EXHIBIT 2.01



DATED 26TH DAY OF OCTOBER, 1998 






                                AGREEMENT FOR THE
                                 ACQUISITION OF



                              SUNBELT (UK) LIMITED


                                       BY


                               EUROPEAN MICRO PLC






                                PHILIP CONN & CO
                                  LINCOLN HOUSE
                               1 BRAZENNOSE STREET
                                   MANCHESTER
                                     M2 5FJ

                               TELE: 0161-833 9494
                               FAX: 0161-834 4540

                                  REF: TJO/MJM


<PAGE>


CLAUSE

1.    INTERPRETATION ..........................................................4

2.    SALE AND PURCHASE.......................................................12

3.    CONDITIONS..............................................................16

4.    PERIOD TO COMPLETION....................................................17

5.    COMPLETION..............................................................18

6.    WARRANTIES AND INDEMNITIES..............................................20

7.    RESTRICTIONS............................................................25

8.    PENSIONS................................................................26

9.    UNIT 1, SAXON BUSINESS CENTRE...........................................28

10.   COSTS...................................................................28

11.   EFFECT OF COMPLETION....................................................28

12.   ACKNOWLEDGEMENTS........................................................29

13.   ENTIRE AGREEMENT AND AMENDMENTS.........................................29

14.   COUNTERPARTS............................................................29

15.   MERGER OF AGREEMENTS....................................................29

16.   GENERAL.................................................................30

17.   SEVERABILITY............................................................30

18.   LAW AND JURISDICTION....................................................31



                                       2
<PAGE>


SCHEDULE 1....................................................................32
THE VENDORS


SCHEDULE 2....................................................................33
PARTICULARS RELATING TO THE COMPANY


SCHEDULE 3....................................................................34
THE PROPERTIES


SCHEDULE 4....................................................................35
WARRANTIES


SCHEDULE 5....................................................................78
DEED OF INDEMNITY


ANNEXURE A....................................................................87
Loan Note and Convertible Loan Note


ANNEXURE B....................................................................96
Deed of Waiver


ANNEXURE C....................................................................97
Schedule of Adjustments


ANNEXURE D....................................................................98
Service Contracts



                                       3
<PAGE>



THIS AGREEMENT is made on 26th October 1998

BETWEEN:-

(1)      EUROPEAN  MICRO  PLC  a  company  incorporated  in  England  and  whose
         registered  office  is  situate  at 20-24  Church  Street,  Altrincham,
         Cheshire WA14 4DW (Company Number: 2663964) ("the Purchaser"); and

(2)      The  persons  whose  names  and  addresses  are set out in  column 1 of
         Schedule 1 (together the "Vendors").

RECITALS:

(A)      Sunbelt  (UK)  Limited is a private  limited  company  incorporated  in
         England under the Companies Acts under number 02743684. Further details
         relating to the Company are set out in Schedule 2.

(B)      The Vendors are or will be upon Completion,  the registered  holders of
         all of the  Shares,  the  numbers  of the  Shares of which  each of the
         Vendors is the  registered  holder  being set out  opposite his name in
         column 2 of Schedule 1, such Shares  comprising  in  aggregate  100 per
         cent of the issued share capital of the Company.

(C)      The Vendors have agreed to sell,  or procure to be sold,  the Shares to
         the  Purchaser  on the terms and subject to the  conditions  set out in
         this agreement free from Encumbrances.

(D)      The Vendors have made  representations to the Purchaser in the terms of
         the  Warranties  to the intent that the  Purchaser  should rely on such
         Warranties in entering into this agreement.


THE PARTIES AGREE AS FOLLOWS:


1.       INTERPRETATION

1.1      The following  provisions shall have effect for the  interpretation  of
         this agreement.

1.2      The following words,  expressions and abbreviations  shall,  unless the
         context otherwise requires, have the following meanings:

"ACCOUNTS"   means  financial   statements  of  the  Company  and  each  of  the
Subsidiaries,  comprising  the balance  sheet of the Company,  the  consolidated
balance sheet and profit and loss account of the Group and the balance sheet and
profit and loss account of each of the Subsidiaries,  together in each case with
the notes  thereon as at and for the  financial  period  ending on the  Accounts
Date.;


                                       4
<PAGE>

"ACCOUNTS DATE" means 30th June 1998;

"ACTIVITIES" means any activity, operation or process carried out by the Company
at any Property whether or not currently owned, occupied or used by the Company;

"ADJUSTED  PRE-TAX  EARNINGS" means pre-tax earnings adjusted in accordance with
clause 2.6;

"AGREED RATE" means 2 per cent above the base rate from time to time of National
Westminster Bank plc;

"AGREED FORM" means the form agreed  between the parties on or prior to the date
of this  agreement and initialled  for the purposes of  identification  by their
respective solicitors;

"ASIAN SUBSIDIARY" means the company to be incorporated in Singapore as a wholly
owned  subsidiary  of EMCC  which  is to  carry  on its  activities  within  the
territory, such activities to be restricted to purchasing and selling on its own
behalf or acting  as  commercial  agent for the  Purchaser's  Group  within  the
territory save in the event that it makes any purchase of stock (inventory) from
any  member  of the  Purchaser  Group  such  purchases  to be  excluded  for any
calculations  of  turnover so that the Asian  Subsidiary  shall only be credited
with sales in the territory;

"ASSOCIATE"  means as defined in s435 of the Insolvency Act 1986 and "Associated
Company" shall be construed accordingly;

"BUSINESS  DAY" means a day (other  than  Saturday or Sunday) on which banks are
open for business in London;

"BOOK VALUE AMOUNT"  means:  the  Shareholders'  Funds of the Company as at 30th
September  1998,  reduced  by the book  value of all  Intangible  Assets  of the
Company except cash and including  goodwill,  minority  interests,  research and
development costs, trademarks, trade names, copyrights,  patents and franchises,
unamortized  debt  discounts and  expenses,  all  determined in accordance  with
clauses 2.6 and 2.7.

"CAA" means the Capital Allowances Act 1990;

"CGTA" means Capital Gains Tax Act 1979;

"COMPANY"  means  Sunbelt  (UK)  Limited  which  definition  shall  include  any
Subsidiary undertaking wherever the context so admits;

"COMPANY'S  ACCOUNTANTS"  means Windsor Stebbing Marsh of Pinnacle House,  17-25
Hartfield Road, London SW19 3SE

"COMPANIES ACTS" has the meaning given to it in section 744 of the Companies Act
1985, together with the Companies Act 1989;



                                       5
<PAGE>

"COMPLETION"  means the  completion  of the sale and  purchase  of the Shares in
accordance with clause 5;

"COMPLETION  DATE" means 26th October 1998 or such other date as the parties may
agree in writing;

"CONDITIONS" means the conditions set out in clause 3 of this agreement;

"CONNECTED PERSON" means as defined in s249 of the Insolvency Act 1986;

"DEED OF INDEMNITY" means a deed of indemnity in the form set out in Schedule 5;

"DISCLOSURE  LETTER"  means a letter at the  Completion  Date  together with the
attachments  thereto  addressed  by the  Vendors'  Solicitors  on  behalf of the
Vendors to the  Purchaser's  Solicitors  on behalf of the  Purchaser  disclosing
exceptions to the Warranties;

"DISTRIBUTION"   means  a  distribution  as  defined  by  sections  209  to  211
(inclusive) of the T.A. and section 418 of the T.A.;

"EMCC" means European Micro Holdings Inc. a company incorporated in the State of
Nevada (United  States of America) with the State of Nevada file no.  28914-1997
and having  its place of  business  at 6073 NW 167  Street,  Unit  C-25,  Miami,
Florida 33015 United States of America;

"EMCC SHARES" means the shares of common stock of $0.01 the same being traded or
tradable  on  NASDAQ,  credited  as fully  paid,  in the  capital  of EMCC to be
allotted to the Vendors at the option of the  Purchaser  pursuant to clause 2.5,
as part of the consideration

"EMPLOYEES"  shall mean the following  employees of the Company  employed by the
Company  at the  Completion  Date and full  particulars  of whom are  fully  and
accurately set out in the Disclosure Letter:-

          Dhaliwal, Embers, O'Brien, Patel, Thompson and Upton;

"ENCUMBRANCE"  means any mortgage,  charge (whether fixed or floating),  pledge,
lien,  security  interest  or other  third  party  right or  interest  (legal or
equitable) over or in respect of the relevant asset, security or right;

"ENVIRONMENT" means any and all living organisms  (including without limitation,
man),  ecosystems,  property and the media of air (including  without limitation
air in buildings,  natural or manmade structures,  below or above ground) water,
(as defined in Section 104(1) of the Water  Resources Act 1991 and within drains
and sewers) and land  (including  under any water as described above and whether
above or below surface);


                                       6
<PAGE>

"ENVIRONMENTAL  CONSENT" means any consent,  approval,  permit,  licence, order,
filing, authorisation,  exemption, registration, permission, reporting or notice
requirement and any related agreement required under any Environmental Law;

"ENVIRONMENTAL  LAWS" means all  international EU, national,  federal,  state or
local  statutes,  which for the avoidance of doubt shall include  section 57 and
schedule 22 of the Environment Act 1995 and the guidance and regulations adopted
under those provisions, by-laws, orders, regulations or other law or subordinate
legislation or common law, all orders, ordinances decrees or regulatory codes of
practice,  circulars,  guidance  notes and  equivalent  controls  concerning the
protection  of human health or which have as a purpose or effect the  protection
or prevention of harm to the  Environment or health and safety which are binding
in  relation  to  the  Properties  and/or  upon  the  Company  in  the  relevant
jurisdiction  in which the Company has been or is  operating  (including  by the
export of its products,  or its waste thereto) on or before Completion and which
for the  avoidance  of doubt  shall  specifically  include  all  regulations  in
relation to the control of noise;

"FIRST CONTINGENT EARN-OUT AMOUNT" means an amount equal to the product of:-

(i)      Adjusted Pre-Tax Earnings of the Company for the fiscal year ended June
         30, 1998, multiplied by

(ii)     the sum of:

(1)            twenty-five  percent  (25%)  if the Nova Gross Profit (as defined
         below) for the sale of Nova products by EMCC and its affiliates  during
         the First Earn-Out Period (as defined below) is at least (pound)600,000
         and the Nova Gross Margin (as defined below) for such sales is at least
         twenty percent (20%); plus

(2)            twenty-five percent (25%) if  the Nova  Gross Profit for the sale
         of Nova Products by EMCC and its affiliates  the First Earn-Out  Period
         is at least (pound)800,000 and the Nova Gross Margin (as defined below)
         for sale of such products is at least twenty percent (20%); plus

(3)            twenty-five  percent  (25%)  if  at  least  four of the following
         employees  are  employed by the Company,  the Group or the  Purchaser's
         Group on the last day of the First Earn-Out Period: Dhaliwal,  O'Brien,
         Embers,  Thompson, Patel and Upton unless such employees' contracts are
         unlawfully or unfairly terminated; plus

(4)            twenty-five  percent  (25%)  if  the Net  Asian   Revenue  is  at
         least (pound)4,500,000

The First Contingent  Earn-Out shall be payable pro rata if the Company achieves
ninety per cent (90%) or more of items (1), (2) and (4) above.

"FIRST EARN-OUT PERIOD" means a period of twelve (12) calendar months commencing
1st November 1998;



                                       7
<PAGE>

"GROUP" means the Company and the Subsidiaries;

"GUARANTEED  EARN-OUT  AMOUNT" means two (2) times the Adjusted Pre-Tax Earnings
of the Company for the financial year ended June 30, 1998.

"I.C.T.A."  means the Income and  Corporation  Taxes Act 1970 and any  reference
thereto shall include any enactment  repealed or modified  thereby as if section
539 of the I.C.T.A. applied in like manner to this agreement;

"INTANGIBLE ASSETS" means any asset, non-monetary in nature and without physical
substance;

"INTELLECTUAL  PROPERTY"  means all rights in the  nature of patent,  trademark,
copyright,  registered  design,  design  right  wheresoever  situate and whether
registered  or  unregistered,   registrable   applied  for  or  granted  without
limitation;

"I.T.A."  means the  Inheritance  Tax Act 1984 and any  reference  thereto shall
include any  enactment  repealed  or  modified  thereby as if section 275 of the
I.T.A. applied in like manner to this agreement;

"KNOW-HOW  AND  CONFIDENTIAL  INFORMATION"  means any  information  known to the
Vendors  or the  Company  which  might be of  commercial  value and which in its
entirety as opposed to its individual components is not in the public domain;

"LOAN NOTE" and "CONVERTIBLE  LOAN NOTE" mean the Loan Note and Convertible Loan
Note in the agreed form annexed hereto;

"MANAGEMENT  ACCOUNTS" means the accounts  prepared by the Company in the agreed
form for the period 30th June 1998 to 30th September 1998;

"NASDAQ"  means the Exchange  known as the National  Association  of  Securities
Dealers  Automated  Quotations  and  recognised by the  Securities  and Exchange
Commission in the USA;

"NET ASIAN  REVENUE" means the turnover of the Asian  Subsidiary  represented by
the cost of purchases  (excluding  any Nova Products) and the cost of sales made
in the territory  less the costs of any purchases  sourced from the  Purchaser's
Group unless  resold in the  territory but so that the value of no item of stock
shall be credited more than once as an item of turnover and for the avoidance of
doubt any purchase or sale (as set out above) shall include any sale or purchase
made directly or indirectly by the Purchaser's  Group or any Connected Person or
any of them in the territory except for any made by Big Blue Europe BV;

"NOVA GROSS MARGIN" means a fraction, the numerator of which is Gross Profit and
the denominator of which is net revenue generated for the sale of Nova Products;

"NOVA GROSS  PROFIT"  means the  difference  between the net revenue and cost of
sales of the Company including duty and freight;


                                       8
<PAGE>

"NOVA  PRODUCTS"  means  all  micro-computers,   micro-computer   components  or
peripherals  excluding any such manufactured by IBM, Compaq,  Hewlett-Packard or
Toshiba save where in respect of  micro-computer  components they are integrated
into a product sold under the Nova badge;

"PER SHARE  VALUE"  means the average  closing  price for the EMCC Shares on the
Nasdaq  Stock  Market  during the thirty  (30)  trading  days ending on the last
trading day before the date of issue of the EMCC Shares;

"PRE-TAX  EARNINGS"  means net income  before taxes for the Company  computed as
provided herein based on the audited  accounts of the Company for the applicable
period;

"PROPERTIES"  means the properties  described in Schedule 3 or any part or parts
thereof and "Property" means any one of them;

"PURCHASER'S AUDITORS" means KPMG of St. James' Square, Manchester M2 6DS;

"PURCHASER'S GROUP" means the Purchaser, any parent company of the Purchaser and
any subsidiary or subsidiary  undertaking of the Purchaser or of any such parent
company;

"PURCHASER'S  SOLICITORS"  means Philip Conn & Co.,  Lincoln House, 1 Brazennose
Street, Manchester M2 5FJ;

"SECOND CONTINGENT EARN-OUT AMOUNT" means an amount equal to the product of:-

(i)    Adjusted  Pre-Tax  Earnings of the Company for the fiscal year ended June
       30, 1998, multiplied by:

(ii)   the sum of :

      (1)    thirty-three percent (33%) if the Nova Gross Profit for the sale of
             Nova Products by EMCC and its affiliates during the Second Earn-Out
             Period (as defined below) is at least (pound)1,000,000 and the Nova
             Gross  Margin  for the sale of such  products  is at  least  twenty
             percent (20%); plus

      (2)    thirty-three percent (33%) if the Nova Gross Profit for the sale of
             Nova products by EMCC and its affiliates during the Second Earn-Out
             Period (as defined below) is at least (pound)1,200,000 and the Nova
             Gross  Margin  for the sale of such  products  is at  least  twenty
             percent (20%); plus

      (3)    thirty-four  percent  (34%) if the  Asian Net  Revenue  is at least
             (pound)7,000,000,  provided  that if Mr.  Gesner does not reside in
             Asia after the end of the First Earn-Out  Period,  by reason of the
             instruction  or  request  of his  employer  then  this sum shall be
             payable in any event.  For the avoidance of doubt this clause shall
             not preclude the parties at any time  renegotiating  a variation of
             this clause.


                                       9
<PAGE>

      The Second  Contingent  Earn-Out  Amount shall be pro-rated if the Company
      achieves ninety percent (90%) or more of items (1), (2) and (3) above.

"SECOND  EARN-OUT  PERIOD" means a period of twelve (12) months  commencing  1st
November 1999;

"SHARES" means together the issued  ordinary  shares of (pound)1.00  and the `A'
Preference  Shares in the capital of the Company  registered  in the name of the
Vendors in such numbers as is set out opposite their  respective names in column
2 of Schedule 1;

"SHAREHOLDERS'  FUNDS" means profits  available for  distribution  as defined in
Part VIII of the  Companies  Act 1985  together  with  called up shares  capital
including any share premium;

"SOFTWARE" means any program specifically written for the Company;

"SUBSIDIARY" means a subsidiary  undertaking of the Company, as set out in s 736
of The Companies Act 1985;

"T.A." means the Income and Corporation Taxes Act 1988;

"T.C.G.A."  means the Taxation of  Chargeable  Gains Act 1992 and any  reference
thereto shall include any enactment repealed or modified thereby;

"TERRITORY" means throughout Asia and Australasia  excluding Middle East, India,
Turkey, Israel, Pakistan, Bangladesh and Russia;

"THE FIRST INSTALMENT" means the amount payable on Completion pursuant to clause
2.4.1.2;

"THE  PENSION  SCHEME"  means the Sunbelt (UK)  Limited  Executive  Pension Plan
established under Scheme numbers 162-100690-96 and 162-100691-96 with Lincoln;

"THE SECOND  INSTALMENT" means the amount payable within ninety (90) days of the
end of the First Earn-Out period;

"THE THIRD  INSTALLMENT" means the amount payable within ninety (90) days of the
end of the Second Earn-Out Period;

"V.A.T.A." means the Value Added Tax Act 1994;

"VENDORS'   SOLICITORS"  means  Arnold  Fooks  Chadwick  of  15  Bolton  Street,
Piccadilly, London W1Y 8AR;

"VENDORS'  SOLICITORS'  ACCOUNT"  means such account as the Vendors'  Solicitors
have notified to the Purchaser for the purposes of this agreement;


                                       10
<PAGE>

"WARRANTIES" means the representations,  warranties,  covenants and undertakings
set out in Clause 6 and Schedule 4;

1.3   References  to "F.A."  followed  by a stated  year mean the Finance Act of
      that year.

1.4   Words,  expressions  and  abbreviations  defined in the Deed of  Indemnity
      shall have the same meanings in this  agreement and clause 1.3 of the Deed
      of Indemnity shall apply to this agreement.

1.5   References  to the parties  hereto  include the  respective  successors in
      title to substantially the whole of their respective  undertakings and, in
      the  case  of  individuals,  to  their  respective  estates  and  personal
      representatives.

1.6   References to persons shall include bodies  corporate and  unincorporated,
      associations,  partnerships and  individuals.  Words denoting the singular
      shall  include the plural and words  denoting any gender shall include all
      genders.

1.7   References to statutes or statutory  provisions  include references to any
      orders or  regulations  made  thereunder  and  references  to any statute,
      provision,  order  or  regulation  include  references  to  that  statute,
      provision,  order  or  regulation  as  amended,  modified,  re-enacted  or
      replaced  from  time to time  whether  before  or after  the  date  hereof
      (subject as  otherwise  expressly  provided  herein)  and to any  previous
      statute,  statutory  provision,  order or  regulation  amended,  modified,
      re-enacted or replaced by such statute, provision, order or regulation.

1.8   Headings to clauses, paragraphs and descriptive notes in brackets relating
      to provisions of taxation  statutes are for information only and shall not
      form  part of the  operative  provisions  of this  agreement  and shall be
      ignored in construing the same.

1.9   References to recitals, clauses, Annexures,  Schedules are to recitals to,
      clauses of,  Annexures to and Schedules to this  agreement.  The recitals,
      Annexures  and  Schedules  form part of the  operative  provisions of this
      agreement  and  references  to this  agreement  shall,  unless the context
      otherwise requires, include references to the recitals,  Annexures and the
      Schedules.

1.10  Each of the  Warranties  in Clause 6 and  Schedule 4 expressed to be given
      "to the  best of the  Vendors'  knowledge  and  belief"  or "so far as the
      Vendors are aware" or otherwise qualified by reference to the knowledge of
      the  Vendors  shall be deemed not to be  qualified  in the  manner  stated
      unless the Vendors have made all  reasonable  enquiries of each other,  of
      the directors, employees and agents of the Company and of the Subsidiaries
      and of relevant  third parties to establish the truth and accuracy of each
      statement.

1.11  The  obligations and liabilities of the Vendors under this agreement shall
      be joint and several.


                                       11
<PAGE>

2.    SALE AND PURCHASE

2.1   Upon the terms and subject to the conditions of this agreement, the Vendor
      with full title  guarantee shall sell and the Purchaser shall purchase the
      number of Shares of which  each of the  Vendors is the  registered  holder
      being set out opposite each of the Vendors'  names in column 2 of Schedule
      1 with effect from the  commencement  of business on the  Completion  Date
      free from all  Encumbrances  and  together  with all accrued  benefits and
      rights attaching  thereto in respect of the Shares save immediately  prior
      to Completion the Vendors shall as members of the Company  declare a final
      dividend for the year ending 30th June 1998 of:

      2.1.1    (pound)37.153  per  share  in  respect  of  the Ordinary (pound)1
               Shares; and

      2.1.2    (pound)24.31 per share in respect of the `A' Preference Shares;

      Further  the Vendors  shall as members of the  Company  declare an interim
      dividend for the year ending 30th June 1999 of:

      2.1.3    (pound)2.227 per share in respect of the Ordinary (pound)1 Shares
               save that Gerard Denis  Patrick  O'Rourke  shall  absolutely  and
               irrevocably  waive all right and  entitlement  to the dividend in
               respect of all the  Ordinary  (pound)1  Shares held by him in the
               terms of the Deed of Waiver in the agreed form annexed  hereto at
               Annexure B and

      2.1.4    (pound)9.246 per share in respect of the `A' Preference Shares;

      together  "the  Dividends."  The  Purchaser  shall  procure  (a)  that  on
      Completion the Company repays the Vendors' loan accounts which include the
      interim dividends and (b) that a final dividend of at least a sum equal to
      the interim dividend is voted.

2.2   The Vendors  hereby  represent,  warrant,  covenant and undertake with the
      Purchaser (so as to bind them, their personal representatives,  successors
      and assigns) as follows:-

      2.2.1    that each of them has the right to dispose  of the  Shares  which
               they purport to sell; and

      2.2.2    that  each of them is  disposing  of the  Shares  free  from  any
               mortgage,  charge or pledge,  lien, security or other third party
               right or interest  (legal or equitable) or  restriction  together
               with  all  such  rights  now  or  hereafter   attaching  thereto,
               including the right to all dividends and other  distributions (if
               any)  declared,  made or paid  after  the  Accounts  Date save as
               provided in clause 2.1.

2.3   The  consideration for the sale of the Shares shall be equal to the sum of
      the following:-

      2.3.1    the Book Value Amount less the Dividends;

      2.3.2    the Guaranteed Earn-Out Amount;



                                       12
<PAGE>

      2.3.3    the First Contingent Earn-Out Amount; and

      2.3.4    the Second Contingent Earn-Out Amount.

2.4   The  consideration  payable  shall  be to  each  of the  Vendors  in  such
      proportions  as is set out against their  respective  names in column 3 of
      Schedule 1 in the following manner:-

      2.4.1    at Completion the sum of  (pound)600,407.72 on account of the sum
               of :-

               2.4.1.1  Book Value Amount less the Dividends, plus

               2.4.1.2  the product of

                        (1)   sixty percent (60%), multiplied by

                        (2)   the Guaranteed Earn-Out Amount;

               the payment due to be made to Mr O'Rourke pursuant to this clause
               2.4.1  shall be  satisfied  by the  issue  of a Loan  Note in the
               agreed form by the Purchaser.

               Any overpayment or underpayment made by the Purchaser pursuant to
               this clause shall be adjusted as provided in clause 2 and paid or
               repaid or the Loan Note adjusted  accordingly  as the case may be
               within  90  days  of the  determination  thereof  or at the  next
               instalment whichever shall be the sooner.

      2.4.2    On the nineteenth day after the end of the First Earn-Out Period,
               an amount equal to the sum of :

               2.4.2.1  twenty percent (20%) of the Guaranteed  Earn-Out Amount,
                        plus

               2.4.2.2  the First Contingent Earn-Out Amount; and

      2.4.3    On the  nineteenth  day  after  the  end of the  Second  Earn-Out
               Period, an amount equal to the sum of

               2.4.3.1  twenty percent (20%) of the Guaranteed  Earn-Out Amount,
                        plus

               2.4.3.2  the Second Contingent Earn-Out Amount.

      2.5.1    Any  portion  of the  Guaranteed  Earn-Out  Amount  not  paid  at
               Completion  shall  accrue  interest  at the agreed  rate from the
               Completion  Date  until the date  payment  is made.  All  amounts
               payable in cash shall be paid by electronic transfer in sterling.

               2.5.1.1  the Second Instalment and the Third Instalment due to Mr
                        Gesner shall at the option of the Purchaser be satisfied
                        in  whole  or in part by the  allotment  of EMCC  Shares
                        (subject to clause 2.5.2 below);

                                       13
<PAGE>

               2.5.1.2  The Second  Instalment  and Third  Instalment  due to Mr
                        O'Rourke   shall  be   satisfied   by  the  issue  of  a
                        Convertible Loan Note in the agreed form.

      2.5.2    Should the  Purchaser  pursuant to clause  2.5.1 elect to satisfy
               the  consideration  by procuring the allotment of EMCC Shares and
               the traded  volume of EMCC  Shares on NASDAQ in the 30 days prior
               to the election  being made not being equal to [three]  times the
               number of shares to be allotted  ("the Trading  Volume") then the
               following conditions shall apply:

               2.5.2.1  after 15 days of  receipt  of the said  shares Mr Gesner
                        shall  arrange  to sell the  shares  received  as far as
                        possible  in equal  lots  over  the  next 40  succeeding
                        trading days;

               2.5.2.2  in the event that the sums realised upon the sale of the
                        said shares shall be less than the amount due for either
                        the  Second  Instalment  or  the  Third  Instalment  the
                        Purchaser  shall pay to Mr Gesner the difference in cash
                        within 28 days of being  notified  of the  amount of any
                        shortfall.

      2.5.3    The  number of EMCC  Shares to be issued in  satisfaction  of any
               portion of the Consideration  shall be equal to the amount of the
               Consideration so payable divided by the Per Share Value.

2.6   For the  purposes  of this  Agreement  the Book  Value  Amount and Pre Tax
      Earnings  shall be  determined as provided  herein and in accordance  with
      generally accepted accounting  principles ("GAAP"),  and on the same basis
      the Accounts which shall be prepared on a consistent basis and accepted by
      the Purchaser or Purchaser's Auditors.

2.7   In  determining  the  Pre-Tax   Earnings  the  following   deductions  and
      adjustments shall be made:-

      2.7.1    deducting any accounts receivable (trade debtors) (or any portion
               thereof) identified in the Accounts as at the Accounts Date which
               are not paid in full,  without any set-off  except in the case of
               any contras of valid and outstanding  sales and purchases made in
               the ordinary  course of  business,  within one hundred and eighty
               (180) days of the Completion  Date save where the Company has any
               valid Trade  Indemnity  Insurance  Claim in which case the period
               applicable shall be two hundred and seventy (270) days, plus

      2.7.2    deducting  the cost of any stock  (inventory)  identified  in the
               Accounts as at the Accounts  Date not sold by the Company  within
               one hundred and eighty  (180) days of the  Completion  Date or if
               such  stock is sold at less  than  cost  within  the  appropriate
               period  then  deducting  the  difference  between the cost of the
               relevant stock and the sale price thereof.



                                    14

<PAGE>

      2.7.3    those   adjustments   and  notes  set  out  in  the  Schedule  of
               Adjustments annexed hereto as Annexure C;

      2.7.4    any sums determined as adjustments by the Purchaser's Auditors to
               the Pre-Tax  Earnings as shown in the  Accounts of the Company as
               at the Accounts Date whether or not any such  adjustment may give
               rise to liability upon the Vendors  pursuant to the Warranties or
               the Deed of Indemnity save that no such adjustment  shall be made
               unless  and  until  the  sum  of  any  such  adjustments  exceeds
               (pound)10,000.  Provided that no adjustments  shall be made under
               this  clause of  matters  adjusted  or noted in the  Schedule  of
               Adjustments.

2.8   In  determining  the  Book  Value  Amount  the  following  deductions  and
      adjustments shall be made:

      2.8.1    deducting  any  accounts  receivable  (or  any  portion  thereof)
               created  prior to  Completion  which are not  collected  in full,
               without  any  set-off  except in the case of any contras of valid
               and  outstanding  sales and purchases made in the ordinary course
               of  business,  within one  hundred  and eighty  (180) days of the
               Completion  Date save  where  the  Company  has any  valid  Trade
               Indemnity  Insurance  Claim in which case the  period  applicable
               shall be two hundred and seventy (270) days, plus

      2.8.2    deducting  the cost of any stock  (inventory)  identified  in the
               books of the  Company as having  been  purchased  by the  Company
               prior to the  Completion  Date not sold by the Company within one
               hundred and eighty (180) days of the  Completion  Date or if such
               stock is sold at less than cost  within  the  appropriate  period
               then  deducting the  difference  between the cost of the relevant
               stock and the sale price thereof.

      2.8.3    those   adjustments   and  notes  set  out  in  the  Schedule  of
               Adjustments annexed hereto as Annexure C.

      2.8.4    any sums determined as adjustments by the Purchaser's Auditors to
               the  Book  Value  Amount  or  Pre-Tax  Earnings  as  shown in the
               Accounts as at the  Accounts  Date or in the books of the Company
               as at the Completion Date by the Purchaser's Auditors upon review
               of the Management Accounts, such review to be made within 90 days
               of the Completion  Date,  whether or not any such  adjustment may
               give  rise  to  liability  upon  the  Vendors   pursuant  to  the
               Warranties or the Deed of Indemnity save that no such  adjustment
               shall be made  unless  and until the sum of any such  adjustments
               exceeds (pound)10,000.  Provided that no adjustment shall be made
               under  this  clause  of the  matters  noted  in the  Schedule  of
               Adjustments.

2.9   Any accounts  receivable or stock (inventory) which results in a reduction
      in Pre-Tax Earnings or in the Book Value Amount under this clause shall be
      assigned to the Vendors for the sum of  (pound)1.00  if so required by the
      Vendors.


                                       15
<PAGE>

2.10     In the event of any over-payment or under-payment in any sum to be made
         under the  Agreement  whether in cash or EMCC Shares such  over-payment
         shall  be set off  and  deducted  from  any  payment  to be made to the
         Vendors pursuant to this Agreement  ("deferred  consideration")  whilst
         such deferred consideration remains to be paid. Any under-payment shall
         be made good on the next  payment  date,  if any, and when all payments
         have been made then any adjustment  shall be paid or re-paid within 180
         days of determination of any such adjustment.

2.11     If the Book Value Amount,  the Pre Tax  Earnings,  the amount(s) of any
         adjustment  relating thereto or of any calculation of the consideration
         is not accepted by either party then such dispute  shall be resolved by
         an independent  accountant acting as an expert (in default of agreement
         whose  appointment  shall be made by the  President of the Institute of
         Chartered Accountants) and whose determination shall, in the absence of
         manifest error, be final and binding upon the parties. Any costs of the
         reference,  including the fees of the independent accountant,  shall be
         allocated  and paid by the  Purchaser or the Vendors,  or divided among
         them, on a basis  determined by the  independent  accountant to be fair
         taking into account his award.

2.12     Any payment of cash  pursuant to this clause  shall be made by means of
         telegraphic  transfer (or such other means as the  Vendors'  Solicitors
         and the  Purchaser's  Solicitors  shall agree in writing) on Completion
         and to the Vendors'  Solicitors'  Account in accordance with clause 5.6
         and  receipt  of the  Vendors'  Solicitors  for such sum  shall be good
         discharge  to the  Purchaser.  Any  payment  to be  made by way of EMCC
         Shares  pursuant  to this  clause  shall be made by  delivering  to the
         Vendors'  Solicitors  share  certificates in respect of the EMCC Shares
         and receipt of the Vendors'  Solicitors for such certificates  shall be
         good discharge to the Purchaser.


3.       CONDITIONS

3.1      Completion  of the  purchase  of the  Shares  is  conditional  upon the
         fulfilment of each of the Conditions as follows:-

         3.1.1    all necessary  resolutions for the approval of the acquisition
                  contemplated  by this  agreement  being passed at a meeting of
                  the Board of EMCC of the Purchaser to be held on or before the
                  Completion Date;

         3.1.2    the  entry  into  by  EMCC  and  Michael   Gesner  of  service
                  agreements in the agreed form annexed hereto

         3.1.3    the entry into by the Purchaser and Gerard Patrick O'Rourke of
                  service agreements in the agreed form annexed hereto

3.2      If all of the Conditions (save for those compliance with which has been
         waived in accordance  with the terms of this  agreement)  have not been
         fulfilled on or before the Completion  Date the respective  obligations
         of the  parties  hereunder  shall  cease and except in  relation to any
         breach of any provision of this  agreement  prior thereto and except in

                                       16
<PAGE>

         relation to clause 11 no party  shall have any claim  against any other
         party.

3.3      The  Purchaser may by notice in writing to the Vendors waive any of the
         Conditions contained in clause 3.1 in whole or in part.

3.4      The Vendors  undertake to procure the  fulfilment of the  Conditions in
         clause  3.1 by  the  Completion  Date.  If the  Purchaser  shall  waive
         compliance with all or any of such Conditions,  such waiver shall only,
         except as specifically other agreed by the Purchaser,  operate so as to
         enable  Completion to take place and accordingly,  if and to the extent
         that the Purchaser  waives  compliance  with any such  Conditions,  the
         Vendors shall be and remain under an obligation to the Purchaser to use
         all reasonable  endeavours to procure  fulfilment of such Conditions as
         soon as possible after  Completion or within such period for fulfilment
         (if any) as shall  have  been  agreed  between  the  Purchaser  and the
         Vendors  at  or  prior  to  Completion.   Pending  fulfilment  of  such
         Conditions  as  aforesaid,   the  Vendors  shall   indemnify  and  keep
         indemnified the Purchaser and the Company and each of the  Subsidiaries
         from and against all claims,  demands,  proceedings,  losses,  damages,
         costs and  expenses  which may be  asserted  against or incurred by the
         Purchaser or the Company or the Subsidiaries arising under or by virtue
         of or in connection  with the subject matter of such  Conditions or the
         non-fulfilment of such Conditions.


4.       PERIOD TO COMPLETION

4.1      The Vendors  covenant  with the  Purchaser to procure that the business
         and activities of the Company and the  Subsidiaries  shall be conducted
         in the ordinary course and in such a manner between the date hereof and
         the  Completion  Date as to  ensure  that no act or event  shall  occur
         during  the  period  which  would or might  result  in a breach  of the
         Warranties upon the repetition at Completion.

4.2      If at any time prior to Completion:-

         4.2.1   a breach of any of the Warranties  occurring  prior to the date
                 hereof shall come to the notice of the Purchaser; or

         4.2.2   there shall occur any act or event after the date hereof  which
                 upon  Completion  would or might  constitute a breach of any of
                 the Warranties; or

         4.2.3   there is any breach or  non-fulfilment by any of the Vendors of
                 his obligations hereunder.

         Which in any such case is incapable of remedy or, if capable of remedy,
         is not  remedied by the Vendors by the date  scheduled  for  Completion
         hereunder or (if earlier)  within seven days after notice  thereof from
         the  Purchaser  requiring the same to be remedied then in any such case
         the Purchaser  shall be entitled (in addition and without  prejudice to


                                       17
<PAGE>

         any other right or remedies it may have against the Vendors  under this
         agreement  or  otherwise)  to elect by notice in writing to the Vendors
         not to  complete  the  purchase  of the  Shares,  in  which  event  the
         agreement to buy and sell the Shares  contained in clause 2 shall be of
         no effect.

4.3      If the  Purchaser  elects not to  complete  the  purchase of the Shares
         pursuant to clause 4.2 then (in addition  and without  prejudice to any
         other  rights or remedies the  Purchaser  may have against the Vendors)
         the Vendors shall  indemnify the Purchaser  against all costs,  charges
         and  expenses  incurred  by  it in  connection  with  the  negotiation,
         preparation, performance and termination of this agreement.


5.       COMPLETION

5.1      Completion   shall  take  place  at  the  offices  of  the  Purchaser's
         Solicitors on the Completion Date.

5.2      On Completion  the Vendors shall deliver to or, if the Purchaser  shall
         so require, make available to the Purchaser:-

         5.2.1   transfers  in  common  form  relating  to all the  Shares  duly
                 executed in favour of the Purchaser (or as it may direct);

         5.2.2   share certificates relating to the Shares;

         5.2.3   any  waivers  or  consents  by  members  of the  Company or the
                 Subsidiaries   or  other   persons   which  the  Purchaser  may
                 reasonably  require  so as  to  enable  the  Purchaser  or  its
                 nominees to be  registered as the holders of the Shares and any
                 shares of Subsidiaries;

         5.2.4   the common seals,  certificates of incorporation  and statutory
                 books, share certificate books,  cheque books and all copies of
                 the  memorandum  and articles of association of the Company and
                 the Subsidiaries;

         5.2.5   the Deed of Indemnity duly executed by the Vendors;

         5.2.6   all land certificates, charge certificates, leases, title deeds
                 and other  documents  relating to the  Properties  (save to the
                 extent  that  the  same  are in the  possession  of  mortgagees
                 thereof  disclosed  by or on  behalf  of  the  Vendors  to  the
                 Purchaser  or  its   representatives  and  those  for  which  a
                 certificate of title is to be produced as referred to in clause
                 5.2.7) and all copies thereof;

         5.2.7   a certificate from the Vendors'  Solicitors in the agreed terms
                 as to the title of the Company to the Property;


                                       18
<PAGE>

         5.2.8   All books of account or  reference  as to  customers  and other
                 records and all  insurance  policies in any way  relating to or
                 concerning  the  respective  businesses  of the Company and the
                 Subsidiaries;

         5.2.9   all licences,  consents, permits and authorisations obtained by
                 or  issued  to the  Company  or the  Subsidiaries  or any other
                 person in  connection  with the  business  carried on by it and
                 them and such contracts,  deeds or other  documents  (including
                 assignments  of any such  licences) as shall have been required
                 by the Purchaser's Solicitors prior to the date hereof;

         5.2.10  duly executed  transfers of each share in the  Subsidiaries not
                 registered  in the name of the Company or the  Subsidiaries  in
                 favour of the Purchaser or as it may direct;

         5.2.11  Share certificates relating to all of the issued shares of each
                 of the Subsidiaries;

         5.2.12  a release duly  executed as a deed, in a form  satisfactory  to
                 the Purchaser,  releasing the Company and the Subsidiaries from
                 any liability  whatsoever  (actual or contingent)  which may be
                 owing to the Vendors by the Company or any of the  Subsidiaries
                 other than any balance on the directors loan accounts;

         5.2.13  an assignment in the agreed form of any trade marks, copyrights
                 and other  intellectual  property rights whether  registered or
                 not.

5.3      At   Completion   the  parties  shall  procure  the  passing  of  board
         resolutions of the Company and each of the Subsidiaries:-

         5.3.1   sanctioning  for  registration  (subject where necessary to due
                 stamping) the transfers in respect of the Shares and any shares
                 to which clause 5.2.9 refers;

         5.3.2   appointing such persons as the Purchaser may nominate to be the
                 directors of the Company and the Subsidiaries,  being initially
                 Harry Daniel  Shields,  John  Bartholomew  Gallagher,  Laurence
                 Martin Gilbert (as chairman of the Company) and Bernadette Mary
                 Spofforth;

         5.3.3   revoking all mandates to bankers and giving authority in favour
                 of the directors  appointed  under  paragraph (b) above or such
                 other persons as the Purchaser may nominate to operate the bank
                 accounts thereof;

         5.3.4   approving  the  Deed of  Indemnity  and  resolving  the same be
                 executed as a deed by the Company and the Subsidiaries;

         5.3.5   accepting the resignation of AFC Corporate  Services Limited as
                 Company  Secretary  of the  Company on the terms of the deed in
                 the agreed form made out in favour of the Company  acknowleding
                 that he has no outstanding  claims in respect of such office or
                 employment;


                                       19
<PAGE>

         5.3.6   resolving  that Messrs.  Gesner and O'Rourke enter into service
                 agreements in the agreed form.

5.4      On or prior to  Completion  the Vendors  shall procure the repayment of
         all sums (if any) owing to or from the Company or the  Subsidiaries  by
         or to  any of  the  Vendors  or the  directors  of the  Company  or the
         Subsidiaries  or any of  them  or any  spouse  of any  such  Vendor  or
         director  of any  company  directly or  indirectly  controlled  by such
         persons or is  connected  with them (as  defined in section  346 of the
         Act) or any of them or any partnership in which such persons or company
         is a partner and whether or not such sums are due for repayment.

5.5      On or  prior  to  Completion  the  Vendors  shall  if  required  by the
         Purchaser  procure that all potential  beneficiaries  under the Pension
         Scheme shall  irrevocably waive all and any claims and rights of action
         whatsoever  or  howsoever   arising  against  the  Company  and/or  the
         Subsidiaries.

5.6      Upon compliance by the Vendors with the provisions of clauses 5.2, 5.3,
         5.4 and 5.5 the Purchaser shall:-

         5.6.1   deliver to the Vendors' Solicitors a duly executed  counterpart
                 of the Deed of Indemnity; and

         5.6.2   pay or cause to be paid by way of  telegraphic  transfer to the
                 Vendors'  Solicitors'  Account and the receipt of the  Vendors'
                 Solicitors   therefore   shall  be  a  good  discharge  to  the
                 Purchaser:-

                 5.6.2.1  by way of loan to the Company to pay the Dividends the
                          sum of  (pound)708,140.88;

                 5.6.2.2  in payment of the  consideration due on Completion the
                          sum of (pound)360,262.63

         For the avoidance of doubt the Vendors'  Solicitors  have  authority to
         pay  the  Dividends  to  the  Shareholders  in  accordance  with  their
         respective entitlements.

         5.6.3   deliver to the Vendors' Solicitors the duly executed Loan Note.


6.       WARRANTIES AND INDEMNITIES

6.1      The Vendors  represent and warrant to and covenant and  undertake  with
         the Purchaser in the terms of the  Warranties  and so that the remedies
         of the  Purchaser  in respect  of any  breach of any of the  Warranties
         shall  continue to subsist  notwithstanding  Completion of the sale and
         purchase hereunder.

6.2      Any  information  supplied  by or on  behalf  of  the  Company  or  the
         Subsidiaries to the Vendors or their agents or accountants,  solicitors


                                       20
<PAGE>

         or other  advisers in connection  with the  Warranties,  the Disclosure
         Letter or  otherwise  in  relation to the  business  and affairs of the
         Company or the Subsidiaries  shall not constitute a  representation  or
         warranty or guarantee as to the accuracy  thereof by the Company or any
         of the  Subsidiaries  and each of the Vendors  hereby waive any and all
         claims  which they might  otherwise  have  against  the  Company or the
         Subsidiaries or any of their respective  agents or employees in respect
         thereof.

6.3      Each of the Warranties shall be construed as a separate representation,
         warranty,  covenant  or  undertaking  (as the case may be) and (save as
         expressly  provided to the contrary)  shall not be limited by the terms
         of any of the other Warranties or by any other term of this agreement.

6.4      The Vendors further undertake with the Purchaser as follows: -

         6.4.1    that they will disclose  forthwith in writing to the Purchaser
                  any matter or thing which may arise or become  known to any of
                  them  after  the  date  of  the  Disclosure  Letter  which  is
                  inconsistent   with  any  of  the  Warranties,   or  which  is
                  sufficiently  material as to be likely to affect the  judgment
                  of a purchaser for value of the Shares;

         6.4.2    that pending  Completion  neither they nor the Company nor the
                  Subsidiaries  will  do or  omit  to do or  suffer  to he  done
                  anything whereby the Warranties  would,  upon their repetition
                  at Completion , be then untrue; and

         6.4.3    that no event has occurred nor pending  Completion  will occur
                  which  would or might  give rise to a claim  under the Deed of
                  Indemnity upon or after execution thereof;

6.5      The  Vendors  shall be under  no  liability  under  the  Warranties  in
         relation to any matter forming the subject matter of a claim thereunder
         to the extent that the same or  circumstances  giving rise  thereto are
         fairly disclosed in the Disclosure Letter or expressly  provided for or
         stated to be exceptions  under the terms of this agreement.  No letter,
         document  or  other  communication  shall be  deemed  to  constitute  a
         disclosure  for the  purposes  of the  Warranties  unless  the  same is
         accepted  as such by the  Purchaser  and is  expressly  included in the
         Disclosure Letter.

6.6      Save in the case of fraud or wilful  non-disclosure by the Vendors, the
         Vendors  shall be under no  liability in respect of any claim under the
         Warranties or the Deed of Indemnity unless written notice of such claim
         setting  out  details of the event or  circumstance  giving rise to the
         breach,  the basis upon which the  Purchaser  is making a claim and the
         total amount of the liability which results shall have been served upon
         the Vendors by the Purchaser within 3 years of the Completion date:

         6.6.1    the amount  payable in respect of the relevant  claim has been
                  agreed by the Vendors within twelve months of the date of such
                  written notice; or


                                       21
<PAGE>

         6.6.2   legal proceedings have been instituted in respect of such claim
                 by the due  service  of process on the  Vendors  within  twelve
                 months of the later of: -

                 6.6.2.1  the date of such written notice; and

                 6.6.2.2  in the event  that the  Vendors  shall make in respect
                          thereof a request  pursuant to clause  6.12(a)(ii)  of
                          the Deed of Indemnity  at Schedule 5 herein,  the date
                          on which in respect of such  proceedings as shall have
                          been  instituted  by the  Purchaser  pursuant  to such
                          request  judgment  is given  by a court  of  competent
                          jurisdiction or the date settlement is reached in such
                          third  party  proceedings  with  the  consent  of  the
                          Vendors  or on which  the  Vendors  and the  Purchaser
                          agree that  proceedings  or other  action  against the
                          third party shall be abandoned.

6.7      The Vendors  shall be under no  liability in respect of any claim under
         the Warranties or the Deed of Indemnity  unless and until the liability
         in  respect of that claim when  aggregated  with the  liability  of the
         Vendors   in   respect  of  all  such   other   claims   shall   exceed
         (pound)10,000.00.

6.8      The  aggregate  liability  of all Vendors in respect of any claim under
         the Warranties and the Deed of Indemnity  shall not save in the case of
         fraud or wilful  non-disclosure  exceed the value of the  Consideration
         pursuant to clause 2.3 hereof and the Purchaser shall have the right to
         treat as forfeit to the Purchaser such number of the EMCC Shares issued
         to the Vendors or either of them  pursuant to this  Agreement  which is
         equal in value at the time of issue or time of forfeit whichever is the
         greater to the liability of the Purchasers. Upon the occurrence of such
         an event the  Purchaser  shall  notify the  Vendors in writing  setting
         forth  the  amount  of the  liability  and the  number  of shares to be
         forfeit.  Unless the Vendors or either of them shall  object in writing
         within 15 days the  shares  shall be sold and the  proceeds  applied to
         extinguish the claim.

6.9      No liability  shall attach to the Vendors in respect of any claim under
         the Warranties or the Deed of Indemnity to the extent that the claim or
         the events  giving  rise to the claim  would not have arisen but for an
         act,  omission  or  transaction  of the  Group  otherwise  than  in the
         ordinary  and proper  course of the business of the Group as at present
         carried on.

6.10     The Vendors hereby  covenant to pay to the Purchaser or the Purchaser's
         Group any sums in  respect  of  taxation  (including  any  interest  or
         penalties)  which the Purchaser or the Purchaser's  Group is or becomes
         liable to pay by virtue of any scheme or arrangement entered into prior
         to Completion by the Vendors or the Company  designed  wholly or partly
         for the purpose of avoiding or deferring tax.

6.11     In assessing any liabilities,  damages or other amounts  recoverable by
         the Purchaser as a result of any claim under the Warranties  and/or the
         Deed of  Indemnity  there shall be taken into account by way of set-off
         any benefit accruing to the Purchaser's  Group in respect of any amount

                                       22
<PAGE>

         of tax relief  obtained  by the  Purchaser's  Group and any  amounts by
         which any  taxation  for which the  Purchaser's  Group is  assessed  or
         accountable is reduced or extinguished,  arising directly or indirectly
         in consequence of the matter which gives rise to such a claim.

         6.11.1  This clause shall apply in circumstances where:-

                 6.11.1.1   any  claim is made  against  the  Purchaser's  Group
                            which may give rise to a claim  against  the Vendors
                            under the Warranties or the Deed of Indemnity; or

                 6.11.1.2   the  Purchaser's  Group is entitled to make recovery
                            from some  other  person  any sum in  respect of any
                            facts or circumstances by reference to which a claim
                            may be made against the Vendors under the Warranties
                            or the Deed of Indemnity; or

                 6.11.1.3   the Vendors shall have paid to the Purchaser's Group
                            an  amount  in  respect  of  the  claim   under  the
                            Warranties or the Deed of Indemnity  and  subsequent
                            to the  making  of such a  payment  the  Purchaser's
                            Group  becomes  entitled to recover  from some other
                            person a sum which is referrable to that payment.

         6.11.2  The  Purchaser  shall and shall  procure  that the  Purchaser's
                 Group shall:-

                 6.11.2.1   (prior to taking  any  action  against  the  Vendors
                            under the Warranties or the Deed of Indemnity in the
                            case of clause  6.12(a)(i)  and clause  6.12(a)(ii),
                            and   subject  to  the   Purchaser's   Group   being
                            indemnified  and secured to the  satisfaction of the
                            Purchaser  by the  Vendors  against  all  reasonable
                            costs and expenses which may properly be incurred by
                            reason of such  action)  take all such action as the
                            majority of the Vendors  may  reasonably  request to
                            avoid, dispute, resist, compromise, defend or appeal
                            against such claim against the Purchaser's  Group as
                            is referred to in clause  6.12(a)(i)  of the Deed of
                            Indemnity   or  to  make   such   recovery   by  the
                            Purchaser's   Group  as   referred   to  in   clause
                            6.12(a)(ii)  or clause  6.12(a)(iii)  of the Deed of
                            Indemnity, as the case may be; and

                 6.11.2.2   in the case of said clause  6.12(a)(iii) only, repay
                            to the  Vendors  an  amount  equal to the  amount so
                            recovered  or,  if  lower,  the  amount  paid by the
                            Vendors to the Purchaser.

6.12     The Purchaser shall as soon as reasonably practicable : -

         6.12.1   inform the  Vendors in writing of any fact,  matter,  event or
                  circumstance which comes to its notice whereby it appears that
                  the  Vendors  are liable to make any payment in respect of any
                  claim under the  Warranties  and/or the Deed of  Indemnity  or


                                       23
<PAGE>

                  whereby it appears the Purchaser's Group shall become entitled
                  to recover  from some other person a sum which is referable to
                  a payment  already  made by the  Vendors  in respect of such a
                  claim; and

         6.12.2  thereafter   keep  the  Vendors   informed   of  all   material
                 developments in relation to thereto.

6.13     No information relating to the Company or the Subsidiaries of which the
         Purchaser  has  knowledge  (actual  or  constructive)  other  than that
         contained in or referred to in this  agreement  and/or  included in the
         Disclosure Letter and no investigation by or on behalf of the Purchaser
         shall  prejudice  any claim by the  Purchaser  under the  Warranties or
         operate to reduce any amount recoverable thereunder.

6.14     If the  Purchasers  or the Group or any of them are  entitled to make a
         claim in respect of any act, event or default both under the Warranties
         and under the Deed of Indemnity the claim shall be made first under the
         Warranties and any amount payable to the Purchasers or the Group or any
         of them under the Deed of  Indemnity  shall be reduced to the extent of
         the claim.

6.15     The Vendors  further agree to defend the Company  against any action or
         proceedings  relating  to any such losses as are  mentioned  in Clauses
         9.15 to 9.16  inclusive  to permit the  Purchasers  (at its  option) to
         become party to any such action or  proceedings  and to  indemnify  the
         Purchasers  against all costs (including legal costs) arising from such
         defence.

6.16     The  Vendors  acknowledge  that the  Purchaser  has  entered  into this
         agreement in reliance upon the Warranties and each of them.

6.17     The  Purchaser  shall  indemnify  the Vendors  against any liability to
         taxation  arising  under  ICTA  s767A  (change  in  company   ownership
         corporation tax)

6.18     The  Purchaser  undertakes  that until the end of the  Second  Earn Out
         Period to afford all reasonable assistance to enable the Company to run
         their  businesses in a manner  consistent  with the way it has been run
         prior to the date hereof and in respect of the Asian  Subsidiary to run
         its  business,  with a view to  enabling  the  Company  and  the  Asian
         Subsidiary to retain at all times  sufficient  working  capital for the
         reasonable requirements of their businesses.

6.19     If the  Service  Agreements  to be entered  into by Mr  O'Rourke  or Mr
         Gesner are  terminated  in  circumstances  which any Court or  Tribunal
         shall  find to  amount  to  wrongful  or  unfair  dismissal,  including
         constructive  dismissal,  then  notwithstanding  that the minimum gross
         profit targets provided for in the First Contingent Earn Out Amount and
         Second Contingent Earn Out Amount are not reached then payment shall be
         made by the  Purchaser  to the  Vendors  as if those  targets  had been
         achieved.


                                       24
<PAGE>

6.20     If a  matter  or  event  is  taken  into  account  in  determining  the
         consideration  for the Shares then and to the extent that is taken into
         account, it shall not give rise to a claim under the Warranties.


7.       RESTRICTIONS

         The Vendors undertake they shall not:

         7.1.1    for a period of 3 years  from the  Completion  Date,  canvass,
                  solicit or approach  or cause to be  canvassed,  solicited  or
                  approached  for orders of any  person,  firm or company who at
                  any time  during  the six  months  immediately  preceding  the
                  Completion Date is or was in connection with the Business:

                  7.1.1.1   negotiating with the Company for the supply of goods
                            or services;

                  7.1.1.2   a client or customer of the Company; and/or

                  7.1.1.3   in the habit of dealing with the Company.

         where the orders relate to goods and/or  services which are competitive
         with or of the type supplied by the Company in respect of the supply of
         which the Vendors (or any other employee on their behalf or under their
         instruction)   was  engaged  or   concerned  in  the  last  six  months
         immediately preceding the Completion Date and where the Vendors (or any
         other employee on their behalf or under their instruction) dealt or had
         contact with that person;

         7.1.2    for a period of 3 years  immediately  following the Completion
                  Date  be  engaged,  concerned  or  interested  in  or  provide
                  technical,  commercial  or  professional  advice  to any other
                  business  which  supplies or is likely to supply  goods and/or
                  services which are competitive with or of the same type as the
                  Business at the  Completion  Date and in respect of the supply
                  of which the Vendors were engaged or concerned in the last six
                  months immediately preceding the Completion Date;

         7.1.3    for a period of 3 years  from the  Completion  Date  approach,
                  solicit, endeavour to entice away, employ, offer employment to
                  or procure the employment of any person who, at the Completion
                  Date,  is employed  in a  managerial,  supervisory,  technical
                  sales,  executive or  administrative  capacity or engaged as a
                  consultant by the Company at the Completion Date;

         7.1.4    interfere or seek to interfere with the continuance, or any of
                  the terms,  of the supply of goods or  services to the Company
                  from any supplier who has been supplying goods and/or services
                  to the Company during the calendar year immediately  preceding
                  the Completion Date; or


                                       25
<PAGE>

         7.1.5    represent  himself  as  being  in any  way  connected  with or
                  interested  in the  business  of  the  Company  (other  than a
                  consultant  or a member  if such be the  case) or use any name
                  which is identical or similar to or likely to be confused with
                  the name of the Company or any product or service  produced or
                  provided by the Company or which  might  suggest a  connection
                  with the Company.

7.2      The Vendors agree that the covenants and undertakings contained in this
         clause  7 are  reasonable  and are  entered  into  for the  purpose  of
         protecting  the  goodwill  of the  business  of the  Company  and  that
         accordingly  the  benefit  of the  covenants  and  undertakings  may be
         assigned  by the  Purchaser  and its  successors  in title  without the
         consent of the Vendors.

7.3      Each  covenant  and/or  undertaking  contained in this clause 7shall be
         construed as a separate covenant and/or  undertaking and if one or more
         of the covenants and/or  undertakings  contained in this clause is held
         to be  against  the  public  interest  or  unlawful  or in  any  way an
         unreasonable   restraint  of  trade  the  remaining   covenants  and/or
         undertakings shall continue to bind the Vendors.

7.4      If any covenant or undertaking contained in this clause 7 would be void
         as drawn but would be valid if the period of  application  were reduced
         or if  some  part of the  covenant  or  undertaking  were  deleted  the
         covenant or undertaking in question shall apply with such  modification
         as may be necessary to make it valid and effective.

7.5      No provision of this  agreement,  by virtue of which this  agreement is
         subject to  registration  (if such be the case)  under the  Restrictive
         Trade  Practices  Act  1976,  shall  take  effect  until  the day after
         particulars  of this  agreement  have been  furnished  to the  Director
         General of Fair  Trading  pursuant to section 24 of that Act.  For this
         purpose the  expression  this  "agreement"  includes  any  agreement or
         arrangement of which this agreement forms part and which is registrable
         or by virtue of which this agreement is registrable.

7.6      Nothing in this  clause 7 shall  prevent the  continued  business of PC
         Wise Inc. in the USA  provided  that  business is continued in a manner
         consistent  with the way that  business  has been run prior to the date
         hereof.


8.       PENSIONS

8.1.     As soon as  practicable  (and in any event not later than 14 days after
         Completion)  the Vendors shall  (provided  that the  Purchaser,  at the
         Vendors' expense, assists so far as may reasonably be necessary):-

         8.1.1    take all  necessary  actions  and  enter  into  all  necessary
                  documentation  to ensure  that the  Company is not or does not
                  remain a trustee or the principal  employer or a participating
                  employer  or retains  any other  liabilities  of any nature in
                  respect of any of the Pension Scheme.


                                       26
<PAGE>

         8.1.2    deliver to the  Purchaser  such copy  documentation  and other
                  evidence as it shall  reasonably  require of  substitution  of
                  parties  other  than the  Company  as  trustee  and  principal
                  employer in respect of the Pension Scheme.

8.2      Without  prejudice to the entitlement of the Purchaser to claim damages
         upon any other  basis  available  to it (whether by virtue of any other
         provision  of this  Agreement  or  otherwise)  the Vendors  jointly and
         severally agree to indemnify and keep indemnified the Purchaser (on its
         own behalf and as  trustee  on behalf  all  members of the  Purchaser's
         Group) against all and any liabilities, costs (including legal costs on
         a  full  indemnity  basis),  claims,   contributions,   fees,  demands,
         penalties,  taxation and other outgoings of whatsoever  nature (whether
         suffered by the  Purchaser or any member of the  Purchaser's  Group and
         whensoever arising) in relation to or by reference to:-

         8.2.1    the Pension  Scheme or the  cessation of any of the  Company's
                  liabilities  in  relation  thereto  whether  pursuant  to  any
                  existing  obligation  of the  Company  under  the terms of any
                  contract of  employment  or the  provisions  of any statute or
                  regulation or otherwise;

         8.2.2    any  breach  of the  provisions  of  paragraphs  12.1  to 12.4
                  inclusive of Schedule 4 to this Agreement;

         8.2.3    any  obligation to make any payment for or in connection  with
                  the  provision  of  relevant  benefits  (as defined in section
                  612(1) ICTA);

         8.2.4    For the  avoidance of doubt the  provisions of clauses 6.6 and
                  6.7 of this Agreement  shall not apply to or limit or restrict
                  the indemnity provided by this clause 8.

8.3      Notwithstanding  the above the parties shall procure the payment of all
         instalments due under Mr O'Rourke's present contract of employment with
         the Company from 30th June 1998 to the Completion Date.

8.4      No objection shall be taken to any lawful pension  payments made by the
         Company  (whether or not they are in excess of or under any contractual
         entitlement).


                                       27
<PAGE>


9.       UNIT 1, SAXON BUSINESS CENTRE

9.1      Without  prejudice to the entitlement of the Purchaser to claim damages
         upon any other  basis  available  to it (whether by virtue of any other
         provision  of this  Agreement  or  otherwise)  the Vendors  jointly and
         severally agree to indemnify and keep indemnified the Purchaser (on its
         own behalf and as  trustee  on behalf  all  members of the  Purchaser's
         Group) against all and any liabilities, costs (including legal costs on
         a full  indemnity  basis),  claims,  contributions,  fees  and  demands
         (whether  suffered by the  Purchaser  or any member of the  Purchaser's
         Group and  whensoever  arising) in relation to or by  reference  to any
         rent or sum payable as rent for any period  after 23rd  October 1998 or
         for any breach of any repairing  covenant  arising out of a lease ("the
         Lease")  dated  the 9th June  1995 and  entered  into  between  (1) the
         Company and (2) John and May Quigley for the office  premises  known as
         Unit 1, Saxon Business Centre, Windsor Avenue, Wimbledon,  London ("the
         Premises").

9.2      For the  avoidance  of doubt the  provisions  of clauses 6.6 and 6.7 of
         this  Agreement  shall not apply to or limit or restrict the  indemnity
         provided by this clause 9.


10.      COSTS

         Each party agrees to pay, without right of reimbursement from the other
         party and regardless of whether or not the  transaction is consummated,
         the costs incurred by it in connection with this transaction, including
         legal fees and other costs  incidental to the  negotiation of the terms
         of the  transaction and the  preparation of related  documentation  and
         none  of  such  fees  shall  be  charged  to the  Company.  Each  party
         represents  to the others that it has dealt with no finder or broker in
         connection with this transaction.  Each party will indemnify and holder
         the others  harmless  from any loss,  liability or expense  (including,
         without limitation, legal fees) resulting from the indemnifying party's
         breach of the representations and agreements.


11.      EFFECT OF COMPLETION

11.1     The  terms  of  this  agreement  shall  in so far as not  performed  at
         Completion  and  subject as  specifically  otherwise  provided  in this
         agreement continue in force after and notwithstanding Completion.

11.2     Each and every  provision of this  Agreement  shall  wherever it may be
         necessary  to give full force and  effect be deemed to be a  continuing
         obligation  from the date of  signature to the Date of  Completion  and
         each and  every  obligation  of the  Vendors  shall be  repeated  as at
         Completion.


                                       28
<PAGE>



12.      ACKNOWLEDGMENTS

         The Purchaser  acknowledges  that it has not been induced to enter into
         this agreement by any representation or warranty express, implied, oral
         or written and that all  representations  or warranties  being given to
         the Purchaser are limited to those  contained in this Agreement and the
         Disclosure Letter.


13.      ENTIRE AGREEMENT AND AMENDMENTS

         This  Agreement,  including the  Schedules  and  Annexures  referred to
         herein as a part  hereof,  contains  the  entire  understanding  of the
         parties  hereto with  respect to the subject  matter  herein and may be
         amended only by instrument executed by the Vendors and the Purchaser or
         their  respective  successors  or assigns.  There are no  restrictions,
         promises,  warranties,  conveyance,  or  undertakings  other than those
         expressly  set  forth  herein.   The  section  and  paragraph  headings
         contained in this  Agreement are for reference  purposes only and shall
         not affect in any way the meaning or interpretation of this Agreement.


14.      COUNTERPARTS

         This  Agreement  may be executed in two or more  counterparts,  each of
         which  will be  deemed  an  original  but all of which  together  shall
         constitute one and the same instrument.


15.      MERGER OF AGREEMENTS

         All  representations,  warranties,  agreements and other inducements to
         this Agreement or the transaction  contemplated hereby, whether oral or
         written, prior to the execution and delivery hereof between the parties
         hereto have been included  herein,  or in the  exhibits,  Annexures and
         Schedules or Disclosure Letter hereto, and shall be deemed to have been
         fully  performed and  discharged  to the extent not included  herein or
         therein. This Agreement including the exhibits, Annexures and Schedules
         and  Disclosure   Letter  hereto  sets  forth  all  rights,   remedies,
         obligations  and  liabilities of the parties,  and no term or provision
         hereof  or  thereof,  including,  without  limitation,  the  terms  and
         provisions  contained in this  sentence,  shall be waived,  modified or
         altered so as to impose any additional right or remedy,  and no custom,
         payment,  act,  knowledge,  extension  of time,  favour or  indulgence,
         gratuitous or otherwise,  or words or silence at any time, shall impose
         any additional obligation,  or grant any additional right or remedy, or
         be deemed a waiver or release of any  obligation,  liability,  right or
         remedy except as set forth in a written  instrument  properly  executed
         and delivered by the parties  sought to be charged,  expressly  stating
         that  it is,  intended  to be so  effected,  no  assent,  expressed  or
         implied,  by  either  party  to or of,  any  breach  of any term or any
         provision of this agreement or of the exhibits,  Annexures or Schedules
         shall  be  deemed  to be an  assent  or  waiver  to or of  such  or any
         succeeding breach of the same or any other such term or provision.


                                       29
<PAGE>


16.      GENERAL

16.1     If this agreement  ceases to have effect the Purchaser will release and
         return to the  Company  all  documents  concerning  it  provided to the
         Purchaser or its advisers in  connection  with this  agreement and will
         not use or make available to any other person any information  which it
         or its advisers  have been given in respect of the Company and which is
         not in the public  domain and each party shall  continue to be bound by
         the terms of a Confidentiality  Letter entered into between the parties
         and dated 4th September 1998

16.2     This  agreement  shall be  binding  upon each  party's  successors  and
         assigns and personal representatives (as the case may be).

16.3     Time shall be of the  essence of this  agreement,  both as regards  the
         dates  and  periods  specifically  mentioned  and as to any  dates  and
         periods  which may by agreement in writing  between or on behalf of the
         Vendors and the Purchaser be substituted for them.

16.4     Any  notice  required  to be given  by any of the  parties  under  this
         agreement may be sent by  registered  or certified  mail prepaid to the
         address of the addressee as set out in this  agreement or to such other
         address as the  addressee  may from time to time have  notified for the
         purpose of this clause.  Communications sent by post shall be deemed to
         have been received  ninety-six hours after posting.  In proving service
         by post it shall only be necessary to prove that the  communication was
         contained  in an  envelope  which  was duly  addressed  and  posted  in
         accordance with this clause.

16.5     This  Agreement is personal to the parties and shall not be  assignable
         save that the  Purchaser  may at any time assign all or any part of its
         rights and benefits under this Agreement,  including the Warranties and
         any cause of action  arising under or in respect of any of them, to any
         transferee  of the share capital of the Company or to any member of the
         Purchaser's Group, or to any affiliate of the Purchaser who may enforce
         them  as  if  it  had  also  been  named  in  this   Agreement  as  the
         Purchaser.16.5At  any time after the date hereof the Vendors shall,  at
         the request of the Purchaser,  execute or procure the execution of such
         documents  and do or  procure  the doing of such acts and things as the
         Purchaser may reasonably require for the purposes of vesting the Shares
         in the  Purchaser or its nominees  and of giving to the  Purchaser  the
         full benefit of all the provisions of this Agreement.


17.      SEVERABILITY

         If at any  time  one or more of the  provisions  hereof  is or  becomes
         invalid,  illegal or  unenforceable  in any respect  under any law, the
         validity,  legality  and  enforceability  or the  remaining  provisions
         hereof shall not be in any way affected or impaired thereby.


                                       30
<PAGE>



18.      LAW AND JURISDICTION

         This  Agreement  shall be governed by and construed in accordance  with
         the laws of England and the parties  irrevocably  agree that the Courts
         of England shall have -exclusive jurisdiction to hear and determine any
         suit,  action or proceeding  and to settle any disputes which may arise
         under and/or out of and/or  relating to and/or in connection  with this
         Agreement and such purposes  irrevocably  submit to the jurisdiction of
         such courts.

IN WITNESS  WHEREOF the parties  hereto have duly executed this Agreement on the
date first above written


SIGNED as a DEED and delivered      )
by MICHAEL CHARLES GESNER           )       /s/ Michael Gesner
                                    )
                                    )



SIGNED as a DEED and delivered      )
by GERARD DENIS PATRICK O'ROURKE    )       /s/ Gerard O'Rourke
                                    )
                                    )



SIGNED as a DEED and delivered      )
by Laurence Gilbert                 )        /s/ Laurence Gilbert
for and on behalf of                )
EUROPEAN MICRO HOLDINGS PLC         )



                                       31
<PAGE>



                                   SCHEDULE 1

                                Vendors' Holdings
<TABLE>
<CAPTION>


VENDORS' NAME AND ADDRESS            NUMBER OF SHARES           CONSIDERATION
-------------------------            ----------------           -------------

<S>                                <C>                          <C>
Gerard O'Rourke                    7,200 Ordinary (pound)1      40% of total less (pound)18
16 William Road                    fully paid
Wimbledon
London SW19 3PL                    1,800 "A" Preference        (pound)18
                                   Shares fully paid


Michael Gesner                     10,800 Ordinary (pound)1    60% of total less (pound)18
c/o Arthur Andersen Corporate      fully paid
Service PTE Limited
10 Hoe Chiang Road
# 18-00Keppel Towers
Singapore 089315

</TABLE>


                                       32
<PAGE>



                                   SCHEDULE 2

                       PARTICULARS RELATING TO THE COMPANY



                                SUNBELT (UK) LTD
<TABLE>
<CAPTION>

<S>                           <C>
Authorised Share Capital:     (pound)18,018 divided into 18,000 ordinary (pound)1 shares and 1,800
                               "A" non-voting shares of (pound)0.01 each

Issued Share Capital:         All issued

Directors:                    Gerard Denis Patrick O'Rourke and Michael Gesner

Secretary:                    AFC Corporate Services Ltd

Auditors:                     Windsor Stebbing Marsh

Accounting Reference Date:    30th June

Registered Office:            15 Bolton Street, London W1Y 8AR


                          MICRO EXPANSION PRODUCTS LTD


Authorised Share Capital:     (pound)1,000 divided into 1,000 ordinary (pound)1 shares

Issued Share Capital:         (pound)2.00

Directors:                    Gerard Denis Patrick O'Rourke

Secretary:                    AFC Corporate Services Ltd

Auditors:

Accounting Reference Date:

Registered Office:            15 Bolton Street, London W1Y 8AR

</TABLE>

                                       33
<PAGE>



                                   SCHEDULE 3

                       THE PROPERTIES (IN RESPECT OF EACH)

Tenure:                          Leasehold

Description:                     Strudwick House, Boundary Business Park, Church
                                 Road, Mitcham, Surrey

Mortgages or Charges:            None

Leases etc.                      Lease  dated  17th  August  1998  between P & O
                                 Property Holdings Limited (1) and  the  Company
                                 (2) for a term of 10 years and 4 months.

Permitted uses/existing use:     Use within Class B1 of the Schedule to the Town
                                 & Country  Planning  (Use Classes) Order  1987.



                                       34
<PAGE>


                                   SCHEDULE 4

                                   WARRANTIES


1.       Constitution

2.       Accounts

3.       Business

4.       Directors and Employees

5.       The Group and its Bankers

6.       Accuracy of Information

7.       Tax

8.       Environmental Matters

9.       Information Technology and Millenium Compliance.

10.      Property

11.      Intellectual Property

12.      Pensions




                                       35
<PAGE>



                                 1. CONSTITUTION

1.1      Memorandum and Articles

         The  memorandum  and articles of association of the Company in the form
         of the copies  supplied to the  Purchaser are complete and accurate and
         have embodied  therein or annexed thereto copies of all resolutions and
         agreements as are referred to in section 380 of the Companies Act 1985,
         and all amendments thereto (if any) were duly and properly made.

1.2      Register of Members

         The  register  of members of the  Company  contains  true and  accurate
         records of the members from time to time of the Company and the Company
         has not been subject to any  application  under the  Companies Act 1985
         for rectification of such register.

1.3      Returns

         All such  resolutions  returns  and  other  documents  required  by the
         Companies Act 1985 to be delivered to the  Registrar of Companies  have
         been duly delivered and are true and accurate.

1.4      Powers of Attorney

         The Company has not  executed any power of attorney or conferred on any
         person other than its  directors,  officers and employees any authority
         to enter into any  transaction  on behalf of or to bind the  Company in
         any way.

1.5      Subsidiaries

         The Company does not have any subsidiary  undertakings other than those
         listed in  Schedule 3 nor does the  Company  own any shares or stock in
         the capital of nor have any beneficial interest in any other company or
         business  organisation nor does the Company control or take part in the
         management of any other company or business  organisation.  Each of the
         Subsidiaries is a wholly-owned subsidiary of the Company.



                                       36
<PAGE>


                                   2. ACCOUNTS

2.1      Accounts Warranty

         The Accounts  comply with the  provisions  of the Companies Act 1985 as
         applicable and have been prepared in accordance  with the  requirements
         of  all  relevant  statutes  and  with  generally  accepted  accounting
         principles  and  practices and are true and accurate in all respects so
         far as they are stated to be facts and not  estimates  and  accordingly
         give a true and fair view of all the  assets and  liabilities  (whether
         present or future,  actual or contingent)  and of the state of affairs,
         financial  position  and  results  of the  Company  as at and up to the
         Accounts  Date  and,  without   prejudice  to  the  generality  of  the
         foregoing:-

         (a)   make full provision or reserve for depreciation,  bad or doubtful
               debts and other actual liabilities;

         (b)   either make full provision or reserve for or make fair disclosure
               in notes of all contingent, postponed or deferred liabilities;

         (c)   do not overvalue assets or understate liabilities; and

         (d)   have  not  (save  as  disclosed  therein)  been  affected  by any
               extraordinary,  exceptional or non-recurring item or by any other
               fact or  circumstance  rendering  the  profits  or losses for the
               relevant period unusually high or low.

2.2      Accounting Policy

         The Accounts  have been prepared on a basis  consistent  with the basis
         upon which all audited accounts of the Company have been prepared since
         the date of its incorporation.

2.3      Book Debts

         No  provision  or reserve has been made in the  Accounts for bad debts.
         All Book debts owed to the Company and whether included in the Accounts
         or arising  since the Accounts Date will be duly paid in full not later
         than 9th  January  1999 and none of such debts has been the  subject of
         any factoring by the Company.

2.4      Stock in Trade

         The value of the stock in trade as shown in the  Accounts is at cost as
         at the Accounts Date and stock and work-in-progress have been valued on
         a basis  consistent with the basis of valuation  adopted in all audited
         accounts  of  the  Company  since  its  date  of  incorporation  and no
         provision or reserve has been made in the Accounts for obsolete or slow
         moving stock.


                                       37
<PAGE>

2.5      Fixed Assets

         The value of all of the fixed  assets  of the  Company  as shown in the
         Accounts is at cost thereof  less  depreciation  deducted  from time to
         time in a consistent  manner and there has been no  revaluation of such
         fixed assets since their acquisition.

2.6      Off Balance Sheet Financing

         Neither  the  Company  nor any  associated  company  has engaged in any
         financing  (including  without  prejudice  to  the  generality  of  the
         foregoing  the incurring of any  borrowing or any  indebtedness  in the
         nature of borrowing  including  without  limitation  liabilities in the
         nature of acceptances or acceptance  credits) of a type which would not
         be required to be shown or reflected in the Accounts.

2.7      Accounting Reference Date

         The Company has notified to the  registrar  of  companies  30th June as
         being its accounting  reference date pursuant to the Companies Act 1985
         and has not at any time  notified  the  registrar  of  companies of any
         other date.

2.8      Books of Account

         The Company has properly kept and  maintained  all  necessary  books of
         account  (reflecting in accordance with generally  accepted  accounting
         principles and practices all transactions effected by the Company or to
         which it is or has been a  party)  minute  books  records  register  of
         members and other statutory books. All such documents  contain full and
         accurate records of all matters required to be recorded therein and all
         deeds and documents  (properly  stamped where stamping is necessary for
         enforcement  thereof)  belonging to the Company or which ought to be in
         the possession of the Company and the common seal of the Company are in
         the possession of the Company.

2.9      Management Accounts

         The Management Accounts have been carefully prepared in accordance with
         accounting policies consistent with those used in preparing the Audited
         Accounts. The cumulative profits, assets and liabilities of the Company
         stated in the Management  Accounts have not been  materially  misstated
         and are not  materially  inaccurate and the Vendors do not consider the
         Management Accounts misleading.



                                       38
<PAGE>



                                   3. BUSINESS

3.1      Business since the Accounts Date

         Since the Accounts  Date there has been no material  adverse  change in
         the  financial or trading  position or prospects of the Company and the
         business of the Company has been  conducted  on a normal  basis and the
         Company  has not  disposed of any of its assets  otherwise  than in the
         normal  course of business  or declared or paid any  dividend on any of
         its Shares or effected any  distribution of its assets or made any loan
         or other payment other than in the normal course of business.

3.2      Acquisition and Disposal of Assets

         The  Company  has not since the  Accounts  Date  acquired  or agreed to
         acquire any asset for a  consideration  which is higher than the market
         value at the time of  acquisition  and has not disposed of or agreed to
         dispose of any asset for a consideration which is lower than the market
         value or the value  thereof as shown in the books of the Company at the
         time of disposal.

3.3      Charges and Title to Assets

         (a)      The Company has not created or agreed to create or suffered to
                  arise  any  Encumbrance  over any part of its  undertaking  or
                  assets and the Company has and will at Completion  have a good
                  and  marketable  title  to  all  the  assets  included  in the
                  Accounts and to all other assets (tangible or intangible) used
                  for the purpose of the  Company's  business at the date hereof
                  and to all assets  acquired  since the Accounts Date and prior
                  to Completion.

         (b)      The Company owns all vehicles,  plant, machinery and equipment
                  required for the proper and efficient  conduct of the business
                  of the Company.

         (c)      No person  other  than the  Company  has any  right,  title or
                  interest  (present  or future) in any asset of the  Company or
                  any trade name, trade secret or secret process.

3.4      Leasing etc. Agreements

         Full and  accurate  details of any hiring or  leasing  agreement,  hire
         purchase agreement, credit or conditional sale agreement, agreement for
         payment on deferred  terms or any other similar  agreement to which the
         Company is a party are  contained in the  Disclosure  Letter and copies
         annexed  thereto  unless  the annual  cost to the  Company is less than
         (pound)250.00.


                                       39
<PAGE>

3.5      Onerous Obligations

         The Company is not a party to any contract, transaction, arrangement or
         liability which:-


         (a)   is of an unusual or abnormal nature,  or outside the ordinary and
               proper course of business;

         (b)   is for a fixed term of more than six months;

         (c)   is of a long-term  nature  (that is,  unlikely to have been fully
               performed,  in  accordance  with its terms,  more than six months
               after the date on which it was entered into or undertaken);

         (d)   is incapable of termination in accordance  with its terms, by the
               Company, on 60 days' notice or less;

         (e)   is of a loss-making nature (that is, known to be likely to result
               in a loss to the Company on completion of performance);

         (f)   cannot  readily be  fulfilled or performed by the Company on time
               without  undue,  or  unusual,  expenditure  of  money,  effort or
               personnel;

         (g)   involves  payment by the Company by reference to  fluctuations in
               the index of retail prices,  or any other index or in the rate of
               exchange for any currency;

         (h)   involves an aggregate  outstanding  expenditure by the Company of
               more than (pound)500,000 ;

         (i)   restricts  its  freedom to engage in any  activity or business or
               confines its activity or business to a particular place; or

         (j)   involves,  or is likely to involve,  obligations  or  liabilities
               which, by reason of their nature or magnitude,  ought  reasonably
               to be made known to an intending purchaser of the Shares.

3.6      Supply Contracts

         All agreements or arrangements  for the supply of stock, raw materials,
         products or goods to or by the Company  which  involve or are likely to
         involve  the  supply of goods the  aggregate  sale  value of which will
         represent in excess of ten percent of the  turnover  for the  preceding
         financial  year of the Company have been  disclosed to the Purchaser in
         writing. The Company has not been notified of nor are the Vendors aware

                                       40
<PAGE>

         of any breach of any of its obligations under any contract, transaction
         or arrangement to which it is a party or by which it is bound.

3.7      Contracts with Connected Persons

         Subsequent to Completion  the Company will not have any  contractual or
         other  arrangements  of any sort  with any of the  Vendors  or any body
         corporate  or person  connected or  associated  with any of the Vendors
         save as contemplated by this Agreement.

3.8      Events of Default

         (a)      No event has occurred or is subsisting  which  constitutes  or
                  results in or would with the giving of notice  and/or lapse of
                  time constitute or result in a default or the  acceleration of
                  any obligation under any agreement or arrangement to which the
                  Company  is a party or by  which it or any of its  properties,
                  revenues or assets are bound.

         (b)      The  Company is not a party to any  agreement  or  arrangement
                  which  is  capable  of  termination   (without  liability  for
                  compensation)   by  any  other  person  on  a  change  in  the
                  management control or shareholding of the Company or by reason
                  of the sale of the Shares under this agreement.

         (c)      To the best of the Vendors' knowledge,  information and belief
                  but  without  enquiry  having  been  made,   after  Completion
                  (whether by reason of an existing  agreement or arrangement or
                  otherwise  or as a result of the proposed  acquisition  of the
                  Company by the Purchaser): -

                  (i)      no supplier of the Company will cease, or be entitled
                           to cease,  supplying the Company or may substantially
                           reduce its supplies to the Company.

                  (ii)     no customer of the Company will cease, or be entitled
                           to   cease,   to  deal  with  the   Company   or  may
                           substantially  reduce its existing  level of business
                           with the Company.

                  (iii)    the Company will not lose the benefit of any right or
                           privilege which it enjoys;

                  (iv)     no officer or senior  employee  of the  Company  will
                           leave.

3.9      Guarantees etc.

         The Company has not given any guarantee, indemnity, warranty or bond or
         incurred any other similar obligation or created any security for or in
         respect of liabilities, actual or contingent, of any other person other
         than any implied by law.



                                       41
<PAGE>

3.10     Options over shares etc.

         Since the  Accounts  Date no share or loan  capital has been created or
         issued or agreed to be created or issued and there are not any  options
         or other agreements outstanding which call or give any person the right
         to call  (whether  or not subject to  conditions)  for the issue of any
         share or loan  capital of the  Company and none of the Vendors is under
         any obligation of any kind  whatsoever  whether actual or contingent to
         sell,  charge or otherwise dispose of any of the Shares or any interest
         therein to any other person.

3.11     Litigation

         The Company is not engaged in any litigation, arbitration,  prosecution
         or other legal  proceedings  (whether as plaintiff,  defendant or third
         party) and there are no such  proceedings  pending or threatened or any
         proceedings  in respect  of which the  Company is or might be liable to
         indemnify  any other  person  concerned  therein,  there are no claims,
         facts or events  which are likely to give rise to any such  proceedings
         and the  Company  is not  engaged  in and has not in the last six years
         been engaged in and no facts or events exist or have occurred which are
         likely to cause the Company to be involved in  proceedings or enquiries
         before any  governmental or municipal board of enquiry or commission or
         any other  administrative  body  (whether  judicial  quasi-judicial  or
         otherwise)  in which any  unfavourable  judgment or  decision  would or
         might adversely  affect the business of the Company or the value of any
         of its assets.

3.12     Business name

         The  Company  does not carry on,  and has not in the past  three  years
         carried on, any business under any name other than its corporate name.

3.13     Intra vires

         The Company has the power to carry on its business as now conducted and
         the  business  of the  Company  has at all times been  carried on intra
         vires.

3.14     Property in other companies

         The  Company  is not  liable to offer for sale  transfer  or  otherwise
         dispose of or purchase  or  otherwise  acquire  any  assets,  including
         shares held by it in other  bodies  corporate  under their  articles of
         association  or any agreement or  arrangement  or to take or suffer any
         action upon the happening of any such event.


                                       42
<PAGE>



3.15     Insurance

         (a)      The  Company  has  produced  to the  Purchaser  details of all
                  insurance  policies in effect in relation to its  business and
                  assets and all such  policies are in and full force effect and
                  not voidable.

         (b)      The policies of insurance  which are maintained by the Company
                  afford  the  Company  adequate  cover  against  such  risks as
                  companies carrying on the same type of business as the Company
                  commonly  cover by  insurance  and in  particular  insure  the
                  assets of the Company  against fire in their full  replacement
                  value.

         (c)      The  Company  is now,  and  has at all  material  times  been,
                  adequately  covered against accident,  damage,  injury,  third
                  party loss (including product liability),  loss of profits and
                  other risks normally covered by insurance and has at all times
                  effected such insurances as are required by law.

         (d)      There are no  circumstances  which might lead to any liability
                  under such  insurance  being  avoided by the  insurers  or the
                  premiums  being  increased  and there is no claim  outstanding
                  under  any  such  policy  nor are  the  Vendors  aware  of any
                  circumstances likely to give rise to a claim.

 3.16    Fair Trading and Compliance with Other Legislation

         (a)      Neither  the  Company,  nor  any of its  officers,  agents  or
                  employees  (during  the course of their  duties in relation to
                  the  Company)  have  committed,  or  omitted to do, any act or
                  thing the  commission or omission of which is, or could be, in
                  contravention of any Act, order, regulation or the like in the
                  United  Kingdom or elsewhere  which is  punishable  by fine or
                  other penalty or which may impose any other liabilities on the
                  Company  or  affect  the  validity  or  enforceability  of any
                  agreement or arrangement to which it is a party.

         (b)      Without  prejudice to the  generality  of the  foregoing,  the
                  Company  has not  done or  omitted  to do any act or  thing in
                  contravention  of  the  provisions  of the  Restrictive  Trade
                  Practices  Acts 1976 and 1977,  the Fair Trading Act 1973, the
                  Competition  Act  1980,  Articles  85 and 86 of the  Treaty of
                  Rome, the Resale Prices Act 1976, the Trade  Descriptions  Act
                  1968, the Consumer  Credit Act 1974,  the Consumer  Protection
                  Act 1989, the Companies Acts, the Financial Services Act 1986,
                  the  Banking  Act 1987 and the  Food  Safety  Act 1990 and all
                  statutory,  municipal and other like  requirements  (including
                  orders  and  regulations  affecting  businesses  carried on in
                  member states of the European Economic  Community)  applicable
                  to the business of the Company have been complied with.


                                       43
<PAGE>



3.17     Licences

         The  Company  has all  licences,  permissions,  permits,  consents  and
         authorisations  required for the carrying on of its business and is not
         in breach of the terms or  conditions  of such  licences,  permissions,
         permits,  consents  and  authorisations  and  there are no  pending  or
         threatened  proceedings  which might in any way affect  such  licences,
         permissions,  permits,  consents and authorisations and the Vendors are
         not  aware of any other  reason  why any of them  should he  suspended,
         threatened or revoked or be invalid.

3.18     Grants

         The Company has not applied for nor received any  financial  assistance
         from any supranational, national or local agency, body or authority.

3.19     Possession of books, records etc

         The Company has in its  possession  all books,  records,  Accounts  and
         other  documents  relating  to the  Company  which it may be obliged to
         produce  under any  contract or under any  statutory  provision  now in
         force to any party. Control of such books, records,  Accounts and other
         documents will remain in the hands of the Company following Completion.

                           4. DIRECTORS AND EMPLOYEES


4.1      The names of the Directors  and Secretary  shown in Schedule 2 are true
         and complete  and no person not named  therein as such is a director of
         the Company.

4.2      The particulars of all employees  annexed to the Disclosure Letter show
         all remuneration and other benefits:-

         (a)      actually provided; and

         (b)      which the Company is bound to provide  (whether  now or in the
                  future)

         to each  officer and  employee of the Company and are true and complete
         and include  particulars of and details of  participation in all profit
         sharing, incentive, bonus, commission, share option, medical, permanent
         health  insurance,  directors  and  officers  insurance,  travel,  car,
         redundancy and other benefit schemes,  arrangements and  understandings
         (the "Schemes")  operated for all or any employees or former  employees
         of the  Company  or their  dependants  whether  legally  binding on the
         Company or not.


                                       44
<PAGE>

4.3      The particulars of all employees  annexed to the Disclosure Letter show
         the names, job title, date of commencement of employment, date of birth
         and period of continuous  employment  (calculated  in  accordance  with
         chapter 1 of part XIV of the  Employment  Rights Act 1996  ("ERA"))  of
         every employee of the Company.

4.4      The  Disclosure  Letter  contains  copies of all the standard terms and
         conditions,  staff  handbooks and policies  which apply to employees of
         the Company and identifies  which terms and  conditions  apply to which
         employees.

4.5      The Schemes have at all times been  operated in  accordance  with their
         governing  rules or terms  and all  applicable  laws and all  documents
         which are required to be filed with any regulatory  authority have been
         so filed  and all tax  clearances  and  approvals  necessary  to obtain
         favourable tax treatment for the Company and/or the participants in the
         Schemes have been obtained and not withdrawn and no act or omission has
         occurred  which has or could  prejudice any such tax  clearance  and/or
         approval.

4.6      No past or present director, officer, employee,  dependent or any other
         participant thereof or any other participant in any Scheme has made any
         claim against the Company in respect of any Scheme.

4.7      There are no service agreements or contracts of1 employment between the
         Company and any of its directors or employees  containing any provision
         in addition to the matters  required to be contained under section 1 of
         the ERA. All employees of the Company have received a written statement
         of particulars of their employment as required by section 1 of the ERA.
         The  terms  of  employment  or  engagement  of all  employees,  agents,
         consultants  and  professional  advisers  of the  Company are such that
         their  employment or engagement may be terminated by not more than four
         weeks'  notice  given at any time  without  liability  for any  payment
         including  by  way  of  compensation  or  damages  (except  for  unfair
         dismissal or a statutory  redundancy  payment) and save as disclosed to
         the Purchaser in the Disclosure Letter the Company has not entered into
         any  agreement or  arrangement  for the  management or operation of its
         business  or  any  part  thereof  other  than  with  its  directors  or
         employees.

4.8      There are no training schemes,  arrangements or proposals, whether past
         or present, in respect of which a levy may henceforth become payable by
         the Company  under the  Industrial  Training  Act 1982 (as amended) and
         pending  Completion no such schemes,  arrangements or proposals will be
         established or undertaken.

4.9      Since the Accounts Date the Company has not made, announced or proposed
         any changes to the emoluments or benefits of or any bonus to any of its
         directors, officers or employees and the Company is under no obligation
         to make any such changes with or without retrospective operation.


---------------------
1
                                       45
<PAGE>

4.10     No past or present director,  officer or employee has any claim against
         the Company.

         (a)     in respect of any accident or injury which is not fully covered
                 by insurance; or

         (b)     for breach of contract of services or for services; or

         (c)     for loss of  office or  arising  out of or  connected  with the
                 termination   of  his  office  or  employment   (including  any
                 redundancy payment);

         and there is no event which would or might give rise to any such claim.

4.11     Within the three  years  preceding  the date hereof the Company has not
         been  engaged or involved  in any trade  dispute (as defined in section
         218 of the Trade Union and Labour Relations  (Consolidation)  Act 1992)
         ("TULR(C)A") with any employee,  trade union,  staff association or any
         other body  representing  workers and no event has occurred which could
         or  might  give  rise to any  such  dispute  and no  industrial  action
         involving  employees of the  Company,  official or  unofficial,  is now
         occurring or threatened nor has any industrial  relations or employment
         matter been  referred  either by the Company or its employees or by any
         trade  union  representing  any of its  employees  to ACAS for  advice,
         conciliation or arbitration.

4.12     The Company has not within the three  years  preceding  the date hereof
         acquired or entered into any agreement which involved or may involve it
         acquiring  any  undertaking  or part of one such that the  Transfer  of
         Undertakings   (Protection   of  Employment)   Regulations   1981  (the
         "Regulations") applied or may apply thereto.

4.13     No  directors,  officers or  employees  of the Company are members of a
         trade union,  staff association or any other body representing  workers
         and no such union, association or body is recognised by the Company for
         the purposes of collective bargaining.

4.14     The Disclosure Letter contains copies of and full details of all rights
         and liabilities relating pursuant to any collective agreements (whether
         with a trade union,  staff  association or any other body  representing
         workers and whether legally binding or not) concerning the Company.

4.15     The Company has  complied in all  material  respects  with all relevant
         provisions of the Treaty of Rome, EC Directives, statutes, regulations,
         codes of  conduct,  collective  agreements,  terms  and  conditions  of
         employment,  orders,  declarations and awards relevant to the company's
         directors,  officers and employees or the relations between the Company
         and any trade union,  staff  association or any other body representing
         workers.


                                       46
<PAGE>

4.16     The Company has maintained  adequate and suitable records regarding the
         service of its  directors,  officers  and  employees  and such  records
         comply with the requirements of the Data Protection Act 1984.

4.17     There are no amounts owing or agreed to be loaned or advanced by any of
         the Vendors or by the Company to any directors,  officers and employees
         of the Company (other than amounts  representing  remuneration  accrued
         due for the  current pay  period,  accrued  holiday pay for the current
         holiday year or for reimbursement of expenses).

4.18     There  are  no  enquiries  or  investigations   existing,   pending  or
         threatened affecting the Company in relation to any directors, officers
         or employees by the Equal Opportunities Commission,  the Commission for
         Racial Equality or the Health and Safety  Executive or any other bodies
         with similar functions or powers in relation to workers.

4.19     No  director,  officer or employee of the Company has given or received
         notice to terminate his employment.

4.20     There are no  directors,  officers or  employees of the Company who are
         absent on grounds of disability or other leave of secondment, maternity
         leave or absence.

4.21     There are no terms or conditions  under which any director,  officer or
         employee of the Company is employed, nor has anything occurred prior to
         Completion that may give rise to any claim for sex discrimination, race
         discrimination  or equal pay either under  domestic  United  Kingdom or
         European  Law  whether  by such  director,  officer  or  employee  or a
         prospective director, officer or employee or otherwise.

4.22     The Vendors and the Company have  complied  with their  obligations  to
         inform and  consult  with trade  unions  and other  representatives  of
         workers  and to send  notices to the  Secretary  of State  pursuant  to
         sections 188 to 194 of the TULR(C)A  and  regulations  10 and 11 of the
         Regulations.

4.23     The  salaries  and wages and other  benefits  of all  employees  of the
         Company have been paid or  discharged  in full in respect of the period
         up to Completion.

                          5. THE GROUP AND ITS BANKERS

5.1      Borrowings

         The total amount  borrowed by the Company from its bankers or any other
         party does not exceed its facilities  and the total amount  borrowed by
         the Company from  whatsoever  source does not exceed any  limitation on
         its  borrowing  contained  in its  articles of  association,  or in any
         debenture or loan stock deed or other instrument.


                                       47
<PAGE>



5.2      Continuance of Facilities

         Full and  accurate  details of all  overdrafts,  loans  leases or other
         financial facilities  outstanding or available to the Company have been
         supplied to the  Purchaser  and none of the Vendors nor the Company has
         done anything  whereby the  continuance of any such  facilities in full
         force and effect might be affected or prejudiced.

5.3      Bank Accounts

         A statement  of all the bank  accounts of the Company and of the credit
         or debit  balances  on such  accounts  as at a date not more than seven
         days before the date hereof has been  supplied  to the  Purchaser.  The
         Company has not any other bank or deposit  accounts  (whether in credit
         or  overdrawn)  not included in such  statement.  Since such  statement
         there have been no payments out of any such accounts except for routine
         payments and the balances on current account are not now  substantially
         different from the balances shown on such statements.

5.4      Events of Default - Indebtedness

         No  circumstances  have  arisen  or,  to the  best  of  the  knowledge,
         information  and  belief  of  the  Vendors,   are  about  to  arise  in
         consequence of the  acquisition of the Company by reason of any default
         by the Company or any of its  Subsidiaries  such that any person is, or
         will,  or would with the giving of notice  and/or  lapse of time and/or
         the  satisfaction  of any other  condition  become  entitled to require
         payment   before  its  stated   maturity  of,  or  security   for,  any
         indebtedness  in respect of borrowed money of the Company which has not
         been satisfied in full and, to the best of the  knowledge,  information
         and  belief  of the  Vendors  no person  to whom any  indebtedness  for
         borrowed  money of the  Company  which is  payable  on  demand  is owed
         presently proposes to demand payment of, or security for, the same, and
         there is no  reason  to  suppose  that any  overdraft  facility  of the
         Company  will be, or is likely to be,  withdrawn.  The Company has also
         complied with the original payment schedules.


                           6. ACCURACY OF LNFORMATION


6.1      All information  contained in this agreement and the Disclosure  Letter
         concerning or which might  concern the Company or its business,  assets
         or  liabilities  was when  given  and is now true  and  correct  in all
         respects and no matter or fact has not been  disclosed  the omission of
         which renders any such  information  untrue or misleading and all facts
         relating to the Company  which could affect the value of the  property,
         business  and  undertaking  of the  Company  or the  Shares  have  been
         disclosed.


                       7. TAXATION LNFORMATLON AND RETURNS

7.1      Returns

         The  Company has made all  returns  (including  any VAT and company tax
         returns including a  self-assessment)  and supplied all information and
         given  all  notices  to  the  Inland  Revenue  or  other  authority  as
         reasonably requested or required by law within any requisite period and
         all such returns and  information  and notices are correct and accurate
         in all  respects  and are not the subject of any dispute or enquiry and
         there  are no facts or  circumstances  likely to give rise to or be the
         subject of any such dispute or enquiry.

7.2      Disclosures

         All statements and disclosures made to any authority in connection with
         any provision of the taxation  statutes  whatsoever  were when made and
         remain complete and accurate in all material respects.

7.3      Clearances

         No action has been taken by the Company in respect of which any consent
         or clearance  from the Inland  Revenue or other  authority was required
         save in  circumstances  where such  consent or  clearance  was  validly
         obtained,  and where any  conditions  attaching  thereto were and will,
         immediately following Completion , continue to be met.

7.4      Claims and Elections

         The  Company  has not made and is not  subject to any claim or election
         under any or all of the following: -

         (a)     sections 279(1) to (6) of the T.C.G.A. (foreign assets: delayed
                 remittances);

         (b)     section 35 of the T.C.G.A. (capital gains: rebasing to 31 March
                 1982);

         (c)     section 24 of the T.C.G.A.  (assets of negligible value or lost
                 or destroyed);

         (d)     section 154 and 175 of the T.C.G.A. and sections 152 and 153 of
                 the T.C.G.A. (roll-over relief);

         (e)     section 242 of the T.A. (surplus franked investment income).

         (f)     section 247 of the T.A. (group income);

         (g)     sections  584,  585 or 723 of the T.A.  (foreign  income etc. :
                 delayed remittances);

                                       49
<PAGE>

         (h)     section  75 of the F.A.  1986  (stamp  duty on  reconstructions
                 etc.).

         (i)     section 161 TCGA (appropriations to and from stock).

7.5      Payment of tax by instalments

         The Company has made no election or arrangement  for the payment of tax
         by instalments under sections 280 and 48 of the T.C.G.A.

7.6      Deed of Indemnity

         No event has  occurred  which would or might give rise to a claim under
         the Deed of Indemnity upon or after the execution thereof.

                        PROVISION FOR AND PAYMENT OF TAX

7.7      General

         The  Accounts  make full  provision or reserve in respect of any period
         ended on or before the Accounts  Date for all tax assessed or liable to
         be  assessed  on the  Company  or for  which it is  accountable  at the
         Accounts  Date  whether or not the Company has or may have any right of
         reimbursement  against any other person  including in  particular  (but
         without prejudice to the generality of the foregoing) tax in respect of
         property (of whatever  nature) income,  profits or gains held,  earned,
         accrued or received by or to any person on or before the Accounts  Date
         or by  reference  to any  event  occurring  act  done or  circumstances
         existing on or before that date  including  distributions  made down to
         such date or provided for in the Accounts and proper provision has been
         made and shown in the Accounts for deferred taxation in accordance with
         generally accepted accounting principles.

7.8      Payment of Tax

         (a)     The Company has duly and punctually  paid all tax to the extent
                 that the same ought to have been paid and is not liable nor has
                 it within  three  years prior to the date hereof been liable to
                 pay any penalty or interest in connection therewith.

         (b)     Without  prejudice to clause (a) of this clause the Company has
                 paid on the due date:-

                 (i)  all value added tax and customs and excise  duties (at the
                      correct  tariff rate) in respect of goods or services sold
                      or supplied or imported;


                                       50
<PAGE>

                 (ii)   all tax due in respect of  payments  made by the Company
                        to any  person  which  ought  to have  been  made  under
                        deduction  of tax and all  such  tax has  been  properly
                        deducted from all such payments made;

                 (iii)  all advance  corporation tax due in respect of dividends
                        and other distributions made or paid by the Company; and


                 (iv)   all social  security  contributions  (both employers and
                        employees) due in respect of the Company's employees and
                        ex-employees.

7.9      Pay As You Earn

         The Company has  properly  operated  the  P.A.Y.E.  system and National
         Insurance  Contributions  system  deducting tax as required by law from
         all  payments  to or  treated  as  made  to or  benefits  provided  for
         employees,  ex-employees  or  independent  contractors  of the  Company
         (including  any such payments  within section 134 of the T.A.) and duly
         accounted  to the Inland  Revenue for tax so deducted  and has complied
         with all its reporting  obligations to the Inland Revenue in connection
         with any such payments made or benefits provided, and no P.A.Y.E. audit
         or National  Insurance  or VAT audit in respect of the Company has been
         made by the  Inland  Revenue,  Contributions  Agency or H.M.  Customs &
         Excise nor has the Company  been  notified  that any such audit will be
         made and the Company has complied with all other obligations in respect
         of National Insurance.

7.10     Give as You Earn

         Details of any payroll  deduction scheme pursuant to section 202 of the
         T A. operated by the Company are set out in the  Disclosure  Letter and
         any such scheme has been operated in  accordance  with that section and
         regulations made thereunder.

7.11     Secondary Liability

         No  transaction  or event  has  occurred  in  consequence  of which the
         Company is or may be held  liable for any tax or  deprived of relief or
         allowances  otherwise  available to it or may  otherwise be held liable
         for or to  indemnify  any  person in  respect of any tax for which some
         other company or person was primarily  liable (whether by reason of any
         such other  company  being or having been a member of the same group of
         companies or otherwise).



                                       51
<PAGE>



                                 CORPORATION TAX

7.12     Changes in Trade etc.

         (a)      Within the period of three  years  ending with the date hereof
                  there has been no major change in the nature or conduct of any
                  trade or business carried on by the Company within the meaning
                  of section 245 or 768 of the T.A.

         (b)      There has been no  cessation  or  discontinuance  of any trade
                  carried on by the Company nor has the scale of  activities  in
                  any trade carried on by the Company  within three years hereof
                  become small or negligible.

         (c)      Prior  to  the  execution  of  this  agreement  no  change  of
                  ownership  of the  Company has taken place such that either or
                  both of sections  245 or 768 of the T.A. has or may be applied
                  to deny  relief in respect of a loss or losses of the  Company
                  or surplus advance corporation tax.

7.13     Trading Assets

         In the event that any asset  shown in the  Accounts as a fixed asset is
         disposed of immediately  following Completion the proceeds derived from
         such asset will not be treated as a trading receipt for tax purposes.

7.14     Deductions

         The Company has not made any payment or incurred any  liability to make
         any payment  which could be  disallowed as a deduction in computing the
         taxable  profits of the Company or as a charge on the Company's  income
         including  (but without  prejudice to the  generality of the foregoing)
         any payment which could be disallowed  under sections 74 (general rules
         as to  deductions  not  allowable),  338-340  (allowance  of charges on
         income),  779-789 (leased  assets),  section 787 (restriction of relief
         for payments of interest) or section 125 of the T.A.  (annual  payments
         for non-taxable consideration).

7.15     Sales at undervalue/overvalue

         All transactions  entered into by the Company have been entered into on
         an arms length basis and the consideration (if any) charged or received
         or paid by the Company on all transactions  entered into by it has been
         equal to the consideration which might have been expected to be charged
         received or paid (as appropriate)  between  independent persons dealing
         at arm's length and no notice or enquiry pursuant to section 770 of the
         T.A. has been made in connection with any of such transactions.

7.16     Appropriations



                                    52

<PAGE>

         Since the  Accounts  Date the Company has not  appropriated  any of its
         assets to or from trading stock.

7.17     Chargeable Policies

         The Company is not and will not become  liable to tax in respect of any
         policy  of  insurance  (including  any  life  policy  or  life  annuity
         contracts) whether or not acquired as original beneficial owner.

7.18     Deep Discount Securities

         (a)     The  Company  has not  issued  or  acquired  any deep  discount
                 securities  as defined by  paragraph  1(1) of schedule 4 of the
                 T.A.

         (b)     In so far as the  Company  has  issued  or  acquired  any  deep
                 discount  securities as defined by paragraph 1(1) of schedule 4
                 of the T.A. the Company has issued or acquired (as the case may
                 be) a relevant certificate in terms of paragraph 13 of schedule
                 4 of the T.A.

7.19     Foreign Borrowings

         The  Company has made no  borrowings  in a foreign  currency  whereby a
         liability  to tax may  arise or may have  arisen or a claim for tax has
         been made.

7.20     Pension Fund Surplus

         Since the  Accounts  Date the Company has not  received  any payment to
         which schedule 22 of the T.A. applies.

                                 CAPITAL ASSETS

7.21     Capital Allowances

         (a)      No  balancing  charge in  respect  of any  capital  allowances
                  claimed or given would arise if any assets of the Company were
                  to be realised for a consideration  equal to the amount of the
                  book value thereof as shown or included in the Accounts.

         (b)      All  necessary  conditions  for  all  capital  allowances  (as
                  defined in section  832(1) of the T.A.) claimed by the Company
                  were at all material times satisfied and remain  satisfied and
                  the Company has not since the Accounts  Date become liable for
                  any balancing charge.



                                       53
<PAGE>



7.22     Finance Leases

         (a)      The  Company  is not and has not been  the  lessee  under  any
                  leases of plant or machinery  which  exceeds an annual cost to
                  the Company of (pound)250 save for the leases specified in the
                  Disclosure Letter (the "Leases").

         (b)      The machinery or plant subject to the Leases has in the period
                  which is the  requisite  period in respect of any  expenditure
                  thereon  by an owner or lessor  for the  purposes  of  section
                  39(1) of the CAA been used and only been used for a qualifying
                  purpose as defined by the section.

         (c)      No assets  subject to the Leases  have at any time been leased
                  by the Company or its lessees to a person who is not  resident
                  in the UK and does  not use the  machinery  or  plant  for the
                  purposes of a trade carried on there.

         (d)      The  Vendors  are  not  aware  of any  revenue  investigation,
                  revenue enquiry or other circumstance which indicates that any
                  person who is or was a lessor or owner of equipment subject to
                  any to any of the Leases  will or may be denied the first year
                  allowances  and writing down  allowances by reference to which
                  the initial rental under that Lease was calculated.

7.23     Investment Grants

         The Company has not received any investment grant or similar payment or
         allowance receivable by virtue of any statute.

                                  DISTRIBUTIONS

7.24     Repayments of Share Capital

         (a)      The  Company  has not at any time after 6 April 1965 repaid or
                  agreed to repay or redeemed  or agreed to redeem or  purchased
                  or  agreed  to  purchase  (or  made  any  contingent  purchase
                  contract  within the meaning of section  165 of the  Companies
                  Act 1985) in respect of any of its issued share capital or any
                  class thereof.  Further the Company has not after 6 April 1965
                  capitalised  or agreed to  capitalise  in the form of  shares,
                  debentures or other  securities or in paying up amounts unpaid
                  on any shares,  debentures or other  securities any profits or
                  reserves of any class or description or passed or agreed to be
                  passed any resolution to do so.

         (b)      The Company has not made (and will not be deemed to have made)
                  any distribution within the meaning of sections 209 and 210 of
                  the T A. and  section 236 of the  I.C.T.A.  since 5 April 1965


                                       54
<PAGE>

                  except dividends properly authorised and shown in its Accounts
                  or as  provided  herein nor is the  Company  bound to make any
                  such distribution.

7.25     Payments to be treated as distributions

         The  Company  has not  issued any  securities  (within  the  meaning of
         section  254(1) of the T.A.) which  remain in issue where the  interest
         payable thereon falls to be treated as a distribution.

                                CHARGEABLE GAINS

7.26     Sales at Book Value

         No  chargeable  gain  or  profit   (disregarding  the  effects  of  any
         indexation  relief  available) would arise if any assets of the Company
         (other than  trading  stock) were to be  realised  for a  consideration
         equal to the amount of the book value  thereof as shown or  included in
         the Accounts.

7.27     Value shifting

         The  Company  has not been  involved  in any scheme or  affected by any
         arrangements whereby the value of any asset has been or will be reduced
         such that sections 29 and/or 30 of the T.C.G.A. might be applicable.

7.28     Valuation of Assets

         (a)      The Company has not made any disposal of part of an asset part
                  of which is still  owned  by the  Company  at the date  hereof
                  which has  required  or may or will  require  any  computation
                  under section 42 of the T.C.G.A. (part disposals of assets).

         (b)      The Company has not  disposed of or acquired any asset so that
                  section  17 of  the  T.C.G.A.  might  apply  to  restrict  the
                  consideration   deemed  to  be  given  on  such   disposal  or
                  acquisition.

7.29     Chargeable Debts

         No gains  chargeable to corporation tax on chargeable gains will accrue
         to the Company on the disposal of any debt owing to the Company.

7.30     Reconstructions

         The  Company has not been  involved in any share for share  exchange or
         any scheme of  reconstruction  or amalgamation such as are mentioned in

                                       55
<PAGE>

         sections  135 and 136 of the  T.C.G.A.  or section 139 of the  T.C.G.A.
         under which shares or debentures  have been or will be issued or assets
         have been or will be transferred.

7.31     Corporate Bonds

         There has been no relevant  transaction  to which section 117(8) of the
         T.C.G.A. can apply to a corporate bond held by the
         Company.

7.32     Depreciatory transactions

         No loss which has arisen or which may hereafter  arise on a disposal by
         the Company of shares in or  securities  of any company is liable to be
         reduced by virtue of the  application  of section  176 of the  T.C.G.A.
         (transactions  in a group) or  section  177 of the  T.C.G.A.  (dividend
         stripping).

7.33     Transfers by way of gift

         The Company has not made any such transfer of an asset at an undervalue
         as is mentioned  in section 125 of the T.C.G.A.  or received any assets
         by way of gift as mentioned in section 282 of the T.C.G.A.

                            ANTI AVOIDANCE PROVISIONS

7.34     Tax Schemes

         The Company and the Vendors  have not entered  into nor been a party to
         nor otherwise involved in any scheme or arrangement  designed wholly or
         partly for the purpose of avoiding or deferring tax which may give rise
         to any  liability to pay tax on the part of the Company,  the Purchaser
         or the Purchaser's Group

7.35     Transactions in Securities

         The Company has not : -

         (a)      become liable for tax; or
         (b)      received  and  will not  receive  or be the  subject  of or be
                  adversely  affected  by any  claim  for tax  arising  under or
                  imposed by or resulting from the operation of sections 703-709
                  of the T.A.  (whether alone or in  conjunction  with any other
                  provisions  of any  taxation  statutes  whatsoever)  and which
                  wholly or partly  results  or arises  from or is  computed  by
                  reference to circumstances existing or events occurring at any
                  time  on  or  before  the  date  hereof  whether  alone  or in
                  conjunction with other  circumstances  arising before or after
                  Completion.


                                       56
<PAGE>



7.36     Transactions in Land

         The Company has not:-

         (a)      become liable for tax; or

         (b)      received  and  will not  receive  or be the  subject  of or be
                  adversely affected by any claim for tax;

         arising under or imposed by or resulting from the operation of sections
         776-778 of the T.A.  (whether  alone or in  conjunction  with any other
         provisions  of any taxation  statutes  whatsoever)  and which wholly or
         partly   results  or  arises  from  or  is  computed  by  reference  to
         circumstances existing or events occurring at any time on or before the
         date hereof  whether alone or in conjunction  with other  circumstances
         arising before or after Completion.

7.37     Sale and lease back of land

         Since 22 June 1971 the Company has not entered into any  transaction as
         is mentioned in sections 34-37 or section 780 of the T.A.

7.38     Transactions between dealing and associated company

         The Company has not entered into any  transaction  mentioned in section
         774 of the T.A.

7.39     Loans or Credit

         The Company has been involved in no transactions  such that section 786
         of the T.A. (transactions associated with loans or credit) might apply.

                                 FOREIGN ELEMENT

7.40     Treasury Consents

         The Company has not without the prior  consent of the Treasury  entered
         into any of the transactions  specified in section  765(1)(c) or (d) of
         the  T.A.  nor did the  Company  prior to 15 March  1988  without  such
         consent  enter  into  any  of the  transactions  specified  in  section
         765(1)(a) or (b) of the T.A.

7.41     Company Migration

         Since 15 March 1988,  no  election  has been made by the Company as the
         principal   company  as  defined  in  section   187  of  the   T.C.G.A.


                                       57
<PAGE>

         (postponement of charge on deemed disposal of assets by company ceasing
         to be resident in the United  Kingdom)  nor has any company  over which
         the  Company  had  control  or which was a member of the same  group of
         companies  as the Company  ceased to be resident in the United  Kingdom
         otherwise than in compliance with section 130 of the F.A. 1988.

7.42     Transfers to non-resident company

         The Company has not made any such  transfer as is  mentioned in section
         140 of the T.C.G.A.

7.43     Double Taxation

         The  Company  has not made and is not  entitled to make any claim under
         part XVIII of the T.A. and in respect of any such claims  disclosed all
         necessary  conditions  for all  foreign  tax  credit  claimed  or to be
         claimed by the Company were at all material times and remain  satisfied
         and in  particular  (but  without  prejudice to the  generality  of the
         foregoing)  the Company holds all tax deduction  certificates  or other
         documentation  necessary  for  production  to H. M.  Inland  Revenue in
         respect of such foreign tax.

7.44     Controlled Foreign Companies

         The Company does not have and never has had an interest in a controlled
         foreign company within the meaning of section 747 of the T.A. such that
         all or any of the chargeable  profits of the controlled foreign company
         have been or will or may be apportioned to the Company.

7.45     Offshore Funds

         The Company has not on or after 1 January 1984 disposed of and does not
         now have a material  interest in an offshore fund which at any material
         time was or is a  non-qualifying  offshore  fund  within the meaning of
         section 757 of the T.A. such that a disposal thereof by the Company has
         given rise or will or may give rise to an offshore income gain.

7.46     Agency for Non Residents

         The  Company  is not and has not been  assessable  to tax by  virtue of
         section 78 of the T.M.A. or section 126 of the Finance Act 1995.

                                  CLOSE COMPANY

7.47     The Company is a close company as defined by section 414 T.A.



                                       58
<PAGE>



                               GROUPS OF COMPANIES

7.48     Group Relief

         The Disclosure Letter contains particulars of all arrangements relating
         to group relief under sections 402-413 of the T.A. to which the Company
         is or has been a party and:-

         (a)      all claims by the Company for group  relief were when made and
                  are now  valid  and  have  been or will be  allowed  by way of
                  relief from corporation tax;

         (b)      the Company has not made nor is liable to make any payment for
                  group relief otherwise than in consideration for the surrender
                  of group relief allowable to the Company by way of relief from
                  corporation tax;

         (c)      the  Company has  received  all  payments  due to it under any
                  arrangement or agreement for surrender of group relief by it;

         (d)      no such payment  exceeds or could exceed the amount  permitted
                  by section 402(6) of the T.A.;

         (e)      there exist or existed for any period of account in respect of
                  which a surrender  has been made or purports to have been made
                  no arrangements such as are specified in section 410(1)-(6) of
                  the T.A.

7.49     Advance Corporation Tax

         The Disclosure Letter contains  particulars of all arrangements for the
         surrender  under  section  240 of the T.A.  of any  amount  of  advance
         corporation tax and in respect of receipts and surrenders disclosed: -

         (a)      the  Company has not paid nor is liable to pay for the benefit
                  of  any  advance  corporation  tax  which  is  or  may  become
                  incapable  of set  off  against  the  Company's  liability  to
                  corporation tax;

         (b)      the  Company  has  received  all  payments  due to it for  all
                  surrenders or purported  surrenders of advance corporation tax
                  made by it;

         (c)      no such payment  exceeds or could exceed the amount  permitted
                  by section 240(8) of the T.A.; and

         (d)             there  exist or  existed  for  any period in respect of
                  which a claim under  section 240 of the T.A. has been or is to
                  be made no  arrangements  such as are specified in sub-section
                  (11) of that section  whereby any person could obtain  control

                                       59
<PAGE>

                  of the Company or of any  subsidiary  to which such  surrender
                  purports or is purported to be made.

7.50     Surplus Advance Corporation Tax

         The Company will not have any unrelieved  surplus  advance  corporation
         tax to  which  the  provisions  of  section  32 of the FA  1998  or any
         regulation made pursuant thereto relating to shadow advance corporation
         tax will apply.

7.51     Intra-Group Transfers

         The Company has not acquired  any asset other than  trading  stock from
         any other  company  belonging  at the time of  acquisition  to the same
         group of companies as the Company  within the meaning of section 170 of
         the  T.C.G.A.  and no  member of any  group of  companies  of which the
         Company is or has at any material time been the  principal  company (as
         defined in section  170(2)(b)  of the  T.C.G.A.)  has so  acquired  any
         asset.

                                 INHERITANCE TAX
7.52     Gifts

         (a)      The Company is not, and will not become, liable to be assessed
                  to capital  transfer tax or inheritance  tax as donor or donee
                  of any gift or  transferor  or  transferee of value (actual or
                  deemed) nor as a result of any disposition chargeable transfer
                  or transfer of value  (actual or deemed)  made by or deemed to
                  be made by any other person.

         (b)      The Company has not been a party to  associated  operations in
                  relation to a transfer of value  within the meaning of section
                  268 of the I.T.A.

         (c)      No asset owned by the Company is subject to any sale, mortgage
                  or charge by virtue of s212 of the I.T.A.

7.53     Inland Revenue Charge

         There is no unsatisfied  liability to capital  transfer tax attached or
         attributable  to  the  Shares  or  any  asset  of  the  Company  and in
         consequence  no person has the power to raise the amount of such tax by
         sale or mortgage of or by a  terminable  charge on any of the Shares or
         assets of the Company as  mentioned  in section  212 of the I.T.A.  and
         none of the Shares or assets of the  Company  are  subject to an Inland
         Revenue charge within section 237 of the I.T.A.


                                       60
<PAGE>



                                 VALUE ADDED TAX

7.54     Value Added Tax

         (a)      The Company is a registered  taxable person for the purpose of
                  the VAT  legislation and has not at any time been treated as a
                  member of a group of  companies  for such  purpose and has not
                  made any  application  to be so treated  and no  circumstances
                  exist  whereby the Company  would or might  become  liable for
                  value added tax as an agent or  otherwise by virtue of section
                  47 of the V.A.T.A.

         (b)      The Company has complied in all respects with the requirements
                  and provisions of V.A.T.A. and all regulations and orders made
                  thereunder (the "VAT legislation") and has made and maintained
                  and will pending  Completion  make and  maintain  accurate and
                  up-to-date  records  invoices  Accounts  and  other  documents
                  required  by  or  necessary   for  the  purposes  of  the  VAT
                  legislation  and the Company has at all times  punctually paid
                  and made all payments and returns required thereunder.

         (c)      That  (without  prejudice to the  generality  of clause (b) of
                  this clause) the Company has not: -

                  (i)   taken part in conduct involving  dishonesty as described
                        in section 60 of the V.A.T.A;

                  (ii)  committed  any  serious  misdeclaration  or  neglect  as
                        described in section 63 of the V.A.T.A;

                  (iii) issued  unauthorised  invoices  or failed to do anything
                        contemplated by section 67 of the V.A.T.A;

                  (iv)  failed  to  comply  with  any  regulatory   requirements
                        described in section 69 of the V.A.T.A;

                  (v)   been notified of any assessment  within  sections 59 and
                        74 of the V.A.T.A.  or a surcharge  notice under section
                        59 of the V.A.T.A;

                  (vi)  made any agreement with the Commissioners of Customs and
                        Excise  which  agreement  has not been put in writing as
                        contemplated by section 85 of the V.A.T.A.

         (d)      The Company has not made any exempt supplies in consequence of
                  which it is or will be unable to obtain  credit  for all input
                  tax  paid  by it  during  any VAT  quarter  ending  after  the
                  Accounts Date.



                                       61
<PAGE>

                                   STAMP DUTY

7.55     Stamp Duty and Capital Duty

         The Company has duly paid all capital  duty and loan  capital  duty for
         which it is or has at any time been  liable  and all  documents  in the
         enforcement of which the Company is or may be interested have been duly
         stamped and since the Accounts Date the Company has not been a party to
         any transaction whereby the Company was or is or could become liable to
         stamp duty reserve tax.

                                FINANCE ACT 1996

7.56     Loan Relationships

         The  Company  is not a party to any loan  relationship  as  defined  in
         Chapter 11 of Finance  Act which may give rise to any debits or credits
         as there mentioned (other than in relation to interest).

7.57     The Company has duly submitted all claims (including without limitation
         claims for capital allowances) and disclaimers.

7.58     Since  the  Accounts   date  the  Company  has  not  entered  into  any
         transactions  which will or may give rise to a liability to corporation
         tax on chargeable gains or to any balancing charge.

7.59     The Company has not entered into any loan  relationship for unallowable
         purposes as defined in Schedule 9 paragraph 13 FA 1996.

7.60     The Company has not within the last three years  elected  under section
         246A  and  246B  TA for  any  dividend  paid  or to be paid by it to be
         treated as a foreign income  dividend for the purposes of Chapter VA of
         part VI of TA.

7.61     The Company has not made any  qualifying  distributions  which could be
         subject to paragraph 1(2) or (3) Schedule 7 FA 1997.

7.62     The Company has not made any loans to a  participator  or any associate
         for the purpose of Section 419 TA and has not  provided  any payment or
         benefit  to  a  participator  which  has  or  could  be  treated  as  a
         distribution for the purposes of Section 418 TA.

7.63     In  relation  to VAT on all  invoices  issued by the Company VAT at the
         percentage rate which at the time of the relevant supply was chargeable
         thereon  has been so charged  and all amounts of VAT which have been so
         charged  since the last  return  made by the  Company  to HM  Customs &
         Excise have been retained by the Company pending the next return date.



                                       62
<PAGE>

                            8. ENVIRONMENTAL MATTERS


8.1      Licences

         The Company has obtained and complied with the terms and  conditions of
         all Environmental  Consents.  All current Environmental Consents remain
         in full force and effect.  The Company has not  received  any notice of
         and to the best of the Vendors' knowledge, information and belief there
         are no  circumstances  that may lead to the  revocation,  modification,
         suspension or that may prejudice or require  material  expenditure  for
         the renewal,  extension, grant or transfer of any current Environmental
         Consents.

8.2      Liability

         The Company and the  Properties  comply and have at all times  complied
         with all  Environmental  Laws and there  are no facts or  circumstances
         which interfere or prevent compliance with any Environmental Laws.

         There are no civil,  criminal  arbitration or  administrative  actions,
         claims,  proceedings or suits pending or threatened against the Company
         arising from or relating to Environmental Consents or Environmental Law
         and to the best of the Vendors' knowledge, information and belief there
         are  no  circumstances   which  may  lead  to  such  actions,   claims,
         proceedings or suit.

8.3      Notices and Complaints

         The Company has not  received any notice of  enforcement,  prohibition,
         improvement,  remediation or other notice of equivalent  nature, or any
         judgment  order,  decree,  award,  demand or decision in respect of the
         Environment  from any court,  tribunal,  arbitrator or  governmental or
         regulatory authority and there have been no complaints,  investigation,
         enquiries,  requests  for  information  or  other  formal  or  informal
         indications  of any possible  claims or legal actions in respect of the
         Environment from any person including without limitation any neighbour,
         governmental  or regulatory  authority,  current or former  employee or
         third party.


                                       63
<PAGE>



8.4      Contaminated Land

         There  has not  been and  there  is not  present  on,  at or under  the
         Properties  and there is and has been no release,  migration,  leakage,
         spill,  discharge,   entry,  deposit  or  emission  onto  or  from  the
         Properties of any hazardous substance or waste.

         There has not been any disposal,  storage, release, leakage, migration,
         spill, discharge, entry, deposit or emission of any hazardous substance
         or waste into the environment caused by any activity of the Company

8.5      House-keeping

         (a)      Hazardous  Substances  kept  on  the  Properties  or  used  in
                  connection  with or produced by any Activities  have been kept
                  in tanks,  containers  (in both cases  surrounded  by suitable
                  bund), or proper storage buildings, as the case may be, all of
                  the foregoing being  appropriate for the substance  stored and
                  fit for the designated purpose.

         (b)      No PCBs,  asbestos,  underground  storage tanks or pipework or
                  landfills  are located on the  Properties  that violate in any
                  material respect any Environmental Law.

         (c)      The Company has not received, generated, handled, used stored,
                  treated,  transported,  kept, deposited,  or disposed of Waste
                  at, on or under the Properties and has not permitted any third
                  party to do so nor has  reasonable  cause to believe  that any
                  third party has done so.

         (d)      No Property  is included on or referred to in any  register of
                  land  subject  to   contaminative   use  or  any  register  of
                  contaminated  land  (whether or not publicly  available)  kept
                  pursuant to any  Environmental Law and not, to the best of the
                  Vendors'  knowledge,  information  and  belief,  are there any
                  circumstances which are likely to lead to such registration.

         (e)      Any substance for disposal has been delivered to an accredited
                  and insured  carrier for onward  disposal to an accredited and
                  insured third party where appropriate.

8.6      Future Laws

         To the best of the Vendors' knowledge, information and belief there are
         no changes likely in the Environmental Consents or in Environmental Law
         or any  anticipated  Environmental  Law  that  would  require  works or
         material   additional   expenditure  to  ensure  compliance  with  such
         Environmental Consent or Environmental Law or anticipated Environmental
         Law or that would prevent,  restrict or hinder or otherwise  affect the
         use of the Properties or the Activities of the Company.


                                       64
<PAGE>

8.7      Predecessors

         To  the  best  of  the  Vendors'  knowledge,   information  and  belief
         predecessors  in title  (including all previous  owners,  occupiers and
         managers)  of the  Properties  or the  Activities  have  complied  with
         Environmental Laws.

8.8      Documentation

         Copies  of  all  environmental   reports,   surveys,   assessments  and
         investigations  in  respect  of the  Properties  or  Activities  in the
         possession or control of the Vendor and the Company have been disclosed
         to  the  Purchaser   and  all  necessary   steps  to  comply  with  the
         recommendation  contained in such  reports,  surveys,  assessments  and
         investigations have been completed.

               9. INFORMATION TECHNOLOGY AND MILLENIUM COMPLIANCE

9.1      None of the business  systems forming part of the Company  Intellectual
         Property  has been  copied  wholly  or  substantially  from  any  other
         material.

9.2      All the business systems,  excluding software,  used in the business of
         the Company are owned and  operated by and are under the control of the
         Company and are not wholly or partly  dependent on any facilities which
         are not under the  ownership  operation or control of the  Company.  No
         action will be  necessary to enable such systems to continue to be used
         in the  business  of the  Company  to the same  extent  and in the same
         manner as they have been used prior to the date hereof.

9.3      The  Company  is  validly  licensed  to use  the  software  used in its
         business  and no action will be  necessary  to enable it to continue to
         use such  software  to the same  extent and in the same  manner as they
         have been used prior to the date hereof.

9.4      All  necessary  steps  have been taken to back up  electrically  stored
         information  used or likely to be used in the  business  of the Company
         and the Vendors have in place adequate disaster recovery provisions and
         security  arrangements in relation to all business  systems used in the
         course of the business of the Company.

9.5      The  performance  of the  business  systems used in the business of the
         Company will not be adversely  affected by either any changes in and to
         date  information used therein or any changes to inputs,  outputs,  and
         other  manipulations of data in relation to dates from 1st January 2000
         and  thereafter.  The Vendors have carried out an audit of the business
         systems  and are  unaware  of the fact or matter  which may cause  such
         adverse consequences.


                                       65
<PAGE>

9.6      The following  information has been disclosed in the Disclosure  Letter
         in a manner which is true  accurate and not  misleading in all material
         respects:-

         (i)     details of all  software  and of its use in the business of the
                 Company  from time to time  including  but  without  limitation
                 details of access to and rights in  relation  to source code of
                 such software;

         (ii)    details  of  all  computer  systems  support   maintenance  and
                 development agreements;

         (iii)   details of all  hardware  used in the  business  of the Company
                 from time to time and of its ownership; and

         (iv)    details of all third party  access to business  systems used in
                 the business of the Company.

                                 10. PROPERTIES


10.1     TITLE
         10.1.1  The  Property  comprises  all the property  owned,  occupied or
                 otherwise  used in connection  with the business of the Company
                 and  all  the  estate  interest  right  and  title   whatsoever
                 (including  for the avoidance of doubt  interests in the nature
                 of options and rights in the nature of contractual licences) of
                 the Company in respect of any land or premises.

         10.1.2  The  Property  is  occupied  under  leases,  the terms of which
                 permit the Company's occupation and use.

         10.1.3  The  Company is the legal and  beneficial  owner of a leasehold
                 interest in the Property for the term stated in Schedule 3.

         10.1.4  The information contained in Schedule 3 as to the tenure of the
                 Property  and the  principal  terms  of the  lease  held by the
                 Company, is accurate in all respects.

10.2     ENCUMBRANCES
         10.2.1  The  Property is free from any  mortgages,  debenture,  charge,
                 rent-charge,  lien, local land charge, land charge or any other
                 encumbrance   securing   the   repayment  of  monies  or  other
                 obligation or liability of the Company or any other person.

         10.2.2  The  Property  is not  subject  to  any  outgoings  other  than
                 business  rates,  water  rates  insurance  premiums,  rent  and
                 service  charges.  
         10.2.3  The  Property  is not  subject  to any  restrictive  covenants,
                 stipulations, easements, profits a prendre, wayleaves, licences
                 grants,  restrictions,  overriding  interests or other  similar
                 rights vested in third parties. 
         10.2.4  Where any of the matters referred to in clauses 10.2.1,  10.2.2
                 and 10.2.3 have been  disclosed in the Disclosure  Letter,  the
                 obligations and liabilities imposed and arising under them have
                 been fully  observed and  performed and any payments in respect
                 of them  due and  payable  have  been  duly  paid.  


                                       66
<PAGE>

         10.2.5  The Property is not subject to any option, right of pre-emption
                 or right of first refusal.

10.3     PLANNING MATTERS
         10.3.1  The use of the Property is the  permitted  use for the purposes
                 of the Planning Acts.
         10.3.2  Planning permission has been obtained or is deemed to have been
                 granted for the purposes of the  Planning  Acts with respect to
                 the  development  of  the  Property,  no  permission  has  been
                 suspended  or  called  in  and  no  application   for  planning
                 permission  is  awaiting  decision.  
         10.3.3  There is no known breach of building  regulations  with respect
                 to  all  development,   alterations  and  improvements  to  the
                 Property.
         10.3.4  The Company has complied and is complying in all respects with:

                 10.3.4.1   planning permissions, orders, and regulations issued
                            under the Planning  Acts,  the London  Building Acts
                            and building regulation consents and by-laws for the
                            time  being in force with  respect to the  Property;
                 10.3.4.2   all agreements  under the Town and Country  Planning
                            Act 1971 s 52 or planning obligations under the Town
                            and Country  Planning Act 1990 s 106 undertaken with
                            respect to the Property; and 
                 10.3.4.3   all agreements made under the Highways Act 1980 s 38
                            with respect to the Property. 
         10.3.5  The  Property  is not  listed as being of special  historic  or
                 architectural  importance  or located in a  conservation  area.
         10.3.6  All claims and liabilities under the Planning Acts or any other
                 legislation  have been  discharged  and no claim or  liability,
                 contingent or otherwise, is known to be outstanding.

10.4     STATUTORY OBLIGATIONS

         10.4.1  The Company has complied and is complying  with all  applicable
                 statutory and by-law requirements with respect to the Property,
                 and  in   particular   (but   without   limitation)   with  the
                 requirements as to fire precautions and under the Public Health
                 Acts and the Offices, Shops and Railway Premises Act 1963.
         10.4.2  There is no known  outstanding  and  unobserved or  unperformed
                 obligation  with  respect to the  Property  necessary to comply
                 with the  requirements  (whether  formal  or  informal)  of any
                 competent authority exercising statutory or delegated powers.

                                       67
<PAGE>



10.5     ADVERSE ORDERS

         10.5.1  There are no compulsory purchase notices, orders or resolutions
                 affecting the Property and there are no circumstances likely to
                 lead to any being made.
         10.5.2  There  are  no  closing,   demolition   or  clearance   orders,
                 enforcement  notices or stop notices affecting the Property and
                 there are no circumstances likely to lead to any being made.

10.6     CONDITION OF THE PROPERTY
         10.6.1  The buildings and other  structures on the Property are in good
                 and substantial repair and fit for the purposes of the business
                 carried on by the Company
         10.6.2  To the  Vendor's  knowledge  no  building or  structure  on the
                 Property has at any time been affected by structural  damage or
                 electrical  defects or by timber  infestation,  rising  damp or
                 disease.  
         10.6.3  There are no disputes with any neighbouring  owner with respect
                 to boundary walls and fences or with respect to any easement or
                 right  over or means of  access  to the  Property.  
         10.6.4  The  principal  means of access to the  Property  is over roads
                 which  have  been  taken  over by the  local or  other  highway
                 authority and which are  maintainable at the public expense and
                 no means of  access to the  Property  is  subject  to rights of
                 determination  by any other party.  
         10.6.5  The  Property  enjoys  the main  services  of water,  drainage,
                 electricity and gas.

10.7     INSURANCE

         10.7.1  The  Property  is insured in its full  reinstatement  value and
                 against  third  party  and  public  liabilities  to the  extent
                 assessed by the Landlord's surveyor
         10.7.2  All  premiums  payable in respect of  insurance  policies  with
                 respect to the  Property  which have  become due have been duly
                 paid and the  Vendor  is not aware of any  circumstances  which
                 have arisen which would vitiate or permit the insurers to avoid
                 the policies.  
         10.7.3  The  information in the  Disclosure  Letter with respect to the
                 insurance policies is accurate in all respects.

10.8     LEASEHOLD PROPERTY

         10.8.1  The Company has paid the rent and  observed and  performed  the
                 covenants  on  the  part  of  the  tenant  and  the  conditions
                 contained  in the lease under which the  Property is held,  and
                 the last  demand for rent (or  receipt  for rent if issued) was
                 unqualified, and the lease is valid and in full force.
         10.8.2  All licences, consents and approvals required from the landlord
                 and any superior  landlord have been obtained and the covenants
                 on the part of the tenant  contained in the Licences,  consents


                                       68
<PAGE>

                 and approvals  have been duly  performed  and observed.  
         10.8.3  There is no rent  review  in  progress.  
         10.8.4  No  obligation  necessary  to comply  with any  notice or other
                 requirement given by the landlord is outstanding and unobserved
                 or unperformed.  
         10.8.5  There is no obligation to reinstate the Property by removing or
                 dismantling  any  alteration  made to it by the  Company or any
                 predecessor in title.  
         10.8.6  There  are  no  circumstances  which  would  entitle  any  such
                 landlord  to  exercise  any powers of entry or take  possession
                 whether by means of peaceable  re-entry or proceedings or which
                 would otherwise restrict the continued possession and enjoyment
                 of  the  Property.   
         10.8.7  The Company does not have any  continuing  liability in respect
                 of any other property formerly owned or occupied by the Company
                 either as original contracting party or by virtue of any direct
                 covenant  having  been  given  on a sale or  assignment  to the
                 Company  or under an  authorised  guarantee  agreement  or as a
                 surety for the  obligations  of any other person in relation to
                 property.

10.9     TENANCIES
         10.9.1  The Property is not subject to any tenancies

10.10    ENVIRONMENTAL MATTERS
         10.10.1 The  Company  has  at all  times  complied  with  environmental
                 legislation  and  there  is  nothing  in on over or  under  the
                 Property   the   presence   existence  or  condition  of  which
                 constitutes a breach of  environmental  legislation  
         10.10.2 No offence  has been  committed  on or in  connection  with the
                 Property or any  activities  processes or substances in on over
                 or under the Property pursuant to environmental legislation.

10.11.   CONTAMINATION

         10.11.1 To the best of the  Vendor's  knowledge  and belief none of the
                 Property:-

                 10.11.1.1  includes   contaminated   land  as  defined  in  the
                            Environmental Protection Act 1990 ("the EPA")
                 10.11.1.2  is  the  subject  of a  remediation  statement  or a
                            remediation  notice  for  the  purpose  of  the  EPA
                 10.11.1.3  is within 250 meters of a  landfill  site  
                 10.11.1.4  has  been  affected  by any  landfill  gas or  other
                            contaminants

10.12    GENERAL
         10.12.1           There is no other  matter of which  the  Vendor is or
                           ought to be aware on  reasonable  enquiry  and  which
                           adversely  affects the value of the Property or casts
                           any  doubt  on the  right  or  title  of the  Company
                           thereto which should be revealed to the Purchaser


                                       69
<PAGE>

10.13    CERTIFICATE OF TITLE
         10.13.1           The  certificate  of title in respect of the Property
                           dated 20th  October  1998 and  prepared and signed by
                           the Vendor's  solicitor is true complete and accurate
                           in all  respects  and the  Vendor  is aware  that the
                           Purchaser intends to place reliance thereon


                            11. INTELLECTUAL PROPERTY


11.1     The  Company  is  the  sole  legal  and  beneficial   owner  free  from
         encumbrances of the  Intellectual  Property and (where such property is
         capable of registration)  the registered  proprietor  thereof and (save
         for  copyrights  and  unregistered  design  rights not  included in the
         Listed Intellectual Property) owns no other Intellectual Property.

11.2     No  person  has  been  authorised  to make  any use  whatsoever  of any
         Intellectual Property owned by the Company.

11.3     All the  Intellectual  property  used by the Company is owned by it and
         does not use any  Intellectual  Property  in respect of which any third
         party has any right, title or interest.

11.4     None of the Intellectual Property is being used, claimed,  applied for,
         opposed to or attacked by any person.

11.5     The  Vendor  is not  aware  of  any  infringement  of the  Intellectual
         Property or of any rights relating to it by any person.

11.6     There are no outstanding claims against the Company for infringement of
         any  Intellectual  Property  or of any rights  relating  to it used (or
         which have been used) by the  Company  and during the last six years no
         such claims have been settled by the giving of any  undertakings  which
         remain in force.  The Company has not received any actual or threatened
         claim that any of the Intellectual Property Rights is invalid.

11.7     Know-how  and  Confidential  Information  used by the  Company  is kept
         strictly  confidential.  The Company has not  disclosed  (except in the
         ordinary course of its business) any of its know-how,  trade secrets or
         list of customers to any other person.

11.8     The Vendor  has, if  required  to do so under the Data  Protection  Act
         1984, duly registered as a data user in respect of the business carried
         on by the Company and has complied with the data protection  principles
         as set out in the Act.

11.9     Any  Software  has been  listed and all rights to the use  thereof  are
         vested in the Company.



                                       70
<PAGE>

                                  12. PENSIONS

12.      INTERPRETATION

12.1     DEFINITIONS

         In this Schedule, where the context admits:

         "Relevant  Employee" means any past or present  employee of the Company
or of any predecessor to all or part of its business.

12.2     EMPLOYEES

         12.2.1 References in this Schedule to employees includes directors.

12.3     WARRANTIES AND REPRESENTATIONS

         12.3.1  The Vendors hereby warrant and represent to and for the benefit
                 of the Purchaser in the following terms:

                 12.3.1.1 NO OTHER ARRANGEMENTS
                          Save for the Pension Scheme the Company is not a party
                          to nor  participates in nor contributes to any scheme,
                          agreement or arrangement  (whether legally enforceable
                          or not) for the provision of any pension,  retirement,
                          death, incapacity,  sickness, disability,  accident or
                          other  like  benefits  (including  the  payment  after
                          cessation  of  employment  with the Company of medical
                          expenses) for any Relevant  Employee or for the widow,
                          widower, child or dependant of any Relevant Employee.

                 12.3.1.2 NO ASSURANCES ETC
                          Neither  the  Company  any   associated  or  connected
                          company:

                          12.3.1.2.1 has  given  any  undertaking  or  assurance
                                     (whether legally  enforceable or not) as to
                                     the continuance,  introduction, improvement
                                     or  increase  of  any  benefit  of  a  kind
                                     described in sub-paragraph  12.3.1.1 above,
                                     or

                          12.3.1.2.2 is paying or has in the last two years paid
                                     any such benefit,


                                       71
<PAGE>

                                     to (in either case) any  Relevant  Employee
                                     or  to  any   widow,   widower,   child  or
                                     dependant of any Relevant Employee.

                          12.3.1.3   MEMBERSHIP
                                     Every  person  who has at any  time had the
                                     right  to  join,  or  apply  to  join,  the
                                     Pension Scheme has been properly advised of
                                     that right.  No Relevant  Employee has been
                                     excluded  from  membership  of the  Pension
                                     Scheme   or  from   any  of  the   benefits
                                     thereunder in  contravention  of Art 119 of
                                     the Treaty of Rome,  the  Pensions Act 1995
                                     or other applicable laws or requirements or
                                     the  provisions  of the  Pension  Scheme or
                                     otherwise.

                          12.3.1.4   BENEFITS
                                     All benefits  which are not money  purchase
                                     benefits  and which are  payable  under the
                                     Pension  Scheme on the death of any  person
                                     while in  employment  to which the  Pension
                                     Scheme  relates are  insured  fully under a
                                     policy  with an  insurance  company of good
                                     repute  and there are no  grounds  on which
                                     that company  might avoid  liability  under
                                     that policy. All other benefits payable, or
                                     prospectively   or  contingently   payable,
                                     under the Pension Scheme are money purchase
                                     benefits.   In  this  sub-paragraph  "money
                                     purchase  benefits" has the same meaning as
                                     in s  181(1)  of the  Pension  Schemes  Act
                                     1993.

                          12.3.1.5   TRANSFER PAYMENTS
                                     No transfer  value has been paid  (directly
                                     or  indirectly)  to the Pension Scheme from
                                     another  arrangement  for any member of the
                                     Pension  Scheme  under  which any  benefits
                                     referable  to that member  contravened  Art
                                     119  of the  Treaty  of  Rome,  s 62 of the
                                     Pensions Act 1995 or other  applicable  law
                                     or requirement.

                          12.3.1.6   CONTRIBUTIONS AND EXPENSES
                                     Contributions to the Pension Scheme are not
                                     paid in arrear  and all  contributions  and
                                     other  amounts  which  have  fallen due for
                                     payment have been paid punctually.  No fee,
                                     charge  or  expense   relating   to  or  in
                                     connection with the Pension Scheme has been
                                     incurred  but not  paid,  If any such  fee,
                                     charge  or  expense  has  been  paid by any
                                     person  other than the  Pension  Scheme the
                                     Pension Scheme has  reimbursed  that person
                                     if and  to  the  extent  that  the  Pension
                                     Scheme is or may become liable so to do.

                          12.3.1.7   COMPANY'S OBLIGATIONS
                                     The Company:-



                                       72
<PAGE>

                                     12.3.1.7.1     has observed  and  performed
                                                    those   provisions   of  the
                                                    Pension  Scheme  which apply
                                                    to it; [and]

                                     12.3.1.7.2     may  (without the consent of
                                                    any    person   or   further
                                                    payment)    terminate    its
                                                    liability to  contribute  to
                                                    the  Pension  Scheme  at any
                                                    time  subject only to giving
                                                    such  notice  (if any) as is
                                                    expressly  provided  for  in
                                                    the documentation containing
                                                    the    current    provisions
                                                    governing     the    Pension
                                                    Scheme); [and

                                     12.3.1.7.3     has  at all  material  times
                                                    held  or  been  named  in  a
                                                    contracting-out  certificate
                                                    (within the meaning of s7(1)
                                                    of the  Pension  Schemes Act
                                                    1993)   referable   to   the
                                                    Pension Scheme].

                  12.3.1.8          NO OTHER EMPLOYER
                                    The  Company  is the only  employer  for the
                                    time  being  participating  in  the  Pension
                                    Scheme.  No  employer  which has  previously
                                    participated  in the Pension  Scheme has any
                                    claim  under  the  Pension   Scheme  and  in
                                    respect of any such  employer  the period of
                                    participation   has  been   terminated   and
                                    benefits  have been  provided in  accordance
                                    with the provisions of the Pension Scheme.

                  12.3.1.9          ADMINISTRATION
                                    All  documentation and records in respect of
                                    the Pension Scheme are up to date and so far
                                    as  the  Vendors  are  aware   complete  and
                                    accurate in all material respects.

                  12.3.1.10         INVESTMENT
                                    Save for any deposit with a bank or building
                                    society  the only  assets  which the Pension
                                    Scheme has held are  insurance  policies and
                                    annuity  contracts with insurance  companies
                                    of good repute.

                  12.3.1.11         COMPLIANCE
                                    The Pension Scheme:

                                    12.3.1.11.1     is an exempt approved scheme
                                                    (within  the  meaning  of  s
                                                    592(1)  of  the  Income  and
                                                    Corporation Taxes Act 1988);

                                    12.3.1.11.2     has properly and  punctually
                                                    accounted   to  the   Inland
                                                    Revenue  for all and any tax
                                                    for which the Pension Scheme
                                                    is  liable  or  accountable;
                                                    and


                                       73
<PAGE>

                                    12.3.1.11.3     has  at all  times  complied
                                                    with and  been  administered
                                                    in   accordance   with   all
                                                    applicable laws, regulations
                                                    and requirements  (including
                                                    those of the Board of Inland
                                                    Revenue and of trust law).

                  12.3.1.12         DISPUTES
                                    None of the Pension  Scheme,  the Company or
                                    any member of the Vendors'  Group is engaged
                                    or involved in any proceedings  which relate
                                    to or are in  connection  with  the  Pension
                                    Scheme  or the  benefits  thereunder  and no
                                    such  proceedings  are pending or threatened
                                    and so far as the Vendor is aware  there are
                                    no  facts  likely  to give  rise to any such
                                    proceedings.     In    this    sub-paragraph
                                    "proceedings"  includes  any  litigation  or
                                    arbitration    and   also    includes    any
                                    investigation   or   determination   by  the
                                    Pensions   Ombudsman  or  the   Occupational
                                    Pensions  Advisory Service and any complaint
                                    under  any   internal   dispute   resolution
                                    procedure established in connection with the
                                    Pension Scheme.

                  12.3.1.13         INDEMNITIES
                                    In relation  to the Pension  Scheme or funds
                                    which are or have been held for the purposes
                                    thereof  neither the Company nor the Pension
                                    Scheme has given an  indemnity  or guarantee
                                    or any person (other than in the case of the
                                    Company any general  indemnity  in favour of
                                    the  trustees  or  administrator  under  the
                                    documentation governing the Pension Scheme).

12.4     DAMAGE FOR BREACH OF PENSION WARRANTIES

         12.4.1   In  determining   the  damages  flowing  from  any  breach  of
                  Warranties  contained in paragraph  12.3, the Company shall be
                  deemed to be under a liability:

                  12.4.1.1          to provide  and to  continue  to provide any
                                    benefit  of  a  kind  referred  to  in  that
                                    paragraph  which is now provided or has been
                                    announced or is proposed; and

                  12.4.1.2          to  maintain  and to  continue  to  maintain
                                    (without benefits being reduced) the Pension
                                    Scheme and any other  arrangements of a kind
                                    described in that paragraph which are now in
                                    existence    or   are   proposed   and   any
                                    discretionary  practices of a kind  referred
                                    to in that  paragraph  which  have  hitherto
                                    been carried on.


                                       74
<PAGE>


                                   SCHEDULE 5

                                DEED OF INDEMNITY


THIS DEED OF INDEMNITY is made on                    1998

BETWEEN:-

(1)   THE PERSONS  whose names and addresses are set out in column 1 of Schedule
      1 hereto (together the "Covenantors"); and

(2)   ( * )  whose  registered  office  is  at  ( *  )  (the  "Purchaser"  which
      expression shall include its successors and assigns).

RECITALS:-

This  Deed of  Indemnity  is  entered  into  pursuant  to the  provisions  of an
agreement  (the  "Sale  Agreement")  made on ( * ) 199  pursuant  to  which  the
Purchaser agreed to purchase the whole of the share capital of ( * ).

THE PARTIES AGREE AS FOLLOWS:-

1.       INTERPRETATION

1.1      Subject  to clause  1.2 and unless  the  context  otherwise  indicates,
         words,  expressions  and  abbreviations  defined in the Sale  Agreement
         shall have the same  meanings  in this deed and any  provisions  of the
         Sale Agreement  concerning  matters of construction  or  interpretation
         shall mutatis mutandis apply to this deed.

1.2      The following words,  expressions and  abbreviations  used in this deed
         shall,  unless  the  context  otherwise  requires,  have the  following
         meanings: -

         "CLAIM FOR TAX" means any of the following:-

         (a)      any  liability  to  make a  payment  of  Tax  and  any  claim,
                  assessment,  demand, notice or other document issued or action
                  taken  by or  on  behalf  of  any  person  authority  or  body
                  whatsoever and of whatever country which claims payment of Tax
                  or any  submission,  return or  correspondence  from  which it
                  appears  likely that there may be a liability  to Tax or Claim
                  for Tax within (b) below; or

         (b)      any  non-availability  or loss of or  reduction  of any Relief
                  (including  in  particular a right to repayment) to the extent
                  that such Relief has been  reflected  in the net assets of the
                  Company as shown by the Accounts;


                                       75
<PAGE>

         "COMPANY" shall have the same meaning as in the main Agreement

         "GROUP" shall be deemed to include the Company and any Subsidiary.

         "GROUP RELIEF" means any of the following:-

         (a)   relief  surrendered  or claimed  pursuant to chapter IV part X of
               the T. A. 1988;

         (b)   advance  corporation  tax  surrendered  or  claimed  pursuant  to
               section 240 of the T.A. 1988;

         (c)   a Transferred Tax Refund;

         "INCOME,  PROFITS OR GAINS"  includes any other measure by reference to
         which Tax is computed;

         "PURCHASER'S  RELIEF"  means  any  Relief to the  extent  that the same
         either:-

         (a)   has been  reflected  in the net assets of the Company as shown by
               the Accounts; or

         (b)   arises in respect of periods after the Accounts Date;

         "RELEVANT EVENT" means every event, act, omission, default, occurrence,
         circumstance,   transaction,   dealing  or   arrangement  of  any  kind
         whatsoever done or omitted to be done by the Covenantors or the Company
         or which in any way concerns or affects the Company whether or not done
         or omitted to be done by the Company or the Covenantors;

         "RELIEF" means any allowance,  credit,  exemption,  deduction or relief
         from,  in  computing,  against or in respect of Tax or any right to the
         repayment of Tax;

         "TAX" means any tax, and any duty, impost, levy or charge in the nature
         of tax, whether domestic or foreign,  and any fine, penalty or interest
         connected  therewith,  including  (without  prejudice to the foregoing)
         corporation  tax,  advance   corporation  tax,  income  tax,   national
         insurance  and  social  security   contribution,   capital  gains  tax,
         inheritance tax, petroleum revenue tax, value added tax, customs excise
         and import  duties,  stamp  duty,  stamp duty  reserve  tax,  insurance
         premium tax, air  passenger  duty,  rates and water rates and any other
         payment  whatsoever  which the Company is or may be or become  bound to
         make to any person by reason of any taxation statutes;

         "TAXATION   STATUTES"   means  all   statutes,   decrees,   orders  and
         regulations,  whether domestic or foreign providing for or imposing any
         Tax;


                                       76
<PAGE>

         "TRANSFERRED  TAX REFUND" means a tax refund  relating to an accounting
         period as  defined  by  section  102(3) of the F.A.  1989 in respect of
         which a notice has been given  pursuant  to section  102(2) of the F.A.
         1989.

         "UTILISATION OF A PURCHASER'S  RELIEF" means the utilisation or set off
         of a Purchaser's Relief available to the Company.

1.3      References to Income, Profits or Gains being earned accrued or received
         before a particular  date shall include  deemed income profits or gains
         treated as earned accrued or received prior thereto.

1.4      The  obligations  and  liabilities of the  Covenantors  under this deed
         shall be joint and several.

2.       INDEMNITY

2.1      Subject  to  clause  2.3,  the  Covenantors  hereby  covenant  with the
         Purchaser to pay from time to time to the Purchaser : -

         (a)      such sums as would if paid to the Company  indemnify  and keep
                  indemnified  the Company  against each and every Claim for Tax
                  where the Claim for Tax in question arises whether in whole or
                  in part : -

                  (i)     in connection  with or as a consequence of one or more
                          Relevant Events occurring or entered into on or before
                          Completion ; or

                  (ii)    in respect of or by reference  to any Income,  Profits
                          or Gains  earned,  accrued  or  received  on or before
                          Completion ; or

                  (iii)   in consequence  of the combined  effect of two or more
                          Relevant  Events  of  which at least  one  shall  have
                          occurred   on  or  before   Completion   but  only  in
                          circumstances  where such Claim for Tax would not have
                          been  suffered  by the  Company but for the failure of
                          any person  (other than a company  falling  within the
                          definition  of the  Company  for the  purposes of this
                          deed) to discharge or pay any liability for Tax;

         (b)     such sums as would if paid to the  Company  indemnify  and keep
                 indemnified the Company against:-

                 (i)   each and  every  loss in whole or in part of the right to
                       receive any  payment for Group  Relief to the extent that
                       the  payment or right to receive  such  payment  has been
                       reflected  in the net  assets of the  Company as shown by
                       the Accounts; and/or


                                       77
<PAGE>

                  (ii)     any  liability  to make any payment for Group  Relief
                           and/or any  liability  to repay any payment  received
                           for  Group   Relief  to  the  extent  that  any  such
                           liability has not been reflected in the net assets of
                           the Company as shown by the Accounts;

         (c)     such sums as will indemnify and keep  indemnified the Purchaser
                 and such  further  sums as would if paid to the Company  and/or
                 any  subsidiary  or holding  company of the  Purchaser  (or any
                 subsidiary  of any such  holding  company)  indemnify  the same
                 against  all  costs  and   expenses   incurred  or  payable  in
                 connection with:-

                  (i)      any Claim for Tax the subject of a claim under clause
                           2.1(a),  including  all  legal  proceedings  relating
                           thereto  and  the  settlement  of any  Claim  for Tax
                           and/or  rebuttal of any  contention  or in connection
                           with any legal proceedings and reasonable steps taken
                           to avoid  any  Claim  for Tax or  contention  whether
                           actual, threatened and/or anticipated;

                 (ii)      any loss or liability  as mentioned in clause  2.1(b)
                           including all legal proceedings relating thereto.

2.2      If any Claim for Tax or liability which would have otherwise given rise
         to a Claim for Tax shall be reduced or  avoided in  consequence  of any
         Utilisation  of a  Purchaser's  Relief this deed shall apply as if such
         Purchaser's  Relief had not been  available so that the amounts paid by
         the  Covenantors  hereunder  shall be the amounts which would have been
         payable in the absence of that or any other Purchaser's Relief.

2.3      The covenant contained in clause 2.1(a) shall not apply:-

         (a)      to any Claim for Tax to the extent that any Tax giving rise to
                  the same has been paid  prior to the  Accounts  Date or that a
                  full and sufficient  provision or reserve for the liability to
                  which the same  relates has been made in the  Accounts and for
                  the  purposes of this clause  2.3(a) no  provision  or reserve
                  shall be prevented  from being full and sufficient if the same
                  proves to be inadequate by reason only of an increase in rates
                  of Tax announced after the date of the Sale Agreement;

         (b)      to any Claim for Tax to the  extent  that the same  shall have
                  arisen in consequence  of any act or  transaction  which could
                  reasonably  have  been  avoided,  and which  was  carried  out
                  without the agreement of the  Covenantors  by the Purchaser or
                  the Company after  Completion  otherwise  than in the ordinary
                  course of business of the Company, and which the Purchaser was
                  or should  reasonably  have been aware  would give rise to the
                  Claim for Tax in question; or

         (c)      to any  Claim  for Tax to the  extent  that it  arises  in the
                  ordinary  course of business of the Company after the Accounts


                                       78
<PAGE>

                  Date or as provided for in the Sale Agreement but on or before
                  Completion and for this purpose,  but without limitation,  the
                  following  shall  not be  regarded  as being  in the  ordinary
                  course of business: -

                  (i)      the  declaration  or payment of any  dividend  or the
                           making of any other distribution save as provided for
                           in the Sale Agreement; or

                  (ii)     any  transaction  entered  into  by  the  Company  in
                           circumstances   where  the   consideration  (if  any)
                           received  by or as  the  case  may  be,  paid  by the
                           Company in respect  thereof is less than or more than
                           the  consideration  deemed to have been  received  or
                           paid for Tax  purposes  but to the extent only of the
                           Claim for Tax  arising  in  respect  of the amount by
                           which the  deemed  consideration  exceeds  or is less
                           than the actual consideration; or

                  (iii)    the Company ceasing or being deemed to cease, for Tax
                           purposes, to be the member of any Group or associated
                           with  any  other   company   or  person   whether  in
                           consequence   of  the  entering   into  of  the  Sale
                           Agreement or anything done under it or otherwise; or

                  (iv)     a Relevant  Event which gives rise to a liability  on
                           the  Company  in respect  of the  Income,  Profits or
                           Gains,  whether actual or deemed, of any non-resident
                           person; or

                  (v)      any  other  Relevant  Event  which  gives  rise  to a
                           liability  to Tax on deemed  (as  opposed  to actual)
                           Income, Profits or Gains;

         (d)      to any Claim for Tax to the extent that the same is  increased
                  as a result of any failure by the  Purchaser or the Company to
                  comply with its obligations under clause 5.

         (e)      where the loss  occasioned has been recovered  pursuant to any
                  claim under the warranties or resulted in an adjustment to the
                  Consideration payable under the Sale Agreement.

2.4      In computing the amount to be paid by the  Covenantors  under this deed
         in respect  of any Claim for Tax no  account  shall be taken of any Tax
         for which the Company  would have been liable in respect of such amount
         had it in fact been paid to the Company.

2.5      All sums payable by the Covenantors  under this deed shall be paid free
         and clear of all deductions or withholdings  (including Tax) unless the
         deduction or  withholding  is required by law, in which event or in the
         event that the Purchaser  shall incur any liability for Tax  chargeable
         or  assessable  in respect of any payment  pursuant  to this deed,  the
         Covenantors  shall pay such additional  amounts as shall be required to
         ensure  that the net amount  received  and  retained  by the  Purchaser
         (after Tax) will equal the full amount  which would have been  received
         and  retained  by it had no such  deduction  or  withholding  been made
         and/or no such  liability  to Tax been  incurred  and in applying  this

                                       79
<PAGE>

         clause  2.5 no  account  shall  be  taken of the  extent  to which  any
         liability for Tax may be mitigated or offset by any Relief available to
         the  Purchaser  so that where such Relief is available  the  additional
         amount  payable  hereunder  shall be the amount  which  would have been
         payable in the absence of such availability.

3.       TIMING

3.1      Where the  Covenantors  become  liable to make any payment  pursuant to
         clause 2, the due date for the making of that payment shall be : -

         (a)      in so far as the claim arises pursuant to clause 2.1 (a) seven
                  days  before  the day on which a payment  of Tax  becomes  due
                  under or in  consequence  of the Claim for Tax in  question or
                  seven days before the day on which any repayment (or increased
                  repayment)  of Tax which but for such Claim for Tax would have
                  been  available,  would have been due and for this  purpose it
                  shall be assumed that the  repayment  would have become due at
                  the earliest possible date;

         (b)      in so far as the  liability  arises  pursuant to clause 2.1(b)
                  nine  months  after  the end of the  accounting  period of the
                  Company in relation to which the Group  Relief  surrender  was
                  made or where  the  liability  arises  as a  consequence  of a
                  liability  to repay any  payment  received  for or to make any
                  payment for Group  Relief,  seven days before the day on which
                  the Company is liable to repay or pay such amounts;

         (c)      in so far as the claim arises pursuant to clause 2.1(c), seven
                  days before the day on which the costs and  expenses  fall due
                  for payment;

         (d)      in so far as the claim arises pursuant to clause 2.2, the date
                  on which  payment would have become due under  sub-clause  (a)
                  above had no  Purchaser's  Relief been  available and for this
                  purpose it shall be assumed  that the Claim for Tax would have
                  been made and all Tax would have  become  due at the  earliest
                  possible date (assuming no application for postponement).

3.2      Where  but  for  the   non-availability,   loss  or  reduction  of  any
         Purchaser's  Relief  the  Company  could have  surrendered  the same to
         another  company  by way of Group  Relief  this deed and in  particular
         clause  3.1(a) shall apply as if the Tax which could have been saved as
         a  consequence  of any such  surrender  would  have  been  saved by the
         Company but for the said non-availability, loss or reduction and at the
         same time.

3.3      For the purposes  hereof where Tax is due or a repayment due is lost or
         reduced  or a Group  Relief  payment  is lost or reduced or falls to be
         repaid or where,  but for a  Utilisation  of a  Purchaser's  Relief Tax
         would be due or costs and expenses  fall due for payment,  on more than
         one  occasion  then  paragraphs  (a) to (d) of clause  3.1 shall  apply
         separately on each such occasion.


                                       80
<PAGE>

3.4      If any sum due  under  clause 2 is not paid by the  Covenantors  by the
         later of the due date and the date  seven  days  after  the date of the
         demand made  therefor  the same shall carry  interest  (from such later
         date until the date of payment) at the rate of four  percent  over base
         rate for the time  being of  National  Westminster  Bank PLC (or in the
         absence of such rate at such  equivalent  rate as the  Purchaser  shall
         select)  save that  interest  shall not start to run in  respect of any
         payments  of Tax above  until  seven  days  before the day on which the
         Company makes the payment of Tax due.


4.       RIGHT TO REIMBURSEMENTS AND CREDITS

4.1      Subject to clause 4.3, in calculating  amounts due from the Covenantors
         under this deed no  account  shall be taken of any  entitlement  of the
         Purchaser or the Company to make any recovery in respect of that amount
         or the circumstances  giving rise to the same from some other person or
         of any  Relief or other  benefit  which  may  become  available  to the
         Purchaser  or the  Company in  consequence  of the Claim for Tax or the
         loss or  refund of the  payment  for Group  Relief in  question  or the
         circumstances giving rise to the same.

4.2      If the Purchaser or the Company is or becomes  entitled to recover from
         some other person (not being the Company or any employee of the Company
         but including,  inter alia, any Tax authority) any amount in respect of
         the Claim for Tax  resulting  in a payment  by the  Covenantors  to the
         Purchaser under this deed, then the Purchaser shall promptly notify the
         Covenantors  of  the  said  entitlement  and,  if so  required  by  the
         Covenantors and if the Covenantors shall undertake to pay all costs and
         expenses  incurred by the  Purchaser  and the Company and shall provide
         reasonable  security for the same,  shall take all reasonable  steps to
         enforce  or  procure  that the  Company  shall  enforce  that  recovery
         (keeping the  Covenantors  fully  informed of progress) and shall apply
         the same in accordance with clause 4.3.

4.3      If the Purchaser or the Company receives: -

         (a)      a recovery as mentioned in clause 4.2; or

         (b)      a benefit  being  either a reduction in Tax due and payable or
                  any  increased  repayment of Tax in either case as a result of
                  credit  being  obtained  for Tax giving rise to a claim by the
                  Purchaser under the terms of this deed (other than a reduction
                  in a liability to Tax which would  otherwise have itself given
                  rise to a payment  hereunder  or been taken into  account in a
                  claim for damages under the Warranties);

         then the  Purchaser  shall  promptly pay to the  Covenantors  an amount
         equal to so much of the benefit received or sum recovered (less any Tax
         paid by the  recipient  in  respect  thereof  and  less any  costs  and


                                       81
<PAGE>

         expenses  incurred by the Purchaser and the Company) as does not exceed
         the amount which the  Covenantors  paid in respect of the Claim for Tax
         in  question  (together  with  so  much of any  interest  or  repayment
         supplement  paid to the recipient of the recovery or benefit in respect
         thereof as  corresponds  to the  proportion  of the recovery or benefit
         accounted for under this clause 4.3, less any Tax thereon).

4.4      Where any recovery or benefit is accounted for under clause 4.3:-

         (a)      the amount of the payment  originally  made by the Covenantors
                  under clause 2 shall be treated as reduced for all purposes of
                  this deed (including any further application of this clause 4)
                  and of the Sale Agreement; and

         (b)      the same shall not  prejudice  the right of the  Purchaser  to
                  make further  recoveries under this deed whether in respect of
                  matters to which the original claim related or otherwise.

5.       RESISTANCE OF CLAIMS

5.1      If the  Purchaser  or the  Company  becomes  aware of any Claim for Tax
         (which  expression  shall for the  avoidance of doubt include any claim
         which  would  give rise to a Claim for Tax but for a  Utilisation  of a
         Purchaser's  Relief and shall also for the  purposes  of this  clause 5
         include any claim which may result in a loss of, or liability to repay,
         a payment for Group Relief) which may result in the Purchaser  having a
         claim against the Covenantors under this deed, the Purchaser shall give
         notice to the  Covenantors in the manner provided by the Sale Agreement
         as soon as is reasonably  practicable and the Covenantors  shall except
         where an  allegation  of fraud or wilful  default  or  neglect  is made
         forthwith be entitled at their sole discretion (but after  consultation
         with the  Purchaser)  to resist  such  Claim for Tax in the name of the
         Purchaser  or the  Company  or any of them  but at the  expense  of the
         Covenantors  and to  have  the  conduct  of any  appeal  or  incidental
         negotiations provided that: -

         (a)      the  Purchaser  shall be kept fully  informed  of all  matters
                  pertaining to the dispute; and

         (b)      no material communication, written or otherwise, pertaining to
                  the dispute (and in  particular  no proposal for or consent to
                  any  settlement or compromise  thereof shall be transmitted to
                  the Inland  Revenue  H.M.  Customs & Excise or other  taxation
                  authority or governmental  body or authority  without the same
                  having been  submitted to, and approved by the Purchaser  such
                  approval not to be unreasonably withheld or delayed; and

         (c)      no application  shall be made for  postponement  of Tax unless
                  the  Purchaser  and the Company  shall be  provided  with such
                  security as the Purchaser may reasonably require in respect of
                  sums subsequently becoming payable under this deed; and


                                       82
<PAGE>

         (d)      the  Covenantors  shall not be  entitled  to  resist  any such
                  Claims for Tax before any court,  tribunal or other  appellate
                  body  unless they have been  advised by leading  tax  counsel,
                  after  disclosure of all relevant  information  and documents,
                  that it is  reasonable  to  resist  the  Claim  for Tax in the
                  manner proposed by the Covenantors.

5.2      The  Purchaser  shall and shall procure that the Company shall give the
         Covenantors  all  reasonable   co-operation,   access  and  assistance,
         technical or otherwise,  for the purpose of resisting  such a Claim for
         Tax provided that each of the Purchaser and the Company is  indemnified
         and secured to the  satisfaction  of the  Purchaser by the  Covenantors
         against all losses (including additional Claims for Tax, costs, damages
         and expenses) which may thereby be incurred.

5.3      If the  Covenantors do not request the Purchaser or the Company to take
         any  appropriate  action or shall  fail to  indemnify  and  secure  the
         Purchaser or the Company to its reasonable  satisfaction within 21 days
         of the said notice to the Covenantors, the Purchaser and/or the Company
         shall be free to pay or settle  the  Claim for Tax on such  terms as it
         may in its absolute discretion thinks fit.

6.       MISCELLANEOUS

6.1      Claims under this deed (whether  being claims  against the  Covenantors
         under clause 2 or claims by the Covenantors pursuant to clause 4) shall
         be wholly barred and unenforceable  unless full written  particulars of
         the claim shall have been given by the claimant  within seven years and
         one month of the Accounts Date.

6.2      In  determining  the  amount of any Claim for Tax  suffered  by, or any
         recovery or benefit  received  by, any company for the purposes of this
         deed any party  hereto may at its own expense  request the  auditors of
         that  company  to  determine  the same  and to  provide  a  certificate
         thereof;  any  certificate  so provided shall be binding on the parties
         hereto in the absence of manifest error.

6.3      The  provisions  of clauses 13 (Entire  Agreement and  Amendments),  14
         (Counterparts),  16 (General) and 18 (Law and Jurisdiction) of the Sale
         Agreement  shall  apply to this deed as if the same  were  incorporated
         herein.

IN WITNESS whereof this deed has been executed on the date first above written.


                                       83
<PAGE>


                                   ANNEXURE A


                               EUROPEAN MICRO PLC

                  FLOATING RATE LOAN NOTE DUE 1ST NOVEMBER 2005



1  EUROPEAN  MICRO  PLC  (the  `Company')   (registered  number  2663964)  whose
registered office is at 20-24 Church Street, Altrincham, Cheshire, WA14 4DW will
on 1st  November  2005  (`Redemption  Date') (or on any earlier date on which it
becomes  payable in accordance  with the  Conditions) pay to the person named in
the  Schedule  (or the then  Noteholder)  the  principal  sum  specified  in the
Schedule,  together with all  outstanding  interest and other sums due under the
Note.

2  Interest  shall  accrue  on the  Principal  Sum at the best  rate  reasonably
obtainable for such sum placed on deposit with a London  Clearing Bank from time
to time with effect from the date of the Note.  The  interest  shall accrue from
day to day and  shall be  calculated  on the  basis of a 365 day year  until the
relevant amount is paid or repaid.  The interest shall be compounded on the last
Business  Day  in  each  of  March,  June,  September  and  December  and on the
Redemption  Date and shall be payable on the date of repayment of the  Principal
Sum.

3 The Note is issued subject to and with the benefit of the Conditions.



                                  THE SCHEDULE


Noteholder:                GERARD DENIS PATRICK O'ROURKE

Principal Sum:             TWO HUNDRED AND FORTY THOUSAND ONE HUNDRED AND  SIXTY
                           THREE POUNDS AND NINE PENCE ((POUND)240,163.09)



                                       84
<PAGE>


                                   CONDITIONS

1.       DEFINITIONS

In the Note the following words and expressions  have the meanings stated unless
they are inconsistent with the context:

         `BUSINESS DAY' a day, other than a Saturday, on which banks in the City
         of London are open for business;

         `CONDITIONS' these conditions;

         `NOTE' this loan stock note including the Conditions;

         `NOTEHOLDER'  at any time the then  registered  holder of the Note and,
         where  appropriate,  the  personal  representatives  of the  registered
         holder;

         `PRINCIPAL  SUM' the principal sum specified on the face of the Note or
         the amount outstanding at the relevant time.

2.       FORM

The Note is a single note for the  Principal  Sum together  with interest due on
it.

3.       REGISTER

The Company  shall keep a register of  Noteholders  in which will be entered the
name and  address  of the  holder  of the Note,  details  of all  transfers  and
payments of principal and interest.

4.       REPAYMENT IN DEFAULT

The Principal  Sum,  together  with accrued  interest and any other sums payable
under the Note, shall immediately  become payable on the happening of any of the
following events:

         4.1   an order being made or an effective  resolution  being passed for
               the winding-up of the Company;

         4.2   a receiver or  administrator  being  appointed or an encumbrancer
               taking  possession  of the  whole  or a  substantial  part of the
               assets or undertaking of the Company; or


                                       85
<PAGE>

         4.3   the  Company  ceasing  or  threatening  to  cease to carry on its
               business,   except  as  part  of  a  solvent   reconstruction  or
               amalgamation.

5.       TRANSFERS

The Note may be transferred only in whole.  Transfers shall be in writing signed
by the  transferor  and  shall be lodged  with the  Company  together  with such
evidence  of title to the Note as the  Company  reasonably  requires  (including
production  of the Note) and the  transferee  shall  then be  registered  as the
holder of the Note. The Company shall be entitled to retain the transfer.

6.       TRANSMISSION

A person  entitled  to the Note by  reason  of the  death of the  Noteholder  or
otherwise by operation of law may, upon  producing such evidence of his title as
the Company reasonably requires, be registered as the holder of the Note subject
to the Conditions.

7.       TITLE

The Company shall  recognise and treat the Noteholder as the sole absolute owner
of the Note and as alone entitled to receive and give  effectual  discharges for
sums payable under it. The Company shall not be affected by notice of a trust or
of the  right,  title  or  claim  to the  Note  of any  person  other  than  the
Noteholder.

8.       JOINT HOLDERS

In the case of joint registered Noteholders the Principal Sum and interest on it
and any other  sums  payable  under the Note shall be deemed to be owing to them
upon a joint account.

9.       PAYMENT

A cheque in respect of any sum payable  under the Note,  drawn on the  Company's
bankers payable to the order of the Noteholder (or in case of joint  Noteholders
to  the  order  of  the  joint   Noteholder  named  first  in  the  register  of
Noteholders),  will be sent by post to the  registered  or last known address of
the  Noteholder.  The Company shall not be responsible  for loss in transmission
and the payment of the cheque shall be a good discharge to the Company.

10.      SET-OFF AND SECURITY

10.1     The  Principal  Sum and interest on it and any other sums payable under
         the Note  shall be paid  without  regard to any  equities  between  the
         Company and the original or any other  Noteholder or any  counter-claim
         or right of set-off.  The receipt of the  Noteholder (or in the case of
         joint  Noteholders  of the joint  Noteholder  who is named first in the
         register  of  Noteholders)  for the  relevant  payment  shall be a good
         discharge to the Company.


                                       86
<PAGE>

10.2     The  Principal  Sum and interest on it and any other sums payable under
         the Note shall be secured by way of a charge  over  deposit  account in
         the form  annexed  hereto  which may at the  option of the  Company  be
         substituted  by a  guarantee  in a form  reasonably  acceptable  to the
         Noteholder from a London Clearing Bank for an equal sum.

11.      OPTIONAL EARLY REPAYMENT

11.1     The  Noteholder  may  require the whole or any part (being an amount or
         whole  multiple of (pound)1) of the  indebtedness  outstanding  in this
         Loan Note to be redeemed by the  Company at par with  accrued  interest
         (subject  to  deduction  of tax) on any date on or after the 1st day of
         June 1999 by the Noteholder  giving not less than 7 days' notice to the
         Company.

12.      REPLACEMENT NOTE

If the Note is worn out,  defaced,  lost or destroyed it may be renewed on terms
as to evidence of identity,  indemnity and  reimbursement of expense incurred by
the Company in investigating or verifying title as the Company requires.  In the
case of defacement the Note must be surrendered before the new note is issued.

13.      NOTICES

Notices given under the Note may be given by the Noteholder or by the Company by
posting  them in prepaid  letters  addressed  to the  Company at its  registered
office  or to the  Noteholder  (or in  the  case  of  joint  Noteholders  to the
Noteholder who is first named in the register of  Noteholders) at his address as
shown in the  register.  A notice  shall be deemed to have been  served 72 hours
after the time of posting.



Executed as a deed by the Company and delivered on _______________.


____________________ Director


____________________ Director/Secretary



                                       87
<PAGE>


                               EUROPEAN MICRO PLC

                       CONVERTIBLE FLOATING RATE LOAN NOTE
                        DUE SIX YEARS AFTER DATE OF ISSUE



1  EUROPEAN  MICRO  PLC  (the  `Company')   (registered  number  2663964)  whose
registered office is at 20-24 Church Street, Altrincham, Cheshire, WA14 4DW will
on the sixth  anniversary  of the date of issue  (`Redemption  Date') (or on any
earlier date on which it becomes  payable in accordance with the Conditions) pay
to the person named in Schedule I (or the then  Noteholder)  the  principal  sum
specified in Schedule I, together with all  outstanding  interest and other sums
due under the Note.

2 Interest shall accrue on the Principal Sum, and on compounded interest, at the
rate of two per cent per annum above the base rate of National  Westminster Bank
PLC from time to time with effect from the date of the Note.  The interest shall
accrue  from day to day and shall be  calculated  on the basis of a 365 day year
until the relevant amount is paid or repaid. The interest shall be compounded on
the last Business Day in each of March, June,  September and December and on the
Redemption  Date and shall be payable on the date of repayment of the  Principal
Sum.

3 The Note is issued subject to and with the benefit of the Conditions.



                                   SCHEDULE I


Noteholder:                GERARD DENIS PATRICK O'ROURKE

Principal Sum:             (POUND)_____________



                                   SCHEDULE II


1.       Should the  Company  pursuant  to clause 5 elect to satisfy any sum due
         under the terms of this Loan Note by  procuring  the  allotment of EMCC
         Shares  and the traded  volume of EMCC  Shares on NASDAQ in the 30 days
         prior to the  election  being made not being  equal to three  times the
         number  of  shares  to be  allotted  (`the  Trading  Volume')  then the
         following conditions shall apply.


                                       88
<PAGE>

         1.1   After 15 days of receipt of the said  shares the Loan  Noteholder
               may  arrange to sell the shares  received  as far as  possible in
               equal lots over the next 40 succeeding trading days.

         1.2   In the  event  that the sums  realised  upon the sale of the said
               shares  shall be less than the cash amount due the Company  shall
               pay to the Loan  Noteholder the difference in cash within 28 days
               of being notified of the amount of any shortfall.

2.       The number of EMCC Shares to be issued in  satisfaction  of any sum due
         under the Loan Note  shall be equal to the  amount of the sum due under
         the Loan Note so payable divided by the per share value save that if it
         shall not be a whole multiple then any balance will be paid in cash.



                                   CONDITIONS

1        DEFINITIONS

In the Note the following words and expressions  have the meanings stated unless
they are inconsistent with the context:

         `BUSINESS DAY' a day, other than a Saturday, on which banks in the City
         of London are open for business;

         `CONDITIONS' these conditions;

         `EMCC' means European Micro  Holdings Inc., a company  incorporated  in
         the State of Nevada  (United  States of America) with a State of Nevada
         File Number  28914-1997 and having its place of business at 6073 NW 167
         Street, Unit C-25, Miama, Florida 33015, United States of America.

         `EMCC  SHARES'  means the shares of common  stock of US$0.01,  the same
         being  traded or  tradable on NASDAQ,  credited  as fully paid,  in the
         capital of EMCC;

         `NOTE' this loan stock note including the Conditions;

         `NOTEHOLDER'  at any time the then  registered  holder of the Note and,
         where  appropriate,  the  personal  representatives  of the  registered
         holder;

         `PRINCIPAL  SUM' the principal sum specified on the face of the Note or
         the amount outstanding at the relevant time.


<PAGE>

2        FORM

The Note is a single note for the  Principal  Sum together  with interest due on
it.

3        REGISTER

The Company  shall keep a register of  Noteholders  in which will be entered the
name and  address  of the  holder  of the Note,  details  of all  transfers  and
payments of principal and interest.

4        REPAYMENT IN DEFAULT

The Principal  Sum,  together  with accrued  interest and any other sums payable
under the Note, shall immediately  become payable on the happening of any of the
following events:

4.1      an order being made or an  effective  resolution  being  passed for the
         winding-up of the Company;

4.2      a receiver or administrator  being appointed or an encumbrancer  taking
         possession  of  the  whole  or a  substantial  part  of the  assets  or
         undertaking of the Company; or

4.3      the Company  ceasing or  threatening to cease to carry on its business,
         except as part of a solvent reconstruction or amalgamation.

5        SHARE OPTION

5.1      The Company may at its option  satisfy any sum due under this Loan Note
         either in cash or by EMCC  Shares or any  combination  thereof.  If the
         Company  issues  EMCC  Shares in respect of all or any part of the sums
         due to the Noteholder then the provisions of Schedule 2 shall apply.

5.2      The share  option as set out in 5.1 above shall not apply if payment is
         due by reason of default as set out in clause 4.

6        TRANSFERS

The Note may be transferred only in whole.  Transfers shall be in writing signed
by the  transferor  and  shall be lodged  with the  Company  together  with such
evidence  of title to the Note as the  Company  reasonably  requires  (including
production  of the Note) and the  transferee  shall  then be  registered  as the
holder of the Note. The Company shall be entitled to retain the transfer.

7        TRANSMISSION


                                       90
<PAGE>

A person  entitled  to the Note by  reason  of the  death of the  Noteholder  or
otherwise by operation of law may, upon  producing such evidence of his title as
the Company reasonably requires, be registered as the holder of the Note subject
to the Conditions.

8        TITLE

The Company shall  recognise and treat the Noteholder as the sole absolute owner
of the Note and as alone entitled to receive and give  effectual  discharges for
sums payable under it. The Company shall not be affected by notice of a trust or
of the  right,  title  or  claim  to the  Note  of any  person  other  than  the
Noteholder.

9        JOINT HOLDERS

In the case of joint registered Noteholders the Principal Sum and interest on it
and any other  sums  payable  under the Note shall be deemed to be owing to them
upon a joint account.

10       SATISFACTION

A cheque in respect of any sum payable  under the Note,  drawn on the  Company's
bankers payable to the order of the Noteholder (or in case of joint  Noteholders
to the order of the joint  Noteholder named first in the register of Noteholders
or the relative  share  certificate),  will be sent by post to the registered or
last known address of the  Noteholder.  The Company shall not be responsible for
loss in transmission  and the payment of the cheque shall be a good discharge to
the Company.

11       SET-OFF

The  Principal  Sum and interest on it and any other sums payable under the Note
shall be paid  without  regard  to any  equities  between  the  Company  and the
original or any other Noteholder or any  counter-claim or right of set-off.  The
receipt  of the  Noteholder  (or in the case of joint  Noteholders  of the joint
Noteholder who is named first in the register of  Noteholders)  for the relevant
payment shall be a good discharge to the Company.

12       OPTIONAL EARLY REPAYMENT

The  Noteholder  may  require  the  whole or any part  (being an amount or whole
multiple of (pound)1) of the  indebtedness  outstanding  in this Loan Note to be
redeemed by the Company at par with  accrued  interest  (subject to deduction of
tax) on any date on or after the expiry of eight  months  from the date of issue
by the Noteholder giving not less than 28 days' notice to the Company.

13       REPLACEMENT NOTE

If the Note is worn out,  defaced,  lost or destroyed it may be renewed on terms
as to evidence of identity,  indemnity and  reimbursement of expense incurred by
the Company in investigating or verifying title as the Company requires.  In the
case of defacement the Note must be surrendered before the new note is issued.


                                       91
<PAGE>

14       NOTICES

Notices given under the Note may be given by the Noteholder or by the Company by
posting  them in prepaid  letters  addressed  to the  Company at its  registered
office  or to the  Noteholder  (or in  the  case  of  joint  Noteholders  to the
Noteholder who is first named in the register of  Noteholders) at his address as
shown in the  register.  A notice  shall be deemed to have been  served 72 hours
after the time of posting.



Executed as a deed by the Company and delivered on _______________.


____________________ Director


____________________ Director/Secretary







                                       92
<PAGE>


                                   ANNEXURE B


                                                            COMPANY NO: 02743684

                                 DEED OF WAIVER

                    RE: SUNBELT (UK) LIMITED ("THE COMPANY")


I, GERARD DENIS PATRICK O'ROURKE of 16 William Road, Wimbledon,  London SW19 3PL
being the  registered  holder of 7,200  Ordinary  Shares of (pound)1 each in the
capital of the Company, whose registered office is situated at 15 Bolton Street,
London  W1Y 8AR DO  HEREBY  absolutely  and  irrevocably  waive  all  right  and
entitlement  to the  dividend  of  (pound)2.227  per  Share  recommended  by the
Directors  and if  considered  fit,  to be approved  by the  Shareholders  at an
emergency general meeting of the Company to be held on October 1998.

DATED this           day of October 1998



SIGNED as a DEED           )
by the said GERARD DENIS   )
PATRICK O'ROURKE           )
in the presence of:-

Witness:

Signature _______________________

Name_____________________________

Address__________________________

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

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

Occupation_______________________



                                       93
<PAGE>


                                   ANNEXURE C



                                                            COMPANY NO: 02743684

                              SUNBELT (UK) LIMITED

                          ADJUSTMENTS TO FINAL ACCOUNTS
                  YEAR ENDED 30TH JUNE 1998 (PER CLAUSE 2.7.3)

Pre-Tax Profit per audited Profit and Loss Accounts               (pound)437,518

Profit effect of Credit Notes raised after Balance Sheet date     ((pound)3,000)

Adjustment of Advertising Prepayment
Relating to advertisements in July and August 1998                ((pound)6,000)

Additional Audit Accrual per Windsor Stebbing Marsh               ((pound)2,000)

Correction to PAYE Control Account                                ((pound)2,000)

                                                                  (POUND)424,518

The following have been agreed as  incorporated  into the Accounts And shall not
be further adjusted for the purposes of clause 2.7.4:

(a).     Increased purchases in trading account in respect of costs relating
         to (pound)41,000 sales adjustment previously made.  This reduced
         profits and increased trade creditors                   ((pound)35,099)

(b).     Removed management charge following receipt of Credit Note from
         P.C. Wise Inc.  This increased profits and increased the debtor due
         From P.C. Wise Inc.                                       (pound)25,034



               ADJUSTMENTS TO BOOK VALUE AMOUNT (PER CLAUSE 2.8.3)


It is agreed that none of the costs  associated  with the move of the  Company's
business to Strudwick House including decorating,  furnishing,  moving costs and
installation  costs shall be deductible  under any  circumstances in determining
the Book Value Amount.



                                       94
<PAGE>


                                   ANNEXURE D


                                SERVICE CONTRACT


THIS AGREEMENT is made the _____ day of _______________, 1998

BETWEEN:

(1)      EUROPEAN  MICRO  HOLDINGS INC. a company  incorporated  in the State of
         Nevada  (United  States of  America)  with the State of Nevada file no.
         28914-1997 and having its place of business at 6073 NW 167 Street, Unit
         C-25, Miami, Florida 33015 United States of America (the "Employer")

(2)      MICHAEL CHARLES GESNER of c/o Arthur  Andersen,  Corporate  Service PTE
         Ltd, 10 Hoe Chiang Road, # 18-00 Keppel Towers,  Singapore  089315 (the
         "Executive")

IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

         1.1   In this Agreement the following words and expressions  shall have
               the following meanings:


               "the Board"                     means  the   Board   of Directors
                                               of the  Employer and includes any
                                               committee   of  the  Board   duly
                                               convened by it

               "the Commencement Date"         means the        day of      1998


               "the Company"                   Sunbelt (UK) Limited

               "EM Group Company"              means   the   Employer   and  any
                                               company  which is a subsidiary or
                                               affiliate of the Company

               "the Employment"                means  the employment established
                                               by this Agreement

               "Intellectual Property"         means   (i)   every     invention
                                               discovery  design or  improvement
                                               (ii)    every   work   in   which
                                               copyright may subsist,  and (iii)
                                               moral  rights as  defined by s 77
                                               and s 80 of the Copyright  Design
                                               and Patents Act 1988.


                                       95
<PAGE>

               "$"                             means  dollars  of   the   United
                                               States of America

               "the Sale Agreement"            means   a   contract   made   the
                                               day of October  1998  between the
                                               Executive and European Micro Plc.


               "the Termination Date"          means the termination date of the
                                               Employment  under this  Agreement
                                               howsoever terminated.


         1.2   The   headings   in  this   Agreement   shall  not   affect   its
               interpretation or construction.

         1.3   Any  reference  in  this  Agreement  to any  statutory  provision
               includes any statutory  modification or re-enactment of it or the
               provision referred to.

2.       EMPLOYMENT

The  Employer  shall employ the  Executive  and the  Executive  agrees to act as
Managing  Director of the Asian  subsidiary  and as a Director of the Company or
any EM Group Company on the terms set out in this Agreement.

3        FREEDOM TO TAKE UP THE APPOINTMENT

The Executive  warrants  that by virtue of entering into this  Agreement he will
not be in breach of any express or implied terms of any contract or of any other
obligation binding upon him.

4.       PERIOD

The Executive's Employment shall commence with effect from the Commencement Date
and shall  (subject as  hereinafter  provided) be for an initial fixed term of 2
years and 3 months and shall  continue  thereafter  until  terminated  by either
party giving to the other not less than 6 months' written notice to expire on or
any time after the expiry date for the initial fixed term.

5.       DUTIES OF THE APPOINTMENT

         5.1      The Executive  shall  faithfully and diligently  perform those
                  duties of his appointment and exercise such powers  consistent
                  with them which are from time to time assigned to or vested in
                  him and shall use his best endeavours to promote the interests
                  of the  Employer  and any EM  Group  Company  for  which he is
                  required to perform duties.

         5.2      The Executive shall (without further  remuneration) if and for
                  so long as the Executive is so required by the Company:


                                       96
<PAGE>

                  (i)   carry out the duties of his appointment on behalf of any
                        EM Group Company

                  (ii)  act as a  director  of any EM Group  Company or hold any
                        other appointment or office as nominee or representative
                        of the Employer or any EM Group Company

                  (iii) carry out such  duties and the duties  attendant  on any
                        such  appointment as if they were duties to be performed
                        by him on behalf of the Company.

         5.3.     Carry out his  primary  duties to achieve so far as he is able
                  the  targets  set out in the  Sale  Agreement  for  the  Asian
                  Subsidiary as defined therein.

6.       OBEDIENCE AND REPORTING

The Executive  shall obey all lawful and reasonable  directions of the Board and
at all times  keep the Board  promptly  and fully  informed  (in  writing  if so
requested)  of his conduct of the  business or affairs of the Company and any EM
Group Company and provide such explanations as the Board may require.

7.       DEVOTION TO DUTIES

         7.1      The Executive shall during the term of this Employment  devote
                  substantially  the whole of his time,  attention and abilities
                  to the business and affairs of the Company unless prevented by
                  ill  health  from so doing and with the  exception  of PC Wise
                  Inc. shall not during the Employment either on his own account
                  or as the  Company  of  others  or  otherwise  be  engaged  or
                  concerned  in any  business  other than that of the Company or
                  any EM Group Company or accept any other  engagement or public
                  office except with the prior consent in writing of the Company
                  but the  Executive  may  nevertheless  be or become a minority
                  holder  of any  securities  which are  quoted on a  recognized
                  investment exchange.

         7.2      The  Executive   shall  not  be  prevented   from  having  any
                  shareholding  in a  company  which  exists at the date of this
                  Contract.

         7.3      The  Executive  will be allowed to become a  Shareholder  in a
                  company which does not directly or indirectly compete with the
                  Company or any EM Group Company provided that consent is first
                  obtained  from the Company in writing  such  consent not to be
                  unreasonably withheld.

8.       COMPLIANCE/DEALINGS IN "SECURITIES"

The Executive  shall during his  Employment and for twelve (12) months after the
termination of his  Employment  comply and shall procure that his minor children


                                       97
<PAGE>

shall  comply  with all  applicable  rules  of law,  any  recognized  investment
exchange  regulations  including the "Model Code for Securities  Transactions by
Directors of Listed Companies' issued by the International Stock Exchange of the
United Kingdom and the Republic of Ireland Limited and any Company policy issued
in relation to dealings in shares, debentures or other securities of the Company
and  any  EM  Group  Company  or any  unpublished  price  sensitive  information
affecting the securities of any other company.

9.       COMPLIANCE/PROPER USE OF FUNDS

         9.1      The  Executive  shall  not use  any  funds  for  any  unlawful
                  contribution,   endorsement,   gift,  entertainment  or  other
                  unlawful expense relating to political  activity,  or make any
                  direct or indirect unlawful payment to any foreign or domestic
                  government  official  or  employee  and shall  comply with the
                  United States  Foreign  Corrupt  Practices Act of 1977 and any
                  other applicable law of the United States or any other country
                  in which the Executive is conducting business on behalf of the
                  Company or any of its  subsidiaries or affiliates  relating to
                  improper payments to governmental representatives.

         9.2      Failure  to comply  with  clause  9.1 shall  constitute  gross
                  misconduct and may result in the termination of the Executives
                  contract of employment in accordance with clause 23 hereto.

10.      PLACE OF WORK

         10.1     The Executive shall work in Singapore for a period of one year
                  from the date  hereof and  thereafter  in such place as may be
                  agreed.

11.      HOURS OF WORK

There are no normal fixed  working  hours for the  Employment.  The Executive is
expected to work at such times as the efficient and  conscientious  discharge of
his duties hereunder requires.

12.      REMUNERATION

         12.1     During  the   Employment   the  Executive   shall  receive  as
                  remuneration  a basic  salary at the rate of $50,000 per annum
                  to be paid by equal  monthly  installments  on the last day of
                  each calendar  month.  Any increase in  remuneration  shall be
                  notified in writing to the Executive  and the details  thereof
                  shall be entered in the table in  Schedule 1 to the  Company's
                  signed copy of this  Agreement  and initialed by an officer of
                  the Company.

         12.2     In addition to the basic salary, the Executive shall receive a
                  bonus at a rate of 0.5% of the  level of  purchases  by any EM
                  Group  Company for which the Executive is  responsible  of Non


                                       98
<PAGE>

                  Nova Products. For the first six months of this Agreement, the
                  Company  guarantees the payment of $2,000 per month in bonuses
                  to the  Executive.  All  bonuses  shall be payable  monthly in
                  arrears.  To be eligible for bonuses the Executive  must still
                  be in service and not under notice of termination.

         12.3     The   remuneration,   bonuses  and  allowances   shall  unless
                  otherwise  by agreement in writing by the Company be inclusive
                  of any fees or other  remuneration  which the Executive  would
                  otherwise  be entitled  to receive  from the Company or any EM
                  Group Company in connection with the performance of the duties
                  delegated to him under this Agreement.

         12.4     The provisions of this clause shall be reviewable  annually by
                  agreement.

13.      ALLOWANCES

         13.1     During the  employment  the Executive  shall receive a Housing
                  Allowance  of $6,000  per month for the first  four  months of
                  this  Agreement and $4,000 per month for the  following  eight
                  months  of this  Agreement  and  thereafter  for so long as he
                  shall be required by the Board to reside in Singapore.

         13.2     In  addition  to the above,  the  Executive  shall  receive an
                  Education  Allowance of up to $28,000 per annum for so long as
                  he  shall  have  children  in  education  in  Singapore,   the
                  Education  Allowance  payable  shall  not  exceed  $14,000  in
                  respect of any one (1) child of the Executive.

         13.3     The  Company  shall  pay for the air  fares  of the  Executive
                  and/or his family up to $13,044 together with the costs of one
                  round  trip for the  Executive  and his family to and from the
                  United States or Europe per year.

14.      CAR

         14.1     The  Executive  shall  receive a car  allowance  of $3,000 per
                  month to provide a motor vehicle for his use in performing his
                  duties.   The  Executive   shall  maintain   service  tax  and
                  comprehensively  insure the car as appropriate  and shall bear
                  all running expenses of the car including fuel consumed during
                  private use of the car. The Executive shall ensure that he has
                  at all times a current  valid  license to drive  private motor
                  cars.

15.      EXPENSES

         15.1     In addition to his basic salary  hereunder the Executive shall
                  be reimbursed the amount of all reasonable  traveling,  hotel,
                  entertainment  and other  expenses  properly  and  necessarily
                  incurred  and  defrayed by him in the  discharge of his duties


                                       99
<PAGE>

                  hereunder (including "professional fees"). The Executive shall
                  produce to the Company at its request all supporting  vouchers
                  and  documents in respect of such  expenses.  The Company will
                  also pay any telephone  expenses  incurred by the Executive in
                  relation to this  Contract of  Employment  upon  production of
                  supporting bills in respect of such expenses.

         15.2     The  Executive  shall  be  entitled  to claim  his  reasonable
                  removal expenses  incurred  pursuant to this Agreement.  Up to
                  $10,000  and  shall  be  payable  upon  the  provision  by the
                  Executive of receipts in respect of such expenses.

16.      PENSION AND OTHER BENEFITS

         16.1     No  pension  contributions  shall  be paid by the  Company  on
                  behalf  of  the  Executive.  The  Executive  will  however  be
                  entitled  to  private  health  insurance  for the  benefit  of
                  himself, his spouse and his children,  if any, during the term
                  of this Agreement.

         16.2     The Company shall pay the  Executive's  current life assurance
                  policy, such policy to continue for two years, the proceeds of
                  such policy to be for the benefit of the Executive's family or
                  estate,  and the  Company  and the  Executive  shall  take all
                  necessary  actions and enter into all necessary  documentation
                  to ensure that such is the case so that the Company shall have
                  no liability to make any payments other than in respect of any
                  proceeds  of the said  policy  as  received  by it (and  after
                  making due allowance for any liability to tax on any sum which
                  the Company have so received).

         16.3     The  Executive  shall  have the right to  subscribe  for up to
                  5,000 EMCC Shares as defined in the Agreement at the mid-price
                  for the same on  NASDAQ at the date of this  agreement  at any
                  time after 3 years.  This option shall lapse if the  Executive
                  shall terminate this agreement before the option is exercised.

17.      HOLIDAYS

         17.1     The  Executive  shall be entitled  (in addition to normal bank
                  and other public holidays) to twenty (20) days paid holiday in
                  each calendar year at such times as shall be convenient to the
                  Company  and  such  additional  holidays  as the  Board  shall
                  approve.

         17.2     The  Executive  shall not be  entitled  to carry  forward  any
                  unused holiday  entitlement  from one holiday year to the next
                  without the written consent of the Company.


                                      100
<PAGE>



18.      SICKNESS OR INJURY

         18.1     The Executive agrees that at any time during the course of the
                  Employment  he shall at the  request  of the  Employer  submit
                  himself  to a  medical  examination  by a  registered  medical
                  practitioner  nominated by the  Employer.  The purpose of such
                  medical  examination  shall be to determine  whether there are
                  any matters  which  might  impair the  Executive's  ability to
                  perform his duties under this  Agreement and  accordingly  the
                  Executive  shall give such  authority  as is required  for the
                  Company's  nominated  doctor to disclose to the  Employer  the
                  findings.  All expenses  associated  with obtaining the report
                  will be borne by the Employer.

         18.2     In the event  that the  Executive  is unable  to  perform  his
                  duties  under this  Agreement  by reason of sickness or injury
                  for a period of seven (7) days or more, the Executive shall if
                  required to do so by the Employer  provide the Employer with a
                  medical  certificate  in  respect  of the whole  period of the
                  absence.  Immediately  following his return from any period of
                  absence the Executive shall complete a self-certification form
                  detailing the reason for the absence.

         18.3     During the Executive's first ten (10) weeks of absence he will
                  receive ninety  percent (90%) of his average  weekly  earnings
                  calculated  by  taking  the  total  of his  earnings  over the
                  previous  twelve  months  and  dividing  the same by fifty two
                  (52).  At the end of such ten (10)  week  period  any  further
                  payment will only be made to the  Executive at the  discretion
                  of the Board.

         18.4     The  Employer   shall  have  the  right  to  deduct  from  the
                  remuneration  paid to the Executive any statutory  sick pay or
                  other social  security  benefits which he is entitled to claim
                  in consequence of sickness or accident or payable to him under
                  any  scheme  for the time being in force of which by virtue of
                  his  employment  by  the  Employer  he  is a  non-contributory
                  member.

         18.5     In the event that the Executive is incapable of performing his
                  duties by reason of injury  sustained wholly or partially as a
                  result of  actionable  negligence  or breach of any  statutory
                  duty on the part of any third party all  payments  made to the
                  Executive by the Employer by way of remuneration  shall to the
                  extent that  compensation is recoverable from that third party
                  constitute   loans   by   the   Company   to   the   Executive
                  (notwithstanding  that as an  interim  measure  income tax has
                  been  deducted  from  payments as if they were  emoluments  of
                  employment)  and shall be repaid  when and to the extent  that
                  the Executive recovers  compensation for loss of earnings from
                  that third party by action or otherwise.

         18.6     The  Company  will  maintain  on behalf of the  Executive  the
                  permanent  health  insurance  scheme currently in place during
                  the term of this Agreement.


                                      101
<PAGE>

19.      CONFIDENTIALITY

The Executive  shall not,  either during the  Employment,  otherwise than in the
proper course of his duties,  or  thereafter,  without the consent in writing of
the Employer being first  obtained,  use directly or indirectly,  divulge to any
person,  firm or company and shall during the  continuance of the Employment use
his best endeavours to prevent the publication, disclosure or non-authorized use
of any  confidential  information of the Employer or any EM Group Company or any
of its or their secrets, dealings or transactions whatsoever which may have come
or may come to his  knowledge  during his  Employment or previously or otherwise
and which include but are not limited to the following matters:

                  (i)      the working of any manufacturing process or invention
                           or any other  methods,  formulae,  technical data and
                           know-how  used by or which  relate to the business of
                           the Employer or any EM Group Company;

                  (ii)     lists of  customers  and  potential  customers  or of
                           suppliers and potential suppliers to the Employer and
                           any  EM  Group  Company  and  any  other  information
                           collected by the Company and any EM Group  Company in
                           relation to those customers or suppliers;

                  (iii)    the  dealings  or   transactions  or  other  business
                           affairs of the  Employer or any EM Group  Company and
                           its or their finances or management accounts.

The  restriction  shall cease to apply to  information  or  knowledge  which may
(otherwise than by reason of the default of the Executive ) become  available to
the public  generally  without  requiring a significant  expenditure  of labour,
skill or money.

20.      INTELLECTUAL PROPERTY

         20.1     The Executive shall  forthwith  communicate to the Employer in
                  confidence all  intellectual  property which the Executive may
                  make or  originate  either  solely or jointly  with another or
                  others  during  the  Employment  (hereinafter  referred  to as
                  "Intellectual Property").

         20.2     In the  case  of  such  Intellectual  Property  as is  made or
                  originated  hereunder wholly or substantially in the course of
                  his  normal  duties or in the  course  of duties  specifically
                  assigned  to  him  and  which  relate  to the  affairs  of the
                  Employer or any EM Group Company the  following  subclauses of
                  this clause shall apply.

         20.3     Such Intellectual Property (or in the case of the Intellectual
                  Property  made or  originated  by the  Executive  jointly with
                  another  or  others  to the  full  extent  of the  Executive's
                  interest therein so far as the law allows) shall be and become


                                      102
<PAGE>

                  the  exclusive  property  of the  Employer  and  shall  not be
                  disclosed  to any other  person,  firm or company  without the
                  consent of the Employer  being  previously  obtained  which if
                  given may be subject to  conditions.  The  provisions  of this
                  subclause shall not entitle the Executive to any  compensation
                  beyond the salary  hereinafter  mentioned  except  that in the
                  case of any  invention  on  which a  British  Patent  has been
                  granted or  assigned  to the  Employer  and the  Employer  has
                  derived  outstanding  benefit from such patent,  the Executive
                  may be entitled by virtue of s 40 of the Patents Act 1977.

         20.4     The  Executive  shall if and when required by the Employer and
                  at the expense of the  Employer do and/or  combine with others
                  in doing all acts and sign and  execute all  applications  and
                  other  documents  (including  Powers of  Attorney in favour of
                  nominees of the Company) necessary or incidental to obtaining,
                  maintaining  or extending  patent or other forms of protection
                  for such Intellectual Property in the UK and in any other part
                  of the world or for transferring to or vesting in the Employer
                  or its  nominees  the  Executive's  entire  right,  title  and
                  interest to and in such Intellectual Property or to and in any
                  application,  patent or other form of  protection to copyright
                  as the case may be including the right to file applications in
                  the name of the  Company or its  nominees  for patent or other
                  forms of  protection or for  registration  of copyright in any
                  country  claiming  priority  from  the date of  filing  of any
                  application  or other date from which  priority may run in any
                  other country.

         20.5     The  provisions  of this clause shall remain in full force and
                  effect  notwithstanding  that after the  Executive has made or
                  originated any such  Intellectual  Property the Employment may
                  have ceased or been determined for any reason  whatsoever with
                  the  intention  that the same  shall  bind the  heirs of an/or
                  assigns of the Executive.

21.      COPYRIGHT

The  Executive  shall  promptly  disclose  to the  Employer  all  works in which
copyright or design  rights may exist which the  Executive may make or originate
either solely or jointly with others during the  Employment.  Any such copyright
works or designs created by him in the normal course of his Employment or in the
course of carrying out duties  specifically  assigned to him which relate to the
affairs of the Employer shall be the property of the Employer whether or not the
work was made by  direction  of the Company or was intended for the Employer and
the  copyright  in it and the rights in any design  shall belong to the Employer
and to the extent that such copyright or design rights are not otherwise  vested
in the Employer the Executive hereby assigns the same to the Employer.

22.      POST-TERMINATION OBLIGATIONS

         22.1     The  Executive  shall not during  the period of 2 years  after
                  termination of the  Employment  solicit or endeavour to entice
                  away from or discourage  from being employed by the Company or

                                      103
<PAGE>

                  any EM Group Company any employee or director  employed by the
                  Company or any EM Group  Company and who to his  knowledge was
                  an employee thereof at the date of such termination or whom to
                  his  knowledge  has at that date  agreed to be  engaged  as an
                  employee of the Company or any EM Group  Company and with whom
                  the Executive has dealt or had contact in the normal course of
                  his duties.

         22.2     The  Executive  shall not for a period  of 6 months  after the
                  termination of the Employment (without the previous consent in
                  writing of the  Company) and whether on his own account or for
                  any other person,  firm or company directly in connection with
                  any business similar to or in competition with the business of
                  the  Company  solicit  or  endeavour  to entice  away from the
                  Company  any  person,  firm or company (a) who or which in the
                  twelve (12) months  prior to the end of his  Employment  shall
                  have been a customer  of or in the habit of  dealing  with the
                  Company and (b) with whom or which the  Executive had personal
                  dealings  in the course of his  employment  in the twelve (12)
                  months prior to the end of his Employment.

         22.3     The  Executive  shall not for a period  of 6 months  after the
                  termination of his Employment (without the previous consent in
                  writing of the  Company) and whether on his own account or for
                  any other  person,  firm or company  directly or indirectly in
                  connection with any business similar to or in competition with
                  the  business  of the  Company do any  business  with,  accept
                  orders from,  or have any business  dealings  with any person,
                  firm or  company  (a) who or which in the twelve  (12)  months
                  prior  to the  end of his  Employment  was a  customer  of the
                  Company and (b) with whom or which the  Executive had personal
                  dealings  in the course of his  Employment  in the twelve (12)
                  months prior to the end of his Employment.

         22.4     The  Executive  shall not for a period  of 6 months  after the
                  termination  of his  Employment  and within the United Kingdom
                  (without  the  previous  consent in  writing  of the  Company)
                  directly or  indirectly  be engaged  concerned  or  interested
                  (whether  as   principal,   servant,   agent,   consultant  or
                  otherwise)  in any trade or business  which is in  competition
                  with any trade or business  being carried on by the Company at
                  the end of the  Employment  or during a period of twelve  (12)
                  months prior to the end of his  Employment  and with which the
                  Executive  was  concerned  in the  course  of his  Employment,
                  provided  always that during such 6 month  period the Employer
                  will pay the Executive a further 6 month salary and bonus even
                  though  his  Employment  has  been   terminated  but  only  in
                  circumstances  where no summary  termination  has  occurred in
                  accordance  with Clause 22 of this Agreement and the Executive
                  is not in  breach of the  covenants  contained  in Clause  20.
                  Bonuses will be  calculated by dividing the previous 12 months
                  bonus total by 12.


                                      104
<PAGE>

         22.5     The Executive shall not at any time after the Termination Date
                  represent  himself as being  employed by or connected with the
                  Employer or any EM Group Company.

         22.6     The Executive acknowledges:

                  (i)    that each of the  foregoing  subclauses  of this clause
                         constitutes  an  entirely   separate  and   independent
                         restriction on him; and

                  (ii)   while  at the  date of  this  Agreement  the  duration,
                         extent and application of each of the  restrictions are
                         considered  by the parties no greater than is necessary
                         for the protection of the interests of the Employer and
                         any  EM  Group  Company  and   reasonable  in  all  the
                         circumstances it is acknowledged  that  restrictions of
                         such a nature may become  invalid  because of  changing
                         circumstances   and   accordingly   if   any   of   the
                         restrictions   shall   be   adjudged   to  be  void  or
                         ineffective  for whatever  reason but would be adjudged
                         to be  valid  and  effective  if  part  of the  wording
                         thereof were deleted or the periods  thereof reduced or
                         the area thereof reduced in scope they shall apply with
                         such  modifications  as may be  necessary  to make them
                         valid and effective.

23.      DELIVERY OF DOCUMENTS AND PROPERTY

The  Executive  shall  upon  request  at any  time  and in any  event  upon  the
termination of the Executive's Employment immediately deliver up to the Employer
or its authorized representative all keys, security passes, credit cards, plans,
statistics,  documents, records, papers, magnetic disks, tapes or other software
storage  media  and  all  property  of  whatsoever  nature  which  may be in his
possession  or  control  or relate  in any way to the  business  affairs  of the
Company or any EM Group Company and the Executive shall not, without the written
consent of the Company, retain any copies thereof.

24.      REMEDIES

It is expressly  agreed by the Executive and the Employer that the provisions of
clauses 17, 18, 19, 20 and 21 are  reasonable for purposes of preserving for the
Employer its business,  goodwill and proprietary  information.  In the event any
breach of the aforementioned  provisions by the Executive, the parties recognize
and  acknowledge  that a remedy at law will be  inadequate  and the  Company may
suffer irreparable  injury.  The Executive  acknowledges that the services to be
rendered by him are of a character giving them peculiar value, the loss of which
cannot be  adequately  compensated  for in damages;  accordingly  the  Executive
consents  to  injunctive  and  other  appropriate   equitable  relief  upon  the
institution  of  proceedings  therefor  by the  Employer in order to protect the
Employer's rights. Such relief shall be in addition to any other relief to which
the Employer may be entitled at law or in equity.


                                      105
<PAGE>

25.      SUMMARY TERMINATION

In any of the  following  cases  the  Employer  may  terminate  the  Executive's
Employment  by written  notice taking effect on the date of its service in which
case the  Executive  shall  not be  entitled  to any  further  payment  from the
Employer except such sums as shall then have accrued due;

                  (i)    if  the   Executive   shall  be  guilty  of  any  gross
                         misconduct  or any repeated  breach of any of the terms
                         of this Agreement;

                  (ii)     if the  Executive  shall be  convicted  of a criminal
                           offense  (except  for a road  traffic  offense  or an
                           offense not involving a custodial sentence);

                  (iii)    if the  Executive  be adjudged  bankrupt or makes any
                           composition  or enters  into any deed of  arrangement
                           with his creditors;

                  (iv)   if the  Executive  is  prohibited  by law from being or
                         acting as a director;  if the Executive shall become of
                         unsound  mind or  become a  patient  under  the  Mental
                         Health Act 1983;

                  (v)    if the  Executive  resigns as a director of the Company
                         otherwise than at the request of the Company

26.      NO RIGHT TO WORK

         26.1     The Employer  shall be under no obligation to provide any work
                  for the Executive  during any period of notice either given by
                  the Company or the  Executive  to  terminate  the  Executive's
                  Employment  under this Agreement.  The Company may at any time
                  during  the  said  period   suspend  the  Executive  from  his
                  Employment  or exclude him from any premises of the  Employer.
                  Provided that during such period the Executive  shall continue
                  to receive salary and all other contractual benefits.

         26.2     If the Contract is  terminated  by notice in  accordance  with
                  Clause 4 then the period  referred  to in Clause  20.1 to 20.4
                  shall start to run from the date of such notice.  This proviso
                  will not apply should the Contract be terminated in accordance
                  with Clause 23.

27.      SHORT NOTICE

If the Executive  shall at any time become or be unable  properly to perform his
duties  hereunder by reason of ill health  accident or otherwise for a period or
periods  aggregating  at least one  hundred  eighty  (180) days in any period of
twelve (12)  consecutive  calendar months the Company may by not less than three
(3) month's notice in writing determine this Agreement.



                                      106
<PAGE>

28.      RESIGNATION OF OFFICE

Upon the  termination of the Employment the Executive  shall at any time or from
time to time thereafter upon the request of the Company resign without claim for
compensation  from  all  offices  held by him in the  Company  and any EM  Group
Company and should he fail to do so the Company is hereby irrevocably authorized
to appoint  some  person in his name and on his behalf to sign and  execute  all
documents or things necessary or requisite to give effect thereto.

29.      RETIREMENT

The Employment shall automatically  terminate on the Executive reaching his 65th
birthday.

30.      PRIOR RIGHTS

The termination of the Employment  shall be without  prejudice to any right that
the  Company  may have in respect of any breach by the  Executive  of any of the
provisions  of  this   Agreement   which  may  have   occurred   prior  to  such
determination.

31.      NOTICES

Any notice given under this Agreement shall be deemed to have been duly given if
dispatched  by either party  hereto by  registered  post  addressed to the other
party in the case of the Company to its registered office for the time being and
in the case of the  Executive to his last known address and such notice shall be
deemed to have been given on the day on which in the ordinary  course of post it
would be delivered.

32.      PRIOR AGREEMENTS

This  Agreement  is in  substitution  for all previous  contracts of  employment
express or implied  between  the Company or EM Group  Company and the  Executive
which  shall be deemed to have been  terminated  by mutual  consent  as from the
Commencement Date.

33.      DISCIPLINARY AND GRIEVANCE PROCEDURE

There  are no fixed  rules  for the  resolution  of  grievance  or  disciplinary
problems.  In the event of the Executive  being  dissatisfied  with any decision
taken against him, or have any grievance  relating to the Employment,  he should
apply in the first instance to the Chairman of the Board who will either propose
a solution or refer the matter to the Board for a final decision.

34.      RECONSTRUCTION OR AMALGAMATION

If before the  termination of this Agreement the Employment  shall be determined
by reason of the  liquidation of the Company for the purposes of  reconstruction

                                      107
<PAGE>

or amalgamation  and the Executive shall be offered  employment with any concern
or undertaking  resulting from such  reconstruction or amalgamation on terms and
conditions no less favorable than the terms of this Agreement then the Executive
shall have no claim against the Company in respect of the  determination  of the
Employment.

35.      EMPLOYMENT RIGHTS ACT 1996

Schedule  2 to  this  Agreement  sets  out the  particulars  of  employment  not
contained in the  Agreement  that must be given to the  Executive in  accordance
with the terms of the said Employment Right Act 1996.

36.      JURISDICTION AND LAW

This  contract  shall be  construed  according to English law whose Courts shall
have non-exclusive jurisdictions.




                                      108

<PAGE>


                                   SCHEDULE 1

                            TABLE OF SALARY INCREASES


                                      Date of
 Current         Increase           commencement     New salary        Signed
 salary                            of new salary







                                      109
<PAGE>


                                   SCHEDULE 2

                           EMPLOYMENT RIGHTS ACT 1996


The following  information is given to supplement the  information  given in the
Agreement  in  order  to  comply  with  the  requirements  of  section  1 of the
Employment Rights Act of 1996.

1.       The Executive's job title is Managing  Director of the Asian subsidiary
         and  Director of the  Company or any EM Group  Company on the terms set
         out in this Agreement

2.       The  Executive's  continuous  period  of  employment  with the  Company
         commenced  on the date hereof and is not  continuous  with any previous
         period of employment with any other Company.

3.       There are no collective  agreements in force which affect the terms and
         conditions of the Executive's employment.

4.       There is no Pension Provision applicable to the employment.




                                      110
<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement as a Deed the
day and year first above written.


Signed by                  )
for and on behalf of the   )
Company                    )







Signed by the Executive    )
                           )
                           )





                                      111
<PAGE>


                                SERVICE CONTRACT


THIS AGREEMENT is made the ____ day of ________________, 1998

BETWEEN:

(1)      EUROPEAN MICRO PLC  (registered  number  2663964) having its registered
         office at Market Court, 20-24 Church Street, Altrincham,  Cheshire WA14
         4DW (the "Company")

(2)      GERARD DENIS PATRICK  O'ROURKE of 16 William Road,  Wimbledon,  London,
         SW19 3PL (the "Executive")



IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

         1.1. In this Agreement the following words and  expressions  shall have
the following meanings:

              "the Agreement"           Means a contract between the Company and
                                        the  Executive and M. Gesner dated _____
                                        day of _________

              "the Board"               means  the  Board  of  Directors  of the
                                        Company and  includes  any  committee of
                                        the Board duly convened by it

              "the Commencement Date"   means the ____ day of __________, 1998

              "Sunbelt"                 means Sunbelt (UK) Limited

              EM Group Company"         means the Company and any Company  which
                                        is a  subsidiary  or  affiliate  of  the
                                        Company

              "the Employment"          means the employment established by this
                                        Agreement

              Intellectual Property"    means   (i)  every  invention  discovery
                                        design or improvement (ii) every work in
                                        which  copyright may subsist,  and (iii)
                                        moral rights as defined by s 77 and s 80
                                        of the Copyright  Design and Patents Act
                                        1988.

              "Nova Products"           Shall  have the same  meaning  as in the
                                        Agreement


                                      112
<PAGE>

             "the Termination Date"     means  the  termination  date  of    the
                                        Employment    under    this    Agreement
                                        howsoever terminated.

         1.2.  The   headings   in  this   Agreement   shall  not   affect   its
               interpretation or construction.

         1.3.  Any  reference  in  this  Agreement  to any  statutory  provision
               includes any statutory  modification or re-enactment of it or the
               provision referred to.

2.       EMPLOYMENT

The Company shall employ the  Executive and the Executive  also agrees to act as
Managing Director of Sunbelt on the terms set out in this Agreement.

3.       FREEDOM TO TAKE UP THE APPOINTMENT

The Executive  warrants  that by virtue of entering into this  Agreement he will
not be in breach of any express or implied terms of any contract or of any other
obligation binding upon him.

4.       PERIOD

The Executive's Employment shall commence with effect from the Commencement Date
and shall  (subject as  hereinafter  provided) be for an initial fixed term of 2
years and 3 months and shall  continue  thereafter  until  terminated  by either
party giving to the other not less than 6 months' written notice to expire on or
any time after the expiry date for the initial fixed term.

5.       DUTIES OF THE APPOINTMENT

         5.1.     The Executive  shall  faithfully and diligently  perform those
                  duties of his appointment and exercise such powers  consistent
                  with them which are from time to time assigned to or vested in
                  him and shall use his best endeavours to promote the interests
                  of Sunbelt  and any EM Group  Company for which he is required
                  to perform duties.

         5.2. The Executive shall (without  further  remuneration) if and for so
long as the Executive is so required by the Company:

         (i)   carry out the duties of his appointment on behalf of any EM Group
               Company

         (ii)  act as a  director  of any EM Group  Company  or hold  any  other
               appointment or office as nominee or  representative of Sunbelt or
               any EM Group Company.

         (iii) carry  out  such  duties  and the  duties  attendant  on any such
               appointment  as if they  were  duties to be  performed  by him on
               behalf of the Company.



                                      113
<PAGE>

         5.3   Use his  reasonable  endeavours to achieve the targets set out in
               the Agreement.

6.       OBEDIENCE AND REPORTING

The Executive  shall obey all lawful and reasonable  directions of the Board and
at all times  keep the Board  promptly  and fully  informed  (in  writing  if so
requested) of his conduct of the business or affairs of Sunbelt and any EM Group
Company and provide such explanations as the Board may require.

7.       DEVOTION TO DUTIES

         7.1.     The Executive shall during the term of this Employment  devote
                  substantially  the whole of his time,  attention and abilities
                  to the business and affairs of Sunbelt unless prevented by ill
                  health  from so doing  and  shall not  during  the  Employment
                  either  on his own  account  or as the  employer  of others or
                  otherwise be engaged or  concerned in any business  other than
                  that of  Sunbelt  or any EM Group  Company or accept any other
                  engagement  or public  office except with the prior consent in
                  writing of the Company but the Executive may  nevertheless  be
                  or become a minority holder of any securities which are quoted
                  on a recognized investment exchange.

         7.2.     The  Executive   shall  not  be  prevented   from  having  any
                  shareholding  in a  company  which  exists at the date of this
                  Contract.

         7.3.     The  Executive  will be allowed to become a  Shareholder  in a
                  company  which does not  directly or  indirectly  compete with
                  Sunbelt or any EM Group Company provided that consent is first
                  obtained  from the Company in writing  such  consent not to be
                  unreasonably withheld.

8.       COMPLIANCE/DEALINGS IN "SECURITIES"

The Executive  shall during his  Employment and for twelve (12) months after the
termination of his  Employment  comply and shall procure that his minor children
shall  comply  with all  applicable  rules  of law,  any  recognized  investment
exchange  regulations  including the "Model Code for Securities  Transactions by
Directors of Listed Companies' issued by the International Stock Exchange of the
United Kingdom and the Republic of Ireland Limited and any Company policy issued
in relation to dealings in shares, debentures or other securities of the Company
and  any  EM  Group  Company  or any  unpublished  price  sensitive  information
affecting the securities of any other company.



                                      114
<PAGE>

9.       COMPLIANCE/PROPER USE OF FUNDS

         9.1      The  Executive  shall  not use  any  funds  for  any  unlawful
                  contribution,   endorsement,   gift,  entertainment  or  other
                  unlawful expense relating to political  activity,  or make any
                  direct or indirect unlawful payment to any foreign or domestic
                  government  official  or  employee  and shall  comply with the
                  United States  Foreign  Corrupt  Practices Act of 1977 and any
                  other applicable law of the United States or any other country
                  in which the  Executive  is  conducting  business on behalf of
                  Sunbelt or any of its  subsidiaries or affiliates  relating to
                  improper payments to governmental representatives.

         9.2      Failure  to comply  with  clause  9.1 shall  constitute  gross
                  misconduct and may result in the termination of the Executives
                  contract of employment in accordance with clause 23 hereto.

10.      PLACE OF WORK

         10.1.    The  Executive  shall  initially  work at the  offices  of the
                  Sunbelt at Strudwick  House,  Boundary  Business Park,  Church
                  Road,  Hitcham,  Surrey but the Executive shall if required to
                  do so work in such place or places  within a twenty  (20) mile
                  radius of said offices as the Board may reasonably require for
                  the proper performance of his duties hereunder.

         10.2.    The Executive shall not be required  (except for travel on the
                  business  of  Sunbelt  or any EM Group  Company)  to reside in
                  other parts of the world.

11.      HOURS OF WORK

There are no normal fixed  working  hours for the  Employment.  The Executive is
expected to work at such times as the efficient and  conscientious  discharge of
his duties  hereunder  requires and it is hereby  agreed that the  provisions of
regulation 4 of the Working Time Regulations 1998 shall not apply.

12.      REMUNERATION

         12.1.    During  the   Employment   the  Executive   shall  receive  as
                  remuneration a basic salary at the rate of  (pound)50,000  per
                  annum to be paid by equal monthly installments on the last day
                  of each calendar month. Any increase in remuneration  shall be
                  notified in writing to the Executive  and the details  thereof
                  shall be entered in the table in  Schedule 1 to the  Company's
                  signed copy of this  Agreement  and initialed by an officer of
                  the Company.



                                      115
<PAGE>

         12.2.    The Executives  remuneration  takes into account any provision
                  for pension  payments  into which the  Executive may have been
                  entitled prior to the date of this Agreement.

         12.3.    In addition to the basic salary the  Executive  shall  receive
                  bonuses  equal to 3.75% of the  pre-tax  gross  profits of the
                  sale of Nova Products through Sunbelt. Such bonuses to be paid
                  monthly in arrears.

         12.4.    During the first six months of this  Agreement  the  Executive
                  shall be  guaranteed  bonus  payments of  (pound)1,666.00  per
                  month.  To be eligible for the bonus the Executive  must still
                  be in service and not under notice of termination  unless such
                  notice shall be wrongful or unfair.

         12.5.    The  remuneration and bonuses shall unless otherwise agreed in
                  writing  by the  Company  be  inclusive  of any  fees or other
                  remuneration  which the Executive  would otherwise be entitled
                  to  receive  from  the  Company  or any EM  Group  Company  in
                  connection with the performance of the duties delegated to him
                  under this Agreement.

         12.6.    The provisions of this clause shall be reviewable  annually by
                  agreement.

13.      CAR

         13.1.    The  Company  shall  pay  the  Executive  a car  allowance  of
                  (pound)8,235  per annum. In addition the Company shall pay for
                  all fuel  including  fuel consumed  during  private use of the
                  car.  The  Executive  shall  ensure that he has at all times a
                  current valid license to drive private motor cars.

         13.2.    The  Company  shall  provide  the  Executive   with  a  Mobile
                  Telephone and pay the rental and cost of calls.

14.      EXPENSES

In addition to his basic salary  hereunder the Executive shall be reimbursed the
amount of all  reasonable  traveling,  hotel,  entertainment  and other expenses
properly and  necessarily  incurred and defrayed by him in the  discharge of his
duties hereunder (including "professional fees"). The Executive shall produce to
the Company at its request all  supporting  vouchers and documents in respect of
such expenses.  The Company will also pay any telephone expenses incurred by the
Executive  in  relation  to this  Contract  of  Employment  upon  production  of
supporting bills in respect of such expenses.



                                      116
<PAGE>

15.      PENSION AND OTHER BENEFITS

         15.1     No  pension  contributions  shall  be paid by the  Company  on
                  behalf  of  the  Executive.  The  Executive  will  however  be
                  entitled  to  private  health  insurance  for the  benefit  of
                  himself his spouse and dependent children if any.

         15.2     The  Executive  shall  have the right to  subscribe  for up to
                  5,000 EMCC Shares as defined in the Agreement at the mid-price
                  for the same on  NASDAQ at the date of this  agreement  at any
                  time after 3 years.  This option shall lapse if the  Executive
                  shall terminate this agreement before the option is exercised.

16.      HOLIDAYS

         16.1.    The  Executive  shall be entitled  (in addition to normal bank
                  and other public holidays) to twenty (20) days paid holiday in
                  each  calendar  year at such times as shall be  convenient  to
                  Sunbelt  and  such  additional  holidays  as the  Board  shall
                  approve.

         16.2.    The  Executive  shall not be  entitled  to carry  forward  any
                  unused holiday  entitlement  from one holiday year to the next
                  without the written consent of the Company.

17.      SICKNESS OR INJURY

         17.1.    The Executive agrees that at any time during the course of the
                  Employment  he  shall at the  request  of the  Company  submit
                  himself  to a  medical  examination  by a  registered  medical
                  practitioner  nominated  by the  Company.  The purpose of such
                  medical  examination  shall be to determine  whether there are
                  any matters  which  might  impair the  Executive's  ability to
                  perform his duties under this  Agreement and  accordingly  the
                  Executive  shall give such  authority  as is required  for the
                  Company's  nominated  doctor to  disclose  to the  Company the
                  findings.  All expenses  associated  with obtaining the report
                  will be borne by the Company.

         17.2.    In the event  that the  Executive  is unable  to  perform  his
                  duties  under this  Agreement  by reason of sickness or injury
                  for a period of seven (7) days or more, the Executive shall if
                  required  to do so by the Company  provide the Company  with a
                  medical  certificate  in  respect  of the whole  period of the
                  absence.  Immediately  following his return from any period of
                  absence the Executive shall complete a self-certification form
                  detailing the reason for the absence.

         17.3.    During the Executive's first ten (10) weeks of absence he will
                  receive ninety  percent (90%) of his average  weekly  earnings
                  calculated  by  taking  the  total  of his  earnings  over the
                  previous  twelve  months  and  dividing  the same by fifty two
                  (52).  At the end of such ten (10)  week  period  any  further
                  payment will only be made to the  Executive at the  discretion
                  of the Board.



                                      117
<PAGE>

         17.4.    The   Company   shall  have  the  right  to  deduct  from  the
                  remuneration  paid to the Executive any statutory  sick pay or
                  other social  security  benefits which he is entitled to claim
                  in consequence of sickness or accident or payable to him under
                  any  scheme  for the time being in force of which by virtue of
                  his employment by the Company he is a non-contributory member.

         17.5.    In the event that the Executive is incapable of performing his
                  duties by reason of injury  sustained wholly or partially as a
                  result of  actionable  negligence  or breach of any  statutory
                  duty on the part of any third party all  payments  made to the
                  Executive by the Company by way of  remuneration  shall to the
                  extent that  compensation is recoverable from that third party
                  constitute   loans   by   the   Company   to   the   Executive
                  (notwithstanding  that as an  interim  measure  income tax has
                  been  deducted  from  payments as if they were  emoluments  of
                  employment)  and shall be repaid  when and to the extent  that
                  the Executive recovers  compensation for loss of earnings from
                  that third party by action or otherwise.

         17.6.    The  Company  will  maintain  on behalf of the  Executive  the
                  permanent  health  insurance  scheme currently in place during
                  the term of this Agreement.

18.      CONFIDENTIALITY

The Executive  shall not,  either during the  Employment,  otherwise than in the
proper course of his duties,  or  thereafter,  without the consent in writing of
the Company being first  obtained,  use directly or  indirectly,  divulge to any
person,  firm or company and shall during the  continuance of the Employment use
his best endeavours to prevent the publication, disclosure or non-authorized use
of any confidential information of Sunbelt or any EM Group Company or any of its
or their secrets, dealings or transactions whatsoever which may have come or may
come to his knowledge during his Employment or previously or otherwise and which
include but are not limited to the following matters:

         (i)      the working of any  manufacturing  process or invention or any
                  other methods,  formulae,  technical data and know-how used by
                  or which  relate to the  business  of  Sunbelt or any EM Group
                  Company;

         (ii)     lists of customers and potential customers or of suppliers and
                  potential  suppliers  to Sunbelt and any EM Group  Company and
                  any other  information  collected  by Sunbelt and any EM Group
                  Company in relation to those customers or suppliers;

         (iii)    the  dealings or  transactions  or other  business  affairs of
                  Sunbelt or any EM Group  Company and its or their  finances or
                  management accounts.


                                      118
<PAGE>

The  restriction  shall cease to apply to  information  or  knowledge  which may
(otherwise than by reason of the default of the Executive)  become  available to
the public  generally  without  requiring a significant  expenditure  of labour,
skill or money.

19.      INTELLECTUAL PROPERTY

         19.1.    The Executive  shall  forthwith  communicate to the Company in
                  confidence all  intellectual  property which the Executive may
                  make or  originate  either  solely or jointly  with another or
                  others  during  the  Employment  (hereinafter  referred  to as
                  "Intellectual Property").

         19.2.    In the  case  of  such  Intellectual  Property  as is  made or
                  originated  hereunder wholly or substantially in the course of
                  his  normal  duties or in the  course  of duties  specifically
                  assigned to him and which  relate to the affairs of Sunbelt or
                  any EM Group Company the  following  subclauses of this clause
                  shall apply.

         19.3.    Such Intellectual Property (or in the case of the Intellectual
                  Property  made or  originated  by the  Executive  jointly with
                  another  or  others  to the  full  extent  of the  Executive's
                  interest therein so far as the law allows) shall be and become
                  the  exclusive  property  of  the  Company  and  shall  not be
                  disclosed  to any other  person,  firm or company  without the
                  consent of the  Company  being  previously  obtained  which if
                  given may be subject to  conditions.  The  provisions  of this
                  subclause shall not entitle the Executive to any  compensation
                  beyond the salary  hereinafter  mentioned  except  that in the
                  case of any  invention  on  which a  British  Patent  has been
                  granted or assigned to the Company and the Company has derived
                  outstanding  benefit from such patent,  the  Executive  may be
                  entitled by virtue of s 40 of the Patents Act 1977.

         19.4.    The Executive shall if and when required by the Company and at
                  the  expense of the Company do and/or  combine  with others in
                  doing all acts and sign and execute all applications and other
                  documents  (including Powers of Attorney in favour of nominees
                  of  the  Company)   necessary  or   incidental  to  obtaining,
                  maintaining  or extending  patent or other forms of protection
                  for such Intellectual Property in the UK and in any other part
                  of the world or for  transferring to or vesting in the Company
                  or its  nominees  the  Executive's  entire  right,  title  and
                  interest to and in such Intellectual Property or to and in any
                  application,  patent or other form of  protection to copyright
                  as the case may be including the right to file applications in
                  the name of the  Company or its  nominees  for patent or other
                  forms of  protection or for  registration  of copyright in any
                  country  claiming  priority  from  the date of  filing  of any
                  application  or other date from which  priority may run in any
                  other country.

         19.5.    The  provisions  of this clause shall remain in full force and
                  effect  notwithstanding  that after the  Executive has made or

                                      119
<PAGE>

                  originated any such  Intellectual  Property the Employment may
                  have ceased or been determined for any reason  whatsoever with
                  the  intention  that the same  shall  bind the  heirs of an/or
                  assigns of the Executive.

20.      COPYRIGHT

The  Executive  shall  promptly  disclose  to the  Company  all  works  in which
copyright or design  rights may exist which the  Executive may make or originate
either solely or jointly with others during the  Employment.  Any such copyright
works or designs created by him in the normal course of his Employment or in the
course of carrying out duties  specifically  assigned to him which relate to the
affairs of the Company  shall be the property of the Company  whether or not the
work was made by  direction  of the Company or was  intended for the Company and
the copyright in it and the rights in any design shall belong to the Company and
to the extent that such  copyright or design rights are not otherwise  vested in
the Company the Executive hereby assigns the same to the Company.

21.      POST-TERMINATION OBLIGATIONS

         21.1.    The  Executive  shall not during  the period of 2 years  after
                  termination of the  Employment  solicit or endeavour to entice
                  away from or discourage  from being employed by Sunbelt or any
                  EM Group Company any employee or director  employed by Sunbelt
                  or any EM  Group  Company  and  who  to his  knowledge  was an
                  employee  thereof at the date of such  termination  or whom to
                  his  knowledge  has at that date  agreed to be  engaged  as an
                  employee of Sunbelt or any EM Group  Company and with whom the
                  Executive has dealt or had contact in the normal course of his
                  duties.

         21.2.    The  Executive  shall not for a period  of 6 months  after the
                  termination of the Employment (without the previous consent in
                  writing of the  Company) and whether on his own account or for
                  any other person,  firm or company directly in connection with
                  any business similar to or in competition with the business of
                  Sunbelt  solicit or  endeavour to entice away from Sunbelt any
                  person,  firm or company  (a) who or which in the twelve  (12)
                  months  prior to the end of his  Employment  shall have been a
                  customer  of or in the habit of dealing  with  Sunbelt and (b)
                  with whom or which the Executive had personal  dealings in the
                  course of his  employment  in the twelve (12) months  prior to
                  the end of his Employment.

         21.3.    The  Executive  shall not for a period  of 6 months  after the
                  termination of his Employment (without the previous consent in
                  writing of the  Company) and whether on his own account or for
                  any other  person,  firm or company  directly or indirectly in
                  connection with any business similar to or in competition with
                  the business of Sunbelt do any business  with,  accept  orders
                  from, or have any business  dealings with any person,  firm or
                  company (a) who or which in the twelve  (12)  months  prior to
                  the end of his  Employment  was a customer  of Sunbelt and (b)
                  with whom or which the Executive had personal  dealings in the


                                      120
<PAGE>

                  course of his  Employment  in the twelve (12) months  prior to
                  the end of his Employment.

         21.4.    The  Executive  shall not for a period  of 6 months  after the
                  termination  of his  Employment  and within the United Kingdom
                  (without  the  previous  consent in  writing  of the  Company)
                  directly or  indirectly  be engaged  concerned  or  interested
                  (whether  as   principal,   servant,   agent,   consultant  or
                  otherwise)  in any trade or business  which is in  competition
                  with any trade or business  being carried on by Sunbelt at the
                  end of the Employment or during a period of twelve (12) months
                  prior  to  the  end of  his  Employment  and  with  which  the
                  Executive  was  concerned  in the  course  of his  Employment,
                  provided  always that during such period the Company  will pay
                  the  Executive a further 6 month  salary and bonus even though
                  his Employment has been  terminated but only in  circumstances
                  where no summary  termination  has occurred in accordance with
                  Clause 22 of this Agreement and the Executive is not in breach
                  of the  covenants  contained  in Clause  20.  Bonuses  will be
                  calculated  by dividing  the previous 12 months bonus total by
                  12.

         21.5.    The Executive shall not at any time after the Termination Date
                  represent  himself  as being  employed  by or  connected  with
                  Sunbelt or any EM Group Company.

         21.6.    The Executive acknowledges:

                  (i)     that each of the  foregoing  subclauses of this clause
                          constitutes  an  entirely   separate  and  independent
                          restriction on him; and

                  (ii)    while  at the  date of this  Agreement  the  duration,
                          extent and application of each of the restrictions are
                          considered by the parties no greater than is necessary
                          for the protection of the interests of Sunbelt and any
                          EM   Group   Company   and   reasonable   in  all  the
                          circumstances it is acknowledged  that restrictions of
                          such a nature may become  invalid  because of changing
                          circumstances   and   accordingly   if   any   of  the
                          restrictions   shall  be   adjudged   to  be  void  or
                          ineffective  for whatever reason but would be adjudged
                          to be  valid  and  effective  if part  of the  wording
                          thereof were deleted or the periods thereof reduced or
                          the area  thereof  reduced in scope  they shall  apply
                          with such  modifications  as may be  necessary to make
                          them valid and effective.

22.      DELIVERY OF DOCUMENTS AND PROPERTY

The  Executive  shall  upon  request  at any  time  and in any  event  upon  the
termination of the Executive's  Employment immediately deliver up to the Company
or its authorized representative all keys, security passes, credit cards, plans,
statistics,  documents, records, papers, magnetic disks, tapes or other software
storage  media  and  all  property  of  whatsoever  nature  which  may be in his


                                      121
<PAGE>

possession or control or relate in any way to the business affairs of Sunbelt or
any EM Group Company and the Executive shall not, without the written consent of
the Company, retain any copies thereof.

23.      REMEDIES

It is expressly  agreed by the Executive and the Company that the  provisions of
clauses 18, 19, 20, 21 and 22 are  reasonable for purposes of preserving for the
Company its business,  goodwill and  proprietary  information.  In the event any
breach of the aforementioned  provisions by the Executive, the parties recognize
and  acknowledge  that a remedy at law will be  inadequate  and the  Company may
suffer irreparable  injury.  The Executive  acknowledges that the services to be
rendered by him are of a character giving them peculiar value, the loss of which
cannot be  adequately  compensated  for in damages;  accordingly  the  Executive
consents  to  injunctive  and  other  appropriate   equitable  relief  upon  the
institution  of  proceedings  therefor  by the  Company in order to protect  the
Company's rights.  Such relief shall be in addition to any other relief to which
the Company may be entitled at law or in equity.

24.      SUMMARY TERMINATION

In any of  the  following  cases  the  Company  may  terminate  the  Executive's
Employment  by written  notice taking effect on the date of its service in which
case the Executive shall not be entitled to any further payment from the Company
except such sums as shall then have accrued due;

                  (i)     if  the  Executive   shall  be  guilty  of  any  gross
                          misconduct or any repeated  breach of any of the terms
                          of this Agreement;

                  (ii)    if the  Executive  shall be  convicted  of a  criminal
                          offense  (except  for a  road  traffic  offense  or an
                          offense not involving a custodial sentence);

                  (iii)   if the  Executive  be  adjudged  bankrupt or makes any
                          composition  or  enters  into any deed of  arrangement
                          with his creditors;

                  (iv)    if the  Executive is  prohibited  by law from being or
                          acting as a director;

                  (v)     if the  Executive  shall  become  of  unsound  mind or
                          become a patient under the Mental Health Act 1983;

                  (vi)    if the  Executive  resigns  as a  director  of Sunbelt
                          otherwise than at the request of the Company




                                      122
<PAGE>



25.      NO RIGHT TO WORK

         25.1.    The Company  shall be under no  obligation to provide any work
                  for the Executive  during any period of notice either given by
                  the Company or the  Executive  to  terminate  the  Executive's
                  Employment  under this Agreement.  The Company may at any time
                  during  the  said  period   suspend  the  Executive  from  his
                  Employment  or exclude him from any premises of Sunbelt or any
                  EM  Group  Company.  Provided  that  during  such  period  the
                  Executive  shall  continue  to  receive  salary  and all other
                  contractual benefits.

         25.2.    If the Contract is  terminated  by notice in  accordance  with
                  Clause 4 then the period  referred  to in Clause  20.1 to 20.4
                  shall start to run from the date of such notice.  This proviso
                  will not apply should the Contract be terminated in accordance
                  with Clause 23.

26.      SHORT NOTICE

If the Executive  shall at any time become or be unable  properly to perform his
duties  hereunder by reason of ill health  accident or otherwise for a period or
periods  aggregating  at least one  hundred  eighty  (180) days in any period of
twelve (12)  consecutive  calendar months the Company may by not less than three
(3) month's notice in writing determine this Agreement.

27.      RESIGNATION OF OFFICE

Upon the  termination of the Employment the Executive  shall at any time or from
time to time thereafter upon the request of the Company resign without claim for
compensation  from all offices  held by him in Sunbelt and any EM Group  Company
and should he fail to do so the  Company  is hereby  irrevocably  authorized  to
appoint  some  person  in his name and on his  behalf  to sign and  execute  all
documents or things necessary or requisite to give effect thereto.

28.      RETIREMENT

The Employment shall automatically  terminate on the Executive reaching his 65th
birthday.

29.      PRIOR RIGHTS

The termination of the Employment  shall be without  prejudice to any right that
the  Company  may have in respect of any breach by the  Executive  of any of the
provisions  of  this   Agreement   which  may  have   occurred   prior  to  such
determination.



                                      123
<PAGE>



30.      NOTICES

Any notice given under this Agreement shall be deemed to have been duly given if
dispatched  by either party  hereto by  registered  post  addressed to the other
party in the case of the Company to its registered office for the time being and
in the case of the  Executive to his last known address and such notice shall be
deemed to have been given on the day on which in the ordinary  course of post it
would be delivered.

31.      PRIOR AGREEMENTS

This  Agreement  is in  substitution  for all previous  contracts of  employment
express or implied  between  Sunbelt or any EM Group  Company and the  Executive
which  shall be deemed to have been  terminated  by mutual  consent  as from the
Commencement Date.

32.      DISCIPLINARY AND GRIEVANCE PROCEDURE

There  are no fixed  rules  for the  resolution  of  grievance  or  disciplinary
problems.  In the event of the Executive  being  dissatisfied  with any decision
taken against him, or have any grievance  relating to the Employment,  he should
apply in the first instance to the Chairman of the Board who will either propose
a solution or refer the matter to the Board for a final decision.

33.      THE COMPANY'S STAFF HANDBOOK

The terms of the Company's standard terms and conditions and employment policies
and  procedures  which are set out in the Company's  staff handbook shall be the
terms of the Executive  Employment save to the extent that they are inconsistent
with this Agreement.

34.      RECONSTRUCTION OR AMALGAMATION

If before the  termination of this Agreement the Employment  shall be determined
by reason of the  liquidation of Sunbelt for the purposes of  reconstruction  or
amalgamation  and the Executive shall be offered  employment with any concern or
undertaking  resulting from such  reconstruction  or  amalgamation  on terms and
conditions no less favorable than the terms of this Agreement then the Executive
shall have no claim against the Company in respect of the  determination  of the
Employment.

35.      EMPLOYMENT RIGHTS ACT 1996

Schedule  2 to  this  Agreement  sets  out the  particulars  of  employment  not
contained in the  Agreement  that must be given to the  Executive in  accordance
with the terms of the said Employment Right Act 1996.



                                      124
<PAGE>

                                   SCHEDULE 1

                            TABLE OF SALARY INCREASES


                                     Date of                                   
  Current        Increase         commencement           New salary       Signed
  salary                          of new salary





                                      125
<PAGE>


                                   SCHEDULE 2

                           EMPLOYMENT RIGHTS ACT 1996


The following  information is given to supplement the  information  given in the
Agreement  in  order  to  comply  with  the  requirements  of  section  1 of the
Employment Rights Act of 1996.

1.       The Executive's job title is Managing Director of Sunbelt (UK) Limited.

2.       The  Executive's  continuous  period  of  employment  with the  Company
         commenced  on 1st July  1992 and is not  continuous  with any  previous
         period of employment with any other employer.

3.       There are no collective  agreements in force which affect the terms and
         conditions of the Executive's employment.

4.       There is no Pension Provision applicable to the employment.



                                      126
<PAGE>


         IN WITNESS WHEREOF the parties hereto have executed this Agreement as a
Deed the day and year first above written.


Signed by                  )
for and on behalf of the   )
Employer                   )






Signed by the Executive    )
                           )
                           )