  to  enforce  any  alleged  nonperformance  or  breach of any
provision  of  the Lease by Assignor. Except as set forth on SCHEDULE D attached
hereto  and  incorporated  herein  by  this reference, the Port Authority has no
existing  defenses  or offsets against the enforcement of the Lease by Assignor,
and  knows  of no other parties who are not signatories to the Lease who possess
or  may  assert  rights  under  or  in  connection  with  the  Lease.
<PAGE>

(h)     Except  as  set  forth  on  SCHEDULE  E attached hereto and incorporated
herein  by  this  reference, the Lease and the Development Agreement dated as of
March 12, 1993, by and between the Port Authority and Hilton Hotels Corporation,
as  thereafter  amended,  are the only agreements, written or oral, entered into
directly  between  the  Port Authority and Hilton Hotels Corporation or Flamingo
Hilton  Riverboat  Casino,  L.P.

     (i)     Except  as set forth on SCHEDULE F attached hereto and incorporated
herein  by this reference, the Port Authority has not received any notice of any
violations  of  any  statutes,  laws,  ordinances  or directives relating to the
Lease.

     6.     Counterparts.  This  Agreement  operates  as  the  required  written
            ------------
consent  under Article XVII of the Lease, and no further action need be taken or
consent obtained by Assignor, Assignee or Operating Assignee with respect to the
Port  Authority  to  give  full  legal  effect  to the Assignment and Assumption
Agreement,  except  to  deliver  an  executed  counterpart of the Assignment and
Assumption  Agreement,  in  recordable  form,  to  the  Port  Authority.

     7.     Reliance.  The Port Authority acknowledges that the Port Authority's
            --------
acknowledgment,  consent  representations  and  warranties  set  forth  in  this
Agreement are for the benefit of, shall be relied upon, and shall be enforceable
by,  Assignor,  in addition to the Assignee and Operating Assignee; accordingly,
the  Port Authority acknowledges and agrees that Assignor shall be a third party
beneficiary  hereof  and  shall  have  the  right  to enforce any such terms and
conditions  hereof  in  such  capacity.

Date:_______________________ 2000

                                                  THE PORT AUTHORITY OF
                                                  KANSAS CITY, MISSOURI

                                                  By:
                                                  Print Name:
                                                  Title:

                                                  ISLE OF CAPRI CASINOS, INC.

                                                  By:
                                                  Print Name:
                                                  Title:

                                                  IOC-KANSAS CITY, INC.

                                                  By:
                                                  Print Name:
                                                  Title:

<PAGE>

                              ACKNOWLEDGMENT
                              --------------

STATE OF MISSOURI     )
                    )     s/s.
COUNTY OF JACKSON     )

     BEFORE ME, a Notary Public in and t for the County and State aforesaid,
personally Appeared ___________, as Chairman of the Port Authority of Kansas
City, Missouri, a public corporation, who is known to me to be the same person
who executed the foregoing instrument on behalf of said Port Authority and
acknowledged the execution of the same as the free and voluntary act and deed of
said Port Authority.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal
This____ day of _____________, 1999.

Notary Public

My Commission Expires:

<PAGE>
                                   SCHEDULE A
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

COMPLETE COPY OF THE LEASE AND ALL AMENDMENTS TO THE LEASE

           ATTACHED HERETO AND FOLLOWING THIS PAGE IS A COMPLETE COPY
                  OF THE LEASE AND ALL AMENDMENTS TO THE LEASE

<PAGE>
                                   SCHEDULE B
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

                    DEFAULT(S) BY ASSIGNOR UNDER THE LEASE

                      NO KNOWLEDGE OF VIOLATION OR BREACH

The Port Authority has no knowledge of any fact or condition under the Lease
Agreement that would constitute a violation or breach of any law, contract or
agreement except that the gravel valet parking lot which Assignor leases from
the Port Authority was not constructed to, and does not currently comply with,
the building code requirements of Kansas City, Missouri.

<PAGE>
                                   SCHEDULE C
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

                DEFAULT(S) BY THE PORT AUTHORITY UNDER THE LEASE

   The Port Authority has no knowledge of any fact or condition under the Lease
Agreement that would constitute a default by Assignor under the Lease Agreement
   except that the gravel valet parking lot which Assignor leases from the Port
     Authority was not constructed to, and does not currently comply with, the
              building code requirements of Kansas City, Missouri.

<PAGE>
                                   SCHEDULE D
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

             NO DEFENSES OR OFFSETS AGAINST ENFORCEMENT AND NO OTHER
                                   SIGNATORIES

NONE

<PAGE>

                                   SCHEDULE E
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

OTHER AGREEMENTS BETWEEN ASSIGNOR AND THE PORT AUTHORITY

     1.     Non-Exclusive Access Easement Agreement dated August 18, 1995, by
and among KCP&L Co., Hilton Hotels Corp. ("IRLC"), HKCC and the Port Authority.

     2.     Those certain agreements, certificates, documents and instruments
delivered by HCC and/or HKCC in connection with the closing of the Bond Issuance
Transaction, including, but not limited to, certain closing certificates, that
certain Continuing Disclosure Agreement dated January 9, 1996, and that certain
Acknowledgment and Attornment Agreement dated as of December 1, 1995.

     3.     Cooperative Agreement dated August 18, 1995 by and among HKCC, the
Port Authority and the City of Kansas City, Missouri.

     4.     Social/Minority Grant Escrow Agreement dated as of November 4, 1996
by and among Flamingo Hilton Riverboat Casino, L.P. ("FlamingoHilton"), the Port
                                                    ----------
Authority, and Boatmen's Trust Company (the "Trust Company").
                                             --------------

     5.     Problem Gaming Grant Escrow Agreement dated as of November 4, 1996
by and among Flamingo Hilton, the Port Authority and the Trust Company.

     6.     Development Rights Memorandum dated August 21, 1995 by and between
the Port Authority and HHC.

<PAGE>
                                   SCHEDULE F
                                   ----------
                                       TO
                                       --
                ACKNOWLEDGMENT, CONSENT AND ESTOPPEL CERTIFICATE
                ------------------------------------------------

NOTICE OF ANY VIOLATIONS

NONEEXHIBIT 10.72

================================================================================

                      ------------------------------------

                       STOCK AND ASSET PURCHASE AGREEMENT

                      ------------------------------------

                                     Between

                       SPECTRA PHYSICS HOLDINGS USA, INC.,

                            SPECTRA PRECISION AB, AND

                     SPECTRA PRECISION EUROPE HOLDINGS, BV,

                                   as SELLERS

                                       and

                            TRIMBLE ACQUISITION CORP.

                                  as PURCHASER

                            Dated as of May 11, 2000

================================================================================

                                       7
<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

ARTICLE I. DEFINITIONS     12

   SECTION 1.1 Certain Defined Terms..........................................12

ARTICLE II. PURCHASE AND SALE       18

   SECTION 2.1 Purchase and Sale of the Shares and SPAB Assets................18
   SECTION 2.2 Purchase Price.................................................18
   SECTION 2.3 Closing........................................................18
   SECTION 2.4 Closing Deliveries by the Sellers..............................18
   SECTION 2.5 Closing Deliveries by the Purchaser............................18
   SECTION 2.6 Adjustment of Purchase Price...................................18
   SECTION 2.7 Estimated Net Debt and Estimated Working Capital Adjustments...19

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS    20

   SECTION 3.1 Organization, Authority and Qualification of the Sellers.......20
   SECTION 3.2 Organization, Authority and Qualification of the Companies.....20
   SECTION 3.3 Capital Stock of the Companies; Ownership of the Shares........20
   SECTION 3.4 Subsidiaries...................................................21
   SECTION 3.5 Corporate Books and Records....................................22
   SECTION 3.6 No Conflict....................................................22
   SECTION 3.7 Consents and Approvals.........................................22
   SECTION 3.8 Financial Information, Books and Records, Projections
                and Operating Data............................................23
   SECTION 3.9 No Undisclosed Liabilities.....................................23
   SECTION 3.10 Receivables...................................................23
   SECTION 3.11 Inventories...................................................23
   SECTION 3.12 Conduct in the Ordinary Course; Absence of Certain
                 Changes, Events and Conditions...............................23
   SECTION 3.13 Litigation....................................................25
   SECTION 3.14 Compliance with Laws..........................................25
   SECTION 3.15 Environmental Compliance and Other Permits and Licenses;
                 Related Matters..............................................25
   SECTION 3.16 Intellectual Property.........................................26
   SECTION 3.17 Real Property.................................................28
   SECTION 3.18 Material Contracts............................................28
   SECTION 3.19 Assets........................................................28
   SECTION 3.20 Customers.....................................................29
   SECTION 3.21 Suppliers.....................................................29
   SECTION 3.22 Employee Benefit Matters......................................29
   SECTION 3.23 Labor Matters.................................................31
   SECTION 3.24 Taxes.........................................................31
   SECTION 3.25 Insurance.....................................................32
   SECTION 3.26 Product and Service Warranties................................32
   SECTION 3.27 Brokers.......................................................32
   SECTION 3.28 Certain Interests.............................................32

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER   33

   SECTION 4.1 Organization and Authority of the Purchaser....................33
   SECTION 4.2 No Conflict....................................................33
   SECTION 4.3 Governmental Consents and Approvals............................33
   SECTION 4.4 Investment Purpose.............................................33
   SECTION 4.5 Litigation.....................................................33
   SECTION 4.6 Brokers........................................................33
   SECTION 4.7 Commitment Letter..............................................33

ARTICLE V. ADDITIONAL AGREEMENTS    33

   SECTION 5.1 Conduct of Business Prior to the Closing.......................33
   SECTION 5.2 Access to Information..........................................33

                                       8
<PAGE>

   SECTION 5.3 Confidentiality................................................34
   SECTION 5.4 Regulatory and Other Authorizations; Notices and Consents......34
   SECTION 5.5 Notice of Developments.........................................35
   SECTION 5.6 Environmental Study and Remedial Action........................35
   SECTION 5.7 No Solicitation................................................35
   SECTION 5.8 Use of Intellectual Property...................................35
   SECTION 5.9 Non-Competition................................................35
   SECTION 5.10 Further Action................................................36
   SECTION 5.11 Audited Financial Statements..................................36
   SECTION 5.12 Non-Solicitation of Employees.................................36

ARTICLE VI. EMPLOYEE MATTERS        37

   SECTION 6.1 Employment Liabilities.........................................37
   SECTION 6.2 Employee Benefit Plans - General...............................37
   SECTION 6.3 WARN Act.......................................................37

ARTICLE VII. TAX MATTERS...37

   SECTION 7.1 Indemnity......................................................37
   SECTION 7.2 Returns and Payments...........................................38
   SECTION 7.3 Refunds........................................................38
   SECTION 7.4 Contests.......................................................38
   SECTION 7.5 Conveyance Taxes...............................................39
   SECTION 7.6 Miscellaneous..................................................39
   SECTION 7.7 Purchase Price Allocation......................................39
   SECTION 7.8 Section 338(h)(10) Election....................................39

ARTICLE VIII. CONDITIONS TO CLOSING 40

   SECTION 8.1 Conditions to Obligations of the Sellers.......................40
   SECTION 8.2 Conditions to Obligations of the Purchaser.....................40

ARTICLE IX. INDEMNIFICATION         42

   SECTION 9.1 Survival of Representations and Warranties.....................42
   SECTION 9.2 Indemnification by the Sellers.................................42
   SECTION 9.3 Limits on Indemnification......................................44
   SECTION 9.4 Tax Matters....................................................44
   SECTION 9.5 Indemnification by the Purchaser...............................45

ARTICLE X. TERMINATION AND WAIVER   45

   SECTION 10.1 Termination...................................................45
   SECTION 10.2 Effect of Termination.........................................46
   SECTION 10.3 Waiver........................................................46

ARTICLE XI. GENERAL PROVISIONS      46

   SECTION 11.1 Expenses......................................................46
   SECTION 11.2 Notices.......................................................46
   SECTION 11.3 Public Announcements..........................................47
   SECTION 11.4 Headings......................................................47
   SECTION 11.5 Severability..................................................47
   SECTION 11.6 Entire Agreement..............................................47
   SECTION 11.7 Assignment....................................................47
   SECTION 11.8 No Third Party Beneficiaries..................................47
   SECTION 11.9 Amendment.....................................................48
   SECTION 11.10 Governing Law................................................48
   SECTION 11.11 Counterparts.................................................48
   SECTION 11.12 Specific Performance.........................................48
   SECTION 11.13 Further Assurances...........................................48

                                       9
<PAGE>

EXHIBITS

Exhibit 1 Commitment  Letter [not  submitted  in filing]
Exhibit 2 Form of SPAB Asset Purchase  Agreement [not submitted in filing]
Exhibit 3 Form of Note [not submitted in filing]
Exhibit 4 Form of Purchaser  Parent Guaranty [not submitted in filing]
Exhibit 5 Form of Sellers' Parent Guaranty [not submitted in filing]

SCHEDULES

Schedule 1            List GAAP Deviations [not submitted in filing]
Schedule 1.1(a)       Excluded Assets [not submitted in filing]
Schedule 1.1(b)       Material Subsidiaries [not submitted in filing]
Schedule 2            Working Capital Worksheet [not submitted in filing]
Schedule 3.1          List of Seller Representatives [not submitted in filing]
Schedule 3.3          No Repurchases, Redemptions, etc.[not submitted in filing]
Schedule 3.4(a)       List of Subsidiaries [not submitted in filing]
Schedule 3.4(b)       Joint Ventures [not submitted in filing]
Schedule 3.4(d)       Pre-emptive Rights [not submitted in filing]
Schedule 3.4(g)       No Partnerships [not submitted in filing]
Schedule 3.7(a)       Government Consents and Approvals[not submitted in filing]
Schedule 3.7(b)       Consents to Assignment of Material Contracts and
                        Assets [not submitted in filing]
Schedule 3.8(a)(i)    Financial Statements [not submitted in filing]
Schedule 3.8(a)(ii)   Reference Balance Sheet [not submitted in filing]
Schedule 3.9          No Undisclosed Liabilities [not submitted in filing]
Schedule 3.10         Receivables List [not submitted in filing]
Schedule 3.11         Inventories, Lists of Facilities; Title to
                        Inventories [not submitted in filing]
Schedule 3.12(iii)    Conduct in Ordinary Course:  No Indebtedness
                        [not submitted in filing]
Schedule 3.12(v)      Conduct in Ordinary Course:  No Dividends
                        [not submitted in filing]
Schedule 3.12(vi)     Conduct in Ordinary Course:  No Material Changes in
                        Operations [not submitted in filing]
Schedule 3.12(viii)   Conduct in Ordinary Course:  No Capital Expenditures in
                        Excess of  Certain Amounts [not submitted in filing]
Schedule 3.12(x)      Conduct in Ordinary Course:  No Sales of Properties or
                        Assets [not submitted in filing]
Schedule 3.12 (xvi)   Conduct in Ordinary Course: Changes in Accounting
                        Methods [not submitted in filing]
Schedule 3.12(xxi)    Conduct in Ordinary Course:  No Terminations
                        [not submitted in filing]
Schedule 3.13         Litigation [not submitted in filing]
Schedule 3.15(a)(i)   Environmental:  Permits [not submitted in filing]
Schedule 3.15(a)(ii)  Environmental:  Practices [not submitted in filing]
Schedule 3.15(a)(iii) Environmental:  Compliance [not submitted in filing]
Schedule 3.15(a)(iv)  Environmental:  Non-Transferable Permits
                        [not submitted in filing]
Schedule 3.15(b)      Environmental:  No Release of Hazardous Materials
                        [not submitted in filing]
Schedule 3.15(c)      Environmental:  No UST's [not submitted in filing]
Schedule 3.15(d)      Environmental:  No PCB's  [not submitted in filing]
Schedule 3.15(e)      Environmental:  No Inspections [not submitted in filing]
Schedule 3.15(f)      Environmental:  No Knowledge [not submitted in filing]
Schedule 3.16(a)(i)   Intellectual Property:  Assignments Recorded
                        [not submitted in filing]
Schedule 3.16(a)(ii)  Intellectual Property:  No Conflict
                        [not submitted in filing]
Schedule 3.16(b)      Intellectual Property:  Ownership
                        [not submitted in filing]
Schedule 3.16(d)(ii)  Intellectual Property:  Effectiveness
                        [not submitted in filing]
Schedule 3.16(d)(iii) Intellectual Property:  No Termination
                        [not submitted in filing]
Schedule 3.16(e)(1)   Intellectual Property: Third Party Assignments
                        [not submitted in filing]
Schedule 3.16(e)(2)   Intellectual Property: Products [not submitted in filing]
Schedule 3.17(a)      Real Property:  Street Addresses [not submitted in filing]
Schedule 3.17(b)      Real Property:  Zoning; Leasing [not submitted in filing]
Schedule 3.18(a)      Material Contracts:  Effectiveness; List
                        [not submitted in filing]
Schedule 3.18(b)      Material Contracts:  No Defaults [not submitted in filing]
Schedule 3.18(c)      Material Contracts:  No Preferential Purchase Rights
                        [not submitted in filing]
Schedule 3.19         Assets [not submitted in filing]
Schedule 3.20         Customers [not submitted in filing]
Schedule 3.21         Suppliers [not submitted in filing]
Schedule 3.22(a)      Employee Benefit Matters': List [not submitted in filing]

                                       10
<PAGE>

Schedule 3.22(b)      Employee Benefit Matters': Multi-Employee Plans
                        [not submitted in filing]
Schedule 3.22(g)      Employee Benefit Matters': Investment Contract
                        [not submitted in filing]
Schedule 3.22(h)      Employee Benefit Matters': ADA [not submitted in filing]
Schedule 3.22(i)      Employee Benefit Matters': Overseas Employees
                        [not submitted in filing]
Schedule 3.23(j)      Labor Matters:  Unions [not submitted in filing]
Schedule 3.24 (b)     Taxes; Audits; Extensions [not submitted in filing]
Schedule 3.25         Insurance [not submitted in filing]
Schedule 3.28(a)      Certain Interests:  Executives [not submitted in filing]
Schedule 3.28(b)      Certain Interests:  No Relationships
                        [not submitted in filing]
Schedule 3.28(c)      Certain Interests:  No Liabilities
                        [not submitted in filing]
Schedule 4.5          Litigation [not submitted in filing]
Schedule 5.1          Conduct of Business [not submitted in filing]
Schedule 8.2(r)       Other Transactions [not submitted in filing]

                                       11
<PAGE>

STOCK AND ASSET PURCHASE  AGREEMENT,  dated as of May 11, 2000,  between SPECTRA
PHYSICS HOLDINGS USA, INC., a Delaware corporation ("SPUSA"),  SPECTRA PRECISION
AB, a  corporation  organized  and existing  under the laws of Sweden  ("SPAB"),
SPECTRA  PRECISION  EUROPE  HOLDINGS  BV, a private  limited  liability  company
organized  and  existing  under  the laws of the  Netherlands  ("SPBV")  (SPUSA,
together with SPBV, and SPAB, the "Sellers"),  and TRIMBLE  ACQUISITION CORP., a
California corporation (the "Purchaser").

================================================================================

                              W I T N E S S E T H:

WHEREAS, the Sellers, directly and through the Companies (as herein defined) and
the  Subsidiaries (as herein defined) are engaged in the business of laser-based
and  sonic-based   instrumentation   surveying  systems  for  the  construction,
agricultural and surveying  industries at various locations in the United States
and other countries (which activities,  as currently  conducted by the Companies
and the  Subsidiaries,  are  hereinafter  referred  to as the  "Business");  and
WHEREAS, the Sellers wish to sell to the Purchaser,  and the Purchaser (directly
or through one or more  Affiliates  of  Purchaser)  wishes to purchase  from the
Sellers,  the Business,  including,  without  limitation,  all right,  title and
interest of the Sellers in and to the property and assets of the  Business,  and
in connection  therewith the Purchaser is willing to assume certain  liabilities
of the  Sellers  relating  thereto,  all  upon  the  terms  and  subject  to the
conditions set forth herein;  NOW,  THEREFORE,  in consideration of the premises
and the mutual agreements and covenants hereinafter set forth, the Purchaser and
the Sellers hereby agree as follows:

                                   DEFINITIONS

     Certain Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:

"Acquisition  Documents" has the meaning specified in Section 9.1.
"Action" means any claim, action, suit, arbitration,  proceeding or announced
investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other Person that
directly,  or indirectly through one or more intermediaries, controls, is
controlled by, or is under  common  control  with,  such  specified  Person.
"Agreement"  or  "this Agreement"  means this Stock and Asset Purchase
Agreement,  dated as of May 11, 2000,  between  the  Sellers  and the  Purchaser
(including  the  Exhibits  and Schedules  hereto)  and all  amendments  hereto
made  in  accordance  with  theprovisions of Section 11.9.
"Assets" has the meaning specified in Section 3.19.
"Business  Day" means any day that is not a  Saturday,  a Sunday or other day on
which banks are  required or  authorized  by law to be closed in The City of San
Francisco.   "Business   Interruption   Costs"  shall  mean  all   out-of-pocket
manufacturing  costs and other  out-of-pocket  costs (e.g., sales and marketing,
shipping and administrative costs) relating to the Purchaser's business from and
after the Closing, plus any and all lost before tax profits,  resulting from any
interruption of the Purchaser's  business activities conducted on or from any of
the Real Property to the extent caused by any Remedial Actions unless covered by
insurance.
"CERCLA"  means  the  Comprehensive  Environmental  Response,  Compensation  and
Liability  Act of 1980,  as amended  through the date hereof.
"Closing" has the meaning  specified in Section 2.3.
"Closing  Balance Sheet" means the unaudited consolidated  balance  sheet of the
Business to be prepared  pursuant to Section 2.6(a) and to be dated as of the
Closing Date.
"Closing Date" has the meaning specified in Section 2.3.
"Code" means the  Internal  Revenue  Code of 1986,  as amended  through the date
hereof.
"Commitment  Letter" means that certain  commitment  letter and summary of terms
and conditions  attached hereto as Exhibit 1.
"Companies"  means SPINC, the SPBV Companies,  SPAB, and the SPAB Companies and
"Company" shall mean any one of the foregoing.
"Companies' Accounting Practices" means those accounting practices of the
Sellers  that  are  consistent  with  past  practices  and  methods  and in
compliance with the Sellers' accounting policies,  as modified,  if relevant, by
the Working Capital Worksheet.  Any differences  between  Companies'  Accounting
Practices and U.S. GAAP are listed on Schedule 1 hereto.
"Confidentiality   Agreement"  means  the  Bi-Lateral  Non-Disclosure  Agreement
between Thermo Instrument  Systems Inc. and Trimble  Navigation Limited dated as
of December 20, 1999.
"Control" (including the terms "controlled by" and "under common control with"),
with respect to the relationship  between or among two or more  Persons,  means
the  possession,  directly or  indirectly or as trustee or executor,  of the
power to  direct or cause the  direction  of the  affairs  or management of a
Person,  whether through the ownership of voting securities,  as trustee or
executor,  by contract or otherwise,  including,  without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance"  means any security interest granted in assets located in
the  United  States or  similar  security  right  granted  outside of the United
States, pledge, mortgage, lien (including, without limitation, environmental and
tax liens), encumbrance,  adverse claim, preferential arrangement or restriction
of any kind, including,  without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.

                                       12
<PAGE>

"Environment"   means   buildings   and  other   facilities,   surface   waters,
groundwaters,  soil, subsurface strata and ambient air.
"Environmental  Claims" means  any  and all  administrative,  regulatory  or
judicial  actions,  suits, demands, demand letters,  claims, liens, notices of
non-compliance or violation, proceedings,  consent orders or consent or
settlement agreements relating in any way to any Environmental Law or any
Environmental  Permit (hereafter  "Claims"), including,  without  limitation,
(a)  any  and  all  Claims  or  directions  by Governmental  Authorities  for
enforcement,  investigation,  cleanup,  removal, response,  remedial  or other
actions or  damages  pursuant  to any  applicable Environmental  Law and
(b) any and all  Claims  by any  Person  seeking  damages (including  natural
resource  damages),  contribution,   indemnification,  cost recovery,
compensation  or  injunctive  relief  (i)  resulting  from  Hazardous
Materials;  (ii)  arising  from  injury to  health,  safety  or the  Environment
resulting  from the  release of  Hazardous  Materials  by the  Companies  or any
Subsidiary;  or (iii)  otherwise  relating  to the  existence  of any  Hazardous
Materials on or under any Real Property or any Real Property previously owned or
operated by the Companies or any Subsidiary.
"Environmental Condition" means a condition relating to or arising or resulting
from a failure to comply with any applicable Environmental Law or Environmental
Permit or a Release of Hazardous materials in the Environment.
"Environmental Laws" means any Law, now in effect or as hereafter amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including but not limited to
CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.
6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.ss.ss. 6901
et seq.; the Clean Water Act, 33 U.S.C.ss.ss. 1251 et seq.; the Toxic Substances
Control Act, 15 U.S.C.ss.ss. 2601 et seq.; the Clean Air Act, 42 U.S.C.ss.ss.
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.ss.ss. 300f et seq.; the
Atomic Energy Act, 42 U.S.C.ss.ss. 2011 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C.ss.ss. 136 et seq. and analogous state,
provincial and foreign laws.
"Environmental  Permits" means all permits,  approvals,  identification numbers,
licenses and other  authorizations  required under any applicable  Environmental
Law.

                                       13
<PAGE>

"Environmental  Study"  has the  meaning  specified  in Section  5.6.
"Excluded Assets"  shall mean those  assets set out on  Schedule  1.1(a).
"ERISA" has the meaning specified in Section 3.22(a).
"Financial  Statements"  means the unaudited  consolidated  balance sheet of the
Business as of October 2, 1999, and the unaudited  statements of income, for the
three-month  and  nine-month  periods  ended  October 2, 1999,  of the Business,
copies of which are attached as Schedule 3.8(a)(i).
"Governmental  Authority" means any United States federal, state or local or any
foreign government, governmental, regulatory or administrative authority, agency
or  commission  or  any  court,   tribunal,   or  judicial  or  arbitral   body.
"Governmental  Order"  means any  order,  writ,  judgment,  injunction,  decree,
stipulation,  determination  or  award  entered  by  or  with  any  Governmental
Authority.
"Hazardous  Materials"  means  (a)  petroleum  and  petroleum  products,  radon,
radioactive  materials,  asbestos in any form that is friable, urea formaldehyde
foam   insulation,   and   transformers   or  other   equipment   that   contain
polychlorinated biphenyls, and (b) any other chemicals,  materials or substances
defined as or included in the definition of "hazardous  substances",  "hazardous
wastes",  "hazardous  materials",   "extremely  hazardous  wastes",  "restricted
hazardous  wastes",   "toxic  substances",   or  "toxic  pollutants"  under  any
applicable Environmental Law.
"HSR Act" means the  Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976, as
amended, and the rules and regulations  promulgated  thereunder.
"Indebtedness"  means, with respect to any Person,  (a) all indebtedness of
such Person,  whether or not contingent,  for borrowed money (exclusive of trade
payables), (b) all obligations of such Person for the deferred purchase price of
property or services (exclusive of trade payables),  (c) all obligations of such
Person evidenced by notes, bonds,  debentures or other similar instruments,  (d)
all  indebtedness  created or arising under any conditional  sale or other title
retention  agreement  with  respect to property  acquired  by such Person  (even
though the rights and remedies of the Sellers or lender under such  agreement in
the event of default are limited to repossession or sale of such property),  (e)
all obligations of such Person as lessee under  equipment  leases that have been
or should be, in accordance with U.S. GAAP,  recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar  facilities,  (g) all  obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any capital stock of such
Person or any warrants, rights or options to acquire such capital stock, valued,
in the case of redeemable  preferred  stock,  at the greater of its voluntary or
involuntary  liquidation  preference plus accrued and unpaid dividends,  (h) all
Indebtedness of others  referred to in clauses (a) through (f) above  guaranteed
directly or  indirectly  in any manner by such Person,  or in effect  guaranteed
directly  or  indirectly  by such  Person  through  an  agreement  (i) to pay or
purchase  such  Indebtedness  or to advance or supply  funds for the  payment or
purchase of such  Indebtedness,  (ii) to  purchase,  sell or lease (as lessee or
lessor) property, or to purchase or sell services,  primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such  Indebtedness  against  loss,  (iii) to supply  funds to or in any other
manner  invest in the debtor  (including  any  agreement  to pay for property or
services  irrespective of whether such property is received or such services are
rendered)  or (iv)  otherwise  to assure a creditor  against  loss,  and (i) all
Indebtedness  referred to in clauses  (a)  through (f) above  secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured by) any  Encumbrance on property  (including,  without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become  liable for the  payment of such  Indebtedness.
"Indemnified Party" has the meaning specified in Section 9.2(a).
"Independent Accounting Firm" has the meaning specified in Section 2.6(b)(ii).
"Intellectual  Property"  means:  (a)  inventions,  whether  or not  patentable,
whether or not reduced to practice, and whether or not yet made the subject of a
pending  patent  application  or  applications,  (b)  ideas and  conceptions  of
potentially patentable subject matter, including, without limitation, any patent
disclosures,  whether or not reduced to practice and whether or not yet made the
subject of a pending patent application or applications, (c) national (including
the United States) and multinational statutory invention registrations, patents,
patent registrations and patent applications (including all reissues, divisions,
continuations,  continuations-in-part,  extensions and  reexaminations)  and all
rights  therein  provided  by  international  treaties  or  conventions  and all
improvements to the inventions  disclosed in each such  registration,  patent or
application, (d) trademarks,  service marks, trade dress, logos, trade names and
corporate names, whether or not registered, including all common law rights, and
registrations  and  applications for registration  thereof,  including,  but not
limited  to, all marks  registered  in the United  States  Patent and  Trademark
Office, the Trademark Offices of the States and Territories of the United States
of America, and the Trademark Offices of other nations throughout the world, and
all rights  therein  provided  by  international  treaties or  conventions,  (e)
copyrights  (registered or otherwise) and  registrations  and  applications  for
registration thereof, and all rights therein provided by international  treaties
or conventions,  (f) computer software,  including,  without limitation,  source
code,   operating  systems  and   specifications,   data,  data  bases,   files,
documentation and other materials related thereto,  data and documentation,  (g)
trade secrets and confidential,  technical and business  information  (including
ideas, formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice),  (h) whether
or not confidential, technology (including know-how and show-how), manufacturing
and production processes and techniques,  research and development  information,
drawings,   specifications,   designs,   plans,   proposals,   technical   data,
copyrightable  works,  financial,  marketing and business data, pricing and cost
information,  business and marketing  plans and customer and supplier  lists and
information,  (i) copies  and  tangible  embodiments  of all the  foregoing,  in
whatever  form or  medium,  (j) all  rights  to obtain  and  rights to apply for

                                       14
<PAGE>

patents, and to register trademarks and copyrights, and (k) all rights to sue or
recover and retain  damages and costs and  attorneys'  fees for present and past
infringement of any of the foregoing.
"Inventories"  means  all  inventory,   merchandise,  finished  goods,  and  raw
materials,  packaging,  supplies,  manufactured  and  purchased  parts,  work in
process, and other personal property related to the Business maintained, held or
stored by or for the Companies or any  Subsidiary  and any prepaid  deposits for
any of the same.
"IRS" means the Internal Revenue Service of the United States.
"Knowledge" means the actual knowledge of the party's current executive officers
(or with respect to non-United  States entities,  persons  exercising  executive
functions sitting on advisory boards, supervisory boards or as directors).
"Law" means any  federal,  state,  local or  foreign  statute,  act,  law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Leased Real  Property"  means the real property  leased by the Companies or any
Subsidiary,  as tenant,  together with, to the extent leased by the Companies or
any Subsidiary,  all buildings and other structures,  facilities or improvements
currently or hereafter  located thereon,  all fixtures,  systems,  equipment and
items of  personal  property  of the  Companies  or any  Subsidiary  attached or
appurtenant  thereto,  and all  easements,  licenses,  rights and  appurtenances
relating to the foregoing.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent,  matured or unmatured or determined or
determinable,  including,  without  limitation,  those  arising  under  any  Law
(including,  without limitation,  any Environmental Law), Action or Governmental
Order and those arising under any contract, agreement,  arrangement,  commitment
or  undertaking,  which are  required to be  reflected  or reserved on a balance
sheet in  conformity  with U.S.  GAAP  applied  on a basis  consistent  with the
preparation  of the  Reference  Balance  Sheet,  as modified,  if  relevant,  by
Schedule 1.
"Licensed  Intellectual  Property" means all  Intellectual  Property
licensed or sublicensed to the Companies or any Subsidiary from a third party.
"Loss" has the meaning specified in Section 9.2.
"Material  Adverse Effect" means any  circumstance,  change in, or effect on the
Business, the Companies or any Subsidiary that, individually or in the aggregate
with any other  circumstances,  changes  in, or effects  on, the  Business,  the
Companies  or any  Subsidiary:  (a) is, or could be,  materially  adverse to the
business,  operations,  assets,  employee  relationships,  customer  or supplier
relationships,  prospects,  results of operations or the condition (financial or
otherwise) of the Companies and the Subsidiaries, taken as a whole, or (b) could
adversely   affect  the  ability  of  the  Purchaser,   the  Companies  and  the
Subsidiaries, taken as a whole, to operate or conduct the Business in the manner
in which it is currently operated or conducted by the Sellers, the Companies and
the Subsidiaries.
"Material  Contracts" shall mean any of the following agreements entered into by
any of the  Companies  or the  Subsidiaries:

        1. Any lease for real  estate  not terminable  without penalty upon less
than 180 days'  notice;

        2. Any lease for equipment  having  lease  payments  in excess of
$250,000  over the term of the lease;

        3. Any purchase order for good or services not in the ordinary course of
business and in excess of $150,000;

        4. Any sales  representative or distributor agreement  not  terminable
without cause on notice of l80 or fewer days;

        5. Any license  agreement  or other  agreement  relating  to the  sale,
assignment  or transfer  of  intellectual   property  rights  (other  than
standard  generally available  "tear open"  license  agreements)  not entered
into in the  ordinary course of business;

        6. Any  agreement  limiting any of such  entity's  right to compete or
relinquishing  any material  Intellectual  Property  rights;

        7. Any employment  agreement  with any  officer or  managing  director
not terminable without cause on at least 90 days' notice;

        8. Any guaranty or similar obligation to pay a third party (other than
any document  evidencing  any obligation to pay normal trade payables or to pay
compensation and benefits to employees);  and

        9. Any  partnership,  joint venture,  collaborative  research and
development,  or similar  agreement.
"Material  Subsidiaries"  means all of the Subsidiaries set forth in
Schedule 1.1(b).
"Multiemployer  Plan" has the meaning  specified in Section  3.22(b).
"Multiple Employer Plan" has the meaning specified in Section 3.22(b).
"Net Debt" means "notes payable" and "long-term obligations" less the "cash" and
"cash  equivalents"  of the  Business  (as such terms are used in the  Reference
Balance Sheet attached hereto as Schedule  3.8(a)(ii)).  For reference purposes,
the

                                       15
<PAGE>

parties  acknowledge  that Net Debt as of October  2, 1999 was One  Million
Seven  Hundred  Thousand  ($1,700,000.00)  Dollars.
"Note"  means  the  note of Purchaser given as part of the Purchase Price in the
form attached as Exhibit 3.
"Off-Site Environmental Matters" means any lawsuit,  action,  proceeding,  claim
(including  Environmental Claims),  charge,  complaint,  liability or obligation
which has been asserted against the Sellers (with respect to the Business),  any
of the Companies or any Subsidiary by a  governmental  entity or a private party
which is the  result  of or  relates  in any  manner to the  transportation  for
disposal or disposal of Hazardous Materials and non-hazardous solid waste, prior
to the Closing Date by any means and by any party from any Real  Property or any
real property  previously  owned or operated by the Sellers (with respect to the
Business),  any of the Companies or any  Subsidiary  (directly or indirectly) at
real property not owned or leased by the Sellers (with respect to the Business),
any of the Companies or any  Subsidiary.  Off-Site  Environmental  Matters shall
include,  without limitation,  lawsuits and claims by any governmental entity or
private party, under any statutory or common law or regulation (including CERCLA
or any  similar  Laws,  rules  or  regulation  of any  federal,  state  or local
government, or the laws, rules and regulations of another country) regarding the
cleanup or remediation of Hazardous Materials at or emanating from real property
not owned or leased by the Companies or any  Subsidiary,  or regarding  personal
injury or damages to natural resources,  real property or personal property as a
result of the presence of Hazardous Materials at or emanating from real property
not owned or leased by the Sellers  (with respect to the  Business),  any of the
Companies or any Subsidiary.
"Other Purchase  Documents" means (i) the SPAB Asset Purchase  Agreement and all
documents to be executed  thereunder;  (ii) a notarized  share  transfer deed in
respect of the  transfer of shares of Spectra  Precision,  BV; (iii) a notarized
share  transfer  deed in respect of the  transfer  of shares of Spectra  Physics
Holdings GmbH; and (iv) a notarized  share transfer deed in respect of shares of
Spectra Precision SRL.
"Owned  Intellectual  Property" means all Intellectual  Property in and to which
the Companies or any Subsidiary holds, or has a right to hold, right,  title and
interest.
"Owned Real Property" means the real property owned by the Companies or any
Subsidiary,  together  with all buildings  and other  structures,  facilities or
improvements  currently or hereafter  located  thereon,  all fixtures,  systems,
equipment  and items of personal  property of the  Companies  or any  Subsidiary
attached  or  appurtenant  thereto  and  all  easements,  licenses,  rights  and
appurtenances relating to the foregoing.
"Permits" has the meaning specified in Section 3.15(a).
"Permitted Encumbrances" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) liens for taxes,  assessments and governmental charges or levies not yet due
and  payable  which  are  not  in  excess  of  $300,000  in the  aggregate;  (b)
Encumbrances  imposed  by law,  such as  materialmen's,  mechanics',  carriers',
workmen's and repairmen's  liens and other similar liens arising in the ordinary
course of business securing obligations that (i) are not overdue for a period of
more than 30 days and (ii) are not in excess of  $25,000 in the case of a single
property or $250,000 in the  aggregate  at any time;  (c) pledges or deposits to
secure obligations under workers' compensation laws or similar legislation or to
secure  public  or  statutory  obligations;  and (d)  minor  survey  exceptions,
reciprocal easement agreements and other customary encumbrances on title to real
property that (i) were not incurred in connection with any Indebtedness, (ii) do
not render title to the property  encumbered  thereby  unmarketable and (iii) do
not, individually or in the aggregate,  materially adversely affect the value or
use of such property for its current and anticipated purposes.
"Person" means any  individual,  partnership,  firm,  corporation,  association,
trust,  unincorporated organization or other entity, as well as any syndicate or
group  that  would  be  deemed  to be a person  under  Section  13(d)(3)  of the
Securities Exchange Act of 1934, as amended.
"Plans" has the meaning specified in Section 3.22(a).
"Precision Names" has the meaning specified in Section 5.8
"Products" means the products listed on Schedule 3.16(e)(2), and improvements or
derivatives  thereof with the same  functionality  or designed to serve the same
customer need. "Purchase Price" has the meaning specified in Section 2.2.
"Purchase  Price Bank  Account"  means a bank account in the United States to be
designated  by the Sellers in a written  notice to the  Purchaser  at least five
Business Days before the Closing.  "Purchaser" has the meaning  specified in the
recitals to this Agreement.
"Purchaser  Parent  Guaranty"  means that certain  guaranty the form of which is
attached hereto as Exhibit 4.
"Purchaser's Accountants" means Ernst & Young LLP, independent accountants of
the Purchaser.
"Real Property" means the Leased Real Property and the Owned Real Property.
"Receivables"  means any and all accounts receivable,  notes  and  other amounts
receivable  by  the  Companies or  any Subsidiary from third parties, including,
without limitation, customers, arising from the conduct of the  Business or
otherwise,  whether or not in the ordinary course,  together with all unpaid
financing charges accrued thereon.
"Reference Balance  Sheet" means the unaudited  consolidated  balance sheet of
the Business dated  as of  October  2,  1999,  a copy  of  which  is set  forth
in  Schedule 3.8(a)(ii).
"Reference Balance Sheet Date" means October 2, 1999.
"Regulations" means the Treasury Regulations  (including Temporary  Regulations)
promulgated by the United States Department of Treasury with respect to the Code
or  other  federal  tax  statutes.

                                       16
<PAGE>

"Release" means any unlawful disposing,  discharging,  injecting, spilling,
leaking, leaching, dumping, emitting,  escaping,  emptying, seeping, placing and
the like into or upon any land or water or air or  otherwise  entering  into the
Environment.
"Remedial  Action"  means  all  action  reasonably  necessary  and
required under any applicable  Environmental Law or Environmental Permit and all
action  required by a  Governmental  Authority to (i) clean up,  remove,  treat,
abate or  handle or  respond  to in any other  way  Hazardous  Materials  in the
Environment; (ii) prevent the Release of Hazardous Materials so that they do not
migrate,  endanger or threaten to endanger  public health or the  Environment in
violation  of any law; or (iii)  perform  remedial  investigations,  feasibility
studies,  corrective actions, closures, and postremedial or postclosure studies,
investigations,  operations, maintenance and monitoring on, about or in any Real
Property.
"Restricted  Period" has the meaning specified in Section 5.9.
"Returns" has the meaning specified in Section 7.2.
"Sellers'  Parent  Guaranty"  means that  certain  guaranty the form of which is
attached hereto as Exhibit 4.
"Seller  Representative"  means the persons listed on Schedule  3.1.
"Sellers"  has the meaning  specified in the recitals to this Agreement.
"Sellers'  Accountants" means Arthur Andersen,  LLP, independent  accountants of
the Sellers.
"Sellers' Acquisition Date" means February 22, 1999.
"Shares" means all of the issued and outstanding capital stock of each of SPINC
and each of the SPBV Companies.
"SPAB" means Spectra Precision AB, a corporation  organized and existing under
the laws of Sweden.
"SPAB Asset Purchase  Agreement" means that certain Asset Purchase Agreement the
form of which is  attached  hereto as Exhibit 2.
"SPAB  Assets"  means the SPAB Companies'  Shares and all of the operating and
financial assets used by SPAB as described in the SPAB Asset Purchase Agreement.
"SPAB Companies" means (i) Spectra Precision of Canada Ltd., a Canadian company,
(ii)  Spectra  Precision  SA,  a French  corporation,  (iii)  Spectra  Precision
Handelsges mbH, an Austrian corporation,  and (iv) Spectra Precision Scandinavia
AB, a Swedish corporation.
 "SPAB Companies' Shares" means all of the issued and outstanding  capital stock
of each of the SPAB Companies.
"SPBV Companies" means (i) Spectra Precision BV, a Dutch company, (ii) Spectra
Physics Holdings GmbH, a German company, and (iii) Spectra Precision SRL, an
Italian company.
"SPBV Subsidiaries" means each of the following German Companies: Spectra
Precision Kaiserslautern GmbH, ZSP Geodetic Systems GmbH, and Spectra Precision
GmbH.
"SPINC" means Spectra Precision Inc., a corporation organized and existing under
the laws of the State of Delaware.
"SPINC Subsidiaries" means each of the following corporations: Spectra Physics
Credit Corp., Spectra Precision KK, Spectra Precision BVBA, Spectra Precision
Ltd., Spectra Precision Software Inc, Spectra Precision USA, Inc., Spectra
Physics Holding Mexico Inc., Spectra Physics Special Employees Inc., Spectra
Precision Pty. Ltd. and Spectra Precision de Mexico SA de CV.
"Subsidiaries"  means each of the SPINC Subsidiaries and the SPBV Subsidiaries,
each as listed on  Schedule  3.4(a) and
"Subsidiary"  shall mean any one of the foregoing.
"Tax" or "Taxes"  means any and all  taxes,  fees,  levies,  duties,
tariffs,  imposts,  and other  charges  of any kind  (together  with any and all
interest,  penalties,  additions  to tax and  additional  amounts  imposed  with
respect  thereto)  imposed by any  government  or taxing  authority,  including,
without  limitation:  taxes or  other  charges  on or with  respect  to  income,
franchises,  windfall or other profits,  gross receipts,  property,  sales, use,
capital stock,  payroll,  employment,  social security,  workers'  compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise,  withholding,  ad valorem, stamp, transfer, value added, or gains taxes;
license,  registration and documentation fees; and customs duties,  tariffs, and
similar charges.
"Transaction  Induced  Payments"  means  any  and  all  payments  or  other
remuneration  due  to  officers,  directors,  employees  or  consultants  of the
Companies or any  Subsidiary  in the form of stay  bonuses,  incentives or other
payments  triggered or calculated by reference to the transactions  contemplated
by this Agreement.
"Third Party Claims" has the meaning specified in Section 9.2(b).
"U.S. GAAP" means United States generally accepted  accounting  principles as of
December 31, 1999, applied consistently.
"USTs" means underground storage tanks, as such term is  defined in the Resource
Conservation  and  Recovery  Act,  as amended, and the regulations promulgated
thereunder.
"Vendors" means any and all vendors who are  unaffiliated  with the Sellers
or the  Companies  and  who  supply  raw  materials,  components,  spare  parts,
supplies,  goods,  merchandise  or services to the Companies or any  Subsidiary.
"Voluntary  Improvements"  means costs  incurred by the  Purchaser  for Remedial
Actions not reasonably required under applicable  Environmental Laws;  provided,
that (i) Remedial Actions  requested or directed by a Governmental  Authority or
pursuant  to a  Governmental  Order  shall  be  deemed  mandatory  and  (ii) the
Purchaser  shall  have the  burden  of proof of  demonstrating  that  particular
Remedial  Action was  reasonably  required by  applicable  Environmental  Law or
Governmental  Order.
"Working Capital" means the difference between (i) "total assets" (less the
sum of "cash and cash equivalents",  plus, "net fixed assets", plus, "goodwill",
minus  the  absolute  of  "intercompany  and  other")  and (ii)  "total  current
liabilities"  (less  "notes  payable")  plus "L/T  deferred  taxes"  and  "other
deferred items",  as such terms are used in the Reference Balance Sheet

                                       17
<PAGE>

attached hereto as Schedule 3.8. For reference  purposes,  the Working  Capital
as of the date of the Reference Balance Sheet is thirty one million, four
hundred thousand dollars ($31,400,000).
"Working Capital Worksheet" means the methodology used to calculate Working
Capital.

                                PURCHASE AND SALE

     Purchase and Sale of the Shares and SPAB Assets. Upon the terms and subject
to the conditions of this Agreement,  at the Closing,  the Sellers shall sell to
the Purchaser  (and/or to one or more Affiliates of the Purchaser  designated in
advance by Purchaser),  and the Purchaser (and/or such Affiliate) shall purchase
from the Sellers, the Shares and the SPAB Assets and the Sellers shall transfer,
and the Purchaser (and/or such Affiliate) shall assume,  certain  liabilities of
SPAB pursuant to the SPAB Asset Purchase  Agreement.  The Excluded  Assets shall
not be included  in the  purchase  and sale  transactions  contemplated  in this
Agreement and the SPAB Asset Purchase Agreement. To the extent that the Excluded
Assets are owned by a Company or Subsidiary other than SPAB, the Excluded Assets
shall be  distributed  by such  Company or  Subsidiary  to the  Sellers or their
Affiliates prior to the Closing.

     Purchase  Price.  Subject to the  adjustments  set forth in Section 2.6 and
2.7, the  aggregate  purchase  price for the Shares and the SPAB Assets shall be
(i) Two Hundred Eighty Million and 00/XX Dollars  ($280,000,000.00),  payable as
follows:  Two  Hundred  Million  and  00/XX  Dollars  ($200,000,000.00)  in cash
(subject  to  adjustment  as provided  herein) and (ii) the Note (the  "Purchase
Price"). The Purchase Price shall be allocated in accordance with Section 7.7 of
this Agreement.  As set forth in Section 2.7 herein, (a) any increase in Working
Capital or decrease in Net Debt, each as between the Reference Balance Sheet and
the Closing  Balance  Sheet,  shall result in an increase in the cash portion of
the  Purchase  Price,  and (b) any  adjustment  as a result of any  decrease  in
Working Capital or increase in Net Debt,  each as between the Reference  Balance
Sheet and the Closing  Balance  Sheet,  shall  result in a reduction in the cash
portion of the Purchase Price.

     Closing.  Upon the terms and subject to the  conditions of this  Agreement,
consummation  of the  transactions  contemplated  by this Agreement and the SPAB
Asset Purchase  Agreement,  shall take place at a closing (the  "Closing") to be
held at the offices of Wilson  Sonsini  Goodrich & Rosati,  P.C.,  650 Page Mill
Road,  Palo Alto, CA 94304 at 10:00 A.M.  California  time on the fifth Business
Day  following  the  later to  occur of (A)  expiration  or  termination  of all
applicable waiting periods under the HSR Act (or analogous foreign laws) and (B)
satisfaction or waiver of all other conditions to the obligations of the parties
set forth in Article  VIII,  or at such other  place or at such other time or on
such other date as the  Sellers and the  Purchaser  may  mutually  agree upon in
writing (the day on which the Closing takes place being the "Closing Date"). The
parties  acknowledge  and agree that the Closing shall have an effective time no
earlier than July 1, 2000.

     Closing  Deliveries  by the  Sellers.  At the  Closing,  the Sellers  shall
deliver or cause to be delivered to the Purchaser:

         stock  certificates  evidencing  the Shares duly endorsed in blank,  or
         accompanied   by  stock  powers  duly   executed  in  blank,   in  form
         satisfactory  to the Purchaser and with all required stock transfer tax
         stamps affixed,  except that with respect to the transfer of registered
         shares of Spectra  Precision BV,  Spectra  Physics  Holdings,  GmbH and
         Spectra  Precision SRL, the Sellers shall instead cause the appropriate
         notarial deed of transfer to be executed and delivered;

         a receipt for the Purchase Price;

         the opinions, certificates and other documents required to be delivered
         pursuant to Section 8.2;

         such transfer  documents relating to the sale of the SPAB Assets as the
         Purchaser may reasonably request and are necessary to put the Purchaser
         into full  possession and enjoyment of all the SPAB Assets,  including,
         without  limitation,  an  executed  copy  of the  SPAB  Asset  Purchase
         Agreement,  one or more bills of sale and general assignment of assets,
         in form and substance reasonably acceptable to the Purchaser; and

         the Sellers' Parent Guaranty.
         Closing Deliveries by the Purchaser.  At the Closing, the Purchaser
         shall deliver to the Sellers:

         the cash portion of the Purchase Price by wire transfer in immediately
         available funds to the Purchase Price Bank Account;

         the Note duly executed by Purchaser;

         the Purchaser Parent Guaranty;

         the Subordination Agreement executed by the parties named therein; and

         the opinions, certificates and other documents required to be delivered
         pursuant to Section 8.1. Adjustment of Purchase Price.  The Purchase
Price shall be subject to adjustment after the Closing as specified in this
Section 2.6:

         Closing  Balance Sheet.  As promptly as  practicable,  but in any event
         within  forty-five  (45) calendar days  following the Closing Date, the
         Purchaser  shall  deliver to the  Sellers the  Closing  Balance  Sheet,
         together with a

                                       18
<PAGE>

         written  confirmation  of the  Purchaser's  Accountants
         that  the  Closing  Balance  Sheet  fairly  presents  the  consolidated
         financial  position of the Business,  at the Closing Date in conformity
         with U.S. GAAP applied on a basis  consistent  with the  preparation of
         the Reference  Balance Sheet, as modified,  if relevant,  by Schedule 1
         and as shown on the Working Capital Worksheet.

Disputes.
     Subject to clause (ii) of this Section  2.6(b),  the Closing  Balance Sheet
delivered  by the  Purchaser  to the Sellers  shall be deemed to be and shall be
final, binding and conclusive on the parties hereto.

     The Sellers may dispute any amounts reflected on the Closing Balance Sheet;
provided,  however,  that the Sellers  shall have notified the Purchaser and the
Purchaser's  Accountants in writing of each disputed item, specifying the amount
thereof in dispute and setting forth, in reasonable  detail,  the basis for such
dispute,  within  thirty  (30) days of the  Purchaser's  delivery of the Closing
Balance  Sheet to the Sellers.  The  Sellers'  Accountants  and the  Purchaser's
Accountants shall attempt to reconcile their differences,  and any resolution by
them as to any disputed  amounts shall be final,  binding and  conclusive on the
parties  hereto and Sellers  shall cause to be made  available to Purchaser  all
records  and  supporting  material  requested  by  Purchaser.  If  the  Sellers'
Accountants  and the  Purchaser's  Accountants  are unable to reach a resolution
with such effect within twenty (20) Business Days after receipt by the Purchaser
and  the  Purchaser's   Accountants  of  the  written  notice  of  dispute,  the
Purchaser's Accountants and the Sellers' Accountants shall submit in writing the
items  remaining in dispute for resolution in reasonable  detail setting out the
basis for such dispute,  including all supporting  schedules and legal opinions,
if any,  to KPMG LLP (or,  if such firm shall  decline to act or is not,  at the
time of such written submission, independent of the Purchaser, the Companies and
the Sellers, to another independent accounting firm of international  reputation
mutually  acceptable to the Purchaser and the Sellers)  (either KPMG LLP or such
other  accounting firm being referred to herein as the  "Independent  Accounting
Firm"),  which  shall,  within  thirty  (30)  Business  Days after such  written
submission,  determine  and report to the  Purchaser  and the Sellers  upon such
remaining disputed items, and such report shall be final, binding and conclusive
on the Sellers and the Purchaser. Each party shall initially pay one half of the
fees and disbursements of the Independent Accounting Firm.  Thereafter,  whether
or not previously paid by either party, all of the fees and disbursements of the
Independent  Accounting Firm shall be ultimately adjusted as between the Sellers
and the  Purchaser  in the same  proportion  that the  aggregate  amount of such
remaining disputed items so submitted to the Independent Accounting Firm that is
unsuccessfully  disputed  by each  such  party  (as  finally  determined  by the
Independent  Accounting  Firm)  bears  to the  total  amount  of such  remaining
disputed items so submitted.

     In acting under this Agreement, the Purchaser's  Accountants,  the Sellers'
Accountants  and the  Independent  Accounting  Firm  shall  be  entitled  to the
privileges and immunities of arbitrators.

         Purchase Price  Adjustment.  The Closing  Balance Sheet shall be deemed
         final for the purposes of this Section 2.6 upon the earliest of (A) the
         failure  of the  Sellers to notify the  Purchaser  of a dispute  within
         thirty (30) days of the  Purchaser's  delivery  of the Closing  Balance
         Sheet to the Sellers,  (B) the resolution of all disputes,  pursuant to
         Section 2.6(b)(ii), by the Purchaser's and the Sellers' Accountants and
         (C) the resolution of all disputes,  pursuant to Section 2.6(b)(ii), by
         the  Independent  Accounting  Firm.  Within three  Business Days of the
         Closing  Balance Sheet being deemed final, a Purchase Price  adjustment
         shall be made as follows:

                  in the event that (A) the  Working  Capital  reflected  on the
         Reference  Balance Sheet exceeds the Working  Capital  reflected on the
         Closing  Balance  Sheet  and/or (B) Net Debt  reflected  on the Closing
         Balance Sheet exceeds the Net Debt  reflected on the Reference  Balance
         Sheet,  then the Purchase Price shall be adjusted downward in an amount
         equal to such excess, the Purchaser shall deliver written notice to the
         Sellers  specifying  the  amount  of such  downward  adjustment  of the
         Purchase  Price,  and Sellers shall,  within three Business Days of its
         receipt  of such  notice,  pay such  amount  to the  Purchaser  by wire
         transfer in immediately available funds. No failure of the Purchaser to
         deliver a notice of the type  specified  in the  immediately  preceding
         sentence  shall relieve the Sellers of the obligation to pay the amount
         of such deficiency to the Purchaser; and

                  in the event that (A) the  Working  Capital  reflected  on the
         Closing  Balance  Sheet  exceeds the Working  Capital  reflected on the
         Reference  Balance Sheet and/or (B) Net Debt reflected on the Reference
         Balance  Sheet  exceeds the Net Debt  reflected on the Closing  Balance
         Sheet,  then the Purchase  Price shall be adjusted  upward in an amount
         equal to such excess and the  Purchaser  shall,  within three  Business
         Days of  such  determination,  pay the  amount  of such  excess  to the
         Sellers by wire transfer in immediately available funds.

     Estimated Net Debt and Estimated Working Capital Adjustments.  The Purchase
Price shall be subject to adjustment at the Closing as specified in this Section
2.7. Two Business  Days prior to the Closing,  the Sellers  shall deliver to the
Purchaser  the Sellers'  good faith  estimate of the (a) Net Debt at the Closing
and a  calculation  of the  difference  between  the  estimated  Net Debt at the
Closing and Net Debt as of the  Reference  Balance  Sheet Date,  and (b) Working

                                       19
<PAGE>

Capital at the Closing and a calculation of the difference between the estimated
Working Capital at the Closing and Working  Capital as of the Reference  Balance
Sheet Date.  The cash portion of the Purchase Price paid at the Closing shall be
(a)  increased by the amount of any estimated  increase in Working  Capital from
the Reference  Balance  Sheet Date to the Closing and any estimated  decrease in
the Net Debt from the  Reference  Balance  Sheet  Date to the  Closing,  and (b)
reduced by the amount of any  estimated  decrease  in Working  Capital  from the
Reference  Balance Sheet Date to the Closing and any  estimated  increase in the
Net Debt  from the  Reference  Balance  Sheet  Date to the  Closing.  The  final
adjustment to the Purchase Price based on changes in the Working Capital and Net
Debt shall be calculated in  accordance  with Section 2.6 above,  whether or not
any Purchase Price adjustments are made pursuant to this Section 2.7.

                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     As an inducement to the Purchaser to enter into this Agreement, the Sellers
hereby  represent and warrant to the Purchaser as follows.  Notwithstanding  the
foregoing,  except  with  respect to Sections  3.1,  3.2,  3.3 and 3.4,  for all
periods of time prior to the Sellers'  Acquisition Date, the representations and
warranties  of the  Sellers  set out  herein are given only to the extent of the
Knowledge of the Sellers (as defined in Section 1.1).

     Organization,  Authority  and  Qualification  of the  Sellers.  SPUSA  is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary  corporate power and authority to
enter into this Agreement and any ancillary documents in connection herewith, to
carry  out its  obligations  hereunder  and  thereunder  and to  consummate  the
transactions  contemplated  hereby  and  thereby.  SPAB  is a  corporation  duly
organized,  validly  existing and in good standing  under the laws of Sweden and
has all necessary corporate power and authority to enter into this Agreement and
any ancillary  documents in connection  herewith,  to carry out its  obligations
hereunder and thereunder and to consummate the transactions  contemplated hereby
and thereby. SPBV is a corporation duly organized,  validly existing and in good
standing under the laws of The Netherlands and has all necessary corporate power
and  authority  to enter into this  Agreement  and any  ancillary  documents  in
connection herewith,  to carry out its obligations  hereunder and thereunder and
to consummate  the  transactions  contemplated  hereby and thereby.  Each of the
Sellers is duly  licensed or qualified to do business and is in good standing in
each jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification  necessary,  except to the
extent  that the  failure to be so licensed  or  qualified  would not  adversely
affect  (i) the  ability  of each of the  Sellers  to carry out its  obligations
under,  and to consummate the  transactions  contemplated  by this Agreement and
(ii) the ability of the Companies and the  Subsidiaries to conduct the Business.
The  execution and delivery of this  Agreement  and any  ancillary  agreement in
connection  herewith by the  Sellers,  the  performance  by the Sellers of their
obligations  hereunder and thereunder and the consummation by the Sellers of the
transactions  contemplated  hereby and thereby have been duly  authorized by all
requisite  action  on the part of the  Sellers.  This  Agreement  has been  duly
executed  and  delivered  by  the  Sellers,  and  (assuming  due  authorization,
execution and delivery by the  Purchaser)  this  Agreement  constitutes a legal,
valid and binding obligation of the Sellers,  enforceable against the Sellers in
accordance with its terms.

     Organization,  Authority and  Qualification  of the Companies.  Each of the
Companies (i) is duly  organized,  validly  existing and in good standing as the
form of legal entity and under the laws of the jurisdiction  specified following
its name in the  respective  definition  section  set forth in Section 1 of this
Agreement;  (ii) has all necessary corporate power and authority to own, operate
or lease the  properties  and assets now owned,  operated or leased by it and to
carry on the Business as it is currently  conducted;  and (iii) is duly licensed
or  qualified  to do business and is in good  standing in each  jurisdiction  in
which the  properties  owned or leased by it or the  operation  of its  business
makes such  licensing or  qualification  necessary  or  desirable  and where the
failure to be qualified  to conduct  business in such  jurisdiction  will have a
Material  Adverse Effect.  All corporate  actions taken by each of the Companies
with respect to the transactions  contemplated hereby have been duly authorized,
and none of such  entities  has taken any action that in any  respect  conflicts
with,  constitutes a default under or results in a violation of any provision of
its Certificate of  Incorporation  or By-laws,  or equivalent  documents for its
jurisdiction  of  incorporation.  True and correct copies of the  Certificate of
Incorporation and By-laws,  or equivalent  documents,  of each of such entities,
each as in effect on the date hereof,  have been delivered by the Sellers to the
Purchaser. The stock certificate books and the stock record books of each of the
Companies, excluding SPAB, are correct and complete.

     Capital Stock of the  Companies;  Ownership of the Shares.  The  authorized
capital  stock of SPINC  consists  of shares of common  stock,  all of which are
validly  issued  and  outstanding  as of the date  hereof and are fully paid and
nonassessable.  The authorized capital stock of Spectra Precision BV consists of
registered  shares of common  stock,  all which  shares are  validly  issued and
outstanding  as of the date  hereof  and are fully paid and  nonassessable.  The
authorized  share  capital of Spectra  Physics  Holdings  GmbH is DM 950,000 and
consists of two shares,  both of which are validly issued and  outstanding as of
the date hereof and are fully paid and  nonassessable.  The  authorized  capital
stock of Spectra  Precision SRL consists of shares of common stock, all of which
shares are validly  issued and  outstanding  as of the date hereof and are fully
paid and  nonassessable.  The authorized  capital stock of Spectra  Precision SA
consists of shares of common stock,  all of which shares are validly  issued and
outstanding  as of the date  hereof  and are fully paid and  nonassessable.  The
authorized capital stock of Spectra Precision  Scandinavia AB consists of shares
of common stock,  all of which shares are validly  issued and  outstanding as of
the date hereof and are fully paid and  nonassessable.  The  authorized  capital
stock of Spectra  Precision of Canada Ltd.  consists of shares of common  stock,
all of which shares are validly issued

                                       20
<PAGE>

and outstanding as of the date hereof and are fully paid and nonassessable.
The  authorized  capital stock of Spectra  Precision  Handelsges mbH consists of
shares of common stock,  all of which shares are validly issued and  outstanding
as of the date hereof and are fully paid and  nonassessable.  None of the Shares
or the SPAB Companies' Shares was issued in violation of any preemptive  rights.
There  are  no  options,  warrants,  convertible  securities  or  other  rights,
agreements,  arrangements  or  commitments of any character made or entered into
that relate to the capital  stock of any of the  entities  listed  above or that
obligate  the Sellers or any of the  above-listed  entities to issue or sell any
shares of capital stock of, or any other interest in, such  entities.  Except as
is set forth in Schedule 3.3, there are no outstanding  contractual  obligations
of such  entities  that require any of them to  repurchase,  redeem or otherwise
acquire any shares of common stock of such  entities or to provide  funds to, or
make any investment (in the form of a loan,  capital  contribution or otherwise)
in, any other Person.  The Shares and the SPAB Companies'  Shares constitute all
the issued and outstanding capital stock of the entities of which they represent
an  equity  interest  and are  owned of record  and  beneficially  solely by the
Sellers  free  and  clear  of  all   Encumbrances.   Upon  consummation  of  the
transactions  contemplated  by  this  Agreement  and  the  SPAB  Asset  Purchase
Agreement,  the registration of the Shares and the SPAB Companies' Shares in the
name of the  Purchaser  in the stock  records of the  respective  entities,  the
Purchaser  will  own  all  the  issued  and  outstanding  capital  stock  of the
respective  entities  free  and  clear  of  all  Encumbrances,  other  than  any
Encumbrances  resulting from the actions of the  Purchaser.  There are no voting
trusts, stockholder agreements, proxies or other agreements or understandings in
effect  with  respect to the voting or transfer of any of the Shares or the SPAB
Companies'  Shares.  The stock register of each  respective  entity listed above
accurately  records:  (i) the name and address of each Person  owning  shares of
capital  stock  of  such  entity,  and  (ii)  the  certificate  number  of  each
certificate evidencing shares of capital stock issued by such entity, the number
of shares  evidenced by such  certificate,  the date of issuance thereof and, in
the case of cancellation, the date of cancellation.

         Subsidiaries

         Schedule  3.4(a)(1)  sets  forth  a  true  and  complete  list  of  all
         Subsidiaries,  including  the Material  Subsidiaries,  listing for each
         Subsidiary its name, type of entity,  the  jurisdiction and date of its
         incorporation or organization, its authorized capital stock, the number
         and type of its issued and outstanding  shares of capital stock and the
         current ownership of such shares.

         Other than the Subsidiaries and ZSP Geodatische Systeme GmbH ("Zeiss"),
         Spectra  Precision  terraSat GmbH  ("TerraSat")  and Spectra  Precision
         Tianjin Limited  ("Spectra  China"),  there are no other  corporations,
         partnerships,  joint ventures,  associations or other entities in which
         any of the  Companies  own,  of record or  beneficially,  any direct or
         indirect  equity  or  other  interest  or  any  right   (contingent  or
         otherwise)  to acquire the same.  None of the  Companies is a member of
         (nor is any part of the Business  conducted  through) any  partnership.
         Except as set forth in  Schedule  3.4(b),  none of the  Companies  is a
         participant in any joint venture or similar arrangement.

         Each  Subsidiary:  (i) is a  corporation  duly  organized  and  validly
         existing under the laws of its jurisdiction of incorporation,  (ii) has
         all necessary  corporate  power and authority to own,  operate or lease
         the properties and assets owned,  operated or leased by such Subsidiary
         and to carry  on its  business  as it is  currently  conducted  by such
         Subsidiary  and (iii) is duly  licensed or qualified to do business and
         is in good standing in each  jurisdiction in which the properties owned
         or leased by it or the operation of its business  makes such  licensing
         or  qualification  necessary  or  desirable,  except for such  failures
         which, when taken together with all other such failures, would not have
         a Material Adverse Effect.

         All the  outstanding  shares of capital  stock of each  Subsidiary  are
         validly issued,  fully paid,  nonassessable and, except as is set forth
         in Schedule 3.4(d),  are free of preemptive rights and are owned by the
         Companies,  whether  directly  or  indirectly,  free  and  clear of all
         Encumbrances.  SPAB's  capital  contribution  to Spectra China has been
         paid in full and duly verified by a registered  accounting  firm in the
         People's  Republic  of China and SPAB holds an  Investment  Certificate
         issued by  Spectra  China  confirming  SPAB's  valid  ownership  of its
         interest in Spectra China.

         There  are no  options,  warrants,  convertible  securities,  or  other
         rights,  agreements,  arrangements  or  commitments  of  any  character
         relating to the  capital  stock of any  Subsidiary  or  obligating  the
         Sellers, the Companies or any Subsidiary to issue or sell any shares of
         capital stock of, or any other interest in, any Subsidiary.

         All  corporate  actions with respect to the  transactions  contemplated
         herein  taken by each  Subsidiary  have  been  duly  authorized  and no
         Subsidiary  has taken any action  that in any respect  conflicts  with,
         constitutes  a default under or results in a violation of any provision
         of its charter or by-laws (or similar organizational  documents).  True
         and   complete   copies  of  the   charter   and  by-laws  (or  similar
         organizational  documents),  in each  case  as in  effect  on the  date
         hereof,  of each  Subsidiary  have been delivered by the Sellers to the
         Purchaser.  With  respect  to each  Subsidiary,  the stock  certificate
         books, and the stock record books are correct and complete.

         Except as set forth in Schedule  3.4(g),  no  Subsidiary is a member of
         (nor is any part of its  business  conducted  through)  any duly formed
         partnership nor is any Subsidiary a participant in any joint venture or
         similar arrangement.

                                       21
<PAGE>

         There are no voting trusts,  stockholder  agreements,  proxies or other
         agreements  or  understandings  in effect with respect to the voting or
         transfer of any shares of capital  stock of or any other  interests  in
         any Subsidiary.

         The stock register of each Subsidiary  accurately records: (i) the name
         and  address of each  Person  owning  shares of  capital  stock of such
         entity, and (ii) the certificate number of each certificate  evidencing
         shares of capital  stock  issued by such  entity,  the number of shares
         evidenced by such certificate, the date of issuance thereof and, in the
         case of cancellation, the date of cancellation.

     Corporate  Books and  Records.  The minute books of the  Companies  and the
Subsidiaries contain accurate records since the Sellers' Acquisition Date of all
meetings of the stockholders,  Boards of Directors (or analogous bodies) and all
committees of the Boards of Directors (or analogous bodies) of the Companies and
the  Subsidiaries.  Complete and accurate copies of all such minute books and of
the stock register of the Companies and each Subsidiary have been made available
to the Purchaser.

     No Conflict.  Assuming that all  consents,  approvals,  authorizations  and
other  actions  described in Section 3.7 have been  obtained and all filings and
notifications listed in Schedule 3.7 have been made, the execution, delivery and
performance  of this  Agreement  and the SPAB Asset  Purchase  Agreement  by the
Sellers does not and will not (a) violate, conflict with or result in the breach
of any provision of the charter or by-laws (or similar organizational documents)
of any of the Sellers,  the Companies or the Subsidiaries,  (b) to the Knowledge
of the Sellers,  conflict  with or violate (or cause an event which could have a
Material Adverse Effect as a result of) any Law or Governmental Order applicable
to the Sellers,  the  Companies,  the  Subsidiaries  or any of their  respective
assets, properties or businesses,  including,  without limitation, the Business,
or (c) to the Knowledge of the Sellers,  conflict with, result in any breach of,
constitute a default which would have a Material  Adverse Effect (or event which
with the  giving of notice or lapse of time,  or both,  would  become a default)
under,  require any consent under,  or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the  creation  of any  Encumbrance  on any of the Shares or the SPAB  Companies'
Shares  or on  any of the  assets  or  properties  of  any of the  Sellers,  the
Companies or Subsidiaries  pursuant to, any note,  bond,  mortgage or indenture,
contract,  agreement,  lease,  sublease,  license,  permit,  franchise  or other
instrument or written arrangement to which any of the Sellers,  the Companies or
Subsidiaries is a party or by which any of the Shares, SPAB Companies' Shares or
any of such assets or properties is bound or affected.

     Consents and  Approvals.  The execution,  delivery and  performance of this
Agreement by the Sellers  does not and will not require any  consent,  approval,
authorization  or other order of, action by, filing with or  notification to any
Governmental  Authority,  except (a) as described in Schedule 3.7(a) and (b) the
notification  requirements  of the HSR Act.  Schedule  3.7(b) sets forth a true,
correct,   and  complete  list  of  every  person  or  entity  (other  than  any
Governmental  Authority)  whose  consent or approval is required and the matter,
agreement,  or contract to which such consent  relates,  in connection  with the
transfer,  assignment, or conveyance of any Material Contract or any Asset being
purchased  by the  Purchaser  hereunder  or pursuant to the SPAB Asset  Purchase
Agreement,  except where a failure to obtain such consent or approval  could not
have a Material Adverse Effect.

                                       22
<PAGE>

       Financial Information, Books and Records, Projections and Operating Data.

       The  Financial  Statements,  copies  of  which  are  attached  to  this
       Agreement as Schedule 3.8(a)(i),  have been delivered by the Sellers to
       the  Purchaser.  The Financial  Statements  and the  Reference  Balance
       Sheet,  a copy of which  is  attached  to this  Agreement  as  Schedule
       3.8(a)(ii),  (i) were prepared in accordance  with the books of account
       and other  financial  records of the Business,  (ii) present fairly the
       financial condition and results of operations of the Business as of the
       dates thereof or for the periods covered  thereby,  and (iii) except as
       is set forth on Schedule 1 hereto,  have been  prepared  in  accordance
       with U.S.  GAAP as applied by the  Sellers on a basis  consistent  with
       past practice of the Business.  The Reference  Balance Sheet includes a
       reservation for accrued Swedish pension  commitments in the approximate
       amount of $4,600,000.

       The books of account and other financial  records of the Business:  (i)
       reflect all items of income and expense and all Assets and  Liabilities
       required  to be  reflected  therein  in  accordance  with U.S.  GAAP as
       applied by the Sellers on a basis consistent with the past practices of
       the  Companies and the  Subsidiaries,  as the case may be, and (ii) are
       complete and correct, and do not contain or reflect any inaccuracies or
       discrepancies.

     No Undisclosed Liabilities. There are no Liabilities of the Business, other
than  Liabilities  (i) reflected or reserved  against on the  Reference  Balance
Sheet,  (ii) disclosed in Schedule 3.9 as of the date hereof,  or (iii) incurred
since  the  date of the  Reference  Balance  Sheet  in the  ordinary  course  of
business,  consistent  with the past  practice  of the  Business.  Reserves  are
reflected on the Reference Balance Sheet against all Liabilities of the Business
as of the Reference  Balance Sheet Date in amounts that have been established in
accordance  with U.S. GAAP as applied by the Sellers on a basis  consistent with
the past practices of the Business, as modified, if relevant, by Schedule 1.

     Receivables.  For any entity the assets of which,  rather than the stock of
which,  are being  purchased  pursuant  to the SPAB  Asset  Purchase  Agreement:
Schedule  3.10  contains  an aged list of  receivables  as of the date  shown in
Schedule 3.10.  Schedule 3.10 shows  separately  those  receivables of each such
entity that as of such date had been  outstanding  (i) for 29 days or less, (ii)
30-59 days,  (iii) 60-89 days,  (iv) 90-119  days,  and (vi) more than 119 days.
Except to the extent,  if any,  reserved for on the Reference Balance Sheet, all
Receivables  reflected on the Reference  Balance Sheet are properly  recorded on
the books and records of the Companies and Subsidiaries, as the case may be, and
arose from, and the  Receivables  existing as of the date of this Agreement have
arisen from,  the sale of Inventory or services to Persons not  affiliated  with
the Sellers,  the Companies or any Subsidiary and in the ordinary  course of the
Business consistent with past practice and, to the Sellers' Knowledge, except as
reserved  against  on  the  Reference  Balance  Sheet,  constitute  only  valid,
undisputed  claims of the  Business  not  subject to valid  claims of set-off or
other defenses or counterclaims  other than normal cash discounts accrued in the
ordinary course of business consistent with past practice.

     Inventories.  For any entity the assets of which,  rather than the stock of
which,  are being  purchased  pursuant  to the SPAB  Asset  Purchase  Agreement:
Schedule 3.11  identifies the inventories as of the date shown on Schedule 3.11.
Schedule 3.11 also  contains a complete list of the addresses of all  warehouses
and other  facilities in which the inventories are located.  As of the Reference
Balance Sheet,  the values at which all Inventories are carried on the Reference
Balance Sheet reflect the historical inventory valuation policy of the Companies
and  the  Subsidiaries  of  stating  such  Inventories  at  the  lower  of  cost
(determined on the first-in,  first-out  method) or market value.  Except as set
forth in Schedule 3.11, the Sellers,  Companies or any  Subsidiary,  as the case
may be, has good and marketable  title to the Inventories  free and clear of all
Encumbrances.  Subject to amounts  reserved  therefor on the  Reference  Balance
Sheet, the Inventories do not consist of, in any material amount, items that are
obsolete,  damaged or slow-moving and are in good and merchantable  condition in
all material  respects,  are suitable and usable for the purposes for which they
are intended  and are in a condition  such that they can be sold in the ordinary
course of the Business  consistent  with past practice.  The  Inventories do not
consist  of  any  items  held  on  consignment.  None  of the  Companies  or the
Subsidiaries have incurred any obligation or liability with respect to accepting
returns  of  items  of  Inventory  or  merchandise  in the  possession  of their
customers  other than in the ordinary  course of business  consistent  with past
practice.  No  clearance  or  extraordinary  sale of the  Inventories  has  been
conducted  since the Reference  Balance Sheet Date. As of the Reference  Balance
Sheet,  none of the Companies or the Subsidiaries  have acquired or committed to
acquire or manufacture Inventory for sale which is not of a quality and quantity
usable in the ordinary course of the Business within a reasonable period of time
or consistent with past practice,  nor have any of the Companies or Subsidiaries
since the Reference Balance Sheet Date changed the price of any Inventory except
for (i) price  reductions  to reflect any  reduction in the cost thereof to such
Company or  Subsidiary,  (ii)  reductions  and  increases  responsive  to normal
competitive  conditions and consistent with such Company's or Subsidiary's  past
sales practices,  (iii) increases to reflect any increase in the cost thereof to
such Company or  Subsidiary  and (iv)  increases  and  reductions  made with the
written consent of the Purchaser.

     Conduct in the  Ordinary  Course;  Absence of Certain  Changes,  Events and
Conditions.  Since the  Reference  Balance  Sheet Date,  the  Business  has been
conducted  in  the  ordinary  course  and  consistent  with  past  practice.  As
amplification and not limitation of the foregoing,  and except as would not have
a Material Adverse Effect,  since the Reference  Balance Sheet Date, none of the
Companies or any Subsidiary has:

                  permitted or allowed any of the assets or properties  (whether
         tangible  or  intangible)  of  the  Companies  and  Subsidiaries  to be
         subjected to any  Encumbrance,  other than Permitted  Encumbrances  and
         Encumbrances that will be released at or prior to the Closing;

                                       23
<PAGE>

                  except in the ordinary course of business consistent with past
         practice,   discharged  or  otherwise   obtained  the  release  of  any
         Encumbrance or paid or otherwise  discharged any Liability,  other than
         current  liabilities  reflected  on the  Reference  Balance  Sheet  and
         current  liabilities  incurred  in  the  ordinary  course  of  business
         consistent with past practice since the Reference Balance Sheet Date;

                  except  as  disclosed  in  Schedule  3.12(iii),  except in the
         ordinary  course of business  consistent  with past practice,  made any
         loan to,  guaranteed  any  Indebtedness  of or  otherwise  incurred any
         Indebtedness on behalf of any Person;

                  failed to pay any  creditor  any amount owed to such  creditor
         when due, which failure has resulted in a creditor  refusing to provide
         goods or services to any of the Companies or Subsidiaries;

                  except as disclosed in Schedule  3.12(v),  redeemed any of the
         capital stock or declared,  made or paid any dividends or distributions
         (whether  in cash,  securities  or other  property)  to the  holders of
         capital  stock of any of the  Companies or  Subsidiaries  or otherwise,
         other than dividends,  distributions and redemptions declared,  made or
         paid by any Subsidiary solely to any of the Companies;

                  except as  disclosed in Schedule  3.12(vi),  made any material
         changes in the customary  methods of operations of any of the Companies
         and Subsidiaries, including, without limitation, practices and policies
         relating to manufacturing,  purchasing, Inventories, marketing, selling
         and pricing;

                  merged with,  entered into a consolidation with or acquired an
         interest of 5% or more in any Person or acquired a substantial  portion
         of the  assets or  business  of any Person or any  division  or line of
         business thereof,  or otherwise acquired any material assets other than
         in the ordinary course of business consistent with past practice;

                  except as disclosed in Schedule  3.12(viii),  made any capital
         expenditure  or  commitment  for any capital  expenditure  in excess of
         $250,000 individually or $1,000,000 in the aggregate;

                  issued any purchase orders in excess of $100,000 individually
         or $500,000 in the aggregate;

                  except as disclosed in Schedule  3.12(x),  sold,  transferred,
         leased, subleased,  licensed or otherwise disposed of any properties or
         assets,  real,  personal  or  mixed  (including,   without  limitation,
         leasehold  interests  and  intangible  assets),  other than the sale of
         Inventories  in the ordinary  course of business  consistent  with past
         practice;

                  issued  or sold  any  capital  stock,  notes,  bonds  or other
         securities,  or any option, warrant or other right to acquire the same,
         of, or any other interest in, any of the Companies or Subsidiaries;

                  entered into any agreement,  arrangement  or transaction  with
         any of its directors,  officers, employees or shareholders (or with any
         relative, beneficiary, spouse or Affiliate of such Person);

                  except in the ordinary course of business consistent with past
         practice,  (A) granted any increase,  or announced any increase, in the
         wages, salaries,  compensation,  bonuses, incentives,  pension or other
         benefits  payable  by any  of  the  Companies  or  Subsidiaries  to any
         employees,  including,  without  limitation,  any  increase  or  change
         pursuant to any Plan or (B)  established  or  increased  or promised to
         increase any benefits under any Plan, in either case except as required
         by Law or any collective bargaining agreement;

                  written down or written up (or failed to write down or write
         up in accordance  with Companies'  Accounting Practices consistent with
         past practice) the value of any  Inventories or receivables or revalued
         any assets of any of the Companies or Subsidiaries  other than in the
         ordinary  course of business  consistent  with past practice,  and,
         except as is set forth in Schedule 1 hereto in accordance with
         U.S. GAAP;

                  amended,  terminated,  cancelled or  compromised  any material
         claims of any of the Companies or Subsidiaries or expressly  waived any
         other rights of material value to any of the Companies or Subsidiaries,
         the waiver of which has a Material Adverse Effect on the Business;

                  made any  change in any method of  accounting  or  accounting
         practice  or policy  used by any of the  Companies  or Subsidiaries,
         other than such changes required by U.S. GAAP or disclosed in
         Schedule 3.12(xvi);

                                       24
<PAGE>

                  failed to maintain the Assets in accordance with good business
         practice and in good  operating  condition and repair,  normal wear and
         tear excepted;

                  allowed any Permit or Environmental  Permit that was issued or
         relates to any of the Companies or Subsidiaries or otherwise relates to
         any Asset to lapse or  terminate  or failed to renew any such Permit or
         Environmental  Permit or any  insurance  policy  that is  scheduled  to
         terminate or expire within 45 calendar days of the Closing Date;

                  amended,  modified or consented to the termination of any
         Material  Contract or the rights of any of the Companies or
         Subsidiaries thereunder;

                  amended or restated the Certificate of  Incorporation  or the
         By-laws (or other  organizational  documents) of any of the Companies
         or Subsidiaries;

                  except  as  disclosed  in  Schedule   3.12(xxi),   terminated,
         discontinued,  closed  or  disposed  of any  plant,  facility  or other
         business operation, or laid off any employees due to reasons other than
         individual  work  performance  (other  than  layoffs  of  less  than 50
         employees in any six-month period) or implemented any early retirement,
         separation or program providing early retirement window benefits within
         the meaning of Section  1.401(a)-4 of the  Regulations  or announced or
         planned any such action or program for the future;

                  permitted to lapse or go abandoned  any  registration  for any
         Intellectual Property to which, or under which, any of the Companies or
         Subsidiaries has any right, title,  interest or license and which lapse
         or abandonment would have a Material Adverse Effect;

                  made any express or deemed  election or settled or compromised
         any  liability,  with respect to Taxes of any of the Companies or
         Subsidiaries;

                  suffered any casualty loss or  unrepaired  damage with respect
         to any of the Assets which in the aggregate have a replacement  cost of
         more than $100,000,  whether or not such loss or damage shall have been
         covered by insurance;

                  agreed,  whether in writing or  otherwise,  to take any of the
         actions  specified  in this  Section  3.12 or  granted  any  options to
         purchase,  rights of first refusal,  rights of first offer or any other
         similar  rights  or  commitments  with  respect  to any of the  actions
         specified in this Section  3.12,  except as expressly  contemplated  by
         this Agreement.

     Litigation.  Except as set forth in Schedule  3.13 (which,  with respect to
each  Action  disclosed  therein,  sets  forth:  the  parties,   nature  of  the
proceeding,  date and method commenced, amount of damages or other relief sought
and, if applicable,  paid or granted), there are no Actions by or against any of
the  Companies or  Subsidiaries  (or by or against the Sellers or any  Affiliate
thereof and relating to the Business or any of the  Companies or  Subsidiaries),
or affecting any of the Assets,  pending before any Governmental  Authority (or,
to the  Knowledge  of the  Sellers,  threatened  to be  brought by or before any
Governmental Authority) which, if resolved against the Sellers, could reasonably
be expected to have a Material Adverse Effect.  None of the matters disclosed in
Schedule 3.13 has or has had a Material  Adverse Effect or affects the legality,
validity  or  enforceability  of  this  Agreement  or  the  consummation  of the
transactions  contemplated  hereby or  thereby.  Except as set forth in Schedule
3.13,  none of the  Companies,  the  Subsidiaries,  the Assets or the Sellers is
subject to any  Governmental  Order (nor, to the  Knowledge of the Sellers,  are
there any such Governmental  Orders threatened to be imposed by any Governmental
Authority) which has or has had a Material Adverse Effect.

     Compliance  with  Laws.  None  of  the  Companies  and  Subsidiaries  is in
violation  of any Law or  Governmental  Order,  including  the  Foreign  Corrupt
Practices Act and applicable import and export control regulations applicable to
the  Companies  and  Subsidiaries  or any of the  Assets  or the  Business,  the
violation  of which has had or could  reasonably  be expected to have a Material
Adverse Effect.

         Environmental Compliance and Other Permits and Licenses; Related
         Matters.

         Except as  disclosed  in Schedule  3.15(a)(i),  the  Companies  and the
         Subsidiaries currently hold all the permits, licenses,  authorizations,
         certificates,  exemptions  and  approvals of  Governmental  Authorities
         relating  to health and safety  (collectively,  "Permits"),  including,
         without limitation,  Environmental  Permits,  necessary for the current
         use,  occupancy  and  operation of each Asset of the  Companies and the
         Subsidiaries  and the conduct of the Business  except where the failure
         to hold such Permits would not have a Material Adverse Effect,  and all
         such  Permits  are in full force and effect in all  material  respects.
         Except as  disclosed  in  Schedule  3.15(a)(ii),  there is no  existing
         practice, action or activity of any of the Companies or Subsidiaries or
         any portion of the Business and no existing  condition of the Assets of
         any of the  Companies or  Subsidiaries  or the Business  which,  to the
         Sellers'  Knowledge,  will give rise to any civil or criminal Liability
         under any  Environmental  Law,  other than  liabilities  which,  in the

                                       25
<PAGE>

         aggregate, could not have a Material Adverse Effect. Since the Sellers'
         Acquisition Date none of the Sellers,  the Companies nor any Subsidiary
         has  received  any notice  from any  Governmental  Authority  revoking,
         canceling,  rescinding,  materially  modifying or refusing to renew any
         Permit and to Seller's Knowledge, there is no action pending to revoke,
         cancel,  rescind,  materially  modify or  refuse  to renew any  Permit.
         Except as disclosed in Schedule 3.15(a)(iii), each of the Companies and
         Subsidiaries  is in all respects in compliance with the Permits and the
         requirements of the Permits,  except where such non-compliance does not
         and is not  reasonably  expected  to have a  Material  Adverse  Effect.
         Schedule 3.15(a)(iv)  identifies all Permits,  other than those Permits
         the  failure of which to  identify  would not have a  Material  Adverse
         Effect, that are  non-transferable or which will require the consent of
         any  Governmental  Authority  in the event of the  consummation  of the
         transactions  contemplated  by this  Agreement,  or which the Companies
         believe will not be renewed in the ordinary course.

         Except  as  disclosed  in  Schedule  3.13  and  Schedule  3.15(b),  (i)
         Hazardous  Materials have not been Released in, on or under,  or do not
         otherwise  exist  on  any  Real  Property  or by the  Companies  or any
         Subsidiary  on any real  property  previously  owned or operated by the
         Companies or any Subsidiary in violation of any Environmental  Law, or,
         to the  Knowledge  of the  Sellers,  any  property  adjoining  any Real
         Property,  in violation  of any  Environmental  Law;  (ii) there are no
         pending or, to the Knowledge of the Sellers,  threatened  Environmental
         Claims against the Companies,  any  Subsidiary,  or, any Real Property;
         (iii) no Real Property, is listed on the National Priorities List under
         CERCLA or any analogous state list of sites requiring  investigation or
         cleanup;  and  (iv),  none  of  the  Companies  and  Subsidiaries  have
         transported  or  arranged  for  the  transportation  of  any  Hazardous
         Materials  to any  location  which is the subject of any  Environmental
         Claim.

         Except as disclosed in Schedule 3.15(c), to Sellers'  Knowledge,  there
         are not now and never have been any USTs  located on any Real  Property
         or any real property  previously  owned or operated by the Companies or
         any Subsidiary.

         To Sellers'  Knowledge,  except as  disclosed in Schedule  3.15(d),  no
         polychlorinated biphenyls or asbestos-containing  materials are or have
         been present at any Real Property or any real property previously owned
         or operated by the Companies or any Subsidiary.

         Except as  disclosed  in Schedule  3.15(e) and  heretofore  provided to
         Purchaser,  since the  Sellers'  Acquisition  Date,  there have been no
         environmental  inspections,  investigations,  studies,  audits,  tests,
         review or other  analyses  conducted  in relation  to the  Assets,  the
         Business,  the Real  Property or on any other  property  now or, to the
         Knowledge of the Sellers,  formerly,  owned,  operated or leased or any
         business now or, to the  Knowledge of the Sellers,  formerly,  owned or
         operated by the  Companies  or any  Subsidiary  or, with respect to any
         portion of the Business, the Sellers.

         Except as  disclosed in Schedule  3.15(f),  neither the Sellers nor the
         Companies or Subsidiaries  know of any facts or circumstances  relating
         to environmental matters concerning the Assets, Business, Real Property
         or on any other property now or formerly  owned,  operated or leased or
         any  business  now or formerly  owned or operated by any Company or any
         Subsidiary or  predecessor  in interest or, with respect to any portion
         of the  Business,  the  Sellers,  Knowledge of an actual event of which
         could be expected to lead to any future  Environmental  Claims  against
         any Company, any Subsidiary or the Purchaser. Intellectual Property.

         Except as otherwise described in Schedule 3.16(a)(i),  to the Knowledge
         of the  Sellers,  in  each  case  where a  registration  or  patent  or
         application  for  registration  or  patent is held by  assignment,  the
         assignment has been duly recorded with the state or national  trademark
         office from which the original  registration was issued or before which
         the  application for  registration  is pending.  Except as disclosed in
         Schedule  3.16(a)(ii),  to the Knowledge of the Sellers,  the rights of
         the Companies and Subsidiaries in or to such Intellectual  Property, do
         not conflict  with or infringe on the rights of any other  Person,  and
         none of the Sellers,  the Companies or the  Subsidiaries  have received
         any claim or written  notice from any Person,  to such effect since the
         Sellers' Acquisition Date.

         Except as disclosed in Schedule 3.16(b): (i) all the Owned Intellectual
         Property is owned either by one of the  Companies or a  Subsidiary,  as
         the case may be, free and clear of any  Encumbrance  and (ii) since the
         Sellers' Acquisition Date, no Actions have been made or asserted or are
         pending (nor, to the Knowledge of the Sellers, has any such Action been
         threatened)  against any of the  Companies or  Subsidiaries  either (A)
         based upon or challenging or seeking to deny or restrict the use by any
         of the  Companies  or  Subsidiaries  of any of the  Owned  Intellectual
         Property  or (B)  alleging  that any  services  provided,  or  products
         manufactured or sold by any of the Companies or Subsidiaries  are being
         provided,   manufactured  or  sold  in  violation  of  any  patents  or
         trademarks,  or any other rights of any Person. To the Knowledge of the
         Sellers,  no  Person  is using  any  patents,  copyrights,  trademarks,
         service marks,  trade names, trade secrets or similar property that are
         confusingly similar to the Owned Intellectual Property or that infringe
         upon the Owned  Intellectual  Property or upon the rights of any of the
         Companies  or  Subsidiaries  therein.  Except as  disclosed in Schedule
         3.16(b),  since the Sellers' Acquisition Date, none of the Sellers, the
         Companies  or  Subsidiaries  have granted any license or other right to
         any other Person with

                                       26
<PAGE>

         respect to the Owned  Intellectual  Property.  To the  Knowledge of the
         Sellers,  the  consummation  of the  transactions contemplated  by this
         Agreement  will not result in the  termination or impairment of any of
         the Owned Intellectual Property.

         With   respect  to  all  Licensed   Intellectual   Property  and  Owned
         Intellectual  Property, to the Knowledge of the Sellers, the registered
         user  provisions  of all nations  where the Sellers  currently  conduct
         business and requiring  such  registrations  have been complied with in
         all material respects.

         The Sellers have made  available to the Purchaser  correct and complete
         copies of all the licenses and  sublicenses  for Licensed  Intellectual
         Property  and  any  and  all  ancillary  documents  pertaining  thereto
         (including,  but not limited to, all amendments,  consents and evidence
         of commencement  dates and expiration  dates).  With respect to each of
         such licenses and sublicenses:

                  such  license  or  sublicense,  together  with  all  ancillary
         documents made available pursuant to the first sentence of this Section
         3.16(d), is, to the Knowledge of the Sellers,  valid and binding and in
         full force and effect and represents the entire  agreement  between the
         respective  licensor and licensee with respect to the subject matter of
         such license or sublicense;

                  except as set forth in Schedule 3.16(d)(ii),  to the Knowledge
         of the Sellers,  such license or sublicense  will not cease to be valid
         and  binding and in full force and effect on terms  identical  to those
         currently in effect as a result of the consummation of the transactions
         contemplated  by this  Agreement,  nor  will  the  consummation  of the
         transactions  contemplated  by this  Agreement  constitute  a breach or
         default under such license or sublicense or otherwise give the licensor
         or sublicensor a right to terminate such license or sublicense;

                  except as set forth in Schedule 3.16(d)(iii),  with respect to
         each such license or sublicense: (A) none of the Sellers, the Companies
         or  the  Subsidiaries  have  received  any  notice  of  termination  or
         cancellation  under such license or sublicense and, to the Knowledge of
         the Sellers, no licensor or sublicensor has any right of termination or
         cancellation under such license or sublicense except in connection with
         the default of the Companies or any Subsidiary thereunder,  (B) none of
         the Sellers, the Companies or the Subsidiaries have received any notice
         of a breach or default under such license or  sublicense,  which breach
         or  default  has not  been  cured,  and (C)  none of the  Sellers,  the
         Companies  or the  Subsidiaries  have  granted to any other  Person any
         rights, adverse or otherwise, under such license or sublicense;

                  none of the Companies or  Subsidiaries or (to the Knowledge of
         the Sellers) any other party to such license or sublicense is in breach
         or  default in any  material  respect,  and,  to the  Knowledge  of the
         Sellers, no event has occurred that, with notice or lapse of time would
         constitute such a breach or default or permit termination, modification
         or acceleration under such license or sublicense; and

                  to the  Knowledge  of the  Sellers,  no  Person  is using  any
         patents,  copyrights,  trademarks,  service marks,  trade names,  trade
         secrets  or  similar  property  that  are  confusingly  similar  to the
         Licensed  Intellectual  Property  or that  infringe  upon the  Licensed
         Intellectual  Property  or upon  the  rights  of the  Companies  or any
         Subsidiary therein.

         Except  as set  forth  in  Schedule  3.16(e),  to the  extent  that any
         material  technology,   software  or  Intellectual  Property  has  been
         developed or created  independently or jointly by a third party for any
         of the  Companies  or  Subsidiaries  or  incorporated  into  any of the
         Products  since the Sellers'  Acquisition  Date,  the  Companies or the
         Subsidiaries  have a written  agreement  with  such  third  party  with
         respect thereto and the Companies  and/or  Subsidiaries  thereby either
         (i) have obtained  ownership  of, and are the  exclusive  owners of, or
         (ii) have obtained a perpetual,  non-terminable  (including as a result
         of  the  consummation  of  the  transactions   contemplated  under  the
         Agreement and the SPAB Asset Purchase  Agreement)  license  (sufficient
         for the conduct of its business as  currently  conducted as proposed to
         be conducted) to all such third party's  Intellectual  Property in such
         work, material or invention by operation of law or by valid assignment.

         Neither the Companies nor any Subsidiary has transferred  ownership of,
         or granted any  exclusive  license  with  respect to, any  Intellectual
         Property that is material Intellectual Property, to any third party, or
         knowingly permitted the Companies' rights in such material Intellectual
         Property to lapse or enter the public domain.

         Since the Sellers'  Acquisition  Date,  none of the  Companies  nor the
         Subsidiaries  have  received  notice  from  any  third  party  that the
         operation of the business of the Companies or the  Subsidiaries  or any
         act, product or service of the Companies or Subsidiaries,  infringes or
         misappropriates  the  Intellectual  Property  of  any  third  party  or
         constitutes unfair competition or trade practices under the laws of any
         jurisdiction.

         Since  the  Sellers'  Acquisition  Date,  each  of  the  Companies  and
         Subsidiaries  has taken  commercially  reasonable  steps to protect the
         rights  of  the   Companies'  and   Subsidiaries'   in  the  Companies'
         confidential information and

                                       27
<PAGE>

         trade secrets that it wishes to protect or any trade secrets or
         confidential information of third parties provided to the Companies or
         any Subsidiary.

         Real Property.

         Schedule  3.17(a) lists the street address of each parcel of Owned Real
         Property and each parcel of Leased Real Property.

         Except as described  in Schedule  3.17(b),  to the Sellers'  Knowledge,
         there  is  no  material  violation  of  any  Law  (including,   without
         limitation,  any  building,  planning or zoning law) relating to any of
         the Real  Property.  The Sellers have made  available to the  Purchaser
         true and  complete  copies of each deed for each  parcel of Owned  Real
         Property and, to the extent  maintained by Sellers,  for each parcel of
         Leased  Real  Property  and all the  title  insurance  policies,  title
         reports, surveys, certificates of occupancy,  environmental reports and
         audits, appraisals,  Permits, other title documents and other documents
         relating to or otherwise affecting the Real Property, the operations of
         the Companies or any Subsidiary thereon or any other uses thereof.  The
         Companies or Subsidiaries are in peaceful and undisturbed possession of
         each parcel of Real Property and, to Sellers'  Knowledge,  there are no
         contractual or legal restrictions that preclude or restrict the ability
         to use the premises for the purposes for which they are currently being
         used. All existing water, sewer, steam, gas, electricity, telephone and
         other  utilities  required  for  the  construction,   use,   occupancy,
         operation  and  maintenance  of the Real  Property are adequate for the
         conduct of the business of the  Companies  and the  Subsidiaries  as it
         currently  is  conducted.  Sellers  have no  Knowledge  of any material
         latent defects or material  adverse physical  conditions  affecting the
         Real  Property  or  any  of  the  facilities,   buildings,  structures,
         erections,  improvements,  fixtures,  fixed assets and personality of a
         permanent nature annexed, affixed or attached to, located on or forming
         part of the Real  Property.  Except as set forth in  Schedule  3.17(b),
         none  of  the  Companies  or  Subsidiaries  is  presently   leasing  or
         subleasing  any parcel or any portion of any parcel of Real Property to
         any  other  Person,  nor  have  any of the  Companies  or  Subsidiaries
         assigned its  interest  under any current  lease or sublease  listed in
         Schedule 3.17(a) to any third party.

         The Sellers  have made  available  to the  Purchaser  true and complete
         copies of all current  leases and  subleases  for Leased Real  Property
         listed  in  Schedule  3.17(a)  and  any  and  all  ancillary  documents
         pertaining  thereto  (including,  but not limited  to, all  amendments,
         consents  for  alterations  and  documents  recording   variations  and
         evidence of commencement dates and expiration  dates).  With respect to
         each  of  such  leases  and   subleases,   none  of  the  Companies  or
         Subsidiaries  or (to the  Knowledge  of the Sellers) any other party to
         such  lease or  sublease,  is in  breach  or  default  in any  material
         respect,  and, to the  Knowledge of the Sellers,  no event has occurred
         that,  with notice or lapse of time would  constitute  such a breach or
         default or permit termination,  modification or acceleration under such
         lease or sublease.

         There are no condemnation  proceedings or eminent domain proceedings of
         any kind  pending  or,  to the  Knowledge  of the  Sellers,  threatened
         against the Real Property.

         The  rental  set forth in each lease or  sublease  of the  Leased  Real
         Property is the actual  rental  being  paid,  and there are no separate
         agreements or understandings with respect to the same.

     The Companies and Subsidiaries  have the full right to exercise any renewal
options  contained  in the leases and  subleases  pertaining  to the Leased Real
Property on the terms and  conditions  contained  therein and upon due  exercise
would be entitled to enjoy the use of each  Leased  Real  Property  for the full
term of such renewal options.

         Material Contracts.

         Except as disclosed in Schedule 3.18(a), each Material Contract: (i) is
         valid and  binding on the  respective  parties  thereto  and is in full
         force and  effect  and (ii) upon  consummation  of the of  transactions
         contemplated by this Agreement,  except to the extent that any consents
         set forth in  Schedule  3.7 are not  obtained,  shall  continue in full
         force and effect without  material  penalty or other  material  adverse
         consequence.  None of the Companies nor any Subsidiary is in breach of,
         or in default under, any Material Contract, except where such breach or
         default could not have a Material  Adverse Effect.  The Seller has made
         copies of all Material Contracts available for review by the Purchaser.
         Schedule 3.18(a) contains a list of all Material Contracts.

         Except as disclosed in Schedule 3.18(b), to the Sellers' Knowledge,  no
         other party to any  Material  Contract is in breach  thereof or default
         thereunder.

         Except  as  disclosed  in  Schedule  3.18(c),  there  is  no  contract,
         agreement or other  arrangement that grants any Person any preferential
         right to  purchase,  other  than in the  ordinary  course  of  business
         consistent  with past practice,  any of the properties or assets of any
         of the Companies or any Subsidiary.

     Assets.  Except for the Excluded  Assets and as disclosed in Schedule 3.19,
the Companies and Subsidiaries own, lease or have the legal right to use all the
properties and assets,  including,  without  limitation,  the Owned Intellectual
Property,   the  Licensed  Intellectual   Property,   the  Real  Property,   the
Inventories, the Receivables, and rights under Material Contracts, fixed assets,
equipment and other  tangible  assets used or reasonably  intended to be used by
them in the conduct of the  Business or otherwise  owned,  leased or used by the
Companies or any Subsidiary and, with respect to contract rights, are parties to
and enjoy the  right to the  benefits  of all  contracts,  agreements  and other
arrangements  used or  reasonably

                                       28
<PAGE>

intended to be used by the Companies or any Subsidiary or in or relating to
the conduct of the Business (all such  properties,  assets and contract  rights,
including any of the Sellers' claims against any parties relating exclusively or
primarily to such  properties,  assets and/or  contract rights but excluding the
Excluded  Assets,  are  hereinafter  referred  to as the  "Assets").  Either the
Companies or a Subsidiary,  as the case may be, has good and valid title to, or,
in the case of leased  or  subleased  Assets,  valid  and  subsisting  leasehold
interests in, all the Assets, free and clear of all Encumbrances,  except (i) as
disclosed  in  Schedules  3.11,  3.12,  3.16(b)  and  3.19  and  (ii)  Permitted
Encumbrances.  Except for the Excluded  Assets,  the Assets  constitute  all the
properties, assets and rights forming a part of the Business.

     Customers.  Schedule 3.20 lists the names and addresses of the five largest
customers of the Business, determined by the aggregate value of orders placed in
the most recently ended fiscal year.  None of the Sellers,  the Companies or the
Subsidiaries  has  received  any  written  notice  that any  customer  listed in
Schedule 3.20 has ceased, or will cease, to use the products,  equipment,  goods
or  services  of the  Business,  or has  substantially  reduced  the use of such
products, equipment, goods or services.

     Suppliers.  Schedule 3.21 lists the names and addresses of the five largest
suppliers of the Business, determined by the aggregate value of orders placed in
the most recently ended fiscal year.  None of the Sellers,  the Companies or the
Subsidiaries  has received any written  notice that any such  supplier  will not
sell raw materials,  supplies,  merchandise and other goods to the Companies and
Subsidiaries at any time after the Closing Date.

     Employee Benefit Matters ; Plans and Material Documents.

     Schedule  3.22(a)  lists (i) all  employee  benefit  plans (as  defined  in
Section 3(3) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA"))  and all bonus,  stock  option,  stock  purchase,  restricted  stock,
incentive,   deferred   compensation,   retiree   medical  or  life   insurance,
supplemental   retirement,   severance  or  other  benefit  plans,  programs  or
arrangements,  to which any of the Companies or any Subsidiary is a party,  with
respect to which any of the Companies or any  Subsidiary  has any  obligation or
which are maintained,  contributed to or sponsored by that Company or Subsidiary
for the  benefit of any current or former  employee,  officer or director of the
Companies or any Subsidiary,  and (ii) any Material  Contracts,  arrangements or
understandings  between  the Sellers or any of their  Affiliates  and any senior
executive of the Companies or of any Subsidiary,  including, without limitation,
any  contracts,  arrangements  or  understandings  relating  to the  sale of the
Companies  (collectively,  the "Plans").  The Sellers have made available to the
Purchaser a complete and accurate  copy of each Plan and a complete and accurate
copy of each  material  document  prepared  in  connection  with  each such Plan
including,  without  limitation,  where  applicable,  (i) a copy of each  trust,
contract  or  other  funding  arrangement;  (ii) the most  recent  summary  plan
description and summaries of material  modifications related thereto;  (iii) the
most  recently  filed  Internal  Revenue  Service  ("IRS") Form 5500,  (with all
attachments and schedules);  (iv) the most recently  received IRS  determination
letter  issued with respect to each such Plan;  (v) the most  recently  prepared
actuarial report and financial statement in connection with each such Plan; (vi)
all forms and  notices  required  by Code  Section  4980B(f)(6);  (vii) the most
recently  completed  discrimination  test results for each Plan (as applicable);
(viii) the most recent annual accounting of Plan assets; (ix) all communications
provided  to Plan  participants  after the  Seller  Acquisition  Date  regarding
amendment, termination,  modification,  termination or establishment of any Plan
which would result in any material liability to the Companies or any Subsidiary;
and  (x)  all  registration  statements,  annual  reports  (Form  11-K  and  all
attachments  thereto) and  prospectuses  prepared in  connection  with any Plan.
Except as disclosed on Schedule  3.22(a),  there are no other  employee  benefit
plans,  programs or  material  arrangements  or  agreements,  whether  formal or
informal,  whether  in  writing  or  not,  to  which  any  of the  Companies  or
Subsidiaries  is a  party,  with  respect  to  which  any  of the  Companies  or
Subsidiaries  has any  obligation  or which are  maintained,  contributed  to or
sponsored by any of the Companies or Subsidiaries for the benefit of any current
or former employee, officer or director of any of the Companies or Subsidiaries.
None of the Companies nor any Subsidiary has any legally  enforceable express or
implied commitment,  (i) to create,  incur liability with respect to or cause to
exist any other employee  benefit plan,  program or  arrangement,  (ii) to enter
into any material  contract or agreement to provide  compensation or benefits to
any individual or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.

         Absence of Certain  Types of Plans.  Except as is set forth in Schedule
         3.22(b),  none of the Plans is a multiemployer plan (within the meaning
         of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer  Plan") or a
         single employer pension plan (within the meaning of Section 4001(a)(15)
         of ERISA) for which any of the  Companies or  Subsidiaries  could incur
         liability  under  Section 4063 or 4064 of ERISA (a  "Multiple  Employer
         Plan").  Except as is set forth in Schedule 3.22(b),  none of the Plans
         provide  for the  payment  of  separation,  severance,  termination  or
         similar-type  benefits to any Person or obligates  the Companies or any
         Subsidiary to pay  separation,  severance,  termination or similar-type
         benefits  solely as a result of any  transaction  contemplated  by this
         Agreement or as a result of a "change in  control",  within the meaning
         of such term under Section 280G of the Code.  Except as is set forth in
         Schedule  3.22(b),  none of the Plans provides for or promises  retiree
         medical, disability or life insurance benefits to any current or former
         employee, officer or director of the Companies or any Subsidiary.

         Compliance  with  Applicable  Law.  Each  Plan is now,  and  since  the
         Sellers'  Acquisition  Date has,  operated in all material  respects in
         accordance  with the  requirements  of all applicable  Law,  including,
         without limitation, ERISA and the Code, and all persons who participate
         in the operation of such Plans and all Plan  "fiduciaries"  (within the
         meaning  of  Section  3(21) of ERISA)  have now and since the  Sellers'
         Acquisition  Date,  always acted in all

                                       29
<PAGE>

         material respects in accordance with  the  provisions  of  all
         applicable  Law,   including,   without limitation, ERISA and the Code.
         To the Knowledge of the Sellers, since the Sellers'  Acquisition  Date,
         each of the Companies and Subsidiaries has in all material respects,
         performed all obligations required to be performed by it under any
         Plan. To the  Knowledge of the Sellers,  none of the Companies and
         Subsidiaries  is, nor is any other party,  in any material  respect in
         default  under or in violation of any Plan. To the Knowledge of the
         Sellers,  no legal action, suit or claim is pending or threatened  with
         respect to any Plan (other than claims for benefits in the ordinary
         course) and no fact or event exists which has arisen since the Sellers'
         Acquisition Date that could reasonably be expected to give rise to any
         such action, suit or claim. There are no audits,  inquiries or
         proceedings pending or, to the Knowledge of the Sellers,  threatened
         by the Internal  Revenue Service or Department of Labor with respect to
         any Plan.

         Qualification  of  Certain  Plans.  Each Plan which is  intended  to be
         qualified  under  Section  401(a)  of the Code has  received  or is the
         subject of a favorable  determination letter from the IRS that it is so
         qualified and each trust  established in connection with any Plan which
         is intended to be exempt from federal  income  taxation  under  Section
         501(a) of the Code has  received or is the  subject of a  determination
         letter  from the IRS  that it is so  exempt,  and no fact or event  has
         occurred  since the date of such  determination  letter from the IRS to
         adversely  affect the  qualified  status of any such Plan or the exempt
         status of any such trust.  Each trust  maintained or  contributed to by
         the Companies or any Subsidiary  which is intended to be qualified as a
         voluntary employees'  beneficiary  association and which is intended to
         be exempt from federal income  taxation under Section  501(c)(9) of the
         Code has received a favorable determination letter from the IRS that it
         is so qualified and so exempt,  and no fact or event has occurred since
         the date of such  determination  by the IRS to  adversely  affect  such
         qualified or exempt status.

         Absence of Certain Liabilities and Events. There has been no prohibited
         transaction (within the meaning of Section 406 of ERISA or Section 4975
         of the Code and not  otherwise  exempt  under either the Code or ERISA)
         with respect to any Plan which is subject to ERISA or the Code. None of
         the  Companies  nor any  Subsidiary  has incurred any liability for any
         penalty or tax arising under Section 4971, 4972, 4980, 4980B or 6652 of
         the Code or any liability  under  Section 502 of ERISA,  and no fact or
         event exists which has occurred  since the Sellers'  Acquisition  Date,
         which could  reasonably be expected to give rise to any such liability.
         Since  the  Sellers'   Acquisition  Date,  none  of  the  Companies  or
         Subsidiaries  has incurred any  liability  under,  arising out of or by
         operation  of Title IV of ERISA (other than  liability  for premiums to
         the  Pension  Benefit  Guaranty  Corporation  arising  in the  ordinary
         course),  including,  without  limitation,  any liability in connection
         with (1) the termination or reorganization of any employee benefit plan
         subject  to Title IV of ERISA or (ii) with  respect to any Plan and any
         employee  benefit plan  maintained or  contributed to by any company or
         other  entity  considered  a  member  of a  controlled  group  with the
         Companies  and  Subsidiaries  in  accordance  with Code Section 414 (an
         "ERISA  Affiliate"),  or (2) the withdrawal from any  Multiemployer
         Plan, and no fact or event exists which could reasonably be expected to
         give rise to any such liability.  Since the Sellers'  Acquisition Date,
         to the Knowledge of the Sellers, no complete or partial termination has
         occurred  with respect to any Plan.  No  reportable  event  (within the
         meaning  of  Section  4043 of ERISA) has  occurred  since the  Sellers'
         Acquisition  Date nor is  expected  to occur  with  respect to any Plan
         subject to Title IV of ERISA. To the Sellers' Knowledge,  no Plan which
         is subject to ERISA or the Code had an accumulated  funding  deficiency
         (within  the  meaning  of Section  302 of ERISA or  Section  412 of the
         Code),  whether or not waived,  as of the most recently ended plan year
         of such Plan.  Since the Seller's  Acquisition  Date, the Companies and
         Subsidiaries  have not in any  material  respect,  violated  any of the
         health  continuation  requirements  of COBRA,  the  requirements of the
         Family Medical Leave Act of 1993, as amended,  the  requirements of the
         Women's Health and Cancer Rights Act, as amended,  the  requirements of
         the Newborns' and Mothers'  Health  Protection Act of 1996, as amended,
         the requirements of the Health Insurance Portability and Accountability
         Act of 1996,  as  amended,  or any  similar  provisions  of  state  law
         applicable to Employees of the Companies or any of their  Subsidiaries.
         None of the assets of the Companies or any Subsidiary is the subject of
         any lien arising under Section 302(f) of ERISA or Section 412(n) of the
         Code as a result of any events occurring since the Sellers' Acquisition
         Date; since the Sellers' Acquisition Date, none of the Companies or any
         Subsidiary  has been required to post any security under Section 307 of
         ERISA or Section 401(a)(29) of the Code; and the Sellers' Knowledge, no
         fact or event exists which could reasonably be expected to give rise to
         any such lien or requirement to post any such security.

         Plan  Contributions and Funding.  Since the Sellers'  Acquisition Date,
         all  contributions,  premiums  or  payments  required  to be made  with
         respect to any Plan have been made on or before  their due  dates.  All
         such  contributions  have been fully  deducted  for income tax purposes
         and,  to the  Knowledge  of the  Sellers,  no such  deduction  has been
         challenged or disallowed by any government entity and, to the Knowledge
         of the  Sellers,  no fact or event  exists  which could  reasonably  be
         expected to give rise to any such challenge or disallowance.  As of the
         Closing  Date,  no Plan which is subject to Title IV of ERISA will have
         an  "unfunded  benefit   liability"  (within  the  meaning  of  Section
         4001(a)(18) of ERISA) arising since the Sellers' Acquisition Date.

                                       30
<PAGE>

         Certain  Employee-Benefits  Assets.  Except as  disclosed  in  Schedule
         3.22(g) since the Sellers'  Acquisition Date, no guaranteed  investment
         contracts  and  other  similar  funding  contracts  with any  insurance
         Companies have been held by any of the Plans.

         Americans With Disability Act. Except as set forth in Schedule 3.22(h),
         each of the  Companies  and  Subsidiaries  required  to comply with the
         requirements  of the Americans With  Disabilities  Act is in compliance
         with such act.

         WARN Act.  Each of the Companies and  Subsidiaries  required to comply
         with the  requirements  of the Workers  Adjustment  and Retraining
         Notification Act ("WARN") is in compliance with such act and has no
         liabilities pursuant to WARN.

     (j) Overseas Employees.  Except as disclosed in Schedule 3.22(j), each Plan
that has been adopted or maintained by any of the Companies or Subsidiaries  for
the benefit of employees who perform  services  outside the United States has no
unfunded  liabilities  arising since the Sellers'  Acquisition Date that are not
offset by insurance or fully accrued.

     Labor  Matters.  Except  as set  forth in  Schedule  3.23:  (a) none of the
Companies or  Subsidiaries  are currently a party to any  collective  bargaining
agreement or other labor union contract applicable to persons employed by any of
the Companies or any Subsidiary and, to the Knowledge of the Sellers,  there are
currently  no  organizational   campaigns,   petitions  or  other   unionization
activities  seeking  recognition  of a  collective  bargaining  unit which could
affect any of the Companies or Subsidiaries; (b) there are no strikes, slowdowns
or work  stoppages  pending  or, to the  Knowledge  of the  Sellers,  threatened
involving the Companies or any Subsidiary,  and none of the Companies nor any of
the  Subsidiaries  has  experienced  any such strike,  slowdown or work stoppage
since the Sellers'  Acquisition  Date; (c) since the Sellers'  Acquisition Date,
none of the  Companies or  Subsidiaries  have  materially  breached or otherwise
failed to comply with the material  provisions of any  collective  bargaining or
union  contract  and  there are no  grievances  outstanding  against  any of the
Companies or Subsidiaries  under any such agreement or contract which could have
a  Material  Adverse  Effect;  (d)  there are no formal  unfair  labor  practice
complaints  pending  against any of the  Companies  or  Subsidiaries  before the
National  Labor  Relations  Board or any  other  Governmental  Authority  or any
current  union  representation  questions  involving  employees  of  any  of the
Companies or Subsidiaries  which could have a Material Adverse Effect;  (e) each
of the  Companies  and  Subsidiaries  is currently in compliance in all Material
Respects with all applicable Laws relating to the employment of labor, including
those  related  to wages,  hours,  collective  bargaining  and the  payment  and
withholding of taxes and other sums as required by the appropriate  Governmental
Authority and has withheld and paid to the appropriate Governmental Authority or
is holding for payment not yet due to such  Governmental  Authority  all amounts
required to be withheld from employees of the Companies and  Subsidiaries  since
the Sellers' Acquisition Date and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the  foregoing  during
the period from the Sellers' Acquisition Date through the date of this Agreement
which could have a Material Adverse Effect;  (f) since the Sellers'  Acquisition
Date,  each of the  Companies  and  Subsidiaries  has paid in full to all  their
respective  employees or adequately accrued for in accordance with U.S. GAAP all
wages, salaries, commissions, bonuses, benefits and other compensation due to or
on behalf of such  employees;  (g) to Sellers'  Knowledge  there is no charge or
proceeding  with  respect to a violation  of any  occupational  safety or health
standards that has been asserted since the Sellers'  Acquisition  Date or is now
pending or, to the Knowledge of the Sellers,  threatened  with respect to any of
the Companies or  Subsidiaries;  and (i) there is no formal,  written  charge of
discrimination in employment or employment practices, for any reason, including,
without  limitation,  age,  gender,  race,  religion or other legally  protected
category, which has been asserted since the Sellers' Acquisition Date or, to the
Sellers'  Knowledge,  threatened  before  the  United  States  Equal  Employment
Opportunity Commission,  or any other Governmental Authority in any jurisdiction
in which any of the Companies or Subsidiaries has employed or currently  employs
any person.

         Taxes.

         (i) All federal, state, local or foreign returns and reports in respect
         of Taxes  required  to be  filed  with  respect  to the  Companies  and
         Subsidiaries  (including the consolidated  federal income tax return of
         the  Sellers and any state,  local or foreign Tax return that  includes
         any of the  Companies or  Subsidiaries  on a  consolidated  or combined
         basis) have been timely filed;  (ii) all Taxes  required to be shown on
         such returns and reports or otherwise due have been timely paid;  (iii)
         all such returns and reports  (insofar as they relate to the activities
         or income of the  Companies  or  Subsidiaries)  are true,  correct  and
         complete in all respects;  there are no pending or, to the Knowledge of
         the Sellers,  threatened  actions or proceedings  for the assessment or
         collection  of Taxes against any of the  Companies or  Subsidiaries  or
         (insofar as either  relates to the  activities  or income of any of the
         Companies  or  Subsidiaries  or could result in liability of any of the
         Companies  or  Subsidiaries  on  the  basis  of  joint  and/or  several
         liability  for any period)  any  corporation  that was  included in the
         filing of a return  with the  Sellers  on a  consolidated  or  combined
         basis;  (iv)  there are no Tax liens on any  Assets;  (v)  neither  the
         Sellers nor any  subsidiary  or  Affiliate of the Sellers is a party to
         any agreement or  arrangement  that would result,  separately or in the
         aggregate, in the payment of any "excess parachute payments" within the
         meaning of Section  280G of the Code;  (vi) from and after the Sellers'
         Acquisition  Date,  SPINC  and its  U.S.  Subsidiaries  have  been  and
         continue to be members of the  affiliated  group (within the meaning of
         Section  1504(a)(1)  of  the  Code)  for  which  SPUSA  or  any  of its
         affiliates  files a consolidated  return as the common parent,  and has
         not been  includible in any other

                                       31
<PAGE>

         consolidated  return for any  taxable  period for which the statute of
         limitations has not expired;  (vii) the Companies and each of the
         Subsidiaries  have  complied in all  material  respects  with all
         rules and regulations  relating to the withholding of Taxes;  and
         (viii)   neither  the   Companies  nor  any   Subsidiaries   have
         participated  in  a  transaction   (either  as  a  controlled  or
         distributing  corporation)  described in Section 355 of the Code;
         and

         Except as disclosed in Schedule  3.24(b):  (i) there are no outstanding
         waivers or agreements extending the statute of limitations with respect
         to  any  Tax to  which  any of the  Companies  or  Subsidiaries  may be
         subject; (ii) none of the Companies or Subsidiaries have any (A) income
         reportable for a period ending after the Closing Date but  attributable
         to a transaction  (e.g., an installment  sale) occurring in or a change
         in  accounting  method and ending on or prior to the Closing Date which
         resulted in a deferred  reporting  of income from such  transaction  or
         from  such  change  in   accounting   method  (other  than  a  deferred
         intercompany transaction),  or (B) deferred gain or loss arising out of
         any deferred intercompany transaction;

         (i) The  Sellers  have made  available  to the  Purchaser a list of all
         income,  franchise and similar tax Returns (federal,  state,  local and
         foreign)  filed with respect to each of the Companies and  Subsidiaries
         for taxable periods ending after 1996,  which indicates all tax returns
         that currently are the subject of audit and known to the Sellers,  (ii)
         the Sellers will  provide to the  Purchaser  upon  request  correct and
         complete copies of all federal and state income,  franchise and similar
         tax  Returns  since  1996 and (iii) the  Sellers  will  provide  to the
         Purchaser  upon request a true and complete copy of any  tax-sharing or
         allocation  agreement  involving the Companies or any  Subsidiary and a
         true and complete description of any unwritten or informal agreement or
         arrangement.

         On the  Reference  Balance  Sheet,  reserves and  allowances  have been
         provided  adequate  to  satisfy  all  Liabilities  for  Taxes as of the
         Reference Balance Sheet Date. Insurance.

         Schedule 3.25 sets forth the name of insurer,  policy number and claims
         history  since the  Sellers'  Acquisition  Date,  as well as the claims
         history  prior to the  Sellers'  Acquisition  Date that is known to the
         Sellers,  with respect to each  insurance  policy  (including  policies
         providing property,  casualty,  liability,  workers' compensation,  and
         bond and  surety  arrangements)  under  which any of the  Companies  or
         Subsidiaries  have been an insured,  a named  insured or otherwise  the
         principal  beneficiary  of  coverage  at any time  since  the  Sellers'
         Acquisition Date and, to the Knowledge of the Sellers, in the two years
         preceding the Sellers'  Acquisition  Date,  true and complete copies of
         which have been made available to the Purchaser.

         To the Sellers' Knowledge,  no insurance policy listed in Schedule 3.25
         will,  prior to the Closing Date,  cease to be legal,  valid,  binding,
         enforceable  in accordance  with its terms and in full force and effect
         on terms identical to those in effect as of the date hereof.

     Product and Service  Warranties.  True and complete  copies of the standard
written forms of product and service  warranties and guarantees  utilized by the
Companies  and  Subsidiaries  as of the date of this  Agreement  have  been made
available to the Purchaser.

     Brokers.  No  broker,  finder  or  investment  banker  is  entitled  to any
brokerage,   finder's  or  other  fee  or  commission  in  connection  with  the
transactions  contemplated by this Agreement based upon  arrangements made by or
on behalf of the Sellers.

         Certain Interests

     Except as disclosed in Schedule 3.28(a), none of the Seller Representatives
listed in Schedule 3.28(a):

                  has  any  direct  or  indirect   financial   interest  in  any
         competitor,  supplier or customer of the Companies or any Subsidiaries,
         provided,  however,  that the ownership of securities  representing  no
         more  than  one  percent  of  the  outstanding   voting  power  of  any
         competitor,  supplier or customer, and which are listed on any national
         securities exchange or traded actively in the national over-the-counter
         market, shall not be deemed to be a "financial interest" so long as the
         Person owning such  securities has no other  connection or relationship
         with such competitor, supplier or customer;

                  owns, directly or indirectly,  in whole or in part, or has any
         other interest in any tangible or intangible property which any Company
         or any  Subsidiary  uses or has used in the conduct of the  Business or
         otherwise; or

                  has outstanding any Indebtedness to any Company or any
         Subsidiary.

         Except as disclosed in Schedule 3.28(b),  no officer or director of any
         Company or any  Subsidiary  and no relative  or spouse (or  relative of
         such spouse) who resides  with,  or is a dependent of, any such officer
         or director has outstanding any Indebtedness to the Sellers.

         Except as  disclosed in Schedule  3.28(c),  neither any Company nor any
         Subsidiary  has any  Liability  or any other  obligation  of any to any
         officer,  director or  shareholder  of the  Seller,  any Company or any
         Subsidiary  or to any

                                       32
<PAGE>

        relative or spouse (or relative of such spouse) who resides  with,  or
        is a dependent  of, any such  officer,  director or  shareholder,
        other than  amounts  owed as  compensation  for  services  in the
        normal  course and amounts  which , in the  aggregate,  could not
        have a Material Adverse Effect.

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     As an inducement to the Sellers to enter into this Agreement, the Purchaser
hereby represents and warrants to the Sellers as follows:

     Organization and Authority of the Purchaser. The Purchaser is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of California and has all necessary corporate power and authority to enter
into this Agreement,  to carry out its obligations  hereunder and thereunder and
to consummate the transactions  contemplated  hereby and thereby.  The execution
and  delivery  of this  Agreement  and any  ancillary  agreement  in  connection
herewith by the Purchaser,  the  performance by the Purchaser of its obligations
hereunder  and  thereunder  and  the   consummation  by  the  Purchaser  of  the
transactions  contemplated  hereby and thereby have been duly  authorized by all
requisite  action on the part of the  Purchaser.  This  Agreement  has been duly
executed and  delivered  by the  Purchaser,  and  (assuming  due  authorization,
execution and delivery by the Sellers) this Agreement constitutes a legal, valid
and binding  obligation  of the Purchaser  enforceable  against the Purchaser in
accordance with its terms.

     No Conflict.  Assuming compliance with the notification requirements of the
HSR Act and the making and  obtaining of all filings,  notifications,  consents,
approvals,  authorizations  and other actions referred to in Section 4.3, except
as may result from any facts or  circumstances  relating  solely to the Sellers,
the execution,  delivery and performance of this Agreement by the Purchaser does
not and will not (i)  violate,  conflict  with or  result  in the  breach of any
provision of the Certificate of Incorporation or By-laws of the Purchaser,  (ii)
conflict  with  or  violate  any Law or  Governmental  Order  applicable  to the
Purchaser  or (iii)  conflict  with,  or result in any breach of,  constitute  a
default  (or event  which with the  giving of notice or lapse or time,  or both,
would become a default) under,  require any consent under, or give to others any
rights of  termination,  amendment,  acceleration,  suspension,  revocation,  or
cancellation  of, or result in the  creation  of any  Encumbrance  on any of the
assets or properties of the Purchaser  pursuant to, any note, bond,  mortgage or
indenture,  contract,  agreement, lease, sublease, license, permit, franchise or
other  instrument or  arrangement  to which the Purchaser is a party or by which
any of such  assets or  properties  are bound or  affected  which  would  have a
Material  Adverse  Effect on the  ability of the  Purchaser  to  consummate  the
transactions  contemplated by this Agreement.  The Note has been approved by the
Purchaser's proposed senior lenders.

     Governmental   Consents  and  Approvals.   The   execution,   delivery  and
performance  of this  Agreement by the Purchaser do not and will not require any
consent,  approval,  authorization or other order of, action by, filing with, or
notification to, any Governmental Authority,  except the notification and review
requirements of the HSR Act and those analogous laws of other countries.

     Investment  Purpose.  The  Purchaser is acquiring the Shares solely for the
purpose of investment and not with a view to, or for offer or sale in connection
with, any distribution thereof.

     Litigation.  Except  as  disclosed  in  Schedule  4.5,  no  claim,  action,
proceeding  or  investigation  is  pending  or,  to the  best  Knowledge  of the
Purchaser,  threatened,  which seeks to delay or prevent the consummation of, or
which would be reasonably likely to materially  adversely affect the Purchaser's
ability to consummate, the transactions contemplated by this Agreement.

     Brokers.  Except for Banc of America  Securities LLC, no broker,  finder or
investment  banker  is  entitled  to any  brokerage,  finder's  or other  fee or
commission in connection  with the  transactions  contemplated by this Agreement
based upon  arrangements  made by or on behalf of the  Purchaser.  The Purchaser
shall be solely  responsible  for  payment of the fees and  expenses  of Banc of
America Securities LLC.

     Commitment  Letter. The Purchaser has provided the Sellers true and correct
copies  of  the  Commitment  Letter.  The  debt  financing  contemplated  by the
Commitment Letter,  together with Purchaser's cash on hand, is sufficient to pay
the Purchase Price,  related fees and expenses of the transactions  contemplated
hereby  to be paid by the  Purchaser  and to  provide  for the  working  capital
requirements of the Purchaser after the Closing.

                              ADDITIONAL AGREEMENTS

     Conduct of Business  Prior to the Closing.  Except as described in Schedule
5.1,  between the date hereof and the time of the Closing,  none of the Sellers,
the  Companies or  Subsidiaries  shall  conduct its  business  other than in the
ordinary  course and  consistent  with the past  practice of the  Companies  and
Subsidiaries.

         Access to Information.

         From the date hereof until the Closing,  upon  reasonable  notice,  the
         Sellers shall cause the Companies and the  Subsidiaries and each of the
         Companies'  and  the  Subsidiaries'  officers,  directors,   employees,
         agents,  representatives,  accountants  and  counsel to: (1) afford the
         officers,  employees  and  authorized  agents,  accountants,   counsel,
         financing  sources  and  representatives  of the  Purchaser  reasonable
         access,  during  normal  business  hours,  to the offices,  properties,
         plants,  other  facilities,  books and  records  of the  Companies  and
         Subsidiaries  and to  those  officers,  directors,  employees,  agents,
         accountants and counsel of the Companies and  Subsidiaries who have any
         Knowledge  relating  to  any  of  the  Companies,  Subsidiaries  or the
         Business and (ii) furnish to the  officers,

                                       33
<PAGE>

         employees  and  authorized  agents,  accountants,  counsel,  financing
         sources and  representatives  of the  Purchaser  such  additional
         financial and operating data and other information  regarding the
         assets,   properties   and   goodwill  of  the   Companies,   the
         Subsidiaries  and the Business (or legible copies thereof) as the
         Purchaser may from time to time reasonably request.

         In order to  facilitate  the  resolution  of any claims made against or
         incurred  by the  Sellers  prior to the  Closing,  for a period of five
         years after the Closing,  the Purchaser  shall (i) retain the books and
         records of the Companies and the Subsidiaries relating to periods prior
         to the  Closing  in a  manner  reasonably  consistent  with  the  prior
         practice of the Companies and the Subsidiaries and (ii) upon reasonable
         notice,  afford  the  officers,  employees  and  authorized  agents and
         representatives  of the Sellers  reasonable access (including the right
         to make, at the Sellers' expense, photocopies),  during normal business
         hours, to such books and records.

         In order to facilitate  the resolution of any claims made by or against
         or incurred by the Purchaser, the Companies or any Subsidiary after the
         Closing or for any other reasonable purpose, for a period of five years
         following  the  Closing,  the  Sellers  shall (i)  retain the books and
         records  of  the  Sellers   which  relate  to  the  Companies  and  the
         Subsidiaries  and their operations for periods prior to the Closing and
         which shall not otherwise  have been  delivered to the  Purchaser,  the
         Companies or any Subsidiary and (ii) upon reasonable notice, afford the
         officers,  employees and authorized agents and  representatives  of the
         Purchaser, the Companies or any Subsidiary reasonable access (including
         the right to make  photocopies,  at the expense of the  Purchaser,  the
         Companies or such  Subsidiary),  during normal  business hours, to such
         books and records.

     Confidentiality. Following the Closing, the Sellers agree to, and shall use
their  best  efforts  to  cause  their  agents,   representatives,   Affiliates,
employees,  officers and directors to: (i) treat and hold as  confidential  (and
not  disclose or provide  access to any Person to) all  information  relating to
trade   secrets,   processes,   patent  and  trademark   applications,   product
development,  price,  customer and supplier lists,  pricing and marketing plans,
policies and strategies, details of client and consultant contracts,  operations
methods,  product  development  techniques,   business  acquisition  plans,  new
personnel acquisition plans and all other confidential  information with respect
to the  Business,  the Companies  and  Subsidiaries,  (ii) in the event that the
Sellers  or any such  agent,  representative,  Affiliate,  employee,  officer or
director becomes legally compelled to disclose any such information, provide the
Purchaser with prompt written notice of such  requirement so that the Purchaser,
or any of the  Companies or  Subsidiaries  may seek a protective  order or other
remedy or waive  compliance  with this Section 5.3, (iii) in the event that such
protective  order or other  remedy  is not  obtained,  or the  Purchaser  waives
compliance with this Section 5.3, furnish only that portion of such confidential
information  which is legally  required to be  provided  and  exercise  its best
efforts to obtain assurances that  confidential  treatment will be accorded such
information,  (iv)  promptly  furnish  (prior to, at, or as soon as  practicable
following,  the Closing) to the Companies or the  Purchaser,  any and all copies
(in whatever form or medium) of all such  confidential  information  then in the
possession  of the  Sellers or any of its agents,  representatives,  Affiliates,
employees,  officers and directors and, except as otherwise  required by Section
5.2(c),  destroy any and all  additional  copies then in the  possession  of the
Sellers or any of its agents, representatives,  Affiliates,  employees, officers
and directors of such information and of any analyses, compilations,  studies or
other documents prepared,  in whole or in part, on the basis thereof;  provided,
however, that this sentence shall not apply to any information that, at the time
of  disclosure,  is available  publicly and was not  disclosed in breach of this
Agreement by the Sellers, its agents,  representatives,  Affiliates,  employees,
officers or directors.  In addition,  with respect to Intellectual Property, any
combination of features shall not be deemed to be within the foregoing exception
merely  because the  individual  features  are in the public  domain  unless the
combination  itself and its  principle  of operation  are in the public  domain.
Remedies at law for any breach of the  obligations of Sellers under this Section
5.3 are inadequate and the Purchaser shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any such breach.

         Regulatory and Other Authorizations; Notices and Consents.

         The Sellers and the Purchaser shall use their  commercially  reasonable
         best efforts to obtain (or cause the Companies and the  Subsidiaries to
         obtain)  all  authorizations,  consents,  orders and  approvals  of all
         Governmental  Authorities and officials that may be or become necessary
         for  its  execution  and  delivery  of,  and  the  performance  of  its
         obligations  pursuant to, this Agreement and will cooperate  fully with
         the other party in promptly seeking to obtain all such  authorizations,
         consents,  orders and  approvals.  Each party hereto  agrees to make an
         appropriate  filing,  if  necessary,  pursuant  to the HSR Act (and any
         other analogous laws and  regulations of other  countries) with respect
         to the transactions  contemplated by this Agreement  promptly following
         the date  hereof  and to  supply  as  promptly  as  practicable  to the
         appropriate  Governmental  Authorities  any additional  information and
         documentary  material that may be requested  pursuant to the HSR Act or
         such other analogous laws and regulations.

         The Sellers shall or shall cause the Companies and the  Subsidiaries to
         give  promptly  such  notices  to  third  parties  and use its or their
         commercially reasonable efforts to obtain such third party consents and
         estoppel certificates as the Purchaser may in its reasonable discretion
         deem  necessary  or  desirable  in  connection  with  the  transactions
         contemplated by this  Agreement;  provided,  however,  that the Sellers
         shall have no obligation  to give any guarantee or other  consideration
         of any nature in connection  with any such notice,  consent or estoppel
         certificate

                                       34
<PAGE>

         or   to  consent  to any  change  in the  terms  of any  agreement  or
         arrangement   which  the  Sellers  in  their  sole  and  absolute
         discretion may deem adverse to the interests of the Sellers,  the
         Business or any of the Companies or Subsidiaries.

         The Purchaser shall cooperate and use all reasonable  efforts to assist
         the Sellers in giving such  notices and  obtaining  such  consents  and
         estoppel certificates; provided, however, that the Purchaser shall have
         no  obligation  to give any  guarantee  or other  consideration  of any
         nature  in  connection  with  any  such  notice,  consent  or  estoppel
         certificate  or to consent to any change in the terms of any  agreement
         or arrangement which the Purchaser in its sole and absolute  discretion
         may deem adverse to the interests of the Purchaser, the Business or any
         of the Companies or Subsidiaries.

         The Sellers and the  Purchaser  agree that,  in the event any  consent,
         approval or  authorization  necessary  or desirable to preserve for the
         Business,  the Companies or any  Subsidiary  any right or benefit under
         any  lease,  license,  contract,   commitment  or  other  agreement  or
         arrangement to which the Sellers,  the Companies or any Subsidiary is a
         party  is  not  obtained  prior  to  the  Closing,  the  Sellers  will,
         subsequent  to the  Closing,  cooperate  with  the  Purchaser  and  the
         Companies  in   attempting   to  obtain  such   consent,   approval  or
         authorization as promptly  thereafter as practicable.  If such consent,
         approval or  authorization  cannot be obtained,  the Sellers  shall use
         their commercially  reasonable efforts to provide the Companies or such
         Subsidiary,  as the case may be,  with the rights and  benefits  of the
         affected  lease,  license,  contract,  commitment or other agreement or
         arrangement  for the term of such  lease,  license,  contract  or other
         agreement or  arrangement,  and, if the Sellers provide such rights and
         benefits,  the Companies or such Subsidiary,  as the case may be, shall
         assume the obligations and burdens thereunder.

     Notice of  Developments.  Prior to the Closing,  the Sellers shall promptly
notify  the  Purchaser  in  writing  of all  events,  circumstances,  facts  and
occurrences arising subsequent to the date of this Agreement which result in any
breach of a  representation  or  warranty  or  covenant  of the  Sellers in this
Agreement which has a Material  Adverse Effect or which has the effect of making
any  representation  or  warranty  of the  Sellers in this  Agreement  untrue or
incorrect in any material respect.

     Environmental  Study  and  Remedial  Action.  The  Sellers  agree  that the
Purchaser  may  perform or have  performed  on behalf of the  Purchaser,  at the
Purchaser's sole expense,  prior to Closing a Phase I environmental audit survey
and compliance audit of the Real Property (the "Environmental Study").

     No Solicitation.  The Sellers agree that between the date of this Agreement
and the earlier of (i) the Closing and (ii) the  termination of this  Agreement,
none of the Sellers, the Companies, the Subsidiaries nor any of their respective
Affiliates,  officers,  directors,  representatives or agents will,  directly or
indirectly,  (a) solicit,  initiate,  consider, or encourage or accept any other
proposals or offers from any Person (i) relating to any  acquisition or purchase
of  all  or any  portion  of the  capital  stock  of  any  of the  Companies  or
Subsidiaries or assets of the Companies or any Subsidiary  (other than Inventory
to be sold in the ordinary  course of business  consistent  with past practice),
(ii) to enter  into  any  business  combination  with  any of the  Companies  or
Subsidiaries or (iii) to enter into any other extraordinary business transaction
involving  or  otherwise  relating  to any  Company  or any  Subsidiary,  or (b)
participate  in  any   discussions,   conversations,   negotiations   and  other
communications  regarding,  or furnish to any other Person any information  with
respect  to,  or  otherwise  cooperate  in any way,  assist or  participate  in,
facilitate  or encourage any effort or attempt by any other Person to seek to do
any of the  foregoing.  The  Sellers  immediately  shall  cease  and cause to be
terminated  all  existing  discussions,  conversations,  negotiations  and other
communications with any Persons conducted  heretofore with respect to any of the
foregoing. The Companies, Subsidiaries or the Sellers shall notify the Purchaser
promptly if any such proposal or offer, or any inquiry or other contact with any
Person  with  respect  thereto,  is made and  shall,  in any such  notice to the
Purchaser,  indicate in reasonable detail the identity of the Person making such
proposal,  offer,  inquiry  or  contact  and the  terms and  conditions  of such
proposal,  offer,  inquiry or other  contact.  The Sellers  agree not to, and to
cause each of the Companies and  Subsidiaries  not to, without the prior written
consent of the  Purchaser,  release any Person from,  or waive any provision of,
any  confidentiality  or standstill  agreement to which any of the Sellers,  the
Companies or Subsidiaries is a party.

     Use of Intellectual  Property.  The Sellers acknowledge that from and after
the Closing,  the name  "Spectra  Precision"  and all similar or related  names,
marks and logos (all of such names, marks and logos being the "Precision Names")
shall be owned by the  Companies or a  Subsidiary,  that neither the Sellers nor
any of their  Affiliates  shall have any rights in the Precision Names, and that
neither the Sellers nor any of their  Affiliates  will contest the  ownership or
validity of any rights of the  Purchaser,  the Companies or any Subsidiary in or
to the Precision Names.  Notwithstanding the foregoing,  the parties acknowledge
and agree that the Sellers  shall have all rights to the "Spectra  Physics" name
as well as any and all  names,  marks and logos  using the name  "Spectra"  on a
standalone basis.  Prior to the Closing,  Sellers will replace the term "Spectra
Physics"  where it appears in the name of any of the  Companies or  Subsidiaries
with the term  "Spectra  Precision".  From and after the  Closing,  neither  the
Sellers  nor any of their  Affiliates  shall use any of the  Owned  Intellectual
Property or any of the Licensed Intellectual Property.

         Non-Competition.

         For  three  years  from  the  Closing  Date  Thermo  Electron  and  its
         Restricted Subsidiaries (defined as any entity in which Thermo Electron
         directly  or  indirectly  owns  all or a  majority  of  the  beneficial
         interest of such entity) will

                                       35
<PAGE>

         not, with respect to equipment or related equipment  management,  data
         communications,  or  data  management  systems  in  each  of  the
         following   industries:   (i)  agricultural,   (ii)  construction
         equipment, or (iii) land surveying:

               Sell or manufacture  for others goods that directly  compete with
         the lines of products manufactured or sold by the Business as of the
         date of this Agreement; or

                 License  others with any  technology  rights  whether now or
         hereafter  held by Thermo Electron  or its  Restricted  Subsidiaries,
         which would be infringed by any products currently manufactured or sold
         by the Business as of the date of this Agreement.

     The provisions of this Section 5.9 shall apply only to Thermo  Electron and
its  Subsidiaries  and the parties  acknowledge and agree that the provisions of
this Section 5.9 shall not apply to any  corporation  or other  business  entity
that is not a Subsidiary of Thermo  Electron and to which Thermo Electron or any
Subsidiary  sells,  licenses  or  otherwise  transfer  all or any portion of any
business,  product line or technology.  Any other activities  conducted or under
demonstrable development by Thermo Electron and its Subsidiaries (other than the
Sellers and any Subsidiary of any Seller) as of the date of this  Agreement,  as
evidenced  by their  records,  do not  directly  compete  with the  Business and
constitute  "Permitted  Pursuits."  In  addition,   for  the  purposes  of  this
Agreement,  Permitted  Pursuits  shall also mean the  Sellers'  (or any of their
Affiliates')  acquisition  of another  company or business  which is competitive
with the Business provided that the total revenue of such acquired company which
is directly  competitive  with the Business  does not exceed 10% of the acquired
company's revenues for the most recent fiscal year.

     The Restricted  Period shall be extended by the length of any period during
which  the  Sellers  are in breach of the  terms of this  Section  5.9.

     (c) The Sellers  acknowledge that the covenants of the Sellers set forth in
this Section 5.9 are an essential  element of this  Agreement and that,  but for
the agreement of the Sellers to comply with these covenants, the Purchaser would
not have entered into this Agreement.  The Sellers acknowledge that this Section
5.9 constitutes an independent covenant and shall not be affected by performance
or  nonperformance  of any other  provision of this  Agreement by the Purchaser,
other than Purchaser's obligations to pay the Sellers the Purchase Price and any
other  sums  due  hereunder  or  pursuant  to the  Note or any  other  ancillary
agreement.  The Sellers have independently consulted with counsel and after such
consultation  agree  that  the  covenants  set  forth  in this  Section  5.9 are
reasonable  and proper and are a reasonable  and proper means of protecting  the
goodwill and know-how  acquired under this Agreement and the SPAB Asset Purchase
Agreement.

     Further Action. Each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken,  all appropriate  action,  do or cause to be done
all things necessary,  proper or advisable under applicable Law, and execute and
deliver such  documents  and other  papers,  as may be required to carry out the
provisions of this Agreement and consummate and make effective the  transactions
contemplated by this Agreement.

     SECTION 1.1 Audited  Financial  Statements.  The Seller  shall  prepare and
deliver to the Purchaser audited consolidated  financial statements with respect
to the Business for the fiscal years ended December 31, 1997, 1998 and 1999 (the
"Audited Financial  Statements").  The Audited Financial Statements shall (i) be
prepared in accordance with the books of account and other financial  records of
the Companies and the Subsidiaries, (ii) present fairly in all material respects
the consolidated  financial condition and results of operations of the Companies
and the  Subsidiaries as of the date thereof or for the period covered  thereby,
(iii)  except as is set forth on Schedule 1 hereto,  be  prepared in  accordance
with U.S.  GAAP  applied on a basis  consistent  with the past  practices of the
Companies and the Subsidiaries and (iv) include all adjustments (consisting only
of normal recurring  accruals) that are necessary for a fair presentation of the
consolidated  financial  condition of the  Companies  and  Subsidiaries  and the
results of the operations of the Companies and the  Subsidiaries  as of the date
thereof or for the period  covered  thereby.  Purchaser's  Accountants  shall be
entitled  to  participate  (including,  with  the  permission  of  the  Sellers'
Accountant,  review of work papers) in the preparation of the Audited  Financial
Statements.  The costs and expenses associated with the preparation and delivery
of the Audited Financial Statements shall be borne 50% by the Sellers and 50% by
the Purchaser.

     SECTION 1.2  Non-Solicitation of Employees.  (a)Neither the Sellers nor any
of their  Affiliates  shall, for a period of two (2) years following the Closing
Date, for its own account or jointly with another,  directly or indirectly,  for
or on behalf of any individual, partnership,  corporation or other legal entity,
as principal,  agent or otherwise solicit or induce, or in any manner attempt to
solicit, any person then employed by Purchaser to leave such employment, whether
or not such employment is pursuant to a written contract and whether or not such
employment is at will, or hire any person who has been employed by the Companies
or the  Subsidiaries  at any time during the six (6) month period  preceding the
Closing.  This Section 5.12(a) shall not apply to general solicitations that are
made pursuant to advertisements  in publications of wide  circulation,  to hires
made  pursuant  to such  solicitations,  to any hiring  made as a result of such
solicitation, or to any employee earning less than $30,000 per year. (b) Each of
the Sellers (and their Affiliates) recognizes the importance of the covenant not
to solicit  contained  in this  subsection  (a) above an  acknowledges  that the
restrictions imposed herein are: (i) reasonable as to scope, time and area; (ii)
necessary for the protection of its  legitimate  business  interests,  including
without limitation, trade secrets, goodwill, and its relationship with customers
and suppliers; (iii) not unduly restrictive of its rights; and (iv) supported by
adequate  consideration.  Each party  acknowledges and agrees that the covenants
not to compete  contained in this Section  5.12 are

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<PAGE>

essential elements of this Agreement and that but for these covenants,  the
other party would not have agreed to enter into this  Agreement.  Such covenants
shall be  construed as  agreements  independent  of any other  provision of this
Agreement.

                                EMPLOYEE MATTERS

     Employment  Liabilities.  Except  as  specifically  described  herein,  the
Sellers shall assume and be responsible  for all  liabilities in connection with
claims incurred from the Sellers'  Acquisition  Date through the Closing Date by
employees  under the  Sellers'  employee  welfare  benefit  plans (as defined in
Section 3(1) of ERISA) and not otherwise reserved against on the Closing Balance
Sheet ("Pre-Closing Employee Claims"). Purchaser shall assume and be responsible
for all  liabilities in connection with claims incurred on and after the Closing
Date in respect of employees of the Companies and the  Subsidiaries  and for all
liabilities in connection  with claims of such  employees  incurred prior to the
Sellers'  Acquisition  Date.  For purposes of this Section 6.1, a claim shall be
considered  incurred on the date  treatment is rendered or a service  performed.
Statutory  worker's  compensation  claims of any  employees of the Companies and
Subsidiaries who are employees thereof at any time after the Closing or for whom
reserves are  established on the Closing  Balance  Sheet,  regardless of whether
they arose before or after the Closing  Date,  shall be the  responsibility  and
liability of the Purchaser.  Effective as of the Closing Date,  Purchaser  shall
assume  responsibility  for  providing  health care  coverage  to all  qualified
beneficiaries  of current or former employees of the Companies or any Subsidiary
(without regard to whether such employees become a transferred employee) who are
receiving (or become entitled to receive)  continuation health coverage pursuant
to an election made under Section 4980B of the Code or Sections 601-608 of ERISA
("COBRA")  (such an  election  to be called a "COBRA  election")  relating  to a
qualifying  event  occurring  prior to or on the Closing  Date.  Coverage of the
employees of the Companies and the Subsidiaries  under Sellers' employee welfare
benefit plans shall cease as of the Closing Date.

         Employee Benefit Plans - General.

         Compensation and Benefits;  Service Credit. As of the Closing Date, the
         Purchaser  shall credit each Company or  Subsidiary  employee  with the
         number of years of service  recognized  by Sellers prior to the Closing
         Date for all  employment  purposes  after the Closing Date,  including,
         without limitation,  for purposes of determining  vacation accrual, and
         eligibility,  vesting and  benefit  accrual  under any profit  sharing,
         retirement, health, welfare, severance plan or other form of benefit or
         compensation  plan  sponsored  or  maintained  by  Purchaser.  Vacation
         accruals as provided on the Closing  Balance Sheet for the employees of
         the  Companies  and  Subsidiaries  shall be respected by the  Purchaser
         after the Closing.

         Enrollment.  Effective on the Closing Date, the Purchaser  shall enroll
         each  Company or  Subsidiary  employee,  other than the four  employees
         listed in Section  2(g) of the SPAB Asset  Purchase  Agreement  and any
         other employees who accept alternative  employment with Thermo Electron
         Corporation or any of its Affiliates  prior to the Closing Date, in the
         Purchaser's  employee benefit plans and shall cause any waiting periods
         or pre-existing  conditions restrictions under the Purchaser's plans to
         be waived to the extent necessary to provide  immediate  coverage under
         the Purchaser's  plans. Such plans shall also credit each such employee
         with the amount, if any, paid during the plan year or calendar year, as
         applicable,   by  such  employee  (or  dependent)  for  all  deductible
         payments,  co-payments,  or similar payments made by each of them under
         Sellers' corresponding plan.

     WARN Act. The Purchaser  shall be  responsible  for any  liability  arising
under  the  Worker  Adjustment  and  Retraining   Notification  Act  arising  in
connection  with the  termination  of any Company or  Subsidiary  employee on or
after the Closing Date.

                                   TAX MATTERS

         Indemnity.
(a)  Notwithstanding  any other  provisions in this  Agreement or the SPAB Asset
Purchase  Agreement,  the Sellers  agree  jointly and severally to indemnify and
hold  harmless the  Purchaser,  the Companies  and each  Subsidiary  against the
following  Taxes (except to the extent the Closing  Balance  Sheet  specifically
reserves  for such  Taxes) and,  except as  otherwise  provided in Section  7.4,
against any loss, damage,  liability or expense,  including  reasonable fees for
attorneys and other outside consultants,  incurred in contesting or otherwise in
connection  with any such  Taxes:  (i) Taxes  imposed  on the  Companies  or any
Subsidiary  with respect to taxable periods ending on or before the Closing Date
(including  but not  limited to the Section  338(h)(10)  Election  described  in
Section 7.8);  (ii) with respect to taxable  periods  beginning on or before the
Closing Date and ending after the Closing  Date,  Taxes imposed on the Companies
or any  Subsidiary  which are  allocable,  pursuant  to Section  7.1(b),  to the
portion of such period  ending on the Closing  Date;  (iii) Taxes imposed on any
member  of  any  affiliated  group  with  which  any of the  Companies  and  the
Subsidiaries file or have filed a Return on a consolidated or combined basis for
a taxable period ending on or before the Closing Date; (iv) Taxes imposed on the
Purchaser or any of the Companies or  Subsidiaries  as a result of any breach of
warranty  or  misrepresentation  under  Section  3.24.  The  Purchaser  shall be
responsible  for Taxes and  associated  expenses  not  allocated  to the Sellers
pursuant to the first sentence hereof.

                                       37
<PAGE>

(b) In the case of Taxes that are payable with respect to a taxable  period that
begins before the Closing Date and ends after the Closing  Date,  the portion of
any such Tax that is  allocable  to the  portion  of the  period  ending  on the
Closing Date shall be:

                  in the case of Taxes that are either (x) based upon or related
         to income or receipts,  or (y) imposed in  connection  with any sale or
         other transfer or assignment of property (real or personal, tangible or
         intangible),  (other than  conveyances  pursuant to this Agreement,  as
         provided under Section 7.7),  deemed equal to the amount which would be
         payable if the taxable year ended with the Closing Date; and

                  in the case of Taxes imposed on a periodic  basis with respect
         to the assets of any of the  Companies  or  Subsidiaries,  or otherwise
         measured  by the  level of any item,  deemed  to be the  amount of such
         Taxes for the entire  period (or, in the case of such Taxes  determined
         on an  arrears  basis,  the  amount of such  Taxes for the  immediately
         preceding  period),  multiplied by a fraction the numerator of which is
         the number of calendar  days in the period  ending on the Closing  Date
         and the  denominator  of which is the  number of  calendar  days in the
         entire period,  provided however, that the amount payable in respect of
         such Taxes  shall not exceed the Taxes that would have been  payable if
         such Taxes were calculated as of the Closing Date.

         Returns and Payments.

         From the date of this Agreement through and after the Closing Date, the
         Sellers shall  prepare and file or otherwise  furnish in proper form to
         the  appropriate  Governmental  Authority  (or cause to be prepared and
         filed or so furnished) in a timely manner all Tax returns,  reports and
         forms  ("Returns")  relating to the Companies and the Subsidiaries that
         are due on or  before  or relate  to any  taxable  period  ending on or
         before  the  Closing  Date  (and the  Purchaser  shall do the same with
         respect to any taxable period ending after the Closing  Date).  Returns
         of the  Companies  and the  Subsidiaries  not yet filed for any taxable
         period  that  begins  before the  Closing  Date shall be  prepared in a
         manner  consistent  with past  practices  employed  with respect to the
         Companies and the  Subsidiaries  (except to the extent  counsel for the
         Sellers or any of the  Companies  renders a legal opinion that there is
         no reasonable  basis in law therefor or determines that a Return cannot
         be so prepared and filed  without  being  subject to  penalties).  With
         respect  to any Return  required  to be filed by the  Purchaser  or the
         Sellers with respect to the  Companies and the  Subsidiaries  and as to
         which an amount of Tax is  allocable  to the other party under  Section
         7.1(b),  the  filing  party  shall  provide  the  other  party  and its
         authorized  representatives  with a copy of such completed Return and a
         statement  certifying  the amount of Tax shown on such  Return  that is
         allocable to such other party pursuant to Section 7.1(b), together with
         appropriate  supporting  information and schedules at least 20 Business
         Days prior to the due date  (including  any extension  thereof) for the
         filing  of such  Return,  and  such  other  party  and  its  authorized
         representatives  shall  have the right to review  and  comment  on such
         Return and statement prior to the filing of such Return.

         The  Sellers  shall  pay or cause to be paid when due and  payable  all
         Taxes with respect to the Companies and the Subsidiaries  which are the
         responsibility of Sellers under this Section 7 to the extent such Taxes
         exceed the  amount,  if any,  accrued  for such Taxes as current  Taxes
         payable on the Closing Balance Sheet, and the Purchaser shall so pay or
         cause to be paid Taxes for any taxable  period  after the Closing  Date
         which are the  responsibility  of the  Purchaser  under this  Agreement
         (subject to its right of  indemnification  from the Sellers by the date
         set forth in Section 7.5 for Taxes  attributable  to the portion of any
         Tax period that includes the Closing Date  pursuant to Sections  7.1(a)
         and 7.1(b)).

     Refunds.  Any Tax refund  (including  any interest  with  respect  thereto)
relating to the Companies or any  Subsidiary for any taxable period prior to the
Closing Date (except for any refund  included on the Closing Date Balance Sheet,
which shall be the property of the Purchaser,  and if paid to the Sellers, shall
be paid over  promptly to the  Purchaser)  shall be the property of the Sellers,
and if received by the Purchaser, the Companies or any Subsidiary, shall be paid
over promptly to the Sellers.  Notwithstanding the foregoing  sentence,  any Tax
refund  (or  equivalent  benefit  to  the  Seller  through  a  reduction  in Tax
liability)  for a period before the Closing Date arising out of the carryback of
a loss or credit  incurred by any Company or any  Subsidiary  in a taxable  year
ending  after the Closing Date shall be the  property of the  Purchaser  and, if
received by the Seller, shall be paid over promptly to the Purchasers.

         Contests.

         After the Closing,  the Purchaser  shall promptly notify the Sellers in
         writing of any written  notice of a proposed  assessment or claim in an
         audit or administrative  or judicial  proceeding of the Purchaser or of
         any of the Companies or Subsidiaries which, if determined  adversely to
         the taxpayer,  would be grounds for indemnification  under this Article
         VII;  provided,  however,  that a failure to give such  notice will not
         affect the Purchaser's right to indemnification  under this Article VII
         except to the extent,  if any, that, but for such failure,  the Sellers
         could have avoided all or a portion of the Tax liability in question.

         In the case of an audit or administrative  or judicial  proceeding that
         relates to periods ending on or before the Closing Date,  provided that
         the Sellers acknowledge in writing their liability under this Agreement
         to hold the  Purchaser,  the  Companies and the  Subsidiaries  harmless
         against the full amount of any adjustment which may be

                                       38
<PAGE>

         made as a result of such audit or  proceeding  that relates to periods
         ending  on or before  the  Closing  Date (or,  in the case of any
         taxable  year  that  includes  the  Closing   Date,   against  an
         adjustment  allocable under Section 7.1(b) to the portion of such
         year ending on or before the  Closing  Date),  the Sellers  shall
         have the right at their expense to participate in and control the
         conduct of such audit or  proceeding  but only to the extent that
         such audit or proceeding relates solely to a potential adjustment
         for  which  the  Sellers  could  be held  liable  hereunder;  the
         Purchaser  also may  participate  in any such audit or proceeding
         and,  if the  Sellers do not assume the defense of any such audit
         or  proceeding,  the Purchaser may defend the same in such manner
         as it may  deem  appropriate,  including,  but  not  limited  to,
         settling such audit or proceeding after giving ten business days'
         prior written  notice to the Sellers  setting forth the terms and
         conditions of settlement.

         With  respect to issues  relating to a potential  adjustment  for which
         both the Sellers and the Purchaser or the  Companies or any  Subsidiary
         could be liable, each party may participate in the audit or proceeding.

         Neither the Purchaser  nor the Sellers shall enter into any  compromise
         or agree to settle any claim  pursuant  to any Tax audit or  proceeding
         which would adversely affect the other party for such year or any other
         year without the written consent of the other party,  which consent may
         not be  unreasonably  withheld.  The Purchaser and the Sellers agree to
         cooperate,  and the  Purchaser  agrees to cause the  Companies  and the
         Subsidiaries to cooperate,  in the defense against or compromise of any
         claim in any audit or proceeding.

         Conveyance Taxes

     The Seller and the  Purchaser  shall each pay one half of any real property
transfer,  sales, use, transfer,  value added, stock transfer,  and stamp taxes,
any transfer,  recording,  registration,  and other fees,  and any similar Taxes
which become payable in connection  with the  transactions  contemplated by this
Agreement,  and shall file such  applications  and documents as shall permit any
such Tax to be assessed and paid on or prior to the Closing  Date in  accordance
with any available per sale filing  procedure.  The Purchaser  shall execute and
deliver  all  instruments  and  certificates  necessary  to enable the Seller to
comply with the foregoing.

         Miscellaneous

         The  Sellers  and the  Purchaser  agree to treat all  payments  made by
         either  of them to or for  the  benefit  of the  other  (including  any
         payments to the  Companies or any  Subsidiary)  under this Article VII,
         under  other  indemnity  provisions  of  this  Agreement  and  for  any
         misrepresentations   or  breaches  of   warranties   or   covenants  as
         adjustments to the Purchase Price or as capital  contributions  for Tax
         purposes  and that such  treatment  shall  govern for  purposes  hereof
         except to the extent that the Laws of a particular jurisdiction provide
         otherwise,  in which  case  such  payments  shall be made in an  amount
         sufficient to indemnify the relevant party on an after-Tax basis.

         Any tax sharing agreement or arrangement between the Sellers and any of
         the Companies or Subsidiaries shall be terminated  immediately prior to
         the Closing.

         Notwithstanding  any provision in this  Agreement to the contrary,  the
         obligations   of  the  Sellers  to  indemnify  and  hold  harmless  the
         Purchaser,  the Companies and the Subsidiaries pursuant to this Article
         VII, and the representations and warranties  contained in Section 3.24,
         shall  terminate  at the close of  business  on the day  following  the
         expiration of the applicable statute of limitations with respect to the
         Tax liabilities in question (giving effect to any waiver, mitigation or
         extension thereof).

         From and  after  the date of this  Agreement,  the  Sellers  shall  not
         without the prior written  consent of the Purchaser  (which may, in its
         sole and absolute discretion,  withhold such consent) make, or cause or
         permit to be made, any Tax election (other than the Section  338(h)(10)
         Election) that would affect any of the Companies or Subsidiaries.

     For  purposes of this  Article  VII,  "the  Purchaser"  and "the  Sellers,"
respectively,  shall include each member of the affiliated group of corporations
of  which  it is  or  becomes  a  member  (other  than  the  Companies  and  the
Subsidiaries,  except  to the  extent  expressly  referenced).  Anything  to the
contrary in this Article VII  notwithstanding,  the parties acknowledge that the
capital  stock  of SPAB is not  being  sold to the  Purchaser  pursuant  to this
Agreement  and  that  the  provisions  of  Article  VII,  as to  SPAB  shall  be
interpreted accordingly.

     Purchase Price  Allocation The parties agree to allocate the Purchase Price
as follows:  $150,000,000  for shares of common stock of SPINC,  $43,000,000 for
the Shares of capital stock of the SPBV Companies and  $87,000,000  for the SPAB
Assets. No party will take a position on any tax return, before any governmental
agency, or in any judicial proceeding, that is in any way inconsistent with such
allocation.  In the event of a Purchase Price Adjustment pursuant to Section 2.6
of this  Agreement the Purchase  Price  Allocation  pursuant to this Section 7.7
shall be proportionately adjusted.

         Section 338(h)(10) Election

         Sellers  agree to join  with  Purchaser  in making  an  election  under
         Section  338(h)(10) of the Code and any  corresponding  election  under
         state law with  respect  to the  purchase  of the  shares of SPINC (the
         "Elections"),  and to sign a mutually  acceptable Form 8023,  Elections
         under Section 338 for Corporations Making Qualified Stock Purchases, at
         Closing,  evidencing  such  election.  Sellers will include any income,
         gain,  loss,  deduction,  or other tax item  resulting from the Section
         338(h)(10)  election  on their Tax  Returns to the extent  required  by
         applicable law.  Sellers shall also pay any Tax imposed on SPINC or its
         subsidiaries  attributable  to the  making  of the  Section

                                       39
<PAGE>

         338(h)(10)  election,  including,  but not  limited to any tax imposed
         under  Regulation  Section  1.338(h)(10)-1(e)(5)  or any state or
         local or foreign tax imposed on SPINC or its subsidiaries' gain.

         Prior to the Closing and in connection with the Elections,  the parties
         shall  agree upon a schedule  which sets forth the  allocation  of that
         portion of the Purchase Price  allocated to the purchase of SPINC under
         Section 7.7 among the assets of SPINC.  Such allocations  shall be made
         in accordance  with Section  338(h)(10) of the Code and any  applicable
         Treasury Regulations.

                              CONDITIONS TO CLOSING

     Conditions to Obligations of the Sellers. The obligations of the Sellers to
consummate the  transactions  contemplated by this Agreement shall be subject to
the  fulfillment,  at or  prior  to  the  Closing,  of  each  of  the  following
conditions:

         Representations,  Warranties and  Covenants.  The  representations  and
         warranties of the Purchaser contained in this Agreement shall have been
         true and correct in all material  respects  when made and shall be true
         and correct in all material  respects as of the Closing,  with the same
         force and  effect as if made as of the  Closing  Date,  other than such
         representations  and  warranties  as are made as of another  date,  the
         covenants  and  agreements  contained in this  Agreement to be complied
         with by the Purchaser on or before the Closing shall have been complied
         with in all material  respects,  and the Sellers  shall have received a
         certificate  from  the  Purchaser  to  such  effect  signed  by a  duly
         authorized officer thereof;

         Covenants. The Purchaser shall have complied in all material  respects
         with all obligations to be performed by it under the terms of the
         Agreement on or before the Closing Date.

         HSR Act and  Other  Analogous  Filings.  Any  waiting  period  (and any
         extension  thereof) under the HSR Act applicable to the purchase of the
         Shares  contemplated  hereby  shall  have  expired  or shall  have been
         terminated and any analogous waiting period (and any extension thereof)
         under the analogous anticompetition laws applicable to the transactions
         contemplated hereby shall have expired or shall have been terminated;

         No Proceeding or Litigation.  No Action shall have been commenced by or
         before any  Governmental  Authority  against  either the Sellers or the
         Purchaser,  seeking to restrain or materially  and adversely  alter the
         transactions  contemplated by this Agreement  which, in the reasonable,
         good  faith  determination  of the  Sellers,  is  likely  to  render it
         impossible  or  unlawful to  consummate  such  transactions;  provided,
         however,  that the provisions of this Section 8.1(d) shall not apply if
         the Sellers have  directly or indirectly  solicited or  encouraged  any
         such Action;

         Resolutions.  The Sellers shall have received a true and complete copy,
         certified by the Secretary or an Assistant  Secretary of the Purchaser,
         of the  resolutions  duly and validly adopted by the Board of Directors
         of the  Purchaser  evidencing  its  authorization  of the execution and
         delivery of this  Agreement and the  consummation  of the  transactions
         contemplated hereby;

         Incumbency Certificate.  The Sellers shall have received a certificate
         of the  Secretary  or an  Assistant  Secretary  of the  Purchaser
         certifying  the  names  and  signatures  of the  officers  of the
         Purchaser  and  authorized  to sign this  Agreement and the other
         documents to be delivered by hereunder;

         Guaranty.  The Sellers shall have received the Purchaser Parent
         Guaranty;

         Legal  Opinion.  The Sellers shall have  received  from Wilson  Sonsini
         Goodrich & Rosati, Professional Corporation, a legal opinion, addressed
         to the Sellers and dated the Closing Date,  containing  such  opinions,
         and taking such  qualifications,  as are customary in  transactions  of
         this nature; and

     (a) Consents and Approvals.  The Sellers shall have received,  each in form
and substance  reasonably  satisfactory  to the Sellers all third party consents
and estoppel certificates listed on Schedule 3.7(b), except where the failure to
obtain any such consents would not have a Material Adverse Effect.

     Conditions  to  Obligations  of  the  Purchaser.  The  obligations  of  the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions:

         Representations,  Warranties and  Covenants.  The  representations  and
         warranties of the Sellers  contained in this Agreement  shall have been
         true and correct in all material  respects  (without  giving effect for
         the  purposes of this  Section 8.2 to any  Knowledge  or other  similar
         qualifications)  when  made and  shall be true  and  correct  as of the
         Closing  with the same force and  effect as if made as of the  Closing,
         other  than  such  representations  and  warranties  as are  made as of
         another date and except where the failure to be true and correct  would
         not have a  Material  Adverse  Effect,  the  covenants  and  agreements
         contained in this  Agreement  to be complied  with by the Sellers on or
         before  the  Closing  shall  have been  complied  with in all  material
         respects,  and the Purchaser  shall have received  certificates  of the
         Sellers to such effect signed by duly authorized  officers  thereof and
         from each of the  Seller  Representatives  as to the  matters  and time
         periods set forth in such certificates;

                                       40
<PAGE>

         Covenants.  Sellers  shall have  complied in all  material  respects
         with all  obligations  to be performed by them under the terms of the
         Agreement on or before the closing date;

         HSR Act and  Other  Analogous  Filings.  Any  waiting  period  (and any
         extension  thereof) under the HSR Act applicable to the purchase of the
         Shares  contemplated  hereby  shall  have  expired  or shall  have been
         terminated and any analogous waiting period (and any extension thereof)
         under the analogous anticompetition laws applicable to the transactions
         contemplated hereby shall have expired or shall have been terminated;

         No Proceeding  or  Litigation.  No Action shall have been  commenced or
         threatened by or before any Governmental  Authority  against either the
         Sellers  or the  Purchaser,  seeking  to  restrain  or  materially  and
         adversely  alter  the  transactions   contemplated   hereby  which  the
         Purchaser believes, in its reasonable  discretion,  is likely to render
         it impossible or unlawful to consummate the  transactions  contemplated
         by this  Agreement  or which  could  have a  Material  Adverse  Effect;
         provided, however, that the provisions of this Section 8.2(d) shall not
         apply if the Purchaser has solicited or encouraged any such Action;

         Resolutions of the Sellers.  The Purchaser shall have received true and
         complete copies,  certified by the Secretary or an Assistant  Secretary
         of each of the Sellers,  of the resolutions duly and validly adopted by
         the  Sellers'   respective   Boards  of  Directors   evidencing   their
         authorization  of the execution and delivery of this  Agreement and the
         consummation of the transactions contemplated hereby;

         Incumbency  Certificates  of the  Sellers.  The  Purchaser  shall  have
         received a certificate  of the  Secretary or an Assistant  Secretary of
         each of the Sellers certifying the names and signatures of the officers
         of the  Sellers  authorized  to  sign  this  Agreement  and  the  other
         documents to be delivered hereunder;

         Legal  Opinion.  The  Purchaser  shall have  received from Mintz Levin
         Cohn Ferris  Glovsky and Popeo,  P.C. a legal opinion, addressed to the
         Purchaser and dated the Closing Date,  containing  such  opinions,  and
         taking such  qualifications,  as are customary in transactions of this
         nature;

         Consents and Approvals. The Purchaser shall have received, each in form
         and substance reasonably satisfactory to the Purchaser, all third party
         consents and estoppel  certificates  listed on Schedule 3.7(b),  except
         where the failure to obtain any such consents would not have a Material
         Adverse Effect;

         Resignations  of the  Companies'  Directors.  The Purchaser  shall have
         received the  resignations,  effective  as of the  Closing,  of all the
         directors  and  officers  of each of the  Companies  and  Subsidiaries,
         except for such persons as shall have been  designated in writing prior
         to the Closing by the Purchaser to the Sellers;

         Organizational  Documents.  The Purchaser shall have received a copy of
         (i)  the  Certificates  of   Incorporation,   as  amended  (or  similar
         organizational  documents),  of  each  of the  Companies  and  Material
         Subsidiaries, certified by the secretary of state (or similar official)
         of the  jurisdiction  in which  each  such  entity is  incorporated  or
         organized,  as of a date not earlier than five  Business  Days prior to
         the Closing Date and  accompanied  by a certificate of the Secretary or
         Assistant Secretary (or similar official) of each such entity, dated as
         of the Closing Date,  stating that no amendments have been made to such
         Certificate  of  Incorporation  (or similar  organizational  documents)
         since  such  date,  and (ii) the  By-laws  (or  similar  organizational
         documents)  of  each  of  the  Companies  and  Material   Subsidiaries,
         certified by the Secretary or Assistant Secretary of each such entity;

         Certificate of Non-Foreign  Status. The Purchaser shall have received a
         certificate  from the Sellers (which  complies with Section 1445 of the
         Code) of non-foreign  status executed in accordance with the provisions
         of the Foreign Investment in Real Property Tax Act;

         Good Standing;  Qualification to Do Business.  The Purchaser shall have
         received  good  standing  certificates  for each of the  Companies  and
         Material  Subsidiaries  from the secretary of state of the jurisdiction
         in which each such entity is incorporated or organized;

         Financing.  The Purchaser shall have received the proceeds of the
         financing referred to in the Commitment Letter;

         Environmental.  The  Environmental  Studies  performed by the Purchaser
         pursuant to Section 5.6 shall not have  revealed,  in Purchaser's
         reasonable  judgment,  Environmental  Claims or remediation  issues
         which would involve  Liabilities in excess of $15,000,000;

         Form 8023.  The Purchaser  shall have received an executed Form 8023 in
         connection with the acquisition of SPINC from SPUSA;

         Sellers' Parent Guaranty.  The Purchaser shall have received the
         Sellers' Parent Guaranty;

          Audited Financial Statements.  The Purchaser shall have received the
          Audited Financial Statements;

         Other  Transactions.  (i) The  transactions  contemplated  by the Other
         Purchase  Documents  shall have  closed  concurrently  with the Closing
         hereunder, and (ii) the transactions described on Schedule 8.2(r) shall
         have been completed to the reasonable satisfaction of Purchaser, except
         where  the  failure  to  complete  such  transaction  would

                                       41
<PAGE>

         not have a Material  Adverse Effect.  The parties  recognize that
         the accelerated  timing imposed upon the preparation,  negotiation and
         execution of this  Agreement,  including the preparation and review of
         the Schedules  hereto and to the SPAB Asset  Purchase  Agreement,  may
         have  inadvertently  resulted in there being technical  errors in this
         Agreement and in the Other Purchase Documents,  including the Exhibits
         and  Schedules  thereto,  and  omissions  or errors in the  Disclosure
         Schedule (which do not have a Material  Adverse  Effect).  The parties
         agree to negotiate in good faith to resolve such issues  promptly upon
         discovery  and notice  thereof,  which,  the parties  acknowledge  may
         result in  additional  items being listed in the  Disclosure  Schedule
         (which do not have a  Material  Adverse  Effect)  within  twenty  (20)
         calendar days following the signing of this Agreement. For purposes of
         this Section  8.2(r),  the term Material  Adverse Effect shall include
         the  addition or omission of any terms  that,  in the  aggregate,  can
         reasonably  be expected to produce a cost to Purchaser or a diminution
         in value of the Business as proposed to be conducted by Purchaser,  of
         $560,000;

         Evidence.  The Purchaser shall have received  evidence that all actions
         required to perfect the  transfers  of all SPAB Assets,  including  the
         SPAB Companies'  Shares,  under the SPAB Asset Purchase  Agreement have
         been taken and all documents  required to perfect the transfers of such
         SPAB Assets, including the SPAB Companies' Shares, under the SPAB Asset
         Purchase Agreement shall have been executed.

                                 INDEMNIFICATION

     Survival  of  Representations  and  Warranties.   The  representations  and
warranties  of the  Sellers  contained  in this  Agreement,  and all  statements
contained in this  Agreement,  the Other  Purchase  Documents,  Exhibits to this
Agreement,  the Disclosure  Schedule and any certificate,  Financial  Statement,
Interim  Statements  or  report or other  document  delivered  pursuant  to this
Agreement or in connection with the transactions  contemplated by this Agreement
(collectively,  the "Acquisition Documents") shall survive the Closing until the
545th  day  thereafter;   provided,   however,  that  (a)  the  representations,
warranties,  and covenants dealing with Tax Matters shall survive as provided in
Section 7.6(c), (b) insofar as any claim is made by the Purchaser for the breach
of any  representation  or warranty of the Sellers  contained herein relating to
environmental  matters,  such representations and warranties shall, for purposes
of such  claims by the  Purchaser,  survive  the  Closing  Date  until the fifth
anniversary  of the  Closing  Date and (c)  insofar  as any claim is made by the
Purchaser  for a breach  of the  representations  and  warranties  specified  in
Section 3.3 and 3.4(d),  such  representations  and  warranties  shall,  for the
purposes of such claims by the Purchaser, survive forever. Neither the period of
survival  nor  the  liability  of the  Sellers  with  respect  to  the  Sellers'
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of the  Purchaser,  except as described  below.  If written
notice of a claim  has been  given  prior to the  expiration  of the  applicable
representations  and  warranties  by the  Purchaser  to the  Sellers,  then  the
relevant  representations  and warranties shall survive as to such claim,  until
such claim has been finally resolved.

         Indemnification by the Sellers

         The  Purchaser  and its  Affiliates,  officers,  directors,  employees,
         agents,  successors and assigns (each an "Indemnified  Party") shall be
         indemnified   and  held  harmless  by  the  Sellers  for  any  and  all
         Liabilities,   losses,  damages,   claims,  costs  (including  Business
         Interruption  Costs) and  expenses,  interest,  awards,  judgments  and
         penalties (including,  without limitation,  attorneys' and consultants'
         fees and expenses)  actually  suffered or incurred by them  (including,
         without limitation, any Action brought or otherwise initiated by any of
         them) (hereinafter a "Loss"), arising out of or resulting from:

               the  breach  of any  representation  or  warranty  made  in  this
          Agreement by the Sellers,  or in the SPAB Asset Purchase  Agreement by
          SPAB;

               the  breach  of any  covenant  or  agreement  contained  in  this
          Agreement by the Sellers,  or in the SPAB Asset Purchase  Agreement by
          SPAB; and

               (i) Pre-Closing Employee Claims (excluding workers'  compensation
          claims) and Transaction Induced Payments; and

               any Off-Site  Environmental  Matters or  Environmental  Claims or
          remediation  with respect  thereto  arising from or in connection with
          events or conditions occurring prior to the Closing Date.

     The limitations  contained in the  representations set forth in Article III
with regard to events occurring prior to the Sellers'  Acquisition Date shall be
inapplicable  where it is shown by a  preponderance  of evidence that any of the
Seller  Representatives  had Knowledge of the events or conditions  prior to the
Sellers'  Acquisition Date that gave rise to such  representation or warranty of
the Sellers being false when and as made hereunder.

     Notwithstanding  any of the foregoing,  Purchaser  shall not be entitled to
indemnification  hereunder  pursuant  to  9.2(a)(i)  where  it  is  shown  by  a
preponderance  of the  evidence  that one or more of the  Purchaser's  executive
officers  (who were  executive  officers of the  Purchaser  prior to the Closing
Date) had actual Knowledge prior to January 12, 2000 that such representation or
warranty of the Sellers is false when and as made hereunder.

                                       42
<PAGE>

         An Indemnified  Party shall give the Sellers notice of any matter which
         an Indemnified  Party  determines  has given,  or could give rise to, a
         right of indemnification  under this Agreement,  within 15 days of such
         determination,  setting out, in  reasonable  detail,  the nature of the
         claim including,  without limitation, the amount of the Loss, if known,
         and method of  computation  thereof,  and containing a reference to the
         provisions  of this  Agreement  in  respect  of  which  such  right  of
         indemnification  is claimed or arises.  The obligations and Liabilities
         of the Sellers  under this  Article IX with  respect to Losses  arising
         from claims of any third party which are subject to the indemnification
         provided  for in this  Article  IX  ("Third  Party  Claims")  shall  be
         governed by and  contingent  upon the  following  additional  terms and
         conditions:  if an Indemnified  Party shall receive notice of any Third
         Party Claim,  the  Indemnified  Party shall give the Sellers  notice of
         such Third Party Claim within 15 days of the receipt by the Indemnified
         Party of such notice;  provided,  however,  that the failure to provide
         such notice shall not release the Sellers  from any of its  obligations
         under this  Article IX except to the extent the Sellers are  materially
         prejudiced  by such  failure and shall not relieve the Sellers from any
         other obligation or Liability that it may have to any Indemnified Party
         otherwise  than under this  Article IX. If the Sellers  acknowledge  in
         writing its  obligation to indemnify the  Indemnified  Party  hereunder
         against any Losses that may result  from such Third Party  Claim,  then
         the Sellers shall be entitled to assume and control the defense of such
         Third Party  Claim at its expense and through  counsel of its choice if
         it gives  notice of its  intention  to do so to the  Indemnified  Party
         within  five  Business  Days of the  receipt  of such  notice  from the
         Indemnified  Party;  provided,  however,  that if  there  exists  or is
         reasonably  likely to exist a conflict of  interest  that would make it
         inappropriate  for the same counsel to represent  both the  Indemnified
         Party and the Sellers,  then the Indemnified Party shall be entitled to
         retain its own counsel,  in each jurisdiction for which the Indemnified
         Party determines counsel is required, at the expense of the Sellers. In
         the  event the  Sellers  exercise  their  right to  undertake  any such
         defense  against  any such Third Party  Claim as  provided  above,  the
         Indemnified  Party shall cooperate with the Sellers in such defense and
         make available to the Sellers, at the Sellers' expense,  all witnesses,
         pertinent records, materials and information in the Indemnified Party's
         possession or under the Indemnified Party's control relating thereto as
         is  reasonably  required by the  Sellers.  Similarly,  in the event the
         Indemnified  Party is,  directly or indirectly,  conducting the defense
         against any such Third Party Claim,  the Sellers shall  cooperate  with
         the  Indemnified  Party  in such  defense  and  make  available  to the
         Indemnified  Party,  at  the  Sellers'  expense,  all  such  witnesses,
         records,  materials and information in the Sellers' possession or under
         the Sellers' control relating thereto as is reasonably  required by the
         Indemnified  Party.  No such  Third  Party  Claim may be settled by the
         Sellers  without the prior  written  consent of the  Indemnified  Party
         which consent shall not be unreasonably withheld.

         The  indemnities  provided in this  Section  9.2(a)  shall  survive the
         Closing as  described  above.  Except with  respect to claims  based on
         actual fraud or intentional,  willful or bad faith breach,  the parties
         agree that the indemnity provided in this Section 9.2 shall be the sole
         and  exclusive  remedy of the  Purchaser  against the Sellers at law or
         equity for any matter covered by paragraphs (a) and (b) above.

         The amount of any Losses for which  indemnification  is provided  under
         this  Section  9.2  shall be  computed  net of any  insurance  proceeds
         received by the Indemnified  Party in connection  with such Losses.  If
         the amount with  respect to which any claim is made under this  Section
         9.2 (an  "Indemnity  Claim") gives rise to a currently  realizable  Tax
         Benefit (as defined below) (after taking into account the tax treatment
         of the  indemnification  payment,  including  the  taxability  of  such
         payment  or the loss of current  or future  deductions  because of such
         payment) to the party making the claim, the indemnity  payment shall be
         reduced by the amount of the Tax Benefit  available to the party making
         the claim.  To the extent such Indemnity  Claim does not give rise to a
         currently  realizable Tax Benefit,  if the amount with respect to which
         any Indemnity  Claim is made gives rise to a subsequently  realized Tax
         Benefit to the party that made the claim,  such party  shall  refund to
         the  Indemnifying  Party the amount of such Tax Benefit when, as and if
         realized. For the purposes of this Agreement, any subsequently realized
         Tax  Benefit  shall be  treated  as though it were a  reduction  in the
         amount of the  initial  Indemnity  Claim,  and the  liabilities  of the
         parties  shall be  redetermined  as though both occurred at or prior to
         the time of the indemnity payment. For purposes of this Section 9.2(d),
         a "Tax Benefit" means an amount by which the tax liability of the party
         (or group of corporations  including the party) is reduced  (including,
         without  limitation,  by  deduction,  reduction  of income by virtue of
         increased  tax basis or  otherwise,  entitlement  to refund,  credit or
         otherwise) plus any related interest  received from the relevant taxing
         authority. Where a party has other losses, deductions, credits or items
         available to it, the Tax Benefit from any losses,  deductions,  credits
         or items relating to the Indemnity Claim shall be deemed to be realized
         proportionately  with any other losses,  deductions,  credits or items.
         For  purposes  of this  Section  9.2(d),  a Tax  Benefit is  "currently
         realizable"  to the extent it can be reasonably  anticipated  that such
         Tax Benefit will be realized in the current  taxable  period or year or
         in any Tax Return with respect thereto  (including  through a carryback
         to a prior  taxable  period) or in any taxable  period or year prior to
         the date of the  Indemnity  Claim.  In the event that there should be a
         determination disallowing the Tax Benefit, the Indemnifying Party shall
         be liable to refund to the Indemnified  Party the amount of any related
         reduction  previously  allowed  or  payments  previously  made  to  the
         Indemnifying  Party pursuant to this Section 9.2(d).  The amount of the
         refunded  reduction  or  payment  shall be deemed a payment  under this
         Section 9.2 and thus shall be paid subject to any applicable reductions
         under this Section 9.2(d).

                                       43
<PAGE>

         The parties  agree that any  indemnification  payments made pursuant to
         this  Agreement  shall be treated for tax purposes as an  adjustment to
         the Purchase Price, unless otherwise required by applicable law.

         Each Indemnified  Party shall be obligated in connection with any claim
         for  indemnification  under  this  Section  9.2 to use  all  reasonable
         efforts to mitigate  Losses upon and after  becoming aware of any event
         which could reasonably be expected to give rise to such Losses.

         Notwithstanding  anything to the  contrary  contained  herein,  neither
         Sellers  nor  any   Affiliate  of  Sellers  shall  be  liable  for  any
         consequential,  punitive or special damages  pursuant to this Agreement
         or any of the agreements  contemplated  hereby,  except with respect to
         intentional, willful or bad faith breaches hereof.

         Purchaser shall promptly pay to Sellers any refund or credit (including
         any  interest  paid or  credited  with  respect  thereto)  received  by
         Purchaser, or any Affiliate thereof after the Closing of Taxes relating
         to any taxable  period  ending on or before the  Closing  Date or, with
         respect to any taxable  period  beginning  before and ending  after the
         Closing Date,  Taxes  relating to the portion of such period  beginning
         before and ending on the  Closing  Date.  Purchaser  shall,  if Sellers
         reasonably so request,  cause the relevant  related  entity to file for
         any refund or credit to which Sellers  believe they are entitled  under
         this Section 9.2(h).

     Limits  on  Indemnification   Notwithstanding   anything  to  the  contrary
contained in this Agreement,  the maximum amount of  indemnifiable  Losses which
may be recovered  from the Sellers  arising out of or resulting  from the causes
enumerated in Section 9.2(a)(i-iii) shall be an amount equal to $40,000,000, and
the maximum amount which may be recovered for events or conditions  specified in
Section  9.2(a)(iv) shall be $15,000,000 and provided,  however,  that any claim
for indemnification  with regard to Tax Matters shall be governed by Article VII
and  shall not be  included  in such  maximum  amount.  Other  than  Claims  for
indemnification  with  regard  to Tax  Matters,  no  claim  may be  made  by the
Purchaser  with  respect to  indemnifiable  Losses  until the  aggregate  of all
indemnifiable  Losses exceeds $2,800,000,  which amount shall be deductible from
the maximum amount of  indemnification,  and Purchaser  shall not be entitled to
recover with respect to the first $1,000,000 of Losses.  The amount of any Claim
payable to the Purchaser by the Sellers in accordance  with this Agreement shall
first be deducted from the outstanding  principal  amount owing by the Purchaser
under the Note and any remaining amount of indemnification  owing by the Sellers
hereunder shall be payable in accordance with the terms of this Agreement.

     Tax Matters. Anything in this Article IX (except for the specific reference
to Tax matters in Section 9.1) to the contrary  notwithstanding,  the rights and
obligations of the parties with respect to  indemnification  for any and all Tax
matters shall be governed by Article VII.

                                       44
<PAGE>

         Indemnification by the Purchaser.

         Each  of  the  Sellers  and  their  respective  Affiliates,   officers,
         directors, employees, agents, successors and assigns (each an "Sellers'
         Indemnified  Party")  shall be  indemnified  and held  harmless  by the
         Purchaser for any and all liabilities,  losses, damages,  claims, costs
         and expenses,  interest,  awards,  judgments and penalties  (including,
         without  limitation,  attorneys'  and  consultants'  fees and expenses)
         actually suffered or incurred by them (including,  without  limitation,
         any Action brought or otherwise  initiated by any of them) (hereinafter
         a "Loss"), arising out of or resulting from:

               the  breach  of  any  representation  or  warranty  made  by  the
          Purchaser in this Agreement;

               the breach of any covenant or agreement by the  Purchaser in this
          Agreement;

               (iii) any claim for severance pay,  termination  pay,  redundancy
          pay or similar amounts  relating to the termination of any employee of
          the Business on or after the Closing Date,  other than with respect to
          the four  employees  listed in Section 2(g) of the SPAB Asset Purchase
          Agreement  and any other  employees  who,  prior to the Closing  Date,
          accept  employment  with  Thermo  Electron  Corporation  or any of its
          Affiliates; or (iv) any claim in respect of vacation accruals included
          in the Closing  Balance  Sheet that is not  satisfied by the Purchaser
          after Closing.

         A Sellers'  Indemnified  Party shall give the  Purchaser  notice of any
         matter which a Sellers'  Indemnified  Party  determines  has given,  or
         could give rise to, a right of  indemnification  under this  Agreement,
         within  60 days of  such  determination,  setting  out,  in  reasonable
         detail,  the nature of the claim  including,  without  limitation,  the
         amount of the Loss, if known,  and method of computation  thereof,  and
         containing a reference to the  provisions of this  Agreement in respect
         of which such  right of  indemnification  is  claimed  or  arises.  The
         obligations and liabilities of the Purchaser under this Article IX with
         respect to Losses  arising  from  claims of any third  party  which are
         subject  to  the  indemnification  provided  for  in  this  Article  IX
         ("Sellers'  Third Party  Claims")  shall be governed by and  contingent
         upon the  following  additional  terms and  conditions:  if a  Sellers'
         Indemnified  Party shall receive  notice of any Third Party Claim,  the
         Indemnified  Party  shall give the  Purchaser  notice of such  Sellers'
         Third  Party  Claim  within  30 days  of the  receipt  by the  Sellers'
         Indemnified Party of such notice;  provided,  however, that the failure
         to provide such notice shall not release the Purchaser  from any of its
         obligations under this Article IX except to the extent the Purchaser is
         materially  prejudiced  by such  failure  and  shall  not  relieve  the
         Purchaser  from any other  obligation or Liability  that it may have to
         any Sellers' Indemnified Party otherwise than under this Article IX. If
         the Purchaser  acknowledges  in writing its obligation to indemnify the
         Sellers' Indemnified Party hereunder against any Losses that may result
         from such  Sellers'  Third Party  Claim,  then the  Purchaser  shall be
         entitled to assume and control the defense of such Sellers' Third Party
         Claim at its  expense  and  through  counsel  of its choice if it gives
         notice of its  intention  to do so to the  Sellers'  Indemnified  Party
         within  five  Business  Days of the  receipt  of such  notice  from the
         Sellers' Indemnified Party; provided,  however, that if there exists or
         is reasonably likely to exist a conflict of interest that would make it
         inappropriate in the judgment of the Sellers' Indemnified Party, in its
         sole and absolute  discretion,  for the same counsel to represent  both
         the Sellers'  Indemnified  Party and the  Purchaser,  then the Sellers'
         Indemnified Party shall be entitled to retain its own counsel,  in each
         jurisdiction  for  which  the  Sellers'  Indemnified  Party  determines
         counsel is required, at the expense of the Purchaser.  In the event the
         Purchaser exercises the right to undertake any such defense against any
         such  Sellers'  Third  Party  Claim as  provided  above,  the  Sellers'
         Indemnified  Party shall  cooperate  with the Purchaser in such defense
         and make available to the Purchaser,  at the Purchaser's  expense,  all
         witnesses, pertinent records, materials and information in the Sellers'
         Indemnified  Party's  possession  or  under  the  Sellers'  Indemnified
         Party's  control  relating  thereto as is  reasonably  required  by the
         Purchaser.  Similarly,  in the event the Sellers' Indemnified Party is,
         directly  or  indirectly,  conducting  the  defense  against  any  such
         Sellers'  Third Party Claim,  the Purchaser  shall  cooperate  with the
         Sellers'  Indemnified  Party in such defense and make  available to the
         Sellers'  Indemnified  Party,  at the  Purchaser's  expense,  all  such
         witnesses,  records,  materials  and  information  in  the  Purchaser's
         possession  or under the  Purchaser's  control  relating  thereto as is
         reasonably required by the Sellers' Indemnified Party. No such Sellers'
         Third  Party  Claim may be settled by the  Purchaser  without the prior
         written consent of the Sellers' Indemnified Party.

     (c) Notwithstanding  anything to the contrary contained herein, neither the
Purchaser  nor  any  Affiliate  of  the  Purchaser   shall  be  liable  for  any
consequential,  punitive or special damages pursuant to this Agreement or any of
the agreements contemplated hereby, except with respect to intentional,  willful
or bad faith breaches hereof.

     (d) Each Indemnified  Party shall be obligated in connection with any claim
for  indemnification  under this  Section 9.5 to use all  reasonable  efforts to
mitigate  Losses  upon  and  after  becoming  aware  of any  event  which  could
reasonably be expected to give rise to such Losses.

                             TERMINATION AND WAIVER

     Termination.  This  Agreement  may be  terminated  at any time prior to the
Closing:

                                       45
<PAGE>

         by the Purchaser if, between the date hereof and the time scheduled for
         the  Closing:  (i)  any  representation  or  warranty  of  the  Sellers
         contained in this Agreement  and/or the SPAB Asset  Purchase  Agreement
         shall  not have been  true and  correct  when  made,  except  where the
         failure  to be true  and  correct  would  not have a  Material  Adverse
         Effect,  and the  Sellers  have  been  given a  reasonable  opportunity
         (which,  shall,  at a minimum be no less than 10 business days) to cure
         such  misrepresentation,  (ii) the Sellers shall not have complied with
         any covenant or agreement to be complied  with by them and contained in
         this Agreement and/or the SPAB Asset Purchase  Agreement,  except where
         the failure to so comply would not have a Material Adverse Effect,  and
         the Sellers have been given a reasonable  opportunity (which, shall, at
         a  minimum  be no less  than 10  business  days) to  comply  with  such
         covenant or agreement; or (iii) the Sellers, or any of the Companies or
         Subsidiaries  makes a general  assignment for the benefit of creditors,
         or any proceeding shall be instituted by or against any of the Sellers,
         the  Companies  or  Subsidiaries  seeking to  adjudicate  any of them a
         bankrupt  or  insolvent,   or  seeking   liquidation,   winding  up  or
         reorganization,   arrangement,   adjustment,   protection,   relief  or
         composition  of  its  debts  under  any  Law  relating  to  bankruptcy,
         insolvency or reorganization; or

         by the Sellers if,  between the date hereof and the time  scheduled for
         the  Closing:  (i) any  representation  or  warranty  of the  Purchaser
         contained in this Agreement  and/or the SPAB Asset  Purchase  Agreement
         shall not have been true and correct in all material respects when made
         except  where  the  failure  to be true and  correct  would  not have a
         material  adverse effect on the  Purchaser's  ability to consummate the
         transactions  contemplated  hereby,  and the Purchaser has been given a
         reasonable  opportunity (which,  shall, at a minimum be no less than 10
         business days) to cure such misrepresentation, (ii) the Purchaser shall
         not have complied with any covenant or agreement to be complied with by
         it and  contained  in this  Agreement  and/or the SPAB  Asset  Purchase
         Agreement  and the  Purchaser  has been given a reasonable  opportunity
         (which, shall, at a minimum be no less than 10 business days) to comply
         with  such  covenant  or  agreement;  or  (iii)  the  Purchaser  or any
         Affiliate makes a general  assignment for the benefit of creditors,  or
         any proceeding  shall be instituted by or against the Purchaser or such
         Affiliates  seeking to adjudicate  any of them a bankrupt or insolvent,
         or  seeking  liquidation,  winding up or  reorganization,  arrangement,
         adjustment,  protection,  relief or  composition of its debts under any
         Law relating to bankruptcy, insolvency or reorganization,; or

         by either the Sellers or the  Purchaser  if the Closing  shall not have
         occurred  by July  31,  2000;  provided,  however,  that  the  right to
         terminate this Agreement under this Section 10.1 shall not be available
         to any party whose willful failure to fulfill any obligation under this
         Agreement  shall have been the cause of, or shall have resulted in, the
         failure of the Closing to occur on or prior to such date; or

         by  either  the  Purchaser  or  the  Sellers  in  the  event  that  any
         Governmental  Authority shall have issued an order, decree or ruling or
         taken any other action restraining,  enjoining or otherwise prohibiting
         the transactions contemplated by this Agreement and such order, decree,
         ruling or other action shall have become final and nonappealable; or

         by the Sellers or Purchaser, if the Commitment Letter shall have been
         withdrawn; or by the mutual written consent of the Sellers and the
         Purchaser.

     Effect of  Termination.  In the event of  termination  of this Agreement as
provided in Section 10.1, this Agreement  shall forthwith  become void and there
shall be no liability on the part of either party hereto except (a) as set forth
in Sections 5.3, 10.2 and 11.1 and (b) that nothing  herein shall relieve either
party from liability for any willful and intentional breach of this Agreement.

     Waiver.  Either  party to this  Agreement  may (a)  extend the time for the
performance  of any of the  obligations  or other acts of the other  party,  (b)
waive any inaccuracies in the  representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant hereto
or (c) waive  compliance  with any of the  agreements or conditions of the other
party contained herein.  Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound  thereby.  Any
waiver  of any term or  condition  shall  not be  construed  as a waiver  of any
subsequent  breach or a subsequent  waiver of the same term or  condition,  or a
waiver of any other term or  condition,  of this  Agreement.  The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.

                               GENERAL PROVISIONS

     Expenses.  Except as otherwise  specified in this Agreement,  all costs and
expenses,  including,  without  limitation,  fees and  disbursements of counsel,
financial  advisors and accountants,  incurred in connection with this Agreement
and the  transactions  contemplated  hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.

     Notices. All notices,  requests,  claims,  demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon  receipt) by  delivery  in person,  by courier
service,  by cable,  by telecopy,  by  telegram,  by telex or by  registered  or
certified mail (postage  prepaid,  return  receipt

                                       46
<PAGE>

requested) to the respective parties at the following addresses (or at such
other  address for a party as shall be specified in a notice given in accordance
with this Section 11.2):

         if to the Sellers:

                           Thermo Instrument Systems Inc.
                           81 Wyman Street
                           P.O. Box 9046
                           Waltham, MA 02454-9046
                           Telecopy:  (781) 622-1283
                           Attention:  Seth H. Hoogasian, General Counsel

                           with a copy to:

                           Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
                           One Financial Center
                           Boston, MA  02111
                           Telecopy:  (617) 542-2241
                           Attention:  Neil H. Aronson, Esquire
                           if to the Purchaser:

                           Trimble Navigation Limited
                           645 North Mary Avenue
                           Sunnyvale, CA  94088
                           Telecopy:  (408) 481-8000
                           Attention:  President
                           with a copy to:

                           Wilson Sonsini Goodrich & Rosati
                           650 Page Mill Road
                           Palo Alto, CA 94304
                           Telecopy:    (650) 493-6811
                           Attention:   John Goodrich, Esquire
                                        William Richter, Esquire

     Public Announcements. Except as may be determined by either party's counsel
to be relevant in order to comply with federal securities laws, no party to this
Agreement  shall  make,  or  cause to be  made,  any  press  release  or  public
announcement  in  respect of this  Agreement  or the  transactions  contemplated
hereby or otherwise  communicate with any news media without prior  notification
to the other  party,  and the  parties  shall  cooperate  as to the  timing  and
contents of any such press release or public announcement.

     Headings.  The  descriptive  headings  contained in this  Agreement are for
convenience  of  reference  only and shall not affect in any way the  meaning or
interpretation of this Agreement.

     Severability.  If any term or other provision of this Agreement is invalid,
illegal or incapable of being  enforced by any Law or public  policy,  all other
terms and provisions of this Agreement shall  nevertheless  remain in full force
and  effect  so long as the  economic  or legal  substance  of the  transactions
contemplated  hereby is not  affected  in any manner  materially  adverse to any
party.  Upon such  determination  that any term or other  provision  is invalid,
illegal or incapable of being  enforced,  the parties hereto shall  negotiate in
good faith to modify this  Agreement so as to effect the original  intent of the
parties  as  closely  as  possible  in an  acceptable  manner in order  that the
transactions  contemplated hereby are consummated as originally  contemplated to
the greatest extent possible.

     Entire  Agreement.  This Agreement and the Exhibits and Schedules  attached
hereto, and the Confidentiality Agreement constitute the entire agreement of the
parties  hereto  with  respect to the  subject  matter  hereof and  thereof  and
supersede all prior agreements and undertakings,  both written and oral, between
the Sellers and the  Purchaser  with  respect to the subject  matter  hereof and
thereof.

     Assignment.  This  Agreement  may not be  assigned by  operation  of law or
otherwise  without the express  written consent of the Sellers and the Purchaser
(which consent may be granted or withheld in the sole  discretion of the Sellers
or the Purchaser).

     No Third  Party  Beneficiaries.  Except  for the  provisions  of Article IX
relating to Indemnified Parties,  this Agreement shall be binding upon and inure
solely to the  benefit of the  parties  hereto and their  permitted  assigns and
nothing  herein,  express or implied,  is  intended to or shall  confer upon any
other  Person  any legal or  equitable  right,  benefit  or remedy of any nature
whatsoever under or by reason of this Agreement.

                                       47
<PAGE>

     Amendment.  This Agreement may not be amended or modified  except (a) by an
instrument in writing  signed by, or on behalf of, the Sellers and the Purchaser
or (b) by a waiver in accordance with Section 10.3.

     Governing  Law.  This  Agreement  shall be governed  by, and  construed  in
accordance  with, the laws of the State of  California,  applicable to contracts
executed  in and to be  performed  entirely  within  that  state.  Venue for any
dispute  regarding  the subject  matter for this  Agreement  shall be the United
States District Court for the District of  Massachusetts if the Purchaser brings
a claim and the  United  States  District  Court for the  Northern  District  of
California if the Sellers bring a claim.

     Counterparts.  This Agreement may be executed in one or more  counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

     Specific  Performance.  The parties  hereto agree that  irreparable  damage
would occur in the event any  provision of this  Agreement  was not performed in
accordance  with the terms  hereof and that the  parties  shall be  entitled  to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.

     Further  Assurances . Upon the reasonable  request of any other party, each
party hereto agrees to take any and all actions, including,  without limitation,
the  execution  of   certificates,   documents  or  instruments,   necessary  or
appropriate  to give  effect  to the  terms  and  conditions  set  forth in this
Agreement. To the extent that any of the matters described in Schedule 8.2(r) is
not completed prior to the Closing, the Sellers will use commercially reasonable
best efforts to complete all of such  outstanding  matters within 90 days of the
Closing.

                                       48
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective  officers  thereunto duly
authorized.

                                     SPECTRA PHYSICS HOLDINGS USA, INC.

                                     By:  /s/ Earl R. Lewis
                                         ----------------------------------
                                          Name: Earl R. Lewis
                                          Title: CEO of Thermo Insturments

                                     SPECTRA PRECISION AB

                                     By:  /s/ Anders Rhodin
                                         ----------------------------------
                                          Name: Anders Rhodin
                                          Title: President

                                     By:  /s/ Erick Asplund
                                         ----------------------------------
                                          Name: Anders Rhodin
                                          Title: Board Member

                                     SPECTRA PRECISION EUROPE HOLDINGS, BV

                                     By:  /s/ Earl R. Lewis
                                         ---------------------------------
                                          Name: Earl R. Lewis
                                          Title: CEO of Thermo Insturments

                                     TRIMBLE ACQUISITION CORP.

                                     By:  /s/ Steven W. Berglund
                                         ----------------------------------
                                           Name: Steven W. Berglund
                                           Title: President and CEO

                                       49
<PAGE>

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