Document:

DATE             24 JUNE          1999
                     --------------------------------------

                              RADICA GAMES LIMITED

                                  NEIL DOUGHTY

                                 CONFORMED COPY

                              EMPLOYMENT AGREEMENT

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                                    CONTENTS

CLAUSE                                                                     PAGE

1                 Definitions                                                 1
2                 Employment                                                  3
3                 Term of Employment                                          4
4                 Business Expense Reimbursement                              5
5                 Compensation                                                5
6                 Stock Options                                               6
7                 Confidentiality and Restrictions following Termination      8
8                 Termination                                                11
9                 Benefit and Binding Effect                                 12
10                Counterparts                                               13
11                Governing law                                              13
12                Entire Agreement                                           13
13                Validity of Provisions                                     13
14                Modifications or Discharge                                 14
15                Notices                                                    14
16                Number and Gender                                          14

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                              EMPLOYMENT AGREEMENT

DATE                                  24 June                               1999

PARTIES

1        RADICA GAMES LIMITED, a Bermuda company, having a registered address at
         Clarendon House, Church Street, Hamilton HM11, Bermuda

2        NEIL DOUGHTY who resides at 41 Park Lane, Knebworth,  Hertfordshire SG3
         6PH

RECITALS

A        Radica  is  engaged   through  its   subsidiaries   in  designing   and
         manufacturing  electronic and mechanical  gifts and games for worldwide
         sale, and ODM manufacturing for others.

B        Employee is currently Sales Director of Leda Media Products ("LMP") and
         has substantial executive management experience.

C        Radica  desires to secure the  services of  Employee,  and  Employee is
         willing to provide  such  services,  each upon the terms and subject to
         the conditions set forth in this Agreement.

AGREEMENT

1        DEFINITIONS

         For the  purposes  of this  Agreement,  the  parties  hereby  adopt the
         following definitions:

         CAUSE:

         (i)      breach by Employee of a fiduciary  obligation to any member of
                  Radica Group;

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         (ii)     commission  by  Employee of any act or omission to perform any
                  act (excluding the omission to perform any act attributable to
                  Employee's Total  Disability) which results in serious adverse
                  consequences to any member of Radica Group;

         (iii)    breach  of any of  Employee's  agreements  set  forth  in this
                  Agreement including,  but not limited to, continual failure to
                  perform substantially his duties with Radica Group,  excessive
                  absenteeism and dishonesty;

         (iv)     any attempt by Employee to assign or delegate  this  Agreement
                  or any of the rights, duties, responsibilities,  privileges or
                  obligations  hereunder  without the prior  written  consent of
                  Radica (except in respect of any delegation by Employee of his
                  employment duties hereunder to other employees of Radica Group
                  in accordance with its usual business practice);

         (v)      Employee's   being  charged  or  indictment  for,  or  written
                  confession of, a felony or any crime involving moral turpitude
                  under the laws of the United  Kingdom or Bermuda or the United
                  States or any state of Hong Kong other  than an offence  under
                  the Road  Traffic  Acts for  which  non-custodial  penalty  is
                  imposed;

         (vi)     death of Employee;

         (vii)    declaration  by a court that Employee is insane or incompetent
                  to manage his business affairs; or

         (viii)   the filing of any petition or other proceeding seeking to find
                  Employee bankrupt or insolvent;

         EMPLOYEE: Neil Doughty;

         1994 PLAN:  the 1994 stock  option plan  adopted by Radica,  as amended
         from time to time;

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         RADICA: Radica Games Limited, a Bermuda company;

         RADICA GROUP: Radica and any other corporation or other entity which at
         the relevant time is more than fifty  percent (50%) owned,  directly or
         indirectly, by Radica;

         RESTRICTED  TERRITORIES:  the United Kingdom,  the Channel Islands, the
         Isle of Man, the Republic of Ireland.  France, Germany, China, Austria,
         Belgium, Czech Republic, Greece, Holland, Italy, Portugal, Scandinavia,
         Spain,  Switzerland  and any other  country  in which  Radica or Radica
         Group is resident or otherwise  carries on business at the  Termination
         Date;

         TERMINATION:   according  to  the  context,  the  termination  of  this
         Agreement  or  the  cessation  of  rendering   employment  services  by
         Employee;

         TOTAL  DISABILITY:  Employee  shall become  disabled to an extent which
         renders him unable to perform the essential  functions of his job, with
         or without reasonable accommodation,  for a cumulative period of twelve
         (12) weeks in any twelve (12) month period.

2        EMPLOYMENT

2.1      Commencing 1 July 1999,  Radica  hereby  employs  Employee and Employee
         hereby accepts  employment by Radica to serve as Managing Director LMP.
         In  such   capacity,   Employee  has   responsibility   for  sales  and
         distribution  of Radica's  products in Europe.  Employee  shall perform
         services of an executive nature consistent with his offices with Radica
         Group as may from time to time be assigned or  delegated  to him by the
         Board of Directors of Radica ("Board").

2.2      Employee will, unless prevented by sickness, injury or other incapacity
         or otherwise  agreed by the Board,  devote his full  business  time and
         attention to his duties under this Agreement.

2.3      Employee shall perform his duties under this  Agreement  principally in
         the United Kingdom and Europe.  It is  contemplated  that Employee will
         frequently  travel  to

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         carry out his duties  under  this  Agreement,  including  travel to the
         offices  of  Radica  subsidiaries  in  Dallas,  Texas,  Hong  Kong  and
         California.  Air travel and other travel  arrangements will comply with
         current Radica Group policies respecting class of travel, etc.

2.4      Radica Group will provide  Employee,  including his spouse and children
         with  medical and dental  benefits,  as  provided to other  officers of
         similar seniority of Radica Group.

2.5      Radica Group will provide  Employee with an automobile  consistent with
         the current  practices of LMP. Radica Group will replace the automobile
         with another motor vehicle  suitable for the Employee's role and status
         of such value and at such intervals as the Board of Radica Group may in
         its reasonable  discretion decide in accordance with the current custom
         and practice within LMP.

2.6      Employee  shall have five (5) weeks paid  vacation  during each year of
         this Agreement  taken at such times as mutually  convenient to Employee
         and Radica  Group.  This  vacation is in addition to paid holidays that
         are allowed under Radica policy.

3        TERM OF EMPLOYMENT

3.1      This Agreement and Employee's employment hereunder shall commence as of
         1 July 1999 and continue for a minimum of two (2) years from this date.
         Thereafter the Agreement may be terminated by either party upon six (6)
         months' notice to the other party.

3.2      Notwithstanding   Clause  3.1  above,  this  Agreement  may  be  sooner
         terminated by Radica for Cause.

3.3      On termination of this  Agreement  pursuant to Clause 3.1 above,  or by
         Radica for Cause, all benefits and  compensation  shall cease as of the
         date of such Termination.

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4        BUSINESS EXPENSE REIMBURSEMENT

         Employee  will be entitled  to  reimbursement  by Radica  Group for the
         proper  business  expenses paid by him on behalf of Radica Group in the
         course of his employment  hereunder on  presentation to Radica Group of
         appropriate  vouchers  (accompanied  by receipts or paid bills) setting
         forth information sufficient to establish:

4.1      the amount, date, and place of each such expense;

4.2      the  business  reason  for each  such  expense  and the  nature  of the
         business benefit derived or expected to be derived as a result thereof;
         and

4.3      the names, occupations,  addresses, and other information sufficient to
         establish the business  relationship  to Radica Group of any person who
         was entertained by Employee.

5        COMPENSATION

5.1      Radica  agrees to pay  Employee,  and  Employee  agrees to accept  from
         Radica, during the first year after 1 July 1999, for the services to be
         rendered   by  him   hereunder   a  minimum   salary  at  the  rate  of
         (pound)106,000  per year  payable  monthly in arrears.  Employee  shall
         receive  annual salary  reviews by the Board to take effect from 1 July
         in each year  commencing  2000,  provided that such salary shall not be
         reduced below (pound)106,000 per year.

5.2      Employee shall be considered for annual bonuses  pursuant to the Radica
         Games Bonus  Policy for  officers of Radica  Group.  Such Radica  Games
         Bonus Policy describes  potential  amounts of bonus which may be earned
         in respect of each fiscal year,  but with no  mandatory  amount for any
         particular  employee.  However,  in the case of Employee in both fiscal
         years 1999 and 2000, Employee shall be entitled to a guaranteed minimum
         bonus of(pound)50,000 in each year under such plan under the conditions
         that Employee has not terminated his employment before the plan payment
         dates, been terminated for cause by Radica prior to such

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         date,  and that LMP shall have been  profitable  in its normal  trading
         activities in such Radica fiscal year as the bonus payment pertains.

5.3      If Radica Group  institutes a  retirement,  bonus or other benefit plan
         which  applies  generally  to  executive  officers  of Radica  Group of
         similar  status as Employee,  Employee shall be entitled to participate
         therein,  but not to the extent such benefits  would be  duplicative of
         the benefits herein.

5.4      All payments by Radica Group shall be subject to required  withholdings
         including taxes.

6        STOCK OPTIONS

6.1      As of the date of this  agreement,  Radica hereby grants to Employee an
         option to purchase  50,000  shares of the common stock of Radica at the
         current  market price as of the date of this  Agreement  subject to the
         terms and  conditions  of this Clause 6 and the 1999 Plan (the "Initial
         Stock Option").

6.2      Additionally,  at or promptly  after the end of each of Radica's  2000,
         2001 and 2002 fiscal years (i.e.,  fiscal  years ending  December  31),
         Radica  shall grant to Employee an option (up to three such  options in
         total) to purchase  twenty-five  thousand (25,000) shares (up to 75,000
         shares  in the  aggregate)  of the  common  stock of Radica at the then
         applicable  market price,  subject to the terms and  conditions of this
         Clause 6 and the 1999 Plan, provided,  however,  that  each such  grant
         shall be subject to the  conditions  that (i) Employee  continues to be
         employed in good  standing by Radica Group through the relevant date of
         grant and (ii)  sufficient  shares are available under the 1999 Plan to
         cover Employee and other similarly situated  executives (i.e., adequate
         shares must be available for this special  programme in the option pool
         under the 1999 Plan). If such quantity of shares is not available,  the
         grant  dates will roll  forward by one year per year until such  shares
         are available. Such stock options under this Clause 6.2 and the Initial
         Stock Option are herein called the "Stock Options".

6.3      The Stock  Options shall vest and become  exercisable  20% per year for
         each year  Employee is employed by Radica Group  following  the date of
         grant, commencing at the first anniversary of the date of grant.

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6.4      The number of shares  subject to the Stock Options will be adjusted for
         stock  splits and reverse  splits  Provided  that such number of shares
         shall not be adjusted if Radica should  otherwise  change or modify its
         capitalisation,  including but not limited to the issuance by Radica of
         new securities (including options or convertible securities),  ESOPs or
         other  employee  stock plans.  It is the intent of the parties that the
         stock subject to the Stock Options shall be subject to dilution, except
         for stock splits and reverse splits.

6.5      Any other provision  hereof to the contrary  notwithstanding  (i) as of
         the date of Termination in the event of Termination  pursuant to Clause
         3.1 or Termination by Radica for Cause or by Employee  without  consent
         of Radica,  or (ii) twelve (12) months after the date of Termination in
         the  event  of  Termination  by  Radica  without  Cause  or  the  Total
         Disability of Employee  (each of such  applicable  dates being called a
         "Determination   Date")   Employee  shall  forfeit  the  Stock  Options
         (measured by percentages of the stock subject to the Stock Options) and
         they shall expire as follows:

6.5.1    if the  Determination  Date is within the first year after the date the
         Stock Option is granted (the "Grant Date") then Employee  shall forfeit
         100% of the stock subject to the Stock Option;

6.5.2    if the  Determination  Date is  after  the end of said  first  year and
         within  the second  year  after the Grant  Date,  then  Employee  shall
         forfeit 80% of the stock subject to the Stock Option;

6.5.3    if the  Determination  Date is after  the end of said  second  year and
         within the third year after the Grant Date, then Employee shall forfeit
         60% of the stock subject to the Stock Option;

6.5.4    if the  Determination  Date is  after  the end of said  third  year and
         within  the fourth  year  after the Grant  Date,  then  Employee  shall
         forfeit 40% of the stock subject to the Stock Option; or

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6.5.5    if the  Determination  Date is after  the end of said  fourth  year and
         within the fifth year after the Grant Date, then Employee shall forfeit
         20% of the stock subject to the Stock Option.

6.6      In  any  event  each  Stock  Option  shall  expire  to the  extent  not
         previously  exercised  on the  tenth  anniversary  of the  Grant  Date.
         Otherwise,  Employee may at any time within ninety (90) days  following
         the Determination Date, exercise his right to purchase stock subject to
         the Stock Options, but subject to the foregoing  provisions  respecting
         vesting and forfeitures.

6.7      Employee shall have no right to sell, alienate,  mortgage, pledge, gift
         or otherwise  transfer the Stock Options or any rights thereto,  except
         by will or by the laws of  descent  and  distribution,  and  except  as
         specifically  contemplated in the 1994 Plan. In any event, any transfer
         must comply with applicable state and federal securities laws.

6.8      Upon Termination,  Employee shall have no claim against Radica for loss
         arising out of  ineligibility  to exercise any Stock Options granted to
         him or otherwise in relation to the 1999 Plan or any other stock option
         plan adopted by Radica and the rights of Employee  shall be  determined
         solely  by the rules of such  plan(s)  (as the case may be) in force at
         Termination.

7        CONFIDENTIALITY AND RESTRICTIONS FOLLOWING TERMINATION

7.1      Employee  understands  and agrees  that he has been  exposed to (or had
         access  to),  and  may be  further  exposed  to (or  have  access  to),
         confidential  information,   knowhow,   knowledge,   data,  techniques,
         computer  software and  hardware,  and trade  secrets of Radica  Group,
         including,  without  limitation,  customer  or  supplier  requirements,
         notes, drawings,  writings,  designs, plans,  specifications,  records,
         charts,  methods,  procedures,  systems,  price lists,  financial data,
         records,  and customer or supplier  lists  (collectively  "Confidential
         Information").  Notwithstanding  the above,  the following shall not be
         considered  "Confidential  Information"  within  the  meaning  of  this
         sub-Clause:  (i) information  known to Employee or to the public at the
         date of this Agreement;  and (ii) information  which hereafter  becomes
         known to the public through no fault of Employee.  Accordingly,  except
         as  permitted or required in the  performance  of his duties for

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         Radica Group,  Employee agrees not to disclose,  divulge,  make public,
         utilise,  communicate  or use,  whether  for his own benefit or for the
         benefit of others,  either  directly or  indirectly,  any  Confidential
         Information  relating to Radica Group's  business  unless  specifically
         authorised in writing by Radica to do so.

7.2      Employee  acknowledges that during the course of his employment he will
         be privy to Confidential  Information  and that he will make,  maintain
         and develop personal knowledge of, influence over and valuable contacts
         with customers,  suppliers, staff and third parties. Employee therefore
         covenants with Radica that:

7.2.1    he will not in the  Restricted  Territories  for the period of one year
         following Termination directly or indirectly in competition with Radica
         or Radica Group engage in business with or be in any way  interested in
         or connected  with any  concern,  undertaking,  firm or body  corporate
         which  engages  in or  carries  on  within  any part of the  Restricted
         Territories any business which competes with any business carried on by
         Radica or Radica Group as at Termination in which Employee was involved
         on  behalf of Radica or  Radica  Group at any time  within  the  twelve
         months immediately preceding Termination and in particular (but without
         limitation)  the  business  of  the  manufacture  and  distribution  of
         peripherals and accessories to the video games and PC games market;

7.2.2    he will not in the  Restricted  Territories  for the period of one year
         following Termination directly or indirectly:-

         7.2.2.1  interfere with or, in competition  with Radica or Radica Group
                  in relation to any business  which  competes with any business
                  carried on by Radica or Radica Group at  Termination  in which
                  Employee  was  involved on behalf of Radica or Radica Group at
                  any  time  within  the  twelve  months  immediately  preceding
                  Termination,  offer or agree to provide  goods or  services of
                  any  description  to, or solicit or  endeavour  to entice away
                  from Radica or Radica Group the custom of any person,  firm or
                  body corporate  which, at any time during the period of twelve
                  months immediately preceding Termination,  has been a customer
                  or  client  of,  or in the habit of  dealing  with,  Radica or
                  Radica Group or which, at any time during that period,  was to
                  his  knowledge

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                  negotiating  with  Radica or Radica  Group in  relation to the
                  provision of goods or services by Radica or Radica Group;

         7.2.2.2  interfere or seek to interfere with contractual or other trade
                  relations  between  Radica or  Radica  Group and any of its or
                  their respective  suppliers in existence or under  negotiation
                  at any time  during  the period of twelve  months  immediately
                  preceding Termination;

         7.2.2.3  solicit  the  services  of or  endeavour  to entice  away from
                  Radica or  Radica  Group any  director,  senior or  managerial
                  employee  or  consultant  of  Radica  or  Radica  Group  known
                  personally to the Executive  (whether or not such person would
                  commit any breach of his contract of  employment or engagement
                  by reason of leaving the service of such company) or knowingly
                  employ,  assist  in or  procure  the  employment  by any other
                  person, firm or body corporate of any such person.

7.3      The  Executive  agrees that the  restrictions  contained  in Clause 7.2
         shall apply in relation to all  customers  and  suppliers  with whom he
         personally  has had dealings on behalf of Radica  notwithstanding  that
         such  customers  and  suppliers  may have been  introduced to Radica or
         Radica Group by Employee  before or during his employment  with Radica.
         He further agrees that if any of the restrictions in Clause 7.2 is held
         to be void or ineffective for any reason, but would be held to be valid
         and  effective if part of its wording were  deleted,  that  restriction
         shall apply with such  deletions  as may be  necessary to make it valid
         and effective.

7.4      The  restrictions  contained in each  sub-clause of Clause 7.2 shall be
         construed as separate  and  individual  restrictions  and shall each be
         capable of being severed without prejudice to the other restrictions or
         to the remaining provisions.

7.5      Employee waives  irrevocably all Moral Rights (as defined in Chapter IV
         of Part I of the Copyright,  Designs and Patents Act 1988) in any works
         produced  during his employment in which  copyright is vested in Radica
         or Radica  Group  whether by virtue of this  Clause  7.5 or  otherwise.
         Employee  shall promptly  communicate  and disclose to Radica Group all
         information, inventions,  improvements,

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         discoveries,  knowhow, methods, techniques, processes, observations and
         data  ("Proprietary  Information")  obtained,  developed,  invented  or
         otherwise  discovered  by him in the  course  of this  employment.  All
         written  materials,  records,  computer  programs or data and documents
         made by Employee or coming into his  possession  during the  employment
         period  concerning  any  Proprietary  Information  used or developed by
         Radica Group, or by Employee,  shall be the sole exclusive  property of
         Radica Group.  Employee shall have no right,  title or interest therein
         notwithstanding  that he may have  purchased  the  medium on which such
         Proprietary Information is recorded.

7.6      Upon  Termination,  Employee  shall  not  take  with  him  any  of  the
         Confidential Information or Proprietary Information.  Upon Termination,
         or at any time upon the  request of  Radica,  Employee  shall  promptly
         deliver all Confidential Information and Proprietary  information,  and
         all copies  thereof,  to Radica  Group with no cost or charge to Radica
         Group.  Upon request by Radica,  Employee  shall  promptly  execute and
         deliver any documents  necessary or convenient to evidence ownership of
         the  Confidential  Information  and  Proprietary  Information by Radica
         Group, or the transfer and assignment of the  Confidential  Information
         and Proprietary Information to Radica Group without cost or charge. The
         provisions  of this  Clause 7 shall  survive  any  Termination  of this
         Agreement.

8        TERMINATION

8.1      Upon Termination  Employee shall  immediately  resign without claim for
         compensation for loss of office (but without  prejudice to any claim he
         may have against  Radica arising out of any breach of this Agreement by
         Radica)  from such offices held by him in Radica and any company in the
         Radica  Group  and from any other  offices  he may hold as  nominee  or
         representative of Radica and any company in the Radica Group and Radica
         is  irrevocably  authorised  by Employee to appoint  some person in his
         name  and on  his  behalf  to  sign  any  documents  and do any  things
         necessary or requisite to give effect to such resignations.

8.2      If either  party gives  notice to terminate  this  Agreement,  Employee
         agrees:

8.2.1    that for a period  not  exceeding  three  months  the  Board may in its
         absolute  discretion  require Employee not to perform any of his duties
         and may require

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         him not to have any  contact  with  clients or  customers  of Radica or
         Radica Group nor any contact  (other than purely  social  contact) with
         such  employees of Radica or Radica Group as the Board shall  determine
         and/or  may  exclude  him from any  premises  Radica  or  Radica  Group
         (without providing any reason for doing so); and

8.2.2    that such action on the part of Radica shall not constitute a breach of
         this  Agreement nor shall  Employee  have any claim  against  Radica in
         respect of any such action;

         Provided always that throughout such period Employee's salary and other
         benefits  shall not cease to be paid or provided  (unless and until his
         employment is terminated).

9        BENEFIT AND BINDING EFFECT

         This Agreement shall inure to the benefit of and be binding upon Radica
         and its  successors  and  assigns,  including  but not  limited  to any
         corporation,   person  or  other   entity  which  may  acquire  all  or
         substantially  all  of  the  assets  and  business  of  Radica  or  any
         corporation with or into which it may be consolidated or merged. Radica
         may  assign its rights  and  obligations  to another  present or future
         member  of  Radica  Group.  The  rights  and  obligations  of  Employee
         hereunder  may not be delegated or assigned,  except that Employee may,
         without the prior consent of any member of Radica Group,  assign to his
         spouse, or to a family member,  proceeds of payments resulting from his
         death or a disability which, in either case, occurs after a termination
         of this Agreement.

10       COUNTERPARTS

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

11       GOVERNING LAW

         This  agreement  shall be governed by and construed in accordance  with
         the law of

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         England and Wales. The parties submit to the non-exclusive jurisdiction
         of the English Courts as regards to any claim, dispute or matter out of
         or relating to this Agreement.

12       ENTIRE AGREEMENT

         12.1 This  Agreement  sets  forth and is an  integration  of all of the
         promises,  agreements,  conditions and understandings among the parties
         hereto with respect to all matters contained or referred to herein, and
         all prior promises, agreements, conditions, understandings,  warranties
         or  representations,  oral,  written,  express or  implied,  are hereby
         superseded and merged herein.

12.2     This  Agreement  replaces  all  previous  contracts of service or other
         employment  arrangements  between  Employee  and  Leda  Media  Products
         Limited,  which  shall have no further  effect as from the date of this
         Agreement.

13       VALIDITY OF PROVISIONS

         Should any  provision(s) of this Agreement be void or  unenforceable in
         whole or in part, the remainder of this Agreement  shall not in any way
         be affected thereby, and such provision(s) shall be modified or amended
         so as to  provide  for  the  accomplishment  of  the  provision(s)  and
         intentions of this Agreement to the maximum extent possible.

14       MODIFICATIONS OR DISCHARGE

         This  Agreement  shall  not  be  deemed  waived,   changed,   modified,
         discharged  or  terminated  in whole or in part,  except  as  expressly
         provided  for herein or by  written  instrument  signed by all  parties
         hereto.

15       NOTICES

         Any notice  which  either  party may wish to give to the other  parties
         hereunder shall be deemed to have been given when actually  received by
         the party to whom it is addressed. Notices by Employee to either Radica
         or Radica USA shall be

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<PAGE>

         sent to both of them.  Notices hereunder may be sent by courier,  mail,
         telefax,  telegram or telex,  to the  following  addresses,  or to such
         other  addresses  as the parties may from time to time  furnish to each
         other by like notice:

         To.      Radica Games Limited
                  180 South Lake Avenue
                  Suite 440
                  Pasadena
                  California 91101

                  USA

                  Attention:       Patrick S Feely
                  Telephone:       (626) 744 1150
                  Telefax:         (626) 744 1155

         To:      Employee:

                  Mr. Neil Doughty
                  c/o Leda Media Products
                  Stonemasons House
                  75 Railway Street
                  Hertford
                  Herts  SG14 1RP
                  Telephone:       (44) 01992 503133
                  Telefax:         (44) 10992 503061

16       NUMBER AND GENDER

         In this Agreement,  the masculine shall include the feminine and neuter
         and vice  versa,  and the  singular  shall  include the plural and vice
         versa, as the context may reasonably require or permit.

IN WITNESS  whereof,  the parties have executed this Agreement as of the day and
year first above written.

SIGNED by                           )  Signed on behalf of Radica Games Limited
for and on behalf of RADICA GAMES   )  by Patrick S Feely
LIMITED                             )

SIGNED by NEIL DOUGHTY              )  Signed by Neil Doughty
[1208587.01]

                                       14DATE            24 JUNE            1999
                     ---------------------------------------

                            RICHARD MYERS AND OTHERS

                               RADICA GOLD LIMITED

                            SHARE PURCHASE AGREEMENT

                    RELATING TO THE ACQUISITION OF THE ENTIRE
               ISSUED SHARE CAPITAL OF LEDA MEDIA PRODUCTS LIMITED

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                                    CONTENTS

CLAUSE                                                                PAGE

1                 Definitions and interpretation                         1
2                 Sale and purchase                                      6
3                 Consideration                                          6
4                 Completion                                             7
5                 Warranties                                             8
6                 Taxation                                              10
7                 Restrictions on the Vendors                           10
8                 Release by the Vendors                                12
9                 Confidentiality                                       12
10                Release from Guarantees                               13
11                General                                               15
12                Notices                                               17
13                Governing law and jurisdiction                        18

SCHEDULES

1                 The Vendors
2                 The Company
3                 The Subsidiaries
4                 Completion Obligations of the Vendors
5                 Warranties
6                 Properties
7                 Tax Covenant
8                 Limitations on Liability

LIST OF AGREED FORM DOCUMENTS

A1 and A2         Service Agreements
B1 to B6          Letters of Resignation
C1 to C3          Vendors' Powers of Attorney
D1 and D2         Board Minutes
E                 Loan Notes
F                 Set-Off Loan Notes
G                 Consultancy Agreement
H                 Announcement

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                            SHARE PURCHASE AGREEMENT

DATE     24 June 1999

PARTIES

1        THE PERSONS  whose names and  addresses are set out in Schedule 1 ("the
         Vendors")

2        RADICA GOLD LIMITED (Registered No. 3777636) whose registered office is
         at 30 Camp Road, Farnborough, Hampshire GU14 6EW ("the Purchaser")

RECITALS

A        The  Company is a private  company  limited  by shares.  Details of the
         Company are set out in Schedule 2.

B        The Vendors have agreed to sell and the Purchaser has agreed to buy the
         Shares on the terms and subject to the conditions of this Agreement.

AGREEMENT

1        DEFINITIONS AND INTERPRETATION

1.1      The Recitals and  Schedules  form part of this  Agreement  and have the
         same force and effect as if set out in the body of this Agreement.  Any
         reference to this Agreement includes the Recitals and Schedules.

1.2      In this  Agreement,  the  following  words  and  expressions  have  the
         following meanings:-

         THE  ACCOUNTS:   the  audited  accounts  of  the  Company  and  of  the
         Subsidiaries and the audited  consolidated  accounts of the Company and
         Leda HK for the accounting reference period which ended on the Accounts
         Date  (comprising  in each case a balance  sheet  and  profit  and loss
         account  or,  as the case  may be, a  consolidated

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         balance  sheet and  consolidated  profit  and loss  account,  notes and
         directors' and auditors' reports);

         THE  ACCOUNTING  STANDARDS  BOARD:  the Accounting  Standards  Board in
         England and Wales;

         THE ACCOUNTS DATE: 31 August 1998;

         THE AGREED FORM:  the form agreed between and signed by or on behalf of
         the Vendors and the Purchaser;

         BUSINESS  DAY:  any day other than a Saturday,  Sunday or any other day
         which is a public holiday in England;

         CAA 1990: Capital Allowances Act 1990;

         THE COMPANY: Leda Media Products Limited;

         THE COMPANIES ACTS: the Companies Act 1985, the Companies Consolidation
         (Consequential  Provisions) Act 1985, the Companies Act 1989 and Part V
         of the Criminal Justice Act 1993;

         COMPLETION:  completion  of the  sale and  purchase  of the  Shares  in
         accordance with this Agreement;

         THE COMPLETION DATE: the date hereof;

         THE CONSIDERATION: the sum referred to in Clause 3.1;

         THE CONSULTANCY  AGREEMENT:  the consultancy  agreement  proposed to be
         entered into between the Company and Trevor Sharman being in the Agreed
         Form marked "G";

         THE DISCLOSURE LETTER: the letter dated the date of this Agreement from
         the Vendors to the Purchaser  making  certain  disclosures  against the
         Warranties;

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         GROUP COMPANY: in relation to any company,  any body corporate which is
         from time to time a holding  company of that  company,  a subsidiary of
         that company or a subsidiary of a holding company of that company;

         ICTA 1988: Income and Corporation Taxes Act 1988;

         INTELLECTUAL  PROPERTY:   patents,   petty  patents,   utility  models,
         registered  designs,  design  right,   topography  rights,   copyright,
         database right,  trade marks,  service marks,  trade or business names,
         domain names,  get-up or trade dress,  inventions or secret  processes,
         know-how and all rights or forms of protection  of a similar  nature or
         effect subsisting anywhere in the world, including applications for any
         such right;

         LEDA  HK:  Leda  Media   Products  (HK)  Limited,   being  one  of  the
         Subsidiaries;

         LOAN NOTES:  the  US$10,945,376  floating  rate  guaranteed  loan notes
         constituted  by the  instrument  in the  Agreed  Form  marked "E" to be
         issued by the  Purchaser  to Richard  Myers and Trevor  Sharman in part
         satisfaction of the Consideration;

         THE MANAGEMENT  ACCOUNTS:  the unaudited accounts of the Company and of
         the  Subsidiaries  for the eight month period from the Accounts Date to
         30 April 1999  comprising a balance sheet and profit and loss account),
         a copy of each of which is annexed to the Disclosure Letter;

         THE PARTIES: the parties to this Agreement;

         THE  PROPERTIES:  the leasehold  properties of the Company and Leda HK,
         details of which are given in Schedule 6;

         THE PURCHASER'S  SOLICITORS:  Macfarlanes of 10 Norwich Street,  London
         EC4A 1BD;

         THE RESTRICTED TERRITORIES:

         (a)      the United Kingdom,  the Channel Islands, the Isle of Man, the
                  Republic of Ireland, France, Germany, China, Austria, Belgium,
                  Czech Republic,

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                  Greece,  Holland,  Italy,  Portugal,  Scandinavia,  Spain  and
                  Switzerland;

         (b)      any other country in which the Company or the  Subsidiaries is
                  resident or otherwise carries on business at Completion;

         THE  SHARES:  the  shares  referred  to in  paragraph  9 of  Schedule 2
         comprising the entire issued share capital of the Company;

         THE SERVICE  AGREEMENTS:  the service agreements proposed to be entered
         into  between the Company  and each of Neil  Doughty and Elliott  Myers
         being in the Agreed Forms marked "A1" and "A2";

         SET-OFF LOAN NOTES: the US$1,399,200  floating rate guaranteed  set-off
         loan notes  constituted by the instrument in the Agreed Form marked "F"
         to be issued by the Purchaser to Richard Myers, Trevor Sharman and Neil
         Doughty in part satisfaction of the consideration;

         THE SUBSIDIARIES:  the subsidiaries of the Company details of which are
         set out in Schedule 3;

         THE TAX COVENANT: the covenant contained in Schedule 7;

         TCGA 1992: Taxation of Chargeable Gains Act 1992;

         VATA 1994: Value Added Tax Act 1994;

         THE VENDORS'  SOLICITORS:  Beachcroft  Wansboroughs of 100 Fetter Lane,
         London EC4A 1BN; and

         THE WARRANTIES:  the representations and warranties set out in Schedule
         5.

1.3      In this Agreement (unless the context requires otherwise):-

1.3.1    words and expressions  which are defined in the Companies Acts have the
         same meanings as are given to them in the Companies Acts;

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1.3.2    any question as to whether a person is connected  with any other person
         shall be determined in  accordance  with the  provisions of Section 839
         ICTA 1988;

1.3.3    any  reference  to  any  statute  or  statutory  provision  includes  a
         reference  to any  subordinate  legislation  made under that statute or
         statutory  provision  before  the  date  of  this  Agreement,   to  any
         modification,  re-enactment  or  extension of that statute or statutory
         provision  made before that date and to any former statute or statutory
         provision which it consolidated or re-enacted before that date;

1.3.4    any  reference  to an SSAP is to a  Statement  of  Standard  Accounting
         Practice  adopted  by the  Accounting  Standards  Board  and  shall  be
         construed as including a reference to:

         1.3.4.1  any  Financial  Reporting  Standard  issued by the  Accounting
                  Standards Board to amend,  withdraw or supersede such SSAP and
                  any reference to an FRS is to a Financial  Reporting  Standard
                  issued by the Accounting Standards Board; and

         1.3.4.2  any  Urgent  Issues  Task  Force   abstracts   issued  by  the
                  Accounting  Standards  Board  to  advise  on and  clarify  the
                  interpretation  of SSAPs and FRSs and any reference to an UITF
                  abstract is to an Urgent Issues Task Force abstract  issued by
                  the Accounting Standards Board;

1.3.5    any gender includes a reference to the other genders;

1.3.6    the singular includes a reference to the plural and vice versa;

1.3.7    any reference to a Recital,  Clause or Schedule is to a Recital, Clause
         or Schedule (as the case may be) of or to this Agreement;

1.3.8    "directly or  indirectly"  means (without  limitation)  either alone or
         jointly with any other  person,  firm or body  corporate and whether on
         his own  account  or in  partnership  with  another or others or as the
         holder  of any  interest  in or as  officer,  employee  or  agent of or
         consultant to any other person, firm or body corporate; and

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1.3.9    any reference to any English legal term for any action,  remedy, method
         of judicial proceeding,  legal document,  legal status, court, official
         or any legal  concept or thing  shall,  in respect of any  jurisdiction
         other than England,  be deemed to include what most nearly approximates
         in that jurisdiction to the English legal term.

1.4      The headings in this  Agreement  do not form part of this  Agreement or
         any part thereof and do not affect its interpretation.

2        SALE AND PURCHASE

2.1               The Vendors (each as to those of the Shares specified  against
                  his name in Schedule  1) shall sell with full title  guarantee
                  free from all liens, charges, encumbrances and any other third
                  party rights and the Purchaser  shall purchase the Shares with
                  effect from and  including the  Completion  Date to the intent
                  that as from that date all rights and  advantages  accruing to
                  the Shares,  including any dividends or distributions declared
                  or paid on the Shares  after that  date,  shall  belong to the
                  Purchaser.

2.2      The  Purchaser  shall not be obliged to complete the purchase of any of
         the  Shares  unless  the  sale  of  all  of  the  Shares  is  completed
         simultaneously.

3        CONSIDERATION

3.1      The  consideration  for the  Shares  shall be the sum of  US$13,992,000
         (thirteen  million nine hundred and ninety two thousand  United  States
         dollars).

3.2      The Consideration shall be divided between the Vendors in proportion to
         their respective  holdings of the Shares (as set out in Schedule 1) but
         the Purchaser shall not be concerned with such division.

3.3      The Consideration shall be satisfied as follows:-

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3.3.1    US$1,647,424  shall be paid on  Completion to the Vendors in accordance
         with Clause 4.1.3;

3.3.2    US$10,945,376  shall be  satisfied on  Completion  in  accordance  with
         Clause 4.1.4; and

3.3.3    US$1,399,200 shall be satisfied on Completion in accordance with Clause
         4.1.5.

3.4      Any  amount  paid in respect  of a breach of any of the  Warranties  or
         under the Tax Covenant shall be deemed to give rise to a  corresponding
         reduction in the Consideration.

4        COMPLETION

4.1      Completion  shall take place on the  Completion  Date at the offices of
         the Purchaser's Solicitors when:-

4.1.1    the Vendors shall deliver to the Purchaser,  or procure the delivery to
         the Purchaser of, the documents and other items referred to in Schedule
         4;

4.1.2    the Vendors and the Purchaser shall jointly procure that there shall be
         held a Meeting of the Board of  Directors of the Company and of Leda HK
         at which there shall be duly passed  Resolutions  set out and contained
         in Board  Minutes of the  Company  and of Leda HK in the  Agreed  Forms
         marked "D1" and "D2" respectively;

4.1.3    the Purchaser shall pay that part of the  Consideration  referred to in
         Clause 3.3.1 to the Vendors'  Solicitors (who are hereby  authorised to
         receive  the same on  behalf of the  Vendors),  by way of  transfer  of
         funds;

4.1.4    the Purchaser shall satisfy that part of the Consideration  referred to
         in Clause 3.3.2 by the issue to the Vendors of the Loan Notes;

4.1.5    the Purchaser shall satisfy that part of the Consideration  referred to
         in Clause 3.3.3 by the issue to the Vendors of the Set-Off Loan Notes.

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4.2      The performance by the Vendors of their  respective  obligations  under
         Clause 4.1 shall be a condition  precedent  to the  performance  by the
         Purchaser of its  obligations  under Clause 4.1 to the intent that,  if
         the Vendors or any of them shall fail or shall be unable to perform any
         of their  obligations  under  Clause 4.1,  the  Purchaser  shall at its
         option (and without  prejudice to any other remedies or rights which it
         may  have  against  the  Vendors  or any of  them  in  respect  of such
         non-performance)  cease to be liable to perform its  obligations  under
         Clause 4.1.

5        WARRANTIES

5.1      The Vendors  represent  and warrant to the  Purchaser  that each of the
         Warranties  is true and accurate in all respects and is not  misleading
         at the date of this Agreement.

5.2      The Warranties  shall not in any respect be extinguished or affected by
         Completion.

5.3      The  Vendors  acknowledge  that the  Purchaser  has  entered  into this
         Agreement in reliance on representations in the terms of the Warranties
         made by the Vendors with the  intention  of inducing  the  Purchaser to
         enter into this Agreement and that  accordingly  the Purchaser has been
         induced by those representations to enter into this Agreement.

5.4      The Vendors  undertake to the Purchaser that, in the event of any claim
         being made  against  them for breach of the  Warranties,  they will not
         make any claim against the Company or the  Subsidiaries  or against any
         director,  officer or employee of the Company or of the Subsidiaries on
         which or on whom they may have relied  before  agreeing to any terms of
         this Agreement or authorising any statement in the Disclosure Letter.

5.5      The Warranties:-

5.5.1    are qualified by reference to those matters  fully,  fairly and clearly
         disclosed in the Disclosure  Letter and not  otherwise.  In particular,
         but without  limitation,  the rights and  remedies of the  Purchaser in
         respect of the  Warranties  shall not be

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         affected  by any  investigation  made by or on behalf of the  Purchaser
         into the affairs of the Company and the Subsidiaries;

5.5.2    are separate and  independent  and,  unless  expressly  provided to the
         contrary,  are not limited or  restricted  by reference to or inference
         from the terms of any other  provision  of this  Agreement or any other
         Warranty;

5.5.3    where qualified by the knowledge,  information,  belief or awareness of
         the  Vendors,  are deemed to include a statement  that such  knowledge,
         information,  belief  or  awareness  has been  acquired  after  due and
         careful  enquiries  by the Vendors in respect of the  relevant  subject
         matter of such Warranties; and

5.6      apply to each of the  Subsidiaries  as well as to the Company as if the
         word  "Company"  was defined to mean each of the  Subsidiaries  and the
         Company.

5.7      The  liability of the Vendors in respect of any claim for breach of the
         Warranties  or the Tax Covenant  shall be subject to the  provisions of
         Schedule 8 provided  that the  provisions of Schedule 8 shall not apply
         in respect of:-

5.7.1    any claim under paragraph 2.1 (capacity),  3.1 (share ownership) or 3.2
         (share and loan capital) of Schedule 5; nor

5.7.2    any claim arising out of any fraudulent or wilful non-disclosure on the
         part of the Vendors.

6        TAXATION

         The provisions of Schedule 7 shall have effect.

7        RESTRICTIONS ON THE VENDORS

7.1      Each of the Vendors  covenants with the Purchaser with the intention of
         assuring to the  Purchaser  the full  benefit and value of the goodwill
         and  connections  of  the  Company  and  the   Subsidiaries  and  as  a
         constituent  part of the agreement for the sale of the Shares that save
         with the previous written consent of the Purchaser:-

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7.1.1    he will not in the Restricted Territories for the period of three years
         following the  Completion  Date  directly or indirectly in  competition
         with the Company or the  Subsidiaries  engage in business with or be in
         any way interested in or connected with any concern,  undertaking, firm
         or body corporate which engages in or carries on within any part of the
         Restricted  Territories  any business  which competes with any business
         carried on by the Company or the  Subsidiaries  at the Completion  Date
         and  in  particular  (but  without  limitation)  the  business  of  the
         manufacture  and  distribution  of peripherals  and  accessories to the
         video games and PC games market;

7.1.2    he will not in the Restricted Territories for the period of three years
         following the Completion Date directly or indirectly:-

         7.1.2.1  interfere  with or, in  competition  with the  Company  or the
                  Subsidiaries  in relation to any business  which competes with
                  any business  carried on by the Company or the Subsidiaries as
                  at the  Completion  Date,  offer or agree to provide  goods or
                  services of any  description  to, or solicit or  endeavour  to
                  entice away from the Company or the Subsidiaries the custom of
                  any person,  firm or body corporate  which, at any time during
                  the period of one year ending on the Completion Date, has been
                  a customer or client of, or in the habit of dealing with,  the
                  Company or the  Subsidiaries or which, at any time during that
                  period,  was to his knowledge  negotiating with the Company or
                  the  Subsidiaries  in  relation to the  provision  of goods or
                  services by the Company or the Subsidiaries;

         7.1.2.2  interfere or seek to interfere with contractual or other trade
                  relations  between the Company or the  Subsidiaries and any of
                  its or  their  respective  suppliers  in  existence  or  under
                  negotiation  at any time  during the period of one year ending
                  on the Completion Date;

         7.1.2.3  solicit the  services of or  endeavour to entice away from the
                  Company  or  the  Subsidiaries   any  director,   employee  or

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                  consultant of the Company or the Subsidiaries  (whether or not
                  such  person  would  commit  any  breach  of his  contract  of
                  employment  or  engagement by reason of leaving the service of
                  such  company) or knowingly  employ,  assist in or procure the
                  employment by any other person,  firm or body corporate of any
                  such person;

7.1.3    he will not at any time following the  Completion  Date disclose to any
         person,  firm or body corporate or otherwise make use or permit the use
         of  any  trade  secrets  or   confidential   knowledge  or  information
         concerning  the business,  finances or affairs of the Company or of the
         Subsidiaries  or of any  of  their  respective  customers,  clients  or
         suppliers  at the  date  of  this  Agreement  and  will  use  his  best
         endeavours  to  prevent  the  publication  or  disclosure  of any  such
         secrets, knowledge or information by any third party;

7.1.4    he will not for the period of three years following the Completion Date
         use or apply to register on any public  register  any trade or business
         name used by the Company or the  Subsidiaries  during the period of two
         years  preceding the  Completion  Date  (including  in particular  (but
         without  limitation) the names Leda, LMP and Gamester (whether alone or
         in conjunction with other names)) or any name similar to those names or
         likely to be confused with them.

7.2      Each of the Vendors agrees that, having regard to the facts and matters
         above,  the  restrictions  contained in Clause 7.1 are  reasonable  and
         necessary  for  the  protection  of  the  legitimate  interests  of the
         Purchaser  and that,  having  regard to those facts and matters,  those
         restrictions  do not work  harshly on him.  It is  nevertheless  agreed
         that, if any of those restrictions shall, taken together or separately,
         be held to be void or  ineffective  for any reason but would be held to
         be valid  and  effective  if part of its  wording  were  deleted,  that
         restriction shall apply with such deletions as may be necessary to make
         it valid and effective.

7.3      The  restrictions  contained in the  sub-clauses of Clause 7.1 shall be
         construed as separate  and  individual  restrictions  and shall each be
         capable of being severed without prejudice to the other restrictions or
         to the remaining provisions of this Agreement.

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8        RELEASE BY THE VENDORS

8.1      Each of Richard Myers and Trevor Sharman  confirms that he has no claim
         (whether in respect of any breach of contract, compensation for loss of
         office or monies due to him or on any account  whatsoever)  outstanding
         against the Company or the Subsidiaries or against any of the directors
         or employees of the Company or the  Subsidiaries  and that no agreement
         or  arrangement   (including  (without   limitation)  any  contract  of
         employment) is outstanding  under which the Company or the Subsidiaries
         or any of such persons has or could have any  obligation of any kind to
         him. Neil Doughty  confirms that he has no such claims save in relation
         to his contract of employment which has been disclosed to the Purchaser
         and is included as an annexure to the Disclosure Letter.

8.2      To the extent  that any such claim or  obligation  exists or may exist,
         each of the Vendors irrevocably and  unconditionally  waives such claim
         or  obligation  and releases the Company and the  Subsidiaries  and any
         such other  persons from any  liability  whatsoever  in respect of such
         claim or obligation.

9        CONFIDENTIALITY

9.1      Subject to the provisions of Clause 9.2, no Party shall issue any press
         release or publish any  circular to  shareholders  or any other  public
         document or make any statement or disclosure to any person who is not a
         Party  (including  (without  limitation)  any  document,  statement  or
         disclosure  published,  issued or made by the Vendors or any of them to
         any supplier to or customer of the Company or the Subsidiaries) in each
         case relating to or connected  with or arising out of this Agreement or
         the matters contained in it, without obtaining the previous approval of
         the  Purchaser  (in the case of the Vendors) and Richard  Myers (in the
         case  of  the  Purchaser)  to  its  contents  and  the  manner  of  its
         presentation  and  publication  or disclosure  (such approval not to be
         unreasonably withheld or delayed).

9.2      The provisions of Clause 9.1 do not apply to:-

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9.2.1    any  announcement  relating to or connected with or arising out of this
         Agreement  required  to be  made  by the  Purchaser  by  virtue  of any
         applicable law or regulation; and

9.2.2    the announcement in the Agreed Form marked "H".

10       RELEASE FROM GUARANTEES

         The  Purchaser  agrees to use  reasonable  endeavours  to  procure  the
         release of the  personal  guarantee  given by Richard  Myers and Trevor
         Sharman  to De Lage  Landen  Leasing  and  Factors  (now FNN  Financial
         Limited)  in the  form  attached  to the  Disclosure  Letter,  and  the
         Purchaser  agrees to indemnify each of Richard Myers and Trevor Sharman
         in  respect  of any  liability  which  he may  incur  pursuant  to such
         guarantee  from  Completion  until the  release  of such  guarantee  is
         obtained.

11       PENSION SCHEME

         It is  hereby  acknowledged  and  declared  that  the  Company  is  the
         principal  employer and trustee of a money purchase pension scheme with
         Scottish Amicable (Policy Number 161HP302) ("the Pension Scheme"),  the
         beneficiaries  of which are Richard Myers and Andrea Myers. The Parties
         will  procure  that the  Company  is  removed  as a trustee  as soon as
         practicable and renounces any interest that it may have therein. Andrea
         Myers has  acknowledged  in writing to the Company in a letter dated 24
         June 1999 and  Richard  Myers  hereby  acknowledges  and  confirms  the
         release by each of them of the Company  from all and any  liability  in
         relation to the Pension Scheme.

12       ESCROW

12.1     In the event that the Purchaser has given notice to any  Noteholder (as
         defined  in the  Set-Off  Loan  Note)  pursuant  to the  provisions  of
         Condition  7.1 of the Set-Off  Loan Note that it wishes to exercise its
         right of set-off  thereunder and to the extent that any claim or claims
         subject  to such  right of  set-off  ("Relevant  Claim")  have not been
         settled or withdrawn  by 31 December  2000 (being the  "Maturity

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         Date"  thereunder),  the  Purchaser  shall  be  entitled,  at its  sole
         discretion,  to pay any amount  which it is entitled to deduct from the
         Principal  and/or the Interest  (each as defined  therein) ("the Escrow
         Sum") into an interest  bearing deposit account held in the joint names
         of the  Purchaser's  Solicitors  and Vendors'  Solicitors  ("the Escrow
         Account").

12.2     As soon as possible  following the agreement or  determination or final
         adjudication  of the  Relevant  Claim there shall be released  from the
         Escrow Account:-

12.2.1   to the Purchaser (or as it shall direct), a sum equal to the amount for
         which the Relevant  Claim shall have been agreed or  determined  or for
         which  judgment  in  respect  of the  Relevant  Claim  shall  have been
         obtained,  together with a proportion of the total  interest  earned on
         the monies standing to the credit of the Escrow Account from Completion
         to the  date of  payment  out  (being  that  proportion  which  the sum
         released  to the  Purchaser  from the Escrow  Account  pursuant to this
         sub-clause bears to the Escrow Sum); and

12.2.2   to the Vendors'  Solicitors  the balance of the monies  standing to the
         credit of the Escrow Account.

12.3     In the event that the Purchaser has not exercised its rights under 12.1
         above and any  Relevant  Claim has not been  settled or withdrawn by 30
         November  2001,  the  Purchaser  shall be obliged to place the relevant
         Escrow Sum into the Escrow Account, such Escrow Sum to be dealt with in
         accordance  with the  provisions  of Clause 12.2 above and in the event
         that the  Purchaser  shall fail to do so,  then,  for the  purposes  of
         Condition  7 only,  the  Relevant  Claim  shall be  deemed to have been
         withdrawn.

12.4     The Parties shall give such instructions to their respective solicitors
         as is necessary to give effect to the provisions of this Clause 12.

13       VENDORS' COVENANT

         The Vendors hereby  covenant to pay to the Purchaser an amount equal to
         five times (5x) the amount (if any) by which the net asset value of the
         Company

                                       14
<PAGE>

         (calculated  as at 24 June 1999 by the  Purchaser  after  Completion in
         accordance  with  the  principles  referred  to in  paragraph  4.1.2 of
         Schedule  5) is less than  (pound)1,320,000  or to the extent  that the
         calculation  of the net asset value is  adjusted  from that used in the
         preparation  of  the  Management  Accounts  to  comply  with  the  said
         principles   where  they  have  not  previously  done  so  the  sum  of
         (pound)1,230,000.

14       GENERAL

14.1.1   The Vendors  shall do or procure to be done all such  further  acts and
         things and execute or procure the execution of all such other documents
         as the  Purchaser  may from  time to time  reasonably  require  for the
         purpose of giving the Purchaser  the full benefit of the  provisions of
         this Agreement.

14.1.2   The Purchaser  shall do or procure to be done all such further acts and
         things and execute or procure the execution of all such other documents
         as the Vendors may from time to time reasonably require for the purpose
         of giving  the  Vendors  the full  benefit  of the  provisions  of this
         Agreement.

14.2     This Agreement,  and the documents  referred to in it,  constitutes the
         entire agreement and understanding of the Parties.  Each of the Parties
         acknowledges  and agrees that in entering into this Agreement,  and the
         documents  referred  to in it, it does not rely on,  and shall  have no
         remedy in  respect  of,  any  statement,  representation,  warranty  or
         understanding  (whether  negligently or innocently  made) of any person
         (whether  party to this  Agreement or not) other than as expressly  set
         out in this  Agreement as a Warranty.  The only remedy  available to it
         for breach of the Warranties  shall be for breach of contract under the
         terms of this  Agreement.  Nothing in this sub-clause  shall,  however,
         operate to limit or exclude any liability for fraud.

14.3     Each of the Vendors  waives any rights of  pre-emption  over the Shares
         conferred  on him or held by him  either  by  virtue  of the  Company's
         Articles of Association or by express agreement or otherwise.

14.4     Each  Party  shall  pay  his or  its  own  costs  and  expenses  of and
         incidental to this Agreement and the sale and purchase of the Shares.

                                       15
<PAGE>

14.5     This  Agreement  shall,  as to any of its  provisions  remaining  to be
         performed or capable of having or taking effect  following  Completion,
         remain in full force and effect notwithstanding Completion.

14.6     Unless expressly provided otherwise,  all representations,  warranties,
         undertakings,  covenants,  agreements and  obligations  made,  given or
         entered into in this Agreement by more than one person are made,  given
         or entered into jointly and severally.

14.7.1   Subject to Clause  14.7.2,  this  Agreement  shall be binding  upon and
         enure for the  benefit of the  successors  and  assigns of the  Parties
         including,  in the case of individuals,  their respective estates after
         their deaths.

14.7.2   The Parties shall not be entitled to assign their respective  rights or
         obligations  under this Agreement  without the prior written consent of
         each of the other Parties PROVIDED THAT the Purchaser shall be entitled
         to assign  its  rights  and  obligations  to any Group  Company  of the
         Purchaser without requiring the consent of the Vendors.

14.8.1   The  failure  of  the  Purchaser  at  any  time  or  times  to  require
         performance  of any  provision of this  Agreement  shall not affect its
         right to enforce such provision at a later time.

14.8.2   No waiver by the  Purchaser  of any  condition  or of the breach of any
         term, covenant,  representation,  warranty or undertaking  contained in
         this  Agreement,  whether by conduct or  otherwise,  in any one or more
         instances shall be deemed to be or construed as a further or continuing
         waiver  of any  such  condition  or  breach  or a waiver  of any  other
         condition or of the breach of any other term, covenant, representation,
         warranty or undertaking in this Agreement.

14.8.3   Any liability to the Purchaser  under this Agreement may in whole or in
         part be released,  compounded or compromised and time or indulgence may
         be given by the  Purchaser  in its absolute  discretion  as regards any
         Party under such liability  without in any way prejudicing or affecting
         its rights against any other Party under the same or a like  liability,
         whether joint and several or otherwise.

                                       16
<PAGE>

14.9     This  Agreement may be amended,  modified,  superseded or cancelled and
         any of its terms, covenants, representations,  warranties, undertakings
         or conditions  may be waived only by an instrument in writing signed by
         (or by some person duly  authorised  by) each of the Parties or, in the
         case of a waiver, by the Party waiving compliance.

14.10    The  Purchaser  shall have no right to rescind  this  Agreement  in the
         event of a breach of the Warranties.

15       NOTICES

15.1     Any notice to be served in connection  with this Agreement  shall be in
         writing  and  shall be  delivered  by hand,  sent by  registered  mail,
         recorded delivery or first-class post or transmitted by fax:-

15.1.1   in the case of the  Purchaser,  to its  registered  office for the time
         being marked "For the Urgent Attention of the Secretary"; or

15.1.2   in the case of an  individual,  to the address set opposite his name in
         Schedule 1 or to such other address as he may notify in writing for the
         purposes of this Agreement to the Party serving the document.

15.2     Each  of  Richard  Myers  and  Trevor  Sharman   irrevocably   appoints
         Beachcroft  Wansboroughs of 100 Fetter Lane,  London EC4A 1BN to be his
         agent for service of process and notices in England.

15.3     Any such notice shall be deemed to have been served as follows:-

15.3.1   in the case of delivery by hand, on delivery;

15.3.2   in the case of service by post, on the third Business Day after the day
         on which it was posted;

15.3.3   in the case of transmission by fax, on the day it is transmitted;

                                       17
<PAGE>

15.4     Subject as provided in Clause 15.3, in proving such service it shall be
         sufficient to prove that the notice was properly addressed and left at,
         posted to or transmitted by fax to that address.

15.5     For the purpose of this Clause, "Business Day" shall mean any day other
         than Saturday, Sunday or any other day which is a public holiday in the
         place at or to which the notice is left or despatched.

16       GOVERNING LAW AND JURISDICTION

16.1     This  Agreement  shall be governed by and construed in accordance  with
         the laws of England and Wales.

16.2     The Parties  submit to the  non-exclusive  jurisdiction  of the English
         Courts as  regards  any  claim,  dispute  or matter  arising  out of or
         relating  to this  Agreement  or any of the  documents  to be  executed
         pursuant to this Agreement.

EXECUTED  as a deed  and  delivered  on the  date  set  out at the  head of this
Agreement.

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                   SCHEDULE 1

                                   THE VENDORS

1                      2                       3              4                   5                  6
                                                                                                     SET-OFF LOAN NOTE

                                               HOLDING OF     CASH CONSIDERATION  LOAN NOTE          CONSIDERATION

NAME                   ADDRESS                 SHARES                             CONSIDERATION

<S>                    <C>                     <C>               <C>              <C>                <C>
Richard Myers          Flat 7, 3rd floor       35,000            US$320,000       US$8,494,960       US$979,440
                       28 Rue Souveraine
                       Brussels 1050, Belgium

Trevor Sharman         Condominium unit        11,000            US$320,000       US$2,450,416       US$307,824
                       592/107,
                       8th Floor Room 812
                       Park Beach Condominium
                       592 Soi Naklua 16
                       Pattaya-Naklua
                       Banglamung
                       Cholbury,
                       Thailand

Neil Doughty           41 Park Lane              4,000        US$1,007,424                           US$111,936
                       Knebworth
                       Hertfordshire
                       SG3 6PH
</TABLE>

                                       19
<PAGE>

                                   SCHEDULE 2

                                   THE COMPANY

1      Registered number:                        2535134

2      Date of incorporation:                    28 August 1990

3      Legislation under which incorporated:     England & Wales

4      Registered office address:                Stonemasons House
                                                 75 Railway Street
                                                 Hertford
                                                 Hertfordshire  SG14 1RP

5      Directors:                                Neil Doughty
                                                 Richard Myers
                                                 Trevor Sharman

6      Secretary:                                Trevor Sharman

7      Authorised share capital:

           (a)  Amount:                          (pound)50,000
           (b)  Number and class of shares:      50,000 ordinary shares of
                                                 (pound)1 each

8      Issued share capital:

           (a)  Amount:                          (pound)50,000
           (b)  Number and class of shares:      50,000 ordinary shares of
                                                 (pound)1 each

9      Issued loan capital:                      None

10     Charges:

<TABLE>
<CAPTION>
Date of     Date of          Property
charge:     registration:    charged:               Sums secured:     Chargee:

<S>         <C>              <C>                    <C>               <C>
05.03.96    07.03.96         Fixed and floating     All monies        FMN Financial Limited
                             on all assets                            (formerly known as De
                                                                      Lage Landen Factors
                                                                      Limited)
</TABLE>

11     Accounting Reference Date:                31 August

12     Auditors:                                 Ernst & Young

13     Bankers:                                  Lloyds Bank plc/
                                                 Midland Bank plc

                                       20
<PAGE>

                                   SCHEDULE 3

                                THE SUBSIDIARIES

PART 1 LEDA MEDIA PRODUCTS (HK) LIMITED

1      Certificate number:                       595096

2      Date of incorporation:                    12 February 1997

3      Legislation under which incorporated:     Hong Kong

4      Registered office address:                37/F Wu Chung House,
                                                 213 Queen's Road East
                                                 Wanchai, Hong Kong

5      Directors:                                Lavinia Kit Wa Wong
                                                 Richard Myers
                                                 Chaparral Limited
                                                 Trevor Sharman

6      Secretary:                                BCS Limited

7      Authorised share capital:

           (a)  Amount:                          HK$1,000
           (b)  Number and class of shares:      1,000 ordinary shares of
                                                 HK$1.00 each

8      Issued share capital:

           (a)  Amount:                          HK$1,000
           (b)  Number and class of shares       1,000 ordinary shares of
                and by whom held                 HK$1.00 each (999 held by Leda
                                                 Media Products Limited and 1
                                                 held by Cobyrne Limited as
                                                 nominee for Leda Media Products
                                                 Limited)

9      Issued loan capital:                      None

10     Charges:

Date of     Date of          Property
charge:     registration:    charged:               Sums secured:     Chargee:

11     Accounting Reference Date:                31 August

12     Auditors:                                 Grant Thornton

13     Bankers:                                  HSBC

                                       21
<PAGE>

                                   SCHEDULE 3

                                THE SUBSIDIARIES

PART 2            LMP (USA) INC.

1      Registered number:                        4310064

2      Date of incorporation:                    16 February 1999

3      Legislation under which incorporated:     Illinois, USA

4      Registered office address:                1260 Karl Court,
                                                 Wancouda,
                                                 Illinois 60084,
                                                 USA

5      Directors:                                Trevor Sharman

6      Secretary:                                John Doughty

7      Authorised share capital:

           (a)  Amount:                          US $100,000
           (b)  Number and class of shares:      100,000 shares of US $ 1 each

8      Issued share capital:

           (a)  Amount:                          US $ 1,000
           (b)  Number and class of shares       1,000 shares of US $ 1 each
                and by whom held:

9      Issued loan capital:                      None

10     Charges:                                  None

Date of     Date of          Property
charge:     registration:    charged:               Sums secured:     Chargee:

11     Accounting Reference Date:                N/A

12     Auditors:                                 N/A

13     Bankers: American National/First National of Chicago

                                       22
<PAGE>

                                   SCHEDULE 4

                      COMPLETION OBLIGATIONS OF THE VENDORS

At  Completion,  the Vendors  shall  deliver or procure to be  delivered  to the
Purchaser:-

1      duly executed  transfers in favour of the Purchaser or its  nominee(s) in
       respect of the Shares together with the certificates for the Shares;

2      any other document which may reasonably be required to give good title to
       the Shares or which may be necessary  to enable the  Purchaser to procure
       the  registration  of the  Shares  in the  name of the  Purchaser  or its
       nominee(s);

3      a copy of any power of attorney under which this Agreement, or any of the
       transfers or other  documents  referred to in the preceding  paragraphs 1
       and 2 of this  Schedule,  is executed  and  evidence  to the  Purchaser's
       satisfaction  of the  authority  of any  person  signing on behalf of any
       corporate entity;

4      the common seal (if any) and  statutory  books  (including  registers and
       minutes  books)  of the  Company  and  the  Subsidiaries  made  up to the
       Completion Date and all certificates of incorporation and certificates of
       incorporation on change of name of the Company and the Subsidiaries;

5      certificates  for  all the  issued  shares  of  each of the  Subsidiaries
       registered in the name of the Company;

6      letters of  resignation  in the  Agreed  Forms  marked  "B1" to "B3" from
       Richard  Myers (as a  director)  and Trevor  Sharman  (as a director  and
       Secretary)  (in each case in  relation  to the  Company)  and a letter of
       resignation  in the  Agreed  Form  marked  "B4"  from  Richard  Myers (in
       relation  to Leda  HK)  acknowledging  under  seal  that he has no  claim
       against  the Company or the  Subsidiaries  for  compensation  for loss of
       office or otherwise;

7      a copy of a letter  from Ernst & Young in the  Agreed  Form  marked  "B5"
       resigning their office as Auditors of the Company and a letter from Grant
       Thornton  in the  Agreed  Form  marked  "B6"  resigning  their  office as
       Auditors of Leda HK with effect from  Completion  and  accompanied by the
       statement

                                       23
<PAGE>

       required by Section 394 Companies  Act 1985,  originals of such letter to
       be deposited at the registered office of the Company;

8      engrossments  in  duplicate  of each of the  Service  Agreements  and the
       Consultancy Agreement duly executed by the relevant party;

9      powers of attorney  in the Agreed Form marked "C1" to "C3" duly  executed
       by the Vendors for the purpose of securing the interest of the  Purchaser
       in the Shares pending their  registration into the names of the Purchaser
       and/or its nominee(s);

10     all credit cards in the name,  or for the  account,  of the Company or of
       the  Subsidiaries  in the  possession  of any  officer or employee of the
       relevant company resigning at Completion;

11     the documents of title to the Properties;

12     evidence to the Purchaser's  satisfaction of the  non-crystallisation  of
       any  floating  charges  created in favour of De Lage  Landen  Leasing and
       Factoring by the Company and the Subsidiaries;

13     evidence to the Purchase's  satisfaction  of the repayment to the Company
       of all sums due to it from any Vendor or any person connected with him;

14     evidence to the Purchaser's  satisfaction that Richard Myers has bought a
       7-series BMW (Registration No. 69 RNM) from the Company  for(pound)26,500
       and that Andrea Myers has bought a Land Rover Discovery (Registration No.
       M518 KAC) from the Company for(pound)7,000;

15     evidence to the Purchaser's  satisfaction  that all and any arrangements,
       agreements and obligations (whether contractual or otherwise) between the
       Company and/or the Subsidiaries and a company known as Eastern Mainsource
       (which is  registered in the British  Virgin  Islands) have been properly
       terminated;

16     a letter of  consent  from Sony  agreeing  not to  enforce  its rights to
       terminate  the  contract  between  it and the  Company as a result of the
       change of control of the

                                       24
<PAGE>

       Company; and

17     duly  executed   changes  of  bank  mandates  for  the  Company  and  the
       Subsidiaries.

                                       25
<PAGE>

                                   SCHEDULE 5

                                   WARRANTIES

1        DISCLOSED INFORMATION

1.1      RECITALS AND OTHER SCHEDULES

         The facts set out in the Recitals and in Schedules 2 and 3 are true and
         accurate in all respects.

1.2      THE DISCLOSURE LETTER

         All  information  contained or referred to in the Disclosure  Letter is
         true and accurate in all material respects.

1.3      MEMORANDUM AND ARTICLES OF ASSOCIATION

         The copy of the  Memorandum  and Articles of Association of the Company
         annexed to the Disclosure Letter is true and complete,  has embodied in
         it or annexed to it a copy of every such  resolution or agreement as is
         referred to in Section  380(4)  Companies Act 1985 and sets out in full
         the rights and  restrictions  attaching to each class of the  Company's
         share capital.

1.4      STATUTORY BOOKS

         The statutory  books  (including all registers and minute books) of the
         Company  have been  properly  kept and contain a complete  and accurate
         record of the matters  which should be dealt with in them and no notice
         or allegation  that any of them is incorrect or should be rectified has
         been received.

1.5      RETURNS

         All returns,  particulars,  resolutions  and other  documents  required
         under the Companies Act 1985 and all other  relevant  legislation to be
         delivered on behalf of the Company to the  Registrar of Companies or to
         any other  relevant  authority  whatsoever  have been duly and properly
         made and delivered.

                                       26
<PAGE>

1.6      MATERIAL DISCLOSURE

         There are no facts or  circumstances  relating  to the Shares or to the
         assets, business or affairs of the Company which have been deliberately
         withheld by the Vendors and which would have a material  adverse effect
         on the Company or the Purchaser as a result of the Purchaser  acquiring
         the Shares.

2        THE VENDORS

2.1      CAPACITY

2.1.1    Each Vendor has full power to enter into and perform this Agreement and
         this  Agreement  constitutes  binding  obligations  of each  Vendor  in
         accordance with its terms.

2.1.2    The  execution  and  delivery of this  Agreement by the Vendors and the
         performance of and compliance with its terms and provisions will not:-

         2.1.2.1  conflict  with or  result  in a breach  of,  or  constitute  a
                  default  under,  any  agreement or  instrument to which any of
                  them or the  Company is a party or by which any of them or the
                  Company  is  bound  or  of  the   Memorandum  or  Articles  of
                  Association of the Company;

         2.1.2.2  conflict  with or result  in a breach of any law,  regulation,
                  order, writ, injunction or decree of any court or agency; or

         2.1.2.3  cause  the  Company  to  lose  the  benefit  of any  right  or
                  privilege it presently enjoys or cause any person who normally
                  does business with the Company not to continue to do so on the
                  same basis or cause any  officer or senior  employee  to leave
                  and, so far as the Vendors are aware,  the attitude or actions
                  of  customers,  suppliers,  employees  and other  persons with
                  regard  to the  Company  will  not be  prejudicially  affected
                  thereby.

                                       27
<PAGE>

2.2      VENDORS' OTHER INTERESTS

         No Vendor nor, so far as the  Vendors are aware,  any person  connected
         with any Vendor has any interest,  direct or indirect,  in any business
         other than that now carried on by the Company  which is or is likely to
         be or become  competitive with the business or any proposed business of
         the Company.

3        THE SHARES AND THE COMPANY

3.1      THE SHARES

3.1.1    The Shares  comprise the whole of the allotted and issued share capital
         of the  Company  and all of the Shares are fully  paid or  credited  as
         fully paid.

3.1.2    The Shares are legally and beneficially  owned by the Vendors free from
         all liens, charges,  equities,  encumbrances or interests of any nature
         whatsoever,  or any agreement,  arrangement or obligation to create any
         of the same, in favour of any other person.

3.2      SHARE AND LOAN CAPITAL

         Save only as provided in this  Agreement,  there are no  agreements  or
         arrangements  in force which call for the  present or future  creation,
         allotment, issue, transfer, redemption or repayment of, or grant to any
         person the right (whether  exercisable now or in the future and whether
         conditional  or not)  to  call  for  the  creation,  allotment,  issue,
         transfer,  redemption or repayment of, any share or loan capital of the
         Company (including by way of option or under any right of conversion or
         pre-emption).

3.3      SUBSIDIARIES AND SUBSIDIARY UNDERTAKINGS

3.3.1    The  Company  does not have,  and never has had,  any  subsidiaries  or
         subsidiary undertakings apart from the Subsidiaries.

3.3.2    The Company is the beneficial  owner of the entire issued share capital
         of  the  Subsidiaries,   free  from  all  liens,   charges,   equities,
         encumbrances or interests of

                                       28
<PAGE>

         any nature whatsoever,  or any agreement,  arrangement or obligation to
         create any of the same, in favour of any other person.

3.4      ASSOCIATED COMPANIES

         The Company has no associated companies as defined in SSAP1, as amended
         by FRS9.

3.5      FOREIGN BRANCHES

         The Company  has no branch,  agency,  place of  business  or  permanent
         establishment outside the United Kingdom.

3.6      COMPANIES CONTROLLED BY VENDORS

         There exists no company owned or controlled (directly or indirectly) by
         the Vendors or any of them or any of their  connected  persons which in
         any way competes with the business of the Company as at the date hereof
         and there exists no understanding,  liability,  commitment or otherwise
         between any such company and the Company  which remains to be satisfied
         and no money is either owed to or by the Company in respect of any such
         companies.

4        THE ACCOUNTS AND ACCOUNTING RECORDS

4.1      THE ACCOUNTS

         The Accounts:-

4.1.1    comply with the requirements of the Companies Act 1985 (or, in the case
         of the Subsidiaries, in accordance with any relevant law);

4.1.2    have been prepared in accordance  with all  applicable  SSAPs,  FRSs or
         UITF abstracts or, where there are none, in accordance  with accounting
         principles  generally  accepted  in the United  Kingdom  and on a basis
         consistent with preceding accounting periods;

                                       29
<PAGE>

4.1.3    show a true and fair view of the state of affairs of the  Company as at
         the  Accounts  Date and of its  profit or loss for the  financial  year
         ended on that date;

4.1.4    save as expressly  disclosed in the  Accounts,  are not affected by any
         extraordinary, exceptional or non-recurring items;

4.1.5    properly  and  adequately  disclose  all  the  assets  and  liabilities
         (whether  ascertained,  contingent  or  otherwise  and  whether  or not
         quantified or disputed) of the Company as at the Accounts Date and make
         proper provision and/or reserve for all such liabilities; and

4.1.6    properly and adequately disclose all financial commitments in existence
         as at the Accounts Date.

4.2      STOCK VALUATION

4.2.1    The  method of  valuing  stock-in-trade  and  work-in-progress  for the
         Accounts was in accordance  with SSAP 9 and,  subject to that Standard,
         was  consistent in all respects with that adopted in the  corresponding
         audited accounts for the preceding three financial periods and has been
         accepted by the Inland Revenue for taxation purposes.

4.2.2    Proper provision has been made in the Accounts in respect of dead, slow
         moving,   obsolete,   redundant   or   excess   stock-in-trade   and/or
         work-in-progress   and   the   value   attributed   to  the   remaining
         stock-in-trade  and/or  work-in-progress  did not  exceed  the lower of
         direct cost or net realisable value at the Accounts Date.

4.3      ACCOUNTING RECORDS

         The accounting records of the Company:-

4.3.1    have at all times been properly and  accurately  kept and completed and
         contain due and accurate  records of all matters  required by law to be
         entered in them;

4.3.2    contain or reflect no material  inaccuracies  or  discrepancies  of any
         kind; and

                                       30
<PAGE>

4.3.3    disclose  the  matters  which  ought to appear in them with  reasonable
         accuracy.

4.4      MANAGEMENT ACCOUNTS

4.4.1    The  Management  Accounts  have  been  properly  prepared  in a  manner
         consistent with that adopted in the preparation of the Accounts.

4.4.2    Having  regard to the purpose for which the  Management  Accounts  have
         been prepared, they are not misleading and do not overstate the profits
         of the Company in respect of the period to which they relate.

5        TAXATION

5.1      DEFINITIONS

         Words and  expressions  defined  for the  purposes  of  Schedule 9 (Tax
         Covenant)  shall have the same meaning for the purposes of this Part of
         Schedule 5.

5.2      THE ACCOUNTS

5.2.1    All liabilities, whether actual or deferred, contingent or disputed, of
         the Company for tax measured by  reference to income,  profits or gains
         earned,  accrued or received on or before the Accounts  Date or arising
         in  respect of an event  occurring  or deemed to occur on or before the
         Accounts Date are fully provided for or (as  appropriate)  disclosed in
         the Accounts. All other Warranties relating to specific tax matters set
         out in this  Schedule are made without  prejudice to the  generality of
         this paragraph.

5.2.2    Full  provision  has been made in the Accounts  for  deferred  taxation
         (calculated according to the liability method).

5.3      POSITION SINCE ACCOUNTS DATE

Since the Accounts Date:-

5.3.1    the Company has not been involved in any transaction which has given or
         may give rise to a  liability  on the Company (or would have given rise
         or might give rise to

                                       31
<PAGE>

         such a liability  but for the  availability  of any relief)  other than
         taxation in respect of normal trading income or receipts of the Company
         arising from transactions  entered into by it in the ordinary course of
         business;

5.3.2    payments  made by the  Company  which  will not be  deductible  for the
         purposes of  corporation  tax,  either in computing  the profits of the
         Company or in computing the  corporation  tax chargeable on it, are not
         materially  greater  than  such  payments  made in the  previous  three
         accounting periods;

5.3.3    the Company has not been involved in any transaction  otherwise than on
         arm's length terms;

5.3.4    no disposal has taken place or other event  occurred which has given or
         may give rise to a liability  to taxation  which,  if such  disposal or
         event had been planned or predicted at the Accounts  Date,  should have
         been reflected in the provision for deferred taxation  contained in the
         Accounts; and

5.3.5    no  accounting  period  (as  defined  in  Section  12 ICTA 1988) of the
         Company has ended as referred to in Section 12(3) of that Act.

5.4      CONTINUING OBLIGATIONS

         All sums of a  revenue  nature  (including  without  limitation  rents,
         interest,  management  charges  and  annual  payments)  payable  by the
         Company  pursuant  to an  obligation  incurred  by the  Company  before
         Completion and which will continue to bind the company after Completion
         have been and will continue to be fully  deductible for the purposes of
         corporation  tax (or any  corresponding  tax on profits in any relevant
         foreign  jurisdiction),  either in computing the profits of the Company
         or in computing the corporation tax or corresponding  tax chargeable on
         it.

5.5      ADMINISTRATIVE MATTERS

5.5.1    The  Company  has not within the last six years  been,  nor has it been
         notified that it will be,  involved in any dispute with, or the subject
         of  any  enquiry  by  any  taxation  authority  (whether  of  the UK or
         elsewhere) other than routine enquiries.

                                       32
<PAGE>

5.5.2    The Company has duly, and within any appropriate time limits,  made all
         returns, given all notices, supplied all information and maintained all
         such records as are required to be made, given,  supplied or maintained
         by it; all such  returns,  notices and  information  were  complete and
         accurate  in all  material  respects  and were made or  provided on the
         proper basis.

5.5.3    The Company has duly paid all  taxation  which it has become  liable to
         pay and has not been  notified  of any  liability  to pay any  penalty,
         interest,  supplement,  fine,  default  surcharge  or other  payment in
         connection with any claim for taxation.

5.5.4    All claims,  disclaimers,  elections,  appeals or  applications  by the
         Company  the  making  of which  has been  taking  into  account  in the
         Accounts  have been made and were and remain  valid and the Company has
         retained all such records and information as may be requisite to enable
         any such claim to be made as a correct and complete claim.

5.5.5    No  transaction  in respect of which any consent or clearance  from any
         taxation  authority  was  required or sought has been  entered  into or
         carried out by the Company  without such  consent or  clearance  having
         been  properly  obtained.  Any  transaction  for which such  consent or
         clearance  was  obtained has been  carried out in  accordance  with the
         terms of such consent or clearance  and the  application  in respect of
         which  such  consent  or  clearance  was  based and at a time when such
         consent or clearance was valid and effective.

5.5.6    No  taxation  authority  has  operated or agreed to operate any special
         arrangement or practice (being one not based on relevant legislation or
         published practice) in relation to the affairs of the Company.

5.5.7    In relation to the Company,  the  Disclosure  Letter gives full details
         of:-

         assessments   to  tax  made  by  any  tax   authority,   and  any  such
         determinations   and  directions   under  sections  41A  or  41B  Taxes
         Management Act 1970,  which are subject to appeal or have otherwise not
         become final at the date of this Agreement.

5.6      COMPANY RESIDENCE

                                       33
<PAGE>

         The  Company  is,  and has at all times  been,  resident  for  taxation
         purposes in the country of its incorporation and is not, and has not at
         any time been,  treated as resident in any other  jurisdiction  for any
         taxation   purposes   (including   pursuant  to  any  double   taxation
         arrangement).  The Company has no branch,  agency, place of business or
         permanent establishment outside the country of its incorporation.

5.7      DISTRIBUTIONS AND PAYMENTS

5.7.1    The Company has not since 5 April 1965:-

         5.7.1.1  made any  distribution  or  deemed  distributions  within  the
                  meaning of Sections  209 or 210 ICTA 1988  (distributions  and
                  deemed  distributions)  except as provided  for in its audited
                  accounts;

         5.7.1.2  issued  any share  capital  as paid up  otherwise  than by the
                  receipt of new  consideration  (within  the meaning of Section
                  254 ICTA 1988); or

         5.7.1.3  redeemed,  repaid or purchased,  or agreed to redeem, repay or
                  purchase, any of its own shares.

5.7.2    No securities  (within the meaning of Section  254(1) ICTA 1988) issued
         by the Company  and  remaining  in issue at the date of this  Agreement
         were issued in circumstances such that the interest or any other amount
         payable on those securities falls to be treated as a distribution.

5.7.3    The Company has not within the period of six years preceding Completion
         made or  received  any  distribution  which is an  exempt  distribution
         within Sections 213 to 218(1) (inclusive) ICTA 1988 (demergers).

5.7.4    The Company has not elected under  Sections 246A and 246B ICTA 1988 for
         any dividend paid by it to be treated as a foreign income  dividend for
         the  purposes  of  Chapter  VA  ICTA  1988,  and no  payment  or  other
         distribution by the Company has been so treated  pursuant to Schedule 7
         Finance Act 1997.

                                       34
<PAGE>

5.8      GROUPS, TAX CONSOLIDATION ETC.

         The Company is not and has not at any time been  treated as a member of
         a group of companies for any taxation purposes and has not been subject
         to taxation  on the basis that its  profits or losses are  consolidated
         with any other company.

5.9      ACT CARRY FORWARD

5.9.1    As at 6 April  1999,  the  Company had no  unrelieved  surplus  advance
         corporation  tax  as  defined  in The  Corporation  Tax  (Treatment  of
         Unrelieved  Surplus  Advance  Corporation  Tax)  Regulations  1999  (SI
         1999/358) (the "Shadow ACT Regulations").

5.10     CAPITAL GAINS

5.10.1   If each of the assets  other than  trading  stock of the  Company  were
         disposed of for a  consideration  equal to the book value of that asset
         in, or adopted  for the  purpose  of, the  Accounts,  no  liability  to
         taxation in relation  to any such asset would arise  (disregarding  for
         this purpose any relief and  allowances  available to the Company other
         than amounts falling to be deducted from consideration receivable under
         Section 38 TCGA 1992).

5.10.2   No liability to taxation  would arise on the disposal by the Company of
         any asset other than trading stock acquired since the Accounts Date for
         a  consideration  equal to the  consideration  actually  given  for the
         acquisition.

5.11     CAPITAL LOSSES

         No loss which might  accrue on the disposal by the Company of any asset
         is liable to be reduced or eliminated and no chargeable  gain is liable
         to be created or increased by virtue of any depreciatory transaction or
         any reduction in value of that or any related asset for the purposes of
         corporation  tax on chargeable  gains or any  corresponding  tax of any
         relevant foreign jurisdiction.

                                       35
<PAGE>

5.12     CAPITAL EXPENDITURE

5.12.1   The Company has not since the  Accounts  Date done or omitted to do, or
         agreed to do,  or  permitted  to be done,  any act as a result of which
         there  may be made a  balancing  charge  or any  disposal  value may be
         brought into account or any deemed  trading  receipt may arise under or
         by  virtue  of  any  provision  of  CAA  1990  (or  any   corresponding
         legislation  in the UK or  elsewhere),  or there may be a withdrawal or
         refusal of  allowances  or a recovery of excess  relief  under any such
         provision.

5.12.2   If the Company disposed of each of its assets, or of any pool of assets
         (that is to say all those assets expenditure relating to which would be
         taken into account in computing  whether a balancing charge would arise
         on a disposal  of any of those  assets)  for a  consideration  equal to
         their  book  value  as  shown  in or  adopted  for the  purpose  of the
         Accounts,  no balancing  charge (or  corresponding  tax of any relevant
         foreign  jurisdiction) would arise in respect of any such asset or pool
         of assets  under any  legislation  relating to capital  allowances  (or
         corresponding legislation of the relevant foreign jurisdiction).

5.12.3   The Company has not made any election  under Section 37 CAA 1990 nor is
         taken to have made such an election under  sub-section  (8)(c) CAA 1990
         (election for assets to be treated as short life  assets).  The Company
         has not incurred any  expenditure on machinery or plant which is a long
         life asset to which Chapter IVA, Part II CAA 1990 applies.

5.13     LOAN RELATIONSHIPS

5.13.1   The Company is not party to any loan relationship as defined in Chapter
         II,  Part IV  Finance  Act 1996  which may give  rise to any  debits or
         credits  for the  purposes  of that  Chapter  other than in relation to
         interest, charges or expenses.

5.13.2   The Company is not a party to any loan relationship:-

         5.13.2.1 where there is a connection  between the parties as defined by
                  Section 87 Finance Act 1996;

                                       36
<PAGE>

         5.13.2.2 where  there  has  been or will be a  release  of the  amounts
                  payable under the relationship;

         5.13.2.3 to which the  transitional  provisions  of Schedule 15 Finance
                  Act 1996 apply or will apply;

         5.13.2.4 to which  paragraph 11, Schedule 9 Finance Act 1996 applies or
                  may apply (transactions not at arm's length);

         5.13.2.5 to  which  Sections  92  (convertible   securities   etc),  93
                  (relationships linked to the value of chargeable assets) or 94
                  (indexed gilt-edged securities) Finance Act 1996 apply.

5.13.3   The  Company  accounts  for all its loan  relationships  (as defined in
         Section 81 Finance  Act 1996) on an  authorised  accruals  basis and no
         circumstances  exist by virtue of which a balancing debit or credit may
         be brought into account in an accounting  period of the Company  ending
         after Completion  pursuant to Section 89 Finance Act 1996 (inconsistent
         application  of  accounting  methods)  or Section  90 Finance  Act 1996
         (changes of accounting method).

5.13.4   The Company is not the debtor pursuant to any loan relationship:-

         5.13.4.1 to which the provisions of paragraph 2, Schedule 9 Finance Act
                  1996 (late interest) have applied; or

         5.13.4.2 which  has  an  unallowable  purpose  within  the  meaning  of
                  paragraph  13 Schedule 9 Finance Act 1996 (loan  relationships
                  for unallowable purposes).

5.13.5   The  Company  has not issued any  relevant  discounted  securities  (as
         defined in Schedule 13 Finance Act 1996 (or any securities  which would
         be relevant  discounted  securities if the amendments to that provision
         contained in clause 59 of the Finance Bill 1999 was enacted in the form
         originally published).

                                       37
<PAGE>

5.14     FOREIGN EXCHANGE AND FINANCIAL INSTRUMENTS

         The Company has no:-

5.14.1   qualifying  assets,  qualifying  liabilities  or currency  contracts to
         which the  provisions  of Chapter II, Part II Finance Act 1993 apply or
         will or may apply;

5.14.2   interest rate or currency  contracts or options to which the provisions
         of Chapter II, Part IV Finance Act 1994 apply or will or may apply.

5.15     WITHHOLDINGS

         The Company has made all  deductions and retentions of or on account of
         taxation  as it was or is obliged or  entitled to make and has made all
         such  payments of or on account of taxation as should have been made to
         any taxation authority in respect of such deductions or retentions.

5.16     EMPLOYEES ETC.

5.16.1   The Company has not made any payment to, or provided any benefit for or
         on behalf of, any officer or employee or ex-officer or  ex-employee  of
         the Company  which is not allowable as a deduction in  calculating  the
         profits of the Company for taxation purposes.

5.16.2   The  Company  has  made  all  payments,  deductions,   withholdings  or
         reductions  as it should  have made in respect of any  remuneration  or
         benefits of any kind paid or provided to employees,  sub-contractors or
         workers supplied by agencies in respect of taxation, national insurance
         or social security  contributions,  and all sums payable by the Company
         to any taxation authority in respect of such amounts have been, or will
         before  Completion  be,  paid  to the  relevant  authority  within  the
         prescribed time limits.

5.16.3   The Company has kept proper books and records relating to the same.

5.16.4   The Disclosure  Letter contains full details of all share schemes which
         the Company operates or in which employees are entitled to participate,
         together  with  copies  of

                                       38
<PAGE>

         any  approvals  issued by the taxation  authorities  in respect of such
         schemes and nothing has been done to prejudice  the approved  status of
         any such schemes.

5.17     CONTROLLED FOREIGN COMPANIES

         The  Subsidiaries of the Company are not and never have been controlled
         foreign companies as defined in section 747(1) ICTA 1988.

5.18     VALUE ADDED TAX

5.18.1   The  Company is  registered  for the  purposes of value added tax . The
         Company is not a member of a group of companies for UK or foreign value
         added tax purposes and has not applied for such treatment.

5.18.2   The Company has not been required by the  Commissioners  of Customs and
         Excise or equivalent foreign  authorities to give security and no steps
         have been taken for distress to be levied on any asset of the Company.

5.18.3   The Company is not in arrears with any payment or returns in respect of
         value added tax. The Company has not been subject to any penalty,  fine
         or  surcharge  in respect of value added tax and has not  received  any
         notice of any such penalty, fine or surcharge.

5.18.4   The Company has complied with and observed in all material respects the
         terms of all  enactments  relating to value added tax or any equivalent
         tax  in  any  jurisdiction  and  all  regulations,   orders,   notices,
         provisions   and   conditions   made  under  those   enactments   ("VAT
         legislation").

5.18.5   The  Company  has  maintained  and  obtained   complete,   correct  and
         up-to-date  records,  invoices and other documents (as the case may be)
         appropriate  or requisite for the purposes of VAT  legislation  and has
         preserved such records,  invoices and other  documents in such form and
         for such periods as are required by VAT legislation.

5.18.6   The Company has not since its incorporation incurred any expenditure on
         capital  items such that the  provisions of Part XV The Value Added Tax
         Regulations 1995 (capital goods scheme) may apply to the Company.

                                       39
<PAGE>

5.18.7   The  Company  obtains  credit for all input tax paid or suffered by it,
         apart  from  input  tax on  supplies  in the case of  which  there is a
         general prohibition on credit (such as cars and entertainment).

5.19     CLOSE COMPANIES

5.19.1   The Company is not and has at no time been a close  investment  holding
         company as defined in Section 13A ICTA 1988.

5.19.2   The  Company  has not made any  transfers  of value  within  Section 94
         Inheritance Tax Act 1984.

5.19.3   The Company  has not in the last six years done  anything so as to give
         rise to an  assessment  or any  charge  to tax  under  Section  419 (as
         extended by Section 422) ICTA 1988.

5.19.4   The  Company has not in the last six years made a  distribution  within
         Section 418 ICTA 1988.

5.20     INHERITANCE TAX

5.20.1   No shares in or assets of the  Company  were  acquired by it or (as the
         case may be) the Vendor in circumstances such that they continued to be
         subject  to any  Inland  Revenue  charge  to which  they  were  subject
         immediately  before  such  acquisition  or such that,  if they had been
         subject  to  an  Inland   Revenue   charge   immediately   before  such
         acquisition, they would have continued to be subject to it.

5.20.2   No shares in or assets of the  Company are subject to any such power of
         sale, charge or mortgage as is mentioned in Section 212 Inheritance Tax
         Act 1984 and  there are no  circumstances  which  might  lead to such a
         power arising.

5.21     SECONDARY LIABILITY

         The  Company  is  not,  nor  will it  become,  liable  to pay,  or make
         reimbursement  or  indemnity in respect of, any taxation (or any amount
         corresponding  to taxation) in  consequence of the failure by any other
         person to discharge that taxation or amount within any specified period
         or otherwise,  where the taxation or amount relates to a

                                       40
<PAGE>

         profit, income or gain,  transaction,  event, omission or circumstances
         arising,  occurring  or  deemed  to arise or occur  (whether  wholly or
         partly) before Completion.

5.22     PAYMENTS EQUIVALENT TO TAXATION

5.22.1   The Company has not entered into any  indemnity,  guarantee or covenant
         under  which the Company has agreed or can be procured to meet or pay a
         sum  equivalent  to or by  reference to another  person's  liability to
         taxation.

5.22.2   The  Company is not liable,  nor has any event or omission  occurred in
         consequence  of which the Company could at any time become  liable,  to
         make a  payment  to any  person as a result  of the  discharge  by that
         person of any  liability  of the  Company to  taxation  incurred  on or
         before Completion.

5.23     CAPITAL DUTY, STAMP DUTY ETC.

5.23.1   All  documents  to which the  Company  is a party  and under  which the
         Company has any rights or which form part of the Company's title to any
         asset owned by it have been duly  stamped  with the  correct  amount of
         stamp  duty and any  applicable  stamp or other duty in respect of such
         documents has been accounted for and paid and no such  documents  which
         are outside the United  Kingdom  would  attract stamp duty if they were
         brought into the United Kingdom.

5.23.2   The Company has complied in all respects with the provisions of Part IV
         Finance Act 1986 (stamp duty reserve tax) and with any regulations made
         under  it and  neither  it nor any  nominee  for it is a  party  to any
         agreement  which  falls  within the terms of Section  87(1) of that Act
         (principal charge) and in relation to which the conditions  referred to
         in Section 92(1) of that Act  (repayment or  cancellation  of tax) have
         not been fulfilled.

6        ASSETS

6.1      TITLE TO ASSETS AND ENCUMBRANCES

6.1.1    Except for trading stock sold by the Company in the ordinary  course of
         its day to day  business  or for  trading  stock  acquired  subject  to
         retention or  reservation of

                                       41
<PAGE>

         title  by the  supplier  or  manufacturer  of  such  trading  stock  as
         disclosed  in the  Disclosure  Letter,  all the assets  included in the
         Accounts or acquired  after the Accounts Date as well as all the assets
         used in the Company's business:-

         6.1.1.1  are legally and  beneficially  owned by the Company  free from
                  any mortgage, charge, lien or other encumbrance;

         6.1.1.2  are not held subject to any  agreement for lease,  hire,  hire
                  purchase or sale on conditional or deferred terms; and

         6.1.1.3  are in the possession or under the control of the Company.

6.1.2    In respect of any of the items  referred to in the preceding  paragraph
         6.1.1 which are held under any agreement for lease, hire, hire purchase
         or sale on conditional or deferred terms,  there has been no default by
         the Company in the  performance  or observance of any of the provisions
         of such agreements.

6.2      PLANT

6.2.1    The plant and machinery,  including fixed plant and machinery,  and all
         vehicles and office and other  equipment  used in  connection  with the
         business  of the  Company  are in  good  repair  and  condition  and in
         satisfactory  working  order having  regard to their age and use,  have
         been  regularly  and  properly  maintained  and are not  surplus to the
         Company's requirements.

6.2.2    So far as the  Vendors  are aware  (having  obtained  such  advice from
         competent   professional   IT   advisers  as  is   reasonable   in  the
         circumstances), in relation to hardware, software and equipment reliant
         on electronic  controls used in the Company's  business and supplied by
         the  Company in the course of its  business  activities,  none  contain
         embedded  logic or code which will fail to  recognise  the year 2000 as
         such,  or  which  might  fail or  cause  other  hardware,  software  or
         equipment to fail to perform according to specification or to the needs
         of the  Company's  business  by  reason  of the  date  change  after 31
         December  1999,  or cannot  accurately  and  correctly  process data by
         reason of a failure  accurately  to recognise  any date or dates of any
         kind.

                                       42
<PAGE>

6.2.3    The Company owns all tooling and  intellectual  property rights therein
         used by or under the control of the Company.

6.3      STOCK

6.3.1    The  Company's  stock in trade is in good  condition  and is capable of
         being sold by the  Company in the  ordinary  course of its  business in
         accordance with its current price list without rebate or allowance to a
         purchaser.

6.3.2    The Company has not sold any  products to  customers  on the basis that
         such  products can be returned by any such  customers to the Company in
         return for complete or partial repayment.

6.4      DEBTS

6.4.1    The amount of all debts  recorded  in the  Accounts or the books of the
         Company as being due to the  Company  (less the amount of any  specific
         provision  or  reserve  for  such  debts  made in the  Accounts  or the
         Management Accounts) will be received in full in the ordinary course of
         business  and none of those  debts is subject to any  counter-claim  or
         set-off.

6.4.2    No part of the amounts  included in the  Accounts or (in the case of an
         amount  arising after the Accounts Date) in the books of the Company as
         due from  debtors has been  released on terms that any debtor pays less
         than the full  book  value of his debt or has been  written  off or has
         proved to any extent irrecoverable or is now regarded as irrecoverable.

6.5      INTELLECTUAL PROPERTY

6.5.1    In respect of the  Intellectual  Property  listed in document 24 of the
         Disclosure Bundle attached to the Disclosure Letter ("the Listed IP"):-

         6.5.1.1  the Listed IP is owned  absolutely  by the Company free of all
                  liens, charges,  encumbrances and licences, nor is the Company
                  obliged to grant any liens, charges,  encumbrances or licences
                  in respect of it;

                                       43
<PAGE>

         6.5.1.2  the list  contains  true and complete  details of all patents,
                  trade marks,  registered designs and applications for the same
                  owned by the Company;

         6.5.1.3  to the best of the Vendors' knowledge, information and belief,
                  all documents  necessary to establish  the Company's  title to
                  the  Listed  IP are in  its  possession  and  have  been  duly
                  stamped; and

         6.5.1.4  to  the   extent   that  the  rights  in  the  Listed  IP  are
                  registrable,  the  same  are  registered  in the  name  of the
                  Company as sole  absolute  owner and all  payments due and all
                  registration  and  renewal  formalities  relating  to them are
                  up-to-date and complete and correct.

6.5.2    To the best of the  Vendors'  knowledge,  information  and belief,  the
         conduct of the Company's business as now and as currently planned to be
         conducted  does not  infringe,  has not infringed and will not infringe
         the rights of any third party in relation to any Intellectual Property.

6.5.3    No third party has  outstanding  any claim against the Company based on
         such third  party's  Intellectual  Property and there are no grounds to
         anticipate that there will be such claim.

6.5.4    The Vendors have provided the Purchaser with true copies of all written
         licences and other  arrangements  relating to Intellectual  Property to
         which the Company is a party or to which it is subject, and such copies
         contain all the terms  applicable to each such licence or  arrangement.
         No party to any such licence or arrangement is or has been in breach of
         it. There are no licences  relating to  Intellectual  Property to which
         the  Company  is a party  or to which it is  subject  which  are not in
         writing.

6.5.5    The Vendors have provided the Purchaser with a listing of all rights in
         Intellectual Property subject to payment of renewal fees by the Company
         and such listing is accurate.

                                       44
<PAGE>

6.5.6    The rights in  Intellectual  Property  used or currently  planned to be
         used by the Company ("the Utilised IP Rights"):-

         6.5.6.1  so far as the Vendors are aware,  are such that no third party
                  may lawfully  manufacture or sell those elements of the design
                  and  function  of  the  products  made  by the  Company  which
                  distinguish  its  products  from  those  made  or  sold by its
                  competitors or will be able to do so;

         6.5.6.2  so  far as the  Vendors  are  aware,  may be  fully  exploited
                  without payment to or permission of third parties;

         6.5.6.3  are not and have not been the subject of any civil,  criminal,
                  administrative  or  arbitration   proceedings  brought  by  or
                  against the Company,  nor are any such proceedings pending or,
                  so far as the  Vendors are aware,  threatened,  nor, so far as
                  the Vendors are aware, could any such proceedings successfully
                  be brought  against the  Company  and no fact or  circumstance
                  exists which might give rise to such  proceedings  against the
                  Company,  nor have any claims or threats been made against the
                  Company which might lead to any  termination  or alteration of
                  the Company's rights therein or to the terms on which the same
                  are exploited;

         6.5.6.4  are not limited in time save by statute or any agreement which
                  has been  disclosed to the  Purchaser and which is included in
                  the annexures to the Disclosure Letter;

         6.5.6.5  are not subject to conditions as to use;

         6.5.6.6  are not the  subject  of any  rights  held by any third  party
                  including employees (whether by licence or otherwise);

         6.5.6.7  so far as the  Vendors  are aware,  are not being and have not
                  been infringed by any third party, and there are no grounds to
                  anticipate that any of them will be so infringed;

                                       45
<PAGE>

         6.5.6.8  to  the  extent  that  they  comprise  trade  marks,  are  not
                  potentially subject to revocation for non-use;

         6.5.6.9  to  the  extent  that  they  comprise  rights  in  respect  of
                  patents:-

                  (i)      have been  protected  insofar as all goods  which are
                           protected by any such patent are (or their  packaging
                           is) marked to show the patent numbers concerned; and

                  (ii)     have not been  exploited  in such a way that an order
                           may be made under Section 49 Patents Act 1977;

         6.5.6.10 to the  extent  that they  relate  to  inventions  capable  of
                  protection by the grant of a patent,  have not been  disclosed
                  in such a way as to prejudice the grant of a patent;

         6.5.6.11 so far as the  Vendors  are aware,  to the extent that they or
                  any licence over them are subject to  registration,  have been
                  protected  to the extent that any  dealing  with them has been
                  submitted  for  registration  within six months of the date of
                  the dealing; and

         6.5.6.12 so far as the  Vendors  are  aware,  are  not  potentially  or
                  currently subject to payment to any employee of the Company or
                  any third  party by reason  of their  use or by  reference  to
                  profits  made  or  income   received  for  goods  or  services
                  incorporating  them,  nor does  any  employee  potentially  or
                  currently   have  the  right  to  payment  by  reason  of  his
                  contribution to their creation.

6.5.7    The Utilised IP Rights which were developed specifically for use by the
         Company:-

         6.5.7.1  have been  developed  exclusively  by employees of the Company
                  within the course of their employment; or

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<PAGE>

         6.5.7.2  to  the  extent  not  so  developed,   have  been  transferred
                  absolutely  to the Company or licensed to it  exclusively  and
                  irrevocably   without   limit  of  time  and  not  subject  to
                  conditions as to use or transferability or as to payment,  and
                  any moral  rights  capable of being  exercised  in relation to
                  them have been waived.

6.5.8    The Company has fully disclosed to the Purchaser:-

         6.5.8.1  all obligations as to  confidentiality  imposed on the Company
                  in relation to its business or any  equipment  or  information
                  held or used in relation to it;

         6.5.8.2  all terms to which the  Company  is  subject  as to the use of
                  equipment or information; and

         6.5.8.3  all terms to which  third  parties  are  subject  by reason of
                  rights  granted to them by the Company in connection  with its
                  business.

6.5.9    The Company owns all the Intellectual Property rights in all chips used
         in connection with the business of the Company.

6.6      PROPERTIES

6.6.1    The  Properties  comprise  the  only  freehold  or  leasehold  or other
         immovable  property  in any part of the world in which the  Company has
         any interest or which are otherwise occupied or used by the Company.

6.6.2    The  particulars  of each of the  Properties  set out in Schedule 6 are
         true and accurate in all respects.

6.6.3    The  Company is in physical  possession  and actual  occupation  of the
         whole of each of the Properties on an exclusive basis.

6.6.4    The Company is solely  entitled at law and in equity to the  Properties
         and has a good and marketable title to them.

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<PAGE>

6.6.5    The Company has in its  physical  possession  free from any lien all of
         the deeds and documents  necessary to prove the title of the Company to
         the  Properties  and the title deeds and documents are all duly stamped
         originals.

6.6.6    The Properties are not subject to or affected by any mortgage or charge
         (whether  legal or  equitable,  fixed or  floating),  debenture,  lien,
         pledge,  security  interest  or  other  encumbrance  including  without
         limitation  any which secure the payment of monies or other  obligation
         or liability of any third party.

6.6.7    The  Properties  enjoy all rights and  privileges  necessary  for their
         continued   use  and  enjoyment  for  their  current  use  without  any
         restrictions or limitations.

6.6.8    The  Properties  are  not  subject  to  any  covenants,   restrictions,
         stipulations,  reservations, agreements or other matters of a public or
         private nature which are onerous or unusual or which  adversely  affect
         their current use or which affect their value.

6.6.9    The current use of the Properties is their permitted use under planning
         legislation.

6.6.10   All necessary planning  permissions and consents and approvals from all
         statutory and other competent authorities in relation to the Properties
         and their development have been obtained and are valid and subsisting.

6.6.11   So far as the Vendors are aware, the Properties are not affected by any
         dispute of any kind.

6.6.12   So far as the Vendors are aware,  all statutes,  orders or  regulations
         affecting  the  Properties  and  their  use and  development  have been
         observed and there are no outstanding  requirements or  recommendations
         of any competent authority.

6.6.13   No difficulty has been  experienced  in obtaining  insurance for any of
         the Properties and the current  requirements of the insurers of each of
         the Properties have been complied with.

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<PAGE>

6.6.14   In relation to the Properties which are leasehold, the Company has paid
         all sums due and has observed and  performed  the covenants on the part
         of the  tenant  and the  conditions  contained  in the  leases  and the
         obligations  contained in any licence or other document supplemental to
         any of the leases and has obtained all consents  required in connection
         with the grant of the leases.

6.6.15   The  Company  has  no  liability   (whether   actual,   contingent   or
         prospective) or obligation in respect of any property whether freehold,
         leasehold,  licensed  or occupied  under an  informal  or  undocumented
         arrangement  in any  part of the  world  (other  than  the  Properties)
         including without limitation any liability or obligation to:-

         6.6.15.1 perform  covenants  (restrictive  or positive)  or  agreements
                  affecting or relating to land;

         6.6.15.2 pay rent or rents,  service  charges,  insurance  premiums  or
                  other monies or observe or perform  covenants,  obligations or
                  conditions  contained  in  any  lease,  agreement  for  lease,
                  licence,  deed,  agreement  or  other  document  ancillary  or
                  supplemental to a lease whether or not expressed to be so;

         6.6.15.3 pay principal,  interest or other monies or observe or perform
                  covenants or agreements  contained in any mortgage,  charge or
                  other  document  creating a security  interest  affecting  any
                  property to which this Warranty applies;

         6.6.15.4 make  payments  under or  otherwise  observe  or  perform  any
                  guarantee or surety,  whether as primary or secondary obligor,
                  or indemnity or otherwise  assume any liabilities of any third
                  party by accepting a leasehold or in any other manner;

         6.6.15.5 make  payments  under or  otherwise  observe  or  perform  any
                  agreement for sale, option or right of pre-emption;

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<PAGE>

         6.6.15.6 make  payments  under or  otherwise  observe  or  perform  any
                  building contract, collateral warranty, duty of care agreement
                  or professional appointment.

6.7      THE ENVIRONMENT

6.7.1    No  Pollution  of the  Environment  in violation of any law relating to
         protection of the  Environment or at levels in excess of that permitted
         under any such law has occurred at, under or from the Properties.

6.7.2    The Company has complied and continues to comply with all laws relating
         to  protection  of the  Environment  and has  filed  all  notifications
         required to enable it lawfully  and properly to operate its business at
         and from the Properties.

6.7.3    In this paragraph 6.7, "Pollution of the Environment" and "Environment"
         have the meanings  given to them by the  Environmental  Protection  Act
         1990.

7        EMPLOYEES AND CONSULTANTS

7.1      DIRECTORS

         The  particulars of Directors shown in paragraph 6 of Schedule 2 and in
         paragraph 6 of Schedule 3 are true and complete and no person not named
         as such in  that  paragraph  is or is  held  out as a  director  of the
         Company.

7.2      PARTICULARS OF EMPLOYEES

7.2.1    The  particulars  shown in the  Schedule  of  Employees  annexed to the
         Disclosure  Letter show all  remuneration  payable  and other  benefits
         provided  or which the Company is bound to provide  (whether  now or in
         the  future) to each  officer and  employee  of the Company  and/or any
         person  connected  with any such person and include  true and  complete
         particulars of all profit sharing,  incentive and bonus arrangements to
         which the Company is a party, whether legally binding on the Company or
         not,  and no person not named in that  Schedule  is an  employee of the
         Company.

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<PAGE>

7.2.2    Since  the  Accounts  Date,  no  change  has  been  made in the rate of
         remuneration  or the  emoluments  or pension  benefits of any  officer,
         ex-officer  or  employee  of the Company and no change has been made in
         the  terms  of  engagement  of any  such  officer  or  employee  and no
         additional officer or employee has been appointed.

7.2.3    No present  officer or  employee  of the  Company has given or received
         notice  terminating  his employment,  except as expressly  contemplated
         under this Agreement.

7.3      SERVICE CONTRACTS

7.3.1    There is not now outstanding any service  contract  between the Company
         and any of its directors, officers or employees which is not terminable
         by the Company without compensation (other than statutory compensation)
         on one month's notice or less given at any time.

7.3.2    The attention of all employees of the Company has been drawn to such of
         the terms of their  employment as is required by the Employment  Rights
         Act 1996.

7.4      TRADES UNIONS

         The  Company is not a party to any  agreement  or  arrangement  with or
         commitment to any trades union or staff association nor, to the best of
         the  Vendors'  knowledge,  information  and  belief,  are  any  of  its
         employees members of any trades union or staff association.

7.5      DISPUTES WITH EMPLOYEES

         There is no outstanding  claim against the Company by any person who is
         now or has been an officer or  employee  of the  Company or any dispute
         between the Company and a material number or class of its employees and
         no  payments  are  due by  the  Company  under  the  provisions  of the
         Employment Rights Act 1996.

7.6      REDUNDANCIES AND TRANSFER OF BUSINESS

         In the 12 months preceding the date of this Agreement,  the Company has
         not:-

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<PAGE>

7.6.1    given  notice of  redundancies  to the  relevant  Secretary of State or
         started  consultations  with a trades union under Chapter II of Part IV
         of the Trade  Union and Labour  Relations  (Consolidation)  Act 1992 or
         failed to comply with its  obligations  under  Chapter II of Part IV of
         that Act; or

7.6.2    been a party to a relevant  transfer  (as  defined in the  Transfer  of
         Undertakings  (Protection of Employment) Regulations 1981) or failed to
         comply  with a duty to inform and  consult a trade  union  under  those
         Regulations.

7.7      CONSULTANTS

         There is not now  outstanding  any contract or arrangement to which the
         Company  is a  party  for  the  payment  to any  person  or body of any
         consultancy or like fees.

7.8      EX-GRATIA PAYMENTS

         Since the Accounts  Date,  no ex-gratia  payments have been made by the
         Company to any officer or employee or former officer or employee of the
         Company  or to  their  dependants  or  relatives  nor  is  the  Company
         considering making any such payments.

7.9      COMPLIANCE

         So far as the Vendors are aware,  the Company  has, in relation to each
         of its officers and employees (and, so far as relevant,  to each of its
         former officers and employees):-

7.9.1    complied  with all  obligations  imposed  on it by,  and all orders and
         awards made under,  all  statutes,  ordinances,  regulations,  codes of
         conduct and practice,  collective  agreements and customs and practices
         relevant to the  relations  between it and its  employees or any trades
         union, or to the conditions of service of its Employees  (including the
         Working Time Regulations 1998);

7.9.2    complied with all recommendations made by the Advisory Conciliation and
         Arbitration  Service and with all awards and  declarations  made by the
         Central

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<PAGE>

         Arbitration Committee; and

7.9.3    maintained current, adequate and suitable records regarding the service
         of each of such officers and employees.

7.10     PENSIONS

         The Company:-

7.10.1   has no obligation (whether legally binding or not) to:-

         7.10.1.1 pay any pension; or

         7.10.1.2 make any  other  payment  on or after  retirement  or death or
                  during  periods  of  sickness  or  disability  (whether  of  a
                  temporary or permanent nature); or

         7.10.1.3 otherwise to provide  "relevant  benefits" (within the meaning
                  of Section 612 ICTA 1988)

         to, or in  respect  of any  person who is now or has been an officer or
         employee  of the  Company  or spouse or  dependant  of such  officer or
         employee; and

7.10.2   is not a party to or obliged to contribute to any scheme or arrangement
         (including, but not limited to, a personal pension scheme as defined in
         Section 630 ICTA 1988) having as its purpose or one of its purposes the
         making of any such payments,  or the provision of any such benefits, as
         are mentioned in paragraph 7.10.1 above.

7.11     FORMER OFFICERS AND EMPLOYEES

         No former officer or employee (and in particular David Bazeley) has any
         claim, whether actual or contingent,  against the Company in respect of
         the period during which he was an officer or an employee of the Company
         (as the case may be) or in respect of his  termination as an officer or
         employee.

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<PAGE>

8        LIABILITIES AND COMMITMENTS

8.1      MATERIAL CONTRACTS

         The Company is not a party to or subject to any agreement, transaction,
         obligation, commitment, understanding, arrangement or liability which:-

8.1.1    is  incapable  of complete  performance  in  accordance  with its terms
         within  six  months  after  the date on which  it was  entered  into or
         undertaken;

8.1.2    is likely to result in a material  loss to the Company on completion of
         performance;

8.1.3    cannot readily be fulfilled or performed by the Company on time without
         unusual expenditure of money and effort;

8.1.4    involves or is likely to involve obligations, restrictions, expenditure
         or receipts of an unusual, onerous or exceptional nature;

8.1.5    is a forward contract relating to foreign currency (including,  without
         limitation, the Euro);

8.1.6    involves  or is  likely  to  involve  the  supply of goods by or to the
         Company the  aggregate  sales value of which will  represent  more than
         five per cent.  of the  turnover of the Company for its last  financial
         year;

8.1.7    is a contract  for  services  (other than a contract  for the supply of
         electricity, gas or water or normal office services);

8.1.8    requires the Company to pay any  commission,  finders' fee,  royalty or
         the like;

8.1.9    in any way restricts the Company's freedom to carry on the whole or any
         part of its  business  in any part of the  world in such  manner  as it
         thinks fit;

8.1.10   is an  agreement  or  arrangement  otherwise  than by way of bargain at
         arm's length; or

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<PAGE>

8.1.11   is in any way  otherwise  than in the ordinary and proper course of the
         Company's business.

8.2      DEFAULTS

         Neither  the  Company  nor any other  party to any  agreement  with the
         Company is in material  default under any such agreement nor (so far as
         the Vendors are aware) are there any circumstances  likely to give rise
         to such a default.

8.3      SURETIES

         No person apart from the Company has given any guarantee of or security
         for any overdraft, loan or loan facility granted to the Company.

8.4      POWERS OF ATTORNEY

8.4.1    There is in force no power of  attorney  or other  authority  (express,
         implied or ostensible) given by the Company to any person to enter into
         any contract or commitment on its behalf other than to its employees to
         enter  into  routine  trading  contracts  in the usual  course of their
         duties.

8.4.2    The Company has not  appointed any agent or  distributor  in respect of
         any of its products or services in any part of the world.

8.5      INSIDER CONTRACTS

8.5.1    There is not outstanding,  and there has not at any time during the six
         years  ending  on the  date of this  Agreement  been  outstanding,  any
         agreement or  arrangement  to which the Company is a party and in which
         any Vendor, any person  beneficially  interested in the Company's share
         capital,  any director of the Company or any person  connected with any
         of them is or has been interested, whether directly or indirectly.

                                       55
<PAGE>

8.5.2    The  Company  is not a party  to,  nor have its  profits  or  financial
         position  during  such  period  been  affected  by,  any  agreement  or
         arrangement which is not entirely of an arm's length nature.

8.6      DEBTS

         There are no debts  owing by the  Company,  other than debts which have
         arisen in the ordinary course of business.

8.7      BORROWINGS AND MORTGAGES

8.7.1    The  Company  has no  borrowings,  and has not  agreed  to  create  any
         borrowings,  from its  bankers or any other  source  and, in respect of
         borrowings  disclosed  in the  Disclosure  Letter,  the Company has not
         exceeded any  limitation on its borrowing  contained in its Articles of
         Association or in any debenture or loan stock deed or other instrument.

8.7.2    No option, right to acquire, mortgage, charge, pledge, lien (other than
         a lien arising by operation of law in the ordinary  course of business)
         or  other  form of  security  or  encumbrance  or  equity  on,  over or
         affecting  the  whole or any part of the  undertaking  or assets of the
         Company is outstanding  and there is no agreement or commitment to give
         or create any.

8.7.3    No part of the  borrowings  or loan capital of the Company is dependent
         on the  guarantee  or  indemnity  of or security  provided by any other
         person.

8.8      THIRD PARTY INDEBTEDNESS

         The Company is not subject to any option or pre-emption  right or party
         to any  guarantee  or  suretyship  or any  other  obligation  (whatever
         called) to pay,  purchase or provide  funds  (whether by the advance of
         money, the purchase of or subscription for shares or other  securities,
         the purchase of assets or services,  or otherwise)  for the payment of,
         indemnity  against  the  consequences  of default in the payment of, or
         otherwise to be responsible for, any indebtedness of any other person.

                                       56
<PAGE>

8.9      TENDERS ETC

         No offer,  tender or the like is outstanding  which is capable of being
         converted  into an  obligation of the Company by an acceptance or other
         act of some other person.

8.10     TRADE WARRANTIES

8.10.1   The  Company  has not  given  any  guarantee  or  warranty  or made any
         representation  in  respect  of  articles  or  trading  stock  sold  or
         contracted to be sold by it, save for any guarantee or warranty implied
         by law and  (save as  aforesaid)  has not  accepted  any  liability  or
         obligation to service,  repair,  maintain, take back or otherwise do or
         not do anything  in respect of any  articles or stock which would apply
         after any such articles or stock have been delivered by it.

8.10.2   The Company has not  manufactured,  sold or  supplied  any  products or
         services  which  are or were or will  become  in any  material  respect
         faulty or  defective  or which do not  comply  with any  warranties  or
         representations  expressly or impliedly made by the Company or with any
         applicable regulations, standards and requirements.

8.11     LITIGATION

         Neither  the  Company,  nor any person for whose acts or  defaults  the
         Company may be vicariously  liable, is involved in any civil,  criminal
         or  arbitration  proceedings  and no such  proceedings  are  pending or
         threatened  by or against the Company or any such person and, so far as
         the Vendors are aware,  there are no facts or  circumstances  which are
         likely to lead to any such proceedings.

8.12     EXPENSES

         The  Company  has not  paid or  agreed  to pay any  costs of any of the
         Vendors   in   connection   with  the   negotiation,   preparation   or
         implementation of the transaction  contemplated by this Agreement,  nor
         has it agreed to  indemnify  any party or  incurred  any  liability  in
         connection therewith on behalf of any of the Vendors.

8.13     H. ORMOND

         There  are  no  outstanding   liabilities   or   commitments   (whether
         contractual or otherwise)  owing by the Company to H. Ormond  following
         termination of a distribution agreement made between the Company and H.
         Ormond,  and H.  Ormond has no claims  (whether  actual or  contingent)
         outstanding against the Company.

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<PAGE>

8.14     DATRIC ORIENTAL

         Leda HK has assumed the benefit of all contracts entered into by Datric
         Oriental, including contracts with Argos, John Lewis and Li and Fung.

9        THE COMPANY'S BUSINESS

9.1      BUSINESS SINCE THE ACCOUNTS DATE

         Since the Accounts Date:-

9.1.1    the  Company  has carried on its  business  in the  ordinary  and usual
         course  and  without  entering  into  any  transaction,   assuming  any
         liability or making any payment not provided for in the Accounts  which
         is  not  in  the  ordinary  course  of its  business  and  without  any
         interruption  or  alteration  in the  nature,  scope or  manner  of its
         business;

9.1.2    the Company has not borrowed or raised any money or taken any financial
         facility;

9.1.3    the  Company  has paid its  creditors  in  accordance  with its  normal
         practice for payments,  its normal  practice  being as disclosed in the
         Disclosure Letter;

9.1.4    the Company has not entered into, or agreed to enter into,  any capital
         commitment nor has it disposed of or realised any capital assets;

9.1.5    no share or loan  capital  has been  allotted or issued or agreed to be
         allotted or issued by the Company;

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<PAGE>

9.1.6    no distribution of capital or income has been declared, made or paid in
         respect of any share capital of the Company and (excluding fluctuations
         in overdrawn  current accounts with bankers) no loan or loan capital or
         preference  capital of the  Company has been repaid in whole or part or
         has become liable to be repaid;

9.1.7    there has been no depletion in the net assets of the Company; and

9.1.8    there has been no material  deterioration  in the  financial  position,
         turnover or prospects of the Company.

9.2      WORKING CAPITAL

         The  Company  has  sufficient   working  capital  for  the  purpose  of
         continuing  to carry on its  business  in its  present  form and at its
         present level of turnover and for the purposes of  executing,  carrying
         out and fulfilling in accordance with their terms all existing  orders,
         projects and  contractual  obligations  which have been placed with, or
         undertaken by, the Company.

9.3      GRANTS

         During  the period of six years  ending on the date of this  Agreement,
         the Company has not applied for or received any grant or allowance from
         any authority or agency.

9.4      COMPLIANCE WITH LAWS

         The Company is entitled to carry on the  business  now carried on by it
         without  conflict  with any valid right of any person,  firm or company
         and the Company has conducted its business in all material  respects in
         accordance  with all  applicable  laws and  regulations  of the  United
         Kingdom or any foreign country and there is no violation of, or default
         with respect to, any statute, regulation,  order, decree or judgment of
         any Court or any  governmental  agency  of the  United  Kingdom  or any
         foreign  country  which may have a  material  adverse  effect  upon the
         assets or business of the Company.

9.5      LICENCES

         All necessary licences, consents, permits and authorisations (public or
         private)  have been  obtained  by the  Company to enable the Company to
         carry on its  business  effectively  in the places and in the manner in
         which such business is now carried on and all such licences,  consents,
         permits and  authorisations  are valid and  subsisting  and the Vendors
         know of no reason why any of them  should be  suspended,  cancelled  or
         revoked.

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<PAGE>

9.6      INSOLVENCY

9.6.1    No  order  has been  made and no  resolution  has been  passed  for the
         winding  up of  the  Company  or  for a  provisional  liquidator  to be
         appointed in respect of the Company and no petition has been  presented
         and no  meeting  has been  convened  for the  purpose of winding up the
         Company.

9.6.2    No administration order has been made and no petition for such an order
         has been presented in respect of the Company.

9.6.3    No receiver (which expression shall include an administrative receiver)
         has been  appointed  in  respect  of the  Company  or all or any of its
         assets nor has any  encumbrance  over all or any of its  assets  become
         enforceable.

9.6.4    The  Company  is not and has not  admitted  itself to be  insolvent  or
         unable  to pay its debts  (or  deemed to be unable to do so within  the
         meaning of  Section  123  Insolvency  Act 1986 or, in  relation  to the
         Subsidiaries,  applicable  law) nor is it nor has it admitted itself to
         be  unable  to pay its  debts as they  fall due nor has it  stopped  or
         threatened to stop doing so.

9.6.5    No voluntary  arrangement  under Section 1 Insolvency  Act 1986 (or, in
         relation to the  Subsidiaries,  under applicable law) in respect of the
         Company  or other  compromise  or  arrangement  for the  benefit of the
         Company's creditors generally has been proposed or agreed.

9.6.6    The Company has not been a party to any transaction at an undervalue as
         defined in Section  238  Insolvency  Act 1986 (nor,  in relation to the
         Subsidiaries, as

                                       60
<PAGE>

         defined in  applicable  legislation)  nor has it given or received  any
         preference  as defined  in Section  239  Insolvency  Act 1986 (nor,  in
         relation to the Subsidiaries, as defined in applicable legislation), in
         either case  within the period of two years  ending on the date of this
         Agreement.

9.6.7    No event analogous to the foregoing has occurred in or outside England.

9.6.8    No unsatisfied judgement is outstanding against the Company.

9.6.9    No guarantee,  loan capital,  borrowed money or interest is overdue for
         payment and no other obligation or indebtedness is outstanding which is
         substantially overdue for performance or payment.

9.6.10   The Company has not  suspended  or ceased or  threatened  to suspend or
         cease to carry on all or a material part of its business.

9.6.11   No creditor of the Company has attached or taken  possession  of and no
         distress, execution,  sequestration or other process has been levied or
         enforced or sued out  against  any asset of the  Company  which has not
         been discharged.

9.7      FAIR TRADING

9.7.1    So far as the Vendors are aware, no agreement,  practice or arrangement
         carried on by the  Company  or to which the  Company is a party or with
         which the Company is concerned:-

         9.7.1.1  is or  requires  to  be  registered  in  accordance  with  the
                  provisions of the  Restrictive  Trade  Practices Acts 1976 and
                  1977 or  contravenes  the  provisions of the Resale Prices Act
                  1976  or  is  or  has  been  the   subject  or  any   enquiry,
                  investigation or proceeding in respect thereof;

         9.7.1.2  is  proscribed  by or has  been  the  subject  of an  enquiry,
                  investigation,  reference or report under the Fair Trading Act
                  1973 (or any previous  legislation  relating to  monopolies or
                  mergers) or the Competition Act 1980;

                                       61
<PAGE>

         9.7.1.3  infringes  Article 81 of the Treaty of Rome or  constitutes an
                  abuse of  dominant  position  contrary  to  Article 82 of that
                  Treaty or infringes  any  regulation or other  enactment  made
                  under  Article 83 of that Treaty or is or has been the subject
                  of  any  enquiry,   investigation  or  proceeding  in  respect
                  thereof;

         9.7.1.4  is, by virtue  of its terms or by virtue of any  practice  for
                  the time being carried on in  connection  with it, a "consumer
                  trade practice"  within the meaning of Section 13 Fair Trading
                  Act 1973 and susceptible to or under reference to the Consumer
                  Protection  Advisory  Committee  or the subject of a report to
                  the  Secretary  of State for Trade and Industry or of an Order
                  by the  Secretary  of State for Trade and  Industry  under the
                  provisions of Part II of that Act; or

         9.7.1.5  infringes any other  competition,  restrictive trade practice,
                  anti-trust   or  consumer   protection   law  or   legislation
                  applicable  in  the  United   Kingdom  or  elsewhere  and  not
                  specifically mentioned in this paragraph 9.7.

9.7.2    The  Company  has  not  given  any  undertaking  or  assurance  to  the
         Restrictive  Practices Court or the Director General of Fair Trading or
         the  Secretary  of State for Trade and  Industry or the  Commission  or
         Court of  Justice  of the  European  Community  or to any other  court,
         person or body and is not  subject  to any Act,  decision,  regulation,
         order or other  instrument  made by any of them  relating to any matter
         referred to in this paragraph 9.7.

9.7.3    The Company is not in material default or in material  contravention of
         any Article, Act, decision, regulation, order or other instrument or of
         any  undertaking  relating to any matter  referred to in this paragraph
         9.7.

9.8      INSURANCES

9.8.1    The Company is adequately  covered against  accident,  damage,  injury,
         third party loss (including product liability) and other risks normally
         insured  against by

                                       62
<PAGE>

         persons carrying on the same type of business as that carried on by the
         Company  and the  Company  has not done or omitted to do  anything  the
         doing or omission of which would make any such policy of insurance void
         or  voidable  or would or might  result in an  increase  in the rate of
         premiums payable under any such policy.

9.8.2    Where any of the  Properties  which are  leasehold  are  insured by the
         landlord under the relevant lease, the interest of the Company is noted
         on the insurance policy.

9.8.3    The Schedule of Insurances  annexed to the Disclosure  Letter  contains
         full  details of the  insurance  policies of the Company or in which it
         has an interest.

9.8.4    No  claim is  outstanding  under  any of the  policies  referred  to in
         paragraph  9.8.3 and no fact or  circumstance  exists  which might give
         rise to a claim under any of those policies.

9.9      CUSTOMERS AND SUPPLIERS

9.9.1    During the period of three years ending on the date of this Agreement:-

         9.9.1.1  the Company has not lost any major or substantial customer for
                  or supplier of all or any of its products or requirements;

         9.9.1.2  no major or substantial customer has significantly reduced its
                  orders for all or any of the products of the Company;

         9.9.1.3  there has been no substantial  change (apart from normal price
                  changes) in the basis or terms on which any person is prepared
                  to enter into contracts or do business with the Company;

         and no such  loss,  reduction  or change is  anticipated  whether  as a
         result of Completion or otherwise.

9.9.2    Neither in the financial  period ending on the Accounts Date nor in the
         period since then has any person (together with other persons connected
         with him)

                                       63
<PAGE>

         purchased  from, or sold to, the Company more than ten per cent. of the
         aggregate  amount of all sales or purchases  made by the Company during
         such  period  and  there is no  person  (together  with  other  persons
         connected with him) on whom the Company is  substantially  dependent or
         the  cessation  of business  with whom would  substantially  affect the
         business of the Company.

9.9.3    The Company has satisfied itself after making all reasonable  enquiries
         that there will be no  interruption  to, or other  adverse  consequence
         for,  its  business by reason of the failure of any person with whom it
         deals in  business  to ensure  that  hardware,  software  or  equipment
         reliant on electronic  controls used by that person (i)  recognises the
         year 2000 as such, (ii) will not fail or cause other hardware, software
         or equipment to fail to perform  according to  specification  or to the
         needs of that  person's  business by reason of the date change after 31
         December  1999 and (iii) will  accurately  and  correctly  process data
         irrespective of any change in date or dates of any kind.

9.10     THE COMPANY'S ACTIVITIES, ETC.

         None of the  activities,  contracts  or rights of the  Company is ultra
         vires,  unauthorised,  invalid  or  unenforceable  or in  breach of any
         contract or covenant and all documents in the  enforcement of which the
         Company may be interested are valid and have been duly stamped.

9.11     TRANSACTIONS WITH EUROPEAN CUSTOMERS

         All the Company's transactions with customers in Europe are denominated
         in US dollars.

10       CONSEQUENCES OF SALE OF THE SHARES

10.1     OTHER AGREEMENTS AND OBLIGATIONS

         Neither  the Vendors  nor the  Company is a party to any  agreement  or
         bound by any  obligation  the terms of which will prevent the Purchaser
         from enjoying the full benefit of this Agreement.

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<PAGE>

10.2     CHANGE OF CONTROL

         There are no  agreements  concerning  the Company  which will or may be
         terminated  or the terms of which will or may in any way be varied as a
         result of a change in the control of the Company or in the  composition
         of the Board of Directors of the Company.

                                       65
<PAGE>

                                   SCHEDULE 6

                                   PROPERTIES

UNREGISTERED LAND

LEASEHOLD

<TABLE>
<CAPTION>
BRIEF DESCRIPTION             ESTATE OWNER      DATE OF          PARTIES                    PRESENT USE
                                                CONVEYANCE

<S>                           <C>               <C>              <C>                        <C>
Unit 11, Ermine Point,        LMP Ltd           08.05.98         Brian Oakley Ltd (1)       Warehouse
Westmill Road, Ware, Herts                                       LMP Ltd (2)

Unit 12, Ermine Point,        LMP Ltd           31.01.97         Brian Oakley Ltd (1)       Warehouse
Westmill Road, Ware, Herts                                       LMP Ltd (2)

75 Railway Street,            LMP Ltd           22.03.99         Michael Herbert Charles    Head Office
Hertford, Herts                                                  Smith (1)
                                                                 LMP Ltd (2)

Office No. 2 on 2nd Floor     LMP (HK) Ltd      23.03.99         LMP (HK) Ltd (1)           Office
Wing on Plaza, No. 62 Mody                                       Flagtop Light Industrial
Road, Kowloon                                                    Co Ltd (2)
</TABLE>

                                       66
<PAGE>

                                   SCHEDULE 7

                                  TAX COVENANT

1        DEFINITIONS

         In this Schedule,  unless the context requires otherwise, the following
         words and expressions  have the following  meanings and in the event of
         conflict  the  definitions  in this  Schedule  shall  prevail  over the
         definitions in Clause 1 of this Agreement:-

1.1      ACCOUNTS:  the audited  accounts of the Company and of the Subsidiaries
         for the  accounting  reference  period which ended on the Accounts Date
         (comprising  in each case a balance  sheet and profit and loss  account
         and the notes to them);

1.2      ACCOUNTS  RELIEF:  any relief which appears as an asset in the Accounts
         or has been taken into account in reducing or eliminating any provision
         for deferred tax which  appears in the Accounts (or which,  but for the
         presumed  availability  of such  relief,  would  have  appeared  in the
         Accounts);

1.3      EVENT:  any event,  act,  omission or  transaction  (whether or not the
         Company  or the  Subsidiaries  is a party  to  such  act,  omission  or
         transaction)   and  for  the  avoidance  of  doubt  includes   (without
         limitation)  any change in the  residence  of any person and the death,
         winding up or  dissolution  of any person and any reference to an event
         occurring on or before a particular  date shall  include a reference to
         any event which for tax  purposes  is deemed to have,  or is treated or
         regarded as having, occurred on or before that date;

1.4      POST-ACCOUNTS DATE RELIEF: any relief which arises as a consequence of,
         or by  reference  to, an event  occurring  or deemed to occur after the
         Accounts Date;

1.5      PURCHASER'S GROUP: the Purchaser, the Company and the Subsidiaries;

1.6      RELIEF:  includes  any relief,  loss,  allowance,  exemption,  set off,
         deduction  or credit in  respect of any  taxation  or  relevant  to the
         computation  of any  income,  profits or gains for the  purposes of any
         taxation, and any right to a repayment of taxation;

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<PAGE>

1.7      TAXATION OR TAX: all forms of taxation, imposts, duties, levies, social
         security  contributions  and rates  whether  of the  United  Kingdom or
         elsewhere  including  (without  limitation)  corporation  tax,  advance
         corporation tax, income tax (including income tax or amounts on account
         of income tax required to be deducted or withheld from or accounted for
         in respect of any payment),  capital gains tax,  development  land tax,
         inheritance  tax, value added tax,  national  insurance  contributions,
         capital duty,  stamp duty, stamp duty reserve tax, duties of custom and
         excise,  petroleum revenue tax, local authority rates and charges,  all
         taxes,  duties or charges replaced by or replacing any of them, and all
         other  taxes on gross or net income,  profits or gains,  distributions,
         receipts, sales, use, occupation,  franchise, value added, and personal
         property, and all levies,  imposts,  duties, charges or withholdings of
         any nature whatsoever chargeable by any tax authority,  and any payment
         whatsoever which the Company or the Subsidiaries may be or become bound
         to make to any person as a result of the  discharge  by that  person of
         any tax which the Company or the  Subsidiaries has failed to discharge;
         together with all  penalties,  charges and interest  relating to any of
         the  foregoing or to any late or incorrect  return in respect of any of
         them,  and  regardless  of  whether  any such  taxes,  levies,  duties,
         imposts, charges,  withholdings,  penalties and interest are chargeable
         directly or primarily against or attributable  directly or primarily to
         the Company,  the  Subsidiaries  or any other person and of whether any
         amount in respect of any of them is recoverable from any other person;

1.8      TAXATION  AUTHORITY:  any taxing or other authority  (whether within or
         outside the United Kingdom) competent to impose any taxation liability;

1.9      TAXATION CLAIM: the issue of any notice, demand, assessment,  letter or
         other  document  by or on  behalf  of  any  taxation  authority  or the
         imposition  (or any document  referring to the possible  imposition) of
         any  withholding  of or on account of  taxation,  from which it appears
         that a  taxation  liability  will  be  imposed  on the  Company  or the
         Subsidiaries;

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<PAGE>

1.10     TAXATION LIABILITY: includes:-

1.10.1   any liability of the Company or the  Subsidiaries  to make or suffer an
         actual payment of taxation (or amount in respect of taxation), in which
         case the amount of the  taxation  liability  shall be the amount of the
         liability;

1.10.2   the loss of any  Accounts  relief,  in which  case  the  amount  of the
         taxation  liability  shall be equal to the amount of the taxation which
         (on the basis of the rates  prevailing  on the date of this  Agreement)
         would have been saved but for such loss or, where the  relevant  relief
         is a right to a repayment of taxation, the amount of the repayment;

1.10.3   the  setting  off  against  taxation,  income,  profits or gains of any
         Accounts relief or any  post-Accounts  Date relief where,  but for such
         setting off, the Company or the Subsidiaries would have been subject to
         a taxation  liability in respect of which the Purchaser would have been
         entitled to make a claim  against the Vendors  under this  Schedule (or
         would  have  been  so  entitled   in  the  absence  of  any   financial
         restrictions  on such  obligation)  in  which  case the  amount  of the
         taxation  liability  shall be the  amount of such  claim or,  where the
         relevant  relief is a right to a repayment of  taxation,  the amount of
         the repayment;

1.10.4   any  liability  of the  Company  or any of the  Subsidiaries  to make a
         payment  pursuant to an indemnity,  guarantee or covenant  entered into
         before  Completion under which the Company or any Subsidiary has agreed
         to meet or pay a sum equivalent to or by reference to another  person's
         liability to taxation,  in which case the taxation  liability  shall be
         equal to the amount of the liability.

1.11     References  to income,  profits or gains  earned,  accrued or  received
         include  income,  profits  or gains  deemed to have been or  treated or
         regarded as earned, accrued or received for tax purposes.

1.12     References  to an event  occurring  on or before  Completion  include a
         series  or  combination  of two or more  events,  where at least one of
         those events occurs before  Completion and at least one of those events
         occurs after Completion.

                                       69
<PAGE>

1.13     References  to the loss of a relief or a right to any  payment or other
         consideration   include   the   loss,   nullification,    cancellation,
         non-availability,  non-existence  or reduction in amount of a relief or
         right to any payment or other consideration.

1.14     For the avoidance of doubt, references to any taxation liability of the
         Company or the  Subsidiaries  which  results  from any gains  earned or
         received on or before  Completion or any event on or before  Completion
         include a reference  to any  taxation  liability  of the Company or the
         Subsidiaries  resulting  from the sale of the Shares  pursuant  to this
         Agreement.

1.15     For the purposes of paragraph 7 (Payment),  reliefs arising from events
         occurring  earlier shall be taken to be used in priority to any reliefs
         arising from events occurring later.

1.16     For the  avoidance of doubt,  references  to any taxation  liability in
         respect of any event  occurring on or before  Completion do not include
         any  taxation  liability  arising  pursuant  to any  adjustments  under
         section  770 or  Schedule  28AA ICTA 1988 in respect of any  profits or
         losses of the  Company  or any  Subsidiary  accruing  after  Completion
         notwithstanding  the fact that those profits or losses may accrue under
         a  transaction  which takes place after  Completion  but  pursuant to a
         contract entered into before Completion.

2        COVENANT

2.1      The Vendors  jointly and severally  covenant to pay to the Purchaser so
         far as  possible by way of an  adjustment  to the  Consideration  a sum
         equal to:-

2.1.1    any  taxation  liability  of the  Company or the  Subsidiaries  arising
         within paragraph 1.10.1:-

         2.1.1.1  in respect of, by reference to or in consequence of any income
                  or profits earned, accrued or received on or before Completion
                  or any gains earned or received on or before Completion; or

         2.1.1.2  in respect of any event occurring on or before Completion; and

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<PAGE>

2.1.2    any  taxation  liability  falling  within any of  paragraphs  1.10.2 to
         1.10.3 (inclusive); and

2.1.3    any taxation  liability  being a liability for capital  transfer tax or
         inheritance tax (not falling within paragraph 2.1.1) which:-

         2.1.3.1  at  Completion  is a charge  on,  or gives  rise to a power to
                  sell,  mortgage  or charge,  any of the shares in or assets of
                  the Company or the Subsidiaries;

         2.1.3.2  after Completion becomes a charge on, or gives rise to a power
                  to sell, mortgage or charge, any of the shares in or assets of
                  the Company or the  Subsidiaries  being a liability in respect
                  of capital transfer tax or inheritance tax payable as a result
                  of the death of any person within seven years after a transfer
                  of value if a charge on, or power to sell,  mortgage or charge
                  any such  shares or assets  would,  if the death had  occurred
                  immediately  before  Completion  and capital  transfer  tax or
                  inheritance  tax  payable as a result had not been paid,  have
                  existed at Completion; and

         2.1.3.3  arises as a result of a transfer of value  occurring  or being
                  deemed to occur on or  before  Completion  (whether  or not in
                  conjunction  with the death of any person whenever  occurring)
                  which  increased  or  decreased  the  value of  assets  of the
                  Company or the  Subsidiaries  or the Vendor or any predecessor
                  in title to such assets or to the Shares;

2.1.4    any taxation  liability of the Company or any of the Subsidiaries  (not
         falling within paragraph 2.1.1) which is also a taxation liability of a
         person other than the Company or any Subsidiary and which is payable by
         the Company or any of the Subsidiaries because that other person was at
         any time  before  Completion  a member of the same  group as such other
         person or otherwise  connected with or related to such other person for
         taxation purposes;

2.1.5    without  prejudice to paragraphs  2.1.1,  2.1.2,  2.1.3 and 2.1.4,  any
         taxation  liability which arises as a result of, or in connection with,
         any of the following:

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<PAGE>

         2.1.5.1  payments  by the  Company  or any  Subsidiaries  of rent to Mr
                  Myers; or

         2.1.5.2  any amounts  payable  under Section 419 ICTA 1988 (as extended
                  by  Section  422  ICTA  1988  and  any  related  penalties  or
                  interest)  in  respect  of loans  made by the  Company  or any
                  Subsidiaries  prior  to  Completion  Mr  Myers  or any  person
                  connected  with Mr Myers (within the meaning of section 286 of
                  the Taxation of Chargeable Gains Act 1992); or

         2.1.5.3  any  liability  of the  Company to  account  for income tax or
                  national insurance  contributions in relation to any fees paid
                  to Mr Sharman,  or to any company of which he is a director or
                  of which he has  control  (within  the  meaning of section 416
                  ICTA 1988), in each case prior to Completion; and

2.1.6    all reasonable  costs and expenses  incurred by or charged  against the
         Purchaser or the Company or the  Subsidiaries  in  connection  with any
         taxation  liability  referred to in paragraphs 2.1.1 to 2.1.5. Any such
         costs and  expenses  shall  include,  where  appropriate,  a reasonable
         amount in respect of management time.

2.2      In determining  for the purposes of paragraph 2.1.3 whether a charge on
         or power to sell,  mortgage or charge any of the shares in or assets of
         the Company or the  Subsidiaries  exists at any time, the fact that any
         taxation  is not yet  payable  or may be paid in  instalments  shall be
         disregarded and such taxation shall be treated for the purposes of this
         Schedule as becoming due or to have become due and a charge on or power
         to sell,  mortgage or charge as arising or having arisen on the date of
         the  transfer of value or other date or event on or in respect of which
         it becomes payable or arises.

2.3      The provisions of Section 213 of the  Inheritance  Tax Act 1984 (refund
         by  instalments)  shall not apply to any  payments  falling  to be made
         pursuant to paragraph 2.1.3.

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<PAGE>

3        LIMITATIONS

3.1      Subject to  paragraph  3.2, the covenant in paragraph 2 shall not apply
         to any taxation liability to the extent that:-

3.1.1    provision  or  reserve  in  respect  of such  liability  is made in the
         Accounts;

3.1.2    the  taxation  liability  is in respect of or by  reference  to income,
         profits  or  gains  earned  in  respect  of the  period,  or any  event
         occurring,  between the Accounts  Date and  Completion  in the ordinary
         course of the business of the Company or the Subsidiaries;

3.1.3    the  Purchaser  has made or makes  recovery in respect of such taxation
         liability under any other provision of this Agreement;

3.1.4    it  arises  as a  result  only of such a  provision  or  reserve  as is
         mentioned  in  paragraph  3.1.1  being  insufficient  by  reason  of an
         increase  in the  rates of  taxation  or a change  in  taxation  law or
         published   practice   made  or   announced   after   Completion   with
         retrospective effect;

3.1.5    it would not have  arisen  but for a change in  accounting  methods  or
         policies  adopted  by the  Company  or any  of the  Subsidiaries  after
         Completion,  provided that the previous  methods used by the Company or
         the Subsidiary  were in compliance with generally  accepted  accounting
         principles applicable to the Company or any of its Subsidiaries;

3.1.6    it would not have  arisen but for a  voluntary  act or  omission of the
         Company or any of the  Subsidiaries  (which could  reasonably have been
         avoided)  carried out or  occurring  after the date of this  Agreement,
         otherwise than in the ordinary  course of business or in performing any
         obligation  under a  contractual  agreement  entered  into on or before
         Completion or in accordance with any statutory duty,  which the Company
         or Subsidiary or the Purchaser was, or ought to have been,  aware could
         give rise to a taxation liability.

                                       73
<PAGE>

3.2      The provisions of paragraph 3.1.2 to 3.1.6 inclusive shall not apply to
         any claim under  paragraph 2 in respect of a taxation  liability  which
         falls within paragraph 2.1.5.

4        OVERPROVISIONS

4.1      If the  auditors  for  the  time  being  of the  Company  or any of the
         Subsidiaries  (at the request and  expense of the  Covenantor)  certify
         that a Relevant  Amount (as  defined in  paragraph  4.2) exists for the
         purposes of this  paragraph,  paragraph  4.3 shall apply  except to the
         extent  to which  credit  has been  given  for the  Relevant  Amount in
         relation to any claim under the Warranties.

4.2      For the purposes of this paragraph,  if a provision for taxation in the
         Accounts   (excluding   any   provision   for   deferred   tax)  is  an
         over-provision  (except to the extent that such over-provision  results
         from the  utilisation  of an Accounts  relief or a  post-Accounts  Date
         relief), the amount of such over-provision shall be a Relevant Amount.

4.3      Where,  pursuant to  paragraph  4.1,  this  paragraph  4.3 applies to a
         Relevant Amount:-

4.3.1    the Relevant Amount shall first be set-off against any payment then due
         from the Covenantor under this Schedule;

4.3.2    to the extent  that there is an excess,  a refund  shall be made to the
         Covenantor  of any previous  payment or payments  made by it under this
         Schedule and not previously refunded under this sub-paragraph up to the
         amount of such excess; and

4.3.3    to the extent  that the excess  referred to in  paragraph  4.3.2 is not
         exhausted under that sub-paragraph,  the remainder of that excess shall
         be carried forward and set-off against any future payments which become
         due from the Covenantor under this Schedule.

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<PAGE>

5        GROSSING UP

5.1      All sums payable by the Vendors to the  Purchaser  under this  Schedule
         shall  be  paid  free  and  clear  of all  deductions  or  withholdings
         whatsoever,  save only as may be required by law. If any  deductions or
         withholdings  are  required  by law to be  made  from  any of the  sums
         payable  under this  Schedule,  then  (except  in the case of  interest
         payable under paragraph 7.3) the Vendors shall be obliged to pay to the
         Purchaser such sum as will, after the deduction or withholding has been
         made,  leave the  Purchaser  with the same amount as it would have been
         entitled  to receive in the absence of any such  requirement  to make a
         deduction or withholding.

5.2      If the Purchaser incurs a taxation  liability which results from, or is
         calculated by reference to, any sum paid under this Schedule other than
         interest  payable under  paragraph  7.3, the amount so payable shall be
         increased  by such amount as will  ensure  that,  after  payment of the
         taxation  liability,  the Purchaser is left with a net sum equal to the
         sum it would have received had no such taxation liability arisen.

5.3      If the Purchaser would,  but for the availability of a relief,  incur a
         taxation liability falling within paragraph 5.2, it shall be deemed for
         the  purposes  of  that  paragraph  to  have  incurred  and  paid  that
         liability.

6        CONDUCT OF CLAIMS FOR TAXATION

6.1      If the Purchaser,  the Company or any of the Subsidiaries becomes aware
         of a taxation  claim  relevant for the purposes of this  Schedule,  the
         Purchaser  shall as soon as  reasonably  practicable  give the  Vendors
         written notice containing reasonable details of that taxation claim and
         shall, subject to paragraphs 6.3 and 6.4, take, or cause the Company or
         the  Subsidiaries  to take,  such action as the Vendors may  reasonably
         request to avoid, resist, appeal or compromise the taxation claim.

6.2      Without prejudice to the generality of paragraph 6.1, the Vendors shall
         be entitled,  subject to the approval of the Purchaser  (such  approval
         not to be unreasonably  withheld or delayed) and,  subject to paragraph
         6.3 and  6.4,  to

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<PAGE>

         instruct such solicitors and other  professional  advisers on behalf of
         the Company or the  Subsidiary  as the Vendors may  nominate to act for
         the Company or any Subsidiary in the matter, and if so the Vendors;

6.2.1    shall ensure that no correspondence, pleading or other document is sent
         or issued in connection  with the taxation  claim without  having first
         consulted the Purchaser in relation  thereto,  and shall  promptly send
         the Purchaser copies of all relevant  correspondence  and other written
         communications and notes of relevant telephone conversations; and

6.2.2    shall  obtain  the  Purchaser's  prior  written  approval  (not  to  be
         unreasonably  withheld) to any admission of liability in respect of, or
         any settlement or compromise of, the taxation claim.

6.3      The Purchaser  shall not be required to take, and shall not be required
         to cause the Company or any  Subsidiaries  to take, any action pursuant
         to paragraph  6.1 and the Vendors (or any  advisers  appointed by them)
         shall not be  entitled  to take any action on behalf of the  Company or
         any  Subsidiaries or to require the Company or the Subsidiaries to take
         any action  pursuant to paragraph 6.2 (including,  without  limitation,
         the adoption of any accounting practice, procedure or methodology):-

6.3.1    if the Purchaser,  the Company, or any Subsidiary  reasonably considers
         such action would be:-

         6.3.1.1  unlawful or  materially  prejudicial  to its dealings with any
                  taxation authority; or

         6.3.1.2  likely  to  have a  material  adverse  effect  on  its  future
                  liability  to taxation  (including,  without  limitation,  any
                  action  which would cause the Company or the  Subsidiaries  to
                  incur a taxation  liability  after  Completion  which it would
                  otherwise have incurred before Completion); or

         6.3.1.3  likely   adversely   to  affect  its   business  or  financial
                  reputation, interests, goodwill, or connection;

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6.3.2    unless the Vendors  indemnify  and secure the Purchaser and the Company
         or  the   Subsidiaries   concerned   to  the   Purchaser's   reasonable
         satisfaction  against  any  costs,  damages  or  expenses  which may be
         incurred  (together  with a reasonable  amount in respect of management
         time);

6.3.3    where such action  involves an appeal  against a  determination  by the
         General or Special Commissioners or the VAT and Duties Tribunal, unless
         the Vendors have obtained the opinion of leading tax counsel that there
         is a reasonable prospect that the appeal will succeed;

6.3.4    if the  Vendors or any of them (or the Company or  Subsidiaries  before
         Completion) is or has been involved in a case involving fraud or wilful
         default in  respect  of the  taxation  liability  which is the  subject
         matter of the taxation claim.

6.4      If:

6.4.1    the Vendors do not request the Purchaser to take any appropriate action
         within 30 days of notice to the  Vendors or if no action is required to
         be taken by virtue of any of the provisions of paragraph 6.3; or

6.4.2    the  Vendors  do not take any  action on behalf of the  Company  or any
         Subsidiaries  pursuant to paragraph 6.2 within 30 days of notice to the
         Vendors

         the Company or Subsidiaries  shall be at liberty  without  reference to
         the Vendors to admit,  compromise,  settle, discharge or otherwise deal
         with such taxation claim.

6.5      The  Vendors'  rights  under this  paragraph 6 (other than the right to
         receive the notice  referred to in paragraph 6.1) shall cease if either
         Mr Sharman or Mr Myers is declared bankrupt, is unable to pay his debts
         as they fall due, commences negotiations with any of his creditors with
         a view to the general  readjustment or rescheduling of his indebtedness
         or makes a general  assignment for the benefit of or a composition with
         his creditors.

                                       77
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7        PAYMENT

7.1      Where a claim under this Schedule relates to a liability of the Company
         or the Subsidiaries to make or suffer an actual payment of taxation (or
         amount in respect of taxation)  the Vendors shall pay the Purchaser any
         amount  which is  required  to be paid by them  (including  any  amount
         payable  pursuant  to  paragraph  2.1.3.3)  within five  business  days
         following the date on which the Purchaser notifies the Vendors of their
         liability to make such payment or, if later,  five business days before
         the last date on which the  taxation in question  would have to be paid
         to the  appropriate  taxation  authority in order to avoid  incurring a
         liability  to  interest  or a charge  or  penalty  in  respect  of that
         taxation liability.

7.2      In any case not falling within paragraph 7.1, the Vendors shall pay the
         amount  which they are required to pay under this  Schedule  (including
         any amount payable pursuant to paragraph  2.1.3.5) within five business
         days of the date on which they receive notice from the Purchaser of the
         amount due to be paid or, if later:

7.2.1    in any case which  falls  within  paragraph  1.10.2  (loss of  Accounts
         relief),  not later than the fifth business day before the day on which
         the Company or the  Subsidiaries  concerned  is due to pay any taxation
         which, but for such loss, it would not have been liable to pay;

7.2.2    in a case which  falls  within  paragraph  1.10.3  (set-off of Accounts
         relief or post-Accounts  Date relief),  not later than the day on which
         the Company or the  Subsidiaries  would, but for such setting off, have
         been liable to pay the actual taxation liability;

7.2.3    in a case which falls within paragraph 1.10.4 (liability for indemnity,
         guarantee or covenant payments),  not later than the fifth business day
         before the day on which the Company or  Subsidiaries is due to make the
         payment or repayment.

7.3      Sums not paid by the Vendors by the dates  specified in paragraphs  7.1
         and 7.2 shall bear interest  (which shall accrue from day to day after,
         as well as  before,  judgment)  at 2 per  cent.  above the base rate of
         Lloyds Bank plc or, in the absence of such base rate,  at such  similar
         rate as the Purchaser may select, from the date

                                       78
<PAGE>

         following the  specified  date up to and including (in either case) the
         date of actual  payment of such sums (or the next  business day if such
         date of actual payment is not a business day).

8        RECOVERY

8.1      Where the Vendors have paid any amount in full discharge of a liability
         under paragraph 2 in respect of any taxation  liability and the Company
         or any of the  Subsidiaries is legally entitled to recover or by virtue
         of a legal  entitlement  recovers  from  any  person  (other  than  the
         Purchaser  or any other member of the  Purchaser's  Group or any person
         connected  with  any of  them)  any sum in  respect  of  such  taxation
         liability,  the Purchaser shall notify the Vendors of such  entitlement
         or recovery  and,  where  recovery has not been effected at the date of
         notification,  shall (if requested by and at the expense of the Vendors
         and upon  the  Vendors  indemnifying  and  securing  the  Company,  the
         Subsidiaries   or  the   Purchaser   to  the   Purchaser's   reasonable
         satisfaction  against  all  costs or  expenses  which  may  thereby  be
         incurred)  take,  or cause the Company or  Subsidiaries  to take,  such
         action as the Vendors shall reasonably request to enforce such recovery
         against the person in question  (keeping the Vendors fully  informed of
         the progress of any action taken) provided that the Purchaser shall not
         be required to take any action pursuant to this paragraph which, in the
         Purchaser's  reasonable opinion, is likely to harm its or the Company's
         or the Subsidiaries' commercial relationship (potential or actual) with
         that or any other person.

8.2      The  Purchaser,  the Company or the  Subsidiaries  shall (to the extent
         that the recovery is not thereby prejudiced) account to the Vendors for
         any sum so recovered (including any interest paid by such person) up to
         an amount not exceeding the amount paid by the Vendors under  paragraph
         2 in respect of the taxation  liability  in question  (but less any tax
         payable by the Company or  Subsidiaries in respect of the sum recovered
         or in respect of such  interest  or which  would be payable but for the
         use or set off of any  relief  and less the  amount  of all  reasonable
         costs and  expenses in obtaining  such  payment  including a reasonable
         amount in respect of management time).

8.3      Where a  payment  is made,  or is to be  made,  by the  Vendors  to the
         Purchaser under paragraph 2 above in respect of only part of a taxation
         liability and that

                                       79
<PAGE>

         taxation  liability  gives rise to a recovery under  paragraph 8.1, the
         amount  recovered shall be attributed for the purposes of paragraph 8.1
         to the part of the taxation  liability  giving rise to the  Purchaser's
         claim  and to the part not so  giving  rise on a pro  rata  basis  and,
         accordingly,  paragraph 8.2 shall only apply to such part of the amount
         recovered as is attributed to the part of the taxation liability giving
         rise to the Purchaser's claim.

9        PURCHASER'S COVENANT

9.1      The Purchaser  hereby  indemnifies  an amount equal to any liability to
         taxation  (and  all  reasonable  costs  and  expenses)  of the  Vendors
         pursuant to section  767A-767C ICTA 1988 which is primarily a liability
         of the Company or any  Subsidiary and which the Vendors are required to
         discharge by reason of the failure of the Company or any  Subsidiary to
         discharge that liability.

9.2      The covenants contained in paragraph 9.1 shall not apply to taxation to
         the extent  that the  Purchaser  could  claim  payment in respect of it
         under this Schedule.

10       TAX RETURNS FOR PERIODS BEFORE AND INCLUDING COMPLETION

10.1     The Purchaser  shall procure that any taxation  returns that have to be
         submitted  by the Company or the  Subsidiaries  for periods  commencing
         before  Completion  shall be prepared by the relevant  company in draft
         and submitted by it to the Vendors, and that the Company shall consider
         any comments or  suggestions  which the Vendors may make. The Purchaser
         shall  procure  that the  Company  shall send the Vendors a copy of the
         return finally submitted.

10.2     The  Vendors  shall  afford or procure  that there is  afforded  to the
         Company  or the  Subsidiaries  or their  duly  authorised  agents  such
         information   and  assistance  as  the  Purchaser  or  the  Company  or
         Subsidiaries or their duly authorised agents may reasonably request for
         the purpose of preparing,  submitting and agreeing the taxation returns
         of the Company and the Subsidiaries  for all accounting  periods ending
         before  Completion and for the accounting  period  beginning before and
         ending after Completion.

                                       80
<PAGE>

11       PROVISION OF INFORMATION TO VENDORS

         The  Purchaser  shall  afford or procure  that there is afforded to the
         Vendors or their duly authorised agents such information and assistance
         as the Vendors may reasonably  request to enable them to exercise their
         rights and fulfil their duties under this Schedule.

                                       81
<PAGE>

                                   SCHEDULE 8

                            LIMITATIONS ON LIABILITY

1        The provisions of this Schedule shall operate to limit the liability of
         the  Vendors  under and in respect of the  provisions  of Clause 5 (the
         Warranties)  and  Tax  Covenant  and  references  in this  Schedule  to
         "hereof",  "hereunder" and to "liability  hereunder" shall be construed
         to refer to such liabilities as appropriate.  Clause 5 (the Warranties)
         and Tax Covenant  respectively shall accordingly have effect subject to
         and as qualified by the terms of this Schedule.

2        The Vendor shall have no liability  whatsoever  in respect of any claim
         for  breach  of the  Warranties  unless  and  until  the  loss  thereby
         sustained  (together  with the  aggregate  amount of  losses  sustained
         arising  under  previous  claims  if any)  shall  exceed a total sum of
         US$139,920, in which event this limitation shall cease to apply and the
         whole of such amounts  shall be  recoverable  and not merely the excess
         over US$139,920.

3        The  aggregate  liability  of the  Vendors in respect of all claims for
         breach of the  Warranties or under the Tax Covenant made on the Vendors
         hereunder shall not exceed $13,992,000. The liability of each Vendor in
         respect  of  claims  for  breach  of the  Warranties  or under  the Tax
         Covenant made on the Vendors  hereunder  shall not exceed the aggregate
         of the  amounts  set out  opposite  his  name in  columns  4,5 and 6 of
         Schedule 1.

4        No claim  shall be  brought by the  Purchaser  against  the  Vendors in
         respect  of any  breach of the  Warranties  or under  the Tax  Covenant
         unless  notice in writing of any such claim  (specifying  in reasonable
         detail the nature of the claim (to the extent available) and, so far as
         practicable,  the amount  claimed)  has been given to the Vendors on or
         before:-

4.1      in  relation  to  matters  in respect  of the  Warranties  (other  than
         Warranties relating to taxation), on or prior to 31 December 2000; and

4.2      in relation to matters  under the  Warranties  relating to taxation and
         under the Tax Covenant,  on or prior to the seventh  anniversary of the
         date of this Agreement.

<PAGE>

5        No liability  shall attach to the Vendors in respect of any claim under
         the Warranties or the Tax Covenant to the extent that:-

5.1      it would not have arisen but for an act, omission or transaction of the
         Purchaser,  or  persons  deriving  title  under the  Purchaser,  or the
         Company or any Subsidiary  effected after Completion  otherwise than in
         the  ordinary  and proper  course of the business of the Company or any
         Subsidiary as at present  carried on or which would not have arisen but
         for any claim, election,  surrender or disclaimer made or omitted to be
         made or notice or consent given or omitted to be done by the Company or
         any  Subsidiary or the Purchaser  under the  provisions of any taxation
         after Completion,  but only to the extent that the Purchaser was aware,
         or ought reasonably to have been aware,  that any such act, omission or
         transaction would have led to such liability arising;

5.2      specific  provision or reserve in respect  thereof shall have been made
         in the Accounts or  Management  Accounts but only (for the avoidance of
         any doubt) to the extent of any provision or reserve;

5.3      the  breach  or claim  occurs  wholly  out of or as a  result  of or in
         connection  with any  legislation  not in force at  Completion  or as a
         result of any change in  legislation  hereafter  or any decision of the
         courts  altering  the  accepted   interpretation   of  any  law  as  at
         Completion;

5.4      the Purchaser or the Company or any  Subsidiary is entitled to claim an
         indemnity  under  any  insurance  policy  against  any  loss or  damage
         suffered  as a result of any breach or claim or, as the case may be, in
         respect of the subject  matter  thereof but only to the extent that the
         Purchaser or the Company or any  Subsidiary  (as the case may be) makes
         recovery under any such insurance policy; or

5.5      the breach or claim is based upon a liability which is contingent only,
         unless and until such contingent  liability becomes an actual liability
         and is due and  payable  provided  that this  sub-clause  5.5 shall not
         operate  to  avoid a claim  made in  reasonably  sufficient  detail  in
         respect of the contingent  liability  within the applicable time limits
         specified in Clause 4 of this Schedule.

6        Any claim  shall if it has not been  previously  satisfied,  settled or
         withdrawn  be

                                       83
<PAGE>

         deemed to have  been  withdrawn  and  shall  become  fully  barred  and
         unenforceable  on the expiry of the period of six months  commencing on
         the date that the claim is made unless  proceedings in respect  thereof
         shall have been  commenced  against the  Vendors  and for this  purpose
         proceedings  shall not be deemed to have  been  commenced  unless  they
         shall have been issued and served upon the Vendors.

7        The  Purchaser  shall not be entitled to recover  damages in respect of
         any claim or otherwise to obtain reimbursement or restitution more than
         once in respect of any one set of circumstances  giving rise to a claim
         for  misrepresentation or breach of the Warranties or in respect of any
         claim under the Tax Covenant.

8        If the  Vendors  shall  have paid to the  Purchaser  or the  Company an
         amount in respect of a claim for breach of the  Warranties or under the
         Tax Covenant and after such payment the Purchaser and/or the Company or
         any  Subsidiary  shall  recover  from a  third  party  a sum  which  is
         referable to that payment then the Purchaser  shall  forthwith repay or
         procure  repayment by the Company or any  Subsidiary  to the Vendors of
         such sum having deducted any costs properly  incurred  relating to such
         recovery from such third party  together with any liability to taxation
         which arises in connection therewith.

9        The  Purchaser  shall  and  shall  procure  that the  Company  and each
         Subsidiary shall:-

9.1      as soon as practicable  after  circumstances  have come to its or their
         notice  which  will or is likely  to give  rise to a claim  give to the
         Vendors by written notice details of such  circumstances  and claim and
         thereafter  keep the  Vendors  informed  of all  material  developments
         relating to such circumstances and claim;

9.2      not make any admission of liability,  agreement or compromise  with any
         person,   body  or  authority  in  relation   thereto   without   prior
         consultation  with and agreement of the Vendors (not to be unreasonably
         withheld or delayed)  unless not doing so would  prejudice the goodwill
         of the business of the Purchaser,  the Company or the Subsidiaries to a
         material  extent in which case the Purchaser  shall be entitled to take
         any action which it considers in its sole discretion to be necessary;

                                       84
<PAGE>

9.3      if so  requested by the Vendors,  take all  reasonable  steps to avoid,
         resist,   appeal,   compromise   or  defend  any  such  claim  and  any
         adjudication   in  respect  thereof  and  for  this  purpose  take  all
         appropriate  proceedings in the name of the Company or any  Subsidiary,
         as the case may be (but subject to the Company  being  indemnified  and
         secured by the Vendors against all losses,  charges, costs, damages and
         expenses that may be incurred in connection  therewith) unless doing so
         would  prejudice  the  goodwill of the business of the  Purchaser,  the
         Company  or the  Subsidiaries  to a  material  extent in which case the
         Purchaser  shall be entitled to take any action  which it  considers in
         its sole discretion to be necessary; and

9.4      allow the Vendors and their agents  reasonable  access during  business
         hours to inspect and take copies of all necessary  books and records of
         the Company and the Group Companies subject always to their keeping the
         same confidential  other than necessary  disclosures in connection with
         any such  action or claim  PROVIDED  THAT such books an records are not
         subject to legal  professional  privilege as between the  Purchaser and
         any of its professional advisers.

                                       85
<PAGE>

SIGNED as a deed by RICHARD         )       /s/ Richard Myers
MYERS in the presence of:-          )

Witness: Signature:        /s/ Laurence Markham

         Name:             Laurence Markham

         Address:

         Occupation:       Solicitor

SIGNED as a deed by NEIL            )       /s/ Neil Doughty
DOUGHTY in the presence of:-        )

Witness: Signature:        /s/ Laurence Markham

         Name:             Laurence Markham

         Address:

         Occupation:       Solicitor

SIGNED as a deed by TREVOR          )       /s/ Trevor Sharman
SHARMAN in the presence of:-        )

Witness: Signature:        /s/ Laurence Markham

         Name:             Laurence Markham

         Address:

         Occupation:       Solicitor

                                       86
<PAGE>

EXECUTED as a deed of               )       /s/ Patrick S. Feely
RADICA GOLD LIMITED                 )
by its attorney P.S. Feely          )

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