<PAGE>

                                                                   Exhibit 10.86
                                                                   -------------



         DATED                                        February 7, 2001
         -------------------------------------------------------------



         (1)       P-COM NETWORK SERVICES LIMITED

         (2)       SPECTRASITE TRANSCO COMMUNICATIONS LIMITED

         (3)       P-COM, INC.



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


                               A G R E E M E N T


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

                           For the sale and purchase

           of the entire issued share capital of R.T. MASTS LIMITED





                                   EVERSHEDS



                               Cloth Hall Court
                               Infirmary Street
                                Leeds  LS1  2JB
                              Tel:  0113 243 0391
                              Fax:  0113 245 6188
<PAGE>

                                   CONTENTS

<TABLE>
<CAPTION>
Clause                                                                      Page
<S>                                                                         <C>
1      INTERPRETATION                                                          1
2      SALE AND PURCHASE                                                       6
3      COMPLETION                                                              6
4      GUARANTEES                                                              6
5      WARRANTIES                                                              7
6      LIMITATION ON CLAIMS                                                    8
7      PURCHASER'S WARRANTIES AND UNDERTAKINGS                                10
8      RESTRICTIVE COVENANTS                                                  10
9      GUARANTOR OBLIGATIONS                                                  12
10     ANNOUNCEMENTS                                                          14
11     COSTS                                                                  14
12     INTEREST                                                               14
13     NOTICES                                                                15
14     ASSIGNMENT                                                             15
15     GENERAL                                                                16
16     GOVERNING LAW AND JURISDICTION                                         17
17     COUNTERPARTS                                                           17
18     PENSION INDEMNITY                                                      17
20     TELESYS INDEMNITY                                                      18
20     ENTIRE AGREEMENT                                                       18
21     MANAGEMENT ACCOUNTS                                                    18
22     LAND CERTIFICATE                                                       19

Schedules
1      THE GROUP                                                              20
       Part 1: Details of the Company                                         20
       Part 2: Details of other Group Members                                 21
2      THE PROPERTY                                                           23
       Part 1: Freehold                                                       23
       Part 2: Leasehold                                                      24
3      NON-TAXATION WARRANTIES                                                25
4      TAXATION                                                               40
       Part 1 - Interpretation                                                40
       Part 2 - Tax Covenant                                                  44
       Part 3 - Tax Warranties                                                53
5      COMPLETION ARRANGEMENTS                                                62
6      PROVISIONS REGARDING RETENTION FUND                                    65
7      RELEVANT SERVICES                                                      66
</TABLE>
<PAGE>

THIS AGREEMENT is made on February 7, 2001

BETWEEN:

(1)  P-Com Network Services Limited (registered number 3416747) whose registered
     office is at 3 and 4 Morris Close, Park Farm Industrial Estate,
     Wellingborough, Northamptonshire NN8 6XF ("the Vendor");

(2)  SpectraSite Transco Communications Limited (registered number 3922958)
     whose registered office is at Claremont House, Hatters Lane, Croxley
     Business Park, Watford, Hertfordshire WD18 8TR ("the Purchaser"); and

(3)  P-COM, INC. of 3175 South Winchester Boulevard, Campbell, California 95008,
     United States of America ("the Guarantor").

OPERATIVE CLAUSES:

1.   INTERPRETATION

     In this Agreement:

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

     "Accounting Date"                  31 December 1999

     "Accounts"                         the audited accounts of each Group
                                        Member for the financial year which
                                        ended on the Accounting Date, comprising
                                        in each case a balance sheet, a profit
                                        and loss account, notes, directors' and
                                        auditors' reports

     "Associated Company"               any company, not being a Group Member,
                                        which at the relevant time is:

                                        (a)  a holding company of the Vendor; or

                                        (b)  a subsidiary or subsidiary
                                             undertaking of the Vendor; or

                                        (c)  a subsidiary or subsidiary
                                             undertaking (other than the Vendor
                                             itself) of any such holding
                                             company; and the expressions
                                             "holding company", "subsidiary" and
                                             "subsidiary undertaking" having the
                                             meanings given to them by CA 1985

                                        and the expressions "holding company",
                                        "subsidiary" and "subsidiary
                                        undertaking" having the meanings given
                                        to them by CA 1985

                                       1
<PAGE>

          "Business Day"                any day (other than a Saturday or
                                        Sunday) on which banks are open in
                                        London for normal banking business

          "CA 1985"                     the Companies Act 1985

          "Company"                     R.T. Masts Limited (details of which are
                                        set out in Part 1 of Schedule 1)

          "Completion"                  completion of the sale and purchase in
                                        accordance with clause 3

          "Computer Systems"            all computer hardware, software,
                                        microprocessors and firmware and any
                                        other items that connect with any or all
                                        of them which in each case are used in
                                        the Group's business or are in the
                                        possession of any Group Member.

          "Confidential Information"    all information not publicly known, used
                                        in or otherwise relating to the Group's
                                        business, customers, or financial or
                                        other affairs, including information
                                        relating to:

                                        (a)  trade secrets, know-how, 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

          "Consideration"               the consideration for the sale of the
                                        Shares as stated in clause 2.2

          "Contract"                    any agreement or commitment whether
                                        conditional or unconditional and whether
                                        by deed, under hand, oral or otherwise,
                                        and any arrangement or understanding
                                        whether legally binding or not

          "Disclosure Letter"           the letter having the same date as this
                                        Agreement from the Vendor to the
                                        Purchaser qualifying the Warranties

          "Encumbrance"                 any mortgage, charge, pledge, lien,
                                        assignment by way of security, option,
                                        restriction, claim, right of pre-
                                        emption, right of first refusal, third
                                        party right or interest, other

                                       2
<PAGE>

                                          encumbrance or security interest of
                                          any kind, or other preferential
                                          arrangement having similar effect

          "EHS Law"                       all or any laws from time to time with
                                          regard to EHS matters

          "EHS Matters"                   all or any matters relating to the
                                          pollution or protection of the
                                          environment or harm to or the
                                          protection of human health and safety
                                          or the health of animals and plants

          "EHS Permits"                   all or any permits, consents,
                                          licences, approvals, certificates and
                                          other authorisations required by EHS
                                          Law for the operation of the business
                                          of the company or the condition or use
                                          of the property

          "Environment"                   any air (including air within natural
                                          or man-made structures above or below
                                          ground), water (including territorial,
                                          coastal and inland waters, ground
                                          water and water in drains and sewers),
                                          and land (including surface land, sub-
                                          surface land, seabed and river bed
                                          under water)

          "the Group"                     together the Company and each other
                                          company details of which are set out
                                          in Part 2 of Schedule 1

          "Group Member"                  any company which is a member of the
                                          group

          "the Group Personal Pension     the R. T. Masts Limited Group Personal
          Scheme"                         Pension Scheme insured with Standard
                                          Life

          "ICTA"                          Income and Corporation Taxes Act 1988

          "Intellectual Property Rights"  patents, trade marks, service marks,
                                          registered designs, design rights,
                                          copyright, know how and all other
                                          intellectual property (of whatever
                                          nature) and any applications for the
                                          same

          "the Loan Note"                 the (Pounds)500,000 loan note to be
                                          issued by the Purchaser to the Vendor
                                          in partial satisfaction of the
                                          Consideration

          "the Life Assurance Scheme"     The R. T. Masts Limited Group Life
                                          Assurance Scheme established by a deed
                                          dated 1 September 1997 insured with
                                          AIG Life (UK) (policy no 394A0004)

          "Management Accounts"           the management accounts of the Company
                                          for each month in respect of the
                                          period from the Accounting Date to 31

                                       3
<PAGE>

                                          December 2000

          "the One2One Contract"          the agreement dated 17 September 1998
                                          entered into between Mercury Personal
                                          Communications and the Guarantor as
                                          subsequently amended

          "the Pension Schemes"           the R. T. Masts Limited Pension Scheme
                                          established by a trust deed dated 27
                                          June 1986 and the R. T. Masts Limited
                                          Executive Pension Scheme established
                                          by an interim trust deed dated 11 May
                                          1990

          "the PHI Scheme"                the R. T. Masts Limited Group Long
                                          Term Disability Insurance Scheme
                                          insured with UNUM Limited (policy
                                          number GS/907918/B)

          "Plant and Equipment"           the plant and machinery, vehicles,
                                          fixtures and fittings, furniture,
                                          tools and other equipment used in
                                          connection with the business of the
                                          Group

          "Property"                      the property specified in Schedule 2
                                          and each part of such property

          "Purchaser's Solicitors"        Eversheds of Cloth Hall Court,
                                          Infirmary Street, Leeds LS1 2JB (Ref:
                                          C5.KF.TLB)

          "Relevant Claim"                any claim for breach of any of the
                                          Warranties

          "Relevant Customer"             any person who at any time during the
                                          period of 12 months immediately
                                          preceding Completion was:

                                          (a)  negotiating with any Group Member
                                               for the supply by such Group
                                               Member of goods or services; or

                                          (b)  a client or customer of any Group
                                               Member; or

                                          (c)  in the habit of dealing with any
                                               Group Member

          "Relevant Services"             the services referred to in Schedule 7
                                          comprising (for the avoidance of
                                          doubt) those services supplied by any
                                          Group Member at any time during the
                                          period of 12 months immediately
                                          preceding Completion in the United
                                          Kingdom

          "Shares"                        all the issued shares in the capital
                                          of the Company

                                       4
<PAGE>

     "Software"                         any form of computer program, including
                                        applications software and operating
                                        systems, whether in source, object or
                                        machine code form.

     "Stock"                            Stocks (as defined in Statement of
                                        Standard Accounting Practice No 9
                                        adopted by the Accounting Standards
                                        Board) of any Group Member including raw
                                        materials, components, work in progress,
                                        finished goods and consumables

     "the Sub-Contract"                 the sub-contract relating primarily to
                                        the One 2 One Contract and to be entered
                                        into at Completion in agreed terms
                                        between the Guarantor and the Company

     "Vendor's Solicitors"              Brobeck, Hale & Dorr of Alder Castle, 10
                                        Noble Street, London EC2V 7QJ

     "Warranties"                       the warranties set out or referred to in
                                        clause 5, Schedule 3 and Part 3 of
                                        Schedule 4;


1.2  references to any statute or statutory provision include, unless the
     context otherwise requires, a reference to the statute or statutory
     provision as modified or re-enacted and in force from time to prior to
     Completion and any subordinate legislation made under the relevant statute
     or statutory provision in force prior to Completion;

1.3  references to persons will include bodies corporate, unincorporated
     associations and partnerships;

1.4  references to a document being "in the agreed terms" are to that document
     in the form agreed and for the purposes of identification initialled by or
     on behalf of the Vendor and the Purchaser;

1.5  references to clauses and Schedules are to clauses of and Schedules to this
     Agreement, and references to paragraphs are to paragraphs in the Schedule
     in which such references appear;

1.6  the Schedules form part of this Agreement and will have the same force and
     effect as if expressly set out in the body of this Agreement;

1.7  the headings in this Agreement will not affect its interpretation; and

1.8  any phrase introduced by the term "include", "including", "in particular"
     or any similar expression will be construed as illustrative and will not
     limit the sense of the words preceding that term.

                                       5
<PAGE>

2.   SALE AND PURCHASE

2.1  The Vendor will sell with full title guarantee, and the Purchaser will buy,
     the Shares. The Shares will be sold free of any Encumbrance and with all
     rights attached or accruing to them at or after the date of this Agreement.

2.2  The consideration for the sale of the Shares will, subject as hereinafter
     provided, be the sum of (Pounds)9,250,000 (nine million two hundred and
     fifty thousand pounds). Of the said aggregate consideration the sum of
     (Pounds)8,250,000 (eight million two hundred and fifty thousand pounds)
     shall be paid in cash on Completion, the sum of (Pounds)500,000 (five
     hundred thousand pounds) ("the Retention Fund") shall be dealt with in
     accordance with the provisions set out in Schedule 6; and the sum of
     (Pounds)500,000 shall be satisfied by the issue of the Loan Note by the
     Purchaser to the Vendor.

2.3  Any sum payable to the Vendor either on Completion or in accordance with
     the provisions set out in Schedule 6 shall be paid in cash by way of a
     CHAPS transfer from a Clearing Bank to the client account of the Vendors'
     Solicitors with Barclays Bank, 155 Bishopsgate, London EC2M 3XA, account
     name "Brobeck Hale & Dorr, Clients Premium Account", sort code 20-77-67,
     account number 80788155 or by such other method as may be agreed between
     the parties. The Vendor's Solicitors are authorised to receive the
     Consideration on behalf of the Vendor and payment to them will be a good
     and sufficient discharge to the Purchaser and the Purchaser will not be
     further concerned as to the application of the moneys so paid.

2.4  If any of the Retention Fund shall become payable to the Purchaser by way
     of compensation or indemnity in accordance with the provisions of Schedule
     6, and, if applicable, subject to the limitations contained in clause 6,
     the Consideration shall be abated by the amount so payable and any rights
     of the Purchaser to such compensation or indemnity shall be reduced by the
     amount of such abatement, but without prejudice to the right of the
     Purchaser (or any Group Member in the case of indemnities granted in their
     favour) to recover the excess of any compensation or indemnity or any costs
     or expenses from the Vendors to the extent not recovered out of the
     Retention Fund.

3.   COMPLETION

3.1  Completion will take place immediately after the signing of this
     Agreement.

3.2  At Completion, the Vendor and the Purchaser will comply with Schedule 5.

3.3  The Purchaser will not be obliged to complete the purchase of any of the
     Shares unless the purchase of all the Shares is completed simultaneously.

4.   GUARANTEES

4.1  The Vendor will procure that on Completion each Group Member is released
     from any guarantee, indemnity, counter-indemnity, letter of comfort or
     other obligation ("Guarantee") given by such Group Member to any third
     party in respect of a liability of any person other than wholly and
     exclusively of any Group Member or Group Members.

                                       6
<PAGE>

4.2  In the period after Completion the Purchaser hereby agrees that it shall,
     upon request, use reasonable endeavours to procure the release and
     discharge of any Guarantee entered into by the Vendor or any Associated
     Company in respect of the liabilities of the Company and/or any other Group
     Member provided that for the avoidance of doubt and without limitation, the
     obligations of the Purchaser pursuant to this clause 4.2 shall not extend
     to:

     4.2.1  procuring that employees of the Purchaser and/or any Group Member
            shall spend significant amounts of time in attempting to procure any
            such release and discharge;

     4.2.2  any expenditure on the part of the Purchaser and/or any Group
            Member, save where such expenditure has already been reimbursed in
            advance to the Purchaser and/or any Group Member by the Vendor or
            any Associated Company; or

     4.2.3  the entering into of any form of guarantee or other security on the
            part of the Purchaser and/or any Group Member,

     and provided also that the Vendor hereby agrees to indemnify and keep
     indemnified the Purchaser and/or any relevant Group Member against any
     costs or other liabilities incurred by the Purchaser and/or any such Group
     Member as a result of any actions undertaken by the Purchaser and/or any
     such Group Member pursuant to this clause 4.2.

5.   WARRANTIES

5.1  The Vendor warrants to the Purchaser in the terms of the Warranties.

5.2  The Warranties are qualified by all facts and matters fairly disclosed in
     the Disclosure Letter.

5.3  The Vendor undertakes to indemnify the Purchaser on demand against all
     costs (including legal costs) or expenses which the Purchaser or any Group
     Member may reasonably incur before or after the commencement of any action
     in connection with a breach of any of the Warranties.

5.4  The Vendor waives and may not enforce any right which the Vendor may have
     against any director or employee of any Group Member, on which or on whom
     the Vendor may have relied in agreeing to any term of this Agreement or any
     statement in the Disclosure Letter PROVIDED THAT the provisions of this
     clause 5.4 shall not restrict the Vendor from making a claim against any
     such director or employee in the event of fraud, dishonesty or reckless or
     wilful misconduct on the part of any such director or employee.

5.5  Each Warranty is to be construed independently and is not limited or
     restricted by any other Warranty or any other term of this Agreement.

5.6  Unless otherwise specified, where any Warranty refers to the knowledge,
     information, belief or awareness of the Vendor (or similar expression), the
     Vendor will be deemed to have such knowledge, information, belief or
     awareness as the Vendor would have obtained had the Vendor made all
     reasonable enquiries of Ben Jarvis, Caroline Kahl, Mark Perkins, George
     Roberts, Leighton Stephens and Graeme Hall into the subject matter of that
     Warranty.

                                       7
<PAGE>

6.   LIMITATION ON CLAIMS

6.1  Neither the Vendor nor the Guarantor will be liable for any Relevant Claim
     or, where specifically indicated, any claim under Part 2 of Schedule 4,
     unless:

     6.1.1   with respect only to any Relevant Claim, the amount of the
             liability in respect of that Relevant Claim when aggregated with
             the amount of the liability in respect of all other Relevant Claims
             exceeds (Pounds)100,000 (in which event the Vendor will be liable
             for the whole amount of such Relevant Claims and not merely the
             excess) and, provided that written particulars of such Relevant
             Claim shall have been received by the Vendor or Guarantor pursuant
             to clause 6.1.3, thereafter unless the amount of the liability in
             respect of any further Relevant Claims when aggregated with the
             amount of the liability in respect of all other further Relevant
             Claims exceeds a further (Pounds)50,000 (in which event the Vendor
             will be liable for the whole amount of such further Relevant Claims
             and not merely the excess) and so forth in multiples of
             (Pounds)50,000 until the expiry of the relevant time periods for
             the bringing of any Relevant Claim pursuant to clause 6.1.3 below
             at which point (assuming the initial threshold of (Pounds)100,000
             has been exceeded) the Purchaser will be entitled to claim the
             balance (if any) outstanding pursuant to any Relevant Claims;

     6.1.2   with respect only to any claim under Part 2 of Schedule 4, the
             amount of the liability in respect of that claim when aggregated
             with the amount of the liability in respect of all other claims
             under Part 2 of Schedule 4 exceeds (Pounds)50,000 (in which event
             the Vendor will be liable for the whole amount of such claims and
             not merely the excess);

     6.1.3   the Vendor and the Guarantor receive from the Purchaser written
             particulars of the Relevant Claim or, as the case may be, claim
             under Part 2 of Schedule 4, (stating in reasonable detail the
             nature of the Relevant Claim or claim under Part 2 of Schedule 4
             and together with, where practicable, reasonable supporting
             documentary evidence):

             6.1.3.1  on or prior to the date which is one month after the
                      filing of the second set of audited accounts of the
                      Company after the date hereof (provided that this is not
                      later than 31 August 2002) in the case of a Relevant Claim
                      for breach of any of the Warranties contained in Schedule
                      3;

             6.1.3.2  within 6 years after Completion, in the case of a Relevant
                      Claim for breach of any of the Warranties contained in
                      Part 3 of Schedule 4 or a claim under Part 2 of Schedule
                      4,

            and any such Relevant Claim that may have been made within the time
            periods set out in this clause 6.1.3 (if it has not been previously
            satisfied, settled or withdrawn) shall be deemed to have been waived
            or withdrawn at the expiry of 8 months after the service of written
            particulars referred to in this clause 6.1.3 unless proceedings in
            respect thereof shall have commenced against the Vendor or the
            Guarantor, and for this purpose proceedings shall not be deemed to
            have commenced unless they have been both issued and served on the
            Vendor or the Guarantor.

                                       8
<PAGE>

6.2  The aggregate amount of the liability of the Vendor and the Guarantor for
     all Relevant Claims, claims under Part 2 of Schedule 4 and claims under the
     indemnities contained in clause 18 and clause 19 will not exceed
     (Pounds)9,250,000 and any such claims shall operate first against the
     Retention Fund in accordance with Schedule 6, thereafter by way of
     cancellation of the principal outstanding under the Loan Note and
     thereafter shall be satisfied by the Vendor or the Guarantor in cash.

6.3  Neither the Vendor nor the Guarantor shall be liable under the Warranties
     in respect of any Relevant Claim:

     6.3.1  based on any liability which is contingent only unless and until
            such contingent liability becomes an actual liability, provided that
            this sub-clause shall not operate to avoid a claim made in
            accordance with clause 6.1.3 in respect of a contingent liability
            within the applicable time limit specified in clause 6.1.3;

     6.3.2  if and to the extent that specific allowance, specific provision or
            specific reserve was made in the Accounts for the matter giving rise
            to the Relevant Claim;

     6.3.3  for any loss arising pursuant to a breach of Warranty to the extent
            that any such loss is actually recovered by the Purchaser or any
            Group Member under a policy of insurance in force on the date of
            loss but having deducted any costs incurred in pursuing recovery
            under such policy of insurance.

6.4  Neither the Vendor nor the Guarantor shall be liable in relation to any
     Relevant Claim which would not have arisen but for a voluntary act,
     omission or transaction carried out outside the ordinary course of business
     of the Group after the date hereof by any Group Member (otherwise than
     pursuant to a legally binding commitment of any such Group Member created
     on or before the date hereof) in circumstances where the Purchaser ought
     reasonably to have been aware that such matters would give rise to a
     Relevant Claim and other than in order to comply with any law.

6.5  Neither the Vendor nor the Guarantor shall be liable in relation to any
     Relevant Claim to the extent that it occurs as a result of any legislation
     not in force at the date hereof or any change of law or administrative
     practice after the date hereof which takes effect retrospectively.

6.6  Save in relation to any Relevant Claim pursuant to the Warranties contained
     in Part 3 of Schedule 4 (in which case paragraphs 8 and 10 of Schedule 4
     shall apply), if the Vendor or the Guarantor pays to the Purchaser or the
     Company an amount in respect of a Relevant Claim and the Purchaser or the
     Company subsequently recovers from a third party a sum which is wholly
     attributable to the subject matter of such Relevant Claim, the Purchaser or
     the Company shall repay to the Vendor or the Guarantor (as the case may be)
     the lesser of:

     6.6.1  the amount of such receipt which is so wholly attributable from the
            third party (after deducting an amount equal to the costs of the
            Purchaser and/or the Company incurred in recovering such receipt and
            any taxation payable thereon); or

                                       9
<PAGE>

      6.6.2  the amount paid by the Vendor or the Guarantor (as the case may be)
             pursuant to the Relevant Claim.

6.7   The Purchaser hereby agrees for itself and on behalf of the Company and
      each other Group Member with the Vendor and the Guarantor that, in respect
      of any claims where the Vendor or the Guarantor may be liable to the
      Purchaser under the Warranties or the provisions of Part 2 of Schedule 4,
      neither the Vendor nor the Guarantor shall be obliged to meet any such
      liability more than once.

6.8   Any breach of any of the Warranties, provisions of Part 2 of Schedule 4,
      covenants or undertakings or any other breach of this Agreement by the
      Vendor or the Guarantor shall not entitle the Purchaser to rescind this
      Agreement.

6.9   The preceding provisions of this clause 6 will not apply in respect of a
      Relevant Claim concerning paragraph 1 (capital and capacity) of Schedule
      3.

6.10  Notwithstanding any other provision of this Agreement, the preceding
      provisions of this clause 6 will not apply to exclude or limit the
      liability of the Vendor or the Guarantor to the extent that any Relevant
      Claim arises by reason of any fraud or dishonest or reckless or wilful
      misconduct or wilful omission by or on behalf of the Vendor.

7.    PURCHASER'S WARRANTIES AND UNDERTAKINGS

7.1   The Purchaser warrants that it is duly incorporated in England and Wales,
      has corporate capacity to enter into this Agreement and its signatories
      have been duly authorised to execute this Agreement and all documents
      mentioned herein as deeds or agreements, as applicable.

7.2   The Purchaser covenants and undertakes with and to the Vendor that it will
      not at any time after Completion use the name "P-Com" or any name
      identical or confusingly similar to "P-Com" in connection with any
      activity whatsoever.

8.    RESTRICTIVE COVENANTS

8.1   The Vendor and the Guarantor undertake to the Purchaser and the Company
      that they will not, and will procure that no Associated Company will
      (whether alone or in conjunction with, or on behalf of, another person and
      whether directly or indirectly), without the prior written consent of the
      Purchaser:

      8.1.1  for a period of 2 years immediately following Completion, canvass,
             solicit or approach, or cause to be canvassed, solicited or
             approached, any Relevant Customer for the supply of Relevant
             Services (other than in connection with the solicitation of or the
             issue of tenders for bids or requests for quotes for the provision
             of services along with products of the Vendor, Guarantor, or any
             Associated Company on a turnkey basis);

      8.1.2  for a period of 2 years immediately following Completion, deal or
             contract with any Relevant Customer in relation to the supply of
             Relevant Services;

                                       10
<PAGE>

     8.1.3  for a period of 2 years immediately following Completion directly
            interfere, or seek to directly interfere, with the continuance of
            supplies to any Group Member from any supplier who has been
            supplying goods or services to any Group Member at any time during
            the 12 months immediately preceding Completion if such interference
            causes or would cause that supplier to cease supplying, or
            materially reduce, or materially and adversely change its terms of,
            its supply of, those goods or services;

     8.1.4  for a period of 2 years immediately following Completion:

            8.1.4.1  solicit or entice away, or endeavour to solicit or entice
                     away, from any Group Member; or

            8.1.4.2  employ:

            (a)      in the case of any relevant employee of any Group Member
                     whose basic current salary (excluding overtime payments) is
                     equal to or in excess of (Pounds)30,000 per annum, in any
                     capacity; or

            (b)      in the case of any other relevant employee of any Group
                     Member, in any respect in connection with the provision of
                     the Relevant Services,

            any person employed in a managerial, supervisory, technical or sales
            capacity by any Group Member at Completion or at any time during the
            period of 12 months immediately preceding Completion where the
            person in question either has Confidential Information or would be
            in a position to exploit any Group Member's trade connections;

     8.1.5  within the United Kingdom for a period of 2 years immediately
            following Completion, be engaged, concerned, connected with or
            interested in (except as the owner for investment of securities in a
            company dealt in on a recognised stock exchange and which confer not
            more than 3 per cent of the votes which could be cast at a general
            meeting), any other business which supplies Relevant Services (other
            than in connection with the solicitation of or the issue of tenders
            for bids or requests for quotes for the provision of services along
            with products of the Vendor, Guarantor, or any Associated Company on
            a turnkey basis);

     8.1.6  without prejudice to any rights relating to passing off or trade or
            service mark infringement (or similar rights in any territory), for
            a period of 2 years immediately following Completion use in
            connection with any business which is competitive with the business
            of any Group Member any name (in whatever form) which includes the
            name of any Group Member or any trading style or get up which is
            confusingly similar to that used by any Group Member as at
            Completion.

8.2  Except so far as required by law or any governmental or regulatory
     organisation (in whatever jurisdiction) and in those circumstances only
     after prior consultation with the Purchaser, each of the Vendor and the
     Guarantor undertakes to the Purchaser and to each Group Member that they
     will not, and will procure that no Associated Company will, at any time
     after Completion:

                                       11
<PAGE>

     8.2.1  disclose any Confidential Information to any person except to those
            authorised by any Group Member to know;

     8.2.2  use any Confidential Information for their own purposes or for any
            purposes other than those of any Group Member; or

     8.2.3  cause or permit any unauthorised disclosure of any Confidential
            Information.

8.3  Each of the undertakings set out in this clause is separate and severable
     and enforceable accordingly, and if any one or more of such undertakings or
     part of an undertaking is held to be against the public interest or
     unlawful or in any way an unreasonable restraint of trade, the remaining
     undertakings or remaining part of the undertakings will continue in full
     force and effect and will bind the Vendor and the Guarantor.

8.4  Nothing in this clause 8 shall prevent the Guarantor or any of the
     Associated Companies issuing or soliciting tenders for bids ("TFB") or
     requests for quotes ("RFQ") for the provision of Relevant Services provided
     that:

     (a)   the Guarantor issues the TFB or RFQ to the Company before or at the
           same time as it issues it to any other provider of Relevant Services;

     (b)   the Relevant Services are required to be provided along with products
           of the Guarantor, the Vendor and/or the Associated Companies on a
           turnkey basis; and

     (c)   for the avoidance of doubt nothing in this clause 8.4 shall in any
           way operate to prejudice or reduce the application of clause 8.1.2
           and 8.1.5 above.

9.   GUARANTOR OBLIGATIONS

9.1  In consideration of the Purchaser entering into this Agreement the
     Guarantor irrevocably and unconditionally:

     9.1.1  guarantees to the Purchaser the due and punctual payment, observance
            and performance by the Vendor of all of the Vendor's liabilities and
            obligations, whether present or future, express or implied, actual
            or contingent, under or arising out of this Agreement, including any
            liability or obligation to pay damages or other compensation for any
            breach of any of the Warranties or to pay sums due and payable (but
            unpaid by the Vendor) under Part 2 of Schedule 4; and

     9.1.2  agrees as a primary obligation to indemnify the Purchaser from time
            to time on demand against each loss, liability and cost which the
            Purchaser incurs as a result of any of the obligations of the Vendor
            under the Agreement being or becoming void, voidable, unenforceable
            or ineffective for any reason whatsoever whether or not known to the
            Purchaser, the amount of such loss being the amount which, having
            regard to any relevant provisions contained in clause 6, the
            Purchaser would otherwise have been entitled to recover from the
            Vendor.

9.2  The Purchaser will not be obliged before exercising any of the rights,
     powers or remedies conferred upon it in respect of the Guarantor under this
     clause or by law:

                                       12
<PAGE>

     9.2.1  to make any demand of the Vendor;

     9.2.2  to enforce or seek to enforce any claim, right or remedy against the
            Vendor or any other person; or

     9.2.3  to make or file any claim or proof in connection with the insolvency
            of the Vendor or any other person; or

     9.2.4  to take any action or obtain judgment in any court against the
            Vendor or any other person.

9.3  Neither the liability of the Guarantor under this clause nor the rights,
     powers and remedies conferred on the Purchaser under this clause or by law
     will in any way be released, prejudiced, diminished or affected by any of
     the following:

     9.3.1  time or other indulgence being granted to the Vendor in respect of
            its obligations under the Agreement;

     9.3.2  the insolvency, incapacity, disability, or any change in the
            constitution, name, control or style of, the Vendor or the
            Guarantor;

     9.3.3  any invalidity, illegality, unenforceability, irregularity or
            frustration in any respect of any of the liabilities or obligations
            referred to in clause 9.1.1; and

     9.3.4  any act, omission event or circumstances which, but for this
            provision, might operate to prejudice, affect or otherwise affect
            the liability of the Guarantor under this clause or any of the
            rights, powers or remedies conferred upon the Purchaser under this
            clause or by law.

9.4  Save for any matters forming the subject matter of any legally binding
     settlement agreement between the Vendor and the Purchaser, the obligations
     of the Guarantor shall constitute and be continuing obligations
     notwithstanding any settlement of account or other matter or thing
     whatsoever, and in particular shall not be considered satisfied by any
     intermediate payment or satisfaction of all or any of the obligations of
     the Vendor under this Agreement and shall continue in full force and effect
     until final payment in full of all amounts owing by the Vendor in total
     satisfaction of all the Vendor's actual and contingent obligations under
     this clause.

9.5  The Guarantor agrees that whilst any amounts are or may be owed by the
     Vendor under this Agreement or the Vendor is under any actual or contingent
     obligation under this Agreement, the Guarantor shall not exercise any
     rights which the Guarantor may at any time have by reason of performance by
     it of its obligations under this clause:

     9.5.1  to be indemnified by the Vendor;

     9.5.2  to claim any contribution from any other guarantor of the Vendor's
            obligations contained in this Agreement;

                                       13
<PAGE>

     9.5.3  to take the benefit (in whole or in part) and whether by way of
            subrogation or otherwise of any rights of the Purchaser under the
            Agreement or of any other security taken in connection with the
            Agreement by the Purchaser; or

     9.5.4  to claim or prove in a liquidation or other insolvency proceedings
            of the Vendor in preference to the Purchaser.

9.6  The Guarantor undertakes that, in the event of any claim being made against
     the Guarantor, the Guarantor will not make any claim against any director
     or employee of any Group Member on which or on whom the Vendor or the
     Guarantor may have relied before agreeing to any term of this Agreement or
     authorising any statement in the Disclosure Letter PROVIDED THAT the
     provisions of this clause 9.6 shall not restrict the Guarantor from making
     a claim against any director or employee in the event of fraud, dishonesty
     or reckless or wilful misconduct on the part of any such director or
     employee.

9.7  Any settlement, discharge, compromise or other arrangement reached between
     the Purchaser and the Guarantor in respect of the Guarantor's obligations
     under this clause shall be deemed always to have been void if in reaching
     such arrangement the Purchaser relied on any fact, matter or circumstance
     which is subsequently invalidated or avoided by any provision of law.

10.  ANNOUNCEMENTS

10.1 No announcement or circular concerning the transactions contemplated by
     this Agreement or any matter ancillary to it and no disclosure of the terms
     of this Agreement will be made by the Vendor or the Guarantor except with
     the prior written approval of the Purchaser or by the Purchaser except with
     the prior written approval of the Vendor and the Guarantor.

10.2 This clause does not apply to any announcement, circular or disclosure
     required by law or any governmental or regulatory organisation or
     recognised stock exchange, provided, if practicable, that the party
     required to make it has first consulted with the other party.

11.  COSTS

     Except where expressly stated otherwise, each party to this Agreement will
     bear such party's own costs and expenses relating to the negotiation,
     preparation and implementation of this Agreement. No Group Member will bear
     any part of such costs and expenses.

12.  INTEREST

     If the Vendor or the Guarantor becomes liable to pay the Purchaser or any
     Group Member any sum pursuant to this Agreement other than pursuant to
     Schedule 6, whether a liquidated sum or by way of damages or otherwise, the
     Vendor or the Guarantor (as the case may be) will be liable to pay interest
     on such sum from the due date for payment at the annual rate of 3 per cent
     above the base lending rate from time to time of the National Westminster
     Bank plc, accruing on a daily basis until payment is made, whether before
     or after any judgment.

                                       14
<PAGE>

13.    NOTICES

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

13.2   A notice is deemed given:

       13.2.1  if delivered personally, upon delivery at the address provided
               for in this clause; or

       13.2.2  if sent by prepaid first class post, on the second Business Day
               after posting it; or

       13.2.3  if sent by overnight courier, on the second Business Day after
               posting it; or

       13.2.4  if sent by fax, on completion of its confirmed transmission

       provided that, if it is delivered by hand or sent by fax on a day which
       is not a Business Day or after 4.00 pm on a Business Day, it will instead
       be deemed to have been given or made on the next Business Day.

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

14.    ASSIGNMENT

14.1   The Purchaser may assign the benefit of, and any of its rights under,
       this Agreement:

       14.1.1  freely to any company which at the relevant time is:

               14.1.1.1  a holding company of the Purchaser; or

               14.1.1.2  a subsidiary or subsidiary undertaking of the
                         Purchaser; or

               14.1.1.3  a subsidiary or subsidiary undertaking (other than the
                         Purchaser itself) of any such holding company,

               (each a "Permitted Transferee" for the purposes of this clause
               14.1) the expressions "holding company", "subsidiary" and
               "subsidiary undertaking" having the meanings given to them by the
               CA 1985 PROVIDED THAT:

               14.1.1.4  following any such assignment the Purchaser shall give
                         written notice thereof to the Vendor; and

               14.1.1.5  if the relevant transferee shall thereafter cease to be
                         a Permitted Transferee it shall immediately re-assign
                         the relevant benefit and rights to the Purchaser or to
                         a Permitted Transferee; and

                                       15
<PAGE>

     14.1.2    to any other person provided that the prior written consent of
               the Vendor or the Guarantor has been obtained to such assignment.

14.2 For the avoidance of doubt, the Vendor and the Guarantor may not assign
     the burden of, or any of their obligations under, this Agreement.

14.3 This Agreement will be binding and enure for the benefit of and permitted
     assigns and successors in title of each of the parties and references to
     the parties will be construed accordingly.

15.  GENERAL

15.1 Unless otherwise provided, any outstanding obligation contained in this
     Agreement will remain in force notwithstanding Completion.

15.2 Each party will do all acts and things and execute all documents as any
     other party reasonably considers necessary to give full effect to the terms
     of this Agreement.

15.3 Failure or delay by any party in exercising any right or remedy under this
     Agreement will not in any circumstances operate as a waiver of it, nor will
     any single or partial exercise of any right or remedy in any circumstances
     preclude any other or further exercise of it or the exercise of any other
     right or remedy.

15.4 Any waiver of any breach of, or any default under, any of the terms of this
     Agreement will not be deemed a waiver of any subsequent breach or default
     and will in no way affect the other terms of this Agreement.

15.5 The rights and remedies expressly provided for by this Agreement will not
     exclude any rights or remedies provided by law.

15.6 The parties to this Agreement do not intend that any of its terms will be
     enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999
     by any person not a party to it.

15.7 No variation of this Agreement will be valid unless it is in writing and
     signed by or on behalf of each party to this Agreement.

15.8 Except as required by law, all payments by the Vendor and the Guarantor
     pursuant to this Agreement will be made free and clear of all deductions
     and withholdings whether in respect of Taxation (as defined in Schedule 4)
     or otherwise. If any deduction or withholding is required by law to be made
     from any payment by the Vendor or the Guarantor pursuant to this Agreement
     which is not governed by the provisions of Schedule 4 or if (ignoring any
     available relief or allowance) the Purchaser or any Group Member is subject
     to Taxation in respect of any such payment which is not governed by the
     provisions of Schedule 4 then the Vendor or, where applicable, the
     Guarantor will pay to the Purchaser or the Relevant Group Member such
     additional amount as is necessary to ensure that the net amount received
     and retained by them (after taking account of such deduction or withholding
     or Taxation) is equal to the amount which they would have received and
     retained had the payment in question not been subject to the deduction or
     withholding or Taxation.

                                       16
<PAGE>

15.9 The Purchaser undertakes and covenants with the Vendor that it will procure
     that the stock transfer form to be executed by the Vendor in relation to
     the transfer of the Shares shall be stamped with the appropriate duty
     within the period of 30 days following Completion and that it will procure
     that the registers of members and transfers are amended appropriately
     following such stamping being effected.

16.  GOVERNING LAW AND JURISDICTION

16.1 This Agreement will be governed by and construed in accordance with
     English law.

16.2 The parties agree that any dispute which arises out of or in connection
     with this Agreement shall be subject to the exclusive jurisdiction of the
     courts of England and Wales or Delaware, USA only, the choice between these
     two jurisdictions being at the discretion of the party bringing such
     proceedings and the other party agrees to raise no challenge or objection
     in relation to the jurisdiction chosen by the party bringing such
     proceedings.

17.  COUNTERPARTS

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

18.  PENSION INDEMNITY

     The Vendor undertakes to the Purchaser that it will indemnify and keep
     indemnified on a continuing basis the Purchaser and the Purchaser as
     trustee for the Group against any contributions, claims, demands,
     penalties, liabilities, proceedings, costs, damages, losses and expenses
     (including all legal, actuarial and other professional fees and VAT and
     other taxes thereon) incurred or suffered by the Purchaser or any member of
     the Group in respect of or as a result of the R T Masts Limited Pension
     Scheme (including for the avoidance of doubt but without limitation any
     contributions, claims, demands, penalties, liabilities, proceedings, costs,
     damages, losses and expenses which relate to the winding-up of the R T
     Masts Limited Pension Scheme PROVIDED THAT:

18.1 the Vendor shall have no liability in respect of any claim under the
     indemnity pursuant to this clause 18 unless:

     18.1.1  notice in writing of such claim is given by or on behalf of the
             Purchaser to the Vendor stating in reasonable detail the nature of
             the claim and together with, where practicable, reasonable support
             in documentary evidence on or prior to the date which is 4 years
             after the date of this Agreement; and

     18.1.2  the amount of the liability in respect of such claim when
             aggregated with the amount of the liability in respect of all other
             such claims exceeds (Pounds)17,500 in which event the Vendor will
             be liable for the whole amount of such claim and not merely the
             excess;

18.2 the aggregate liability of the Vendor under this clause 18 shall be limited
     in accordance with clause 6.2 above;

                                       17
<PAGE>

18.3 the Vendor shall not be liable in relation to any such claim which would
     not have arisen but for a voluntary act, omission or transaction carried
     out outside the ordinary course of business of the Group after the date
     hereof by any Group Member (otherwise than pursuant to a legally binding
     commitment of any Group Member created on or before the date hereof) in
     circumstances where the Purchaser ought reasonably to have been aware that
     such matters would give rise to such a claim and other than in order to
     comply with any law.

19.  TELESYS INDEMNITY

19.1 The Vendor undertakes to the Purchaser that it will indemnify and keep
     indemnified on a continuing basis the Purchaser and the Purchaser as
     trustee for the Group against any claims, demands, liabilities,
     proceedings, costs, damages, losses and expenses (including all legal and
     other professional fees and VAT and other taxes thereon) incurred or
     suffered by the Purchaser or any Group Member as a result of any failure to
     effectively and validly transfer with effect from 31 December 1998 from the
     Vendor to the Company full legal and beneficial ownership of the Sale
     Assets as defined in the sale and purchase documentation attached to the
     Disclosure Letter at reference 26 in the Disclosed Documents (as defined in
     the Disclosure Letter) pursuant to the terms of such sale and purchase
     documentation, and further the Vendor and the Guarantor each hereby
     undertake that, in the event that such assets have not been so transferred,
     they will, upon request by the Purchaser, do all acts and things and
     execute such documents as the Purchaser may reasonably consider necessary
     to give effect to the transfer of assets referred to above;

19.2 the aggregate liability of the Vendor under this clause 19 shall be
     limited in accordance with clause 6.2 above

20.  ENTIRE AGREEMENT

     This Agreement and any other documents to be entered into between the
     Vendor and the Purchaser pursuant to this Agreement set forth the entire
     agreement and understanding between the parties or any of them in
     connection with the sale and purchase described herein.

21.  MANAGEMENT ACCOUNTS

21.1 By the tenth day of the month following Completion the Purchaser shall
     procure that the Company shall prepare and deliver to the Vendor management
     accounts in relation to the Company covering the period from 1 January 2001
     to the date of Completion and prepared in a manner consistent with that
     adopted in respect of the Management Accounts PROVIDED THAT such management
     accounts shall be provided strictly on the basis that neither the Company
     nor the Purchaser (nor any of their respective officers, directors,
     employees, advisers or agents) shall have any liability whatsoever to the
     Vendor or any Associated Company in relation to such management accounts,
     and provided further that the Vendor and/or any relevant Associated Company
     shall provide the Company and/or the Purchaser with such information and
     assistance as is reasonably required in the preparation and provision of
     such management accounts.

21.2 In connection with this clause 21, the Purchaser shall permit Mark Perkins
     and Graeme Hall to prepare the aforementioned management accounts and shall
     also make them available to answer such reasonable

                                       18
<PAGE>

     questions as the Vendor may raise and to provide such assistance to the
     Vendor as the Vendor may reasonably require in relation to the due
     completion of the Vendor's own financial statements and reports in the
     context of such management accounts.

22.  LAND CERTIFICATE

22.1 It being acknowledged that the Company has filed a statutory declaration in
     the form disclosed to the Purchaser at HM Land Registry requesting a
     replacement land certificate under Title Number NN92526 the Vendor hereby
     agrees to provide such assistance to the Purchaser as the Purchaser may
     reasonably require in relation to the pursuit of the relevant application
     by the Company.

22.2 The Vendor will indemnify the Purchaser against any loss the Purchaser may
     suffer as a result of the Vendor's failure to produce the relevant original
     land certificate at Completion.

AS WITNESS the hands of the parties or their duly authorised representatives on
the date first stated above.

                                       19
<PAGE>

                                  SCHEDULE 1

                                   The Group

                        Part 1: Details of the Company
<TABLE>
<S>                                          <C>
Name of Company                              :       R.T. Masts Limited
Registered number                            :       1981078
Registered office                            :       3 and 4 Morris Close, Park Farm Industrial Estate,
                                                     Wellingborough, Northamptonshire, NN8 6XF
Date of incorporation                        :       22 January 1986
Authorised share capital                     :       (Pounds)160,625 divided into 160,625 ordinary shares of
                                                     (Pounds)1 each
Issued share capital                         :       (Pounds)160,625 divided into 160,625 ordinary shares of
                                                     (Pounds)1 each
Registered Shareholders                      :       Name and address                Number and class of shares
                                                                                     held
                                                     P-Com Network Services Limited  160,625 ordinary shares of
                                                     3-4 Morris Close                (Pounds)1 each
                                                     Park Farm Industrial Estate
                                                     Wellingborough
                                                     Northamptonshire
                                                     NN8 6XF

Directors' full names                        :       Mark Robert Perkins and George Powers Roberts
Secretary's full name                        :       Christopher Adam Grew and Graeme Andrew Hall
Accounting reference date                    :       31 December
</TABLE>

                                       20
<PAGE>

                    Part 2: Details of other Group Members

Name of Group Member                  :   R.T. Masts (Property) Limited

Registered number                     :   606471

Registered office                     :   3 and 4 Morris Close, Park Farm
                                          Industrial Estate, Wellingborough,
                                          Northamptonshire NN8 6XF

Date of incorporation                 :   17 June 1958

Authorised share capital              :   (Pounds)16,000 divided into 16,000
                                          ordinary shares of (Pounds)1.00 each

Issued share capital                  :   (Pounds)15,003 divided into 15,003
                                          ordinary shares of (Pounds)1.00 each

Beneficially owned by the Company     :   the whole of the issued share capital

Directors' full names                 :   Mark Robert Perkins and George Powers

Secretary's full name                 :   Christopher Adam Grew and Graeme Hall

Accounting reference data             :   31 December

Name of Group Member                  :   Skymasts Limited

Registered number                     :   2184662

Registered office                     :   3 and 4 Morris Close, Park Farm
                                          Industrial Estate, Wellingborough,
                                          Northamptonshire NN8 6XF

Date of incorporation                 :   28 October 1987

Authorised share capital              :   (Pounds)100 divided into 100 ordinary
                                          shares of (Pounds)1.00 each

Issued share capital                  :   (Pounds)2 divided into 2 ordinary
                                          shares of (Pounds)1.00 each

Beneficially owned by the Company     :   the whole of the issued share capital

Directors' full names                 :   Mark Robert Perkins and George Powers
                                          Roberts

Secretary's full name                 :   Christopher Adam Grew and Graeme Hall

                                       21
<PAGE>

Accounting reference date             :   31 December

                                       22
<PAGE>

                                  SCHEDULE 2

                                 The Property

                               Part 1: Freehold


Description        Title Holder           Title number and quality of Use
                                          title if reg'd

None

                                       23
<PAGE>

                               Part 2: Leasehold

<TABLE>
<CAPTION>
Description                Title holder        Title number and quality    Date of lease and parties to it        Term and
                                               of title if reg'd                                                  current rent
<S>                        <C>                 <C>                         <C>                                    <C>
Unit 1 Morris Close,       R T Masts Limited   NN87280                     Lease dated 25 March 1986 between
Park Farm Industrial                           (Title Absolute)            A M Sturdy (1) and BV Wholesale
Estate, Wellingborough                                                     Limited (2)



Unit 2 Morris Close,       R T Masts Limited   NN142728                    Lease dated 19 February 1991
Park Farm Industrial                           (Title Absolute)            between Philippa Sherwood (1) and
Estate, Wellingborough                                                     David Hollister and Others (2)



Unit 3 Morris Close,       R T Masts Limited   NN92526                     Lease dated 1 September 1986
Park Farm Industrial                           (Title Absolute)            between S M Laughton (1) and R T
Estate, Wellingborough                                                     Masts Limited (2)

<CAPTION>
Description                         Use
<S>                                 <C>
Unit 1 Morris Close,                Term: 25 years from 25 March 1986
Park Farm Industrial
Estate, Wellingborough              Use: Any use falling within Use Class
                                    II, III or X of the Town & Country
                                    Planning (Use Classes) Order 1972

                                    Rent: (Pounds)50,000 pa

Unit 2 Morris Close,                Term: 250 years from 20 August 1990
Park Farm Industrial
Estate, Wellingborough              Use: Any use falling within use Class
                                    II, III or X of the Town and Country
                                    Planning (Use Classes) Order 1972

                                    Rent: Peppercorn

Unit 3 Morris Close,                Term: 25 years from 1 September 1986
Park Farm Industrial
Estate, Wellingborough              Use: Any use falling within use Class
                                    II, III or X of the Town and Country
                                    Planning (Use Classes) Order 1972

                                    Rent: (Pounds)27,500 pa
</TABLE>

                                       24
<PAGE>

                                  SCHEDULE 3

                            Non-Taxation Warranties

1.   Interpretation

     In this Schedule 3 the following expressions have the following meanings:


     "Company"                          notwithstanding the definition contained
                                        in clause 1, each company individually
                                        details of which are set out in Schedule
                                        1 as if the provisions of this Schedule
                                        3 were set out in full in respect of
                                        each such company provided that where
                                        used other than in this Schedule 3 and
                                        Schedule 4 "Company" shall have the
                                        meaning given in clause 1

2.   Schedule 1: Capital and Capacity

2.1  The information contained in Schedule 1 is complete and accurate in all
     respects.

2.2  The Shares are in issue fully paid and are beneficially owned and
     registered as set out in Schedule 1 free from any third party right.

2.3  No Contract has been entered into which requires or may require the Company
     to allot or issue any share or loan capital.

2.4  The Company has no interest in the share capital of any body corporate.

2.5  Each of the Vendor and the Guarantor has full power to enter into and
     perform this Agreement and this Agreement constitutes obligations binding
     on each of them in accordance with its terms.

2.6  Each of the Group Members details of which are set out in Part 2 of
     Schedule 1 are, and have at all times in the last 6 years been, dormant
     within the meaning of section 250(3) of the CA 1985.

3.   The Disclosure Letter

     This provision is intentionally left blank.

4.   Accounts, records and Management Accounts

4.1  The Accounts:

     4.1.1  comply with the requirements of the Act and have been prepared in
            accordance with all applicable accounting standards (as that term is
            defined in section 256 of the Act) and (to the

                                       25
<PAGE>

            extent that none are applicable) with accounting principles and
            practices generally accepted in the United Kingdom;

     4.1.2  have been prepared on bases and principles which are consistent with
            those used in the preparation of the audited statutory accounts of
            the Company for the three financial years immediately preceding that
            which ended on the Accounting Date;

     4.1.3  show a true and fair view of the assets and liabilities (including
            contingent, unquantified and disputed liabilities) of the Company
            and of the state of affairs of the Company as at the Accounting Date
            and of the results of the Company for the financial year ended on
            that date; and

     4.1.4  are not affected (except as disclosed in the Accounts) by any
            extraordinary or exceptional item.

4.2  The accounting records of the Company are up to date and contain complete
     and accurate details of all transactions of the Company and comply with the
     provisions of sections 221 and 222 of the Act.

4.3  Except as fairly disclosed in the Disclosure Letter, the Management
     Accounts, copies of which are attached to the Disclosure Letter, have been
     prepared on bases consistent with those used in the preparation of the
     Accounts.

4.4  Except as fairly disclosed in the Disclosure Letter, the Management
     Accounts:

     4.4.1  are not misleading in any material respect;

     4.4.2  neither materially over-state the value of any of the assets nor
            materially under-state any of the liabilities of the Company as at
            the dates to which they were drawn up; and

     4.4.3  do not materially over-state the profits or turnover of the Company
            in respect of the periods to which they relate.

ASSETS

5.   Unencumbered title

     Each asset reflected in the Accounts (save for the Property, and current
     assets disposed of by the Company in the ordinary course of its business
     since the Accounting Date) and each asset treated as an asset of the
     Company and/or used by the Company at the date of this Agreement:

5.1  is in the legal and beneficial ownership of the Company, free from any
     third party right and from any Contract to grant the same; and

5.2  is situated at the Property.

                                       26
<PAGE>

6.    Debtors

      The Company has not factored or discounted any debt or agreed to do so.
      All of the debts which are reflected in the Accounts as owing to the
      Company (apart from bad and doubtful debts to the extent to which they
      have been provided for in the Accounts or the Management Accounts ) or
      which have subsequently been recorded in the books of the Company have
      realised or will realise in the normal course of collection and within six
      months of Completion their full value as included in the Accounts or in
      the books of the Company, and no such debt nor any part of it has been
      outstanding for more than four months from its due date for payment.  For
      the avoidance of doubt the debit entries in the books of the Company in
      relation to Orange shall be deemed to be "debt" for the purposes of this
      paragraph 6.

7.    Stock

      The Stock now held by the Company and not written off in the Accounts:

7.1   is not obsolete or likely to realise less than its book value; and

7.2   is fit for its intended purpose and of satisfactory quality and accords
      with any other representation or contractual term, express or implied,
      which has been given, or which would in the normal course of its business
      be given, by the Company in respect of it.

8.    Plant and Equipment

      The Plant and Equipment:

8.1   is in a good state of repair and condition and satisfactory working order
      and have been regularly maintained to a reasonable standard and in
      accordance with any safety regulations usually observed in relation to
      them;

8.2   is capable and so far as the Vendor is aware will (subject to fair wear
      and tear) be capable throughout the periods of time during which they will
      be written down to a nil value (at the rates adopted in the Accounts) of
      meeting the needs for which they were designed or acquired; and

8.3   is accurately recorded in the fixed asset/plant register.

9.    Property

9.1   The particulars of the Property shown in Schedule 2 (including in the case
      of registered land the class of title and title number) are true, complete
      and correct. The use of the Property for the purpose stated in Schedule 2
      corresponds to the use to which it is in fact put or (where the Property
      is not presently in use) to the use to which it was last in fact put.

9.2   The Company has a good and marketable title to the Property for the estate
      or interest stated in Schedule 2, free from any defects, and has in its
      possession, or under its control, all duly stamped deeds and documents
      which are necessary to prove title to the Property.

                                       27
<PAGE>

9.3  The Company is not in occupation of or entitled to any estate or interest
     in any land or premises save the Property.

9.4  Save as disclosed the Company has no knowledge of any of the following
     matters affecting the Property:

     9.4.1  any easement, reservation, covenant, restriction, agreement,
            licence, mortgage, charge, encumbrance, or third party right;

     9.4.2  any notice, order, proposal, dispute or complaint relating to it or
            its present use under any legislation, agreement, covenant,
            condition, licence or consent; or

     9.4.3  material outgoings (other than yearly rent and service charges,
            uniform business rates, water charges and other standard payments to
            the relevant water company, management fees to the management
            company for the Property including, without limitation, insurance
            premiums), whether of a periodically recurring nature or otherwise
            and whether payable by the owner or occupier of the Property.

9.5  The Company has not received notification of any breach of any obligations,
     restrictions, conditions and covenants (including any imposed by or
     pursuant to any lease) relating to the Property or its present use under
     any legislation, agreement, covenant, condition, licence or consent by any
     competent authority or other person and the Vendor is not aware of any
     circumstance which might give rise to such a breach.

9.6  So far as the Company is aware (but not having carried out any survey or
     tests) the Property is in a good and substantial state of repair and
     condition and fit for the purposes for which it is presently used.

9.7  So far as the Company is aware (but no specific enquiries or searches
     having been made) the use of the Property for the purpose stated in
     Schedule 2 is the permitted user under the provisions of all relevant
     legislation (including, without limitation, legislation relating to town
     and country planning, health and safety, and environmental protection) and
     regulations made under such legislation and is in accordance with the
     requirements of the local planning and all other competent authorities and
     all restrictions, conditions and covenants imposed by or pursuant to such
     legislation have been observed and performed and no agreement has been
     entered into under section 106 Town and Country Planning Act 1990 (or any
     similar statutory provision) in respect of the Property.

9.8  The replies given by the Vendors' Solicitors to the Purchaser's Solicitors'
     written enquiries concerning the Property are believed to be true and
     accurate in all respects.

10.  Intellectual Property Rights

10.1 All Intellectual Property Rights used in, or held in relation to, the
     Company's business (save for Intellectual Property Rights licensed to the
     Company under any Contract) are legally and beneficially owned by the
     Company free from any Encumbrance.

10.2 All Intellectual Property Rights used in, or held in relation to, the
     Company's business which are registered or the subject of applications for
     registration and all commercially significant unregistered

                                       28
<PAGE>

      Intellectual Property Rights are listed and described in the Disclosure
      Letter and such rights are all that are necessary or desirable for the
      Company to operate its business as it is currently operated.

10.3  The Intellectual Property Rights owned by the Company are (and nothing has
      been done or omitted to be done whereby any of them might cease to be)
      valid, subsisting and enforceable. In respect of such Intellectual
      Property Rights which are registered, all renewal fees have been duly
      paid, all steps required to have been taken by the Company for their
      maintenance and protection have been taken and so far as the Vendor is
      aware there are no grounds on which any person is or will be able to seek
      cancellation, rectification or any other modification of any registration.

10.4  There are, and have been, no proceedings, actions or claims and so far as
      the Vendor is aware none are pending or threatened or will arise,
      impugning the title, validity or enforceability of the Company's
      Intellectual Property Rights or claiming any right or interest in such
      Intellectual Property Rights.

10.5  There is, and has been, no infringement of the Company's Intellectual
      Property Rights and so far as the Vendor is aware none is pending or
      threatened.

10.6  The past and present activities of the Company (including the processes,
      methods, Software, goods and services used or dealt in by it, and the
      services supplied by it):

      10.6.1  with respect to Intellectual Property Rights are not, and have not
              been, subject to the licence, consent or permission of, or payment
              to, any other party;

      10.6.2  do not infringe, have not infringed and so far as the Vendor is
              aware will not result in any claim in relation to, any
              Intellectual Property Rights of any third party; and

      10.6.3  have not, and so far as the Vendor is aware will not, result in a
              claim in respect of Intellectual Property Rights against the
              Company including any liability to any compensation under sections
              40 and 41 of the Patents Act 1977.

10.7  Save in the ordinary course of business neither the Vendor nor the Company
      has disclosed, nor is obliged to disclose, any know how to any third
      party, other than those who are bound by obligations of confidence. Save
      for officers or employees of the Company, no third party has had, other
      than in the ordinary course of business, access to any of the know how
      relating to or held by the Company. The Company is not restricted in its
      ability to use, or to disclose to any third party, any of its know how.

10.8  So far as the Vendor is aware there are no circumstances which would
      render any current application for registration of the Company's
      Intellectual Property Rights unacceptable to the relevant registry or
      other authority or which would prevent any such application from
      proceeding to grant and registration.

10.9  Except in relation to Software (in relation to which paragraph 11.1 of
      this Schedule 3 below applies) complete and accurate copies of all
      licences, sub-licences and other agreements whereby the Company is
      licensed or otherwise authorised to use the Intellectual Property Rights
      of a third party or whereby the Company licenses or otherwise authorises a
      third party to use Intellectual Property Rights are attached to the
      Disclosure Letter. All of them are in full force and effect, no notice
      having been given to terminate

                                       29
<PAGE>

       them, and the obligations of the Company in respect of them and, so far
       as the Vendor is aware, the obligations of third parties in respect of
       them have been fully complied with and no disputes have arisen in respect
       of them.

10.10  The Company has in its possession all necessary drawings, artwork,
       specifications, prototypes and other documents and things necessary to
       establish the Company's ownership of its Intellectual Property Rights and
       to prove that they are original or novel or both.

10.11  The Disclosure Letter contains a full list of domain names and other
       addresses in connection with the Internet or Worldwide Web which are held
       by or are or have been used in respect of the Company.

11.    Computer Systems

11.1   Details of all Software used or held by the Company in which the
       Intellectual Property Rights are owned by a third party are set out in
       the Disclosure Letter. Complete and accurate copies of all licences in
       respect of such Software as was specifically developed for the Company
       are attached to the Disclosure Letter. So far as the Vendor is aware, the
       licences of such Software are complied with in all respects in the
       operation of the business of the Company.

11.2   Complete and accurate copies of all maintenance agreements in place in
       respect of the Computer Systems which have been specifically developed
       for the Company are attached to the Disclosure Letter. So far as the
       Vendor is aware, the maintenance providers concerned have always
       fulfilled their obligations under those agreements in accordance with
       their terms.

11.3   Assuming that the Computer Systems which have been specifically developed
       for the Company were to carry on functioning in the manner in which they
       are currently functioning, then they, together with all other Computer
       Systems currently utilised by the Company, would be sufficient to enable
       the business of the Company to be managed in the same manner in which it
       is currently managed.

EMPLOYEES

12.    Remuneration and employees

12.1   Full particulars of the identities, dates of commencement of employment
       (or appointment to office), length of notice period, dates of birth,
       terms and conditions of employment and remuneration (including any bonus,
       commission, profit sharing, share and other incentive schemes, and
       collective or workforce agreements) of all the employees and officers of
       the Company are accurately set out in the Disclosure Letter and copies of
       all their written service agreements or contracts of employment or
       particulars of employment statements are attached to the Disclosure
       Letter.

12.2   Save for accrued holiday pay in respect of the Company's current holiday
       year there are no amounts owing to any present or former officers,
       workers or employees of the Company, other than remuneration accrued (but
       not yet due for payment) in respect of the calendar month in which this
       Agreement is executed or for reimbursement of business expenses incurred
       during such month.

                                       30
<PAGE>

12.3    All Contracts of employment between the Company and its directors and
        employees are terminable by the Company by giving at least the
        applicable minimum period of notice specified in section 86 Employment
        Rights Act 1996, and the Company is not contractually obliged to make
        any payment as a consequence of the termination of any such Contract.

12.4    Other than as fairly disclosed in the Disclosure Letter, the Company has
        not:

        12.4.1   with respect to salaried employees earning at least
                 (Pounds)30,000 (excluding overtime payments) per annum, offered
                 to employ or engage any person since the Accounting Date or
                 where such employment or engagement will take effect after the
                 date of this Agreement;

        12.4.2   with respect to salaried employees earning at least
                 (Pounds)30,000 (excluding overtime payments) per annum, given
                 or received notice to terminate the employment or engagement of
                 any person since the Accounting Date or where such notice has
                 not yet expired;

        12.4.3   with respect to any employee of the Company, offered to employ
                 or engage any person since 30 November 2000 or where such
                 employment or engagement will take effect after the date of
                 this Agreement;

        12.4.4   with respect to any employee of the Company, given notice to
                 terminate the employment or engagement of any person since 30
                 November 2000 or where such notice has not yet expired; or

        12.4.5   with respect to any employee of the Company, made, agreed or
                 proposed any material change of terms and conditions of
                 employment or engagement other than as disclosed pursuant to
                 paragraph 12.1 above.

12.5    There is no person previously employed or engaged by the Company who now
        has or may have a statutory or contractual right to return to work or to
        be re-instated or re-engaged by the Company.

12.6    There are no employees who have been absent due to sickness leave for
        more than 3 months in the 12 month period ending on the date of this
        Agreement.

12.7    The Company has not recognised, and has not done any act which might be
        construed as recognition of, a trade union and the Company is not party
        to any agreement with any trade union or organisation of employees or
        workers nor so far as the Vendor is aware are any steps being taken by
        employees, workers or other representatives to ensure trade union
        recognition.

12.8    The Company is not involved, and has not during the 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 union or
        body of employees or workers.

12.9    There are no part-time, job share, flexitime or early retirement schemes
        applicable to any employees of the Company.

                                       31
<PAGE>

12.10  The Company does not operate or intend to operate and has not operated
       any short time working scheme or arrangement or any redundancy or
       redeployment scheme or arrangement, whether formal or informal,
       contractual or non-contractual, which provides for payments greater than
       those required by statute or for notice periods greater than those set
       out in contracts of employment or engagement.

12.11  The Company does not use the service of agency or other self-employed
       persons, contracted labour or agents.

12.12  The Company has, in relation to all present and former employees and
       workers, complied in all material respects with all statutes,
       regulations, orders and codes of conduct relating to employment and
       relations with employees and trade unions and has maintained adequate and
       suitable records, whether or not required to do so by law, regarding the
       service of each of its employees and has complied with all agreements for
       the time being having effect as regards such relations or the conditions
       of service of its employees (whether collectively or individually).

13.    Pensions

13.1   With the exception of the Pension Schemes, the Group Personal Pension
       Scheme and the Life Assurance Scheme there are no:

       13.1.1  agreements or arrangements for the provision of any relevant
               benefits (as defined in section 612(1) ICTA) or similar benefit
               (including any pension, annuity, lump sum, gratuity or other like
               benefit) to be given on retirement, or in anticipation of
               retirement or after retirement in connection with past service,
               or to be given on or in anticipation of or in connection with any
               change in the nature of the service of the person in question or
               on death or disability to which any member of the Group
               contributes or is a participating employer; or

       13.1.2  informal or ex-gratia pension arrangements, customs or schemes
               involving any member of the Group for the provision of such
               benefits, for any Employee or officer or former employee or
               officer of any member of the Group or for any dependants of any
               such person.

13.2   No proposal has been announced by any member of the Group to alter the
       Group Personal Pension Scheme, the Life Assurance Scheme or the PHI
       Scheme nor has any proposal been announced by any member of the Group to
       establish any retirement death or disability agreement or arrangement of
       the nature referred to in paragraph 13.1 which proposal remains
       outstanding and has not been implemented (in whole or in part).

13.3   All benefits payable under the Life Assurance Scheme or the PHI Scheme on
       the death of any person or during periods of sickness or disability are
       as at Completion fully insured under a policy effected with an insurance
       company and such insurance cover is underwritten by it at its normal
       rates and on its normal terms for a person in good health. So far as the
       Vendor is aware, there is no reason why the relevant policies cannot be
       continued on the same terms following Completion.

                                       32
<PAGE>

13.4   As at Completion all premiums by way of insurance which are payable in
       respect of the Life Assurance Scheme or the PHI Scheme by any member of
       the Group or by the trustees (where relevant) or other administrators in
       respect of those schemes have been duly paid.

13.5   Copies of the documents containing the provisions currently governing the
       Pension Schemes, the Group Personal Pension Scheme, the Life Assurance
       Scheme and the PHI Scheme and material particulars of the benefits and
       entitlements under those schemes have been given to the Purchaser and are
       attached to the Disclosure Letter.

13.6   Except as set out in the Disclosure Letter, all actuarial, consultancy,
       legal and other fees charges or expenses in relation to each of the
       Pension Schemes whether payable by any member of the Group or its
       trustees, have been paid and no services have been rendered in respect of
       which an account or other invoice has not been rendered.

13.7   Each of the Pension Schemes and the Life Assurance Scheme is an exempt
       approved scheme within the meaning of section 592(1) ICTA and, so far as
       the Vendor is aware, there is no reason why such approval could be
       withdrawn.

13.8   So far as the Vendor is aware and except as otherwise set out in the
       Disclosure Letter, each of the Pension Schemes and the Life Assurance
       Scheme complies (and has at all times complied) with and has been
       administered in all material respects in accordance with all legislation,
       regulation and Inland Revenue practice and requirements relating to
       exempt approved pension schemes and subject thereto in all material
       respects in accordance with its governing trusts powers and provisions.

13.9   There are no actions, suits or claims (other than routine claims for
       benefits) outstanding, pending or threatened against the trustees (where
       relevant) or administrators of any of the Pension Schemes, the Group
       Personal Pension Scheme, the Life Assurance Scheme or the PHI Scheme or
       against the Vendor or any member of the Group in respect of any act,
       event, omission or other matter arising in connection with those schemes
       and the Vendor is not aware of any reason why any such action, suit or
       claim may arise.

13.10  As at Completion, there are no contributions due to the Group Personal
       Pension Scheme, whether payable by any member of the Group or the
       employees or officers of the Group (and whether payable in accordance
       with the terms of the Group Personal Pension Scheme or the terms of any
       contractual commitment entered into between any member of the Group and
       an employee or officer of the Group which have fallen due but are
       unpaid).

13.11  The members' benefits payable under the Group Personal Pension Scheme
       whether immediate, prospective or contingent are solely benefits which
       can be provided by the funds available for, and allocated to, each member
       under the Group Personal Pension Scheme.

13.12  No employee or officer or former employee or officer (whether living or
       deceased) of any member of the Group has been excluded or prevented from
       participating (or been granted restricted participation) in any of the
       Pension Schemes, the Group Personal Pension Scheme, the Life Assurance
       Scheme or the PHI Scheme or any other pension scheme or arrangement by
       any member of the Group or by any former employer (where liabilities have
       been transferred to the Group) on the grounds of part-time employment,

                                       33
<PAGE>

       marital status or otherwise where such exclusion, prevention or
       restriction constitutes discrimination in breach of the Treaty of Rome or
       any European Directive.

13.13  Except as otherwise set out in the Disclosure Letter, the Pension Schemes
       have been operated at all times from and including 17 May 1990 in
       accordance with the provisions of the EC Treaty relating to equal
       treatment and all Acts of Parliament, Directives and other relevant
       legislation including (without prejudice to the generality of the
       foregoing) the provision of sex equal benefits accruing after 16 May
       1990.

CONTRACTS

14.    Insurance

14.1   All assets of the Company of an insurable nature are, and have at all
       material times been, insured in amounts equal to their full replacement
       or reinstatement value against fire and other risks normally insured
       against by persons carrying on the same classes of business as the
       Company including employer's liability, public liability and product
       liability.

14.2   All premiums due in relation to the Company's insurances have been paid,
       and nothing has been done or omitted to be done which would make any
       policy of insurance of the Company void or voidable or which is likely to
       result in an increase in premium or which would release any insurer from
       any of its obligations under any policy of insurance of the Company.

14.3   There is no insurance claim pending or outstanding and, as far as the
       Vendors are aware, there are no circumstances likely to give rise to any
       such claim.

14.4   Reasonable particulars of all the Company's insurances are given in the
       Disclosure Letter.

15.    Financing and working capital

15.1   Full and accurate details of any and all overdrafts, loans or other
       financial facilities outstanding or available to the Company are
       contained in the Disclosure Letter; and no person who provides any such
       facility has given any indication that it may be withdrawn or its terms
       altered.

15.2   The details contained in the Disclosure Letter of the credit or debit
       balances on all the bank or deposit accounts of the Company were correct
       at the date stated in the Disclosure Letter and since such date there
       have been no payments out of any such accounts except for payments in the
       ordinary course of business.

15.3   The Company has, since the Accounting Date, paid its creditors materially
       in accordance with their respective credit terms.

15.4   Having regard to existing bank and other facilities the Company has
       sufficient working capital to enable it to perform in accordance with
       their terms all Contracts which have been entered into by it.

15.5   No person has given any guarantee of or security for any overdraft, loan,
       other financial facility granted to the Company or other liability of the
       Company.

                                       34
<PAGE>

15.6   The Company has not applied for or received any grant, subsidy or
       financial assistance from any government department or other body.

16.    Material Contracts

       The Company is not, or has not been since the Accounting Date, a party
       to, liable under or subject to any Contract which:

16.1   involves agency, distributorship, franchising, marketing rights,
       information sharing, manufacturing rights, consultancy or servicing;

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

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

16.4   involves or is likely to involve any capital expenditure by the Company
       or involves or is likely to involve an aggregate expenditure or receipt
       in excess of (Pounds)50,000 by the Company;

16.5   is incapable of complete performance in accordance with its terms within
       6 months after the date on which it was entered into;

16.6   cannot readily be fulfilled or performed by the Company;

16.7   the Vendor believes may result in a loss to the Company;

16.8   involves or is likely to involve any obligation, restriction, expenditure
       or receipt which the Vendor believes is of an unusual or onerous nature;

16.9   is for the supply of goods by or to the Company on a sale or return
       basis;

16.10  is for the supply of goods or services by or to the Company on terms
       under which retrospective or future discounts, price reductions or other
       financial incentives are given;

16.11  is for the supply of goods or services by the Company or is a contract
       for the supply of goods or services to the Company which in either case
       is material to the business of the Company which in either case is not on
       the current standard terms and conditions on which the Company normally
       contracts to buy or supply (as appropriate) goods or services, copies of
       which are attached to the Disclosure Letter;

16.12  involves the forward purchase or sale of any currency, commodity,
       precious metal or other asset;

16.13  involves delegation of any power under a power of attorney or
       authorisation of any person other than its employees or officers (as
       agent or otherwise) to bind or commit the Company to any obligation;

16.14  restricts the freedom of the Company to carry on its business in any part
       of the world or to use or exploit any of its assets, in each case in such
       manner as it may think fit;

                                       35
<PAGE>

16.15  involves conditions, warranties, indemnities or representations given in
       connection with a sale of shares or an undertaking or fixed assets;

16.16  is a guarantee, indemnity, surety or letter of comfort in respect of the
       obligations of a third party, under which any liability or contingent
       liability is outstanding;

16.17  so far as the Vendor is aware includes a term which is not, or may not
       be, binding on the Company or any other party in consequence of the
       Unfair Terms in Consumer Contracts Regulations 1999; or

16.18  is not on arm's length terms or is in any way otherwise than in the
       ordinary and proper course of the Company's business.

17.    Other business matters

       During the 12 months ended on the date of this Agreement there has been
       no substantial change in the basis or terms on which any person is
       prepared to do business with the Company (apart from normal price
       changes), and no substantial customer or supplier of the Company has
       ceased or substantially reduced its business with the Company, and no
       indication has been received by the Company or any of the Vendors that
       there will or may be any such change, cessation or reduction.

COMPLIANCE; DISPUTES

18.    Company law matters and general compliance

18.1   Compliance has been made with all legal requirements in connection with
       the formation of the Company and all issues and grants of shares or other
       securities of the Company.

18.2   The copy of the memorandum and articles of association of the Company
       enclosed with the Disclosure Letter is true and complete.

18.3   All returns, particulars, resolutions and other documents required to be
       filed with or delivered to the Registrar of Companies by the Company have
       been properly filed, and none has been so filed or delivered within 14
       days of the date of this Agreement.

18.4   The statutory books (including all registers and minute books) of the
       Company have been properly kept.

18.5   The Company has conducted its business in all material respects in
       accordance with all applicable laws and regulations of the United Kingdom
       and any relevant foreign country.

18.6   No agreement, practice or arrangement to which the Company is party is or
       ought to be or ought to have been registered under, or infringes, any
       competition, anti-restrictive trade practice or consumer protection
       legislation applicable in the United Kingdom or elsewhere.

18.7   There is not in existence or, so far as the Vendor is aware, pending, any
       investigation or enquiry by, or on behalf of, any governmental or other
       body in respect of the affairs of the Company.

                                       36
<PAGE>

19.    Litigation

19.1   Neither the Company nor any person for whose acts or defaults it may be
       liable is involved (whether as plaintiff, defendant or any other party)
       in any civil, criminal, tribunal or arbitration proceedings involving the
       Company, and so far as the Vendor is aware there are no facts likely to
       give rise to any such proceedings.

19.2   There is no unsatisfied judgment or unfulfilled order outstanding against
       the Company and the Company is not party to any undertaking or assurance
       given to a court, tribunal or any other person in connection with the
       determination or settlement of any claim or proceedings.

20.    Default

20.1   The Company has not sold, supplied or provided any service which did not,
       does not or will not comply in all material respects with all applicable
       laws, regulations or standards or which was when sold, supplied or
       provided, defective or dangerous or not in accordance with any
       representation or contractual term, express or implied, relating to it.

20.2   The Company is not in material breach ("material" for these purposes to
       be deemed to include any breach in respect of which the relevant customer
       brings a claim against the Company in respect thereof) of the customer
       contracts included at documents 13 to 19 of the Disclosed Documents (as
       defined in the Disclosure Letter) together with the sub-contract between
       the Guarantor and the Company relating to the contract at Document 12 in
       the Disclosed Documents, and is not in material breach of any other
       Contract to which it is a party, and so far as the Vendor is aware no
       other party to any such Contract is in breach of it.

21.    Events since the accounting date

       Since the Accounting Date:

21.1   there has been no reduction in the value of the net assets of the Company
       determined in accordance with the same accounting policies as those
       applied in the Accounts (and valuing no asset at a figure greater than
       the value attributed to it in the Accounts or, in the case of any asset
       acquired since the Accounting Date, greater than cost);

21.2   the Company has not acquired, or agreed to acquire, any single asset
       having a value in excess of (Pounds)20,000 or assets having an aggregate
       value in excess of (Pounds)50,000;

21.3   the Company has not disposed of, or agreed to dispose of, any asset other
       than finished goods;

21.4   the trade and business of the Company has been carried on in the ordinary
       and normal course;

21.5   there has been no adverse change in the financial or trading position or
       prospects of the Company;

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

                                       37
<PAGE>

21.7   no resolution of the shareholders of the Company has been passed;

21.8   no management or similar charge has become payable or been paid by the
       Company; and

21.9   no payment has been made to, or benefit conferred by the Company on, any
       of the Vendors, save as specified in the Disclosure Letter.

22.    Insolvency

22.1   No meeting has been convened at which a resolution will be proposed, no
       petition has been presented, no order has been made and no resolution has
       been passed for the winding-up of the Company or for the appointment of
       any provisional liquidator.

22.2   No administrative receiver, receiver or manager has been appointed of the
       whole or any part of the property, assets or undertaking of the Company.

22.3   No administration order has been made appointing an administrator in
       respect of the Company and no petition has been presented for an
       administration order in respect of the Company.

22.4   No voluntary arrangement has been proposed or approved under Part I
       Insolvency Act 1986 and no compromise or arrangement has been proposed,
       agreed to or sanctioned under section 425 Insolvency Act 1986 in respect
       of the Company.

22.5   The Company has not stopped or suspended the payment of its debts or
       received a written demand pursuant to section 123(1)(a) Insolvency Act
       1986 and the Company is not insolvent or unable to pay its debts within
       the meaning of section 123 Insolvency Act 1986.

22.6   No disqualification order has at any time been made pursuant to the
       provisions of the Company Directors Disqualification Act 1986 against any
       former or current officer of the Company.

22.7   So far as the Vendor is aware, there are no facts in existence which are
       likely to lead to any of the events or circumstances referred to in this
       paragraph.

23.    Effects of the Agreement

23.1   The execution of this Agreement and the observance and performance of its
       provisions will not:

       23.1.1  result in a breach of any Contract, law, regulation, order,
               judgement, injunction, undertaking, decree or similar imposition
               to or by which the Company is party or bound, or entitle any
               person to terminate or avoid any Contract to which the Company is
               party, or have any material effect on any such Contract;

       23.1.2  result in the loss or impairment of or any default under any
               licence, authorisation or consent required by the Company for the
               purposes of its business;


                                       38
<PAGE>

        23.1.3  result in the creation, imposition, crystallisation or
                enforcement of any encumbrance whatsoever on any of the assets
                of the Company;

        23.1.4  result in any present or future indebtedness of the Company
                becoming due and payable, or capable of being declared due and
                payable, prior to its stated maturity date or in any financial
                facility of the Company being withdrawn; or

        23.1.5  adversely affect the Company's relationships with customers,
                suppliers and employees.

23.2    There is no Contract to which the Company is party which depends on the
        continuation of the connection (as shareholder, officer or employee of
        the Company) of any person with the Company who will cease to be a
        shareholder, officer or employee of the Company at Completion.

24.     Environmental/Health and Safety Matters

24.1    The Company does require my EHS Permits.

24.2    The Company and its officers, agents and employees comply and have at
        all times compiled in all material respects with Ehs Law.



                                       39
<PAGE>

                                  SCHEDULE 4

                                   Taxation

Part 1 - Interpretation

1.    Interpretation

      In this Schedule 4:

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

      "the Accounting Date"       the same meaning as in clause 1

      "ACT"                       advance corporation tax

      "the Auditors"              auditors for the time being of the Company

      "the Balance Sheet"         the audited balance sheet of the Company as
                                  at the

      "CAA"                       Capital Allowances Act 1990

      "Claim"                     any notice, demand, assessment, letter or
                                  other document issued, or action taken, by or
                                  on behalf of any Taxation Authority from which
                                  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

      "Company"                   notwithstanding the definition contained in
                                  clause 1, each company individually details of
                                  which are set out in Schedule 1 as if the
                                  provisions of this Schedule 4 were set out in
                                  full in respect of each such company provided
                                  that where used other than in this Schedule 4
                                  and Schedule 3 "Company" shall have the
                                  meaning given in Clause 1

      "Dispute"                   any dispute, appeal, negotiations or other
                                  proceedings in connection with a Claim

      "Event"                     any event, fact or circumstance whatsoever
                                  including but not limited to:

                                  (a)  any transaction, action or omission
                                       (whether or not the Company is party to
                                       it);

                                       40
<PAGE>

                                             the Company is party to it);

                                       (b)   the earning, receipt or accrual for
                                             any Taxation purpose of any income,
                                             profits or gains;

                                       (c)   the incurring for any Taxation
                                             purpose of any loss or expenditure;

                                       (d)   the declaration, payment or making
                                             of any dividend or other
                                             distribution;

                                       (e)   the sale and purchase of the Shares
                                             pursuant to this Agreement; and

                                       (f)   Completion

     "FA"                              Finance Act

     "Group Relief"                    the meaning given to that expression by
                                       section 402 ICTA

     "ICTA"                            Income and Corporation Taxes Act 1988

     "IHTA"                            Inheritance Tax Act 1984

     "Liability to Taxation"           (a)   any liability of the Company to
                                             make an actual payment of Taxation
                                             (whether or not the Company is
                                             primarily so liable and whether or
                                             not the Company has any right of
                                             recovery against any other person);
                                             and

                                       (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 (whether
                                             or not the Company is primarily so
                                             liable and whether or not the
                                             Company has any right of recovery
                                             against any other person) in
                                             respect of which the Vendor would
                                             otherwise have been liable under
                                             paragraph 2; and

                                       (c)   the loss by the Company (in whole
                                             or in part) of any Purchaser's
                                             Relief falling within paragraphs
                                             (a) and (b) of the definition of
                                             that term

                                       41
<PAGE>

     "Purchaser's Relief"                    (a)  any Relief which was treated
                                                  as an asset of the Company in
                                                  the Balance Sheet; 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 Balance
                                                  Sheet or which would have
                                                  appeared in the Balance Sheet
                                                  but for the presumed
                                                  availability of such Relief;
                                                  and

                                             (c)  any Relief which arises wholly
                                                  or mainly as a result of any
                                                  Event in the ordinary course
                                                  of trading which has occurred
                                                  or occurs after the Accounting
                                                  Date

     "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
                                             repayment of Taxation from a
                                             Taxation Authority where the Vendor
                                             made a payment under this Part 2 of
                                             Schedule 4 or for breach of any
                                             Taxation Warranty which is the
                                             subject of the repayment

     "Saving"                                the reduction of elimination of any
                                             liability of the Company or the
                                             Purchaser or any member of the same
                                             group of companies as the Purchaser
                                             to make an actual payment of
                                             Taxation in respect of which the
                                             Vendor would not have been liable
                                             under paragraph 2 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 paragraph 2 or
                                             for breach of any Taxation Warranty

     "Taxation"                              (a)  any tax, duty, impost or levy,
                                                  past or present, of the United
                                                  Kingdom or elsewhere, whether
                                                  governmental, state,
                                                  provincial, local governmental
                                                  or municipal, including but
                                                  not limited to income tax
                                                  (including income tax required
                                                  to be deducted or withheld
                                                  from or

                                       42
<PAGE>

                                                  accounted for in respect of
                                                  any payment under section 203
                                                  ICTA 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,
                                                  national insurance and social
                                                  security contributions; and

                                          (b)     any fine, penalty, surcharge
                                                  or interest relating to any
                                                  tax, duty, impost or levy
                                                  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,
                                                  duty, impost or levy

     "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

     "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 Warranty"                  any Warranty in Part 3 of this
                                          Schedule 4

     "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 or has been a member on
                                          or before Completion;

1.2   references to Events include Events which are deemed to have occurred for
      any Taxation purpose and references to income, profits or gains earned,
      received or accrued for any Taxation purpose include income, profits or
      gains which are deemed to have been earned, received or accrued for any
      Taxation purpose;

                                       43
<PAGE>

1.3  references to an Event occurring on or before Completion shall be deemed to
     include the combined result or results of two or more Events where the
     first occurred on or before Completion outside the ordinary course of
     business and the Event or Events occurring after Completion are inside the
     Company's ordinary course of business;

1.4  references to the loss of a Relief include the disallowance of a Relief and
     the failure to obtain a Relief;

1.5  any stamp duty which is charged on any document, or in the case of a
     document which is outside the United Kingdom any stamp duty which would be
     charged on the document if it were brought into the United Kingdom, which
     is necessary to establish the title of the Company to any asset or in the
     enforcement or production of which the Company is interested, and any
     interest, fine or penalty relating to such stamp duty, will be deemed to be
     a liability of the Company to make an actual payment of Taxation.

Part 2 - Tax Covenant

2.   Covenant

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

2.1  any Liability to Taxation which has arisen or arises as a result of any
     Event which occurred on or before Completion; and

2.2  any Liability to Taxation which arises under section 767A or 767AA ICTA,
     section 132 FA 1988 or section 179, 189, 190 or 191 TCGA as a result of the
     combined effect of two or more Events, the first of which occurred on or
     before Completion; and

2.3  any Liability to Taxation which has arisen or arises on or before
     Completion as a result of the non payment of Taxation by the Vendor or any
     person (other than the Company) which is or has been connected (within the
     meaning of section 839 ICTA) with the Vendor and for which that person is
     primarily liable; and

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

2.5  any Liability to Taxation which arises as a result of any supply,
     acquisition or importation made or deemed to be made on, before or after
     Completion for the purposes of VAT by any member of any VAT Group other
     than the Company; and

2.6  any liability of the Company to make a payment in respect of Taxation to
     any person pursuant to:

     2.6.1  any indemnity, covenant, guarantee or charge entered into by the
            Company on or before Completion; and

                                       44
<PAGE>

       2.6.2  any agreement or arrangement relating to the surrender of Group
              Relief, ACT or any other Relief or to any VAT Group, entered into
              by the Company on or before Completion; and

2.7    any Liability to Taxation which has arisen or arises as a result of:

       2.7.1  the sale of the Company pursuant to this Agreement under section
              179 TCGA including but not limited to any section 179 TCGA
              liability in respect of the transfer of the trade and assets of
              the Telesys business from the Vendor to the Company on 1 January
              1999; or

       2.7.2  the Inland Revenue or any other Taxation Authority treating the
              consideration received or paid by the Company on the disposal or
              acquisition of any asset or on the supply or obtaining of any
              service or business facility of any kind by or to the Company
              prior to Completion as being different from the consideration
              actually received or given including but not limited to any
              interest which is deemed to be received by the Company in relation
              to amounts owed to the Company by the Vendor and other members of
              the same group of companies as the Vendor; or

       2.7.3  any transaction on or prior to Completion in relation to the debt
              due from the Guarantor to the Company including but not limited to
              the replacement or novation of such debt for an equivalent debt
              due to the Company from the Vendor and the declaration of a
              dividend by the Company in satisfaction in whole or in part of
              such debt;

       2.7.4  the exercise of share options held by employees of the Company in
              the share capital of the Guarantor including but not limited to
              employer's national insurance contributions in each case where the
              options were entered into on or prior to Completion; or

       2.7.5  emoluments paid to employees and/or directors of the Company in
              platinum sponge prior to Completion, including but not limited to
              employer's National Insurance contributions

2.8    any reasonable costs, fees or expenses (including legal costs on a full
       indemnity basis) incurred by the Company or the Purchaser in connection
       with:

       2.8.1  any Liability to Taxation or other liability in respect of which
              the Vendors are liable under any of paragraphs 2.1 to 2.7; or

       2.8.2  any Claim or any Dispute; or

       2.8.3  reasonably 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:

                                       45
<PAGE>

3.1  the amount of a Liability to Taxation 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 is liable to make;

3.2  the amount of a Liability to Taxation 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 of the Purchaser's
     Relief; and

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

     3.3.1  the amount of Taxation which would have been saved by the Company
            but for the loss of the Purchaser's Relief on the basis of the rates
            of Taxation current at the date of the loss, assuming for this
            purpose that the Company had sufficient profits or was otherwise in
            a position actually to use the Purchaser's Relief; or

     3.3.2  if the Purchaser's Relief lost was a right to a repayment of
            Taxation, the amount of the repayment of Taxation so lost; and

3.4  the amount of a liability of the Company to make a payment in respect of
     Taxation will be the amount of the payment in respect of Taxation which the
     Company is liable to make.

4.   Exclusions

4.1  The Vendor will not be liable under paragraphs 2.1 to 2.6 in respect of a
     Liability to Taxation or other liability of the Company to the extent to
     which:

     4.1.1  such Liability to Taxation or other liability was discharged on or
            before the Accounting Date; or

     4.1.2  specific provision was made in the Balance Sheet for such Liability
            to Taxation or other liability; or

     4.1.3  such Liability to Taxation or other liability would not have arisen
            but for any Event which occurred in the ordinary course of trading
            of the Company after the Accounting Date and on or before
            Completion; or

     4.1.4  payment has already been made in respect of such Liability to
            Taxation or other liability under this Part 2 or Part 3 of this
            Schedule 4; or

     4.1.5  such Liability to Taxation or other liability would not have arisen
            but for a change in legislation (including but not limited to an
            increase in rates of Taxation) or in the published practice of any
            Taxation Authority first enacted or announced after Completion in
            each case with retrospective effect; or

     4.1.6  such Liability to Taxation would not have arisen but for any
            voluntary omission, act, transaction or arrangement made, carried
            out or entered into after Completion by one or more of

                                       46
<PAGE>

            the Purchaser or the Company or any persons connected with any of
            them or acting on behalf of any of them;

            4.1.6.1  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

            4.1.6.2  which the Purchaser was aware or could reasonably have been
                     expected to be aware would give rise to the Liability to
                     Taxation in question;

            4.1.6.3  otherwise than in the ordinary course of business of the
                     Company; or

     4.1.7  such Liability to Taxation would not have arisen but for the fact
            that the accounting treatment of any asset or liability in future
            accounts of the Company after Completion is different from the
            treatment in the Balance Sheet save where the change is required to
            comply with generally accepted accounting principles existing at
            Completion; or

     4.1.8  such Liability to Taxation would not have arisen but for

            4.1.8.1  failure or omission on the part of the Company and/or the
                     Purchaser (other than at the request of the Vendor) to make
                     any claim, election, surrender or disclaimer, or give any
                     notice or consent or do any other thing under the Taxation
                     legislation after Completion, the making, giving or doing
                     of which was permitted by law and taken into account in
                     computing and so reducing the provisions for Taxation in
                     the Balance Sheet; or

            4.1.8.2  the withdrawal or amendment by the Company after Completion
                     (other than at the request of the Vendor) of any claim,
                     election, surrender or disclaimer or the giving of a notice
                     or consent made by the Company prior to Completion which
                     was taken into account in computing and so reducing the
                     provisions for Taxation in the Balance Sheet; or

     4.1.9  the Purchaser or the Company has already recovered an amount at
            least equal to such Liability to Taxation from a person or persons
            other than the Vendor and other than the Company or the Purchaser or
            the same group of companies as the Purchaser (provided that nothing
            in this paragraph 4.1.9 shall oblige the Company or the Purchaser to
            recover from such person in priority to claiming under Part 2 of
            this Schedule 4); or

     4.1.10 such Liability to Taxation results from any winding up or cessation
            after Completion of any trade or business carried on by the Company.

4.2  The provisions of paragraphs 4, 8 (Savings and Repayments) and 10
     (Recovery) of this Schedule 4 and clauses 6.1, 6.2, 6.3, 6.4, 6.5, 6.7,
     6.8, 6.9 and 6.10 of the Agreement shall apply to the Taxation Warranties
     to limit any claim in respect of the Taxation Warranties as if they were
     incorporated herein.

                                       47
<PAGE>

4.3  Clauses 6.1.2, 6.1.3, 6.2, 6.7 and 6.8 of the Agreement shall have as full
     effect as if they were incorporated herein in respect of any claim under
     Part 2 of this Schedule 4.

4.4  For the purposes of this Schedule 4 none of the following will be regarded
     as an Event occurring in the ordinary course of trading of the Company:

     4.4.1  any distribution (within the meaning of section 418 ICTA or Part VI
            ICTA) or deemed distribution;

     4.4.2  the disposal or acquisition of any asset (including trading stock)
            or the supply or obtaining of any service or business facility of
            any kind (including a loan of money or the letting, hiring or
            licensing of any tangible or intangible property) in circumstances
            where the consideration (if any) actually received or given for such
            disposal, acquisition, supply or obtaining is different from the
            consideration deemed to have been received or given for any Taxation
            purpose;

     4.4.3  any Event which gives rise to a Liability to Taxation in respect of
            deemed (as opposed to actual) income, profits or gains;

     4.4.4  the Company ceasing, or being deemed to cease, to be a member of any
            group of companies or associated with any other company for any
            Taxation purpose;

     4.4.5  any Event which gives rise to a Liability to Taxation primarily
            chargeable against or attributable wholly or partly to or
            recoverable wholly or partly from any other person;

     4.4.6  the acquisition or disposal of any capital asset other than routine
            disposals of office equipment, furniture and motor cars;

     4.4.7  any scheme, arrangement or transaction designed partly or wholly or
            containing steps or stages designed partly or wholly for the purpose
            of avoiding or reducing or deferring a Liability to Taxation;

     4.4.8  the creation, cancellation or reorganisation of any share or loan
            capital of the Company;

     4.4.9  the failure by the Company to deduct or account for any Taxation; or

     4.4.10 any Event which gives rise to any fine, penalty, surcharge, interest
            or other imposition relating to any Taxation.

5.  Deductions from payments

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

5.2  If any deduction or withholding is required by law to be made from any
     payment by the Vendor under this Part 2 of this Schedule 4 (other than any
     interest payable under clause 6.6) or if (ignoring any available Relief)
     the Purchaser is subject to Taxation in respect of any payment by the
     Vendor under this Part 2 of

                                       48
<PAGE>

     this Schedule 4, the Vendor covenants with the Purchaser to pay to the
     Purchaser such additional amount as is necessary to ensure that the net
     amount received and retained by the Purchaser (after taking account of such
     deduction or withholding or Taxation) is equal to the amount which it would
     have received and retained had the payment in question not been subject to
     the deduction or withholding or Taxation.

6.   Due date for payment

6.1  Subject to paragraph 6.5, the due date for the making of a payment by the
     Vendor under this Part 2 of this Schedule 4 will be the later of the date
     falling ten Business Days after the Purchaser has served a notice on the
     Vendor demanding such payment and the date determined in accordance with
     paragraphs 6.2 to 6.4.

6.2  In any case involving a Liability 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 second date
     mentioned in paragraph 6.1 will be the date falling five clear Business
     Days before the last date upon which the payment is required to be made to
     the person entitled thereto (after taking into account any postponement of
     the due date for payment of any Taxation which is obtained).

6.3  In any case involving a Liability 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 upon which the payment of Taxation which has been
     reduced or eliminated by the use of a Purchaser's Relief is or would have
     been required to be made to the relevant Taxation Authority.

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

     6.4.1  if the Purchaser's Relief lost was a Relief other than a right to
            repayment of Taxation, the second date mentioned in paragraph 6.1
            will be the date falling five clear Business Days before the last
            date upon which Taxation is or would have been required to be paid
            to the relevant Taxation Authority in respect of the period in which
            the Purchaser's Relief is lost (irrespective of whether the Company
            then had sufficient profits or was otherwise in a position actually
            to use the Purchaser's Relief); or

     6.4.2  if the Purchaser's Relief lost was 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 Taxation
            Authority.

6.5  In any case involving a liability 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 withholding being required by law to be made, the
            due date for payment will be the same as the due date for payment of
            the amount from which the deduction or withholding is required to be
            made; and

                                       49
<PAGE>

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

6.6  If any payment required to be made by the Vendor under this Part 2 of this
     Schedule 4 is not made by the due date, ascertained in accordance with
     paragraphs 6.1 to 6.5, then such payment will bear interest from the due
     date for payment at the annual rate of 3 per cent above the base lending
     rate from time to time of National Westminster Bank plc, accruing on a
     daily basis until payment is made, whether before or after judgement,
     calculated on the basis of a 365 day year.

7.   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 the
     Shares pursuant to this Agreement, provided that this paragraph 7 will not
     operate in any way to limit the liability of the Vendor under this Part 2
     this Schedule 4.

8.   Savings and repayments

8.1  If, at the Vendor's request and expense, the Auditors determine that the
     Company has obtained a Saving or a Repayment has been made, the Saving or
     Repayment (as the case may be) will be applied as follows:

     8.1.1  first, the amount of the Saving or Repayment will be set off against
            any payment then due from the Vendor under this Part 2 of Schedule 4
            or for breach of any Taxation Warranty;

     8.1.2  secondly, to the extent that there is an excess a refund shall be
            made to the Vendor of any previous payment or payments made by the
            Vendor under this Part 2 of Schedule 4 and not previously refunded
            under this clause up to the amount of such excess and, the Purchaser
            will, within five Business Days, pay to the Vendor the amount of the
            excess; and

     8.1.3  thirdly to the extent that the excess referred to in sub-clause
            8.1.2 is not exhausted under that clause, the remainder of that
            excess shall be carried forward and set off against any future
            payment or payments which become due from the Vendor under this
            Schedule.

8.2  In determining whether or not the Company has obtained a Saving or a
     Repayment and, if so, the amount, the Auditors will act as experts and not
     as arbitrators and their determination will (in the absence of manifest
     error) be conclusive and binding on the parties.

8.3  The Purchaser will inform the Vendor as soon as reasonably practicable
     after it or the Company becomes aware that the Company may obtain a Saving
     or a Repayment.

                                       50
<PAGE>

8.4  The provisions of this clause 8 will also apply, with appropriate
     modifications, to the obtaining by the Company, the Purchaser or any member
     of the same group of companies as the Purchaser of any Repayment or Saving
     (other than a repayment of Taxation from a Taxation Authority) in respect
     of a Liability to Taxation or other liability in respect of which the
     Vendor has made them a payment under this Part 2 of Schedule 4 or for
     breach of any Taxation Warranty.

9.   Purchaser's covenant

9.1  The Purchaser covenants with the Vendor to pay to the Vendor an amount
     equal to any liability of the Vendor to Taxation under section 767A or
     767AA ICTA in connection with an Event occurring in the accounting period
     of the Company current at Completion or in any earlier accounting period
     and arising as a result of the Company failing to discharge such liability
     together with any losses, costs, fees or expenses incurred by the Vendor in
     connection with such liability.

9.2  The Purchaser will be entitled to set off against any amount which it is
     liable to pay to the Vendor under paragraph 9.1 any amount which the Vendor
     is liable to pay the Purchaser under this Part 2 of Schedule 4 in
     connection with the same Event.

10.  Recovery

     If any payment is made by the Vendor in full discharge of a liability which
     has arisen under this Schedule 4 then where the Company is entitled to
     recover or recovers from any other person any sum (other than a Repayment)
     in respect of the matter which has given rise to the liability the
     Purchaser shall, or shall procure that the Company shall in the case of
     such entitlement (if requested by, and at the expense of the Vendor and
     upon the Vendor indemnifying the Purchaser to the reasonable satisfaction
     of the Purchaser, against all reasonable costs or expenses which may
     therefore be incurred) take such action as the Vendor shall reasonably
     request to enforce such recovery against the person in question. The
     Purchaser shall account to the Vendor for any sums so recovered (including
     any interest or repayment supplement (as defined in section 825 ICTA) paid
     by such a person) in accordance with paragraph 8.1 of this Schedule 4.

11.  Claims Procedure

11.1 The Purchaser will as soon as reasonably practicable (and in any event no
     later than 7 days before the expiry of any time limit for making any appeal
     against such Claim) give notice of any Claim to the Vendor, provided that
     the giving of such notice will not be a condition precedent to the
     liability of the Vendor under this Schedule 4.

11.2 If the Vendor first indemnifies and keeps indemnified (on an after-tax
     basis) the Purchaser and the Company to the reasonable satisfaction of the
     Purchaser against any liability, cost, damage, loss or expense which the
     Purchaser or the Company may incur in consequence thereof the Purchaser
     agrees to take such action as the Vendor may reasonably request, at the
     Vendor's cost and expense, to dispute, resist, appeal, compromise or defend
     the claim.

11.3 The Purchaser shall not be obliged:

                                       51
<PAGE>

     11.3.1    to allow the Vendor to take over the conduct of the Company's
               Taxation affairs in relation to the Claim or the conduct of any
               negotiations or proceedings with any Taxation Authority;

     11.3.2    to procure that the Company pursues any proceedings before the
               General or Special Commissioners of the Inland Revenue or a Value
               Added Tax Tribunal or their nearest applicable equivalent in any
               other jurisdiction or the High Court of Justice of England and
               Wales or any other court or tribunal of first instance unless the
               Vendor and the Purchaser have first together obtained, at the
               Vendor's cost and expense, opinion of Counsel reasonably
               acceptable to the Purchaser recommending the course of action
               proposed by the Vendor; or

     11.3.3    in its absolute discretion, to procure that the Company pursues
               any proceedings beyond any court or tribunal referred to in
               paragraph 11.3.2; or

     11.3.4    to take any action which it reasonably considers would be
               prejudicial to the business or Taxation affairs of the Company,
               the Purchaser or any other company within the same group of
               companies as the Purchaser.

11.4 Paragraph 11.2 shall not apply, and the Purchaser shall be free to deal
     with all Claims in its absolute discretion:

     11.4.1    in any case involving an allegation by any Taxation Authority of
               dishonest or fraudulent conduct on the part of the Vendor or the
               Company or any person acting on behalf of any of the Vendor or
               the Company; or

     11.4.2    if the Vendor commits an act of bankruptcy, if a receiving order
               is made against the Vendor, if the Vendor becomes unable to pay
               its debts as and when they fall due or if the Vendor makes a
               composition with creditors or enters into a deed of arrangement.

12.  Corporation tax returns

12.1 The Vendor or its duly authorised agents will, at the Company's cost and
     expense if and to the extent such cost and expense has been provided for in
     the Balance Sheet (or in the case where such cost and expense has not been
     provided for in the Balance Sheet it has been paid prior to Completion),
     and thereafter at the Vendor's cost and expense, prepare the corporation
     tax returns and computations of the Company for all accounting periods
     ended on or before the Accounting Date, to the extent that they have not
     been prepared before Completion, and submit them to the Purchaser.

12.2 Purchaser will procure that the Company causes the returns and computations
     mentioned in paragraph 12.1 to be authorised, signed and submitted to the
     appropriate Taxation Authority without amendment or with such amendments as
     the Purchaser reasonably considers to be necessary.

12.3 The Vendor or its duly authorised agents will, at the Company's cost and
     expense if and to the extent such cost and expense has been provided for in
     the Balance Sheet (or in the case where such cost and expense has not been
     provided for in the Balance Sheet it has been paid prior to Completion) and
     thereafter at the Vendor's cost and expense, prepare all documentation and
     deal with all matters (including

                                       52
<PAGE>

     correspondence) relating to the corporation tax returns and computations of
     the Company for all accounting periods ended on or before the Accounting
     Date provided that the Vendor will not without the prior written consent of
     the Purchaser (not to be unreasonably withheld or delayed) transmit any
     communication (whether written or otherwise) to HM Inspector of Taxes or
     agree any matter with HM Inspector of Taxes.

12.4 The Purchaser will procure that the Company affords such access to its
     books, accounts and records as is necessary and reasonable to enable the
     Vendor or its duly authorised agents to prepare the corporation tax returns
     and computations of the Company for all accounting periods ended on or
     before the Accounting Date and conduct matters relating to them in
     accordance with this paragraph 12.

12.5 The Vendor will take all reasonable steps to ensure that the corporation
     tax returns and computations of the Company for all accounting periods
     ended on or before the Accounting Date are prepared and agreed with HM
     Inspector of Taxes as soon as possible.

13.  Group Relief

13.1 The Vendor will procure that it surrenders for no consideration pursuant to
     the provisions of Chapter IV Part X ICTA to the extent legally possible the
     following trading losses or other amounts eligible for surrender by way of
     Group Relief:

     Surrendering   Claimant Company       Amount            Accounting Period
     ------------   ----------------       ------            -----------------
     Company
     -------
     Vendor         Company               (Pounds)26,284     31 December 1997
     Vendor         Company              (Pounds)254,964     31 December 1998


13.2 The Vendor will keep the Purchaser fully informed of all matters relating
     to any surrender of Group Relief mentioned in paragraph 13.1.

Part 3 - Tax Warranties

14.  Returns, disputes and clearances

14.1 All notices, returns, computations, registrations and payments which should
     have been made by the Company for any Taxation purpose have been made
     within the requisite periods and are up-to-date, correct and on a proper
     basis and none of them is, or so far as the Vendor is aware is likely to
     be, the subject of any dispute with any Taxation Authority.

14.2 The Company is not involved in any dispute with any Taxation Authority
     concerning any matter likely to affect in any way the liability of the
     Company to Taxation and so far as the Vendor is aware there are no
     circumstances which are likely to give rise to any such dispute.

14.3 The Taxation affairs of the Company have never been the subject of any
     investigation or enquiry by any Taxation Authority (other than routine
     questions), and so far as the Vendor is aware no Taxation Authority

                                       53
<PAGE>

      has indicated that it intends to investigate the Taxation affairs of the
      Company and there are no circumstances which are likely to give rise to
      any such investigation.

14.4  The Company has punctually supplied all information requested by any
      Taxation Authority for any Taxation purpose.

14.5  All particulars furnished to the Inland Revenue or any other Taxation
      Authority in connection with the application for any consent or clearance
      made on behalf of or affecting the Company fully and accurately disclosed
      all facts, circumstances and (where appropriate) law material to the
      decision of the Inland Revenue or such other Taxation Authority and any
      such consent or clearance given remains valid and effective and any
      transaction for which such consent or clearance has previously been
      obtained has been carried into effect (if at all) only in accordance with
      the terms of the relevant application, consent or clearance.

15.   Penalties and interest

15.1  The Company has not since the Accounting Date paid, and is not liable to
      pay, any fine, penalty, charge, surcharge or interest charged by virtue of
      any of the provisions of Taxation Statute and has not since the Accounting
      Date become subject to any forfeiture by virtue of any such provisions or
      the operation of any penal provisions contained in any Taxation Statute.

15.2  There are no circumstances which are likely to cause the Company to become
      liable to pay any fine, penalty, charge, surcharge or interest, or become
      subject to any forfeiture, as mentioned in paragraph 15.1.

16.   Taxation claims, liabilities and reliefs

16.1  The Company has sufficient records to enable it to make and complete
      returns for Taxation purposes and to calculate the liability to Taxation
      or relief arising on the disposal of any asset owned at the Accounting
      Date or acquired since the Accounting Date but before Completion.

16.2  The Company has duly and properly made all Taxation claims, disclaimers,
      elections and surrenders and given all notices and consents and done all
      other things in respect of Taxation the making, giving or doing of which
      was assumed to have been made for the purposes of the Balance Sheet, all
      such claims, disclaimers, elections, surrenders, notices, consents and
      other things have been accepted as valid by the relevant Taxation
      Authorities and none has been revoked or otherwise withdrawn.

16.3  The Company has not made any claim under section 23, 24, 48, 242, 279 or
      280 TCGA or section 584 ICTA.

16.4  The Company is not, and will not become, liable to pay, or make
      reimbursement or indemnity in respect of, any Taxation (or amounts
      corresponding to any Taxation) payable by or chargeable on or attributable
      to any other person, whether in consequence of the failure by that person
      to discharge that Taxation within any specified period or otherwise, where
      such Taxation relates to a profit, income or gain, transaction,

                                       54
<PAGE>

      event, omission or circumstance arising, occurring or deemed to arise or
      occur (whether wholly or partly) on or prior to Completion.

17.   Distributions and payments

17.1  The Company has not at any time issued or agreed to issue any share
      capital as paid up otherwise than by the receipt of new consideration,
      after repaying any share capital, as mentioned in section 210 ICTA.

17.2  The Company has not made or received any exempt distribution within the
      meaning of section 213 ICTA, and has at no time been a relevant company in
      relation to an exempt distribution for the purposes of that section or
      concerned in an exempt distribution for the purposes of section 214 ICTA.

17.3  No rents, interest, annual payments or other sums of an income nature paid
      or payable by the Company since the Accounting Date, or which the Company
      is under an obligation to pay, will be wholly or partially disallowable as
      deductions or charges in computing the profits of the Company for the
      purposes of corporation tax, whether by virtue of the provisions of
      section 74, 79, 125, 338, 577, 779 to 786 (inclusive) or 787 ICTA or
      otherwise.

17.4  The Company has not since the Accounting Date made any payment to, or
      provided any benefit for, any present or former director, employee or
      officer which is wholly or partially disallowable as a deduction in
      computing the profits of the Company for the purposes of corporation tax,
      and is under no obligation to make any such payment or provide any such
      benefit.

18.   Employee benefits

18.1  Without prejudice to the generality of paragraph 14.1, the Company has
      properly operated the Pay As You Earn system, by making deductions, as
      required by the applicable Taxation Statute, from all payments made, or
      treated as made, to its directors, employees or officers or former
      directors, employees or officers or any persons required to be treated as
      such, and accounting to the Inland Revenue for all Taxation so deducted
      and for all Taxation chargeable on the Company on benefits provided for
      its directors, employees or officers, or former directors, employees or
      officers.

18.2  The Company has complied fully with all reporting requirements, and proper
      records have been maintained, relating to all payments and benefits made
      or provided, or treated as made or provided, to its directors, employees
      or officers or former directors, employees or officers.

18.3  The Company has complied fully with its obligations under Chapter IV Part
      XIII ICTA.

18.4  The Company has complied fully with all its obligations relating to Class
      1 and Class 1A National Insurance Contributions, both primary and
      secondary.

19.   Group transactions

      The Company has not at any time:

                                       55
<PAGE>

19.1  acquired any asset from any company which at the time of the acquisition
      was a member of the same group of companies as defined in section 170
      TCGA;

19.2  surrendered or claimed or agreed or arranged to surrender or claim (and
      prior to Completion will not surrender or claim or agree or arrange to
      surrender or claim) any amount by way of Group Relief pursuant to sections
      402 to 413 (inclusive) ICTA and has not made or received and is not liable
      to make or entitled to receive a payment for Group Relief;

19.3  surrendered or claimed or agreed or arranged to surrender or claim (and
      prior to Completion will not surrender or claim or agree or arrange to
      surrender or claim) any amount of ACT pursuant to section 240 ICTA and has
      not made or received and is not liable to make or receive a payment for
      surrender of ACT;

19.4  joined in the making of any election pursuant to section 247 ICTA or paid
      any dividend without paying ACT or made any payment without deduction of
      income tax in circumstances such that ACT ought to have been paid or
      income tax ought to have been deducted as mentioned in section 247(6)
      ICTA;

19.5  been, and there are no circumstances by virtue of which the Company could
      be, assessed or charged to corporation tax by virtue of the provisions of
      section 178(9), 179(11), 190 or 191 TCGA and the Company is not entitled
      to recover or liable to have recovered from it any sums paid pursuant to
      any of those sections; or

19.6  ceased to be a member of a group of companies in such circumstances that a
      profit or gain was deemed to accrue to the Company by virtue of section
      178 or 179 TCGA and neither the execution of this Agreement nor Completion
      will result in any profit or gain being deemed to accrue to the Company
      for any Taxation purpose whether pursuant to section 179 TCGA or
      otherwise.

20.   Tax avoidance

      So far as the Vendor is aware the Company has not entered into or been a
      party to any scheme, arrangement or transaction to which the provisions of
      any of sections 34 to 37 (inclusive), 56 and 398, 395, 399, 703 to 709
      (inclusive), 713, 714, 729 to 737 (inclusive), 770, 775, 776, 779 to 787
      (inclusive), 798 and Schedule 28AA ICTA could apply.

21.   Base values and acquisition costs

21.1  If each of the capital assets of the Company owned at the Accounting Date
      was disposed of for a consideration equal to the book value of that asset
      in, or adopted for the purpose of, the Balance Sheet, or in the case of
      assets acquired since the Accounting Date, equal to the consideration
      given on acquisition, no liability to corporation tax on chargeable gains
      or balancing charge under the CAA would arise (and for this purpose there
      will be disregarded any relief or allowance available to the Company other
      than amounts falling to be deducted from the consideration receivable
      under section 38 TCGA).

22.   Capital gains

      The Company has not at any time:

                                       56
<PAGE>

22.1  made a claim under sections 152 to 158 (inclusive) or 175 or 247 TCGA
      which affects the amount of the chargeable gain or allowable loss which
      would, but for such claim, have arisen upon a disposal of any asset or
      acquired any asset or any interest in any asset in circumstances in which
      another company has made a claim under section 175 TCGA which affects for
      the purposes of the TCGA the amount or value of the consideration given
      for such asset or interest;

22.2  been a party to, involved in, or connected with any disposal of assets
      within the meaning of section 29 TCGA or any scheme or arrangement such as
      are mentioned in section 30 TCGA;

22.3  been a party to, involved in, or connected with, any depreciatory
      transaction to which section 176 TCGA applied (including any transaction
      to which that section applied by virtue of section 177 TCGA);

22.4  made an election under section 35(5) TCGA nor has the Company made its
      first relevant disposal for the purposes of section 35(6) TCGA;

23.   Capital allowances

23.1  All capital expenditure incurred by the Company since the Accounting Date
      and all capital expenditure which may be incurred by the Company under any
      existing contract has qualified or will be capable of qualifying for
      capital allowances.

23.2  The Company is not in dispute with any person as to the availability of
      allowances under section 51 CAA and there are no circumstances which are
      likely to give rise to such a dispute.

24.   VAT: general

24.1  The Company:

      24.1.1   is duly registered and is a taxable person for the purposes of
               VAT and such registration is not subject to any conditions
               imposed by or agreed with the Commissioners of Customs and
               Excise;

      24.1.2   has complied in all respects with all statutory requirements,
               orders, provisions, directions or conditions relating to value
               added tax;

      24.1.3   maintains complete, correct and up-to-date records for the
               purposes of all legislation relating to VAT and is not subject to
               any condition imposed by the Commissioners of Customs and Excise
               under paragraph 6 Schedule 11 VATA relating to the preservation
               of information;

      24.1.4   is not in arrears with any payment or returns under legislation
               relating to VAT or excise duties, or liable to any abnormal or
               non-routine payment of VAT, or any forfeiture or penalty, or to
               the operation of any penal provision;

      24.1.5   has not within the two years ending on the date of this Agreement
               been served with any penalty liability notice under section 64
               VATA or any surcharge liability notice under section 59 VATA or
               been issued with any written warning under section 76(2) VATA;

                                       57
<PAGE>

      24.1.6   has not been or applied for treatment as a member of a group for
               VAT purposes under section 43 VATA and no transaction has been
               effected in consequence of which the Company is or may be held
               liable for any VAT arising from supplies made by another company;

      24.1.7   has no interest and has not at any time within the period of ten
               years preceding the date of this Agreement had any interest in
               any assets treated as items under Part XV of the Value Added Tax
               Regulations 1995; and

      24.1.8   is not, and has not agreed to become, an agent, manager or factor
               for the purposes of section 47 VATA of any person who is not
               resident in the United Kingdom.

24.2  All supplies of goods and services made by the Company are taxable
      supplies for the purposes of the VATA and all input tax is deductible in
      accordance with the provisions of sections 25 and 26 VATA.

24.3  All goods or services supplied to the Company, or goods imported by the
      Company, in respect of which the Company has claimed credit for input tax
      under the rules set out in VATA, are used or to be used wholly for the
      purposes of the Company's business.

24.4  The Company has not received any material supplies of the type described
      in Schedule 5 VATA.

25.   VAT: property transactions

25.1  The Company has not incurred any liability in respect of VAT (whether to
      H.M. Customs and Excise or to any other person) by reason of the
      provisions of paragraph 2(1) Schedule 10 VATA and there are no
      circumstances whereby the Company could become so liable as a result of a
      person making an election under that paragraph.

25.2  Neither the Company nor any relevant associate (within the meaning of
      paragraph 3(7) Schedule 10 VATA) has made any election under paragraph
      2(1) Schedule 10 VATA in respect of any land in, over or in respect of
      which the Company has any interest, right or licence to occupy and the
      Company is not aware of any intention to make such an election.

26.   Stamp duty and stamp duty reserve tax

26.1  All documents which are liable to stamp duty and which confer any right
      upon the Company have been duly stamped and no document which confers any
      right upon the Company and which is outside the United Kingdom would
      attract stamp duty if it were brought into the United Kingdom and there is
      no liability to any penalty in respect of such duty or circumstances which
      may give rise to such a penalty.

26.2  The Company is not under a liability to pay stamp duty reserve tax and so
      far as the Vendor is aware there are no circumstances which may result in
      the Company being so liable.

                                       58
<PAGE>

27.   Residence and offshore interests

27.1  The Company is and has at all times been resident in the United Kingdom
      for the purposes of all Taxation Statutes and has not at any time been
      resident outside the United Kingdom for the purposes of any Taxation
      Statute or any double taxation arrangements.

27.2  The Company has not at any time entered into any transaction falling
      within section 765 ICTA or failed to comply with the requirements of
      section 765A ICTA.

27.3  The Company has not at any time been subject to Taxation in any
      jurisdiction outside the United Kingdom or had a branch outside the United
      Kingdom or any permanent establishment (as that expression is defined in
      the respective double taxation relief orders current at the date of this
      Agreement) outside the United Kingdom.

27.4  The Company does not own and has not at any time owned any interest in a
      controlled foreign company within the meaning of sections 747 and 752
      ICTA.

27.5  The Company does not and has at no time held shares in a company which is
      not resident in the United Kingdom and which would be a close company if
      it were resident in the United Kingdom, in circumstances such that a
      chargeable gain accruing to that other company could be apportioned to the
      Company under section 13 TCGA.

28.   Shares and securities

28.1  The Company has not at any time:

      28.1.1   purchased or agreed to purchase, repaid or agreed to repay or
               redeemed or agreed to redeem any shares of any class of its share
               capital or any amount paid up on any of its shares;

      28.1.2   capitalised or agreed to capitalise in the form of redeemable
               shares or debentures any profits or reserves of any class or
               description or passed or agreed to pass any resolution to do so;
               or

      28.1.3   provided capital to any company on terms whereby the company so
               capitalised has in consideration of the provision of capital
               issued loan stock or other securities on terms which were
               otherwise than by way of a bargain made at arm's length.

28.2  The Company does not hold or have in issue and shares or securities (as
      defined in section 132(3)(b) TCGA) other than the Shares.

29.   Loan relationships

      There are no outstanding debts owed to or by the Company, or any
      securities issued by the Company or which it owns or in which it has an
      interest, which will not be repaid at Completion, other than trade debts
      which fall within the exemption in section 251(1) TCGA and which do not
      arise out of loan relationships of the Company for the purposes of section
      81(1) FA 1996.

                                       59
<PAGE>

30.   Foreign exchange gains and losses

30.1  The Company is not, nor has it since the Accounts Date been:

      30.1.1   the holder of a qualifying asset;

      30.1.2   subject to a qualifying liability; or

      30.1.3   a party to a currency contract

      30.1.4   for the purposes of Chapter II Part II FA 1993.

30.2  The Company is not and never has been a party to any debt contract or
      option, any interest rate contract or option, or any currency or option
      which is treated as a qualifying contract in Chapter II Part IV FA 1994 or
      which in future may become such a qualifying contract.

31.   Quarterly instalment payments

      The Company is not obliged to pay corporation tax in quarterly instalments
      under the provisions of Corporation Tax (Instalment Payments) Regulations
      1998 (SI 1998 No 3175) and section 59E TMA.

32.   Group payment arrangements

      The Company has not entered into any group payment arrangements under the
      provisions of section 36 FA 1998.

33.   Transfer pricing

33.1  The Company has not, nor agreed to, undertake any transactions which are
      within the provisions of Schedule 28AA ICTA and the Disclosure Letter sets
      out the details of the documentation the Company has prepared to enable it
      to fulfil its obligations under Schedule 18 FA 1998 in respect of
      accounting periods ending after 30 June 1999 in relation to transfer
      pricing.

33.2  The Company has not entered into any advance pricing arrangements with the
      Inland Revenue under the provisions of section 85 FA 1999.

34.   Balance Sheet

34.1  The Balance Sheet fully provides or reserves, in accordance with the
      accounting policies set out in the notes included in the Balance Sheet,
      for all Taxation (including deferred tax attributable to timing
      differences capable of reversal after the Accounting Date) for which the
      Company is or may be liable, or for which it may be accountable, as at the
      Accounting Date by reference to:

      34.1.1   the profits, gains, income and earnings (whether actual or
               deemed) for any period ended on or before the Accounting Date; or

                                       60
<PAGE>

     34.1.2    any distributions (within the meaning of Part VI or section 418
               ICTA) made or deemed to be made on or before Accounting Date; or

     34.1.3    any other transaction entered into or deemed to be entered into
               on or before the Accounting Date.

                                       61
<PAGE>

                                      SCHEDULE 5
                            Completion Arrangements

At Completion the following will take place:

1.        Items For Delivery

1.1       The following items will be produced and delivered by the Vendor:

          Share Transfers

          1.1.1     Executed transfers of the Shares in favour of the Purchaser
                    together with the share certificates for the Shares (or in
                    the case of any lost certificate an indemnity satisfactory
                    to the Purchaser in relation to it).

          Authorisations

          1.1.2     A copy of a resolution of each of the board of directors of
                    the Company and the Guarantor authorising the execution of
                    and the performance by the Company and the Guarantor of
                    their obligations under each of the documents to be executed
                    by them, together with a legal opinion in agreed terms
                    relating to the entering into of this Agreement and related
                    documentation by the Guarantor.

          1.1.3     If the Purchaser requests, a power of attorney in the agreed
                    terms by each registered holder of the Shares which enables
                    the Purchaser or its nominee to attend and vote at general
                    meetings of the Company.

          Resignations and Appointments

          1.1.4     Letters of resignation as directors of the Company and Group
                    Members in the agreed terms from George Roberts and Mark
                    Perkins.

          1.1.5     Letters of resignation as secretaries of the Company and
                    Group Members in the agreed terms from Christopher Grew and
                    Graeme Hall.

          1.1.6     Letters of appointment of such new trustees to, and the
                    letters of retirement of such of the existing trustees of,
                    the Pension Scheme as the Purchaser may require.

          Company Documentation

          1.1.7     The certificate of incorporation, any certificate(s) of
                    incorporation on change of name, the common seal and the
                    statutory books and registers (which will be written up to
                    but not including Completion) of the Company.

          1.1.8     All deeds and documents relating to the title of the Company
                    to the Property.

                                       62
<PAGE>

          Financial

          1.1.9     A copy of the bank mandate of the Company and copies of bank
                    statements in respect of each account of the Company as at
                    the close of business on the last Business Day prior to
                    Completion, together in each case with a reconciliation
                    statement prepared by the Vendor to show the position at
                    Completion (listing unpresented cheques drawn or received by
                    the Company and standing orders payable since the date of
                    such bank statements).

          Miscellaneous

          1.1.10    All licences, certificates or other documents previously
                    specified by the Purchaser.

          1.1.11    A deed in the agreed terms from the Vendor acknowledging
                    that neither the Vendor nor any Associated Company has any
                    claim against the Company and that there is no agreement or
                    arrangement under which the Company has any actual,
                    contingent or prospective obligation to any such person.

          1.1.12    Where any agreement or arrangement referred to in paragraph
                    1.1.12 previously existed, evidence of the release or
                    termination of it in a form satisfactory to the Purchaser.

2.        Convening of Meetings

2.1       The Vendor will procure that duly convened board meetings of the
          Company are held at which:

          2.1.1     the transfers referred to in paragraph 1.1.1 (subject to
                    stamping if not previously effected) are approved for
                    registration in the books of the Company;

          2.1.2     the address of the registered office of the Company is
                    changed to Claremont House, Hatters Lane, Croxley Business
                    Park, Watford, Hertfordshire WD18 8TR;

          2.1.3     the resignations of directors and secretary referred to in
                    each of paragraphs 1.1.5 and 1.1.6 are accepted with effect
                    from the end of the relevant board meeting;

          2.1.4     such persons as are nominated by the Purchaser as directors,
                    secretary and auditors of the Company are appointed with
                    effect from the end of the relevant board meeting; and

          2.1.5     if specified by the Purchaser, all existing instructions to
                    the bankers of the Company are revoked and new instructions
                    given to such bankers as the Purchaser may nominate, in such
                    form as the Purchaser directs;

3.        Purchaser authorisation

          The Purchaser will deliver to the Vendor a copy of a resolution of the
          board of directors of the Purchaser authorising the execution of and
          performance by the Purchaser of its obligations under each of the
          documents to be executed by it.

                                       63
<PAGE>

4.        Sub-Contract

          In connection with the Sub-Contract:

4.1       the Guarantor will produce and deliver to the Purchaser the consent of
          Mercury Personal Communications in a form acceptable to the Purchaser
          to the sub-contracting of the One2One Contract on the terms of the
          Sub-Contract; and

4.2       the Guarantor shall, and the Vendor shall procure that the Company
          shall, enter into the Sub-Contract.

5.        Payment of Consideration

          The Purchaser will pay in accordance with clause 2.3 that part of the
          Consideration which is payable to the Vendors on Completion and as
          regards the Retention Fund the Purchaser and the Vendors shall take
          all such steps and give all such written instructions as are necessary
          or desirable to give effect to the provisions of Schedule 6.

6.        Loan Note

          The Purchaser shall issue the Loan Note to the Vendor and the
          Certificate for such Loan Note shall be delivered at Completion.

                                       64
<PAGE>

                                       SCHEDULE 6
                      Provisions regarding Retention Fund

1.    The Retention Fund shall be paid on Completion by the Purchaser to the
      Purchaser's Solicitors and the Vendor's Solicitors ("the Retention Fund
      Holders") who shall hold the Retention Fund as stakeholders upon trust for
      the Vendor and Purchaser on the following terms and who shall be
      irrevocably instructed by the Vendor and the Purchaser:

1.1   to place the Retention Fund in a deposit account in the name of the
      Retention Fund Holders with Bank of Scotland and, subject to paragraph
      1.3, to retain the same in such account;

1.2   subject as provided in paragraph 1.3, to pay the Retention Fund to the
      Vendor Solicitors in accordance with clause 3 at the expiration of 6
      months from the date of Completion;

1.3   if at any time or from time to time prior to the expiration of the said
      period of 6 months the Retention Fund Holders shall receive notice from
      the Purchaser and the Vendor stating that any claim for compensation or
      indemnity has been admitted by the Vendor, or awarded by any Court or in
      any arbitration, to pay to the Purchaser the amount so admitted or awarded
      (including any costs which may be admitted or awarded in favour of the
      Purchaser), and, subject thereto, to pay the balance if any of the
      Retention Fund to the Vendor's Solicitors in accordance with paragraph
      1.2; and

1.4   to pay any interest received by the Retention Fund Holders on the
      Retention Fund (less any tax thereon for which the Retention Fund Holders
      may be accountable and any charges and expenses incurred by the Retention
      Fund Holders) to the Vendor in accordance with clause 2.3 at the
      expiration of the period referred to in paragraph 1.2 or, if applicable,
      when the balance of the Retention Fund is paid to the Vendor's Solicitors
      in accordance with paragraph 1.3.

                                       65
<PAGE>

                                    SCHEDULE 7
                               Relevant Services

Rigging Services including the survey, installation and testing of antenna and
feeder systems for use in UHF, VHF, PCN, GSM, PMR, PAMR (as defined in Newton's
Telecoms Dictionary, 15th Edition) radio systems;

Microwave Services including the survey, line of sight, installation and
commissioning of microwave links;

Structure Services including design, provision and installation of
telecommunication support structures together with the management of contractors
to provide foundations, security fencing, equipment cabins, lightening
protection etc;

Maintenance Services including preventative and reactive maintenance to support
the Company's rigging, microwave and structure services;

Support Services including project management of Relevant Services,
material/equipment, storage and logistics; and

Special Projects - providing the above services in special environments such as
Trackside, roadside in tunnels, in buildings.

                                       66
<PAGE>

SIGNED by   /s/ B.J. Jarvis             )
duly authorised for and on behalf of    )
P-COM NETWORK SERVICES LTD              )
in the presence of:                     )


Witness signature:   /s/ Jacqui Tate

Name:       Jacqui Tate

Address:    32 Cross Street
            London N12BG

Occupation: Solicitor


SIGNED by   /s/ Philip Wainwright       )
duly authorised for and on behalf of    )
SPECTRASITE TRANSCO                     )
COMMUNICATIONS LIMITED                  )
in the presence of:                     )


Witness signature:

Name:

Address:


Occupation:


SIGNED by    /s/  B.J. Jarvis           )
duly authorised for and on behalf of    )
P-COM, INC.                             )
in the presence of:                     )


Witness signature:   /s/ Jacqui Tate

Name:         Jacqui Tate

Address:      32 Cross Street
              London N12BG

Occupation:   Solicitor

                                       67