Document:

Exhibit 10.1

                              DATED 17th JULY, 2000

                                   INTERX PLC

                                INTERX MEDIA PLC

                                       and

                             BELL MICROPRODUCTS INC.

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

                                    AGREEMENT

                          for the sale and purchase of
                    the whole of the issued share capital of
                             Ideal Hardware Limited
                          ----------------------------

                                  ALLEN & OVERY
                                     London

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                                    CONTENTS

Clause                                                               Page

1.       Definitions...................................................1
2.       Sale and Purchase.............................................5
3.       Consideration.................................................6
4.       Completion Accounts...........................................6
5.       Condition Precedent...........................................6
6.       Warranties....................................................7
7.       Limitations on Warranty Claims................................8
8.       Covenants up to Completion...................................12
9.       Rescission...................................................14
10.      Completion...................................................14
11.      Exit Charge..................................................16
12.      Employees....................................................16
13.      Loans........................................................17
14.      Guarantees...................................................17
15.      Protective Covenants.........................................18
16.      Independent Accountant.......................................19
17.      Agreed Claims................................................20
18.      Whole agreement..............................................21
19.      Announcements................................................21
20.      Notices......................................................21
21.      General......................................................22
22.      Governing Law and Jurisdiction...............................25
23.      Rights of Third Parties......................................26
24.      Guarantee....................................................26
25.      Access to Books and Records; Cooperation with Purchaser......28

Schedules

1.    Particulars of Newco............................................29
2.    Particulars of the Subsidiaries.................................30
3.    Warranties......................................................33
4.    Scheduled Intellectual Property.................................60
5.    Pro forma Completion Accounts...................................61

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THIS AGREEMENT is made on 17th July, 2000 BETWEEN:

(1)      INTERX PLC (registered number 1876997) whose registered office is at
         Fountain Court, Cox Lane, Chessington, Surrey, KT9 1SJ ("InterX");

(2)      INTERX MEDIA PLC (formerly called Ideal Hardware plc) (registered
         number 3621733) whose registered office is at Fountain Court, Cox Lane,
         Chessington, Surrey KT9 1SJ (the "Seller"); and

(3)      BELL  MICROPRODUCTS  INC.  whose  principal  executive  office  is at
         1941  Ringwood  Avenue,  San  Jose, California 95131-1721, USA (the
         "Purchaser").

WHEREAS:

(A)      Newco (as defined below) is a private company limited by shares short
         particulars of which are set out in Schedule 1 having an authorised
         capital of (pound)1,000,000 divided into 1,000,000 ordinary shares of
         (pound)1 each, all of which have been issued fully paid or credited as
         fully paid (the "Shares").

(B)      With effect from midnight on 2nd June, 2000 the Seller transferred all
         of the assets and certain specified liabilities of the Seller to Newco
         with a view to Newco carrying on the business as a going concern in
         succession to the Seller.

(C)      The Seller is beneficially entitled to the Shares.

(D)      Newco is the beneficial owner of the entire issued share capitals of
         the Subsidiaries.

(E)      The Seller wishes to sell and the Purchaser wishes to purchase the
         whole of the issued share capital of Newco for the consideration and
         upon the terms and subject to the conditions set out in this agreement.

(F)      InterX has agreed to guarantee certain obligations of the Seller
         pursuant to this agreement.

IT IS AGREED as follows:

1.       Definitions

(1)      In this agreement:

         "Accounts" means all of the audited balance sheets as at the Accounts
         Date and the audited profit and loss accounts for the year ended on the
         Accounts Date for the Seller and the notes to them and any directors'
         and auditors' reports annexed or attached to them in the Agreed Form;

         "Accounts Date" means 30th July, 1999;

         "Agreed Claim" means a claim which has been (a) accepted by the Seller
         as to its validity and its amount; (b) determined to be valid by a

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         Queen's Counsel in accordance with clause 17; or (c) adjudicated by a
         court of competent jurisdiction as being recoverable by the Purchaser
         (such adjudication carrying no right of appeal or in respect of which
         the relevant party has indicated that it does not intend to appeal);

         "Agreed Form" means, in relation to any document, the form of that
         document which has been initialled for the purpose of identification by
         the Seller's Solicitors and the Purchaser's Solicitors;

         "Business" means the business formerly carried on by the Seller and
         which was transferred to Newco with effect from midnight on 2nd June,
         2000 pursuant to the Hivedown Agreement and which has been carried on
         since that time by Newco;

         "Claim" means a claim under the Warranties or the Tax Deed, submitted
         by the Purchaser to the Seller in accordance with the notice provisions
         in clause 6, which is not an Agreed Claim;

         "Completion" means completion of the sale and purchase of the Shares in
         accordance with clause 10;

         "Completion Accounts" has the meaning set out in clause 4;

         "Completion Accounts Date" means 29th July, 2000 if Completion occurs
         on or before 11th August, 2000 or the date of Completion if Completion
         occurs after 11th August, 2000;

         "Computer Systems" means all computer systems used by any Group Company
         at any time, including computing and electronic and technical equipment
         linked to a computer, hardware, Software, programs, data, electronic
         data, processing systems and all associated equipment and materials
         from time to time;

         "Confidential Information" means all business information belonging or
         relating to any member of the Group and their respective businesses,
         customers, suppliers, assets, liabilities, plans and projections, which
         is confidential (whether or not so stated or marked and whether or not
         in tangible form);

         "Consideration" means the aggregate of the Initial Consideration and
         the Deferred Payment, if the Deferred Payment is payable by the
         Purchaser or the Initial Consideration less the Deferred Payment if the
         Deferred Payment is payable by the Seller;

         "Damages" means all losses, damages, liabilities, obligations,
         penalties, fines, interest and reasonable expenses including court
         costs and reasonable legal fees and expenses;

         "Deferred Payment" means the amount (if any) payable by the Seller or
         the Purchaser, as the case may be in accordance with Schedule 5;

         "Disclosure Letter" means the letter of the same date as this agreement
         from the Seller to the Purchaser a copy of which is in the Agreed Form;

         "Employees" means all those persons particulars of whom are set out in
         the Disclosure Letter;

         "Employment Acts" means the Employment Rights Act 1996, the Sex
         Discrimination Act 1975, the Race Relations Act 1976, the Trade Union

                                       2
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         and Labour Relations (Consolidation) Act 1992, the Disability
         Discrimination Act 1995, the Equal Pay Act 1970, the Transfer of
         Undertakings (Protection of Employment) Regulations 1981, the Working
         Time Regulations 1998, the Health and Safety at Work etc. Act 1974;

         "Environmental Matters" means any activity involving Hazardous Material
         or having or likely to have a polluting effect on the environment
         including (without limitation) noise, vibrations, smells and dust.

         "Event" has the meaning as defined in the Tax Deed;

         "Exit Charge" has the meaning set out in clause 11;

         "Final Disclosure Letter" means the letter from the Seller to the
         Purchaser to be given at Completion in accordance with clause 6(3),
         Part A of which is in Agreed Form;

         "Group Companies" or "Group" means the Company and the Subsidiaries and
         "Group Company" means any of them;

         "Hazardous Material" means any substance or material which either alone
         or together with other substances or materials is capable of causing
         harm to human health, harm to any living organism or damage to the
         environment.

         "Hivedown Agreement" means the agreement dated 5th June, 2000 between
         the Seller and Newco relating to the hivedown of the Business;

         "Independent Accountant" has the meaning set out in clause 16;

         "Initial Consideration" has the meaning set out in clause 3;

         "InterX Debtor" has the meaning set out in Schedule 5;

         "Intellectual Property" means any know-how, patents, trade marks,
         service marks, domain names, designs, design rights, copyrights,
         utility model, logos, confidential processes and information,
         inventions, discoveries and improvements, trading and business names,
         database rights, moral rights, get-up, other intellectual property
         rights and any rights in the nature of intellectual property rights (in
         each case whether registered or not and including application for
         registration thereof) and all rights or forms of protection of a
         similar nature or having equivalent or similar effect or any other
         matters which may subsist in any part of the world including all
         Proprietary Information, Technical Information and Confidential
         Information;

         "Leases" means the leases in relation to the Properties, each in Agreed
         Form;

         "Loans" means the aggregate net amount due as at Completion from the
         Group Companies to members of the Seller's Group (other than the InterX
         Debtor, which is dealt with in accordance with Schedule 5);

         "Newco" or the "Company" means Ideal Hardware Limited (registered
         number 3969946);

         "Options" means the options in respect of the Properties in the Agreed
         Form;

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<PAGE>

         "Properties" means the properties known as the freehold land and
         buildings on the south side of Cox Lane and the east side of Mount Road
         Tolworth being the whole of the land registered at HM Land Registry
         with absolute title under title number SGL287800 (and comprising the
         buildings now known as Fountain Court) and the freehold land and
         buildings known as Cox House Davis Road Chessington being the whole of
         the land registered at HM Land Registry with absolute title under title
         number TGL 152423 (including the building known as Thrust House) and
         "Property" means either of them as the context may require;

         "Proprietary Information" means confidential information and business
         secrets relating to any member of the Group including technical,
         commercial and financial information and names and lists of customers
         of and suppliers of any member of the Group but excluding any such
         information which after Completion comes to be in the public domain
         other than by reason of a default by the Sellers in the performance of
         their obligations hereunder;

         "Purchaser's Group" means the Purchaser and subsidiaries of the
         Purchaser (other than the Group Companies);

         "Purchaser's Solicitors" means Wedlake Bell of 16 Bedford Street,
         Covent Garden, London WC2E 9HF;

         "Regulations" means the Transfer of Undertakings (Protection of
         Employment) Regulations 1981;

         "Relief" has the meaning as defined in the Tax Deed;

         "Right to Repayment" has the meaning as defined in the Tax Deed;

         "Security Interest" means any mortgage, charge (fixed or floating),
         pledge, lien, hypothecation, assignment, security interest or other
         encumbrance or equity of any kind securing any obligation of any
         person, any right conferring a priority of payment in respect of any
         obligation of any person or any retention of title clause or provision
         (including an agreement or commitment to cause any of the same);

         "Seller's Group" means InterX and its subsidiaries excluding the Group
         Companies;

         "Seller's Solicitors" means Allen & Overy of One New Change, London
         EC4M 9QQ;

         "Software" means any and all computer programs in both source and
         object code form, including all modules, routines and sub-routines
         thereof and any manuals or other documentation relating thereto;

         "subsidiary" means a subsidiary for the purposes of the Companies Act
         1985;

         "Subsidiaries" means the companies details of which are set out in
         Schedule 2;

         "Taxation" has the meaning assigned to it in the Tax Deed;

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

                                       4

<PAGE>

         "Tax Deed" means the tax deed to be entered into at Completion by the
         Seller and the Purchaser in the Agreed Form;

         "Taxation Statute" includes all statutes, statutory instruments,
         enactments, laws, bye-laws, directives, decrees, ordinances,
         regulations and other legislative provisions imposing or relating to
         Taxation;

         "Technical Information" means all data, formulae, methods, techniques,
         recipes, specifications and other industrial information and techniques
         used by any Group Company;

         "VATA" means the Value Added Tax Act 1994; and

         "Warranties" means the warranties contained in clauses 6(1), 6(2) and
         Schedule 3.

(2)      In this agreement any reference, express or implied, to an enactment
         includes references to:

         (a)      that enactment as re-enacted, amended, extended or applied by
                  or under any other enactment before or after the signature of
                  this agreement;

         (b)      any enactment which that enactment re-enacts (with or without
                  modification); and

         (c)      any subordinate legislation made before or after the signature
                  of this agreement under that enactment, as re-enacted,
                  amended, extended or applied as described in paragraph (a)
                  above, or under any enactment referred to in paragraph (b)
                  above;

         and "enactment" includes any legislation in any jurisdiction, except to
         the extent that any enactment or subordinate legislation made, enacted,
         re-enacted, amended, extended or applied after the signature of this
         agreement creates or increases a liability of the Seller under this
         agreement or the Tax Deed provided that the exception in this subclause
         shall not apply to section 179 of the Taxation of Chargeable Gains Act
         1992.

(3)      Where any statement is qualified by the expression "so far as the
         Seller is aware" or "to the best of the Seller's knowledge, information
         and belief" or any similar expression that statement shall be deemed to
         be made on the basis of the actual knowledge of Simon Barker, Simon
         Miesegaes, Ian French, James Wickes, Stephen Lundy, Gordon Milner,
         Alexander Tatham, Mark Walker and Seamus Twohig or the knowledge that
         such persons ought reasonably to have had, such persons being deemed to
         have made all appropriate enquiries of senior employees employed within
         the Business.

(4)      Words denoting persons shall include bodies corporate and
         unincorporated associations of persons.

(5)      Subclauses (1) to (4) above apply unless the contrary intention
         appears.

(6)      The headings in this agreement do not affect its interpretation.

                                       5

<PAGE>

2.       Sale and Purchase

(1)      Subject to clause 5, the Seller shall sell or procure the sale of the
         Shares and the Purchaser shall purchase the Shares with full title
         guarantee and free from all charges, liens, encumbrances, equities and
         claims whatsoever and together with all rights attaching to them.

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

3.       Consideration

         The consideration for the sale of the Shares (subject to adjustment as
         provided in this agreement) shall be the sum of (pound)13,182,178 (the
         "Initial Consideration") payable in cash on Completion less the
         Deferred Payment, if the Deferred Payment is payable by the Seller, or
         plus the Deferred Payment, if the Deferred Payment is payable by the
         Purchaser.

4.       Completion Accounts

(1)      As soon as reasonably practicable after Completion and in any event
         within 15 business days of Completion the Purchaser shall procure that
         the Company prepares and delivers to the Seller a draft balance sheet
         of the Company as at the close of business on the Completion Accounts
         Date (the "Draft Completion Accounts") and the Seller and Purchaser
         shall in good faith use all reasonable endeavours to approve and agree
         the Draft Completion Accounts as soon as reasonably practicable
         following delivery by the Purchaser of the Draft Completion Accounts.

(2)      The Draft Completion Accounts shall be in the form contained in, and
         include the items identified in, Schedule 5 and such accounts shall be
         prepared by adopting the provisions contained in Schedule 5, applying
         the principles contained in Schedule 5 and otherwise in a manner
         consistent with the application of the accounting policies in preparing
         the Accounts.

(3)      If the Seller and the Purchaser do not reach agreement on the Draft
         Completion Accounts within 10 business days of delivery of the Draft
         Completion Accounts either party may refer the matter(s) in dispute to
         the Independent Accountant for resolution in accordance with clause 16.

(4)      The Draft Completion Accounts, as approved and agreed in accordance
         with subclause (1) above or, if subclause (3) above applies, as
         determined by the Independent Accountant shall comprise the "Completion
         Accounts".

(5)      Each party shall (if applicable):

         (a)      disclose to the other and (if applicable) to the Independent
                  Accountant (if so requested) all relevant facts and
                  information in its possession; and

         (b)      promptly give to the other and (if applicable) to the
                  Independent Accountant, all information, assistance and access
                  to books of account, documents, files and papers which either
                  of them may reasonably require,

         for the purposes of agreeing or determining the matter(s) contemplated
         by the foregoing provisions of this clause.

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<PAGE>

(6)      The Independent Accountant shall be entitled (to the extent it
         considers it appropriate) to rely on information provided or made
         available by either of the parties.

5.       Condition Precedent

(1)      The sale and purchase of the Shares is conditional on a resolution to
         approve the sale of the Shares being duly passed by the members of
         InterX in general meeting.

(2)      InterX shall use reasonable endeavours to procure that the condition in
         subclause (1) above is fulfilled on or before 31st August, 2000.

(3)      If the condition in subclause (1) above is not fulfilled on or before
         31st August, 2000 neither party (provided it shall have used reasonable
         endeavours as described above) shall have any rights or obligations
         under this agreement except under clauses 19 (Announcements), 20
         (Notices) and 22 (Governing Law and Jurisdiction) which shall continue
         to apply and the parties accrued rights and obligations shall not be
         affected.

6.       Warranties

(1)      The Seller warrants to the Purchaser that each of the statements set
         out in Part A and Part B of Schedule 3 is true and accurate in all
         respects and not misleading, and agrees and acknowledges that the
         Purchaser is entering into this agreement in reliance on such
         warranties.

(2)      On Completion Warranties 10, 12, 13, 25(2), 27, 28, 36 and 37 in Part A
         of Schedule 3 and Warranties 2(a), 6(a) and 22(h) in Part B of Schedule
         3 shall be repeated by the Seller in each case so far as the Seller is
         aware (without having made any enquiry) with reference to the facts and
         matters then existing and (except in relation to any transaction,
         matter or thing which arises outside the ordinary course of business
         after the Completion Accounts Date but prior to Completion) subject to
         any matter fairly disclosed in the Final Disclosure Letter.

(3)      The Seller shall be entitled to submit a Final Disclosure Letter to the
         Purchaser substantially in the form to be submitted on Completion not
         less than 48 hours before Completion and the Purchaser shall not be
         entitled to make any Warranty Claim in relation to the Warranties
         referred to in subclause (2) above in respect of anything arising
         directly or indirectly from any transaction, matter or thing fairly
         disclosed in the Final Disclosure Letter or the documents specifically
         referred to in and attached to the Final Disclosure Letter.

(4)      The Seller agrees with the Purchaser (as trustee for the Group
         Companies), to waive any rights or claims which it may have and (as
         trustee for the employees of each Group Company) in the absence of
         fraud, dishonesty or wilful concealment by or on behalf of the relevant
         employee to waive any rights or claims which it may have in each case
         against the Group Companies or any of their employees in respect of any
         misrepresentation, inaccuracy or omission in or from any information or
         advice supplied or given by the Group Companies or any of their
         employees in connection with the giving of the Warranties and the
         preparation of the Disclosure Letter or the Final Disclosure Letter.

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<PAGE>

(5)      The Purchaser warrants to the Seller that:

         (a)      it is a corporation validly existing under the laws of
                  California with the requisite power and authority to enter
                  into and perform, and has taken all necessary corporate action
                  to authorise, the execution and performance of, its
                  obligations under this agreement and the Tax Deed; and

         (b)      this agreement and the Tax Deed constitute valid and binding
                  obligations of the Purchaser.

(6)      The Seller undertakes to the Purchaser that upon it becoming aware of
         the occurrence or the impending or threatened occurrence or
         non-occurrence of any matter, event or circumstance (including any
         omission to act) which would or might reasonably be expected to cause
         or constitute a breach (or which would have caused or constituted a
         breach had such matter, event or circumstance occurred or been known to
         the Seller prior to the date of this agreement) of any of the
         Warranties or which would or might reasonably be expected to give rise
         to a claim under the Tax Deed (whether or not then executed) it will as
         soon as reasonably practicable give written notice (with such
         particulars as are reasonably available to it) of such matter, event or
         circumstance to the Purchaser prior to Completion and, if so requested
         by the Purchaser, use reasonable endeavours to prevent or to remedy the
         same.

(7)      The Seller acknowledges that the Purchaser and its directors, officers,
         employees and its advisers have not made any representations or
         warranties (other than as set out in this agreement or the documents
         referred to in this agreement as being in the Agreed Form) upon which
         the Seller has relied or which have caused (wholly or in part) the
         Seller or any other person to sell the Shares and/or enter into this
         agreement.

(8)      Only transactions, matters or things fairly disclosed in the Disclosure
         Letter or the Final Disclosure Letter (as the case may be) or in the
         documents specifically referred to in paragraphs 1 to 47 of Part A of
         the Disclosure Letter and paragraphs 1 to 24 of Part B of the
         Disclosure Letter, or in the Final Disclosure Letter (as the case may
         be) operate to reduce or affect any claim under, any of the Warranties
         or operate to reduce any amount claimable or recoverable.

(9)      Subject to the provisions of clause 7(14), each of the Warranties shall
         be construed as a separate and independent warranty and representation
         and agreement to the intent that the Purchaser shall have a separate
         claim and right of action in respect of every event giving rise to a
         breach of any of the Warranties and (except as expressly provided in
         this agreement) shall not be limited by reference to any other
         paragraph or anything in this agreement or other documents referred to
         herein.

7.       Limitations on Warranty Claims

(1)      The Purchaser acknowledges to and agrees with the Seller that:

         (a)      the Warranties are the only representations, warranties or
                  other assurances of any kind given by or on behalf of the
                  Seller or any other member of the Seller's Group and on which
                  the Purchaser may rely in entering into and performing this
                  agreement;

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<PAGE>

         (b)      no other statement, promise or forecast made by or on behalf
                  of the Seller or any other member of the Seller's Group may be
                  relied on or form the basis of, or be pleaded in connection
                  with, any claim by the Purchaser under or in connection with
                  this agreement;

         (c)      any claim by the Purchaser in connection with the Warranties
                  (a "Warranty Claim") shall be subject to the following
                  provisions of this clause; and

         (d)      at the time of entering into this agreement it will not take
                  action in respect of any matter of which it is actually aware
                  which would give rise to a Warranty Claim immediately after
                  Completion.

(2)      The liability of the Seller under or in respect of the Warranties shall
         be limited as follows:

         (a)      the Seller shall not be liable in respect of any breach of the
                  Warranties if and to the extent that the matter giving rise to
                  the breach is the subject of a successful claim under the Tax
                  Deed;

         (b)      there shall be disregarded for all purposes any breach, or any
                  number of connected breaches, of the Warranties in respect of
                  which the aggregate amount of the damages to which the
                  Purchaser would otherwise be entitled is less than
                  (pound)10,000;

         (c)      the Purchaser shall not be entitled to recover any damages in
                  respect of any breach or breaches of the Warranties unless the
                  amount of damages in respect of such breach or breaches
                  exceeds in aggregate the sum of (pound)100,000; and

         (d)      the maximum aggregate liability of the Seller in respect of
                  all and any Warranty Claims (and any claims under the Tax
                  Deed) shall not exceed the Consideration.

(3)      The Purchaser shall not be entitled to make any Warranty Claim:

         (a)      to the extent that specific provision or allowance for the
                  matter or liability which would otherwise give rise to the
                  claim in question has been made or falls to be made in the
                  Accounts, the Completion Accounts or the calculation of the
                  Deferred Payment or it is otherwise specifically taken account
                  of in the Accounts, the Completion Accounts or the calculation
                  of the Deferred Payment;

         (b)      in respect of anything arising directly or indirectly from any
                  transaction, matter or thing fairly disclosed in the
                  Disclosure Letter or in the documents specifically referred to
                  in paragraphs 1 to 47 of Part A of the Disclosure Letter and
                  paragraphs 1 to 24 of Part B of the Disclosure Letter, or in
                  the Final Disclosure Letter;

         (c)      if the claim would not have arisen but for a change in
                  legislation announced or enacted on or after the date of this
                  agreement (whether relating to Taxation, rates of Taxation or
                  otherwise) or the withdrawal after the date of this agreement
                  of any practice or extra-statutory concession previously
                  published by the Inland Revenue or other taxing authority
                  (whether or not the change purports to be effective
                  retrospectively in whole or in part);

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<PAGE>

         (d)      to the extent that the claim arises as a result of any changes
                  in the accounting policies or practices upon which any Group
                  Company values its assets made after Completion;

         (e)      to the extent occasioned by any voluntary act or omission of
                  any member of the Purchaser's Group or the Group Companies
                  after Completion done or suffered outside the ordinary course
                  of business and other than pursuant to a legally binding
                  obligation entered into by any Group Company before
                  Completion; or

         (f)      to the extent that any loss or liability is caused or
                  increased by the failure of any member of the Purchaser's
                  Group to mitigate any loss suffered by it,

         and to the extent that any Warranty Claim is increased as a result of
         any of the matters set out in this subclause, the Seller shall not be
         liable in respect of the amount by which any claim is so increased.

(4)      If the Purchaser or any of the Group Companies becomes aware of a
         matter which is likely to give rise to a Warranty Claim:

         (a)      the Purchaser shall give written notice of the relevant facts
                  to the Seller as soon as reasonably practicable; and

         (b)      the Purchaser shall claim under any applicable policy of
                  insurance before making a Warranty Claim against the Seller
                  but without prejudicing its ability to notify a claim within
                  the relevant period.

(5)      Subject to the provisions of the Tax Deed in relation to any matter
         which may form the subject of a claim under it, if the Warranty Claim
         in question is as a result of or in connection with a liability or
         alleged liability to a third party:

         (a)      the Purchaser shall procure the relevant Group Company to take
                  such action to avoid, dispute, resist, appeal, compromise or
                  contest the liability as may be reasonably requested by the
                  Seller which shall be entitled to have the conduct of any
                  appeal, dispute, compromise or defence of the dispute and of
                  any incidental negotiations and the Seller shall, to the
                  extent reasonably practicable, keep the Purchaser fully
                  informed of such matters; and

         (b)      the Purchaser shall procure the relevant Group Company to make
                  available to the Seller such persons and all such information
                  as the Seller may reasonably require for avoiding, disputing,
                  resisting, appealing, compromising or contesting any such
                  liability;

         in each case provided that the Purchaser and the relevant Group Company
         is indemnified to its reasonable satisfaction against the costs and
         expenses of taking such action including all reasonable legal and
         professional expenses.

(6)      The Seller shall, in the absence of fraud or wilful concealment, cease
         to have any liability under or in respect of the Warranties:

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<PAGE>

         (a)      on the seventh anniversary of the date of this agreement in
                  respect of Warranties in Part B of Schedule 3;

         (b)      on 31st October, 2001 in respect of any other Warranties,

         except in respect of a Warranty Claim of which the Purchaser gives
         written notice to the Seller before the relevant date and in accordance
         with subclause (3) but the liability of the Seller in respect of any
         Warranty Claim shall terminate if proceedings in respect of it have not
         been commenced within six months of the termination of the relevant
         period in subclause (6) above.

(7)      The Seller shall, in the absence of fraud or wilful concealment, cease
         to have any liability under or in respect of the Tax Deed on the
         seventh anniversary of Completion.

(8)      Without prejudice to the Purchaser's duty to mitigate any loss in
         respect of any breach of the Warranties, if, in respect of any matter
         which would otherwise give rise to a breach of the Warranties, a Group
         Company is entitled to claim under any policy of insurance (or would
         have been so entitled had it maintained in force its insurance cover
         current at Completion) the amount of insurance monies to which that
         Group Company actually receives shall reduce pro tanto or extinguish
         the claim for breach of the Warranties.

(9)      If the Seller makes any payment by way of damages for breach of the
         Warranties (the "Damages Payment") and a Group Company or any member of
         the Purchaser's Group receives any benefit otherwise than from the
         Seller which would not have been received but for the circumstance
         giving rise to the claim in respect of which the Damages Payment was
         made the Purchaser shall, once it or a Group Company or the member of
         the Purchaser's Group has received such benefit, immediately repay to
         the Seller an amount equal to the lesser of the amount of such benefit
         and the Damages Payment less the Purchaser's reasonable costs and
         expenses (if any) incurred in paying such benefit to the Seller.

(10)     The Purchaser shall not intentionally do, and shall procure that each
         Group Company shall not intentionally do, any act or thing which is
         reasonably likely to give rise to a Warranty Claim which would not
         otherwise arise other than pursuant to a legally binding obligation
         entered into by any Group Company before Completion or in the proper
         course of the relevant Group Company's business or activities.

(11)     Where the Seller has made a payment to the Purchaser in respect of, or
         relating to, any claim under the Warranties and a Group Company or the
         Purchaser has a right of reimbursement against any other person in
         respect of or relating to that claim the Purchaser shall notify the
         Seller within a reasonable period of that fact and shall (if
         indemnified to its reasonable satisfaction against the costs and
         expenses of taking such action) take all reasonable steps or
         proceedings to enforce such right.

(12)     If any amount in respect of any breach of the Warranties is paid by the
         Seller to the Purchaser and any subsequent event or circumstances
         happens or arises by virtue of which the loss attributable to such
         breach is reduced or removed altogether, then the Purchaser shall
         forthwith repay to the Seller that amount or the appropriate proportion
         thereof less the Purchaser's reasonable costs and expenses (if any)
         incurred in recovering any relevant amount.

                                       11

<PAGE>

(13)     The Purchaser shall not be entitled to recover more than once in
         respect of any claim under the Warranties, the Tax Deed or to the
         extent that any claim has been taken into account in accordance with
         Schedule 5 arising from the same subject matter or set of
         circumstances.

(14)     Nothing in this agreement shall in any way restrict or limit the common
         law obligation of the Purchaser to mitigate any loss or damage which it
         may suffer in relation to the matters contained in this agreement.

(15)     The Purchaser shall not be entitled to rescind this agreement after
         Completion in any circumstances and the Purchaser shall be entitled to
         rescind this agreement before Completion only in accordance with clause
         9.

(16)     Any payment made by the Seller under this agreement or the Tax Deed
         shall be deemed to be a pro tanto reduction in the Consideration.

8.       Covenants up to Completion

(1)      The Seller shall procure that without the prior written consent of the
         Purchaser the Group Companies shall not before Completion:

         (a)      incur any expenditure or make any commitment exceeding
                  (pound)100,000 in aggregate on capital account; or

         (b)      dispose of or grant any option or right of pre-emption in
                  respect of any part of its assets except in the ordinary
                  course of trading; or

         (c)      borrow or lend any money (except borrowings from its bankers
                  not exceeding (pound)24,000,000) or make any payments out of
                  or drawings on its bank account(s) (except for routine or
                  committed payments); or

         (d)      enter into, terminate or amend or vary in any material respect
                  any unusual or abnormal contract or commitment which is
                  material to the business or outside the ordinary course of
                  business of the relevant Group Company; or

         (e)      do or allow to be done anything which renders its financial
                  position less favourable than at the date of this agreement;
                  or

         (f)      grant, issue or redeem any mortgage, charge, debenture or
                  other security or give any guarantee or indemnity; or

         (g)      make any material change in the terms and conditions of
                  employment of any of its directors or employees or employ or
                  terminate (except for good cause) the employment of any person
                  or pay any abnormal bonus or other sum; or

         (h)      create, issue, purchase or redeem any class of share or loan
                  capital; or

         (i)      modify any of the rights attached to any of its shares or
                  create allot or issue any shares or grant of any option over
                  any shares or uncalled capital or issue any obligations
                  convertible into shares; or

                                       12
<PAGE>

         (j)      capitalise or repay any amount standing to the credit of any
                  reserve or redeem or purchase any shares or otherwise
                  reorganise its share capital; or

         (k)      declare or pay or recommend any dividend or other
                  distribution; or

         (l)      alter its Memorandum of Association or Articles of Association
                  or adopt new Articles of Association; or

         (m)      acquire (including by subscription) or dispose of any shares
                  in or other securities of any other company or participate in
                  any partnership or joint venture save in respect of the
                  Logical Online joint venture; or

         (n)      propose or pass any resolution (other than pursuant to this
                  agreement); or

         (o)      institute, settle or agree to settle any proceedings save for
                  the institution of debt collection proceedings in the ordinary
                  course of business; or

         (p)      pay any management or similar charge to the Seller or the
                  Seller's Group other than in the ordinary course of business
                  and on an arms' length basis; or

         (q)      establish any superannuation or retirement benefit scheme,
                  personal pension scheme or other pension or life assurance
                  arrangement; or

         (r)      release any debt; or

         (s)      assign, grant, dispose or license any Intellectual Property
                  relating to the Business or any right or interest, thereunder
                  or be responsible for any act or omission which would or could
                  prejudice any such right or interest or any registration or
                  pending application of the same; or

         (s)      agree, conditionally or otherwise, to do any of the foregoing.

(2)      The Seller shall not (and shall procure that no Group Company shall)
         before Completion without the prior written consent of the Purchaser
         dispose of any interest in the Shares or grant any option or right of
         pre-emption over, or mortgage, charge or otherwise encumber the Shares.

(3)      The Seller undertakes to the Purchaser and each Group Company that it
         shall procure that between the date of this agreement and Completion,
         the business of each Group Company is carried on in the ordinary course
         in consultation with the Purchaser.

(4)      The Seller undertakes to the Purchaser that from the date of this
         agreement until Completion:

         (a)      each Group Company will use reasonable endeavours to maintain
                  its trade and trade connections;

         (b)      all debts which each Group Company has incurred or incurs will
                  be settled within the applicable period of credit;

                                       13

<PAGE>

         (c)      each Group Company, or the Seller as applicable, shall
                  promptly give to the Purchaser details of any material changes
                  in its business, financial position or prospects;

         (d)      each Group Company, or the Seller if applicable, shall
                  maintain in force policies of insurance within limits of
                  indemnity at least equal to and otherwise on terms no less
                  favourable than those policies of insurance currently
                  maintained in respect of each Group Company, shall not
                  knowingly do anything or omit to do anything which makes or is
                  likely to make any such policy void or voidable and shall at
                  the Purchaser's cost effect such additional insurances as the
                  Purchaser may reasonably request.

(5)      From the date of this agreement and until Completion the Seller agrees
         to provide the Purchaser and the Purchaser's advisers upon reasonable
         notice and during normal business hours with reasonable access to the
         Properties and all the books, title deeds and records of each Group
         Company as the Purchaser may reasonably request and the Seller shall
         instruct the directors and employees of each Group Company to give
         promptly all such information and explanations to the Purchaser or any
         such authorised persons, as the Purchaser or its advisers may
         reasonably request.

(6)      The Seller and the Purchaser will both use all best endeavours
         (including the agreement and signing of all relevant documentation)
         from the date of this agreement to obtain court orders excluding the
         Leases from the provisions of the Landlord and Tenant Act 1954.

9.       Rescission

(1)      If before Completion there shall occur a Rescission Event the Purchaser
         shall be entitled (but not obliged) to elect not to complete the
         purchase of the Shares by giving notice in writing to InterX. Such
         election shall be without any liability to the Seller or the Purchaser.

(2)      "Rescission Event" means for the purposes of this clause one or more of
         the following:

         (a)      the destruction of the building on the property known as
                  Fountain Court, Cox Lane, Chessington or it being damaged to
                  the extent that it cannot reasonably be expected to be used
                  for the conduct of the Business (in all material respects in
                  the same way as the Business is conducted as at the date of
                  this agreement) for a period of not less than three months; or

         (b)      a breach of one or more of the Warranties specified in clause
                  6(2) in respect of a matter or event which shall not be
                  capable of remedy before Completion and in relation to which
                  the aggregate Damages that the Purchaser or the Company would
                  suffer as a result of any such breach or breaches are greater
                  than (pound)5,000,000.

10.      Completion

(1)      Completion shall take place at the offices of the Seller's Solicitors
         immediately following the satisfaction of the condition set out in
         clause 5(1).

(2)      At Completion the Seller shall procure:

                                       14
<PAGE>

         (a)      the delivery to the Purchaser of:

                  (i)      signed transfers into the name of the Purchaser or
                           its nominee in respect of the Shares;

                  (ii)    share certificates in respect of the Shares (or an
                          express indemnity in the Agreed Form in the case of
                          any found to be missing);

                  (iii)   the certificate of incorporation, the common seal, all
                          minute books, the share register and the share
                          certificate books and other statutory books of the
                          Group Companies;

                  (iv)     the Tax Deed duly executed by the Seller and InterX;

                  (v)      the resignation of the auditors of each of the Group
                           Companies in each case confirming, in accordance with
                           section 394 of the Companies Act 1985, that there are
                           no circumstances connected with their resignation
                           which should be brought to the notice of the members
                           or creditors of the Company or the Property Companies
                           respectively;

                  (vi)     a copy of the minute of the meeting of the members of
                           InterX approving the transaction;

                  (vii)    the Leases and the Options each duly executed by the
                           relevant member of the Seller's Group; and

                  (ix)     the resignation of Simon Miesegaes as a director of
                           the Company.

         (b)      that a meeting of the directors of each Group Company is held
                  at Completion at which the following business is transacted:

                  (i)      the directors of each Group Company (as appropriate)
                           shall approve for registration (subject to their
                           being duly stamped) the transfers referred to in
                           subclause (2)(a) above;

                  (ii)     the situation of the registered office of each Group
                           Company shall be changed as the Purchaser may direct;

                  (iii)    such persons as the Purchaser shall nominate shall be
                           appointed as directors of that Company;

                  (iv)     Arthur Andersen resign as auditors of each Group
                           Company and PricewaterhouseCoopers are appointed as
                           auditors of each Group Company; and

                  (v)      its bank mandates are revised in such manner as the
                           Purchaser requires.

(3)      Upon completion of all the matters referred to in subclause (2) above
         the Purchaser shall:

         (a)      deliver to the Seller a counterpart of the Tax Deed duly
                  executed by the Purchaser;

                                       15
<PAGE>

         (b)      deliver to the Seller a counterpart of the Leases and the
                  Options duly executed by the Purchaser; and

         (c)      pay to the Seller the sum of (pound)13,182,178 in cash.

(4)      The parties acknowledge that prior to Completion the Group Companies
         have had the benefit of insurances effected and maintained by the
         Seller in relation to the Seller's Group and the Group Companies and
         that such insurances (other than the Directors and Officers liability
         insurance in respect of the period prior to Completion) will cease with
         effect from Completion in respect of the Group Companies. Accordingly,
         insurance in relation to the Group Companies on and from Completion
         shall be the responsibility of the Purchaser. Forthwith following
         signature of this agreement and prior to Completion InterX shall
         procure that the interest of the Purchaser arising from this agreement
         is noted on the relevant insurance policies.

11.      Exit Charge

(1)      The Purchaser covenants to procure that the Company pays any liability
         of the Company under section 179 of the Taxation of Chargeable Gains
         Act 1992 which arises as a result of the Company ceasing to be a member
         of the same group of companies as the Seller (the "Exit Charge").

(2)      If the Exit Charge is greater or less than(pound)3,000,000, the
         difference shall be dealt with in accordance with Schedule 5.

(3)      The Seller will have no liability under Schedule 5 or any other
         provision of this agreement or the Tax Deed in respect of any interest
         or penalties which arise as a result of the Company failing to pay the
         Exit Charge, or any part of the Exit Charge on the last date on which
         such amount can be paid in order to avoid interest and penalties except
         to the extent such date fell prior to Completion or such interest and
         penalties relate solely to a failure to pay any amount of the Exit
         Charge in excess of (pound)3,000,000 and the Seller has not paid the
         excess to the Purchaser on the due date for payment under Schedule 5.

(4)      Following Completion the Purchaser (or its advisers) will prepare a
         calculation of the Exit Charge for the purposes of agreeing the amount
         of the Exit Charge with the Inland Revenue. The Purchaser shall provide
         a copy of the calculation to the Seller. The Purchaser shall procure
         that the Company shall submit such calculation to the Inland Revenue
         without any amendments or with such amendments as the Seller shall
         reasonably request and the Purchaser shall agree, such agreement not to
         be unreasonably withheld or delayed.

(5)      The Purchaser (or its advisers) shall have responsibility for agreeing
         the amount of the Exit Charge with the Inland Revenue and shall prepare
         all correspondence relating to such matter for submission by the
         Company. The Purchaser shall provide the Seller with copies of any
         correspondence prior to submission to the Inland Revenue. The Purchaser
         shall procure that the Company will send all such correspondence to the
         Inland Revenue without amendment or with such amendments as the Seller
         shall reasonably request and the Purchaser shall agree, such agreement
         not to be unreasonably withheld or delayed. If the Company receives any

                                       16
<PAGE>

         correspondence from the Inland Revenue relating to the Exit Charge, the
         Purchaser shall procure that the Company shall, as soon as reasonably
         practicable, send a copy of the relevant correspondence to the Seller.

(6)      If the Exit Charge is not agreed with the Inland Revenue prior to the
         preparation of the Company's tax return for the accounting period
         current at Completion the Purchaser shall procure that the Company
         shall provide the Seller with a copy of the Company's tax return to the
         extent it relates to the Exit Charge in sufficient time prior to the
         due date for submission of such tax return to allow the Seller an
         opportunity to comment thereon. The Company shall take account of any
         reasonable comments of the Seller in relation to such matters.

12.      Employees

(1)      Save in respect of the directors of Newco as set out in Schedule 1, the
         Purchaser agrees to honour the existing terms and conditions of
         employment of the employees of the Group Companies and not to make any
         material changes to them for a period of twelve months following
         Completion.

(2)      The Seller and InterX, in consideration of the Purchaser entering into
         this agreement at the request of InterX, hereby, jointly and severally,
         indemnify and shall keep indemnified the Purchaser and each Group
         Company against all claims, counter-claims, actions, proceedings,
         liabilities, losses, damages, penalties, payments, costs, expenses and
         legal and other professional fees suffered or incurred by any of them
         in connection with any claims brought by the employees and/or former
         employees of the Seller relating to any act or omission of any member
         of the Seller's Group prior to completion of the Hivedown Agreement (to
         the extent that any such claims, counter-claims, actions, proceedings,
         liabilities, losses, damages, penalties, payments, costs, expenses and
         legal or other professional fees have not been taken into account in
         the Completion Accounts or the calculation of the Deferred Payment)
         arising out of or in connection with:

         (a)      any provision of the Hivedown Agreement including the change
                  of employer occurring by virtue of the Regulations and/or the
                  Hivedown Agreement;

         (b)      a change to any term of employment or working condition
                  (including any term or condition relating to an occupational
                  pension scheme) or any proposal to make such a change;

         (c)      the termination of employment of an employee or any other act
                  or omission or any other event, matter or circumstance
                  occurring whether pursuant to the Employment Acts or
                  otherwise;

         (d)      the failure of a Group Company to employ an employee by virtue
                  of the Regulations.

13.      Loans

         The Seller shall procure that immediately prior to Completion all the
         Loans are repaid or otherwise discharged in full.

14.      Guarantees

(1)      The Purchaser undertakes with the Seller:

                                       17
<PAGE>

         (a)      to procure the release at Completion of the Seller and any
                  member of the Seller's Group from all guarantees, indemnities,
                  bonds, letters of comfort, undertakings, licences and other
                  arrangements to which they or any of them are a party in
                  respect of any of the Group Companies or their business or
                  properties occupied by them details of which are specified in
                  the Disclosure Letter and to indemnify and to keep indemnified
                  on a continuing basis the Seller and any member of the
                  Seller's Group from all claims, liabilities, costs and
                  expenses (including without limitation, legal and other
                  professional advisers' fees) arising in respect or by reason
                  thereof; and

         (b)      to use all reasonable endeavours to procure the release of the
                  Seller and any member of the Seller's Group from any other
                  guarantees, indemnities, bonds, letters of comfort,
                  undertakings, licences and other arrangements to which any of
                  them are a party in respect of any of the Group Companies or
                  their business or properties occupied by them, if any, copies
                  of which are not specified in the Disclosure Letter and
                  details of which are subsequently notified to the Purchaser.

(2)      Without limiting the generality of subclause (1), the Purchaser agrees,
         in discharging its obligations under that subclause, to:

         (a)      offer any guarantees, indemnities or other undertakings (as
                  the case may be) in place of the guarantees and indemnities
                  and other arrangements referred to in subclause (1)(a); or

         (b)      offer to discharge the liabilities in relation to which a
                  guarantee or indemnity or other arrangements referred to in
                  subclause (1)(a) was given.

(3)      The obligations of the Purchaser under subclauses (1) and (2) will
         continue after Completion until all such releases are obtained.

(4)      InterX and the Seller shall procure that prior to or on Completion each
         Group Company shall be released from all charges, guarantees and
         indemnities given by it in respect of the obligations of any member of
         the Seller's Group or any third parties.

15.      Protective Covenants

(1)      Each of InterX and the Seller undertakes that it shall not, and it
         shall procure that no member of the Seller's Group for so long as it
         shall remain a subsidiary of InterX shall, whether directly or
         indirectly, either alone or in conjunction with or on behalf of any
         other person, do any of the following:

         (a)      within two years after Completion, be engaged or (save as the
                  holder of the shares or debentures in a listed company which
                  confer not more than five per cent. of the votes which could
                  normally be cast at a general meeting of the company) directly
                  or indirectly interested in carrying on any business in the
                  United Kingdom which competes with any core business carried
                  on by the Company at Completion; or

         (b)      within six years after Completion disclose to any other person
                  any Confidential Information, Proprietary Information,
                  Technical Information or any other information of a secret or
                  confidential nature to the extent such information relates
                  exclusively to the business of the Company except:

                                       18
<PAGE>

                  (i)      to the extent that the information has entered the
                           public domain otherwise than by reason of the
                           unauthorised act or default of the Seller or of any
                           other member of the Seller's Group; and

                  (ii)     insofar as may be required by law or by any
                           regulatory authority; or

         (c)      within two years after Completion do or fail to do anything
                  which directly results in any person who at any time during
                  the period of twelve months before Completion was a
                  consultant, contractor, adviser, supplier or agent to or of
                  the Company in respect of goods and/or services:

                  (i)      ceasing to supply or substantially reducing such
                           goods and/or services; or

                  (ii)     changing substantially the bases or terms on which he
                           is prepared to enter into contracts, do business or
                           supply such goods and/or services; or

         (d)      within two years after Completion canvas, solicit for orders
                  from or entice or endeavour to entice away from any Group
                  Company the custom of any person who at any time within the
                  period of twelve months prior to Completion has been a
                  customer of any Group Company in respect of goods and/or
                  services similar to those provided by any Group Company to
                  such person at any time during the said period of six months
                  prior to Completion; or

         (e)      within two years after Completion solicit or entice away from
                  the employment of any Group Company any person who at the date
                  of this agreement or at Completion is one of the senior or key
                  employees of any Group Company (irrespective of whether such
                  person would by reason of leaving service commit a breach of
                  his contract of employment) provided that this subclause shall
                  not prevent InterX or the Seller from employing any such
                  person who responds to a general advertisement offering
                  employment; or

         (f)      within two years after Completion employ or engage the
                  services of any of Ian French, Stephen Lundy, Gordon Milner,
                  Alex Tatham, Mark Walker or Seamus Twohig.

(2)      Each of InterX and the Seller acknowledges that the undertakings
         contained in this clause are considered reasonable in the context of
         the proposed sale of the Shares but in the event that any of the said
         undertakings shall be found or held to be void in circumstances when
         such undertaking would be valid if some part were deleted, or the
         geographical, temporal or other limits were reduced, the parties agree
         that such undertaking shall apply with such modification as may be
         necessary to make it valid and effective.

(3)      Subject to clause 15(1)(a) the Purchaser acknowledges that nothing in
         this clause shall prevent any member of the Seller's Group from selling
         technology owned as at the date of Completion or developed by any such
         member.

(4)      The restrictions in subclause (1) shall not apply (or as the case may
         be shall cease to apply) insofar and to the extent that any member of
         the Seller's Group after Completion acquires any company or business

                                       19
<PAGE>

         and, as a result of that acquisition, acquires a company or business
         which falls within the terms of that subclause (the "Relevant
         Interest"), provided that the Relevant Interest accounts for less than
         20 per cent of the turnover of the company or business acquired.

(5)      Each undertaking contained in this clause shall be construed as a
         separate undertaking and if one or more of the undertakings is held to
         be against the public interest or unlawful or in any way an
         unreasonable restraint of trade, the remaining undertakings shall
         continue to bind the Seller or the Purchaser (as the case may be).

16.      Independent Accountant

(1)      If the Seller and the Purchaser do not agree any matter referred to in
         clause 4 or Part 7 of Schedule 5 within the period(s) stated the matter
         in dispute shall be referred at the request of either the Seller or the
         Purchaser for decision to an independent chartered accountant (the
         "Independent Accountant") to be appointed by agreement between the
         Seller and the Purchaser, or, in default of agreement within 14 days of
         a request by either the Seller or the Purchaser, by the President for
         the time being of the Institute of Chartered Accountants in England and
         Wales on the application of either the Seller or the Purchaser.

(2)      If the Independent Accountant dies, delays or becomes unwilling or
         incapable of acting or if for any other reason the President for the
         time being of the Institute of Chartered Accountants in England and
         Wales thinks fit he may discharge the Independent Accountant and
         appoint another in his place.

(3)      The Independent Accountant shall act as an expert and not as an
         arbitrator and his decision shall be final and binding on the parties.
         The Independent Accountant shall afford the Seller and the Purchaser
         the opportunity of making written representations to him.

(4)      The fees and expenses of the Independent Accountant shall be borne by
         the Seller and the Purchaser in equal shares unless the Independent
         Accountant otherwise determines.

(5)      Any amount payable as a result of the Independent Accountant's decision
         shall be paid within seven days of his decision being notified in
         writing to the Seller and the Purchaser.

17.      Agreed Claims

(1)      If the Purchaser makes a Claim the validity of which is accepted by the
         Seller but the quantum of which is not accepted by the Seller, the
         parties shall negotiate in good faith to reach agreement as to quantum.
         If they do not reach such agreement within 21 days of the Purchaser
         submitting the Claim to the Seller, the matter shall be referred
         immediately to a Queen's Counsel (the "Queen's Counsel"), acting as an
         expert, to be appointed by agreement between the Purchaser and the
         Seller or, in the absence of such agreement within 14 days appointed by
         the President of the Law Society of England and Wales. The Queen's
         Counsel shall be instructed to determine within 14 days the amount
         which he or she considers to be a reasonable estimate of the quantum of
         the Claim. The amount agreed between the parties or determined by the
         Queen's Counsel in accordance with this clause shall be the "Agreed
         Claim".

(2)      If the Purchaser makes a Claim the validity of which is not accepted by
         the Seller within 21 days of submission, the matter shall be referred
         immediately to a Queen's Counsel appointed in accordance with subclause

                                       20

<PAGE>

         (1) above. The Queen's Counsel shall be instructed to determine
         whether, on a balance of probabilities, the Claim will succeed and to
         notify the parties of his or her determination as soon as possible and
         in any event within 14 days after his or her appointment. Where the
         Queen's Counsel determines a Claim will, on a balance of probabilities,
         succeed the quantum of such a Claim shall be determined in accordance
         with subclause (1).

(3)      The parties agree to procure that there is made available to the
         Queen's Counsel all such information and evidence as he or she may
         reasonably require for the purpose of making a fair determination of
         the validity or quantum of the Claim. All costs arising out of or in
         connection with instructing the Queen's Counsel under this clause shall
         be borne by the Seller on the one hand and the Purchaser on the other
         in equal shares or in such other proportions as the Queen's Counsel may
         determine to be fair and reasonable. The Queen's Counsel may instruct
         any expert (including a chartered accountant) to assist him or her in
         arriving at his or her decision and the fees and expenses of any such
         expert shall be payable by the parties in the same proportions as the
         fees of the Queen's Counsel. All findings of the Queen's Counsel shall
         be final and binding on the parties.

18.      Whole agreement

(1)      This agreement, the Hivedown Agreement and the documents referred to in
         either of them contain the whole agreement between the parties relating
         to the transactions contemplated by this agreement and supersede all
         previous agreements between the parties relating to those transactions
         (with the exception of all pre-existing confidentiality undertakings
         between the parties).

(2)      Each of the parties acknowledges that, in agreeing to enter into this
         agreement, it has not relied on any representation, warranty,
         undertaking or other assurance except those set out in this agreement.
         Without prejudice to the foregoing, the Purchaser acknowledges that it
         has not relied on any representations or warranties or other
         information contained in the Confidential Information Memorandum on the
         Company prepared by Broadview International Limited or in any other
         written or oral information supplied by or on behalf of the Seller or
         its advisers or made or supplied in connection with the negotiations of
         the sale and purchase under this agreement.

(3)      In entering into this agreement no party may rely on any
         representation, warranty, collateral contract or other assurance (
         except those set out in this agreement and the documents referred to in
         it) made by or on behalf of any other party before the signature of
         this agreement and each of the parties waives all rights and remedies
         which, but for this subclause, might otherwise be available to it in
         respect of any such representation, warranty, collateral contract or
         other assurance; providing that nothing in this subclause shall limit
         or exclude any liability for fraud or wilful concealment.

19.      Announcements

         No announcement concerning this sale and purchase or any ancillary
         matter will be made before, on or after Completion by any member of the
         Seller's Group or of the Purchaser's Group without prior consultation
         with and (unless the announcement is required by law, the London Stock
         Exchange, Nasdaq or any other relevant regulatory authority) without
         the prior written approval of the Seller and the Purchaser (such
         approval not to be unreasonably withheld or delayed).

                                       21
<PAGE>

20.      Notices

(1)      Any notice or other document to be served under this agreement must be
         in the English language and may be delivered or sent by first class
         recorded delivery post (using air courier (such as FedEx or DHL) if
         required to be served on a party in a different jurisdiction) or
         facsimile process to the party to be served at its address appearing in
         this agreement or at such other address as it may have notified to the
         other parties in accordance with this clause.

(2)      Any notice or document shall be deemed to have been served:

         (a)      if delivered, at the time of delivery; or

         (b)      if posted, at 10.00 a.m. on the third business day after it
                  was put into the post; or

         (c)      if sent by facsimile process, at the expiration of two hours
                  after the time of despatch, if despatched before 3.00 p.m. on
                  any business day, and in any other case at 10.00 a.m. on the
                  business day following the date of despatch.

(3)      In proving service of a notice or document it shall be sufficient to
         prove that delivery was made or that the envelope containing the notice
         or document was properly addressed and posted as a prepaid first class
         recorded delivery letter or, if sent by air courier, was delivered to
         the correct address and signed for upon receipt or that the telex or
         facsimile message was properly addressed and despatched and the correct
         answerback or identity code is received as the case may be.

(4)      The addresses of the parties for the purpose of this clause are as
         follows:

         InterX and the Seller

         Holden House
         57 Rathbone Place
         London  W1P 1AW

         For the attention of: the Finance Director and the Commercial Director
         Facsimile:            020 7769 9201

         The Purchaser

         1941 Ringwood Avenue
         San Jose
         California
         95131-1721
         USA

         For the attention of: Remo Canessa
         Facsimile:            001 408 451 1694

         with a copy to:

                                       22

<PAGE>

         Fredrikson & Byron, P.A.
         1100 International Centre
         900 Second Avenue South
         Minneapolis
         MN 55402
         USA

         For the attention of:              Tom Garton
         Facsimile:                         001 612 347 7000

21.      General

(1)      Each of the obligations and undertakings set out in this agreement
         which is not fully performed at Completion will continue in force after
         Completion.

(2)      No party shall be entitled to assign or transfer its rights or
         obligations under this agreement or any of them without the prior
         written consent of the other parties.

(3)      Each party shall pay the costs and expenses incurred by it in
         connection with the entering into and completion of this agreement.

(4)      The Purchaser will bear all stamp duty and registration fees payable or
         assessed in relation to this agreement and the transfer of the Shares.

(5)      The Purchaser agrees to provide the Seller and its advisers upon
         reasonable notice and during normal business hours with reasonable
         access (including the right to take copies) to the books of accounts
         and other financial records of the Group Companies which relate to the
         period up to Completion as the Seller may reasonably request for the
         purposes of preparing its annual consolidated accounts for the year in
         which Completion takes place and preparing its tax returns. The Seller
         agrees to provide to the Purchaser and its advisors upon reasonable
         notice and during normal business hours with reasonable access
         (including the right to take copies) to the books and records which
         relate to the businesses of the Group Companies for the period up to
         midnight on 2nd June, 2000 but which were not transferred pursuant to
         the Hivedown Agreement as the Purchaser may reasonably request so far
         as, in the reasonable opinion of the Seller, they relate to the
         business of the Group Companies for the period up to midnight on 2nd
         June, 2000.

(6)      This agreement may be entered into in the form of two or more
         counterparts each executed by one or more of the parties but, taken
         together, executed by all and, provided that all the parties so enter
         into the agreement, each of the executed counterparts, when duly
         exchanged or delivered, shall be deemed to be an original but, taken
         together, they shall constitute one document.

(7)      Save as otherwise provided, time is not of the essence in relation to
         the obligations under this agreement.

(8)      The terms of this agreement may be enforced only by a party to it or a
         party's successors and permitted assigns.

                                       23
<PAGE>

(9)      Except as otherwise provided in this agreement, all payments to be made
         by any of the parties to this agreement, the Tax Deed or any of the
         other documents referred to in this agreement shall be made in cleared
         funds in full without any set-off or counterclaim and free from any
         deduction or withholding except as may be required by law.

(10)     If all of the Shares are sold or transferred after Completion the
         benefit of each of the obligations, warranties, indemnities and
         undertakings given by the Seller in this agreement or the Tax Deed may
         be assigned to a wholly-owned subsidiary of the Purchaser or a holding
         company of which the Purchaser is a wholly-owned subsidiary provided
         that the liability of the Seller in this agreement or the Tax Deed
         shall not be increased by such assignment and provided that if such
         assignee shall cease to be so wholly owned by the Purchaser or, as the
         case may be, the Purchaser shall cease to be wholly owned by the
         assignee, the benefit of the obligations, warranties, indemnities and
         undertakings shall be reassigned to another wholly-owned subsidiary of
         the Purchaser or to a holding company of which the Purchaser is a
         wholly-owned subsidiary or to the Purchaser itself, who may enforce
         them as if it had been named in this agreement as the Purchaser. If
         such assignee does not so reassign the benefit of the obligations,
         warranties, indemnities and undertakings, the Seller shall be released
         from any further liability in respect thereof from the date on which
         such assignee ceases to be wholly owned by the Purchaser or, as the
         case may be, the Purchaser ceases to be wholly owned by the assignee
         until such time as a reassignment as envisaged by this clause takes
         place.

(11)     Unless otherwise expressly stated all payments to be made under this
         agreement shall be made in sterling to the party to be paid as follows:

         (a)      to the Seller in immediately available funds to the account of
                  InterX at:

                  bank:                     National Westminster Bank plc
                                            Berkeley Square Branch
                                            PO Box 2153
                                            1-4 Berkeley Square House
                                            Berkeley Square
                                            London  W1A 15N

                  sort code:                60-02-20
                  account number:           50329855

                  or such other account as the Seller may specify; and

         (b)      to the Purchaser in immediately available funds to the account
                  of the Purchaser at:

                  bank:                     California Bank & Trust
                                            465 California Street
                                            San Francisco
                                            CA 94104
                                            USA

                  sort code:                12100 2042

                                       24
<PAGE>

                  account number:           01700039970

                  or such other account as the Purchaser may specify.

(12)     It is agreed that the Purchaser shall be entitled but not obliged at
         any time or times to set-off an Agreed Claim against any liability of
         the Purchaser to the Seller (in either case howsoever arising and
         whether any such liabilities is present or future liquidated or
         unliquidated and irrespective of the currency of its denomination). Any
         exercise by the Purchaser of its rights under this clause shall be
         without prejudice to any other rights or remedies available to the
         Purchaser under this agreement or otherwise.

(13)     If the whole of the undertaking (but not part only) of the Company is
         assigned by the Company after Completion to the Purchaser or any
         wholly-owned subsidiary of the Purchaser either:-

         (a)      the benefit of each of the obligations, warranties,
                  indemnities and undertakings given by the Seller in this
                  agreement or the Tax Deed may be assigned to such a transferee
                  of the undertaking who may enforce them as if it had been
                  named in this agreement as the Purchaser provided that if such
                  assignee shall cease to be a wholly owned subsidiary of the
                  Purchaser, the benefit of the obligations, warranties,
                  indemnities and undertakings shall be reassigned to another
                  wholly owned subsidiary of the Purchaser or the Purchaser
                  itself. If such assignee does not so reassign the benefit of
                  the obligations, warranties, indemnities and undertakings, the
                  Seller shall be released from any further liability in respect
                  thereof from the date on which such assignee ceases to be
                  wholly owned by the Purchaser until such time as a
                  reassignment as envisaged by this clause takes place; or

         (b)      (at the option of the Purchaser) any cost, expense or loss of
                  such assignee which results from a breach by the Seller of any
                  of the obligations, warranties, indemnities or undertakings
                  given by the Seller in this agreement or the Tax Deed and
                  which would have entitled the Purchaser to bring a claim
                  against the Seller either for breach of contract or under an
                  indemnity (so long as it remains a wholly-owned subsidiary of
                  the Purchaser) shall for the purpose of this agreement be
                  deemed to be a cost, expense or loss of the Company or the
                  Purchaser and the Seller shall, on the terms of this
                  agreement, be liable accordingly.

(14)     Each of the parties hereto hereby undertake they (and any nominee for
         them) will execute such deeds, sign such documents, attend such
         meetings, exercise such votes, pass such resolutions, waive such rights
         (under the Memorandum or Articles of Association of any company or
         otherwise and including rights of pre-emption), give and/or obtain such
         consents and generally do and procure all things as may be necessary or
         convenient for the implementation and completion of this agreement
         according to its terms and conditions.

(15)     The Seller shall from time to time after Completion give to the Company
         and/or the Purchaser on written request all information in their
         possession which relates exclusively to the business, dealings,
         transactions or affairs of the Company.

(16)     InterX agrees with the Purchaser and undertakes that any subsequent
         liquidation of the Seller will be carried out such that the provisions
         of section 216 of the Insolvency Act 1986 do not apply.

                                       25
<PAGE>

(17)     InterX and the Seller, to the extent that they have any equitable
         interest in the Properties, hereby confirm and consent to the grant of
         the Leases and the Options to the Purchaser and to the sale of the
         Properties to the Purchaser or the Purchaser's successor in title and
         undertake that they will release such equitable interests in the event
         that the Options are exercised and InterX and the Seller further agree
         and undertake to the Purchaser and any successor in title to the
         Purchaser that they will enter into such further consents, releases or
         assignments in respect of any such equitable interests as the Purchaser
         or the Purchaser's successors in title may reasonably require. For the
         purposes of the Contracts (Rights of Third Parties) Act 1999 it is
         expressly agreed that the provisions of this clause are for the benefit
         of and enforceable by the successor in title of the Purchaser and for
         the avoidance of doubt the provisions of this clause shall remain in
         full force and effect notwithstanding completion of this agreement,
         completion of the Leases and completion of the sales of the Properties
         pursuant to the Options.

22.      Governing Law and Jurisdiction

(1)      This agreement is governed by, and shall be construed in accordance
         with the laws of England.

(2)      The Purchaser submits to the exclusive jurisdiction of the English
         courts for all purposes relating to this agreement and irrevocably
         appoints the Purchaser's Solicitors as its agent for service of
         process.

23.      Rights of Third Parties

(1)      Each Group Company may enforce the terms of clauses 6, 8, 15 and 21(17)
         of this agreement subject to the provision of the Contracts (Rights of
         Third Parties) Act 1999.

(2)      Except as provided in subclause (1) above a person who is not a party
         to this agreement has no right under the Contracts (Rights of Third
         Parties) Act 1999 to enforce any term of this agreement but this does
         not affect any right or remedy of a third party which exists or is
         available apart from the Contracts (Rights of Third Parties) Act 1999.

24.      Guarantee

(1)      In consideration of the Purchaser entering into this agreement at the
         request of InterX (as InterX hereby acknowledges) InterX irrevocably
         and unconditionally:

         (a)      guarantees to the Purchaser prompt performance by the Seller
                  of all its obligations under or in connection with the
                  Hivedown Agreement, this agreement and any documents referred
                  to in it as being in the Agreed Form and of payment on the due
                  date of all sums payable now or in the future to the Purchaser
                  by the Seller under or in connection with the Hivedown
                  Agreement, this agreement or any documents referred to in it
                  as being in the Agreed Form as and when the same shall become
                  due;

         (b)      undertakes with the Purchaser that, if and whenever the Seller
                  shall be in default in the payment of any sum whatsoever under
                  or in connection with the Hivedown Agreement, this agreement
                  or any documents referred to in it InterX will pay such sum on
                  demand;

                                       26
<PAGE>

         (c)      undertakes with the Purchaser that, if and whenever the Seller
                  shall be in default in the performance of any of its
                  obligations whatsoever under or in connection with the
                  Hivedown Agreement, this agreement or any documents referred
                  to in it, InterX will, so far as it is able to, perform such
                  obligation on demand;

         (d)      agrees that if any sums hereby secured are not recoverable on
                  the basis of a guarantee, then InterX will, as a separate and
                  independent stipulation and as a primary obligor, pay to the
                  Purchaser on demand an amount or amounts equal to the amount
                  or amounts which InterX would have been liable to pay but for
                  such irrevocability and will on demand indemnify the Purchaser
                  against any loss or liability suffered or incurred by the
                  Purchaser as a result of such irrevocability.

(2)      All payments to be made by InterX hereunder will be made by not later
         than noon (London time) on the date 5 business days following the due
         date in pounds sterling in same day cleared funds into the account of
         the Purchaser specified in clause 19 or such other account as the
         Purchaser may from time to time notify to InterX.

(3)      (a)      Payments will be made free and clear of and without
                  deduction for or on account of any present or future tax
                  unless InterX is required by law to make any such payment
                  subject to any tax.

         (b)      In the event that InterX is required by any law to make any
                  deduction or withholding on account of any tax from any
                  payment due hereunder, then such payment will be increased by
                  such amount as may be necessary to ensure that the Purchaser
                  received a net amount, free and clear of all taxes equal to
                  the full amount which the Purchaser would have received had
                  such payment not been subject to such taxes and InterX will
                  indemnify the Purchaser against any liability of the Purchaser
                  in respect of such taxes and will remit promptly the amount of
                  such taxes to the appropriate taxation authority and in any
                  event prior to the date on which penalties attach.

(4)      The security constituted by this Guarantee will be in addition to and
         not in substitution for any other rights which the Purchaser may now or
         hereafter have under or by virtue of any guarantee or security or
         agreement or any lien or operation of law or under any collateral or
         other security now or hereafter held by the Purchaser or to which the
         Purchaser may be entitled and this Guarantee will be held by the
         Purchaser as a continuing security, will not be satisfied by any
         intermediate payment or satisfaction of any part of the obligations
         hereby guaranteed and will remain in force until all obligations of the
         Seller hereunder have been unconditionally and irrevocably paid and
         satisfied in full.

(5)      The Purchaser will not be bound to enforce any other security before
         enforcing its rights under this Guarantee and no delay or omission on
         the part of the Purchaser in exercising any right under this Guarantee
         will impair such right or be construed as a waiver thereof nor will any
         single or partial exercise of any such right preclude any further
         exercise thereof.

(6)      The rights provided in this Guarantee are cumulative and not exclusive
         of any rights provided by law and may be exercised from time to time as
         often as the Purchaser may deem expedient.

(7)      Any settlement or discharge under this Guarantee between the Purchaser
         and InterX will be conditional upon no security or payment to the

                                       27
<PAGE>

         Purchaser by InterX or any other person being avoided or satisfied or
         ordered to be refunded or reduced by any provision or enactment
         relating to bankruptcy, insolvency, administration or liquidation for
         the time being in force, and if such condition is not satisfied, the
         Purchaser will be entitled to recover from InterX on demand the value
         of such security or the amount of any such payment as if such
         settlement or discharge had not occurred.

(8)      The rights of the Purchaser under this Guarantee and security hereby
         constituted will not be affected by any omission, matter or thing which
         apart from this provision might operate to impair affect or discharge
         such rights and security, in whole or in part and whether or not known
         to or discoverable by InterX, the Purchaser or any other person.

(9)      Until all obligations of the Seller have been unconditionally and
         irrevocably paid in full to the reasonable satisfaction of the
         Purchaser, the Purchaser may at any time keep in a separate account for
         as long as it may think fit any monies received, recovered or realised
         under this Guarantee without being under any intermediate obligation to
         apply the same or any part thereof towards discharge of such amount
         provided that any payment by InterX to the Purchaser under the terms of
         this Guarantee shall discharge the liability of the Seller to make such
         payment.

25.      Access to Books and Records; Cooperation with Purchaser

         After Completion, InterX and the Seller shall, upon the reasonable
         request of the Purchaser and at the Purchaser's cost provide, and
         procure that its auditors provide, to the Purchaser, during normal
         business hours upon reasonable notice, reasonable access to and the
         right to make copies of all files, books, work papers, records,
         documents and other information, including financial accounting
         information (to the extent such items are in InterX or the Seller's
         possession or accessible to them) relating to the Seller as necessary
         for the Purchaser to comply with financial reporting and/or securities
         regulation requirements relating to the historical operations and
         finances of the Seller and/or in connection with the calculation of the
         Exit Charge or the preparation of the Draft Completion Accounts. InterX
         and the Seller shall retain files, books, work papers, records and
         documents relating to the Seller (to the extent not transferred to the
         Purchaser at Completion) for at least seven years after Completion.

AS WITNESS this agreement has been executed as a deed by each of InterX and the
Seller and by the hands of the duly authorised representatives of the Purchaser
the day and year first before written.

                                       28

<PAGE>

                                   SCHEDULE 1

                             (Particulars of Newco)

Registered number:        3969946

Registered office:        Fountain Court, Cox Lane, Chessington, Surrey, KT9 1SJ

Date and place of         11th April, 2000, England
Incorporation:

Directors:                Ian Michael French
                          Stephen Roy Lundy
                          Gordon Milner
                          Alexander Charles Heathcote Tatham
                          Mark Walker
                          Seamus Twohig
                          *Simon James Victor Miesegaes

Secretary:                Nicholas James Lee

Accounting reference      30th April
date:

Authorised capital:       1,000,000 ordinary shares of(pound)1 each

Issued capital:           1,000,000 ordinary shares

Shareholders:             The Seller: 1,000,000 ordinary shares

                                       29

<PAGE>

                                   SCHEDULE 2

                         Particulars of the Subsidiaries

Subsidiary's name:           Ideal Hardware (Europe) Limited (previously
                             called BrandIT Limited)

Registered number:           3711148

Registered office:           Fountain Court, Cox Lane,
                             Chessington, Surrey, KT9 1SJ

Date and place of            10th February, 1999, England
Incorporation:

Directors:                   Ian Michael French
                             Stephen Roy Lundy
                             Seamus Twohig
                             Gordon Milner

Secretary:                   Nicholas Lee

Accounting reference         31st July
date:

Auditors:                    Arthur Andersen

Authorised capital:          100 ordinary shares of(pound)1 each

Issued capital:              2 ordinary shares

Shareholders:                Ideal Hardware Limited

                                       30

<PAGE>

Subsidiary's name:              Logical Online Limited

Registered number:              3803158

Registered office:              Fountain Court, Cox Lane,
                                Chessington, Surrey KT9 1SJ

Date and place of               8th July, 1999, United Kingdom
Incorporation:

Directors:                      Nicholas James Lee
                                Alex Charles Heathcote Tatham
                                Stephen Roy Lundy

Secretary:                      Nicholas James Lee

Accounting reference            31st July
date:

Auditors:                       Arthur Andersen

Authorised capital:             (pound)10,000 ordinary shares of(pound)1 each

Issued capital:                 1 share

Shareholder:                    Ideal Hardware Limited

                                       31

<PAGE>

Subsidiary's name:                    Ideal Financial Services Limited

Registered number:                    3942210

Registered office:                    Cox Lane, Chessington
                                      Surrey, KT9, 1TJ

Date and place of                     8th March, 2000, United Kingdom
Incorporation:

Directors:                            Ian Michael French
                                      Stephen Roy Lundy
                                      Alexander Charles Heathcote Tatham

Secretary:                            Nicholas James Lee

Accounting reference                  31st March
date:

Auditors:                             Arthur Andersen

Authorised capital:                   100 ordinary shares of(pound)1 each

Issued capital:                       1 share

Shareholder:                          Ideal Hardware Limited

                                       32

<PAGE>

                                   SCHEDULE 3

                                  (Warranties)

A.       GENERAL

1.       Recitals and Schedules

         The particulars relating to the Group Companies set out in the recitals
         and Schedules 1 and 2 to this agreement are accurate.

2.       Due Incorporation and Capacity

         Each of InterX and the Seller is a corporation validly existing under
         the laws of England with the requisite power and authority to enter
         into and perform, and has taken all necessary corporate action to
         authorise the execution and performance of, its obligations under this
         agreement and the Tax Deed.

3.       Valid Obligations

         This agreement and the Tax Deed constitute valid and binding
         obligations of InterX and the Seller.

4.       Filings and Consents

         Other than as required by this agreement, no notices, reports or
         filings are required to be made by InterX or the Seller in connection
         with the transactions contemplated by this agreement nor are any
         consents, approvals, registrations, authorisations or permits required
         to be obtained by InterX or the Seller in connection with the execution
         and performance of this agreement the failure to make or obtain any of
         which:

         (a)      would prevent or delay completion of this agreement; or

         (b)      would subject the Purchaser or the Group Companies to any
                  material liability.

5.       Incorporation

         The Group Companies are corporations validly existing under the laws of
         England with the requisite power and authority to conduct their
         businesses as presently conducted.

6.       InterX's other interests

         Neither InterX nor any member of the Seller's Group has any material
         interest in any business which is competitive or likely to be
         competitive with the business of any of the Group Companies as
         conducted at the date hereof.

7.       Ownership of the Shares

(1)      The shares described in Schedule 1 constitute the whole of the issued
         and allotted share capital of the Company.

                                       33

<PAGE>

(2)      The shares described in Schedule 2 constitute the whole of the issued
         and allotted share capital of the Subsidiaries.

(3)      There is no option, right to acquire, mortgage, charge, pledge, lien or
         other form of security or encumbrance on, over or affecting any of the
         Shares and there is no agreement or commitment to give or create any of
         the foregoing.

(4)      The Seller is entitled to transfer or procure the transfer of the full
         legal and beneficial ownership in the Shares to the Purchaser on the
         terms set out in this agreement.

8.       Subsidiaries and associates

         No Group Company is the holder or beneficial owner of or has agreed to
         acquire any shares of any other corporation other than the
         Subsidiaries.

9.       Assets

(1)      Particulars of each fixed asset with a value in excess of (pound)20,000
         acquired or agreed to be acquired by each of the Group Companies since
         the Accounts Date are set out in the Disclosure Letter.

(2)      Except for assets offered for sale or sold in the ordinary course of
         business, no Group Company has since the Accounts Date disposed or
         agreed to dispose of any of the assets included in the Accounts or any
         asset acquired or agreed to be acquired since the Accounts Date, in
         each case with a book value in excess of (pound)20,000.

(3)      Save for the bare licence in favour of the Company in relation to the
         Properties no Group Company has on the date of this agreement any
         interest in any real property (freehold or leasehold) whatsoever or
         wheresoever situate and has no liability (contingent or otherwise) in
         respect of any premises formerly owned or occupied by any Group
         Company.

10.      Licences

(1)      Each Group Company has obtained all material licences, permissions,
         authorisations and consents required for the carrying on of the
         businesses now carried on by it in the place and in the manner in which
         such business is now carried on and there are no factors which might in
         any way prejudice the continuance or renewal of any of those licences,
         permissions, authorisations or consents.

(2)      Neither the Seller nor any Group Company has received notice that any
         Group Company is in default under any material licence, permission,
         authorisation or consent.

11.      Insider Contracts

         There are no subsisting material contracts to which a Group Company is
         a party and in which any member of the Seller's Group has a material
         interest (other than, in the case of the Seller, its interest in the
         Shares).

                                       34
<PAGE>

12.      Litigation

         Except as claimant in the collection of debts arising in the ordinary
         course of business, no Group Company is a plaintiff or defendant in or
         otherwise a party to any litigation, arbitration or administrative
         proceedings which are in progress nor, so far as the Seller is aware,
         have such proceedings been expressly threatened by or against any Group
         Company or any of their assets in each case where those proceedings
         would have a material adverse effect on the Group Companies' financial
         position.

13.      Liquidation

(1)      No administrator, receiver or administrative receiver has been
         appointed in respect of the whole or any part of the assets or
         undertaking of a Group Company.

(2)      So far as the Seller is aware, no petition has been presented, no order
         has been made for the winding-up of a Group Company.

(3)      No resolution has been passed for the winding-up of a Group Company.

14.      Consequences of sale

         The sale of the Shares to the Purchaser will not:

         (a)      result in the breach of or constitute a default under any of
                  the terms or provisions of the memorandum or articles of
                  association of any of the Group Companies; or

         (b)      result in the creation or imposition of any lien, charge or
                  encumbrance of any nature on any of the property or assets of
                  the Group Companies.

15.      Accounts and Management Accounts

(1)      The Accounts were prepared in accordance with applicable law and
         generally accepted accounting principles and give a true and fair view
         of the state of affairs of the Company and the Property Companies (as
         appropriate) as at the Accounts Date and of the results of the Company
         and the Property Companies (as appropriate) for the financial period
         ended on the Accounts Date.

(2)      The unaudited management accounts of the Business for the month ended
         2nd June, 2000 (a copy of which is attached to the Disclosure Letter)
         fairly present the income and expenditure of the Business for that
         period.

16.      Records

         Save in the ordinary course of business all material records and
         information belonging to the Group Companies (whether or not held in
         written form) are in their exclusive possession, under their control
         and all such records and information are in all material respects
         up-to-date and accessible by them.

                                       35
<PAGE>

17.      Borrowings

(1)      The total amount borrowed by each Group Company from its bankers does
         not exceed(pound)24,000,000 (or if lower its overdraft and other
         financial facilities).

(2)      No Group Company has outstanding loan capital or money borrowed or
         raised (other than under its bank and overdraft facilities or normal
         trade credit).

18.      Loans

         No Group Company has lent any money which is due to be repaid and, as
         at the date of this agreement, has not been repaid to it and it does
         not own the benefit of any debt other than debts accrued to it in the
         ordinary course of its business.

19.      Indebtedness

         No Group Company has received any notice to repay under any agreement
         relating to any borrowing (or indebtedness in the nature of borrowing)
         which is repayable on demand; and no Group Company has received notice
         that there has occurred any event of default under any agreement
         relating to any other borrowing or indebtedness in the nature of
         borrowing or other credit facility of that Group Company.

20.      Bank accounts

         No Group Company has bank or deposit accounts other than those listed
         in the Disclosure Letter.

21.      Existing suppliers and customers

         Since the Accounts Date:

         (a)      no material supplier of any Group Company has ceased or has
                  notified that it will cease supplying, or materially reduce
                  supplies to, any Group Company; and

         (b)      no material customer of any Group Company has terminated or
                  has notified that it will terminate or materially reduce its
                  business with any Group Company.

22.      Material commitments and liabilities

(1)      No Group Company is a party to any material contract (other than the
         Hivedown Agreement) which:

         (a)      was entered into otherwise than in the ordinary course of
                  trading; or

         (b)      is of a long-term nature (that is to say, incapable of
                  performance in accordance with its terms within twelve months
                  after the date on which it was entered into or undertaken); or

         (c)      is of a loss-making nature (that is to say, known to be likely
                  to result in a loss on completion or performance); or

                                       36
<PAGE>

         (d)      involves the supply of goods the aggregate sales value of
                  which will represent in excess of five per cent. of the
                  turnover of the Group Companies for the current financial
                  year.

(2)      No Group Company has outstanding (save as disclosed in the Accounts):

         (a)      any material agreement or arrangement with any members of the
                  Seller's Group otherwise than by way of bargain at arm's
                  length;

         (b)      any mortgage, charge, lien or pledge or any obligation to
                  create a mortgage, charge, lien or pledge to secure any
                  material obligation of, or the performance of, a material
                  obligation by any member of the Seller's Group or any other
                  company, firm or undertaking.

(3)      Neither the Seller nor any Group Company has received notice that they
         are in default under any agreement, mortgage, charge, lien or pledge
         which is material to the financial condition of the Group Companies.

23.      Joint ventures, agencies, etc.

(1)      Other than as set out in the Disclosure Letter, no Group Company is or
         has agreed to become a member of any partnership or other
         unincorporated association, joint venture or consortium (other than
         recognised trade associations).

(2)      No Group Company is a party to any agreement which is material in
         relation to its business and which in any way restricts its freedom to
         carry on the whole or any material part of its business as it does at
         present.

24.      Secret or confidential information

         So far as the Seller is aware, no Group Company has (except in the
         ordinary course of business, or to its professional advisers, or to the
         Seller, or as required by law or any regulatory authority or subject to
         a confidentiality undertaking) disclosed to any person other than the
         Purchaser (and its professional advisers) any Confidential Information,
         Technical Information, Proprietary Information or any other secret or
         confidential information relating to its business.

25.      Intellectual Property and Style and Places of Business

(1)      No Group Company currently uses on its letterheads, circulars,
         advertisements or vehicles any name other than its corporate name.

(2)      All material licences, rights or similar arrangements granted to each
         Group Company at the date of this agreement in respect of any
         Intellectual Property are valid and subsisting and no Group Company is
         in material breach of any of the provisions thereof and no Group
         Company has received notice of any material dispute in relation thereto
         and no material dispute is reasonably foreseeable with respect to them.

                                       37
<PAGE>

(3)      (a)      The Group Companies are, between them, the sole legal and
                  beneficial owners of the registered Intellectual Property
                  identified in Schedule 4 (the "Scheduled Intellectual
                  Property"). No person has been authorised to use any Scheduled
                  Intellectual Property owned by any Group Company. No Group
                  Company has disclosed (except in the normal, usual and
                  ordinary course of its business or subject to a duty of
                  confidentiality) any of its Confidential Information,
                  Technical Information, Proprietary Information or any other
                  know how, trade secrets or lists of customers to any other
                  person.

         (b)      So far as the Sellers are aware all of the Intellectual
                  Property used by a Group Company at the date of this agreement
                  is owned by it or licensed to it .

         (c)      So far as the Sellers are aware none of the processes,
                  products or services or activities of any Group Company
                  infringes any material right of any other person relating to
                  Intellectual Property or involves the unlicensed use of
                  confidential information disclosed to any Group Company by any
                  person in circumstances which would entitle that person to
                  claim against any Group Company and so far as the Seller is
                  aware none of the Intellectual Property used or required to be
                  used by any Group Company in carrying its business is being
                  used, claimed, opposed or attacked by any person.

         (d)      The Seller is not aware of any infringement by any third party
                  of any Scheduled Intellectual Property owned by any Group
                  Company.

         (e)      There are no outstanding written claims against any Group
                  Company for infringement of any Scheduled Intellectual
                  Property used (or which has been used) by any Group Company
                  and no such claims have been settled by the giving of any
                  undertakings which remain in force.

         (f)      Confidential Information and know how used by any Group
                  Company are kept confidential and each Group Company operates
                  and complies with procedures which maintain such
                  confidentiality. Such confidentiality has not been breached in
                  any material respect.

         (g)      All application and renewal fees, costs and charges relating
                  to the Scheduled Intellectual Property in carrying on its
                  business have been duly paid on time.

         (h)      Copies of all material agreements relating to Scheduled
                  Intellectual Property to which the Company is a party have
                  been supplied to the Purchaser and each of them is in force.

(4)      The Intellectual Property owned by each Group Company is not subject to
         any Security Interest.

(5)      So far as the Sellers are aware none of the material Intellectual
         Property owned by any Group Company is subject to any claims from
         employees, consultants, agents or others.

(6)      There have been no actions, claims, counterclaims or allegations
         impugning the validity or enforceability of any Scheduled Intellectual
         Property owned (for whether interest) by any Group Company or any Group
         Company's ownership thereof and so far as the Seller is aware there are

                                       38
<PAGE>

         no facts, matters or circumstances which are reasonably likely to give
         rise to any such action, claim, counterclaim or allegation.

(7)      No Group Company has in the past 12 months received a written claim
         alleging that the Scheduled Intellectual Property is invalid.

(8)      No Group Company has at any time (save in the normal, usual and
         ordinary course of its business or to its professional advisers or
         subject to a duty of confidentiality) disclosed (or undertaken or
         arranged to disclose or permitted to be disclosed) to any person other
         than the Purchaser any Confidential Information or any of its secret
         information or property (including, without limitation, secrets,
         processes, know-how financial and technical information, designs,
         drawings, plans, models, prototypes, statistics, lists of customers or
         suppliers documents, files, records and papers) or any other
         information relating to its business or affairs the disclosure of which
         would cause loss or damage to or adversely affect any Group Company or
         any other information relating to its manufacturers, suppliers,
         customers, clients and agents or to any other person who has or has had
         any dealings with it.

26.      Memorandum & Articles of Association

(1)      The copy of the Memorandum and Articles of Association of each of the
         Company and the Subsidiaries which has been produced to the Purchaser's
         Solicitors (together with all material required to be embodied in or
         annexed thereto by section 380 of the Companies Act) is accurate and
         complete in all material respects as at the date of this agreement and
         fully sets out all rights attaching to each class of the share capital
         of the Company and the Subsidiaries.

(2)      No dividends or other distributions or profits have been declared, made
         or paid since the Accounts Date.

27.      Compliance with Laws

(1)      No Group Company has committed any criminal, illegal or unlawful act or
         default or any breach of any rules or regulations of any professional
         body relevant to its business or affairs or the activities of its
         employees and no officer or employee of any Group Company has committed
         any criminal, illegal or unlawful act or default (other than minor
         traffic offences) or breach of trust in connection with the business or
         affairs of any Group Company or any breach of any rules or regulations
         of any professional body relevant to any Group Company's business or
         affairs or the activities of its employees.

(2)      None of the activities or contracts or rights of any Group Company is
         ultra vires, unauthorised, invalid or unenforceable or in breach of any
         contract or covenant.

(3)      So far as the Seller is aware no event has occurred which would entitle
         any third party to terminate any contract or any benefit enjoyed by any
         Group Company or call in any money before the normal due date therefor
         and there are no circumstances likely to give rise to such an act or
         event.

(4)      The Company does not carry on, nor does it purport to carry on, nor has
         it at any time since 28th April, 1988 carried on, or purported to carry
         on, investment business in the United Kingdom within the meaning of
         section 3 of the Financial Services Act 1986 nor has it contravened any
         provision of the said Act.

                                       39
<PAGE>

28.      Insolvency

(1)      No Group Company has stopped payment or is unable to pay its debts
         within the meaning of s.123 of the Insolvency Act 1986.

(2)      No Group Company is insolvent either on the basis that it is unable to
         pay its debts as and when they fall due or upon the basis of a
         deficiency of assets over liabilities taking into account any
         contingent or prospective liabilities.

(3)      No receiver or manager (whether an administrative receiver or
         otherwise) has been appointed by any person or court over the business
         or assets of any Group Company or any part thereof.

(4)      No petition has been presented to the court for the appointment of an
         administrator to any Group Company and no Group Company nor its
         directors have any intention to present such a petition nor has any
         order been made for the appointment of such an administrator.

(5)      No Group Company has made nor does it intend to make any proposal to
         its creditors for a composition in satisfaction of its debts or a
         scheme of arrangement.

(6)      There is no unfulfilled or unsatisfied judgment or court order
         outstanding against any Group Company and there has been no delay by
         any Group Company in the payment or discharge of any obligation or
         liability when due.

(7)      No distress, execution or other analogous process has been levied on
         any of the assets of any Group Company.

29.      Business Since Incorporation

(1)      Since its incorporation the Company has carried on only the Business
         and has not at any time during such period ceased to carry on such
         business or changed its business or carried on any new or other
         business and save for liabilities incurred in the ordinary course of
         business and which are reflected in the 2nd June, 2000 management
         accounts has no obligations or liabilities whatsoever other than those
         acquired by it pursuant to the Hivedown Agreement or this agreement.

(2)      The assets acquired by the Company pursuant to the Hivedown Agreement
         are (other than the fixed assets and stock) adequate and suitable for
         the Company to conduct the Business as at the date of this agreement.

30.      Effects of this agreement

         Neither the exchange of nor the performance of nor compliance with this
         agreement or any of the documents referred to in it or Completion will:

         (a)      conflict with or result in the breach of or constitute a
                  default under any of the terms, conditions or provisions any
                  arrangement, contracts, transactions to which any Group
                  Company is a party;

         (b)      relieve any other party to a contract, agreement, arrangement
                  or instrument with any Group Company of its obligations

                                       40
<PAGE>

                  thereunder or enable it to terminate its obligations under
                  such contract, agreement, arrangement or instrument or to
                  exercise any option or right against any Group Company or any
                  asset of any Group Company; or

         (c)      result in the creation or imposition of any Security Interest
                  on any of the assets of any Group Company other than any
                  Security Interest required by the Purchaser's lender.

31.      Government and Other Grants

         As a result of Completion no Group Company is subject to any
         arrangement for receipt or repayment of any allowance, redundancy
         payment contribution, grant, subsidy or financial assistance from any
         government department, local authority, agency, board or other body
         whatsoever or is under any obligation, contingent or otherwise, to
         return, repay, allow to be forfeited, withheld or set-off the whole or
         any part of the same.

32.      Insurance

(1)      All the assets and liabilities of each Group Company of an insurable
         nature (including but not limited to the stock-in-trade, the real
         property, product liability and consequential loss of profits covering
         a period of not less than six months) are and have at all material
         times been insured against all risks as would in the circumstances be
         prudent in amounts representing the full replacement or reinstatement
         value thereof or the full amount of any liability and all such
         insurance is currently in full force and effect.

(2)      So far as the Seller is aware nothing has been done or omitted to be
         done which has made or could make any policy of insurance void or
         voidable and all conditions attached thereto have been and are being
         complied with and so far as the Seller is aware there are no insurance
         claims outstanding, pending or threatened and no circumstances which
         are likely to give rise to any claim under any of such insurance.

33.      Terms of Business and Trade

(1)      No party with whom any Group Company has entered into any contract,
         arrangement or understanding is in material default thereunder and so
         far as the Seller is aware there are no circumstances likely to give
         rise to such a default.

(2)      Each Group Company has observed and performed in all material respects
         so far as the Seller is aware the terms and conditions on its part to
         be observed and performed under any trading contracts.

34.      Warranties of Goods and/or Services

         There are no outstanding claims (other than claims for payment under
         outstanding invoices or warranties) against any Group Company on the
         part of customers or suppliers which exceed (pound)5,000 nor have any
         such claims been settled or paid since the Accounts Date in respect of
         defects in quality of or delays in delivery or completion of contracts
         or deficiencies of design or performance of equipment or otherwise
         relating to liability for goods or services supplied by any Group
         Company so far as the Seller is aware and no such claims are threatened
         or anticipated and so far as the Seller is aware there is no matter or
         fact in existence in relation to goods or services supplied before the
         date of this agreement which is likely to give rise to the same.

                                       41
<PAGE>

35.      Ownership of Assets

         As at the Accounts Date all the assets included in the Accounts were
         owned by the Seller or Subsidiaries and particulars of all fixed assets
         acquired or agreed to be acquired by the Seller or any Group Company
         since the Accounts Date are set out in the Disclosure Letter.

36.      Sureties

(1)      No person has given or promised any guarantee or indemnity of or
         security for any overdraft, loan or loan facility granted or to be
         granted to any Group Company or of any obligation owed or to be owed by
         any Group Company.

(2)      Other than in the ordinary course of business, no Group Company has
         given or promised any guarantee or indemnity of any of the obligations
         of any third party except to members of the Seller's Group.

37.      Powers of Attorney, Authorisation, Agencies

(1)      Other than in the ordinary course of business, no Group Company has
         given any power of attorney or any other authority (express, implied or
         ostensible) which is still outstanding or effective to any person to
         enter into any contract or commitment or do anything on its behalf
         (other than any authority of employees to enter into routine trading
         contracts in the ordinary course of their duties) except to members of
         the Seller's Group.

(2)      Other than in the ordinary course of business, no Group Company has
         appointed any agents or distributors or managers in respect of any of
         its assets, liabilities, products or services whether within or outside
         the United Kingdom except to members of the Seller's Group.

38.      Employment

(1)      The Disclosure Letter contains:

         (a)      details of all employees of the Group Companies and their
                  material terms of employment, including (without limitation)
                  their names, dates of birth, date of commencement of
                  employment, job title, current salary, profit sharing,
                  commission, discretionary bonus arrangements and all other
                  financial benefits;

         (b)      particulars of any person who has accepted an offer of
                  employment made by any Group Company but whose employment has
                  not yet started and of any outstanding offer of employment
                  made to any person by any Group Company; and

         (c)      particulars of any agreement for the provision of consultancy
                  services or the services of personnel to any Group Company and
                  of the terms applicable to the secondment to any Group Company
                  of any person.

(2)      Since the Accounts Date there has been no promise, or agreement for any
         change in the terms of employment or any increase in the emoluments
         payable to any director or employee of any Group Company and no
         director or employee has given notice, or is under notice of dismissal,
         and no amounts are due to or in respect of any former director or

                                       42
<PAGE>

         employee and no amounts which should have been paid to any director, or
         employee of any Group Company are in arrears or unpaid.

(3)      No amount is owing by any of the directors of any Group Company to any
         Group Company.

(4)      No Group Company has any current but unsatisfied liability to pay
         compensation for loss of office or employment or a redundancy payment
         to any present or former employee or to make any compensation payment
         under any provision of the Employment Acts and no such sums have been
         paid (whether pursuant to a legal obligation or ex gratia) since the
         date of incorporation of the relevant Group Company and so far as the
         Seller is aware there are no existing circumstances which will give
         rise to any such liability.

(5)      No Group Company has any outstanding loan or advance to any employee.

(6)      Each of the Group Companies have in relation to each of its employees
         (and so far as it is relevant, to each of its former employees)
         complied in all material respects with all relevant obligations imposed
         by the Employment Acts.

(7)      None of the Employees is involved in any industrial action and the
         Seller is not aware of any circumstances which may result in any
         industrial action involving any Employees.

(8)      No Group Company has entered into any recognition agreement with a
         trade union nor has it received any request for recognition.

39.      Pension Schemes

(1)      Other than the Ideal Hardware Limited No 2 Executive Pension Scheme and
         the group personal pension plan (the "Pension Schemes"), all material
         details of which are contained in the Disclosure Letter, no Group
         Company is a party to or has any liability under any retirement
         benefit, pension or life assurance scheme or arrangement or fund
         relating to any of its directors or ex-directors, officers or
         ex-officers, employees or ex-employees nor is it under any legal
         obligation to provide any retirement benefit, pension or life assurance
         scheme or arrangement or fund for any person nor has it regularly
         conferred any benefit or made any payment to any ex-director,
         ex-officer or ex-employee or person connected therewith. No ex gratia
         payments have been or are proposed or intended to be made by any Group
         Company to any employees, former employees, director or former director
         or to any person connected therewith.

(2)      In relation to the Pension Schemes:

         (a)      there is disclosed the basis on which Newco makes, or is
                  liable to make, contributions to it;

         (b)      all contributions which are payable by Newco in respect of it
                  and all contributions due from employees have been duly made
                  and Newco has fulfilled all its obligations under it;

         (c)      no discretion has been exercised to provide in respect of a
                  member a benefit which would not otherwise be provided;

                                       43
<PAGE>

         (d)      it provides only money purchase benefits (as defined in
                  section 181 Pension Schemes Act 1993);

         (e)      it is an exempt approved scheme and/or group personal pension
                  scheme approved, or capable of being approved, under the Taxes
                  Act; and

         (f) all consultancy, legal and other expenses have been paid to date.

(3)      No death, disability or retirement gratuity is currently being paid or
         has been promised by Newco.

(4)      In relation to the Ideal Hardware Limited No 2 Executive Pension
         Scheme, the Seller shall (at the Seller's expense) execute such deeds
         as the Company reasonably requires in order to be substituted as
         Principal Employer and Trustee in place of the Seller subject to the
         agreement of the Inland Revenue (for tax approval purposes).

40.      Security Interests

         There is no Security Interest on, over or affecting all or any part of
         the undertaking or assets of any Group Company and there is no
         agreement, commitment or obligation to create any Security Interest and
         no claim has been made by any person to be entitled to any Security
         Interest other than any lien operating in favour of bankers arising in
         the ordinary course of operating bank accounts and other bank
         facilities.

41.      Material Contracts

         No Group Company is a party to or has either any liability or any right
         or purported right under the Contracts (Rights of Third Parties) Act
         1999 under any deed, mortgage, debenture, instrument, charge,
         guarantee, bond, indemnity, undertaking, lease (whether assigned or
         not), contract (including any agency, distributorship, franchise or
         commission agreement) arrangement, obligation or commitment of any sort
         other than:-

         (a)      contracts for the sale or purchase of trading stock or supply
                  or services in the normal, usual and ordinary course of such
                  Group Company's business (being contracts on terms which are
                  in no way unusual or unreasonably onerous on any Group
                  Company, which will not be likely to result in a loss to any
                  Group Company and which do not give or purport to give any
                  person a right under the Contracts (Rights of Third Parties)
                  Act 1999); and

         (b)      contracts of service with its employees which can be
                  terminated by the relevant Group Company by not more than four
                  weeks' prior notice without compensation (other than
                  compensation payable under any statute).

42.      Restrictive Practices

(1)      No Group Company is or has been concerned directly or indirectly in any
         agreement, arrangement, understanding or practice (whether or not
         legally binding) or any conduct which infringes or has infringed or
         which has or should have been registered or notified under any
         anti-monopoly or anti-trust legislation including the Restrictive Trade
         Practices Act 1976 and 1977, the Resale Prices Act 1976, the Fair

                                       44
<PAGE>

         Trading Act 1973, the Competition Act 1980, Articles 34, Article 81
         (ex-Article 85) or Article 82 (ex-Article 86) of the EC Treaty, or the
         Competition Act 1998.

(2)      The Company in relation to anti-trust or similar matters relating to
         the Business:

         (a)      has not given any undertaking to, nor is subject to, any order
                  of or investigation by, nor has received any request for
                  information from;

         (b)      has not received or is likely to receive any process, notice
                  or communication, formal or informal by or on behalf of;

         (c)      has not been or is a party to, nor is or has been concerned
                  in, any agreement, arrangement, understanding or practice in
                  respect of which an application for negative clearance and/or
                  exemption has been made to

         the Office of Fair Trading, the Competition Commission, the Secretary
         of State for Trade and Industry, the European Commission, or any other
         Governmental or other authority, department, board, body or agency of
         any country having jurisdiction in anti-trust or similar matters.

(3)      Save as required by law or pursuant to the terms of any distribution
         agreement no Group Company is subject to any contracts, obligations,
         practices, agreements or arrangements which restrict any Group
         Company's freedom to carry on the whole or any part of its business in
         any part of the world in such manner as it sees fit.

43.      Computer Systems

(1)      No Group Company has any of its records, Computer Systems or other
         systems, controls, data or information recorded, stored, maintained,
         operated or otherwise dependent upon or held by any means (including
         any electronic, mechanical or photographic process whether computerised
         or not) which (including all means of access thereto and therefrom) are
         not under the exclusive ownership and direct control of a Group
         Company.

(2)      The Computer Systems have been satisfactorily maintained and supported
         and have the benefit of an appropriate maintenance and support
         agreement terminable by the contractor by not less than twelve months'
         notice.

(3)      The Computer Systems have had adequate capability and capacity for the
         requirements of the Company for the processing and other functions
         required to be performed for the purposes of the business of each Group
         Company.

(4)      Disaster recovery plans are in effect and are adequate to ensure that
         the Computer Systems can be replaced or substituted without material
         disruption to the business of any Group Company.

(5)      In the event that any person providing maintenance or support services
         for the Computer Systems ceases or is unable to do so, the Group
         Companies have all necessary rights to obtain the relevant source codes
         and all related technical and other information free of charge and to
         procure the carrying out of such services by employees or by a third
         party.

                                       45
<PAGE>

(6)      The Group Companies have adequate procedures to ensure internal and
         external security of the Computer Systems, including procedures for
         taking and storing on-site and off-site back-up copies of computer
         programs and data.

(7)      None of the Computer Systems will be affected and the performance and
         function of any Computer System and/or related hardware, software or
         communication facilities or other automated process used by the Company
         in connection with its activities or business will not be affected by
         dates prior to, during or after the year 2000 and in particular:

         (a)      none of the Computer Systems is unable to accept without
                  interruption all date inputs, provide without interruption
                  correct date outputs and correctly perform without
                  interruption calculations on dates or portions of dates and
                  otherwise accurately without interruption handle date
                  information before, during and after 1st January, 2000;

         (b)      no value for any date element in any data used as input by the
                  software will cause any interruption in the operation of the
                  software, which will either correctly interpret the date
                  element (where it is a valid date) or else affect and report
                  it as an invalid date and continue processing accordingly; and

         (c)      date-based functionality shall behave consistently for dates
                  prior to, during and after year 2000 and produce correct
                  results in accordance with the software's specifications.

44.      Environmental Liability

         No Group Company has cause any and the Sellers is not aware of any
         events, conditions, circumstances, activities, practices, incidents or
         actions which have given or might give rise to any liability (whether
         in common law or under statute) on the part of any Group Company
         related to Environmental Matters or otherwise form the basis of any
         expenditure, claim, action, suit, hearing, proceedings or investigation
         related to Environmental Matters against or involving any Group
         Company.

45.      Ownership of Fixed Assets

         The Group Companies together own absolutely both legally and
         beneficially free from any Security Interest all the fixed assets
         listed in the Disclosure Letter.

46.      Ownership of Stock

         The Group Companies together own absolutely both legally and
         beneficially free from any Security Interest all the stock listed in
         the Disclosure Letter.

47.      Data Protection Act 1998

(1)      The Company has registered or applied to register itself under the Data
         Protection Act 1998 in respect of all registrable personal data held by
         it, and all due and requisite fees in respect of such registrations
         have been paid.

                                       46
<PAGE>

(2)      The details contained in such registrations or applications are
         correct, proper and suitable for the purpose(s) for which the Company
         holds or uses the personal data which are the subject of them, and the
         contents of all such registrations or applications have been made
         available to the Purchaser.

(3)      All personal data held by the Company has been held in accordance with
         the data protection principles and there has been no unauthorised
         disclosure of such personal data.

(4)      There are no outstanding enforcement, deregistration or transfer
         prohibition notices or any other nature or notice under the Data
         Protection Act 1998 currently outstanding against the Company, nor is
         there any outstanding appeal against such notices. The Sellers are not
         aware of any circumstances which may give rise to the giving of any
         such notices to the Company.

(5)      There are no unsatisfied requests to the Company made by data subjects
         in respect of personal data held by the Company, nor any outstanding
         applications for rectification or erasure of personal data.

(6)      There are no outstanding claims for compensation for inaccuracy, loss
         or unauthorised disclosure of personal data nor is any personal data
         held by the Company inaccurate, nor has the Company lost or made any
         unauthorised disclosure of any such data.

(7)      Without prejudice to the specific provisions above, the Company and its
         employees have complied in all respects with the requirements of the
         Data Protection Act 1998.

48.      Properties

(1)      The Properties are the only freehold and leasehold properties owned,
         controlled or occupied by any Group Company and no Group Company has
         entered into any agreement to acquire or dispose of any land or
         premises or any interest therein which has not been completed.

(2)      There is no Security Interest, option, agreement for sale, right to
         acquire or any overriding interest or rent charge on over or affecting
         all or any part of the Properties and there is no agreement or
         commitment to give or create any of he foregoing and no claim has been
         made by any person to be entitled to any of the foregoing.

(3)      A Group Company is in actual and exclusive occupation of the whole of
         the Properties no lease, tenancy, licence or other right of occupancy
         has been granted or agreed to be granted to any third party in respect
         of the Properties or any part thereof.

(4)      So far as the Seller is aware, there are no legal proceedings issued,
         pending or threatened against any Group Company in any way relating to
         the Properties.

(5)      No Group Company has at any time assigned or otherwise disposed of any
         freehold or leasehold property in such a way that it retains any
         residual liability in respect of any such freehold or leasehold
         property.

(6)      No Group Company holds or owns any real property or interest therein
         situate outside England and Wales.

                                       47
<PAGE>

(7)      The replies to enquiries given by the Seller to the Purchaser in
         respect of Cox House and in respect of Fountain Court are true and
         accurate in all material respects.

(8)      No Group Company has received any notice or complaint issued by the
         local, county or other competent authority or from any third party in
         respect of the Properties or any part of them and have no knowledge of
         any such notice or complaint.

(9)      There are no overriding interests, covenants restrictions or easements
         affecting the Properties which might adversely affect the relevant
         Group Company's ability to continue to carry out its existing business
         from any Property in the same manner as at present and at the same
         cost.

B.       TAXATION

1.       Entering Into/Performance of the Agreement

         So far as the Seller is aware neither the exchange of or performance of
         this agreement nor Completion will render any Group Company liable to
         any, or any additional, Taxation.

2.       Returns and Clearances

(a)      Any return, notification, computation, accounts, information, statement
         or payment which should have been made, submitted or given by any Group
         Company for the purposes of Taxation has been made, submitted or given
         properly, correctly and fully within the requisite period and is not
         the subject of any material dispute nor, so far as the Seller, is aware
         likely to become the subject of any material dispute with any Taxation
         authority.

(b)      Each Group Company has complied in all respect with all statutory
         provisions, rules, regulations, orders and directions relating to Value
         Added Tax and has made timely and accurate returns and maintained full,
         complete, correct and up-to-date records, obtained and, where
         appropriate, retained invoices and other documents requisite for the
         purposes of such legislation and is not in arrears with any payments or
         returns thereunder and has not been required by the Commissioners of
         Customs and Excise to give security.

(c)      All particulars furnished to any Taxation authorities, in connection
         with any application for consent or clearance on behalf of any and each
         Group Company, fully and accurately disclosed all facts and
         circumstances material to the decision of the authorities: any consent
         or clearance was and remains valid and effective; and any transaction,
         for which consent or clearance was obtained, has been carried out (if
         at all) only in accordance with the terms of the relevant application
         and consent or clearance.

(d)      No Taxation authority has operated or agreed to operate any special
         arrangement (being an arrangement which is not based on relevant
         legislation or any published practice) in relation to the affairs of
         any Group Company.

(e)      No Group Company is involved in any arrangement for the payment of
         Corporate tax by instalments.

3.       Penalties

(a)      No Group Company is under a liability to pay any penalty, fine,
         surcharge or interest to any Taxation authority.

                                       48
<PAGE>

(b)      No Group Company has within the last six years been the subject of an
         investigation, audit, non-routine investigation or discovery by or
         involving any Taxation authority and there are no circumstances, so far
         as the Seller is aware, which make it likely that an investigation,
         audit or discovery will take place.

(c)      No Group Company has, within the last two years, been given a penalty
         liability notice within Section 64 VATA 1994 nor a surcharge liability
         notice within Section 59 VATA 1994 nor received a written warning
         within Section 76(2) VATA 1994.

4.       Claims, Elections, Liabilities and Reliefs

(a)      No Group Company has made a claim under any of the following provisions
         of TCGA:

         (i)      Section 24 (disposals where assets are lost or destroyed or
                  become of negligible value);

         (ii)     Section 48 and 280 (consideration due after time of disposal).

(b)      No Group Company is or will become liable to pay, or to reimburse or
         indemnify in respect of, any Taxation in consequence of the failure by
         any other person to discharge that Taxation, where the Taxation relates
         to profit, income or gains earned or arising or deemed to have arisen
         or an Event occurring or deemed to have occurred (whether wholly or
         partly) on or before Completion.

(c)      All Taxation which any Group Company is liable to pay or for which any
         Group Company is liable to account has been duly paid or accounted for
         insofar as such Taxation ought properly to have been paid or accounted
         for.

5.       PAYE National Insurance and Payments under Deduction of Tax

(a)      Each Group Company has properly operated the PAYE system by duly
         deducting from all payments made or treated as made to its employees or
         former employees, including anyone treated as an employee of such Group
         Company by a Taxation authority, Taxation under the PAYE system and has
         duly accounted to the Inland Revenue for all Taxation deducted by it
         and for all Taxation chargeable on salaries, wages and bonuses paid,
         and where applicable, benefits provided by such Group Company and
         notional payments within the meaning of Section 203 Taxes Act, and
         proper records have been maintained in respect thereof.

(b)      All payments due in respect of national insurance contributions have
         been deducted from salaries, wages and bonuses paid by and where
         applicable, benefits provided by any Group Company (including for the
         avoidance of doubt the granting of options over any Group Company's
         shares), and each Group Company has accounted to the Inland Revenue for
         such deductions made by it and for all national insurance contributions
         chargeable on or in respect of salaries, wages and bonuses paid or
         benefits provided and proper records have been maintained in respect
         thereof.

(c)      Each Group Company has made such deductions withholdings and retentions
         as it was required by the Taxation Statutes to make from payments made
         or treated as made and has accounted to the Taxation authorities for
         such deductions, withholdings or retentions and proper records in
         respect thereof have been maintained and retained by the Company.

                                       49
<PAGE>

(d)      Each Group Company has complied in all respects with sections 559 to
         567 of Taxes Act (deduction of tax from payments to sub-contractors in
         the construction industry).

(e)      Each Group Company has correctly operated:

         (i)      a statutory sick pay scheme in accordance with the provisions
                  of the Social Security and Housing Benefits Act 1982;

         (ii)     a statutory maternity pay scheme in accordance with the
                  provisions of the Social Security Act 1986.

(f)      Each Group Company has complied with the provisions of section 85 FA
         1988 (duty to furnish returns where a person acquires shares in a
         company in certain (circumstances).

(g)      No Group Company is or has been a party to any arrangement which has
         been, is being, or may be challenged as being an abnormal pay practice
         under Regulation 21 of the Social Security (Contributions) Regulations
         (SI 1979/591).

6.       Disallowance of Deductions

         All rents, interest, annual payments and other sums of an income nature
         paid or payable by any Group Company or which any Group Company is
         under an obligation to pay in the future are wholly allowable as
         deductions or charges in computing income for the purposes of
         corporation tax and, in particular, are not disallowable by reason of
         any of the following provisions of Taxes Act:

         (a)      section 74 (general rules as to deductions which are not
                  allowable);

         (b)      section 125 (annual payment for non-taxable consideration);

         (c)      section 338 (allowance of charges on income);

         (d)      section 770 (sales etc. at an undervalue or an overvalue);

         (e)      section 779 (sale and lease-back; limitation on tax reliefs);
                  or

         (f)      section 787 (restriction of relief for payments of interest),

         provided that this sub-paragraph shall relate only to such payments or
         transfers by the Company as in aggregate exceed (pound)25,000.

7.       Tax Avoidance etc.

(a)      No Group Company has been party to or otherwise involved in any
         transaction, scheme or arrangement of which the main purpose or one of
         the main purposes was avoiding, reducing or delaying a liability to
         Taxation or which or any part of which could for the purposes of
         Taxation be disregarded or reconstructed by reason of any motive to
         avoid, reduce, mitigate or delay payment of Taxation.

(b)      No Group Company has been party to or otherwise involved in any
         transaction or agreement to which any of the following provisions of
         Taxes Act could apply:

                                       50
<PAGE>

         (i)      section 75 CAA (further restrictions on allowances);

         (ii)     sections 159(4)-(6) CAA

         (iii)    section 399 (dealings in commodity futures etc.: withdrawal of
                  loss relief);

         (iv)     section 410 (arrangements for transfer of a company to another
                  group or consortium), section 395 (leasing contracts and
                  company reconstructions) and section 116 (arrangements for
                  transferring relief);

         (v)      section 729 (sale and purchase of securities) and section 730
                  (transfers of income arising from securities);

         (vi)     sections 731-735 (purchase and sale of securities);

         (vii)    section 736 (company dealing in securities: distribution
                  materially reducing the value of the holding);

         (viii)   section 774 (transactions between dealing company and
                  associated company);

         (ix)     section 779 (sale and leaseback: limitation on tax relief):

         (x)      Section 781 (assets leased to traders and others);

         (xi)     Section 786 (transactions associated with loans or credit).

(c)      No Group Company has been party to or otherwise involved in any
         transaction to which any of the following provisions of the TCGA could
         apply:

         (i)      section 29 (value-shifting);

         (ii)     section 106 (disposals of shares and securities by company
                  within prescribed period of acquisition).

(d)      No Group Company has since the Accounts Date been a party to or
         otherwise involved in any transaction to which any of the following
         provisions have been, or could be, applied, other than transactions in
         respect of which all necessary consents or clearances have been
         obtained:

         (i)      Sections 703-709 Taxes Act (cancellations of tax advantages
                  from certain transactions in securities);

         (ii)     section 765 Taxes Act (migration etc. of companies);

         (iii)    section 776 Taxes Act (transactions in land taxation of
                  capital gains);

         (iv)     sections 135-136 TCGA (reconstruction and amalgamations); and

         (v)      section 139 TCGA (reconstruction or amalgamation involving
                  transfer of business).

                                       51
<PAGE>

8.       Transactions relating to Land

         No Group Company has carried out or entered into any transaction or
         arrangement whereby it is or may become liable to Taxation under or by
         virtue of any of the following provisions of the Taxes Act:

         (a)      section 34 (treatment of premiums etc as rent of Schedule D
                  profits);

         (b)      section 35 (Schedule D charge on assignment of lease granted
                  at an undervalue);

         (c)      section 36 (Schedule D charge on sale of land with a right to
                  a reconveyance);

         (d)      section 37 (premiums paid etc; deductions from premiums and
                  rent received);

         (e)      section 43 (payments to non-residents);

         (f)      sections 776-778 (transactions in land: taxation of capital
                  gains);

         (g)      section 780 (sale and lease-back: taxation of consideration
                  received).

9.       Depreciatory Transactions and Value-shifting

(a)      No loss which was accrued or might accrue on the disposal by any Group
         Company of any asset is liable to be reduced or disallowed by reason of
         the provisions of section 176 TCGA (depreciatory transactions) or
         section 177 TCGA (dividend stripping).

(b)      No chargeable gain or allowable loss arising on a disposal by any Group
         Company of any asset is liable to be adjusted under section 30 TCGA
         (tax free benefits).

10.      Transactions not at Arm's length

(a)      No Group Company has disposed of or acquired any assets in
         circumstances to which the provisions of section 17 TCGA (disposals and
         acquisitions treated as made at market value) or section 125 TCGA
         (close company transferring assets at an under value) apply.

(b)      No Group Company has been a party to any transaction to which the
         provisions of section 770 Taxes Act (sales at undervalue/overvalue
         between associated persons) apply or in respect of which a direction
         under paragraph 1 of Schedule 6 or paragraph 1 of Schedule 7 VATA could
         be made.

(c)      No Group Company is entitled to any capital loss to which the
         provisions of section 18(3) TCGA (disposals between connected persons:
         restriction of loss relief) apply.

(d)      No Group Company has received any assets by way of gilt as mentioned
         section 282 TCGA (recovery of tax from donee).

11.      Distributions and Payments

(a)      No Group Company has repaid or agreed to repay or redeemed or agreed to
         redeem or purchased or agreed to purchase or granted an option under
         which it may become liable to purchase any shares of any class of its
         issued share capital.

                                       52
<PAGE>

(b)      No Group Company has issued any share capital which is of a relevant
         class as defined in section 249(2) Taxes Act (stock dividends treated
         as income) or to which section 141(1) TCGA (stock dividends:
         consideration for new holding) applies or could apply nor does the
         Company own any such share capital.

(c)      No Group Company has been engaged in, or been a party to, any of the
         transactions set out in sections 213-218 Taxes Act (demergers) and
         Section 192 TCGA (tax exempt distributions) or has made or received a
         chargeable payment as defined in Section 214 Taxes Act (chargeable
         payments connected with exempt distributions).

(d)      No Group Company has capitalised or agreed to capitalise in the form of
         shares or debentures any profits or reserves of any class or
         description or otherwise issued or agreed to issue any share capital
         otherwise than for the receipt of "new consideration" (within the
         meaning of Part VI Taxes Act) or passed or agreed to pass any
         resolution to do so.

(e)      No distribution within the meaning of sections 209, 210, 211 or 254 of
         Taxes Act has been made by any Group Company since 1st January, 1987
         except dividends shown in the Accounts nor is any Group Company bound
         to make any such distribution.

(f)      No Group Company has received a capital distribution to which the
         provisions of section 189 TCGA (capital distribution or chargeable
         gain: recovery of tax from shareholder) applies or could apply.

12.      Close Companies

(a)      No Group Company is or has ever been within the last six years a close
         company within the meaning of section 414 Taxes Act.

(b)      No Group Company is or has ever been a close investment holding company
         as defined in section 13A Taxes Act.

(c)      No distribution within section 418 Taxes Act has been made by any Group
         Company within the last seven years.

(d)      No loan or advance made by or debt incurred to or assigned to any Group
         Company falling within the provisions of section 419 Taxes Act as
         extended by section 422 is outstanding or has been waived since the
         Accounts Date.

13.      Employees

(a)      No Group Company is under any obligation to pay nor has any Group
         Company since the Accounts Date paid or agreed to make any payment to
         or provided or agreed to provide any benefit for any person who is or
         has been an officer or employee of any Group Company or a dependant of
         any such person which is not allowable as a deduction in calculating
         the profits of such Group Company for the purposes of Taxation.

(b)      No Group Company participates in a scheme under section 202 Taxes Act
         (donations to charity: payroll deduction scheme).

                                       53
<PAGE>

(c)      No scheme registered under Chapter III of Part V Taxes Act
         (profit-related pay) applies to any Group Company or any of its
         employees and no application for registration of such a scheme has been
         made.

(d)      No Group Company has made any payment since the Accounts Date which may
         be wholly or partly disallowed as an expense or expense of management
         under Section 112 FA 1993 (employers' pension contributions) nor do any
         circumstances exist at the Accounts Date which could result in an any
         payment made after that date being wholly or partly so disallowed.

14.      Group Relief, Surrenders of ACT and Group Income

(a)      The Purchaser has been given in writing full particulars of all
         arrangements and agreements relating to the claim or surrender of group
         relief (as defined by section 402 Taxes Act) to which any Group Company
         is or had been a party and under which it has an outstanding obligation
         to surrender any group relief or make any payment and:

         (i)      all claims by such Group 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; and

         (ii)     each Group Company has received all payments due to it under
                  any such arrangement or agreement for surrender of group
                  relief made by it.

(b)      There are no arrangements in existence within the meaning of section
         410 Taxes Act which would preclude any Group Company from being
         registered as a member of the Seller's Group.

(c)      The Purchaser has been given in writing full particulars of all
         arrangements and agreements to which any Group Company is or has been a
         party relating to the surrender of advance corporation tax made or
         received by such Group Company under section 240 Taxes Act and under
         which the Group Company has an outstanding obligation to surrender any
         advance corporation tax or make any payment and:

         (i)      no Group Company has paid nor is liable to make a payment
                  under any such arrangement or agreement which exceeds the
                  amount of the advance corporation tax surrendered to it under
                  section 240 Taxes Act;

         (ii)     no Group Company has paid nor is liable to make a payment
                  under any such arrangement or agreement for the surrender of
                  any advance corporation tax which is or may become incapable
                  of set-off against the Company's liability to corporation tax;
                  and

         (iii)    each Group Company has received all payments due to it under
                  any such arrangement or agreement for all surrenders of
                  advance corporation tax made by it.

(d)      No Group Company has paid any payment without deductions of income tax
         in the circumstances specified by section 247(6) Taxes Act.

(e)      No Group Company has made or is subject to any claim under section 242
         Taxes Act (surplus franked investment income).

                                       54
<PAGE>

(f)      No Group Company owns any asset which was acquired from another company
         within the last six years which was a Group Company which owned the
         asset other than as trading stock within the meaning of section 173
         TCGA.

(g)      No Group Company has ceased or will cease to be a member of a group of
         companies in circumstances in which a charge under section 179 TCGA has
         arisen or may arise.

15.      Capital Allowances

(a)      On the assumption that a disposal is made of the pool of assets or of
         any asset not in such a pool for a consideration equal to the book
         value shown in or adopted for the purposes of the Accounts for the
         assets in the pool or, as the case may be, the asset, no balancing
         charge under CAA or any other Tax Statute relating to capital
         allowances would be made on any Group Company (and for the purpose of
         this paragraph 15 "asset" shall be taken to include each and every part
         of such asset).

(b)      No event has occurred since the Accounts Date by reason of which any
         balancing charges may fall to be made against or any disposal value
         brought into account by any Group Company under CAA or any other
         Taxation Statute relating to capital allowances, or a withdrawal of
         first year allowances or recovery of excess relief be made under
         sections 46 and 47 CAA.

(c)      No claim for capital allowances has been made by any Group Company in
         respect of any asset which is leased to or from or hired to or from any
         Group Company and no election affecting any Group Company has been made
         under section 53 CAA (expenditure incurred by an equipment lessor) or
         section 55 CAA (expenditure incurred by an incoming lessee) in respect
         of any such asset.

(d)      No Group Company has made an election under section 37 CAA (short-life
         assets) nor is it taken to have made such an election under subsection
         (8)(c) of that section.

(e)      None of the assets of any Group Company expenditure on which has
         qualified for a capital allowance under Part I CAA (industrial
         buildings and structures), has at any time since that expenditure was
         incurred been used otherwise than as an industrial building or
         structure.

16.      Acquisition Costs and Re-basing

(a)      If each of the assets (except trading stock and work-in-progress) of
         each Group Company were disposed of at the date of this Agreement for a
         consideration equal to the book value of that asset in or adopted for
         the purpose of the Accounts to a person not connected with it and by
         way of a bargain at arm's length, no liability to corporation tax on
         chargeable gains would arise and for this purpose there shall be
         disregarded any relief and allowances available to such Group Company
         other than amounts falling to be deducted from the consideration
         receivable under section 38 TCGA (acquisition and disposal costs, etc).

(b)      No election under section 35(5) TCGA (assets held on 31st March, 1982
         re-election for re-basing) has been made by any Group Company and the
         Accounts are prepared on the basis that no such election will be made.

                                       55
<PAGE>

(c)     No loss which might accrue on the disposal by any Group Company of any
        asset is liable to be reduced or eliminated by the application of
        section 35(3) or (4) of TCGA (exclusion of rebasing).

(d)      No asset owned by any Group Company is subject to a deemed disposal and
         reacquisition under paragraphs 16, 17, 19 or 21 Schedule 2 TCGA and
         there are no circumstances which could give rise to any Group Company
         being denied time apportionment in computing chargeable gains.

17.      Replacement or Restoration of Business Assets

         The Purchaser has been given in writing full particulars of all claims
         and elections which have been made or assumed in the Accounts to be
         made by any Group Company under:

         (a)      section 23 TCGA (receipt of compensation and insurance
                  proceeds applied to replace or restore asset);

         (b)      sections 152 to 158 TCGA (replacement of business assets;
                  roll-over relief):

         (c)      section 165 TCGA (relief for gifts of business assets);

         (d)      sections 175 TCGA (replacement of business assets by members
                  of a group); or

         (e)      section 247-248 TCGA 1992 (roll-over relief on compulsory
                  acquisition),

         which would affect the amount of the chargeable gain or allowable loss
         which would, but for the claim, have arisen on a disposal of any of the
         Company's assets and no such claim or election has been made by any
         other person which affects or could affect the amount or value of the
         consideration for the acquisition of any asset by the Company taken
         into account in calculating liability to corporation tax on chargeable
         gains on a subsequent disposal of that asset.

18.      Chargeable Debts

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

19.      Chargeable Policies

         No Group Company has acquired benefits under any policy of assurance
         otherwise than as original beneficial owner.

20.      Gifts and Inheritance Tax

(a)      No transfer of value (as defined in section 3 IHTA) or disposal by way
         of gift (within the meaning of section 102 FA 1986) has at any time
         been made by or to any Group Company and there are no other
         circumstances by reason of which any liability in respect of
         inheritance tax has arisen or could arise on any Group Company or on
         any of its participators.

                                       56
<PAGE>

(b)      No Inland Revenue charge (as defined in section 237 IHTA) is
         outstanding over any asset of any Group Company or in relation to any
         of the shares in any Group Company and no circumstances exist which
         could lead to any such charge arising in the future.

(c)      There are not in existence any circumstances whereby any such power as
         is mentioned in section 212 IHTA could be exercised in relation to any
         shares in or securities or assets of any Group Company.

(d)      No Group Company has disposed of or acquired any asset in circumstances
         to which the provisions of section 282 TCGA (recovery of tax from the
         donee) could apply.

21.      Overseas Matters

(a)      Each Group Company is and always has been resident in the United
         Kingdom for United Kingdom tax purposes.

(b)      No Group Company is registered or has ever fallen to be treated for the
         purposes of any double taxation relief arrangements as resident in a
         territory outside the United Kingdom or is liable to tax on gains
         arising on disposals of assets of descriptions specified in any such
         arrangements nor is the Seller aware of any circumstances as to why
         this would be the case.

(c)      No Group Company is or has ever been a dual resident company within the
         meaning of section 404(2) Taxes Act.

(d)      There has been no transfer by any Group Company of a trade or part of a
         trade which it carried on outside the United Kingdom through a branch
         or agency, to a company not resident in the United Kingdom in
         circumstances such that a chargeable gain might be deemed to arise at a
         later date pursuant to the provisions of section 140 TCGA (postponement
         of charge to tax on transfer of assets to a non-resident company).

(e)      No notice of the making of a direction under section 747 Taxes Act
         (imputation of chargeable profits and creditable tax of controlled
         foreign companies) has been received by any Group Company and the
         circumstances are not such and have never been such as would permit the
         Inland Revenue to make such a direction as to apportion the profits of
         a controlled foreign company in whole or in part to any Group Company
         pursuant to section 752 Taxes Act (apportionment of chargeable profits
         and creditable tax).

(f)      No Group Company owns or has at any time owned a material interest in
         an offshore fund which is or has at any time been a non-qualifying
         offshore fund as defined by section 760 Taxes Act.

(g)      No Group Company has received or become entitled to any income which is
         "unremittable income" within the meaning of section 584 Taxes Act which
         has not been remitted to the United Kingdom nor has it received or
         become entitled to any gain to which section 279 TCGA could apply or
         has been applied and which has not been transferred to the United
         Kingdom.

(h)      No gain has accrued in respect of which any Group Company may be liable
         to corporation tax on chargeable gains by virtue of the provisions of
         section 13 TCGA 1992 (attribution of gains to members of non-resident
         company) or section 87 TCGA 1992 (attribution of gains to
         beneficiaries).

                                       57
<PAGE>

(i)      No Group Company is a person to whom section 132(2) FA 1988 or section
         191(2) TCGA applies (liability of other persons for unpaid tax of
         migrating companies non payment of tax by non-resident companies).

(j)      No Group Company has been or is assessable to Tax under section 78
         Taxes Management Act 1970 (method of charging non-residents) including
         that section as modified and extended for stamp duty reserve tax.

(k)      No Group Company has received foreign loan interest on which double
         taxation relief will, or may be, restricted under section 798 Taxes Act
         (interest on certain overseas loans).

(l)      No Group Company is deemed to have made a disposal of any assets under
         section 186 TCGA (assets ceasing to be within the charge to UK tax).

(m)      No claim or election affecting any Group Company has been made or has
         been assumed in the Accounts to have been made under any of the
         following sections of TCGA:

         (i)      section 140 (postponement of charge on transfer or assets to a
                  non-resident company);

         (ii)     section 140C (transfer of a non-United Kingdom trade);

         (iii)    section 187 (postponement of charge on deemed disposal on a
                  company ceasing to be resident in the United Kingdom).

22.      Value Added Tax

(a)      Each Group Company is duly registered for the purposes of Value Added
         Tax with quarterly prescribed accounting periods and its registration
         is not subject to any conditions imposed by or agreed with Customs and
         Excise and no Group Company is under a duty to make monthly payments on
         account.

(b)      No Group Company has ever been required by the Commissioners of H.M.
         Customs and Excise to give security.

(c)      No Group Company is authorised to account for Value Added Tax annually
         in accordance with Part VII Value Added Tax Regulations 1995.

(d)      No Group Company is accounting for Value Added Tax in accordance with
         Part VIII Value Added Tax Regulations 1995.

(e)      No Group Company is or has at any time been treated for the purposes of
         Value Added Tax as a member of a group of companies and there has been
         no transfer of a business as a going concern in respect of which any
         Group Company could become or at any time since the Accounts Date has
         become liable under section 44 VATA (supplies to groups).

(f)      No act or transaction has been effected in consequence of which any
         Group Company is or may be held responsible for any Value Added Tax
         under section 29 (self-billing), section 47 (agents), section 48 (VAT
         representatives) VATA and no direction affecting any Group Company has
         been given under paragraph 2 Schedule 6 VATA (sales by retail).

                                       58
<PAGE>

(g)      No Group Company is partially exempt for VAT purposes and there are no
         circumstances by reason of which any Group Company might not be
         entitled to credit for all Value Added Tax chargeable on supplies
         received and imports and acquisitions made by it.

(h)      The Purchaser has been given in writing full particulars of all
         elections to waive exemption made or agreed to be made under Schedule
         10 VATA (interests in buildings and land) by any Group Company and any
         person in relation to which any Group Company is a relevant associate
         as defined in paragraph 3(7) of that Schedule in respect of the
         Properties and in respect of each election made, all things necessary
         for the election to have effect have been done and in particular any
         necessary notification and information has been duly given and any
         necessary permission has been duly given and any necessary permission
         has been properly obtained, and in no case has any Group Company
         charged Value Added Tax which is not properly any Group chargeable
         because a Group Company has not made an election to waive exemption
         having effect in relation to the relevant supply.

(i)      There are no present circumstances by reason of which any Group Company
         is or could become liable to Value Added Tax under paragraph 1
         (residential or charitable buildings: change of use etc) or paragraph 5
         (developers of certain non-residential buildings etc) of Schedule 10
         VATA or under the Value Added Tax (Self-Supply of Construction
         Services) Order 1989.

(j)      In relation to each capital item (if any) within Part XV of the VAT
         Regulations in relation to which a liability under Part XV has arisen
         or could in future arise on any Group Company the Group Company has
         sufficient records to calculate the amount of any such liability.

23.      Stamp Duty and Stamp Duty Reserve Tax

(a)      All documents in the possession or under the control of any Group
         Company or to the production of which any Group Company is entitled
         which are necessary to establish the title of any Group Company to any
         asset and which, in the United Kingdom or elsewhere, attract either
         stamp duty or require to be stamped with a particular stamp denoting
         that no duty is chargeable or that the document has been produced to
         the appropriate authority, have been properly stamped and there is no
         liability for any penalty in respect of such duty; and no such
         documents which are outside the United Kingdom would attract stamp duty
         if they were brought into the United Kingdom.

(b)      No Group Company has since the Accounts Date incurred any liability to
         or been accountable for stamp duty reserve tax and there has been no
         agreement within section 87 (1) FA 1986 which could lead to any Group
         Company incurring any such liability or becoming so accountable.

(c)      No Group Company has had transferred to it any chargeable securities
         (as defined in section 99 FA 1986) in circumstances which have given
         rise to or may give rise to a liability for stamp duty reserve tax nor
         are there any other circumstances in which any Group Company may have a
         liability for stamp duty reserve tax.

24.      The Subsidiaries

         Each of Ideal Financial Services Limited and Logical Online Limited is
         dormant and has no outstanding tax liabilities whatsoever.

<PAGE>

                                   SCHEDULE 4

                         SCHEDULED INTELLECTUAL PROPERTY

1.       TRADEMARKS

<TABLE>
<CAPTION>

------------------------ ---------------------- --------------------- ---------------------- ---------------------
Territory                Mark                   Number                Class                  Status
------------------------ ---------------------- --------------------- ---------------------- ---------------------
<S>                      <C>                    <C>                   <C>                    <C>
UK                       UNISOLVE               2180376               9, 16, 35, 38, 41, 42  Registered
                         Unisolve
------------------------ ---------------------- --------------------- ---------------------- ---------------------
CTM                      IDEAL UNISOLVE         982694                9, 16, 35, 38, 41, 42  Pending
------------------------ ---------------------- --------------------- ---------------------- ---------------------
</TABLE>

                         [Chart with graphics omitted]

2.       DOMAIN NAMES TO BE TRANSFERRED TO THE COMPANY

         Contained in the Disclosure Letter

<PAGE>

                                   SCHEDULE 5

                               COMPLETION ACCOUNTS

PART A - PRO FORMA COMPLETION ACCOUNTS

Part A - Pro Forma Completion Accounts

<TABLE>
<CAPTION>

                                                                                                   (pound)           (pound)

<S>                                      <C>                                                    <C>               <C>
Estimated "Fixed Assets"                 Tangible Assets                                         3,160,954
                                         Intangible Assets                                               -
                                                                                           ----------------
                                                                                                                   3,160,954

Estimated "Completion Assets"            Stock                                                  27,104,571
                                         Trade Debtors                                          65,600,869
                                         Debit Notes                                             6,472,370
                                         Prepayments & Other Debtors                               202,622
                                         Amounts owing from InterX Group companies                 159,730
                                                                                           ----------------
                                                                                                                  99,540,162

Estimated"Completion Liabilities"        Bank                                                  -24,116,188
                                         Trade Creditors                                       -54,626,872
                                         Other Creditors, Accruals & Taxes                     -10,706,463
                                                                                           ----------------
                                                                                                                 -89,449,523

"InterX Debtor"                                                                                                    1,234,562

Estimated July 2000 Profit (net of tax) - to be reallocated throughout assets/liabilities                            345,000

                                                                                                              ---------------
Gross Assets Less Liabilities                                                                                     14,831,155

"Completion Provision"                   Stock Value - 'POT'                                      -148,271
                                         Stock Specific                                           -434,612
                                         Bad Debts                                              -1,197,467
                                         Credit Notes for Customers                               -122,216
                                         Unallocated Credit Notes from Suppliers                  -681,785
                                         Debit Notes                                              -318,701
                                         Annual Bonuses                                           -355,909
                                                                                           ----------------
                                                                                                                  -3,258,961

                                                                                                              ---------------
Estimated Net Assets per July 2000 Management Accounts                                                            11,572,194

"Super Provision"                                                                                                 -1,678,333

                                                                                                              ---------------
Estimated "Completion Net Assets"                                                                                  9,893,861
                                                                                                              ===============
</TABLE>

                                       61

<PAGE>

PART B - COMPLETION PROVISION, SUPER PROVISION AND CATASTROPHE PROVISION

1.       INTERPRETATION

         In this Schedule:

         "Completion Assets" means the assets of the Company as set forth in the
         Completion Accounts;

         "Completion Liabilities" means the liabilities of the Company as set
         forth in the Completion Accounts;

         "Completion Net Assets" means the value of net assets of the Company as
         set forth in the Completion Accounts;

         "Completion Provision" means the "completion provision" as set forth in
         the Completion Accounts;

         "Catastrophe Provision" means (pound)1,977,326 as adjusted in
         accordance with Part 7 below;

         "Super Provision" means the additional provision of at least
         (pound)1,318,218 as set forth in the Completion Accounts, as adjusted
         in accordance with Part 8.5 below;

         "InterX Debtor" means the inter-company loan of (pound)1,234,562 from
         the Company to InterX Media plc which is outstanding at the date of
         this agreement and which shall be settled in accordance with Part 7
         below;

         "Pre-Completion Assets" means assets of the Company in existence at
         Completion but which were not reflected in the Completion Accounts; and

         "Pre-Completion Liabilities" means liabilities of the Company in
         existence at Completion but which were not reflected in the Completion
         Accounts.

2.       POST-COMPLETION CLAIMS AND POST-COMPLETION GAINS

2.1      Within 15 business days of the end of the months of August 2000,
         September 2000, October 2000, November 2000, December 2000, January
         2001 and February 2001, the Purchaser shall cause the Company to
         deliver to the Seller management accounts (the "Review Accounts") for
         the relevant preceding month, such management accounts to be prepared
         in accordance with the procedures and accounting policies applied by
         the Seller in preparing the Accounts and to the same standard as the
         management accounts prepared by the Seller for the Purchaser for the
         months of May and June 2000. For the avoidance of doubt, any tax losses
         or other tax assets (other than VAT or other taxes paid on account)
         shall not be recognised in the Review Accounts.

2.2      Included in the Review Accounts shall be analyses of:

                                       62
<PAGE>

         2.2.1    any Completion Assets outstanding as at the end of the month
                  in question;

         2.2.2    any Completion Liabilities outstanding as at the end of the
                  month in question;

         2.2.3    any potential Pre-Completion Assets that have been accounted
                  for in the month in question; and

         2.2.4    any potential Pre-Completion Liabilities that have been
                  accounted for in the month in question.

2.3      Within 5 business days after delivery of the Review Accounts to the
         Seller under Part 2.1, and on the reasonable request of the Seller,
         authorised representatives of the Purchaser and the Seller shall review
         the Review Accounts (the "Provisions Review"). In undertaking the
         Provisions Review, both parties shall apply UK generally accepted
         accounting principles and the accounting practices of the Company at
         Completion, which, for the avoidance of doubt, shall preclude the
         recognition of any tax losses or other assets (other than VAT and other
         taxes paid on account), to ascertain and agree within such 5 business
         day period:

         2.3.1    which Completion Assets are unlikely to be realised, either in
                  full or in part;

         2.3.2    which Completion Liabilities are unlikely to be realised,
                  either in full or in part;

         2.3.3    whether there are any Pre-Completion Assets that should have
                  been accounted for in the Review Accounts; and

         2.3.4    whether there are any Pre-Completion Liabilities that should
                  have been accounted for in the Review Accounts,

         and accordingly to agree the actions, if any, to be taken by the
         Company to either mitigate any such potential loss (including using
         set-off or insurance policies) or maximise any such potential gain to
         the Company.

2.4      Subject to the Company carrying out the actions under Part 2.3, if both
         parties agree that:

         2.4.1    there is a Completion Asset that will not be realised, either
                  in full or in part; or

         2.4.2    there is a Pre-Completion Liability which should have been
                  accounted for in the Review Accounts,

         then the amount of the loss shall be agreed and termed a
         "Post-Completion Claim".

2.5      Subject to the Company carrying out the actions under Part 2.3, if both
         parties agree that:

         2.5.1    there is a Completion Liability that will not be realised,
                  either in full or in part; or

         2.5.2    there is a Pre-Completion Asset which should have been
                  accounted for in the Review Accounts,

         then the amount of the gain shall be agreed and termed a
         "Post-Completion Gain".

                                       63
<PAGE>

3.       COMPLETION PROVISION MANAGEMENT

3.1      At each Provisions Review:

         3.1.1    any agreed Post-Completion Claims shall be deducted from the
                  Completion Provision; and

         3.1.2    any agreed Post-Completion Gains shall be added to the
                  Completion Provision.

3.2      If the Completion Provision has been exhausted, and the balance agreed
         as zero, then all unapplied or future Post-Completion Claims and
         Post-Completion Gains shall be applied to the Super Provision in
         accordance with Part 4 below.

3.3      The balance on the Completion Provision at the end of the month in
         question shall be agreed during each Provisions Review.

4.       SUPER PROVISION MANAGEMENT

4.1      Subject to the Completion Provision being agreed as zero in accordance
         with Part 3.2 above, then at each Provisions Review:

         4.1.1    any unapplied agreed Post-Completion Claims shall be deducted
                  from the Super Provision; and

         4.1.2    any unapplied agreed Post-Completion Gains shall be added to
                  the Super Provision.

4.2      If the Super Provision has been exhausted, and the balance agreed as
         zero, then all unapplied future Post-Completion Claims and
         Post-Completion Gains shall be applied to the Catastrophe Provision in
         accordance with Part 7 below.

4.3      The balance on the Super Provision at the end of the month in question
         shall be agreed during each Provisions Review.

5.       EXIT CHARGE

5.1      To the extent that the estimated Exit Charge of (pound)3,000,000 is
         greater than the Actual Exit Charge paid as contemplated under Article
         11 of the agreement, then the excess (the "Exit Charge Excess") shall
         be added to the Catastrophe Provision in accordance with Part 7 below.

5.2.     To the extent that the estimated Exit Charge of (pound)3,000,000 is
         less than the actual Exit Charge paid as contemplated under Article 11
         of the agreement, then the shortfall (the "Exit Charge Shortfall")
         shall be deducted from the Catastrophe Provision in accordance with
         Part 7 below.

5.3      To the extent that the creation of an Exit Charge Excess creates an
         additional charge to tax for the Company or the Purchaser, then the
         Exit Charge Excess shall be decreased on a (pound)1 for (pound)1 basis.

6.       PROPERTY ADJUSTMENT

                                       64
<PAGE>

6.1      Should the Purchaser exercise the Options, the "Property Adjustment"
         shall be(pound)550,000.

6.2      Should the Purchaser fail to exercise the Options, the "Property
         Adjustment" shall be(pound)0 (zero).

7.       CATASTROPHE PROVISION MANAGEMENT

7.1      At the Provisions Review to be held in March, 2001, both parties,
         having

         7.1.1    completed their review of the Review Accounts for February
                  2001;

         7.1.2    agreed the balance of the Completion Provision under Part 3
                  ("CP");

         7.1.3    agreed the balance of the Super Provision under Part 4 ("SP");

         7.1.4    agreed the value of any unapplied Post-Completion Claims under
                  Part 4.2 ("PCC");

         7.1.5    agreed the value of any unapplied Post-Completion Gains under
                  Part 4.2 ("PCG");

         7.1.6    agreed the value of the Exit Charge Excess, if any, under Part
                  5.1 and 5.3 ("ECE");

         7.1.7    agreed the value of the Exit Charge Shortfall, if any, under
                  Part 5.2 ("ECS"), and

         7.1.8    agreed the value of the Property Adjustment under Part 6
                  ("PA")

         shall then conduct the Catastrophe Provision Calculation under Part
         7.2.

7.2      Catastrophe Provision Calculation and the InterX Debtor:

         Where the value at Completion of the InterX Debtor ((pound)1,234,562)
         is "ID", then:

         7.2.1    if CP + SP - ID is greater than or equal to(pound)0 (zero),
                  then the Catastrophe Provision is calculated as:

                  (pound)1,977,326 + ECE - ECS - PA, and the value of ID will
                  then be deemed by the Seller, the Purchaser and the Company to
                  be (pound)0 (zero), and all claims by the Purchaser or the
                  Company for repayment of the InterX Debtor shall be waived
                  forthwith.

         7.2.2    if CP + SP - ID is less than(pound)0 (zero), then the
                  Catastrophe Provision is calculated as:

                  CP + SP - ID + (pound)1,977,326 - PCC + PCG + ECE - ECS - PA
                  and the value of ID will then be deemed by the Seller, the
                  Purchaser and the Company to be (pound)0 (zero), and all
                  claims by the Purchaser or the Company for repayment of the
                  InterX Debtor shall be waived forthwith.

7.3      Should the balance of the Catastrophe Provision, as calculated under
         Part 7.2 above, be greater than zero, then the amount shall be paid by
         the Purchaser to the Seller on 31st March 2001 provided that, in the

                                       65
<PAGE>

         absence of fraud, dishonesty or wilful concealment, the amount payable
         by the Purchaser under this Part 7.3 shall not exceed (pound)4,977,326,
         being the pre-adjusted Catastrophe Provision of (pound)1,977,326
         aggregated with the estimated Exit Charge of (pound)3,000,000.

7.4      Should the balance of the Catastrophe Provision, as calculated under
         Part 7.2 above, be less than zero, then the amount shall be paid by the
         Seller to the Purchaser on 31st March 2001 provided that, in the
         absence of fraud, dishonesty or wilful concealment, the amount payable
         by the Seller under this Part 7.4 shall not exceed the Initial
         Consideration.

8.       General

8.1      The Completion Provision shall be determined in accordance with the
         procedures and accounting policies applied by the Seller in preparing
         the Accounts and to the same standard as the management accounts
         prepared by the Seller for the Purchaser for the months of May and June
         2000. For the avoidance of doubt, any tax losses or other tax assets
         (other than VAT or other taxes paid on account) shall not be recognised
         in the Review Accounts.

8.2      If the Exit Charge has not been agreed with the Tax Authorities by 31st
         March 2001 then the Catastrophe Provision shall be calculated without
         reference to ECE or ECS. Upon subsequent agreement of the Exit Charge
         with the Tax Authorities the ECE or ECS is then to be settled by the
         respective party within 10 business days.

8.3      For the purposes of paragraph 8.2 the Exit Charge shall be agreed on
         the earlier of:

         8.3.1    the date on which it is agreed in writing with the Inland
                  Revenue;

         8.3.2    the date the Seller and the Purchaser agree the value of the
                  Exit Charge in writing;

         8.3.3    if the Company has submitted an assessment to the Inland
                  Revenue in respect of the accounting period in which the Exit
                  Charge arises the last date on which the Inland Revenue can
                  amend that assessment in the absence of fraudulent or
                  negligent conduct or a failure by the Company to supply the
                  Inland Revenue with all relevant information.

8.4      The Completion Accounts will include:

         8.4.1    a charge of (pound)25,000 for the professional costs of the
                  preparation of Form 8-K.

         8.4.2    a charge of (pound)25,000 for the professional costs of the
                  submission to, and the agreement with, the Tax Authorities of
                  the Exit Charge.

         8.4.3    the creation of an "Other Debtor" of (pound)100,000, relating
                  to the possible recovery of the costs of the abortive Logical
                  Online Limited joint venture, with a corresponding provision
                  of the same amount.

8.5      To the extent that the value of the net assets of the Company
         immediately prior to Completion exceeds (pound)9,893,861, then the
         Super Provision will be increased on a (pound)1 for (pound)1 basis so
         that the amount of the "Completion Net Assets" equals (pound)9,893,861.

                                       66
<PAGE>

8.6      The Exit Charge shall not be a Pre-Completion Liability nor a
         Post-Completion Claim. Any Exit Charge Excess shall not be treated as a
         Pre-Completion Asset giving rise to a Post-Completion Gain, and any
         Exit Charge Shortfall shall not be treated as a Pre-Completion
         Liability giving rise to a Post-Completion Claim.

8.7      Any payment made pursuant to Part 7.3 or 7.4, as the case may be, shall
         be deemed to be a pro tanto increase or decrease to the Consideration.

                                       67

<PAGE>

SIGNED as a deed by                                 )
INTERX PLC acting by                                )
its attorney                                        )
in the presence of:                                 )

Witness's signature:     ...........................

Name:                    ...........................

Address:                 ...........................

SIGNED as a deed by                                 )
INTERX MEDIA PLC acting by                          )
its attorney                                        )
in the presence of:                                 )

Witness's signature:     ...........................

Name:                    ...........................

Address:                 ...........................

SIGNED by                                            )
for and on behalf of                                 )
BELL MICROPRODUCTS INC.                              )

                                       68S & K Famous Brands, Inc.

                                Credit Agreement

                            Dated As Of May 31, 2000

<PAGE>

         THIS CREDIT AGREEMENT, dated as of May 31, 2000, is made by and between
S&K FAMOUS BRANDS,  INC., a Virginia  corporation (the "Company"),  and SunTrust
Bank, a Georgia corporation (the "Bank").

                                    SECTION I
                                   DEFINITIONS

                  1.1  Definitions.

         As used in this Agreement,

         "Agreement" means this credit agreement, as it may be amended from time
to time.

         "Bond  Purchase  Agreement"  means  the  Bond  Purchase  Agreement  and
Agreement of Sale dated as of December 1, 1983 as amended on November 1, 1984 by
and among the Company, the Bank, and the Industrial Development Authority of the
County of Henrico, Virginia.

         "Business Day" means any day other than  Saturday,  Sunday or other day
on which  commercial  banks in Richmond,  Virginia are authorized or required to
close under applicable law.

         "Capitalized  Lease Obligations" means the amount of the obligations of
the Company and its Subsidiaries  under Financing Leases which would be shown as
a  liability  on a balance  sheet of the  Company or a  Subsidiary,  prepared in
accordance with generally accepted accounting principles.

         "Consolidated"  refers to any  determination to be made for the Company
and  its   Subsidiaries  in  accordance  with  generally   accepted   accounting
principles, including the principles of consolidation.

         "Default" means an event described in Section 8.1 of this Agreement.

         "Effective  Tangible  Net  Worth"  means  Tangible  Net Worth  plus the
principal amount of Subordinated Debt outstanding from time to time.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time.

         "Eurodollar  Loan" means any Revolving Loan on which  interest  accrues
based on a Eurodollar Rate.

         "Eurodollar  Rate" means,  with respect to any Eurodollar  Loan for any
Interest  Period,  an interest  rate per annum  determined  by the Bank (rounded
upwards,  if  necessary,  to the next 1/16 of 1%) as the interest  rate at which
deposits  of U. S.  dollars  approximately  equal  in  principal  amount  to the
Eurodollar Loan and for a maturity comparable to the Interest Period are offered
in immediately  available funds to the Bank by at least two leading banks in the
London interbank market on the date of determination.  Each determination by the
Bank of any  Eurodollar  Rate shall be conclusive and binding on the Company and
the Bank absent manifest error.  The Bank and the Company  acknowledge  that the
Bank may determine the Eurodollar  Rate from quotations of the Bank's money desk
or by reference to Reuter Screen or similar quotations, in the discretion of the
Bank, on and as of the date of determination.

         "Federal  Funds  Rate  Loan"  means  any  overnight  Loan on which  the
interest accrues based on the Federal Funds Rate.

         "Federal  Funds  Rate" means for any day,  the rate per annum  (rounded
upwards, if necessary,  to the next 1/16 of 1%) equal to the weighted average of
the rates on overnight  federal funds  transactions  with members of the Federal
Reserve  System  arranged by federal  funds brokers on such day, as published by
the Federal  Reserve Bank of New York, on the Business Day next  succeeding such
day, provided that (a) if the day for which such rate is to be determined is not
a Business  Day, the Federal  Funds Rate for such day shall be such rate on such
transactions  on the next  preceding  Business  Day as so  published on the next
succeeding  Business  Day, and (b) if such rate is not so published for any day,
the Federal Funds Rate for such a day shall be such rate on such transactions as
shall be determined by the Bank.

         "Financing   Lease"  means  any  lease  of  property   which  would  be
capitalized  on a balance  sheet of the  Company or a  Subsidiary,  prepared  in
accordance with generally accepted accounting principles.

         "Funded Debt" means any  Indebtedness  of the Company or any Subsidiary
which has a stated  maturity more than one year after the date of  determination
or has a maturity  which may be extended by the Company or any  Subsidiary  to a
date more than one year after the date of determination.

         "Guaranty"  means any agreement by which the Company or any  Subsidiary
assumes, guarantees,  endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise  becomes  liable upon,  the  obligation  of any
other Person for borrowed  money, or agrees to maintain the net worth or working
capital or other  financial  condition of any other Person or otherwise  assures
any creditor of such other Person against loss.

         "Indebtedness"   means  the   Company's  and  each   Subsidiary's   (a)
obligations  for  borrowed  money,  (b)  obligations  representing  the deferred
purchase  price of property  other than accounts  payable  arising in connection
with the purchase of inventory on terms customary in the trade, (c) obligations,
whether or not assumed and with or without recourse, secured by liens or payable
out of the  proceeds or  production  from  property  now or  hereafter  owned or
acquired by the Company or any Subsidiary and (d) Capitalized Lease Obligations.

         "Interest  Period" means, (1) with respect to each Negotiated Rate Loan
or  Eurodollar  Loan,  the period  commencing  on the date of the  borrowing and
ending  one,  three,  or six months  thereafter  or such other  period as may be
agreed  between the Company and the Bank,  and (2) with respect to each Floating
Rate Loan other than a Eurodollar  Loan,  the period  commencing  on the date of
borrowing and ending on the date of repayment.

         "Investment"  means any loan,  advance,  extension of credit (excluding
accounts receivable arising in the ordinary course of business), or contribution
of  capital  by  the  Company  or any  Subsidiary  to any  other  Person  or any
investment  in,  or  purchase  or  other  acquisition  of,  the  stock,   notes,
debentures,  or  other  securities  of any  Person  made by the  Company  or any
Subsidiary.

         "Lien" means any security  interest,  mortgage,  pledge,  lien,  claim,
charge,  encumbrance,  title  retention  agreement,  lessor's  interest  under a
Financing  Lease or analogous  instrument,  in, of or on any of the Company's or
any Subsidiary's property.

         "Loans" means the  Revolving  Loans defined in ss.2.1 and the Term Loan
defined in ss.3.1 of this Agreement.

         "Notes"  means the  Revolving  Note defined in ss.2.4 and the Term Note
defined in ss.3.3 of this Agreement.

         "Obligations"  means all unpaid  principal and interest under the Notes
and all other  obligations  of the Company or any Subsidiary to the Bank arising
under this Agreement or the Notes.

         "Person" means any  corporation,  natural person,  firm, joint venture,
partnership, trust, unincorporated organization, government or any department or
agency of any government.

         "Plan" means a "defined  benefit  plan" as defined in Section  3(35) of
ERISA,  other than a  "multiemployer  plan" as defined  in Section  3(37)(A)  of
ERISA, for which the Company or any Subsidiary could be held liable for Unfunded
Liabilities by the Pension Benefit Guaranty Corporation.

         "Potential  Default" means an event  described in Section 8.1 which but
for the lapse of time or the  giving of  notice,  or both,  would  constitute  a
Default.

         "Prepayment  Penalty"  means  with  respect  to the  prepayment  of any
Negotiated Rate Loan, any Eurodollar  Loan, or any Term Loan prior to the end of
an Interest Period, the amount paid by the Company to the Bank and calculated as
follows:  (1) the  principal  amount of the  prepayment,  times (2) the positive
difference between the accruing interest rate of the Loan and the interest rate,
determined  as of the date of  prepayment,  for a U. S.  Government  security of
comparable  maturity to the remaining  Interest Period divided by (3) 365, times
(4) the number of days remaining to the maturity of the Interest Period.

         "Prime Rate" shall mean the rate  established  from time to time by the
Bank and  recorded in its Credit  Administration  Division  as a  reference  for
establishing  the  lending  rate on  commercial  loans.  The  Prime  Rate is not
necessarily  the lowest  rate of  interest  charged  by the Bank for  commercial
borrowings.

         "Section" and "ss." means a numbered section of this Agreement,  unless
another document is specifically referenced.

         "Subordinated  Debt" means any  Indebtedness  of the  Company  which is
subordinated  to the payment of the  Obligations on terms approved in writing by
the Bank.

         "Subsidiary"  means a corporation  or other entity of which 50% or more
of the voting stock or other ownership  interest is owned directly or indirectly
by the Company, by one or more of its Subsidiaries, or by the Company and one or
more of its Subsidiaries, and the financial statements of which are Consolidated
with  those  of  the  Company  in  preparing  the  Company's  annual  report  to
stockholders,  it being understood that as of the date hereof the Company has no
Subsidiaries  and until the Company has a Subsidiary  all  references  herein to
Consolidated statements and figures shall refer to the statements and figures of
the Company alone.

         "Tangible  Net Worth" means the  Consolidated  stockholders'  equity as
reported in the Company's most recent financial  reports as described in Section
7.1.1(a) and 7.1.1(b) minus any goodwill,  any patents and any other  intangible
assets determined in accordance with generally accepted accounting principles as
reported in those same financial reports.

         "Unfunded Liabilities" means with regard to any Plan, the excess of the
current value of the Plan's benefits  guaranteed by the Pension Benefit Guaranty
Corporation under ERISA over the current value of the Plan's assets allocable to
such benefits.

         "Unsubordinated  Liabilities"  means all amounts which would be treated
as liabilities on a balance sheet prepared in accordance with generally accepted
accounting principles, excluding, however, Subordinated Debt.

         "Unsubordinated   Funded   Debt"  means  all  Funded  Debt  other  than
Subordinated Debt.

         "Working  Capital"  means  current  assets  minus  current  liabilities
determined in accordance with generally accepted accounting principles.

         The  foregoing  definitions  shall be  equally  applicable  to both the
singular and plural of the defined terms.

                                   SECTION II
                                 REVOLVING LOANS

         2.1  Commitment  to Lend.  Subject to the terms and  conditions of this
Agreement,  the Bank agrees to make Revolving Loans  ("Revolving  Loans") to the
Company  from time to time until  maturity of the  Revolving  Note as defined in
Section  2.4, up to the  maximum  outstanding  principal  amount at any one time
outstanding of Twenty Million Dollars  ($20,000,000) from the date hereof to and
including May 31, 2003,  such amounts being hereafter  called the  "Commitment."
Revolving  Loans may be  designated  as  Floating  Rate Loans  (Section  2.5) or
Negotiated Rate Loans (Section 2.2). The Company may borrow, repay, and reborrow
the maximum annual permitted principal amount of the Commitment.

         2.2  Negotiated Rate Loans.

             (a) Parties'  Option.  Subject to the terms and  conditions of this
Agreement,  from time to time the Company may request the Bank to make offers to
the Company to make  Revolving  Loans which are  designated as  Negotiated  Rate
Loans. The Bank may, but shall have no obligation to, make such offers,  and the
Company may, but shall have no obligation to, accept such offers.

             (b) Rate  Quote  Requests.  When the  Company  wishes to request an
offer from the Bank to make  Negotiated  Rate Loans, it shall notify the Bank by
telephone  (each such telephone  request a "Rate Quote  Request") not later than
11:00 a.m.  (Eastern  Time) on the day of the proposed  borrowing (or such other
time and date as the Company and the Bank shall agree), specifying:

                  (i) the proposed date of borrowing,  which shall be a Business
Day;

                  (ii) the amount of such  borrowing,  which  shall be a minimum
amount of $500,000 and;

                  (iii) the duration of the Interest Period or Interest  Periods
applicable thereto, subject to the definition of the Interest Period.

         The Company may request an offer to make Negotiated Rate Loans for more
than one Interest Period in a single Rate Quote Request. Each Rate Quote Request
shall constitute an invitation by the Company to the Bank to submit a fixed rate
quote offering to make a Negotiated  Rate Loan or Negotiated Rate Loans to which
the applicable Rate Quote Request relates.

         2.3  Maturity  of Loans.  Each  Revolving  Loan shall  mature,  and the
principal  amount  thereof  shall  be due and  payable  on the  last  day of the
Interest  Period  applicable  thereto,  but in no event shall a  Revolving  Loan
mature later than May 31, 2003,  when the Commitment  expires in accordance with
the terms of the Revolving Note as defined in Section 2.4.

         2.4 Revolving  Note;  Interest  Payments.  The Revolving Loans shall be
evidenced  by a single  note in the  form of  Exhibit  A  attached  hereto  (the
"Revolving Note") maturing on May 31, 2003. The Company agrees to deliver to the
Bank the  Revolving  Note in the  principal  amount  of Twenty  Million  Dollars
($20,000,000),  representing  the obligation of the Company to pay the aggregate
unpaid  principal  amount of all  Revolving  Loans from time to time made by the
Bank.  Accrued  interest on the Revolving Note shall be paid monthly on the last
day of the  month,  regardless  of  the  Interest  Period  or  Interest  Periods
selected, or at maturity, whichever is sooner.

         2.5 Floating  Rate Loans.  Floating Rate Loans made on any one occasion
shall be in the  minimum  principal  amount of $25,000  or any  higher  integral
multiple of $25,000.  Principal payments will be in minimum principal amounts of
$25,000 or any higher integral multiple of $25,000. The Company shall notify the
Bank by  telephone  not later than 11:00 a.m.  (Eastern  Time) on the day of the
proposed  borrowing  (or such  other time and date as the  Company  and the Bank
shall  agree),  specifying;  the proposed  date of  borrowing,  which shall be a
Business Day, the amount of such borrowing,  the interest rate, as determined in
this Section,  and the duration of the Interest Period or Interest  Periods,  if
any, applicable thereto. The unpaid principal balance of each Floating Rate Loan
made under the Revolving Note shall bear interest  calculated in accordance with
ss.9.5 and at the  interest  rate  selected  by the Company  from the  following
options ("Interest Rate Option") on the date each Floating Loan is made:

             (a).  Interest  Rate  Option A. For a Federal  Funds Rate Loan at a
rate per annum  equal to the  Federal  Funds Rate  (Index)  plus .75%  (Interest
Spread). Such rate shall change daily.

             (b).  Interest  Rate Option B. For a Eurodollar  Loan at a rate per
annum equal to the  Eurodollar  Rate  (Index)  plus .75%  (Interest  Spread) for
Interest Periods of one month,  three months or six months,  as specified by the
Company.

             (c).  Interest  Rate  Option  C. At a rate per  annum  equal to the
Bank's Prime Rate with any change in such  interest  rate being  effective as of
the day such Prime Rate is changed.

         2.6  Prepayment.  The Company may without  penalty  prepay any Floating
Rate Loan  accruing  interest in  accordance  with Interest Rate Options A or C.
Prepayment of Negotiated Rate Loans or Eurodollar  Loans prior to the end of the
Interest Period will be subject to Prepayment Penalty.

         2.7  Commitment  Fee.  The  Company  shall  pay to the  Bank an  annual
commitment fee in an amount equal to the product of the annual Commitment amount
multiplied  by  .125%  (.00125).  The  commitment  fee  shall  be paid in  equal
quarterly  installments on the last day of each quarter commencing June 30, 2000
through maturity.  For the purpose of prorating the amount of the commitment fee
due, a quarter shall be deemed to consist of 91 days.

                                   SECTION III
                                    TERM LOAN

         3.1 Amount.  The Bank  agrees to make a Term Loan (the "Term  Loan") to
the Company on May 31, 2003, in a principal amount equal to the principal amount
of the Revolving Note outstanding on such date, or any part thereof as specified
by the Company.

         3.2  Proceeds.  The proceeds of the Term Loan shall be applied first to
payment of the  Revolving  Note.  Any  unpaid  balance  of such  Revolving  Note
thereafter remaining,  together with accrued interest shall be contemporaneously
paid  by  the  Company  to the  Bank.  Upon  expiration  or  termination  of the
Commitment  and payment by the Company of all  Obligations on the Revolving Note
held by the Bank,  the Bank shall deliver the Revolving Note to the Company with
a notation that it has been canceled.

         3.3 Term Note. On May 31, 2003, the Company shall deliver to the Bank a
note in the form of Exhibit B attached  hereto (the "Term Note") dated such date
and in a principal  amount equal to the principal  amount of the Term Loan to be
made by the Bank.  The  principal of the Term Note shall be paid in  fortyseven
consecutive  equal monthly  installments of principal plus interest each payable
on the last day of each month commencing June 30, 2003 with a final  installment
due on May 31, 2007, when the unpaid principal amount and the accrued and unpaid
interest on the Term Note shall be payable in full.

         3.4  Interest.   The  Term  Note  shall  bear  interest  calculated  in
accordance  with  Section  9.5 from the date  thereof  on the  unpaid  principal
balance from time to time outstanding at an interest rate per annum equal to the
Company's  option of: (a) a rate  floating  at the Prime Rate with any change in
such interest rate being effective as of the date the Prime Rate is changed, (b)
a rate at the Federal Funds Rate (Index) plus 1.25% (Interest Spread). Such rate
shall change  daily,  or (c) The  Eurodollar  Rate (Index) plus 1.25%  (Interest
Spread)  for  Interest  Periods of one month,  three  months or six  months,  as
specified by the Company.  The Company shall choose an interest rate option when
the Term Loan is  initially  funded which shall remain in effect for the life of
the Loan.  Accrued  interest on the Term Note shall be paid  monthly on the last
day of each month commencing June 30, 2003 and at its maturity.

         3.5  Voluntary  Prepayments.  The  Company  may  make  full or  partial
prepayments for application to the Term Note, provided that (a) the Company pays
accrued interest on the principal prepaid to the date of prepayment, and (b) any
partial  prepayment  shall be in a minimum  aggregate  principal amount equal to
$25,000 or any higher  integral  multiple of $25,000.  Each  partial  prepayment
shall be applied  first to the  payment of accrued  interest  and other  charges
payable  hereunder and then to installments of principal in the inverse order of
maturity.  If interest is accruing based on a Eurodollar  Rate under 3.4(c) then
any prepayment would be subject to a Prepayment Penalty. If interest is accruing
based on the Prime  Rate or Fed Funds  option,  prepayment  may be made  without
premium or penalty.

                                   SECTION IV
           CONDITIONS PRECEDENT TO CLOSING AGREEMENT AND MAKING LOANS

         4.1 Conditions Precedent to Closing Agreement. The following conditions
must be satisfied  contemporaneously with the execution of this Agreement by the
Company:

             (a)  Receipt by the Bank of an opinion  addressed  to the Bank from
McGuire, Woods, Battle, & Boothe, L.L.P., counsel for the Company, substantially
in the form of Exhibit C attached hereto.

             (b) Receipt by the Bank of such other  documents  as the Bank shall
require,  all in form and  substance  satisfactory  to the Bank and its counsel,
including, without limitation, appropriate corporate resolutions and certificate
of incumbency.

         4.2  Conditions  Precedent  to Making  Loans.  (a) Prior to making  the
Revolving Loans, the Bank shall receive an appropriately  completed and executed
Revolving Note, and the following  conditions shall have been satisfied prior to
and after each Loan:

                  (i)  No  event  shall  have  occurred  and  be  continuing  or
condition shall exist, or would result from the proposed  Revolving Loan,  which
constitutes or, with the lapse of time or the giving of notice,  or both,  would
constitute a Default; in the case of a Refunding Loan (as hereinafter  defined),
this  condition  shall only  require  that no event shall have  occurred  and be
continuing or condition exist, or would result from the proposed Refunding Loan,
which constitutes a Default;

                  (ii) The representations and warranties  contained in Sections
6.1 through  6.12 hereof  shall be true and correct on and as of the date of the
proposed  Revolving  Loan  as  though  made on and as of  such  date,  provided,
however,  in the case of a Refunding  Loan, this condition shall not include the
representations and warranties in Sections 6.5 (second sentence), 6.6, 6.7, 6.8,
6.9, 6.10 and 6.12; and

                  (iii) No change shall have  occurred in any law or  regulation
thereunder  or  interpretation  thereof  which in the opinion of counsel for the
Bank would make it illegal for the Bank to make the Revolving  Loans as provided
herein.

         As used herein, the term "Refunding Loan" means a Revolving Loan which,
after  application  of the proceeds  thereof,  results in no net increase of the
outstanding principal amount of the Revolving Loan.

             (b)  Prior to making  the Term  Loan,  the Bank  shall  receive  an
appropriately  completed  and executed  Term Note and the  following  conditions
shall have been satisfied:

                  (i)  No  event  shall  have  occurred  and  be  continuing  or
conditions   shall  exist,  or  would  result  from  the  proposed  Loan,  which
constitutes  or,  with  lapse of time or the giving of  notice,  or both,  would
constitute a Default; and

                  (ii) No change  shall have  occurred in any law or  regulation
thereunder  or  interpretation  thereof  which in the opinion of counsel for the
Bank would make it illegal for the Bank to make the Loans as provided herein.

                                    SECTION V
                              BORROWING PROCEDURES

         5.1 Applicability. The following procedures shall be applicable to each
loan.

         5.2 Notice of  Borrowing.  The  Company  shall  certify to the Bank the
name, title and true signature of each officer of the Company authorized to sign
the Notes and give notice of borrowing hereunder. The Bank may conclusively rely
on such certification  until it receives written notice to the contrary from the
Company.

         5.3 Funds.  The Bank shall make available to the Company on the date of
borrowing the amount of such  borrowing in  immediately  available  funds at its
main office in Richmond, Virginia, during its normal business hours.

         5.4 Method of Payment. All payments of the Obligations shall be made by
the Company to the Bank by check or in immediately available funds, but the Bank
reserves the right to require immediately available funds.

                                   SECTION VI
                         REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to the Bank (which  representatives
and  warranties  shall  survive the  execution and delivery of the Notes and the
making of the Loans), as follows:

         6.1 Corporate Existence and Standing. The Company is a corporation duly
incorporated,  validly  existing and in good standing under the laws of Virginia
and the  Company has all  requisite  authority  to conduct its  business in each
jurisdiction  in which its business is conducted  and where failure to have such
authority would have a material adverse effect on the Company.

         6.2  Authorization  and  Validity.  The  execution  and delivery by the
Company of this  Agreement and the Notes  (together the "Loan  Documents")  have
been duly authorized by proper corporate  proceedings and this Agreement and the
Revolving  Note  constitute,  and the Term Note when  executed and delivered for
value will  constitute,  legal,  valid and  binding  obligations  of the Company
enforceable in accordance with their  respective terms except as the same may be
limited by bankruptcy,  insolvency,  reorganization and other laws affecting the
enforcement of creditors' rights generally and by usual equity principles.

         6.3  Compliance  with Laws and  Contracts.  Neither the  execution  and
delivery  by  the  Company  of  the  Loan  Documents,  the  consummation  of the
transactions herein contemplated, or compliance with the provisions thereof will
violate any law, rule, regulation, order, writ, judgment, injunction, decree, or
award  binding on the  Company or the  Company's  articles of  incorporation  or
bylaws or the provisions of any indenture, instrument or agreement to which the
Company is a party or  conflict  with or  constitute  a default  thereunder,  or
result in the creation or  imposition  of any Lien  pursuant to the terms of any
such indenture, instrument or agreement.

         6.4 No Governmental  or Other  Approvals.  The execution,  delivery and
performance of the Loan Documents and the  transactions  contemplated  hereby do
not require any  approval or consent  of, or filing or  registration  with,  any
governmental agency, stockholders,  or any other property, except for the filing
of this Agreement  with the Securities and Exchange  Commission as an exhibit to
any report of the Company  pursuant to ss.13 of the  Securities  Exchange Act of
1934.

         6.5  Financial  Statements.  The  financial  statements  of the Company
contained  in the  Company's  Form 10K Annual  Report for the fiscal year ended
January  29,  2000 and in the  Company's  10Q  Quarterly  Report for the fiscal
quarter  ended  October  30,  1999  filed  with  the   Securities  and  Exchange
Commission,  copies of which have been  heretofore  delivered to the Bank,  were
prepared in accordance with generally accepted  accounting  principles in effect
on the dates such  statements  were  prepared and fairly  present the  financial
condition of the Company at the dates of such  statements and the results of its
operations  for the  periods  then  ended.  No  material  adverse  change in the
condition  of the Company as shown on such  financial  statements  has  occurred
since the dates thereof.

         6.6 Taxes.  The Company has filed all United Stated  Federal income tax
returns  and all other tax returns  which are  required to be filed and has paid
all taxes due pursuant to said returns or pursuant to any assessment received by
the Company, except such taxes, if any, as are being contested in good faith and
as to which  adequate  reserves have been  provided.  The charges,  accruals and
reserves  on  the  books  of the  Company  in  respect  of any  taxes  or  other
governmental charges are adequate.

         6.7 Litigation. There is no litigation or proceeding pending or, to the
knowledge of any of its  officers,  threatened  against the Company  which might
materially  and adversely  affect the condition of the Company or the ability of
the Company to perform the Obligations.

         6.8  ERISA.  As of the date of this  Agreement,  the  Company  does not
maintain or contribute to a "multiemployer plan" as defined in section 3(37)(A)
of ERISA,  or any Plan.  The  Company is not in the process of  terminating  any
Plan. To the best of the Company's knowledge and belief, no fact,  including any
event  described  in Section  4043 of ERISA (a  "Reportable  Event"),  exists in
connection with any Plan which might  constitute  grounds for the termination of
any Plan by the Pension Benefit  Guaranty  Corporation or the appointment by the
appropriate United States district court of a trustee to administer any Plan.

         6.9  Defaults.  No Default or  Potential  Default has  occurred  and is
continuing.  The Company is not in default in respect of any of its Indebtedness
for borrowed money and no holder of any such Indebtedness has given notice of an
asserted default thereunder. No liquidation,  dissolution or other winding up of
the Company and no bankruptcy or similar proceedings relative to the Company are
pending or, to the Company's knowledge, threatened.

         6.10  Accuracy  of  Information.  No  information,  exhibit  or  report
furnished by the Company to the Bank in connection  with the  negotiation of the
Loan  Documents  contains any untrue  statement  of a material  fact or omits to
state a material fact necessary to make the statements  contained therein in the
light of the circumstances under which they were made not misleading.

         6.11 Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying  "margin  stock" (as defined in Regulation U of the Board
of Governors of the Federal Reserve System).

         6.12 Subsidiaries. The representatives and warranties set forth in 6.1,
6.3, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10 and 6.11 of this Section VI are also true and
correct with respect to any Subsidiary of the Company.

                                   SECTION VII
                                    COVENANTS

         During the term of this  Agreement,  and until the Obligations are paid
in full, unless the Bank shall otherwise consent in writing:

         7.1  The Company will:

         7.1.1 Financial Reporting.  Maintain, for itself and each Subsidiary, a
modern system of accounting, and furnish to the Bank:

             (a)  Within 90 days  after the close of each of its  fiscal  years,
provide   to   the   Bank   an   unqualified    audit   report    certified   by
PricewaterhouseCoopers,  L.L.P.,  or other  accountants  of recognized  national
standing,  prepared in accordance with generally accepted accounting principles,
consistently applied (except for changes in such principles or their application
as approved by such  accountants),  on a  Consolidated  basis for itself and the
Subsidiaries,  including balance sheets as of the end of such period, statements
of income or loss,  statements of changes in stockholders' equity and statements
of cash flows  accompanied  by a certificate  of such  accountants  that, in the
course of their examination  necessary for their certification of the foregoing,
they have obtained no knowledge of any Default or Potential  Default,  or if, in
the opinion of such  accountants,  any Default or Potential Default shall exist,
such certificate shall state the nature and status thereof;

             (b)  Within 60 days  after the close of the first  three  quarterly
periods during each fiscal year, for itself and the Subsidiaries, provide to the
Bank,  Consolidated unaudited balance sheets as at the close of each such period
and  Consolidated  statements  of  income  or loss,  statements  of  changes  in
stockholders'  equity  and  statements  of cash  flows for the  period  from the
beginning  of such  fiscal  year to the end of such  quarter,  all  prepared  in
accordance with generally accepted accounting  principles,  consistently applied
(except for changes in such  principles or their  application as approved by the
Company's  chief  financial  officer),  and  certified  by its  chief  financial
officer;

             (c) Together with the financial statements required under 7.1.1 (a)
and (b) above, a certificate,  dated as of the end of the fiscal period to which
the financial  statements apply, signed by the Company's chief financial officer
stating that to the best of his knowledge and belief there neither exists on the
date of such  certificate,  nor  existed  during  such  period,  any  Default or
Potential  Default,  or if any such  Default  or  Potential  Default  existed or
exists,  the  certificate  shall  specify  the  nature  thereof,  the  period of
existence  thereof and what action the Company has taken,  is taking or proposed
to take with respect thereto;

             (d) Within 90 days after the close of each fiscal year, a statement
of the Unfunded  Liabilities of each Plan which exceeded $100,000,  certified as
correct by an actuary enrolled under ERISA;

             (e) As soon as possible  and in any event  within 10 days after the
Company knows that any Reportable  Event (as described in Section 4043 of ERISA)
has  occurred  with  respect to any Plan which is required to be reported to the
Pension Benefit Guaranty Corporation, a statement, signed by the chief financial
officer of the Company,  describing such  Reportable  Event and the action which
the Company proposes to take with respect thereto; and

             (f)  Promptly  upon  their  becoming  available,  (i) copies of all
financial statements,  proxy statements and reports which the Company shall send
to its  stockholders,  and (ii)  copies of all regular  and  periodic  financial
reports,  if any,  which the Company shall file with the Securities and Exchange
Commission,  or any governmental agency or agencies substituted therefor, or any
similar or corresponding governmental department,  commission,  board, bureau or
agency, or with any national securities exchange;

             (g) Such other information (including nonfinancial information) as
the Bank may from time to time reasonably request.

         7.1.2 Use of  Proceeds.  Use of  proceeds of the Loans only for working
capital and other general corporate purposes,  including funds for the Company's
store expansion.

         7.1.3 Minimum Consolidated  Tangible Net Worth.  Maintain  Consolidated
Tangible  Net Worth at all times of not less than  $48,300,000  of  Consolidated
Tangible Net Worth at January 30, 1999, and for each fiscal year thereafter,  of
not  less  than  $48,300,000  plus 80% of each  successive  year's  net  income.
However,  during the fiscal year  beginning  February  1, 1999,  and all periods
thereafter,  upon approval of the Company's Board of Directors and  notification
to SunTrust, S & K Famous Brands may purchase up to an additional $12,800,000 of
its own  stock.  Any such  repurchases  shall  reduce the  minimum  Consolidated
Tangible Net Worth requirement by 90% of the value of the stock repurchased. The
minimum  Consolidated  Tangible  Net Worth will not be adjusted for any net loss
reported by the Company.

         7.1.4  Current  Ratio.  Maintain  as of the end of  each of its  fiscal
quarters  a  ratio  of  Consolidated  current  assets  to  Consolidated  current
liabilities of not less than 2.5 to 1. For purposes of this computation, amounts
outstanding  under the Revolving Note and the  agreements  referenced in Section
9.16 shall be considered long term debt.

         7.1.5 Ratio of Consolidated  Unsubordinated Liabilities to Consolidated
Effective Tangible Net Worth. Maintain at the end of each fiscal quarter a ratio
of Consolidated  Unsubordinated  Liabilities to Consolidated  Effective Tangible
Net Worth of not greater  than 1.25 to 1 and  maintain at the end of each fiscal
year end a ratio of  Consolidated  Unsubordinated  Liabilities  to  Consolidated
Effective Tangible Net Worth of not greater than .85 to 1.

         7.1.6 Fixed  Charge  Coverage  Ratio.  Maintain,  as of the end of each
fiscal  quarter,  a ratio greater than 1.25 to 1 of (a) the sum of profit before
tax, noncash charges, interest expense (including interest on Capitalized Lease
Obligations)  and operating  lease payments (all for the four most recent fiscal
quarters ending prior to the quarter in which the  determination is made) to (b)
the  sum  of  interest  expense   (including   interest  in  Capitalized   Lease
Obligations),  operating lease payments, Capitalized Lease Obligations, payments
due on Funded Debt for the four ensuing fiscal  quarters  (including the quarter
in which the determination is made), and cash dividends for the four most recent
fiscal quarters ending prior to the quarter in which determination is made.

         7.2  The Company will and will cause each Subsidiary to:

         7.2.1 Notice of Default.  Give prompt  notice in writing to the Bank of
the occurrence of any Default or Potential Default and of any other development,
financial  or  otherwise,  which  might  materially  and  adversely  affect  its
business,  properties  or affairs or the  ability of the  Company to perform the
Obligations.

         7.2.2 Conduct of Business and  Maintenance  of Existence.  Carry on and
conduct business in substantially  the same manner and in substantially the same
fields of enterprise as it is presently  conducted;  and do all things necessary
to remain duly incorporated, validly existing and in good standing as a domestic
corporation  in its  jurisdiction  of  incorporation  and maintain all requisite
governmental authority to conduct business in each jurisdiction in which failure
to maintain such authority would have a material  adverse effect on the Company.
Notwithstanding  the  above,  Subsidiaries  may be  dissolved  if the  continued
existence of such  Subsidiary  is not  material to the business or  Consolidated
financial condition of the Company and its remaining Subsidiaries.

         7.2.3  Taxes.  Pay when due all  taxes,  assessments  and  governmental
charges and levies  upon it or its income,  profits or  property,  except  those
which are being  contested  in good faith by  appropriate  proceedings  and with
respect to which adequate reserves have been set aside.

         7.2.4 Insurance.  Maintain  insurance in such amounts and covering such
risks as is consistent with sound business practice.

         7.2.5 Inspection. Permit the Bank by its representatives and agents and
at its expense, to inspect any of the properties,  corporate books and financial
records of the  Company and each  Subsidiary,  to examine and make copies of the
books  of  accounts  and  other  financial  records  of  the  Company  and  each
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
each Subsidiary  with, and to be advised as to the same by, its officers at such
reasonable times and intervals as the Bank may designate.

         7.3  The Company will not, nor will it permit any Subsidiary to:

         7.3.1  Mergers,   Acquisitions  and  Sale  of  Assets.   (a)  Merge  or
consolidate with or into any other Person;  (b) lease, sell or otherwise dispose
of all, or a  substantial  portion of, its  property,  assets or business to any
other Person; or (c) lease,  purchase or otherwise acquire all, or a substantial
portion of, the property,  assets or business of any other  Person,  except that
(i) any  Subsidiary may merge with, or transfer its assets to, any Subsidiary or
to the Company, (ii) the Company may merge or consolidate with another Person if
the Company is the  surviving  entity and if, after giving  effect to the merger
and consolidation,  there would exist no Default or Potential Default hereunder,
(iii) assets may be leased,  sold or otherwise  disposed of provided such assets
are not  material to the  business or  Consolidated  financial  condition of the
Company  and its  Subsidiaries,  (iv) the  Company  may  purchase or acquire its
inventory from a Person even if such inventory  constitutes all or a substantial
portion of the property, assets or business of such Person, (v) inventory may be
sold in the ordinary  course of business of the Company or any  Subsidiary,  and
(vi) sales, leases or other dispositions in any fiscal year of the Company in an
aggregate amount for the Company and all  Subsidiaries not to exceed  $2,000,000
shall be permitted.

         7.3.2  Sale  of  Accounts.  Sell  or  otherwise  dispose  of any  notes
receivable or accounts receivable, with or without recourse, having an aggregate
face value of more than $400,000.

         7.3.3  Investments.  Make  or  suffer  to  exist  any  Investments,  or
commitments therefore, except:

             (a) Shortterm  obligations  of, or fully  guaranteed as to interest
and principal by, the United States of America.

             (b)  Commercial  paper of any Person  rated at least A2 by Standard
and Poor's or P2 by Moody's Investors Service, Inc.

             (c) Demand deposit  accounts  maintained in the ordinary  course of
its business, or that of its Subsidiaries.

             (d)  Certificates  of deposit  issued by  commercial  banks  having
capital and surplus in excess of $100,000,000.

             (e) Investments in  Subsidiaries,  if, after giving effect thereto,
there would exist no Default or Potential Default hereunder.

             (f) Notes or other  securities  of any Person  issued in connection
with any disposition of assets permitted by this Agreement.

             (g) Any other Investments which, in the aggregate, are less than 5%
of the Consolidated Tangible Net Worth of the Company and its Subsidiaries.

             (h)  Repurchase  of the Company's  outstanding  shares , if , after
giving effect  thereto,  there would not exist any Default or Potential  Default
hereunder subject to Section 7.1.3.

         7.3.4 Guaranties. Make or suffer to exist any Guaranties, except (a) by
endorsement of instruments  for deposit or collection in the ordinary  course of
business  and  (b)  the  guaranty  by  the  Company  of the  obligations  of any
Subsidiary or issuing authority in connection with any industrial  revenue bonds
issued to finance the purchase or  construction of facilities to be purchased by
or leased to the Company or any Subsidiary.

         7.3.5  Liens.  Create, incur, or suffer to exist any Lien, except:

             (a)  Those in favor of the Company by its Subsidiaries.

             (b) Those for taxes,  assessments or governmental charges or levies
on its property if the same shall not at the time be  delinquent  or  thereafter
can be paid  without  penalty,  or are  being  contested  in good  faith  and by
appropriate proceedings.

             (c) Those  imposed by law,  such as liens in favor of  lessors  for
distraint and similar  remedies and  carriers',  warehousemen's,  and mechanics'
liens and other similar liens arising in the ordinary  course of business  which
secure  payment of  obligations  not more than 90 days past due, or, if the same
are more than 90 days past due, those that are being contested in good faith and
by appropriate proceedings.

             (d)  Those  arising  out of  pledges  or  deposits  under  worker's
compensation laws,  unemployment  insurance,  old age pensions,  or other social
security or retirement benefits, or similar legislation.

             (e)  Utility  easements,   building  restrictions  and  such  other
encumbrances  or charges  against  real  property  as are of a nature  generally
existing with respect to  properties of a similar  character and which do not in
any material way affect the  saleability  of the same or interfere  with the use
thereof in the business of the Company or the Subsidiaries.

             (f) Liens and charges for  maintenance,  repairs and  operation  of
facilities  owned  or  leased  by the  Company  or its  Subsidiaries  or used in
connection therewith,  arising under joint easement and maintenance  agreements,
reciprocal  easement  agreements  or  similar  documents  governing  the  use or
occupancy of such facilities.

             (g)  Judgment  liens not in existence  for a period  longer than 60
days after the  creation  thereof,  or, if a stay of  execution  shall have been
obtained, for a period longer than 60 days after the expiration of such stay.

             (h)  Lessors' interests under Financing Leases.

             (i)  Those disclosed in exhibit D attached hereto.

             (j) Liens  securing the purchase or deferred  price of fixed assets
if the Lien extends only to the property acquired.

             (k) Equitable liens in favor of dissenting shareholders of acquired
corporations  for the  fair  market  value  of  their  shares  of  stock of such
corporations.

             (l)  Liens  in  addition  to  those  permitted  above  securing  an
aggregate amount not exceeding 1% of the Consolidated  Tangible Net Worth of the
Company and its Subsidiaries at any one time.

         7.3.6 Prepayment of Subordinated  Debt. Prepay, in whole or in part (or
upon the occurrence and continuation of a Default,  repay), the principal amount
of any of its Subordinated Debt.

         7.3.7  Purchase  of Stock.  Extend  credit to others for the purpose of
purchasing  or  carrying  any  "margin   stock"  (as  defined  in  Regulation  U
promulgated by the Board of Governors of the Federal  Reserve System) or use any
of the proceeds of the Loans made under this  Agreement to purchase or carry any
"margin stock."

                                  SECTION VIII
                                    DEFAULTS

         8.1  Events  of  Default.  The  occurrence  of any  one or  more of the
following events shall constitute a Default:

         8.1.1 Any material  representation  or warranty  made by the Company to
the Bank under or in connection with any Loan Document shall be materially false
as of the date on which made.

         8.1.2  Nonpayment of principal of or interest or commitment  fee on any
of the Notes within 5 days after the same becomes due.

         8.1.3 The breach by the  Company of any of the terms or  provisions  of
sections 7.1.2,  7.1.3,  7.1.4, 7.1.5, 7.1.6, 7.2.2, 7.3.1, 7.3.2, 7.3.3, 7.3.4,
7.3.5, 7.3.6, or 7.3.7.

         8.1.4 The  Company  shall  breach or fail to  perform  any of the other
terms or provisions of the Agreement and such default shall continue for 30 days
after written notice thereof has been given to the Company by the Bank.

         8.1.5 The  Company  or any  Subsidiary  shall (a) not pay,  or admit in
writing its  inability to pay, its debts  generally as they become due, (b) make
an assignment for the benefit of creditors,  (c) apply for, seek, consent to, or
acquiesce  in, the  appointment  of a receiver,  custodian,  trustee,  examiner,
liquidator or similar  official for it or any substantial  part of its property,
(d) institute any  proceeding  seeking to adjudicate it insolvent,  or seeking a
decree  or  order  for  relief  in  bankruptcy  or   dissolution,   winding  up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to  bankruptcy,  insolvency  or  reorganization  or
relief  of  debtors  or fail to file an  answer or other  pleading  denying  the
material  allegations  of any such  proceeding  filed  against  it, (e) take any
corporate  action to authorize or effect any of the foregoing  actions set forth
in this Section 8.1.5,  or (f) fail to contest in good faith any  appointment or
proceeding described in Section 8.1.6.

         8.1.6  Without the  application,  approval or consent of the Company or
any Subsidiary, a receiver,  custodian, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or any substantial
part of its property,  or a proceeding  described in Section  8.1.5(d)  shall be
instituted against the Company or any Subsidiary and such appointment  continues
undischarged or such proceeding  continues  undismissed or unstayed for a period
of 60 days.

         8.1.7 Any court, government or governmental agency shall condemn, seize
or  otherwise  appropriate,  or take custody or control of all or any portion of
the property of the Company or any  Subsidiary  which is material to the conduct
of the business of the Company and the Subsidiaries on a Consolidated basis, and
for which the Company does not receive market consideration.

         8.1.8 The Company or any  Subsidiary  shall fail within 60 days to pay,
bond or  otherwise  discharge  any judgment or order for the payment of money in
excess  of  $500,000,   which  is  not  stayed  on  appeal  or  otherwise  being
appropriately contested in good faith.

         8.1.9 The Unfunded  Liabilities  of all Plans shall exceed  $500,000 in
the aggregate.

         8.1.10 An Event of Default under the Bond Purchase Agreement.

         8.1.11 An Event of Default under the Credit Agreement and/or Notes with
First Union National Bank.

         8.2 Acceleration  and Recourse.  Upon the occurrence of any Default the
Bank may, at its option,  by notice given to the Company,  terminate  the Bank's
Commitment and, if Loans are then outstanding, declare the then outstanding Note
to be forthwith due and payable,  whereupon  the  principal  amount of such Note
together with accrued interest thereon shall become  immediately due and payable
without presentment,  demand, protest, or other notice of any kind, all of which
are hereby expressly waived by the Company.

                                   SECTION IX
                                  MISCELLANEOUS

         9.1 Notices. All written notices hereunder shall be deemed to have been
given (i) when  delivered at the address  specified on the signature page hereto
or at such other  address  as a party may  hereafter  advise the other  party in
writing or (ii) three  calendar days after the same shall have been deposited in
the United  States  mail,  by  certified  or  registered  mail,  return  receipt
requested, postage prepaid.

         9.2 Term of Agreement.  This Agreement shall continue in effect so long
as any Commitment, Loan, Note or Obligation of the Company shall be outstanding.

         9.3 No Waivers. Any failure by the Bank to exercise any right hereunder
shall not be  construed  as a waiver of the  right to  exercise  the same or any
other right at any time. The rights and remedies  herein provided are cumulative
and not exclusive of any rights or remedies otherwise provided by law.

         9.4  Jurisdiction.  This  Agreement and each Note shall be construed in
accordance with and governed by the laws of the Commonwealth of Virginia.

         9.5 Computation of Interest.  Interest shall be calculated daily on the
unpaid principal  balance of the outstanding  Notes and shall be computed on the
basis of a year of 365 days and paid for the  actual  number  of days for  which
due. Such daily  computation  shall not be  compounded.  If the due date for any
payment of principal is extended by operation of law,  interest shall be payable
for such  extended  time.  If any  payment  becomes  due on a day which is not a
Business Day such payment may be made on the next  succeeding  Business Day, and
such  additional  day(s) shall be included in computing  interest in  connection
with such payment.

         9.6  Expenses,  Taxes,  Etc. The Company  agrees to pay all  reasonable
outofpocket  expenses  of the Bank and the  reasonable  fees and  expenses  of
counsel to the Bank, in connection with the preparation of all  documentation in
connection with this Agreement,  the Loans and the enforcement thereof,  whether
or not any Loans are made.  The Company  agrees to indemnify the Bank from,  and
hold it harmless against, any taxes, charges or penalties (other than in respect
of taxes  imposed  upon or  measured  by the income of the Bank)  imposed by any
governmental authority by reason of the execution and delivery of this Agreement
or the  issuance  or the  acquisition  of the  Notes or the  making of any Loans
unless any such tax,  charge or penalty shall be the result of the negligence or
misconduct  of the Bank.  In the event that the Bank shall retain at any time an
attorney  to  collect,  enforce or protect  its  interest  with  respect to this
Agreement,  any Loan or any  Note,  the  Company  shall pay all of the costs and
expenses of such  collection,  enforcement or protection,  including  reasonable
fees of attorneys, and the Bank may take judgment for all such amounts.

         9.7  Accounting  Terms.  Unless  expressly  otherwise  defined  in this
Agreement,   all  accounting   terms  shall  be  defined,   and  all  accounting
computations  shall be made, in accordance  with generally  accepted  accounting
principles.

         9.8 Repayment in Bankruptcy. In the event any amount of the Obligations
is paid by the  Company  and  because of  bankruptcy  or other laws  relating to
creditors'  rights  the Bank  repays any such  amounts to the  Company or to any
trustee,  receiver or  otherwise,  then the amounts so repaid shall again become
part of the Obligations.

         9.9  Changes,  Waivers,  Etc.  This  Agreement  may not be  amended  or
terminated orally, but only by a statement in writing signed by both parties.

         9.10  Singular and Plural.  Terms in the singular  number shall include
the plural and those in the plural shall include the singular.

         9.11 Use of Defined Terms.  All terms defined in this  Agreement  shall
have  the  defined  meanings  when  used in the  Notes  and in  other  documents
delivered  pursuant  to this  Agreement,  unless  the  context  shall  otherwise
require.

         9.12 Binding Effect of Agreement.  This Agreement shall be binding upon
and  inure  to the  benefit  of the  Company,  the  Bank  and  their  respective
successors and assigns, provided that the Company may not assign or transfer its
rights hereunder.

         9.13 Headings.  Headings or captions have been inserted for convenience
only  and  shall  not be  construed  as  limiting  or  affecting  in any way the
provisions of this Agreement.

         9.14  Counterparts.  This  Agreement  may be  signed  in any  number of
counterparts  with the same  effect  as if such  signatures  were  upon the same
instrument.

         9.15 Cross  Default.  The Company  agrees  that if the  maturity of the
Notes shall be accelerated  because of a Default hereunder or if the Notes shall
mature and be unpaid when due,  upon request of the Bank and tender of the Bonds
(the  "Bonds")  issued  under the Bond  Purchase  Agreement  to the Company duly
endorsed without recourse,  the Company shall purchase (or cause its designee to
purchase) the Bonds from the Bank at a price equal to the outstanding  principal
amount of the Bonds plus accrued interest thereon to the date of purchase.

         9.16 Additional  Banks/Loan  Agreements.  The Bank understands that the
Company also maintains a $20,000,000  revolving credit facility with First Union
National Bank. The Bank further understands that the terms and conditions of the
$20,000,000 loan agreement do not conflict with those in this Agreement and that
all loan proceeds from any First Union  National Bank loans are used for working
capital and general corporate purposes.  During the term of this Agreement,  the
Company  or any  Subsidiary  agrees  that it shall not enter into any other loan
agreement(s) which would cause its Indebtedness to exceed $40,000,000 (excluding
loans under the Bond Purchase Agreement).

         WITNESS the following signatures.

                                    S&K FAMOUS BRANDS, INC.

                                    By:      /s/ Robert E. Knowles

                                    Title:   Executive Vice President
                                             Chief Financial Officer

                                    Address: 11100 West Broad Street
                                             P.O. Box 31800
                                             Richmond, Virginia  232941800
                                             Attn:  Executive Vice President and
                                                    Chief Financial Officer

                                    SunTrust Bank

                                    By       /s/ W. A. Stratton

                                    Title    Senior Vice President

                                    Address: 919 East Main Street
                                             P.O. Box 26665
                                             Richmond, Virginia 23261
                                             William A. Stratton

<PAGE>

                                    EXHIBIT A
                                 REVOLVING NOTE

$20,000,000                                                   Richmond, Virginia
                                                                   May, 31, 2000

         FOR VALUE  RECEIVED,  on May 31,  2003,  S&K  FAMOUS  BRANDS,  INC.,  a
Virginia  corporation (the  "Borrower"),  hereby promises to pay to the order of
SunTrust  Bank (the  "Payee" or the  "Bank") at its main  office,  in  Richmond,
Virginia,  in lawful money of the United States, the principal of Twenty Million
and no/100 Dollars ($20,000,000) or the aggregate unpaid principal amount of all
Revolving  Loans  made by the  Payee  to the  Borrower  pursuant  to the  Credit
Agreement  hereinafter  referred to,  whichever is less (the  "Principal").  The
Borrower  further  promises to pay interest on the last day of each month during
the term hereof,  commencing  June 30,  2000,  and on the last day of each month
thereafter and on May 31, 2003, on the amount of the Principal from time to time
outstanding  during the period beginning on the date hereof and continuing until
this  Note  is  paid in full  at a rate  or  rates  provided  for in the  Credit
Agreement.  Interest  payable  hereunder  shall be  calculated on the basis of a
365day year and paid for the actual number of days for which due.

         This Note is issued  pursuant  to and  subject to the  provisions  of a
certain Credit Agreement dated as of May 31, 2000,  between the Borrower and the
Bank (herein,  as the same may from time to time be amended,  referred to as the
"Credit Agreement");  but neither this reference to the Credit Agreement nor any
provisions  thereof  shall  affect  or impair  the  absolute  and  unconditional
obligation  of the Borrower to pay the Principal of and Interest on this Note as
herein provided.

         This Note is subject to  prepayment,  in whole or in part, as specified
in the Credit Agreement.  In case a Default, as defined in the Credit Agreement,
shall occur and be continuing, this Note may become or may be declared to be due
and payable in the manner and with the effect provided in the Credit  Agreement,
and the  Borrower  hereby  agrees to pay all costs and  expenses  in  connection
therewith,  including  reasonable  attorney's  fees,  as  provided in the Credit
Agreement.

         The Borrower and all  guarantors,  endorsers and pledgors hereof hereby
waive presentment,  demand,  notice of dishonor,  protest, and all other demands
and notices in connection with the delivery,  acceptance and performance of this
Note.

         This Note shall be governed by and  interpreted in accordance  with the
laws of the Commonwealth of Virginia.

         In Witness  Whereof,  the Borrower has caused its corporate  name to be
signed  by its  duly  authorized  officer  as of the day and  year  first  above
written.

                                          S&K FAMOUS BRANDS, INC.

                                          By      /s/ Robert E. Knowles

                                          Title   Executive Vice President
                                                  Chief Financial Officer

<PAGE>

                                    EXHIBIT B
                                    TERM NOTE

$_____________                                                Richmond, Virginia
                                                                    May 31, 2003

         FOR VALUE  RECEIVED,  S&K FAMOUS BRANDS,  INC., a Virginia  corporation
(the  "Borrower"),  hereby  promises to pay to the order of  SunTrust  Bank (the
"Payee" or the "Bank") at its main  office,  in  Richmond,  Virginia,  in lawful
money  of  the  United  States,   the  principal  of   _______________   Dollars
($_______________)   (the  "Principal"),   in  fortyseven  consecutive  monthly
installments of principal of  _____________________  Dollars  ($_______________)
each, plus interest, commencing on June 30, 2003, and continuing on the last day
of each month  thereafter  and one final  payment of principal of  _____________
Dollars ($_______________) on May 31, 2007, when the entire unpaid Principal and
accrued  interest  thereon shall be paid in full.  The Borrower  hereby  further
promises to pay interest  from the date hereof on the amount of  Principal  from
time to time  outstanding  at a rate or  rates  as  provided  for in the  Credit
Agreement.  Interest  shall be payable on the last day of each month  during the
term  hereof,  commencing  on June 30,  2003,  and on the last day of the  month
thereafter  and on May 31, 2007.  Interest shall continue to accrue on this Note
after  maturity  at the rate set forth above and shall then be payable on demand
of the holder of this Note.  Interest  payable  hereunder shall be calculated on
the basis of a  365day  year and paid for the  actual  number of days for which
due.

         This Note is issued  pursuant  to and  subject to the  provisions  of a
certain Credit Agreement dated as of May 31, 2000,  between the Borrower and the
Payee (herein, as the same may from time to time be amended,  referred to as the
"Credit Agreement");  but neither this reference to the Credit Agreement nor any
provision  thereof  shall  affect  or  impair  the  absolute  and  unconditional
obligation  of the Borrower to pay the Principal of and interest on this Note as
herein provided.

         This Note is subject to  prepayment,  in whole or in part, as specified
in the Credit Agreement.  In case a Default, as defined in the Credit Agreement,
shall occur and be continuing, this Note may become or may be declared to be due
and payable in the manner and with the effect provided in the Credit  Agreement,
and the  Borrower  hereby  agrees to pay all costs and  expenses  in  connection
therewith,  including  reasonable  attorney's  fees,  as  provided in the Credit
Agreement.

         The Borrower and all  guarantors,  endorsers and pledgors hereof hereby
waive presentment, demand, notice of dishonor, protest and all other demands and
notices in connection with the delivery, acceptance, performance and enforcement
of this Note.

         This Note shall be governed by and  interpreted in accordance  with the
laws of the Commonwealth of Virginia.

         IN WITNESS  WHEREOF,  the Borrower has caused its corporate  name to be
signed  by its  duly  authorized  officer  as of the day and  year  first  above
written.

                                       S&K FAMOUS BRANDS, INC.

                                       By ____________________________________

                                       Title _________________________________

<PAGE>

                                    EXHIBIT D

                                  LIST OF LIENS

1.  Liens  created  in favor of the  holder  of the Bonds  pursuant  to the Bond
Purchase Agreement.

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