**Exhibit 2.1**

 
| **DATED** | ** ** | ** **                         | **28 September 2004** |
|-----------|------------|------------------------------------|-----------------------|
|      |       |                               |
| (1)       |       | VIA  NET.WORKS EUROPE HOLDING B.V. |
|      |       |                               |
| (2)       |       | CLARANET  LIMITED                  |
|      |       |                               |
| (3)       |       | CLARA.NET  HOLDINGS LIMITED        |
|      |       |                               |
| (4)       |       | VIA  NET.WORKS, INC.               |

 

 

**A G R E E M E N T**

 

 

For the sale and purchase of the entire sharecapital of ViaNet.Works UK Limited

 

 

**EVERSHEDS LLP**

Eversheds House

70 Great Bridgewater Street

Manchester M1 5ES

Tel +44 (0) 161 831 8000

Fax +44 (0) 161 831 8888

 

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**CONTENTS**

 
| **Clause**    |                                                                     |       |
|---------------|--------------------------------------------------------------------------|------------|
|          |                                                                     |       |
| 1             | DEFINITIONS AND  INTERPRETATION                                          |       |
| 2             | SALE AND PURCHASE                                                        |       |
| 3             | COMPLETION                                                               |       |
| 4             | WARRANTIES                                                               |       |
| 5             | PROVISIONS  RELATING TO THE USE OF COMPANY NAME                          |       |
| 6             | PURCHASER’S  WARRANTIES AND VENDOR’S WARRANTIES                |       |
| 7             | PURCHASER’S UNDERTAKINGS,  VENDOR ASSURANCES AND COMPANY ASSURANCES |       |
| 8             | RESTRICTIVE COVENANTS                                                    |       |
| 9             | ANNOUNCEMENTS                                                            |       |
| 10            | COSTS                                                                    |       |
| 11            | INTEREST                                                                 |       |
| 12            | GUARANTEES                                                               |       |
| 13            | PAYMENTS                                                                 |       |
| 14            | NOTICES                                                                  |       |
| 15            | ENTIRE AGREEMENT                                                         |       |
| 16            | CONTINUING EFFECT                                                        |       |
| 17            | INVALIDITY                                                               |       |
| 18            | AMENDMENTS,  VARIATIONS AND WAIVERS                                      |       |
| 19            | FURTHER ASSURANCE AND  ASSISTANCE                                        |       |
| 20            | COUNTERPARTS                                                             |       |
| 21            | ASSIGNMENT                                                               |       |
| 22            | KP CLAIM                                                                 |       |
| 23            | CASH                                                                     |       |
| 24            | INDEMNITIES AND  COMPUTER EQUIPMENT                                      |       |
| 25            | GOVERNING LAW AND  JURISDICTION                                          |       |
|          | ** **                                                               | ** ** |
| **Schedules** | ** **                                                               | ** ** |
| 1             | The Vendor                                                               |       |
| 2             | PART 1                                                                   |       |
|          | THE COMPANY                                                              |       |
|          | PART 2                                                                   |       |
|          | THE  SUBSIDIARIES                                                        |       |
| 3             | The  Warranties                                                          |       |
|          | COMPLIANCE, DISPUTES                                                     |       |
|          | SUBSIDIARIES                                                             |       |
| 4             | Taxation                                                                 |       |
|          | PART  1 – INTERPRETATION                                            |       |

 

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|   | PART 2 -  TAX COVENANT                                                        |   |
|--------|-------------------------------------------------------------------------------|--------|
|   | PART  3 - TAX WARRANTIES                                                      |   |
| 5      | Completion Arrangements                                                       |   |
| 6      | The  Properties                                                               |   |
| 7      | Limitations on  the Vendor’s Liability                                   |   |
| 8      | Completion Adjustment                                                         |   |
| 9      | Provisions  regarding Retention Fund                                          |   |
| 10     | People  of whom enquiry has been made for the purpose of Vendor awareness     |   |
| 11     | Identified  Prospects under ‘Sales Radar’                           |   |
| 12     | Computer  Equipment                                                           |   |
| 13     | Documents  to be submitted to the Inland Revenue for adjudication (clause 24) |   |

 

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| **THIS AGREEMENT** is made on | 2004 |
|-------------------------------|------|

 

 

**BETWEEN**

 

(1)                                           The person whose name andaddress is set out in **Schedule 1**(“**the Vendor**”);

 

(2)                                           **CLARANETLIMITED**(registered number 03152737) whose registered office is at 21 Southampton Row,London WC1B 5HA (“**the Purchaser**”);

 

(3)                                           **CLARA.NETHOLDINGS LIMITED** (registered in Jersey under number 76481) whoseregistered office is at PO Box 274, Thirty Six Hilgrove Street, St Helier,Jersey, JE4 8TR, Channel Islands (“**the Guarantor**”);and

 

(4)                                           **VIANET.WORKS, INC**.(registered number FCO24926) whose registered office is at 2711Centreville Road, Suite 400, Wilmington, Delaware 19808, USA (“**the Vendor’s Guarantor**”).

 

**BACKGROUND**

 

(A)                                       The Vendor has agreed to sell,and the Purchaser has agreed to purchase, the Shares on the terms andconditions set out in this Agreement.

 

(B)                                         The Vendor has agreed to enterinto this Agreement in consideration (inter alia) of the Guarantor giving theguarantee set out in clauses 12.6 to 12.10 (inclusive).

 

(C)                                         The Purchaser has agreed toenter into this Agreement in consideration (inter alia) of the Vendor’sGuarantor giving the guarantee set out in clauses 12.1 to 12.5 (inclusive).

 

**OPERATIVECLAUSES**

 

1.                                                **DEFINITIONSAND INTERPRETATION**

 

1.1                                          **DefinedTerms**

 

In this Agreement:

 

the following expressions have the following meanings unlessinconsistent with the context:

 
| **“Accounting Date”**      |   | means 31 December 2003                                                                                                                                                                                                                                                          |
|--------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                           |   |                                                                                                                                                                                                                                                                                 |
| **“Accounts”**             |   | means the audited balance sheet of the Company as at  the Accounting Date and the audited profit and loss account of the Company  for the Financial Year which ended on the Accounting Date including the  Directors’ Report, the Auditors Report and all notes annexed to them |
| ** **                           |   |                                                                                                                                                                                                                                                                                 |
| **“Accounting Standards”** |   | means the statements of standard accounting practice  referred to in section 256 CA 1985                                                                                                                                                                                        |

 

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| ** **                        |   | issued by the Accounting Standards Board                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“agreed terms”**      |   | means, in relation to any document, in the terms  agreed between the parties and signed or initialled for identification  purposes only by or on behalf of the Purchaser’s Solicitors and the Vendor’s  Solicitors prior to the execution of this Agreement                                                                                                                                                                                                                                                                                                     |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Business Day”**      |   | means any day (other than a Saturday or Sunday or a  public holiday) on which clearing banks are open in London and Amsterdam for  a full range of normal banking business                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“CA 1985”**           |   | means the Companies Act 1985 (as amended)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Company”**           |   | means VIA NET.WORKS UK Limited (details of which are  set out in **Part 1**  of **Schedule 2**)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Company Assurance”** |   | means any indemnity, guarantee or commitment of any  nature given by the Company or any Subsidiary to the Vendor or any Member of  the Vendor’s Group or to any other person to the extent it relates to the  Vendor or any Member of the Vendor’s Group but excluding in each case any  such obligation which is contained in a Transaction Document or any document  entered into pursuant thereto, and any such obligation which is in the  ordinary and normal course of trade between the Company and the Vendor or any  Member of the Vendor’s Group |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Completion”**        |   | means completion of the sale and purchase of the  Shares in accordance with **clause 3**(*Completion*)  and **Schedule 5**                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Completion Date”**   |   | means the date of this Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Computer Systems”**  |   | means all computer hardware and software used in the  Company’s business and in the possession of the Company but does not include  Customer Premises Equipment nor hardware or software of the Vendor or its  contractors used in the performance of the TSA                                                                                                                                                                                                                                                                                                        |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Consideration”**     |   | means the consideration for the sale of the Shares  as stated in **clause 2.3**(*Purchase Price*) subject to any adjustment made in  accordance with the terms of **Schedule 8**                                                                                                                                                                                                                                                                                                                                                                                     |
| ** **                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **“Contract”**          |   | means any legally binding agreement or commitment  whether conditional or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

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| ** **                                         |   | unconditional                                                                                                                                                                                                                                                                                                                                                         |
|----------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Customer Premises  Equipment”**       |   | means equipment required for the provision or  receipt of services by a customer and which is not located at the premises of  the Company                                                                                                                                                                                                                             |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Data Room”**                          |   | means the data room containing information relating  to the Group which was located at Eversheds LLP, Senator House, 85 Queen  Victoria Street, London, EC4V 4JL and to which the Purchaser, its  representatives and professional advisers were afforded access (a complete  index of which is attached to the Disclosure Letter (“**Data Room  Index**”)) |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Disclosure Letter”**                  |   | means the letter having the same date as this  Agreement together with the appendices and attachments thereto and all  documentation or matters deemed to be disclosed therein (including all  documents listed in the Data Room Index) from the Vendor to the Purchaser  qualifying the Warranties                                                                   |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Encumbrance”**                        |   | means any mortgage, charge, pledge, lien, assignment  by way of security, option, third party right or third party interest of any  nature whatsoever                                                                                                                                                                                                                 |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Escrow Account”**                     |   | means the account to be opened on Completion in the  joint names of the Vendor’s Solicitors and the Purchaser’s Solicitors and  operated in accordance with the terms of the Escrow Account Instruction  Letter                                                                                                                                             |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Escrow Account Instruction  Letter”** |   | means the letter in the agreed terms from the Vendor  and the Purchaser to the Vendor’s Solicitors and the Purchaser’s Solicitors  relating to the Escrow Account                                                                                                                                                                                           |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Excluded Contracts  Assignment”**     |   | means the assignment agreement to be entered into on  or prior to Completion between the Company and the Vendor relating, inter  alia, to the assignment or proposed assignment of certain Contracts from the  Company to the Vendor                                                                                                                                  |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Financial Year”**                     |   | means, in relation to the Company, an accounting reference  period as defined in accordance with s223 of the CA 1985                                                                                                                                                                                                                                                  |
| ** **                                         |   |                                                                                                                                                                                                                                                                                                                                                                  |
| **“Group”**                              |   | means the Company and the Subsidiaries                                                                                                                                                                                                                                                                                                                                |

 

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| **“ICTA”**                  |   | means Income and Corporation Taxes Act 1988                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“Intellectual Property”** |   | means all intellectual property, including patents,  utility models, trade and service marks, trade names (whether registered or  not), domain names, rights in designs, copyrights, moral rights, topography  rights, rights in databases, trade secrets and know-how, in all cases whether  or not registered or registrable and including registrations and applications  for registration of any of these rights to apply for the same but for the  avoidance of doubt excluding all such intellectual property of the Members of  the Vendor’s Group and all such rights of the Members of the Vendor’s Group  which in each case are the subject of the TSA |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“Interest Rate”**         |   | means the base lending rate of the Royal Bank of  Scotland plc from time to time                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“KP Claim”**              |   | means the claim against the Company by (a) the  liquidators of KPNQwest B.V. for unpaid invoices arising out of the KP  Services Agreement; and (b) Citibank International plc, acting as the  security agent of certain creditors of KPNQwest BV, each as more fully  described in the Disclosure Letter                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“KP Counterclaim”**       |   | means the counterclaim by the Company against  KPNQwest B.V. arising out of the failure by KPNQwest B.V. to provide services  under the KP Services Agreement and the resultant termination by Synstar  Computer Services UK Limited of its Contract with the Company, as more fully  described in the Disclosure Letter                                                                                                                                                                                                                                                                                                                                                    |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“KP Services Agreement”** |   | the services agreement entered into between the  Company and KPNQwest B.V. in June 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“Management Accounts”**   |   | means the management accounts of the Company from  the Accounting Date to 31 August 2004, copies of which are annexed to  the Disclosure Letter at document 167 of volume 12 of the Data Room Documents  (as defined in the Disclosure Letter)                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“Properties”**            |   | means the properties of the Company and the  Subsidiaries specified in **Schedule 6**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

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| **“PSI Net Europe”**                 |   | means each of:  PSINet Germany GmbH, PSINet Datacenter, Germany GmbH, PSINet France Sarl,  PSINet Switzerland Sarl, PSINet Netherlands BV, and PSINet Belgium BVBA/SPRL                                                                                                                                                                                                              |
|------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Purchaser’s Group”**         |   | means any of the following from time to time: the  Purchaser and each of its subsidiaries and subsidiary undertakings and any  holding company or parent undertaking of the Purchaser and all other  subsidiaries and subsidiary undertakings of any holding company or parent  undertaking and “**Member of the  Purchaser’s Group”** shall be construed accordingly |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Purchaser’s Solicitors”**    |   | means Lewis Silkin of 12 Gough Square, London EC4A  3DW                                                                                                                                                                                                                                                                                                                              |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Recognised Investment Exchange”** |   | means any recognised investment exchange as defined  in the Financial Services and Markets Act 2000, the Alternative Investment  Market of the London Stock Exchange, Nasdaq US and Nasdaq Europe or any  relevant market as defined in Article 37 of the Financial Service and  Markets Act 2000 (Financial Promotion) Order 2001                                              |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Retention Fund”**                 |   | the aggregate sum of £2 million (two million  pounds), the subject of **Schedule 9**                                                                                                                                                                                                                                                                                       |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Shares”**                         |   | means all the issued shares in the capital of the  Company                                                                                                                                                                                                                                                                                                                           |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Software”**                       |   | means all software owned by the Company or used in  the Company’s business but, for the avoidance of doubt, excluding any  software owned or licensed by any Member of the Vendor’s Group in providing  services under the TSA                                                                                                                                             |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Subsidiaries”**                   |   | means Netlink Internet Services Limited, I-Way  Limited, U-Net Limited, I-Way Oxford Limited and WorldWide Web Services  Limited, further details of which are set out in **Part 2** of **Schedule 2**                                                                                                                                                                          |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Taxation”**                       |   | shall have the meaning given in **Schedule 4**                                                                                                                                                                                                                                                                                                                                  |
| ** **                                     |   |                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Tax Covenant”**                   |   | means the tax covenant set out in **Part 2**  of **Schedule 4**                                                                                                                                                                                                                                                                                                                 |

 

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| **“Transaction Documents”**    |   | means this Agreement, the Disclosure Letter and the  TSA                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“TSA”**                      |   | means the Transition Services Agreement in the agreed terms between  the Vendor’s Guarantor, the Company and the Purchaser                                                                                                                                                                                                                                                                                                                                                                       |
| ** **                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“Vendor Assurance”**         |   | means any indemnity, guarantee or commitment of any nature given by  the Vendor to the Company or a Subsidiary or to any other person to the  extent it relates to the Company or a Subsidiary but excluding in each case  any such obligation which is contained in a Transaction Document or any  document entered into pursuant thereto, and any such obligation which is in  the ordinary and normal course of trade between the Company and the Vendor or  any Member of the Vendor’s Group |
| ** **                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“Vendor’s Group”**      |   | means any of the following from time to time: the Vendor and each of  its subsidiaries and subsidiary undertakings (other than the Group) and any  holding company or parent undertaking of the Vendor and all other  subsidiaries and subsidiary undertakings of any holding company or parent  undertaking and “**Member of the Vendor’s  Group”** shall be construed accordingly                                                                                                    |
| ** **                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“Vendor’s Solicitors”** |   | means Eversheds LLP of Eversheds House, 70 Great  Bridgewater Street, Manchester, M1 5ES                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** **                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“Warranties”**               |   | means the warranties set out in **clause 4,  clause 6.3** and **Schedule 3**  and **Part 3**  of **Schedule 4**                                                                                                                                                                                                                                                                                                                                                                   |

 

1.2                                          **Contentspage and headings**

 

In this Agreement,****the contentspage and headings are included for convenience only and shall not affect theinterpretation or construction of this Agreement.

 

1.3                                          **Meaningof references**

 

In this Agreement, unless the context requires otherwise, any referenceto:

 

(a)                                                    this **Agreement**includes the Schedules, which form part of this Agreement****forall purposes;

 

(b)                                                   the **Background**isto the statements about the background to this Agreement****madeabove, a **Clause**or a **Schedule **isto a clause of or a schedule to this Agreement****andto a **Part**or a **Paragraph**ofa Schedule is to a part or a paragraph of that Schedule;

 

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(c)                                                    a **statute**or**statutory provision**includes anyconsolidation or re-enactment, modification or replacement of the same, anystatute or statutory provision of which it is a consolidation, re-enactment,modification or replacement and any subordinate legislation in force under anyof the same from time to time except to the extent that any consolidation,re-enactment, modification or replacement enacted after the date of thisAgreement would extend or increase the liability of any party to another underthis Agreement;

 

(d)                                                   a **party**orthe **parties**is to a party or the parties(as the case may be) to this Agreement and shall include any permittedassignees of a party;

 

(e)                                                    the **masculine**,**feminine**or **neuter**genderrespectively includes the other genders and any reference to the singularincludes the plural (and vice versa);

 

(f)                                                      a **person**includesany individual, firm, corporation, unincorporated association, government,state or agency of state, association, partnership or joint venture (whether ornot having a separate legal personality);

 

(g)                                                   a **person**includesa reference to that person’s legal personal representatives and successors;

 

(h)                                                   references to a **company** shall be construed so as to include any company,corporation or other body corporate wherever and however incorporated orestablished;

 

(i)                                                       a **document**isto that document as varied, supplemented or replaced from time to time;

 

(j)                                                       any English statutoryprovision or English legal term for any action, remedy, method of judicialproceeding, documents, legal status, court, official or any other legal conceptor thing shall in respect of any jurisdiction other than England be deemed toinclude what most nearly approximates in that jurisdiction to the Englishstatutory provision or English legal term;

 

(k)                                                    **writing**shall include any modes ofreproducing words in a legible and non-transitory form;

 

(l)                                                       **Sterling** or **£**or **pounds** is to the lawful currency of theUnited Kingdom; and

 

(m)                                                 a **time of theday**is to London time and references to a **day**areto a period of 24 hours running from midnight to midnight.

 

1.4                                          **Norestrictive interpretations**

 

In this Agreement,****general wordsshall not be given a restrictive interpretation by reason of their beingpreceded or followed by words indicating a particular class of acts, matters orthings.

 

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1.5                                          **CA 1985definitions**

 

In this Agreement, unless the context otherwise requires any word andexpression defined in the CA 1985 and not defined in this Agreement shall bearthe meaning ascribed to it in the CA 1985.

 

2.                                                **SALE ANDPURCHASE**

 

2.1                                          **ShareSale and Purchase**

 

The Vendor will sell with full title guarantee, and the Purchaser willbuy, the Shares.  The Shares will be soldfree of any Encumbrance and with all rights attached or accruing to them atCompletion.

 

2.2                                          The Vendor shall procure thewaiver of all restrictions on transfer which may exist in relation to theShares.

 

2.3                                          **Consideration**

 

The Consideration for the sale of the Shares is an aggregate sum of£7,239,132 (seven million, two hundred and thirty-nine thousand one hundred andthirty-two pounds) which shall be satisfied as to:

 

2.3.1                                £5,239,132 by payment in cashon Completion (in accordance with **Schedule 5**) butsubject to adjustment as provided in **Schedule 8**;

 

2.3.2                                £1,000,000 by payment in cashon the date falling 6 months after Completion; and

 

2.3.3                                £1,000,000 by payment in cashon the date falling 12 months after Completion;

 

the sumsreferred to in **clause 2.3.2**and **2.3.3**(forming the Retention Fund) shall both be paid into the Escrow Account onCompletion and released from the Escrow Account in accordance with the terms of**Schedule 9**and the Escrow Account Instruction Letter.

 

2.4                                          If any of the Retention Fundbecomes payable to the Purchaser in accordance with the provisions of **Schedule 9**,the Consideration will be reduced by the amount paid (excluding any interestpaid as part of such sum) and any rights of the Purchaser to compensation orindemnity arising from the subject matter of the claim that gave rise to suchpayment will also be reduced by the amount so paid.

 

3.                                                **COMPLETION**

 

3.1                                          **Completion**

 

Completion will take place at the offices of the Vendor’s Solicitors inLondon immediately after the signing of this Agreement.

 

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3.2                                          **Completionarrangements**

 

At Completion, the Vendor and the Purchaser will comply with theprovisions of **Schedule 5**.

 

3.3                                          **Payment**

 

The Vendor’s Solicitors are authorised to receive the Consideration onbehalf of the Vendor and payment to them will be a good and sufficientdischarge to the Purchaser and the Purchaser will not be further concerned asto the application of the moneys so paid.

 

4.                                                **WARRANTIES**

 

4.1                                          **Warranties**

 

As at the dateof this Agreement the Vendor warrants to the Purchaser in the terms of theWarranties, provided however that the Purchaser will not be entitled to claimthat any fact or combination of facts constitutes a breach of any of theWarranties to the extent such fact or facts are fairly disclosed in theDisclosure Letter.

 

4.2                                          The Vendor accepts that thePurchaser is entering into this Agreement in reliance on the Warranties.

 

4.3                                          **Limitationon Claims**

 

Notwithstanding any other provisions of this Agreement, the liabilityof the Vendor for breach of the Warranties or otherwise pursuant to thisAgreement (except with respect to any breach by the Vendor or any Member of theVendor’s Group of the provisions of **clause 8** or **clause 23** of this Agreement or any liability or paymentpursuant to **clause 7.3** or **Schedule 8**)will be excluded and/or limited in accordance with the provisions of **Schedule 7**.  For the avoidance of doubt, in relation toany claim by the Purchaser under the provisions of **clause 24**, theprovisions of**Schedule 7**shall apply only to the extent expressly set out in **clause 24**.

 

4.4                                          **CertainWarranties specific**

 

The only Warranties given:

 

4.4.1                                in respect of IntellectualProperty are those set out in **Schedule 3**,**Paragraph 9***(Intellectual Property)* and the other Warranties shall bedeemed not to be given in relation to Intellectual Property;

 

4.4.2                                in respect of employment andrelated matters are those set out in **Schedule 3**, **Paragraph 12**(*Remuneration and Employees)* and the other Warranties shallbe deemed not to be given in relation to employment and related matters;

 

4.4.3                                in respect of the Propertiesare those set out in **Schedule 3**,**Paragraph 11**(*Property*) and the other Warranties shall be deemed not to begiven in relation to the Properties; and

 

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4.4.4                                in respect of Taxation arethose set out in **Schedule 4**,**Part 3**(*Tax Warranties*) and the other Warranties shall be deemed notto be given in relation to Taxation.

 

4.5                                          **Meaningof “so far as the Vendor is aware”**

 

Where any of the Warranties are expressed to be given “so far as theVendor is aware” or “to the best of the knowledge, information and belief ofthe Vendor” or “the Vendor is not otherwise aware” or words to that effect,these expressions shall mean that the Vendor has only made reasonable enquiriesof those persons listed in **Schedule 10**and the Vendor shall be deemed only to have knowledge of all facts, matters andcircumstances actually known by such persons and such expressions shall nothave imported to them any wider meaning or interpretations or be deemed toinclude enquiries or actual awareness of any additional persons.

 

4.6                                          Each of the Warranties shallbe separate and independent and shall not be limited by reference to the termsof any other warranty or, except as provided in **clause 4.3** and **Schedule 7**,any other term of this Agreement.

 

4.7                                          **No rightof rescission**

 

Except in the case of fraud, the Purchaser acknowledges that it shallhave no right to rescind this Agreement after the Completion Date in anycircumstances and that the sole remedy of the Purchaser for breach of theWarranties shall be damages and the Purchaser irrevocably waives any otherremedies it may have in relation to a breach of the Warranties afterCompletion.

 

4.8                                          The Vendor and the Vendor’s Guarantorhereby waive any and all claims (except any claims arising out of or in respectof fraud) which they might otherwise have against the Company or any of theSubsidiaries or against any officer, employee or agent of any of them inrespect of any information supplied by or on behalf of the Company or on behalfof any of the Subsidiaries (or by any officer, employee or agent of any ofthem) to the Vendor and/or the Vendor’s Guarantor or their advisers inconnection with the Warranties or any other matter the subject of thisAgreement.

 

**5.****                                               ****PROVISIONSRELATING TO THE USE OF COMPANY NAME**

 

The Purchaser acknowledges that the Vendor will retain all rights tothe company name VIA (**“the Name”**)subject only to any licence granted to the Purchaser pursuant to the TSA.

 

6.                                                **PURCHASER’SWARRANTIES AND VENDOR’S WARRANTIES**

 

6.1                                          **Warranties**

 

The Purchaser and the Guarantor respectively warrant to the Vendorthat:

 

6.1.1                                the Purchaser and theGuarantor each has full power to enter into and perform this Agreement and thisAgreement constitutes valid and binding obligations on the Purchaser and theGuarantor in accordance with its terms;

 

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6.1.2                                the Purchaser is entering intothis Agreement on its own behalf and not on behalf of any other person;

 

6.1.3                                the execution and delivery of,and the performance by the Purchaser and the Guarantor of their respectiveobligations under this Agreement will not:

 

(a)                                                              result in a breach of anystatutory provision or regulation applicable to it or any provision of itsmemorandum or articles of association;

 

(b)                                                             result in a breach of anyorder, judgment or decree of any court or governmental agency to which thePurchaser and/or the Guarantor is a party or by which the Purchaser and/or theGuarantor is bound; or

 

(c)                                                              result in a breach of anyagreement by which the Purchaser and/or the Guarantor is bound.

 

6.1.4                                save as provided in thisAgreement all consents, permissions, approvals and agreement of shareholders ofthe Purchaser and/or the Guarantor and/or any other third parties which are necessaryor desirable for the Purchaser or the Guarantor to obtain in order to enterinto and perform this Agreement in accordance with its terms have beenunconditionally obtained.

 

6.2                                          **Purchaser’sacceptance**

 

The Purchaser accepts that the Vendor is entering into this Agreementin reliance on the warranties set out in **clause 6.1**(*Warranties*).

 

6.3                                          **Vendor’sWarranties**

 

The Vendor and the Vendor’s Guarantor respectively warrant to thePurchaser that:

 

6.3.1                                the Vendor and the Vendor’sGuarantor each has full power to enter into and perform this Agreement and thisAgreement constitutes valid and binding obligations on the Vendor and theVendor’s Guarantor in accordance with its terms;

 

6.3.2                                the Vendor is entering intothis Agreement on its own behalf and not on behalf of any other person;

 

6.3.3                                the execution and delivery of,and the performance by the Vendor and the Vendor’s Guarantor of theirrespective obligations under this Agreement will not:

 

(a)                                                              result in a breach of anystatutory provision or regulation applicable to it or any provision of itsmemorandum or articles of association;

 

(b)                                                             result in a breach of anyorder, judgment or decree of any court or governmental agency to which theVendor and/or the

 

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Vendor’sGuarantor is a party or by which the Vendor and/or the Vendor’s Guarantor isbound; or

 

(c)                                                              result in a breach of anyagreement by which the Vendor and/or the Vendor’s Guarantor is bound;

 

### 6.3.4                        save as provided in thisAgreement all consents, permissions, approvals and agreement of shareholders ofthe Vendor and/or the Vendor’s Guarantor and/or any other third parties whichare necessary or desirable for the Vendor or the Vendor’s Guarantor to obtainin order to enter into and perform this Agreement in accordance with its termshave been unconditionally obtained.

###  

7.                                                **PURCHASER’SUNDERTAKINGS****, VENDOR ASSURANCES AND COMPANY ASSURANCES**

 

7.1                                          **No rights**

 

The Purchaser agrees and undertakes on behalf of itself and each otherMember of the Purchaser’s Group that (in the absence of fraud) it has no rightsagainst and shall not make any claim against any adviser, agent, director,officer, employee or consultant of any Member of the Vendor’s Group on whom itmay have relied before agreeing to any term of this Agreement or any otheragreement or document referred to herein or entering into this Agreement or anyother agreement or document referred to in this Agreement.

 

7.2                                          **VendorAssurances**

 

The Purchaser undertakes to indemnify the Vendor against all amountspaid by the Vendor or any Member of the Vendor’s Group to any third partypursuant to any Vendor Assurance (and all costs incurred in connection withsuch obligation) arising after the date of this Agreement save that thisindemnity shall not extend to any matter giving rise to a claim (as defined in **Schedule 7**).

 

7.3                                          **CompanyAssurances**

 

The Vendor undertakes to indemnify the Purchaser against all amountspaid by the Purchaser or the Company or any Subsidiary to any third partypursuant to any Company Assurance (and all costs incurred in connection withsuch obligation) arising after the date of this Agreement. The provisions of **Schedule 7** shall not apply to this **clause 7.3**.

 

**8.****                                               ****RESTRICTIVECOVENANTS**

 

8.1                                          **Definitions**

 

In this clause:

 
| **“Confidential Information”** |   | means all information of a confidential nature which  is not publicly known and is used in and relates to the Group’s business,  customers, or financial or other affairs, including any such |
|------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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| ** **                           |   | information relating to:                                                                                                                                                                                                                                                     |
|--------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (a)                                                                                                                                                                                                                                                                          | trade secrets, know-how, ideas, computer systems and  computer software; |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (b)                                                                                                                                                                                                                                                                          | future projects, business development or planning,  commercial relationships and negotiations; and |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (c)                                                                                                                                                                                                                                                                          | the marketing of goods or services including  customer names and lists, sales targets and statistics |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| **“European Customer”**    |   | means a client or customer of the Vendor’s Group  from time to time receiving services from any Member of the Vendor’s Group in  Continental Europe which also has a requirement for Relevant Services in the  Prohibited Area                                     |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| **“Excluded Customers”**   |   | means, as at 9 August 2004, all and any  customer or customers of the Vendor’s Group having offices within or being  provided with products or services within, the Prohibited Area and for the  avoidance of doubt the Vendor’s Group includes PSINet Europe |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| **“Permitted Activities”** |   | means:                                                                                                                                                                                                                                                                       |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (a)                                                                                                                                                                                                                                                                          | the sale or supply of any products or services to  Excluded Customers*;* and/or |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (b)                                                                                                                                                                                                                                                                          | the conduct of any business activity (whether within  the Prohibited Area or not) via the internet; and/or |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| ** **                           |   | (c)                                                                                                                                                                                                                                                                          | the provision of services normally associated with a  hosting business (whether within the Prohibited Area or not) including, but  not limited to managed and unmanaged services such as web site and  application hosting, domain names, web-mail, anti-spam, anti-virus, and  associated back-up and security services |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| **“Prohibited Area”**      |   | means the United Kingdom of Great Britain and  Northern Ireland                                                                                                                                                                                                              |
| ** **                           |   |                                                                                                                                                                                                                                                                         |
| **“Relevant Customer”**    |   | means any person who at Completion is:                                                                                                                                                                                                                                       |
|                                      |        |                                                                                                                                                                                                                                                                              |  |  |

 

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| ** **                                             |   | (a)                                                                                                                                                                                                                                   | identified as a prospect of the Company in the  “Sales Radar” sales pipeline tool of the Vendor on the report produced for  the period ended 1 September  2004 and attached hereto as **Schedule 11**;  or |
|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                             |   |                                                                                                                                                                                                                                  |
| ** **                                             |   | (b)                                                                                                                                                                                                                                   | a current client or customer of the Company                                                                                                                                                                                    |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| **“Relevant  Services”**                |   | any business (other than the Permitted Activities)  carried on as at Completion by the Company within the Prohibited Area                                                                                                             |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| **“Vendor’s Confidential Information”** |   | means all information of a confidential nature which  is not publicly known and is used in and relates to the Vendor Group’s businesses,  customers, or financial or other affairs, including any such information  relating to: |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| ** **                                             |   | (d)                                                                                                                                                                                                                                   | trade secrets, know-how, ideas, computer systems and  computer software;                                                                                                                                                       |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| ** **                                             |   | (e)                                                                                                                                                                                                                                   | future projects, business development or planning,  commercial relationships and negotiations; and                                                                                                                             |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| ** **                                             |   | (f)                                                                                                                                                                                                                                   | the marketing of goods or services including  customer names and lists, sales targets and statistics.                                                                                                                          |
| ** **                                             |   |                                                                                                                                                                                                                                  |
| ** **                                             |   | and for the avoidance of doubt the Vendor’s Group  includes PSI Net Europe                                                                                                                                                       |
|                                                        |        |                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                |  |

 

8.2                                          **Vendor’sCovenant**

 

The Vendor undertakes to the Purchaser and the Company that the Vendorwill not (whether alone or in conjunction with, or on behalf of, another personand whether directly or indirectly), without the prior written consent of thePurchaser:

 

8.2.1                                for a period of 12 monthsimmediately following Completion, provide, in competition with the Company, anyof the Relevant Services, within the Prohibited Area provided that the Vendormay (whether alone or in conjunction with, or on behalf of, another person) incompetition with the Company provide to a European Customer Relevant Serviceswithin the Prohibited Area if the Company has been given the opportunity by theVendor to provide the Relevant Services to such European Customer and haseither declined such opportunity or been unable to provide the RelevantServices at rates competitive in the market;

 

8.2.2                                for a period of 12 monthsimmediately following Completion, use any Confidential Information to solicitor entice away, or knowingly cause to be

 

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solicited orenticed away, any Relevant Customer for the supply to them of Relevant Serviceswithin the Prohibited Area;

 

8.2.3                                for a period of three yearsafter Completion, knowingly interfere, or seek to interfere, with thecontinuance of supplies to the Company from any supplier who has been supplyinggoods or services to the Company at any time during the 6 months immediatelypreceding Completion if such interference causes or would cause that supplierto cease supplying, or reduce its supply of, those goods or services;

 

8.2.4                                for a period of 12 monthsimmediately following Completion, solicit or entice away, or endeavour tosolicit or entice away, from the Company, any person employed in a managerial,supervisory, technical or sales capacity by the Company at Completion or at anytime during the period of 6 months immediately preceding Completion where theperson in question either has Confidential Information or would be in aposition to exploit the Company’s trade connections save in response to anational advertising campaign or in response to a recruitment consultant whohas not been instructed by the Vendor’s Group to pursue or solicit such personand provided that the restrictions contained in this **clause 8.2.4**shall not apply to:

 

8.2.4.1                                           any employee of the Companywhose employment is terminated by the Company on or after Completion; and

 

8.2.4.2                                           Johnno Loggie and Jit Maroo.

 

8.3                                          **Confidentiality**

 

8.3.1                                Except so far as required bylaw or, to the extent relevant, the regulations of any Recognised InvestmentExchange or the Panel on Takeovers and Mergers**orany other governmental or regulatory organisation (and in those circumstancesthe Vendor shall as soon as reasonably practicable after any such announcementor filing produce a copy thereof to the Purchaser), the Vendor undertakes tothe Purchaser and the Company that the Vendor will not, and will procure thatno Member of the Vendor’s Group will, at any time after Completion:

 

8.3.1.1                                           disclose any ConfidentialInformation to any person except to those authorised by the Company to know andexcept to those employees, third parties and contractors required to know inorder to perform the services described in the TSA;

 

8.3.1.2                                           use any ConfidentialInformation for the Vendor’s own purposes or for the purposes of the Vendor’sGroup or for any purposes other than those of the Company or any other Memberof the Purchaser’s Group; or

 

8.3.1.3                                           cause or permit anyunauthorised disclosure of any Confidential Information.

 

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**PROVIDED THAT** notwithstanding theforegoing, the Purchaser acknowledges that the Vendor is required under therules of the applicable Recognised Investment Exchange to provide and filepublicly historical financial information, including historical financialinformation of the Company as a “discontinued operation”, whether individuallyor in aggregate with other such discontinued operations of the Vendor and thePurchaser agrees and acknowledges that any such filing shall not be a breach ofthe foregoing provisions of this clause and further agrees that the Vendorshall not be required to deliver a copy of such filings to the Purchaser unlessCompany specific and identifiable Confidential Information is set out thereinapart and individually.

 

8.3.2                                Except so far as required bylaw or, to the extent relevant, the regulations of any Recognised InvestmentExchange or listing authority or the Panel on Takeovers and Mergers**or any other governmental or regulatory organisation (andin those circumstances the Purchaser shall as soon as reasonably practicableafter any such announcement or filing produce a copy thereof to the Vendor),the Purchaser undertakes to the Vendor that the Purchaser will not, and willprocure that no Member of the Group or the Purchaser’s Group will, at any timeafter Completion:

 

8.3.2.1                                       disclose any Vendor’sConfidential Information to any person except to those authorised by the Vendorto know;

 

8.3.2.2                                       use any Vendor’s ConfidentialInformation for the Purchaser’s own purposes or for the purposes of the Groupor the Purchaser’s Group or for any purposes other than those of the Vendor’sGroup; or

 

8.3.2.3                                       cause or permit anyunauthorised disclosure of any Vendor’s Confidential Information.

 

8.4                                          **Severability**

 

Each of the undertakings set out in this clause is separate andseverable and enforceable accordingly, and if any one or more of suchundertakings or part of an undertaking is held to be against the publicinterest or unlawful or in any way an unreasonable restraint of trade, theremaining undertakings or remaining part of the undertakings will continue infull force and effect and will bind the Vendor.

 

9.                                                **ANNOUNCEMENTS**

 

9.1                                          **NoAnnouncements**

 

No announcement or circular concerning the transactions contemplated bythis Agreement or any matter ancillary to it and no disclosure of the terms ofthis Agreement will be made by the Vendor other than to another member of theVendor’s Group, except with the prior written approval of the Purchaser or bythe Purchaser except with the prior written approval of the Vendor (suchapproval in either of such cases aforesaid not to be unreasonably withheld ordelayed).

 

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9.2                                          **PermittedAnnouncements**

 

**Clause 9.1***(Noannouncements)*does not apply to:

 

9.2.1                                any announcement, circular ordisclosure required by law or, to the extent relevant, the regulations of anyRecognised Investment Exchange or listing authority or the Panel on Takeoversand Mergers, or any other governmental or regulatory organisation, provided, ifpracticable, that the party required to make it has first consulted and takeninto account the reasonable requirements of the other party; or.

 

9.2.2                                any announcement afterCompletion by any party to its employees or in the case of the Purchaser anycorrespondence with customers of the Group or the Purchaser’s Group.

 

10.                                          **COSTS**

 

**Eachparty to bear own costs**

 

Except where expressly stated otherwise, each party to this Agreementwill bear its own costs and expenses relating to the negotiation, preparationand implementation of this Agreement. The Purchaser shall promptly pay all stamp duty, stamp duty reserve tax,transfer or registration taxes or duties payable in respect of the transfer ofthe Shares pursuant to this Agreement.

 

11.                                          **INTEREST**

 

Save as otherwise specifically provided interest shallbe payable by any party on any money which shall not be paid by it to anotherparty under this Agreement by the due date for payment at the annual rate of 2per cent. above the Interest Rate for the period from the date due for paymentuntil the date on which it shall actually be paid (whether before or after anyjudgement).  Interest shall be accrueddaily and compounded annually.

 

12.                                          **GUARANTEES**

 

12.1                                    In consideration of thePurchaser entering into this Agreement, the Vendor’s Guarantor irrevocablyguarantees to the Purchaser the due and punctual payment, observance andperformance by the Vendor of all of the Vendor’s liabilities and obligations(whether present or future, express or implied, actual or contingent) under orarising out of this Agreement, including any liability or obligation to paydamages or other compensation for any breach of any of the Warranties or to paysums due and payable (but unpaid by the Vendor) under **Schedule 4**.

 

12.2                                    The Purchaser will be obligedbefore exercising any of the rights, powers or remedies conferred upon it inrespect of the Vendor’s Guarantor under this clause or by law to makedemand of the Vendor and allow the Vendor 10 Business Days from demand tocomply with such demand but will not be obliged to institute any action orproceedings against the Vendor or make or file any claim or proof in connectionwith the insolvency of the Vendor or any other person.  Following the expiry of such 10 Business Dayperiod, the Vendor’s Guarantor will, forthwith on demand by the

 

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Purchaser,unconditionally pay to the Purchaser an amount equal to the amount payable bythe Vendor.

 

12.3                                  Neither the liability of theVendor’s Guarantor under this clause nor the rights, powers and remediesconferred on the Purchaser under this clause or by law will in any way bereleased, prejudiced, diminished or affected by the insolvency, incapacity,disability, or any change in the constitution, name, control or style of theVendor, the Purchaser, the Company or the Vendor’s Guarantor or the Guarantor.

 

12.4                                  The obligations of theVendor’s Guarantor shall constitute and be continuing obligations and inparticular shall not be considered satisfied by any intermediate payment orother intermediate satisfaction of all or any of the liabilities andobligations of the Vendor under this Agreement and shall continue in full forceand effect until final payment in full of all amounts owing by the Vendor intotal satisfaction of all the Vendor’s actual obligations under this Agreement.

 

12.5                                  The Vendor’s Guarantor shallnot be exonerated or discharged nor shall its liability be affected by anyforbearance, whether as to payment, time, performance or otherwise, or by anyother indulgence being given to the Vendor or by any variation of the terms ofthis Agreement or by any act, thing, omission or means whatever which, but forthis provision, might operate to exonerate or discharge the Vendor’s Guarantorfrom its obligations under the guarantee and indemnity contained in this **Clause 12**.

 

12.6                                  In consideration of the Vendorentering into this Agreement, the Guarantor irrevocably guarantees to theVendor the due and punctual payment, observance and performance by thePurchaser of all of the Purchaser’s liabilities and obligations (whetherpresent or future, express or implied, actual or contingent) under or arisingout of this Agreement, including any liability or obligation to pay theConsideration or any sum due under **Schedule 8**.

 

12.7                                  The Vendor will be obligedbefore exercising any of the rights, powers or remedies conferred upon it inrespect of the Guarantor under this clause or by law to make demand of thePurchaser and allow the Purchaser 10 Business Days from demand to comply withsuch demand but will not be obliged to institute any action or proceedingsagainst the Purchaser or make or file any claim or proof in connection with theinsolvency of the Purchaser or any other person.  Following the expiry of such 10 Business Dayperiod, the Guarantor will forthwith on demand by the Vendor, unconditionallypay to the Vendor an amount equal to the amount payable by the Purchaser.

 

12.8                                  Neither the liability of theGuarantor under this clause nor the rights, powers and remedies conferredon the Vendor under this clause or by law will in any way be released,prejudiced, diminished or affected by the insolvency, incapacity, disability,or any change in the constitution, name, control or style of, the Purchaser,the Vendor, the Company, the Vendor’s Guarantor, or the Guarantor.

 

12.9                                  The obligations of theGuarantor shall constitute and be continuing obligations and in particularshall not be considered satisfied by any intermediate payment or otherintermediate satisfaction of all or any of the liabilities and obligations ofthe Purchaser under this Agreement and shall continue in full force and effectuntil final

 

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payment infull of all amounts owing by the Purchaser in total satisfaction of all thePurchaser’s actual obligations under this Agreement.

 

12.10                            The Guarantor shall not beexonerated or discharged nor shall its liability be affected by anyforbearance, whether as to payment, time, performance or otherwise, or by anyother indulgence being given to the Purchaser or by any variation of the termsof this Agreement or by any act, thing, omission or means whatever which, butfor this provision, might operate to exonerate or discharge the Guarantor fromits obligations under the guarantee and indemnity contained in this **Clause 12**.

 

13.                                          **PAYMENTS**

 

**Paymentsto be made without set off or withholding**

 

All payments to be made by any party under this Agreement shall (unlessand save where expressly provided otherwise) be made in full without anyset-off, restriction or condition or deduction for or on account of anycounter-claim and free from any deduction or withholding save where expresslyprovided otherwise or save as may be required by law in which event thededuction or withholding will not exceed the minimum amount which it isrequired by law to deduct or withhold and the payer will simultaneously pay tothe payee such additional amounts as will result in the receipt by the payee ofa net amount equal to the full amount which would otherwise have beenreceivable had no deduction or withholding been required.

 

14.                                          **NOTICES**

 

14.1                                    **Methods**

 

Any notice or other communication given in connection with thisAgreement will be in writing and will be delivered personally or sent bypre-paid first class post (or air mail if overseas) or by fax to therecipient’s address set out in this Agreement or to any other address which therecipient has notified in writing to the sender received not less than 7Business Days before the notice was despatched.

 

14.2                                    **DateGiven**

 

A notice or other communication is deemed given:

 

14.2.1                          if delivered personally, upondelivery at the address provided for in this clause; or

 

14.2.2                          if sent by prepaid first classpost, on the second Business Day after posting it; or

 

14.2.3                          if sent by air mail, on thesixth Business Day after posting it; or

 

14.2.4                          if sent by fax, on completionof its transmission

 

provided that, if it is delivered personally or sent by fax on a daywhich is not a Business Day or after 4 p.m. on a Business Day, it will insteadbe deemed to have been given or made on the next Business Day.

 

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14.3                                    **CourtService**

 

The provisions of this clause will not apply, in the case of service ofcourt documents, to the extent that such provisions are inconsistent with theCivil Procedure Rules.

 

14.4                                    **OtherMethod of Service**

 

Service of a notice or other communication on the Vendor may beeffected as specified in **clause25.3***(Valid service)***.**

 

15.                                          **ENTIREAGREEMENT**

 

Each of the parties hereto acknowledge and agree that:

 

15.1                                    this Agreement, each of theTransaction Documents and any documents entered into pursuant thereto setsforth the entire agreement between the parties with respect to the subjectmatter covered by this Agreement and the Transaction Documents and supersedesand replaces all prior communications, drafts, representations, warranties,stipulations, undertakings and agreements of whatsoever nature, whether oral orwritten, between the parties relating thereto;

 

15.2                                    it does not enter into thisAgreement in reliance on any warranty, representation, undertaking, stipulationor agreement other than those contained in this Agreement, each of theTransaction Documents and any documents entered into pursuant thereto;

 

15.3                                    its only remedies are forspecific performance, injunctive relief and/or contractual damages for breachof contract;

 

15.4                                    it has no right to rescindthis Agreement either for breach of contract or for negligent or innocent misrepresentation;

 

15.5                                    without prejudice to thegenerality of the foregoing, they each waive any right or remedy it may haveagainst any other in respect of any statement (whether oral or written) of factor opinion whatsoever, including any untrue or misleading statement, warrantyor representation, express or implied, made to them or their respective agents,officers, directors or employees during the negotiation of or otherwise inconnection with this Agreement, save for any warranty, representation orundertaking expressly contained in this Agreement or any of the TransactionDocuments or any of the documents entered into pursuant thereto;

 

15.6                                    the Consideration has beenagreed by the Vendor and the Purchaser having regard (inter alia) to theprovisions of this **clause 15***(Entire Agreement)*;and

 

15.7                                    accordingly, all otherconditions representations and warranties which would otherwise be implied (bylaw or otherwise) shall not form part of this Agreement

 

**PROVIDEDTHAT**the provisions of this **clause 15***(Entire Agreement)*will not exclude anyliability which the Vendor would otherwise have to the Purchaser or which thePurchaser would otherwise have to the Vendor or any right which either of themmay have to rescind this Agreement in respect of any statements madefraudulently by the other of them prior to the execution of this Agreement.

 

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16.                                          **CONTINUINGEFFECT**

 

Each provision of this Agreement****shall continuein full force and effect after Completion, except to the extent that aprovision has been fully performed on or before Completion.

 

17.                                          **INVALIDITY**

 

If all or any part of any provision of this Agreement****shall be or become illegal, invalid or unenforceable in anyrespect, then the remainder of such provision and/or all other provisions ofthis Agreement****shall remain valid andenforceable.

 

18.                                          **AMENDMENTS****, VARIATIONSAND WAIVERS**

 

18.1                                    **Amendments**

 

No amendment or variation of the terms of this Agreement or any of theTransaction Documents shall be effective unless it is made or confirmed in awritten document signed by all of the parties to the relevant document but novariation will require the consent or signature of the Company.

 

18.2                                   **Waivers**

 

No delay in exercising or non-exercise by any party of any right, poweror remedy under or in connection with this Agreement****orany other document referred to in it shall impair that right, power or remedyor operate as a waiver or release of it.

 

19.                                          **FURTHERASSURANCE AND ASSISTANCE**

 

19.1                                    **Furtherassurance**

 

The Vendor shall from time to time at its own cost, on being requiredto do so by the Purchaser now or at any time within twelve (12) months afterCompletion, do or procure the doing of all such acts and/or execute or procurethe execution of all such documents in a form reasonably satisfactory to thePurchaser as the Purchaser may reasonably consider necessary for vesting titleto the Shares in the Purchaser.  To theextent that the Purchaser requires the doing of acts or the execution ofdocuments by the Vendor after the expiry of such twelve (12) month period thensuch acts or execution shall be at the expense of the Purchaser.

 

19.2                                    **ThirdParty Rights**

 

**The Company has theright to enforce only****clause 8****(*Restrictive Covenants*)****of this Agreement and inaccordance with the provision of the Contracts (Rights of Third Parties) Act1999. Except as stated in****this clause****, the parties to this Agreement do not intend that any of its termswill be enforceable by virtue of the Contracts (Rights of Third Parties) Act1999 by any person not a party to it.**

 

19.3                                    **Books andrecords**

 

Without prejudice to the provisions of the TSA, as from the CompletionDate, the Purchaser shall give to the Vendor such reasonable access duringnormal working

 

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hours to the books, accounts, records and returns relating to or inconnection with the Company as the Vendor may reasonably require in order toprepare and complete its tax returns and/or comply with other regulatoryrequirements including the right to take copies and extracts (at the Vendor’scost) on reasonable advance notice within the period of seven calendar yearsfrom the Completion Date.

 

20.                                          **COUNTERPARTS**

 

20.1                                    **Anynumber of counterparts**

 

This Agreement may be executed in any number of counterparts, and bythe parties on separate counterparts, but shall not be effective until each ofthe parties has executed at least one counterpart.

 

20.2                                    **Eachcounterpart an original**

 

Each counterpart shall constitute an original of this Agreement but allthe counterparts shall together constitute but one and the same instrument.

 

21.                                          **ASSIGNMENT**

 

21.1                                    **Agreementbinding on successors and permitted assignees**

 

This Agreement shall be binding on and enure for the benefit of thesuccessors and permitted assignees of the parties.

 

21.2                                    **Benefitof agreement not assignable by Purchaser**

 

The benefit of this Agreement may not be assigned, transferred, chargedor dealt in (whether by way of security, trust or otherwise) either in whole orin part to any person by the Purchaser or the Guarantor except as provided in **clause 21.3**(*Permitted assignments*).

 

21.3                                    **Permittedassignments**

 

The Purchaser may assign all or any of its rights under this Agreement:

 

(a)                                                              with the Vendor’s priorwritten consent to any person;

 

(b)                                                             without the Vendor’s consentto one or more Members of the Purchaser’s Group subject to the condition thatthe Purchaser will procure that, before any assignee subsequently ceases to bea Member of the Purchaser’s Group, that assignee shall assign back to thePurchaser, or to another Member of the Purchaser’s Group (which itself shallthen be deemed to be an assignee of the Purchaser for the purposes of thisclause), so much of the benefit of this Agreement as has been assigned to it;

 

(c)                                                              withoutthe Vendor’s consent, by way of security to a lender in connection with anyarrangements for the provision of acquisition finance by that lender to thePurchaser to facilitate it

 

----

to purchase theCompany (or to another lender on a re-financing of that acquisition facility),

 

**PROVIDEDTHAT**theliability of the Vendor as a result of the assignment shall not be greater thanits liability had no assignment occurred and that any purported assignment incontravention of **this clause**shallbe void.

 

21.4            **No assignment by Vendor**

 

 Neither the Vendor nor theVendor’s Guarantor may assign all or any of their respective rights under thisAgreement to any person without the Purchaser’s prior written consent.

 

22.              **KP CLAIM**

 

22.1            **Indemnity**

 

The Vendor shall be responsible for, and shall indemnify and keepindemnified the Purchaser (for itself and as trustee for the Purchaser’s Group)against, all costs, losses, damages, liabilities and expenses incurred by theCompany or any other Member of the Purchaser’s Group pursuant to the KP Claimand KP Counterclaim.

 

22.2            **Conduct of KP Claim/Counterclaim**

 

22.2.1         The Vendor shall at all times haveexclusive conduct of both the KP Claim and the KP Counterclaim and shall beentitled at any stage and at its sole discretion to settle either or both ofthe KP Claim and the KP Counterclaim.

 

22.2.2         In the conduct of the KP Claim and/or theKP Counterclaim the Vendor shall, or shall procure that the Vendor’s Guarantorshall, instruct direct all professional advisers necessary to represent theCompany such that the Company will have no liability to such advisers for anycosts or expenses incurred by them.

 

22.3            **Purchaser’s Conduct**

 

22.3.1         The Purchaser will (or will procure thatthe Company will):

 

22.3.1.1            as soon as reasonably practicable notify the Vendor in writing of any written notification orcorrespondence received by the Company or the Purchaser from any party (otherthan any Member of the Vendor’s Group) involved in the KP Claim and KPCounterclaim;

 

22.3.1.2            not make any admission ofliability, agreement or compromise with any person, body or authority inrelation to the KP Claim or KP Counterclaim;

 

22.3.1.3            upon written request by the Vendorgive the Vendor and its professional advisers reasonable access on reasonableprior notice to:

 

----

 

#### (a)             the personnel of the Purchaser and/or theCompany in order to interview the personnel;

####  

#### (b)             any relevant premises, chattels, accounts,documents and records within the power, possession or control of the Purchaserand/or the Company in order to, at the Vendor’s own expense, examine andphotograph and take copies of the accounts, documents and records.

####  

22.4            **Payment**

 

22.4.1         In the event of the KP Claim being Settled(as defined below) the Vendor shall pay to the Company within 7 days of the KPClaim being Settled (and in any event before the due date for any payment bythe Company) a sum equal to any amount to be paid by the Company pursuant tothe Settlement of the KP Claim less any sum received by the Company pursuant tosub-**clause 22.4.2**.The Purchaser shall be entitled in its sole discretion to require that any suchpayment by the Vendor be met by the release of funds from the Escrow Account.The Purchaser shall procure that the terms of such Settlement in so far as itrelates to the Company are fully complied with provided that the Company isplaced in funds by any Member of the Vendor’s Group to make any paymentpursuant to such Settlement.

 

22.4.2         In the event of the KP Counterclaim beingSettled the Purchaser shall pay to the Vendor by way of additionalconsideration for the Shares an amount equal to the sum received by the Company(if any) as part of the Settlement of the KP Counterclaim less any payment tobe made by the Vendor pursuant to **clause 22.4.1**, suchsum to be paid within 7 days of receipt by the Company of such sum.

 

22.5            The KP Claim and the KP Counterclaim shallbe regarded as “**Settled**” for the purpose of **Clause 22.4**if either:

 

22.5.1         the Vendor and the other partiesto the KP Claim and/or the KP Counterclaim shall so agree in writing; or

 

22.5.2         a Court has awarded judgementin respect of the KP Claim or the KP Counterclaim and either no right of appeallies in respect of such judgement or the parties are debarred whether bypassage of time or otherwise from exercising any such right of appeal.

 

23.              **CASH**

 

23.1            The Vendor will procure that immediatelyfollowing the Completion Accounts Date, the Company has Cash (as defined in **Schedule 8**) of not less than £739,132.

 

**23.2****           ****The provisions of****Schedule 7****shall not apply to the Vendor’s obligation underthis****clause 23****.**

 

24.              **INDEMNITIES AND COMPUTER EQUIPMENT**

 

24.1            The Vendor shall indemnify and keepindemnified the Purchaser (for itself and as

 

----

 

trustee for the Purchaser’s Group)against all costs, loss, damages, liabilities and expenses incurred as a resultof:

 

**24.1.1****        ****any claim brought by former employees of the Group for breach ofcontract arising out of any redundancies or purported redundancies made inApril and May 2004, details of which are set out in the Disclosure Letter;**

 

**24.1.2****        ****any claim which may be made by Matt Stuart Nydell whose resignation****from office the Vendor is obliged to procure inorder to comply with this Agreement or claims by Nick Callaghan for payment ofthe “Special Retention Bonus” as defined in the Addendum to his employmentcontract dated 24 June 2004 or arising from Nick Callaghan ceasing to be adirector of the Company (including, in particular, any claim for constructivedismissal arising therefrom), but otherwise this indemnity shall not cover anyliability relating to Nick Callaghan ceasing to be an employee of the Company;**

 

**24.1.3****        ****any claim made against the Company by Microsoft as a result of theCompany’s failure to comply with the Microsoft licensing requirements in theuse of Microsoft Windows software in the provision by the Company to itscustomers prior to Completion of shared and managed hosting services;**

 

**24.1.4****        ****any****claim against the Company or U-Net Limited byBritish Aerospace plc for:**

 

**24.1.4.1****           ****dilapidations as set out in the Disclosure Letter relating to Unit 620,621 and 622 Birchwood Boulevard, Warrington, Cheshire as demised by a leasedated 1 October 1999, details of which are set out in****Schedule 6****(“****the Lease****”), provided that the Vendor will only be liable forthe amount by which the claim exceeds £35,000;**

 

**24.1.4.2****           ****any****rent or other outgoings payable by the Company orU-Net Limited pursuant to the Lease to the extent such rent or other outgoingsrelate to the period after 1 October 2004,**

 

subject to the Purchaser first payingall rents due and/or outstanding in relation to the period prior to 1October 2004 and in relation to the properties described in clause21.1.4.1 above

 

**24.1.5****        ****the failure by the Company to make an application for exemption fromstamp duty pursuant to section 42 of the Finance Act 1930, as amended,(including any stamp duty payable and any penalties and interest for latepayment) on the transfer of the trade and assets of the Subsidiaries to the Company(and of I-Way Oxford Limited to I-Way Limited) on 1 December 2000 (“****theReorganisation****”) as referred to in the Disclosure Letter (“****the Stamp DutyIndemnity****”).**

 

**For the avoidance of doubt, the provisions of****Schedule 7****shall apply mutatis mutandis to any claims underthis****clause 24.1****except as follows:**

 

# **(i)**               paragraphs2.2, 4.4.1 and 4.5 shall not apply to**clause24.1**; and

 

----

 

# **(ii)**              **paragraph3**shall notapply to **clause 24.1.4**although at such time as the dilapidationsreferred to above in **clause 24.1.4.1**are paid by the Purchaser and reimbursed bythe Vendor and/or the Vendor’s Guarantor (where upon the Purchaser covenants tothe Vendor immediately to pay such sum to the Landlord under the Lease) anyliability of the Vendor to the Purchaser pursuant to the provisions of **clause24.1.4**shallimmediately cease.

 

24.2            The Purchaser shall be entitled at its solediscretion to require that any payment by the Vendor pursuant to **clause 24.1**bemet by the release of funds from the Escrow Account.

 

24.3            With regard to the indemnity in **clause 24.1.4**, the Purchaser undertakes to the Vendor thatit shall not, and shall procure that the Company and U-Net Limited shall not,enter into any negotiations with the Landlord or communicate with the Landlord(save where the Landlord initiates the communication verbally) in relation tothe validity or otherwise of the break notice served in respect of the Lease(as referred to in the Disclosure Letter) without the prior written consent ofthe Vendor, such consent not to be unreasonably withheld or delayed. ThePurchaser shall, and shall procure that the Company and U-Net Limited shall,take such action as the Vendor may reasonably request in relation to anynegotiations or communications with the Landlord under the Lease in relation tothe validity of the break notice.

 

24.4            The following provisions shall apply inrelation to the Stamp Duty Indemnity:

 

24.4.1         the Vendor shall procure that the Vendor’sSolicitors shall (at the Vendor’s cost), within 14 days of Completion, submit tothe Inland Revenue an application pursuant to section 42 of the FinanceAct 1930, as amended, for exemption from stamp duty in respect of the documentslisted in **Schedule 13**in respect of theReorganisation and shall deal with any questions raised by the Inland Revenuein respect thereof until such time as the Inland Revenue shall have finallyadjudicated on such application; and

 

24.4.2         the Purchaser shall, and shallprocure that the Company and the Subsidiaries shall, give such assistance tothe Vendor’s Solicitors (at the Vendor’s cost) as they shall reasonably requestin order to make such application and to deal with any questions that theInland Revenue may raise in connection with such application.

 

24.5            The Purchaser (for itself and as agent onbehalf of each member of the Group) hereby acknowledges and agrees that thecomputer equipment listed in **Schedule 12**is owned by Members of the Vendor’s Group and will procure that neither thePurchaser or any member of the Group will make any claim to title or ownershipor to use of any such computer equipment.

 

25.              **GOVERNING LAW AND JURISDICTION**

 

25.1            **Governing law**

 

This Agreement****shall begoverned by and construed in accordance with English law.

 

----

 

25.2            **Jurisdiction**

 

The parties irrevocably submit to the exclusive jurisdiction of theEnglish Courts to settle any disputes which may arise out of or in connectionwith this Agreement and agree that accordingly any proceedings may only bebrought in those courts.

 

25.3            **Valid service**

 

25.3.1        Each of the Vendor and theVendor’s Guarantor irrevocably appoint the Vendor’s Solicitors as their processagent to receive on their behalf service of any process in any proceedings inEngland.  Such service shall be deemedcompletion on delivery to the process agent, marked for the attention of DanielHall (whether or not such process is forwarded to and received by the Vendorand the Vendor’s Guarantor).  If for anyreason such process agent ceases to be able or willing to act as process agent,the Vendor and the Vendor’s Guarantor irrevocably agree to appoint a substituteagent reasonably acceptable to the Purchaser and to deliver to the Purchaser acopy of the new process agent’s acceptance of that appointment within 30 daysof such acceptance.

 

25.3.2        The Guarantor irrevocablyappoints the Purchaser’s Solicitors as its process agent to receive on itsbehalf service of any process in any proceedings in England.  Such service shall be deemed completion ondelivery to the process agent, marked for the attention of Philip Lamb (whetheror not such process is forwarded to and received by the Guarantor).  If for any reason such process agent ceasesto be able or willing to act as process agent, the Guarantor irrevocably agreesto appoint a substitute agent reasonably acceptable to the Vendor and todeliver to the Vendor a copy of the new process agent’s acceptance of thatappointment within 30 days of such acceptance.

 

**EXECUTION**

 

The parties have shown their acceptance of the terms of this Agreement****by signing it at the end of the Schedules.

 

----

 

**SCHEDULE 1**

 

**The Vendor**

 
| **Name and address of registered   owner**                                                  | ** ** | **The Shares**              |
|----------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|
| ** **                                                                                                           | ** ** | ** **                  |
| VIA NET.WORKS EUROPE HOLDING B.V. of H. Walaardt  Sacrestraat 401, 1117 BM, Schipol-Oost, Amsterdam, The Netherlands |       | 1 ordinary share of £1 |

 

----

 

**SCHEDULE 2**

 

**PART 1**

 

**The Company**

 
| **Name of Company**                                         | :      | VIA NET.WORKS UK Limited                                                                                                                                                                                                                                 |
|-------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Registered number**                                       | :      | 03983189                                                                                                                                                                                                                                                 |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Registered office**                                       | :      | Senator House, 85 Queen Victoria Street, London EC4V  4JL                                                                                                                                                                                                |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Date of incorporation**                                   | :      | 28/4/2000                                                                                                                                                                                                                                                |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Authorised share capital**                                | :      | £1000 divided into 1000 shares of £1 each                                                                                                                                                                                                      |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Issued share capital**                                    | :      | £1 divided into 1 ordinary share of £1 each                                                                                                                                                                                                    |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Directors’ full names**                              | :      | Mr Matt Stuart Nydell                                                                                                                                                                                                                                    |
|                                                        |   |                                                                                                                                                                                                                                                     |
|                                                        |   | Mr Nick Callaghan                                                                                                                                                                                                                                        |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Secretary’s full name**                              | :      | Mr Matt Stuart Nydell                                                                                                                                                                                                                                    |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Accounting reference date**                               | :      | 31/12                                                                                                                                                                                                                                                    |
|                                                        |   |                                                                                                                                                                                                                                                     |
| **Mortgages/charges over Shares  or Company’s assets** | :      | Rent deposit deed in favour of IM Properties (Nationwide) Limited in  respect of a sum equal to £25,000 plus VAT deposited by the Company and all  other sums from time to time constituting the deposit (including any  interest) dated 2 May 2001 |
| ** **                                                  |   |                                                                                                                                                                                                                                                     |
| ** **                                                  |   | Rent deposit deed in favour of The Queen’s Most Excellent Majesty in  respect of all monies due or to become due from the Company to the chargee  dated 7 May 2003.                                                                                 |

 

----

** **

**PART 2**

 

**The Subsidiaries**

 
| **Name of Company**                                         | :      | Netlink Internet Services Limited                                                         |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                      |
| **Registered number**                                       | :      | 3099479                                                                                   |
|                                                        |   |                                                                                      |
| **Registered office**                                       | :      | Eversheds House, 70 Great Bridgewater Street,  Manchester M1 5ES                          |
|                                                        |   |                                                                                      |
| **Date of incorporation**                                   | :      | 07/09/1995                                                                                |
|                                                        |   |                                                                                      |
| **Authorised share capital**                                | :      | £404 divided into 40,400 shares of £0.01 each                                   |
|                                                        |   |                                                                                      |
| **Issued share capital**                                    | :      | £282.00 divided into 400 A ordinary and 27,800 B  ordinary shares of £0.01 each |
|                                                        |   |                                                                                      |
| **Directors’ full names**                              | :      | Mr Matt Stuart Nydell VIA NET.WORKS UK Limited                                            |
|                                                        |   |                                                                                      |
| **Secretary’s full name**                              | :      | Mr Matt Stuart Nydell                                                                     |
|                                                        |   |                                                                                      |
| **Accounting reference date**                               | :      | 31/12                                                                                     |
|                                                        |   |                                                                                      |
| **Mortgages/charges over Shares  or Company’s assets** | :      | None                                                                                      |

 

----

 
| **Name of Company**                                        | :      | I-Way Limited                                                                           |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|
|                                                       |   |                                                                                    |
| **Registered number**                                      | :      | 3029221                                                                                 |
|                                                       |   |                                                                                    |
| **Registered office**                                      | :      | Eversheds House, 70 Great Bridgewater Street,  Manchester M1 5ES                        |
|                                                       |   |                                                                                    |
| **Date of incorporation**                                  | :      | 06/03/1995                                                                              |
|                                                       |   |                                                                                    |
| **Authorised share capital**                               | :      | £200,000 divided into 200,000 shares of £1 each                               |
|                                                       |   |                                                                                    |
| **Issued share capital**                                   | :      | £74,514 divided into 26,789 A ordinary and 47,725  ordinary shares of £1 each |
|                                                       |   |                                                                                    |
| **Directors’ full names**                             | :      | Mr Matt Stuart Nydell VIA NET.WORKS UK LIMITED                                          |
|                                                       |   |                                                                                    |
| **Secretary’s full name**                             | :      | Mr Matt Stuart Nydell                                                                   |
|                                                       |   |                                                                                    |
| **Accounting reference date**                              | :      | 31/12                                                                                   |
|                                                       |   |                                                                                    |
| **Mortgages/charges over Shares or Company’s assets** | :      | None                                                                                    |

 

----

 
| **Name of Company**                                         | :      | U-Net Limited                                                                                                                                                                                                                                                                                                                       |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Registered number**                                       | :      | 2952757                                                                                                                                                                                                                                                                                                                             |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Registered office**                                       | :      | Eversheds House, 70 Great Bridgewater Street,  Manchester, M1 5ES                                                                                                                                                                                                                                                                   |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Date of incorporation**                                   | :      | 26/07/1994                                                                                                                                                                                                                                                                                                                          |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Authorised share capital**                                | :      | £10,000 divided into 1,000,000 shares of £0.01 each                                                                                                                                                                                                                                                                       |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Issued share capital**                                    | :      | £5,000 divided into 500,000 shares of £0.01 each                                                                                                                                                                                                                                                                          |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Directors’ full names**                              | :      | Mr Matt Stuart Nydell VIA NET.WORKS UK Limited                                                                                                                                                                                                                                                                                      |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Secretary’s full name**                              | :      | Mr Matt Stuart Nydell                                                                                                                                                                                                                                                                                                               |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Accounting reference date**                               | :      | 31/12                                                                                                                                                                                                                                                                                                                               |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                |
| **Mortgages/charges over Shares  or Company’s assets** | :      | Rent deposit deed in favour of YORKSHIRE PROPERTY HOLDINGS LIMITED.  created: 05/09/1996 registered: 13/09/1996 to secure  all monies due or to become due from the company to the chargee under the  terms of a lease of even date.  Deposit of £10,000 plus VAT and all other sums from time to time constituting  the same. |

 

----

** **
| **Name of Company**                                         | :      | I-Way Oxford Limited                                              |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                        |   |                                                              |
| **Registered number**                                       | :      | 3106468                                                           |
|                                                        |   |                                                              |
| **Registered office**                                       | :      | Eversheds House, 70 Great Bridgewater Street,  Manchester M1 5ES  |
|                                                        |   |                                                              |
| **Date of incorporation**                                   | :      | 26/09/1995                                                        |
|                                                        |   |                                                              |
| **Authorised share capital**                                | :      | £66,000 divided into 66,000 ordinary shares of £1  each |
|                                                        |   |                                                              |
| **Issued share capital**                                    | :      | £65,152 divided into 65,152 ordinary shares of £1  each |
|                                                        |   |                                                              |
| **Directors’ full names**                              | :      | Mr Matt Stuart Nydell I-Way Limited                               |
|                                                        |   |                                                              |
| **Secretary’s full name**                              | :      | Mr Matt Stuart Nydell                                             |
|                                                        |   |                                                              |
| **Accounting reference date**                               | :      | 31/12                                                             |
|                                                        |   |                                                              |
| **Mortgages/charges over Shares  or Company’s assets** | :      | None                                                              |

 

----

 
| **Name of Company**                                         | :      | WorldWide Web Services Limited                                    |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                        |   |                                                              |
| **Registered number**                                       | :      | 3203253                                                           |
|                                                        |   |                                                              |
| **Registered office**                                       | :      | Eversheds House, 70 Great Bridgewater Street,  Manchester M1 5ES  |
|                                                        |   |                                                              |
| **Date of incorporation**                                   | :      | 24/05/1996                                                        |
|                                                        |   |                                                              |
| **Authorised share capital**                                | :      | £55,556 divided into 55,556 ordinary shares of £1  each |
|                                                        |   |                                                              |
| **Issued share capital**                                    | :      | £55,556 divided into 55,556 ordinary shares of £1  each |
|                                                        |   |                                                              |
| **Directors’ full names**                              | :      | Mr Matt Stuart Nydell VIA NET.WORKS UK Limited                    |
|                                                        |   |                                                              |
| **Secretary’s full name**                              | :      | Mr Matt Stuart Nydell                                             |
|                                                        |   |                                                              |
| **Accounting reference date**                               | :      | 31/12                                                             |
|                                                        |   |                                                              |
| **Mortgages/charges over Shares  or Company’s assets** | :      | None                                                              |

 

----

 

**SCHEDULE 3**

 

**The Warranties**

 

1.                **Schedules1 & 2; Capital**

 

1.1              The Disclosure Letter has been preparedbased on opinions actually and honestly held by the persons identified in **Schedule 10**in relation to the information provided in the Disclosure Letter.  The Disclosure Letter (excluding the DataRoom documents) is, as far as the Vendor is aware, accurate in all materialrespects and the Data Room documents are true copies of documents of which theypurport to be copies and are otherwise complete copies in all material respectsof the original.

 

1.2              The information contained in **Schedules 1,2 and 6** is true, complete and accurate in all respectsand the relevant information is set out for the Company and the Subsidiaries.

 

1.3              The Shares are fully paid and arebeneficially owned and registered as set out in **Schedule 1** and **Part 1**of**Schedule 2**free from any Encumbrance or any claim to, or Contract to grant, anyEncumbrance.

 

1.4              The Company has not allotted or issued anyshare capital other than the Shares shown in **Schedule 1** and **Part 1**of**Schedule 2**as being issued.

 

1.5              No Contract has been entered into whichrequires or may require the Company to allot or issue any share or loan capitaland the Company has not allotted or issued any securities which are convertibleinto share or loan capital.

 

1.6              The Company has no interest in the sharecapital of any body corporate other than the Subsidiaries.

 

**VENDOR**

 

2.                **Insiders’interests**

 

For the purpose of this **paragraph 2**:

 
| **“Insider”** |   | means the Vendor, any Member of the Vendor’s  Group or any person who is connected (as defined in section 839 ICTA)  with the Vendor or any Member of the Vendor’s Group. |
|-------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

2.1              There is not outstanding, and there has notat any time since 1 January 2003 been outstanding, any Contract to whichthe Company or any Subsidiary is a party and in which any Insider is interestedin any way whatsoever (excluding any Contract of employment materialparticulars of which are disclosed in the Disclosure Letter and any agreement forthe sale or supply of goods or services in the ordinary course of business onnormal commercial terms material particulars of which are disclosed in theDisclosure Letter).

 

----

 

2.2              No Insider has any interest, direct orindirect, in any trade or business which competes or is likely to compete withthe Company’s business save as an investor holding less than 3% of the issuedshare capital of a company whose shares are listed or dealt in on a RecognisedInvestment Exchange.

 

**ACCOUNTS AND RECORDS**

 

3.                **The Accounts**

 

3.1              The Accounts (a copy of which is attachedto the Disclosure Letter):

 

3.1.1           give a true and fair view of thestate of affairs of the Company as at the Accounting Date and of the profits(or losses) of the Company for the Financial Year ended on that date;

 

3.1.2           have been prepared and audited inaccordance with the historical cost convention, with all applicable law andAccounting Standards; and

 

3.1.3           have been prepared on bases andprinciples which are consistent with those used in the preparation of theaudited statutory accounts of the Company for the 2 Financial Years immediatelypreceding that which ended on the Accounting Date.

 

4.                **Records**

 

The Company’s accounting records have been properly kept in accordancewith sections 221 and 222 CA 1985.

 

5.                **Managementaccounts**

 

The ManagementAccounts have been honestly and carefully prepared on bases consistent in allmaterial respects with those employed in the preparation of the previousmanagement accounts of the Company for the same period in the previousFinancial Year.

 

**CHANGES SINCE THE ACCOUNTING DATE**

 

6.                **General**

 

6.1              Since the Accounting Date:

 

6.1.1           the business of the Company hasbeen carried on in the ordinary and usual course and in the same manner(including nature and scope) as in the 12 months preceding the Accounting Date;

 

6.1.2           there are no debts outstanding fromthe Company to ordinary trade creditors which have been due for more than 60days ;

 

6.1.3           the Company has not acquired, oragreed to acquire, any single capital asset having a value in excess of£20,000;

 

6.1.4           the Company has not disposed of,written off, or agreed to dispose of or

 

----

 

write off , any capital assethaving a value reflected in the Accounts in excess of £20,000****or acquired since the AccountingDate;

 

6.1.5           no loan made by the Companywhich remains outstanding has become due and payable in whole or in part;

 

6.1.6           the Company has not borrowed orraised any money or taken up any financial facilities and the Company has notrepaid any borrowing or indebtedness in advance of its stated maturity;

 

6.1.7           the Company has not sold or agreed to sella debt at less than its value in the Accounts and no debt has been released,deferred, subordinated or written off by the Company;

 

6.1.8           no dividend or other payment whichis, or could be treated as, a distribution for the purposes of Part VI ICTA orsection 418 ICTA has been declared, paid or made by the Company;

 

6.1.9           no resolution of theshareholders of the Company has been passed;

 

6.1.10         the Company has not changed its accountingreference date;

 

6.1.11         no management or similar charge has becomepayable or been paid by the Company;

 

6.1.12         no share or loan capital has been allotted,issued, repaid or redeemed or agreed to be allotted, issued, repaid or redeemedby the Company.

 

6.2              There is set out in the Disclosure Lettermaterial particulars of those Material Contracts in respect of which theCompany has since 1 January 2004 received from customers under suchcontracts effective notification of cancellation or non-renewal of suchcontracts.

 

**ASSETS**

 

7.                **Unencumberedtitle; possession**

 

7.1              Each tangible asset included in theAccounts or acquired by the Company since the Accounting Date (save for stockdisposed of or consumed in the ordinary course of business or assets acquiredon retention of title terms which are not onerous or unusual) is, save asspecifically disclosed in the Accounts or the Management Accounts, legally andbeneficially owned by the Company free from any Encumbrance.

 

7.2              Every material tangible asset owned by theCompany is situated at the Properties as at Completion except Customer PremisesEquipment situated at customer sites or physical points of presence and assetsowned by the Company at physical points of presence.

 

----

 

8.                **Debtorsand Creditors**

 

8.1              The Company has not made, or entered intoany Contract to make, any loan to, or other arrangement with, any person as aresult of which it is or may be owed any money, other than trade debts incurredin the ordinary course of business and cash at bank.

 

8.2              The Company is not entitled to the benefitof any debt otherwise than as the original creditor and the Company has notraised finance by factoring, deferring or discounting any debt or agreed to doso.

 

8.3              There is set out in document 40 of Volume12 of the documents annexed to the Disclosure Letter a list of line entrieswhich together constitute the creditors (other than ordinary trade creditors)of the Company as shown in the Accounts.

 

8.4              The Company has not entered into anycontract pursuant to which it is obligated for any amount otherwise than as theoriginal debtor.

 

8.5              Material particulars of all disputesbetween the Company and its creditors in respect of amounts of £20,000 or moredue to such creditors are set out in the Disclosure Letter.

 

9.                **IntellectualProperty**

 

9.1              All Intellectual Property owned by theCompany which is registered or the subject of an application for registrationis listed and described in the Disclosure Letter.  The Company has received no adverse writtenopinion from any registry in relation to any pending application.

 

9.2              In respect of registered IntellectualProperty owned by the Company, all renewal and maintenance fees have been dulypaid.

 

9.3              There are no proceedings, actions or claimsto which the Company is a party and so far as the Vendor is aware, none arepending or threatened, impugning the title, validity or enforceability of theCompany’s Intellectual Property.

 

9.4              As far as the Vendor is aware, there is,and has been, no infringement of the Company’s Intellectual Property.

 

9.5              Copies of all material licences,sub-licences and other material agreements whereby the Company is licensed orotherwise authorised to use the Intellectual Property of a third party orwhereby the Company licenses or otherwise authorises a third party to usematerial Intellectual Property are attached to the Disclosure Letter. No noticehas been given to terminate them, the obligations of the Company in respect ofthem have been complied with in all material respects and so far as the Vendoris aware the obligations of all other parties in respect of them have beencomplied with in all material respects.

 

9.6              The Disclosure Letter contains or hasattached to it in the Data Room a full list of domain names which areregistered in the name of the Company.

 

9.7              So far as the Vendor is aware, nodeliberate action has been taken by the Company to diminish or otherwiseadversely affect the reputation of any unregistered trade or service marks,trade, business or brand names owned by the Company.

 

----

 

9.8              The Company has not infringed and does notinfringe any Intellectual Property of a third party as a result of theCompany’s use or exploitation of the Company’s Intellectual Property nor willsuch use or exploitation give rise to any infringement, dispute, claims orproceedings against the Company.

 

9.9              There are not, and have not in the past 24months been, any disputes, claims or proceedings threatened against the Companyor in existence in any court or tribunal in respect of any of the CompanyIntellectual Property as such or in respect of any use or exploitation thereofby the Company.

 

10.              **Computer Systems**

 

10.1            Copies of all licences and escrowagreements relating to Software material to the Company either individually orin the aggregate are attached to the Disclosure Letter. The licences of suchSoftware have been complied with in all material respects in the operation ofthe business of the Company and any restrictions in those licences do notmaterially and adversely affect the present conduct of the business of theCompany.

 

10.2            The Disclosure Letter contains accuratedetails of the Company’s current procedures with a view to security of theComputer Systems and data stored on them, and the Vendor considers thoseprocedures to be prudent.

 

10.3            The Company has a sufficient number ofemployees who are technically competent and appropriately trained with a viewto the proper operation and use of the Computer Systems.

 

10.4            So far as the Vendor is aware the datastorage capability, functionality and performance of the Computer Systems aresufficient to conduct the Company’s business (as it is now conducted).

 

10.5            All Computer Systems are in working order.

 

10.6            The Company has full and unrestrictedaccess to and use of the Computer Systems and no third party agreements orconsents are required to enable the Company to continue such access and usefollowing Completion.

 

10.7            The Company operates a documented procedureto avoid virus infections and unauthorised access.

 

10.8            All the Company’s operating data (beingdata materially required for the Company to be able to provide services to itscustomers, to bill such customers, pay its suppliers, manage and compensate itsemployees and maintain internal and external e-mail communications systems forits employees) has been regularly archived in soft copy form.

 

10.9            The Company has in its unencumberedpossession or has unrestricted access to up-to-date and accurate source codefor all bespoke Software which has been written or produced in-house by theCompany.

 

----

 

**PROPERTY**

 

11.              In this paragraph unless the contextotherwise requires:

 
| **“Ancillary Document”**     |   | means any licence, deed, permission, approval,  consent or other document supplemental to or otherwise associated with any  Occupational Agreement or any Letting Document                                                                                    |
|----------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                             |   |                                                                                                                                                                                                                                                          |
| **“Lease”**                  |   | means any lease or underlease (however inferior)                                                                                                                                                                                                              |
| ** **                             |   |                                                                                                                                                                                                                                                          |
| **“Letting Document”**       |   | means any Lease, tenancy agreement, service  occupancy, licence to occupy and other agreement or arrangement, together  with any Ancillary Document, relating to the occupation or use of the  Properties by any Occupational Tenant, whether oral or written |
| ** **                             |   |                                                                                                                                                                                                                                                          |
| **“Occupational Agreement”** |   | means any Lease, tenancy agreement, service  occupancy, licence to occupy and other agreement or arrangement, together  with any Ancillary Document, relating to the occupation or use of the  Properties by the Company, (whether oral or written)           |
| ** **                             |   |                                                                                                                                                                                                                                                          |
| **“Occupational Tenant”**    |   | any tenant permitted to occupy any of the Properties  pursuant to a Letting Document                                                                                                                                                                          |
| ** **                             |   |                                                                                                                                                                                                                                                          |
| **“Rent”**                   |   | includes licence fees, charges for occupation or  use, mesne profits, damages for trespass and compensation for use and/or  occupation                                                                                                                        |

 

11.1            The Company does not own, is in occupationof or is entitled to any estate or interest in any freehold or leaseholdproperty other than the Properties.

 

11.2            The Properties are held under the terms ofthe Occupational Agreements briefly referred to in **Schedule 6**andno collateral assurances, undertakings or concessions have been made by anyparty to the Occupational Agreements.

 

11.3            There are no variations proposed to theOccupational Agreements nor are there any current applications for the consentof the landlord.

 

11.4            The Occupational Agreements are valid andin full force.

 

11.5            The Rent and all other sums payable underthe Occupational Agreements have been paid to date.

 

11.6            Full copies of all documents of title tothe Properties to which the Company is a party or which are in the possessionof the Company have been disclosed in the Data Room.

 

----

 

11.7            The Company has complied in all materialrespects with the covenants, conditions and agreements in the OccupationalAgreements.

 

11.8            The Company has not entered into either thelease of or a licence to assign relating to any leasehold property as aguarantor of the lessee’s covenants contained in any such document in respectof which the Company has a continuing commitment as guarantor.

 

11.9            The Company has not at any time assigned ordisposed of or contracted to assign or dispose of any leasehold property of whichit was first lessee without receiving a full and effective indemnity in respectof its liability under any such lease and so far as the Vendor is aware, thereare no claims being made or threatened against the Company in its capacity as aprior lessee under any lease which has been assigned.

 

11.10          The Company is in physical possession andactual occupation of the whole of the Properties on an exclusive basis and noright of occupation or enjoyment has been acquired or so far as the Vendor isaware is in the course of being acquired by any third party or has been grantedor agreed to be granted to any third party.

 

11.11          The Properties are free from anyEncumbrance and the Company has not entered into any agreement or commitment togive or create any Encumbrance.

 

11.12          The Company has not received any writtennotice that it has failed to comply in any material respect with any applicablestatutory and bye-law requirements relating to the Properties and in particularwith all requirements under the Public Health Acts, the Offices, Shops andRailway Premises Act 1963, the Health and Safety at Work etc. Act 1974, theControl of Pollution Act 1974, the Environmental Protection Act 1990, theEnvironmental Protection Act 1995, the Construction (Design and Management)Regulations 1994 and all regulations, rules and delegated legislationthereunder and is not otherwise aware of any such material failure.

 

11.13          No dispute exists between the Company andthe owner or occupier of any other premises adjacent to or neighbouring theProperties relating to the Properties and so far as the Vendor is aware thereare no circumstances which may give rise to any such dispute hereafter.

 

**EMPLOYEES**

 

12.              **Remuneration and employees**

 

12.1            Particulars of the identities, dates of commencementof employment (or appointment to office), notice periods, dates of birth, termsand conditions of employment and remuneration (including any bonus, commission,profit sharing, share and other incentive schemes, and collective or workforceagreements) of all the employees, workers and officers of the Company(“Employees”) are contained in the Disclosure Letter and copies of all standardform contracts of employment or particulars of employment statements are in theData Room.

 

12.2            There are no amounts owing to anyEmployees, other than remuneration accrued (but not yet due for payment) inrespect of the calendar month in which this Agreement is executed or forreimbursement of business expenses incurred during such month.

 

----

 

12.3            There are no Employees who have been absentdue to sickness leave for more than 3 months in the 12 month period ending onthe date of this Agreement.

 

12.4            The Company has not recognised, or done anyact which might be construed as recognition of, a trade union and the Companyis not party to any agreement with any trade union or organisation ofemployees.

 

12.5            The Company is not involved, or has duringthe 12 months prior to the date of this Agreement been involved, in any strike,lock-out, industrial or trade dispute or any negotiations with any trade unionor body of employees or workers.

 

12.6            There is no material dispute outstandingbetween the Company and any of its Employees.

 

12.7            No person is employed or engaged by theCompany (whether under a contract of service or contract for services andwhether directly, through an agency, subsidiary or otherwise) other than theEmployees.

 

12.8            The Disclosure Letter contains completecopies of the current terms of engagement of all persons engaged undercontracts for services with the Company.

 

12.9            The Company has not offered any contract ofemployment to any person (except to the Employees).

 

12.10          The Company has not offered, promised oragreed for the future any variation in any contract of employment in respect ofthe Employees.

 

12.11          No Employee has given or received writtennotice terminating his employment.

 

12.12          There is no person previously employed bythe Company who now has a right to return to work either now or in the future(whether for reasons connected with maternity leave, parental leave or absenceby reason of illness or incapacity) or a right to be reinstated or re-engagedby the Company or to any other compensation.

 

12.13          None of the Employees is absent from workby reason of any disciplinary action.

 

12.14          The Company has not entered into anycommitment to provide any increase in the emoluments or benefits of anyEmployee which are current or expected to take place within the next sixmonths.

 

12.15          The Company has performed in all materialrespects its obligations and duties required to be performed by it in respectof its Employees (and has settled all outstanding claims brought by anyEmployee against the Company), whether arising under contract, statute, atcommon law or in equity.

 

12.16          Particulars of Employees who are requiredto have permission or permits to work under relevant UK immigration laws arelisted in the Disclosure Letter.

 

12.17          There are no enquiries or investigationsexisting and of which the Company has had notice or threatened against theCompany or, so far as the Vendor is aware, pending into the Company by theEqual Opportunities Commission, the Disability Rights Commission or theCommission for Racial Equality or other similar authorities.

 

----

 

12.18          There are no schemes or arrangements (whichare legally enforceable) to which the Company is a party for payment ofretirement, pension, disability, or death benefit or similar schemes orarrangements in operation in respect of any of the Employees or theirdependants or persons formerly employed or engaged by the Company or theirdependants under which the Purchaser or Company may become liable to makepayments or to provide equivalent benefits.

 

12.19          There are not in existence and the Companyis not proposing to introduce any bonus, profit sharing scheme, share optionscheme, share incentive scheme or any other scheme or arrangement for thebenefit of Employees or any of them and whether or not additional to theircontractual entitlements.

 

12.20          The Company has no custom and practice ofpaying more than statutory redundancy entitlement.

 

12.21          There is no obligation on the Company topay contributions to a stakeholder pension arrangement in respect of anyemployee or officer of the Company.

 

**CONTRACTS**

 

13.              **Insurance**

 

13.1            Material particulars of the Company’sinsurances and of all claims made against those insurances which areoutstanding or which have been made in the 12 months immediately preceding thedate of this Agreement are set out in or attached to the Disclosure Letter.  So far as the Vendor is aware, there are nocircumstances likely to give rise to a claim with a claimable value in excessof £5,000 thereunder.

 

13.2            All premiums due in relation to theCompany’s policies of insurance have been paid and no written notice has beenreceived that any policy of insurance of the Company is void or voidable.

 

14.              **Financing and working capital**

 

14.1            The amount borrowed by the Company from itsbankers does not exceed the amount of the facility agreed with such bankers andthe total amount borrowed by the Company from whatever source does not exceedany limitation on its borrowing contained in its articles of association or inany Contract, debenture, loan stock deed or any other document.

 

14.2            All material particulars of all overdrafts,loans or other financial facilities outstanding or available to the Company areset out in the Disclosure Letter.

 

14.3            The Company has not applied for or receivedany grant, subsidy or financial assistance from any government department orother body which is subject to any continuing right of claw back.  All material particulars of any such grant,subsidiary or financial assistance are contained in the Disclosure Letter.

 

15.              **Material contracts**

 

For thepurposes of this **Warranty15**and **Warranty6.2**“**Material Contracts**”******means contracts to which the Company is a party and**whichaccount for, in the case

 

----

 

of customersin excess of £20,000 of revenue per annum and, in the case of suppliers, inexcess of £20,000 per annum of expenditure by the Company.

 

15.1            There is no outstanding Contract to whichthe Company is a party which:

 

15.1.1         involves agency, distributorship,franchising;

 

15.1.2         involves partnership, joint venture,consortium, joint development, shareholders or similar arrangements;

 

15.1.3         involves hire purchase, conditional sale,credit sale, leasing, hiring or similar arrangements;

 

15.1.4         involves or is likely to involve anycapital expenditure by the Company in excess of £20,000;

 

15.1.5         is incapable of complete performance inaccordance with its terms within 12 months after the date on which it wasentered into;

 

15.1.6         is not on arm’s length terms oris in any way otherwise than in the ordinary course of the Company’s business;

 

15.1.7         involves the provision of goods orservices by the Company to a customer or customers the aggregate sales value ofwhich represents in excess of 5 per cent. of theturnover of the Company in the 12 months preceding Completion.

 

15.2            There is no Material Contract whichpursuant to its terms can be terminated or varied as a result of any change inthe control, management or shareholders of the Company.

 

15.3            The Company does not carry on businessunder any name other than its own corporate name or any other name specified inthe Disclosure Letter.

 

15.4            All Material Contracts between the Companyand its customers are on the Company’s standard terms and conditions.

 

15.5            All the Material Contracts to which theCompany is party are in full force and effect and have been duly complied withby the Company and so far as the Vendor is aware nothing has occurred wherebyany of them is or could be subject to early termination or which has given ormay so far as the Vendor is aware give rise to a material claim in damagesunder any of them by any party to any of them.

 

15.6            No person is entitled to receive from theCompany any introduction fee, brokerage or other commission in connection withthe introduction of or continuation of any business to or with the Companyexcept sales commission [to Employees] in the ordinary course of business.

 

15.7            The Disclosure Letter has annexed to it:

 

15.7.1         details of monthly commissionpayments to sales Employees of the Company since 1 January 2004; and

 

----

 

15.7.2         copies of all sales commissions’policies of the Company in respect of its Employees and such details and copies(as the case may be) are accurate in all material respects.

 

15.8            Copies of all Material Contracts betweenthe Company and its suppliers are attached to the Disclosure Letter.

 

**COMPLIANCE**, DISPUTES

 

16.              **Company law matters**

 

16.1            The copy of the memorandum and articles ofassociation of the Company attached to the Disclosure Letter is true andcomplete and has embodied in it or annexed to it all resolutions referred to insection 380 of the CA1985.

 

16.2            So far as the Vendor is aware all materialreturns, particulars, resolutions and other documents required to be filed withor delivered to the Registrar of Companies by the Company or any of itsofficers have been correctly and properly prepared and so filed and delivered,and no such returns, particulars, resolutions or other documents have been sofiled or delivered during the period of 14 days ending on the date of thisAgreement.

 

16.3            The statutory registers of the Company havebeen properly kept and the Company has not received any notice, application orrequest for rectification of its register of members.

 

17.              **General legal compliance**

 

17.1            The Company has not received any writtennotice that it has not complied in the conduct of its business in all materialrespects in accordance with all applicable laws and regulations of the UnitedKingdom and the Vendor is not otherwise aware of any such material breach.

 

17.2            The Company has obtained all materiallicences, consents, permits and authorities to enable it to carry on itsbusiness in the places and in the manner in which such business is now carriedon.  All such licences, consents, permitsand authorities are, so far as the Vendor is aware, valid and subsisting andhave been complied with in all respects and there is no reason known to theVendor why any of them should be suspended, cancelled or revoked.

 

17.3            No current or threatened investigation orenquiry by, or on behalf of any governmental body in respect of the affairs ofthe Company has been notified in writing to the Vendor.

 

17.4            The Company has not received any writtennotification that any agreement, transaction, obligation, commitment,understanding or arrangement to which it was a party:

 

17.4.1         was required to be registered butwas not duly registered in accordance with or is invalidated (in whole or inpart) by the Restrictive Trade Practices Acts 1956 to 1977 or contravenes or isinvalidated (in whole or in part) by the provisions of the Resale Prices Act1976 or by virtue of its terms or any

 

----

 

practice carried on in connection therewithis a consumer trade practice (within the meaning of the Fair Trading Act 1973)or is liable to be referred to the Consumer Protection Advisory Committee underPart II of that Act or contravenes the Completion Act 1980 or the TradeDescriptions Acts 1968 and 1972 or Part XI of the Fair Trading Act 1973; or

 

17.4.2         infringes or requires registrationunder Articles 81 or 82 of the Treaty establishing the European EconomicCommunity (or any regulations or directives made pursuant to the Treaty); or

 

17.4.3         is liable to be referred to the CompetitionCommission or infringes any provision of the Competition Act 1998.

 

18.              **Litigation**

 

18.1            Save for debt collection in the ordinarycourse of business not exceeding £5,000 in aggregate, the Company is not nor,so far as the Vendor is aware, is any person for whose acts or defaults theCompany may be contractually or vicariously liable, involved (whether asclaimant, defendant or otherwise) in any civil, criminal, tribunal, arbitration,administrative or other proceedings in respect of the business of the Companyand, so far as the Vendor is aware, there are no such proceedings pending orthreatened either by or against the Company and so far as the Vendor is awarethere are no facts which are likely to give rise to any such litigation orarbitration.

 

18.2            There is no outstanding or unsatisfiedjudgement, decree, order, award or decision of a court, tribunal, arbitrator orgovernmental agency against the Company and the Company is not party to anyundertaking or assurance given to a court, tribunal or any other person inconnection with the determination or settlement of any claim or proceedings.

 

18.3            There are not currently outstanding anymaterial written complaints in respect of any aspect of the performance of anyMaterial Contracts by the Company.

 

19.              **Insolvency**

 

19.1            No meeting has been convened at which aresolution will be proposed, no petition has been presented, no order has beenmade and no resolution has been passed for the winding-up of the Company or forthe appointment of any provisional liquidator. The Company has not called any formal or informal meeting of all or anyof its creditors.

 

19.2            No administrative receiver, receiver orreceiver and manager has been appointed of the wholeor any part of the property, assets or undertaking of the Company.

 

19.3            No administrator has been appointed inrespect of the Company and no steps or actions have been taken in connectionwith the appointment of an administrator in respect of the Company.

 

19.4            No voluntary arrangement has been proposedor approved under Part I Insolvency Act 1986 and no compromise or arrangementhas been proposed, agreed to or sanctioned under section 425 CA 1985 inrespect of the Company.

 

----

 

19.5            No distress, execution or other process hasbeen levied on or applied for in respect of any asset of the Company.

 

19.6            The Company is not unable to pay its debtsaccording to section 123 of the Insolvency Act 1986.

 

20.              **Effects of the Agreement**

 

20.1            The execution of this Agreement and theobservance and performance of its provisions will not:

 

20.1.1         result in a material breach of anyContract, law, regulation, order or judgement to or by which the Company isparty or bound, or entitle any person to terminate or avoid any Contract towhich the Company is party;

 

20.1.2         result in any default under anylicence, authorisation or consent required by the Company to conduct itsbusiness.

 

21.              **Data Protection Act**

 

The Company has not received any written notification that it hasfailed in any material respect to comply with the requirements of the DataProtection Act 1998 and the Data Protection Act 1984 and the Vendor is nototherwise aware of any such material non-compliance.

 

**SUBSIDIARIES**

 

22.              The Subsidiaries have been dormant since1 December 2000 and have no assets or liabilities (actual or contingent)of any nature whatsoever other than their paid up share capital.

 

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**SCHEDULE 4**

**Taxation**

 

**PART 1 – INTERPRETATION**

 

1.                                                **Interpretation**

 

In this **Schedule 4**:

 

1.1                                          the following expressions havethe following meanings unless inconsistent with the context:

 
| **“ACT”**                   |   | advance corporation tax                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“the Auditors”**          |   | the auditors for the time being of the Company                                                                                                                                                                                                                                                                                                                             |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“CAA”**                   |   | Capital Allowances Act 2001                                                                                                                                                                                                                                                                                                                                                |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“Dispute”**               |   | any dispute, appeal, negotiations or other  proceedings in connection with a Tax Claim                                                                                                                                                                                                                                                                                     |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“Event”**                 |   | includes (without limitation) any event,  circumstance, state of affairs, occurrence, transaction, action or omission  (whether or not the Company is party to it), including, for the avoidance of  doubt, the sale and purchase of the Shares pursuant to the Agreement, and the  accrual, earning, or receipt for any Taxation purpose of any income, profits  or gains |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“FA”**                    |   | Finance Act                                                                                                                                                                                                                                                                                                                                                                |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“Group Relief”**          |   | the meaning given to that expression by  section 402 ICTA                                                                                                                                                                                                                                                                                                             |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“IHTA”**                  |   | Inheritance  Tax Act 1984                                                                                                                                                                                                                                                                                                                                                  |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“ITEPA”**                 |   | Income  Tax (Earnings and Pensions) Act 2003                                                                                                                                                                                                                                                                                                                               |
| ** **                            |   |                                                                                                                                                                                                                                                                                                                                                                       |
| **“Liability to Taxation”** |   | (a)                                                                                                                                                                                                                                                                                                                                                                        | any  liability of the Company to make an actual payment of Taxation; |
| ** **                            |   | ** **                                                                                                                                                                                                                                                                                                                                                                 |   |
| ** **                            |   | **(b)**                                                                                                                                                                                                                                                                                                                                                                    | the  use by the Company (in whole or in part) of any Purchaser’s Relief to reduce  or eliminate any |

 

----

 
| ** **                              |   | ** **                                                                                                              | liability  of the Company to make an actual payment of Taxation in respect of which the  Vendor would otherwise have been liable under **paragraph 2****; and**                                                                                                       |
|-----------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                              |   |                                                                                                                    |
| ** **                              |   | (c)                                                                                                                     | the  loss of any Purchaser’s Relief falling within **paragraph (a)** or **(b)** of the definition thereof                                                                                                                                                                  |
| ** **                              |   |                                                                                                                    |
| **“Purchaser’s Group”**  |   | the Purchaser and all companies with which it forms  a group for the purposes of section 170 TCGA after Completion |
| ** **                              |   |                                                                                                                    |
| **“Purchaser’s Relief”** |   | (a)                                                                                                                     | any  Relief which was treated as an asset of the Company in the Completion  Accounts; and                                                                                                                                                                                       |
| ** **                              |   |                                                                                                                    |
| ** **                              |   | (b)                                                                                                                     | any  Relief which was taken into account in computing (and so reducing or  eliminating) any provision for deferred tax which appears in the Completion  Accounts or which would have appeared in the Completion Accounts but for the  presumed availability of such Relief; and |
| ** **                              |   |                                                                                                                    |
| ** **                              |   | (c)                                                                                                                     | any  Relief which arises as a result of any Event which occurs after Completion or  by reference to any period or portion of any period which commences on or  after Completion                                                                                                 |
| ** **                              |   |                                                                                                                    |
| **“Relief”**                  |   | (a)                                                                                                                     | any  relief, allowance, exemption, set-off, deduction or credit available from,  against or in relation to Taxation or in the computation for any Taxation  purpose of income, profits or gains; and                                                                            |
| ** **                              |   |                                                                                                                    |
| ** **                              |   |                                                                                                                    | (b)any  right to a repayment of Taxation                                                                                                                                                                                                                                        |
| ** **                              |   |                                                                                                                    |
| **“Repayment”**               |   | the  obtaining by the Company of:                                                                                       |
| ** **                              |   |                                                                                                                    |
| ** **                              |   | (a)                                                                                                                     | a  repayment of Taxation where the Vendor has made a payment under this **Schedule 4**  or for                                                                                                                                                                             |
|                                         |        |                                                                                                                         |                                                                                                                                                                                                                                                                                 |  |  |  |

 

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| ** **               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | breach  of any Taxation Warranty in respect of the same Taxation which is the subject  of the repayment; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **               |   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | a  repayment of Taxation in respect of which Taxation the Vendor was not liable  under **Part 2**of  this **Schedule 4**  or for breach of any Taxation Warranty by the use of any Relief arising as a  result of a Liability to Taxation in respect of which the Vendor has made a  payment under **Part 2**of  this **Schedule 4**  or for breach of any Taxation Warranty or as a result of or in connection  with the Events which gave rise to such a Liability to Taxation                                                                                     |
| ** **               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **“Saving”**   |   | the reduction or elimination of any liability of the Company or the  Purchaser, or any member of the Purchaser’s Group to make an actual payment  of tax in respect of which the Vendor would not have been liable under **paragraph 2**,  by the use of any Relief arising as a result of a Liability to Taxation in  respect of which the Vendor has made a payment under **paragraph 2**or  for breach of the Taxation Warranties or as a result of or in connection with  the Events which gave rise to such a Liability to Taxation |
| ** **               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **“Taxation”** |   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | any  tax or duty, past or present, of the United Kingdom or elsewhere, including  without limitation income tax (including income tax required to be deducted  or withheld from or accounted for in respect of any payment under  section Part 11 ITEPA or otherwise), corporation tax, ACT, capital gains  tax, inheritance tax, VAT, customs and other import or export duties, rates,  stamp duty, stamp duty reserve tax, stamp duty land tax, national insurance  contributions but excluding all business rates water rates and similar local  authority or utility |

 

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| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             | charges;  and                                                                                                                                                                                                                                                                                                             |
|-------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                          |   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                              | any  fine, penalty, surcharge, interest or other imposition relating to any tax or  duty, mentioned in **paragraph (a)**  of this definition or to any account, record, form, return or computation  required to be kept, preserved, maintained or submitted to any person for the  purposes of any such tax or duty |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Taxation Authority”**  |   | any authority, whether of the United Kingdom or  elsewhere, competent to impose, assess or collect Taxation, including but not  limited to the Board of Inland Revenue and the Commissioners of Customs and  Excise                                                                                                                                                                                                                                              |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Taxation Statute”**    |   | any statute (and all regulations and other documents  having the force of law under such statute) published, enacted, issued or  coming into force on or before the date of this Agreement relating to  Taxation                                                                                                                                                                                                                                                 |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Taxation Warranties”** |   | the Warranties set out in **Part 3** of this **Schedule 4**(and “Taxation Warranty” shall be defined  accordingly)                                                                                                                                                                                                                                                                                                                                |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Tax Claim”**           |   | any notice, demand, assessment, letter or other  document issued, or action taken, by or on behalf of any Taxation Authority  and the submission of any Taxation form, return or computation from which, in  either case, it appears to the Purchaser that the Company is or may be  subject to a Liability to Taxation or other liability in respect of which the  Vendor is or may be liable under **paragraph 2**or  for breach of any Taxation Warranty |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“TCGA”**                |   | Taxation of Chargeable Gains Act 1992                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“TMA”**                 |   | Taxes Management Act 1970                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“VAT”**                 |   | value added tax                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“VATA”**                |   | Value Added Tax Act 1994                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ** **                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“VAT Group”**           |   | any group of companies for the purposes of  section 43 VATA of which the Company is                                                                                                                                                                                                                                                                                                                                                                         |

 

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| ** **                           |   | or has been a member on or before Completion;                                                                   |
|--------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|
| ** **                           |   |                                                                                                            |
| **“Vendor’s Relief”** |   | any Relief which is or subsequently becomes  available to the Company other than a Purchaser’s Relief; and |

 

1.2                                          references to Events includeEvents which are deemed to have occurred for any Taxation purpose andreferences to income, profits or gains earned, accrued or received for anyTaxation purpose include income, profits or gains which are deemed to have beenearned, accrued or received for any Taxation purpose.

 

**PART 2 - TAX COVENANT**

 

2.                                                **Covenant**

 

Subject to the provisions of this **Part 2** of this **Schedule 4****,** the Vendor covenants with thePurchaser to pay to the Purchaser an amount equal to the amount of:

 

2.1                                          any Liability to Taxationwhich has arisen or arises as a result of or in connection with any Event whichoccurred on or before Completion or in respect of or by reference to anyincome, profits or gains which were earned, accrued or received on or beforeCompletion or in respect of a period ending on or before Completion, in eachcase, whether or not the Taxation is chargeable against or attributable to anyother person and whether or not any amount in respect thereof is recoverablefrom any other person; and/or

 

2.2                                          any Liability to Taxationwhich arises under section 767A or 767AA ICTA, as a result of the combinedeffect of two or more Events, the first of which occurred on or beforeCompletion; and/or

 

2.3                                          any Liability to Taxationwhich arises as a result of any Event which occurs after Completion pursuant toa legally binding obligation (whether or not conditional) entered into by theCompany on or before Completion otherwise than in the ordinary course ofbusiness of the Company; and/or

 

2.4                                          any Liability to Taxationwhich arises as a result of any supply, acquisition or importation made ordeemed to be made after Completion for the purposes of VAT by any member of anyVAT Group other than the Company; and/or

 

2.5                                          without limitation to thegenerality of **paragraph 2.1**, any Liability to Taxation whicharises as a result of the Company ceasing to be a member of the same group ofcompanies (for any Taxation purpose) as the Vendor or any other company priorto or as a result of Completion; and/or

 

2.6                                          any Liability to Taxationwhich arises as a result of any person or company (other than the Company orone of the Subsidiaries) failing at any time to discharge any Taxation forwhich such person or company is primarily liable, where such person or companyhas at any time on or before Completion:

 

2.6.1                                been a member of the samegroup of companies as the Company for any Taxation purpose; and/or

 

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2.6.2                                been under the control of, orconnected with, the Company for any Taxation purpose; and/or

 

2.6.3                                controlled the Company for anyTaxation purpose; and/or

 

2.7                                          any reasonable costs, fees orexpenses properly incurred by the Company or the Purchaser in connection withany such Liability to Taxation as is mentioned in this **paragraph 2** or with successfully taking or defending any action(including but not limited to legal proceedings) under this **Part 2**of this **Schedule 4**.

 

3.                                                **Quantification**

 

For the purposes of **paragraph 2**the amount of a Liability to Taxation or a liability of the kind mentioned in **paragraph 2.6**will be determined as follows:

 

3.1                                          the amount of a Liability toTaxation falling within **paragraph (a)**of the definition of that expression in **paragraph 1.1**will be the amount of the actual payment of Taxation which the Company isliable to make;

 

3.2                                          the amount of a Liability toTaxation falling within **paragraph (b)**of the definition of that expression in **paragraph 1.1**will be the amount of Taxation saved by the Company as a result of the use ofthe Purchaser’s Relief; and

 

3.3                                          the amount of a Liability toTaxation falling within **paragraph (c)**of the definition of that expression in **paragraph 1.1**will be:

 

3.3.1                                the amount of Taxation whichwould have been saved by the Company but for the loss of the Purchaser’s Reliefon the basis of the rates of Taxation current at the date of the loss, assumingfor this purpose that the Company had sufficient profits or was otherwise in aposition actually to use the Purchaser’s Relief; or

 

3.3.2                                if the Purchaser’s Relief lostwas a right to a repayment of Taxation, the amount of the repayment of Taxationso lost; and

 

4.                                                **Exclusions**

 

4.1                                          The Vendor will not be liableunder **paragraph 2**or for a breach of the Taxation Warranties in respect of a Liability toTaxation or other liability of the Company:

 

4.1.1                                to the extent to which suchLiability to Taxation or other liability was discharged on or before Completionand the discharge was reflected in the Completion Accounts; or

 

4.1.2                                if a provision, allowance orreserve was made in the Completion Accounts for such Liability to Taxation orother liability (whether or not, for the avoidance of doubt, such provision,allowance or reserve was sufficient); or

 

4.1.3                                to the extent to which thePurchaser or the Company has already recovered (at no cost) from any otherperson, other than the Company, the Purchaser or a member of the Purchaser’sGroup a payment in respect of such Liability to Taxation or other liabilitywhether under this Agreement or otherwise; or

 

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4.1.4                                to the extent to which suchLiability to Taxation or other liability would not have arisen but for a changein legislation (including but not limited to an increase in rates of Taxation)or in the published practice of any Taxation Authority or but for any decisionof any court or tribunal, in each case first enacted or announced or deliveredafter Completion; or

 

4.1.5                                to the extent to which suchLiability to Taxation or other liability would not have arisen but for avoluntary act, transaction, omission or arrangement carried out afterCompletion by the Purchaser or the Company or any of their respectivedirectors, employees or agents or successors in title of the Company afterCompletion:

 
| 4.1.5.1 |   | otherwise than pursuant to a legally binding  obligation entered into by the Company on or before Completion or imposed on  the Company by any legislation whether coming into force before, on or after  Completion; and                                       |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                            |
| 4.1.5.2 |   | otherwise than in the ordinary course of business of  the Company; and                                                                                                                                                                                          |
|    |   |                                                                                                                                                                                                                                                            |
| 4.1.5.3 |   | which the Purchaser was aware or ought reasonably to  have been aware (on the basis of matters disclosed in the Disclosure Letter  or information contained within the Data Room) would give rise to the  Liability to Taxation or other liability in question, |

 

provided that, for the avoidance of doubt, any act, transaction,omission or arrangement carried out by the Purchaser or the Company at therequest of the Vendor pursuant to the provisions of **paragraph 10** shall not constitute a voluntary act, transaction,omission or arrangement for the purposes of this **paragraph 4.1.5**; or

 

4.1.6                                to the extent to which suchLiability to Taxation or other liability would not have arisen but for theCompany changing any of its accounting policies, bases or practices (including,but not limited to, the date to which the Company prepares its accounts, thetreatment of timing differences, the bases on which the Company values itsassets and its taxation reporting practice) after Completion unless such changewas required to comply with UK GAAP as at Completion; or

 

4.1.7                                to the extent to which suchLiability to Taxation is in respect of the actual (as opposed to the deemed)income, profits or gains earned, received or accrued prior to Completion butwhich are not recognised in the Completion Accounts; or

 

4.1.8                                to the extent to which suchLiability to Taxation or other liability would not have arisen but for theCompany ceasing to carry on any trade or business after Completion or effectinga major change after Completion in the nature or conduct of any trade orbusiness carried on by it; or

 

4.1.9                                to the extent to which suchLiability to Taxation or other liability would not

 

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have arisenbut for the failure by the Company after Completion to make any claim,election, surrender or disclaimer or to give any notice or consent or to do anyother thing, the making, giving or doing of which was permitted by law andwhich was taken into account:

 

4.1.9.1                                           in computing and so reducingany provision for current or deferred Taxation which appears in the CompletionAccounts (or eliminating any provision for current or deferred Taxation which,but for such Relief, would have appeared in the Completion Accounts); or

 

4.1.9.2                                           in computing any right to arepayment of Taxation which appears as an asset in the Completion Accounts,

 

unless such failure is at the written request of the Vendor or its dulyauthorised agents (including, for the avoidance of doubt, any request madepursuant to the provisions of **paragraph 10**); or

 

4.1.10                          to the extent to which suchLiability to Taxation or other liability would not have arisen but for thewithdrawal or amendment by the Company after Completion of any valid claim,election, surrender, disclaimer, notice or consent made by the Company prior toCompletion in relation to any Relief and taken into account or reflected in theCompletion Accounts unless such withdrawal or amendment is at the writtenrequest of the Vendor or its duly authorised agents (including, for theavoidance of doubt, any request made pursuant to the provisions of **paragraph 10**); or

 

4.1.11                          to the extent to which suchLiability to Taxation or other liability is a liability to interest orpenalties which would not have arisen but for any failure by the Purchaser orthe Company to comply with its obligations under **paragraph 7** of this **Schedule 4** orthe Agreement; or

 

4.1.12                          to the extent to which suchLiability to Taxation or other liability is a liability to interest orpenalties which would not have arisen but for any failure or delay by thePurchaser or the Company in paying over to any Taxation Authority any paymentpreviously made by the Vendor under this **Schedule 4**; or

 

4.1.13                          to the extent to which aVendor’s Relief is available to be used against the liability in question.

 

4.2                                          For the avoidance of doubt andnotwithstanding any other provision in this **Schedule 4**, the Purchaser is notentitled to recover damages or otherwise obtain payment, reimbursement orrestitution from the Vendor in full more than once in respect of the sameLiability to Taxation or other loss.

 

4.3                                         The provisions of **paragraphs 2.1**, **2.2**, **3.1****,****3.2****and****6****of****Schedule 7**shall apply to limit the liability of the Vendor under **paragraph 2****. **The provisions of **paragraphs 2.1**, **2.2**, **3.1, 3.2, 4, 6, 7****and****9****of****Schedule 7**shall apply to limit the liability of the Vendor in respect of a claim for abreach of the Taxation Warranties**.**

 

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5.                                                **DeductionsFrom Payments**

 

5.1                                          Except as required by law allpayments by the Vendor under this **Part 2** of this **Schedule 4**will be made free and clear of all deductions and withholdings (whether inrespect of Taxation or otherwise).

 

5.2                                          If any deduction or withholdingis required by law to be made from any payment by the Vendor under this **Part 2**of this **Schedule 4**or if the Purchaser is subject to Taxation in respect of any payment by theVendor under this **Part 2**of this **Schedule 4**,the Vendor covenants with the Purchaser to pay to the Purchaser such additionalamount as is necessary to ensure that the net amount received and retained bythe Purchaser (after taking account of such deduction or withholding orTaxation) is equal to the amount which it would have received and retained hadthe payment in question not been subject to the deduction or withholding orTaxation.

 

5.3                                          In the event of the assignmentof this Agreement the Vendor’s liability to the assignee under this **Schedule 4**will be no greater than it would have been to the Purchaser.

 

6.                                                **Due Datefor Payment**

 

6.1                                          The due date for the making ofa payment by the Vendor under this **Part 2** of this **Schedule 4**will be the later of the date falling five Business Days after the Purchaserhas served a notice on the Vendor demanding such payment and the datedetermined in accordance with **paragraphs6.2** to **6.4**.

 

6.2                                          In any case involving aLiability to Taxation falling within **paragraph (a)**of the definition of that expression in **paragraph .1.1**or any other liability of the Company to make an actual payment, the seconddate mentioned in **paragraph 6.1**will be the date falling five clear Business Days before the last date uponwhich the payment is required to be made to the person entitled thereto (aftertaking into account any postponement of the due date for payment of anyTaxation which is obtained).

 

6.3                                          In any case involving aLiability to Taxation falling within **paragraph (b)**of the definition of that expression in **paragraph 1.1**,the second date mentioned in **paragraph 6.1**will be the date falling five clear Business Days before the last date uponwhich the payment of Taxation which has been reduced or eliminated by the useof a Purchaser’s Relief is or would have been required to be made to therelevant Taxation Authority.

 

6.4                                          In any case involving aLiability to Taxation falling within **paragraph (c)**of the definition of that expression in **paragraph 1.1**:

 

6.4.1                                if the Purchaser’s Relief lostwas a Relief other than a right to repayment of Taxation, the second datementioned in **paragraph 6.1**will be the date falling five clear Business Days before the last date uponwhich Taxation is or would have been required to be paid to the relevantTaxation Authority in respect of the period in which the Purchaser’s Relief islost (irrespective of whether the Company then had sufficient profits or wasotherwise in a position actually to use the Purchaser’s Relief); or

 

----

 

6.4.2                                if the Purchaser’s Relief lostwas a right to a repayment of Taxation, the second date mentioned in **paragraph 6.1**will be the date upon which the repayment was due from the relevant TaxationAuthority.

 

6.5                                        In any case involving aliability of the Vendor to pay an additional amount to the Purchaser under **paragraph 5.2**as a result of:

 

6.5.1                                any deduction or withholdingbeing required by law to be made, the due date for payment will be the same asthe due date for payment of the amount from which the deduction or withholdingis required to be made; and

 

6.5.2                                the Purchaser being subject toTaxation in respect of any payment, the due date for payment will be the laterof the date falling five Business Days after the Purchaser has served a noticeon the Vendor demanding such payment and the date falling five clear BusinessDays before the last date upon which the Taxation is (or, but for theavailability of any Relief, would have been) required to be paid to therelevant Taxation Authority (taking into account any postponement of the duedate for payment of Taxation).

 

7.                                              **ClaimsProcedure**

 

7.1                                        The Purchaser will as soon asreasonably practicable after the Purchaser or the Company becomes aware of aTax Claim give notice of any Tax Claim to the Vendor, and in the event of anassessment or demand for Taxation in respect of which a time limit for themaking of an appeal applies, no later than 10 Business Days prior to the expiryof such time limit, such notice to contain reasonable details of the Tax Claimand, so far as available, the quantum. The giving of such notice shall not be a condition precedent to theliability of the Vendor under this **Schedule 4**.

 

7.2                                        Provided that the Vendorindemnifies the Company and the Purchaser to the reasonable satisfaction of thePurchaser against all losses, costs, damages and expenses (including intereston overdue Taxation) which may be incurred thereby, the Purchaser will procurethat the Company, at the Vendor’s cost and expense, takes such action and givessuch information and assistance in connection with its Taxation affairs as theVendor may reasonably and promptly request to dispute, appeal against, settleor compromise any Tax Claim, including, but not limited to:

 

7.2.1                                applying to postpone (so faras legally possible) the payment of any Taxation; and

 

7.2.2                                (except in the case of a TaxClaim where any Taxation Authority alleges in writing fraudulent conduct on thepart of the Vendor or the Company prior to Completion) allowing the Vendor toundertake, at the Vendor’s own cost and expense, the conduct of the Dispute.

 

7.3                                        The Vendor will not withoutthe prior written consent of the Purchaser (not to be unreasonably withheld ordelayed) take any of the following actions in relation to any Dispute conductedby the Vendor or at the Vendor’s request:

 

7.3.1                                the transmission of anymaterial written communication to any Taxation Authority;

 

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7.3.2                                the settlement or compromiseof the relevant Tax Claim; and

 

7.3.3                                the agreement of any matterwhich is likely to affect the amount of any future Liability to Taxation.

 

7.4                                        The Vendor will promptly andfully inform the Purchaser of all matters relating to any Dispute conducted byor at the request of the Vendor and will provide the Purchaser with copies ofall material correspondence and other documents relating thereto.

 

7.5                                        Without prejudice to theliability of the Vendor under this **Part 2** of this **Schedule 4**:

 

7.5.1                                the Purchaser will not beobliged to procure that the Company appeals against any assessment to or demandfor Taxation unless within 15 Business Days of the Purchaser giving noticethereof to the Vendor in accordance with **paragraph 7.1**,the Vendor has given notice to the Purchaser to do so;

 

7.5.2                                if the Vendor fails promptly(and in any event within 15 Business Days of the Purchaser giving noticerequiring the Vendor to do so) to inform the Purchaser of any action which theVendor wishes the Purchaser to procure the Company to take under **paragraph 7.2**,the Purchaser will be entitled to procure that the Company settles orcompromises any Tax Claim on such terms as it determines in its reasonablediscretion;

 

7.5.3                                the Purchaser will not beobliged to or procure that the Company appeals against any assessment to ordemand for Taxation beyond the General or Special Commissioners of the InlandRevenue, a VAT tribunal or any equivalent court or tribunal unless thePurchaser and the Company have been advised in writing, at the expense of theVendor, by tax counsel of at least 7 years’ call that such an appeal would havea reasonable prospect of success;

 

7.5.4                                the Purchaser will not beobliged to or procure that the Company complies with any request or take anyaction which is likely to increase the future Liability to Taxation of theCompany; and

 

7.5.5                                in the event of a failure ofthe Vendor to give notice as mentioned in **paragraph 7.5.1** or a failure of the Vendor toindemnify the Purchaser and the Company as mentioned in **paragraph 7.2** or if the Dispute concerns fraudulent or negligentconduct on behalf of the Vendor or its duly authorised agents or, on or beforeCompletion, on behalf of the Company or its duly authorised agents, the Purchaserand the Company shall have sole conduct of the Dispute and shall be free to payor settle the Tax Claim on such reasonable terms as the Purchaser or theCompany shall think fit, having regard to the best interests of the Company.

 

8.                                                **Savingsand Repayments**

 

8.1                                          If the Auditors determine thatthe Company has obtained a Saving or a Repayment, the Saving or Repayment (asthe case may be) will be applied as follows:

 

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8.1.1                                first, the amount of theSaving or Repayment will be set off against any payment then due from theVendor under this **Schedule 4**or for breach of any Taxation Warranty;

 

8.1.2                                secondly, to the extent thatthere is an excess, the Purchaser will, within two Business Days, pay to theVendor the lesser of:

 
| 8.1.2.1 |   | the amount of the excess; and                                                                                  |
|---------|--------|----------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                           |
| 8.1.2.2 |   | any amount previously paid by the Vendor under this **Schedule 4**or for breach of any Taxation Warranty; |

 

8.1.3                                thirdly, to the extent thatthe excess referred to in **paragraph8.1.2**is not exhausted, the remainder of that excesswill be carried forward and set off against any future liability of the Vendorunder this Schedule 4 or for breach of any Taxation Warranty.

 

8.2                                          The Purchaser will procurethat the Company uses any Relief available to it which would give rise to aSaving or Repayment as soon as it is reasonably practicable for the Company todo so without there being a consequent reduction in, elimination of ordiminution in value of any other Relief which is or would be available to it.

 

8.3                                          In determining whether or notthe Company has obtained a Saving or a Repayment and, if so, the amount, theAuditors will act as experts and not as arbitrators and their determinationwill (in the absence of manifest error) be conclusive and binding on theparties.

 

8.4                                        The Purchaser will inform theVendor as soon as reasonably practicable after it or the Company becomes awarethat the Company may obtain a Saving or a Repayment.

 

9.                                                **Purchaser’sCovenant**

 

9.1                                        The Purchaser covenants withthe Vendor to pay to the Vendor an amount equal to any liability of the Vendorto Taxation under section 767A, 767AA or 767B ICTA section 132 FA1998, section 190 TCGA or paragraph 68 of Schedule 29 or paragraph 8of Schedule 34 FA 2002 (and any related interest or penalties) in connectionwith the Company failing to discharge a liability to tax together with anyreasonable costs or expenses properly incurred by the Vendor in connection withsuch liability save that this **paragraph 9.1** shall not apply in respect ofany tax for which the Vendor is liable to make (but has not yet made) paymentto the Purchaser under **Part 2** of this **Schedule 4** or for breach of any Taxation Warranty.

 

9.2                                          **Paragraphs 5,6**and**7**will apply to the covenants in **paragraph9.1** as they apply to the covenants contained in **paragraph 2**replacing references to the Vendor and the Purchaser (and vice versa) andmaking any other necessary modifications.

 

10.                                          **CorporationTax Returns**

 

10.1                                  The Vendor or its dulyauthorised agents will at the Company’s cost and expense (provided such costsand expenses are reasonable and proper) prepare the corporation tax returns andcomputations of the Company for all accounting periods ended on or

 

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beforeCompletion, to the extent that they have not been prepared before Completion,and will submit them to the Purchaser.

 

10.2                                  The Purchaser will procurethat the Company causes the returns and computations mentioned in **paragraph 10.1**tobe authorised, signed and submitted to the Company’s Inspector of Taxes withoutamendment or with such amendments as the Purchaser may reasonably requestprovided that the Purchaser shall not be required to procure that the Companyauthorises, signs and submits any return or computation which the Purchaserreasonably considers is not full, true and accurate in all material respects orwhich contains any provision or other item which has not been provided for orreflected in the audited accounts for the accounting period to which the returnor computation in question relates or in any audited accounts for anysubsequent period (including the Completion Accounts) but, for the avoidance ofdoubt, the Purchaser shall be under no obligation to make any enquiry as to thecompleteness and accuracy thereof and shall be entitled to rely entirely on theVendor and its duly authorised agents.

 

10.3                                  The Vendor or its dulyauthorised agents will prepare all documentation and deal with all matters(including correspondence) relating to the corporation tax returns andcomputations of the Company for all accounting periods ended on or beforeCompletion.  The Vendor will keep thePurchaser informed of all material matters relating to the agreement of suchcorporation tax returns with the Company’s Inspector of Taxes and will providethe Purchaser with copies of all material correspondence and other documentsrelating thereto.  The Vendor will submitto the Purchaser for comments all material correspondence and documents whichit intends to submit to a Taxation Authority and will take into account allsuch reasonable and timely comments as the Purchaser shall make.

 

10.4                                  The Purchaser will procurethat the Company affords the Vendor or its duly authorised agents such accessto the Company’s books, accounts and records as is reasonable to enable theVendor or its duly authorised agents to prepare the corporation tax returns andcomputations of the Company for all accounting periods ended on or beforeCompletion and conduct matters relating to them in accordance with this **paragraph 10**.

 

10.5                                  The Purchaser will procurethat the Company promptly makes or gives such claims, elections, surrenders andconsents in relation to Taxation for all accounting periods of the Companyended on or before Completion as the Vendor reasonably requests in writing andwhich were assumed to have been made in the audited accounts for the accountingperiod in question or in any audited accounts for any subsequent period(including the Completion Accounts), including (without limitation) the carryforward, carry back, acceptance or surrender of or any claim or election inrelation to any Vendor’s Relief, and generally does all such things as may bereasonably necessary to give effect to such claims, elections, surrenders orconsents.

 

10.6                                  In relation to the tax returnfor the accounting period current at Completion, the Purchaser shall or shallprocure that the Company shall afford to the Vendor a reasonable opportunity tocomment on such document only insofar as it relates to the affairs of theCompany whilst it was under the control of the Vendor.

 

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10.7                                  If any document is issued or anymatter arises which constitutes a Tax Claim, such Tax Claim shall be dealt withunder the provisions of **paragraph 7** and not this **paragraph 10**.

 

11.                                          **RecoveryFrom Other Persons**

 

11.1                                    If the Company recovers fromany other person (including any Taxation Authority but excluding the Purchaser,any other member of the same group of companies as the Purchaser and anyofficer or employee of any such company) any amount which is referable to aLiability to Taxation or other liability of the Company in respect of which theVendor has made a payment under **paragraph 2**,the Purchaser will repay to the Vendor the lesser of:

 

11.1.1                          the amount so recovered (lessany losses, costs, Taxation, damages and expenses incurred by the Company, thePurchaser or any other member of the same group of companies as the Purchaseras a result of the recovery of that amount); and

 

11.1.2                          the amount paid by the Vendorunder **paragraph 2**in respect of the Liability to Taxation or other liability in question less anypart of such amount previously repaid to the Vendor under any provision of thisAgreement.

 

11.2                                    If the Purchaser becomes awarethat the Company is entitled to recover any amount mentioned in **paragraph 11.1**,the Purchaser will as soon as reasonably practicable give notice of that factto the Vendor and provided that the Vendor indemnifies the Company, thePurchaser and all other members of the same group of companies as the Purchaserto the reasonable satisfaction of the Purchaser against all losses, costs,damages and expenses which may be incurred thereby, the Purchaser will procurethat the Company, at the Vendor’s cost and expense, takes such action as theVendor may request to effect such recovery.

 

12.                                          **General**

 

All payments by the Vendor under this **Part 2** of this **Schedule 4**will be treated as repayments by the Vendor of the Consideration paid for theShares pursuant to this Agreement to the extent possible, but not so as tolimit the liability of the Vendor to the Purchaser hereunder**.**

 

**PART 3 - TAX WARRANTIES**

** **

13.                                          **Taxation paid**

 

13.1                                    In the six years prior to thedate of this Agreement the Company has duly and punctually paid all Taxationwhich it is or has been liable to pay or account for and the due date forpayment of which has fallen prior to the date of this Agreement and is notliable nor has it in the past six years been liable to any fine, penalty,surcharge or interest in connection with any Taxation.

 

13.2                                    Without limitation of **paragraph 13.1**, the Company has deducted or withheld all Taxationwhich it has been obliged by law to deduct or withhold from payments made by itand has properly accounted to the relevant Taxation Authority for the

 

----

 

Taxation sodeducted. The Company has not received any notice from any Taxation Authoritywhich will or may require it to withhold tax from any payment which may be madeafter the date of this Agreement.

 

14.                                          **Returns**

 

14.1                                    In the six years prior to thedate of this Agreement the Company has duly and punctually made all returns andgiven or delivered all notices and accounts and information which on or beforethe date of this Agreement ought to have been made, given or delivered for thepurposes of Taxation or which have been assumed to have been made, given ordelivered for the purposes of the Accounts.

 

14.2                                    The Company has prepared andmaintained all records in relation to Taxation as it is required by anyTaxation Statute to prepare and/or maintain or which may be required tocalculate any future Liability to Taxation or the amount of any Relief.

 

15.                                          **Nodisputes**

 

There is no dispute or disagreement outstanding with any TaxationAuthority in respect of the Taxation affairs of the Company (and the Vendor isnot aware of any existing circumstance which make it likely that such disputeor disagreement may arise) and no Taxation Authority has indicated to theCompany or the Vendor that it intends to investigate the Taxation affairs ofthe Company.

 

16.                                          **GroupTransfers**

 

The Company has not in the six (6) years ending on the date of thisAgreement acquired an asset from any company which at the time of theacquisition was a member of the same group of companies (as defined inSection 170 TCGA) as the Company, and neither section 179 TCGA norparagraph 58 Schedule 29 FA 2002 will have effect in relation to any assetof the Company by virtue of or in consequence of the entering into orperformance of the Agreement or any event since the Accounts Date.

 

17.                                          **Groups -General**

 

Save for surrenders, payments, refunds etc between the members of theGroup, in respect of:

 

17.1                                    any surrender or claim forgroup relief or consortium relief pursuant to sections 402 – 413 ICTA; and

 

17.2                                    any surrender or claim forsurrender of any tax refund pursuant to section 102 FA 1989,

 

made or received or agreed to be made or received in the six yearsended on the date of this Agreement, no payment remains due or outstanding andrelevant claims, elections and surrenders will be allowed in full and nofurther action is required of any member of the Group in respect thereof.

 

18.                                          **Residence**

 

The Company has since its incorporation been resident in the UnitedKingdom for

 

----

 

Taxation purposes and has not been resident for Taxation purposes inany other jurisdiction nor has any jurisdiction other than the United Kingdomimposed or sought to impose Taxation on the Company.

 

19.                                          **Companyregistered under VATA**

 

19.1                                    The Company is duly registeredfor VAT purposes and in the three years prior to the date of this Agreement hasfully complied with all relevant provisions of VATA and regulations made ornotices issued under any legislation relating to VAT.

 

19.2                                    The Company is not and neverhas been registered as a member of a group of companies for the purposes ofVATA nor applied to be treated as such a member. No event has occurred as aresult of which the provisions of schedule 9A VATA will or may be appliedto the Company.

 

19.3                                    The Company has not purchasedor agreed to purchase any asset to which Article 5 VAT (SpecialProvisions) Order 1995 applied or would apply.

 

19.4                                    The Company does not own anyasset and has not incurred any expense in respect of Part XV VAT Regs (capitalgoods scheme) applies.

 

19.5                                    The Company is not nor hasbeen at any time exempt or partially exempt for VAT purposes and there are nocircumstances existing at the date of this Agreement whereby regulations107-109 of the VAT Regs apply or may apply to it.

 

20.                                          **Employees**

 

In the six years prior to the date of this Agreement the Company hasproperly deducted Taxation as required by law from all payments to or treatedas made to or benefits provided for employees or former employees of theCompany and duly accounted to the appropriate Taxation Authority for Taxationso deducted and for national insurance contributions in respect thereof and hascomplied with all its reporting obligations to that Taxation Authority inconnection with any such payments made or benefits provided.

 

21.                                          **CloseCompanies**

 

21.1                                    The Company is not, nor has itever been, a close investment holding company within the meaning ofsection 13A ICTA.

 

21.2                                    The Company has not at any timein the six years prior to this Agreement made any loan or advance or effect anytransaction falling within section 419, 421 or 422 ICTA which (in the caseof any loan or advance) is still outstanding or released or written off oragreed to release or write off the whole of any part of any such loans oradvances.

 

22.                                          **Arms’Length Dealings**

 

The Company is not and has not been a party to or otherwise involved inany transaction, agreement or arrangement otherwise than by way of bargain atarms’ length in consequence of which it will or may be liable to Taxation(including Taxation which would have been payable but for the availability ofany Relief) in

 

----

 

respect of an amount deemed for Taxation purposes to be income or gainsof the Company but which are not actually income or gains of the Company.

 

23.                                          **StampDuty**

 

23.1                                    All documents which are liableto stamp duty and which are in the possession or under the control of theCompany and which confer any right upon the Company or on which the Company mayneed to rely in respect of any asset held at Completion have been duly stampedand no document which confers any right upon the Company or on which theCompany may need to rely and which is outside the United Kingdom would attractstamp duty if it were brought into the United Kingdom.

 

23.2                                    The Company has properly andpunctually paid all stamp duty land tax for which it is liable in respect ofany land transaction (as defined in section 43 FA 2003) to which it is orhas been a party or in respect of which it is liable to account for stamp dutyland tax, and the Company is not liable nor has it been party to any landtransaction whereunder it will or may have a liability to make a payment of orin respect of stamp duty land tax or additional stamp duty land tax afterCompletion, as a result of or by reference to any matter arising or eventoccurring after Completion or to submit any return or additional return inrelation to stamp duty land tax.

 

23.3                                    Neither the execution nor theperformance of this Agreement nor any action taken in pursuance of thisAgreement nor any other Event since the Accounts Date will result in thewithdrawal of any relief from stamp duty or stamp duty land tax previouslyclaimed.

 

----

 

**SCHEDULE 5**

 

**CompletionArrangements**

 

At Completion the following will take place:

 

1.                                                **Items forDelivery**

 

The following items will be produced and delivered by the Vendor to thePurchaser or as it directs:

 

**ShareTransfers**

 

1.1                                          Executed transfers of theShares in favour of the Purchaser (or its nominee(s)) together with the sharecertificates for the Shares (if issued) (or in the case of any lost certificatean indemnity satisfactory to the Purchaser in relation to it).

 

1.2                                          An irrevocable power ofattorney in the agreed terms executed by the Vendor in favour of the Purchaserto enable the Purchaser (pending registration of the transfer of the Shares) toexercise all voting and other rights attaching to the Shares and to appointproxies for this purpose.

 

**Authorisations**

 

1.3                                          A copy or certified extract ofthe duly signed minutes of the board of the Vendor authorising the execution ofthis Agreement and a Secretary’s Certificate in agreed terms signed by theSecretary of the Vendor’s Guarantor confirming that a resolution of the boardof the Vendor’s Guarantor has been passed authorising the execution of thisAgreement.

 

1.4                                          Legal opinion letters in theagreed terms confirming the power of the Vendor and the Vendor’s Guarantor toenter into and be bound by the terms of its obligations under this Agreementand all other Transaction Documents together with any additional documentsexecuted pursuant thereto to which it is a party.

 

**Resignationsand Appointments**

 

1.5                                          A letter of resignation in theagreed terms from the directors of the Company and each of the Subsidiaries.

 

1.6                                          A letter of resignation in theagreed terms from the secretary of the Company and from each of theSubsidiaries.

 

1.7                                          A copy of a letter to theCompany and to each Subsidiary from its auditors resigning from office witheffect from Completion and containing the statement required bysection 394 CA 1985, the original of the letter having been deposited atthe registered office of the Company or the relevant Subsidiary.

 

**CompanyDocumentation**

 

1.8                                          The certificate ofincorporation, any certificate(s) of incorporation on change of name, thecommon seal and the statutory books and registers (which will be written

 

----

 

up to but notincluding Completion) of the Company and of each of the Subsidiaries.

 

1.9                                        All deeds and documentsrelating to the title of the Company or the relevant Subsidiary to theProperties specified in Schedule 6.

 

**Financial**

 

1.10                                  A copy of the bank mandate ofthe Company and copies of bank statements in respect of each account of theCompany as at the close of business on a date no earlier than two Business Daysprior to Completion, together in each case with a reconciliation statementprepared by the Vendor to show the position at Completion (listing unpresentedcheques drawn or received by the Company and standing orders or direct debitspayable since the date of such bank statements).

 

2.                                              **Conveningof Meetings**

 

2.1                                        The Vendor will procure that aduly convened board meeting of the Company is held at which:

 

2.1.1                                the transfers referred to in **paragraph 1.1**(subject to stamping if not previously effected) are approved for registrationin the books of the Company;

 

2.1.2                                the accounting reference dateof the Company is changed to 30 June;

 

2.1.3                                the address of the registeredoffice of the Company is changed to 21 Southampton Row, London WC1B 5HA;

 

2.1.4                                the resignations of directors,secretaries and auditors referred to in each of **paragraphs 1.5, 1.6**and **1.7**are accepted with immediate effect ;

 

2.1.5                                such persons as are nominatedby the Purchaser as directors, secretary and auditors of the Company areappointed with immediate effect; and

 

2.1.6                                all existing instructions tothe bankers of the Company are revoked.

 

2.2                                        The Vendor will procure that aduly convened board meeting of each Subsidiary is held at which:

 

2.2.1                                the accounting reference dateof the Subsidiary is changed to 30 June;

 

2.2.2                                the address of the registeredoffice of the Subsidiary is changed to 21 Southampton Row, London WC1B 5HA;

 

2.2.3                                the resignations of directors,secretaries and auditors referred to in each of paragraphs 1.5, 1.6 and 1.7 areaccepted with immediate effect;

 

2.2.4                                such persons as are nominatedby the Purchaser as directors, secretary and auditors of the Subsidiary areappointed with immediate effect;

 

2.2.5                                all existing instructions tothe bankers of the Subsidiary are revoked.

 

----

 

3.                                              **Repaymentof Monies Owed**

 

The Vendor will repay, and will procure that each Member of theVendor’s Group will repay, any amounts owed at Completion by such Vendor orMember of the Vendor’s Group to the Company or Subsidiary (as the case may be)whether due for payment or not save for normal inter-company trading accountsin the ordinary course of trading.

 

4.                                                **EscrowAccount**

 

The Vendor will procure execution of all documents (insofar as they areto be executed by the Vendor, its officers and advisers) necessary to establishand operate the Escrow Account in accordance with the terms of this Agreement.

 

5.                                                **TSA andExcluded Contracts Assignment**

 

The Vendor will deliver an engrossment of each of the TSA and theExcluded Contracts Assignment duly executed by the Vendor’s Guarantor or theVendor, as the case may be.

 

6.                                                **Satisfactionof Consideration and Purchaser’s Obligations**

 

6.1                                          The Purchaser will pay theConsideration payable on Completion, by electronic funds transfer to the Vendor’sSolicitors client account details of which shall be notified to the Purchaser’sSolicitors or by such other method as may be agreed between the parties andwill pay the Retention Fund amount as stipulated in **clause 2** into theEscrow Account.

 

6.2                                          The Purchaser will:

 

(a)                                           acknowledge receipt of theDisclosure Letter;

 

(b)                                          produce and deliver to theVendor a copy or certified extract of the duly signed minutes of the board ofthe Purchaser and the Guarantor authorising the execution of this Agreement;

 

(c)                                           produce and deliver to theVendor a legal opinion letter in the agreed terms confirming the power of theGuarantor to enter into and be bound by the terms of its obligations under thisAgreement and all other Transaction Documents together with any additionaldocuments executed pursuant thereto to which it is a party;

 

(d)                                          procure execution of alldocuments (insofar as they are to be executed by the Purchaser, its officersand advisers) necessary to establish and operate the Escrow Account in accordancewith the terms of this Agreement; and

 

(e)                                           deliver an engrossment of eachof the TSA and the Excluded Contracts Assignment duly executed by the Company.

 

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**SCHEDULE 6**

 

**The Properties**

 
| **Property**           | :      | Part 3rd floor and additional 3rd floor room, Old Bridge House, 40  Church Street, Staines, TW16 4EP                                                                                                |
|------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **             |   |                                                                                                                                                                                                |
| **Interest**           | :      | Leasehold                                                                                                                                                                                           |
| ** **             |   |                                                                                                                                                                                                |
| **Landlord**           | :      | Innoprise (Europe) Limited                                                                                                                                                                          |
| ** **             |   |                                                                                                                                                                                                |
| **Tenant**             | :      | Via Net.works UK Limited                                                                                                                                                                            |
| ** **             |   |                                                                                                                                                                                                |
| **Date of Lease**      | :      | 7 October 2002 (Part 3rd floor) 25 June 2003 (additional  room)                                                                                                                           |
| ** **             |   |                                                                                                                                                                                                |
| **Term**               | :      | 5 years from and including 1 July 2002 and expiring at 12 noon  on 30 June 2007 (part 3rd floor) from and including 2 June 2003 and  expiring on 30 June 2007 (additional room) |
| **Rent (£ p.a.)** | :      | £30,915 (part 3rd floor) £5965 (additional room)                                                                                                                                          |
| ** **             |   |                                                                                                                                                                                                |
| **Service Charge**     | :      | £1,431.25 per quarter (part 3rd floor) £1,105 per annum (additional  room)                                                                                                                |

 
| **Property**           | :      | Second Floor, Old Bridge House, 40 Church Street, Staines, TW16 4EP                       |
|------------------------|--------|-------------------------------------------------------------------------------------------|
| ** **             |   |                                                                                      |
| **Interest**           | :      | Leasehold                                                                                 |
| ** **             |   |                                                                                      |
| **Landlord**           | :      | Innoprise (Europe) Limited                                                                |
| ** **             |   |                                                                                      |
| **Tenant**             | :      | Via Net.works UK Limited                                                                  |
| ** **             |   |                                                                                      |
| **Date of Lease**      | :      | 7 October 2002                                                                       |
| ** **             |   |                                                                                      |
| **Term**               | :      | 5 years from and including 1 July 2002 and expiring at 12 noon  on 30 June 2007 |
| ** **             |   |                                                                                      |
| **Rent (£ p.a.)** | :      | £67,365                                                                              |
| ** **             |   |                                                                                      |
| **Service Charge**     | :      | £3,118.75 per quarter                                                                |

 

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| **Property**           | :      | First floor and part ground floor, Old Bridge House, 40 Church  Street, Staines, TW18 4EP                                                                                                    |
|------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **             |   |                                                                                                                                                                                         |
| **Interest**           | :      | Leasehold                                                                                                                                                                                    |
| ** **             |   |                                                                                                                                                                                         |
| **Landlord**           | :      | Innoprise (Europe) Limited                                                                                                                                                                   |
| ** **             |   |                                                                                                                                                                                         |
| **Tenant**             | :      | Via Net.works UK Limited                                                                                                                                                                     |
| ** **             |   |                                                                                                                                                                                         |
| **Date of Lease**      | :      | 7 October 2002 (First Floor) 25 June 2003 (Ground Floor)                                                                                                                           |
| ** **             |   |                                                                                                                                                                                         |
| **Term**               | :      | 5 years from and including 1 July 2002 and expiring at 12 noon  on 30 June 2007 (First Floor) from and including 25 June 2003 to 12  noon on 30 June 2007 (Ground Floor) |
| ** **             |   |                                                                                                                                                                                         |
| **Rent (£ p.a.)** | :      | £67365 (First Floor) £4250 (Ground Floor)                                                                                                                                          |
| ** **             |   |                                                                                                                                                                                         |
| **Service Charge**     | :      | £3118.75 (First Floor) £787 (First Floor)                                                                                                                                          |

 
| **Property**           | :      | 830 and 832 Birchwood Boulevard, Warrington    |
|------------------------|--------|------------------------------------------------|
| ** **             |   |                                           |
| **Interest**           | :      | Leasehold                                      |
| ** **             |   |                                           |
| **Landlord**           | :      | IM Properties (Nationwide) Limited             |
| ** **             |   |                                           |
| **Tenant**             | :      | Via Networks (UK) Limited                      |
| ** **             |   |                                           |
| **Date of Lease**      | :      | 2 May 2001                                     |
| ** **             |   |                                           |
| **Term**               | :      | 5 years from and including 9 January 2001 |
| ** **             |   |                                           |
| **Rent (£ p.a.)** | :      | £73,050                                   |
| ** **             |   |                                           |
| **Service Charge**     | :      | £4,310.55                                 |

 

----

 
| **Property**           | :      | 824 and 825 Birchwood Boulevard, Warrington  |
|------------------------|--------|----------------------------------------------|
| ** **             |   |                                         |
| **Interest**           | :      | Leasehold                                    |
| ** **             |   |                                         |
| **Landlord**           | :      | IM Properties Limited                        |
| ** **             |   |                                         |
| **Tenant**             | :      | Via Networks UK Limited                      |
| ** **             |   |                                         |
| **Date of Lease**      | :      | 13 June 2001                            |
| ** **             |   |                                         |
| **Term**               | :      | 5 years from and including 13 June 2001 |
| ** **             |   |                                         |
| **Rent (£ p.a.)** | :      | £30,000                                 |
| ** **             |   |                                         |
| **Service Charge**     | :      | £2,000                                  |

 
| **Property**           | :      | Units 620, 621 and 622 Birchwood Boulevard, Warrington |
|------------------------|--------|--------------------------------------------------------|
| ** **             |   |                                                   |
| **Interest**           | :      | Leasehold                                              |
| ** **             |   |                                                   |
| **Landlord**           | :      | British Aerospace plc                                  |
| ** **             |   |                                                   |
| **Tenant**             | :      | U-Net Limited                                          |
| ** **             |   |                                                   |
| **Date of Lease**      | :      | 1 October 1999                                    |
| ** **             |   |                                                   |
| **Term**               | :      | 10 years from and including 1 October 1999        |
| ** **             |   |                                                   |
| **Rent (£ p.a.)** | :      | £111,429.69                                       |
| ** **             |   |                                                   |
| **Service Charge**     | :      | £3,400                                            |

 

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**SCHEDULE 7**

 

**Limitationson the Vendor’s Liability**

 

1.                                                The provisions of thisSchedule will apply notwithstanding any provisions to the contrary in thisAgreement and will not cease to have effect in consequence of any terminationby the Purchaser of any other provisions of this Agreement.

 

In this **Schedule 7**“claim” means any claim which would (but for the provisions of this **Schedule 7****)** be capable of being made againstthe Vendor for breach of **this Agreement (save forany claim by the Purchaser for breach by any Member of the Vendor’s Group ofthe provisions of****clause 8******or **clause 23**of this Agreement or any liability or payment pursuant to **clause 7.3**or **Schedule 8)****or under****Part 3****of****Schedule 4**unlessthe context otherwise requires. For the avoidance of doubt, in relation to anyclaim by the Purchaser under the provisions of **clause 24**, theprovisions of******this****Schedule 7**shall apply mutatis mutandis only to the extent expressly set out in **clause 24**.

 

2.                                                **Financiallimitations**

 

2.1                                          In no event shall theaggregate liability of the Vendor in respect of all claims under this Agreementor under **Schedule 4**(includingfor any sums due under **Schedule 8**)exceed the Consideration actually received by the Vendor or that would havebeen received by the Vendor save for the operation of the provisions of **Schedule 9**.

 

2.2                                          The Purchaser shall not beentitled to claim against the Vendor under the Warranties (other than inrespect of **Warranties 1.3,1.4**and **1.5**) or under **Part 3**of **Schedule 4**:

 

2.2.1                                unless the amount (excludinginterest and costs) that would be recoverable from the Vendor in respect of theclaim exceeds £2,500.** **For this purpose, if a claimrelates to more than one event or circumstance which would separatelyconstitute a breach of any of the Warranties or any other provision of thisAgreement or under Part 3 of **Schedule 4**that claim shall be treated as a separate claim inrespect of each event or circumstance;

 

2.2.2                                until the amount (excludinginterest and costs) that would be recoverable from the Vendor in respect of theclaim, when aggregated with the amount (excluding interest and costs)recoverable in respect of any other claims against the Vendor under theWarranties or any other provision of this Agreement or under Part 3 of **Schedule 4**(and for those purposes ignoring any claims which the Purchaser is not entitledto bring because of **paragraph2.2.1**above) exceeds a threshold of £120,000****in which event, the Vendor shall(but subject to **paragraph 2.2.1****)** be liable for the entire amountof the claim and not merely the amount by which that threshold is exceeded.

 

3.                                                **Timelimitation**

 

**3.1****                                         ****No claimunless notice in writing**

 

No claim shall be brought by the Purchaser under the Warranties or anyother

 

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provision of this Agreement (other than in respect of **Warranties 1.3,1.4** and **1.5**) unless it shallhave given notice in writing of that claim specifying (in reasonably sufficientdetail) the matter giving rise to the claim, the nature of the claim and theamount claimed, as soon as practicable upon becoming aware of the existence ofsuch claim, and shall have issued proceedings in respect thereof to the Vendornot later than:

 

a)                             in the case of a claimrelating to Taxation, the expiry of a period of seven (7) years, commencing onthe Completion Date;

 

b)                            in any other case, the datefalling two (2) years after (and including) the date of Completion.

 

3.2                                          **Liabilityof Vendor to terminate**

 

The liability of the Vendor in respect of a claim notified inaccordance with **paragraph 3.1**(*No claim unless notice in writing)* shall absolutelyterminate (if that claim has not been previously satisfied, settled orwithdrawn) (and without affecting any time limit set out in **paragraph 3.1**)if legal proceedings in respect of that claim shall not have been properlyissued and validly served on the Vendor within six (6) months or, in the caseof any claim relating to Taxation, three (3) years after the date of service ofthat notice.

 

4.                                                **Specificlimitations**

 

The Vendor will have no liability in respect of any claim (other than aclaim under **Part 2**of**Schedule 4**whenthe provision of **paragraph4**of **Schedule 4**shall apply):

 

4.1                                          to the extent that it arisesor is increased as a result of the passing of, or a change in, any law, rule,regulation, interpretation of the law or administrative practice of agovernment, government department, agency or regulatory body or an increase inrates of taxation after Completion, or any provision or reserve in the Accountsand/or the Management Accounts being insufficient by reason of any increase inrates of taxation after Completion;

 

4.2                                          if it would not have arisenbut for any voluntary act, omission, transaction or arrangement carried outafter Completion outside of the ordinary course of its business (unlesspursuant to a legally binding obligation incurred prior to Completion) by thePurchaser or the Company or any of their respective directors, employees oragents or successors in title;

 

4.3                                          to the extent that such claimarises, or has otherwise arisen and is increased, as a result of anyreorganisation or change made in the ownership of the Company after Completionor any change in any accounting or taxation policies or practice or accountingreference date of the Company (other than to comply with the law or AccountingStandards in force at the date hereof) made after Completion;

 

4.4                                          to the extent that it relatesto any loss for which:

 

4.4.1                                the Company would have had aright of recovery if the insurance which had been in force immediately prior toCompletion (and which was fairly disclosed to the Purchaser) had beenmaintained at the relevant time; and

 

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.4.4.2                             the Purchaser or the Companyrecovers under any policy of insurance in force at the relevant time subject tothe Vendor reimbursing to the Purchaser the amount of the insurance premiumactually incurred by the Company or the Purchaser in respect of any relevantinsurance which made good the relevant loss;

 

4.5                                          to the extent that the subjectmatter of the claim is a matter provided for, or included as a liability or isdisclosed, in the Accounts and/or the Management Accounts and/or the CompletionAccounts save that in relation to the Completion Accounts the Vendor will haveno liability in respect of a claim only to the extent that the relevantprovision (or inclusion of liability) has the effect of reducing theConsideration paid by the Purchaser (either by reducing the Excess orincreasing the Deficit); or

 

4.6                                          the damage, liability or losssuffered or incurred by the Purchaser or the Company has been made good or hasbeen otherwise been compensated for without cost to the Purchaser or theCompany.

 

5.                                                **Recoveryfrom third parties**

 

5.1                                          Save where the provisions of **paragraph 11**of **Schedule 4** would apply, if the Vendorpays the Purchaser or the Company a sum to settle or discharge a claim and thePurchaser or the Company subsequently recovers whether by payment, discount,credit, relief or otherwise from any third party (including any tax authority)a sum which is referable to the claim then:

 

5.1.1                                either the Purchaser will (orwill procure that the Company will) repay the Vendor as soon as reasonably practicablethe amount recovered from the third party less any taxation payable on such sumand any costs and expenses incurred in recovering the same; or

 

5.1.2                                if the figure resulting under **paragraph 5.1.1**above is greater than the amount paid by the Vendor to settle or discharge theclaim, then the Purchaser is only obliged to repay to the Vendor such amount asis equivalent to the sum paid by the Vendor in settlement or discharge of thatclaim.

 

6.                                                **No doublerecovery**

 

The Purchaseris not entitled to recover damages or otherwise obtain payment, reimbursementor restitution more than once in respect of the same loss or liability.

 

7.                                                **ContingentLiabilities**

 

If anypotential claim arises as a result of a contingent liability of the Company,the Vendor will not be obliged to pay any sum in respect of the potential claimuntil the liability ceases to be contingent and becomes an actual liabilityprovided that, where any such claim is contingent, the Purchaser shall still beentitled to serve notice of any such claim pursuant to **paragraph 3.1**and the period in which to serve proceedings as referred to in **clause 3.2**,shall not commence until such contingent liability becomes an actual liability.

 

----

 

8.                                                **Conductof Relevant Claims**

 

8.1                                          If the Purchaser or the Companybecomes aware of a claim or a potential claim by a third party (“**Third Party Claim**”) that will or is likely to give rise to aclaim (other than a claim under **Part2** of **Schedule4**when the provisions of **paragraph 7**of **Schedule 4**shallapply) and save where to do so would or might reasonably breach or endanger thePurchaser’s privilege in any documents or records, or render unavailable anyapplicable insurance coverage, the Purchaser will (or will procure that theCompany will):

 

8.1.1                                as soon as reasonablypracticable notify the Vendor in writing of the Third Party Claim and of thematters which will or are likely to give rise to such claim;

 

8.1.2                                not make any admission ofliability, agreement or compromise with any person, body or authority inrelation to the Third Party Claim without first consulting with the Vendor;

 

8.1.3                                consult with the Vendorregarding the conduct of such Third Party Claim;

 

8.1.4                                if requested by the Vendorgive the Vendor and its professional advisers reasonable access to:

 

8.1.4.1                                           the personnel of the Purchaserand/or the Company in order to interview the personnel;

 

8.1.4.2                                           any relevant premises,chattels, accounts, documents and records within the power, possession orcontrol of the Purchaser and/or the Company in order to, at the Vendor’s ownexpense, examine and photograph the premises and chattels and to examine,photograph and take copies of the accounts, documents and records;

 

8.1.5                                take such action as the Vendormay reasonably request to avoid, resist, contest, defend, compromise or remedythe Third Party Claim or the matters which will or are likely to give rise tosuch claim subject to the Vendor and the Vendor’s Guarantor first indemnifyingthe Purchaser and the Company to the Purchaser’s reasonable satisfaction forall reasonable costs and expenses, damages or losses incurred as a result of arequest by the Vendor.

 

8.2                                          Notwithstanding any otherprovision of this **paragraph8**, the Purchaser shall not be required to take, permitor omit, or procure the taking, permitting or omission of, any step or actionin relation to any Third Party Claim if and to the extent that the Purchaseracting in good faith, reasonably considers that the taking, permitting oromission of the relevant step or action would have a material adverse effect onany trading relationship or goodwill of any member of the Group or thePurchaser’s Group.

 

9.                                                **Mitigation**

 

Nothing inthis **Schedule 7**shall in any way restrict or limit the Purchaser’s common law duty to mitigateits loss including mitigating any loss of the Company.

 

----

 

10.                                          **NoLimitations for Fraud**

 

Nothing in **paragraph 2**ofthis **Schedule 7**shallhave the effect of limiting or restricting any liability of the Vendor inrespect of a claim arising as a result of any fraud or dishonest or wilfulmisconduct by the Vendor.

 

11.                                          **Paymentof Relevant Claim to be reduction in consideration**

 

Any amountpaid by the Vendor in respect of a successful claim under this Agreement shallnot constitute nor be deemed to constitute a reduction in the amount of theConsideration paid or payable to the Vendor.

 

12.                                          **Records**

 

The Purchasershall and shall procure that the Company will retain and preserve all books,records, documents and information of or relating to the Company which are ormay be relevant in connection with defending any claim brought by the Purchaseragainst the Vendor under this Agreement for so long as any actual orprospective claims remain outstanding.

 

----

 

**SCHEDULE 8**

 

**CompletionAdjustment**

 

1.                                                **Interpretation**

 

In this **Schedule 8**thefollowing expressions have the following meanings:

 
| **“Agreed Accounting  Principles”** | ** ** | means the  accounting policies and principles adopted in preparing the Accounts, which  accounting policies and principles are to be applied in compiling the  Completion Accounts in accordance with this **Schedule 8**                                                                                                                                                                                                                                                                                                                                |
|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **“Cash”**                          |       | all cash and  cheques at bank credited in any account with a bank of the Company including  uncleared or unpresented cheques received or issued by the Company  (excluding, for the avoidance of doubt, any cheque or other method of payment  of sum of £46,648.35 relating to the payment of outstanding invoices issued  by British Telecommunications plc to the Company or the Subsidiaries prior to  the Completion Accounts Date) save to the extent that such cheques relate to  debts taken into account in the Target Net Working Capital |
| ** **                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **“Cash Statement”**                |       | the  statement of Cash as at the Completion Accounts Date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **“Completion Accounts”**           |       | the  statement of Net Working Capital prepared in accordance with **paragraph 2**                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **“Completion Accounts Date”**      |       | 5pm 24  September 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **“Net Working Capital”**           |       | the  aggregate value of the current assets of the Company (excluding any  intangible assets, intercompany loans, intercompany trading balances and  Cash) less the aggregate amount of the current liabilities of the Company  (but excluding intercompany loans, intercompany trading balances and Cash) as  at the Completion Accounts Date as shown by the Completion Accounts                                                                                                                                                                        |

 

----

 
| **“Target Net Working Capital”** |   | the sum of  negative £1,205,690 (a liability of one million two hundred and four thousand  pounds sterling)                                                                                                                                                         |
|--------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                 |   |                                                                                                                                                                                                                                                                     |
| **“UK GAAP”**                    |   | all  applicable laws and accounting conventions, standards, principles and  practices including Financial Reporting Standards, statements of Standard  Accounting Practice and Audit Guidelines having current force which are  generally accepted in the United Kingdom |

 

2.                                                **CompletionAccounts**

 

**2.1****                                         **The parties shall procure thatforthwith after the Completion Accounts Date Completion Accounts of the Companyand the Cash Statement shall be prepared in accordance with the provisions ofthis **Schedule 8****.**

 

2.2                                          The Completion Accounts shallconsist of a statement of the Net Working Capital as at 5.00 p.m. on theCompletion Accounts Date.

 

2.3                                          The Completion Accounts shall:

 

2.3.1                                apply the Agreed AccountingPrinciples;

 

2.3.2                                apply and adopt the samejudgments, bases and policies of accounting and valuation methods as applied oradopted for the purposes of the Management Accounts; and

 

2.3.3                                be prepared under thehistorical cost convention in accordance with the requirements of UK GAAP.

 

If there is aconflict between the provisions set out in **paragraph 2.3.1, 2.3.2**and **2.3.3, 2.3.1**shallprevail over **2.3.2**and**2.3.2**shallprevail over **2.3.3.**

 

2.4                                         The Completion Accounts shallmake no provision for the following items which shall also be excluded for thepurposes of calculating the Net Working Capital:-

 

2.4.1                                intercompany balances owedto/from the Vendor’s Group;

 

2.4.2                                Cash;

 

2.4.3                                the KP Claim and KPCounterclaim;

 

2.4.4                                any liabilities in connectionwith the termination of the employment of Nick Callaghan and any other officerand/or employee of the Company (except as provided in paragraph 2.5.4 below) onor after Completion; and

 

2.4.5                                the payment of £46,648.35 toBritish Telecommunications plc in respect of outstanding invoices.

 

----

 

2.5                                          The Completion Accounts shallmake the following provisions for the purposes of calculating Net WorkingCapital:

 

2.5.1                                £68,000 for the claim by Cable& Wireless regarding low usage charges as detailed in the Disclosure Letter;

 

2.5.2                                £40,000 for the claims byFibernet as detailed in the Disclosure Letter; and

 

2.5.3                                £35,000 in respect of thetermination of employment of Michael Hogan.

 

3.                                                **Procedure**

 

**3.1****                                         **The Purchaser shall procurethat within 2 months after the Completion Accounts Date the Purchaser shalldeliver a final draft of the Completion Accounts to the Vendor (“DraftCompletion Accounts”) and of the Cash Statement (“Draft Cash Statement”).  If the Vendor does not serve a Dispute Notice(as defined below) in accordance with **paragraph 3.2**theDraft Completion Accounts shall constitute the Completion Accounts and theDraft Cash Statement shall constitute the Cash Statement**.**

 

3.2                                          **I**f within the period of 15 Business Daysfollowing delivery to the Vendor by the Purchaser of the Draft CompletionAccounts, the Vendor shall notify the Purchaser in writing that it does notaccept the Draft Cash Statement and/or that the Draft Completion Accountscomply with **paragraph 2**(“**Dispute Notice**”)then the Vendor and the Purchaser shall use all reasonable endeavours to reachagreement upon adjustment of the said draft or drafts (as the case may be)within a further 10 Business Days.  TheDispute Notice shall specify (a) which items are disputed, (b) the reasonstherefor and, to the extent practicable, (c) the effect the Vendor believesthat the items in dispute have on Net Working Capital and/or Cash (as the casemay be).  Only those items or amountsspecified in the Dispute Notice shall be treated as being in dispute.

 

3.3                                          If the Vendor accepts inwriting or the Vendor is deemed (pursuant to **paragraph 3.1**)to accept the Draft Cash Statement or that the Draft Completion Accounts complywith **paragraph 2**then the Draft Completion Accounts shall be theCompletion Accounts and/or the Draft Cash Statement shall be the Cash Statement(as appropriate) for the purposes of this Agreement and shall be final andbinding on the parties.

 

3.4                                          In the event that the Vendorand the Purchaser are unable to reach agreement in the further period of 10Business Days specified in **paragraph3.2**any matter in dispute and the amount of NetWorking Capital or Cash (as the case may be) shall be referred to anddetermined by such independent accountant as they shall agree or, failingagreement within 2 Business Days of expiry of the period referred to in **paragraph 3.2**,to such accountant as shall be appointed on the application of either theVendor or the Purchaser, by the President for the time being of the Instituteof Chartered Accountants in England and Wales (the “**IndependentAccountant**”). In giving his decision the Independent Accountantshall state what adjustments (if any) are to be made to the Draft CashStatement and/or the Draft Completion Accounts in order that they shall complywith **paragraph 2**and the amount of the Net Working Capital and/or Cash.

 

----

 

3.5                                          The Vendor and the Purchasershall provide the Independent Accountant with such access to the books andrecords of the Group as the Independent Accountant may reasonably request.  The Vendor and the Purchaser shall each beentitled to make representations to the Independent Accountant concerning theitems and amounts set out in the Dispute Notice.

 

3.6                                          Any such decision of theIndependent Accountant shall be final and binding on the Vendor and the Purchaser(save in the case of fraud or manifest error) and shall be given by theIndependent Accountant as expert and not as arbitrator.

 

3.7                                          The costs of the IndependentAccountant (if applicable) shall be borne as he or they shall direct or in theabsence of such direction by the Vendor and the Purchaser in equal half shares.

 

3.8                                          The Vendor and the Purchasershall give such assistance to each others accountants and to the IndependentAccountant as may be reasonably required by them.

 

4.                                                **Adjustmentof Consideration**

 

4.1                                       When the Completion Accountshave become final and binding (whether under **paragraph 3.3**orby virtue of a decision of the Independent Accountant) the Consideration shallbe subject to the following adjustments:

 

4.1.1                                there will be added thereto,the amount, if any, by which the Net Working Capital is greater than the TargetNet Working Capital (the “**Excess**”); or

 

4.1.2                                there will be deductedtherefrom, the amount, if any, by which the Net Working Capital is less thanthe Target Net Working Capital (the “**Deficit**”).

 

provided thatthere shall be no adjustment to the Consideration if the Excess or the Deficit(as the case may be) is within 10 per cent (more or less) of the Target NetWorking Capital.

 

4.2                                       Subject to the proviso to **paragraph 4.1**anamount equal to the Excess or the Deficit shall be paid by the Purchaser or theVendor (as the case may be) within 7 Business Days after the CompletionAccounts have become final and binding as aforesaid.

 

4.3                                       When the Cash Statement hasbecome final and binding (whether under paragraph 3.3 or by virtue of adecision of the Independent Accountant), the Vendor shall, if Cash is less than£739,132 (“**Cash Deficit**”), pay to thePurchaser the amount of the Cash Deficit within 7 Business Days after the CashStatement has become final and binding as aforesaid.  In the event that Cash is more than £739,132(such amount being the “**Cash Excess**”)the Purchaser shall pay to the Vendor (or, at the Vendor’s election such CashExcess may be deducted from the funds standing to the credit of the RetentionFund at that time) the amount of the Cash Excess within 7 Business Days afterthe Cash Statement has become final and binding as aforesaid.

 

4.4                                       Any amount not paid when dueunder this **Schedule 8**shallcarry interest on the amount to be paid at the annual rate of 3 per cent. abovethe base lending rate from time to time of HSBC Bank plc from the due dateuntil the date of actual payment (as well after judgment as before).

 

----

 

4.5                                       All sums payable to thePurchaser under this Schedule shall first be settled from the Retention Fundand thereafter be paid in cash by telegraphic transfer to the Purchaser’sSolicitors (at Barclays Bank plc, Account Number 80823627, Sort Code 20-65-82)and payment to them will be a good and sufficient discharge to the Purchaserand the Vendor will not be further concerned as to the application of themoneys so paid and in respect of any payments to the Vendor the provisions of **clause 3.3**shallapply.

 

----

 

**SCHEDULE 9**

**Provisionsregarding Retention Fund**

 

The RetentionFund will be paid on Completion by the Purchaser into a joint on-demandinterest bearing deposit account with Yorkshire Bank in the name of thePurchaser’s Solicitors and the Vendor’s Solicitors (the “**RetentionFund Holders**”) who will hold the Retention Fund as stakeholders upontrust for the Purchaser and the Vendor on the following terms:

 

1.                                                Subject as provided in **paragraphs 3and 6**, the Retention Fund Holders will pay £1,000,000(one million pounds) of principal of the Retention Fund to the Vendor’sSolicitors in the manner provided in **paragraph 6.1**of**Schedule 5**atthe expiration of six months from and including the date of Completion,together with fifty per cent. of the interest accrued on the balance standingto the credit of the Escrow Account, net of bank and electronic funds transfercharges.

 

2.                                                Subject as provided in **paragraphs 3and 6**, the Retention Fund Holders will pay the balanceof the Retention Fund to the Vendor’s Solicitors in the manner provided in **paragraph 6.1**of **Schedule 5**at the expiration of one year from and including thedate of Completion (including any interest accrued on the balance standing tothe credit of the Escrow Account, net of bank and electronic funds transfercharges).

 

3.                                                If prior to the expiration ofthe periods referred to in **paragraph 1**and**paragraph 2**(each a “**RelevantDate**”) the Purchaser shall have given written notice to the Vendorof a bona fide claim under or arising out of or in connection with thisAgreement, the Warranties or under the Tax Covenant (“**Claim**”)the following provisions shall apply:

 

3.1                                          to the extent that such Claimshall not have been Settled (as hereinafter defined) by the Relevant Date thenon receipt by the Vendor and Purchaser prior to the Relevant Date of an opinionof Counsel (instructed in accordance with **paragraph 3.3**below)to the effect that on the balance of probabilities the Purchaser is likely tosucceed in its Claim and specifying the quantum which is Counsel’s bestestimate of the amount which the Purchaser will recover in the event of asuccessful Claim then the Purchaser shall be entitled to defer payment of suchamount of the Retention Fund as is equal to such estimate pending the Claimbeing Settled and such amount (up to the maximum amount of the Retention Fund)shall be retained in the Escrow Account and the balance of any sum payablepursuant to **paragraph 1**or**paragraph 2**shallbe paid to the Vendor’s Solicitors in accordance with such relevant paragraph;

 

3.2                                          as soon as possible followingthe Claim being Settled (and in any event within 10 Business Days thereof)there shall be paid to the Vendor from the Escrow Account a sum equal to theamount (if any) for which the Claim was Settled below the amount which wasretained in the Escrow Account except that no such payment shall be required tothe extent that there are additional unsettled Claims to which the provisionsof this **Schedule 9**shallhave been applied.  The amount of anyClaim so Settled shall be treated as a reduction pro tanto of the Purchaser’sobligation to pay in whole or in part the Consideration and there shall be paidto the Purchaser

 

----

 

from the Escrow Account to the fullestextent possible an amount equal to the Settled Amount.

 

4.                                                A Claim shall be regarded as “**Settled**” for the purpose of this **Schedule 9**ifeither:

 

4.1                                          the Vendor and the Purchaser(or their respective Solicitors) shall so agree in writing; or

 

4.2                                          a Court has awarded judgementin respect of the Claim and either no right of appeal lies in respect of suchjudgement or the parties are debarred whether by passage of time or otherwisefrom exercising any such right of appeal or the parties in whose favour theright of appeal subsists fails to lodge such appeal within 28 days of suchjudgment

 

and “**Settled Amount**”shall mean the amount for which the Claim is Settled (including interest andcosts).

 

5.                                                For the purposes of **paragraph 3.2**,the Counsel to be instructed as herein provided shall be of such age andexperience as is commensurate with the nature of and sums involved in the Claimbeing made and as shall be agreed upon by the Vendor and the Purchaser or inthe absence of such agreement within 3 Business Days as shall be nominated atthe request of either the Vendor or the Purchaser by the President for the timebeing of the Law Society (“**Counsel**”).  The Counsel shall be instructed by thePurchaser’s Solicitors and the Purchaser’s Solicitors shall, in the firstinstance, provide the Vendor’s Solicitors with instructions to Counsel fortheir approval (such approval not to be unreasonably withheld or delayed).  The reasonable comments and amendments of theVendor’s Solicitors shall be included in the instructions to Counsel.  In the event that the Vendor’s Solicitorsfail to provide any such comments and amendments within 3 Business Days, thePurchaser’s Solicitors shall be entitled to instruct Counsel without furtherreference to the Vendor’s Solicitors. Such Counsel’s costs shall be borne by the Purchaser but shall be takeninto account as costs as appropriate in connection with the settlement of theClaim.

 

6.                                                Where any payment is made tothe Purchaser out of the Escrow Account as provided in this Schedule, thePurchaser shall at the same time be entitled to a corresponding proportion ofthe interest accrued on the proportionate balance of the Retention Fund.  Otherwise all interest accrued on theRetention Fund shall be payable to the Vendor at the time of payment to theVendor out of the Retention Fund in accordance with this Schedule.  All payments of interest to the Purchaser orthe Vendor shall be made in accordance with their respective instructions andshall be less any tax on such interest for which the Retention Fund Holders maybe accountable.

 

7.                                                If any interest on sums due tothe Purchaser will be included in any determination or award and paid to thePurchaser out of the Retention Fund then the amount of interest payable to thePurchaser under **paragraph 6**will be reduced by the amount of such interestdetermined or awarded.

 

8.                                                The amount of money in theRetention Fund is not to be regarded as imposing a limit on the amount of anycompensation or indemnity which may be claimed by the Purchaser.

 

----

 

9.                                                The Vendor and the Purchaserwill execute the Retention Fund Instruction Letter and deliver it to itsaddressees, and will promptly take all such steps and promptly give all suchother written instructions, as are necessary or desirable to give effect to theprovisions of this Schedule.

 

10.                                          The Purchaser shall only havedirect recourse against the Vendor or the Vendor’s Guarantor to satisfy aSettled Amount in respect of a Claim, once the Retention Fund has either beenexhausted or paid to the Vendor.

 

----

 

**RETENTION FUND INSTRUCTION LETTER**

 
| From:  |   | VIA  NET.WORKS Europe B.V.; and |
|--------|--------|---------------------------------|
|   |   |                            |
|   |   | Claranet  Limited               |
|   |   |                            |
| TO:    |   | Eversheds  LLP                  |
|   |   | Eversheds  House                |
|   |   | 70 Great  Bridgewater Street    |
|   |   | Manchester                      |
|   |   | M1 5ES                          |
|   |   |                            |
|   |   |                            |
|   |   | Lewis Silkin                    | {DATE}  2004 |
|   |   | 12 Gough  Square                |
|   |   | London                          |
|   |   | EC4A 3DW                        |

 

Dear Sirs

 

**RetentionFund**

 

This RetentionFund Instruction Letter relates to the Escrow Account as defined in anagreement (“the Share Purchase Agreement”) dated {DATE} 2004 between inter alia the Vendor and the Purchaser (eachas defined in the Share Purchase Agreement) relating to the sale and purchaseof the issued share capital of Via Net.Works UK Limited.  Words and expressions defined in the SharePurchase Agreement shall, save as otherwise defined or as the context mayrequire in this letter, have the same meanings in this letter.

 

We herebyjointly and irrevocably instruct you as follows:

 

1.                                                You shall maintain theRetention Fund in a separately designated interest bearing deposit account withYorkshire Bank plc, such account to be opened by instruction letter in the formannexed to this letter and bank mandate forms previously supplied to such bankand held in your joint names as stakeholders upon trust for us.

 

2.                                                The Retention Fund shall beheld on six month call unless you receive written instructions to the contrarysigned on our behalf in accordance with **paragraph 4** ofthis letter.

 

3.                                                Any payments from theRetention Fund shall be made by you in accordance with the provisions of **Schedule 9**ofthe Share Purchase Agreement.  You shallnot deal with the funds held from time to time in the Retention Fund except inaccordance with the provisions of this Retention Fund Instruction Letter, **Schedule 9**ofthe Share Purchase Agreement or any written instructions signed on our behalfin accordance with **paragraph 5**of this letter.

 

----

 

4.                                                You may (without making anyfurther enquiries or checks) rely on and be protected in acting or refrainingfrom acting on any written instructions, notice or request given by thePurchaser and the Vendor if provided by any one person for each of thePurchaser and the Vendor whose name and specimen signature is set out in the annexureto this letter and it shall not be necessary for you to enquire into theauthority of any signatory or the authenticity of any such signature.

 

5.                                                You may withdraw from theRetention Fund and account to the Inland Revenue for any amount of tax payableon the interest earned on the Retention Fund for which you are accountable.

 

6.                                                You are authorised to pay anybank charges incurred in the conduct of the Retention Fund out of fundsstanding from time to time to its credit.

 

7.                                                We shall each pay one half ofyour costs and expenses in relation to the establishment of the Retention Fundand its administration.

 

8.                                                Neither of you shall be liablefor any loss or damage occurring as a result of any act, mistake or omissionmade by you in good faith or by reason of any other matter or thing exceptwhere arising out of your fraud, wilful default or negligence.

 

9.                                                We jointly and severally agreeto indemnify each of you against all actions, proceedings, claims, demands,liabilities, costs and expenses which you may suffer or incur in connectionwith the performance of your obligations under this letter, save insofar as thesame result from your fraud, wilful default or negligence.

 

10.                                          The provisions of this letterwill apply to and enure for the benefit of the partners and/or members for thetime being of each of the firms respectively to whom it is addressed and to thepartners and/or members of any firm resulting from any reconstitution or namechange of either firm and references to “partners”, “members” or “firms” willinclude references to such partners, members or firms.

 

11.                                          This letter shall be governedby and construed in accordance with English law.

 

Pleaseindicate your acceptance of the instructions contained in this letter bysigning and returning one of the two enclosed copies of this letter to each ofus.

 

Yours faithfully

 
|              |   |
|-------------------|--------|
| Claranet  Limited |

 

 
|                                |   |
|-------------------------------------|--------|
|                                |
| VIA  NET.WORKS EUROPE HOLDINGS B.V. |

 

----

 

**Annexto Retention Fund Instruction Letter**

 

**Purchasersignatories**

 
|                    |   |   | [                     ]       |   |   |      |      |   |
|-------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|-----------|--------|
| Name                    |   | Office |                                                                                                                                   |   |   | Signature |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   | [                     ]       |   |   |      |      |   |
| Name                    |   |   | Office                                                                                                                                 |   |   |      | Signature |
|                    |   |   |                                                                                                                                   |   |   |      |
| **Vendor  signatories** |   |   |                                                                                                                                   |   |   |      |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   | [                      ] |   |   |      |      |   |
| Name                    |   | Office |                                                                                                                                   |   |   | Signature |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   |                                                                                                                                   |   |   |      |
|                    |   |   | [                      ] |   |   |      |      |   |
| Name                    |   | Office |                                                                                                                                   |   |   | Signature |

 

----

 

**BANK INSTRUCTION LETTER**

 

**TO:**

 

Yorkshire Bank

ManchesterRegional Business Centre

The Chancery

Spring Gardens

Manchester

M2 17B

 

Dated

 

Dear Sirs

 

We, theundersigned, hereby request that you open an interest bearing deposit accountin the joint names of Eversheds LLP and Lewis Silkin subject to the followingconditions:

 

1.                                                Interest is to be credited tothe account gross.

 

2.                                                Withdrawals at any time ortimes from the deposit account are to be made in accordance with written instructionsaddressed to you, provided that they are signed by two of the authorisedsignatories listed below, one from Eversheds LLP and one from Lewis Silkin.

 

3.                                                You are entitled to deductyour reasonable and proper charges from the amount for the time being standingto the credit of the deposit account.

 

4.                                                This authority will remain inforce until revoked notwithstanding any change in the constitution or name ofthe firms specified below and will apply notwithstanding any change in themembership of the firms by death, bankruptcy, retirement or otherwise, or theadmission of any new partner or partners.

 

5.                                                Statements shall be suppliedmonthly to each of Eversheds LLP (for the attention of Mark Holleran) and LewisSilkin (for the attention of Philip Lamb).

 

**Listof Authorised Signatories**

 
| **1.NAME**           | ** ** | **2.OFFICE HELD** | ** ** | **3.SPECIMEN  SIGNATURE** | ** ** |
|----------------------|------------|-------------------|------------|---------------------------|------------|
| EVERSHEDS  LLP       | ** ** | ** **        | ** ** | ** **                | ** ** |
|                 | ** ** | ** **        | ** ** | ** **                | ** ** |
| Helen Ridge          |       | Partner           |       |                      |       |
|                 |       |              |       |                      |       |
| Geoffrey  Blower     |       | Partner           |       |                      |       |
|                 |       |              |       |                      |       |
| Christopher  Moss    |       | Partner           |       |                      |       |
|                 |       |              |       |                      |       |
| Christopher  Tinsley |       | Partner           |       |                      |       |

 

----

 
| LEWIS SILKIN    | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------|------------|------------|------------|------------|------------|
|            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Philip Lamb     |       | Partner    |       |       |       |
|            |       |       |       |       |       |
| Fergus Payne    |       | Partner    |       |       |       |
|            |       |       |       |       |       |
| Jo Evans        |       | Partner    |       |       |       |
|            |       |       |       |       |       |
| Paul  Glassberg |       | Partner    |       |       |       |

 

 
| Yours  faithfully |   |   |
|-------------------|--------|--------|
|              |   |   |
|              |   |   |
|              |   |   |   |   |
| LEWIS SILKIN      |   | Date   |
|              |   |   |
|              |   |   |   |   |
| EVERSHEDS  LLP    |   | Date   |

 

----

 

**SCHEDULE 10**

 

**Peopleof whom enquiry has been made for the purpose of Vendor awareness**

 

Matt StuartNydell

 

Nick Callaghan

 

Ray Walsh

 

Michael Hogan

 

CameronMackenzie

 

----

 

**SCHEDULE 11**

**IdentifiedProspects under “Sales Radar”**

 

**Omitted.**

 

----

 

**SCHEDULE 12**

**Computer Equipment**

 

Omitted.

 

----

 

**SCHEDULE 13**

 

**Documentsto be submitted to the Inland Revenue for adjudication (clause 24)**

 

1.                                                Agreement for the sale andpurchase of the business and assets of Netlink Internet Services Limited dated1 December 2000 between Netlink Internet Services Limited and VIA NET.WORKS UKLimited;

 

2.                                                Agreement for the sale andpurchase of the business and assets of U-Net Limited dated 1 December 2000between U-Net Limited and VIA NET.WORKS UK Limited;

 

3.                                                Agreement for the sale andpurchase of the business and assets of I-Way Limited between 1-Way Limited andVIA NET.WORKS UK Limited; and

 

4.                                                Agreement for the sale andpurchase of the business and assets of Worldwide Web Services Limited dated 1December 2000 between Worldwide Web Services.

 

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**SIGNED by**MattNydell

dulyauthorised on behalf of

**VIANET.WORKS EUROPE**

**HOLDINGB.V.**

 

in the presence of :

 

 

Witness Name:

 

Address:

 

 

Occupation:

 
| Signature:                    | /s/ |   |
|-------------------------------|-----|--------|
| ** **                    |
| ** **                    |
| **SIGNED**by  Matt Nydell     |
| duly  authorised on behalf of |
| **VIA  NET.WORKS, INC**       |
| in the  presence of:          |

 

 

Witness:

 

Address:

 

 

Occupation:

 
| Signature:                    | /s/ |   |
|-------------------------------|-----|--------|
|                          |
|                          |
| **SIGNED**by  Charles Nasser  |
| duly  authorised on behalf of |
| **CLARANET  LIMITED**         |
| in the  presence of :         |

 

 

Witness:

 

Address:

 

 

Occupation:

 
| Signature: | /s/ |   |
|------------|-----|--------|

 

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| **SIGNED**by                    | Charles  Nasser |   |
|---------------------------------|-----------------|--------|
| duly  authorised on behalf of   |
| **CLARA.NET  HOLDINGS LIMITED** |
| in the  presence of :           |

 

Witness:

 

Address:

 

 

Occupation:

 

Signature:

 

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