Document:

DATED     January 2000
                         ---------------------

                                AGREEMENT FOR THE
                            ACQUISITION OF THE ISSUED
                                SHARE CAPITAL OF

                              Ilios Travel Limited

                                       BY

                          LEISURE TRAVEL GROUP LIMITED

                           McFadden, Pilkington & Ward
                             City Tower B Level Four
                              40 Basinghall Street
                                 London EC2V 5DE
                               Tel: 0207 638 8788
                               Fax: 0207 638 8799

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                                    CONTENTS

CLAUSE                                                                     PAGE
------                                                                     ----

1.       INTERPRETATION

2.       AGREEMENT FOR SALE

3.       PURCHASE CONSIDERATION

4.       COMPLETION

5.       WARRANTIES AND UNDERTAKINGS

6.       RESTRICTIVE AGREEMENT

7.       GENERAL

SCHEDULE 1                                  Shareholders

SCHEDULE 2                                  Details of the Company

SCHEDULE 3                                  The Property

SCHEDULE 4                                  Warranties

SCHEDULE 5                                  Deed of Indemnity

SCHEDULE 6                                  Vendor's Protection

SCHEDULE 7                                  Shareholders' Undertaking

                                       2

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THIS AGREEMENT is made on  January 2000
                         ----------------

BETWEEN:

(1)    NITA EUGENIE ANNE BEECROFT of Stylehurst  Paddock,  Vannlake Road,  Weire
       Street, Ockley, Surrey RH5 5JD (the "Vendor"); and

(2)    LEISURE  TRAVEL  GROUP  LIMITED  a Company  incorporated  in  England  of
       Trafalgar House, 11Waterloo Place, London SW1 (the "Purchaser")

RECITALS

(A)    Details  relating  to the  Company  and it  Subsidiaries  are  set out in
       Schedule 2.

(B)    The  Vendor is not the  beneficial  owner of all of the  Shares  but will
       agree in this Agreement to procure the transfer thereof to the Purchaser.

(C)    The Shares are registered in the names of the  Shareholders as set out in
       Schedule 1.

(D)    The Vendor is willing to sell,  or procure to be sold,  the Shares to the
       Purchaser  on the terms and  subject  to the  conditions  set out in this
       Agreement free from Encumbrances.

(E)    The Vendor hereby makes  representations to the Purchaser in the terms of
       the  Warranties  to the intent  that the  Purchaser  should  rely on such
       Warranties in entering into this Agreement.

THE PARTIES AGREE AS FOLLOWS:-

1.     INTERPRETATION

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

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

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

       "Agreed Form"          means the form  agreed  between  the parties on or
                              prior  to the Completion  of  this  Agreement  and
                              initialled for the purposes of  identification  by
                              their respective solicitors;

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

                                       3
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       "CA"                   means the Companies Act 1985;

       "CAA'90"               means the Capital Allowances Act 1990;

       "CAA"                  means the Civil Aviation Authority;

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

       "Completion Date"      shall have the meaning assigned to it in clause 4;

       "Company"              means Ilios Travel Limited;

       "Deed of Indemnity"    means a deed of  indemnity  in the form set out in
                              Schedule 5;

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

       "Distribution"         means a distribution as defined by sections 209 to
                              211 (inclusive) of the ICTA and section 418 of the
                              ICTA;

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

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

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

       "Environmental Laws"   means all  international,  EU, national,  or local
                              statutes,  which for the  avoidance of doubt shall
                              include   section  57  and   schedule  22  of  the
                              Environment   Act  1995  and  the   guidance   and
                              regulations   adopted   under  those   provisions,
                              by-laws,  orders,

                                       4
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                              regulations    or   other   law   or   subordinate
                              legislation or common law, all orders, ordinances,
                              decrees   or   regulatory   codes   of   practice,
                              circulars,  guidance notes and equivalent controls
                              concerning the protection of human health or which
                              have as a purpose  or  effect  the  protection  or
                              prevention  of harm to the  Environment  or health
                              and safety  which are  binding in  relation to the
                              Property  and/or upon the Company in the  relevant
                              jurisdiction  in which the  Company has been or is
                              operating on or before Completion;

       "ICTA"                 means the Income and Corporation Taxes Act 1988;

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

       "Last Accounts Date"   means 31st  October  1999 (being the date to which
                              the Principal Accounts have been prepared);

       "Planning Acts"        means the Town and Country  Planning  Acts for the
                              time being in force;

       "Principal Accounts"   means the audited profit and the loss accounts for
                              the year ended on the Last  Accounts  Date and the
                              audited  balance  sheet of the  Company  as at the
                              Last Accounts Date  including the audited  balance
                              sheet as at that date and the  audited  profit and
                              loss  account  for that  year  and the  directors'
                              report and notes;

       "Property"             means  the   property  of  the   Company   shortly
                              described in Schedule 3;

       "Purchaser's
       Solicitors"            means  McFadden,  Pilkington & Ward,  City Tower B
                              Level 4, 40 Basinghall Street, London EC2V 5DE;

       "Shareholders"         means  the  persons  whose  names  are  listed  in
                              Schedule 1 as holders of the Shares;

       "Shareholders'
       Undertaking"           means  the  undertaking  under  seal of even  date
                              herewith  executed by the Shareholders and set out
                              in Schedule 7;

       "Shares"               means the whole of the issued and  allotted  share
                              capital of the Company;

                                       5
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       "subsidiary"           means a subsidiary  company as the same is defined
                              in s.736 CA;

       "Taxation"             means all forms of taxation including:-

                              (a)  any charge,  tax,  duty or levy upon  income,
                                   profits,   chargeable  gains  or  development
                                   value,  land,  any interest in land or in any
                                   other  property,  or documents or supplies or
                                   other transactions;

                              (b)  income tax,  corporation  tax,  capital gains
                                   tax,  inheritance tax, value added tax, stamp
                                   duty,  stamp duty reserve tax,  capital duty,
                                   customs  and other  import  duties,  national
                                   insurance contributions, general rates, water
                                   rates or other local rates;

                              (c)  any liability for sums equivalent to any such
                                   charge,  tax, duty,  levy or rates or for any
                                   related penalty, fine or interest;

       "TGCA"                 means the  Taxation of  Chargeable  Gains Act 1992
                              and  any  reference   thereto  shall  include  any
                              enactment repealed or modified thereby;

       "VATA"                 means the Value Added Tax Act 1994;

       "Vendor's Solicitors"  means James Tingley & Co, 9 London Road, Sevenoaks
                              TN13 1AH;

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

       "Warranty Claim"       means any claim made by the  Purchaser  for breach
                              of any of the  Warranties or any claim made by the
                              Company under the Deed of Indemnity;

1.3    References  to "FA"  followed  by a stated  year means the Finance Act of
       that year.

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

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

                                       6
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1.6    References to persons shall include bodies corporate and  unincorporated,
       associations,  partnerships and individuals.  Words denoting the singular
       shall include the plural and words  denoting any gender shall include all
       genders.

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

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

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

2.     AGREEMENT FOR SALE

2.1    Subject to the terms and  conditions of this  Agreement  with effect from
       and  including  Completion,  the Vendor shall sell or procure the sale of
       with full title  guarantee  and the Purchaser  shall  purchase the Shares
       free  from all  liens,  charges  and  encumbrances  and  with all  rights
       attaching to them.

2.2    The Vendor hereby waive any pre-emption  rights they may have in relation
       to any of the Shares under the articles of  association of the Company or
       otherwise.

3.     PURCHASE CONSIDERATION

3.1    The   purchase   consideration   for  the   Shares   shall   be  the  sum
       of(pound)325,000 (Three hundred and twenty five thousand pounds).

4.     COMPLETION

4.1    Completion  will,  subject to clause  4.5,  take place on or before  14th
       January 2000 (the  "Completion  Date") at the offices of the Company when
       all the transactions  mentioned in the following  sub-clauses  shall take
       place.

4.2    The Vendor shall deliver to the Purchaser:-

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       4.2.1  duly completed and signed  transfers in favour of the Purchaser or
              as it may  direct  in  respect  of the  Shares  together  with the
              relative share certificates;

       4.2.2  duly completed and signed  transfers in favour of the Purchaser or
              as it may  direct of all the  Shares  together  with the  relative
              share certificates;

       4.2.3  the Deed of Indemnity duly executed by the Vendor and the Company;

       4.2.4  the Shareholders' Undertaking;

       4.2.5  the resignation of the existing auditors of the Company confirming
              that they have no outstanding  claims of any kind and containing a
              statement  under CA s 394(1) that there are no such  circumstances
              as are mentioned in that section;

       4.2.6  the  statutory  books of the Company  complete  and up to date and
              their certificate of incorporation and common seals;

       4.2.7  the title deeds relating to the Property;

       4.2.8  the  appropriate  forms to amend the mandates given by the Company
              to bankers;

       4.2.9  written  confirmation from the Vendor that there are no subsisting
              guarantees  given by the  Company in favour of or on behalf of the
              Vendor and that the Vendor  will not be indebted to the Company or
              vice versa.

4.3    Board meetings of the Company shall be held at which:-

       4.3.1  such  persons as the  Purchaser  may  nominate  shall be appointed
              additional directors;

       4.3.2  the  transfers  referred to in clauses 4.2.1 or 4.2.2 (as the case
              may be) shall be approved (subject to stamping); and

       4.3.3  the resignation referred to in clause 4.2.5 shall be submitted and
              accepted.

4.4    Upon  completion  of the  matters  referred to in clauses 4.2 and 4.3 the
       Purchaser  shall  deliver to the Vendor's  Solicitors  by a bankers draft
       drawn on a London  Clearing  Bank or such  other  payment  method  as the
       Vendor's  solicitors may reasonably  approve the sum of the consideration
       referred to in Clause 3.1.

4.5    Completion  shall be conditional  upon the approval of this Agreement and
       the transaction for which it provides by Ernst & Young in connection with
       an issue of shares by the Purchaser in the USA. If such  condition  shall
       not have been fulfilled  before the Completion Date, this Agreement shall
       be null and void unless prior to the  Completion  Date the parties  shall
       have agreed in writing to the contrary.

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5.     WARRANTIES AND UNDERTAKINGS BY THE VENDOR

5.1    The Vendor warrants to the Purchaser that:-

       5.1.1  the  Vendor has and will have full  power and  authority  to enter
              into and perform this  Agreement  and the Deed of Indemnity  which
              constitute or when executed will constitute binding obligations on
              her in accordance with their respective terms;

       5.1.2  the Shares will at Completion  constitute  the whole of the issued
              and allotted share capital of the Company ;

       5.1.3  there is,  and at  Completion  will be, no  pledge,  lien or other
              encumbrance  on, over or affecting the Shares and there is, and at
              Completion  will be, no agreement or arrangement to give or create
              any such  encumbrance and no claim has been or will be made by any
              person to be entitled to any of the foregoing;

       5.1.4  the Vendor and the  Shareholders  will be entitled to transfer the
              full legal and beneficial ownership of the Shares to the Purchaser
              on the terms of this  Agreement  without  the consent of any third
              party;

       5.1.5  the  information  in  Schedule  2 is  true  and  accurate  in  all
              respects;

       5.1.6  save  as set  out in the  Disclosure  Letter,  the  Warranties  in
              Schedule  4 are,  to the best of the  knowledge  and belief of the
              Vendor,  true and accurate in all material respects at the date of
              this Agreement;

       5.1.7  the contents of the Disclosure  Letter and all of the accompanying
              documents  are,  to the best of the  knowledge  and  belief of the
              Vendor,  true and  accurate in all  material  respects  and fully,
              clearly and accurately disclose every matter to which they relate.

5.2    The Vendor  undertakes  in relation to any  Warranty  which refers to the
       knowledge,  information  or  belief  of the  Vendor,  that  she has  made
       relevant enquiries into the subject matters of that Warranty.

5.3    Each of the  Warranties is without  prejudice to any other  Warranty and,
       except where  expressly  stated  otherwise,  no clause  contained in this
       Agreement  shall govern or limit the extent or  application  of any other
       clause.

5.5    The rights and remedies of the  Purchaser in respect of any breach of the
       Warranties shall not be affected by Completion, or failing to exercise or
       delaying  the  exercise  of any right or remedy or by any other  event or
       matter  whatsoever,  except a specific and duly authorised written waiver
       or  release,  and no single or  partial  exercise  of any right or remedy
       shall preclude any further or other exercise.

                                       9
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5.6    None of the  information  supplied  by the  Company  or its  professional
       advisers prior to the date of this Agreement to the Vendor or her agents,
       representatives  or advisers in connection  with the  Warranties  and the
       contents  of the  Disclosure  Letter,  or  otherwise  in  relation to the
       business  or affairs of the  Company,  shall be deemed a  representation,
       warranty or guarantee  of its accuracy by the Company to the Vendor,  and
       the  Vendor  waives  any  claims  against  the  Company  which they might
       otherwise have in respect of it.

5.7    The Vendor shall  procure that prior to  Completion  the  Purchaser,  its
       agents, representatives, accountants and solicitors are given promptly on
       request all such  facilities  and  information  regarding  the  business,
       assets,  liabilities,  contracts  and affairs of the Company,  and of the
       documents of title and other evidence of ownership of its assets,  as the
       Purchaser may require.

5.8    The provisions set out in Schedule 5 shall have effect in relation to the
       Vendor's  liability under the Warranties,  representations,  undertakings
       and  indemnities  contained  or  referred  to  herein  or in the  Deed of
       Indemnity.

5.9    The  Purchaser  acknowledges  that it has not been  induced to enter into
       this  Agreement  by  any   representation  or  warranty  other  than  the
       Warranties.

6.     RESTRICTIVE AGREEMENT

6.1    For the  purpose of  assuring to the  Purchaser  the full  benefit of the
       businesses and goodwill of the Company,  the Vendor  undertakes by way of
       further  consideration  for the  obligations of the Purchaser  under this
       Agreement as separate and  independent  agreements  that they will not in
       competition with the Purchaser:-

       6.1.1  at any time after Completion disclose to any person, or itself use
              for any purpose,  and shall use her best endeavours to prevent the
              publication  or  disclosure  of, any  information  concerning  the
              business,  accounts or finances of the Company any of its clients'
              or  customers'  transactions  or affairs,  which may, or may have,
              come to her knowledge;

       6.1.2  for a period  of two  years  after  Completion  either  on her own
              account or for any other person  directly or  indirectly  solicit,
              interfere  with or  endeavour  to entice away from the Company any
              person  who to its  knowledge  is now  or  has  during  the  years
              preceding the date of this  Agreement  been a client,  customer or
              employee of, or in the habit of dealing with, the Company;

       6.1.3  for  a  period  of  two  years  after   Completion,   without  the
              Purchaser's  prior written consent either alone or jointly with or
              as  manager,  agent for or  employee  of any  person,  directly or
              indirectly  carry on or be engaged or concerned or  interested  in
              any business  similar to any business carried on by the Company at
              the date of this Agreement.

                                       10
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7.     GENERAL

7.1    No  announcement  of any kind  shall be made in  respect  of the  subject
       matter of this Agreement unless  specifically agreed between the parties.
       Any  announcement by either party shall in any event be issued only after
       prior consultation with the other party

7.2    If this  Agreement  shall cease to have effect the Purchaser will release
       and return to the Company  all  documents  concerning  it provided to the
       Purchaser or its advisers in connection  with this Agreement and will not
       use or make available to any other person any information which it or its
       advisers  have been given in respect of the  Company  and which is not in
       the public domain.

7.3    If any of the  Shares  shall  at any  time be sold  or  transferred,  the
       benefit of each of the  Warranties  may be assigned to the  purchaser  or
       transferee of those shares who shall  accordingly  be entitled to enforce
       each of the  Warranties  against  the  Vendor as if he were named in this
       Agreement as the Purchaser.

7.4    This Agreement shall be binding upon each party's  successors and assigns
       and  personal  representatives  (as the  case  may  be)  but,  except  as
       expressly  provided  above,  none of the rights of the parties under this
       Agreement or the Warranties may be assigned or transferred.

7.3    Save where expressly otherwise  provided,  all expenses incurred by or on
       behalf of the  parties,  including  all fees or agents,  representatives,
       solicitors,  accountants  and  actuaries  employed  by  any  of  them  in
       connection  with  the  negotiation,  preparation  or  execution  of  this
       Agreement  shall be borne solely by the party who incurred the  liability
       and the Company shall not have any liability in respect of them.

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

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

7.6    The operative law relating to this Agreement shall be that of England and
       Wales

AS  WITNESS  the  hands  of  the  parties   hereto  or  their  duly   authorised
representatives on the date set out above

                                       11
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   SIGNED by NITA EUGENIE             )
   ANNE BEECROFT in the               )   /s/ NITA EUGENIE ANNE BEECROFT
   presence of:                       )

   SIGNED by                         ,)
   Director,  for and on behalf of    )
   LEISURE TRAVEL GROUP               )   /s/ Illegible
   LIMITED in the presence of:        )

                                       12
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                                   SCHEDULE 1

                        Shareholders' Holdings of Shares

   Name and Address                   No. of Shares            Consideration

   Nita Eugenie Anne Beecroft          29,999                  (pound)324,989.17
   Stylehurst Paddock,
   Vannlake Road
   Weire Street
   Ockley,
   Surrey RH5 5JD
   and
   Matthew Eric Beecroft
   65 Tennyson Street
   London SW8 3SU

   Matthew Eric Beecroft                    1                       (pound)10.83
   65 Tennyson Street
   London SW8 3SU

                                       13
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                                   SCHEDULE 2

                             Details of the Company

   Ilios Travel Limited

   Company Number:                    1459479

   Incorporated :                     6th November 1979

   Authorised share capital:          (pound)100,000
                                      Divided into 100 ordinary shares of
                                      (pound)1 each

   Issued share capital:              (pound)30,000

   Directors:                         Nita Eugenie Anne Beecroft
                                      Carol Lesley Wood

   Secretary:                         Carol Lesley Wood

   Registered office:                 18 Market Square
                                      Horsham
                                      West Sussex RH12 1EU

                                       14
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                                   SCHEDULE 3

                                  The Property

   Address                            Tenure                     Expiry of Lease

   18 Market Square and               Leasehold                6th November 2000
   18A Market Square
   Horsham
   West Sussex

   Subject to the following Sub-lease

   18A Market Square                  Leasehold                5th November 2000
   Horsham
   West Sussex

   Tenant            Leaders Limited
                     28 New Road
                     Brighton
                     East Sussex

   Rent              (pound)10,000 per annum

                                       15
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                                   SCHEDULE 4

                                   Warranties

1.     Constitution

2.     Accounts

3.     Business

4.     Directors and Employees

5.     Property

6.     The Group and its Bankers

7.     Accuracy of Information

8.     Tax

9.     Environmental Matters

10.    Intellectual Property

11.    Information Technology and Millennium Compliance

12.    Pensions

                                       16
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1.     CONSTITUTION

1.1    Memorandum and Articles

       The  Memorandum and Articles of Association of the Company in the form of
       the copy attached to the Disclosure  Letter are complete and accurate and
       have embodied  therein or annexed  thereto copies of all  resolutions and
       agreements  as are referred to in section 380 of the  Companies Act 1985,
       and all amendments thereto (if any) were duly and properly made.

1.2    Register of Members

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

1.3    Returns

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

1.4    Powers of Attorney

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

1.5    Subsidiaries

       The Company has no  subsidiaries  and does not own any shares or stock in
       the capital of nor has any  beneficial  interest in any other  company or
       business  organisation  and does not take part in the  management  of any
       other company or business organisation.

2.     ACCOUNTS

2.1    The Principal Accounts

       The Principal  Accounts  comply with the  provisions of the Companies Act
       1985 as applicable and have been prepared in accordance with all relevant
       statutes and with generally accepted accounting  principles and practices
       and give a true and fair view of all the assets and liabilities  (whether
       present or future,  actual or  contingent)  and of the state of  affairs,
       financial  position  and  results of the Company as at and up to the Last
       Accounts Date.

                                       17
<PAGE>

2.2    Accounting Policy

       The Principal  Accounts  have been  prepared on a basis fully  consistent
       with the basis upon which all audited  accounts of the Company  have been
       prepared.

2.3    Stock in Trade

       The Company has no stock in trade.

2.4    Off Balance Sheet Financing

       The Company has not engaged in any financing (including without prejudice
       to the  generality of the foregoing the incurring of any borrowing or any
       indebtedness  in the nature of  borrowing  including  without  limitation
       liabilities in the nature of acceptances or acceptance credits) of a type
       which  would not be required to be shown or  reflected  in the  Principal
       Accounts.

2.5    Accounting Reference Date

       The Company has notified to the  Registrar  of Companies  31st October as
       being its accounting reference date pursuant to the Companies Act 1985.

2.6    Books of Account

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

2.7    Management Accounts

       Any management  accounts  prepared by the Company since the Last Accounts
       Date were  compiled  with due care,  on the same basis as the  management
       accounts of the Company had been prepared during the previous  accounting
       period prior to the Last Accounts Date and give a fair  representation of
       the  financial  position  of the  Company  from the period  from the Last
       Accounts  Date to the date to which  they were  drawn up and the state of
       affairs of the Company as at the date to which they were drawn up.

                                       18
<PAGE>

3.     BUSINESS

3.1    Business since the Last Accounts Date

       Since  the  Last  Accounts  Date the  business  of the  Company  has been
       conducted in the ordinary course of business as a licensed tour operator.

                                       19
<PAGE>

3.2    Acquisition and Disposal of Assets

       The Company has not since the Last  Accounts  Date  acquired or agreed to
       acquire  any asset for a  consideration  which is higher  than the market
       value at the time of  acquisition  and nor has  disposed  of or agreed to
       dispose of any asset for a  consideration  which is lower than the market
       value or the value thereof as shown in its books at the time of disposal.

3.3    Charges and Title to Assets

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

3.4    Debts

       All debts owed to the  Company as  recorded  in the  Company's  books and
       records are good and  collectable in the ordinary  course of business and
       will realise their full face value within three months of Completion. The
       rights of the Company in respect of such debts are valid and  enforceable
       and not  subject  to any  defence,  right  of  set-off  or  counterclaim,
       withholding  or  other  deduction  and no act has been  done or  omission
       permitted  whereby  any of them has ceased or might cease to be valid and
       enforceable  in whole or in part.  No amount  included  in the  Principal
       Accounts  as owing to the  Company  at the  Last  Accounts  Date has been
       released  for an amount  less than the value at which it was  included in
       the Principal  Accounts or is now regarded by the Vendor as irrecoverable
       in whole or in part.  The Company has not factored or  discounted  any of
       its debts or other receivables or agreed to do so.

3.5    Leasing etc. Agreements

       Full and  accurate  details  of any hiring or  leasing  agreements,  hire
       purchase agreement,  credit or conditional sale agreement,  agreement for
       payment on deferred  terms or any other  similar  agreement  to which the
       Company  is a party are  contained  in the  Disclosure  Letter and copies
       annexed thereto.

3.6    Onerous Obligations

       The Company is not a party to any contract,  transaction,  arrangement or
       liability  which is Material and outside the ordinary  course of business
       of the Company and which:-

       3.6.1  is of an unusual or abnormal nature;

       3.6.2  is for a fixed term of more than six months;

                                       20
<PAGE>

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

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

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

       3.6.6  involves an aggregate  outstanding  expenditure  by the Company of
              more than (pound)25,000;

       3.6.7  restricts  its  freedom to engage in any  activity  or business or
              confines its activity or business to a particular place.

       Material  is to be defined as  material  in the context of the affairs of
       the Company.

3.7    Supply Contracts

       All  agreements or  arrangements  for the supply of services to or by the
       Company which involve or are likely to involve the supply of services the
       aggregate sale value of which will represent in excess of ten per cent of
       the turnover for the  preceding  financial  year of the Company have been
       disclosed to the Purchaser in writing.  The Company has not been notified
       of nor is the Vendor aware of any breach of any of its obligations  under
       any contract,  transaction or arrangement to which it is a party or which
       binds it.

3.8    Events of Default

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

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

3.9    Guarantees etc.

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

                                       21
<PAGE>

3.10   Options over shares etc.

       Since the Last Accounts Date no share or loan capital has been created or
       issued or agreed to be created or issued and there are not any options or
       other agreements  outstanding  which call or give any person the right to
       call (whether or not subject to conditions) for the issue of any share or
       loan capital of the Company and the Vendor is not under any obligation of
       any kind  whatsoever  whether  actual or  contingent  to sell,  charge or
       otherwise  dispose  of any of the Shares or any  interest  therein to any
       other person.

3.11   Litigation

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

3.12   Business name

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

3.13   Property in other companies

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

3.14   Insurance

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

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

       3.14.3 So far as the Vendor is aware,  there are no  circumstances  which
              might lead to any liability  under such insurance being avoided by
              the insurers or the premiums being increased and there is no claim
              outstanding  under any such policy nor is the

                                       22
<PAGE>

              Vendor aware of any circumstances likely to give rise to a claim.

3.15   Licences

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

3.16   Grants

       The Company has neither applied for nor received any financial assistance
       from any supranational, national or local agency, body or authority.

4.     DIRECTORS AND EMPLOYEES

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

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

       4.2.1  actually provided; and

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

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

4.3    The particulars of all employees in the Disclosure Letter is correct.

4.4    There are no standard terms and conditions,  staff handbooks and policies
       which apply to employees of the Company.

4.5    There are no service  agreements or contracts of  employment  between the
       Company and any of its directors or employees containing any provision in
       addition to the matters  required to be contained  under section 1 of the
       ERA. All  employees of the Company have  received a written  statement of
       particulars of their employment as required by section 1

                                       23
<PAGE>

       of the ERA.

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

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

4.8    No past or present directors, officer or employee has currently any claim
       against the Company:

       4.8.1  in respect or any accident or injury which is not fully covered by
              insurance; or

       4.8.2  in breach of contract of services or for services; or

       4.8.3  for  loss of  office  or  arising  out of or  connected  with  the
              termination of his office of employment  (including any redundancy
              payment)  and,  so far as the  Vendor is aware,  there is no event
              which would or might give rise to any such claim.

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

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

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

4.12   Save  in  accordance  with  their  respective   contracts  there  are  no
       directors, officers or employees of the Company who are absent on grounds
       of disability or other leave of secondment, maternity leave or absence.

5.     PROPERTY

5.1    Title

       5.1.1  The  Property  comprises  all the  properties  owned,  occupied or
              otherwise used in connection with their business by the Company.

                                       24
<PAGE>

       5.1.2  The  Property  occupied  or  otherwise  used  by  the  Company  in
              connection  with its  business  is so occupied or used by right of
              ownership  or under  lease or  licence,  and the terms of any such
              lease or licence have been disclosed to the Purchaser.

       5.1.3  The Company is the legal and  beneficial  owners of its  leasehold
              interest in the Property.

       5.1.4  The  information  contained  in Schedule 3 as to the tenure of the
              Property is true and correct.

       5.1.5  The Company has good title to the Property.

5.2    Encumbrances

       5.2.1  The  Property  is  free  from  any  mortgage,  debenture,  charge,
              rent-charge,  lien or other encumbrance  securing the repayment of
              monies or other  obligation  or  liability  of the  Company or any
              other person.

       5.2.2  The  Property is not subject to any  outgoings  other than general
              rates,  water  rates  and  insurance  premiums  and in the case of
              leasehold  property rent and service  charges and as may be stated
              in the leases.

       5.2.3  Where any such  matters as are  referred  to in clauses  5.2.1 and
              5.2.2 have been  disclosed in the Disclosure  Letter,  neither the
              Vendor nor the Company has received any notice of breach of any of
              the  obligations  and  liabilities  imposed and arising under such
              clauses. Any payments in respect of them which are due and payable
              have been duly paid.

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

5.3    Planning Matters

       Neither the vendor nor the Company has received or is aware of any notice
       of breach in connection with any of the matters set out below:

       5.3.1  The use of the Property for the purposes of the Planning Acts.

       5.3.2  Planning permission for development purposes.

       5.3.3  Building regulation consents.

       5.3.4  Planning  permissions,  orders,  and regulations  issued under the
              Planning  Acts, the

                                       25
<PAGE>

              London Building Acts and building regulation consents and bye-laws
              for the time being in force with respect to the Property.

       5.3.5  Agreements  under the Town and Country Planning Act 1971 s 52 made
              with respect to the Property.

       5.3.6  All agreements  made under the Highways Act 1980 s 38 with respect
              to the Property.

       5.3.7  Requirements  in  connection  with the  Property  being of special
              historic or architectural  importance or located in a conservation
              area.

       5.3.8  Any development charges, monetary claims and liabilities under the
              Planning Acts or any other such legislation.

5.4    Statutory Obligations

       Neither  the  Vendor nor the  Company  has  received  notice of breach in
       connection with any of the matters listed below:

       5.4.1  Compliance  being made with all  applicable  statutory  and by-law
              requirements with respect to the Property,  and in particular (but
              without  limitation)  with the requirements as to fire precautions
              and  under  the  Public  Health  Acts and the  Offices,  Shops and
              Railway Premises Act 1963.

       5.4.2  Outstanding and unobserved or unperformed  obligation with respect
              to the Property necessary to comply with the requirements (whether
              formal  or  informal)  of  any  competent   authority   exercising
              statutory or delegated powers.

       5.4.3  Any licences  whether under the  Licensing  Acts 1964 or otherwise
              which apply to the Property.

5.5    Adverse Orders

       Neither the Vendor nor the Company has received any of the following:

       5.5.1  Compulsory purchase notices,  orders or resolutions  affecting any
              of the Property.

       5.5.2  Closing,  demolition or clearance  orders,  enforcement  notice or
              stop notices affecting the Property.

5.6    Condition of the Property

       5.6.1  There are no disputes  with any  adjoining or  neighbouring  owner
              with  respect to boundary  walls and fences or with respect to any
              easement, right or means of access to the Property.

                                       26
<PAGE>

       5.6.2  The principal  means of access to the Property is over roads which
              have been taken over by the local or other  highway  authority and
              which have been taken over by the local or other highway authority
              and which are  maintainable  at the public expense and no means of
              access to the  Property is shared with any other party nor subject
              to rights of determination by any other party.

       5.6.3  The  Property   enjoys  the  main  service  of  water,   drainage,
              electricity and/or gas.

       5.6.4  The Property is not located in an area or subject to circumstances
              particularly susceptible to flooding.

5.7    Insurance

       5.7.1  The Property is insured in its respective full reinstatement value
              for not less than two years' loss of rent and against  third party
              and public liabilities to an adequate extent.

       5.7.2  All premiums payable in respect of insurance policies with respect
              to the  Property  which have become due have been duly paid and no
              circumstances  have  arisen  which  would  vitiate  or permit  the
              insurers to avoid such policies.

       5.7.3  The  information  in the  Disclosure  Letter  with  respect to the
              insurance  policies  is up to date and true  and  accurate  in all
              respects.

5.8    Leasehold Property

       5.8.1  The Company has paid the rent due under the lease of the  Property
              and neither the Vendor nor the Company has  received any notice in
              connection  with the  observation and performance of the covenants
              on the part of the  tenant  and the  conditions  contained  in any
              leases (which  expressions  includes  underleases) under which the
              Property  are held,  and the last demands (or receipts for rent if
              issued) were unqualified.

       5.8.2  All licences,  consents and approvals  required from the landlords
              and any superior  landlords  under any leases of the Property have
              been  obtained  and  the  covenants  on the  part  of  the  tenant
              contained in such licences,  consents and approvals have been duly
              performed and observed.

       5.8.3  There are no rent reviews under the leases of the Property held by
              the Company currently in progress.

       5.8.4  There  is  not  outstanding  and  unobserved  or  unperformed  any
              obligation   necessary   to  comply   with  any  notice  or  other
              requirement  given  by  the  landlord  under  any  leases  of  the
              Property.

                                       27
<PAGE>

       5.8.5  There is no  obligation  to reinstate  the Property by removing or
              dismantling  any  alteration  made  to it by  the  Company  or any
              predecessor in title to the Company.

5.9    Tenancies

       5.9.1  The  Property is held  subject only to and with the benefit of the
              tenancies (which expression  includes  subtenancies) as set out in
              Schedule 3 and none other.

       5.9.2  With  respect to such  tenancies  the  details  in the  Disclosure
              Letter are correct.

       5.9.3  The Vendor is not aware of any material or persistent  breaches of
              covenant by a tenant of the Property  including  the  covenants to
              pay rent.

       5.9.4  The Vendor shall procure (and the Purchaser agrees to) the service
              by the Company prior to the Completion Date of a Tenant's  Request
              for a new  tenancy  pursuant  to  Section 26 of the  Landlord  and
              Tenant Act 1954 in respect of the Lease of the Company's  premises
              dated 6th November  1985 to take effect as soon as possible  under
              the terms of such Act.

6.     THE COMPANY AND ITS BANKERS

6.1    Borrowings

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

6.2    Continuance of Facilities

       Full and  accurate  details  of all  overdrafts,  loans,  leases or other
       financial  facilities  outstanding  or available to the Company have been
       supplied  to the  Purchaser  and  (save for  entry  into this  Agreement)
       neither  the  Vendor  nor the  Company  has  done  anything  whereby  the
       continuance  of any such  facilities  in full force and  effect  might be
       affected or prejudiced.

6.3    Bank Accounts

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

                                       28
<PAGE>

       now substantially different from the balances shown on such statements.

7.     DISCLOSURE OF ALL MATERIAL MATTERS

       So far  as  the  Vendor  is  aware  and  to  the  best  of her  knowledge
       information and belief after relevant enquiry, all information  contained
       or  referred  to in  this  Agreement  (including  the  Schedules  and the
       documents  in  Agreed  Terms)  and in  the  Disclosure  Letter  or in any
       annexure thereto or which has otherwise been disclosed by or on behalf of
       the Vendor to the  Purchaser  or its  advisers/others  on or prior to the
       date hereof is true and accurate in all material  respects and the Vendor
       is not  aware  of any  other  fact  or  matter  which  renders  any  such
       information  misleading  because of any  omission,  ambiguity  or for any
       other  reason.  So far as the  Vendor  is  aware  and to the  best of her
       knowledge  information  and  belief,  the  Vendor  has  disclosed  to the
       Purchaser  all  information  and facts  relating  to the  Company and its
       business,  assets and undertaking (including financial information) which
       are or may be material  for  disclosure  to a purchaser of the Company on
       the terms of this  Agreement and all  information  and facts so disclosed
       are true and accurate in all material respects.

8.     TAXATION

8.1    Returns

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

8.2    Disclosures

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

8.3    Clearances

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

                                       29
<PAGE>

8.4    Claims and Elections

       The Company  has not made nor is subject to any claim or  election  under
       any or all of the following:-

       8.4.1  sections  2/9(1)  to (6)  of the  TCGA  (foreign  assets:  delayed
              remittances);

       8.4.2  section 35 of the TCGA (capital gains rebasing to 31 March 1982);

       8.4.3  section  24 of the TCGA  (assets  of  negligible  value or lost or
              destroyed);

       8.4.4  sections  154 and 175 of the TCGA and  sections 152 and 153 of the
              TCGA. (roll-over relief);

       8.4.5  sections 242 of the ICTA (surplus franked investment income)

       8.4.6  section 247 of the ICTA (group income)

       8.4.7  sections 584, 585 or 723 of the ICTA (foreign income etc;  delayed
              remittances);

       8.4.8  section 75 of the FA 1986 (stamp duty on reconstructions etc.)

       8.4.9  section 161 TCGA (appropriations to and from Stock).

                                       30
<PAGE>

8.5    Payment of tax by instalments

       The Company has not made an  election or  arrangement  for the payment of
       tax by instalments under sections 280 and 48 of the TCGA.

8.6    Deed of Indemnity

       So far as the Vendor is aware, no event has occurred which would or might
       give  rise to  claim  under  the  Deed of  Indemnity  upon or  after  the
       execution thereof.

                        PROVISION FOR AND PAYMENT OF TAX

8.7    General

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

8.8    Payment of Tax

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

       8.8.2  Without  prejudice to clause 8.8.1 the Company has paid on the due
              date:-

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

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

                                       31
<PAGE>

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

              (iv)   all  social  security  contributions  (both  employers  and
                     employees)   due   in   respect   of  its   employees   and
                     ex-employees.

8.9    Pay As You Earn

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

8.10   Give as You Earn

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

8.11   Secondary Liability

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

                                 CORPORATION TAX

8.12   Changes in Trade etc.

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

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

                                       32
<PAGE>

       8.12.3 Prior to the execution of this Agreement no change of ownership of
              the  Company  has taken place such that either or both of sections
              245 or 768 of ICTA has or may be applied to deny relief in respect
              of loss or losses of the  Company or surplus  advance  corporation
              tax.

8.13   Trading Assets

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

8.14   Deductions

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

8.15   Sales and undervalue/overvalue

       All transactions entered into by the Company have been entered into on an
       arm's length basis and the  consideration (if any) charged or received or
       paid by the Company on all transactions entered into by it has been equal
       to the  consideration  which  might  have  been  expected  to be  charged
       received or paid (as appropriate)  between independent persons dealing at
       arm's length and no notice or enquiry pursuant to section 770 of the ICTA
       has been made in connection with any of such transactions.

8.16   Appropriations

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

8.17   Chargeable Policies

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

8.18   Deep Discount Securities

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

                                       33
<PAGE>

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

8.19   Foreign Borrowings

       The  Company  has not made  borrowings  in  foreign  currency  whereby  a
       liability to tax may arise or may have arisen or a claim for tax has been
       made.

8.20   Pension Fund Surplus

       Since the Last  Accounts Date the Company has not received any payment to
       Schedule 22 of the ICTA applies.

                                 CAPITAL ASSETS

8.21   Capital Allowances

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

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

8.22   Finance Leases

       8.22.1 The  Company  is not nor has been the  lessee  under any leases of
              plant or machinery save for the leases specified in the Disclosure
              Letter (the  "Leases").

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

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

       8.22.4 So far as the Vendor is aware  there is no revenue  investigation,
              revenue  enquiry or other  circumstance  which  dictates  that any
              person who is or was a lessor or owner of equipment subject to any
              of the Leases will or may be denied the first year  allowances and
              writing down  allowances by reference to which the initial  rental
              under that Lease was calculated.

8.23   Investment grants

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

                                       34
<PAGE>

                                  DISTRIBUTION

8.24   Repayments of Share Capital

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

       8.24.2 The Company has not made (and will not be deemed to have made) any
              distribution  within the meaning of sections  209,  210 and 236 of
              ICTA since 5 April 1965 except dividends  properly  authorised and
              shown in the  Principal  Accounts nor is the Company bound to make
              any such distribution.

8.25   Payments to be treated as distributions

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

                                CHARGEABLE GAINS

8.26   Sales at Book Value

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

8.27   Value shifting

       The  Company  has  been  involved  in  any  scheme  or  affected  by  any
       arrangements  whereby  the value of any asset has been or will be reduced
       such that sections 29 and/or 30 of TCGA might be applicable.

8.28   Valuation of Assets

       8.28.1 The Company has not made any  disposal of part of an asset part of
              which is still

                                       35
<PAGE>

              owned by the Company at the date hereof  which has required or may
              or will require any computation under section 42 of the TCGA (part
              disposals of assets).

       8.28.2 The  Company has not  disposed  of or acquired  any assets so that
              section  17 of TCGA  might  apply to  restrict  the  consideration
              deemed to be given on such disposal or acquisition.

8.29   Chargeable debts

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

8.30   Reconstructions

       The  Company  has been  involved  in any share for share  exchange or any
       scheme of reconstruction or amalgamation such as are mentioned in section
       135 and 136 of the TCGA or section 139 of the TCGA under which  shares or
       debentures  have been or will be  issued  or assets  have been or will be
       transferred.

8.31   Corporate Bonds

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

8.32   Depreciatory transactions

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

8.33   Transfers by way of gift

       The Company has not made any such  transfer of an asset at an  undervalue
       as is mentioned in section 125 of TCGA or received any assets by way of a
       gift as mentioned in section 282 of TCGA.

                            ANTI AVOIDANCE PROVISIONS

8.34   Tax Schemes

       The  Company  has not  entered  into nor  been a party  to nor  otherwise
       involved in any scheme or arrangement  designed  wholly or partly for the
       purpose of avoiding or deferring tax.

                                       36
<PAGE>

8.35   Transactions in Securities

       The Company has not:-

       8.35.1 become liable for tax; or

       8.35.2 received  and will  receive or be the  subject of or be  adversely
              affected  by any  claim for tax  arising  under or  imposed  by or
              resulting from the operation of sections  703-709 of ICTA (whether
              alone or in conjunction  with any other provisions of any taxation
              statutes  whatsoever) and which wholly or partly results or arises
              from or is  computed by  reference  in  circumstances  existing or
              events  occurring at any time on or before the date hereof whether
              alone or in conjunction with other circumstances arising before or
              after Completion.

8.36   Transactions in Land

       The Company has not:-

       8.36.1 become liable for tax; or

       8.36.2 received and will not receive or be the subject of or be adversely
              affected  by any  claim for tax

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

8.37   Sale and lease back of land

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

8.38   Transactions between dealing and associated company

       The Company has not entered into any transaction mentioned in section 774
       of ICTA.

8.39   Loans or Credit

       The Company has been  involved in  transactions  such that section 786 of
       ICTA (transactions associated with loans or credit) might apply.

                                       37
<PAGE>

                                 FOREIGN ELEMENT

8.40   Treasury Consents

       The Company has not without  the prior  consent of the  Treasury  entered
       into any of the transactions specified in 765(1)(c) or (d) of ICTA

                                       38
<PAGE>

8.41   Company Migration

       Since 15 March  1988,  no  election  has been made by the  Company as the
       principal  company as defined in  section  187 of TCGA  (postponement  of
       charge on deemed  disposal of assets by company ceasing to be resident in
       the  United  Kingdom)  nor has any  company  over which the  Company  had
       control  or which  was a member  of the same  group of  companies  as the
       Company  ceased to be resident in the United  Kingdom  otherwise  than in
       compliance with section 130 of the FA 1988.

8.42   Transfers to non-resident company

       The Company has not made any such transfer as is mentioned in section 140
       of the TCGA.

8.43   Double Taxation

       The  Company  has not made nor is  entitled  to make any claim under part
       XVIII  of the ICTA  and in  respect  of any  such  claims  disclosed  all
       necessary  conditions for all foreign tax credit claimed or to be claimed
       by it were at all material  times and remain  satisfied and in particular
       (but without  prejudice to the  generality of the  foregoing) the Company
       holds all tax deduction certificates or other documentation necessary for
       production to HM Inland Revenue in respect of such foreign tax.

8.44   Controlled Foreign Companies

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

8.45   Offshore Funds

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

8.46   Agency for Non Residents

       The Company is not nor has been assessable to tax by virtue of section 78
       of the Taxes Management Act 1998

                                       39
<PAGE>

                                  CLOSE COMPANY

8.47   The Company is a close company as defined by section 414 ICTA.

                               GROUPS OF COMPANIES

8.48   Group Relief

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

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

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

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

       8.48.4 no such payment  exceeds or could  exceed the amount  permitted by
              section  402(6) of ICTA;

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

8.49   Advance Corporation Tax

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

       8.49.1 the  Company  has not paid nor is liable to pay for the benefit of
              any advance  corporation  tax which is or may become  incapable of
              set off against its liability to corporation tax;

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

       8.49.3 no such payment  exceeds or could  exceed the amount  permitted by
              section 240(8) of ICTA; and

       8.49.4 there exists or existed for any period in respect of which a claim
              under  section  240  of  ICTA  has  been  or  is  to  be  made  no
              arrangements  such as are  specified in  sub-section  (11) of that
              section  whereby any person could obtain control of the Company or
              of any subsidiary to which such surrender purports or is purported
              to be made.

                                       40
<PAGE>

8.50   Intra-Group Transfers

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

                                       41
<PAGE>

                                 INHERITANCE TAX

8.51   Gifts

       8.51.1 The Company is nor will  become,  liable to be assessed to capital
              transfer tax or  inheritance  tax as donor or donee of any gift or
              transferor  or  transferee  of value  (actual or deemed)  nor as a
              result of any disposition chargeable transfer or transfer of value
              (actual  or  deemed)  made by or  deemed  to be made by any  other
              person.

       8.51.2 The Company has been a party to associated  operations in relation
              to a transfer of value within the meaning of section 268 of ITA.

       8.51.3 No asset owned by the Company is subject to any sale,  mortgage or
              charge by virtue of s212 of ITA.

8.52   Inland Revenue Charge

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

                                 VALUE ADDED TAX

8.53   Value Added Tax

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

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

       8.53.3 That (without  prejudice to the  generality of clause  8.53.2) the
              Company has not:-

                                       42
<PAGE>

              (i)    taken part in conduct involving  dishonesty as described in
                     section 60 of VATA;

              (ii)   committed   any  serious   misdeclaration   or  neglect  as
                     described in section 63 of VATA;

              (iii)  issued  unauthorised  invoices  or  failed  to do  anything
                     contemplated by section 67 of VATA;

              (iv)   failed to comply with any regulatory requirements described
                     in section 69 of VATA;

              (v)    been notified of any assessment  within  sections 59 and 74
                     of VATA or a surcharge notice under section 59 of VATA;

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

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

                                   STAMP DUTY

8.54   Stamp Duty and Capital Duty

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

                                FINANCE ACT 1996

8.55   Loan Relationships

       The Company is not a party to any loan relationship as defined in Chapter
       11 of the  Finance  Act 1996 which may give rise to any debits or credits
       as there mentioned.

9.     ENVIRONMENTAL MATTERS

9.1    Consents

       The Company does not require any Environmental  Consent, nor has received
       any notice of any requirement for any Environmental Consent.

                                       43
<PAGE>

9.2    Liability

       The  Company  is in  compliance  with all  environmental  laws  which are
       currently  applicable  to its  business  (other than  breaches  which are
       unintentional, minor or insignificant in effect).

       There are no civil criminal arbitration or administrative  actions claims
       proceedings  or suits pending or threatened  against the Company  arising
       from or relating to  Environmental  Consents  or  Environmental  Laws and
       there  are no  circumstances  which  may  lead  to  such  actions  claims
       proceedings or suit.

10.    INTELLECTUAL PROPERTY

10.1   The use by the Company of its Intellectual Property does not infringe the
       rights of any third party.

10.2   There are no claims or  proceedings in existence or threatened in respect
       of the use by the Company of its  Intellectual  Property and there are no
       circumstances likely to give rise to any such claims or proceedings

11.    INFORMATION TECHNOLOGY AND MILLENIUM COMPLIANCE

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

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

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

11.4   The  Disclosure  Letter  sets  out or has  annexed  to it  copies  of all
       disaster  recovery  agreements  used in the course of the business of the
       Company.

11.5   The  performance  of the  business  systems  used in the  business of the
       Company  will not be  adversely  affected by either any changes in and to
       data  information  used  therein  or any  changes  to  inputs  and  other
       manipulations  of data in  relation  to  dates  from 1  January  2000 and
       thereafter.

                                       44
<PAGE>

11.6   The Disclosure  Letter has annexed to it copies of all computer  hardware
       and software  maintenance  agreements,  all such agreements being in full
       force and effect.

12.    PENSIONS

12.1   The  Company  is not  under a legal  obligation  or  moral  liability  or
       obligation and is not a party to any ex-gratia  arrangement or promise to
       pay  pensions,  gratuities,  super-annuation  allowances  or the like, or
       otherwise to provide  "relevant  benefits" within the meaning of s.612 of
       the  Income and  Corporation  Taxes Act 1988 to or for any of its past or
       present  officers  or  employees  or their  dependents;  and there are no
       retirement  benefit  or pension  or death  benefit or similar  schemes or
       arrangements  in  relation  to or binding on the  Company or to which the
       Company contributes.

                                       45
<PAGE>

                                   SCHEDULE 5

1.     Interpretation

1.1    The  provisions  of this Schedule 5 shall operate to limit or qualify the
       liability  of the  Vendor  under or in  connection  with any term of this
       Agreement and the  Warranties  and  indemnities  in the Indemnity  ("such
       liabilities")  and  references to "such  liabilities"  shall be construed
       accordingly.

1.2    In the  Warranties,  reference to  "material"  shall mean material in the
       context of the business of the Company as a whole.

2.     Cap

2.1    Notwithstanding   any  other  provision  hereof  the  maximum   aggregate
       liability of the Vendor in respect of all breaches of this  Agreement and
       the Warranties and the tax Deed shall not exceed (pound)325,000.

3.     Time Limits

3.1    Subject to the  provisions  of paragraph 3.2 of this  Schedule,  no claim
       shall be brought against the Vendor in respect of such liabilities unless
       notice in writing of any such claim  (specifying in reasonable detail the
       nature of the breach and so far as is  practicable  the amount claimed in
       respect  thereof) has been given to the Vendor  within  twelve  months of
       Completion  and any such claim  which may have been made shall (if it has
       not been  previously  satisfied  settled or  withdrawn) be deemed to have
       been  withdrawn on the expiration of six months from the date of the said
       notice unless  proceedings in respect thereof shall have been both issued
       and served on the Vendor before such expiration.

3.2    No claim or claims  shall be  brought  against  the  Vendor in respect of
       which the subject matter relates to Taxation  unless notice in writing of
       any such claim  (specifying in reasonable  detail the nature of the claim
       and so far as practicable the amount claimed in respect thereof) has been
       given to the  Vendor  within six years of  Completion  and any such claim
       which may have been made shall (if it has not been  previously  satisfied
       settled or withdrawn) be deemed to have been  withdrawn on the expiration
       of six months  from the date of the said  notice  unless  proceedings  in
       respect  thereof  shall  have been both  issued  and served on the Vendor
       before such expiration.

4.     Small Claims and Threshold

4.1    Notwithstanding the other provisions of this Schedule 5:-

       4.1.1  no claim  shall be  brought in respect of any breach of any of the
              Warranties or  indemnities  unless the amount of loss sustained in
              respect of which a claim may properly be brought  shall exceed the
              sum of  (pound)5,000  (such a claim which  exceeds

                                       46
<PAGE>

              that sum being herein referred to as a "Qualifying Claim"); and

       4.1.2  no claim  shall be  brought in  respect  of any  Qualifying  Claim
              unless the loss thereby  sustained (when aggregated with any other
              Qualifying Claims) exceeds (pound)25,000  whereupon all Qualifying
              Claims  and  not  merely  the  excess  over  (pound)25,000  may be
              brought.

5.     No Double Claims

5.1    Neither  the  Purchaser  nor the  Company  shall be  entitled  to recover
       damages in respect of any claim for breach of this Agreement or otherwise
       obtain  reimbursement or restitution more than once in respect of any one
       breach  of any of  the  Warranties  contained  in  the  Agreement  or the
       indemnities  contained  in the  Deed of  Indemnity  and so that  for this
       purpose any  recovery by the  Purchaser  shall be deemed to be a recovery
       under either of the Warranties or indemnities and further any recovery in
       respect of a claim for breach of any of the Warranties  shall satisfy any
       liability in respect of the  circumstances  giving rise to such claim and
       vice versa.

6.     General Limitations

6.1    The Vendor  shall have no liability  in respect of such  liabilities  and
       accordingly  no claim may be  brought  in  respect  thereof if and to the
       extent that any one or more of the following provisions may apply:-

       6.1.1  such  liabilities  are  wholly  or  partly   attributable  to  any
              voluntary act omission transaction or arrangement of the Purchaser
              or the Company after the date hereof;

       6.1.2  either  the  Company  or  the   Purchaser  is  entitled  to  claim
              indemnified (and then only to the extent of the indemnity) against
              any loss or damage  suffered by any of them under the terms of any
              insurance policy for the time being in force;

       6.1.3  such  liabilities  arise in  connection  with any fact,  matter or
              circumstance   fairly  disclosed  in  the  Disclosure   Letter  or
              subsequently  disclosed  by the Vendor to the  Purchaser or in the
              schedules to this Agreement;

       6.1.4  such liabilities  arise in connection with any matter provided for
              under  the  terms  of  this   Agreement   or   arising   from  the
              implementation of the same;

       6.1.5  either such liabilities arise in connection with any exceptions or
              matters included mentioned provided for reserved or referred to in
              the  Principal  Accounts  or the  audited  accounts  for  the  two
              previous accounting periods of the Company or in the notes thereto
              or the subject matter of the claim giving rise to such liabilities
              was  taken  into  account  in  computing  the  amount  of any such
              provision or reserve or is noted therein;

                                       47
<PAGE>

       6.1.6  such  liabilities  arise wholly or partly out of as a result of or
              in connection with:-

              6.1.6.1  any change in the nature of the  business  of the Company
                       (or in the manner of  conducting  the same)  between  the
                       date hereof and  Completion  which is  authorised  by the
                       Purchaser pursuant to this Agreement; or

              6.1.6.2  any asset acquired or disposed of by the Company  between
                       the date hereof and completion which is authorised by the
                       Purchaser pursuant to this Agreement; or

              6.1.6.3  any  statutory  provision not in force at the date hereof
                       or any change in any statutory provision hereafter or any
                       decision of the Courts  altering the  generally  accepted
                       interpretation   of  any   statutory   provision  or  the
                       withdrawal of any extra statutory  concession  previously
                       made by or any change in practice  of the Inland  Revenue
                       or other taxation  authority or any increase in the rates
                       of Taxation in force at the date hereof;

              6.1.6.4  the  passing of a  resolution  for the  winding up of the
                       Company after the date hereof; or

              6.1.6.5  any change in the format,  matter, bases,  priorities and
                       principles used in the preparation of the accounts of the
                       Company  from  those used and  adopted  in the  Principal
                       Accounts;

       6.1.7  the loss or liability  resulting from such liabilities has been or
              is made good or  otherwise  compensated  for at no  expense to the
              Purchaser and/or the Company;

       6.1.8  the loss or liability resulting from such liabilities is less than
              the aggregate of any over-provision made in the Principal Accounts
              in  respect  of any  liability  and any  undervalue  of any  asset
              recorded in the Principal Accounts.

7.     Purchaser's Covenant

7.1    The Purchaser hereby covenants with the Vendor that:

       7.1.1  It  is  not  aware  of  any  fact,  matter  or  thing  as  may  be
              inconsistent  with  any  Warranty  or that  may  give  rise to any
              liability on the part of the Vendor hereunder; and

       7.1.2  It will  procure  repayment by the Company on or before 31st March
              2000 of the Loan of  (pound)10,000  made by the  Vendor or take an
              assignment  thereof from the Vendor for a  consideration  equal to
              the outstanding amount of such loan.

                                       48
<PAGE>

8.     Subsequent Recovery from Third Party

8.1    The Purchaser shall reimburse to the Vendor  forthwith an amount equal to
       any sum paid by the Vendor in  respect of any claim for such  liabilities
       which is  subsequently  recovered  by or paid to the Company by any other
       person  (including  but not  limited  to  insurance  payments)  (less any
       reasonable  costs and  expenses  incurred  by the  Company in making such
       recovery).

9.     Assignment of Claim

9.1    Where having discharged any claim for breach of the Warranties the Vendor
       requests  the  assignment  to it of any right of the  Purchaser or of the
       Company to make  recovery in whole or in part from any third  party,  the
       Purchaser  will assign at Vendor's  expense or procure the  assignment to
       the  Vendor of such  right  and,  if the same is not  legally  capable of
       effective   assignment,   will,  subject  to  being  indemnified  to  the
       reasonable  satisfaction of the Purchaser  pursue such claim on behalf of
       the  Vendor and  deliver  over upon  receipt  to the  Vendor all  amounts
       recovered.

10.    Reliefs

10.1   Any such  liabilities  shall not extend to any part of the loss or damage
       suffered  by the  Purchaser  or the  Company to the extent that such part
       shall be used or shall be capable of being used by the  Purchaser  or the
       Company or any present or future subsidiaries of either of them to offset
       in whole or in part any past present or future liability to Taxation.

11.    Third Party Claim

11.1   Where the  Company or the  Purchaser  is  entitled  (whether by reason of
       insurance or payment  discount or  otherwise)  to recover from some other
       person any sum in respect of  Taxation or any other  damage or  liability
       the subject of a claim  against the Vendor  under this  Agreement  or for
       which a claim could be made  hereunder  (and whether  before or after the
       Vendor has made payment  hereunder) the Purchaser shall if so required by
       the  Vendor  and at her own  cost  and  expense  take or (as the case may
       require)  procure that the Company  takes all steps  (whether by way of a
       claim  against its insurers or  otherwise)  as the Vendor may  reasonably
       require to enforce such  recovery  and shall keep the Vendor  informed to
       their  reasonable  satisfaction  of the  progress  of any  action  taken.
       Thereafter  any claim against the Vendor shall be limited (in addition to
       the  limitations  on the  liability  of the  Vendor  referred  to in this
       Schedule  5) to the  amount by which the loss or damage  suffered  by the
       Purchaser  as a result of such breach shall exceed the amount (if any) so
       recovered.  The  Purchaser  shall  not be  entitled  to make any claim in
       respect  of  such  liabilities  if it or  the  Company  fails  to  act in
       accordance  with the reasonable  instructions of the Vendor in conducting
       any claim against a third party.

                                       49
<PAGE>

12.    Right to Fight

12.1   The Vendor  shall be entitled to require the  Purchaser or the Company to
       take all such reasonable  steps or proceedings as the Vendor may consider
       appropriate in order to mitigate any claim in respect of such liabilities
       or in respect of the  undertakings  in this  Agreement  and the Purchaser
       shall  procure  that the Company  shall act in  accordance  with any such
       requirements   (subject  to  the  Purchaser   and/or  the  Company  being
       indemnified  by the Vendor  against  all  reasonable  costs and  expenses
       incurred in connection therewith). For the purpose of enabling the Vendor
       to remedy a breach or to mitigate or  otherwise  determine  the amount of
       any claim or to decide what steps or proceedings should be taken in order
       to mitigate any claim the Purchaser shall:-

       12.1.1 give notice to the Vendor  within  fourteen  days of any breach or
              circumstance  giving or likely to give rise to a breach  coming to
              its notice or to the notice of the Company;

       12.1.2 make or  procure  to be made  available  to the Vendor or her duly
              authorised   representatives  all  relevant  personnel,  books  of
              accounts,  records  and  correspondence  of the  Company  for  the
              purpose  of  enabling  the  Vendor to  ascertain  or  extract  any
              relevant information; and

       12.1.3 make no  admission  of the fact or amount of any  liability on the
              part of the Company or the  Purchaser  without  the prior  written
              consent  of  the  Vendor  such  consent  not  to  be  unreasonably
              withheld.

       The  Purchaser  shall not be  entitled  to make any claim in respect of a
       breach of Warranty if it or the Company  fails to give the said notice or
       to act in accordance  with the reasonable  instructions  of the Vendor in
       conducting  any  dispute  or  negotiation  in  relation  to the  claim in
       accordance with this paragraph 12.

13.    Reliance on Statements

13.1   No claim  shall be made  against  the Vendor in respect of any  warranty,
       representation, indemnity, covenant, undertaking or otherwise arising out
       of or in  connection  with the sale of the  issued  share  capital of the
       Company except where the same is expressly contained in this Agreement or
       the Schedules hereto or the Disclosure Letter and the Purchaser  confirms
       that it has not relied upon or been induced to enter into this  Agreement
       by any warranty, representation, indemnity, covenant or undertaking given
       by any person which is not expressly contained in this Agreement.

14.    No Rescission

14.1   Any  breach  of any of the  Warranties  or any  other  provision  of this
       Agreement  by the  Vendor  shall  give  rise  only  to an  action  by the
       Purchaser for damages and shall not entitle the Purchaser to rescind this
       Agreement,  save  as  expressly  provided  for  in  clause  4.2  of  this
       Agreement.

                                       50
<PAGE>

Duty to Mitigate

15.1   Nothing in this  Agreement  shall be deemed to relieve the Purchaser from
       its  common  law duty to the Vendor to  mitigate  their loss and  without
       prejudice to the generality of the foregoing the Purchaser shall take and
       shall do all things in its power to procure  that the Company  shall take
       all  practicable  and  reasonable  steps to avoid or mitigate any loss or
       liability  which may give rise to a claim  under the  Warranties  or this
       Agreement.

                                       51
<PAGE>

                                   SCHEDULE 6

                                Deed of Indemnity

THIS DEED OF INDEMNITY is made on ________________ 199

BETWEEN:-

(1)    NITA EUGENIE ANNE BEECROFT of Stylehurst  Paddock,  Vannlake Road,  Weire
       Street, Ockley, Surrey RH5 5JD (the "Covenantor"); and

(2)    LEISURE  TRAVEL  GROUP  LIMITED  whose  office is at  Trafalgar  House 11
       Waterloo Place London SW1 (the "Purchaser" which expression shall include
       its successors and assigns).

RECITAL

This  Deed of  Indemnity  is  entered  into  pursuant  to the  provisions  of an
agreement  (the "Sale  Agreement")  made on 1999 pursuant to which the Purchaser
agreed to purchase the whole of the share capital of the Company.

THE PARTIES AGREE AS FOLLOWS:-

1.     INTERPRETATION

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

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

       "Claim for Tax" means any of the following:-

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

       (b)    any  non-availability  or  loss  of or  reduction  of  any  Relief
              (including  in particular a right to repayment) to the extent that
              such Relief has been reflected in the Net

                                       52
<PAGE>

              Assets of the Company as shown by the Principal Accounts.

       "Company" shall have the same meaning as in the Sale Agreement.

       "Group" shall be deemed to include the Company and any subsidiary.

       "Group Relief" means any of the following:-

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

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

       (c)    a Transferred Tax Refund.

       "income  profits or gains"  includes  any other  measure by  reference to
       which Tax is computed;

       "Purchaser's  Relief"  means  any  Relief  to the  extent  that  the same
       either:-

       (a)    has been  reflected  in the Net Assets of the  Company as shown by
              the Principal Accounts; or

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

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

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

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

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

       "Transferred  Tax Refund"  means a tax refund  relating to an  accounting
       period as defined

                                       53
<PAGE>

       by  section  102(3) of the FA 1989 in  respect of which a notice has been
       given pursuant to section 102(2) of the FA 1989.

       "Utilisation of a Purchaser's Relief" means the utilisation or set off of
       a Purchaser's Relief available to the Company.

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

2.     INDEMNITY

2.1    Subject to clause 2.2 the Covenantor  hereby  covenant with the Purchaser
       to pay from time to time to the Purchaser:-

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

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

              (ii)   in respect  of or by  reference  to any  income  profits or
                     gains earned,  accrued or received on or before Completion;
                     or

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

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

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

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

       (c)    such sums as will indemnify and keep indemnified the Purchaser and
              such  further  sums as would  if paid to the  Company  and/or  any
              subsidiary or holding  company of the Purchaser (or any subsidiary
              of any such  holding  companies)  indemnify  the

                                       54
<PAGE>

              same  against  all costs  and  expenses  incurred  or  payable  in
              connection with:-

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

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

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

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

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

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

       (c)    to any Claim for Tax to the extent that it arises in the  ordinary
              course of business of the Company after the Last Accounts Date but
              on  or  before  Completion  and  for  this  purpose,  but  without
              limitation,  the  following  shall not be regarded as being in the
              ordinary course of business:-

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

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

                                       55
<PAGE>

                     only of the Claim for Tax  arising in respect of the amount
                     by which the deemed  consideration  exceeds or is less than
                     the actual consideration; or

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

              (iv)   a Relevant  Event which  gives rise to a  liability  of the
                     Company in respect of the income, profits or gains, whether
                     actual or deemed, of any non-resident person;

              (v)    any other Relevant Event which gives rise to a liability to
                     Tax on deemed (as  opposed to  actual)  income,  profits or
                     gains.

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

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

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

2.5    All sums payable by the Covenantor under this Deed shall be paid free and
       clear  of all  deductions  or  withholding  (including  Tax)  unless  the
       deduction  or  withholding  is  required by law, in which event or in the
       event that the Purchaser  shall incur any liability for Tax chargeable or
       assessable  in  respect  of  any  payment  pursuant  to  this  deed,  the
       Covenantor  shall pay such  additional  amounts as shall be  required  to
       ensure that the net amount received and retained by the Purchaser  (after
       Tax) will  equal the full  amount  which  would  have been  received  and
       retained by it had no such deduction or  withholding  been made and/or no
       such  liability to Tax been  incurred and in applying  this clause 2.5 no
       account  shall be taken of the extent to which any  liability for Tax may
       be mitigated or offset by any Relief  available to the  Purchaser so that
       where such Relief is available the additional  amount  payable  hereunder
       shall be the amount  which would have been payable in the absence of such
       availability.

3.     TIMING

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

                                       56
<PAGE>

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

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

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

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

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

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

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

4.     REBATE

4.1    If the Purchaser or as the case may be the Company is entitled to recover
       from any person

                                       57
<PAGE>

       (other than the  Covenantor  the  Purchaser or the Company) in respect of
       any claim  for tax which  gives  rise to a  liability  on the part of the
       Covenantor under this Deed then:-

       (a)    the  Purchaser  shall  give the  Covenantor  full  details  of the
              entitlement as soon as practicable;

       (b)    subject to the Purchaser and the Company being  indemnified to the
              reasonable satisfaction of the Purchaser by the Covenantor against
              all costs,  expenses  and other  liabilities  which may be thereby
              incurred by the Purchaser or the Company or the Purchaser shall at
              the request of the Covenantor  take all reasonable and appropriate
              steps to recover or procure  the  recovery  of the sum keeping the
              Covenantor  fully  informed of the  progress  of any action  taken
              provided  that  neither the  Purchaser  nor the  Company  shall be
              required to take any action which they consider to be  prejudicial
              to their commercial interests.

4.2    The Purchaser  undertakes  that if after the Covenantor have paid in full
       any amount due hereunder in respect of any claim for tax the Purchaser or
       the  Company is or becomes  entitled to receive  and  receives  (from any
       person other than the  Covenantor) a payment in respect of such claim for
       tax the  Purchaser  shall or shall  procure that the Company shall pay to
       the Covenantor a sum equal to the lesser of:-

       (a)    the amount of any payment so received after deduction therefrom of
              an amount equal to any costs  reasonably and properly  incurred in
              obtaining it and any taxation liability in respect of it; and

       (b)    the  amount  paid by the  Covenantor  hereunder  in respect of the
              taxation liability in question.

4.3    If the  liability  of the  Company  to make an actual  payment  of tax is
       reduced in  consequence  of the  utilisation  of a relief which would not
       have arisen but for the  circumstances  giving rise to a claim for tax in
       respect  of which the  Covenantor  are liable  under this Deed  (relevant
       relief) then:

       (a)    the  Purchaser  shall procure that details of the reduction in tax
              liability are given to the Covenantor; and

       (b)    the Purchaser  shall procure that as soon as practicable and after
              the date on which the tax which has been reduced  would  otherwise
              have been paid any payment  made by the  Covenantor  in respect of
              the Relevant  Claim is paid to the  Covenantor up to the amount of
              the reduction (after deducting therefrom any reasonable and proper
              costs and  expenses  incurred by the  Purchaser  or the Company in
              obtaining  such  reduction)  and that any  interest  or  repayment
              supplement  received relating to the reduction so far as repaid is
              also forthwith paid to the Covenantor.

                                       58
<PAGE>

5.     CONDUCT OF CLAIMS

5.1    If the Purchaser  shall become aware of any claim which is likely to give
       rise to a liability on the  Covenantor  hereunder the Purchaser  shall by
       way of covenant but not as a condition  precedent to the liability of the
       Covenantor  hereunder gives notice thereof or procure that notice thereof
       is  given  as soon  as  reasonably  practical  to the  Covenantor  and if
       possible  giving an estimate of the sums  involved and shall not make any
       communication with any taxation authority in relation to such claim.

5.2    As regards any claim the  Purchaser  shall take or shall procure that the
       Company  shall  take any such  action as the  Covenantor  may by  written
       notice given to the  Purchaser  reasonably  request cause the claim to be
       withdrawn or to dispute, resist, appeal against, compromise or defend the
       claim and any  determination  in respect  thereof or to apply to postpone
       (so  far as  legally  possible)  the  payment  of  any  tax  pending  the
       determination  of any appeal but subject to the Purchaser and the Company
       being  indemnified  and  secured to the  reasonable  satisfaction  of the
       Purchaser by the Covenantor  against all losses (including any additional
       taxation liability)  interest,  costs,  damages and expenses which may be
       thereby incurred by the Purchaser or the Company and provided that :

       (a)    any  request  made by the  Covenantor  pursuant to this Clause 5.2
              shall  be  made  within  a  reasonable  time  of  receipt  by  the
              Covenantor of any notice given by the Purchaser to the  Covenantor
              in  accordance  with Clause 5.1 and if on the expiry of the period
              of 14 days  commencing on the date of receipt by the Covenantor of
              such notice the  Covenantor  shall not have given to the Purchaser
              notice of the  Covenantor's  intention  in respect of the claim or
              shall not have provided satisfactory  indemnities or securities in
              accordance  with this  Clause 5.2 the  Purchaser  and the  Company
              shall be entitled to be satisfied or settle or deal with the claim
              on such terms as they shall in their absolute discretion think fit
              without prejudice to their rights and remedies under this Deed;

       (b)    the  Purchaser and the Company shall not be obliged to comply with
              any  request  of the  Covenantor  which  involves  contesting  any
              assessment  for taxation  before any court or any other  appellant
              body  unless  they have been  advised in  writing  by leading  tax
              Counsel  instructed  by agreement  between the  Purchaser  and the
              Covenantor at the expense of the Covenantor that an appeal against
              the  assessment  for  taxation in question  will on the balance of
              probably  be won  by  the  Purchaser  or as  the  case  may be the
              Company;

       (c)    neither the Purchaser nor the Company shall be obliged to take any
              action which is likely to increase the future  taxation  liability
              of the Company in the group of companies of which the Purchaser is
              for the time being a member; and

       (d)    the  Purchaser  may require the  Covenantor to take in the name of
              the Company the action  requested in  accordance  with this Clause
              5.2 on such  terms as the  Purchaser  in its  absolute  discretion
              thinks fit.

5.3    The  Purchaser  shall  procure  that the Company  ensures that a claim to
       which this Deed

                                       59
<PAGE>

       applies is so far as is reasonably practicable dealt with separately from
       claims  to which it does not  apply  and that any  claim to which it does
       apply is not paid prematurely.

5.4    The  Purchaser  shall  supply to the  Covenantor  copies of all  material
       written  correspondence  with  the  Inland  Revenue  in  relation  to any
       dispute,  failed negotiations or other proceedings conducted by or at the
       request of the Covenantor pursuant to Clause 5.2.

                                       60
<PAGE>

IN WITNESS  WHEREOF the parties  hereto have  executed this deed on the date set
out above

SIGNED by NITA EUGENIE ANNE  )     /s/ NITA EUGENIE ANNE BEECROFT
BEECROFT in the presence of: )

SIGNED by                    )
duly authorised by LEISURE   )     /s/ Illegible
TRAVEL GROUP LIMITED         )

                                       61
<PAGE>

                                   SCHEDULE 7

                            Shareholders Undertaking

We, Nita Eugenie Anne Beecroft and Matthew Eric  Beecroft,  being the registered
shareholders  of all of the shares in Ilios Travel Limited (the  "Company") give
this Undertaking pursuant to Clause 4 of an agreement of even date herewith made
between  Nita  Eugenie  Anne  Beecroft  and Leisure  Travel  Group  Limited (the
Agreement") concerning the sale of such shares.

1.     Words and phrases  defined in the Agreement  shall bear the same meanings
       in this Undertaking.

2.     The Shares are held as set out in Schedule 1 to the Agreement.

3.     We  acknowledge  receipt  of the  consideration  for the  Shares  set out
       opposite our names in Schedule 1.

4.     We severally undertake to Leisure Travel Group Limited that if the Vendor
       or the  Covenantor  shall be  liable  under  the  terms of the  Agreement
       (including  but  without  limitation  the  Warranties  and  the  Deed  of
       Indemnity) to make any payment to Leisure Travel Group Limited,  we shall
       on demand make such payment.

5.     Our  several  liabilities  hereunder  shall be  limited  to the amount of
       consideration we have received.

6.     The  provisions  of  Clause  7 of  the  Agreement  shall  apply  to  this
       Undertaking mutatis mutandis.

IN WITNESS  WHEREOF the parties hereto have executed this  undertaking as a Deed
on the                   1999

EXECUTED AS A DEED by NITA     )
EUGENIE ANNE BEECROFT in the   )
presence of:                   )

EXECUTED AS A DEED by          )
MATTHEW ERIC BEECROFT in the   )
presence of:                   )

                                       62================================================================================

                          INTERSIL HOLDING CORPORATION
                          1999 EQUITY COMPENSATION PLAN

================================================================================

     Intersil Holding Corporation, a Delaware corporation, wishes to attract key
employees, directors and consultants to the Company and its Subsidiaries, to
induce key employees, directors and consultants to remain with the Company and
its Subsidiaries and to encourage them to increase their efforts to make the
Company's business more successful, whether directly or through its
Subsidiaries. In furtherance thereof, the Intersil Holding Corporation 1999
Equity Compensation Plan is designed to provide equity-based incentives to key
employees, directors and consultants of the Company and its Subsidiaries. Awards
under the Plan may be made in the form of Options, Restricted Stock or Phantom
Shares.

1.   DEFINITIONS.

     Whenever used herein and unless otherwise provided in the Participant's
Award Agreement, the following terms shall have the meanings set forth below:

     "Affiliate" means, with respect to any specified Person, (i) any other
Person which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person (for
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise) and (ii) each Person of which such specified Person or
an Affiliate (as defined in clause (i) above) thereof shall, directly or
indirectly, beneficially own at least 5% of any class of outstanding capital
stock or other evidence of beneficial interest at such time.

     "Approved Sale" means the approval of the merger or consolidation of the
Company or the sale of all or substantially all of its assets or sale of all or
a majority of the outstanding capital stock or any other similar transaction,
prior to the consummation of a Public Offering that is approved by the holders
of at least 50% of the Common Stock (including voting and non-voting shares
voting as a single class).

     "Award," except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock and Phantom Shares.

     "Award Agreement" means a written agreement in a form approved by the
Committee to be entered into by the Company and the Participant as provided in
Section 3.

     "Board" means the Board of Directors of the Company.

<PAGE>

     "Cause" means the Participant's (i) act or acts of dishonesty, moral
turpitude or criminality with respect to his or her employment or other service
with the Company, (ii) continued failure to perform such Participant's duties as
an employee, Director or consultant, as reasonably determined by the Board
acting in good faith, after reasonable notice of such failure and opportunity to
cure such failure (if curable) is given to such Participant by the Board, and or
(iii) willful or deliberate violations of such Participant's obligations to the
Company that result or could reasonably be expected to result in material injury
to the Company.

     "Change of Control" means the happening of any of the following after the
consummation of a Public Offering:

          (i) any Person, other than (a) the Company or any of its Subsidiaries,
     (b) a trustee or other fiduciary holding securities under an employee
     benefit plan of the Company or any of its Subsidiaries, (c) an underwriter
     temporarily holding securities pursuant to an offering of such securities,
     (d) a corporation owned, directly or indirectly, by the stockholders of the
     Company in substantially the same proportion as their ownership of stock of
     the Company, (e) a Participant or any "group" (as such term is used in
     Sections 13(d) and 14(d) of the Exchange Act) which includes the
     Participant), or (f) the Investors or their Affiliates is or becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of securities of the Company (not including in the
     securities beneficially owned by such Person any securities acquired
     directly from the Company or its Subsidiaries) representing more than 25%
     of either the then outstanding shares of Stock of the Company or the
     combined voting power of the Company's then outstanding securities;

          (ii) the individuals who serve on the Board as of the effective date
     hereof (the "Incumbent Directors") cease for any reason to constitute at
     least a majority of the Board; provided, however, any person who becomes a
     director subsequent to the effective date hereof, whose election or
     nomination for election was approved by a vote of at least a majority of
     the directors then constituting the Incumbent Board, shall for purposes of
     this clause (ii) be considered an Incumbent Director;

          (iii) the consummation of a merger or consolidation of the Company in
     which the stockholders of the Company immediately prior to such merger or
     consolidation, would not, immediately after the merger or consolidation,
     beneficially own (as such term is defined in Rule 13d-3 under the Exchange
     Act), directly or indirectly, shares representing in the aggregate 50% or
     more of the combined voting power of the securities of the corporation
     issuing cash or securities in the merger or consolidation (or of its
     ultimate parent corporation, if any); or

          (iv) the stockholders of the Company approve a plan of complete
     liquidation or dissolution of the Company, or there is consummated an
     agreement for the sale or disposition by the Company of all or
     substantially all of the Company's assets, other than a sale or disposition
     by the Company of all or substantially all of the Company's assets to an
     entity, at least 50% of the combined voting power of the voting securities
     of which are owned by Persons in substantially the same proportion as their
     ownership of the Company immediately prior to such sale.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the Committee appointed by the Board under Section 3.

                                      -2-
<PAGE>

     "Common Stock" means Class A Common Stock of the Company, par value $.01
per share, either currently existing or authorized hereafter.

     "Company" means Intersil Holding Corporation, a Delaware corporation.

     "Director" means a member of the Board who is not an employee of the
Company or a Subsidiary.

     "Disability" means the occurrence of an event which would entitle an
employee of the Company to the payment of disability income under the Company's
then current long-term disability income plan, if any, or a long-term disability
as determined by the Committee in its absolute discretion pursuant to any other
standard as may be adopted by the Committee.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Fair Market Value" per Share as of a particular date means (i) if Shares
are then listed on a national stock exchange, the closing sales price per Share
on the exchange for the last preceding date on which there was a sale of Shares
on such exchange, as determined by the Committee, (ii) if Shares are not then
listed on a national stock exchange but are then traded on an over-the-counter
market, the average of the closing bid and asked prices for the Shares in such
over-the-counter market for the last preceding date on which there was a sale of
such Shares in such market, as determined by the Committee, or (iii) if Shares
are not then listed on a national stock exchange or traded on an
over-the-counter market, the "Fair Market Value Price" as defined in the
Securities Purchase and Holders Agreement.

     "Grantee" means an employee, Director or consultant who is granted
Restricted Stock or Phantom Shares hereunder.

     "Incentive Stock Option" means an "incentive stock option" within the
meaning of Section 422(b) of the Code.

     "Investors" means, collectively, Sterling Holding Company, LLC, Manatee
Investment Corporation, Intersil Prism LLC, Citicorp Mezzanine Partners, L.P.,
William N. Stout, and the Affiliates of each.

     "Non-Qualified Stock Option" means an Option which is not an Incentive
Stock Option.

     "Option" means the right to purchase, at the price and for the term fixed
by the Committee in accordance with the Plan, and subject to such other
limitations and restrictions in the Plan and the applicable Award Agreement, a
number of Shares determined by the Committee.

     "Optionee" means an employee or Director of, or consultant to, the Company
to whom an Option is granted, or the Successors of the Optionee, as the context
so requires.

     "Option Price" means the exercise price per Share of an Option.

     "Participant" means a Grantee or Optionee.

     "Person" means any individual, partnership, corporation, company, limited
liability company, association, trust, joint venture, unincorporated
organization, entity or division, or any government, governmental department or
agency or political subdivision thereof.

                                      -3-
<PAGE>

     "Phantom Share" means a right, pursuant to the Plan, of the Grantee to
payment of the Phantom Share Value.

     "Phantom Share Value" per Phantom Share, means the Fair Market Value of a
Share or, if so provided by the Committee, such Fair Market Value to the extent
in excess of a base value established by the Committee at the time of grant.

     "Plan" means this Intersil Holding Corporation 1999 Equity Compensation
Plan, as amended from time to time.

     "Public Offering" means a successfully completed firm-commitment
underwritten public offering (other than a Unit Offering, as hereinafter
defined) pursuant to an effective registration statement under the Securities
Act in respect of the offer and sale of shares of Common Stock for the account
of the Company resulting in aggregate net proceeds to the Company and any
stockholder selling shares of Common Stock in such offering of not less than $30
million.

     "Restricted Stock" means an award of Shares that are subject to
restrictions hereunder as described in Section 7.

     "Retirement" means the Termination of Service of a Participant with the
Company under circumstances which would entitle an employee of the Company to an
immediate pension under one of the Company's approved retirement plans or
retirement as determined by the Committee in its absolute discretion pursuant to
such other standard as may be adopted by the Committee.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Securities Purchase and Holders Agreement" means that certain Securities
Purchase and Holders Agreement among the Company, Sterling Holding Company, LLC,
Manatee Investment Corporation, Intersil Prism, LLC, Citicorp Mezzanine
Partners, L.P., William N. Stout, the individuals designated on Schedule I
thereto as Management Investors and other individuals who join such agreement as
Management Investors, as defined therein, dated August 13, 1999, as may be
amended by the parties thereto from time to time.

     "Settlement Date" means the date determined under Section 8.4(c).

     "Share" means one share of Common Stock of the Company.

     "Subsidiary" means any corporation (other than the Company) that is a
"subsidiary corporation" with respect to the Company under Section 424(f) of the
Code. In the event the Company becomes a subsidiary of another company, the
provisions hereof applicable to subsidiaries shall, unless otherwise determined
by the Committee, also be applicable to any company that is a "parent
corporation" with respect to the Company under Section 424(e) of the Code.

     "Successor of the Optionee" means: (i) the legal representative of the
estate of a deceased Optionee, (ii) persons who shall acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of the
Optionee or (iii) persons who shall acquire the right to exercise an Option on
behalf of the Optionee as the result of a determination by a court or other
governmental agency of the incapacity of the Optionee.

                                      -4-
<PAGE>

     "Termination of Service" means a Participant's termination of employment or
other service, as applicable, with the Company and its Subsidiaries. Cessation
of service as an officer, employee, director or consultant shall not be treated
as a Termination of Service if the Participant continues without interruption to
serve thereafter in a material manner in another one (or more) of such other
capacities, as determined by the Committee in its sole discretion.

     "Transfer" means the making of any sale, exchange, assignment,
hypothecation, gift, security interest, pledge or other encumbrance, or any
contract therefor, any voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in any
Award or Share issued or issuable under the Plan, the creation of any other
claim thereto or any other transfer or disposition whatsoever, whether voluntary
or involuntary, affecting the right, title, interest or possession in or to such
Award or Share issued or issuable under the Plan.

     "Unit Offering" means an underwritten public offering of a combination of
debt securities and Common Stock (or warrants or exchange rights to purchase
Common Stock) of the Company in which not more than 15% of the gross proceeds
received for the sale of such securities is attributed to Common Stock.

2.   EFFECTIVE DATE AND TERMINATION OF PLAN.

     The effective date of the Plan is August 13, 1999. The Plan shall terminate
on, and no Award shall be granted hereunder on or after, the 10-year anniversary
of the earlier of the approval of the amended and restated Plan by (i) the Board
or (ii) the stockholders of the Company; provided, however, that the Board may
at any time prior to that date terminate the Plan.

3.   ADMINISTRATION OF PLAN.

     (a) The Plan shall be administered by the Committee appointed by the Board.
The Committee shall, at such times as the Common Stock, or shares of such other
stock that may be the subject of Awards hereunder, are registered pursuant to
Section 12 of the Exchange Act, consist of at least two individuals each of whom
shall be a "nonemployee director" as defined in Rule 16b-3 as promulgated by the
Securities and Exchange Commission ("Rule 16b-3") under the Exchange Act and
shall, at such times as the Company is subject to Section 162(m) of the Code (to
the extent relief from the limitation of Section 162(m) of the Code is sought
with respect to Awards), qualify as "outside directors" for purposes of Section
162(m) of the Code and related Treasury regulations. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is
present, or acts approved in writing by a majority of the entire Committee,
shall be the acts of the Committee for purposes of the Plan. No member of the
Committee may act as to matters under the Plan exclusively relating to such
member. If no Committee is designated by the Board to act for these purposes,
the Board shall have the rights and responsibilities of the Committee hereunder.

                                      -5-
<PAGE>

     (b) Subject to the provisions of the Plan, the Committee shall in its
discretion as reflected by the terms of the Award Agreements (i) authorize the
granting of Awards to key employees, Directors and consultants of the Company
and its Subsidiaries; and (ii) determine the eligibility of an employee,
Director or consultant to receive an Award subject to Section 4 hereof, as well
as determine the number of Shares to be covered under any Award Agreement,
considering the position and responsibilities of the employee, Director or
consultant, the nature and value to the Company of the employee's, Director's or
consultant's present and potential contribution to the success of the Company
whether directly or through a Subsidiaries and such other factors as the
Committee may deem relevant.

     (c) The Award Agreement shall contain such other terms, provisions and
conditions not inconsistent herewith as determined by the Committee. The
Participant shall take whatever additional actions and execute whatever
additional documents the Committee may in its reasonable judgment deem necessary
or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express provisions of
the Plan and the Award Agreement.

     (d) Without limiting the generality of the Committee's discretion
hereunder, the Committee may (subject to such considerations as may arise under
Section 16 of the Exchange Act, or under other corporate, securities or tax
laws) take any steps it deems appropriate, that are not inconsistent with the
purposes and intent of the Plan, to establish performance-based criteria
applicable to Awards otherwise permitted to be granted hereunder, and to attempt
to procure stockholder approval with respect thereto, to take into account the
provisions of Section 162(m) of the Code and the regulations thereunder.

4.   ELIGIBILITY.

     Any key employee, Director or consultant of the Company or a Subsidiary who
is designated by the Committee as eligible to participate in the Plan shall be
eligible to receive an Award under the Plan, provided that no Incentive Stock
Option shall be granted to a Director or consultant.

5.   SHARES AND UNITS SUBJECT TO THE PLAN.

     5.1. In General.

          (a) Subject to Section 5.2, and subject to adjustments as provided in
     Section 13, the total number of Shares subject to Options granted under the
     Plan and Shares of Restricted Stock and Phantom Shares granted under the
     Plan, in the aggregate, may not exceed 7,500,000. Shares distributed under
     the Plan may be treasury Shares or authorized but unissued Shares. Any
     Shares that have been granted as Restricted Stock or that have been
     reserved for distribution in payment for Options or Phantom Shares but are
     later forfeited or for any other reason are not, and will not be, payable
     under the Plan may again be made the subject of Awards under the Plan.

                                      -6-
<PAGE>

          (b) The certificates for Shares issued hereunder may include any
     legend which the Committee deems appropriate to reflect any rights of first
     refusal or other restrictions on transfer hereunder or under the Award
     Agreement, or as the Committee may otherwise deem appropriate.

     5.2. Options.

          Subject to adjustments pursuant to Section 13, Options with respect to
     an aggregate of no more than 7,500,000 Shares may be granted under the
     Plan. In no event may any Optionee receive Options for more than 1,000,000
     Shares in any calendar year. The aggregate Fair Market Value, determined as
     of the date an Option is granted, of the Common Stock for which any
     Optionee may be awarded Incentive Stock Options which are first exercisable
     by the Optionee during any calendar year under the Plan (or any other stock
     option plan required to be taken into account under Section 422(d) of the
     Code) shall not exceed $100,000.

6.   ROVISIONS APPLICABLE TO STOCK OPTIONS.

     6.1. Grant of Option.

          Subject to the other terms of the Plan, the Committee shall, in its
     discretion as reflected by the terms of the applicable Award Agreement: (i)
     determine and designate from time to time those eligible key employees,
     Directors and consultants of the Company and its Subsidiaries to whom
     Options are to be granted and the number of Shares to be optioned to each
     employee, Director and consultant; (ii) determine whether to grant
     Incentive Stock Options, Non-Qualified Stock Options, or both (to the
     extent that any Option does not qualify as an Incentive Stock Option, it
     shall constitute a separate Non-Qualified Stock Option); provided that
     Incentive Stock Options may only be granted to employees; (iii) cause each
     Option to be designated as an Incentive Stock Option or a Non-Qualified
     Stock Option; (iv) determine the time or times when and the manner and
     condition in which each Option shall be exercisable and the duration of the
     exercise period; and (v) determine or impose other conditions to the grant
     or exercise of Options under the Plan as it may deem appropriate.

     6.2. Option Price.

          The Option Price shall be determined by the Committee on the date the
     Option is granted and shall be reflected in the Award Agreement, as the
     same may be amended from time to time. Any particular Award Agreement may
     provide for different exercise prices for specified amounts of Shares
     subject to the Option. The Option Price with respect to each Incentive
     Stock Option shall not be less than 100% (or 110% in the case of an
     individual described in Section 422(b)(6) of the Code (relating to certain
     10% owners)) of the Fair Market Value of a Share on the day the Option is
     granted.

                                       -7-

<PAGE>

     6.3. Period of Options Vesting and Exercisability.

          (a) Unless earlier expired, forfeited or otherwise terminated, each
     Option shall expire in its entirety upon the 10th anniversary of the date
     of grant or shall have such other term as is set forth in the applicable
     Award Agreement (except that, in the case of an individual described in
     Section 422(b)(6) of the Code (relating to certain 10% owners) who is
     granted an Incentive Stock Option, the term of such Option shall be no more
     than five years from the date of grant). The Option shall also expire, be
     forfeited and terminate at such times and in such circumstances as
     otherwise provided hereunder or under the Award Agreement.

          (b) The Award Agreement may, but need not, include a provision whereby
     the Optionee may elect at any time while an employee or Director of, or a
     consultant to, the Company to exercise the Option as to any part or all of
     the shares subject to the Option prior to the full vesting of the Option.
     Any Shares so purchased (i) shall vest in accordance with the vesting
     schedule otherwise applicable to the Option, (ii) shall, prior to vesting,
     be subject to a repurchase right in favor of the Company, with the
     repurchase price to be equal to the lesser of (x) the exercise price paid
     or (y) the Fair Market Value of the Shares on the date of such repurchase,
     and (iii) shall be subject to any other restriction the Company determines
     to be appropriate.

          (c) Unless otherwise provided in the Award Agreement or herein, no
     Option (or portion thereof) shall ever be vested and exercisable, and no
     Shares acquired pursuant to such Option shall ever be vested, if the
     Optionee has a Termination of Service before the time at which such Option
     or Shares would otherwise have become vested, and any Option that would
     otherwise become vested and exercisable, or Shares that would otherwise
     become vested, after such Termination of Service shall be forfeited upon
     such termination. Notwithstanding the foregoing provisions of this Section
     6.3, Options exercisable pursuant to the schedule set forth by the
     Committee at the time of grant may be fully or more rapidly exercisable or
     vested, and Shares subject to such schedule may be fully or more rapidly
     vested, at any time in the discretion of the Committee. Upon and after the
     death of an Optionee, such Optionee's Options, if and to the extent
     otherwise exercisable hereunder or under the applicable Award Agreement
     after the Optionee's death, may be exercised by the Successors of the
     Optionee.

     6.4. Exercisability Upon and After Termination of Optionee.

          (a) The Committee shall provide in the Award Agreement the extent (if
     any) to which any Option may be exercised upon the Termination of Service
     of the Optionee.

          (b) Except as may otherwise be expressly set forth in this Section 6
     or as may otherwise be expressly provided under the Award Agreement, no
     provision of this Section 6 is intended to or shall permit the exercise of
     the Option to the extent the Option was not exercisable upon the
     Termination of Service.

                                      -8-

<PAGE>

     6.5. Exercise of Options.

          (a) Subject to vesting and other restrictions provided for hereunder
     or otherwise imposed in accordance herewith, an Option may be exercised,
     and payment in full of the aggregate Option Price made, by an Optionee only
     by written notice (in the form prescribed by the Committee) to the Company
     specifying the number of Shares to be purchased.

          (b) Without limiting the scope of the Committee's discretion
     hereunder, the Committee may impose such other restrictions on the exercise
     of Incentive Stock Options (whether or not in the nature of the foregoing
     restrictions) as it may deem necessary or appropriate.

          (c) If Shares acquired upon exercise of an Incentive Stock Option are
     disposed of in a disqualifying disposition within the meaning of Section
     422 of the Code by an Optionee prior to the expiration of either two years
     from the date of grant of such Option or one year from the transfer of
     Shares to the Optionee pursuant to the exercise of such Option, or in any
     other disqualifying disposition within the meaning of Section 422 of the
     Code, such Optionee shall notify the Company in writing as soon as
     practicable thereafter of the date and terms of such disposition and, if
     the Company (or any affiliate thereof) thereupon has a tax-withholding
     obligation, shall pay to the Company (or such affiliate) an amount equal to
     any withholding tax the Company (or affiliate) is required to pay as a
     result of the disqualifying disposition.

     6.6. Payment.

          (a) The aggregate Option Price shall be paid in full upon the exercise
     of the Option. Payment must be made by one of the following methods:

               (i) cash or a certified or bank cashier's check;

               (ii) the proceeds of a Company loan program or third-party sale
          program or a note acceptable to the Committee given as consideration
          under such a program, in each case if permitted by the Committee in
          its discretion, if such a program has been established and the
          Optionee is eligible to participate therein;

               (iii) if approved by the Committee in its discretion Shares of
          previously owned Common Stock having an aggregate Fair Market Value on
          the date of exercise equal to the aggregate Option Price;

               (iv) if approved by the Committee in its discretion, by delivery
          of an assignment satisfactory in form and substance to the Company of
          a sufficient amount of the proceeds from the sale of Shares to be
          acquired pursuant to such exercise and an instruction to the broker or
          selling agent to pay that amount to the Company; or

               (v) by any combination of such methods of payment or any other
          method acceptable to the Committee in its discretion.

                                      -9-

<PAGE>

          (b) Except in the case of Options exercised by certified or bank
     cashier's check, the Committee may impose limitations and prohibitions on
     the exercise of Options as it deems appropriate, including, without
     limitation, any limitation or prohibition designed to avoid accounting
     consequences which may result from the use of Common Stock as payment upon
     exercise of an Option. Any fractional Shares resulting from an Optionee's
     election that is accepted by the Company shall be paid in cash.

     6.7. Stock Appreciation Rights.

          Committee, in its discretion, may also permit the Optionee to elect to
     exercise an Option by receiving a combination of Shares and cash, or, in
     the discretion of the Committee, either Shares or cash, with an aggregate
     Fair Market Value (or, to the extent of payment in cash, in an amount)
     equal to the excess of the Fair Market Value of the Shares with respect to
     which the Option is being exercised over the aggregate Option Price, as
     determined as of the day the Option is exercised.

     6.8. Exercise by Successors.

          An Option may be exercised, and payment in full of the aggregate
     Option Price made, by the Successors of the Optionee only by written notice
     (in the form prescribed by the Committee) to the Company specifying the
     number of Shares to be purchased. Such notice shall state that the
     aggregate Option Price will be paid in full, or that the Option will be
     exercised as otherwise provided hereunder, in the discretion of the Company
     or the Committee, if and as applicable.

     6.9. Nontransferability of Option.

          Each Option granted under the Plan shall by its terms be
     nontransferable by the Optionee except by will or the laws of descent and
     distribution of the state wherein the Optionee is domiciled at the time of
     his death; provided, however, that the Committee may (but need not) permit
     other transfers that are not inconsistent with the provisions of the
     Securities Purchase and Holders Agreement, where the Committee concludes
     that such transferability (i) does not result in accelerated U.S. federal
     income taxation, (ii) does not cause any Option intended to be an Incentive
     Stock Option to fail to be described in Section 422(b) of the Code, and
     (iii) is otherwise appropriate and desirable.

7.   PROVISIONS APPLICABLE TO RESTRICTED STOCK.

     7.1. Grant of Restricted Stock.

          Subject to the other terms of the Plan, the Committee may, in its
     discretion as reflected by the terms of the applicable Award Agreement: (i)
     authorize the granting of Restricted Stock to eligible key employees,
     Directors and consultants of the Company and its Subsidiaries; (ii)
     determine the restrictions applicable to Restricted Stock; and (iii)
     determine or impose other conditions to the grant of Restricted Stock under
     the Plan as it may deem appropriate.

                                      -10-

<PAGE>

     7.2. Certificates.

          (a) Each Grantee of Restricted Stock shall be issued a stock
     certificate in respect of Restricted Stock awarded under the Plan. Such
     certificate shall be registered in the name of the Grantee. Without
     limiting the generality of Section 5.1(c), the certificates for Restricted
     Stock issued hereunder may include any legend which the Committee deems
     appropriate to reflect any restrictions on transfer hereunder or under the
     Award Agreement, or as the Committee may otherwise deem appropriate, and,
     without limiting the generality of the foregoing, shall bear a legend
     referring to the terms, conditions, and restrictions applicable to such
     Award, substantially in the following form:

          The transferability of this certificate and the shares of stock
          represented hereby are subject to the terms and conditions (including
          forfeiture) of the Intersil Holding Corporation 1999 Equity
          Compensation Plan and an Award Agreement entered into between the
          registered owner and Intersil Holding Corporation. Copies of such Plan
          and Award Agreement are on file in the offices of Intersil Holding
          Corporation.

          (b) The Committee shall require that the stock certificates evidencing
     such Shares be held in custody by the Company until the restrictions
     thereon shall have lapsed, and that, as a condition of any Award of
     Restricted Stock, the Grantee shall have delivered a stock power, endorsed
     in blank, relating to the stock covered by such Award. If and when such
     restrictions lapse, the stock certificates shall be delivered by the
     Company to the Grantee or his or her designee as provided in Section 7.3.

     7.3. Restrictions and Conditions.

          Unless otherwise provided by the Committee, the Restricted Stock
     awarded pursuant to the Plan shall be subject to the following restrictions
     and conditions:

               (i) Subject to the provisions of the Plan and the Award
          Agreement, during a period commencing with the date of the Award and
          ending on the date the period of forfeiture with respect to the
          Restricted Stock lapses, the Grantee shall not be permitted
          voluntarily or involuntarily to sell, transfer, pledge, anticipate,
          alienate, encumber or assign Restricted Stock awarded under the Plan
          (or have such Shares attached or garnished). Subject to the provisions
          of the Award Agreement and clauses (iii) and (iv) below, the period of
          forfeiture with respect to Restricted Stock granted hereunder shall
          lapse as provided in the applicable Award Agreement.

               (ii) Except as provided in the foregoing clause (i), the Grantee
          shall have, in respect of Restricted Stock, all of the rights of a
          stockholder of the Company, including the right to vote the Shares,
          and the right to receive any cash dividends, which dividends shall be
          held by the Company (unsegregated as a part of its general assets)
          until the period of forfeiture lapses (and shall be forfeited if the
          underlying Shares are forfeited). Certificates for Shares (not subject
          to restrictions) shall be delivered to the Grantee or his or her
          designee promptly after, and only after, the period of forfeiture
          shall lapse without forfeiture in respect of such Restricted Stock.

                                      -11-

<PAGE>

               (iii) Subject to the provisions of the Award Agreement and clause
          (iv) below, if the Grantee has a Termination of Service by the Company
          for Cause, or by the Grantee for any reason, during the applicable
          period of forfeiture, then all Shares still subject to restriction
          shall thereupon, and with no further action, be forfeited by the
          Grantee.

               (iv) Subject to the provisions of the Award Agreement, in the
          event the Grantee has a Termination of Service on account of death or
          Disability, or the Grantee has a Termination of Service by the Company
          for any reason other than Cause, during the applicable period of
          forfeiture, then restrictions will immediately lapse on all Restricted
          Stock granted to the applicable Grantee.

8.   PROVISIONS APPLICABLE TO PHANTOM SHARES.

     8.1. Grant of Phantom Shares.

          Subject to the other terms of the Plan, the Committee shall, in its
     discretion as reflected by the terms of the applicable Award Agreement: (i)
     authorize the granting of Phantom Shares to employees, directors and
     consultants of the Company and its Subsidiaries and (ii) determine or
     impose other conditions to the grant of Phantom Shares under the Plan as it
     may deem appropriate.

     8.2. Term.

          The Committee may provide in an Award Agreement that any particular
     Phantom Share shall expire at the end of a specified term.

     8.3. Vesting.

          (a) Phantom Shares shall vest and first become exercisable according
     to the terms and conditions set forth in the Award Agreement, as determined
     by the Committee at the time of grant.

          (b) Unless otherwise provided in the Award Agreement, if a Grantee has
     a Termination of Service, any and all of the Grantee's Phantom Shares which
     have not vested prior to or as of such termination shall thereupon, and
     with no further action, be forfeited and cease to be outstanding.

     8.4. Settlement of Phantom Shares.

          (a) Each vested and outstanding Phantom Share shall be settled by the
     transfer to the Grantee of one Share; provided that, the Committee at the
     time of grant may provide that a Phantom Share may be settled (i) in cash
     at the applicable Phantom Share Value, (ii) in cash or by transfer of
     Shares as elected by the Grantee in accordance with procedures established
     by the Committee or (iii) in cash or by transfer of Shares as elected by
     the Company.

                                      -12-

<PAGE>

          (b) Each Phantom Share shall be settled with a single-sum payment by
     the Company; provided that, with respect to Phantom Shares of a Grantee
     which have a common Settlement Date, the Committee may permit the Grantee
     to elect in accordance with procedures established by the Committee to
     receive installment payments over a period not to exceed 10 years.

          (c) (i) The Settlement Date with respect to a Grantee is the first day
     of the month to follow the Grantee's Termination of Service, provided that
     a Grantee may elect, in accordance with procedures to be adopted by the
     Committee, that such Settlement Date will be deferred as elected by the
     Grantee to a time permitted by the Committee under procedures to be
     established by the Committee. Unless otherwise determined by the Committee,
     elections under this Section 8.4(c)(i) must be made at least six months
     before, and in the year prior to the year in which, the Settlement Date
     would occur in the absence of such election.

               (ii) Notwithstanding Section 8.4(c)(i), the Committee may provide
          that distributions of Phantom Shares can be elected at any time in
          those cases in which the Phantom Share Value is determined by
          reference to Fair Market Value to the extent in excess of a base
          value, rather than by reference to unreduced Fair Market Value.

               (iii) Notwithstanding the foregoing, the Settlement Date, if not
          earlier pursuant to this Section 8.4(c), is the date of the Grantee's
          death.

     8.5. Other Phantom Share Provisions.

          (a) Rights or benefits with respect to Phantom Shares granted under
     the Plan shall not be subject in any manner to anticipation, alienation,
     sale, transfer, assignment, pledge, encumbrance attachment, charge,
     garnishment, execution, or levy of any kind, wither voluntary or
     involuntary, prior to actually being received by the person entitled to the
     benefit under the terms of the Plan; and any attempt to anticipate,
     alienate, sell, transfer, assign, pledge, encumber, attach, charge or
     otherwise dispose of any right or benefits payable hereunder shall be void.

          (b) A Grantee may designate in writing, on forms to be prescribed by
     the Committee, a beneficiary or beneficiaries to receive any payments
     payable after his or her death and may amend or revoke such designation at
     any time. If no beneficiary designation is in effect at the time of a
     Grantee's death, payments hereunder shall be made to the Grantee's estate.
     If a Grantee with a vested Phantom Share dies, such Phantom Share shall be
     settled and the Phantom Share Value in respect of such Phantom Shares paid,
     and any payments deferred pursuant to an election under Section 8.3(c)
     shall be accelerated and paid, as soon as practicable (but no later than 60
     days) after the date of death to such Grantee's beneficiary or estate, as
     applicable.

                                      -13-

<PAGE>

          (c) Phantom Shares are solely a device for the measurement and
     determination of the amounts to be paid to a Grantee under the Plan. Each
     Grantee's right in the Phantom Shares is limited to the right to receive
     payment, if any, as may herein be provided. The Phantom Shares do not
     constitute Common Stock and shall not be treated as (or as giving rise to)
     property or as a trust fund of any kind; provided, however, that the
     Company may establish a mere bookkeeping reserve to meet its obligations
     hereunder or a trust or other funding vehicle that would not cause the Plan
     to be deemed to be funded for tax purposes or for purposes of Title I of
     the Employee Retirement Income Security Act of 1974, as amended. The right
     of any Grantee of Phantom Shares to receive payments by virtue of
     participation in the Plan shall be no greater than the right of any
     unsecured general creditor of the Company. Nothing contained in the Plan
     shall be construed to give any Grantee any rights with respect to Shares or
     any ownership interest in the Company. Without limiting Section 8, no
     provision of the Plan shall be interpreted to confer any voting, dividend
     or derivative or other similar rights with respect to any Phantom Shares.

     8.6. Claims Procedures.

          (a) The Grantee, or his beneficiary hereunder or authorized
     representative, may file a claim for benefits with respect to Phantom
     Shares under the Plan by written communication to the Committee or its
     designee. A claim is not considered filed until such communication is
     actually received. Within 90 days (or, if special circumstances require an
     extension of time for processing, 180 days, in which case notice of such
     special circumstances should be provided within the initial 90-day period)
     after the filing of the claim, the Committee will either:

               (i) approve the claim and take appropriate steps for satisfaction
          of the claim; or

               (ii) if the claim is wholly or partially denied, advise the
          claimant of such denial by furnishing to him a written notice of such
          denial setting forth (A) the specific reason or reasons for the
          denial; (B) specific reference to pertinent provisions of the Plan on
          which the denial is based and, if the denial is based in whole or in
          part on any rule of construction or interpretation adopted by the
          Committee, a reference to such rule, a copy of which shall be provided
          to the claimant; (C) a description of any additional material or
          information necessary for the claimant to perfect the claim and an
          explanation of the reasons why such material or information is
          necessary; and (D) a reference to this Section 8.6 as the provision
          setting forth the claims procedure under the Plan.

          (b) The claimant may request a review of any denial of his claim by
     written application to the Committee within 60 days after receipt of the
     notice of denial of such claim. Within 60 days (or, if special
     circumstances require an extension of time for processing, 120 days, in
     which case notice of such special circumstances should be provided within
     the initial 60-day period) after receipt of written application for review,
     the Committee will provide the claimant with its decision in writing,
     including, if the claimant's claim is not approved, specific reasons for
     the decision and specific references to the Plan provisions on which the
     decision is based.

                                      -14-

<PAGE>

9.   TAX WITHHOLDING.

     9.1. In General.

          The Company shall be entitled to withhold from any payments or deemed
     payments any amount of tax withholding determined by the Committee to be
     required by law. Without limiting the generality of the foregoing, the
     Committee may, in its discretion, require a Participant to pay to the
     Company at such time as the Committee determines the amount that the
     Committee deems necessary to satisfy the Company's obligation to withhold
     federal, state or local income or other taxes incurred by reason of (i) the
     exercise of any Option, (ii) the lapsing of any restrictions applicable to
     any Restricted Stock, (iii) the receipt of a distribution in respect of
     Phantom Shares or (iv) any other applicable income-recognition event (for
     example, an election under Section 83(b) of the Code).

     9.2. Share Withholding.

          (a) Upon the exercise of an Option, the Optionee may, if approved by
     the Committee in its discretion, make a written election to have Shares
     then issued withheld by the Company from the Shares otherwise to be
     received, or to deliver previously owned Shares, in order to satisfy the
     liability for such withholding taxes. In the event that the Optionee makes,
     and the Committee permits, such an election, the number of Shares so
     withheld or delivered shall have an aggregate Fair Market Value on the date
     of exercise sufficient to satisfy the applicable withholding taxes. Where
     the exercise of an Option does not give rise to an obligation by the
     Company to withhold federal, state or local income or other taxes on the
     date of exercise, but may give rise to such an obligation in the future,
     the Committee may, in its discretion, make such arrangements and impose
     such requirements as it deems necessary or appropriate.

          (b) Upon the lapsing of restrictions on Restricted Stock (or other
     income-recognition event), the Grantee may, if approved by the Committee in
     its discretion, make a written election to have Shares withheld by the
     Company from the Shares otherwise to be released from restriction, or to
     deliver previously owned Shares (not subject to restrictions hereunder), in
     order to satisfy the liability for such withholding taxes. In the event
     that the Grantee makes, and the Committee permits, such an election, the
     number of Shares so withheld or delivered shall have an aggregate Fair
     Market Value on the date of exercise sufficient to satisfy the applicable
     withholding taxes.

     9.3. Withholding Required.

          Notwithstanding anything contained in the Plan to the contrary, the
     Participant's satisfaction of any tax-withholding requirements imposed by
     the Committee shall be a condition precedent to the Company's obligation as
     may otherwise be provided hereunder to provide Shares to the Participant
     and to the release of any restrictions as may otherwise be provided
     hereunder, as applicable; and the applicable Option, Restricted Stock or
     Phantom Shares shall be forfeited upon the failure of the Participant to
     satisfy such requirements with respect to, as applicable, (i) the exercise
     of the Option, (ii) the lapsing of restrictions on the Restricted Stock (or
     other income-recognition event) or (iii) distributions in respect of any
     Phantom Shares.

                                      -15-

<PAGE>

10.  CERTAIN RESTRICTIONS.

     (a) Restrictions on Transfer. In addition to any restrictions on Transfer
imposed in this Plan or an applicable Award Agreement, no Participant shall
effect a Transfer of any Award and/or Shares issued or issuable under the Plan
without the prior written consent of the Board. In exercising the consent and
approval described in the first sentence of this Section 10(a), the Board may
employ its sole discretion in evaluating the nature of the proposed transferee
and the Board may impose such conditions on Transfer as it deems appropriate in
its sole discretion, including, but not limited to, requirements that the
transferee be an employee of the Company and that the transferee purchase the
Participant's Award and/or Shares subject to the restrictions of this Article X.
Any purported Transfer in violation of this Agreement shall be null and void and
of no force and effect and the purported transferees shall have no rights or
privileges in or with respect to the Company.

     (b) Right of Repurchase. Any Shares acquired pursuant to the Plan shall be
subject to a right of repurchase in favor of the Company as reflected in the
terms of the applicable Award Agreement.

     (c) Right of First Refusal. If a Participant proposes to sell any or all of
his or her Shares acquired or to be acquired under to the Plan to a third party
in a bona fide transaction, and provided such transaction is permitted under any
applicable restrictions set forth in Section 10(a), the Participant may not
Transfer such Shares without first offering to sell such Shares to the Company
pursuant to this Section 10(c). The Participant shall deliver a written notice
(a "Sale Notice") to the Company describing in reasonable detail the Shares
being offered, the name of the offeree, the purchase price to be received and
all other material terms of the proposed Transfer. Upon receipt of the Sale
Notice, the Board shall have the right and option to cause the Company to
purchase all or any portion of the Award and/or Shares being offered at the
price and on the terms of the proposed Transfer set forth in the Sale Notice.
Within 30 days after receipt of the Sale Notice, the Board shall notify such
Participant whether or not it will cause the Company to purchase any or all of
the offered Securities. If the Board elects to cause the Company to purchase any
of the offered Shares, the closing of the purchase and sale of such Shares shall
be held at the place and on the date established by the Board in its notice to
the Participant, in response to the Sale Notice, which in no event shall be less
than ten or more than 60 days from the date of such notice. In the event that
the Board does not elect to cause the Company to purchase all the offered
Shares, the Participant may, subject to the other provisions of this Agreement,
Transfer the remaining offered Shares to the offeree specified in the Sale
Notice at a price no less than the price specified in the Sale Notice and on
other terms no more favorable to the transferee(s) thereof than specified in the
Sale Notice during the 180-day period immediately following the last date on
which the Board could have elected to cause the Company to purchase the offered
Shares. Any such Shares not transferred within such 180-day period will be
subject to the provisions of this Section 10(c) upon subsequent Transfer.

     (d) Involuntary Transfer. In the event that Shares issued or issuable to or
owned by any Participant shall be subject to sale or other Transfer (the date of
such sale or Transfer shall hereinafter be referred to as the "Transfer Date")
by reason of (i) bankruptcy or insolvency proceedings, whether voluntary or
involuntary, or (ii) distraint, levy, execution or other involuntary Transfer,
then such Participant shall give the Company written notice thereof

                                      -16-
<PAGE>

promptly upon the occurrence of such event stating the terms of such proposed
Transfer, the identity of the proposed transferee, the price or other
consideration, if readily determinable, for which the Shares are proposed to be
transferred, and the number of shares of Common Stock to be transferred. After
its receipt of such notice or, failing such receipt, after the Company otherwise
obtains actual knowledge of such a proposed Transfer, the Company, or a designee
selected by a majority of the non-employee members of the Board of Directors of
the Company, shall have the right and option to purchase all, but, not less than
all of such Shares which right shall be exercised by written notice given by the
Company to such proposed transferor within 60 days following the Company's
receipt of such notice or, failing such receipt, the Company's obtaining actual
knowledge of such proposed Transfer. Any purchase pursuant to this Section 10(d)
shall be at the price and on the terms applicable to such proposed transfer. If
the nature of the event giving rise to such involuntary Transfer is such that no
readily determinable consideration is to be paid for the Transfer of the Shares,
the price to be paid by the Company shall be the Fair Market Value of the
Shares. The closing of the purchase and sale of Shares shall be held at the
place and the date to be established by the Company, which in no event shall be
less than ten or more than 60 days from the date on which the Company gives
notice of its election to purchase the Shares. At such closing, the Participant
shall deliver the certificates evidencing the number of shares of Common Stock
to be purchased by the Company, accompanied by stock powers duly endorsed in
blank or duly executed instruments of transfer, and any other documents that are
necessary to transfer to the Company good title to such of the securities to be
transferred, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature other than those
imposed under this Agreement, and concurrently with such delivery, the Company
shall deliver to the Participant the full amount of the purchase price for such
Shares in cash by certified or bank cashier's check.

     (e) Lapse. The provisions of Sections 10(a), 10(b), 10(c) and 10(d) shall
terminate upon the consummation of a Public Offering.

11.  STOCKHOLDERS AGREEMENT.

     To the extent provided in the applicable Award Agreement, any Shares
acquired pursuant to the Plan shall be subject to, and the Participant agrees,
upon the Participant's initial acquisition of Shares under the Plan, to execute
and be bound by, the Securities Purchase and Holders Agreement and all
provisions of such agreement applicable to Management Investors (as defined in
such Securities Purchase and Holders Agreement) shall be applicable to the
Participant.

12.  REGULATIONS AND APPROVALS.

     (a) The obligation of the Company to sell Shares with respect to an Award
granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

                                      -17-

<PAGE>

     (b) The Committee may make such changes to the Plan as may be necessary or
appropriate to comply with the rules and regulations of any government authority
or to obtain tax benefits applicable to an Award.

     (c) Each grant of Options, Restricted Stock, or Phantom Shares (or issuance
of Shares in respect thereof) is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Options, shares of
Restricted Stock, or Phantom Shares no payment shall be made or Phantom Shares
or Shares issued, or grant of Restricted Stock made, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions in a manner acceptable to the Committee.

     (d) In the event that the disposition of stock acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required under the Securities
Act, and the Committee may require any individual receiving Shares pursuant to
the Plan, as a condition precedent to receipt of such Shares, to represent to
the Company in writing that such Shares will be disposed of only if registered
for sale under the Securities Act or if there is an available exemption for such
disposition.

13.  INTERPRETATION AND AMENDMENTS, OTHER RULES.

     The Committee may make such rules and regulations and establish such
procedures for the administration of the Plan as it deems appropriate. Without
limiting the generality of the foregoing, the Committee may (i) determine the
extent, if any, to which Options, or Phantom Shares or Shares (whether or not
Shares of Restricted Stock) shall be forfeited (whether or not such forfeiture
is expressly contemplated hereunder); (ii) interpret the Plan and the Award
Agreements hereunder, with such interpretations to be conclusive and binding on
all persons and otherwise accorded the maximum deference permitted by law,
provided that the Committee's interpretation shall not be entitled to deference
on and after a Change of Control except to the extent that such interpretations
are made exclusively by members of the Committee who are individuals who served
as Committee members before the Change of Control; and (iii) take any other
actions and make any other determinations or decisions that it deems necessary
or appropriate in connection with the Plan or the administration or
interpretation thereof. Unless otherwise expressly provided hereunder, the
Committee, with respect to any grant, may exercise its discretion hereunder at
the time of the Award or thereafter. In the event of any dispute or disagreement
as to the interpretation of the Plan or of any rule, regulation or procedure, or
as to any question, right or obligation arising from or related to the Plan, the
decision of the Committee, except as provided in clause (ii) of the foregoing
sentence, shall be final and binding upon all persons. The Board may amend the
Plan as it shall deem advisable, except that no amendment may adversely affect a
Participant with respect to an Award previously granted unless such amendments
are required in order to comply with applicable laws; provided that the Board
may not make any amendment in the Plan that would, if such

                                      -18-

<PAGE>

amendment were not approved by the holders of the Common Stock, cause the Plan
to fail to comply with any requirement of applicable law or regulation, unless
and until the approval of the holders of such Common Stock is obtained.

14.  CHANGES IN CAPITAL STRUCTURE; CHANGE OF CONTROL.

     14.1. Changes in Capital Structure.

          (a) If (i) the Company shall at any time be involved in a merger,
     consolidation, dissolution, liquidation, reorganization, exchange of
     shares, sale of all or substantially all of the assets or stock of the
     Company or a transaction similar thereto, (ii) any stock dividend, stock
     split, reverse stock split, stock combination, reclassification,
     recapitalization or other similar change in the capital structure of the
     Company or any distribution to holders of Common Stock other than cash
     dividends, shall occur or (iii) any other event shall occur which in the
     judgment of the Committee necessitates action by way of adjusting the terms
     of the outstanding Options, then:

               (x) the maximum aggregate number of Shares which may be made
          subject to Options under the Plan, and the maximum aggregate number
          and kind of Shares of Restricted Stock that may be granted under the
          Plan shall be appropriately adjusted by the Committee; and/or

               (y) the Committee shall take any such action as in its judgment
          shall be necessary to preserve the Participants' rights in their
          respective Options substantially proportionate to the rights existing
          in such Options prior to such event, including, without limitation,
          adjustments in (A) the number of Options granted, (B) the number and
          kind of shares or other property to be distributed in respect of
          Options, (C) the Option Price, and (D) performance-based criteria
          established in connection with Awards; provided that, in the
          discretion of the Committee, the foregoing clause (D) may also be
          applied in the case of any event relating to a Subsidiary if the event
          would have been covered under this Section 14.1(a) had the event
          related to the Company.

          (b) Any Shares or other securities distributed to a Grantee with
     respect to Restricted Stock shall be subject to the restrictions and
     requirements imposed by Section 7, including depositing the certificates
     therefor with the Company together with a stock power and bearing a legend
     as provided in Section 7.2(a).

          (c) If the Company shall be consolidated or merged with another
     corporation, each Grantee who has received Restricted Stock that is then
     subject to restrictions imposed by Section 7.3(a) may be required to
     deposit with the successor corporation the certificates for the stock or
     securities or the other property that the Grantee is entitled to receive by
     reason of ownership of Restricted Stock in a manner consistent with Section
     7.2(b), and such stock, securities or other property shall become subject
     to the restrictions and requirements imposed by Section 7.3(a), and the
     certificates therefor or other evidence thereof shall bear a legend similar
     in form and substance to the legend set forth in Section 7.2(a).

                                      -19-

<PAGE>

     14.2. Approved Sale; Change of Control.

          (a) Upon an Approved Sale or a Change of Control, unless otherwise
     provided in an Optionee's Award Agreement, the Committee, in its
     discretion, may take one or more of the following actions with respect to
     all Options that are outstanding and unexercised as of such Approved Sale
     or Change of Control: (i) accelerate the vesting and exercisability of all
     such Options to the extent unvested and unexercisable, such that all
     outstanding Options are fully vested and exercisable, (ii) cancel all
     outstanding vested Options in exchange for a cash payment in an amount
     equal to the excess, if any, of the Fair Market Value of the Common Stock
     underlying the unexercised portion of the Option as of the date of the
     Change of Control over the Option Price of such portion, (iii) terminate
     all such Options immediately prior to the Change of Control, provided that
     the Company provide the Optionee an opportunity to exercise the Option
     within a specified period following the Optionee's receipt of a written
     notice of such Approved Sale or Change of Control and of the Company's
     intention to terminate the Option prior to such Approved Sale or Change of
     Control, or (iv) require the successor corporation, following an Approved
     Sale or a Change of Control if the Company does not survive such Change of
     Control, to assume all outstanding Options and to substitute such Options
     with awards involving the common stock of such successor corporation on
     terms and conditions necessary to preserve the rights of Optionees with
     respect to such Options. Notwithstanding anything in the Plan to the
     contrary, in the event of an Approved Sale or a Change of Control, the
     Committee shall not have the right to take any actions described in the
     Plan (including without limitation actions described in this Section 14.2)
     that would make the Approved Sale or Change of Control ineligible for
     pooling of interests accounting treatment or that would make the Approved
     Sale or Change of Control ineligible for desired tax treatment if, in the
     absence of such right, the transaction would qualify for such treatment and
     the Company intends to use such treatment with respect to the transaction,
     in which case the Committee shall be required to take the action described
     in clause (iv) above.

     14.3. Committee Authority.

          The judgment of the Committee with respect to any matter referred to
     in this Section 14 shall be conclusive and binding upon each Participant
     without the need for any amendment to the Plan.

15.  MISCELLANEOUS.

     15.1. No Rights to Employment or Other Service.

          Nothing in the Plan or in any grant made pursuant to the Plan shall
     confer on any individual any right to continue in the employ or other
     service of the Company or its Subsidiaries or interfere in any way with the
     right of the Company or its Subsidiaries and its stockholders to terminate
     the individual's employment or other service at any time.

     15.2. No Fiduciary Relationship.

          Nothing contained in the Plan, and no action taken pursuant to the
     provisions of the Plan, shall create or shall be construed to create a
     trust of any kind, or a fiduciary relationship between the Company or its
     Subsidiaries, or their officers or the Committee, on the one hand, and the
     Participant, the Company, its Subsidiaries or any other person or entity,
     on the other.

                                      -20-

<PAGE>

     15.3. Notices.

          All notices under the Plan shall be in writing, and if to the Company,
     shall be delivered to the Board or mailed to its principal office,
     addressed to the attention of the Board; and if to the Participant, shall
     be delivered personally, sent by facsimile transmission or mailed to the
     Participant at the address appearing in the records of the Company. Such
     addresses may be changed at any time by written notice to the other party
     given in accordance with this Section 14.3.

     15.4. Exculpation and Indemnification.

          The Company shall indemnify and hold harmless the members of the Board
     and the members of the Committee, from and against any and all liabilities,
     costs and expenses incurred by such persons as a result of any act or
     omission to act in connection with the performance of such person's duties,
     responsibilities and obligations under the Plan, to the maximum extent
     permitted by law, other than such liabilities, costs and expenses as may
     result from the gross negligence, bad faith, willful misconduct or criminal
     acts of such persons.

     15.5. Captions.

          The use of captions in this Plan is for convenience. The captions are
     not intended to provide substantive rights.

     15.6. Governing Law.

          THE PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE,
     WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS.

                                      -21-

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