FUTURELINK CORP
8-K, 2000-01-06
COMPUTER PROGRAMMING SERVICES
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<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K


                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934.



       Date of report (Date of earliest event reported): December 22, 1999



                           Commission File No. 0-24833




                                FUTURELINK CORP.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                DELAWARE                                 95-4763404
- ----------------------------------------  --------------------------------------
    (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
     Incorporation or Organization)


   100, 6 Morgan, Irvine, California                        92618
- ----------------------------------------  --------------------------------------
(Address of principal executive offices)                  (ZIP Code)


                                 (949) 837-8252
- --------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)



- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)


<PAGE>   2



ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS

           On December 22, 1999, the Registrant completed its previously
announced acquisition of UK-based KNS Holdings Limited, carrying on business as
KNS Distribution ("KNS"). Under the terms of this acquisition, KNS shareholders
received (pound)3,095,293.84 million in cash (approx. US$5,000,000) and
2,160,307 shares of the Registrant's common stock valued at $14.95 per share. In
addition, KNS shareholders received two loan notes due April 6, 2000 and June
30, 2000 for (pound)1,654,706.16 (approx. US$2,660,000) and (pound)2,500,000
(approx. US$4,025,00) respectively. The Agreement for the Sale and Purchase of
the Entire Issued Share Capital of KNS Holdings Limited dated November 15, 1999
(the "Acquisition Agreement") and the Supplemental Agreement for Sale and
Purchase of Shares (the "Supplemental Agreement") to the Acquisition Agreement,
dated December 20, 1999, pursuant to which this acquisition was completed are
attached as an exhibits hereto.

           Audited combined financial statements for KNS as at February 28, 1999
and for the years ended February 28, 1998 and 1999 and unaudited financial
statements for KNS as at September 30, 1999 and for the seven months ended
September 30, 1999 are attached to this Current Report on Form 8-K.

           The Registrant intends to file unaudited pro forma financial
statements for the fiscal year ended December 31, 1998 and for the nine months
ended September 30, 1999 showing the impact of the KNS acquisition in a
subsequent Current Report on Form 8-K or Form 8-K/A on or before February 1,
2000.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS

(a)      FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:

         Audited financial statements for KNS as at February 28, 1999 and for
         the years ended February 28, 1998 and 1999 and unaudited financial
         statements for KNS as at September 30, 1999 and for the seven months
         ended September 30, 1999 are attached to this Report.

(b)      PRO  FORMA FINANCIAL INFORMATION:

         Pro forma financial information is not included with this Current
         Report on Form 8-K. Unaudited pro forma financial statements showing
         the combination of the Registrant with KNS as at December 31, 1998 and
         for the 12 months ended December 31, 1998 and as at September 30, 1999
         and for the nine months ended September 30, 1999 will be provided in a
         subsequent filing which the Registrant intends to file on or before
         February 1, 2000.


<PAGE>   3


(c)      EXHIBITS:

         2.1      The Agreement for the Sale and Purchase of the Entire Issued
                  Share Capital of KNS Holdings Limited dated November 15, 1999
                  between FutureLink Corp., a Delaware corporation and John
                  Bennett, Richard Bennett, Colin Matthissen, Quadrangle Trust
                  Company, Peter Crozier, Michael Dorward, Anthony
                  Harrison-Wallace, Robert Kell, Mark Kerridge, Nicola Kerridge,
                  Nigel Hawley, Rajan Mehta and Yuri Pasea. (the "Acquisition
                  Agreement")

         2.2      Supplemental Agreement for Sale and Purchase of Shares dated
                  December 20, 1999 to the Acquisition Agreement.

         23.1     Consent of Ernst & Young, Certified Public Accountants, the
                  independent auditors of KNS.

         99.1     News Release of the Registrant dated December 22, 1999.


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


   FUTURELINK CORP.


   By:  [signed: R. Kilambi]                          Date:  January 6, 1999
        ----------------------------------------
         Raghu Kilambi, Chief Financial Officer


<PAGE>   4


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>

Exhibit No.                         Description
- -----------                         -----------
<S>          <C>
2.1          The Agreement for the Sale and Purchase of the
             Entire Issued Share Capital of KNS Holdings Limited
             dated November 15, 1999 between FutureLink Corp., a Delaware
             corporation and John Bennett, Richard Bennett, Colin Matthissen,
             Quadrangle Trust Company, Peter Crozier, Michael Dorward, Anthony
             Harrison-Wallace, Robert Kell, Mark Kerridge, Nicola Kerridge, Nigel
             Hawley, Rajan Mehta and Yuri Pasea. (the "Acquisition Agreement")

2.2          Supplemental Agreement for Sale and Purchase of Shares dated
             December 20, 1999 to the Acquisition Agreement.


23.1         Consent of Ernst & Young, Certified Public Accountants, the
             independent auditors of KNS.

99.1         News Release of the Registrant dated December 22, 1999.
</TABLE>


<PAGE>   1



                                                                     Exhibit 2.1


                             DATED 15 NOVEMBER 1999






  JOHN BENNETT, RICHARD BENNETT, COLIN MATTHISSEN, QUADRANGLE TRUSTEE COMPANY,
     PETER CROZIER, MICHAEL DORWARD, ANTHONY HARRISON-WALLACE, ROBERT KELL,
    MARK KERRIDGE, NICOLA KERRIDGE, NIGEL HAWLEY, RAJAN MEHTA AND YURI PASEA

                                       AND

                                FUTURELINK CORP.





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

                                    AGREEMENT
                        FOR THE SALE AND PURCHASE OF THE
                           ENTIRE ISSUED SHARE CAPITAL
                                       OF
                              KNS HOLDINGS LIMITED

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







                      PAUL, HASTINGS, JANOFSKY & WALKER LLP
                                    TOWER 42
                               25 OLD BROAD STREET
                                 LONDON EC2N 1HQ

                               TEL: 020 7562 4000
                               FAX: 020 7628 4444


<PAGE>   2




                                TABLE OF CONTENTS


                                                                    PAGE

1.       DEFINITIONS AND INTERPRETATION...............................1

2.       AGREEMENT TO SELL AND PURCHASE...............................6

3.       CONSIDERATION................................................6

4.       PRE-EMPTION RIGHTS...........................................9

5.       VENDORS' AND TRUSTEES' WARRANTIES............................9

6.       LIMITATIONS TO THE VENDORS' WARRANTIES......................10

6A.      PURCHASER'S WARRANTIES......................................12

7.       RELEASE OF GUARANTEES.......................................12

8.       COMPLETION..................................................12

9.       CONDUCT OF BUSINESS.........................................13

10.      CONDITIONS PRECEDENT........................................14

11.      TERMINATION, AMENDMENT AND SURVIVAL OF OBLIGATIONS..........16

12.      RESTRICTIVE COVENANTS.......................................18

13.      POST-COMPLETION EFFECT......................................19

14.      SUCCESSORS AND ASSIGNS......................................19

15.      INFORMATION AND CONFIDENTIALITY.............................19

16.      ANNOUNCEMENTS AND PUBLICITY.................................19

17.      NOTICES.....................................................20

18.      SERVICE OF PROCESS..........................................21

19.      FURTHER ASSURANCE...........................................21

20.      WAIVERS.....................................................21

21.      ENTIRE AGREEMENT............................................22

22.      VARIATION...................................................22

23.      COUNTERPARTS................................................22

24.      APPLICABLE LAW..............................................22



                                      -i-

<PAGE>   3




                                    SCHEDULES



SCHEDULE 1           Particulars of the Vendors and of the Shares to be Sold
PART A               and Consideration Shares to be Received by Each of Them

SCHEDULE 1           Payments Schedule
PART B

SCHEDULE 2           Particulars Concerning the Company

SCHEDULE 3           Redundant

SCHEDULE 4           General Warranties
PART A

SCHEDULE 4           Warranty and Service Agreements Relating to Year 2000
PART A.1

SCHEDULE 4           Warranties Relating to Tax
PART B

SCHEDULE 4           Property Warranties
PART C

SCHEDULE 4           Intellectual Property Warranties
PART D

SCHEDULE 4           Pensions Warranties
PART E

SCHEDULE 5           Completion Requirements

SCHEDULE 6           Tax Deed

SCHEDULE 7           Certificate as to Regulation S

SCHEDULE 8           Purchaser Warranties

SCHEDULE 9           Redundant

SCHEDULE 10          Loan Note



                                      -ii-
<PAGE>   4


                    AGREEMENT FOR SALE AND PURCHASE OF SHARES


DATE:             15 November 1999

PARTIES:



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


(2)      FUTURELINK CORP., a corporation incorporated under the laws of the
         State of Delaware, whose principal place of business is at 6 Morgan,
         Suite 100, Irvine, California 92618 ("Purchaser").

OPERATIVE PROVISIONS:

1.       DEFINITIONS AND INTERPRETATION

1.1      In this Agreement and (save as provided in Section 1.6) in the
         Schedules:

         "Accounting Date"                        means 28 February 1999;

         "Accounting Period"                      has the meaning ascribed
                                                  thereto in Section 12 of the
                                                  Taxes Act;

         "Accounts"                               means the audited accounts of
                                                  the Company comprising a
                                                  balance sheet as at the
                                                  Accounting Date, a profit and
                                                  loss account for the period
                                                  which commenced on 1 March
                                                  1998 and ended on the
                                                  Accounting Date, the notes
                                                  thereto and the Directors' and
                                                  auditors' reports thereon;

         "Bennett Family Settlements"             means those settlements of
                                                  which the Trustee Vendors are
                                                  the present trustees and which
                                                  hold the shares of Kerridge
                                                  Group Limited specified in
                                                  Section 5.6.1;

         "Business Day"                           means any day which is not a
                                                  Saturday, a Sunday or a bank
                                                  or public holiday in England
                                                  and Wales;

         "Centrix"                                means Centrix Networking
                                                  Limited;

         "Companies Act"                          means the Companies Act 1985;


<PAGE>   5


         "Company"                                means KNS Holdings Limited,
                                                  particulars relating to which
                                                  are set out in Schedule 2;

         "Completion"                             means the completion of the
                                                  sale and purchase of the
                                                  Shares in accordance with
                                                  Section 8 and Schedule 5;

         "Completion Date"                        means the date on or prior to
                                                  20 December 1999 (or such
                                                  later date as may be agreed to
                                                  between the parties) on which
                                                  the requirements set forth in
                                                  Schedule 5 and the conditions
                                                  set forth in Section 10 shall
                                                  have been satisfied or waived;

         "Confidential Information"               means confidential information
                                                  as defined in Part D of
                                                  Schedule 4;

         "Connected Person"                       means a connected person as
                                                  defined in Section 839 of the
                                                  Taxes Act except that in
                                                  construing Section 839
                                                  "control" has the meaning
                                                  given by Section 840 or
                                                  Section 416 of the Taxes Act
                                                  so that there is control
                                                  whenever either Section 840 or
                                                  416 requires;

         "Consideration Shares"                   means such number of the
                                                  Purchaser Shares calculated in
                                                  accordance with Section 3.3 as
                                                  are to be allotted and issued
                                                  credited as fully paid in
                                                  accordance with Section 3.2;

         "Directors"                              means the persons listed as
                                                  directors of the Company in
                                                  Schedule 2;

         "Disclosed"                              means fairly disclosed to the
                                                  Purchaser (and not omitting
                                                  any information which would
                                                  make such disclosure
                                                  misleading) expressly for the
                                                  purposes of this Agreement in
                                                  the Disclosure Letter;

         "Disclosure Letter"                      means the disclosure letter of
                                                  even date herewith from the
                                                  Vendors to the Purchaser in
                                                  the agreed form, and any
                                                  supplemental disclosure letter
                                                  delivered to the Purchaser no
                                                  later than 12:00 noon (London
                                                  time) on 29 November 1999,
                                                  provided that such
                                                  supplemental disclosure letter
                                                  includes supplemental
                                                  information which would give
                                                  rise to warranty claims for
                                                  which the Vendors would,
                                                  without regard to Section
                                                  6.1.2, be liable in an
                                                  aggregate amount of
                                                  (pound)50,000 or more;


                                       2
<PAGE>   6

         "Employment Agreements"                  means the employment
                                                  agreements to be entered into
                                                  by the Purchaser or the
                                                  Company and each and every one
                                                  of the Executives and at least
                                                  80% of all other employees at
                                                  the Completion Date, in a
                                                  mutually satisfactory form;

         "Escrow Agreement"                       means an escrow agreement
                                                  entered into by the parties to
                                                  this Agreement, in a form
                                                  satisfactory to the parties
                                                  and the Escrow Agent;

         "Escrow Agent"                           means that escrow agent
                                                  designated by the parties
                                                  before Completion;

         "Escrow Period"                          means the period commencing on
                                                  the Completion Date and ending
                                                  on the third anniversary of
                                                  such date;

         "Executives"                             means Yuri Pasea, Rajan Mehta
                                                  and Nigel Hawley whose details
                                                  are contained in Schedule 1,
                                                  Part A;

         "Intellectual Property Rights"           means intellectual property
                                                  rights as defined in Part D of
                                                  Schedule 4;

         "KCC"                                    means Kerridge Computer
                                                  Company Limited.

         "KCC Debenture"                          means a debenture in mutually
                                                  satisfactory form at the
                                                  Completion securing the KCC
                                                  Loan;

         "KCC Loan"                               means the loan monies owed to
                                                  Kerridge Computer Company
                                                  Limited by the Company;

         "Lease"                                  means the lease between Tarmac
                                                  Heavy Building Materials UK
                                                  Limited and KCC dated 9
                                                  February 1999, a copy of which
                                                  is enclosed with the
                                                  Disclosure Letter;

         "Leasehold Property"                     means the property at 2 Old
                                                  Bath Road, Newbury, Berkshire,
                                                  comprised in title number
                                                  BK59233.

         "Loan Notes"                             means the loan notes
                                                  substantially in the form set
                                                  out in Schedule 10 to be
                                                  issued to the Vendors on
                                                  Completion in the amounts set
                                                  out against their names in
                                                  column 4 of Schedule 1, Part
                                                  A.
                                       3

<PAGE>   7

         "Management Accounts"                    means the Company's unaudited
                                                  profit and loss account for
                                                  the period starting on the day
                                                  after the last Accounting Date
                                                  and ending on 31 October 1999
                                                  and the Company's unaudited
                                                  balance sheet as at 31 October
                                                  1999 together with related
                                                  statements of operations and
                                                  shareholders' equity for the
                                                  period starting on the day
                                                  after the last Accounting Date
                                                  and ending on 31 October 1999;

         "Planning Acts"                          means the Town and Country
                                                  Planning Act 1990, the
                                                  Planning (Listed Buildings and
                                                  Conservation Areas) Act 1990,
                                                  the Planning (Hazardous
                                                  Substances) Act 1990 and the
                                                  Planning (Consequential
                                                  Provisions) Act 1990 as
                                                  respectively amended,
                                                  consolidated, extended or
                                                  re-enacted as at the date of
                                                  this Agreement.

         "PSL"                                    means Panic Systems Limited;

         "PSL and Centrix Agreement"              means the agreement to be
                                                  entered into prior to
                                                  Completion between the Company
                                                  and Kerridge Computer Company
                                                  Limited in a mutually
                                                  satisfactory form for the sale
                                                  and purchase or novation of
                                                  the Company's interests in PSL
                                                  and Centrix;

         "Premises"                               means the leasehold property
                                                  occupied by the Company;

         "Purchaser Group Company"                means any company which is at
                                                  or at any time after the date
                                                  of this Agreement a subsidiary
                                                  or associated company of the
                                                  Purchaser or the holding
                                                  company of the Purchaser or a
                                                  subsidiary or associated
                                                  company of any such holding
                                                  company;

         "Purchaser Shares"                       means shares of the common
                                                  stock, US$ 0.0001 par value
                                                  per share, of the Purchaser;

         "Purchaser's Warranties"                 means the warranties,
                                                  representations and
                                                  undertakings set out in
                                                  Schedule 8;

         "Representative"                         means the person specified as
                                                  such in Section 3.11;

         "Shares"                                 means the 20,571,429 ordinary
                                                  shares of one (1) pence each
                                                  in the capital of the Company
                                                  plus



                                       4
<PAGE>   8


                                                 shares of the Company to be
                                                  issued upon exchange as
                                                  described in Section 10.2.12;

         "Tax"                                    means tax as defined in the
                                                  Tax Deed;

         "Tax Deed"                               means a Deed substantially in
                                                  the form set out in Schedule
                                                  6;

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

         "Trustee Vendors"                        means John Bennett, Richard
                                                  Bennett, Colin Matthissen and
                                                  Quadrangle Trustee Company;

         "Vendors Group Company"                  means any company which is at
                                                  or before Completion a
                                                  subsidiary or associated
                                                  company of the Company or a
                                                  holding company of the Company
                                                  or a subsidiary or associated
                                                  company of any such holding
                                                  company; and

         "Vendors' Warranties"                    means the warranties,
                                                  representations and
                                                  undertakings set out in
                                                  Schedule 4.

1.2      The Schedules are deemed to be incorporated in this Agreement, and a
         reference to "this Agreement" includes a reference to the Schedules.

1.3      In this Agreement:-
         1.3.1      the index and the Section headings are included for
                    convenience only and shall not affect the construction of
                    this Agreement;
         1.3.2      words denoting the singular shall include the plural and
                    vice versa;
         1.3.3      words denoting any gender shall include a reference to each
                    other gender; and
         1.3.4      references to persons shall be deemed to include references
                    to natural persons, firms, partnerships, companies,
                    corporations, associations, organisations, foundations and
                    trusts (in each case whether or not having separate legal
                    personality);
         1.3.5      a "subsidiary undertaking" or "parent undertaking" is to be
                    construed in accordance with Section 258 of the Companies
                    Act and a "subsidiary" or "holding company" is to be
                    construed in accordance with Section 736 of the Companies
                    Act;
         1.3.6      an "associated company" of a company shall mean a legal
                    entity in which such company directly or indirectly owns or
                    controls at least 20% of the issued share capital and/or
                    voting rights.

1.4      References in this Agreement to statutory provisions shall (where the
         context so admits and unless otherwise expressly provided) be construed
         as references to those provisions as respectively amended,
         consolidated, extended or re-enacted as at the date of this Agreement
         and to the corresponding provisions of any earlier legislation (whether




                                        5

<PAGE>   9


         repealed or not) directly or indirectly amended, consolidated,
         extended, replaced or re-enacted thereby and to any orders,
         regulations, instruments or other subordinate legislation made under
         the relevant statute.

1.5      Any statement qualified by the expression "to the best of the
         knowledge, information and belief of the Vendors " or "so far as the
         Vendors are aware" or any similar expression shall be deemed to include
         an additional statement that it has been made after due, diligent and
         careful enquiry by each of the Vendors of its books, accounts and
         records.

1.6      If any of the words or expressions defined in Section 1.1 are also
         defined in any of the Schedules then for the purposes of interpreting
         that relevant Schedule such words and expressions shall have the
         meaning ascribed to them in that Schedule.

2.       AGREEMENT TO SELL AND PURCHASE

2.1      Each of the Vendors sells such of the Shares as are set out opposite
         his name in column 2 of Schedule 1 to the Purchaser and the Purchaser
         purchases the Shares in part by way of an exchange of Purchaser Shares,
         in part by way of loan note and in part by way of immediate cash
         consideration.

2.2      Each of the Vendors severally covenants with the Purchaser that:-
         2.2.1      he has the right to sell and transfer the full legal and
                    beneficial interest in the Shares to the Purchaser on the
                    terms set out in this Agreement;
         2.2.2      the Shares will be sold free from all claims, charges,
                    liens, encumbrances, equities and adverse rights of any
                    description and together with all rights attached or
                    accruing thereto as at and from the date of this Agreement;
                    and
         2.2.3      he shall (and shall procure that any necessary third party
                    shall), at his own expense, do, execute and perform all such
                    further acts, Deeds, documents and things as the Purchaser
                    may reasonably request from time to time as being necessary
                    to vest any of the Shares in the Purchaser.

2.3      Nothing in this Agreement shall oblige the Purchaser to purchase some
         only of the Shares unless the Vendors shall at the same time complete
         the sale to the Purchaser of all of the Shares.

3.       CONSIDERATION

3.1      The aggregate consideration payable by the Purchaser to the Vendors in
         respect of the sale of the Shares shall be (pound)27,000,000 consisting
         of:
         3.1.1      (pound)4,750,000 in cash;
         3.1.2      (pound)2,500,000 in Loan Notes; and
         3.1.3      (pound)19,750,000 in Purchaser Shares (placed in escrow on
                    Completion and released in tranches thereafter in accordance
                    with the Escrow Agreement), as described in Section 3.3.


                                       6


<PAGE>   10



3.2      Subject to Section 3A.2, the total aggregate consideration shall be
         apportioned between the Vendors as set out in Columns 3, 4 and 5 of
         Schedule 1, Part A, or as otherwise agreed by the Vendors and notified
         to the Purchaser and the Escrow Agent by the Representative three
         Business Days prior to Completion.

3.3      The number of Consideration Shares to be allotted to the Vendors
         pursuant to Section 3.2 shall be such number of Purchaser Shares as
         have an aggregate value (determined in accordance with Sections 3.4 and
         3.5) which is as near as possible to, but not less than,
         (pound)19,750,000.

3.4      For the purpose of determining the aggregate value referred to in
         Section 3.3, the UK pounds sterling value of a Purchaser Share shall be
         US$ 14.95, converted from US dollars to UK pounds sterling at the
         applicable exchange rate as determined in accordance with Section 3.5

3.5      For the purpose of determining the applicable exchange rate at which to
         convert the US Dollar value of each Purchaser Share (as calculated in
         accordance with Section 3.4), the applicable exchange rate shall be the
         average exchange rate as reported in the Wall Street Journal over the
         15 Business Days immediately prior to the date of this Agreement.

3.6      No fraction of a Consideration Share shall be issued to the Vendors and
         the number of Consideration Shares shall be adjusted accordingly to the
         nearest whole number.

3.7      The Consideration Shares, on issue, shall rank pari passu in all
         respects with the existing issued Purchaser Shares, except that at
         Completion the Consideration Shares will not be registered under the
         Securities Act of 1933, as amended.

3A.      OTHER COVENANTS

3A.1     Each of the Vendors agrees that he shall deliver to the Purchaser at
         Completion a certificate and undertaking in the form of Schedule 7,
         appointing the Representative, and making or giving such
         representations, warranties and covenants as are necessary or advisable
         for the qualification of the issuance of Purchaser Shares to the
         Vendors under Regulation S of the United States Securities Act of 1933,
         as amended. Purchaser covenants to submit a registration statement in
         accordance with the Securities Act of 1933, as amended, within 180 days
         after the Completion Date, and to use all reasonable endeavours to
         effect the registration before the first anniversary date of Completion
         and to maintain such registration until the second anniversary date of
         Completion. The Vendors acknowledge that the registration statement is
         subject to the approval of the Securities and Exchange Commission.
         Prior to the Completion Date, the parties will agree such terms and
         conditions as to such registration as are customary in transactions of
         this nature.

3A.2     The Purchaser, the Representative and the Escrow Agent at Completion
         shall execute and deliver the Escrow Agreement in order to provide the
         Purchaser with security for breach of any of the Vendors' Warranties
         under this Agreement and to maintain an orderly



                                       7


<PAGE>   11




         market in the Purchaser's Shares in accordance with Section 3A.3. At
         Completion, the Purchaser shall deliver to the Escrow Agent a share
         certificate (issued in the respective names of the Vendors, except in
         respect of the share certificate for the Trustee Vendors, a joint share
         certificate shall be issued their names) for all the Consideration
         Shares (the "Escrow Shares"). The Escrow Shares shall constitute all
         the Consideration Shares issuable under this Agreement. The Escrow
         Shares shall be held by the Escrow Agent under the Escrow Agreement
         pursuant to the terms thereof. The Escrow Shares shall be held as a
         trust fund and shall not be subject to any lien, attachment, trustee
         process or other judicial process of any creditor of any party, and
         shall be held and disbursed solely for the purposes and in accordance
         with the terms of the Escrow Agreement. The Purchaser acknowledges that
         at Completion the Vendors will have paid the full purchase price for
         the Escrow Shares and that the Vendors are not required to pay any
         further consideration for the Escrow Shares.

3A.3     Notwithstanding anything to the contrary in this Agreement and
         irrespective of whether or not the Vendors would otherwise be permitted
         to sell, transfer or otherwise dispose of any Consideration Shares in
         accordance with Regulation S under the Securities Act of 1933, as
         amended, or otherwise, the Vendors covenant and agree for the benefit
         of the Purchaser that they will not sell, transfer or otherwise dispose
         of any Consideration Shares other than in accordance with Regulation S
         or Rule 144 of the Securities Act of 1933, as amended, or pursuant to
         an effective registration statement in respect of such Consideration
         Shares under the Securities Act of 1933, as amended.

3A.4     In order to administer efficiently the transactions contemplated
         hereby, including the defence or settlement of any claims for which the
         Vendors may be responsible pursuant to the Vendors' Warranties, and
         entering into the Escrow Agreement, Colin Matthissen has agreed to his
         appointment as the Representative. The Representative is hereby
         authorised to take any and all action as is contemplated to be taken by
         the Vendors by the terms of this Agreement. All decisions and actions
         by the Representative shall be binding upon all of the Vendors and no
         Vendor shall have the right to object, dissent, protest or otherwise
         contest the same. By their approval of this Agreement, the Vendors
         agree that:

         3A.4.1   the Purchaser shall be able to rely exclusively on the
                  instructions and decisions of the Representative as to the
                  settlement of claims for breach of any of the Vendors'
                  Warranties, or any other actions taken by the Representative
                  hereunder, and no party shall have any cause of action against
                  the Purchaser in reliance upon the instructions or decisions
                  of the Representative;
         3A.4.2   all actions, decisions and instructions of the Representative
                  shall be final, conclusive and binding upon the Vendors;
         3A.4.3   the provisions of this Section 3A.4 are independent and
                  severable, are irrevocable, and shall be enforceable
                  notwithstanding any rights and remedies that any Vendor may
                  have in connection with the transactions contemplated by this
                  Agreement and the Escrow Agreement; and
         3A.4.4   the provisions of this Section 3A.4 shall be binding upon the
                  assigns, executors, heirs, legal representatives and
                  successors of each Vendor, and any references in


                                       8


<PAGE>   12



                  this Agreement to a Vendor shall mean and include the
                  successors to the Vendors' rights hereunder.

3A.5     The Vendors shall deliver the Management Accounts to the Purchaser not
         later than 6:00pm London time on 22 November 1999.

3A.6     The Vendors shall cooperate with the Purchaser in the preparation of
         SEC-compliance audited accounts of each Vendors' Group Company for the
         years ended 28 February 1998 and 28 February 1999.

3A.7     The Vendors shall use all reasonable endeavours to promptly:
         3A.7.1   procure an assignment of KCC's interest in the Lease to the
                  Company, with such Lease assignment constituting good and
                  marketable title to the Leasehold Property;
         3A.7.2   obtain any requisite licence or licences from the landlord and
                  it sreversioner to such assignment, the incidental cost of
                  obtaining such licence or licences to be paid by the Vendors;
         and subject to the Purchaser using all reasonable endeavours to assist
         the Vendors to procure or obtain the above, in the event that the
         Vendors are unable to do so, they shall indemnify the Company for all
         damages, liabilities, legal proceedings, actions, losses, costs and
         expenses (including reasonable legal and other advisors' fees) incurred
         by the Company in respect of the Company's occupation of the Leasehold
         Property without the benefit of such assignment. The Purchaser may not
         recover any sum under this indemnity which constitutes a penalty on the
         Vendors for their failure to procure or obtain the above.

4.       PRE-EMPTION RIGHTS

         The Vendors irrevocably waive and undertake to procure that any other
         person having such rights shall by Completion have irrevocably waived
         all and any rights of pre-emption or other restrictions on transfer
         over or in respect of the Shares existing by virtue of the articles of
         association of the Company or otherwise.

5.       VENDORS' AND TRUSTEES' WARRANTIES

5.1      Each of the Vendors severally represents, warrants and undertakes to
         the Purchaser for the benefit of the Purchaser and its successors in
         the terms set out in Schedule 4 (provided that as among the Trustee
         Vendors, their collective several representations, warranties and
         undertakings shall be made jointly as among them and not among the
         other Vendors) and acknowledges that the Purchaser is entering into
         this Agreement in reliance on each of the Vendors' Warranties and each
         of the Vendors further acknowledges that the Purchaser shall be
         entitled to treat the Vendors' Warranties as conditions of this
         Agreement. The Vendors' Warranties shall be deemed to be given as of
         the date of this Agreement and as of the Completion Date.





                                       9


<PAGE>   13

5.2      The Vendors waive and may not enforce a right which they may have in
         respect of a misrepresentation, inaccuracy or omission in or from
         information or advice supplied or given by the Company or a Director,
         officer or employee of the Company for the purpose of assisting the
         Vendors to make a representation, give a Vendors' Warranty or prepare
         the Disclosure Letter; provided however, that the Vendors shall have
         the right to sue a Director, officer or employee of the Company should
         the information or advice have been fraudulently supplied, given or
         withheld by such person.

5.3      Each of the Vendors' Warranties shall be separate and independent and
         shall not be limited by reference to any other of the Vendors'
         Warranties or (except where this Agreement expressly provides
         otherwise) any other provision of this Agreement.

5.4      For the purpose of the Vendors' Warranties and elsewhere in this
         Agreement where the context so admits, any reference to the Company is
         deemed to include (unless the context otherwise so requires), a Vendors
         Group Company.

5.5      The Vendors' Warranties are qualified by the facts and circumstances
         Disclosed in the Disclosure Letter. No other knowledge relating to the
         Company (actual, constructive or imputed) prevents or limits a claim
         made by the Purchaser for breach of Section 5.1 and the Vendors may not
         invoke the Purchaser's knowledge (actual, constructive or imputed) of a
         fact or circumstance which might make or makes a warranty untrue,
         inaccurate, incomplete or misleading as a defence to a claim or breach
         of Section 5.1.

5.6      The Trustee Vendors jointly and severally warrant and undertake to the
         Purchaser that:
         5.6.1    the Trustee Vendors are as trustees the legal owners of
                  10,635,291 ordinary shares of (pound)0.01 each in Kerridge
                  Group Limited; and
         5.6.2    the Trustee Vendors as such trustees have no liabilities other
                  than liabilities in respect of taxation on income and
                  liabilities in respect of professional fees.

6.       LIMITATIONS TO THE VENDORS' WARRANTIES

6.1      The provisions of this Section shall operate to limit the liability of
         the Vendors in respect of any claim under or in connection with the
         Vendors' Warranties, the Tax Deed and the Disclosure Letter and
         references to "claim" and "claims" shall be construed accordingly. The
         parties agree as follows:
         6.1.1    the maximum aggregate liability of the Vendors in respect of
                  all claims shall not exceed the total Consideration;
         6.1.2    the maximum aggregate liability of each of the Vendors shall
                  not exceed the sum set out opposite such Vendor's name in
                  column (6) of Schedule 1 Part A (but so that the Trustee
                  Vendors shall for this purpose be deemed to be a single
                  Vendor);
         6.1.3    Each of the Vendors shall be liable only for such proportion
                  of any claim against the Vendors as shall correspond to the
                  proportion which the sum set out opposite such Vendor's name
                  in column (6) of Schedule 1A bears to the sum of
                  (pound)27,000,000 (but so that the Trustee Vendors shall for
                  this purpose be deemed to be a single Vendor);



                                       10


<PAGE>   14

         6.1.4    no liability shall attach to the Vendors unless the aggregate
                  amount of all claims for which they would, in the absence of
                  this provision, be liable shall exceed (pound)50,000 and in
                  such event the Vendors shall be liable only for the excess
                  over such amount;

         6.1.5    no liability shall attach to the Vendors in respect of any
                  claim unless notice has been given to the Vendors of that
                  claim:

                  6.1.5.1     for breach of Section 5.1 in respect of a Vendors'
                              Warranty contained in Part B of Schedule 4, on or
                              before the seventh anniversary of the Accounting
                              Date; and

                  6.1.5.2     for breach of Section 5.1 in respect of any other
                              Vendors' Warranty, on or before the third
                              anniversary of this Agreement.

         6.1.6    The liability of the Trustee Vendors shall not exceed the
                  value of the assets for the time being and from time to time
                  held by them as trustees of the Bennett Family Settlements to
                  the intent that the Purchaser shall have no recourse against
                  the Trustee Vendors in respect of any assets owned by them
                  beneficially provided that:

                  6.1.6.1     if the Trustee Vendors shall make any distribution
                              of capital to any beneficiary of the Bennett
                              Family Settlements during the Escrow Period the
                              Trustee Vendors shall first procure that the
                              recipient of such distribution shall enter into
                              such covenants and indemnities as the Purchaser
                              shall reasonably require to ensure that the
                              Purchaser is not prejudiced by such distribution;
                              and

                  6.1.6.2     this Section 6.1.6 shall not limit the liability
                              of the Trustee Vendors for any breach of Section
                              5.6

         6.1.7    in the event that the Purchaser or the Company is entitled to
                  recover any sum (whether by payment, discount, credit or
                  otherwise) from any third party in respect of any matter for
                  which a claim could be made against the Vendors, the Purchaser
                  shall use, or procure that the Company shall use, all
                  reasonable endeavours to recover such sum before making the
                  claim, and any sum recovered will reduce the amount of the
                  claim; and, in the event of the recovery being delayed until
                  after the claim has been satisfied by the Vendors or the
                  Purchaser shall account to the Vendors in respect of any
                  amount so recovered (after deduction of all reasonable costs
                  and expenses of the recovery) up to the amount of the claim;

6.2      Any claim made by the Purchaser for breach of Vendors' Warranty shall
         be reduced by the amount of any payment made by any of the Vendors in
         respect of the same facts or circumstances pursuant to the provisions
         of the Tax Deed and vice versa.

6.3      If any of the Vendors pays any sum to the Purchaser pursuant to a
         claim, that part of the consideration received by such Vendor for the
         sale of his Shares shall be deemed to be reduced by the amount of such
         payment and the purchase price paid by the Purchaser shall also be
         deemed to be reduced by such amount.



                                       11


<PAGE>   15

6.4      While the Escrow Agent shall hold any Escrow shares of a Vendor
         pursuant to the Escrow Agreement any claim against such Vendor shall to
         the extent possible be satisfied by its release to the Purchaser of
         Escrow Shares.

6.5      Any Vendor shall be entitled at his option to satisfy any claim made
         against such Vendor by the Purchaser by transferring any Consideration
         Shares previously released to such Vendor by the Escrow Agent to the
         Purchaser.

6.6      For the purposes of Sections 6.4 and 6.5, the value of each
         Consideration Share shall be determined in the manner as the value of
         the Escrow Shares falls to be US$ 14.95.

6A.      PURCHASER'S WARRANTIES

6A.1     The Purchaser represents, warrants and undertakes to the Vendors for
         the benefit of the Vendors and their respective successors in the terms
         set out in Schedule 8 and acknowledges that the Vendors are entering
         into this Agreement in reliance on the Purchaser's Warranties and that
         the Vendors shall be entitled to treat them as conditions of this
         Agreement. The Purchaser's Warranties shall be deemed to be given as of
         the date of this Agreement and as of the Completion Date.

6A.2     Each of the Purchaser's Warranties shall be separate and independent
         and shall not be limited by reference to any other of the Purchaser's
         Warranties or any other provision of this Agreement.

7.       RELEASE OF GUARANTEES

         The Vendors shall immediately prior to Completion procure the absolute
         and unconditional release of the Company from all guarantees,
         suretyships, encumbrances, indemnities and like undertakings of a
         non-trading nature or outside the ordinary course of business of the
         Company given by the Company in respect of any obligations of any
         person and shall fully and effectually indemnify and keep indemnified
         the Purchaser from and against any and all costs, claims, demands or
         liabilities incurred or arising from any such guarantees, suretyships,
         indemnities and like undertakings.

8.       COMPLETION

         Completion will take place in accordance with Schedule 5 at the
         Company's offices at The Chestnuts, 2 Old Bath Road, Newbury, Berkshire
         RG14 1QL on the Completion Date. The obligations of the parties under
         this Agreement are subject to the fulfilment on or before the
         Completion of each of the Completion requirements set out in Schedule 5
         and as set forth in Section 10 hereof.




                                       12


<PAGE>   16

9.       CONDUCT OF BUSINESS

9.1      During the period from the date of this Agreement and continuing until
         the Completion Date, except as expressly contemplated or permitted by
         this Agreement or with the written consent of the Purchaser, the
         Company shall carry out its business in the ordinary course consistent
         with past practice. Without limiting the generality of the foregoing,
         and except as previously Disclosed by the Company to the Purchaser in
         writing or as otherwise contemplated by this Agreement or consented to
         in writing by the Purchaser, the Company shall not:
         9.1.1    declare or pay any dividends on, or make other distributions
                  in respect of, any Shares;
         9.1.2    repurchase, redeem or otherwise acquire any Shares or any
                  securities convertible into or exercisable for any Shares;
         9.1.3    split, combine or reclassify any Shares or issue or authorise
                  or propose the issuance of any other securities in respect of,
                  in lieu of or in substitution for Shares;
         9.1.4    issue, deliver or sell, or authorise or propose the issuance,
                  delivery or sale of, any Shares or any securities convertible
                  into or exercisable for, or any rights, warrants or options to
                  acquire, any Shares;
         9.1.5    amend its Memorandum or Articles of Association;
         9.1.6    make any capital expenditures in excess of (pound)15,000 other
                  than those which are made in the ordinary course of business
                  or are necessary to maintain existing assets in good repair;
         9.1.7    enter into any new line of business, except as contemplated
                  hereby;
         9.1.8    acquire or agree to acquire, by merging or consolidating with,
                  or by purchasing any equity interest in or any of the assets
                  of, or by any other manner, any business or any corporation,
                  partnership, association or other business organisation or
                  division thereof or otherwise acquire any assets, which would
                  be material, individually or in the aggregate, to the Company;
         9.1.9    take any action that is intended or may reasonably be expected
                  to result in any of the Vendors' Warranties set forth in this
                  Agreement being or becoming untrue, or in any of the
                  conditions to the Agreement not being satisfied;
         9.1.10   make a material change in its methods of accounting in effect
                  at the Accounting Date except as required by changes in GAAP
                  or as concurred with by the Company's auditors;
         9.1.11   except as required by applicable law adopt, amend, or
                  terminate any employee benefit plan or any agreement,
                  arrangement, plan or policy between the Company and one or
                  more of its current or former directors, officers or
                  employees, or increase in any manner the compensation, fringe
                  benefits or bonuses of any Director, officer or employee, nor
                  any payments thereto;
         9.1.12   other than activities in the ordinary course of business
                  consistent with past practice, sell, lease, encumber, assign
                  or otherwise dispose of, or agree to sell, lease, encumber,
                  assign or otherwise dispose of, any of its material assets,
                  properties or other rights or agreements;
         9.1.13   other than in the ordinary course of business consistent with
                  past practice, incur any indebtedness for borrowed money or
                  assume, guarantee, endorse or



                                       13


<PAGE>   17


                  otherwise as an accommodation become responsible for the
                  obligations of any other individual, corporation or other
                  entity;
         9.1.14   other than agreements in the ordinary course of business that
                  do not require payments by the Company in excess of
                  (pound) 15,000 per year per individual agreement or an
                  aggregate of (pound) 30,000 per year for all such agreements,
                  create, renew, amend or terminate or give notice of a proposed
                  renewal, amendment or termination of, any material contract,
                  agreement or lease for goods, services or office space to
                  which the Company is a party or by which the Company or its
                  properties are bound; or
         9.1.15   agree to do any of the foregoing.

9.2      Notwithstanding anything contained in Section 9.1, the Vendors covenant
         that prior to Completion they shall procure that the Company sells any
         interest it may have by way of ownership or otherwise in Centrix and
         PSL in accordance with the PSL and Centrix Agreement for an aggregate
         amount equal to the aggregate amount outstanding of the loans made by
         KNS Limited to PSL and Centrix and shall use the proceeds in their
         entirety and all available cash of the Company to repay an equivalent
         amount of the KCC Loan, together with any cash applied thereto in
         accordance with the last sentence of Section 3.1.

10.      CONDITIONS PRECEDENT

10.1     The respective obligation of each party to effect the Agreement shall
         be subject to the satisfaction at or prior to Completion of the
         following conditions:
         10.1.1   No temporary restraining order, preliminary or permanent
                  injunction or other order issued by any court of competent
                  jurisdiction or other legal or regulatory restraint or
                  prohibition preventing the consummation of the Agreement shall
                  be in effect, nor shall any proceeding brought by an
                  administrative agency or commission or other governmental
                  authority or instrumentality, domestic or foreign, seeking any
                  of the foregoing be pending; nor shall there by any action
                  taken, or any statute, rule, regulation or order enacted,
                  entered, enforced or deemed applicable to the Agreement, which
                  makes the consummation of the Agreement illegal.
         10.1.2   All approval waivers and consents from each governmental body
                  necessary for consummation of or in connection with the
                  Agreement and the several transactions contemplated hereby, if
                  any, shall have been obtained.
         10.1.3   The Executives and at least 80% of all other employees at the
                  Completion Date shall have entered into the Employment
                  Agreements in a mutually satisfactory form. The Employment
                  Agreements for employees having a per annum salary
                  of (pound)20,000 or more at the Completion Date shall be for a
                  minimum term of three years and shall contain non-competition
                  covenants during the term and for two years after the end of
                  the term or earlier termination. The Employment Agreements
                  will be on terms no less favourable than those to which the
                  Executives and the employees are currently parties.





                                       14

<PAGE>   18

         10.1.4   The Company shall have entered into loan and security
                  agreements (granting a charge over the accounts receivable
                  of the Company) in respect of the KCC Loan in a form
                  mutually satisfactory to the Purchaser and the Vendors.

10.2     The obligation of the Purchaser to effect the Agreement is also subject
         to the satisfaction or waiver by the Purchaser at or prior to
         Completion of the following conditions:
         10.2.1   The Vendors' Warranties shall be true and correct as of the
                  date of this Agreement and as of the Completion Date as though
                  made on and as of the Completion Date. The Purchaser shall
                  have received a certificate signed on behalf of the Vendors by
                  Nigel Hawley to that effect; provided that such certificate
                  may include qualifications in respect of breaches to the
                  Vendors' Warranties which would not in themselves result in
                  liability to the Vendors having regard to Section 6.1.4.
         10.2.2   The Vendors shall have performed in all material respects all
                  obligations required to be performed by them under this
                  Agreement at or prior to the Completion Date, and the
                  Purchaser shall have received a certificate signed on behalf
                  of the Vendors by Nigel Hawley to that effect.
         10.2.3   There shall not have occurred any material adverse change in
                  the condition (financial or otherwise), properties, assets
                  (including intangible assets), liabilities, business,
                  prospects, operations or results of operations of the Company
                  or any Vendors Group Company, taken as a whole.
         10.2.4   The Purchaser shall have been furnished with evidence
                  satisfactory to it of the consent or approval of those persons
                  whose consent or approval shall be required in connection with
                  the Agreement.
         10.2.5   In addition to any other instruments and documents required to
                  be delivered by the Vendors pursuant to this Agreement, the
                  Vendors shall have delivered to the Purchaser on or before the
                  Completion Date such certificates, instruments and
                  documentation as are reasonably required in the opinion of the
                  Purchaser's lawyers to complete the transactions contemplated
                  herein.
         10.2.6   The Purchaser shall have been satisfied in its sole discretion
                  with its review of due diligence materials supplied, either
                  prior to or subsequent to the date hereof, to the Purchaser by
                  the Vendors including without limitation the working papers of
                  the Company's accountants in respect of their latest
                  preparation of the audited accounts for the Accounting Period
                  ending on the Accounting Date and all working and other papers
                  in their possession relating to the period up to the
                  Accounting Date and such other materials as the Purchaser
                  requires the Vendors to produce; provided that this condition
                  shall be deemed to be waived by the Purchaser if the Purchaser
                  shall not have delivered written notice to the Vendors that
                  the Purchaser does not wish to complete this Agreement
                  pursuant to this Section 10.2.6 by 6:00pm (London time) on 29
                  November 1999.
         10.2.7   The Purchaser shall be satisfied that the Completion under the
                  PSL and Centrix Agreement has occurred in accordance with its
                  terms and the proceeds of sale thereunder shall have been
                  applied to reduce the outstanding balance of the KCC Loan.
         10.2.8   The Escrow Agreement shall have been executed and delivered.




                                       15

<PAGE>   19

         10.2.9   KNS Limited shall be a wholly owned subsidiary of the Company
                  beneficially owned by the Company free of all encumbrances.
         10.2.10  The KCC Loan shall not exceed 70% of the debtors balance of
                  the Company net of the PSL indebtedness and provisions.

10.3     The obligation of the Vendors to effect the Agreement is subject to the
         satisfaction or waiver by the Vendor at or prior to Completion of the
         following conditions:
         10.3.1   The Purchaser's Warranties shall be true and correct as of the
                  date of this Agreement and as of the Completion Date as though
                  made on and as of the Completion Date. The Vendors shall have
                  received a certificate signed on behalf of the Purchaser by
                  its Chief Executive Officer and Chief Financial Officer to
                  that effect.
         10.3.2   The Purchaser shall have performed in all material respects
                  all obligations required to be performed by it under this
                  Agreement at or prior to the Completion Date, and the Vendors
                  shall have received a certificate signed on behalf of the
                  Company by its Chief Executive Officer and Chief Financial
                  Officer to that effect.
         10.3.3   There shall not have occurred any material adverse change in
                  the condition (financial or otherwise), properties, assets
                  (including intangible assets), liabilities, business,
                  prospects, operations or results of operations of the
                  Purchaser or any Purchaser Group Company, taken as a whole, it
                  being understood that any fluctuation in the market price of
                  the Purchaser Shares shall not be or be deemed to be such a
                  material adverse change.
         10.3.4   The Vendors shall have been furnished with evidence
                  satisfactory to them of the consent or approval of those
                  persons whose consent or approval shall be required in
                  connection with the Agreement.
         10.3.5   In addition to any other instruments and documents required to
                  be delivered by the Purchaser pursuant to this Agreement, the
                  Purchaser shall have delivered to the Vendors on or before the
                  Completion Date such certificates, instruments and
                  documentation as are reasonably required in the opinion of the
                  Vendors' lawyers to complete the transactions contemplated
                  herein.

11.      TERMINATION, AMENDMENT AND SURVIVAL OF OBLIGATIONS

11.1A    This Agreement may be terminated at any time prior to the Completion
         Date, whether before or after approval of the matters presented in
         connection with the Agreement by the Vendors:
         11.1A.1  by mutual consent of the Purchaser and Vendors in a written
                  instrument;
         11.1A.2  by either the Purchaser or the Vendors if there shall have
                  been a material breach of any of the warranties, covenants or
                  agreements set forth in this Agreement on the part of the
                  other party, which breach shall not have been cured within
                  seven (7) days following receipt by the breaching party of
                  written notice of such breach from the other party hereto, or
                  which breach, by its nature, cannot be cured prior to
                  Completion and which breach shall constitute a material
                  adverse change.





                                       16


<PAGE>   20

11.1.B   This Agreement may be terminated at any time after 20 December 1999 if
         the Completion Date has not occurred by such date, by either the
         Purchaser or the Vendors.

11.2     In the event of termination of this Agreement by either the Purchaser
         or the Vendors as provided in Section 11.1A or B, this Agreement shall
         forthwith become void and have no effect except that those Sections
         expressly stated herein to survive termination, namely this Section
         11.2 and Sections 3.11, 11.6, 15.2, 16 and 24 shall survive any
         termination of this Agreement and notwithstanding anything to the
         contrary contained in this Agreement, no party shall be relieved or
         released from any liabilities or damages arising out of its wilful
         breach of any provision of this Agreement.

11.3     At any time prior to the Completion Date, each of the parties hereto,
         may, to the extent legally allowed, (a) extend the time for the
         performance of any of the obligations or other acts of the other party
         hereto, (b) waive any inaccuracies in the warranties or in any document
         delivered pursuant hereto and (c) waive compliance with any of the
         agreements or conditions of another party contained herein. Any
         agreement on the part of a party hereto to any such extension or waiver
         shall be valid only if set forth in a written instrument signed on
         behalf of such party, but such extension or waiver or failure to insist
         on strict compliance with an obligation, covenant, agreement or
         condition shall not operate as a waiver of, or estoppel with respect
         to, any subsequent or other failure.

11.4     In the event that either the Purchaser or the Vendors is or are unable
         to consummate the transaction as a result of its or their failure to
         fulfil any of the provisions of Section 10 for reasons beyond its or
         their control, it or they shall incur no liability to the other
         whatsoever (whether in contract or tort). For the avoidance of doubt,
         the failure of the parties to complete this Agreement by reason of the
         failure to satisfy Section 10.1.3 shall be deemed beyond the control of
         the parties.

11.5     If Completion takes place and there is either before or after
         Completion any breach of warranty or non-fulfilment of any covenant or
         agreement on the part of the Vendors contained in this Agreement, the
         Vendors shall take such action as shall be required to bring the
         Company into the position it would have been in if there had been no
         breach of any Vendors' Warranty or non-fulfilment of any agreement on
         the part of the Vendor contained in this Agreement. In the event that
         the nature of the relevant breach or non-fulfilment is such that the
         Vendors are unable to bring such Company into that position, or if the
         Purchaser so elects, the Vendors severally (but with the Trustee
         Vendors being regarded for this purpose as a single Vendor) shall
         indemnify and hold harmless the Purchaser from and against and fully
         reimburse the Purchaser any and all damages (including but not limited
         to the amount whereby the value of the Company or any of its assets is
         less than the value which such assets would have had, had the relevant
         breach or non-fulfilment not occurred), liabilities, actions, legal
         proceedings, losses, costs and expenses (including but not limited to
         legal and other advisers' fees and expenses) incurred by the Purchaser
         arising out of or resulting from any such breach of a Vendors' Warranty
         or non-fulfilment of any covenant or agreement on the part of the
         Vendors contained in this Agreement.



                                       17


<PAGE>   21

11.6     The representations, warranties, covenants and agreements of the
         parties made in this Agreement shall survive Completion and shall
         terminate on the dates that the right to indemnification under such
         representations, warranties, covenants or agreements terminates as
         provided in Sections 6.1.3.1 and 6.1.3.2 and they shall not be affected
         in any respect by any examination or investigation conducted by or on
         behalf of the parties hereto and any information which any party may
         receive pursuant to the schedules hereto or otherwise.

12.      RESTRICTIVE COVENANTS

12.1     Each of the Vendors hereby undertakes to and covenants with the
         Purchaser that he will not either on his own account or jointly with or
         as manager, agent, officer, employee or otherwise on behalf of any
         other person, firm or corporation directly or indirectly (and so that
         each undertaking below shall be a further and separate obligation):
         12.1.1   for a period of three years from the Completion Date:
                  12.1.1.1    carry on or be engaged, concerned, or interested
                              in or assist any business which competes with any
                              business of the Company as carried on at the
                              Completion Date;
                  12.1.1.2    canvass or solicit business, orders or custom for
                              goods or services supplied or provided by the
                              Company from any person who at any time within the
                              period of one (1) year preceding the Completion
                              Date has been a customer of or in the habit of
                              dealing with the Company for such goods or
                              services;
                  12.1.1.3    solicit or entice away or endeavour to solicit or
                              entice away from the Company any person who on the
                              Termination Date or within the six months prior to
                              the Termination Date is or was a director,
                              officer, employee or other servant of the Company;
                  12.1.1.4    induce or attempt to induce any person (including
                              without limitation any agent or independent
                              distributor) who in the six months prior to the
                              Termination Date has been a supplier of any goods
                              or services to the Company to cease to supply, or
                              to restrict or vary the terms of supply, to the
                              Company; or
                  12.1.1.5    do or say anything which is harmful to the
                              Company's reputation or which may lead a person to
                              cease to deal with the Company on substantially
                              equivalent terms to those previously offered or at
                              all.
         12.1.2   at any time after the Completion Date use or procure the use
                  in connection with any business of any corporate or business
                  name which is identical to or likely to be confused with the
                  corporate name or any business name of the Company or which
                  might suggest a connection with the business of the Company.

12.2     The Purchaser acknowledges that certain of the Vendors are shareholders
         and directors in Kerridge Group Limited ("KGL") and KCC, certain
         customers and suppliers of the Company may also be customers and
         suppliers of KGL and KCC, and that the Company, on the one hand, and
         KGL and KCC, on the other, may to a limited extent compete. The
         Purchaser agrees that such identity of customers and suppliers and/or
         such limited competition shall not constitute a violation of Section
         12.1 by any of the Vendors.





                                       18


<PAGE>   22

13.      POST-COMPLETION EFFECT

         This Agreement shall remain in full force and effect after and
         notwithstanding Completion in respect of all obligations, agreements,
         covenants, undertakings, conditions, representations, warranties or
         indemnities which have not been done, observed or performed at or prior
         to Completion.

14.      SUCCESSORS AND ASSIGNS

         This Agreement shall be binding upon and enure for the benefit of each
         party's successors and shall be assignable by the Purchaser to any
         Purchaser Group Company to the extent that the rights and benefits
         under this Agreement shall enure for the benefit of the Purchaser's
         assigns; provided that no such assignment shall alter or diminish the
         Purchaser's obligations hereunder. Save as aforesaid this Agreement
         shall not be assignable.

15.      INFORMATION AND CONFIDENTIALITY

         Each of the Vendors hereby undertakes to the Purchaser:

15.1     that he will at any time and from time to time after Completion give to
         the Purchaser all such information in his possession concerning the
         business, dealings, transactions or affairs of the Company as the
         Purchaser may reasonably request and in particular, but without
         prejudice to the generality of the foregoing, relating to claims made
         or threatened against the Company and the source from and consideration
         for which any assets of the Company were acquired or derived; and

15.2     that he will not, and will procure that no person under his control
         will, at any time after the date hereof, take away or (directly or
         indirectly) make use of, divulge or communicate to any person (except
         as may be necessary to comply with any statutory obligation or order of
         any court or statutory tribunal of competent jurisdiction) any
         Confidential Information or trade secrets of the Company or of any
         supplier, customer or other person who has or who has had dealings with
         the Company, except in the ordinary course of his employment with the
         Company.

16.      ANNOUNCEMENTS AND PUBLICITY

         Any announcement or circular or other publicity relating to this
         Agreement or any termination thereof shall prior to its publication be
         approved in writing by each of the Representative and the Purchaser as
         to its content, form and manner of publication (such approval not to be
         unreasonably withheld or delayed), save that any announcement, circular
         or other publicity required to be made or issued by the Purchaser
         pursuant to the regulations of rules governing the NASDAQ Stock Market
         or other recognised investment exchange or by other governmental agency
         or regulatory body or law may be made or issued by the Purchaser
         without such approval.



                                       19


<PAGE>   23

17.      NOTICES

17.1     Any notice required to be given under this Agreement shall be
         sufficiently given if delivered personally or if sent by first-class
         recorded delivery post (express air courier service if sent overseas)
         or if sent by facsimile transmission.

17.2     Any notice which is sent or  despatched  in  accordance  with this
         Section 17 shall be deemed to have been received by the addressee:-

         17.2.1   if delivered personally, at the time of delivery;

         17.2.2   in the case of a notice sent by post (or express air courier),
                  two Business Days after the envelope containing the notice was
                  delivered to the postal authorities (or courier service);

         17.2.3   in the case of a notice sent by facsimile transmission, if the
                  notice was sent during the normal business hours of the
                  addressee, on the day of transmission; otherwise on the next
                  following Business Day.

17.3     In proving service by post or express air courier, it shall be
         necessary to prove only that the notice was sent or despatched and that
         the notice was contained in an envelope properly addressed, stamped and
         delivered to the postal authorities or courier service in the country
         from where despatched. In proving service by facsimile transmission, it
         shall be necessary to produce only a legible copy of the confirmation
         of the facsimile transmission.

17.4     Any notice required to be given under this Agreement shall be sent:

         17.4.1   to the Vendors c/o the Vendors' solicitors at:
                  Wiggin & Co.
                  The Quadrangle
                  Imperial Square
                  Cheltenham
                  Glos.  GL50 1YX
                  Facsimile No: 01242 224223
                  For the attention of: Mike Turner/Denis Moore

         17.4.2   to the Purchaser at:
                  FutureLink Corp.
                  6 Morgan
                  Suite 100
                  Irvine
                  California 92618
                  Facsimile No: +1-949-837-4433
                  For the attention of: Jim Bailey





                                       20



<PAGE>   24

                  With a copy to:
                  Paul, Hastings, Janofsky & Walker LLP
                  Tower 42
                  25 Old Broad Street
                  London  EC2N 1HQ
                  Facsimile No: 0171 628 4444
                  For the attention of: Keith T. Ott

                  or to such other address or facsimile number as is notified in
                  writing from time to time by the Vendors (or any one of them)
                  or the Purchaser (as the case may be) to the other.

18.      SERVICE OF PROCESS

         The Purchaser hereby appoints Paul, Hastings, Janofsky & Walker LLP, as
         its agent for the service of any process in the United Kingdom. Such
         appointment shall not be revocable without the prior written consent of
         the Representative.

19.      FURTHER ASSURANCE

         The Vendors shall do, execute and perform and shall procure to be done,
         executed and performed all such further acts, deeds and documents as
         the Purchaser may require effectively to vest the legal and beneficial
         ownership of the Shares in the Purchaser or as it directs free from all
         liens, charges, options, encumbrances or adverse rights of interests of
         any kind and otherwise to give to the Purchaser the full benefit of
         this Agreement.

20.      WAIVERS

20.1     A failure by any party to exercise and any delay, forbearance or
         indulgence by any party in exercising any right, power or remedy under
         this Agreement shall not operate as a waiver of that right, power or
         remedy or preclude its exercise at any subsequent time or on any
         subsequent occasion. The single or partial exercise of any right, power
         or remedy shall not preclude any other or further exercise of that
         right, power or remedy or the exercise of any other right, power or
         remedy. No custom or practice of the parties at variance with the terms
         of this Agreement shall constitute a waiver of the rights of any party
         under this Agreement. The rights, powers and remedies provided in this
         Agreement are cumulative and not exclusive of any rights, powers or
         remedies provided by law.

20.2     In relation to any two or more persons who are severally liable under
         this Agreement, the liability under this Agreement of any one or more
         of such persons shall not be prejudiced or affected in any way by the
         giving of time or any forbearance or indulgence granted by the
         Purchaser to any other or others of such persons or by the release or
         compromise by the Purchaser of any liability under this Agreement of
         any other or others of such persons.



                                       21



<PAGE>   25

21.      ENTIRE AGREEMENT

         This Agreement, the Disclosure Letter, the Tax Deed and all agreements
         entered into between the Vendors and the Purchaser pursuant to the
         terms of this Agreement together constitute the entire agreement
         between the parties with respect to the subject matter of this
         Agreement and supersede all prior discussions, understandings and
         agreements between the parties or their agents in relation thereto.

22.      VARIATION

         No variation of this Agreement shall be effective unless made in
         writing and signed by or on behalf of each of the parties.

23.      COUNTERPARTS

         This Agreement may be executed in two or more counterparts, each of
         which shall be deemed to be an original, and which together shall
         constitute one and the same Agreement. Unless otherwise provided in
         this Agreement, this Agreement shall become effective and be dated (and
         each counterpart shall be dated) on the date on which this Agreement
         (or a counterpart of this Agreement) is signed by the last of the
         parties to execute this Agreement or, as the case may be, a counterpart
         thereof.

24.      APPLICABLE LAW

         This Agreement shall be governed by and construed in accordance with
         English law and the parties hereby submit themselves to the
         non-exclusive jurisdiction of the English Courts.



Executed by the parties:



SIGNED BY:       John Bennett
           -------------------------
for and on behalf of JOHN BENNETT



SIGNED BY:     Richard Bennett
           -------------------------
for and on behalf of RICHARD BENNETT



SIGNED BY:     Colin Matthissen
           -------------------------
for and on behalf of COLIN MATTHISSEN


                                       22


<PAGE>   26


SIGNED BY: Quadrangle Trustee Company
          ---------------------------
for and on behalf of QUADRANGLE TRUSTEE COMPANY



SIGNED BY:      Peter Crozier
          --------------------------
for and on behalf of PETER CROZIER



SIGNED BY:     Michael Dorward
          --------------------------
for and on behalf of MICHAEL DORWARD



SIGNED BY: Anthony Harrison-Wallace
          --------------------------
for and on behalf of ANTHONY HARRISON-WALLACE



SIGNED BY:       Robert Kell
          --------------------------
for and on behalf of ROBERT KELL




SIGNED BY:      Mark Kerridge
          --------------------------
for and on behalf of MARK KERRIDGE



SIGNED BY:     Nicola Kerridge
          --------------------------
for and on behalf of NICOLA KERRIDGE



SIGNED BY:       Nigel Hawley
          --------------------------
for and on behalf of NIGEL HAWLEY



SIGNED BY:       Nigel Hawley
          --------------------------
for and on behalf of RAJAN MEHTA





                                       23


<PAGE>   27


SIGNED BY:        Yuri Pasea
          --------------------------
for and on behalf of YURI PASEA



SIGNED BY:    Philip R. Ladouceur
          --------------------------
for and on behalf of FUTURELINK CORP.







                                       24

<PAGE>   28


                                   SCHEDULE 1

                                     PART A

            PARTICULARS OF THE VENDORS AND OF THE SHARES TO BE SOLD
                AND CONSIDERATION TO BE RECEIVED BY EACH OF THEM

<TABLE>
<CAPTION>
(1)                                             (2)              (3)               (4)             (5)                (6)
Name and Address                                Number of        Cash              Loan Notes      Consideration      Total
                                                Shares to be     Consideration                     Shares             Consideration
                                                Sold             (pound)           (pound)         (pound)            (pound)

<S>                                              <C>             <C>               <C>              <C>                <C>
1.   John Henry Bennett, Richard Bennett,         7,302,388       1,686,141.65      963,509.53       6,934,733.05       9,584,384.23
     Colin Ainslie Matthissen and
     Quadrangle Trustee Company as
     trustee of the various family
     settlements established by
     John Bennett

2.   Richard Bennett, John Henry Bennett,         3,332,903         769,576.55      439,758.03       3,165,100.59       4,374,435.17
     Colin Ainslie Matthissen and
     Quadrangle Trustee Company as
     trustee of various family
     settlements, established by
     Richard Bennett

3.   Peter Joseph Crozier                           772,410         178,351.62      101,915.21         733,521.30       1,013,788.13

4.   Michael John Dorward                           772,410         178,351.62      101,915.21         733,521.30       1,013,788.13

5.   Anthony Penswick Monamy                        772,410         178,351.62      101,915.21         733,521.30       1,013,788.13
     Harrison-Wallace

6.   Robert Kell                                    772,410         178,351.62      101,915.21         733,521.30       1,013,788.13

7.   Mark Kerridge and Nicola Kerridge              675,069         155,875.32       89,071.60         641,081.16         886,028.08

8.   Nigel Anthony Ashley Hawley                  2,057,143            475,000         200,000          2,025,000          2,700,000

9.   Rajan Mehta                                  2,057,143            475,000         200,000          2,025,000          2,700,000

10.  Yuri Pasea                                   2,057,143            475,000         200,000          2,025,000          2,700,000

Total                                            20,571,429          4,750,000       2,500,000         19,750,000         27,000,000
</TABLE>

The shares shown in this schedule for the Executives represent the shares that
they will hold in the Company following the exercise of their options prior to
Completion.



                                      1A.1
<PAGE>   29





                                   SCHEDULE 1

                                     PART B

                                PAYMENTS SCHEDULE








                                      1B.1




<PAGE>   30


                                   SCHEDULE 2

                       PARTICULARS CONCERNING THE COMPANY


1.       Registered Office:                 KNS Holdings Limited
                                            Northcroft Lane
                                            Newbury
                                            Berkshire   RG14 1HT

2.       Date of Incorporation:             26 November 1997

3.       Registered Number:                 03471603

4.       Directors:                         J. H. Bennett
                                            R. Bennett
                                            C. E. Poulter

5.       Secretary:                         B. C. Soulby

6.       Mortgages and Charges:

7.       Share Capital:                     (pound)144,000 divided into
                                            14,400,000 ordinary shares of
                                            1p each





                                      2.1

<PAGE>   31


                                   SCHEDULE 3

                              [REDUNDANT SCHEDULE]







                                      3.1
<PAGE>   32

                                   SCHEDULE 4

                                     PART A

                               GENERAL WARRANTIES

1        INFORMATION SUPPLIED AND CAPACITY OF VENDORS
1.1      All written information given by, or on behalf of, the Vendors or on
         its behalf by the Company to the Purchaser, its advisers or agents
         before or during the negotiations leading to this Agreement and all
         information contained in this Agreement and all matters contained in
         the Disclosure Letter are true and accurate in every respect and so far
         as the Vendors are aware there is no fact or matter which has not been
         Disclosed which renders any such matters or information untrue or
         misleading in any material respect.

1.2      The Vendors have full power and authority to enter into and perform
         this Agreement and the Vendors (as defined in the Tax Deed) have full
         power and authority to enter into and perform the Tax Deed, and this
         Agreement and the Tax Deed, when executed, will constitute valid and
         binding obligations on the Vendors and the Vendors respectively in
         accordance with the respective terms thereof.

2        ACCOUNTS AND RECORDS
2.1      The Company has at all times fully, properly and accurately maintained
         all books, accounts and records of whatever kind required by law to be
         maintained.

2.2      The books, accounts and records of the Company fully and accurately
         record in all material respects all matters required by law to be
         entered therein and accurately present and reflect in accordance with
         generally accepted accounting principles and practice in the United
         Kingdom the assets and liabilities (actual, prospective and contingent)
         of the Company and all transactions to which it is or has been a party.

2.3      The Accounts:
         2.3.1    comply with the requirements of the Companies Act and other
                  relevant statutes and U.K. generally accepted accounting
                  principles, SSAPs and FRSs and give a true and fair view of
                  and properly reflect the financial position of the Company as
                  at the Accounting Date and are not affected by any unusual or
                  non-recurring items;
         2.3.2    fully disclose all assets and make full provision or reserve
                  for all assets and liabilities (whether or not quantified or
                  disputed) and fully provide for (or disclose by way of note)
                  all bad and doubtful debts and all contingent liabilities at
                  the Accounting Date; and
         2.3.3    make adequate provision for depreciation of the fixed assets
                  of the Company having regard to their original cost and
                  estimated life in accordance with SSAP 12.

2.4      The Company has made full provision in the Accounts for all Tax liable
         to be assessed on the Company or for which it is accountable in respect
         of income, profits or gains earned,



                                      4A.1

<PAGE>   33


         accrued or received on or before the Accounting Date including
         distributions made down to that date.

2.5      The Management Accounts of the Company have been prepared on a proper
         and consistent basis in accordance with the accounting principles and
         practices adopted in the preparation of the Accounts and give a fair
         view of and properly reflect the assets, liabilities, profits and
         losses and financial position of the Company for the period ending on
         31 October 1999.

2.6      Except as disclosed in the Accounts or Management Accounts:
         2.6.1    the Company is not a guarantor or indemnitor of any
                  indebtedness of any other person, firm or corporation;
         2.6.2    all monies set aside or held in trust by the Company for the
                  benefit of another person are properly accrued or so held and
                  are completely and accurately recorded in the books and
                  records of the Company and no claim can be made against the
                  Company in respect thereof in excess of the amounts so set
                  aside or held.

2.7      The Company has no material obligations or liabilities of any nature
         (matured or unmatured, fixed or contingent) other than Disclosed in the
         Accounts or Management Accounts and those incurred in the ordinary
         course of business not required to be set out in the Accounts under
         U.K. GAAP and consistent with past practice.

3 BUSINESS SINCE THE ACCOUNTING DATE

3.1 Since the Accounting Date:

         3.1.1    the Company has carried on its business in the ordinary and
                  usual course both as regards the nature, scope and manner of
                  conducting the same and so as to maintain the same as a going
                  concern;
         3.1.2    the Company has not entered into any long-term (that is to
                  say, incapable of performance in accordance with its terms
                  within six months after the date on which it was entered into
                  or undertaken) arrangements, commitments or contracts or
                  arrangements, commitments or contracts of a material nature
                  outside the ordinary and usual course of business of the
                  Company;
         3.1.3    no distribution of capital or income (including for the
                  avoidance of doubt, any dividend) has been declared, made or
                  paid or agreed or resolved to be declared, made or paid by the
                  Company;
         3.1.4    the Company has not created, allotted, issued, acquired,
                  repaid, redeemed or pledged share or loan capital or made an
                  agreement or arrangement or undertaken an obligation or
                  granted an option, right or privilege in respect of any of the
                  above;
         3.1.5    no loans have been made or guarantees given by the Company and
                  no loan capital or loan has been or has become liable to be
                  repaid by the Company in whole or in part;
         3.1.6    no sum has been paid or voted to any director or employee (or
                  ex-director or ex-employee) of the Company by way of
                  remuneration, benefit or otherwise in excess of the rates paid
                  to him by the Company at the Accounting Date and no



                                      4A.2



<PAGE>   34

                  new employment agreements have been made by the Company other
                  than in respect of employees listed in the corresponding
                  schedule to the Disclosure Letter.
         3.1.7    no loans are outstanding or have been made to employees,
                  Directors, officers of the Company or Shareholders;
         3.1.8    save for the KCC loan the Company has not borrowed, raised or
                  taken any money or any financial facility except in the
                  ordinary course of business not exceeding (pound)20,000;
         3.1.9    the Company has paid its creditors within the times agreed
                  with such creditors and there are no debts outstanding by the
                  Company which have been due for more than 60 days;
         3.1.10   the Company has not entered into any capital commitments or
                  any transaction or agreement for the acquisition, lease,
                  disposal, transfer, mortgage, pledge or subjection to any
                  encumbrance or lien of any asset or under which it has
                  incurred or will incur, except in the ordinary course of
                  business not exceeding (pound)20,000, any liabilities
                  (including contingent liabilities);
         3.1.11   the business of the Company has not been adversely affected by
                  the loss of or material reduction in nor is the Company aware
                  of any threatened loss of or material reduction in orders from
                  any customer, any source of supply, contract, lease, other
                  agreement, certificate or licence required by the Company for
                  its operation or by any abnormal factor not affecting similar
                  businesses to a like extent;
         3.1.12   the Company has not sold, assigned or transferred any
                  Intellectual Property Rights except in the ordinary course of
                  business;
         3.1.13   the Company has not received nor is aware of any plans of any
                  key officer or employee to resign from or renegotiate his
                  employment arrangements with the Company;
         3.1.14   none of the fixed assets of the Company shown in the Accounts,
                  Management Accounts and none acquired by the Company since
                  March 31, 1998 has been lost, damaged or destroyed;
         3.1.15   there has been no material adverse change in the financial
                  position or trading prospects or turnover of the Company nor
                  so far as the Vendors are aware is any such material change
                  expected; and
         3.1.16   there has been no change in the Company's Memorandum and
                  Articles of Association, no resolution of the Shareholders of
                  the Company has been passed and the Company has not changed
                  its accounting reference date.

3.2      Since the Accounting Date the Company has not engaged in any
         negotiations to do any of the things described in Section 3.1.

4        TRADING AND CONTRACTUAL ARRANGEMENTS
4.1      None of the contracts or obligations entered into by the Company is
         invalid, ultra vires the Company or exceeds the powers of the Directors
         to bind the Company and the Company is not in default under any such
         contracts or obligations and no event has occurred which, with the
         giving of notice or passage of time or both would constitute a default
         under any contract. No party with whom the Company has entered into an
         agreement, arrangement or obligation has given notice of its intention
         to terminate, or has


                                      4A.3


<PAGE>   35

         sought to repudiate or disclaim any agreement, arrangement or
         obligation nor has any right to do so.

4.2      Each contract is valid, binding and enforceable (subject to the effects
         of bankruptcy, insolvency, fraudulent conveyance, reorganisation,
         moratorium and other similar laws relating to or affecting creditors'
         rights generally, general equitable principles (whether considered in a
         proceeding in equity or at law)) and is in full force and effect, and
         assuming all consents required by the terms thereof or applicable law
         have been obtained, such contracts will continue to be valid, binding
         and enforceable and in full force and effect immediately following the
         consummation of the transactions contemplated hereby, in each case. No
         event has occurred which either entitles, or would, on notice of lapse
         of time or both, entitle the holder of any indebtedness for borrowed
         money affecting the Company to accelerate, or which does accelerate,
         the maturity of any indebtedness of the Company.

4.3      The Company is not a party to any contract, transaction, obligation,
         commitment or liability which, whether by reason of its nature, term,
         scope, price or otherwise is or may be material in relation to its
         business, profits or assets or which:-
         4.3.1    is in any way otherwise than in the ordinary course of the
                  Company's business;
         4.3.2    is of an unusual or abnormal nature, or not fully on an arm's
                  length basis;
         4.3.3    is of a long-term nature (that is to say incapable of
                  performance in accordance with its terms within six months
                  after the date on which it was entered into or undertaken);
         4.3.4    is incapable of termination in accordance with its terms by
                  the Company on 60 days' notice or less; or
         4.3.5    cannot readily be fulfilled or performed by the Company on
                  time without undue or unusual expenditure of money or effort.

4.4      No party with whom the Company has entered into an agreement or
         arrangement is in material breach thereof and the Vendors are not aware
         of any matter which might give rise to such a breach.

4.5      Except for the KCC Loan, no sums of whatever nature (apart from normal
         business expenses) are owing by the Company to any of the Vendors or
         any of the Directors or any person being a Connected Person of the
         Vendors or the Directors or any of them respectively and no Vendor or
         Director or Connected Person of any Vendor or Director has any cause of
         action or other claim against the Company.

4.6      Except for the KCC Loan, the Company has not been a party to any
         transaction to which any of the provisions of Section 320 (substantial
         property transactions involving directors, etc.), 322 (liability
         arising from contravention of Section 320), or 330 (general
         restrictions on loans, etc. to directors and persons connected with
         them) of the Companies Act may apply.

4.7      None of the Vendors, officers or Directors, nor any person being a
         Connected Person in relation to any Vendor has any direct or indirect
         interest with any business which has a


                                      4A.4

<PAGE>   36


         close trading relationship with that of the Company or which is or is
         likely to become competitive with the business of the Company.

4.8      There are no outstanding arrangements or understandings (whether
         legally binding or not) between the Company and any person who is a
         shareholder (or the beneficial owner of any interest in the Company or
         in any company in which the Company is interested), or any person who
         is a Connected Person of any such person, relating to the management of
         the Company's business, or the appointment or removal of the Directors,
         or the ownership or transfer of ownership, or the letting of any of the
         assets of the Company, or the provision, supply, purchase or finance of
         goods, services or other facilities to, by or from the Company or
         otherwise howsoever in relation to the Company's affairs.

4.9      The Company is not and has not agreed to become bound by any debenture
         or guarantee or contract for indemnity or suretyship or any like
         undertaking and there is not now outstanding any guarantee or contract
         for indemnity or suretyship or like undertaking given for the
         accommodation of or in respect of any obligation on the part of the
         Company.

4.10     No person is entitled to receive from the Company any finders' fee,
         brokerage or commission in connection with the sale of the Shares to
         the Purchaser.

5        ASSETS (OTHER THAN THE PREMISES)
5.1      The Company was at the Accounting Date the owner with good title to all
         the assets included in the Accounts and now so owns and has in its
         possession and under its control all such assets (save for current
         assets subsequently disposed of in the ordinary course of its business)
         and all assets acquired by it after the Accounting Date and all such
         assets are the sole and absolute property of the Company free from any
         charge, lien, encumbrance or equity and no other person has or claims
         any rights in relation to such assets or any of them and in particular
         all such assets are free from any hire-purchase, leasing or rental
         agreement for payments on deferred terms or bill of sale.

5.2      In relation to any asset held by the Company which is the subject of
         any hire-purchase, conditional sale, chattel leasing or retention of
         title agreement or otherwise belonging to a third party, no event has
         occurred which entitles or which upon intervention or notice by any
         third party may entitle any such third party to repossess the asset
         concerned, or terminate the agreement, or any licence in respect of the
         same.

5.3      The stock in trade of the Company is in good condition and is capable
         of being sold by the Company in the ordinary course of business and its
         level of stock is reasonable having regard to current and anticipated
         demand.

5.4      The fixed and loose plant, machinery, furniture, fixtures, fittings,
         equipment, vehicles and other moveable assets used in connection with
         the business of the Company are not surplus to requirements and are in
         good repair and condition and satisfactory working order.





                                      4A.5

<PAGE>   37

5.5      All information technology presently expected to be used by the Company
         or any Subsidiary on or following December 31, 1999 in the
         administration and the business operations of the Company or any
         Subsidiary, including, without limitation, in all products and services
         (i) provided by the Company or any Subsidiary whether to third parties
         or for internal use of (ii) to the best of the Company's knowledge
         after reasonable investigation, used in combination with any
         information technology of its clients, customers, suppliers or Vendors,
         accurately processes or will process date and time data (including, but
         not limited to, calculating, comparing and sequencing) from, into and
         between the years 1999 and 2000 and the twentieth century and the
         twenty-first century, including leap year calculations and neither
         performance nor functionality of such technology will be affected by
         dates prior to, during and after the year 2000. Except as set forth on
         Schedule 4, Part A.1, neither the Company nor any Subsidiary has any
         obligation under warranty agreements, service agreements or otherwise
         to remedy any information technology defect relating to the year 2000.

5.6      The Company is not entitled to the benefit of any debt otherwise than
         as the original creditor and is not and has not agreed to become a
         party to any factoring or discounting arrangement.

5.7      So far as the Vendors are aware, none of the debts due as at the
         Accounting Date nor any debt which has subsequently become due to the
         Company (or any part of any such debt) will remain unpaid for more than
         three months after the Completion Date, and every invoice issued by the
         Company and debt outstanding is regarded by the Directors as fair and
         fully recoverable.

6        EMPLOYEES AND AGENTS
6.1      The names of all employees of the Company together with copies of all
         service contracts and contracts for services and full particulars of
         the current terms of employment (including, without limitation, names,
         job descriptions, annual salary rates and other compensation) of all
         officers, employees, consultants and agents of the Company have been
         Disclosed.

6.2      There is not now outstanding any contract of service or for services
         between the Company and any of its officers, employees, consultants or
         agents which is not determinable by the Company at any time on three
         months' notice or less without compensation (other than under the
         Employment Rights Act 1996) or any liability (other than for accrued
         salary, wages, commission or pension) on the part of the Company to or
         for the benefit of any person who is or has been an officer, employee,
         consultant or agent of the Company.

6.3      No present officer, employee, consultant or agent of the Company has
         given or received notice terminating his employment or appointment and
         no such officer, employee, consultant or agent is entitled nor (so far
         as any of the Vendors is aware) intends or is likely as a result of
         this Agreement or Completion or otherwise to terminate his employment
         or appointment with the Company.


                                      4A.6


<PAGE>   38


6.4      Full particulars have been Disclosed of all loans and other benefits
         enjoyed by any officer, employee, consultant or agent of the Company in
         relation to the affairs of the Company and of all contracts,
         transactions and arrangements made or entered into by the Company and
         to which any of Sections 330 to 338 of the Companies Act applies.

6.5      The Company is not under any legal liability or obligation to pay
         bonuses, pensions, gratuities, superannuation, allowances or the like
         to any of its past or present officers or employees or their dependants
         nor is it a party to any arrangement or promise to make or in the habit
         of making ex gratia or voluntary payments by way of bonus, pension,
         gratuity, superannuation, allowance or the like to any such persons and
         there are no schemes or arrangements for payment of retirement pension
         or death benefit or similar schemes or arrangements in operation or
         contemplated in relation to the Company.

6.6      Save to the extent (if any) to which provision or allowance has been
         made in the Accounts, no liability has been incurred by the Company to
         make any redundancy payments or any protective awards or to pay damages
         or compensation for wrongful or unfair dismissal or for failure to
         comply with any order for the reinstatement or re-engagement of any
         employee and no gratuitous payment has been made or promised by the
         Company in connection with the actual or proposed termination or
         suspension of employment or variation of any contract of employment of
         any present or former director or employee.

6.7      The Company has not and is not obliged to recognise any trade union or
         association of trade unions or works council, staff association or any
         other organisation of employees in respect of its employees or any of
         them.

7        INSURANCE
7.1      Full particulars of all the Company's insurances have been Disclosed.
         Such insurances are sufficient for compliance by the Company with all
         requirements of law and all material agreements to which the Company is
         a party. Each insurable asset of the Company is insured to its full
         replacement value (with no provision for deduction or excess against
         each risk normally insured against by a person operating the types of
         business operated by the Company. There are no outstanding claims or
         circumstances likely to give rise to a claim thereunder and nothing has
         been done or omitted to be done which has made or could make any policy
         of insurance void or voidable or whereby the premiums are likely to be
         increased.

7.2      None of the said policies is subject to any special or unusual terms or
         restrictions or to the payment of any premium in excess of the normal
         rate.

7.3      The Company does not have any claim pending against any of the
         insurance carriers under any insurance policies.

8        BANKING FACILITIES
         There are no overdrafts, loans or other financial facilities
         outstanding or available to the Company other than the KCC Loan. All of
         the Company's bank and deposit accounts


                                      4A.7


<PAGE>   39


         have been Disclosed and so far as the Vendors are aware, none of the
         Vendors or the Company has done or omitted to do anything whereby the
         continuance of any such facilities in full force and effect might be
         materially adversely affected or prejudiced.

9        DEFECTIVE AND UNSAFE PRODUCTS/SERVICES
9.1      There are no outstanding claims against the Company in respect of
         defects in quality or delays in delivery or completion of contracts or
         deficiencies of design or performance of products or equipment or
         otherwise relating to liability for goods or services supplied or to be
         supplied by the Company and so far as the Vendors are aware no such
         claims are threatened or anticipated.

9.2      The Company has no knowledge that any goods or products for which the
         Company has responsibility under Section 2 of the Consumer Protection
         Act 1987 ("CPA") or for which the Company assumes responsibility under
         any contract of indemnity or otherwise is defective within the meaning
         of Section 3 of the CPA or that the Company supplies or possesses for
         supply any goods or products which are in breach of the general safety
         requirement provided by Section 10 of the CPA.

10       LITIGATION
10.1     Neither the Company nor any person for whose acts or omissions it may
         be vicariously liable is engaged in or subject to any civil, criminal,
         arbitration, administrative or other proceedings or investigations and,
         as far as any of the Vendors are aware, there are no such proceedings
         pending or threatened by or against the Company or against any such
         person and so far as the Vendors are aware there are no facts or
         circumstances likely to give rise to any such proceedings.

10.2     There is no outstanding judgment, order, decree, arbitral award or
         decision of a court, tribunal or governmental agency in any
         jurisdiction against the Company or a person for whose acts or defaults
         the Company may be vicariously liable.

10.3     The Company has conducted its business and dealt with its assets in all
         material respects in accordance with all applicable legal and
         administrative requirements in any jurisdiction.

11       INSOLVENCY
11.1     None of the Vendors is insolvent or has proposed a compromise of his
         creditors generally and no order has been made, or petition presented,
         or resolution passed for the winding-up of the Company and there is not
         outstanding:-
         11.1.1   any petition or order for the winding-up of the Company;
         11.1.2   any appointment of a receiver over the whole or any part of
                  the undertaking or assets of the Company;
         11.1.3   any petition or order for the administration of the Company;
         11.1.4   any voluntary arrangement between the Company and any of its
                  creditors;
         11.1.5   any distress or execution or other process levied in respect
                  of the Company, which remains undischarged; or
         11.1.6   any unfulfilled or unsatisfied judgment or court order against
                  the Company.



                                      4A.8


<PAGE>   40

11.2     The Company is not deemed unable to pay its debts within the meaning of
         Section123 of the Insolvency Act 1986.

11.3     No action is being taken by the Registrar of Companies to strike the
         Company off the register under Section 652 of the Act.

12       LICENCES, ENVIRONMENTAL AND HEALTH AND SAFETY COMPLIANCE
12.1     All necessary licences, consents, permits and authorities (public and
         private) have been obtained by the Company to enable the Company to
         carry on its business effectively in the places and in the manner in
         which such business is now carried on and all such licences, consents,
         permits and authorities are valid and subsisting and none of the
         Vendors is aware of any reason why any of them should be suspended,
         cancelled or revoked or should not be renewed upon the expiry of their
         existing term.

12.2     No consents, approvals, orders or authorisations of or filings or
         registrations with any court, administrative agency or commission or
         other governmental authority or with any third party are necessary with
         respect to the Company or any of the Vendors in connection with the
         execution and delivery of this Agreement or the consummation of any of
         the transactions contemplated hereby.

12.3     So far as the Vendors are aware, the Company complies and has complied
         at all times with all material conditions, limitations, obligations,
         prohibitions and requirements contained in or imposed by any
         Environmental Law and there are no facts or circumstances which may
         give rise to any liability under Environmental Law. For the purposes of
         this Warranty, "Environmental Law" means all applicable statutes,
         statutory instruments, common law, treaties, regulations, directives,
         codes of practice, circulars, guidance notes and the like and other
         measures imposed by any relevant body to which the Company or the
         Premises is or has been subject which relate to the pollution or
         protection of the Environment or the protection of the health of
         humans, animals or plants.

12.4     So far as the Vendors are aware, the Company has complied and continues
         to comply with all material conditions, limitations, obligations,
         prohibitions and requirements contained in any Health and Safety
         Legislation and there are no facts or circumstances which may lead to
         any breach of any Health and Safety Legislation. For the purposes of
         this Warranty, "Health and Safety Legislation" means all applicable
         statutes, statutory instruments, common law, treaties, regulations,
         directives, codes of practice, guidance notes including (but without
         limitation) the Fire Precautions Act 1971, the Health and Safety at
         Work etc. Act 1974, the Management of Health and Safety at Work
         Regulations 1992 and the Workplace (Health Safety & Welfare)
         Regulations 1992 concerning the health and safety of those who work for
         the Company, whether as employees or otherwise, visit the Premises or
         are in any way affected by the undertaking of the Company or by persons
         working for the Company.



                                      4A.9


<PAGE>   41

13       CHARGES
13.1     No charge in favour of the Company is void or voidable for want of
         registration.

13.2     No event has occurred causing, or which upon intervention or notice by
         any third party may cause, any floating charge created by the Company
         to crystallise or any charge created by it to become enforceable nor
         has any such crystallisation occurred or is such enforcement in
         process.

14       DIRECTORS AND OFFICERS
14.1     The Directors are the only directors of the Company and no person is a
         shadow director (within the meaning of Section 741 of the Companies
         Act) of the Company.

14.2     No officer or Director of the Company is subject to any of the
         disqualification provisions of Rule 505(b)(iii) under the
         Securitisation Act 1993 or any other such proceedings nor is threatened
         with any of the above.

15       CUSTOMS
         The Company has acted with reasonable care to properly value and
         classify, in accordance with applicable tariff laws, rules and
         regulations, all goods that Company the imports or exports into or out
         of the United Kingdom (the "Goods"). To Company's knowledge, there are
         currently no material claims pending against the Company by the U.K.
         Customs Service (or other foreign customs authorities) relating to the
         valuation, classification or marketing of the Goods.

16       CAPITAL OF THE COMPANY
16.1     The authorised and issued share capital of the Company is as set out
         in Schedule 2.

16.2     The Trustee Vendors are the legal owners and registered holders of the
         Shares sold by them hereunder, and the Trustee Vendors hold such shares
         in trust solely for the benefit of the beneficiaries of the trust of
         which they serve as trustees. The remaining Vendors are the legal and
         beneficial owners and registered holders of the Shares sold by them
         hereunder. All such shares which have been issued in proper legal form
         and are fully paid or credited as fully paid, and each of the Vendors
         is entitled to sell such of the Shares as are set out opposite his name
         in Column 2 of Schedule 1 free from all claims, charges, liens,
         encumbrances, equities, pre-emption rights and adverse rights of any
         description and together with all rights attached or accruing thereto
         as at and from the Accounting Date.

16.3     There is not now outstanding any loan capital of the Company nor any
         agreement, arrangement or option under which any person may now or at
         any time hereafter call for the creation, allotment, issue, sale or
         transfer of any loan or share capital of the Company or require any
         loan or share capital of the Company to be put under option.

16.4     Full particulars have been disclosed in respect of the Company's direct
         or indirect ownership, control, shares or interest in any other
         company, partnership, joint venture, business, trust, association or
         other venture or entity and anything in respect thereof


                                     4A.10


<PAGE>   42



         which is or may be materially adverse to the current or future trading
         or financial position of the Company.

17       MAJOR CUSTOMERS
         There has been no termination or cancellation of any relationship
         between the Company and any of its top 20 customers (by revenue
         generated from such customers).

18       EFFECT OF AGREEMENT
         So far as the Vendors are aware there are no material contracts or
         arrangements, mortgages, security interests, pledges, charges or other
         material rights or obligations (whether written or oral) to which the
         Company is a party which will by their terms be determinable cancelled
         or the performance of any obligation accelerated as a result of the
         provisions of this Agreement or which will or may be terminated by
         completion of this Agreement.


                                     4A.11


<PAGE>   43



                                   SCHEDULE 4

                                    PART A.1

              WARRANTY AND SERVICE AGREEMENTS RELATING TO YEAR 2000



                                      NONE.




                                     4A.1.1



<PAGE>   44




                                   SCHEDULE 4

                                     PART B

                           WARRANTIES RELATING TO TAX

DEFINITIONS:
In this Schedule, defined terms have the same meaning as in the Tax Deed
(Schedule 5) and:

"CAA"             means the Capital Allowances Act 1990;

"Group"           means the group comprising the Company and KNS Limited;

"TCGA"            means the Taxation of Chargeable Gains Act 1992;

"VATA"            means the Value Added Tax Act 1994.

1.       ADMINISTRATION AND RETURNS
1.1      Provision
         The Company has no liability for Tax (whether actual, deferred or
         contingent) in respect of any financial period down to and including
         the Accounting Date or referable to profits (including income and
         gains) made or deemed to have been made on or before the Accounting
         Date which has not been provided for or disclosed in the Accounts.

1.2      Payment of Tax
         The Company has duly paid all tax which it has become liable to pay and
         has not in the six years ending on the date of this Agreement been
         liable to pay a penalty, surcharge, fine or interest in connection with
         Tax or the submission or failure to submit any returns.


                                      4B.1


<PAGE>   45

1.3      Interest/Penalties
         The Company is under no liability to pay any interest, penalty, fine or
         default surcharge in connection with any Tax nor to the best of its
         knowledge information and belief as at Completion is any such liability
         likely to arise.

1.4      Returns
         The Company has properly and duly made all returns and supplied all
         notices, accounts, computations and information for the purposes of Tax
         required to have been made or supplied to any Tax Authority.

1.5      Disputes
         None of the aforementioned returns, notices, accounts and information
         has been or to the best of its knowledge information and belief as at
         Completion is likely to be disputed by any Tax Authority or to the best
         of its knowledge information and belief as at Completion will give rise
         to any disallowance of relief, allowance, deduction or credit or any
         assessment (including any claim for any penalty, interest, surcharge or
         fine).

1.6      Investigations
         The Company's affairs have not been and are not to the best of its
         knowledge information and belief as at Completion likely to be the
         subject of any dispute, investigation or discovery by or with any Tax
         Authority.

1.7      Claims and Elections
         All claims, disclaimers, elections, appeals or applications which the
         Company has made or is entitled to make in respect of Tax have been
         Disclosed and the particulars thereof are sufficient to enable the
         Purchaser to procure that any time limit to such entitlement expiring
         within six months of Completion can be met.

1.8      Clearances and Consents
         1.8.1    All clearances or consents relating to Tax (including for the
                  avoidance of doubt clearances made pursuant to Section 765 of
                  the Taxes Act) obtained by or on




                                      4B.2


<PAGE>   46

                  behalf of the Company have been properly obtained on the basis
                  of full and accurate disclosure to the relevant Tax Authority
                  of all material facts and circumstances; any transaction for
                  which such consent or clearance was obtained has been carried
                  out in accordance with the terms of the relevant application
                  and consent or clearance; and any such consent or clearance
                  was and remains valid and effective.
         1.8.2    All agreements, concessions or other arrangements which are
                  not based on a strict application of the relevant legislation
                  (whether formal or informal) currently subsisting which have
                  been made with or by any Tax Authority have been Disclosed.

1.9      Collection and Deduction of Tax
         1.9.1    The Company has complied in all respects with the following
                  provisions of the Taxes Act and other legislation and all
                  regulations made under any of those provisions:

                  (a)    Section 43 (payments of rent to a non-resident
                         landlord);

                  (b)    Section 123 and Schedule 3 (collection of foreign
                         dividends on behalf of a UK resident);

                  (c)    Section 339 (deduction of tax from donations to a
                         charity);

                  (d)    Sections 349 and 350 (deduction of tax from interest
                         and annual payments);

                  (e)    Section 524 (deduction of tax from patent receipts);

                  (f)    Section 536 (deductions of tax from royalties);

                  (g)    Sections 555 to 558 (deduction of tax from payments to
                         entertainers and sportsmen);

                  (h)    Sections 559 to 567 (deduction of tax from payments to
                         sub-contractors in the construction industry);

                  (i)    Section 582 (deduction of tax from funding bonds);

                  (j)    Section 732 (deduction of tax by dealers in securities
                         buying securities cum interest);

                  (k)    Section 737 (deduction of tax where dividends
                         manufactured);





                                      4B.3


<PAGE>   47

                  (l)    Section 777 (deduction of tax following a Section 776
                         transaction in land); and

         1.9.2.   The Company has properly accounted for all such deductions and
                  retentions required of it by virtue of the above provisions.
         1.9.3.   Save to the extent excepted by paragraph 12.2 of Part B of
                  this Schedule 4, all interest, annual payments and other sums
                  of an income nature paid during or in respect of the six years
                  ending on Completion or which the Company is under an
                  obligation to pay in the future are to the best of its
                  knowledge, information and belief as at Completion wholly
                  allowable as deductions or charges on income in computing
                  profits for the purposes of corporation tax.

2.       ANTI-AVOIDANCE
2.1      The Company has not at any time entered into any transaction, series of
         transactions, schemes or arrangements of which the main purpose, or one
         of the main purposes, was the avoidance of, or a reduction in liability
         to, Tax and the Company has not at any time entered into a transaction
         the main purpose of which was a commercial purpose but into which a
         step or a series of steps have been inserted with a view to the
         avoidance of, or a reduction in, or the mitigation of, or the deferral
         of a liability to Tax, and, without prejudice to the generality of the
         foregoing, to which any of the following provisions of the Taxes Act
         could apply:

         2.1.1    Sections 35 and 36 (assignment of lease granted at undervalue;
                  sale with right to conveyance);

         2.1.2    Section 56 (transactions in deposits with and without
                  certificates or in debts);

         2.1.3    Section 116 (arrangements for transferring relief);

         2.1.4    Section 240 (surrender of advance corporation tax);

         2.1.5    Section 341 (payments of interest etc between related
                  companies);

         2.1.6    Section 395 (leasing contracts and company reconstructions);

         2.1.7    Section 399 (dealings in commodity futures etc; withdrawal of
                  loss relief);

         2.1.8    Section 410 (arrangements for transfer of company to another
                  group or consortium);




                                      4B.4


<PAGE>   48



         2.1.9    Sections 729 and 730 (sale and repurchase of securities;
                  transfers of income arising on securities);

         2.1.10   Sections 731 to 735 (purchase and sale of securities);

         2.1.11   Section 736 and Section 737 (miscellaneous provisions relating
                  to securities);

         2.1.12   Section 774 (transactions between dealing company and
                  associated company);

         2.1.13   Section 779 (sale and lease-back; limitation on tax relief);

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

         2.1.15   Section 786 (transactions associated with loans or credit);

         2.1.16   Sections 22, 42, 75 or 142 of the CAA (capital allowances:
                  effect of sales between connected persons, sale and lease-back
                  etc);

         2.1.17   Section 106 of the TCGA (disposals of shares and securities
                  within prescribed period of acquisition); and

         2.1.18   Sections 29 to 34 of the TCGA (value shifting).

2.2      The Company has not been a party to any transaction to which any of the
         following provisions have been, or could be, applied, other than where
         all necessary consents or clearances have been obtained:

         2.2.1    Sections 703 to 709 (inclusive) of the Taxes Act (cancellation
                  of tax advantages from certain transactions in securities);

         2.2.2    Sections 765 to 767 (inclusive) of the Taxes Act (migration
                  etc. of companies);

         2.2.3    Section 776 of the Taxes Act (transactions in land; taxation
                  of capital gains); and

         2.2.4    Sections 135 to 139 (inclusive) of the TCGA (company
                  reconstructions and amalgamations) in respect of or to any
                  transaction which the Company could be liable to Tax as a
                  result of the principles enunciated by the House of Lords in
                  the line of cases including Furniss v Dawson, Craven v White
                  and McGuckian v IRC.

3.       CAPITAL ALLOWANCES
3.1      The Company has made no claim for capital allowances under the
         provisions of the CAA or Sections 520 to 533 (inclusive) of the Taxes
         Act.




                                      4B.5


<PAGE>   49

3.2      The Vendor is not aware of any circumstances as to why the capital
         expenditure on which capital allowances have been claimed should not
         continue to attract capital allowances either under the Taxes Act or
         the CAA.

3.3      Details of capital allowances claimed in each of the last six years,
         analysed as to industrial buildings allowances, first year allowances
         and writing down allowances in respect of machinery and plant, patents
         and know-how have been Disclosed.

3.4      All capital allowances made or to be made to the Company in respect of
         capital expenditure incurred prior to Completion have been made in
         taxing its trade.

3.5      Since the Accounting Date the Company has not done or omitted to do or
         agreed to do or permitted to be done any act as a result of which there
         may be a balancing charge under Sections 4, 24, 100 or 129 of the CAA,
         or a withdrawal of first year allowances or recovery of excess relief
         under Sections 46 and 47 of the CAA.

3.6      The Company has not made any election under Section 37 of the CAA nor
         has it or could it be taken to have made such an election under
         sub-Section 8(c) thereof (election for assets to be treated as
         short-life assets).

3.7      The Company has not incurred any capital expenditure on the provision
         of machinery or plant for leasing under Chapter V of Part II of the
         CAA.

3.8      No balancing charge under the CAA would arise on the disposal of any
         asset or the assets of the Company taken as a whole if each of the
         assets were disposed of for a consideration equal to its book value in
         or adopted for the purposes of the Accounts (and for the purposes of
         this warranty "asset" shall be taken to include each and every part of
         such asset).






                                      4B.6


<PAGE>   50
4.       CLOSE COMPANIES
4.1      The Company is not and has never been a close company within the
         meaning of Section 414 of the Taxes Act (close companies).

4.2      The Company has not made any distribution prior to Completion within
         the meaning of Section 418 of the Taxes Act ("distribution" to include
         certain expenses of close companies).

4.3      The Company is not and has never been a close investment holding
         company within the meaning of Section 13A of the Taxes Act.

4.4      The Company has not made any loans or advances within the meaning of
         Section 419 (as  extended by Section 422) of the Taxes Act (loans to
         participators etc).

4.5      No transfer of value (as defined in Section 3 of the Inheritance Tax
         Act 1984) has ever been made by the Company so that the provisions of
         Section 94 of the Inheritance Tax Act 1984 (charge on participators)
         could not apply.

5.       CORPORATION TAX ON CHARGEABLE GAINS
5.1      The Company has not made nor has it been entitled to make any claim
         under any of the  following provisions of the TCGA:

         5.1.1    Section 23 (compensation and insurance proceeds applied to
                  replace or restore asset);

         5.1.2    Section 24(2) (assets lost or destroyed or whose value becomes
                  negligible);

         5.1.3    Sections 48 and 280 (consideration due after time of
                  disposal);

         5.1.4    Sections 247 (roll-over relief on compulsory acquisition of
                  land);

         5.1.5    Sections 152 to 154 (roll-over relief on business assets);

         5.1.6    Section 161(3) (appropriation to trading stock); and

         5.1.7    Sections 253 or 254.





                                      4B.7


<PAGE>   51

5.2      The book value of each asset of the Company as shown in or adopted for
         the purposes of the Accounts is such that if an asset were disposed of
         at Completion for a consideration or deemed consideration equal to its
         book value no liability to Tax would be incurred and for this purpose
         any relief or allowance available to the Company, other than amounts to
         be deducted in calculating the amount liable to Tax, shall be
         disregarded.

5.3      No assessment has been postponed under Section 279 of the TCGA (delayed
         remittance of capital gain on disposal of a foreign asset).

5.4      The Company has not disposed of or acquired any asset in circumstances
         such that Section 17 of the TCGA could apply (disposals and
         acquisitions treated as made at market value).

5.5      The Company has not been entitled to a capital loss to which Section
         18(3) and (4) of the TCGA is applicable (disposals to a connected
         person).

5.6      The Company has not acquired shares as a "new holding" within the
         meaning of Sections 126 to 130 of the TCGA (inclusive), as extended by
         Sections 132, 135 and 136 of the TCGA.

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

5.8      No loss which may accrue on the disposal by the Company of any asset is
         liable to be reduced by virtue of any depreciatory transaction within
         the meaning of Section 176 of the TCGA (transactions in a group) or
         Section 177 of the TCGA (dividend stripping).

5.9      The Company has not engaged in any transactions which may hereafter
         result in an adjustment being made under Sections 29, 30, 31, 32, 33 or
         34 of the TCGA of the consideration received on any future disposal
         (value shifting).




                                      4B.8


<PAGE>   52

5.10     The Company has not taken part in any transaction in respect of which
         Section 176 of the TCGA could apply to reduce any allowable loss.

5.11     Full details of all assets currently owned by the Company in relation
         to which a charge to Tax might at any time within the next six years
         arise under Sections 178-181 (inclusive) of the TCGA (company ceasing
         to be member of a group) on the sale of any company which is at the
         date of this Agreement a subsidiary of the Company are (together with
         the current allowable expenditure in relation to each of such assets)
         Disclosed.

5.12     The Company has not been assessed and no event has occurred as a result
         of which the Company is or could be liable to be assessed to
         corporation tax under Section 190 of the TCGA (tax on one member
         recoverable from another).

5.13     The Company has not acquired benefits under any policy of assurance
         which would on disposal give rise to a chargeable gain under Section
         210 of the TCGA (disposals by a person other than the original
         beneficial owner).

5.14     The Company has not received any assets by way of gift and as mentioned
         in Section 282 of the TCGA (recovery of tax from donee).

5.15     The Company is not nor has it been a shareholder in a company which has
         made a transfer as mentioned in Section 125 of the TCGA (close company
         transferring assets at an undervalue).

5.16     The Company has not made any claim or election under Section 187 of the
         TCGA (postponement of gains relating to foreign trades).

5.17     The Company does not own any assets which are wasting assets within
         Section 44 of the TCGA and which do not qualify for capital allowances.






                                      4B.9


<PAGE>   53

6.       LOANS
6.1      The Company is not a party to any loan relationship within the meaning
         of Section 81 of the Finance Act 1996.

6.2      The Company is not and has not been a party to any loan relationship in
         circumstances where the debt has become a bad debt, has been or could
         be estimated to be bad or has been released so that paragraphs 5 or 6
         of Schedule 9 of the Finance Act 1996 could apply.

7.       DISTRIBUTIONS
7.1      The Company has not made any distributions within the meaning of
         Sections 209 and 210 of the Taxes Act except for dividends shown in its
         audited accounts nor is the Company bound to make any such
         distributions.

7.2      The Company has not issued any security within the meaning of Section
         254 of the Taxes Act the interest or other consideration given in
         respect of which falls to be taxed under Section 209.

7.3      The Company has not redeemed, repaid or purchased any of its own shares
         or agreed to redeem, repay or purchase any of its own shares or
         converted or agreed to convert its share capital or capitalised or
         agreed to capitalise in the form of redeemable shares or debentures any
         profits or reserves of any class or description.

7.4      The Company has not been a party to an exempt distribution within the
         meaning of Sections 213 to 218 (inclusive) of the Taxes Act within the
         last six year (demergers - exempt distributions).

7.5      The Company has not issued any share capital to which the provisions of
         Section 249 of the Taxes Act (stock dividends treated as income) could
         apply nor does it own any such share capital (shares carrying the right
         to bonus share capital).





                                      4B.10


<PAGE>   54

8.       EMPLOYMENT TAXES
8.1      The Company has duly paid and accounted for all sums payable to the
         Inland Revenue in respect of income assessable to income tax under
         Schedule E (including any sums payable in respect of benefits provided
         to the Company's Directors, employees or former employees) and has
         complied with all its reporting obligations in connection with all
         payments to and benefits provided for the Company's Directors,
         employees and former employees.

8.2      The Company has duly paid and accounted for all National Insurance
         contributions required of it under the provisions of the Social
         Security Contributions and Benefits Act 1992 and regulations made
         thereunder.

8.3      Up to the date hereof the Company has correctly operated:-
         8.3.1    a statutory sick pay scheme in accordance with the provisions
                  of the Social Security Contributions and Benefits Act 1992 and
                  the regulations made thereunder;
         8.3.2    a statutory maternity pay scheme in accordance with the
                  provisions of the Social Security Contributions and Benefits
                  Act 1992 and the regulations made thereunder.

8.4      No PAYE audit has been made in respect of the Company by the Inland
         Revenue and no notice has been given that any such audit will or may be
         made.

8.5      The Company is not and has not 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).

9.       FOREIGN MATTERS
9.1      The Company is and has at all times been resident in the United Kingdom
         for Tax purposes.



                                      4B.11


<PAGE>   55


9.2      The Company is not regarded and has never fallen to be treated for the
         purposes of any double taxation relief arrangements as resident in a
         territory outside of the United Kingdom and is not liable to tax on
         capital gains arising on disposals of assets of descriptions specified
         in any such arrangements nor is the Vendor aware of any circumstances
         as to why this would be the case.

9.3      The Company has not carried out any transaction prohibited by Section
         765 of the Taxes Act (migration of companies).

9.4      The Company has not carried out any transaction to which Section 765A
         of the Taxes Act applies (movement of capital between residents of the
         European Community).

9.5      The Company is not a person to whom Section 132(2) of the Finance Act
         1988 or Section 191(2) of the TCGA applies (liability of other persons
         for unpaid tax of migrating companies:
         non-payment of tax by non-resident companies).

9.6      The Company has not transferred a trade carried on by it 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 may be
         deemed to arise at a date after the transfer under Section 140 of the
         TCGA (postponement of charge on transfer to a non-resident company).

9.7      The Company does not hold shares in a company which is not resident in
         the United Kingdom and which would be a close company if it were
         resident in the United Kingdom in circumstances such that a chargeable
         gain accruing to the company not resident in the United Kingdom could
         be apportioned to the Company pursuant to Section 13 of the TCGA.

9.8      The Company has not carried out nor been engaged in any transactions to
         which the provisions of Section 770 of the Taxes Act (as extended by
         Section 773 of the Taxes Act)



                                      4B.12


<PAGE>   56



         (transactions at an undervalue) or Schedule 28AA (transfer pricing)
         have been or may be applied.

9.9      The Company has not received notice of a direction under Section 747 of
         the Taxes Act (imputations of chargeable profits of controlled foreign
         companies) and no circumstances exist which would entitle the Inland
         Revenue to make such a direction and apportion any profits of a
         controlled foreign company to the Company.

9.10     The Company has no material interest in:
         9.10.1   an offshore fund; or
         9.10.2   a UK resident company or a unit trust scheme the trustees of
                  which are resident in the United Kingdom;
         any of which is or has at any material time been a non-qualifying
         offshore fund for the purposes of Sections 757 to 764 (inclusive) of
         and Schedules 27 and 28 to the Taxes Act.

9.11     The Company is not a dual resident investment company within the
         meaning of Section 404 of the Taxes Act.

9.12     The Company is not liable to be assessed to Tax under Sections 126 to
         130 of the Finance Act 1995.

10.      INHERITANCE TAX
10.1     No circumstances exist whereby any power within Section 212 of the
         Inheritance Tax Act 1984 (powers to raise tax) could be exercised in
         relation to any shares, securities or other assets of the Company.

10.2     There is no Inland Revenue charge outstanding for unpaid inheritance
         tax as provided by Sections 237 and 238 of the Inheritance Tax Act 1984
         (Inland Revenue charge for unpaid tax) over any asset of the Company or
         in relation to any shares in the capital of the Company.



                                      4B.13


<PAGE>   57


11.      LOSSES AND RELIEFS
11.1     There has been no change in the ownership of the Company or major
         change in the nature or conduct of a trade or business carried on by
         the Company and no event or series of events which might cause the
         disallowance of the carry forward of losses or excess charges under the
         provisions of Section 768 of the Taxes Act or the disallowance of the
         carry forward, set-off or surrender of advance corporation tax under
         the provisions of Sections 245, 245A or 245B of the Taxes Act (change
         of ownership of company; calculation and treatment of advance
         corporation tax) or restrictions on the set off of pre-entry losses
         under Schedule 7A of the TCGA.

11.2     The Company has not surrendered or claimed any amount by way of group
         relief under the provisions of Sections 402 to 413 (inclusive) of the
         Taxes Act (group relief) or under the provisions of Section 240 of the
         Taxes Act (surrender of advance corporation tax).

12.      MATTERS SINCE THE ACCOUNTING DATE
         Since the Accounting Date:
12.1     no Event has occurred which has given rise or may give rise to a Tax
         liability on the Company other than transactions entered into in the
         ordinary course of business; and

12.2     the Company has not made any payment either alone or in aggregate with
         any other payments of a similar nature which exceed (pound) 10,000
         which will not be deductible for the purposes of corporation tax in
         computing the taxable profits of the Company.

13.      STAMP DUTY AND STAMP DUTY RESERVE TAX
13.1     All documents which are required to be stamped and which are in the
         possession or under control of the Company or to which the Company is a
         party have been properly stamped and the appropriate stamp duty has
         been paid and there is no liability for any interest or 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 and no documents are presently subject to adjudication of
         claims for exemption or relief.




                                      4B.14


<PAGE>   58


13.2     Within the period of five years ending on today's date the Company has
         not made any claim for relief or exemption from stamp duty or Section
         42 of the Finance Act 1930.

13.3     The Company has not had transferred to it chargeable securities (as
         defined in Section 99 of the Finance Act 1986) in circumstances which
         have given rise to or which may give rise to a liability for Stamp Duty
         Reserve Tax nor are there any other circumstances in which the Company
         may have a liability for Stamp Duty Reserve Tax.

14.      VALUE ADDED TAX AND IMPORT DUTIES
14.1     The Company is a registered taxable person for the purposes of VAT and
         has been duly registered at all times that it has been required to be
         registered.

14.2     The Company has at all times issued correct tax invoices to all persons
         properly requiring the same in respect of its taxable supplies either
         by way of goods or of services and has likewise requested and received
         all appropriate tax invoices from its suppliers and others and has kept
         all necessary records and documents required to complete and verify its
         quarterly VAT returns.

14.3     The Company has in all other respects complied with the VAT legislation
         and all regulations, notices, orders, provisions, directions and
         conditions relating to VAT.

14.4     The Company is not in arrears with any payments or returns under such
         legislation or liable to any abnormal or non-routine payment or any
         forfeiture, penalty, interest or surcharge or to the operation of a
         penalty, interest or surcharge provisions contained therein.

14.5     The Company is not and has never been partially exempt for VAT
         purposes.

14.6     The Company has never been required by the Commissioners of HM Customs
         and Excise to give security.




                                      4B.15


<PAGE>   59


14.7     There is not, nor has there at any time been, in force a group or
         similar election for VAT purposes in relation to the Company and the
         Company has not been the subject of an application for group
         registration.

14.8     The Company is not and will not become for VAT as agent, manager or
         factor (for the purposes of Section 47 of the VATA) nor as VAT
         representative (for the purposes of Section 48 of the VATA) of any
         person who is not resident in the United Kingdom.

14.9     Full particulars of any claim for bad debt relief made or which may be
         made by the Company under Part XIX of the Value Added Tax Regulations
         1995 (SI 1995/2518) have been Disclosed.

14.10    The Company has not received a surcharge liability notice under Section
         59 of the VATA (default surcharge) or a penalty liability notice under
         Section 64 of the VAT Act 1994 (persistent misdeclaration resulting in
         understatements or overclaims).

14.11    The Company and each relevant associate of the Company (within the
         meaning of paragraph 3(7) of Schedule 10 to the VAT Act 1994) have not
         and will not prior to Completion make an election under paragraph 2 of
         Schedule 10 to the VAT Act 1994 (election to waive exemption).

14.12    The Company is not and has not at any time been liable nor has it taken
         any action likely to make it liable to a self supply charge under
         paragraph 6 of Schedule 10 to the VAT Act 1994 (developers of certain
         non-residential buildings etc.)

14.13    No notice has been received by the Company and the Company is not aware
         of anything which indicates that the grant to the Company of any
         interest in or right over land or of any licence to occupy land is and
         will continue to be other than an exempt supply for VAT purposes.



                                      4B.16


<PAGE>   60


14.14    The Company does not own any assets which are or could be subject to
         the Capital Goods Adjustment Scheme pursuant to Part XV Value Added Tax
         Regulations 1995 (SI 1995/2518).

14.15    The Company has complied in all respects with the Customs Legislation
         and has made and maintained at the date hereof full, complete, correct
         and up-to-date records and other documents appropriate or requisite for
         the purposes of such legislation, has made all customs declarations in
         accordance with the Customs Legislation, has at all times punctually
         paid and made all payments and returns required under the VAT
         legislation, has complied with the terms of any agreement reached with
         HM Customs and Excise and has and has never had any goods liable to
         forfeiture under Section 49 or penalties under Section 50 of the
         Customs and Excise Management Control Act 1979.

14.16    For the purposes of warranty 14.15 above "the Customs Legislation"
         means the Community Customs Code (EC Regulation 2913/92) and all
         regulations made or imposed thereunder and any other statutes or other
         provisions relating to import duties.

15.      GROUP PROVISIONS
15.1     The Company has never been a member of any group other than the Group
         for Tax purposes.

15.2     The Company is a member of the Group for the purposes of Section 402 of
         the Taxes Act and there are no arrangements in existence within the
         meaning of Section 410 of the Taxes Act which would preclude the
         Company from being a member of the Group.

15.3     The provisions of Section 413(7) and (8) of the Taxes Act as
         supplemented by the provisions of Schedule 18 to the Taxes Act have
         been complied with and the Vendor is not aware of any reason as to why
         they may apply to restrict group relief claimed.


                                      4B.17


<PAGE>   61


15.4     Details of all claims and surrenders for group relief and of the
         surrender of advance corporation tax pursuant to Section 240 of the
         Taxes Act and refunds pursuant to Section 102 of the Finance Act 1989
         have been Disclosed.

15.5     The Company has not made, nor is it liable to make any payment for the
         surrender of group relief or advance corporation tax.

15.6     All claims for the surrender of group relief and advance corporation
         tax were valid when made and have been or will be allowed by way of
         relief from corporation tax.

15.7     The Company does not own any asset which it has acquired from another
         company which was at the time a member of the Group and which owned
         that asset other than as trading stock within the meaning of Section
         173 of the TCGA.

15.8     The Company has not ceased to be a member of a group of companies in
         circumstances in which a charge under Sections 178 and 179 of the TCGA
         has arisen.

15.9     The Company has made no claim under Section 175 of the TCGA
         (replacement of business assets by a member of a group).

15.10    There have been Disclosed copies of all elections made pursuant to
         Section 247 of the Taxes Act (claim to have dividends and interest paid
         gross) and all such elections were validly made and are now in force.

15.11    The Company has not paid any dividend without advance corporation tax
         or made any payment without deduction of income tax in the
         circumstances specified in Section 247(6)(b) of the Taxes Act.

15.12    The provisions of Sections 245A and 245B of the Taxes Act have not and
         will not apply to any advance corporation tax which has been
         surrendered to the Company.



                                      4B.18


<PAGE>   62


15.13 No shares owned by the Company are held as trading stock.




                                      4B.19



<PAGE>   63




                                   SCHEDULE 4

                                     PART C

                               PROPERTY WARRANTIES

1.       Save for the Leasehold Property, the Company does not own, use or
         occupy any other property.

2.       The Leasehold Property is held by KCC under the Lease and KCC has the
         original Lease deed which constitutes a good and legally marketable
         title to the Leasehold Property.

3.       The Lease is an underlease.

4.       Save in respect of the occupation of the Leasehold Property by the
         Company, the Vendors are not aware (having made reasonable inquiry) of
         any breach of the covenants and other obligations contained in the
         Lease or any documents supplemental thereto on the part of KCC or the
         Company.

5.       All monies due to the landlord under the Lease have been paid as and
         when they become due and none have been commuted or waived.

6.       All consents for the purpose of the Planning Acts and building
         regulations in the actual possession of the Vendors and relating to the
         Leasehold Property have been Disclosed.

7.       The Vendors are not actually aware of any complaint or dispute with the
         Landlord and adjoining occupier or any local or other competent
         authority relating to the Leasehold Property or the Lease and are not
         aware of any circumstances which may give rise to such a complaint or
         dispute after the date hereof.



                                      4C.1

<PAGE>   64


                                   SCHEDULE 4

                                     PART D

                        INTELLECTUAL PROPERTY WARRANTIES

1.       Definitions
         In this Part D of Schedule 4 and in Schedule 5:-

         "Confidential Information"     means all confidential information
                                        relating to the Company and/or its
                                        business, property, services,
                                        operations, management and
                                        administration, business and financial
                                        affairs and/or the sale or marketing of
                                        any of its products or services
                                        including (without limitation) customer
                                        names and lists, sales targets, sales
                                        statistics, market share statistics,
                                        market surveys and reports on research,
                                        information relating to future business
                                        development or planning, information
                                        relating to litigation or legal advice
                                        and in whatever form such information
                                        may be recorded and on whatever media;

         "Copyright Works"              means all works in which copyright or
                                        rights in the nature of copyright
                                        subsist including, without limitation,
                                        all manuals and other technical and
                                        organisational documentation, drawings,
                                        plans, blueprints, designs, design
                                        materials, models, computer software,
                                        data and information, and references to
                                        Copyright Works shall be construed as
                                        including references to each of the
                                        Copyright Works;

         "Intellectual Property"        means Patents, registered and
                                        unregistered trade marks, registered and
                                        unregistered service marks, registered
                                        designs, utility models (in each case
                                        for the full period thereof and all
                                        extensions and renewals thereof),
                                        applications for any of the foregoing
                                        and the right to apply for any of the
                                        foregoing in any part of the world,
                                        inventions, business names, trade names,
                                        brand names, Copyright Works and rights
                                        in the nature of copyright and design
                                        rights (the "Base Intellectual
                                        Property") and Confidential Information,
                                        Know-How, get-up and any similar rights
                                        situated in any country; and the benefit
                                        (subject to the burden) of any and all
                                        agreements, arrangements and licences in
                                        connection with any of the foregoing;





                                      4D.1

<PAGE>   65




         "Know-How"                     means the body of knowledge, technical
                                        experience, expertise and skills,
                                        technical processes, secret processes,
                                        formulae and technical information held
                                        by the Company and relating to its
                                        business which is not in the public
                                        domain at the date of this Agreement;

         "Patents"                      means subsisting patents and all
                                        subsisting rights of a similar nature
                                        held in any part of the world and all
                                        applications for patents and re-issues
                                        of patents and divisions and
                                        continuations of applications for
                                        patents.

2.       Warranties
2.1      The Company owns or licenses from another person all the Intellectual
         Property necessary for its business as presently conducted without to
         the knowledge of the Company any conflict with or infringement of the
         valid rights of others and the lack of which could materially and
         adversely affect the operations or condition, financial or otherwise,
         of the Company, and the Company has not received any notice of
         infringement upon or conflict with the asserted rights of others.

2.2      The Company has disclosed a complete list of all Base Intellectual
         Property and all agreements related to and all agreements pursuant to
         which the Company licenses Intellectual Property from or to a third
         party.

2.3      All Intellectual Property owned by the Company is owned free and clear
         of all liens, encumbrances, restrictions and, to its knowledge, adverse
         claims.

2.4      All Intellectual Property licensed by the Company is the subject of a
         license agreement which is legal, valid, binding and enforceable and in
         full force and effect.

2.5      The consummation of the transactions contemplated hereby will not
         result in the termination or impairment of the Company's ownership of,
         or right to use, any Intellectual Property.

2.6      The Company has the right to use the Intellectual Property which it
         owns or licenses free and clear of any rights, liens, encumbrances or
         claims of others.

2.7      The Company is not aware that any of its employees is obligated under
         any contract (including licenses, covenants or commitments of any
         nature) or other agreement, or subject to any judgment, decree or order
         of any court or administrative agency, that would interfere with the
         use of his or her best efforts to promote the interests of the Company
         (set out in such employee's contract of employment or implied by the
         general law) or that would conflict with the Company's business.









                                      4D.2



<PAGE>   66




                                   SCHEDULE 4

                                     PART E

                               PENSIONS WARRANTIES

1.       PENSIONS

1.1      Definitions
         For the purposes of this paragraph:

         "COMPANY"                      means KNS Holdings Limited and KNS
                                        Limited;

         "DIRECTORS"                    means all the directors of KNS Limited
                                        and shall (where the context permits)
                                        include former directors of KNS Limited;

         "EMPLOYEES"                    means all the employees employed by KNS
                                        Limited at Completion and shall (where
                                        the context permits) include individuals
                                        formerly employed by KNS Limited;

         "PLAN"                         means the Kerridge Computer Company
                                        Limited Retirement Benefit Scheme with
                                        an effective date of 1 January 1981.

         Sole pension arrangement
1.2      Except under the Plan, the Company has no (nor contributes to any)
         agreement, arrangement or understanding (whether contractual, under
         trust or otherwise and whether or not legally enforceable) which exists
         for the provision of relevant benefits (as defined in Section 612 of
         the Taxes Act but as if the exception contained in that definition were
         included) in respect of the Employees or Directors or for any relative
         or dependant of any of the Employees or Directors in connection with
         which the Company is or may become legally or morally liable to make
         any payment.

1.3      Save for the Plan the Company has never participated in, or contributed
         to, any other pension scheme or arrangement (without limitation,
         including any personal pension plan as defined in the Taxes Act).

         Full benefit structure disclosed
1.4      Full details of the Plan have been given to the Purchaser in the form
         of copies of all Deeds and rules governing the Plan, the current
         booklet and any announcements to employees, all insurance policies and
         contracts, any undertakings and indemnities given to the Inland Revenue
         and all other relevant pension documents and the Plan is governed
         solely by the aforementioned Deeds and rules which have been properly
         and validly brought into effect. There is no obligation to provide
         benefits under the Plan other than as revealed in such documents and
         particulars.




                                      4E.1


<PAGE>   67



         Inland Revenue
1.5      The Plan is an approved scheme for the purpose of Chapter I of Part XIV
         of the Taxes Act and so far as the Vendors are aware there is no matter
         which could lead to the withdrawal of that approval.

1.6      All taxes which have fallen due in relation to the Plan have been paid.

         Contributions
1.7      Employer and employee contributions to the Plan have been paid when
         they fall due. All contributions have been paid in accordance with the
         payments schedule (as required by, and defined in, Section 87 of the
         Pensions Act 1995).

1.8      All fees, charges and expenses of whatever nature with respect to the
         Plan have been paid and no services have been rendered for which an
         account or invoice has not been delivered.

         Discretions and Benefit Promises
1.9      No plan, proposal or intention to amend or exercise a discretion in
         relation to the Plan has been communicated to a member of the Plan.

1.10     No promise or guarantee (oral or written) has been made or given to any
         member of the Plan that any particular level or amount of benefits
         would be provided for and in respect of him under the Plan on his
         retirement, death or leaving service.

         Confirmation of membership
1.11     The Disclosure Letter contains a list of the employees who are
         contributing members of the Plan with full particulars in each case
         necessary to establish the current entitlements and the current
         contributions payable under the Plan for and in respect of the
         individual specified, and a list of all Employees and Directors who
         'will become eligible to join the Plan upon the satisfaction of any
         conditions of eligibility.'

         Death in service benefits
1.12     All benefits payable on the death of an Employee are fully insured
         under a policy effected with an insurance company and each Employee has
         been covered for such insurance by such insurance company on its normal
         terms for persons in good health and all insurance premiums payable
         have been paid and no person has done or omitted to do anything which
         has or might render any such policies of insurances void or voidable.

         Litigation
1.13     No claim, action, suit or dispute (which include, without limitation,
         contact with OPRA or OPAS or the Pensions Ombudsman) has been made or
         threatened against the Company or the Plan trustees or administrator,
         or against any person whom the Company is or may be liable or indemnify
         or compensate, in connection with the Plan (other than routine claims
         for benefits) and there are no circumstances which may give rise to any
         such claim.






                                      4E.2


<PAGE>   68



1.14     The Company has not given any indemnity to any person in connection
         with the Plan.

         No alterations to benefits payable
1.15     Prior to Completion the employer and employee contributions to the
         Plan, made in respect of any Employee or Director shall not be
         increased without the prior consent of the Purchaser.

1.16     No undertaking or assurance has been given to any of the Employees or
         Directors or former employees of the Company as to the continuance,
         introduction, increase or improvement of any retirement, death or
         disability benefits (whether or not there is any legal obligation to do
         so).

         Compliance
1.17     The Plan complies with, and has been administered in accordance with
         all applicable legal and administrative requirements (including,
         without limitation, Article 141 of the Treaty of Rome as it applies to
         the eligibility of an Employee to join the Plan and the benefits
         provided under the Plan and the Pensions Act 1995) and the trusts,
         powers and provisions of the Plan.

1.18     The Plan has been operated at all times in accordance with the
         documents constituting the same (as lawfully amended from time to time)
         and all applicable laws and, without limitation to the foregoing, all
         decisions made by the trustees and administrators of the Plan have been
         made in accordance with their powers and duties as the trustees or
         administrators respectively.

1.19     No part-time Employee or former Employee (whether part-time or not)
         has either:-

         (a)      been excluded from membership of the Plan; or

         (b)      been provided with benefits under the Plan which are different
                  from those provided for, or in respect of, full-time Employees
                  or former Employees or do not comply with the requirements of
                  Article 141 of the Treaty of Rome.

         Transfers-in
1.20     The Plan has not accepted any transfer value from a pension arrangement
         ("the Paying Scheme") in respect of an Employee or former Employee
         where the Paying Scheme in relation to such transfer value did not
         comply with the requirements of Article 141 of the Treaty of Rome
         (which, for the avoidance of doubt, includes obligations in respect of
         part-timers).






                                      4E.3




<PAGE>   69

                                   SCHEDULE 5


                             COMPLETION REQUIREMENTS

1.       OBLIGATIONS OF THE VENDORS

1.1      At Completion the Vendors shall deliver to the Purchaser:

         1.1.1    a certificate to the effect that the Vendors have complied in
                  all respects with their obligations under this Agreement, and
                  that the Vendors' Warranties remain true, complete and
                  accurate in all respects and not outstanding as at the date of
                  Completion save as Disclosed in the Disclosure Letter;

         1.1.2    a certificate, signed by the Chief Executive Officer and Chief
                  Financial Officer of the Company and its Auditors, stating the
                  amount by which the Company had repaid the KCC Loan since the
                  date of the Management Accounts, the sources of such payments,
                  effects on working capital and any amounts outstanding;

         1.1.3    the PSL and Centrix Agreement duly executed by the parties
                  thereto;

         1.1.4    the Tax Deed duly executed under seal by the parties thereto
                  (other than the Purchaser);

         1.1.5    the audited accounts of the Company for the year ended
                  February 28, 1999;

         1.1.6    duly executed transfers of the Shares in favour of the
                  Purchaser or its nominees and the share certificates in
                  respect of the Shares, together with any power of attorney or
                  other authority under which such transfers have been executed
                  and an indemnity in the agreed form in relation to any missing
                  certificates.

         1.1.7    a Deed of release executed by each of the Vendors in the
                  agreed form releasing the Company from all claims (actual or
                  contingent) which he has or may have or might thereafter have
                  on account of or in relation to any act, matter, cause or
                  thing down to and inclusive of the Completion Date;

         1.1.8    the statutory and other books duly written up to date, the
                  Certificate of Incorporation, Certificate[s] of Incorporation
                  on Change of Name and common seal of the Company;

         1.1.9    the title Deeds relating to the Premises and all insurance
                  policies, premium receipts, maintenance contracts and other
                  documents relating to the Premises;

         1.1.10   all books of account and other books and records and copies of
                  the memorandum and articles of association of the Company;

         1.1.11   all documents of title, certificates, Deeds, licenses,
                  agreements and other documents relating to the Company's
                  Intellectual Property Rights and all manuals, drawings, plans,
                  documents and other materials and media on which the Company's
                  Know-How is recorded;

         1.1.12   the Employment Agreements duly executed by each of the
                  Executives and at least 80% of the employees;

         1.1.13   the certificate and undertaking as to Regulation "S" in the
                  form contained in Schedule 7 duly executed by each of the
                  Vendors; and

         1.1.14   the Escrow Agreement executed by the Vendors.

1.2      At Completion the Vendors shall procure that:

                                      5.1

<PAGE>   70

         1.2.1    a board meeting of the Company be held at which the Employment
                  Agreements shall be approved and executed by the Executives
                  and at least 80% of the other employees;

         1.2.2    all amounts owing to the Company by any of the Vendors or any
                  of the Directors or any Connected Person in relation to the
                  Vendors, the Directors or any of them shall be repaid in full;
                  and

         1.2.3    all the papers, books, records (in whatever medium) and all
                  other assets of the Company which are within the possession or
                  under the control of the Vendors, the Directors or any of
                  them, or any Connected Person of the Vendors the Directors of
                  any of them are delivered to the Company.

2.       OBLIGATIONS OF THE PURCHASER

2.1      On Completion the Purchaser shall:

         2.1.1    deliver to the Vendors a certificate of the Purchaser to the
                  effect that the Purchaser has completed in all respects with
                  its obligations under this Agreement, and that the Purchaser
                  Warranties remain true, complete and accurate in all respects
                  and not outstanding at the date of Completion;

         2.1.2    deliver to the Vendors a counterpart of the Tax Deed duly
                  executed by the Purchaser;

         2.1.3    deliver to the Vendors a counterpart of the Escrow Agreement
                  duly executed by the Purchaser and the Escrow Agent;

         2.1.4    deliver to the Vendors the Loan Notes duly executed by the
                  Purchaser;

         2.1.5    deliver to Kerridge Computer Company Limited a duly executed
                  copy of the KCC Debenture;

         2.1.6    satisfy the cash consideration for the Shares as provided in
                  Section 3 of this Agreement by the delivery to the Vendors'
                  solicitors by telegraphic transfer of the sum specified in
                  Section 3.1.1 of this Agreement;

         2.1.7    deliver the stock certificates in the names of the relevant
                  Vendors in respect of the relevant Consideration Shares to the
                  Escrow Agent;

         2.1.8    deliver to the Executives' Employment Agreements duly executed
                  by the Purchaser or the Company.

3.       To the extent that any documents referred to in this Schedule have been
         executed before Completion, they shall be deemed to have taken place at
         Completion in the order set out in this Schedule.


                                      5.2


<PAGE>   71


                                   Schedule 6

                                    TAX DEED



DATE              20 DECEMBER 1999
- ----

PARTIES
- -------

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

(2)    FUTURELINK CORP., a corporation incorporated under the laws of the State
       of Delaware, whose principal place of business is at 6 Morgan, Suite 100,
       Irvine, California 92618 ("Purchaser").

RECITAL
- -------

Pursuant to an agreement of today's date the Purchaser has today completed the
purchase of the whole of the issued share capital of KNS Holdings Limited in
reliance (inter alia) upon the undertaking of the Covenantors to enter into this
Deed and the undertakings and covenants by the Covenantors hereinafter
contained.

NOW THIS DEED WITNESSES as follows:
- -----------------------

1.       DEFINITIONS AND INTERPRETATION
         ------------------------------
1.1      Definitions
         -----------

         In this Deed (including the Schedule):

                                       6.1


<PAGE>   72


       "Accounts"                  means the audited consolidated profit and
                                   loss account and balance sheet of the Company
                                   (including the Subsidiary) as at the
                                   Accounting Date;

       "Accounting Date"           means 28 February 1999;

       "Agreement"                 means the agreement of today's date between
                                   the Covenantors, and the Purchaser for the
                                   sale and purchase of the Shares;

       "Claim"                     includes any claim, assessment, notice,
                                   demand, letter, direction, order,
                                   counterclaim or other document issued or
                                   made, or action taken by or on behalf of any
                                   Tax Authority (including any action deemed to
                                   be a self-assessment) by virtue of which the
                                   Company has, or is alleged to have, a
                                   liability to Tax, or from which it appears
                                   that the Company has, or will or may have, a
                                   liability to Tax, or from which it is sought
                                   to impose upon the Company a liability to Tax
                                   (whether in each case the same is primarily
                                   payable by the Company and whether or not the
                                   Company shall or may have any right of
                                   reimbursement against any other person) or is
                                   denied or sought to be denied any relief;

       "Business Day"              means any day which is not a Saturday, a
                                   Sunday or a bank or public holiday in London;

       "Company"                   means each of KNS HOLDINGS LIMITED and its
                                   successors and assigns and the Subsidiary and
                                   its successors and assigns, as the case may
                                   be;

                                       6.2


<PAGE>   73

       "Completion"                means completion of the sale and purchase of
                                   the Shares pursuant to the Agreement;

       "Event"                     includes any event, transaction, act, or
                                   occurrence of whatsoever nature including
                                   omission, receipt, distribution and failure
                                   to distribute, acquisition, disposal,
                                   transfer, payment, loan or advance, or deemed
                                   distribution of income, the death of any
                                   person, the change in residence of any
                                   person, entry into the Agreement, Completion
                                   or the inclusion of a company within a group
                                   of companies for any purpose;

       "Group Relief"              means (i) relief for trading losses and other
                                   amounts by way of group relief under Sections
                                   402 to 413 of the Taxes Act; (ii) the
                                   surrender of advance corporation tax under
                                   Section 240 of the Taxes Act; and (iii) the
                                   surrender of tax refunds under Section 102 of
                                   the Finance Act 1989; or, in each case, the
                                   nearest equivalent under the laws of any
                                   other jurisdiction;

       "Relief"                    includes any relief, loss, allowance,
                                   exemption, set-off, deduction or credit in
                                   respect of any tax, or any set-off or
                                   deduction in computing income, profits or
                                   gains for the purposes of any Tax;

       "Shares"                    means the 20,571,429 ordinary shares of one
                                   pence each in the capital of the Company plus
                                   shares of the Company to be issued upon
                                   exchange as described in Section 10.2.12 of
                                   the Agreement;

       "Subsidiary"                means KNS Limited;

                                       6.3


<PAGE>   74


       "Tax"                       means all taxes, duties, levies, imposts,
                                   charges and withholdings of any nature
                                   whatsoever, whether created or imposed in the
                                   United Kingdom or elsewhere and at whatever
                                   time created or imposed which are collected
                                   and administered by any Tax Authority, and
                                   includes:

                                   (a)      within the United Kingdom, income
                                            tax, corporation tax, advance
                                            corporation tax, capital gains tax,
                                            value added tax, customs' duties
                                            (including import duties, excise
                                            duties), stamp duty reserve tax but
                                            not stamp duty, inheritance tax,
                                            national insurance contributions,
                                            and any other forms of taxes,
                                            duties, levies, imposts, charges or
                                            withholdings similar to or
                                            supplementing or replaced by or
                                            replacing the foregoing or any of
                                            them, in all cases together with all
                                            incidental and supplemental
                                            penalties, charges, interest, fines
                                            and default surcharges; and

                                   (b)      outside the United Kingdom, any
                                            liability to any taxes, levies,
                                            duties, imposts, charges and
                                            withholdings of any nature
                                            whatsoever, including (without
                                            limitation) taxes on gross or net
                                            income, taxes on profits or gains
                                            and taxes on receipts, sales, use,
                                            occupation, franchise, value added,
                                            and personal property, in all cases
                                            together with all incidental or
                                            supplemental penalties, charges,
                                            interest, fines and default
                                            surcharges and costs;

                                       6.4


<PAGE>   75


       "Tax Authority"             means any taxing or other
                                   authority (whether within or outside the
                                   United Kingdom) competent to impose,
                                   administer or collect any Tax.

1.2      In this Deed:

         1.2.1    references to the loss of a Relief or of a right to repayment
                  of Tax include references to the loss, reduction,
                  modification, set-off, withdrawal, nullifying or cancellation
                  of a Relief or of a right to repayment of Tax;

         1.2.2    references to the utilisation of a Relief or of a right to
                  repayment of Tax include references to the utilisation or
                  setting-off of a Relief or of a right to repayment of Tax; and

         1.2.3    references to the loss or utilisation of a Relief shall be
                  construed.

1.3      References to an Event occurring on or before any date or on or before
         other Events shall be deemed to include any combination of two or more
         Events the first of which has taken place or took place on or before
         that date or on or before that other Event and shall include any Event
         which is deemed for Tax purposes to have occurred prior to such date.

1.4      Words and expressions (if any) which are defined in the Agreement and
         which are not expressly defined in this Deed, and rules of
         interpretation which are provided for in the Agreement and which are
         not otherwise expressly provided for in this Deed, shall have the same
         meaning in and shall apply to this Deed and shall be deemed to be
         incorporated in this Deed.

1.5      Words and expressions (if any) neither defined in this Deed nor in the
         Agreement but which are defined or used in any legislation relating to
         Tax which is relevant in the context shall have the same meaning in
         this Deed as they have in such legislation.

                                       6.5


<PAGE>   76


1.6      References to income, profits or gains accrued, or being earned or
         received, on or before a particular period shall include any profits
         deemed for Tax purposes to have accrued, or to have been earned or
         received, on or before that date or in respect of that period.

1.7      References to "income, profits or gains" shall include receipts, value
         and any other criterion used in establishing the incidence of any Tax
         or measure in establishing the amount of any liability to Tax.

1.8      Unless the context otherwise requires, words importing the singular
         only shall include the plural and vice versa, words importing the
         masculine gender only shall include the feminine gender and vice versa
         and words importing natural persons only shall include corporations,
         unincorporated associations and partnerships and vice versa.

1.9      Unless  otherwise  stated  references to any Section or Schedule is a
         reference to the  appropriate  Section of or Schedule to this Deed.

1.10     Unless otherwise expressly stated:-

         1.10.1   the rule of construction known as "the ejusdem generis rule"
                  shall not apply in interpreting this Deed so that words or
                  phrases of a generally descriptive nature shall not be given a
                  restrictive meaning by reason only of the fact that they are
                  preceded by more specific words of phrases; and

         1.10.2   words of a generally descriptive nature in this Deed shall not
                  be given a restrictive meaning by reason only of the fact that
                  they are followed by specific examples.


1.11     Section headings are for convenience only and accordingly shall be
         disregarded in interpreting this Deed.

2.       COVENANT
         --------
                                       6.6


<PAGE>   77


2.1      Subject to Section 3, the Covenantors hereby jointly and severally
         agree with the Purchaser to pay to the Purchaser an amount equal to:-

         2.1.1    any liability to Tax of the Company which arises as a
                  consequence of or by reference to:

                  (a)      any Event occurring on or before Completion; or

                  (b)      any income, profits or gains accrued, or earned or
                           received, on or before Completion,

                  in each case whether or not such liability to Tax is also
                  chargeable against or attributable to any other person;

         2.1.2    any costs and expenses incurred or payable by the Purchaser
                  or the Company in connection with any matter in respect of
                  which a claim is made under this Deed;

         2.1.3    any liability to Tax of the Company which would have been
                  saved but for the loss of some Relief in consequence of an
                  Event occurring on or before Completion;

         2.1.4    any liability to Tax of the Company which arises in
                  consequence of an Event occurring on or before Completion and
                  which would have been payable but for the utilisation of some
                  Relief or right to repayment of Tax where the Relief or right
                  to repayment of Tax arises in respect of an Event occurring
                  after Completion;

         2.1.5    any liability to Tax of the Company arising in consequence of
                  an Event occurring after Completion and for which the Company
                  is liable as a result of having been a member of any group for
                  Tax purposes at any time before Completion;

         2.1.6    any Tax which would have been repaid to the Company but for
                  the loss, reduction, set-off or cancellation of any right to
                  repayment of Tax in consequence of an Event occurring on or
                  before Completion;

         2.1.7    (a)      any liability of the Company (other than to any
                           other company) to repay in whole or in part any
                           payment for Group Relief received pursuant to an
                           agreement or arrangement entered into on or before
                           Completion; or

                                       6.7


<PAGE>   78


                  (b)      any payment which a Company fails to obtain for Group
                           Relief which was taken into account as an asset in
                           the Accounts;

         2.1.8    any amount the Company is obliged to pay by way of
                  reimbursement, recharge, indemnity, damages or management
                  charge connected in any way with Tax:-

                  (a)      in respect of or arising from any Event effected or
                           deemed to have been effected on or before Completion;
                           or

                  (b)      by reference to any profits earned accrued or
                           received on or before Completion; and

         2.1.9    any depletion in or reduction in value of the assets or
                  increase in the liabilities of the Purchaser and the Company
                  as a result of any inheritance tax which:-

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

                  (b)      after Completion becomes a charge on or gives rise to
                           a power to sell, mortgage or charge any of the shares
                           or assets of the Company, which is a liability in
                           respect of inheritance tax payable as a consequence
                           of the death of any person (whenever occurring)
                           within seven years after a transfer of value,
                           occurring on or before Completion; or

                  (c)      arises as a consequence of a transfer of value
                           occurring on or before Completion (whether or not in
                           conjunction with the death of any person whenever
                           occurring) made by or to the Company.

2.2      For avoidance of doubt, any payment made by the Company or the
         Purchaser to discharge or remove any power to sell, mortgage or charge
         shall give rise to a liability and notwithstanding any provision of
         this Deed the Company or the Purchaser may disregard any right to pay
         any Tax in instalments in discharging or removing a charge or power.

                                       6.8


<PAGE>   79


2.3      Section 213 of the Inheritance  Act 1984 shall not apply in relation
         to any payments to be made by the Covenantors  under this Deed.

2.4      There shall be treated as an amount of Tax which would for the purposes
         of Section 2.1.3 have been saved but for the loss, reduction,
         modification, setting-off or cancellation of some Relief, the amount of
         Tax which would have been saved by the Relief lost, reduced, modified,
         set-off or cancelled applying the relevant rates of Tax in force or
         (where the rate has at the relevant time not been fixed) at the last
         known rate, in the earliest period in respect of which Tax becomes
         payable which would not have been payable if the Relief had not been
         lost, reduced, modified, set-off or cancelled.

2.5      Any amount paid under Section 2.1 shall be treated as an adjustment to
         the consideration paid by the Purchaser for the Shares under the
         terms of the Agreement.

2.6      Each of the covenants contained in Section 2.1 shall be construed as
         giving rise to separate and independent obligations and shall not be
         restricted by the other save that (for the avoidance of doubt) any
         payment by the Covenantors in respect of a liability under one covenant
         shall pro tanto discharge any liability under the other so far as it
         arises from the same subject matter.

2A.      PURCHASER'S COUNTER-INDEMNITY
         -----------------------------

2A.1     The Purchaser covenants to pay to the Covenantors by way of adjustment
         to the consideration paid by the Purchaser for the sale of the Shares
         under the terms of the Agreement a sum equivalent to any Tax for which
         the Covenantors or any company under the control (or formerly under the
         control and in respect of which the Covenantors are liable to any third
         party) of the Covenantors becomes liable to pay by virtue of the
         operation of Sections 767A, 767AA and 767B of the Taxes Act in
         circumstances where the taxpayer company (as referred to in the said
         Section 767A(1)) or the transferred

                                       6.9


<PAGE>   80

         company or an associated company (as referred to in the said
         Section 767AA(1)) is the Company or the subsidiary of the Company.

2A.2     The covenant contained in Section A.1 shall:

         (a)      extend to any reasonable costs incurred by the Covenantors (or
                  such other company as is referred to in Section A.1) in
                  connection with the liability to pay such Tax;

         (b)      not apply to Tax which has been recovered under
                  Section 767B(2) of Taxes Act.

         (c)      not apply to such Tax that the Covenantors are liable for
                  under the provisions of this Deed.

2A.3     The Purchaser shall pay such sum as is mentioned in Section A.1 to the
         Covenantors five business days before such sum is to be paid and the
         provisions of Sections 6.2 and 7 shall apply, mutatis mutandis, in
         respect of the aforementioned sum.

3.       LIMITATIONS
         -----------

3.1      Exclusions
         ----------

         In addition to the limitations in Section 6 of the Agreement the
         Covenantors  shall not be liable under Section 2 to the extent that:-

         3.1.1    specific provision or reserve in respect of such liability to
                  Tax was made in the Accounts (not being a provision or reserve
                  for deferred Tax); or

         3.1.2    provision or reserve made in the Accounts is insufficient only
                  by reason of any alteration in rates of Tax or mandatory
                  change in accountancy practice or principles or any change in
                  the law introduced after Completion with retrospective effect;
                  or

         3.1.3    the loss occasioned has been recovered pursuant to a claim
                  under the in the Agreement; or


                                      6.10
<PAGE>   81


         3.1.4    which would not have arisen but for a voluntary act or
                  transaction or omission carried out, effected or suffered by
                  the Company or the Purchaser after Completion unless such act
                  transaction or omission occurs:-

                  (a)      in the ordinary course of the business of the
                           Company or the Purchaser; or

                  (b)      pursuant to a legally binding obligation of the
                           Company or the Purchaser entered into prior to
                           Completion; or

                  (c)      with the approval, concurrence or assistance of the
                           Covenantors; or

         3.1.5    which would not have arisen but for a change after Completion
                  in the accounting policies used in the preparation of the
                  Company's accounts; or

         3.1.6    to the extent that the liability to Tax would not have arisen
                  but for a failure by the Company to utilise a Relief arising
                  in respect of an Event occurring on or before Completion other
                  than a Relief taken into account in computing the Accounts if
                  such Relief is available to be used against any profit, gain
                  or Tax arising from the matters which would but for this
                  Section 3.1.6 have given rise to a Claim or would have been
                  available to be so used had it not been used against any
                  profit, gain or taxation arising from a matter which occurred
                  after Completion; or

         3.1.7    to the extent that the liability to Tax arises as a result of
                  any action taken at the express written request of or with the
                  express written approval of the Purchaser or its
                  representatives; or

         3.1.8    to the extent that the liability to Tax has been reduced or
                  eliminated by the valid surrender of Group Relief by a member
                  of the Company Group at no cost to the Company after
                  Completion.

3.2      Time Limits for making Claims
         -----------------------------

         No Claim shall be made unless notice of such Claim is given to the
         Covenantors by the Purchaser within seven years from the date of this
         Deed.

                                      6.11
<PAGE>   82

3.3      OVERPROVISIONS, RELIEF, etc.
         ----------------------------

         3.3.1    If the auditors for the time being of the Company shall
                  certify (at the request and expense of the Covenantors) that
                  any provision for Tax in the Accounts (excluding any provision
                  for deferred Tax) has proved to be an over-provision, then the
                  amount of such over-provision shall be dealt with in
                  accordance with Section 3.3.3. However, for the avoidance of
                  doubt, it will not be regarded as such an over-provision if
                  any action by the Company (or any person connected within the
                  meaning of Section 839 of the Taxes Act with the Company)
                  after Completion gives rise to any Relief which may be used by
                  the Company so as to reduce the Company's liability to Tax as
                  stated in the Accounts.

         3.3.2    If the auditors for the time being of the Company shall
                  certify (at the request and expense of the Covenantors) that
                  any Tax liability (or Event giving rise to a liability to Tax)
                  which has resulted in a payment having been made or becoming
                  due from the Covenantors under this Deed will give rise to a
                  Relief for the Company which would not otherwise have arisen,
                  then, as and when the liability of the Company to make an
                  actual payment of or in respect of Tax is reduced by reason of
                  that Relief and after taking account of the effect of all
                  other Reliefs that are or become available to the Company
                  (including any Relief derived from a subsequent accounting
                  period and any Group Relief surrendered to the Company), the
                  amount by which that liability is so reduced shall be dealt
                  with in accordance with Section 3.3.3.

         3.3.3    Where it is provided under Sections 3.3.1 and 3.3.2 that any
                  amount (the "Relevant Amount") is to be dealt with in
                  accordance with this sub-Section:-


                                      6.12



<PAGE>   83

                  (a)      the Relevant Amount shall first be set off against
                           any payment then due from the Covenantors under this
                           Deed or pursuant to a claim in respect of the Tax
                           Warranties; and

                  (b)      to the extent there is an excess, a refund shall be
                           made to the Covenantors of any previous payment or
                           payments made by the Covenantors under this Deed or
                           in respect of the Tax Warranties and not previously
                           refunded under this Deed up to the amount of such
                           excess; and

                  (c)      to the extent that the excess referred to in
                           paragraph (b) of this sub-Section is not exhausted
                           under that paragraph, the remainder of that excess
                           shall be carried forward and set-off against any
                           future payment or payments which become due from the
                           Covenantors under this Deed or in respect of the Tax
                           Warranties.

         3.3.4    Where any such certification as is mentioned in Section 3.3.1
                  or 3.3.2 above has been made, the Covenantors or the Purchaser
                  or the Company may request the auditors for the time being of
                  the Company to review such certification in the light of all
                  relevant circumstances, including any facts which have become
                  known only since certification, and to certify whether such
                  certification remains correct or whether, in the light of
                  those circumstances, the amount that was the subject of such
                  certification should be amended.

         3.3.5    If the auditors certify under Section 3.3.4 above that an
                  amount previously certified should be amended, that amended
                  amount shall be substituted for the purposes of Section 3.3.3
                  above as the Relevant Amount in respect of the certification
                  in question in place of the amount originally certified, and
                  such adjusting payment (if any) as may be required by virtue
                  of the above-mentioned substitution shall be

                                      6.13



<PAGE>   84

                  made as soon as practicable by the Covenantors or (as the
                  case may be) to the Covenantors.

3.4      RECOVERY FROM THIRD PARTIES
         ---------------------------

         3.4.1    Without prejudice to the Covenantors' obligations under this
                  Deed to make payment or otherwise, where the Covenantors have
                  made a payment under this Deed and the Company or the
                  Purchaser is entitled to recover from any third party any sum
                  in respect of the matter to which the payment made by the
                  Covenantors relates, the Purchaser shall notify the
                  Covenantors of the entitlement as soon as reasonably
                  practicable following it becoming aware of such entitlement
                  and without any obligation to enquire or investigate such
                  possible entitlement.

         3.4.2    Without prejudice to the Covenantors' obligations under this
                  Deed to make payment or otherwise, the Purchaser shall or
                  shall procure that the Company and/or the Purchaser shall (at
                  the request and expense of the Covenantors and upon the
                  Covenantors indemnifying and securing the Purchaser and/or the
                  Company to the reasonable satisfaction of the Purchaser and/or
                  the Company against all costs or expenses which may thereby be
                  incurred) take such action as the Covenantors shall reasonably
                  request to enforce such recovery as is mentioned in Section
                  3.4.1 against the third party in question and shall account to
                  the Covenantors by way of the refund of the payment referred
                  to in Section 3.4.1 made for any sums so recovered (including
                  any interest or repayment supplement paid by the third party)
                  subject to a maximum of the amount of the payment then made by
                  the Covenantors under this Deed in respect of the relevant
                  liability for Tax.

4.       CONDUCT OF CLAIMS
         -----------------

4.1      In the event of the Purchaser becoming aware of any assessment which
         does or may give rise to a Claim the Purchaser shall or shall procure
         that the

                                      6.14



<PAGE>   85

         Company as soon as reasonably practicable give notice of such
         assessment to the Covenantors PROVIDED that the giving of such notice
         shall not be a condition precedent to the liability of the Covenantors
         under this Deed.

4.2      If the Covenantors shall first indemnify and secure the Company and the
         Purchaser to their reasonable satisfaction against any Tax, additional
         Tax, losses, fines, penalties, interest, charges, damages, costs and
         expenses (including the cost to the Purchaser or the Company of
         executives assisting the Covenantors) the Company and the Purchaser
         shall subject to Section 4.3 take such action as the Covenantors may
         reasonably request to avoid, dispute, resist, appeal, compromise, or
         defend such assessment (the "Covenantor's Action").

4.3      Neither the Purchaser nor the Company shall be obliged to appeal
         against any assessment if, having given the Covenantors notice of the
         receipt of that assessment, it has not within ten Business Days
         received instructions in writing from the Covenantors in accordance
         with the preceding provisions of this Section to make that appeal.

4.4      Neither the Purchaser nor the Company shall be obliged to take any
         action or further action under this Section in respect of any
         assessment if it appears to the Purchaser that either the Covenantor,
         or the Company prior to its being in the ownership of the Purchaser,
         have committed acts or omissions which may constitute fraud,
         misfeasance or negligence.

4.5      Neither the Purchaser nor the Company shall be required to take any
         action which either interferes with the normal course of its business
         or which in its opinion is likely to prejudice its business or its
         relationship with any Tax Authority or result in the Purchaser or any
         Company which forms part of the Purchaser's group incurring a liability
         to Tax or an increased liability to Tax.

                                      6.15



<PAGE>   86

4.6      Neither the Purchaser nor the Company shall be obliged to take any
         action pursuant to this Section 4 which includes continuing the
         Covenantor's action or contesting an assessment beyond the first
         appellate body (excluding the Tax Authority demanding the Tax in
         question) in the jurisdiction concerned.

4.7      Neither the Purchaser nor the Company shall be obliged to take any
         action under this Section 4 which involves continuing the Covenantor's
         action or contesting any assessment before any court or other appellate
         body (excluding the Tax Authority demanding the Tax in question) unless
         the Covenantors furnishes the Purchaser with the written opinion of
         leading Tax counsel to the effect that an appeal against the assessment
         in question will, on the balance of probabilities, be won.

4.8      The Purchaser and the Company shall be at liberty without reference to
         the Covenantors to admit, compromise, settle, discharge or otherwise
         deal with any assessment after whichever is the earliest of:-

         4.8.1    the Purchaser or the Company being notified by the Covenantors
                  that they consider the assessment should no longer be
                  resisted;

         4.8.2    the expiry of a period of 14 Business Days following the
                  service of a notice by the Purchaser or the Company on the
                  Covenantor, requiring the Covenantors to clarify or explain
                  the terms of any request made under Section 4.2 during which
                  period no such clarification or explanation has been received
                  by the Purchaser or the Company; and

         4.8.3    if appropriate, the expiration of any period prescribed by
                  applicable legislation for the making of an appeal against
                  either the assessment or the decision of any court or tribunal
                  in respect of any such assessment, as the case may be.

4.9      The Covenantors shall be bound to accept for the purposes of this Deed
         any admission, compromise, settlement or discharge of any assessment
         and the outcome of any proceedings relating thereto made or arrived at
         in accordance with the provisions of this Section 4.

                                      6.16



<PAGE>   87

5.       TAX RETURNS
         -----------

5.1      The Covenantors or their duly authorised agents shall prepare the Tax
         returns of the Company for all accounting periods ended on or prior to
         the Accounting Date, to the extent that the same shall not have been
         prepared before Completion.

5.2      The Purchaser shall procure that the Company shall cause the returns
         mentioned in Section 5.1 to be authorised, signed and submitted to the
         appropriate Tax Authority without amendment or with such amendments as
         the Covenantors shall agree, and shall give the Covenantors or its
         agents all such assistance as may be required to agree those returns
         with the appropriate Tax Authority PROVIDED THAT the Company shall not
         be obliged to take any such action as is mentioned in this Section in
         relation to any Tax return that is not full, true and accurate in all
         material aspects.

5.3      The Covenantors or its duly authorised agents shall prepare all
         documentation and deal with all matters (including correspondence)
         relating to the Tax returns of the Company for all accounting periods
         ended on or prior to the Accounting Date and the Purchaser shall
         procure that the Company shall afford such access to their books,
         accounts and records as is necessary and reasonable to enable the
         Covenantors or their duly authorised agents to prepare those returns
         and conduct matters relating thereto in accordance with the
         Covenantor's rights under this Section.

5.4      Nothing done by the Purchaser or the Company pursuant to this Section
         shall in any respect restrict or reduce any rights which the Purchaser
         may have to make a Claim against the Covenantor.

6.       DUE DATE FOR PAYMENT
         --------------------

6.1      The Covenantors shall pass to the Purchaser any payment required to
         be made by them in cleared funds:-

                                      6.17

<PAGE>   88

         6.1.1    in a case that involves an actual payment of Tax by the
                  Company, seven Business Days immediately before the last date
                  on which the Company would have had to have paid to the
                  relevant Tax Authority the Tax that has given rise to the
                  Covenantor's liability under this Deed in order to avoid
                  incurring a liability to interest or a charge or penalty in
                  respect of that Liability to Tax; or

         6.1.2    in a case falling within Section 2.1.3, five Business Days
                  after the date on which the Covenantors has been notified by
                  the Purchaser that the auditors for the time being of the
                  Company have certified, at the request of the Purchaser, that
                  there is liability for a determinable amount under Section
                  2.4;

         6.1.3    to the extent the claim under this Deed involves the loss of
                  any right to repayment of Tax, the date which is or would have
                  been the "material date" for the purposes of Sections 825 and
                  826 of the Taxes Act or, in the case where those Sections do
                  not apply to the repayment in question, the date on which such
                  Tax would otherwise have been repaid;

         6.1.4    to the extent the claim under this Deed involves the loss of
                  any Relief, the seventh Business Day prior to the date on
                  which the Tax, which would have been saved but for such loss
                  becomes due and payable.

6.2      If any payment required to be made by the Covenantors under this Deed
         is not made by the due date then that payment shall carry interest from
         that due date until the date when the payment is actually made at the
         rate of 4 per cent above the base rate from time to time of National
         Westminster Bank PLC or such bank as succeeds it.

6.3      The Covenantors shall pay to the Company or the Purchaser as the case
         may be any amount required to be paid by them pursuant to Section 2.1.2
         on the date on which the Company or the Purchaser incurs or suffers
         such costs or expenses.

                                      6.18
<PAGE>   89

6.4      Notice of the amount of the payment required to be made by the
         Covenantors under Section 6.3 and the due date for payment shall be
         given in writing by the Company or the Purchaser and shall (save for
         manifest error) be conclusive and binding on the Covenantors.

7.       TAXES AND DEDUCTIONS FROM PAYMENTS
         ----------------------------------

7.1      All sums payable by the Covenantors to the Purchaser under this Deed
         shall be paid free and clear of all deductions or withholdings
         whatsoever, save only as may be required by law.

7.2      If any sum ("the first sum") payable by the Covenantors to the
         Purchaser under this Deed shall or in the reasonable opinion of the
         Purchaser be subject to Tax in the hands of the Purchaser or would have
         been taxable in the hands of the Purchaser, then the Covenantors shall
         pay to the Purchaser (as often as shall be necessary) such additional
         sum or sums as will after such Tax (and any Tax on such additional sum
         or sums) leave the Purchaser with such amount as the Purchaser would
         have been left with had the first sum not been subject to Tax in the
         hands of the Purchaser.

7.3      All sums payable by the Covenantors under this Deed are to be paid in
         the currency or currencies appropriate to the Assessment as a result of
         which the liability to make a payment of Tax has arisen.

7.4      The Purchaser may direct the Covenantors to pay to the Company any sums
         due to the Purchaser under this Deed and such payment shall be treated
         as a payment to the Purchaser and not a payment to the Company.

8.       STAMP DUTY
         ----------

         The Covenantors hereby jointly and severally warrant to the Purchaser
         that all documents forming part of the title to any asset of a Company
         or which a Company may wish to enforce or produce in evidence are duly
         stamped and have where appropriate been adjudicated. The Covenantors
         hereby jointly and

                                      6.19


<PAGE>   90

         severally agree that in the event of a breach of this warranty they
         shall pay to the Purchaser by way of liquidated damages an amount equal
         to any unpaid stamp duty and any interest or penalties payable in
         respect thereof.

9.       RELEASE OF COVENANTOR
         ---------------------

         The Purchaser may release, or compromise the liability of, any
         Covenantors or grant time or other indulgence to any Covenantors
         without releasing or reducing the liability of any other Covenantor.
         Where a liability of one or some but not all of the Covenantors under
         any obligation which is both joint and several is released or
         compromised, the remaining Covenantor(s) shall continue to be severally
         and shall together be jointly liable in respect of that obligation.

10.      ASSIGNMENT
         ----------

         The benefit of this Deed may be assigned in whole or in part by the
         Purchaser.

11.      GOVERNING LAW AND JURISDICTION
         ------------------------------

         This Deed shall be governed by and construed in all respects in
         accordance with the laws of England and the parties hereby submit
         themselves to the exclusive jurisdiction of the English courts for such
         purpose.

12.      NOTICES
         -------

12.1     Any notice required to be given under this Agreement shall be
         sufficiently given if delivered personally or if sent by first-class
         recorded delivery post (express air courier service if sent overseas)
         or if sent by facsimile transmission.

12.2     Any notice which is sent or despatched in accordance with this
         Section 12 shall be deemed to have been received by the addressee:-

12.2.1   if delivered personally, at the time of delivery;

                                      6.20


<PAGE>   91

         12.2.2   in the case of a notice sent by post (or express air courier),
                  2 Business Days after the envelope containing the notice was
                  delivered to the postal authorities (or courier service);

         12.2.3   in the case of a notice sent by facsimile transmission, if the
                  notice was sent during the normal business hours of the
                  addressee, on the day of transmission; otherwise on the next
                  following Business Day.

12.3     In proving service by post or express air courier, it shall be
         necessary to prove only that the notice was sent or despatched and that
         the notice was contained in an envelope properly addressed, stamped and
         delivered to the postal authorities or courier service in the country
         from where despatched. In proving service by facsimile transmission, it
         shall be necessary to produce only a legible copy of the confirmation
         of the facsimile transmission.

12.4     Any notice required to be given under this Agreement shall be sent:

         12.4.1   to the Covenantors c/o the Covenantors' solicitors at:

                  Wiggin & Co.
                  The Quadrangle
                  Imperial Square
                  Cheltenham
                  Glos.  GL50 1YX
                  Facsimile No: 01242 224223
                  For the attention of: Mike Turner/Denis Moore

         12.4.2   to the Purchaser at:
                  Futurelink Corp.
                  6 Morgan
                  Suite 100
                  Irvine
                  California 92618
                  Facsimile No: +1-949-837-4433
                  For the attention of: Jim Bailey

                  With a copy to:
                  Paul, Hastings, Janofsky & Walker LLP
                  Tower 42


                                      6.21



<PAGE>   92
                  25 Old Broad Street
                  London  EC2N 1HQ
                  Facsimile No: 0171 628 4444
                  For the attention of: Keith T. Ott

                  or to such other address or facsimile number as is notified in
                  writing from time to time by the Covenantors (or any one of
                  them) or the Purchaser (as the case may be) to the other.

IN WITNESS whereof this Deed has been duly executed and delivered the day and
- ----------
year first before written.

Signed as a Deed on behalf of            )
the Vendors by                           )
DENIS CHRISTOPHER MOORE                  )    [signed: Denis Christopher Moore]
as Attorney                              )




EXECUTED as a Deed by
FUTURELINK CORP.


[signed: Jim Bailey]                  Signature of Director

______________________                Name of Director


______________________                Signature of Director/Secretary

______________________                Name of Director/Secretary

                                      6.22



<PAGE>   93




THE SCHEDULE

                     Names and Addresses of the Covenantors


1.       J. H. Bennett

2.       R. Bennett

3.       C. A. Matthissen

4.       Mark Kerridge

5.       Nicola Kerridge

6.       P. J. Crozier

7.       M. J. Dorward

8.       A. P. M. Harrison-Wallace

9.       R. Kell

10.      Yuri Pasea

11.      Rajan Mehta

12.      Nigel Hawley



IN WITNESS whereof this Deed has been duly executed the day and year first
before written.

                                      6.23

<PAGE>   94


                                   Schedule 7

                         CERTIFICATE AS TO REGULATION S


                          INVESTMENT INTENT LETTER AND
                   APPOINTMENT OF THE REPRESENTATIVE AGREEMENT


              This Investment Intent Letter and Appointment of the
Representative Agreement (this "Agreement") dated as of December 20, 1999, is
entered into by and among the persons whose names appear on the signature pages
hereto as "Vendors" (collectively the "Vendors"), Colin Ainslie Matthissen or
the "Representative," who is also a "Vendor"), and FutureLink Corp., a Delaware
corporation ("Purchaser"). Unless otherwise defined herein, all capitalised
terms used herein shall have the meanings assigned to them in the Purchase
Agreement (as defined below).

                                    RECITALS

              A. Vendors and Representative collectively own all of the issued
and outstanding ordinary shares (the "Company Stock") of KNS Holdings Ltd., a
limited company organised under the laws of England (the "Company"), and are
"Vendors" defined in the Purchase Agreement described below.

              B. Pursuant to the terms and conditions of that certain Agreement
for Sale and Purchase of Shares (the "Purchase Agreement") dated of even date
herewith by and among Purchaser and Vendors, Purchaser is acquiring all the
Company Stock.

              C. In connection with the Purchase Agreement, the Vendors will be
issued shares of common stock, US$0.0001 par value, of Purchaser (the
"Purchaser's Shares") in exchange for their shares of Company Stock (and the
Purchaser's Shares issued to the Vendors are herein referred to as the
"Consideration Shares").

              D. The Vendors desire to appoint Colin Ainslie Matthissen as their
"Representative" and attorney-in-fact pursuant to the terms and conditions
hereof.

              E. The Vendors desire to make certain representations and
warranties to Purchaser to satisfy various U.S. securities law requirements.

                                    AGREEMENT

              NOW THEREFORE, in consideration of the respective covenants and
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

              SECTION 1. APPOINTMENT OF REPRESENTATIVE. Each Vendor (other than
Representative) hereby makes, constitutes and appoints Colin Ainslie Matthissen
as his true and lawful attorney-in-fact with full power and authority to take
any and all

                                       7.1

<PAGE>   95

action as is contemplated to be taken by such Vendor by the terms of
the Purchase Agreement; including, without limitation, the following:

              (a) to administer the defence and/or settlement of any claims for
which the Vendors may be liable to Purchaser pursuant to the Purchase Agreement;
such Vendor expressly acknowledges and agrees to such obligations set forth in
the Purchase Agreement; and

              (b) to make, execute and deliver all agreements, Schedules,
exhibits and certificates required to be executed by the Vendors and delivered
to Purchaser in accordance with the terms and conditions of the Purchase
Agreement, including but not limited to the escrow agreement of even date
herewith among the Vendors, Purchaser and the escrow agent named therein (the
"Escrow Agreement"), and to act as proxy, if necessary, with respect to the
escrow shares delivered pursuant to the Escrow Agreement.

              SECTION 2. ACCEPTANCE OF APPOINTMENT. Representative hereby
accepts his appointment as Representative and agrees to carry out in good faith
the responsibilities undertaken hereby and in accordance with the terms and
conditions of the Escrow Agreement and the Purchase Agreement.

              SECTION 3. POWER OF ATTORNEY IRREVOCABLE, ETC. Each Vendor does
hereby ratify and confirm all that Representative shall do or cause to be done
by virtue of this Agreement. Each Vendor agrees that the power of attorney
granted hereby to Representative is a special power of attorney coupled with an
interest, is irrevocable, shall not terminate upon the death of such Vendor and
shall be effective from the date hereof until or upon termination of this
Agreement. Each Vendor hereby renounces all right to revoke the power of
attorney granted herein and to appoint another person or entity to perform the
acts of Representative, except for successors hereunder.

              SECTION 4. SUCCESSOR REPRESENTATIVE. Each Vendor agrees that in
the event Colin Ainslie Matthissen ceases to act as Representative, then the
Vendors by vote or assent of Vendors holding a majority of the Consideration
Shares shall select a successor from among the remaining Vendors. If none of the
remaining Vendors will accept such appointment, then Colin Ainslie Matthissen
may select a successor who shall be such person or entity reasonably acceptable
to the remaining Vendors. Any successor to Colin Ainslie Matthissen shall have
all the rights, powers and obligations of Representative under this Agreement.

              SECTION 5. COSTS. All charges, fees or other expenses or costs of
any Representative, if any, shall be borne and paid by the Vendors on a pro rata
basis in accordance with their respective Allocable Percentages as set forth on
Schedule 1 to the Purchase Agreement.

              SECTION 6. LIMITATION OF LIABILITY OF REPRESENTATIVE AND
INDEMNITY. Each of the Vendors agrees that in performing any of his duties,
Representative shall not incur any liability to anyone for damages, losses or
expenses for any reason except for wilful negligence or intentional misconduct.
Without limiting the foregoing, each Vendor specifically agrees that
Representative shall be entitled to act upon advice of his counsel given with
respect to any questions relating to his duties and responsibilities as
Representative hereunder without incurring any liability to the Vendors or to
any other person. The Vendors agree to indemnify and hold harmless
Representative against and in respect of any and all losses, claims, damages,
liabilities

                                       7.2

<PAGE>   96

and expenses (including, without limitation, reasonable costs of
investigation, counsel and accountants' fees and disbursements) which may be
imposed upon or incurred by Representative in connection with the performance of
his duties hereunder on a pro rata basis in accordance with their respective
Allocable Percentages as set forth on Schedule 1 to the Purchase Agreement.

              SECTION 7. LIMITATION OF LIABILITY OF PURCHASER AND INDEMNITY.
Each of the Vendors agrees that Purchaser shall be entitled to rely exclusively
on the instructions and decisions of the Representative as to the matters for
which the Representative has authority to act on behalf of the Vendors pursuant
to this Agreement, and no Vendor shall have any cause of action against
Purchaser in reliance upon the instructions or decisions of the Representative
in accordance with the terms and conditions set forth herein. The Vendors agree
to indemnify and hold harmless Purchaser against and in respect of any and all
losses, claims, damages, liabilities and expenses, including reasonable costs of
investigation, counsel fees and disbursements, which may be imposed upon or
incurred by Purchaser in connection with its reliance upon the instructions and
decisions of the Representative in accordance with the terms and conditions set
forth in this Agreement, on a pro rata basis in accordance with their respective
Allocable Percentages as set forth on Schedule 1 to the Purchase Agreement.

              SECTION 8. SHAREHOLDER REPRESENTATIONS AND WARRANTIES. As a
condition to the receipt of the Consideration Shares, of the Vendors
represents and warrants to, and covenants with, Purchaser as follows:

                      (a) Such Vendor is aware of Purchaser's business
affairs and has acquired sufficient information about Purchaser to reach an
informed and knowledgeable decision to acquire the Consideration Shares. Such
Shareholder has been furnished by Purchaser with copies of the Purchaser's
filings listed in the attached Schedule and any documents which may have been
available upon request, and such Vendor has carefully read such reports and any
documents which were otherwise provided and understands and has evaluated the
risks of making an investment in the Purchaser's Shares. Such Vendor has been
afforded access to information concerning Purchaser and to its executive
officers and has been afforded the opportunity to ask questions of, and receive
answers from, Purchaser. Such Vendor has been given the opportunity to obtain
such additional information in order for such Vendor to evaluate the merits and
risks of the receipt of the Consideration Shares. Based upon such information
received, such Vendor believes such Vendor has received full and adequate
information concerning Purchaser and its proposed plan of operations.

                      (b) Such Vendor is generally familiar with the
semiconductor industry since such Vendor has either been employed in such
industry or has invested in business entities engaged in such industry.

                      (c) Such Vendor is taking the Consideration Shares for
investment for such Vendor's own account only and not with a view to, or for
resale in connection with, any unregistered "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Act").

                      (d) Vendor understands that no United States federal or
state agency has passed on, or made any recommendation or endorsement of, the
Consideration Shares.

                                       7.3

<PAGE>   97


                      (e) Vendor understands that the Consideration Shares are
being offered and sold to it in reliance on specific exemptions from or
non-application of the registration requirements of federal and state securities
laws and that Purchaser is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
Vendor set forth herein in order to determine the applicability of such
exemptions and the suitability of Vendor to acquire the Consideration Shares.

                      (f) Purchaser is not a U.S. Person (as defined in
Regulation S promulgated under the Act) and is not and will not be an affiliate
(as defined in the Securities Exchange Act of 1934, as amended) of Purchaser.
To enable Purchaser to avoid any withholding requirements under U.S. law, Vendor
certifies under penalty of perjury that he, she or it is neither a citizen nor a
resident of the United States and that his, her or its address set forth in the
Purchase Agreement is correct.

                      (g) No public offer or solicitation of the Consideration
Shares was made to Vendor and no offer of the Purchaser's Shares was made to
Vendor while Vendor was present in the United States.

                      (h) At the time any buy order for the Consideration Shares
was originated, Vendor was located outside the United States and is outside the
United States on the date of the execution and delivery of this agreement and
will be outside the United States on the Completion Date.

                      (i) Vendor is aware that the Consideration Shares have not
been registered under the Act and may only be offered or sold pursuant to
registration under the Act or an available exemption therefrom and the Vendor
has not, and will not, engage in any public offering or distribution of the
Consideration Shares or engage in any hedging transaction with respect thereto,
except in accordance with the registration or exemptive provisions of the Act.

                      (j) Except to the extent the Consideration Shares have
been registered under the Act, Vendor (i) will not, during the period commencing
on the Completion Date and ending one year after the Completion Date
(the "Distribution Compliance Period), offer or sell or agree to sell the
Consideration Shares in the United States, to a U.S. Person or for the account
or benefit of a U.S. Person other than in accordance with Rule 903 or 904, as
applicable, of Regulation S and (ii) will, after the expiration of the
Distribution Compliance Period, offer, sell, pledge or otherwise transfer the
Consideration Shares only pursuant to registration under the Act or an available
exemption therefrom and, in any case, in accordance with applicable United
States federal and state securities laws.

                      (k) Vendor has been advised of, and is familiar with, has
complied, and will comply, with the offering restrictions, and any other
requirements, of Regulation S.

                      (l) The transactions contemplated by this Agreement (i)
have not been pre-arranged by Vendor with a Purchaser located in the United
States which is a U.S. Person, and (ii) are not part of a plan or scheme by
Vendor to evade the registration provisions of the Act.

                      (m) Neither Vendor nor any of his, her or its affiliates
has entered, has the intention of entering, or will during the Distribution
Compliance Period enter into, with any U.S. Person, any put option, short
position or other similar

                                       7.4

<PAGE>   98

instrument or position with respect to the Purchaser's Shares or participate in
any other attempt designed to hedge Vendors' risk with respect to the
Consideration Shares in any manner which does not comply with the Act.

                      (n) Such Vendor (individually or together with such
Vendor's investor representative who is not affiliated with Purchaser) has such
knowledge and experience in financial, tax and business matters that such Vendor
is capable of evaluating the merits and risks of receiving the Consideration
Shares and of making an informed investment decision with respect thereto.

                      (o) Such Vendor has determined that the Consideration
Shares are a suitable investment.

                      (p) If such Vendor will be a director, officer or employee
of the Purchaser or the Company following the Completion Date or have other
confidentiality obligations to Purchaser, such Vendor acknowledges receipt of
Purchaser's Insider Trading Policy and agrees to abide by its terms, and further
agrees to execute such Policy upon the request of Purchaser.

                      (q) The certificates representing the Consideration Shares
shall bear the following legend:

              "The securities represented hereby have been issued pursuant to
              Regulation S ("Regulation S") promulgated under the Securities Act
              of 1933, as amended (the "1933 Act"), and have not been registered
              under the 1933 Act. Unless so registered, such securities may not
              be transferred, offered, hedged or sold prior to the end of the
              one-year distribution compliance period prescribed by Regulation S
              unless such transfer, offer, hedge or sale is made in an "offshore
              transaction" and not to or for the account of or benefit of a
              "U.S. Person" (as such terms are defined in Regulation S) and is
              otherwise in accordance with the requirements of Regulation S.
              Following expiration of any such one-year distribution compliance
              period, the securities represented hereby may not be offered, sold
              or otherwise transferred in the United States or to a U.S. Person
              unless the securities are registered under the 1933 Act and
              applicable state securities laws, or such offers, sales and
              transfers are made pursuant to an available exemption from the
              registration requirements of those laws."

                      (r) Vendor shall indemnify Purchaser against any loss,
cost or damages (including reasonable attorneys' fees and expenses) incurred as
a result of Vendor's breach of any representation, warranty, covenant or
agreement in this Agreement.

              SECTION 9.  MISCELLANEOUS.

                      (a) Amendments, Waivers and Consents. No amendment or
modification of this Agreement, nor any termination or waiver of any provision
of this Agreement or consent to any departure by any party hereto therefrom,
shall in any event be effective without the written concurrence of the parties
hereto.

                      (b) Notices. Notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (i)
if delivered personally, upon delivery, (ii) if delivered by courier, then upon
receipt, or (iii) if given by telecopy, upon confirmation of transmission by
telecopy (or, if such

                                       7.5

<PAGE>   99

confirmation does not occur during normal business hours on a Business Day (as
defined in the Purchase Agreement), then on the next Business Day), in each case
to the parties at the address for notice set forth on Schedule 1 to the Purchase
Agreement.

                      (c) Applicable Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with English
law and the United States federal securities laws without reference to any
choice of law rules that would require the application of the laws of any other
jurisdiction.

                      (d) Severability. The provisions of this Agreement are
severable, and if any Section or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such Section or provision, or part thereof,
in such jurisdiction and shall not in any manner affect such Section or
provision in any other jurisdiction, or any other Section or provision of this
Agreement in any jurisdiction.

                      (e) Interpretation. Time is of the essence of each
provision of this Agreement of which time is an element.

                      (f) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors, heirs and assigns.

                      (g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.

                      (h) Purchaser's Representation. Purchaser represents and
warrants to Vendors that, since the end of its most recent third fiscal quarter,
there has been no material adverse change in the business, assets, financial
condition or results of operations of Purchaser.

                     [SIGNATURES APPEAR ON FOLLOWING PAGES]

                                       7.6

<PAGE>   100


              IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                        For and on behalf of the Vendors
                        By DENIS CHRISTOPHER MOORE
                        as Attorney



                        [signed: Denis Christopher Moore]



                        REPRESENTATIVE:


                        COLIN AINSLIE MATTHISSEN

                        by his attorney

                        [signed: Denis Christopher Moore]


                        FUTURELINK CORP.


                        By:______________________________
                          An Authorised Representative


                                       7.7




<PAGE>   101

                                   SCHEDULE 8

                              PURCHASER WARRANTIES

1. Issuance of Shares. The Consideration Shares are duly authorised, validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances directly or indirectly imposed or suffered by the Purchaser or
any Purchaser Group Company will be entitled to all rights and preferences
accorded to a holder of the Purchaser's Shares except that at Completion they
will not have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), shall be entitled to be traded on the same markets and
exchanges as the Purchaser's Shares are traded on, and will not be subject to
pre-emptive rights or other similar rights of stockholders of the Purchaser or
of any person or entity.

2. No Conflicts. The execution, delivery and performance of this Agreement by
the Purchaser, and the consummation by the Purchaser of transactions
contemplated hereby (including, without limitation, the issuance of the
Purchaser's Shares) will not (a) result in a violation of the Certificate of
Incorporation or By-laws or (b) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Purchaser
or any Purchaser Group Company is a party, or result in a violation of any law,
rule, regulation, order, judgement or decree (including US federal and state
securities laws and regulations and the rules and regulations of NASDAQ)
applicable to the Purchaser or any Purchaser Group Company, or by which any
property or asset of the Purchaser or any Purchaser Group Company is bound or
affected (except for such possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a material adverse effect on the
Purchaser). Neither the Purchaser nor any Purchaser Group Company is in
violation of its Certificate of Incorporation or other organisational documents,
and neither the Purchaser nor any Purchaser Group Company is in default (and no
event has occurred which has not been waived which, with notice or lapse of time
or both, would put the Purchaser or any Purchaser Group Company in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Purchaser or any
Purchaser Group Company is a party, except for possible violations, defaults or
rights as would not, individually or in the aggregate, have a material adverse
effect on the Purchaser. The Purchaser is not required to obtain any consent,
authorisation or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement or to
perform its obligations in accordance with the terms hereof. The Purchaser is
not in violation of the listing requirements of NASDAQ, does not know of or
anticipate any event which could be grounds for such delisting and does not
reasonably anticipate that the Purchaser's Shares will be delisted by NASDAQ for
the foreseeable future.

3. SEC Documents. Since 1 January, 1999, the Purchaser has timely filed all
reports, Schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission (the "SEC") pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (such documents being referred to



                                      8.1




<PAGE>   102

hereafter as the "SEC Documents"). The Purchaser has delivered to each Vendor
true and complete copies of the SEC Documents, except for exhibits, Schedules
and incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading None of the statements made in any such SEC Documents which is
required to be updated or amended under applicable law has not been so updated
or amended. The financial statements of the Purchaser included in the SEC
Documents have been prepared in accordance with US generally accepted accounting
principles, consistently applied, and the rules and regulations of the SEC
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and, fairly present in all material respects the
consolidated financial position of the Purchaser and any consolidated Purchaser
Group Company as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments). Except
as set forth in the financial statements or the notes thereto of the Purchaser
included in the SEC Documents, the Purchaser has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business consistent with past practice subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business consistent with past practice and (iii) liabilities
not required under generally accepted accounting principles to be reflected in
such financial statements, in each case of Section (i), (ii) and (iii) next
above which, individually or in the aggregate, are not material to the financial
condition, business, operations, properties, operating results or prospects of
the Purchaser and any Purchaser Group Company or to the transactions
contemplated hereby or to the Purchaser's Shares. To the extent required by the
rules of the SEC applicable thereto, the SEC Documents contain a complete and
accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments existing as of the respective date of
each such SEC Document (or such other date required by the rules of the SEC) to
which the Purchaser or any subsidiary is a party or by which the Purchaser or
any subsidiary is bound or to which any of the properties or assets of the
Purchaser or any subsidiary is subject (each a "Contract"). None of the
Purchaser, Purchaser Group Company or, to the best knowledge of the Purchaser,
any of the other parties thereto, is in breach or violation of any Contract,
which breach or violation would have a material adverse effect on the Purchaser.
No event, occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, could become a default by the Purchaser or its
Subsidiary thereunder which would have a material adverse effect on the
Purchaser.

4. Disclosure. No information, statement or representation to or concerning the
Purchaser or any Purchaser Group Company set forth in this Agreement or provided
to a Vendor in connection with the transactions contemplated hereby contains an
untrue statement of a material fact. No information relating to or concerning
the Purchaser or any Purchaser Group Company set forth in any of the SEC
Documents contains a statement of material fact that was untrue as of the date
such SEC Document was filed with the SEC. The Purchaser has not omitted to state
a material fact necessary in order to make the statements and representations
made herein or






                                      8.2




<PAGE>   103




therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement which
Purchaser does not acknowledge is material, no material fact (within the meaning
of the federal securities laws of the United States and of applicable state
securities laws) exists with respect to the Purchaser or any Purchaser Group
Company which has not been publicly disclosed.

5. No General Solicitation. Neither the Purchaser nor any distributor
participating on the Purchaser's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Purchaser, or any such distributor, has
conducted any "general solicitation", as described in Rule 502(c) under
Regulation D, with respect to any of the Consideration Shares.

6. Since the date of the Purchaser's Form 10-Q for the fiscal quarter ended 30
June 1999, there has not occurred any material adverse change in the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, prospects, operations or results of operations of the
Purchaser or any Purchaser Group Company, taken as a whole, it being understood
that any fluctuation in the market price of the Purchaser Shares shall not be or
be deemed to be a material adverse change.





                                      8.3




<PAGE>   104


                                   SCHEDULE 9

                               REDUNDANT SCHEDULE














                                      9.1

<PAGE>   105

                                   SCHEDULE 10









                                FUTURELINK CORP.







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

                             DEED POLL CONSTITUTING
                              UNSECURED LOAN NOTES
                   ------------------------------------------













                      PAUL, HASTINGS, JANOFSKY & WALKER LLP
                                    TOWER 42
                               25 OLD BROAD STREET
                                 LONDON EC2N 1HQ

                              TEL: (020) 7562 4000
                              FAX: (020) 7628 4444




                                      10.1
<PAGE>   106


THIS DEED POLL is made on December 20, 1999

BY:

FUTURELINK CORP., a corporation incorporated under the laws of the State of
Delaware, the United States of America, whose principal place of business is at
6 Morgan, Suite 100, Irvine, California 92618 (the "COMPANY").

WHEREAS pursuant to the terms of the Sale and Purchase Agreement the Company has
agreed to enter into a Deed constituting the Notes as herein provided.

THIS DEED WITNESSES as follows:

1.       INTERPRETATION

         In this Deed:

         "APPLICABLE RATE" means Libor plus a margin of 1%;

         "BUSINESS DAY" means any day which is not a Saturday, a Sunday or a
         bank or public holiday in England and Wales;

         "LIBOR" means the rate which appears on the display designated as the
         British Bankers Association's Interest Settlement Rate as quoted on the
         relevant page of the Dow Jones/Telerate Monitor for six month sterling
         as at 11.00 am (London time) on the second Business Day preceding the
         date of this Deed;

         "MATURITY DATE" means the date which is six months from the date of
         this Deed;

         "NOTES" means the (pound) 2,500,000 unsecured loans notes constituted
         by this Deed;

         "NOTEHOLDER" means a person for the time being entered in the Company's
         Register of Noteholders as the holder of a Note; and

         "SALE AND PURCHASE AGREEMENT" means the agreement of even date relating
         to the Company between (1) John Henry Bennett, Richard Bennett, Colin
         Ainslie Matthissen and Quadrangle Trust Company as trustees of the
         various family settlements established by John Bennett, (2) Richard
         Bennett, John Henry Bennett, Colin Ainslie Matthissen and Quadrangle
         Trustee Company as trustees of various family settlements established
         by Richard Bennett, (3) Peter Joseph Crozier, (4) Michael John Dorward,
         (5) Anthony Penswick Monamy Harrison-Wallace, (6) Robert Kell, (7)
         Nigel Anthony Ashley Hawley, (8) Rajan Mehta, (9) Yuri Pasea, (10) Mark
         Kerridge and Nicola Kerridge and (11) FutureLink Corp.






                                      10.2
<PAGE>   107



2.       CONSTITUTION OF THE NOTES

2.1      The principal amount of the Notes constituted by this Deed is limited
         to (pound) 2,500,000 issuable in integral multiples of (pound) 1.

2.2      The Company shall only issue the Notes in accordance with the Sale and
         Purchase Agreement.

2.3      The Notes are not transferable.

3.       REDEMPTION AND INTEREST

3.1      Unless previously redeemed, at the Maturity Date the Company shall pay
         to the relevant Noteholder in cash and to such account details of which
         shall be provided in writing by the Noteholder to the Company the
         principal amount of the Note at par together with accrued interest at
         the Applicable Rate up to but excluding the Maturity Date.

3.2      The Company may by notice in writing at any time prior to the Maturity
         Date redeem the Note in whole or part from a Noteholder at par plus any
         outstanding accrued interest at the Applicable Rate up to but excluding
         the date of redemption.

3.3      The Company may only redeem Notes provided that it is undertaken
         rateably amongst the Noteholders.

4.       CERTIFICATES

         A person on becoming a Noteholder is entitled without charge to one
         certificate for the total principal amount of a Note registered in his
         name.

5.       GOVERNING LAW AND JURISDICTION

         This Deed shall be governed by and construed in accordance with English
         law and the parties hereby submit themselves to the non-exclusive
         jurisdiction of the English Courts.

6.       Any notice required to be given under this Agreement shall be sent:

6.1      to the Company at:
         6 Morgan
         Suite 100
         Irvine
         California 92618
         Facsimile no.: +1-949-837-4433
         For the attention of: Jim Bailey

6.2      to the Noteholder at:
         Wiggin & Co.
         The Quadrangle
         Imperial Square
         Cheltenham
         Glos. GL50 1YX
         For the attention of: Denis Moore
         Facsimile no.: 01242 224223





                                      10.3
<PAGE>   108



         or to such other address or facsimile number as is notified in writing
         from time to time by the Company or the Noteholder to the other.

IN WITNESS WHEREOF this Deed has been executed by the Company and is intended to
be and is hereby delivered on the date first above written.



Executed as a Deed by
FUTURELINK CORP.


By:           [Signed: Jim Bailey]
        --------------------------------

Name:              Jim Bailey
        --------------------------------

Title:  Director, Mergers & Acquisitions
        --------------------------------


<PAGE>   109


                            CERTIFICATE OF LOAN NOTE

Certificate No. 1                                       Amount (pound)__________

                        FUTURELINK CORP. (THE "COMPANY")
             (Incorporated under the laws of the State of Delaware)

                              UNSECURED LOAN NOTES


This is to certify that __________________________ is the registered holder of
(pound)__________ in principal amount of the unsecured loan notes (the "NOTES")
as constituted by a Deed poll (the "DEED") dated __________________ 1999 and
made by the Company. The Notes are issued with the benefit of and subject to the
provisions contained in the Deed and on this certificate.

Interest is payable on the Notes and the Notes are redeemable in accordance with
Section 3 of the Deed.

The Notes are not transferable.

The Notes are governed by and construed in accordance with English law and the
parties hereby submit themselves to the non-exclusive jurisdiction of the
English Courts.


Executed as a Deed
by the Company


By:      _________________________

Name:    _________________________

Title:   _________________________




                                      10.5
<PAGE>   110










                                FUTURELINK CORP.







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

                             DEED POLL CONSTITUTING
                        UNSECURED LOAN NOTES MATURING ON
                                  APRIL 6, 2000
                   ------------------------------------------













                      PAUL, HASTINGS, JANOFSKY & WALKER LLP
                                    TOWER 42
                               25 OLD BROAD STREET
                                 LONDON EC2N 1HQ

                              TEL: (020) 7562 4000
                              FAX: (020) 7628 4444


<PAGE>   111


THIS DEED POLL is made on December 20 1999

BY:

FUTURELINK CORP., a corporation incorporated under the laws of the State of
Delaware, the United States of America, whose principal place of business is at
6 Morgan, Suite 100, Irvine, California 92618 (the "COMPANY").

WHEREAS pursuant to the terms of the Sale and Purchase Agreement the Company has
agreed to enter into a Deed constituting the Notes as herein provided.

THIS DEED WITNESSES as follows:

1.   INTERPRETATION

     In this Deed:

     "APPLICABLE RATE" means Libor plus a margin of 1%;

     "BUSINESS DAY" means any day which is not a Saturday, a Sunday or a bank or
     public holiday in England and Wales;

     "LIBOR" means the rate which appears on the display designated as the
     British Bankers Association's Interest Settlement Rate as quoted on the
     relevant page of the Dow Jones/Telerate Monitor for three month sterling as
     at 11.00 am (London time) on the second Business Day preceding the date of
     this Deed;

     "MATURITY DATE" means April 6, 2000;

     "NOTES" means the (pound)1,654,706 unsecured loans notes constituted by
     this Deed;

     "NOTEHOLDER" means a person for the time being entered in the Company's
     Register of Noteholders as the holder of a Note; and

     "SALE AND PURCHASE AGREEMENT" means the agreement of even date relating to
     the Company between (1) John Henry Bennett, Richard Bennett, Colin Ainslie
     Matthissen and Quadrangle Trust Company as trustees of the various family
     settlements established by John Bennett, (2) Richard Bennett, John Henry
     Bennett, Colin Ainslie Matthissen and Quadrangle Trustee Company as
     trustees of various family settlements established by Richard Bennett, (3)
     Peter Joseph Crozier, (4) Michael John Dorward, (5) Anthony Penswick Monamy
     Harrison-Wallace, (6) Robert Kell, (7) Nigel Anthony Ashley Hawley, (8)
     Rajan Mehta, (9) Yuri Pasea, (10) Mark Kerridge and Nicola Kerridge and
     (11) FutureLink Corp.


                                       2

<PAGE>   112

2.   CONSTITUTION OF THE NOTES

2.1  The principal amount of the Notes constituted by this Deed is limited
     to(pound)1,654,706 issuable in integral multiples of(pound)1.

2.2  The Company shall only issue the Notes in accordance with the Sale and
     Purchase Agreement.

2.3  The Notes are not transferable.

3.   REDEMPTION AND INTEREST

3.1  Unless previously redeemed, at the Maturity Date the Company shall pay to
     the relevant Noteholder in cash and to such account details of which shall
     be provided in writing by the Noteholder to the Company the principal
     amount of the Note at par together with accrued interest at the Applicable
     Rate up to but excluding the Maturity Date.

3.2  The Company may by notice in writing at any time prior to the Maturity Date
     redeem the Note in whole or part from a Noteholder at par plus any
     outstanding accrued interest at the Applicable Rate up to but excluding the
     date of redemption.

3.3  The Company may only redeem Notes provided that it is undertaken rateably
     amongst the Noteholders.

4.   CERTIFICATES

     A person on becoming a Noteholder is entitled without charge to one
     certificate for the total principal amount of a Note registered in his
     name.

5.   GOVERNING LAW AND JURISDICTION

     This Deed shall be governed by and construed in accordance with English law
     and the parties hereby submit themselves to the non-exclusive jurisdiction
     of the English Courts.

6.   Any notice required to be given under this Agreement shall be sent:

6.1  to the Company at:
     6 Morgan
     Suite 100
     Irvine
     California 92618
     Facsimile no.: +1-949-837-4433
     For the attention of: Jim Bailey

6.2  to the Noteholder at:
     Wiggin & Co.
     The Quadrangle
     Imperial Square

                                       3

<PAGE>   113


     Cheltenham
     Glos.  GL50 1YX
     For the attention of: Denis Moore
     Facsimile no.: 01242 224223

     or to such other address or facsimile number as is notified in writing from
     time to time by the Company or the Noteholder to the other.

IN WITNESS WHEREOF this Deed has been executed by the Company and is intended to
be and is hereby delivered on the date first above written.



Executed as a Deed by
FUTURELINK CORP.


By:            [Signed: Jim Bailey]
         --------------------------------

Name:               Jim Bailey
         --------------------------------

Title:   Director, Mergers & Acquisitions
         --------------------------------


                                       4

<PAGE>   114




                            CERTIFICATE OF LOAN NOTE

Certificate No. 1                                        Amount(pound)__________

                        FUTURELINK CORP. (THE "COMPANY")
             (Incorporated under the laws of the State of Delaware)

                              UNSECURED LOAN NOTES


This is to certify that __________________________ is the registered holder of
(pound)__________ in principal amount of the unsecured loan notes (the "NOTES")
as constituted by a Deed poll (the "DEED") dated December 20 1999 and made by
the Company. The Notes are issued with the benefit of and subject to the
provisions contained in the Deed and on this certificate.

Interest is payable on the Notes and the Notes are redeemable in accordance with
Section 3 of the Deed.

The Notes are not transferable.

The Maturity Date is April 6, 2000.

The Notes are governed by and construed in accordance with English law and the
parties hereby submit themselves to the non-exclusive jurisdiction of the
English Courts.


Executed as a Deed
by the Company


By:      _________________________

Name:    _________________________

Title:   _________________________


                                       5



<PAGE>   1


                                                                     EXHIBIT 2.2


             SUPPLEMENTAL AGREEMENT FOR SALE AND PURCHASE OF SHARES


DATE:              20 December 1999

PARTIES:

(1)      THE PERSONS whose names are set out in Column (1) of Schedule 1,
         Part A to the  Principal  Agreement  (as  hereinafter defined)
         ("VENDORS"); and

(2)      FUTURELINK CORP., a corporation incorporated under the laws of the
         State of Delaware, whose principal place of business is at 6 Morgan,
         Suite 100, Irvine, California 92618 ("PURCHASER").

SUPPLEMENTAL  to an agreement  for the sale and purchase of shares dated
15 November  1999 made between  Vendors (1) and  Purchaser 2) (the "Principal
Agreement").

WHEREAS Vendors and Purchaser have agreed to amend certain terms of the
Principal Agreement as set out below.

OPERATIVE PROVISIONS:

1.       DEFINITIONS AND INTERPRETATION

         Expressions defined in the Principal Agreement shall have the same
         respective meanings in this Agreement

2.       AMENDMENTS TO PRINCIPAL AGREEMENT

         The Principal Agreement shall be amended as follows:

         2.1      Section 3.1 shall be deleted and replaced by the following
                  new Section:

                  "3.1 The aggregate consideration payable by the Purchaser to
                  the Vendors in respect of the sale of the Shares shall be
                  (pound)27,000,000 consisting of:

                  3.1.1      (pound)3,095,293.84 in cash;

                  3.1.2      (pound)1,654,706.16 in Loan Notes issued pursuant
                             to a deed poll in the form of the Deed Poll
                             Constituting Unsecured Loan Notes due 6 April 2000
                             set out in Schedule 11, to be issued to the


                                        1

<PAGE>   2

                             Vendors on Completion in the amounts set out
                             against their names in column 4 of Schedule 1,
                             Part A;

                  3.1.3      (pound)2,500,000 in Loan Notes issued pursuant to a
                             deed poll in the form of the Deed Poll Constituting
                             Unsecured Loan Notes due 30 June 2000 set out in
                             Schedule 12, to be issued to the Vendors on
                             Completion in the amounts set out against their
                             names in column 4 of Schedule 1, Part A; and

                  3.1.4      (pound)19,750,000 in Purchaser Shares (placed in
                             escrow on Completion and released in tranches
                             thereafter in accordance with the Escrow Agreement)
                             as described in Section 3.3."


                  New Schedule 11 and Schedule 12 referred to above are attached
                  to this Agreement.

         2.2      Section 6.1.4 shall be deleted and replaced by the following
                  new Section:

                  "6.1.4     no liability shall attach to the Vendors unless the
                             aggregate amount of all claims for which they
                             would, in the absence of this provision, be liable
                             shall exceed (pound) 50,000 (the "de minimis
                             amount") and in such event the Vendors shall be
                             liable only for the excess over the de minimus
                             amount; provided that if stamp duty or stamp duty
                             reserve tax is paid by the Company in respect of
                             the exchange of shares in the capital of KNS
                             Limited by the Executives for Shares in the capital
                             of KNS Holdings Limited (the "Exchange") (which
                             payment shall give rise to liability of the Vendors
                             absent the foregoing provisions of this Section),
                             the de minimus amount shall be reduced (but not
                             below zero) by the amount of such duty or tax
                             payment in respect of all subsequent claims."

         2.3      Section 6.6 shall be deleted and replaced by the following
                  new Section:

                  "6.6       for the purposes of Sections 6.4 and 6.5, the value
                             of each Consideration Share shall be deemed to be
                             US$14.95."

         2.4      Section 6 shall be amended by the addition of the following
                  new Section 6.7:

                  "6.7       The Purchaser acknowledges and agrees that the
                             Vendors shall be entitled to direct the Company and
                             to the extent practicable undertake on the
                             Company's behalf all dealings with Inland Revenue
                             in connection with the payment and adjudication of
                             stamp duty or stamp duty reserve tax in respect of
                             the Exchange and the payment of Tax in respect of
                             the PSL and Centrix


                                        2

<PAGE>   3

                             Transactions (as hereinafter defined), provided
                             in all cases that the Vendors comply with the
                             provisions of Clause 4 of the Tax Deed."

         2.5      Section 9.2 shall be deleted and replaced by the following
                  new Section:

                  "9.2       Notwithstanding anything contained in Section 9.1,
                             the Vendors covenant that prior to Completion they
                             shall procure that:

                             9.2.1 the loans made by KNS to Centrix and PSL
                                   (together "the Centrix/PSL Loans") shall
                                   be novated, so that KCC shall be substituted
                                   for KNS as creditor in respect of the
                                   Centrix/PSL Loans; and

                             9.2.2 the outstanding balance of the KCC Loan
                                   payable at Completion shall be reduced by an
                                   amount equal to the principal amount of the
                                   Centrix/PSL Loans.

         2.6      Section 10.1.3 shall be deleted and replaced by the following
                  new Section:

                  "10.1.3    The Executives at the Completion Date shall have
                             entered into the Employment Agreements in a
                             mutually satisfactory form."

         2.7      Section 10.1.4 shall be deleted and replaced by the following
                  new Section:

                  "10.1.4    The Company shall have repaid the KCC Loan in full
                             and be fully released from any continuing
                             obligations thereunder."

         2.8      Schedule 1, Part A shall be amended by deleting columns 3 and
                  4 thereof and Schedule 1, Part B shall be deleted and replaced
                  by a new Schedule 1, Part B attached to this Agreement.

         2.9      Schedule 2 (Particulars Concerning the Company) shall be
                  amended by deleting  paragraph 7 and  substituting  the
                  following new paragraph:

                  "7.      Share Capital:(pound)205,714.29 divided into
                           20,571,429 ordinary shares of 1p each."

         2.10     Schedule 5 shall be amended by deleting clause 1.1.2.

         2.11     Schedule 5 shall be amended by deleting clause 1.1.12 and
                  substituting the following:

                  "1.1.12    the Employment Agreements duly executed by each of
                             the Executives;"


                                        3

<PAGE>   4


         2.12     Schedule 5 shall be amended by deleting clause 2.1.5 and
                  substituting the following:

                  "2.1.5     Repay the KCC Loan in full and enter into an
                             agreement with KCC releasing the Company from all
                             obligations under the KCC Loan and effecting the
                             PSL and Centrix Transactions to the reasonable
                             satisfaction of the Purchaser;"

         2.13     Schedule 6 (Tax Deed) shall be amended by deleting the
                  definition  of "Shares"  therein and  substituting  the
                  following:

                  "Shares" means the 20,571,429 ordinary shares of one pence
                  each in the capital of the Company;"

  3.     APPLICABLE LAW

         This Agreement shall be governed by and construed in accordance with
         English law and the parties hereby submit themselves to the
         non-exclusive jurisdiction of the English courts.


  Signed for and on behalf of       )
  the Vendors by                    )
  DENIS CHRISTOPHER MOORE           )      [signed: Denis Christopher Moore]
  as Attorney                       )





  SIGNED BY: [signed: Jim Bailey]
  JIM BAILEY
  for and on behalf of FUTURELINK CORP.


                                        4

<PAGE>   1

[ERNST & YOUNG LOGO]                                                Exhibit 23.1




                        CONSENT OF INDEPENDENT AUDITORS



We consent to the incorporation by reference of our report dated December 17,
1999 with respect to the combined financial statements of KNS Holdings Limited
in the Registration Statement (Form S-8 No. 333-84679) pertaining to the
FutureLink Corp. Stock Option Plan, included in FutureLink Corporation's Current
Report on Form 8-K related to the acquisition of KNS Holdings Limited by
FutureLink Corporation.






[signed: Ernst & Young]
December 23, 1999
Reading, England
<PAGE>   2










                          KNS HOLDINGS LIMITED

                          Combined Financial Statements
                          for the year ended February 28, 1999




<PAGE>   3


KNS Holdings Limited
- --------------------------------------------------------------------------------

COMBINED FINANCIAL STATEMENTS
for the year ended February 28, 1999





TABLE OF CONTENTS                                                     PAGE



REPORT OF INDEPENDENT AUDITORS                                           3

COMBINED PROFIT AND LOSS ACCOUNTS                                        4

COMBINED BALANCE SHEETS                                                  5

COMBINED STATEMENT OF SHAREHOLDERS' FUNDS                                6

COMBINED STATEMENT OF CASH FLOWS                                         7

NOTES TO THE COMBINED FINANCIAL STATEMENTS                               9





- --------------------------------------------------------------------------------
                                                                               2

<PAGE>   4





REPORT OF THE INDEPENDENT AUDITORS
TO THE DIRECTORS OF KNS HOLDINGS LIMITED



We have audited the combined balance sheets of KNS Holdings Limited as at
February 28, 1998 and February 28, 1999, and the related combined profit and
loss accounts and statements of movements in invested capital and cash flows for
the periods then ended. These financial statements are the responsibility of KNS
Holdings Limited's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis of
our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of KNS Holdings Limited
at February 28, 1998 and February 28, 1999 and the combined results of its
operations and its combined cash flows for the periods then ended in conformity
with accounting principles generally accepted in the United Kingdom which differ
in certain respects from those generally accepted in the United States (see Note
21 of Notes to the Financial Statements).



Ernst & Young

Registered Auditor
Reading



December 17, 1999


- --------------------------------------------------------------------------------
                                                                               3

<PAGE>   5


KNS Holdings Limited
- --------------------------------------------------------------------------------
COMBINED PROFIT AND LOSS ACCOUNT
for the year ended February 28, 1999


<TABLE>
<CAPTION>

                                                                                           9 months ended
                                                              Period ended     Year ended    September 30
                                                               February 28    February 28            1999
                                                                     1998            1999     (unaudited)

                                                        Note            $               $              $

<S>                                                     <C>     <C>            <C>            <C>
TURNOVER                                                  2       947,872      18,324,373     15,836,650
Cost of sales                                                     786,042      14,979,474     11,141,911
                                                                ---------      ----------     ----------
                                                                  161,830       3,344,899      4,694,739

GROSS PROFIT
Distribution expenses                                               3,911          99,947         35,720
Selling and marketing expenses                                     80,515       1,650,021      3,284,844
Establishment expenses                                             13,618         367,561        267,902
Administration expenses                                            36,044         593,427        620,137
                                                                ---------      ----------     ----------

OPERATING PROFIT                                          3        27,742         633,943        486,136

Exception Item:  continuing operations
Loss on disposal of fixed asset investments                             -        (283,387)             -

Other income                                              5           853          57,528         18,047
Interest payable and similar charges                      6       (17,290)       (336,892)      (197,741)
                                                                ---------      ----------     ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                      11,305          71,192        306,442
Taxation on profit on ordinary activities                          (7,447)       (116,127)       (96,765)
                                                                ---------      ----------     ----------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION                 3,858         (44,935)       209,677
Minority interests:  equity                                             -         (17,884)       (62,903)
                                                                ---------      ----------     ----------
PROFIT FOR THE FINANCIAL YEAR ATTRIBUTABLE
TO MEMBERS OF THE PARENT COMPANY (i)                                3,858         (62,819)       146,774
                                                                =========      ==========     ==========

</TABLE>

There are no recognized gains or losses other than the loss of $62,819 for the
year ended February 28, 1999 and profit of $3,858 for the year ended February
28, 1998.

(i) A summary of the significant adjustments to profit for the year that would
be required if US generally accepted accounting principles were to be applied
instead of those generally in the United Kingdom is set forth in Note 21 to the
Financial Statements.




- --------------------------------------------------------------------------------
                                                                               4


<PAGE>   6


KNS Holdings Limited
- --------------------------------------------------------------------------------
COMBINED BALANCE SHEET
at February 28, 1999



<TABLE>
<CAPTION>
                                                                                            September 30
                                                                February 28   February 28           1999
                                                                       1998          1999    (unaudited)
                                                       Note               $             $              $
<S>                                                   <C>        <C>           <C>            <C>
FIXED ASSETS
Tangible fixed assets                                   8           410,109       694,643        716,253
Investments                                             9           344,935       522,882        537,537
                                                                  ---------     ---------      ---------
                                                                    755,044     1,217,525      1,253,790
CURRENT ASSETS
Stocks                                                 10         1,998,377     2,093,636      1,947,775
Debtors                                                11         3,537,736     3,592,460      6,588,845
Cash at bank and in hand                                          1,221,645       539,999        199,613
                                                                  ---------     ---------      ---------
                                                                  6,757,758     6,226,095      8,736,233

CREDITORS: amounts falling due within one year         12         6,271,137     5,902,080      8,291,911
                                                                  ---------     ---------      ---------
NET CURRENT ASSETS                                                  486,621       324,015        444,322
                                                                  ---------     ---------      ---------
TOTAL ASSETS LESS CURRENT LIABILITIES                             1,241,665     1,541,540      1,698,112

PROVISIONS FOR LIABILITIES & CHARGES                   13                 -        12,959         16,469

ACCRUALS AND DEFERRED INCOME                           14           297,644       379,163        172,579
                                                                  ---------     ---------      ---------
                                                                    944,021     1,149,418      1,509,064
MINORITY INTERESTS:  EQUITY                                               -       291,739        345,691
                                                                  ---------     ---------      ---------
                                                                    944,021       857,679      1,163,373
                                                                  =========       =======      =========

CAPITAL AND RESERVES
Called up share capital                                             237,096       237,096        237,096
Other reserves                                                      703,056       421,022        421,022
Profit & loss account                                                 3,858       224,428        505,799
Cumulative translation adjustment                                        11       (24,867)          (544)
                                                                  ---------     ---------      ---------
Total shareholders' funds                                           944,021       857,679      1,163,373
                                                                  =========       =======      =========
</TABLE>



(i) A summary of the adjustments to invested capital that would be required if
US generally accepted accounting principles were to be applied is set forth in
Note 21 of Notes to the Financial Statements.




- --------------------------------------------------------------------------------
                                                                               5


<PAGE>   7


KNS Holdings Limited
- --------------------------------------------------------------------------------

COMBINED STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS
at February 28, 1999

<TABLE>
<CAPTION>
                                                                                 9 months ended
                                                     Period ended    Year ended    September 30
                                                      February 28   February 28            1999
                                                             1998          1999     (unaudited)
                                                                $             $               $

<S>                                                      <C>           <C>           <C>
Recognized profit/(loss)                                    3,858       (62,819)        146,774
Other movements:
  New shares issued                                       940,152             -               -
  Exchange movements                                           11       (23,523)       (119,415)
                                                          -------       -------       ---------
Total movements in the periods                            944,021       (86,342)         27,359

Shareholders' funds at March 1/January 1                        -       944,021       1,136,011
                                                          -------       -------       ---------
Shareholders' funds at February 28/September 30           944,021       857,679       1,163,370
                                                          =======       =======       =========

</TABLE>



- --------------------------------------------------------------------------------
                                                                               6

<PAGE>   8


KNS Holdings Limited
- --------------------------------------------------------------------------------

COMBINED CASH FLOW STATEMENTS
at February 28, 1999


<TABLE>
<CAPTION>
                                                                                          9 months ended
                                                              Period ended    Year ended    September 30
                                                               February 28   February 28            1999
                                                                      1998          1999     (unaudited)
                                                      Notes              $             $               $

<S>                                                   <C>         <C>          <C>          <C>
NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES                                     17        (62,432)    1,133,929    (2,083,116)
                                                                  --------     ---------    ----------


RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received                                                        -        57,528        18,047
Interest paid                                                            -      (336,892)     (197,742)
                                                                  --------     ---------    ----------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE                                                 -      (279,364)     (179,695)
                                                                  --------     ---------    ----------

TAXATION
Corporation tax paid                                                     -      (142,101)            -
                                                                  --------     ---------    ----------
TAX PAID                                                                 -      (142,101)            -
                                                                  --------     ---------    ----------
INVESTING ACTIVITIES
Payments to acquire tangible fixed assets                          (87,190)     (554,350)     (625,435)
Receipts from sales of tangible fixed assets                             -        47,499        10,008
Loan to fixed asset investment                                    (259,404)     (193,394)            -
                                                                  --------     ---------    ----------

NET CASH OUTFLOW FROM INVESTING ACTIVITIES                        (346,594)     (700,245)     (615,427)
                                                                  --------     ---------    ----------
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING                        (409,026)       12,219    (2,878,238)
                                                                  --------     ---------    ----------

FINANCING
Other loan advances                                                959,246             -     2,326,210
Loan repayments                                                          -      (682,064)            -
                                                                  --------     ---------    ----------
NET CASH INFLOW FROM FINANCING                                     959,246      (682,064)    2,326,210
                                                                  --------     ---------    ----------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS         17        550,220      (669,845)     (552,028)
                                                                  ========     =========    ==========
</TABLE>


- --------------------------------------------------------------------------------
                                                                               7

<PAGE>   9
COMBINED CASH FLOW STATEMENTS
at February 28, 1999

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

<TABLE>
<CAPTION>
                                                                                            9 months ended
                                                                Period ended    Year ended    September 30
                                                                 February 28   February 28            1999
                                                                        1998          1999     (unaudited)
                                                      Notes                $             $               $

<S>                                                               <C>           <C>           <C>
Increase/(decrease) in cash                                          550,220      (669,845)     (552,028)
Cash inflow from increase in loans                                  (959,246)            -    (2,326,210)
Repayment of loans                                                         -       682,064             -
                                                                  ----------    ----------    ----------
Change in net debt resulting from cash flows                        (409,026)       12,219    (2,878,238)

Exchange differences                                                  (7,888)       75,923        (8,673)
Other movements                                                   (2,406,528)            -             -
                                                                  ----------    ----------    ----------
MOVEMENT IN NET DEBT                                              (2,823,442)       88,142    (2,886,911)

NET DEBT AT MARCH 1                                                        -    (2,823,442)   (2,189,424)
                                                                  ----------    ----------    ----------

NET DEBT AT FEBRUARY 28                                           (2,823,442)   (2,735,300)   (5,076,335)
                                                                  ==========    ==========    ==========
</TABLE>




- --------------------------------------------------------------------------------
                                                                               8

<PAGE>   10


KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999





1.      ACCOUNTING POLICIES

BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention and in
accordance with all applicable accounting standards.

KNS Holdings Limited was incorporated on November 25, 1997. The combined
financial statements include the accounts of the company and its subsidiary, KNS
Limited, from January 15, 1998, the date of acquisition. On November 12, 1998,
the company granted options to three directors of KNS Limited to purchase from
the company 50,000 (pound)1 ordinary shares each in KNS Limited. These options
were exercised by the directors on November 12, 1998. Consequently, KNS Holdings
Limited now owns 70% of KNS Limited.

TURNOVER
Turnover represents the net invoiced value of goods and services excluding Value
Added Tax.

FIXED ASSETS
Depreciation is provided to write off the cost of the assets over their expected
useful lives at the following annual rates/lives on a straight line basis:

Computers and other equipment           25%
Motor vehicles                          25%
Office equipment                        25%

STOCKS
Stocks and work in progress are stated at the lower of cost and net realizable
value, having made appropriate provisions for obsolete or slow moving items.
Cost represents the net purchase price of stock less trade discounts and
allowances.

RESEARCH AND DEVELOPMENT
Expenditure on research and development is written off in the year in which it
is incurred.

LEASED ASSETS AND HIRE PURCHASE AGREEMENTS
Where assets are financed by leasing or hire purchase agreements which give
risks and rewards approximating to ownership (finance leases) they are treated
as if they had been purchased outright on credit. They are therefore initially
recorded as a fixed asset and a liability at a sum equal to the fair value of
the asset. Leasing payments on such assets are regarded as consisting of a
capital element which reduces the outstanding liability and an interest charge.

All other asset leases are regarded as operating leases and the total payments
made under them are charged to the profit and loss account on a straight line
basis over the lease term.

USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles in the United Kingdom requires management to make
estimates and assumptions that affect reported revenues, expenses, assets and
liabilities. Actual amounts could differ from such estimates.

PENSION SCHEMES
The company operates defined contribution pension schemes on behalf of the
directors and employees. Contributions payable for the period are charged to the
profit and loss account.




- --------------------------------------------------------------------------------
                                                                               9

<PAGE>   11
KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999


1.   ACCOUNTING POLICIES (continued)

     FOREIGN CURRENCY TRANSLATION

     The functional currency of the group is sterling (Stg Pound Sterling).

     Transaction gains or losses arising on changes in the exchange rates
     between the functional currency and foreign currencies are included in net
     income/(loss) for the period.

     Translation adjustments arising from the translation of the results, assets
     and liabilities of the group into US dollars (US$) are reported as a
     component of shareholders' funds.


2.   TURNOVER

     The turnover and profit on ordinary activities before taxation are
     attributable to the one principal activity of the company.

     An analysis of turnover is given below:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $               $
                                                                    -------    ----------      ----------
<S>                                                                 <C>        <C>            <C>
United Kingdom                                                      937,320    18,075,874      15,617,657
Europe                                                                3,845       109,738          94,814
Rest of world                                                         6,707       138,761         124,179
                                                                    -------    ----------      ----------
                                                                    947,872    18,324,373      15,836,650
                                                                    =======    ==========      ==========
</TABLE>


3.   OPERATING PROFIT

          The operating profit is stated after charging:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $               $
                                                                    -------    ----------      ----------
<S>                                                                 <C>        <C>             <C>
Depreciation of tangible fixed assets                                22,489       213,227         106,181
Rent on buildings held under operating lease                          7,427       184,843         144,171
Hire on other assets                                                  2,510         8,395           8,509
Exchange loss                                                         1,934        54,822          25,331
Auditors' remuneration:
           - audit services                                           2,736        13,135          15,422
                                                                    =======    ==========      ==========
</TABLE>



- --------------------------------------------------------------------------------
                                                                              10

<PAGE>   12


KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999


4.   DIRECTORS AND EMPLOYEES

     Staff costs during the period were as follows:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $              $
                                                                    -------    ----------     ----------
<S>                                                                 <C>        <C>            <C>
Wages and salaries                                                  286,351     2,724,882      2,253,952
Value of benefits in kind                                            21,936       211,746         35,176
Social security costs                                                29,834       277,627        229,646
Other pension costs                                                  12,586       121,923        117,890
                                                                    -------    ----------      ----------
                                                                    350,707     3,336,178      2,636,664
                                                                    =======    ==========      ==========
</TABLE>

     The average weekly number of employees of the company, included above, was
     as follows:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                         No            No             No
                                                                    -------    ----------      ----------
<S>                                                                 <C>        <C>             <C>
Office and management                                                     5             5               5
Production and sales                                                     19            34              35
                                                                    -------    ----------      ----------
                                                                         24            39              40
                                                                    =======    ==========      ==========
</TABLE>

     Remuneration in respect of directors of the company, included above, was
     payable by the company as follows:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $               $
                                                                    -------    ----------      ----------
<S>                                                                 <C>        <C>             <C>
Emoluments                                                           63,051       754,571         248,723
Pension contribuions                                                  2,579        26,394          48,883
                                                                    -------    ----------      ----------
                                                                     65,630       780,965         297,606
                                                                    =======    ==========      ==========
</TABLE>


- --------------------------------------------------------------------------------
                                                                              11

<PAGE>   13


KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999



4.   DIRECTORS AND EMPLOYEES (continued)

     Pension contributions are payable under defined contributions schemes on
     behalf of three directors.

<TABLE>
<CAPTION>

                                                                              Period ended     Year ended
                                                                               February 28    February 28
                                                                                      1998           1999
                                                                                    ------       -------
Highest paid director                                                                    $             $
<S>                                                                                 <C>          <C>
Emoluments                                                                          21,466       256,199
Pension contributions                                                                  789         8,303
                                                                                    ------       -------
                                                                                    22,255       264,502
                                                                                    ------       -------
</TABLE>


5.   OTHER INCOME

<TABLE>
<CAPTION>
                                                                                            9 months ended
                                                                Period ended    Year ended    September 30
                                                                 February 28   February 28            1999
                                                                        1998          1999     (unaudited)
                                                                           $             $              $
                                                                         ---        ------         ------
<S>                                                                      <C>        <C>            <C>
Loan interest receivable                                                 853        33,311         18,047
Bank interest receivable                                                   -        24,217              -
                                                                         ---        ------         ------
                                                                         853        57,528         18,407
                                                                         ===        ======         ======
</TABLE>


6.   INTEREST PAYABLE AND SIMILAR CHARGES

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $               $
                                                                     ------       -------         -------
<S>                                                                  <C>          <C>             <C>
Loan interest payable                                                17,290       334,347         197,741
                                                                     ======       =======         =======
</TABLE>




- --------------------------------------------------------------------------------
                                                                              12

<PAGE>   14


KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999




7.   TAXATION ON PROFIT ON ORDINARY ACTIVITIES

     The tax charge on the profit on ordinary activities for the year was as
     follows:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                               Period ended    Year ended    September 30
                                                                February 28   February 28            1999
                                                                       1998          1999     (unaudited)
                                                                          $             $               $
                                                                     ------       -------         -------
<S>                                                                   <C>         <C>              <C>
UK Corporation tax                                                    7,447       102,291          93,255
Deferred tax                                                              -        12,959           3,510
                                                                     ------       -------         -------
                                                                      7,447       115,250          96,765
                                                                     ======       =======          ======
</TABLE>


8.      TANGIBLE FIXED ASSETS

<TABLE>
<CAPTION>
                                                                                    Office
                                                      Computers                 equipment,
                                                      and other        Motor    fixtures &
                                                      equipment     vehicles      fittings         Total
                                                              $            $             $             $
                                                        -------      -------       -------       -------
<S>                                                     <C>          <C>            <C>          <C>
Cost:
At March 1, 1998                                        233,320      325,100        30,289       588,709
Additions                                               234,756      165,402       154,192       554,350
Disposals                                                (4,636)     (31,907)       (8,780)      (45,323)
Difference on exchange                                  (13,593)     (13,015)       (5,425)      (32,033)
                                                        -------      -------       -------       -------
At February 28, 1999                                    449,847      445,580       170,276     1,065,703
                                                        -------      -------       -------       -------
Depreciation:
At March 1, 1998                                         89,517       84,640         4,443       178,600
Provided during year                                     86,302       98,526        28,399       213,227
Disposals                                                   (83)      (8,459)         (943)       (9,485)
Difference on exchange                                   (5,151)      (5,142)         (989)      (11,282)
                                                        -------      -------       -------       -------
At February 28, 1999                                    170,585      169,565        30,910       371,060
                                                        -------      -------       -------       -------
Net book value:
At February 28, 1999                                    279,262      276,015       139,366       694,643
                                                        =======      =======       =======       =======
At March 1, 1998                                        143,803      240,460        25,846       410,109
                                                        =======      =======       =======       =======

At September 30, 1999 (unaudited)                       218,433      371,793       126,027       716,253
                                                        =======      =======       =======       =======
</TABLE>



- --------------------------------------------------------------------------------
                                                                              13

<PAGE>   15


KNS Holdings Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999


9.      INVESTMENTS

<TABLE>
<CAPTION>
                                                                                   Loan to
                                                                  Investment   Fixed asset
                                                                   in shares    investment         Total
                                                                           $             $             $
                                                                        ----       -------       -------
<S>                                                                     <C>        <C>           <C>
Cost
At March 1, 1998                                                          99       344,836       344,935
Additions                                                                  -       193,394       193,394
Difference on exchange                                                     -       (15,447)      (15,447)
                                                                        ----       -------       -------
At February 28, 1999                                                      99       522,783       522,882
                                                                        ====       =======       =======
At September 30, 1999 (unaudited)                                         99       537,438       537,438
                                                                        ====       =======       =======
</TABLE>


     The investment in shares relates to 30% holding in the issued ordinary
     share capital of Panic Systems Limited. Panic Systems Limited is
     incorporated in England and Wales and its principal activity is the design
     and manufacture of communications equipment. The company's accounting date
     is 31 March.


10.     STOCKS

<TABLE>
<CAPTION>
                                                                 February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Goods for resale                                                   1,998,377     2,093,636     1,947,775
                                                                   =========     =========     =========
</TABLE>


11.     DEBTORS

<TABLE>
<CAPTION>
                                                                 February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Trade debtors                                                      3,457,846     3,281,822     5,423,395
Prepayments                                                           79,890       221,624       226,844
Other debtors                                                              -        89,014       938,606
                                                                   ---------     ---------     ---------
                                                                   3,537,736     3,592,460     6,588,845
                                                                   =========     =========     =========
</TABLE>





- --------------------------------------------------------------------------------
                                                                              14

<PAGE>   16


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999



12.     CREDITORS:  amounts falling due within one year

<TABLE>
<CAPTION>
                                                                 February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Trade creditors                                                    2,136,434     2,490,899     2,041,133
Other creditors                                                    4,045,087     3,275,299     5,937,766
Social security & other taxes                                              -        86,801       103,628
Corporation tax                                                       89,616        49,082       209,384
                                                                   ---------     ---------     ---------
                                                                   6,271,137     5,902,081     8,291,911
                                                                   =========     =========     =========
</TABLE>


13.  PROVISIONS FOR LIABILITIES AND CHARGES

     Deferred taxation provided in the accounts and amounts not provided are as
     follows:

<TABLE>
<CAPTION>
Provided                                                         February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Capital allowances in advance of depreciation                              -        12,959        16,469
                                                                   =========     =========     =========
</TABLE>

<TABLE>
<CAPTION>
Not provided                                                     February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Capital allowances in advance of depreciation                        (14,069)            -             -
                                                                   =========     =========     =========
</TABLE>



14.     ACCRUALS AND DEFERRED INCOME

<TABLE>
<CAPTION>
                                                                 February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>

Accruals                                                             161,047       310,053        76,202
Deferred income                                                      136,597        69,110        96,377
                                                                   ---------     ---------     ---------
                                                                     297,644       379,163       172,579
                                                                   =========     =========     =========
</TABLE>





- --------------------------------------------------------------------------------
                                                                              15

<PAGE>   17


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999


15.     SHARE CAPITAL

<TABLE>
<CAPTION>
                                                                 February 28   February 28  September 30
                                                                        1998          1999          1999
                                                                                             (unaudited)
                                                                           $             $             $
                                                                   ---------     ---------     ---------
<S>                                                                <C>           <C>           <C>
Authorized:
Ordinary shares of Pound Sterling 0.01p each                         237,096       237,096       237,096
                                                                   =========     =========     =========

Allotted, issued and fully paid:
Ordinary shares of Pound Sterling 0.01p each                         237,096       237,096       237,096
                                                                   =========     =========     =========
</TABLE>


16.  MOVEMENTS IN RESERVES

<TABLE>
<CAPTION>
                                                                                 Cumulative          Total
                                            Share         Other      Profit &   Translation  Shareholders'
                                          Capital      Reserves  Loss Account    Adjustment          Funds
                                                $             $             $             $              $
                                          -------      --------       -------       -------      ---------
<S>                                       <C>           <C>           <C>           <C>            <C>
At March 1, 1997                                -             -             -             -              -
Arising on share issues                   237,096       703,056             -             -        940,152
Retained profit                                 -             -         3,858             -          3,858
Exchange gain                                   -             -             -            11             11
                                          -------      --------       -------       -------      ---------
At February 28, 1998                      237,096       703,056         3,858            11        944,021
Retained loss                                   -             -       (62,819)            -        (62,819)
Exchange loss                                   -             -             -       (23,523)       (23,523)
Transfer from other reserves                    -      (282,034)      283,389        (1,355)             -
                                          -------      --------       -------       -------      ---------

At February 28, 1999                      237,096       421,022       224,428       (24,867)       857,679
                                          =======      ========       =======       =======      =========

At September 30, 1999 (unaudited)         237,096       421,022       505,799          (544)     1,163,370
                                          =======      ========       =======       =======      =========
</TABLE>




- --------------------------------------------------------------------------------
                                                                              16

<PAGE>   18


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999

17.  NOTES TO THE STATEMENT OF CASH FLOWS

     (a)  Reconciliation of operating profit to net cash inflow from operating
          activities

<TABLE>
<CAPTION>
                                                                                            9 months ended
                                                                Period ended    Year ended    September 30
                                                                 February 28   February 28            1999
                                                                        1998          1999     (unaudited)
                                                                           $             $               $
                                                                    --------     ---------      ----------
<S>                                                                 <C>          <C>            <C>
Operating profit                                                      22,743       633,945         486,138
Depreciation                                                          22,489       213,227         106,181
Profit on sale of fixed assets                                             -       (11,667)        (10,008)
(Increase)/decrease in debtors                                       502,848      (154,152)     (2,226,103)
(Increase)/decrease in stocks                                       (560,965)     (155,256)         48,895
Increase/(decrease) in creditors                                     (54,547)      607,832        (488,219)
                                                                    --------     ---------      ----------
Net cash inflow from operating activities                            (62,432)    1,133,929      (2,083,116)
                                                                    ========     =========      ==========
</TABLE>


 (b)    Analysis of net debt

<TABLE>
<CAPTION>
                                                             At                                       At
                                                        March 1         Cash      Exchange   February 28
                                                           1998         flow   differences          1999
                                                              $            $             $             $
                                                     ----------   ----------       -------    ----------
<S>                                                  <C>          <C>              <C>        <C>
Cash at bank and in hand                              1,221,645     (669,845)      (11,801)      539,999
Loans                                                (4,045,087)     682,064        87,724    (3,275,299)
                                                     ----------   ----------       -------    ----------
                                                     (2,823,442)      12,219        75,923    (2,735,300)
                                                     ==========   ==========       =======    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                             At                                       At
                                                      January 1         Cash      Exchange  September 30
                                                           1999         flow   differences          1999
                                                              $            $             $             $
                                                     ----------   ----------       -------    ----------
<S>                                                  <C>          <C>              <C>        <C>
Cash at bank and in hand                                765,343     (552,028)      (13,702)      199,613
Loans                                                (2,954,767)  (2,326,210)        5,029    (5,275,948)
                                                     ----------   ----------       -------    ----------
                                                     (2,189,424)  (2,878,238)       (8,673)   (5,076,335)
                                                     ==========   ==========       =======    ==========
</TABLE>


- --------------------------------------------------------------------------------
                                                                              17

<PAGE>   19


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999


18.  RELATED PARTY TRANSACTIONS

     The group's ultimate controlling parties are the Bennett family
     settlements.

     During the year the group undertook the following transactions with
     Kerridge Computer Limited, a company which is controlled by the same
     parties as KNS Holdings Limited:

          The group sold good and services totaling $679,229 of which a balance
          of $91,809 was outstanding at the period end.

          The group bought goods and services totaling $122,695 of which a
          balance of $74,519 was outstanding at the period end.

          Kerridge Computer Company Limited incurred expenditure totaling
          $2,189,876 on behalf of the group which has not been repaid at the
          period end.

          Kerridge Computer Company Limited has charged a management charge
          amounting to $111,677 which was outstanding at the period end.

          Kerridge Computer Company Limited has charged interest on the loan
          amounting to $336,892 which was outstanding at the period end.

          KNS Limited has loaned Panic Systems Limited $160,083 to assist in the
          development of a new product. KNS Limited has charged interest of
          $33,310 on this loan. The loan and accrued interest are outstanding at
          the period end.


19.  COMMITMENTS UNDER OPERATING LEASES

     At February 28, 1999 the group had annual commitments under non-cancelable
     operating leases as set out below:

<TABLE>
<CAPTION>
                                                                  1998                       1999
                                                      ----------------------     -----------------------
                                                         Land &                     Land &
                                                      Buildings        Other     Buildings         Other
                                                              $            $             $             $
                                                        -------        -----       -------        ------
<S>                                                     <C>            <C>         <C>            <C>
Operating leases which expire:
  within one year                                             -        2,282             -             -
  within two to five years                              189,348            -       184,230        10,525
                                                        -------        -----       -------        ------
                                                        189,348        2,282       184,230        10,525
                                                        =======        =====       =======        ======
</TABLE>

20.  PENSION SCHEMES

     The group operates defined contribution pension schemes on behalf of the
     directors and employees, the assets of which are held separately from those
     of the group in independently administered funds. Pension costs are charged
     to the profit and loss account as incurred. At February 28, 1999 unpaid
     contributions totaled $nil.





- --------------------------------------------------------------------------------
                                                                              18

<PAGE>   20


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999



21.  DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES

     The consolidated financial statements are prepared in accordance with
     accounting principles generally accepted in the United Kingdom ("UK GAAP")
     which differ in certain respects from those generally accepted in the
     United States ("US GAAP"). The significant differences applicable to KNS
     Holdings Limited are described below.

     DEFERRED TAXATION

     Under UK GAAP provision is made for deferred taxation using the liability
     method on short-term timing differences and all material timing differences
     which are not expected to continue in the future. Under US GAAP, deferred
     taxation is provided on a full liability basis on all temporary differences
     between the tax and book bases of assets and liabilities including the
     differences between the assigned fair values and tax bases of assets and
     liabilities acquired. Future tax benefits are recognized as deferred tax
     assets, subject to a valuation allowance to the extent that it is more
     likely than not that any part will be realized.

PROFIT FOR THE PERIOD

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                             Period ended      Year ended    September 30
                                                              February 28     February 28            1999
                                                                     1998            1999     (unaudited)
                                                                        $               $               $
                                                                  -------         -------       ---------
<S>                                                               <C>             <C>           <C>
Profit/(loss) for the period as reported in the consolidated
profit and loss account under UK GAAP                               3,858        (62,819)         146,774
                                                                  -------         -------       ---------
Adjustments:
Deferred taxation
    Methodology                                                     1,169               -               -
                                                                  -------         -------       ---------
Net income as adjusted to accord with US GAAP                       5,027        (62,819)         146,774
                                                                  =======         =======       =========
</TABLE>

INVESTED CAPITAL

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                             Period ended      Year ended    September 30
                                                              February 28     February 28            1999
                                                                     1998            1999     (unaudited)
                                                                        $               $               $
                                                                  -------         -------       ---------
<S>                                                               <C>             <C>           <C>
Invested capital as reported in the consolidated
balance sheet under UK GAAP                                       944,021         857,679       1,163,370
                                                                  -------         -------       ---------
Adjustments:
Deferred taxation
    Methodology                                                    14,069               -               -
                                                                  -------         -------       ---------

Invested capital as adjusted to accord with US GAAP               958,090         857,679       1,163,370
                                                                  =======         =======       =========
</TABLE>



- --------------------------------------------------------------------------------
                                                                              19

<PAGE>   21


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999




20.  DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES (continued)


     REVENUE RECOGNITION

     The group recognizes revenues in accordance with American Institute of
     Certified Public Accountants statement of Position 97-2, Software Revenue
     Recognition, as amended. Accordingly, no adjustment is necessary under US
     GAAP.

     CONSOLIDATED STATEMENT OF CASH FLOWS

     The consolidated statements of cash flows prepared under UK GAAP present
     substantially the same information as those required under US GAAP but they
     differ, however, with regard to classification of items within them and as
     regards the definition of cash and cash equivalents.

     Under UK GAAP, cash is defined as cash in hand and at bank and deposits
     repayable on demand less bank overdrafts. Under US GAAP, cash and cash
     equivalents would not include bank overdrafts but would include cash
     deposits repayable within three months at inception. Under UK GAAP, cash
     flows are presented separately for operating activities, returns on
     investments and servicing of finance, taxation, capital expenditure and
     financial investment, acquisitions, equity dividends, management of liquid
     resources and financing. US GAAP require only three categories of cash flow
     activity to be reported: operating, investing and financing. Cash flows
     from taxation and returns on investments and servicing of finance shown
     under UK GAAP would be included in the determination of cash flows from
     operating activities under US GAAP. Under US GAAP, the payment of dividends
     would be included as a financing activity and capital expenditure and
     financial investment and acquisitions would be included within investing
     activities.

     The categories of cash flow activity under US GAAP can be summarized as
     follows:

<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                             Period ended      Year ended    September 30
                                                              February 28     February 28            1999
                                                                     1998            1999     (unaudited)
                                                                        $               $               $
                                                                 --------       ---------      ----------
<S>                                                             <C>             <C>           <C>
Cash (outflow)/inflow from operating activities                   (62,432)        712,464      (2,262,812)
Cash outflow on investing activities                             (346,594)       (700,245)       (615,426)
Cash inflow/(outflow) from financing activities                   959,246        (682,064)      2,326,210
                                                                 --------        --------      ----------
Increase/(Decrease) in cash and cash equivalents                  550,220        (669,845)       (552,028)
                                                                 ========        ========      ==========
</TABLE>


     COMBINED STATEMENT OF COMPREHENSIVE INCOME

     KNS Holdings Limited has no amounts which, under US GAAP, would be reported
     as other comprehensive income.

     CONCENTRATIONS OF CREDIT RISK

     KNS Holdings Limited did not consider there to be any significant
     concentration of credit risk at February 28, 1999.



- --------------------------------------------------------------------------------
                                                                              20

<PAGE>   22


KNS Holding Limited
- --------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS
at February 28, 1999



20.  DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES (continued)


     FINANCIAL INSTRUMENTS

     The carrying amounts and fair values of the material financial instruments
     of KNS Holdings Limited which comprise cash and external borrowings,
     approximate their carrying amounts. KNS Holdings Limited has not utilized
     derivatives.

     DEFERRED TAXATION

     The analysis of the deferred taxation balance under US GAAP is as follows:


<TABLE>
<CAPTION>
                                                                                           9 months ended
                                                             Period ended      Year ended    September 30
                                                              February 28     February 28            1999
                                                                     1998            1999     (unaudited)
                                                                        $               $
                                                                   ------         -------        -------
<S>                                                                <C>            <C>            <C>
Deferred taxation liabilities
    Excess of book value over taxation value of fixed assets            -         (12,959)       (16,469)
                                                                   ------         -------        -------
                                                                        -         (12,959)       (16,469)
                                                                   ------         -------        -------
Deferred taxation assets
    Excess of taxation value over book value of fixed assets       14,069               -              -
                                                                   ------         -------        -------
                                                                   14,069               -              -
                                                                   ------         -------        -------

Net deferred taxation asset/(liability)                            14,069         (12,959)       (16,469)
                                                                   ======         =======        =======
</TABLE>




- --------------------------------------------------------------------------------
                                                                              21


<PAGE>   1

                                                                    Exhibit 99.1





                  FUTURELINK COMPLETES ACQUISITION OF UK-BASED
               KNS HOLDINGS LIMITED (TRADING AS KNS DISTRIBUTION)


Irvine, California, December 22, 1999 -- FutureLink Corp. (OTC: FLNK) today
announced that it completed the acquisition of privately-held, UK-based, KNS
Holdings Limited (trading as KNS Distribution) ("KNS"), the largest distributor
of Citrix products outside of the U.S. The acquisition was previously announced
November 16, 1999 upon signing of the definitive agreement.

ABOUT KNS

KNS is a leading distributor of technology solutions in the United Kingdom. KNS
has been the top Citrix distributor in the world, excluding the United States,
in l996, l997 and l998. KNS is headquartered in Newbury, Berkshire, United
Kingdom and has offices in Edinburgh, Scotland. KNS has over 360 active
resellers for six product lines and employs a professional and technical staff
of 44.

ABOUT FUTURELINK

FutureLink, The Computer Utility Company(TM), is one of the founders of the
Application Service Provider (ASP) industry and a founding member of the ASP
Industry Consortium.

FutureLink's Application Hosting Services Division provides businesses with
off-site, Internet-based computing. The company's Application Hosting Platforms
Division builds application server farms and provides Citrix application server
software integration services. With Application Hosting Platform solutions,
FutureLink customers manage their own server farms, and provide ASP services to
users with their own IT staff and FutureLink consultants.

                                     -more


<PAGE>   2

For more information, contact FutureLink toll-free at (877) 216-6001; e-mail:
[email protected]; or visit the FutureLink Web site at
http://www.futurelink.net.



Forward-looking statements and comments in this news release are made pursuant
to safe harbor provisions of the Securities Exchange Act of 1934. Such
statements relating to, among other things, the prospects for the companies to
complete the transaction and enhance operating results, are necessarily subject
to risks and uncertainties, some of which are significant in scope and nature.
These risks may be further discussed in periodic reports and registration
statements to be filed by the company from time to time with the Securities and
Exchange Commission in the future.




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