<PAGE>
                                                             EXHIBIT 4.(a)(xvii)

                            DATED September 10, 2001

                       RED-M (COMMUNICATIONS) LIMITED (1)

                                     - and -

                             M WILSON AND OTHERS (2)

                                     - and -

                              MADGE NETWORKS NV (3)

                                     - and -

                               THE APAX FUNDS (4)

                                     - and -

                              THE AMADEUS FUNDS (5)

                                     - and -

                          INTEL CAPITAL CORPORATION (6)

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                             SHAREHOLDERS AGREEMENT

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                           REYNOLDS PORTER CHAMBERLAIN
                                Chichester House
                              278/282 High Holborn
                                 London WC1V 7HA
                                Ref: TRA/RED22.1


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                                    CONTENTS


1.            Definitions and Interpretation
2.            Company Option
3.            Strategic Investors
4.            Management of the Company
5.            Financial Information
6.            Matters Requiring Consent
7.            Management Non-Compete Undertakings
8.            Madge Non-Compete Undertakings
9.            Nominated Directors and New Directors
10.           Intel Board Observer
11.           The Audit Committee and the Remuneration Committee
12.           Transfers and New Members
13.           Madge Securitisation
14.           Management and Employee Shares
15.           Investor's Consent
16.           Sale or Listing
17.           Duration of Obligations
18.           Enforcement of the Company's Rights
19.           Company Confidential Information
20.           General Provisions
21.           April Investment Agreement
22.           Contracts (Rights of Third Parties) Act 1999
23.           Notices
24.           Governing Law and Jurisdiction

SCHEDULES

Schedule 1        -     The Senior Managers
Schedule 2        -     Particulars of the Company and Subsidiaries
Schedule 3        -     Deed of Adherence

AGREED FORM DOCUMENT

1.   Articles

                                       2

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AGREEMENT dated  September 10,  2001

PARTIES:

(1)      RED-M (COMMUNICATIONS) LIMITED a company incorporated in England and
         Wales under Number 03985301 whose registered office is at Wexham
         Springs, Framewood Road, Wexham, Slough, Berkshire SL3 6PJ ("COMPANY").

(2)      THE PERSONS whose names and addresses are set out in Schedule 1.

(3)      MADGE NETWORKS NV a company incorporated in the Netherlands whose
         address is at Transpolis Schiphol Airport, Polaris Avenue, 23, 2132 JH
         Hoofddorp, The Netherlands ("MADGE").

(4)      APAX EUROPE V - A, L.P., a Delaware limited partnership established
         under the Delaware Revised Uniform Limited Partnership Act (the "EUROPE
         A FUND"), APAX EUROPE V - B, L.P., an English limited partnership
         established under the Limited Partnerships Act 1908 (the "EUROPE B
         FUND"), APAX EUROPE V-C GMBH & CO KG, a German limited partnership
         (Kommanditgesellschaft) established under the German Civil Code
         (Handelsgesetzbuch) (the "EUROPE C FUND"), APAX EUROPE V - D, L.P., an
         English limited partnership established under the Limited Partnerships
         Act 1908 (the "EUROPE D FUND"), APAX EUROPE V - E, L.P., an English
         limited partnership established under the Limited Partnerships Act 1908
         (the "EUROPE E FUND"), APAX EUROPE V - F, C.V., a Dutch limited
         partnership (commanditaire vennootschap) established under the Wetboek
         van Koophandel (the "EUROPE F FUND"), and APAX EUROPE V - G, C.V., a
         Dutch limited partnership (commanditaire vennootschap) established
         under the Wetboek van Koophandel (the "EUROPE G FUND"), each having its
         principal place of business at 13-15 Victoria Road, St. Peter Port,
         Guernsey, GY1 3ZD and each acting by its investment manager Apax
         Partners Europe Managers Limited whose registered office is at 15
         Portland Place, London W1B 1PT, (collectively referred to as "APAX" and
         individually referred to as an "APAX FUND"); and

(5)      AMADEUS II A, a limited partnership established in England under the
         Limited Partnership Act 1907, whose principal place of business is at 5
         Shaftesbury Road, Cambridge, CB2 2BW acting by its manager, AMADEUS
         CAPITAL PARTNERS LIMITED having its registered office at 5 Shaftesbury
         Road, Cambridge, CB2 2BW ("AIIA"), AMADEUS II B, a limited partnership
         established in England under the Limited Partnership Act 1907, whose
         principal place of business is at 5 Shaftesbury Road, Cambridge, CB2
         2BW acting by its manager, AMADEUS CAPITAL PARTNERS LIMITED having its
         registered office at 5 Shaftesbury Road, Cambridge, CB2 2BW ("AIIB"),
         AMADEUS II C, a limited partnership established in England under the
         Limited Partnership Act 1907, whose principal place of business is at 5
         Shaftesbury Road Cambridge CB2 2BW acting by its manager, AMADEUS
         CAPITAL PARTNERS LIMITED having its registered office at 5 Shaftesbury
         Road,

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         Cambridge, CB2 2BW ("AIIC"), AMADEUS II GMBH & CO KG, a German limited
         partnership acting by its manager AMADEUS CAPITAL PARTNERS LTD ("AKG"),
         AMADEUS II AFFILIATES, a limited partnership established in England
         under the Limited Partnership Act 1907, whose principal place of
         business is at 5 Shaftesbury Road, Cambridge, CB2 2BW acting by its
         manager, AMADEUS CAPITAL PARTNERS LIMITED having its registered office
         at 5 Shaftesbury Road, Cambridge, CB2 2BW ("AII AFFILIATES"). (AIIA,
         AIIB and AIIC, AKG and AII Affiliates collectively referred to as
         "AMADEUS" and individually to as an "AMADEUS FUND");

(6)      INTEL CAPITAL CORPORATION a Cayman Islands company whose registered
         office is situated at the offices of Caledonian Bank & Trust Limited,
         Caledonian House, PO Box 1043, George Town, Grand Cayman, Cayman
         Islands ("INTEL").

RECITALS:

         The parties (with the exception of the Company) are all shareholders
         (directly or through a nominee) in the Company and wish to record
         certain matters agreed between them relating to the Company
         (particulars of which are set out in Schedule 2).

IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION*

         In this Agreement (which expression shall be deemed to include the
         Schedules hereto):

1.1      Unless the context otherwise requires:

         "AGREED FORM" means in the form previously agreed by the parties to
         this Agreement and initialled for the purposes of identification by or
         on their behalf;

         "AMADEUS DIRECTOR" means the non-executive director of the Company
         nominated by Amadeus pursuant to clause 9.2 and the Articles;

         "ANNUAL PLAN" means the Group operating plan and financial budget
         (including inter alia annual revenue and capital expenditure budgets)
         to be prepared for each financial year and approved in accordance with
         clause 5.1.2;

         "APRIL INVESTMENT AGREEMENT" means the investment agreed entered into
         by the parties hereto (excluding Intel) on 12th April 2001;

         "APAX DIRECTOR" means the non-executive director of the Company
         nominated by Apax pursuant to clause 9.2 and the Articles;

         "ARTICLES" means the articles of association of the Company as amended
         from time to time (and "ARTICLE" shall be construed accordingly);

         "ASSOCIATE" means, in relation to any person, an associated company of
         that person or a person who is connected with that person determined in
         accordance with Sections 416 and 839 of the Taxes Act (save that in
         construing Section 839 the term "control" shall have the meaning given
         by Section 840 or Section 416 of the Taxes


----------
*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       4

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         Act so that there shall be control wherever either of the said Sections
         would so require);

         "AUDITORS" means the auditors of the Company from time to time;

         "BOARD" means the board of directors of the Company;

         "BUSINESS DAY" means a day on which the banks are open for business in
         the country of receipt of any notice;

         "BUSINESS PLAN" means the business plan and profit and cash flow
         projections prepared by the Senior Managers dated 10th April 2001;

         "COMPANY OPTION" means the option for the Company to call for the
         subscription for further Convertible Shares in accordance with clause
         2;

         "CONFIDENTIAL INFORMATION" means the Intellectual Property Rights,
         trade secrets, accounts, financial or trading information or other
         confidential information relating to the businesses, transactions,
         property, finances, dealings or affairs of the Group including, without
         limitation, any information regarding the formulae, products,
         processes, research projects or the other technical data of the Group
         or the names and addresses of any customers, suppliers or agents of the
         Group and including, without limitation, any papers or records
         howsoever recorded (whether in writing or print or by photographic,
         electrical, magnetic, symbolic or other means);

         "CONNECTED PERSON" has the meaning given to that expression in Section
         839 Taxes Act;

         "CONVERTIBLE SHARES" means the Series A Convertible Preferred shares of
         $1 each in the capital of the Company;

         "DEED OF ADHERENCE" means a deed in the form set out in Schedule 3 or a
         deed in such other form as the Shareholders may agree;

         "$" means US dollars;

         "EASDAQ STOCK MARKET" means the recognised investment exchange (as
         defined in s285 of the Financial Services and Markets Act 2000) which
         is regulated by the Belgian Banking and Finance Commission and any
         successor thereof;

         ENCUMBRANCE" means a mortgage, charge, pledge, lien, option,
         restriction, right of first refusal, right of pre-emption, third party
         right or interest, other encumbrance or security or equity interest of
         any kind, or another type of preferential arrangement (including,
         without limitation, a title transfer and retention arrangement) having
         similar effect;

         "EXISTING SCHEMES" means the Red-M 2000 stock plan adopted by a
         resolution of the board dated 31st May 2000 and the Red-M 2000
         California stock plan adopted by a resolution of the Board dated 31st
         May 2000;

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         "FACILITIES AGREEMENT" means the agreement entered into by the Company
         and Madge on 12th April 2001.

         "GROUP" means, in relation to a company, that company and any company
         which is from time to time a holding company of that company or a
         subsidiary of that company or of such holding company;

         "GROUP" means the Company and its subsidiary undertakings (if any) from
         time to time and "MEMBER OF THE GROUP" or "GROUP COMPANY" is to be
         construed accordingly;

         "INITIAL INVESTORS" means Apax, Amadeus and Intel (and the expression
         "INITIAL INVESTOR" shall be construed accordingly);

         "INTELLECTUAL PROPERTY" means:

         (a)      patents, trade marks, service marks, registered designs,
                  applications for any of those rights, trade and business
                  names, domain names, unregistered trade marks and service
                  marks, semi-conductor topography rights, copyrights (including
                  copyright in computer software), database rights and all other
                  semi-generis rights, know-how, rights in designs and
                  inventions; and

         (b)      rights under licences, consents, orders, statutes or otherwise
                  in relation to a right in paragraph (a);

         in either case in any jurisdiction;

         "INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property used by
         the Company in, or in connection with its business;

         "INVESTORS" means Apax, Amadeus and Intel and, to the extent applicable
         at the time, the Strategic Investors (and the expression "INVESTOR"
         shall be construed accordingly);

         "LAN" means local area network;

         "LISTING" means the admission of any part of the ordinary share capital
         of the Company to the Official List (as defined in s103(1) of the
         Financial Services and Markets Act 2000) or the grant of permission to
         deal in the same (or in any instruments representing any such ordinary
         share capital) on the NASDAQ Stock Market, EASDAQ Stock Market or the
         Neuer Markt Stock Market and specifically excludes the Alternative
         Investment Market;

         "MADGE DIRECTORS" means the non-executive directors of the Company
         nominated by Madge pursuant to clause 9.2 and the Articles (and the
         expression "MADGE DIRECTOR" shall be construed accordingly);

         "MANAGERS" means the Senior Managers and each of Duncan Simpson and
         Alison Edge (and the expression "MANAGER" shall be construed
         accordingly);

                                       6


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         "NASDAQ STOCK MARKET" means the recognised investment exchange (as
         defined in s285 of the Financial Services and Markets Act 2000) which
         is regulated by the National Association of Securities Dealers, Inc., a
         self-regulatory organisation which operates under the authority granted
         it by the 1938 Maloney Act Amendment to the Securities Exchange Act
         1934;

         "NEUER MARKT STOCK MARKET" means the recognised investment exchange (as
         defined in s285 of the Financial Services and Markets Act 2000) owned
         and operated by the Deutsche Borse AG group of companies;

         "NOMINATED DIRECTORS" means the Apax Director, Amadeus Director and
         Madge Directors (and the expression "NOMINATED DIRECTOR" shall be
         construed accordingly);

         "PAN" means personal area network;

         "PRINCIPAL WARRANTIES" means the warranties referred to in clause 7 of
         the April Investment Agreement;

         "SENIOR MANAGERS" means Michael Wilson, Simon Gawne and Clive Mayne;

         "SHARE" means a share in the capital of the Company of whatever class;

         "SHAREHOLDERS" means all those persons holding shares (and the
         expression "SHAREHOLDER" shall be construed accordingly);

         "STRATEGIC INVESTORS" means the new investors in the Company proposed
         pursuant to clause 3 (and the expression "STRATEGIC INVESTOR" shall be
         construed accordingly);

         "SYNDICATION SHARES" means XXX Convertible Shares to be dealt with
         pursuant to clause 3;

         "TRADE INVESTORS" means any person which is not an independent
         financial investor. For this purpose independent financial investor
         means an investor which is not a trading company, or an associate of
         any trading company (other than in respect of financial investments
         made by it in such trading companies). For the avoidance of doubt a
         venture capital fund which is an associate of a trading company (other
         than in respect of a financial investment made by it in such trading
         company) is deemed a Trade Investor;

1.2      A reference to a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed
         in accordance with Section 736 of the Companies Act 1985 and a
         reference to a "SUBSIDIARY UNDERTAKING" or a "GROUP UNDERTAKING" is to
         be construed in accordance with Sections 258 and 259 of the Companies
         Act 1985.

1.3      References to statutes or statutory provisions include those statutes
         or statutory provisions as amended, extended, consolidated, re-enacted
         or replaced from time to time and any orders, regulations, instruments
         or other subordinate legislation made thereunder.

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1.4      Subject as herein otherwise expressly defined, words and phrases
         defined in Part XXVI of the Companies Act 1985 (the "ACT") and in the
         Articles bear the same respective meanings.

1.5      Unless otherwise specified, words importing the singular include the
         plural, words importing any gender include every gender, words
         importing persons include bodies corporate and unincorporate and
         references to the whole include the part; and (in each case) vice
         versa.

1.6      References to clauses and other provisions are references to clauses
         and other provisions of this Agreement.

1.7      The headings shall not affect interpretation.

2.       COMPANY OPTION*

2.1      The Investors hereby grant to the Company the right to call upon the
         Investors to subscribe, in the proportions specified in clause 2.2, for
         2,396,166 new Convertible Shares at a subscription price of $3.13 per
         share at any time within the period 9 to 12 months from 12th April 2001
         by serving written notice on the Investors exercising the option. The
         Investors shall pay the subscription monies within 21 days of such
         notice and within 7 days thereafter the Company shall allot and issue
         the new Convertible Shares to the Investors (or their nominee(s)) and
         the Company shall register the Investors (or their nominee(s)) as the
         holders of such Convertible Shares and shall prepare and deliver the
         requisite share certificate to the Investors (or their nominee(s)).

2.2      The Investors (or their nominee(s)) shall subscribe for the new
         Convertible Shares in proportion to their respective share holdings in
         Convertible Shares.

2.3      The right to exercise the Company Option is conditional upon there
         being no Material Adverse Change in the business of the Company at the
         date notice of exercise of the Company Option is given and "MATERIAL
         ADVERSE CHANGE" shall mean:

         2.3.1    that Mike Wilson is no longer employed by the Company (other
                  than by reason of Dismissal Without Cause); or

         2.3.2    that more than one of the Senior Managers has left the employ
                  of the Company (excluding any Senior Manager leaving by reason
                  of Dismissal Without Cause);

         where "DISMISSAL WITHOUT CAUSE" shall mean where an employee of the
         Company ceases to be an employee of the Company for any of the
         following reasons:

         (i)      the Company giving notice to terminate his employment under
                  the terms of any service agreement for reasons other than a
                  breach by the employee of


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*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       8


<PAGE>

                  such service agreement or such employee's wilful neglect or
                  gross misconduct; or

         (ii)     the serious illness, death, injury or disability of the
                  employee which renders the employee incapable of working;

         (iii)    by the mutual consent of the Company and the employee;

         (iv)     in circumstances in which it has been legally established by a
                  court or tribunal of competent jurisdiction that he has a
                  successful claim against the Company for redundancy, unfair
                  dismissal or wrongful dismissal; or

         (v)      by reason of the employee terminating his service agreement
                  due to the Company's breach or by reason of his service
                  agreement expiring and not being renewed by the Company; or

         2.3.3    that there have been material adverse variances in the OEM
                  relationships from those existing at 12th April 2001 (if any)
                  or envisaged by the Business Plan, and "MATERIAL ADVERSE
                  VARIANCE" for the purposes of this clause 2.3.3 shall mean the
                  Company failing to establish at least XXX major strategic OEM
                  relationships within 12 months of 12th April 2001 with
                  entities such as XXX or entities of equivalent standing; or

         2.3.4    there has been a material breakdown in the operability of the
                  technology of the Company, and "MATERIAL BREAKDOWN IN THE
                  OPERABILITY OF THE TECHNOLOGY" for the purposes of this clause
                  2.3.4 shall mean:

                  2.3.4.1    the Company either (i) not developing a commercial
                             PICONET product within twelve months of 12th April
                             2001, or (ii) not releasing a commercial product
                             that conforms and has been qualified/certified with
                             the Bluetooth 1.1 ratification or such other
                             equivalent ratification for the market, assuming
                             such ratification implies wide scale
                             interoperability of devices; or

                  2.3.4.2    the Company not developing a saleable product that
                             is capable of supporting voice calls in a way that
                             conforms with the Bluetooth Standard; or

                  2.3.4.3    a dissolvement of the Bluetooth SIG; or

                  2.3.4.4    the Company not being allowed to be an associate
                             member of the Bluetooth SIG or being excluded from
                             the SIG PAN working group;

         2.3.5    the Company not achieving XXX million of revenues (excluding
                  bad and doubtful debts) to 31st December 2001; or

         2.3.6    that there has been a material breach of any of the Principal
                  Warranties (which for the purposes of the this clause 2.3.6
                  only shall mean a breach

                                       9


<PAGE>

                  of the Principal Warranties resulting in a claim or claims in
                  excess of the aggregate limit set by clause 7.7.3 of the April
                  Investment Agreement).

2.4      There shall be no deemed material breakdown in the operability of the
         technology for the purposes of clause 2.3.4 if Apax agree in writing
         any variance to the criteria set out in clause 2.3.4. Apax before
         agreeing any such variance will consult with Amadeus and Intel.

3.       STRATEGIC INVESTORS*

3.1      The Company, with the support of the Shareholders, shall use its
         reasonable endeavours to procure Strategic Investors to subscribe on
         the terms of this Agreement for the Syndication Shares at a minimum
         price of $3.13 per share.

3.2      The Company shall endeavour to procure subscription for the Syndication
         Shares from ideally XXX Strategic Investors. The Board shall approve
         the Strategic Investors which, ideally, shall comprise any of: XXX.

3.3      Insofar as the Company has not been able to procure Strategic Investors
         (to be approved in accordance with clause 3.2 above) to subscribe in
         cash for some or all of the Syndication Shares, within a period
         expiring midnight 11th October 2001, the Initial Investors shall, if
         requested in writing by the Company prior to expiry of such period (or
         such further period as may be agreed in writing by the Company and the
         Initial Investors), forthwith subscribe for the amount of the remaining
         Syndication Shares on the terms of this Agreement in proportion to
         their respective shareholdings in Convertible Shares.

3.4      Each of the parties to this Agreement hereby waives both compliance
         with any restriction relating to pre-emption and enforcement of any
         rights relating to pre-emption which he or it may have which exist
         pursuant to this Agreement, the Articles or otherwise or pursuant to
         clause 6 and which may prevent the subscription, syndication and
         allotment of the Syndication Shares contemplated in this Agreement.

3.5      Upon receipt of the subscription monies due the Company shall forthwith
         allot the Syndication Shares and issue certificates in respect thereof.

3.6      Notwithstanding clause 20.1 the terms of this clause 3 may be varied in
         writing by the Company, Madge and the Initial Investors alone.

4.       MANAGEMENT OF THE COMPANY

4.1      The Company undertakes with the Initial Investors (for such period as
         they hold in aggregate at least 2.5% of the issued share capital of the
         Company) and Madge (for such period as it holds at least 2.5% of the
         issued share capital of the Company), and the Senior Managers shall
         procure, that (save as otherwise provided or contemplated in this
         Agreement or in the Business Plan or in any Annual Plan approved by
         each of the Nominated Directors ) the Company (and each of the other
         members of the Group) will (to the extent it is within each of their
         respective powers to do so):


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*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       10
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         4.1.1    carry on and conduct its business and affairs in a proper and
                  efficient manner in accordance with all applicable laws and
                  regulations, for its own benefit and in accordance with the
                  Business Plan or any Annual Plan approved by each of the
                  Nominated Directors;

         4.1.2    utilise the monies subscribed for new shares pursuant to this
                  Agreement solely for the purposes of fulfilment of the
                  Business Plan and Annual Plan;

         4.1.3    transact all its business on arm's length terms;

         4.1.4    unless otherwise agreed by all the members of the Board,
                  ensure that its business, other than routine day to day
                  business, shall be undertaken and transacted by the Board;

         4.1.5    unless otherwise agreed by all members of the Board ensure
                  that there shall be no less than six meetings of the Board
                  each year of which the Nominated Directors shall receive at
                  least ten days' prior notice of meetings of the Board
                  accompanied by an agenda and all relevant board papers;

         4.1.6    subject to the Business Plan and the Annual Plan, carry on its
                  business pursuant to policies laid down from time to time by
                  the Board;

         4.1.7    maintain with a well established and reputable insurer
                  adequate insurance against all risks usually insured against
                  by companies carrying on the same or a similar business, in
                  amounts which the Board considers prudent, and (without
                  prejudice to the generality of the foregoing) for the full
                  replacement or reinstatement value of all its assets of an
                  insurable nature and against damage, injury, third party loss
                  (including product liability) and loss of profits;

         4.1.8    not acquire, dispose, hire, lease, licence or receive licences
                  of any assets, goods, rights or services otherwise than on the
                  best terms reasonably obtainable in the circumstances;

         4.1.9    keep proper books of account containing true and complete
                  entries of all its dealings and transactions of and in
                  relation to its business;

         4.1.10   prepare its accounts in accordance with UK GAAP;

         4.1.11   not have as an accounting reference period any period other
                  than a period of 12 calendar months and subject as provided in
                  Section 223(3) of the Companies Act 1985;

         4.1.12   to the extent that it is commercially and economically viable
                  for the Group to do so, if it requires any approval, consent
                  or licence for the carrying on of its business in the places
                  and in the manner in which it is for the time being carried on
                  or proposed to be carried on, obtain and maintain the same in
                  full force and effect;

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<PAGE>

         4.1.13   procure that appropriate conditions are inserted into the
                  contracts of employment of all senior employees and executive
                  directors of the Group requiring them to devote their full
                  time and effort wholly and exclusively to the affairs of the
                  Group and not to make significant investments in, take other
                  interests in or (save with the written consent of the Board)
                  accept directorships or other positions of a consultancy or
                  executive nature with any other person;

         4.1.14   effect and maintain directors and officers insurance (which
                  insurance shall, for the avoidance of doubt, cover the
                  Nominated Directors) with an insurance company of good repute
                  and on terms approved by Apax and Amadeus;

         4.1.15   effect and maintain Key Man life insurance with an insurance
                  company of good repute in respect of Simon Gawne and Clive
                  Mayne for not less than (pound)1,000,000 each and for not less
                  than (pound)2,000,000 in respect of Mike Wilson and on terms
                  approved by the Apax and Amadeus; and

         4.1.16   endeavour to release Madge from any guarantees given by Madge
                  in favour of any Group Company.

4.2      Each of the Senior Managers severally undertakes with the Initial
         Investors and Madge to use his reasonable endeavours to:

         4.2.1    use all reasonable and proper means in his power to maintain,
                  improve and extend the business of the Group and to further
                  the reputation and interests of the Group; and

         4.2.2    use all their respective powers to procure that any expansion,
                  development or evolution of any business of the Group will
                  only be effected through the Company or a wholly-owned
                  subsidiary of the Company unless any such expansion,
                  development or evolution consists of joint development
                  arrangements in the ordinary course of business.

4.3      Each of the Company, the Initial Investors and Madge, shall use their
         respective rights and powers to procure that no alteration is made to
         any service agreement without the written consent of the relevant
         Manager.

5.       FINANCIAL INFORMATION

5.1      The Company shall supply the Initial Investors (for such period as they
         hold in aggregate at least 2.5% of the issued share capital of the
         Company) and Madge (for such period as it holds at least 2.5% of the
         issued share capital of the Company) with the following information:

         5.1.1    the audited consolidated accounts of the Group for each
                  financial year as soon as practicable, and at the latest by
                  three months after the end of that financial year;

         5.1.2    no later than one month before the start of each financial
                  year:

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<PAGE>

                  5.1.2.1   the draft Group operating plan and financial budget
                            which the Company, having consulted Apax and Madge,
                            shall adopt as the Annual Plan for that financial
                            year;

                  5.1.2.2   the draft budget for allocation of employee share
                            options for that financial year which the Company,
                            having consulted Apax and Madge and obtained their
                            approval (not to be unreasonably withheld or
                            delayed) shall adopt as the option budget for that
                            financial year;

         5.1.3    monthly and quarterly management accounts, in a form approved
                  by the Board (having consulted with Madge and Apax),
                  consisting of a balance sheet, profit and loss account, cash
                  flow statement, as soon as practicable, and at the latest by
                  three weeks after the end of each month or quarter (as
                  appropriate):

                  5.1.3.1   on a consolidated basis for the Group; and

                  5.1.3.2   for the Company and each trading subsidiary
                            undertaking; and

         5.1.4    such other financial or management information relating to the
                  Group as the Initial Investors and Madge may reasonably
                  request from time to time.

5.2      The Nominated Directors and the Board Observer shall be entitled (in
         each case, provided that the respective appointor of such person holds
         at least 2.5% of the issued share capital of the Company (or such lower
         threshold share percentage as specified in clause 6.5.2)) during the
         Company's normal hours of business to inspect and take copies of the
         books of account and all other records and documents of the Group on
         giving not less than 48 hours' written notice to the secretary (or, if
         there is none for the time being, the chairman).

5.3      The Nominated Directors and the Board Observer may pass any information
         received from the Company to the Initial Investors and Madge as
         appropriate.

5.4      An Initial Investor or Madge may pass any information received from the
         Company or the Nominated Directors to any of its investment or
         professional advisers and the Initial Investors may include in
         quarterly reports to a committee of unit holders, certain abridged
         current financial information on the Company and in annual reports to
         unit holders, historical audited financial information of the Company.

5.5      The Company shall keep the Initial Investors and Madge fully informed
         as to all material developments regarding its financial and business
         affairs and shall notify them promptly of:

         5.5.1    any event which is not in the public domain and which
                  materially affects the business of the Group;

                                       13

<PAGE>


         5.5.2    any offer for any business of the Group or for any member of
                  the Group; and

         5.5.3    any significant litigation affecting or likely to affect any
                  member of the Group.

5.6      Each of the Senior Managers shall make every effort to procure full and
         prompt performance by the Company of its obligations under this clause
         5.

6.       MATTERS REQUIRING CONSENT

6.1      Each of the parties (other than the Company) agrees that the following
         acts, unless required by this Agreement or unless already contained
         within the Business Plan or in any Annual Plan (provided such Annual
         Plan has been approved by the Board), shall not be carried out without
         first obtaining the written consent of the Initial Investors and Madge
         (such consent not to be unreasonably withheld or delayed) and each
         party (other than the Company) shall use his respective rights and
         powers as a director or Shareholder to procure so far as he is able
         that no such act is carried out unless such consent has been given:

         6.1.1    the variation of the authorised or issued share capital of the
                  Company (other than the redemption or conversion of
                  Convertible Shares as provided in the Articles) or any
                  subsidiary undertaking or the creation or the granting of any
                  option (other than pursuant to the Existing Schemes) or other
                  right to subscribe for shares or convert into shares in the
                  capital of the Company or any subsidiary undertaking; the
                  variation of the rights attaching to shares in the capital of
                  the Company (other than as provided in the Articles) or any
                  subsidiary undertaking;

         6.1.2    the alteration of the memorandum of association or Articles
                  (or equivalent documents) of the Company or a subsidiary
                  undertaking of the Company;

         6.1.3    the declaration or distribution of any dividend or other
                  payment out of the distributable profits of the Company or of
                  any subsidiary undertaking of the Company, other than a
                  wholly-owned subsidiary;

         6.1.4    the reduction of the Company's share capital, share premium
                  accounts, capital redemption reserve or any other reserve,
                  other than as required by the Articles; the reduction of any
                  uncalled liability in respect of partly paid shares of the
                  Company;

         6.1.5    unless the person concerned has had legal advice in writing
                  that to honour this commitment would be a breach of his
                  fiduciary duties to the Company or under the Insolvency Act
                  1986 would or could render him personally liable for having
                  failed so to act, the taking of steps to wind up or dissolve
                  the Company or a subsidiary undertaking of the Company;

         6.1.6    any material change in the nature of the business of the
                  Company or any subsidiary undertaking;

                                       14


<PAGE>

         6.1.7    other than any of the Nominated Directors or otherwise
                  approved by the Remuneration Committee the fixing of
                  remuneration of any director or vice-President (or similar
                  officer) of the Company or of a subsidiary undertaking of the
                  Company;

         6.1.8    the appointment of auditors of the Company or any subsidiary
                  undertaking, other than the re-appointment of an existing
                  auditor;

         6.1.9    the alteration of the accounting reference date of the Company
                  or any subsidiary undertaking;

         6.1.10   the alteration of the accounting policies of any member of the
                  Group;

         6.1.11   the appointment or termination of employment of any director
                  of the Company whose basic salary is to be or is in excess
                  of (pound) 100,000 a year;

         6.1.12   the entry into, termination or variation of any contract or
                  arrangement between (1) the Company or any subsidiary
                  undertaking and (2) a Manager or a person who in relation to a
                  Manager is a Connected Person, including the variation of the
                  remuneration or other benefits under such a contract or
                  arrangement, and the waiver of any breach of such a contract
                  or arrangement;

         6.1.13   the delegation by the directors of the Company or any
                  subsidiary undertaking of any of their powers to a committee;

         6.1.14   the incurring by the Company or any subsidiary undertaking of
                  any borrowing or other indebtedness or liability in the nature
                  of borrowing, other than in the ordinary course of trading in
                  any such case;

         6.1.15   capital expenditure of the Company or any subsidiary
                  undertaking which is greater than $50,000 or which would cause
                  capital expenditure of the Group in any financial year to
                  exceed $150,000 which is not specifically provided for in the
                  Annual Plan for the relevant financial year;

         6.1.16   the entering into by the Company or any subsidiary undertaking
                  of any lease, licence or similar obligation under which the
                  rental and all other payments exceed $50,000 a year or which
                  would make the Group liable for payments exceeding $150,000 a
                  year under all its leases, licences or similar obligations;

         6.1.17   the creation of any mortgage, charge or other encumbrance over
                  any asset of the Company or any subsidiary undertaking and the
                  giving of any guarantee by the Company or any subsidiary
                  undertaking, other than in the ordinary course of trading in
                  any such case;

         6.1.18   the entering into by the Company or any subsidiary undertaking
                  of any contract or arrangement outside the ordinary course of
                  trading or otherwise than at arm's length;

                                       15


<PAGE>

         6.1.19   the incorporation of a new subsidiary undertaking of the
                  Company or the acquisition by the Company or any subsidiary
                  undertaking of an interest in any shares in the capital of any
                  body corporate;

         6.1.20   the instigation or settlement of any litigation or arbitration
                  proceedings by the Company or any subsidiary undertaking when
                  the amounts claimed exceed $50,000; and

         6.1.21   the termination or any variation of the terms of the directors
                  and officers insurance and Key Man insurance referred to in
                  clause 4.1.15 of this Agreement or the Facilities Agreement.

6.2      For the purposes of clause 6.1, the written consent of the Initial
         Investors in respect of any matter listed in clause 6.1.7 to 6.1.21 may
         be given by Apax on behalf of the Initial Investors.

6.3      For the purposes of clause 6.1 the written consent of the Initial
         Investors in respect of any matter referable to clause 6.1.6 may be
         given by Apax on behalf of the Initial Investors Provided that Amadeus
         and Intel shall be notified by Apax of its intention to give any such
         consent and, if Amadeus and Intel both notify Apax (within 10 business
         days of notice from Apax) that they disagree that consent should be
         given, then Apax shall withhold such consent.

6.4      The written consent of Apax (and for this purpose the Amadeus and Intel
         shareholdings shall be deemed included in that of Apax) or Madge in
         respect of any matter listed in clause 6.1.6 to 6.1.21 shall not be
         required if the shareholding of that party falls below 15% percent of
         the issued share capital of the Company.

6.5      For the purposes of clause 6.1, the written consent of Apax, Madge,
         Intel or Amadeus in respect of any matter listed in clause 6.1.1 to
         6.1.5 shall not be required if the shareholding of that party falls
         below 2.5% of the issued share capital of the Company;

         6.5.1    Provided that the requirement to seek such consent will
                  transfer to any one transferee of Apax or Madge acquiring in
                  aggregate more than 25% of the issued share capital of the
                  Company; and

         6.5.2    Provided further that in respect of any matter listed in
                  clauses 6.1.2 to 6.1.5, in the event of an issue or issues of
                  further shares or securities convertible into shares, at a
                  purchase price per share lower than $3.13 per share ("Purchase
                  Price"), such that the shareholding of the relevant party
                  falls below 2.5%, the consent threshold for that party shall
                  fall from 2.5% to its percentage shareholding following such
                  share issue provided always that the consent threshold shall
                  always be 1% or greater. The Purchase Price is to be adjusted
                  proportionally on any consolidation or division of the share
                  capital or upon any further issue of shares or a dividend of
                  shares.

6.6      Each of the Initial Investors and Madge shall exercise its consent
         rights pursuant to this clause 6 having full regard to the best
         interests of the Company.

                                       16
<PAGE>

7.       MANAGEMENT NON-COMPETE UNDERTAKINGS

7.1      Each of the Senior Managers undertakes with the Company that, except
         with the written consent of the Nominated Directors:

         7.1.1    that for a period commencing on the date hereof and expiring
                  on the date twelve months after the Termination Date he will
                  not whether by himself, through his employees or agents or
                  otherwise howsoever and whether on his behalf or on behalf of
                  any person, firm, company or other organisation, directly or
                  indirectly:

                  7.1.1.1   in competition with any member of the Group within
                            the Restricted Area be employed or engaged or
                            otherwise interested in the business of
                            manufacturing, designing, distributing, selling,
                            supplying or otherwise dealing with the Goods or the
                            Services. For the avoidance of doubt, subject to the
                            Board's consent (not to be unreasonably withheld)
                            and subject to the employing entity being informed
                            of these obligations, after the Termination Date,
                            the Senior Manager may be permitted to work on
                            non-competitive activities in businesses which may
                            have different independent divisions which compete
                            with the Company but may not work in or with such
                            competing division;

                  7.1.1.2   in competition with any member of the Group, solicit
                            business from or canvas any Customer or Prospective
                            Customer if such solicitation or canvassing is in
                            respect of the Goods or the Services;

                  7.1.1.3   in competition with any member of the Group accept
                            orders for the Goods or the Services from any
                            Customer or Prospective Customer;

                  7.1.1.4   solicit or induce or endeavour to solicit or induce
                            any person who on the Termination Date was a
                            director/manager/employee earning in excess of
                            (pound)30,000 of any member of the Group with whom
                            the Senior Manager had dealings during the 12 months
                            preceding the Termination Date to cease working for
                            or providing services to the Group, whether or not
                            any such person would thereby commit a breach of
                            contract;

                  7.1.1.5   employ or otherwise engage in the business of
                            manufacturing, distributing, designing, selling,
                            supplying or otherwise dealing with the Goods or the
                            Services any person who was during the 12 months
                            preceding the Termination Date employed or otherwise
                            engaged by any member of the Group and who by reason
                            of such employment or engagement is in possession of
                            any trade secrets or confidential information
                            relating to the business of any member of the Group
                            or who has acquired influence over its

                                       17


<PAGE>

                            Customers and Prospective Customers (defined as in
                            subclauses 7.1.3.3 and 7.1.3.4 but so that
                            references to the Senior Manager shall be replaced
                            by references to the relevant employee);

                  7.1.1.6   interfere or seek to interfere with the continuance
                            of supplies to any member of the Group (or the terms
                            of such supplies) from any suppliers who shall have
                            been supplying components for material or services
                            to any member of the Group at any time during the
                            course of his employment by a member of the Group;

         7.1.2    while employed by a member of the Group he shall, unless
                  prevented by illness or specifically permitted by his service
                  agreement, devote his whole time and attention to the business
                  of the Group and shall not:

                  7.1.2.1   be employed or engaged as consultant without the
                            consent of the Board in any other business; or

                  7.1.2.2   be concerned or interested in any business competing
                            with that carried on by a member of the Group or the
                            business of a supplier or customer of a member of
                            the Group provided that a Senior Manager may be
                            interested in securities which are for the time
                            being quoted on a recognised investment exchange (as
                            defined by Section 285 (1) Financial Services Act
                            2000) or which are dealt on the Alternative
                            Investment Market of the London Stock Exchange if
                            the Senior Manager's interest in the securities does
                            not exceed 5% of the total amount of the securities
                            in issue;

         7.1.3    for the purposes of this clause 7.1 the following words shall
                  have the following meanings:

                  7.1.3.1   "GOODS" shall mean any product that materially
                            performs the same function as any goods
                            manufactured, designed, distributed or sold by any
                            member of the Group with which the duties of the
                            Senior Manager were concerned or for which he was
                            responsible during the one year immediately
                            preceding the Termination Date and, for the
                            avoidance of doubt, including Bluetooth or 802.11
                            wireless LAN or PAN networking solutions or directly
                            competing technology;

                  7.1.3.2   "SERVICES" shall mean any services (including but
                            not limited to technical and product support,
                            technical advice and customer services) directly
                            relating to the Goods supplied by any member of the
                            Group with which the duties of the Senior Manager
                            were concerned or for which he was responsible and
                            for the avoidance of doubt, including, Bluetooth or
                            802.11 wireless LAN or PAN networking solutions or
                            directly competing technology;

                                       18
<PAGE>

                  7.1.3.3   "CUSTOMER" shall mean any person, firm, company, or
                            other organisation whatsoever to whom or which any
                            member of the Group distributed, sold or supplied
                            Goods or Services during the one year immediately
                            preceding the Termination Date and with whom or
                            which during such period, the Senior Manager had
                            personal dealings in the course of his employment
                            (or consultancy, as appropriate) or with whom any
                            employee who was under the direct supervision of the
                            Senior Manager had personal dealings in the course
                            of his employment (or consultancy, as appropriate).

                  7.1.3.4   "PROSPECTIVE CUSTOMER" shall mean any person, firm,
                            company or other organisation whatsoever with whom
                            or which any member of the Group had negotiations or
                            material discussions regarding the distribution,
                            sale or supply of Goods or Services during the
                            twelve months immediately preceding the Termination
                            Date and with whom, during such a period, the Senior
                            Manager had personal dealings in the course of his
                            employment or with whom any employee who was under
                            the direct supervision of the Senior Manager had
                            personal dealings in the course of their employment;

                  7.1.3.5   "RESTRICTED AREA" shall mean

                            7.1.3.5.1   United Kingdom, the European Union, the
                                        United States, Canada and Japan; and

                            7.1.3.5.2   any other country in the world where, on
                                        the Termination Date, any member of the
                                        Group was engaged in the manufacture,
                                        distribution, design, sale or supply or
                                        otherwise dealt with Goods or Services.

                  7.1.3.6   "TERMINATION DATE" shall mean the date of
                            termination of employment within the Group.

7.2      Each Senior Manager (having taken independent legal advice) agrees with
         the Initial Investors that the above non-compete undertakings are
         reasonable and necessary for the protection of the legitimate interests
         of the Initial Investors.

7.3      While the above undertakings are considered to be reasonable it is
         agreed that if any such undertakings shall be adjudged to go beyond
         what is reasonable for the protection of the interests of the Company
         but would be reasonable if part or parts were deleted or modified, the
         relevant undertaking or undertakings shall apply with such deletion
         and/or modification as may be necessary to make it or them valid and
         effective.

7.4      Should a Senior Manager's employment with the Company or any Group
         Company be terminated at any time "without cause" (which shall include
         paragraphs (i) to (v) of clause 2.3.2 only):

                                       19

<PAGE>

         7.4.1    the Company agrees that, at the election of the Company,
                  clause 7.1 will remain enforceable provided that the Company
                  shall continue to pay the Senior Manager the salary (excluding
                  any bonus) and medical benefits the Senior Manager was
                  entitled to receive under the Senior Manager's service
                  agreement at that time for the period of restriction imposed
                  under clause 7 or the Senior Manager becoming employed or
                  self-employed (whichever is the shorter period);

         7.4.2    the Company agrees that, if it (or any member of the Group who
                  is employing the Senior Manager at the relevant Termination
                  Date) requires the Senior Manager not to perform any of the
                  Senior Manager's duties and/or excludes the Senior Manager
                  from the premises of the Company for some or all of the Senior
                  Manager's notice period ("GARDEN LEAVE"), the period of
                  restriction set out in clause 7.1 above shall be reduced by
                  the length of Garden Leave served prior to the Termination
                  Date.

8.       MADGE NON-COMPETE UNDERTAKINGS

8.1      Madge undertakes with the Company that, except with the written consent
         of the Board (excluding the Madge Directors):

         8.1.1    that for a period commencing on the date hereof and expiring
                  on the date twelve months after the Termination Date it will
                  not whether by itself, through its employees or agents or
                  otherwise howsoever and whether on its behalf or on behalf of
                  any person, firm, company or other organisation, directly or
                  indirectly:

                  8.1.1.1   in competition with any member of the Group within
                            the Restricted Area be engaged or otherwise
                            interested in the business of manufacturing,
                            designing, distributing, selling, supplying or
                            otherwise dealing with Goods;

                  8.1.1.2   in competition with any member of the Group, solicit
                            business from or canvas any Customer or Prospective
                            Customer if such solicitation or canvassing is in
                            respect of Goods;

                  8.1.1.3   in competition with any member of the Group accept
                            orders for Goods from any Customer or Prospective
                            Customer;

                  8.1.1.4   solicit or induce or endeavour to solicit or induce
                            any person who on the Termination Date was a
                            director/manager of any member of the Group to cease
                            working for or providing services to the Group,
                            whether or not any such person would thereby commit
                            a breach of contract;

                  8.1.1.5   employ or otherwise engage in the business of
                            manufacturing, distributing, designing, selling,
                            supplying or otherwise dealing with Goods any person
                            who was during

                                       20


<PAGE>

                            the 12 months preceding the Termination Date
                            employed or otherwise engaged by any member of the
                            Group and who by reason of such employment or
                            engagement is in possession of any trade secrets or
                            confidential information relating to the business of
                            any member of the Group or who has acquired
                            influence over its Customers and Prospective
                            Customers;

                  8.1.1.6   interfere or seek to interfere with the continuance
                            of supplies to any member of the Group (or the terms
                            of such supplies) from any suppliers who shall have
                            been supplying components for material or services
                            to any member of the Group;

         8.1.2    for the purposes of clauses 8.1 to 8.7 the following words
                  shall have the following meanings:

                  8.1.2.1   "GOODS" shall mean Bluetooth or 802.11 wireless LAN
                            or PAN networking solutions or directly competing
                            technology;

                  8.1.2.2   "SERVICES" shall mean the provision of managed
                            services relating to Bluetooth or 802.11 wireless
                            LAN or PAN networking solutions or directly
                            competing technology;

                  8.1.2.3   "CUSTOMER" shall mean any person, firm, company, or
                            other organisation whatsoever to whom or which any
                            member of the Group distributed, sold or supplied
                            Goods during the one year immediately preceding the
                            Termination Date;

                  8.1.2.4   "PROSPECTIVE CUSTOMER" shall mean any person, firm,
                            company or other organisation whatsoever with whom
                            or which any member of the Group had negotiations or
                            discussions regarding the possible distribution,
                            sale or supply of Goods during the twelve months
                            immediately preceding the Termination Date;

                  8.1.2.5   "RESTRICTED AREA" shall mean

                            8.1.2.5.1   United Kingdom, the European Union, the
                                        United States, Canada and Japan; and

                            8.1.2.5.2   any other country in the world where, on
                                        the Termination Date, any member of the
                                        Group was engaged in the manufacture,
                                        distribution, design, sale or supply or
                                        otherwise dealt with Goods;

                  8.1.2.6   "TERMINATION DATE" shall mean the date that Madge
                            ceases to hold 20% or more of the issued share
                            capital of the Company.


                                       21
<PAGE>

8.2      Madge (having taken independent legal advice) agrees with the Company
         that the above non-compete undertakings are reasonable and necessary
         for the protection of the legitimate interests of the Initial
         Investors.

8.3      While the above undertakings are considered to be reasonable it is
         agreed that if any such undertakings shall be adjudged to go beyond
         what is reasonable for the protection of the interests of the Company
         but would be reasonable if part or parts were deleted or modified, the
         relevant undertaking or undertakings shall apply with such deletion
         and/or modification as may be necessary to make it or them valid and
         effective.

8.4      Madge shall procure that each group company of Madge complies with this
         clause 8.

8.5      Nothing contained in clause 8.1 shall preclude or restrict Madge or a
         group company of Madge acquiring another company, group of companies,
         business or undertaking (the "ACQUIRED UNDERTAKING") whose business or
         businesses include(s) any of the businesses which would, following such
         acquisition, be subject to the restrictions set out in clause 8.1 (the
         "RELEVANT BUSINESS") provided that the annual turnover of the Relevant
         Business as shown in the most recently audited annual accounts of the
         Acquired Undertaking prior to the date of the acquisition did not
         account for more than 5 per cent of the aggregate turnover of the
         Acquired Undertaking, as shown by such accounts and Madge shall ensure
         that such part of the Relevant Business as is subject to the
         restriction set out in clause 8.1 is disposed of within 6 months of
         acquisition to a third party or parties.

8.6      In relation to any Board meetings to consider, or action to be taken by
         the Company in respect of any breach or suspected breach by Madge of
         this clause 8, Madge shall procure that its Nominated Directors shall
         not attend such Board meetings (unless requested by the Initial
         Investors) and shall not vote thereat and will permit the prosecution
         of such matter by the Apax Director and Amadeus Director on behalf of
         the Board (or a committee of the Board appointed by them).

8.7      Notwithstanding the provisions of the above non-compete undertakings,
         in the event that:

         8.7.1    Madge shall during the term of this Agreement supply any
                  services within the Restricted Area, which compete with any
                  Services provided by the Company; or

         8.7.2    the Company shall during the term of this Agreement supply any
                  Services within the Restricted Area, which compete with any
                  services provided by Madge or any member of the Madge group;

         the board of Madge shall meet with the Board in order to resolve the
         conflict of interests between the respective businesses of the Company
         and Madge and the Company and Madge acting in good faith shall use
         their respective best endeavours to reach a workable solution to their
         mutual benefit.

                                       22


<PAGE>

9.       NOMINATED DIRECTORS AND NEW DIRECTORS

9.1      Save with the prior written consent of the Initial Investors and Madge,
         the number of Directors of the Company shall initially (at the date of
         this Agreement) be 7 but shall be no greater than 9. The parties shall
         use reasonable endeavours to agree on the appointment of a new
         independent non-executive chairman within three months of 12th April
         2001.

9.2      Subject to the shareholding requirements specified in the Articles each
         of the Initial Investors (excluding Intel) and Madge shall be entitled
         at any time and from time to time by the delivery of written notice to
         the Company to appoint a director of the Company (and in the case of
         Madge two directors) and in like manner to remove such person from
         office and the Company shall give effect to the provisions of any such
         notice. Each of the Initial Investors (so appointing) agrees that it
         shall not appoint a Nominated Director (or, if already appointed, as
         soon as is reasonably practicable remove a Nominated Director) whose
         other directorships include a directorship of a company in direct
         competition with the business of the Company (a "COMPETING INTEREST").
         In the event of any dispute between the parties concerning whether any
         directorship of a proposed Nominated Director (or an existing Nominated
         Director) amounts to a competing interest the matter shall be put to a
         resolution of the Board. The existing directorships of Michael Risman
         and Hermann Hauser shall not for the purposes of this clause 9.2 be
         deemed to amount to a competing interest.

9.3      A Director nominated by an Initial Investor or Madge shall be entitled
         to appoint any person to be his alternate director.

9.4      The Company shall not remove or purport to remove the Apax Director,
         the Amadeus Director or a Madge Director without the prior approval of
         Apax, Amadeus or Madge (as appropriate).

9.5      In addition to the four Nominated Directors the following shall
         comprise the Board :

         9.5.1    the chief executive officer;

         9.5.2    an independent non-executive director approved by the parties;

         9.5.3    an independent non-executive chairman appointed pursuant to
                  clause 9.1;

         9.5.4    two further Board members if agreed upon by the parties;

         Provided that if an independent non-executive director to be appointed
         pursuant to clause 9.5.2 cannot be agreed upon within three months of
         12th April 2001 then Apax shall be entitled to make such appointment
         but in this event the CEO (Mike Wilson) shall be entitled to select the
         independent non-executive chairman of the Board. "INDEPENDENT" in this
         context shall mean economically independent of the Initial Investors
         and Madge and, if the CEO is not satisfied that the Apax appointee is
         independent, the CEO may veto such appointment.

                                       23


<PAGE>

9.6      Each of the Initial Investors shall be entitled to appoint an observer
         to attend Board meetings but not to vote thereat.

9.7      The Company agrees that Apax Partners Europe Managers Ltd and Amadeus
         Capital Partners Limited shall, in respect of the provision of the
         services of the Apax Director, Amadeus Director and their respective
         observers, be paid, in aggregate, a fee at the rate of $50,000 per
         annum (plus value added tax) payable quarterly in arrears from 12th
         April 2001. Such fee shall be subject to upward review during the month
         before and with effect from each anniversary of 12th April 2001, and if
         the Company and the Apax Director and Amadeus Director cannot agree a
         revised fee the annual fee payable immediately before each anniversary
         shall be increased to the annual sum which reflects the increase in the
         Retail Prices Index over the previous year. In addition, the Apax
         Director, the Amadeus Director and any of their respective observers
         shall be reimbursed such reasonable expenses that they may properly
         incur in providing their services to the Company.

9.8      The Company agrees that Madge shall, in respect of the provision of the
         services of the Madge Directors, be paid, in aggregate, a fee at the
         rate of $50,000 per annum (plus value added tax) payable quarterly in
         arrears from 12th April 2001. Such fee shall be subject to upward
         review during the month before and with effect from each anniversary of
         12th April 2001, and if the Company and Madge cannot agree a revised
         fee the annual fee payable immediately before each anniversary shall be
         increased to the annual sum which reflects the increase in the Retail
         Prices Index over the previous year. In addition, the Madge Directors
         shall be reimbursed such reasonable expenses that they may properly
         incur in providing their services to the Company.

9.9      If a Nominated Director is not appointed from time to time the relevant
         Initial Investor and/or Madge shall during such periods be sent notice
         of all directors' meetings and the minutes thereof and all other
         documents and papers circulated to the Board.

10.      INTEL BOARD OBSERVER

10.1     In accordance with clause 9.6 so long as Intel, together with its
         subsidiaries holds at least 2.5% in aggregate of the issued share
         capital of the Company (or such lower threshold share percentage as
         specified in clause 6.5.2), the Company will permit a representative of
         Intel (the "OBSERVER") to attend all meetings of the Board and all
         committees thereof (whether in person, by telephone or otherwise) in a
         non-voting, observer capacity and shall provide to Intel, concurrently
         with the members of the Board, and in the same manner, notice of such
         meeting and a copy of all materials provided to such members.

10.2     The Company acknowledges that Intel is likely to have, from time to
         time, information that may be of interest to the Company
         ("INFORMATION") regarding a wide variety of matters including, by way
         of example only: (1) Intel's technologies, plans and services, and
         plans and strategies relating thereto; (2) current and future
         investments Intel has made, may make, may consider or may become aware
         of with respect to other companies and other technologies, products and
         services, including, without limitation, companies that may be
         competitive with the Company's; and (3) developments with respect to
         the technologies, products and services, and plans and






                                       24
<PAGE>

         strategies relating thereto, of other companies, including, without
         limitation, companies that may be competitive with the Company. The
         Company recognises that a portion of such Information may be of
         interest to the Company. Such Information may or may not be known by
         the Observer. The Company, as a material part of the consideration for
         this Agreement, agrees that Intel and its Observer shall have no duty
         to disclose any Information to the Company or permit the Company to
         participate in any projects or investments based on any Information, or
         to otherwise take advantage of any opportunity that may be of interest
         to the Company if it were aware of such Information, and hereby waives,
         to the extent permitted by law, any claim based on the corporate
         opportunity doctrine or otherwise that could limit Intel's ability to
         pursue opportunities based on such Information or that would require
         Intel or Observer to disclose any such Information to the Company or
         offer any opportunity relating thereto to the Company.

11.      THE AUDIT COMMITTEE AND THE REMUNERATION COMMITTEE

11.1     The Board of the Company (and, at the request of the Apax Director or a
         Madge Director, the board of any other Group Company) shall establish
         an audit committee (the "AUDIT COMMITTEE") and a remuneration committee
         (the "REMUNERATION COMMITTEE") having the membership and duties set out
         in this clause 11.

11.2     The members of the Audit Committee shall be the chairman of the Board,
         the Amadeus Director and a Madge Director (or in default appointed by
         the Chairman of the Board). At the request of the Audit Committee, the
         Company and/or any Group Company shall ensure the attendance of the
         Auditors or of any other director or employee of the Company or any
         Group Company and shall ensure the disclosure to the committee of any
         books and records of the Company or any Group Company or other
         information which it may require. The Company or any Group Company
         shall upon request provide authorisation to the Audit Committee to seek
         directly from the financiers and Auditors or any Group Company such
         information as the Audit Committee shall see fit.

11.3     The Audit Committee shall consider, report and make recommendations to
         the Board on:

         11.3.1   appropriate accounting policies, compliance with accounting
                  standards and material accounting matters (such as contingent
                  liabilities);

         11.3.2   the adequacy and effectiveness of internal systems of
                  reporting and control;

         11.3.3   the scope of the audit, action required as a result of the
                  Auditors' findings and conclusion, and the Auditors'
                  remuneration;

         11.3.4   compliance with the policies of the Company or any Group
                  Company and with external codes of conduct or regulations; and

         11.3.5   any other matters which it considers appropriate or otherwise
                  at the request of the Board.


                                       25

<PAGE>

11.4     The members of the Remuneration Committee shall be the chairman of the
         Board, the Apax Director and a Madge Director (or in default appointed
         by the Chairman of the Board). The chief executive officer shall, upon
         the request of the Remuneration Committee, prepare and deliver a report
         and recommendations on remuneration.

11.5     The Remuneration Committee, subject to clause 6.1.11, shall be
         authorised to determine on behalf of the Board the terms of appointment
         or dismissal and the remuneration of both executive and non-executive
         directors (including, subject to the provisions of clause 9 the
         Nominated Directors).

11.6     The decisions of the Audit Committee and the Remuneration Committee
         shall be reached by a majority of its members voting.

12.      TRANSFERS AND NEW MEMBERS*

12.1     No Shareholder shall transfer shares (pursuant to one or more
         transfers) constituting more than 3% in aggregate of the issued share
         capital of the Company to a Trade Investor unless such transfer is a
         transfer following the making of an offer for the whole of the issued
         share capital of the Company. No Shareholder may transfer shares to a
         Strategic Investor. For the purpose of this clause Madge shall not be
         deemed a Trade Investor.

12.2     Apax and Amadeus on the one hand and Madge on the other mutually agree
         to procure that the provisions of Article 11.15.1 (tag provisions) will
         apply as between themselves (and for the avoidance of doubt not to a
         sale by any other Shareholder) in respect of any offer not amounting to
         an offer for a controlling interest (as defined in such Article) in
         respect of the number of shares sought to be purchased by the purchaser
         pro rata to their respective holdings of shares in the Company
         ("TAG-RIGHTS") Provided that:

         12.2.1   XXX;

         12.2.2   XXX; and

         12.2.3   XXX

12.3     It is the parties intention that Strategic Investors will waive all or
         part of their rights of pre-emption (whether arising under this
         Agreement, the Articles or otherwise) on the issue of any new shares or
         on the transfer of shares.

12.4     Notwithstanding the provisions of this clause 12, the Initial Investors
         may transfer up to 25% of each of their shares in the Company to any
         non-Trade Investor provided always that such transfer takes place by
         the end of January 2002 and provided always that such transferee is
         acceptable to the Company (such acceptance not to be unreasonably
         withheld or delayed). For the avoidance of doubt, any of Kreditanstalt
         fur Wiederaufbau or other Apax related funds are deemed acceptable
         transferees. The Shareholders (to include any successors in title)
         shall and hereby waive any rights of pre-emption (whether arising under
         this Agreement, the Articles, or

----------
*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       26

<PAGE>

         otherwise) on any transfer of shares by Apax pursuant to this clause
         12.4. The parties are aware that the financing of AP V-C GmbH & Co KG
         is provided by the Risk Capital program of the Kredittanstalt fur
         Wiederaufbau.

12.5     Notwithstanding any provision of this Agreement (as between the parties
         apart from the Company) or the Articles to the contrary, no shares
         shall be issued or transferred to a person who is not already a party
         to this Agreement, unless that person has already executed a Deed of
         Adherence by which he is treated as a Senior Manager or an Investor (or
         Initial Investor in the event of transfer by Apax or Amadeus pursuant
         to clause 12.4 to a related fund) or a Strategic Investor (as the case
         may be) or unless that person is an employee of the Group (but not a
         Senior Manager) purchasing shares pursuant to the Existing Schemes (or
         any future employee share scheme of the Company) or pursuant to clause
         18 of the April Investment Agreement.

12.6     All executed Deeds of Adherence shall be delivered to and held by the
         Company.

13.      MADGE SECURITISATION*

13.1     Notwithstanding Article 11.7.2 the parties agree that Madge shall be
         entitled to secure up to XXX of its shares ("SECURITISED SHARES")
         ("SECURITISATION") to a non Trade Investor ("COMMERCIAL LENDER"). The
         parties agree such concession on the following basis:

         13.1.1   The Commercial Lender must be regulated in the UK with the
                  Financial Services Authority and have as one of its primary
                  activities the provision of debt financing; for the avoidance
                  of doubt the Commercial Lender may include the commercial
                  lending division of a UK clearing bank. It is agreed that the
                  Commercial Lender may include GE Capital Commercial Finance
                  notwithstanding that it is a Trade Investor.

         13.1.2   The Securitisation shall not provide for a transfer of the
                  Securitised Shares to the Commercial Lender until there is an
                  event of default under the terms of the Securitisation between
                  Madge and the Commercial Lender which also triggers a Transfer
                  Event pursuant to any of Articles 12.1.1 to 12.1.4
                  (inclusive) and in respect of which the Transfer Price (as
                  defined in the Articles) shall be calculated in accordance
                  with clause 13.1.3.

         13.1.3   Before any proposed transfer (or other disposition pursuant to
                  Article 11.7.2) of the Securitised Shares from Madge to the
                  Commercial Lender or any other person a Transfer Notice shall
                  be served pursuant to Article 11.10 or other relevant
                  provision of the Articles and the Transfer Price shall be the
                  lower of:

                  (a)      XXX and

                  (b)      XXX.


----------
*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       27


<PAGE>

         13.1.4   The Commercial Lender under the terms of its agreement with
                  Madge shall not, and shall have no right to, instruct or
                  advise Madge as to how it exercises its rights and obligations
                  under this Agreement or otherwise in relation to the Company
                  and in the event of any such instruction or advice received
                  from the Commercial Lender in breach of its agreement with
                  Madge, the Company may resolve (a resolution from which the
                  Madge Directors shall abstain) that a Transfer Event in
                  accordance with Article 12.1.5 shall have occurred to which
                  the provisions of Article 12 shall apply save that the
                  Transfer Price shall be calculated in accordance with clause
                  13.1.3 and Article 12.8 shall not apply.

         13.1.5   For the avoidance of doubt, if any of the events specified in
                  Article 12.1 occur in relation to Madge then a Transfer Event
                  will have occurred in respect of the Securitised Shares on the
                  basis of the relevant provision of Article 12.1 and the
                  remaining provisions of Article 12 shall apply save that the
                  Transfer Price for the Securitised Shares shall be calculated
                  in accordance with clause 13.1.3 and Article 12.8 shall not
                  apply.

         13.1.6   None of the rights of Madge under this Agreement or the
                  Articles shall be exerciseable by the Commercial Lender prior
                  to any transfer of the Securitised Shares to the Commercial
                  Lender. For the avoidance of doubt, following any lawful
                  transfer of the Securitised Shares to the Commercial Lender
                  under this Agreement and the Articles (only ever to happen
                  after the Securitised Shares have been offered to the
                  Shareholders pursuant to the rights of pre-emption under the
                  Articles), the Commercial Lender's rights under this Agreement
                  and the Articles shall be as an ordinary shareholder only and
                  no rights granted specifically to Madge under this Agreement
                  or the Articles (except as per clause 13.3 and 13.4 below)
                  will transfer to the Commercial Lender including without
                  limitation any rights pursuant to clause 4 (management of the
                  Company), clause 6.5.1 (matters requiring consent), clause 9.2
                  (Nominated Director) and clause 11 (Audit and Remuneration
                  Committee).

13.2     For the purposes of clause 8.1.2.6 (Restrictive Covenants) Madge shall
         be deemed to be the holder of 20% or more of the issued share capital
         of the Company for so long as Madge and/or the Commercial Lender hold
         or have a beneficial or equitable interest in 20% or more of the issued
         share capital of the Company.

13.3     Notwithstanding the foregoing if Madge is no longer entitled to receive
         financial information pursuant to clause 5.1 the Commercial Lender
         shall be so entitled (provided it holds at least 2.5% of the issued
         share capital of the Company) to exercise the rights under clause 5.1
         stated to be exerciseable by Madge (excluding the rights exercisable by
         the Madge Nominated Director).

13.4     Notwithstanding the foregoing, the Commercial Lender shall have no tag
         rights as defined in clause 12.2 in respect of any transfer by Apax
         and/or Amadeus but shall have the corresponding obligations of Madge
         set out in clause 12.2 subject to the provisions in clause 12.2.1,
         12.2.2 and 12.2.3 (such that Madge and the Commercial Lender are
         treated as one party).


                                       28

<PAGE>

13.5     For the avoidance of doubt clause 16.3 (sale of the Company at less
         than $XXX per share) shall not apply if Madge is no longer a
         shareholder.

14.      MANAGEMENT AND EMPLOYEE SHARES*

14.1     The Board will consider the establishment of an employee benefit trust
         empowered to buy shares from employees leaving the Group and for sale
         to new recruits.

14.2     Exercise of options granted and to be granted under the Existing
         Schemes will be conditional on the option holder discharging all
         National Insurance liability of the Company.

14.3     It is intended that the Company shall have a pool of XXX share options
         available to grant employees (this figure to include share options
         already granted).

14.4     Madge hereby agrees to fully indemnify the Company against any National
         Insurance liability the Company may incur in respect of the Madge
         Networks NV 1993 Stock Plan and/or the Madge Networks NV 1993 Employee
         Stock Purchase Plan.

15.      INVESTOR'S CONSENT

15.1     Where this Agreement provides that any particular transaction or matter
         requires the consent, approval or agreement of the Investors or Madge
         such consent, approval or agreement must be given in writing and may be
         given subject to such terms and conditions as the Investors or Madge
         may impose and any breach of such terms and conditions by any person
         subject thereto shall ipso facto be deemed to be a breach of the terms
         of this Agreement.

15.2     If the consent, approval or agreement of an Investor or Madge is
         required under more than one provision of this Agreement for any one
         transaction or matter then any consent, approval or agreement given in
         relation to that transaction or matter by the Investor or Madge shall
         be deemed to cover all consents, approvals or agreements required for
         that transaction or matter unless otherwise specified by the relevant
         Investor or Madge.

16.      SALE OR LISTING*

16.1     It is the parties' mutual objective to achieve a Listing of the
         Company.

16.2     In the event of the right of Shareholders to sell shares on a Listing
         then in relation to the first XXX shares (subject to adjustment upward
         and downward - to reflect any subdivision, consolidation or other
         capital reorganisation in relation to the Ordinary Shares after the
         date hereof but excluding any conversion of the Convertible Shares) to
         be allocated to Shareholders for sale the Initial Investors (pro rata
         to shareholdings) shall have prior rights of sale and any balance
         thereafter shall be dealt with pro rata to shareholdings. It is
         understood by the Senior Managers that save in exceptional
         circumstances IPO underwriters and investors will wish to restrict the
         sale of shares by the Managers to whatever level they regard as
         reasonable and

----------
*Confidential treatment for various items in this section requested by Madge
 Networks N.V.

                                       29

<PAGE>

         consequently may allow the Managers to sell no more than a nominal
         amount of their shareholdings.

16.3     Subject to clause 16.4, if a sale of the entire issued share capital of
         the Company is proposed at a price of less than $XXX per share (subject
         to adjustment upward and downward - as the case may be - to reflect any
         subdivision, consolidation or other capital reorganisation in relation
         to the shares after the date hereof) (prior to any conversion of
         Convertible Shares) then the decision of whether a sale should proceed
         shall be determined by the independent directors (who are not the CEO
         or Nominated Directors). The independent directors shall have regard to
         the effect of the sale on Madge provided that no special consideration
         shall be given to the position of Madge if on such sale it shall
         receive a gross consideration at least equal to its Original Basis.
         "ORIGINAL BASIS" for this purpose shall mean $XXX but reduced
         proportionately by reference to any shares sold (or transferred
         pursuant to the Securitisation) by Madge after 12th April 2001.

16.4     In the event that the proposed sale referred to in clause 16.3 is to an
         associate of Apax then the decision as to whether the sale should
         proceed (on the terms proposed in clause 16.3) shall be determined by
         the Board (save for the Apax Director).

16.5     The Company agrees that prior to a Listing on a stock exchange in the
         United States, the Company will enter into a Registration Rights
         Agreement, subject to Delaware Law and on terms normal for such
         agreements, with the Investors such agreement to include the following
         terms:

         16.5.1   XXX;

         16.5.2   XXX;

         16.5.3   XXX;

         16.5.4   XXX.

17.      DURATION OF OBLIGATIONS

17.1     On a Listing the provisions of this Agreement shall cease to have
         effect except that the parties' accrued rights and obligations shall
         not be affected.

17.2     When Madge, a Senior Manager or an Investor ceases to hold shares
         Madge, the Senior Manager or the Investor (as the case may be) shall
         cease to be party to this Agreement except that any accrued rights and
         obligations shall not be affected.

18.      ENFORCEMENT OF THE COMPANY'S RIGHTS

         If it appears that any Senior Manager or any associate of a Senior
         Manager (in whatever capacity) is in breach of any obligation which he
         owes to any company in the Group (whether under this Agreement or
         otherwise), then the conduct of the right of action of such company in
         respect thereof shall be passed to the Nominated Directors (or to a
         committee of the Board selected by them) who shall have full authority
         to negotiate, litigate and settle any claim arising and the Senior
         Managers


                                       30


<PAGE>

         and the Company shall take all reasonable steps within their power to
         give effect to the provisions of this clause 18.

19.      COMPANY CONFIDENTIAL INFORMATION

19.1     Each of the Shareholders undertakes to each of the other Shareholders
         and the Company that he will not any time hereafter use or divulge or
         communicate to any person other than officers or employees of the
         Company whose province it is to know the same or on the instructions of
         the Board any Confidential Information which may come to his knowledge
         and he shall use all reasonable endeavours to prevent the publication
         or disclosure of any Confidential Information and these obligations
         shall continue to apply after that Shareholder shall cease to be a
         party to this Agreement or otherwise involved in the affairs of the
         Company without limit in point of time but shall cease to apply to
         information which shall come into the public domain other than by a
         breach of this clause or which for any other reason, other than through
         the default of that Shareholder, shall have ceased to be confidential.

19.2     The Investors and Madge shall not without the prior approval of the
         Board disclose Confidential Information to any third party. For the
         avoidance of doubt, and subject to the provisions of this clause 19, no
         such consent shall be required for the making of any announcement or
         communication relating to this Agreement or the Group by an Investor or
         Madge solely to its investment bankers, accountants, legal counsel,
         employees and lenders (and in the case of the Initial Investors to
         their investment partners), in each case only where such persons or
         entities are, in turn under appropriate non-disclosure obligations.

19.3     Each Shareholder may disclose information about the Company or this
         Agreement as required by:

         19.3.1   the London Stock Exchange or other recognised investment
                  exchange;

         19.3.2   any regulatory authority to which the relevant Shareholder is
                  subject; or

         19.3.3   law.

19.4     This clause 19 shall not apply in respect of any Shareholder to the
         extent that such Shareholder has in place from time to time a separate
         valid non-disclosure agreement with the Company.

20.      GENERAL PROVISIONS

20.1     A variation of this Agreement is valid only if it is in writing and
         signed by or on behalf of each party.

20.2     The failure to exercise or delay in exercising a right or remedy
         provided by this Agreement or by law does not constitute a waiver of
         the right or remedy or a waiver of other rights or remedies. No single
         or partial exercise of a right or remedy provided by this Agreement or
         by law prevents further exercise of the right or remedy or the exercise
         of another right or remedy.


                                       31

<PAGE>

20.3     The parties rights and remedies contained in this Agreement are
         cumulative and not exclusive of rights or remedies provided by law.

20.4     Nothing contained in this Agreement is to be construed as creating a
         partnership between any of the parties.

20.5     If there is any conflict or inconsistency between the provisions of
         this Agreement and the Articles, this Agreement prevails.

20.6     The invalidity, illegality or unenforceability of any provision of this
         Agreement does not affect the continuation in force of the remainder of
         this Agreement.

20.7     This Agreement shall be binding upon and shall enure for the benefit of
         the successors and assigns and personal representatives (as the case
         may be) of each of the parties hereto.

20.8     Save as otherwise herein expressly provided neither the Company nor
         Madge nor any of the Senior Managers, nor the Initial Investors shall
         be entitled to assign or otherwise transfer any of its or his rights
         and obligations under this Agreement (save where this is to a permitted
         transferee in accordance with Article 11.9 of the Articles) without the
         prior written consent of non-assigning parties.

20.9     The parties hereto shall, and shall use their respective reasonable
         endeavours to procure that any necessary third parties shall, do and
         execute and perform all such further deeds, documents, assurances, acts
         and things as any of the parties hereto may reasonably require by
         notice in writing to the others to carry the provisions of this
         Agreement and the Articles into full force and effect.

20.10    This Agreement may be executed in any number of counterparts, each of
         which when executed and delivered is an original, but all the
         counterparts together constitute the same document.

21.      APRIL INVESTMENT AGREEMENT

         This Agreement shall supersede all (if any) previous agreements and
         understandings between the parties in respect of the matters set out in
         this Agreement and (together with the Articles and the other agreements
         and documents referred to in this Agreement) represents the entire
         agreement between the parties hereto in relation to all matters the
         subject matter hereof. In this connection those parties hereto who are
         also parties to the April Investment Agreement hereby agree, in
         consideration of the parties entering into this Agreement, that the
         following clauses of the April Investment Agreement shall cease to have
         effect from the date hereof, save in respect of any prior breach; the
         relevant clauses are clauses 2, 5, 6, 10, 11, 13, 14, 15, 16, 17, 18,
         19 (inclusive).

22.      CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

         A person who is not a party to this Agreement may not enforce any term
         of this Agreement. The parties agree that the Contracts (Rights of
         Third Parties) Act 1999 shall not apply to this Agreement or to any
         agreement or document entered into pursuant to this Agreement.


                                       32

<PAGE>



23.      NOTICES

23.1     All notices and other communications made pursuant to this Agreement
         shall be in writing and shall be conclusively deemed to have been duly
         given:

         23.1.1   in the case of hand delivery to the address shown below, on
                  the next Business Day after delivery;

         23.1.2   in the case of delivery by an internationally recognised
                  overnight courier to the address set forth below, freight
                  prepaid, on the next Business Day after delivery;

         23.1.3   in the case of a notice sent by facsimile transmission to the
                  number, and addressed as, set forth below, on the next
                  Business Day after delivery, if facsimile transmission
                  confirmed;

         23.1.4   in the case of a notice sent by email to the email address set
                  forth below, on the date of written acknowledgment of receipt
                  of such email by the recipient.

23.2     In the event that notices are given pursuant to one of the methods
         listed in Sub-sections 23.1.1 to 23.1.4 above, a copy of the notice
         should also be sent by email.

23.3     Contact details:

23.4     Red M:   Reynolds Porter Chamberlain
                  Chichester House
                  278/282 High Holborn
                  London
                  WC1V 7HA

                  Fax + 44 (0) 20 7242 1431 and marked 'Attn: Tim Anderson'
                  Always with copy to: tra@rpc.co.uk

         Mike Wilson: to the address set out in Schedule 1

         Simon Gawne: to the address set out in Schedule 1

         Clive Mayne: to the address set out in Schedule 1

         Alison Edge: to the address set out in Schedule 1

         Duncan Simpson: to the address set out in Schedule 1

         Red-M Trustee Limited: to the address set out in Schedule 1
                  Tel: 020 7242 2877
                  Fax: 020 7242 1431 and marked "Attention: Jonathan Watmough"
                  Always with a copy to: jpw@rpc.co.uk

         Compass Trustees Limited: to the address set out in Schedule 1


                                       33

<PAGE>

                  Tel: 01534 706000
                  Fax: 01534 706099 and marked "Attention: Tim Scott-Warren"
                  Always with a copy to: timsw@closejersey.com

         Madge Networks:
                  Wexham Springs
                  Framewood Road
                  Wexham
                  Slough
                  Berkshire
                  SL3 6PJ

                  Tel:  01753 661000
                  Fax: 01753 661010 and marked `Attn: Kirstie Hallgate'
                  Always with a copy to: kirstie.hallgate@madge.com

         Apax Funds:
                  Apax Partners & Co Ventures Limited
                  15 Portland Place
                  London
                  W1N 3AA

                  Tel : 020 7872 6300
                  Fax : 020 7872 9449 and marked `Attn: Mike Risman'
                  Always with a copy to: michael.risman@apax.co.uk

         Amadeus Funds:
                  Amadeus Capital Partners Limited
                  5 Shaftsbury Road
                  Cambridge
                  CB2 2BW

                  Tel : 01223 707000
                  Fax : 01223 707070 and marked 'Attn: Andrea Traversone'
                  Always with a copy to: atravers@amadeuscapital.com

23.5     Intel:   EMEA Portfolio Management
                  c/o Intel Corporation (UK) Ltd.
                  Mail-stop iSw 68
                  Pipers Way, Swindon
                  Wiltshire SN3 1RJ
                  United Kingdom

                  Always with copy to: EMEAportfolio@intel.com.

23.6     A party may change or supplement the contact details for service of any
         notice pursuant to this Agreement, or designate additional addresses,
         facsimile numbers and email addresses for the purposes of this clause
         23 by giving the other party written notice of the new contact details
         in the manner set forth above.

                                       34
<PAGE>


24.      GOVERNING LAW AND JURISDICTION

24.1     This Agreement shall be governed by and construed in accordance with
         English law and the parties hereto irrevocably submit to the
         non-exclusive jurisdiction of the English courts.

24.2     The parties agree to negotiate in good faith to resolve any dispute
         between them regarding this Agreement. If the negotiations do not
         resolve the dispute to the reasonable satisfaction of both parties,
         then each party shall nominate one senior officer of the rank of Vice
         President or higher as its representative. These representatives shall,
         within thirty (30) days of a written request by either party to call
         such a meeting, meet in person and alone (except for one assistant for
         each party) and shall attempt in good faith to resolve the dispute. If
         the disputes cannot be resolved by such senior managers in such
         meeting, the parties agree that they shall, if requested in writing by
         either party, meet within thirty (30) days after such written
         notification for one day with an impartial mediator and consider
         dispute resolution alternatives other than litigation. If an
         alternative method of dispute resolution is not agreed upon within
         thirty (30) days after the one day mediation, either party may begin
         litigation proceedings. This procedure shall be a prerequisite before
         taking any additional action hereunder.

24.3     The parties shall not be required to institute the procedure set out in
         clause 24.2 in the event that such party considers it necessary to
         commence immediate court proceedings to protect its intellectual
         property and/or confidential information.

EXECUTED the day and year first before written.

                                       35

<PAGE>



                                   SCHEDULE 1
                       (Employee and Trustee Shareholders)

                                   SCHEDULE 2
                  (Particulars of the Company and Subsidiaries)

THE COMPANY

RED-M (COMMUNICATIONS) LIMITED

Registered Address:                          Wexham Springs
                                             Framewood Road
                                             Wexham
                                             Slough, SL3 6PJ

Registered Number:                           03985301

Country/State of Incorporation:              England & Wales
Date:                                        27th April 2000
Purpose:                                     Manufacturing & Distribution

Shareholder(s):                              Madge Networks N.V.
                                             Apax (OCS) Nominees Limited
                                             Amadeus II A
                                             Amadeus II B
                                             Amadeus II C
                                             Amadeus II GmbH & Co. K.G.
                                             Amadeus II Affiliates
                                             Michael Wilson
                                             Clive Mayne
                                             Simon Gawne
                                             Alison Edge
                                             Duncan Simpson
                                             Red-M Trustee Limited
                                             Compass Trustees Limited

Number of Shares Authorised:                 50,000,000
Par Value Per Share:                         US$1.00
Number of Shares Issued:                     17,190,014
Issued Share Capital:                        US$17,190,014
Additional Capital:                          US$8,753,500 (injected 24/11/00)

Directors:                                   Mike Wilson
                                             Christopher Bradley
                                             Kirstie Hallgate
                                             Hermann Hauser
                                             Michael Risman

Officers:                                    Catherine Robbins - Secretary

                                       36
<PAGE>

Auditors:                                    Ernst & Young

Accounting Reference Date:                   31st December

Charges:                                     None registered


SUBSIDIARY 1

RED-M INC

Registered Address:                          1209 Orange Street
                                             Wilmington, DE 19801
                                             USA

Principal Office:                            1 State Street Plaza
                                             12th Floor
                                             New York, NY 10004

Country/State of Incorporation:              Delaware
Date:                                        11th May 2000
Purpose:                                     Manufacturing & Distribution

Shareholder(s):                              Red-M (Communications) Limited
                                             (100%)

Number of Shares Authorised:                 1,000
Par Value Per Share:                         US$0.01
Number of Shares Issued:                     100
Issued Share Capital:                        US$1.00
Additional Capital:                          US$8,753,500 (injected 24/11/00)

Directors:                                   Michael D Wilson

Officers:                                    Duncan Simpson - Secretary

Auditors:                                    Ernst & Young

Accounting Reference Date:                   31st December

Charges:                                     None registered


SUBSIDIARY 2

RED-M TRUSTEE LIMITED

Registered Address:                          Chichester House
                                             278/282 High Holborn
                                             London
                                             WC1V 7HA

                                       37
<PAGE>

Registered Number:                           04205911

Country/State of Incorporation:              England & Wales
Date:                                        25th April 2001
Purpose:                                     Trust established for the holding
                                             of Employee Shares

Shareholder(s):                              Red-M (Communications) Limited

Number of Shares Authorised:                 100
Par Value Per Share:                         (pound)1.00
Number of Shares Issued:                     1
Issued Share Capital:                        (pound)1.00

Directors:                                   Anthony Richard Harry Brett
                                             Jonathan Peter Watmough

Officers:                                    Reynolds Porter Chamberlain -
                                             Secretary

Auditors:                                    Ernst & Young

Accounting Reference Date:                   30th April

Charges:                                     None registered


                                       38

<PAGE>
                                   SCHEDULE 3
                               (Deed of Adherence)

THIS DEED OF ADHERENCE is made on [ ] 200[ ] by [ ] of [ ] (the "COVENANTOR") in
favour of the persons whose names are set out in the schedule to this Deed and
is SUPPLEMENTAL to the Shareholders Agreement dated [ ] 2001 made by (1) Red-M
(Communications) Limited (2) Mike Wilson and Others (3) Madge Networks NV (4)
The Apax Funds (5) The Amadeus Funds and (6) Intel Capital Corporation
("INVESTMENT AGREEMENT").


THIS DEED WITNESSETH as follows:

49.      The Covenantor confirms that [it] [(s)he] has been given and read a
         copy of the Shareholders Agreement and covenants with each person named
         in the Schedule to this Deed to perform and be bound by all the terms
         of the Shareholders Agreement as if the Covenantor were [an
         Investor/Strategic Investor/a Senior Manager or as provided in clause
         12.5 an Initial Investor] who is party to the Shareholders Agreement.

50.      This Deed is governed by English law.

IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended
to be and is hereby delivered on the date first above written.

                                    SCHEDULE

[Parties to Shareholders Agreement including those who have executed earlier
deeds of adherence.]

SIGNED and UNCONDITIONALLY                           )
DELIVERED as a Deed by [                      ]      )
in the presence of:                                  )


                                       39

<PAGE>



SIGNED for and on behalf of RED-M                   )/s/ M WILSON
(COMMUNICATIONS) LIMITED in the                     )
presence of:                                        ) /s/ C ROBBINS





SIGNED by MICHAEL WILSON in the presence of:        ) /s/ M WILSON
                                                    ) /s/ C ROBBINS





SIGNED by SIMON GAWNE in the presence of:           ) /s/ S GAWNE
                                                    ) /s/ C ROBBINS





SIGNED by CLIVE MAYNE in the presence of:           ) /s/ C MAYNE
                                                    ) /s/ C ROBBINS




SIGNED by ALISON EDGE in the presence of:           ) /s/ A EDGE
                                                    ) /s/ C ROBBINS





SIGNED by DUNCAN SIMPSON in the presence of:        ) /s/ D SIMPSON
                                                    ) /s/ C ROBBINS





SIGNED for and on behalf of RED-M TRUSTEE  LIMITED  ) /s/ J WATMOUGH
in the presence of:                                 ) /s/ T ANDERSON


                                       40


<PAGE>
SIGNED  for  and on  behalf  of  COMPASS  TRUSTEES  ) /s/ T SCOTT-WARREN
LIMITED in the presence of:                         ) WITNESSED



SIGNED for and on behalf of MADGE  NETWORKS  NV in  ) /s/ R MADGE
the presence of:                                    ) /s/ R KILCOYNE





EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in                   )
its capacity as manager of                          )
APAX EUROPE V-A, L.P. by:                           ) /s/ M RISMAN






EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
manager of APAX EUROPE V-B, L.P. by:                ) /s/ M RISMAN


                                       41




<PAGE>
EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
manager of APAX EUROPE V-C, GMBH & CO. KG by:       ) /s/ M RISMAN







EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
managers of APAX EUROPE V-D, L.P. by:               ) /s/ M RISMAN







EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
manager of APAX EUROPE V-E, L.P. by:                ) /s/ M RISMAN


                                       42




<PAGE>



EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
manager of APAX EUROPE V-F, C.V. by:                ) /s/ M RISMAN




                              Authorised Signatory

                              Authorised Signatory





EXECUTED for and on behalf of APAX PARTNERS         )
EUROPE MANAGERS LIMITED acting in its capacity as   )
manager of APAX EUROPE V-G, C.V. by:                ) /s/ M RISMAN










EXECUTED for and on behalf of AMADEUS CAPITAL       )
PARTNERS LIMITED acting in its capacity as          )
manager of AMADEUS II A by:                         ) /s/ H HAUSER


                                       43



<PAGE>
EXECUTED for and on behalf of AMADEUS CAPITAL       )
PARTNERS LIMITED acting in its capacity as          )
manager of AMADEUS II B by:                         ) /s/ H HAUSER






EXECUTED for and on behalf of AMADEUS CAPITAL       )
PARTNERS LIMITED acting in its capacity as          )
manager of AMADEUS II C by:                         ) /s/ H HAUSER









EXECUTED for and on behalf of AMADEUS CAPITAL       )
PARTNERS LIMITED acting in its capacity as          )
manager of AKG by:                                  ) /s/ H HAUSER









EXECUTED for and on behalf of AMADEUS CAPITAL       )
PARTNERS LIMITED acting in its capacity as          )
manager of AII AFFILIATES by:                       ) /s/ H HAUSER


                                       44

<PAGE>



EXECUTED for and on behalf of INTEL CAPITAL         )
CORPORATION by:                                     )
                                                    )

By:      /s/ G KERSHAW

Name:    GARY KERSHAW

Title:   ASSISTANT TREASURER


                                       45