PROXICOM INC
8-K, 2000-04-21
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): April 19, 2000

                                 PROXICOM, INC.
                                 --------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                        0-25741               52-1770631
- -----------------------------            -----------         ------------------
 (State or other jurisdiction            (Commission           (IRS Employer
       of incorporation)                 File Number)        Identification No.)



              11600 SUNRISE VALLEY DRIVE, RESTON, VIRGINIA 20191
               --------------------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (703) 262-3200
                                                           ---------------

<PAGE>   2


ITEM 2.     ACQUISITION OR DISPOSITION OF ASSETS.

     On April 19, 2000, Proxicom, Inc., a Delaware corporation (the "Proxicom"),
completed its acquisition of Clarity IBD Limited, a United Kingdom e-business
development consultancy company ("Clarity"), pursuant to the Share Exchange
Agreement, dated as of April 11, 2000, by and among Proxicom and Clarity's
shareholders (the "Share Exchange Agreement"). Clarity provides a complete range
of e-business services in the United Kingdom in four rapidly evolving digital
markets: IT and Telecommunications, Retail, Travel and Financial Services.
Proxicom intends to integrate Clarity's team of more than 80 consulting
professionals based in London with its wholly owned subsidiary, Proxicom U.K.
Ltd.

     Pursuant to the terms of the Share Exchange Agreement, Proxicom acquired
all of the issued ordinary shares of Clarity in exchange for 1,291,046 shares of
Proxicom common stock, par value $0.01 per share, and approximately US$16
million in cash. In addition, options outstanding under Clarity's share option
plan converted into options to acquire an aggregate of 43,558 shares of Proxicom
common stock. The terms of the Clarity options and the Clarity share option plan
under which such options were granted continue to apply except for the exercise
prices which were adjusted in connection with the assumption of such options.
Proxicom has agreed to file a registration statement under the Securities Act
of 1933, as amended, with respect to 500,000 shares of the Proxicom common stock
issued to the Clarity shareholders and with respect to all of the shares of
Proxicom common stock issuable pursuant to options assumed in the transaction. A
portion of the shares issued in this transaction have been retained in escrow as
security for the performance of the indemnity obligations of the Clarity
shareholders and a portion of the shares issued have been retained subject to
issuance upon the continued employment of certain management shareholders of
Clarity.

     The consideration for this transaction was determined through arms'-length
negotiations between Proxicom and the shareholders of Clarity. Proxicom paid
the cash component of the purchase price from available cash on hand. The
acquisition will be recorded as a purchase for accounting purposes.

     The foregoing description of the acquisition does not purport to be
complete and is qualified in its entirety by reference to the Share Exchange
Agreement, a copy of which is attached as Exhibit 2.1 hereto. A copy of the
press release, dated April 11, 2000, announcing the above-described transaction
is attached as Exhibit 99.1 hereto.


<PAGE>   3



ITEM 7.       FINANCIAL STATEMENTS AND EXHIBITS.

(a)           Financial Statement of Business Acquired.

              Due to the impracticability of preparing the required financial
statements of Clarity within the prescribed time period for filing this Current
Report on Form 8-K, Proxicom will file such financial statements in an amended
filing not later than July 3, 2000.

(b)           Pro Forma Financial Information.

              Due to the impracticability of preparing the required pro forma
financial information of Clarity within the prescribed time period for filing
this Current Report on Form 8-K, Proxicom will file such financial statements in
an amended filing not later than July 3, 2000.

(c)   Exhibits.

     2.1.   Share Exchange Agreement, dated as of April 11, 2000, by and among
            Proxicom, Inc. and the shareholders of Clarity IBD Limited.

     99.1   Press release issued by Proxicom, Inc., dated April 11, 2000.


<PAGE>   4




                                    SIGNATURE

            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 hereunto duly authorized.

                                 PROXICOM, INC.

Date:  April 21, 2000           By:         /s/ Kenneth J. Tarpey
                                    ---------------------------------------
                                    Kenneth J. Tarpey
                                    Executive Vice President, Chief Financial
                                     Officer and Treasurer


<PAGE>   5


                             INDEX TO EXHIBITS

EXHIBIT NUMBER                 EXHIBIT

     2.1                       Share Exchange Agreement, dated as of April
                               11, 2000, by and among Proxicom, Inc. and the
                               shareholders of Clarity IBD Limited.

    99.1                       Press release issued by Proxicom, Inc., dated
                               April 11, 2000.






<PAGE>   1

                            SHARE EXCHANGE AGREEMENT

                                  BY AND AMONG

                                 PROXICOM, INC.

                                       and

                       SHAREHOLDERS OF CLARITY IBD LIMITED

                           DATED AS OF APRIL 11, 2000


<PAGE>   2


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                                                Page
<S>                                                                                                                            <C>
ARTICLE I THE EXCHANGE.............................................................................................................1
        SECTION 1.1.            Exchange of Shares.................................................................................1
        SECTION 1.2.            Indemnity Escrow Stock; Shareholders'
                                Representative.....................................................................................2
        SECTION 1.3.            Deferred Payment Stock.............................................................................3
        SECTION 1.4.            Exchange of Certificates...........................................................................5
        SECTION 1.5.            Transferability of Acquiror Common Stock...........................................................6
        SECTION 1.6.            Legend.............................................................................................6
        SECTION 1.7.            Company Preference Shares..........................................................................8
        SECTION 1.8.            Conversion of Company Stock Options................................................................8
        SECTION 1.9.            Closing............................................................................................9
       ARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE
        SHAREHOLDERS..............................................................................................................10
        SECTION 2.1.            Organization and Qualification....................................................................10
        SECTION 2.2.            Subsidiaries......................................................................................11
        SECTION 2.3.            Organizational Documents..........................................................................11
        SECTION 2.4.            Capitalization....................................................................................11
        SECTION 2.5.            Authority.........................................................................................12
        SECTION 2.6.            No Conflict; Required Filings and Consents........................................................12

        SECTION 2.7.            The Company Financial Statements; No Liabilities..................................................13
        SECTION 2.8.            Accounts Receivable...............................................................................14
        SECTION 2.9.            Absence of Certain Changes or Events..............................................................14
        SECTION 2.10.           Assets............................................................................................15
        SECTION 2.14.           Intellectual Property.............................................................................21
        SECTION 2.11.           Leases............................................................................................15
        SECTION 2.12.           Contracts; Suppliers and Customers................................................................15
        SECTION 2.14.           Intellectual Property.............................................................................21
        SECTION 2.13.           Real Property.....................................................................................17
        SECTION 2.15.           Environmental Matters.............................................................................22
        SECTION 2.16.           Absence of Litigation.............................................................................23
        SECTION 2.17.           Books and Records; Data Protection................................................................24
        SECTION 2.18.           Taxes and Assessments.............................................................................24
        SECTION 2.19.           Employment Matters................................................................................24
        SECTION 2.20.           Pensions and Other Benefits.......................................................................26
        SECTION 2.21.           Transactions with Related Parties.................................................................26
        SECTION 2.22.           Insurance.........................................................................................27
        SECTION 2.23.           Compliance With Laws; Permits.....................................................................27
        SECTION 2.24.           Restrictions on Business Activities;
                                Competition.......................................................................................27
</TABLE>
                                      -i-
<PAGE>   3
<TABLE>
<S>                                                                                                                             <C>
        SECTION 2.25.           Brokers...........................................................................................28
        SECTION 2.26.           Minute Books......................................................................................29
        SECTION 2.27.           HSR Act Compliance................................................................................29
        SECTION 2.28.           Grants and Subsidies..............................................................................29
        SECTION 2.29.           Insolvency, Winding Up, Etc.......................................................................29
        SECTION 2.30.           Auditors' Opinion.................................................................................30
        SECTION 2.31.           Disclosure........................................................................................30
ARTICLE III  REPRESENTATIONS AND WARRANTIES OF THE
        SHAREHOLDERS..............................................................................................................31
        SECTION 3.1.            Authority and Capacity............................................................................31
        SECTION 3.2.            Absence of Violation..............................................................................31
        SECTION 3.3.            Restrictions and Consents.........................................................................31
        SECTION 3.4.            Title to Shares...................................................................................32
        SECTION 3.5.            Representations and Warranties under the
                                United States Securities Laws.....................................................................32
        SECTION 3.6.            Ability of Shareholder to Evaluate
                                Investment and Bear Economic Risk.................................................................34
ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF
        ACQUIROR..................................................................................................................34
        SECTION 4.1.            Organization and Qualification....................................................................35
        SECTION 4.2.            Authority.........................................................................................35
        SECTION 4.3.            No Conflict; Required Filings and Consents........................................................35
        SECTION 4.4.            Absence of Litigation.............................................................................36
        SECTION 4.5.            SEC Filings; Financial Statements.................................................................36
        SECTION 4.6.            Brokers...........................................................................................37
        SECTION 4.7.            Disclosure........................................................................................37
ARTICLE V COVENANTS...............................................................................................................37
        SECTION 5.1.            Affirmative Covenants of the Shareholders
                                in Relation to the Company........................................................................37
        SECTION 5.2.            Negative Covenants of the Shareholders in
                                Relation to the Company...........................................................................38
        SECTION 5.3.            Negative Covenants of the Shareholders............................................................39
ARTICLE VI  ADDITIONAL AGREEMENTS.................................................................................................40
        SECTION 6.1.            Consents and Approvals; Filings and
                                Notices...........................................................................................40
        SECTION 6.2.            Access to Information; Financial Statements.......................................................40
        SECTION 6.3.            Confidentiality...................................................................................41
        SECTION 6.4.            Further Action; Commercially Reasonable
                                Efforts...........................................................................................41
        SECTION 6.5.            Public Announcements..............................................................................42
        SECTION 6.6.            No Solicitation...................................................................................42
        SECTION 6.7.            Employees.........................................................................................42
        SECTION 6.8.            Meeting of the Company's Board of
                                Directors.........................................................................................42
</TABLE>
                                      -ii-
<PAGE>   4
<TABLE>
<S>                                                                                                                             <C>
        SECTION 6.9.            Further Undertakings by the Shareholders..........................................................43
        SECTION 6.10.           Rule 144..........................................................................................44
        SECTION 6.11.           Updates to Disclosure Schedule....................................................................44
        SECTION 6.12.           Acquiror Notice of Breaches by Shareholders.......................................................45
        SECTION 6.13.           Real Property Lease...............................................................................45
ARTICLE VII  CLOSING CONDITIONS...................................................................................................46
        SECTION 7.1.            Conditions to Obligations of Acquiror.............................................................46
        SECTION 7.2.            Conditions to Obligations of the
                                Shareholders......................................................................................49
ARTICLE VIII  TERMINATION, AMENDMENT AND WAIVER...................................................................................50
        SECTION 8.1.            Termination.......................................................................................50
        SECTION 8.2.            Effect of Termination.............................................................................51
        SECTION 8.3.            Waiver............................................................................................51
ARTICLE IX  SURVIVAL OF REPRESENTATIONS; ESCROW
                 ARRANGEMENTS; REMEDIES...........................................................................................51
        SECTION 9.1.            Survival of Representations.......................................................................51
        SECTION 9.2.            General Indemnification by the
                                Shareholders......................................................................................52
        SECTION 9.3.            Indemnification for Pension Matters...............................................................53
        SECTION 9.4.            Third Party Claims................................................................................54
        SECTION 9.5.            No Recourse Against the Company...................................................................56
        SECTION 9.6.            Specific Performance..............................................................................56
        SECTION 9.7.            Remedies Cumulative...............................................................................57
        SECTION 9.8.            Joint and/or Several Liability of the
                                Shareholders......................................................................................57
        SECTION 9.9.            Currency Exchange Rate............................................................................57

ARTICLE X  GENERAL PROVISIONS.....................................................................................................58
        SECTION 10.1.           Notices...........................................................................................58
        SECTION 10.2.           Certain Definitions...............................................................................60
        SECTION 10.3.           Headings..........................................................................................62
        SECTION 10.4.           Severability......................................................................................62
        SECTION 10.5.           Entire Agreement; Amendment.......................................................................63
        SECTION 10.6.           Assignment........................................................................................63
        SECTION 10.7.           Third Party Beneficiaries.........................................................................63
        SECTION 10.8.           Governing Law.....................................................................................63
        SECTION 10.9.           Counterparts......................................................................................64
        SECTION 10.10.          Fees and Expenses.................................................................................64
        SECTION 10.11.          Submission to Jurisdiction........................................................................64
</TABLE>
                                     -iii-
<PAGE>   5

                                    EXHIBITS
                                    --------

Exhibit A - List of Shareholders
Exhibit B - Form of Indemnity Escrow Agreement
Exhibit C - Form of Deferred Payment Escrow Agreement
Exhibit D - Form of Tax Deed
Exhibit E - Form of Registration Rights Agreement

                                      -iv-
<PAGE>   6

                             Index of Defined Terms
                             ----------------------
<TABLE>
<CAPTION>
                                                                                                         Section
                                                                                                         -------
<S>                                                                                                  <C>
A Shares...........................................................................................      2.4
Acquiror...........................................................................................      PREAMBLE
Acquiror Common Stock..............................................................................      RECITALS
Acquiror Indemnified Persons.......................................................................      9.2
Acquiror SEC Reports...............................................................................      4.5(a)
Acquiror Share Price...............................................................................      9.2
Act................................................................................................      10.2
Affiliate..........................................................................................      10.2
Agreement .........................................................................................      PREAMBLE
Assets.............................................................................................      10.2
Audited Financial Statements.......................................................................      2.7
B Shares...........................................................................................      2.4
Balance Sheet Date.................................................................................      2.7
Basket Amount......................................................................................      9.2
Business...........................................................................................      6.9(b)
business day.......................................................................................      10.2
Certificates.......................................................................................      1.4
City Road..........................................................................................      6.13
Closing............................................................................................      1.9
Closing Date.......................................................................................      1.9
Code...............................................................................................      10.2
Company............................................................................................      PREAMBLE
Company Balance Sheet..............................................................................      2.7
Company Intellectual Property......................................................................      2.14(a)
Company Option.....................................................................................      1.8(a)
Company Ordinary Shares............................................................................      2.4
Company Preference Shares..........................................................................      2.4
Company Stock Option Plan..........................................................................      1.8(a)
Consultants........................................................................................      2.19(b)
Contracts..........................................................................................      2.12(a)
control, controlled by and under common control with...............................................      10.2
Deferred Payment Escrow Agreement..................................................................      1.3(a)
Deferred Payment Stock.............................................................................      1.3(a)
DGFT...............................................................................................      2.24(b)
Employees..........................................................................................      2.19(a)
Employment Agreements..............................................................................      RECITALS
Encumbrances.......................................................................................      10.2
Environmental Laws.................................................................................      2.15(b)(i)
Escrow Agent.......................................................................................      1.2(a)
</TABLE>
                                      -i-
<PAGE>   7
<TABLE>
<S>                                                                                                    <C>
                                                                                                         Section
                                                                                                         -------

Exchange...........................................................................................      RECITALS
Exchange Act.......................................................................................      4.5(a)
Exchange Cash......................................................................................      1.1(a)
Exchange Stock.....................................................................................      1.1(a)
Expenses...........................................................................................      10.10
Financial Advisor..................................................................................      10.2
First Anniversary Deferred Payment Stock...........................................................      1.3(a)
Government Entity..................................................................................      10.2
Hazardous Materials................................................................................      2.15(b)(ii)
HSR Act............................................................................................      10.2
Indemnified Party..................................................................................      9.4(a)
Indemnifying Party.................................................................................      9.4(a)
Indemnity Cap......................................................................................      9.2
Indemnity Escrow Agreement.........................................................................      1.2(a)
Indemnity Escrow Stock.............................................................................      1.2(a)
Intellectual Property..............................................................................      10.2
Laws...............................................................................................      10.2
Losses.............................................................................................      10.2
Management Accounts................................................................................      2.7
Management Shareholders............................................................................      RECITALS
Material Adverse Effect............................................................................      10.2
Nasdaq.............................................................................................      1.8(b)
Option Exchange Ratio..............................................................................      1.8(a)
Organizational Documents...........................................................................      10.2
Percentage Interest................................................................................      9.8
Person.............................................................................................      10.2
Real Property......................................................................................      2.13(a)
Real Property Permit...............................................................................      10.2
Redemption.........................................................................................      1.7
Registration Rights Agreement......................................................................      7.2(e)
Regulation D Shareholder...........................................................................      1.5(b)
Regulation S Shareholder...........................................................................      1.5(a)
Related Agreements.................................................................................      10.2
Release............................................................................................      2.15(b)(iii)
SEC................................................................................................      4.5(a)
Second Anniversary Deferred Payment Stock..........................................................      1.3(a)
Securities Act.....................................................................................      1.5(a)
Shareholder(s).....................................................................................      PREAMBLE
Shareholders' Representative.......................................................................      1.2(b)
Subsidiary.........................................................................................      10.2
Survival Period....................................................................................      9.1
</TABLE>
                                      -ii-
<PAGE>   8
<TABLE>
<CAPTION>
                                                                                                         Section
                                                                                                         -------
<S>                                                                                                      <C>
Tax, Taxation and Taxes............................................................................      10.2
Tax Authority and Taxation Authority...............................................................      10.2
Tax Deed...........................................................................................      7.1(h)
Third Party Claim..................................................................................      10.2
Unclassified Shares................................................................................      2.4
</TABLE>
                                     -iii-
<PAGE>   9

                            SHARE EXCHANGE AGREEMENT

                THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into
this 11th day of April, 2000, by and among PROXICOM, INC., a Delaware
corporation ("Acquiror"), and the shareholders of CLARITY IBD LIMITED, a private
company limited by shares incorporated and registered under the laws of England
and Wales with registered number 3186947 (the "Company"), all of whom are listed
on Exhibit A hereto (each a "Shareholder" and collectively, the "Shareholders").

                WHEREAS, the Shareholders and the Board of Directors of Acquiror
have approved the exchange of all of the Company's issued ordinary
share capital for shares of common stock, par value $0.01 per share, of Acquiror
("Acquiror Common Stock") and cash (the "Exchange"), pursuant to and subject to
the terms and conditions of this Agreement;

                WHEREAS, the Shareholders are the legal and beneficial owners of
all of the issued share capital of the Company; and

                WHEREAS, as a material inducement to Acquiror to enter into this
Agreement, Martin Chilcott, James Tarin and Andrew Skates (collectively, the
"Management Shareholders") have, concurrently with the execution of this
Agreement, entered into service agreements with Proxicom UK Limited, a wholly
owned subsidiary of Acquiror (the "Employment Agreements"), the effectiveness of
which is conditioned upon the Closing (as hereinafter defined).

                NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:

                                    ARTICLE I

                                  THE EXCHANGE

         SECTION 1.1. EXCHANGE OF SHARES.

                (a) Company Ordinary Shares. Subject to the provisions of this
Agreement, at the Closing (as defined in Section 1.9 below), each Shareholder
shall sell, assign, transfer and deliver to Acquiror the number of Company
Ordinary Shares (as defined in Section 2.4) owned by such Shareholder as set
forth on Exhibit A hereto, free and clear of all Encumbrances. In exchange for
the Company Ordinary Shares of each Shareholder, such Shareholder shall, subject
to the provisions of this Agreement (including Section 1.2 and Section 1.3
hereof), have the
<PAGE>   10

right to receive (i) the number of shares of Acquiror Common Stock set forth
next to such Shareholder's name as "Total Exchange Stock" on Exhibit A hereto;
and (ii) the amount of "Exchange Cash" (in United States Dollars) set forth next
to such Shareholder's name on Exhibit A hereto (without any interest thereon).
The total number of shares of Acquiror Common Stock issuable pursuant to this
Section 1.1(a) to the registered holders of the Company Ordinary Shares as of
the Closing Date (including the Indemnity Escrow Stock and the Deferred Payment
Stock) are referred to herein as the "Exchange Stock", and the cash payable to
the registered holders of the Company Ordinary Shares as of the Closing Date
pursuant to this Section 1.1(a) is referred to herein as the "Exchange Cash".
The parties acknowledge and agree that the aggregate maximum number of shares of
Exchange Stock issuable to the Shareholders pursuant to this Section 1.1(a)
shall be one million two hundred ninety-one thousand forty-six (1,291,046), and
the aggregate maximum amount of cash payable to the Shareholders pursuant to
this Section 1.1(a) shall be Sixteen Million Dollars ($16,000,000).

                (b) Certain Adjustments. If between the date hereof and the
Closing Date the outstanding shares of Acquiror Common Stock shall be changed
into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, the number of shares of Exchange Stock (including the
number of shares of Indemnity Escrow Stock and the Deferred Payment Stock) shall
be adjusted accordingly to provide the same economic effect as contemplated by
this Agreement prior to such reclassification, recapitalization, split,
combination, exchange or dividend (with any fractional shares resulting from any
such adjustment being rounded or cashed-out on the same basis applicable to all
shares of Acquiror Common Stock in such reclassification, recapitalization,
split, combination, exchange or dividend).

         SECTION 1.2. INDEMNITY ESCROW STOCK; SHAREHOLDERS' REPRESENTATIVE.

                (a) When making the issuances of the Exchange Stock pursuant to
Section 1.1(a) above, Acquiror shall withhold and retain in escrow from each
Shareholder the number of shares of Acquiror Common Stock set forth next to such
Shareholder's name as "Indemnity Escrow Stock" on Exhibit A hereto (such shares,
collectively, the "Indemnity Escrow Stock"). The Indemnity Escrow Stock will be
placed in escrow pursuant to an Indemnity Escrow Agreement, in the form of
Exhibit B hereto (the "Indemnity Escrow Agreement"), to be entered into at
Closing among Acquiror, the Shareholders' Representative (as defined below), for
and on behalf of the Shareholders as their attorney-in-fact, and Crestar Bank
(Richmond, Virginia), as escrow agent (the "Escrow Agent"). The Indemnity Escrow
Stock shall be held in escrow pursuant to the Indemnity Escrow Agreement as
security for the performance of the indemnity obligations of the Shareholders
under Article IX of
                                      - 2 -
<PAGE>   11

this Agreement. The Indemnity Escrow Stock of each Shareholder shall be
registered in the name of such Shareholder and the certificates therefor shall
contain a legend to the effect that the Indemnity Escrow Stock is being held in
escrow pursuant to the Indemnity Escrow Agreement. The Indemnity Escrow Stock
shall be released from escrow only in accordance with the terms and conditions
of the Indemnity Escrow Agreement. The release of any shares of Indemnity Escrow
Stock to any Management Shareholder pursuant to the Indemnity Escrow Agreement
shall be subject to the terms and conditions set forth in Section 1.3(c) below.

                (b) Each Shareholder hereby appoints Martin Chilcott as
attorney-in-fact with full power and authority to act for such Shareholder and
on such Shareholder's behalf (with full power of substitution in the premises),
in connection with the indemnity provisions of Article IX as they relate to the
Shareholders generally and such other matters as are reasonably necessary for
the consummation of the transactions contemplated hereby including, without
limitation, (i) to review all claims for indemnification asserted by an Acquiror
Indemnified Person, and, to the extent deemed appropriate, dispute, question the
accuracy of, compromise, settle or otherwise resolve any and all such claims,
(ii) to compromise on their behalf with Acquiror any claims asserted thereunder,
(iii) to extend the time period within which the Acquiror Indemnified Persons
are obligated to initiate proceedings with respect to any such claims, (iv) to
authorize payments to be made with respect to any such claims for
indemnification, (v) to execute and deliver on behalf of the Shareholders any
document or agreement contemplated by or necessary or desirable in connection
with this Agreement and the transactions contemplated hereby, and (vi) to take
such further actions including coordinating and administering post-closing
matters related to the rights and obligations of the Shareholders as are
authorized in this Agreement (the above named representative, as well as any
subsequent representative of the Shareholders appointed by the Shareholders,
being referred to herein as the "Shareholders' Representative"). Acquiror shall
be entitled to rely on such appointment and treat such Shareholders'
Representative as the duly appointed attorney-in-fact of each Shareholder. No
subsequent change in the Person serving as the Shareholders' Representative
shall be binding upon Acquiror unless and until the former Shareholders'
Representative (or all of the Shareholders) shall have notified Acquiror of such
change in writing in accordance with the provisions of Section 10.1(a) hereof.

         SECTION 1.3. DEFERRED PAYMENT STOCK.

                (a) When making the issuances of the Exchange Stock pursuant to
Section 1.1(a) above, Acquiror shall, in addition to the Indemnity Escrow Stock,
withhold and retain in escrow from each Management Shareholder (i) the number of
shares of Acquiror Common Stock set forth next to such Management Shareholder's
name as "First Anniversary Deferred Payment Stock" on Exhibit A

                                     - 3 -
<PAGE>   12

hereto (the "First Anniversary Deferred Payment Stock"), and (ii) the number of
shares of Acquiror Common Stock set forth next to such Management Shareholder's
name as "Second Anniversary Deferred Payment Stock" on Exhibit A hereto (the
"Second Anniversary Deferred Payment Stock") (the shares of First Anniversary
Deferred Payment Stock and Second Anniversary Deferred Payment Stock,
collectively, the "Deferred Payment Stock"). The Deferred Payment Stock will be
placed in escrow pursuant to a Deferred Payment Escrow Agreement, in the form of
Exhibit C hereto (the "Deferred Payment Escrow Agreement"), to be entered into
at Closing among Acquiror, the Management Shareholders and the Escrow Agent. The
Deferred Payment Stock shall be registered in the names of the respective
Management Shareholders and the certificates therefor shall contain a legend to
the effect that the Deferred Payment Stock is being held in escrow pursuant to
the Deferred Payment Escrow Agreement.

                (b) Subject to Section 1.3(d) below, the First Anniversary
Deferred Payment Stock held in the name of each Management Shareholder shall be
released from escrow to such Management Shareholder on the first anniversary of
the Closing Date if such Management Shareholder shall be employed by Acquiror
(or one of its Affiliates) as of such date and, if such Management Shareholder's
employment with Acquiror (or one of its Affiliates) shall have been terminated
prior to such date, then such First Anniversary Deferred Payment Stock shall be
forfeited and released from escrow to Acquiror for cancellation on the effective
date of such termination.

                (c) Subject to Section 1.3(d) below, the Second Anniversary
Deferred Payment Stock held in the name of such Management Shareholder shall be
released from escrow to such Management Shareholder on the second anniversary of
the Closing Date if such Management Shareholder shall be employed by Acquiror
(or one of its Affiliates) as of such date and, if such Management Shareholder's
employment with Acquiror (or one of its Affiliates) shall have been terminated
prior to such date, then such Second Anniversary Deferred Payment Stock shall be
forfeited and released from escrow to Acquiror for cancellation on the effective
date of such termination. If the Second Anniversary Deferred Payment Stock of
any Management Shareholder shall be in escrow pursuant to the Deferred Payment
Escrow Agreement at the time that any shares of Indemnity Escrow Stock of such
Management Shareholder shall become eligible for release to such Management
Shareholder pursuant to the Indemnity Escrow Agreement, then such shares of
Indemnity Escrow Stock shall be placed in escrow pursuant to the Deferred
Payment Escrow Agreement and shall thereafter be treated as Second Anniversary
Deferred Payment Stock for all purposes of this Agreement and the Deferred
Payment Escrow Agreement. If, at the time that any shares of Indemnity Escrow
Stock of any Management Shareholder shall become eligible for release to such
Management Shareholder pursuant to the Indemnity Escrow Agreement, the Second
Anniversary Deferred Payment Stock shall have been previously forfeited


                                     - 4 -
<PAGE>   13


and released from escrow to Acquiror for cancellation pursuant to this Section
1.3(c), then such shares of Indemnity Escrow Stock shall also be forfeited by
such Management Shareholder and released from escrow to Acquiror for
cancellation. If, at the time that any shares of Indemnity Escrow Stock of any
Management Shareholder shall become eligible for release to such Management
Shareholder pursuant to the Indemnity Escrow Agreement, the Second Anniversary
Deferred Payment Stock shall have been released from escrow to such Management
Shareholder pursuant to this Section 1.3(c), then such shares of Indemnity
Escrow Stock shall be released from escrow to such Management Shareholder.

                (d) Notwithstanding anything to the contrary set forth in this
Section 1.3, if Acquiror (or one of its Affiliates) shall terminate a Management
Shareholder's employment with Acquiror (or one of its Affiliates) other than
pursuant to Section 13.1.1, Section 13.1.2, Section 13.1.3, Section 13.1.4 or
Section 13.1.5 of such Management Shareholder's Employment Agreement, then the
full amount of the Deferred Payment Stock then held in the name of such
Management Shareholder shall be released from escrow to such Management
Shareholder within sixty (60) days after the effective date of such termination.

            SECTION 1.4. EXCHANGE OF CERTIFICATES.

                At the Closing, the Shareholders shall deliver to Acquiror all
certificates evidencing Company Ordinary Shares (the "Certificates")
representing all of the issued Company Ordinary Shares held immediately prior to
the Closing Date, together with duly executed stock transfer forms. In exchange
for the Certificates, Acquiror shall, on the Closing Date, (a) deliver to the
Shareholders' Representative (i) a stock certificate for each Shareholder
representing the aggregate number of shares of Acquiror Common Stock set forth
next to such Shareholder's name as "Stock Deliverable to Shareholder at Closing"
on Exhibit A hereto (less the number of shares of Acquiror Common Stock set
forth next to such Shareholder's name as "Stock Transferable to Financial
Advisor"), and (ii) a Stock Certificate in the name of the Financial Advisor
representing the aggregate number of shares of Acquiror Common Stock under the
column titled "Stock Transferable to Financial Advisor" on Exhibit A hereto, all
of which shares of Exchange Stock shall be deemed to have been issued and fully
paid on the Closing Date; and (b) wire transfer to a single account designated
by the Shareholders' Representative to Acquiror in writing the amount of
Exchange Cash set forth next to such Shareholder's name on Exhibit A hereto. The
Shareholders' Representative shall be responsible for delivering such stock
certificates, and disbursing the Exchange Cash, to the Shareholders promptly
after Closing. The Shareholders acknowledge and agree that the shares of
Acquiror Common Stock issued in the name of the Financial Advisor pursuant to
clause (a)(ii) above represent shares of Exchange Stock required to be
transferred by the Shareholders to the Financial Advisor in

                                     - 5 -
<PAGE>   14

satisfaction of the obligations of the Shareholders to pay the share portion of
the Financial Advisor's fee pursuant to the agreement described in Section 2.25
hereof.

         SECTION 1.5. TRANSFERABILITY OF ACQUIROR COMMON STOCK.

                (a) The shares of Acquiror Common Stock to be issued and
delivered in the Exchange in accordance with the provisions of
this Article I to each Shareholder identified on Exhibit A as a "Non-U.S.
Person" (each such Shareholder, together with any permitted transferee, a
"Regulation S Shareholder"), and to the Financial Advisor will not have been
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance on Regulation S promulgated under the Securities
Act, and may not be encumbered, pledged, hypothecated, sold, transferred or
otherwise disposed of within the United States or to or for the account or
benefit of U.S. Persons (as defined in Regulation S under the Securities Act),
except in accordance with the provisions of Regulation S or any other available
exemption from the registration requirements of the Securities Act. The holders
of the Exchange Stock may not engage in any hedging transactions with regard to
such securities unless conducted in compliance with the Securities Act.

                (b) The shares of Acquiror Common Stock to be issued and
delivered in the Exchange in accordance with the provisions of this Article I to
each Shareholder identified on Exhibit A as a "U.S. Person" (each such
Shareholder, together with any permitted transferee, a "Regulation D
Shareholder"), will not have been registered under the Securities Act (or under
the securities laws of any state) in reliance on Section 4(2) promulgated under
the Securities Act and Regulation D thereunder (and applicable exemptions from
registration under state securities laws), and may not be encumbered, pledged,
hypothecated, sold, transferred or otherwise disposed of, except in compliance
with the Securities Act, any state securities laws, the rules, regulations and
other administrative regulations promulgated under the Securities Act and any
state securities laws. The holders of the Exchange Stock may not engage in any
hedging transactions with regard to such securities unless conducted in
compliance with the Securities Act.

                (c) The restrictions upon transferability contained in this
Section 1.5 shall not limit any rights of the Shareholders under the
Registration Rights Agreement.

         SECTION 1.6. LEGEND.

                (a) Each certificate representing Acquiror Common Stock issued
to each Regulation S Shareholder (and the Financial Advisor) hereunder shall be
stamped or otherwise imprinted with a legend in substantially the following
form:

                                     - 6 -
<PAGE>   15


            THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
            AMENDED (THE "ACT"), IN RELIANCE ON REGULATION S PROMULGATED UNDER
            THE ACT, AND MAY NOT BE ENCUMBERED, PLEDGED, HYPOTHECATED, SOLD,
            TRANSFERRED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES OR TO
            OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (A) AS PART OF THEIR
            DISTRIBUTION AT ANY TIME OR (B) OTHERWISE AFTER THE DISTRIBUTION
            COMPLIANCE PERIOD, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
            REGULATION S OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
            REQUIREMENTS OF THE ACT UPON RECEIPT BY PROXICOM, INC. (THE
            "COMPANY") OF A WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY
            TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THE HOLDER
            MAY NOT ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO SUCH
            SECURITIES UNLESS CONDUCTED IN COMPLIANCE WITH THE ACT.
            TERMS USED ABOVE HAVE THE MEANINGS ASCRIBED TO THEM BY REGULATION S.

                (b) Each certificate representing Acquiror Common Stock issued
to the Regulation D Shareholders hereunder shall be stamped or otherwise
imprinted with a legend in substantially the following form:

            THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
            AMENDED (THE "ACT"), IN RELIANCE ON SECTION 4(2) PROMULGATED UNDER
            THE ACT AND REGULATION D THEREUNDER, AND MAY NOT BE ENCUMBERED,
            PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
            WITHOUT REGISTRATION UNDER THE ACT, EXCEPT IN ACCORDANCE WITH ANY
            AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
            UPON RECEIPT BY PROXICOM, INC. (THE "COMPANY") OF A WRITTEN OPINION
            OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
            REGISTRATION IS NOT REQUIRED. THE HOLDER MAY NOT ENGAGE IN ANY
            HEDGING TRANSACTIONS WITH REGARD TO SUCH SECURITIES UNLESS CONDUCTED
            IN COMPLIANCE WITH THE ACT.

                (c) In addition, where applicable, the shares of Indemnity
Escrow Stock shall contain a legend providing notice as to the Indemnity Escrow
Agreement, and the shares of Deferred Payment Stock shall contain a legend
providing notice as to the Deferred Payment Escrow Agreement.

                                     - 7 -
<PAGE>   16

                (d) Such legends will also be placed on any certificate
representing Acquiror securities issued subsequent to the original issuance of
the Acquiror Common Stock pursuant to the Exchange as a result of any stock
dividend, stock split, or other recapitalization, or upon the exercise of any
Acquiror stock options, as long as such Acquiror Common Stock is subject to the
restrictions set forth herein or in the Related Agreements.

         SECTION 1.7. COMPANY PREFERENCE SHARES.

                Prior to the Closing Date, the Shareholders shall procure the
redemption and cancellation by the Company of all issued Company Preference
Shares (as defined in Section 2.4) for a redemption price equal to Pound
Sterling1.00 per share (the "Redemption"). In connection therewith, the holders
of the Company Preference Shares shall execute and deliver such documents, and
shall take such actions, as Acquiror shall reasonably request.

         SECTION 1.8. CONVERSION OF COMPANY STOCK OPTIONS.

                (a) As of the Closing Date, each outstanding option to purchase
or acquire shares of Company Ordinary Shares (each, a "Company Option") granted
under the Company's Employee Share Option Scheme (the "Company Stock Option
Plan") shall be converted into an option to acquire Acquiror Common Stock as
provided for in this Section 1.8(a). Following the Closing Date, each Company
Option shall continue to have, and shall be subject to, the terms and conditions
of each agreement pursuant to which such Company Option was subject as of the
Closing Date (including the terms and conditions of the Company Stock Option
Plan), except that (i) each Company Option shall be exercisable for that number
of whole shares of Acquiror Common Stock equal to the product of (A) the
aggregate number of shares of Company Ordinary Shares for which such Company
Option was exercisable immediately prior to the Closing Date multiplied by (B)
the Option Exchange Ratio (as defined below), rounded up to the nearest whole
number; and (ii) the exercise price per share of Acquiror Common Stock issuable
pursuant to each Company Option shall be equal to the exercise price per Company
Ordinary Share under such Company Option immediately prior to the Closing Date
divided by the Option Exchange Ratio, rounded to the nearest whole cent. Except
for changes to the Company Options provided for in the Company Stock Option Plan
by reason of the consummation of the transactions contemplated hereby, the
assumption and substitution of Company Options as provided herein shall not give
the holders of such Company Options additional benefits or additional (or
accelerated) vesting rights which they did not have as of the Closing Date, or
relieve the holders of such Company Options of any obligations or restrictions
applicable to their Company Options or the shares obtainable upon exercise of
the Company Options. The Company Stock Option Plan shall be assumed by Acquiror
with

                                     - 8 -
<PAGE>   17

respect to all outstanding Company Options granted under the Company Stock
Option Plan, and no further options to purchase or acquire shares of Company
Ordinary Shares or other awards or rights shall be granted under the Company
Stock Option Plan after the date hereof. The duration and other terms of the new
options provided for in this Section 1.8(a) shall be the same as the original
Company Options except that all references to the Company shall be references to
Acquiror. Acquiror shall take all corporate action reasonably necessary to
reserve for issuance a sufficient number of shares of Acquiror Common Stock for
delivery upon the exercise of the Company Options.

                The "Option Exchange Ratio" shall be the result obtained by
dividing (i) forty-three thousand five hundred fifty-eight (43,558) by (ii) the
sum of (A) the number of Company Ordinary Shares issuable pursuant to Company
Options granted as of the date hereof which remain unexercised as of the Closing
Date, plus (B) the number of Company Ordinary Shares issued pursuant to Company
Options granted as of the date hereof which are exercised after the date hereof.

                (b) Acquiror shall (i) promptly after the Closing Date (and in
any event within twenty-five (25) business days after the Closing Date, file one
or more registration statements on Form S-8 (or amend existing registration
statements on Form S-8) to become effective as soon as practicable thereafter
with respect to the shares of Acquiror Common Stock subject to Company Options
granted under the Company Stock Company Option Plan (as converted pursuant to
Section 1.8(a)); (ii) use commercially reasonable efforts to maintain the
effectiveness of such registration statement(s) (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such Company
Options remain outstanding; and (iii) promptly after the Closing Date, if
required, prepare and submit to the National Association of Securities Dealers
Automated Quotation System/National Market System ("Nasdaq") applications
covering the shares of Acquiror Common Stock subject to such Company Options and
use commercially reasonable efforts to cause such securities to be approved for
listing as soon as practicable after the Closing Date, subject to official
notice of issuance.

         SECTION 1.9. CLOSING.

                Subject to the terms and conditions of this Agreement, the
closing of the Exchange (the "Closing") will take place on April 21, 2000, or,
if the conditions set forth in Article VII hereof have not been satisfied or
waived as of such date, as promptly as practicable after satisfaction of the
latest to occur or, if permissible, waiver of the conditions set forth in
Article VII hereof (the "Closing Date"), at the offices of Clifford Chance,
L.L.P., 200 Aldersgate Street, London EC1A 4JJ,

                                     - 9 -
<PAGE>   18

ENGLAND, unless another date or place is agreed to in writing by the parties
hereto.

                                   ARTICLE II

               REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

                Subject to the qualifications, exceptions and other disclosures
expressly set forth in the Disclosure Schedule hereto, the Shareholders
represent and warrant to Acquiror that the statements contained in this Article
II are true and correct. The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
II, and the disclosures in any paragraph of the Disclosure Schedule shall
qualify other paragraphs in this Article II only to the extent that such
disclosure clearly and actually notifies Acquiror that such disclosure is
applicable to such other paragraphs. The inclusion of any information in any
paragraph of the Disclosure Schedule or other document delivered by the
Shareholders pursuant to this Agreement shall not be deemed to be an admission
or evidence of the materiality of such information, nor shall it establish a
standard of materiality for any purpose whatsoever; provided that the foregoing
shall not be a limitation on the obligations of the Shareholders to provide or
disclose any such information required to be provided or disclosed by the
Shareholders pursuant to this Agreement or any of the Related Agreements. For
purposes of this Article II, the phrase "to the knowledge of the Shareholders"
or any phrase of similar import shall be deemed to refer to the actual knowledge
of the Shareholders, as well as any other knowledge which the Shareholders would
reasonably be expected to have possessed had they made reasonable inquiry of
appropriate employees, officers, directors, representatives and agents of the
Company with respect to the matter in question, and shall include, without
limitation, the knowledge of the Company.

         SECTION 2.1. ORGANIZATION AND QUALIFICATION.

                The Company is a corporation duly organized, validly existing
and in good standing under the laws of England and Wales. The Company has the
requisite power and authority to own, lease and operate its business as it is
now being conducted and to perform the terms of this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby. The Company is
qualified under applicable Laws to conduct business in each jurisdiction in
which the Company is currently conducting business.

                                     - 10 -
<PAGE>   19

         SECTION 2.2. SUBSIDIARIES.

                The Company has no Subsidiaries and no equity interest or other
investment in, nor has the Company made advances or loans to, any

Person.

         SECTION 2.3. ORGANIZATIONAL DOCUMENTS.

                The Company is not in violation of any of the provisions of its
Organizational Documents.

         SECTION 2.4. CAPITALIZATION.

                The authorized share capital of the Company is Pound
Sterling 568,799.10, divided into (i) one hundred two thousand four hundred
forty (102,440) "A1" Ordinary Shares of Pound Sterling1 each, one thousand nine
hundred seven (1,907) "A2" Ordinary Shares of Pound Sterling 1 each, twelve
thousand fourteen (12,014) "A3" Ordinary Shares of Pound Sterling 1 each, twelve
million one thousand nine hundred eighty-six (12,001,986) "A4" Ordinary Shares
of Pound Sterling 0.01 each (collectively, the "A Shares"); (ii) thirty-nine
thousand ninety-four (39,094) "B1" Ordinary Shares of Pound Sterling 1 each,
twenty thousand eight hundred forty-eight (20,848) "B2" Ordinary Shares of Pound
Sterling 1 each, seven thousand one hundred thirteen (7,113) "B3" Ordinary
Shares of Pound Sterling 1 each, and seven million one hundred five thousand
eight hundred eighty-seven (7,105,887) "B4" Ordinary Shares of Pound Sterling
0.01 each (collectively, the "B Shares"); (iii) five thousand six hundred
seventy-three (5,673) unclassified Ordinary Shares of Pound Sterling 1 each (the
"Unclassified Shares"; the A Shares, the B Shares and the Unclassified Shares,
collectively the "Company Ordinary Shares"); and (iv) one hundred ninety
thousand (190,000) Preference Shares of Pound Sterling 1.00 each ("Company
Preference Shares"). All of the authorized A Shares and B Shares are issued,
none of the authorized Unclassified Shares are issued and eighty-five thousand
two hundred fifty-three (85,253) shares of the Company Preference Shares are
issued. All of the issued shares of the Company are owned legally and
beneficially by the Shareholders as set forth in Schedule 2.4, free and clear of
all Encumbrances. Four thousand seven hundred seventy-five (4,775) Company
Ordinary Shares have been reserved for issuance upon the exercise of stock
options under the Company Stock Option Plan. Schedule 2.4 sets forth a complete
and correct list of the number of shares of Company Ordinary Shares subject to
the Company Options, including, without limitation, those subject to employee
stock options or other rights to purchase or receive Company Ordinary Shares
granted under the Company Stock Option Plan, in each case including the names of
the holders of the Company Options, the dates of grant and exercise prices
thereof. Except as set forth in Schedule 2.4 and except for the Redemption,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued share capital of
the Company or obligating the Company to issue or sell any shares of or other
equity interests in the Company, including any securities directly or indirectly
convertible

                                     - 11 -
<PAGE>   20

into or exercisable or exchangeable for any share capital or other equity
securities of the Company. There are no outstanding obligations of the Company
to repurchase, redeem or otherwise acquire any shares or make any investment (in
the form of a loan, capital contribution or otherwise) in any other Person. All
of the issued Company Ordinary Shares and Company Preference Shares have been
duly authorized and validly issued in accordance with applicable laws and are
fully paid and not subject to preemptive rights. Other than under the Company
Stock Option Plan, no shares of the Company have been reserved for any purpose.
Acquiror acknowledges and agrees that if the representations and warranties set
forth in this Section 2.4 shall fail to be true and correct as of the Closing
Date solely as a result of the exercise of any Company Options between the date
of this Agreement and the Closing Date, then such failure shall not by itself
cause a failure of the conditions set forth in Section 7.1(a) to be satisfied as
of the Closing Date.

         SECTION 2.5. AUTHORITY.

                The Company has the necessary corporate power and authority to
enter into the Related Agreements to which the Company is a party, to perform
its obligations thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by the Company of the Related
Agreements to which the Company is a party and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate director, shareholder and other action
required by Law and by the Company's Organizational Documents and no other
corporate proceedings on the part of the Company are necessary to authorize the
Related Agreements or to consummate the transactions contemplated hereby and
thereby. The Related Agreements to which the Company is a party have been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Acquiror and any other parties thereto, as applicable,
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyances and
other similar laws of general applicability relating to or affecting creditors'
rights generally and by the application of general principles of equity.

         SECTION 2.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

                (a) Except as set forth in Schedule 2.6, the execution and
delivery by the Company of the Related Agreements to which the Company is a
party do not, the performance by the Company of its obligations under such
Related Agreements will not, and the consummation of transactions contemplated
hereby and by the Related Agreements will not, (i) conflict with or violate any
Organizational Document of the Company, (ii) conflict with or violate any Laws
applicable to the

                                     - 12 -
<PAGE>   21

Company or to its Assets, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company is a party or by which the Company is bound or to which any
of its Assets is subject.

                (b) Except as set forth in Schedule 2.6, the execution and
delivery by the Company of the Related Agreements to which the Company is a
party do not, the Company's performance of such Related Agreements will not, and
the consummation of transactions contemplated hereby and by the Related
Agreements will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any third party or any court, arbitral
tribunal, regulatory body, administrative agency or commission, whether national
or foreign, or Government Entity.

         SECTION 2.7. THE COMPANY FINANCIAL STATEMENTS; NO LIABILITIES.

                The Company has prepared and furnished to Acquiror and there are
included as exhibits to Schedule 2.7 hereto, the audited balance sheet of the
Company as of the end of the financial year ending in each of June 30, 1997,
1998 and 1999, and the audited profit and loss accounts for each of such
financial years, each accompanied by an unqualified audit report of the
Company's auditors, Messrs. Petersons for the financial years ending June 30,
1997 and Messrs. Grant Thornton for the financial years ending June 30, 1998 and
1999. The Company also has prepared and furnished to Acquiror, and there are
included as exhibits to Schedule 2.7 hereto, the unaudited balance sheet of the
Company as of February 29, 2000, and the unaudited profit and loss account for
the eight (8) month period then ended (the "Management Accounts"). All of the
audited financial statements, including, without limitation, the notes thereto,
referred to in this Section 2.7 or furnished to Acquiror after the date hereof
pursuant to this Agreement (collectively, the "Audited Financial Statements"):
(a) are in accordance with the books and records of the Company, (b) present a
true and fair view of the assets, liabilities and state of affairs of the
Company as of the respective dates and the profits and losses of the Company for
the respective periods indicated, and (c) have been prepared in accordance with
all applicable accounting standards and legal requirements in the United
Kingdom, including, without limitation, United Kingdom generally accepted
accounting principles, standards and practices applied on a basis consistent
with prior accounting periods. The Management Accounts have been prepared in
material compliance with all applicable accounting standards and legal
requirements in the United Kingdom, including, without limitation, United
Kingdom generally accepted accounting principles, standards and practices
applied on a basis consistent with prior accounting periods. Schedule 2.7 sets
forth all changes in accounting methods (for financial accounting purposes) at
any time made, agreed to, requested or required with respect to the Company.
Except as

                                     - 13 -
<PAGE>   22

reflected in the balance sheet of the Company (the "Company Balance Sheet")
dated June 30, 1999 (the "Balance Sheet Date") or as set forth in Schedule 2.7,
the Company has no liabilities, contingent or absolute, matured or unmatured,
except for liabilities incurred in the ordinary course of business since the
Balance Sheet Date and which would not have a Material Adverse Effect on the
Company.

         SECTION 2.8. ACCOUNTS RECEIVABLE.

                Except as set forth in Schedule 2.8, the accounts
receivable of the Company shown on the Company Balance Sheet, or recorded by the
Company after the Balance Sheet Date, have been collected or are collectible in
amounts not less than the amounts thereof carried in the books of the Company,
except to the extent of the allowance for doubtful accounts shown on the Company
Balance Sheet.

         SECTION 2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS.

                Since the Balance Sheet Date, there has been no Material Adverse
Effect on the Company. Since the Balance Sheet Date, the Company has conducted
its business in the ordinary course, and the Company has not, except as set
forth in Schedule 2.9, (a) paid any dividend or distribution in respect of, or
redeemed or repurchased any of, its capital stock; (b) except as set forth in
Schedule 2.4, issued any shares, bonds or other corporate securities or debt
instruments, granted any options, warrants or other rights calling for the
issuance thereof, or borrowed any funds; (c) incurred loss of, or significant
injury to, any of the Assets as the result of any fire, explosion, flood,
windstorm, earthquake, labor trouble, riot, accident, act of God or public enemy
or armed forces, or other casualty; (d) incurred, or become subject to, any
obligation or liability (absolute or contingent, matured or unmatured), except
current liabilities incurred in the ordinary course of business; (e) mortgaged,
pledged or subjected to any Encumbrance any of its Assets; (f) sold, exchanged,
transferred or otherwise disposed of any of its Assets or canceled any debts or
claims; (g) written down the value of any of its Assets or written off as
uncollectible any accounts receivable, except write downs and write-offs in the
ordinary course of business, none of which, individually or in the aggregate,
are material; (h) entered into any transactions other than in the ordinary
course of business and consistent with its past practice; (i) made any change in
any method of accounting or accounting practice; (j) made any agreement or is
otherwise legally obligated to do any of the foregoing; or (k) been materially
and adversely affected by the termination of, or a change in the terms of, an
agreement or by the loss of a customer or supplier or by any other event or
factor not affecting similar businesses and, to the knowledge of the
Shareholders, no fact or circumstance exists which might have a material and
adverse effect on the Company's business.

                                     - 14 -
<PAGE>   23

         SECTION 2.10. ASSETS.

                Except as set forth in Schedule 2.10, the Company is the sole
and exclusive legal and equitable owner of and has good title to, or has a good
and valid leasehold or license interest in and to, its Assets (including,
without limitation, the Intellectual Property reflected on the Company Balance
Sheet), free and clear of all Encumbrances. No Person or Government Entity has
an option to purchase, right of first refusal or other similar right with
respect to all or any part of the Company's Assets. All of the tangible personal
property of the Company is in good working order and repair, ordinary wear and
tear excepted.

         SECTION 2.11. LEASES.

                Schedule 2.11 lists and describes all leases and other
agreements under which the Company is lessee or lessor of any Asset, or holds,
manages or operates any Asset owned by any third party, or under which any Asset
owned by the Company is held, operated or managed by a third party. Each such
lease and other agreement is in full force and effect and constitutes a legal,
valid and binding obligation of, and is legally enforceable against, the Company
and, to the knowledge of the Company, the other party or respective parties
thereto, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyances and other similar laws of
general applicability relating to or affecting creditor's rights generally and
by the applications of general principles of equity. With respect to each such
lease and other agreement, (a) all necessary governmental approvals with respect
thereto required to be obtained by the Company have been obtained, (b) all
necessary filings or registrations therefor required to be made by the Company
have been made, and (c) there have been no threatened cancellations thereof and
no outstanding disputes thereunder. The Company has performed in all material
respects all obligations thereunder required to be performed by the Company to
date. The Company is not, and, to the Company's knowledge, no other party is, in
default in any material respect under any of the foregoing, and there has not
occurred any event which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default.

         SECTION 2.12. CONTRACTS; SUPPLIERS AND CUSTOMERS.

                (a) Schedule 2.12 sets forth a complete and correct list of all
agreements, contracts and commitments (whether written or oral) to which the
Company is a party or by which the Company or any of its Assets is bound
(collectively, the "Contracts"), including, without limitation, the following
types of contracts and agreements: (i) employment, severance, termination,
consulting and retirement agreements; (ii) license agreements or distributor,
dealer, manufacturer's representative, sales agency and advertising agreements;

                                     - 15 -
<PAGE>   24

(iii) agreements with any labor organization or other collective bargaining
unit; (iv) agreements for the future purchase of materials, supplies, services,
merchandise or equipment involving payments of more than Five Thousand Dollars
($5,000) individually (or Twenty Thousand Dollars ($20,000) in the aggregate for
all such agreements) over their remaining terms taking into account periods
covered by any option to renew or terminate, which may be exercised by either
party upon advanced notice to the other party); (v) agreements for the purchase,
sale or lease of any real estate or other Assets; (vi) profit-sharing, bonus,
incentive compensation, deferred compensation, stock option, severance pay,
stock purchase, employee benefit, insurance, hospitalization, pension,
retirement or other similar plans or agreements; (vii) agreements for the sale
of Assets other than in the ordinary course of business or the grant of any
preferential rights to purchase Assets; (viii) agreements containing warranties
or indemnities relating to products or services provided by the Company (the
Shareholders represent that no warranty or indemnity has been given by the
Company which differs therefrom); (ix) joint venture agreements or other
agreements involving the sharing of profits; (x) outstanding loans to any
Persons or entities or receivables due from any stockholders or any Affiliates
of the Company; (xi) agreements (including, without limitation, agreements not
to compete and exclusivity agreements) that reasonably could be interpreted to
impose any material restriction on any business operations of the Company; (xii)
agreements, notes and other instruments evidencing indebtedness for borrowed
money and grants of Encumbrances on any of the Assets of the Company; (xiii)
customer and client contracts; and (xiv) any other agreement which by its terms
does not terminate or is not terminable by the Company within thirty (30) days
or upon thirty (30) days' (or less) notice. Schedule 2.12 includes a brief
description of all oral Contracts of the types described in clauses (i) through
(xiv) above, and indicates all warranty and indemnity claims in excess of Five
Thousand Dollars ($5,000) made against the Company.

                (b) All the Contracts are valid and in full force and effect and
constitute legal, valid and binding obligations of, and are legally enforceable
against, the Company and, to the knowledge of the Shareholders, the other party
or respective parties thereto, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyances and
other similar laws of general applicability relating to or affecting creditor's
rights generally and by the applications of general principles of equity. With
respect to each such Contract, (i) all necessary governmental approvals with
respect thereto required to be obtained by the Company have been obtained, (ii)
all necessary filings or registrations therefor required to be made by the
Company have been made, and (iii) the Company has not been notified of any
threatened cancellations thereof and there are no outstanding disputes
thereunder. The Company has performed in all material respects all obligations
thereunder required to be performed by the Company to date. The Company is not,
and to the knowledge of the Shareholders, no other party is in default in any
material respect under any of

                                     - 16 -
<PAGE>   25

the Contracts, and there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default. True and complete copies of all Contracts have
been delivered to Acquiror.

                (c) The Company is not a party to, and is not liable under, any
onerous or unusual agreement, arrangement or obligation including, without
limitation, (i) an agreement, arrangement or obligation entered into other than
in the ordinary course of its business; (ii) an agreement, arrangement or
obligation entered into other than by way of a bargain at arm's length; (iii) an
agreement, arrangement or obligation restricting the Company's freedom to
operate the whole or part of its business or to use or exploit any of its
Assets; or (iv) a sale or purchase, option or similar agreement, arrangement or
obligation affecting an Asset owned, occupied, possessed or used by the Company
or by which the Company is bound.

                (d) Except as set forth in Schedule 2.12, the Company is
not (i) a member of a joint venture, consortium, partnership or
association (other than a bona fide trade association); or (ii) a party to a
distributorship, agency, franchise or management agreement or arrangement.

                (e) During the twelve (12) month period ending on the date of
this Agreement, no material supplier or material customer of the Company has (i)
stopped, or indicated an intention to stop, doing business with the Company;
(ii) reduced, or indicated an intention to reduce, substantially its business
with the Company; or (iii) changed, or indicated an intention to change,
substantially the terms on which it is prepared to do business with the Company.

                (f) To the knowledge of the Shareholders, no material supplier
or material customer of the Company is likely to (i) stop trading with the
Company; (ii) reduce substantially its trading with the Company; or (iii) change
substantially the terms on which it is prepared to trade with the Company.

                (g) The Company has not entered into any agreement or
arrangement with a supplier or customer on terms materially different from its
standard terms of business. Copies of the Company's standard terms of business
and copies of all agreements and arrangements on terms materially different from
such standard terms are attached hereto as Annex A and Annex B, respectively, to
Schedule 2.12.

         SECTION 2.13. REAL PROPERTY.

                (a) Schedule 2.13 contains a list and brief description of all
interests in real estate, easements, rights to access, rights-of-way and other
real property

                                     - 17 -
<PAGE>   26
interests which are owned, leased, used or held for use by the Company
(collectively, the "Real Property").

                (b) The Real Property comprises all of the land and premises
vested in, occupied or used by, or in the possession of, the Company. The
Company's title in each of its leasehold interests is absolute and the Company
has a good and marketable title to the Real Property.

                (c) There is appurtenant to the Real Property each right and
easement necessary for its proper and existing use including, without
limitation, emergency escape routes. No right or easement is restricted in any
way (including, without limitation, a restriction on hours of use) or is capable
of being lawfully interrupted or terminated by any Person. The Company holds
each right or easement appurtenant to (i) freehold Real Property, in fee simple;
or (ii) Real Property held by the Company under a lease, tenancy or license, for
a term not less than the unexpired term of the lease, tenancy or license. Each
service necessary for the Real Property's existing use (including, without
limitation, electricity, gas and water supplies, sewerage and telecommunications
lines) is available to the Company. The Company's access to the Real Property is
sufficient for the existing use of the Real Property and is by means of a road
adopted by the local highway authority and maintainable at public expense.

                (d) The Real Property is not subject to outgoings other than the
uniform business rate, water and sewerage rates and, in
the case of a property held under a lease, tenancy or license, rent, service
charge and insurance premiums.

                (e) Except as set forth in Schedule 2.13, neither the Real
Property nor any of its title deeds is subject to an Encumbrance, agreement,
obligation, condition, right, easement, exception, reservation, overriding
interest (as defined in section 70(1) of the Land Registration Act 1925) or
other interest. There is no Person in possession or occupation of, or who has or
claims a right or interest of any kind in, the Real Property adversely to the
Company's interest. Except as set forth in Schedule 2.13, the Company is the
beneficial owner of and is entitled to and has exclusive vacant possession of
the Real Property. No fact or circumstance exists which materially and adversely
affects the Real Property's value or the use or enjoyment of the Real Property
or casts doubt on the Company's right or title to the Real Property.

                (f) The Company has not obtained and is not required to obtain
any Real Property Permit.

                (g) There are, and during the two (2) years ending on the date
of this Agreement have been, no proceedings of any kind relating to the Real
Property and none are pending or threatened. To the Shareholders' knowledge, no
fact or circumstance exists which might give rise to proceedings of any kind
relating to the

                                     - 18 -
<PAGE>   27

Real Property. There is no outstanding notice, judgment, order, decree, arbitral
award or decision of a court, tribunal, arbitrator or governmental agency
affecting the Real Property.

                (h) To the knowledge of the Shareholders, there is no resolution
or proposal for compulsory acquisition of the Real Property by a local or other
authority.

                (i) The Real Property's existing use as set forth in Schedule
2.13 is the lawful use permitted under (i) applicable town and country planning
legislation; and (ii) where Real Property is held by the Company under a lease,
tenancy or license, the terms of the lease, tenancy or license, as varied by any
supplemental deed or document and in neither case is that permission temporary
or personal. Any permission necessary for the Real Property's existing use, its
original construction and any subsequent alteration has been obtained and is in
force, unimpeachable and unconditional or subject only to a condition that has
been satisfied.

                (j) There is no material deficiency which requires correction in
the state or condition of the Real Property. No flooding, subsidence or other
material defect of any kind (including, without limitation, a design or
construction defect) affects or has affected the Real Property during the period
in which the Company has had an interest in the Real Property. None of the Real
Property contains a deleterious substance or a substance which is not at the
date of this Agreement used in generally accepted good building practice. Where
the Real Property comprises a building or other structure which was completed
within five years before the date of this Agreement, the Company obtained from
each Person involved in the design or construction of the building or other
structure (including, without limitation, a developer, landlord, contractor,
sub-contractor, architect, engineer or surveyor) a warranty by the Person, in a
form that a prudent owner or occupier of the building or other structure would
reasonably require, as to its design or construction or both, and each warranty
is enforceable and may be assigned at least once; each such warranty is set
forth in Schedule 2.13.

                (k) Where the Company holds Real Property under a lease, tenancy
or license (i) no Person (including, without limitation, the landlord or
licensor) may bring the term to an end before the expiration of the lease,
tenancy or license by effluxion of time (except by forfeiture or by terms set
forth in such lease, tenancy or license); and (ii) there is no fact or
circumstance (and, to the Shareholders' knowledge, no fact or circumstance will
within six months starting on the date of this Agreement occur or arise) which
(x) could entitle or require a Person (including, without limitation, a landlord
or licensor) to forfeit or enter on, or take possession of, or occupy, the Real
Property; or (y) could restrict or terminate the Company's continued and
uninterrupted possession or occupation of the Real Property. Except

                                     - 19 -
<PAGE>   28

as set forth in Schedule 2.13, a rent or fee payable in respect of the Real
Property is not at the date of this Agreement being reviewed and cannot be
reviewed before Closing or at any time during the period one year after Closing.
No lease, tenancy or license contains an unusually onerous covenant or condition
including, without limitation, a covenant or condition allowing the landlord or
licensor unreasonably to withhold or delay consent to an assignment of the whole
or to an application to carry out a non-structural obligation.

                (l) Where Real Property is subject to a lease, tenancy or
license: (i) the lease, tenancy or license is on tenant's or licensee's full
repairing and insuring terms and contains no provision which could materially or
adversely affect the value of the Company's reversion; (ii) the tenant or
licensee has in all material respects complied with its obligations under the
lease, tenancy or license; (iii) the Company has not waived compliance with an
obligation of the tenant or licensee, nor with an obligation of a surety for the
tenant or licensee; (iv) no premium or rent has been taken, accepted or agreed
of an amount more than that legally permitted and no advance payment or
computation of any future rent, fee or other payment under the lease, tenancy or
license has been accepted or agreed to be accepted; (v) the Company has taken no
deposit of money or charge over a sum of money or fund from a tenant or licensee
as security for compliance with any of its obligations; (vi) the lease, tenancy
or license contains no restriction on the election by the Company to waive an
exemption from charging value added tax on a payment made by the tenant or
licensee under the lease, tenancy or license; and (vii) there has been no
relevant variation for the purposes of Section 18 of the Landlord and Tenant
(Covenants) Act 1995.

                (m) No such former tenant or guarantor as is mentioned in
Section 17 of the Landlord and Tenant (Covenants) Act 1995 has ceased to be
under a liability to the Company by virtue of the operation of that Section, nor
is any such former tenant or guarantor entitled to call for, or has called for,
the grant of an overriding lease by the Company under Section 19 of that Act.

                (n) Except in relation to the Real Property, the Company has no
liability arising out of a conveyance, transfer, lease, tenancy, license,
agreement or other document relating to land, premises or an interest in land or
premises.

                (o) Property File D, as updated by any subsequent releases
provided to Acquiror's U.K. counsel at least three (3) days prior to the date of
this Agreement, in the agreed form contains all documents in the Company's
possession or control relating to the Real Property and such documents
accurately reflect the Shareholders' knowledge of the Real Property and the
Company's interest in the Real Property.

                                     - 20 -
<PAGE>   29

            SECTION 2.14. INTELLECTUAL PROPERTY.

                (a) Schedule 2.14 sets forth a list and brief description of all
Intellectual Property owned, utilized or licensed by the Company (all of the
foregoing items collectively referred to as the "Company Intellectual
Property"). Schedule 2.14 identifies the Company Intellectual Property based on
the following categories: (i) patents and patent applications, (ii) trademarks
and trade names, (iii) registered copyrights, (iv) licenses and (v) other
Intellectual Property. The Shareholders have furnished Acquiror with copies of
all license agreements to which the Company is a party, either as licensor or
licensee, with respect to the Company Intellectual Property. The Company has
good title to or the right to use, all the Company Intellectual Property and all
inventions, processes, designs, formulae, trade secrets and know-how necessary
for the conduct of the business of the Company as presently conducted or
currently proposed to be conducted, without the payment of any royalty or
similar payment except to the extent disclosed on Schedule 2.14. The Company is
not infringing on any Intellectual Property right of others, and the
Shareholders have no knowledge of any infringement by others of such rights of
the Company.

                (b) All licenses set forth on Schedule 2.14 are valid and
binding obligations of the Company and, to the knowledge of the Shareholders, of
the other parties thereto, and enforceable against the Company and, to the
knowledge of the Shareholders, the other parties thereto in accordance with
their respective terms. Except as set forth on Schedule 2.14, the Company owns
and possesses all right, title and interest in and to, or has the right to use
pursuant to a valid license, all the Company Intellectual Property necessary for
the operation of the business of the Company as presently conducted or currently
proposed to be conducted by the Company.

                (c) All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception and
development of any Company Intellectual Property have executed nondisclosure
agreements and either (i) have been or are party to a written agreement with the
Company that has accorded the Company full, effective, exclusive and original
ownership of all Company Intellectual Property used or required by the Company
in the Company's business, or (ii) have executed appropriate instruments of
assignment in favor of the Company as assignees that have conveyed to the
Company full, effective, and exclusive ownership of all Company Intellectual
Property.

                (d) The Shareholders also have delivered to Acquiror correct and
complete samples or copies of all trademarks, service marks, trade names,
copyrights, patents, registrations and, as relate to the foregoing,
applications, licenses, agreements and permissions (as amended to date) held by
the Company,

                                     - 21 -
<PAGE>   30

and have made available to Acquiror correct and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable) of
each such item. With respect to each item of Company Intellectual Property
necessary for the conduct of the business of the Company as heretofore and as
currently conducted, each as set forth on Schedule 2.14: (i) with respect to
each item of Company Intellectual Property not owned by the Company, the
identified owner of such item possesses all right, title, and interest in and to
the item; (ii) the item is not subject to any outstanding judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator; (iii) no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand is
pending or, to the knowledge of the Shareholders, is threatened which challenges
the legality, validity, enforceability, use, or ownership of the item; and (iv)
except as set forth on Schedule 2.14, the Company has not agreed to indemnify
any Person for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.

                (e) Except as set forth on Schedule 2.14, all of the computer
software, computer firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by the Company in the
administration and conduct of its business (i) has been and will be able to
process date data (including, but not limited to, calculating, comparing, and
sequencing) in a consistent manner from, into and between the twentieth century
(through 1999), the year 2000 and the twenty-first century, including leap year
calculations, and (ii) has not malfunctioned, ceased to function, generated
incorrect data or produced incorrect results, and will not do any of the
foregoing, when processing, providing, and/or receiving (A) date-related data
into and between the twentieth and twenty-first centuries, and (B) date-related
data in connection with any valid date in the twentieth and twenty-first
centuries.

         SECTION 2.15. ENVIRONMENTAL MATTERS.

                (a) The Company is in compliance in all material respects with
all Environmental Laws. The Company does not have any liability under any
Environmental Law, nor is the Company responsible for any liability of any other
Person under any Environmental Law. There are no pending or, to the knowledge of
the Shareholders, threatened actions, suits, claims, legal proceedings or other
proceedings based on, and the Company has not directly or indirectly received
any notice of any complaint, order, directive, citation, notice of
responsibility, notice of potential responsibility, or information request from
any Government Entity or any other Person arising out of or attributable to: (i)
the current or past presence, Release or threatened Release of Hazardous
Materials at or from any part of the Real Property; (ii) the off-site disposal
or treatment of Hazardous Materials originating on or from the Real Property or
the businesses or Assets of the Company; or (iv) any violation of Environmental
Laws at any part of the Real

                                     - 22 -
<PAGE>   31

Property or otherwise arising from the Company's activities involving Hazardous
Materials.

                (b) As used herein, these terms shall have the following
meanings:

                (i) "Environmental Laws" means all Laws, including any plans,
other criteria, or guidelines promulgated pursuant to such Laws, now or
hereafter in effect relating to the generation, production, installation, use,
storage, treatment, transportation, release, threatened release, or disposal of
Hazardous Materials, noise control, or the protection of human health or safety,
natural resources, or the environment.

                (ii) "Hazardous Materials" means wastes, substances, radiation,
or materials (whether solids, liquids or gases) (i) which are hazardous, toxic,
infectious, explosive, radioactive, carcinogenic, or mutagenic; (ii) which are
or become defined as a "pollutants", "contaminants", "hazardous materials",
"hazardous wastes", "hazardous substances", "toxic substances", "radioactive
materials", "solid wastes", or other similar designations in, or otherwise
subject to regulation under, any Environmental Laws; (iii) the presence of which
on the Real Property cause or threaten to cause a nuisance pursuant to
applicable statutory or common law upon the Real Property or to adjacent
properties; (iv) without limitation, which contain polychlorinated biphenyls
(PCBs), asbestos and asbestos-containing materials, lead-based paints,
urea-formaldehyde foam insulation, and petroleum or petroleum products
(including, without limitation, crude oil or any fraction thereof) or (v) which
pose a hazard to human health, safety, natural resources, or the environment.

                (iii) "Release" means any emission, spill, seepage, leak,
escape, leaching, discharge, injection, pumping, pouring, emptying, dumping,
disposal, or release of Hazardous Materials from any source (including, without
limitation, the Real Property and property adjacent to the Real Property) into
or upon the environment, including the air, soil, improvements, surface water,
groundwater, the sewer, septic system, storm drain, publicly owned treatment
works, or waste treatment, storage, or disposal systems at, on, from, above, or
under the Real Property or any other property at which Hazardous Materials
originating on or from the Real Property or the businesses or Assets of the
Company have been stored, treated or disposed.

         SECTION 2.16. ABSENCE OF LITIGATION.

                Except as set forth in Schedule 2.16, there are (a) no claims,
actions, suits, investigations, or proceedings pending or, to the knowledge of
the Shareholders, threatened against the Company (or, to the knowledge of the


                                     - 23 -
<PAGE>   32

Shareholders (without independent investigation), against a Person for whose
acts or defaults the Company may be vicariously liable) or any of its properties
or Assets before any court, administrative, governmental, arbitral, mediation or
regulatory authority or body, domestic or foreign, and (b) no judgments,
decrees, injunctions or orders of any Government Entity or arbitrator
outstanding against the Company (or, to the knowledge of the Shareholders
(without independent investigation), against a Person for whose acts or defaults
the Company may be vicariously liable) or any of its properties or Assets.

         SECTION 2.17. BOOKS AND RECORDS; DATA PROTECTION.

                (a) The books of account, Register of Members, books and other
records of the Company are true and complete in all material respects.

                (b) Except as set forth on Schedule 2.17 hereto, none of the
records, systems, data or information of the Company is recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held or
accessible by any means (including, without limitation, any electronic,
mechanical or photographic process, whether computerized or not) which are not
under the exclusive ownership and direct control of the Company.

                (c) The Company is in compliance with, and has at all times
complied with, all applicable data protection laws in the United Kingdom,
including without limitation, the Data Protection Act 1998 and the
Telecommunications (Data Protection and Privacy) Regulations 1999.

         SECTION 2.18. TAXES AND ASSESSMENTS.

                        The representations and warranties set forth in Exhibit
2.18 hereto are incorporated herein by reference and made a part of this
Section 2.18.

         SECTION 2.19. EMPLOYMENT MATTERS.

                (a) Schedule 2.19 identifies those Persons employed by the
Company as of the date hereof (the "Employees") (including those who are on
maternity or paternity leave, on secondment, or absent because of disability or
other long-term leave of absence and who have or may have a right to return to
work with the Company) and contains details of (i) the date of birth, start date
of employment, period of continuous employment, grade and location, salary and
other benefits of each of the Employees and, where an Employee has been
continuously absent from work for more than one (1) month, the reason for the
absence; and (ii) the terms and conditions of employment of the Employees
entitled to remuneration at an annual rate, or an average annual rate over the
last three (3)

                                     - 24 -
<PAGE>   33

financial years, of more than Twenty-Five Thousand Dollars ($25,000) (including
any agreed but not yet implemented changes to terms and conditions).

                (b) Schedule 2.19 identifies those Persons who provide services
personally to the Company under consultancy or similar arrangements (the
"Consultants") and provides details of the terms on which those services are
provided. There is no contract for services or contract of services between the
Company and any directors of the Company who are not Employees or Consultants.

                (c) No offers of employment by the Company or of consultancy or
similar arrangements have been made to any Person who is not disclosed as one of
the Employees or Consultants. No Person has proposed to supply personnel
services to the Company.

                (d) The basis of the remuneration payable to the Employees and
Consultants set forth in Schedule 2.19 is the same as that in force as of the
Balance Sheet Date. The Company is not obliged to increase, nor has the Company
made provision to increase, the total annual remuneration payable to the
Employees or Consultants by more than five percent (5%) or to increase the rate
of remuneration of any of the Employees or Consultants entitled to annual
remuneration of more than Twenty-Five Thousand Dollars ($25,000).

                (e) Other than the Company Stock Option Plan, the Company does
not have and is not proposing to introduce a share incentive, share option,
profit sharing, bonus or other incentive scheme for any of the Employees or
Consultants and none of the Employees or Consultants have a contractual right to
receive a bonus payment in respect of the financial year ended June 30, 1999, or
thereafter, except as set forth in any contract for services or employment a
true and correct copy of which has been made available to Acquiror.

                (f) None of the Employees or Consultants are entitled to any
payment or entitled to regard himself as discharged from any obligation by
virtue of any change of control (however defined) of the Company. The Company
has not agreed to provide any gratuitous payment or benefit to any Employee or
Consultant or to any of their dependants.

                (g) The employment of each of the Employees and services of each
the Consultants can be terminated by the Company at any time on the giving of
three (3) months' notice or less without giving rise to any claim for any
payment or liability for damages or compensation (other than a statutory
redundancy payment or statutory compensation for unfair dismissal).

                (h) The Company has not given or received notice of the
termination of the employment or services of any of the Employees and
Consultants and there

                                     - 25 -
<PAGE>   34

are no proposals on the part of the Company to terminate the employment or
services of any such Person.

                (i) No monies are owed by the Company to any of the Employees or
Consultants (or any of their dependants), other than for accrued remuneration or
reimbursement of business expenses, and there are no disputes with or concerning
any of the Employees or Consultants. No monies are owing by any of the Employees
or Consultants to the Company.

                (j) No disputes exist with any former employee or consultant and
the Company is not under any obligation to make any payments to or on behalf of
any such Person or to his dependants at any time. The Company is not, and has
not been within the last twelve (12) months, in dispute with any trade union
staff association or any other body or individuals representing employees.

                (k) Except as set forth in Schedule 2.19, no trade union staff
association or other body representing employees is recognized by the Company
for any purpose and the Company does not operate any standing staff council or
forum or operate any standing employee information and consultation procedure.
There are no collective or workforce agreements directly affecting the
Employees.

                (l) The Company has not failed within the last six (6) months to
comply with any obligation to inform and consult with employee representatives
in connection with proposed redundancies or the transfer of any undertaking.

                (m) The Company has complied with each obligation imposed on the
Company by, and each order and award made under, statute, regulation, code of
conduct and practice, collective agreement, custom and practice relevant to the
relations between it and its employees or the terms of employment of its
Employees.

            SECTION 2.20.  PENSIONS AND OTHER BENEFITS

                The representations and warranties set forth in Exhibit 2.20
hereto are incorporated herein by reference and made a part of this Section
2.20.

            SECTION 2.21. TRANSACTIONS WITH RELATED PARTIES.

                No present or former officer, director, shareholder or Affiliate
of the Company, nor any Person known by the Shareholders to be an Affiliate of
any such Person, is currently a party to any transaction or agreement with the
Company, including any agreement providing for any loans, advances, the
employment of, furnishing of services by, rental of their respective Assets from
or to, or otherwise requiring payments to, any such officer, director,
stockholder or Affiliate.

                                      -26-
<PAGE>   35
        SECTION 2.22. INSURANCE.

               Schedule 2.22 contains a list of all insurance policies of title,
property, fire, casualty, liability, life, worker's compensation, libel and
slander, and other forms of insurance of any kind relating to the Assets or the
business and operations of the Company, true and correct copies of which have
been made available to Acquiror. All premiums with respect to such policies
covering all periods up to and including the date hereof have been paid in
accordance with the terms of such policies, and no notice of cancellation or
termination has been received with respect to any such policy. All such policies
are in full force and effect and are sufficient for compliance by the Company
with all requirements of applicable Law and of all licenses, franchises and
other agreements to which the Company is a party.

        SECTION 2.23. COMPLIANCE WITH LAWS; PERMITS.

               The Company is in compliance in all material respects with all
Laws applicable to the Company, its Assets and to the business and operations of
the Company. The Company holds all licenses and permits from Government Entities
as are necessary for the conduct of its business.

        SECTION 2.24. RESTRICTIONS ON BUSINESS ACTIVITIES; COMPETITION.

               (a) There is no agreement (noncompete, grant of exclusivity or
otherwise), commitment, judgment, injunction, order or decree to which the
Company is a party or otherwise binding upon the Company which has or reasonably
could be expected to have the effect of prohibiting or impairing any business
practice of the Company as presently conducted or proposed to be conducted, any
acquisition of property (tangible or intangible) by the Company or the conduct
of business by the Company as presently conducted or proposed to be conducted by
the Company.

               (b) The Company has no liability under, and is not a party to,
any agreement or arrangement (i) particulars of which have been furnished or
should have been furnished to the Director General of Fair Trading ("DGFT")
under the Restrictive Trade Practices Acts 1976 and 1977; (ii) which has been
notified to the DGFT for guidance or a decision under the Competition Act 1998;
(iii) which has been notified to the Commission of the European Communities or
EFTA Surveillance Authority for an exemption under Article 81(3) of the Treaty
of Rome or Article 53(3) of the Agreement on the European Economic Area; (iv)
for which an application has been made to the Commission of the European
Communities or EFTA Surveillance Authority for a negative clearance under
Article 81 or 82 of the Treaty of Rome or Article 53 or 54 of the Agreement on
the European Economic



                                      -27-
<PAGE>   36

Area; or (v) which is prohibited by any applicable competition Law by which the
Company is bound.

               (c) The Company has not given an undertaking or written assurance
(legally binding or not) to a Government Entity or an authority of the European
Communities or European Economic Area under the Fair Trading Act 1973,
Competition Act 1980, Restrictive Trade Practices Acts 1976 and 1977, Resale
Prices Act 1976, Competition Act 1998, Treaty of Rome, Agreement on the European
Economic Area or any other statute or legal instrument. The Company is not
affected by an order or regulation made under the Fair Trading Act 1973 or the
Competition Act 1980 or by any guidance or decision of the Director General of
Fair Trading, or by a decision of the Commission of the European Communities,
EFTA Surveillance Authority or a competition or governmental authority of
another jurisdiction.

               (d) The Company has not received a communication or request for
information relating to any aspect of the Company's business from or by the
Director General of Fair Trading, Competition Commission, Secretary of State for
Trade and Industry, Commission of the European Communities or EFTA Surveillance
Authority or a competition or Government Entity of another jurisdiction. No
agreement, arrangement or conduct (by omission or otherwise) of the Company is
or has been the subject of an investigation, report or decision by any of those
Persons or bodies and none is pending or threatened. To the knowledge of the
Shareholders, no fact or circumstance exists which might give rise to an
investigation, report or decision by any of those Persons or bodies.

               (e) The Company has never received, nor is the Company proposing
to receive, any financial aid (as that term is understood for the purposes of
Articles 87 to 89 of the Treaty of Rome) from a Member of State of the European
Community or from State resources.

        SECTION 2.25. BROKERS.

               Except for the Financial Advisor, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission from
the Company or any Shareholder in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company or
any of the Shareholders. Prior to the date of this Agreement, the Company has
provided to Acquiror a complete and correct copy of all agreements between the
Company or any Shareholder and the Financial Advisor pursuant to which such firm
will be entitled to any payment from the Company relating to the transactions
contemplated by this Agreement.



                                      -28-
<PAGE>   37

        SECTION 2.26. MINUTE BOOKS.

               The minute books of the Company made available to Acquiror are
the only minute books of the Company and contain a complete and accurate summary
of all formal meetings of directors (or any committees thereof) and shareholders
or actions by written consent since the time of incorporation of the Company
through the date of this Agreement, and reflect all transactions referred to in
such minutes accurately in all material respects.

        SECTION 2.27. HSR ACT COMPLIANCE.

               The Company, including all entities controlled by the Company (as
the terms "entity" and "control" are defined in the HSR Act regulations, 16
C.F.R. Section 801), (a) does not hold assets located in the United States
having an aggregate book value of Fifteen Million Dollars ($15,000,000) or more,
and (b) has not made aggregate sales in or into the United States of Twenty Five
Million Dollars ($25,000,000) or more in its financial year ended June 30, 1999.

        SECTION 2.28. GRANTS AND SUBSIDIES.

               The Company is not liable to repay an investment or other grant
or subsidy made to the Company by a Government Entity (including, without
limitation, the Department of Trade and Industry or its predecessor). To the
knowledge of the Shareholders, no fact or circumstance (including, without
limitation, the execution and performance of this Agreement) exists which could
reasonably be expected to entitle a body to require repayment of, or refuse an
application by the Company for, the whole or part of a grant or subsidy.


        SECTION 2.29. INSOLVENCY, WINDING UP, ETC.

               (a) No order has been made, petition presented or resolution
passed for the winding up of the Company or for the appointment of a provisional
liquidator to the Company and no administration order has been made in respect
of the Company.

               (b) No receiver or receiver and manager has been appointed of the
whole or part of the Company's business or Assets.

               (c) No voluntary arrangement has been proposed under section 1 of
the Insolvency Act 1986 in respect of the Company. No compromise or arrangement
has been proposed, agreed to or sanctioned under section 425 of the Act in
respect of the Company.


                                      -29-
<PAGE>   38

               (d) The Company is not insolvent or unable to pay its debts
within the meaning of section 123 of the Insolvency Act 1986.

               (e) The Company is paying its debts as they fall due except for
any debts being contested in good faith by the Company, which do not exceed
Twenty Thousand Dollars ($20,000) in the aggregate.

               (f) No distress, execution or other process has been levied on
any Asset of the Company.

               (g) There is no unsatisfied judgment or court order outstanding
against the Company.

               (h) No action is being taken by the Registrar of Companies to
strike the Company off the register under section 652 of the Act.

               (i) The Company has not at anytime during the two (2) years
immediately prior to the date of this Agreement (i) entered into a transaction
with any Person at an undervalue (as referred to in section 238(4) of the
Insolvency Act 1986); or (ii) been given a preference by any Person (as referred
to in section 239(4) of the Insolvency Act 1986).

        SECTION 2.30. AUDITORS' OPINION.

               The Company and the Shareholders have received from Grant
Thornton, the Company's auditors, a written opinion that the financial position
of the holders of the Company Options will not be diminished by the conversion
of the Company Options pursuant to Section 1.8 of this Agreement, a true and
correct copy of which opinion has been provided to Acquiror. Such opinion is
sufficient to satisfy the requirements of Rule 7.3 of the Company Stock Option
Plan.

        SECTION 2.31. DISCLOSURE.

               No representations or warranties by the Shareholders in this
Agreement and no statement or information contained in the Schedules hereto or
any certificate furnished or to be furnished by the Shareholders to Acquiror
pursuant to the provisions of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading. Except for the representations and
warranties contained in this Agreement (including the Disclosure Schedule
hereto), the Related Agreements and any certificate executed and delivered by
the Shareholders pursuant to this Agreement, no Shareholder nor any Person
acting on



                                      -30-
<PAGE>   39

behalf of a Shareholder makes any representation or warranty, express or
implied, written or oral, to Acquiror.

                                   ARTICLE III

               REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

               In addition to the representations and warranties made by the
Shareholders in Article II hereof, each Shareholder (and only with respect to
such Shareholder) hereby represents and warrants to Acquiror as follows:

        SECTION 3.1. AUTHORITY AND CAPACITY.

               Such Shareholder has full legal right, capacity, power and
authority necessary to execute and deliver this Agreement and all other Related
Agreements to which such Shareholder is a party, to perform the obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. This Agreement has been and the Related Agreements to which such
Shareholder is a party will have been duly executed and delivered by such
Shareholder and, assuming due authorization, execution and delivery by Acquiror
and the other parties hereto and thereto, constitute legal, valid and binding
obligations of such Shareholder, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyances and other similar laws of
general applicability relating to or affecting creditor's rights generally and
by the applications of general principles of equity.

        SECTION 3.2. ABSENCE OF VIOLATION.

               The execution, delivery and performance by such Shareholder of
this Agreement and all other Related Agreements to which such Shareholder is a
party, the fulfillment of and the compliance with the respective terms and
provisions hereof and thereof, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (a) conflict with, or
violate any provision of, any Laws applicable to the Shareholder; or (b)
conflict with, or result in any breach of, or constitute a default under, any
agreement to which such Shareholder is a party or by which such Shareholder or
such Shareholder's property is bound or affected.

        SECTION 3.3. RESTRICTIONS AND CONSENTS.

               Such Shareholder's execution and delivery of this Agreement and
the Related Agreements to which such Shareholder is a party do not, and such



                                      -31-
<PAGE>   40

Shareholder's performance of this Agreement and the Related Agreements to which
such Shareholder is a party will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any third party
or any court, arbitral tribunal, regulatory body, administrative agency or
commission or Government Entity.

        SECTION 3.4. TITLE TO SHARES.

               The Company Ordinary Shares and Company Preference Shares
reflected on Schedule 2.4 as being owned by such Shareholder are the only shares
of the Company owned legally or beneficially by such Shareholder, and except as
set forth in Schedule 2.4, such Shareholder does not own any other options,
warrants or rights to acquire shares of any class of the Company. Such
Shareholder has the sole power respecting voting and transfer of such
Shareholder's shares. The Company Ordinary Shares and Company Preference Shares
of such Shareholder are now, and (subject to Section 1.7) at all times prior to
the Closing Date will be, owned as indicated on Schedule 2.4 by such
Shareholder, free and clear of all Encumbrances. Such Shareholder represents and
warrants that Schedule 2.4 lists all shares of the Company in issue as of the
date hereof.

       SECTION 3.5. REPRESENTATIONS AND WARRANTIES UNDER THE UNITED STATES
                    SECURITIES LAWS.

               (a) Such Shareholder understands that the Exchange Stock to be
received by such Shareholder pursuant to this Agreement has not been registered
under the Securities Act in reliance on an exemption contained in Regulation S
of the Securities Act in connection with the offer and sale of Exchange Stock to
the Regulation S Shareholders, and in Regulation D of the Securities Act in
connection with the offer and sale of Exchange Stock to the Regulation D
Shareholders; and that Acquiror is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Shareholder set forth herein in order to determine the applicability of such
exemptions and the Shareholder's suitability to acquire the Exchange Stock.

               (b) With respect to each Regulation S Shareholder, such
Shareholder is not, nor is such Shareholder acquiring the Exchange Stock for the
account or benefit of, a "U.S. Person" as defined in Regulation S under the
Securities Act. Upon consummation of the transactions contemplated by this
Agreement, such Shareholder will be the sole beneficial owner of the Exchange
Stock issued to such Shareholder pursuant to this Agreement, and such
Shareholder has not pre-arranged any sale with any purchaser or purchasers in
the United States. Such Shareholder understands that a "U.S. Person" includes,
without limitation, any natural Person resident in the United States, any




                                      -32-
<PAGE>   41

partnership or corporation organized or incorporated under the Laws of the
United States (other than certain branches of non-U.S. banks or insurance
companies), any estate of which any executor or administrator is a U.S. Person
or any trust of which any trustee is a U.S. Person (with certain exceptions) and
any agency or branch of a foreign entity located in the United States, but does
not include a natural Person not resident in the United States; and the "United
States" means the United States of America, its territories and possessions, any
state of the United States and the District of Columbia.

               (c) With respect to each Regulation S Shareholder, such
Shareholder is outside the United States as of the date of the execution and
delivery of this Agreement and will be outside the United States at the time of
the closing of the transactions contemplated by this Agreement.

               (d) With respect to each Regulation S Shareholder, such
Shareholder understands that Acquiror is required, under Rule 903 of Regulation
S, to refuse to register the transfer of any of the Exchange Stock to be
received by such Shareholder pursuant to this Agreement that is not transferred
pursuant to a registration statement under the Securities Act, in compliance
with Regulation S under the Securities Act or otherwise pursuant to an available
exemption from registration.

               (e) With respect to each Regulation D Shareholder, such
Shareholder is acquiring the Exchange Stock for the purpose of investment only
and not with a view to distribution or resale thereof. Each Regulation D
Shareholder is and as of the Closing Date will be an "accredited investor" as
that term is defined in Regulation D promulgated under the Securities Act.

               (f) With respect to each Regulated S Shareholder, such
Shareholder understands that the Exchange Stock cannot be offered for sale, sold
or otherwise transferred unless in accordance with the provisions of Regulation
S, pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration under the Securities Act. Such Shareholder
has no present intention to sell or otherwise transfer the Exchange Stock except
in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration under the Securities Act.

               (g) With respect to each Regulated S Shareholder, such
Shareholder understands that the Exchange Stock cannot be offered for sale, sold
or otherwise transferred unless in accordance with the provisions of Regulation
S, pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration under the Securities Act. Such Shareholder
has no present intention to sell or otherwise transfer the Exchange Stock except
in accordance with the



                                      -33-
<PAGE>   42

provisions of Regulation S, pursuant to registration under the Securities Act,
or pursuant to an available exemption from registration under the Securities
Act.

               (h) Such Shareholder is aware of the provisions of Rule 144 under
the Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including the
existence of a public market for the shares, the availability of certain current
public information about Acquiror, the resale occurring not less than one year
after a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f) under the Securities Act) and the
number of shares being sold during any three-month period not exceeding
specified limitations.

               (i) Such Shareholder is not an underwriter of, or dealer in, any
of the Exchange Stock to be issued hereunder, and such Shareholder is not
participating, pursuant to a contractual agreement or otherwise, in the
distribution of any of the Exchange Stock.

               (j) Such Shareholder is not an Affiliate of Acquiror.


        SECTION 3.6. ABILITY OF SHAREHOLDER TO EVALUATE INVESTMENT AND
                     BEAR ECONOMIC RISK.

               Such Shareholder further represents that such Shareholder: (a)
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of such Shareholder's prospective
investment in the Exchange Stock and such Shareholder's liabilities and
obligations under this Agreement; (b) has received all of the information such
Shareholder has requested from Acquiror for deciding whether to accept the
Exchange Stock; (c) has the ability to bear the economic risks of such
Shareholder's investment in the Exchange Stock; (d) is able, without materially
impairing such Shareholder's financial condition, to hold the Exchange Stock for
an indefinite period of time and to suffer complete loss on such Shareholder's
investment; and (e) has been given sufficient time and opportunity to seek the
advice of counsel regarding such Shareholder's liabilities and obligations
hereunder.


                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF ACQUIROR

               Acquiror represents and warrants to the Shareholders as follows:


                                      -34-
<PAGE>   43
        SECTION 4.1. ORGANIZATION AND QUALIFICATION.

               Acquiror is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Acquiror has the
requisite power and authority to own, lease and operate its Assets and
properties and to carry on its business as it is now being conducted and to
perform the terms of this Agreement, the Related Agreements and the transaction
contemplated hereby and thereby. Acquiror is duly qualified to conduct its
business, and is in good standing, in each jurisdiction where the ownership or
leasing of its properties or the nature of its activities in connection with the
conduct of its business makes such qualification necessary, except where such
failure to be so qualified would not have a Material Adverse Effect on Acquiror.

        SECTION 4.2. AUTHORITY.

               Acquiror has the necessary corporate power and authority to enter
into this Agreement and the Related Agreements, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Related
Agreements by Acquiror and the consummation by Acquiror of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Acquiror are
necessary to authorize this Agreement and the Related Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Related Agreements have been duly executed and delivered by Acquiror and,
assuming the due authorization, execution and delivery by the Company and the
other parties thereto, as applicable, constitute legal, valid and binding
obligations of Acquiror, enforceable in accordance with their terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyances and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity. The Acquiror Common Stock will,
when issued to the Shareholders pursuant to this Agreement, be duly authorized
and validly issued in accordance with applicable laws and will be fully paid and
nonassessable and not subject to preemptive rights.

        SECTION 4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

               (a) The execution and delivery of this Agreement and the Related
Agreements by Acquiror do not, and the performance by Acquiror of its
obligations under this Agreement and the Related Agreements will not, (i)
conflict with or violate the certificate of incorporation, bylaws or other
organizational document of Acquiror, (ii) conflict with or violate any Laws
applicable to Acquiror or its Assets, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under any note, bond, mortgage,




                                      -35-
<PAGE>   44
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Acquiror is a party or by which Acquiror is
bound, or by which any of its Assets is subject, except, in the case of clauses
(ii) and (iii), for such conflicts, violations, breaches and defaults which,
individually or in the aggregate, would not have a Material Adverse Effect on
Acquiror.

               (b) The execution and delivery of this Agreement and the Related
Agreements by Acquiror does not, and the performance of this Agreement by
Acquiror will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any third party or any court, arbitral tribunal,
regulatory body, administrative agency or commission, whether national or
foreign, or Government Entity, except for applicable state and federal
securities related filings.

        SECTION 4.4. ABSENCE OF LITIGATION.

               There are (a) no claims, actions, suits, investigations, or
proceedings pending or, to Acquiror's knowledge, threatened against Acquiror or
any of its properties or Assets before any court, administrative, governmental,
arbitral, mediation or regulatory authority or body, domestic or foreign, that
challenge or seek to prevent, enjoin, alter or materially delay the transactions
contemplated hereby, or which, if determined adversely against Acquiror would
have a Material Adverse Effect on Acquiror, and (b) no judgments, decrees,
injunctions or orders of any Government Entity or arbitrator outstanding against
Acquiror or any of its properties or Assets which would have a Material Adverse
Effect on Acquiror.

        SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.

               (a) Acquiror has filed all forms, reports, statements and other
documents required to be filed with the Securities and Exchange Commission
("SEC") since April 19, 1999, and has made available to the Company, in the form
filed with the SEC since such date, together with any amendments thereto, all of
Acquiror's (i) annual reports on Form 10-K; (ii) quarterly reports on Form 10-Q,
(iii) current reports on Form 8-K and (iv) other reports or registration
statements filed by Acquiror (collectively, the "Acquiror SEC Reports"). As of
their respective filing dates, the Acquiror SEC Reports (i) complied in all
material respects with the requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and the Securities Act, as applicable, and (ii) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

               (b) The audited consolidated financial statements and unaudited
interim financial statements of Acquiror included in the Acquiror SEC Reports
complied in all material respects with applicable accounting requirements and
with



                                      -36-
<PAGE>   45

the published rules and regulations of the SEC with respect thereto (including,
without limitation, Regulation S-X of the Exchange Act). The financial
statements, including all related notes and schedules, contained in the Acquiror
SEC Reports (or incorporated by reference therein) present fairly in all
material respects the consolidated financial position of Acquiror and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of Acquiror and its Subsidiaries for the periods
indicated, in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be noted
therein) and subject in the case of interim financial statements to normal
year-end adjustments.

        SECTION 4.6. BROKERS.

               No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.


        SECTION 4.7. DISCLOSURE.

               No representations or warranties by Acquiror in this Agreement
and no statement or information contained in the Schedules hereto or any
certificate furnished or to be furnished by Acquiror to the Company pursuant to
the provisions of this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any fact necessary, in light
of the circumstances under which it was made, in order to make the statements
herein or therein not misleading. Except for the representations and warranties
contained in this Agreement, the Related Agreements and any certificate executed
and delivered by Acquiror pursuant to this Agreement, neither Acquiror nor any
Person acting on behalf of Acquiror makes any representation or warranty,
express or implied, written or oral.


                                    ARTICLE V

                                    COVENANTS


        SECTION 5.1. AFFIRMATIVE COVENANTS OF THE SHAREHOLDERS IN RELATION
                     TO THE COMPANY.

               The Shareholders hereby covenant and agree that, prior to the
Closing Date, unless otherwise expressly contemplated by this Agreement or
consented to in writing by Acquiror, they shall cause the Company to (a) operate
its business in the usual and ordinary course consistent with past practices and
in accordance with




                                      -37-
<PAGE>   46

applicable Laws; (b) preserve intact its business organization, maintain its
rights and material contracts, use commercially reasonable efforts to retain the
services of its respective principal officers and key employees and maintain its
relationship with its respective suppliers, contractors, distributors, customers
and others having business relationships with it; (c) keep its Assets in as good
repair and condition as at present, ordinary wear and tear excepted; and (d)
keep in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained.


        SECTION 5.2. NEGATIVE COVENANTS OF THE SHAREHOLDERS IN RELATION TO
                     THE COMPANY.

               Except as expressly contemplated by this Agreement or as set
forth on Schedule 5.2 hereto, or otherwise consented to in writing by Acquiror,
from the date hereof until the Closing Date, the Shareholders shall cause the
Company not to do any of the following:

               (a) (i) increase the compensation payable to or to become payable
to any of its directors, officers or employees; (ii) grant any severance or
termination pay to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; or (iii) adopt or
amend any employee benefit plan or arrangement, except as may be required by
applicable Law;

               (b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its share capital;

               (c) (i) except for the Redemption, redeem, repurchase or
otherwise reacquire any of its share capital or any securities or obligations
convertible into or exchangeable for any of its share capital, or any options,
warrants or conversion or other rights to acquire any of its share capital or
any such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its share capital
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for, its share capital;

               (d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of any
Encumbrances) of, any shares of any class or other equity securities, any
securities or obligations directly or indirectly convertible into or exercisable
or exchangeable for any such shares, or any rights, warrants or options to
acquire, any such shares or securities or any rights, warrants or options
directly or indirectly to acquire any such shares or securities; or (ii) amend
or otherwise modify the terms of any such securities, obligations, rights,
warrants or options in a manner inconsistent with or which violates the
provisions of this Agreement or the effect of which shall be to make such terms
more favorable to the holders thereof;



                                      -38-
<PAGE>   47

               (e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the Assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any Assets of any other Person (other than the purchase of inventory
or other tangible or intangible assets in the ordinary course of business and
consistent with past practice), or make or commit to make any capital
expenditures;

               (f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its Assets;

               (g) propose or adopt any amendments to its Organizational
Documents;

               (h) (i) change any of its methods of accounting, or (ii) make or
rescind any express or deemed election relating to taxes, settle or compromise
any claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes, except, in the
case of clause (i) or clause (ii), as may be required by Law or generally
accepted accounting principles in force or operation within the United Kingdom,
consistently applied;

               (i) prepay, before the scheduled maturity thereof, any of its
long-term debt, or incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, other than trade
payables incurred in the ordinary course of business consistent with past
practices;

               (j) enter into or modify in any material respect any Contract,
except as requested by a customer of the Company in the ordinary course of
business consistent with past practice of the Company, and provided that
Acquiror shall have approved such customer request (which approval shall not be
unreasonably withheld);

               (k) take any action that would reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being
untrue or in any of the conditions to the Exchange set forth in Article VII not
being satisfied; or

               (l) agree in writing or otherwise to do any of the foregoing.

        SECTION 5.3. NEGATIVE COVENANTS OF THE SHAREHOLDERS.

               Each Shareholder covenants and agrees that prior to the Closing
Date such Shareholder will not sell, transfer, pledge, assign or otherwise
encumber or




                                      -39-
<PAGE>   48
dispose of or enter into any contract, option or other agreement with respect
to, the sale, transfer, pledge, assignment or other encumbrance or disposition
of, any Company Ordinary Shares, Company Preference Shares (except for the
Redemption pursuant to Section 1.7 of this Agreement) or any other voting or
equity interests in the Company now owned or hereafter acquired beneficially or
of record by such Shareholder.

                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

        SECTION 6.1. CONSENTS AND APPROVALS; FILINGS AND NOTICES.

               (a) The Shareholders shall, and shall cause the Company to, use
all commercially reasonable efforts to as promptly as possible make all filings
with, provide all notices to and obtain all consents and approvals from third
parties required to be obtained by the Company and the Shareholders in
connection with the transactions contemplated hereunder, including all filings
with, notices to and consents and approvals from any Government Entities and
other Persons.

               (b) Acquiror shall use all commercially reasonable efforts to as
promptly as possible make all filings with, provide all notices to and obtain
all consents and approvals from third parties required to be obtained by
Acquiror in connection with the transactions contemplated hereunder, including
all filings with, notices to and consents and approvals from any Government
Entities and other Persons.


        SECTION 6.2. ACCESS TO INFORMATION; FINANCIAL STATEMENTS.

               (a) At Acquiror's sole expense, the Shareholders shall cause the
Company to afford Acquiror and Acquiror's accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Closing Date to (i) all of the Company's properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel (subject to restrictions imposed by
applicable law) of the Company as Acquiror may reasonably request. Subject to
the terms of the non-disclosure agreement between Acquiror and the Company dated
December 10, 1999, the Shareholders agree to provide, and to cause the Company
to provide, to Acquiror and Acquiror's accountants, counsel and other
representatives copies of internal financial statements promptly upon request,
and to provide to Acquiror's independent accountants such customary management
representation letters as they may reasonably request in connection with any
audit of the Company's financial statements. No information or knowledge
obtained in any investigation




                                      -40-
<PAGE>   49

pursuant to this Section 6.2 shall affect or be deemed to modify any
representation or warranty of the Shareholders contained herein. In the event of
the termination of this Agreement, Acquiror shall destroy or deliver to the
Company all confidential documents, work papers and other materials, and all
copies thereof, including any such copies in electronic form, obtained by
Acquiror from the Company as a result of this Agreement or in connection
herewith, whether obtained before or after the execution and delivery of this
Agreement.

               (b) Acquiror and its auditors shall be entitled at Acquiror's
expense to conduct an audit of the Company's financial information as Acquiror
may reasonably determine is necessary to satisfy Acquiror's public company
reporting requirements pursuant to the Securities Act and the Exchange Act. The
Shareholders agree to cooperate (and to cause the Company to cooperate) with
Acquiror and its auditors as reasonably requested by Acquiror in connection with
the preparation and filing of such financial statements, including causing the
Company to provide customary and required confirmations of the financial data as
prescribed by generally accepted auditing standards.

        SECTION 6.3. CONFIDENTIALITY.

               All information delivered or made available to either party
hereto or to the representatives of such party or otherwise disclosed in writing
by a party hereto (or the representatives of such disclosing party) before or
after the date hereof, in connection with the transactions contemplated by this
Agreement, shall be kept confidential by the party to whom such information is
disclosed and the representatives of the party to whom such information is
disclosed and shall not be used other than in furtherance of the transactions
contemplated by this Agreement, except to the extent that such information (a)
was otherwise publicly available when received, (b) is or hereafter becomes
lawfully obtainable from third parties not related to the disclosing party or
its Affiliates, (c) is required to be disclosed to a Government Entity, (d) is
required by Law or the rules of any stock exchange to be disclosed or (e) to the
extent such duty as to confidentiality is waived in writing by the disclosing
party.


        SECTION 6.4. FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS.

               Subject to the terms and conditions herein provided, each of the
parties shall use commercially reasonable efforts to take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Laws or otherwise to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including using its commercially reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Government




                                      -41-
<PAGE>   50

Entities and parties to contracts with the Company and Acquiror as are necessary
for the transactions contemplated herein.

        SECTION 6.5. PUBLIC ANNOUNCEMENTS.

               The Shareholders on the one hand, and Acquiror on the other hand,
agree that neither they nor the Company will issue any press release or
otherwise make any public statements concerning this Agreement or the
transactions contemplated hereby at any time prior to the Closing Date without
the prior written consent of Acquiror or the Shareholders' Representative, as
the case may be, except to the extent that any such disclosure is required by
Acquiror under applicable Law or the rules of any stock exchange on which the
Acquiror Common Stock is listed.

        SECTION 6.6. NO SOLICITATION.

               During the term of this Agreement, the Shareholders shall not,
and the Shareholders shall cause the Company and the respective Affiliates of
the Company and the Shareholders and any Person acting on behalf of such party
or Affiliate not to (a) solicit or favorably respond to indications of interest
from, or enter into discussions or negotiations with, any third party for any
proposed merger, consolidation, sale or acquisition of the Company, the Assets
or the Company Ordinary Shares or the Company Preference Shares or (b) furnish
or cause to be furnished any nonpublic information concerning the business to
any Person other than in the ordinary course of business or pursuant to
applicable Laws and after prior written notice to Acquiror.

        SECTION 6.7. EMPLOYEES.

               The Management Shareholders shall, and shall cause the Company
to, subject to the terms and conditions of this Agreement, use commercially
reasonable efforts to encourage the current employees of the Company (subject to
the continued satisfactory performance of each such employee determined in
consultation with Acquiror) to continue their employment and relationship with
the Company following the Closing Date.

        SECTION 6.8. MEETING OF THE COMPANY'S BOARD OF DIRECTORS.

               The Shareholders shall ensure that at the Closing, a meeting of
the board of directors of the Company shall be held at which the directors (a)
vote in favor of the registration of Acquiror or its nominee(s) as member(s) of
the Company in respect of the Company Ordinary Shares (subject to the production
of properly stamped transfers); (b) change the Company's registered office to a
place nominated by Acquiror; (c) subject to the Act, change the Company's
accounting reference date




                                      -42-
<PAGE>   51

to a date nominated by Acquiror; (d) appoint Persons nominated by Acquiror as
directors, secretary and auditors of the Company with effect from the end of the
meeting; and (e) with effect from the end of the meeting, authorize the
secretary to notify the specimen signatures of the new officers of the Company
in connection with each existing mandate given by the Company for the operation
of its bank accounts.

        SECTION 6.9. FURTHER UNDERTAKINGS BY THE SHAREHOLDERS.

               Each Shareholder (other than a Shareholder identified on Exhibit
A with an "(x)" next to such Shareholder's name) covenants and agrees with
Acquiror, in such Shareholder's own capacity and as agent and trustee for the
Company, that such Shareholder will not:

               (a) incorporate any company with or carry on business under the
name of the Company or under any other name under which the Company or any of
its Affiliates may from time to time carry on business or under any other name
which might be confused with any such names;

               (b) within a period of eighteen (18) months from the date of this
Agreement and without the consent of Acquiror, be interested either directly or
indirectly and with or without others and whether as a shareholder, partner,
agent, advisor, consultant, employee, joint venturer or otherwise, howsoever in
any business within the United Kingdom of a similar nature to the business of
the Company as presently conducted in so far as it relates to advertising and
communications business specializing in the use of the Internet for commercial
purposes (herein, the "Business") and which is or may become a competitor of the
Company; provided, that nothing herein shall prevent any shareholder from being
interested in not more than five percent (5%) of the issued share capital of a
Company whose shares are listed on the London Stock Exchange or dealt in on the
Alternative Investment Market or any other recognized investment exchange);

               (c) either alone or jointly with, through or as manager, adviser,
consultant or agent for a Person, directly or indirectly, use or authorize,
encourage or assist any Person to use in connection with a business which
competes, directly or indirectly, with the Business, any of the Company
Intellectual Property; and

               (d) and will use such Shareholder's best efforts to cause such
Shareholder's directors, alternate directors, nominees on the Board of the
Company, officers and employees not to:

                   (i) if the Company shall have obtained trade secrets or other
confidential information of any third party under an agreement including



                                      -43-
<PAGE>   52
restrictions on disclosure known to such Shareholder without the consent of such
third party at any time infringe such restrictions;

                   (ii) during the period of eighteen (18) months from the date
of this Agreement within the United Kingdom solicit in competition with the
Company in relation to the Business the custom of any Person who on or at any
time during the twelve (12) months immediately preceding the date of this
Agreement was a client or customer of the Company, or act for any such client or
customer whether as principal or as servant or agent of some other Person; and

                   (iii) during a period of eighteen (18) months from the date
of this Agreement employ or seek to employ either directly or indirectly on its
or his own behalf or on behalf of any other Person any Person employed or
retained as a freelancer by the Company on or during the last twelve (12) months
immediately preceding the date of this Agreement.

        SECTION 6.10. RULE 144.

               Acquiror covenants that at all times while Acquiror has
securities registered pursuant to the Securities Act and is subject to the
reporting requirements of the Securities Act, Acquiror shall use commercially
reasonable efforts to (a) file any reports required to be filed by Acquiror
under the Exchange Act and (b) take such further action required from time to
time to satisfy the conditions set forth in Rule 144(c)(1) of the Securities Act
to enable the Shareholders to sell Exchange Stock without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, or (ii)
any similar rules or regulations hereafter adopted by the SEC. Acquiror shall,
upon the reasonable request of the Shareholders' Representative, deliver to the
Shareholders' Representative a written statement as to whether it has complied
with such requirements.

        SECTION 6.11. UPDATES TO DISCLOSURE SCHEDULE.

               Between the date of this Agreement and the Closing Date, the
Shareholders shall promptly notify Acquiror in writing if any Shareholder
becomes aware of any fact or condition that causes or constitutes a breach of
any of the representations and warranties of the Shareholders as of the date of
this Agreement, or if any Shareholder becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
provided for in this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition




                                      -44-
<PAGE>   53

require any change in the Disclosure Schedule if the Disclosure Schedule were
dated the date of the occurrence or discovery of any such fact or condition, the
Shareholders shall promptly deliver to Acquiror a supplement to the Disclosure
Schedule specifying such change. Except as set forth in Section 9.2(a), no
notice or supplement provided to Acquiror pursuant to this Section 6.11 shall
relieve or limit the liability or responsibility of the Shareholders for any
breaches of representations, warranties, covenants or agreements set forth in
this Agreement.


        SECTION 6.12. ACQUIROR NOTICE OF BREACHES BY SHAREHOLDERS.

               If between the date of this Agreement and Closing, Acquiror shall
have actual knowledge of a material breach by any Shareholder of a
representation or warranty of such Shareholder set forth in Article II or
Article III of this Agreement (other than a breach which is disclosed by the
Shareholders pursuant to Section 6.11 above) and, as a result of such material
breach, the conditions precedent to the obligations of Acquiror to close
specified in Section 7.1(a) will not be satisfied without cure of such breach by
the Shareholders prior to Closing, then Acquiror shall promptly notify the
Shareholders' Representative in writing of such breach, which notice shall
specify in reasonable detail a description of such breach; provided, that
neither (a) Acquiror's knowledge of any such breach (whether actual or capable
of being acquired) nor (b) the failure by Acquiror to give any notice of such
breach to the Shareholders' Representative pursuant to this Section 6.12, shall
in any way affect the rights and remedies of Acquiror under this Agreement or
otherwise with respect to any such breach.


        SECTION 6.13. REAL PROPERTY LEASE.

               The Shareholders on behalf of the Company are currently
negotiating to let premises known as the 8th floor, 99 City Road London EC1
("City Road"). The Shareholders agree that neither they nor the Company shall
enter into an agreement for lease or any other binding agreement or obligation
with respect to City Road or any other premises without the prior written
consent of Acquiror, which consent may be arbitrarily and unreasonably withheld
in Acquiror's sole discretion; provided, however, that if, at the time that any
such consent is sought from Acquiror, all of the conditions precedent to Closing
set forth in Article VII shall have been satisfied but Acquiror shall have
refused to consummate the Closing as required pursuant to this Agreement, then
no such consent shall be required to be obtained from Acquiror. Prior to the
Closing Date, the Shareholders shall keep Acquiror regularly informed of the
state of negotiations with respect to City Road.



                                      -45-
<PAGE>   54

                                   ARTICLE VII

                               CLOSING CONDITIONS


        SECTION 7.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR.

               The obligations of Acquiror to effect the Exchange and the other
transactions contemplated in this Agreement are also subject to the fulfillment
at or prior to the Closing Date of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:

               (a) Representations and Warranties. The representations and
warranties of the Shareholders made in this Agreement shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, without giving effect to any supplement to the Disclosure Schedule
(provided that any representation or warranty contained herein that is qualified
by a materiality standard shall not be further qualified hereby), except for
representations and warranties that speak as of a specific date or time other
than the date of this Agreement or the Closing Date (which need only be true and
correct in all material respects as of such other date or time, without giving
effect to any supplement to the Disclosure Schedule).

               (b) Agreements and Covenants. The agreements and covenants of the
Shareholders required to be performed on or before the Closing Date shall have
been performed in all material respects.

               (c) No Material Adverse Effect. Since the date of this Agreement,
no Material Adverse Effect as to the Company shall have occurred and be
continuing.

               (d) Legal Proceedings. No action or proceeding before any
Government Entity shall have been instituted or threatened (and not subsequently
settled, dismissed, or otherwise terminated) which does or is reasonably
expected to restrain, prohibit or invalidate the Exchange or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by a party hereto.

               (e) Required Consents. The Shareholders shall have delivered to
Acquiror at or before Closing all consents or notices necessary to be obtained
or made by the Company and the Shareholders in connection with the transactions
contemplated by this Agreement.





                                      -46-
<PAGE>   55

               (f) Indemnity Escrow Agreement. Acquiror, the Escrow Agent and
the Shareholders' Representative shall have entered into the Indemnity Escrow
Agreement at or before Closing pursuant to which the Indemnity Escrow Stock
shall have been retained in escrow.

               (g) Deferred Payment Escrow Agreement. Acquiror, the Escrow Agent
and the Management Shareholders shall have entered into the Deferred Payment
Escrow Agreement at or before Closing pursuant to which the Deferred Payment
Stock shall have been retained in escrow.

               (h) Tax Deed. The Shareholders shall have executed and delivered
a Tax Deed in substantially the same form as Exhibit D hereto (the "Tax Deed").

               (i) Consent of Auditors. Acquiror shall have received a written
consent of Grant Thornton, the Company's auditors, in a form reasonably
acceptable to Acquiror and its auditors, that Acquiror is authorized to include
in its SEC filings the Audited Financial Statements audited by Grant Thornton.

               (j) Stock Certificates. The Shareholders shall have delivered to
Acquiror the Certificates, together with executed stock transfer forms attached.

               (k) Financial Advisor Release and Investment Representation
Letter. Acquiror shall have received (i) evidence reasonably satisfactory to
Acquiror that all amounts owed to the Financial Advisor by the Shareholders have
been paid in full; and (ii) an investment representation letter, in a form
reasonably satisfactory to Acquiror, duly executed by the Financial Advisor,
pursuant to which the Financial Advisor shall acknowledge and agree to the
applicable provisions of Section 1.5 and Section 1.6 of this Agreement, and
shall make to Acquiror the representations and warranties set forth in Section
3.5 and Section 3.6 hereof.

               (l) Redemption of Company Preference Shares. All of the Company
Preference Shares shall have been redeemed and no Company Preference Shares
shall be outstanding.

               (m) Other Closing Documents. The Shareholders shall have executed
and/or delivered to Acquiror such additional documents, certificates, opinions
and agreements as Acquiror may reasonably request, including, without
limitation, the following:

                   (i) an irrevocable power of attorney duly executed by each
Shareholder in favor of Acquiror (or its nominee(s)) in respect of the Company
Ordinary Shares in the agreed form;

                   (ii) the common seal (if any) of the Company; each register,
minute book and other book required to be kept by the Company under the Act




                                      -47-
<PAGE>   56

made up to the Closing Date; and each certificate of incorporation and
certificate of incorporation on change of name for the Company;

                   (iii) a copy of a letter to the Company from its auditors
resigning their office with effect from Closing and containing the statement
referred to in section 394 of the Act, the original of the letter having been
deposited at the registered office of the relevant company;

                   (iv) resignations in the agreed form from each director and
secretary of the Company expressed to take effect from the end of the meeting
held pursuant to Section 6.8 hereof;

                   (v) a copy of each bank mandate of the Company and copies of
statements of each bank account of the Company made up to a date not earlier
than two (2) business days before the Closing Date;

                   (vi) the title deeds to the Real Property; and

                   (vii) all documentation relating to the Company Intellectual
Property including, without limitation, the original registration and renewal
certificate for such of the Company Intellectual Property as is registered or
pending as at Closing.

               (n) Certificate of Shareholders. Acquiror shall have received a
certificate executed by each Shareholder representing and warranting to Acquiror
that (i) the representations and warranties of the Shareholders made in this
Agreement are true and correct in all material respects on and as of the Closing
Date with same effect as though such representations and warranties had been
made on and as of the Closing Date, giving effect to any supplements to the
Disclosure Schedule that were delivered to Acquiror prior to the Closing Date in
accordance with Section 6.11 hereof (provided that any representation or
warranty contained herein that is qualified by a materiality standard shall not
be further qualified hereby), except for representations and warranties that
speak as of a specific date or time other than the date of this Agreement or the
Closing Date (which were true and correct in all material respects as of such
other date or time), giving effect to any supplements to the Disclosure Schedule
that were delivered to Acquiror prior to the Closing date in accordance with
Section 6.11 hereof; and (ii) the agreements and covenants of the Shareholders
required to be performed on or before the Closing Date have been performed in
all material respects.

               (o) Auditor's Opinion. The opinion of the auditors of the Company
described in Section 2.30 hereof shall not have been modified and shall remain
in full force and effect.



                                      -48-
<PAGE>   57
        SECTION 7.2. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.

               The obligations of the Shareholders to effect the Exchange and
the other transactions contemplated in this Agreement are also subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived, in whole or in part, to the extent permitted by
applicable Law:

               (a) Representations and Warranties. The representations and
warranties of Acquiror made in this Agreement shall be true and correct in all
material respects, on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(provided that any representation or warranty contained herein that is qualified
by a materiality standard shall not be further qualified hereby), except for
representations and warranties that speak as of a specific date or time other
than the date of this Agreement or the Closing Date (which need only be true and
correct in all material respects as of such other date or time). The
Shareholders' Representative shall have received a certificate of an officer of
Acquiror to that effect.

               (b) Agreements and Covenants. The agreements and covenants of
Acquiror required to be performed on or before the Closing Date shall have been
performed in all material respects. The Shareholders' Representative shall have
received a certificate of an officer of Acquiror to that effect.

               (c) Legal Proceedings. No action or proceeding before any
Government Entity shall have been instituted or threatened (and not subsequently
settled, dismissed, or otherwise terminated) which does or is reasonably
expected to restrain, prohibit or invalidate the Exchange or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by a party hereto.

               (d) No Material Adverse Effect. Since the date of this Agreement,
no Material Adverse Effect as to the Acquiror shall have occurred and be
continuing.

               (e) Registration Rights Agreement. Acquiror shall have executed
and delivered the Registration Rights Agreement in substantially the same form
as Exhibit E hereto (the "Registration Rights Agreement").

               (f) Tax Clearance. The Shareholders shall have received written
notification clearance from the UK Inland Revenue of the application filed on
their behalf on March 24, 2000, under Section 138 Taxation of Chargeable Gains
Act 1992 for the rollover of gains into the Exchange Stock, and confirmation
from the



                                      -49-
<PAGE>   58

UK Inland Revenue that no notice is required to be delivered under Section 707
of the Income and Corporation Taxes Act 1988.

                                  ARTICLE VIII

                        TERMINATION, AMENDMENT AND WAIVER

        SECTION 8.1.  TERMINATION.

               This Agreement and the obligations of the parties to consummate
the Exchange may be terminated at any time prior to the Closing Date:

               (a) by mutual written consent of Acquiror and the Shareholders'
Representative;

               (b) by Acquiror if any Shareholder shall have breached any
representations, warranties, covenants or agreements contained in this
Agreement, or any such representation or warranty shall have become untrue
(without giving effect to any supplement to the Disclosure Schedule), in any
such case such that the conditions precedent to the obligations of Acquiror to
close specified in Section 7.1 will not be satisfied and such breach has not
been promptly cured within fifteen (15) days following receipt by the
Shareholders' Representative of written notice of such breach;

               (c) by the Shareholders' Representative if Acquiror shall have
breached any representations, warranties, covenants or agreements contained in
this Agreement, or any such representation or warranty shall have become untrue,
in any such case such that the conditions precedent to the obligation of the
Shareholders to close specified in Section 7.2, will not be satisfied and such
breach has not been promptly cured within fifteen (15) days following receipt by
Acquiror of written notice of such breach;

               (d) by either Acquiror or the Shareholders' Representative if any
decree, permanent injunction, judgment, order or other action by any court of
competent jurisdiction or any Government Entity preventing or prohibiting
consummation of the Exchange shall have become final and non-appealable;

               (e) by either Acquiror or the Shareholders' Representative if the
Closing Date has not occurred on or prior to such date which is forty-five (45)
days after the date of this Agreement (unless such date shall be extended by the
mutual written consent of the Shareholders' Representative and Acquiror);
provided, that the right to terminate this Agreement under this Section 8.1(e)
shall not be available to any party whose breach of representations, warranties,
covenants or agreements contained in this Agreement has been the sole cause of,
or resulted in,




                                      -50-
<PAGE>   59
the failure of the Closing Date to occur by such date or the inability of such
condition to be satisfied; or

               (f) by Acquiror (i) if, in Acquiror's reasonable discretion, a
supplement or amendment of any section of the Disclosure Schedule provided to
Acquiror pursuant to Section 6.11 hereof materially and adversely affects the
benefits to be obtained by Acquiror pursuant to this Agreement, or (ii) in the
event that the information contained in such supplement or amendment is such
that the conditions precedent to the obligations of Acquiror to close specified
in Section 7.1 will not be satisfied and such breach has not been promptly cured
within fifteen (15) days after such supplement or amendment has been provided to
Acquiror.

        SECTION 8.2.  EFFECT OF TERMINATION.

               If this Agreement is terminated pursuant to Section 8.1, this
Agreement and all Related Agreements shall forthwith become void and there shall
be no liability or obligation on the part of any party hereto, except that the
provisions of Section 6.2(a), Section 6.3 and Section 10.10 shall not be
extinguished but shall survive such termination, and nothing herein shall
relieve any party from liability for any breach hereof and each party shall be
entitled to any remedies at law or in equity for such breach.

        SECTION 8.3.  WAIVER.

               At any time prior to Closing, one party may (a) extend the time
for the performance of any of the obligations or other acts of the other party,
(b) waive any inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this Agreement of the
other party and (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.


                                   ARTICLE IX

           SURVIVAL OF REPRESENTATIONS; ESCROW ARRANGEMENTS; REMEDIES


        SECTION 9.1.  SURVIVAL OF REPRESENTATIONS.

               All representations, warranties, covenants, indemnities and other
agreements made by any party to this Agreement and in any other agreement
required to be exercised by the parties pursuant to this Agreement, shall be
deemed made on and as of the Closing Date as though such representations,
warranties,




                                      -51-
<PAGE>   60

covenants, indemnities and other agreements were made on and as of such date,
and all such representations, warranties, covenants, indemnities and other
agreements shall remain in full force and effect as follows: (a) unless
otherwise specified herein below, representations and warranties shall survive
for a period of twelve (12) months after the Closing Date; (b) the
representations and warranties of the Shareholders set forth in Section 2.4 and
Section 3.4 shall survive in perpetuity; (c) the representations and warranties
of the Shareholders set forth in Sections 2.15, 2.18 and 2.20 shall survive
until one (1) month after the expiration of the applicable statute of
limitations, which for this purpose includes the time within which a Tax
Authority may make an Assessment (as defined in the Tax Deed); (d) the covenants
and agreements contained in this Agreement, including, without limitation, the
covenants and agreements in this Article IX, shall continue in full force and
effect until fully discharged; (e) any claim arising out of the Related
Agreements shall be governed by the terms and conditions of such agreements; and
(f) any representation, warranty, covenant, indemnity or agreement that is the
subject of a claim which is asserted in writing prior to the expiration of the
applicable survival period set forth above (a "Survival Period") shall survive
with respect to such claim until the final resolution thereof as long as the
party asserting such claim shall have instituted proceedings with respect to
such claim with a Government Entity within six (6) months after the expiration
of the applicable Survival Period.

        SECTION 9.2.         GENERAL INDEMNIFICATION BY THE SHAREHOLDERS.

               The Shareholders hereby agree to indemnify and hold Acquiror, the
Company and their respective officers, directors, agents and representatives
(collectively, the "Acquiror Indemnified Persons") harmless against all Losses
resulting from, imposed upon or incurred by any Acquiror Indemnified Person,
directly or indirectly, as a result of (a) any inaccuracy or breach of a
representation or warranty of any Shareholder, other than any such inaccuracy or
breach which is disclosed in a written supplement to the Disclosure Schedule
provided to Acquiror pursuant to Section 6.11 hereof and which is expressly
identified in the certificate delivered to Acquiror pursuant to Section 7.1(n)
hereof as having caused the condition specified in Section 7.1(a) not to be
satisfied; (b) any failure by any Shareholder to perform or comply with any
covenant or agreement contained in this Agreement, any Related Agreement or any
document, certificate or agreement furnished pursuant to this Agreement; (c) the
obligations of the Shareholders with respect to Expenses set forth in Section
10.10 hereof, including, without limitation, the fees and expenses of the
Financial Advisor; and (d) the matters described on Schedule 2.16 hereto.
Notwithstanding the foregoing, the Shareholders shall not have any liability for
claims for Losses asserted under Section 9.2(a) or (b) until such time as the
aggregate amount of such claims exceeds One Hundred Thousand Dollars ($100,000)
(the "Basket Amount"), at which point the Shareholders shall be




                                      -52-
<PAGE>   61
liable for all such claims for Losses, and not just amounts in excess of the
Basket Amount; provided, however, that the aggregate liability of the
Shareholders for Losses under Sections 9.2(a) and (b) shall not exceed the sum
of (i) Sixteen Million Dollars ($16,000,000), plus (ii) the value of the
aggregate number of shares of Acquiror Common Stock issuable to the Shareholders
pursuant to Article I of this Agreement (the "Indemnity Cap"); provided, further
that nothing herein shall limit (A) the remedies that the Acquiror Indemnified
Persons may have for Losses based on fraud; (B) the equitable remedies of
specific performance and injunctive relief that may be available to the Acquiror
Indemnified Persons; or (C) any remedies for Losses that the Acquiror
Indemnified Persons may have in the event of a termination of this Agreement.
For purposes of determining whether the aggregate liability of the Shareholders
for Losses under Sections 9.2(a) and (b) has exceeded the Indemnity Cap at the
time that the Shareholders are required to satisfy a claim for such Losses by
any Acquiror Indemnified Person, the value of the shares of Acquiror Common
Stock issuable to the Shareholders pursuant to Article I of this Agreement shall
be equal to one million two hundred ninety-one thousand forty-nine (1,291,049)
(as adjusted to reflect any stock split, reclassification, recapitalization or
similar event with respect to the Acquiror Common Stock), multiplied by the
Acquiror Share Price. As used herein, the "Acquiror Share Price" means the
lesser of (x) the closing price per share of Acquiror Common Stock on the
Closing Date (as adjusted to reflect any stock split, reclassification,
recapitalization or similar event with respect to the Acquiror Common Stock), or
(y) the average closing price per share of Acquiror Common Stock for the ten
(10) consecutive trading days immediately preceding the date on which such claim
is satisfied by the Shareholders (or, for purposes of the next sentence, the ten
(10) consecutive trading days immediately preceding the date on which shares of
Deferred Payment Stock are returned to Acquiror. If any shares of Deferred
Payment Stock shall be forfeited and returned to Acquiror for cancellation
pursuant to Section 1.3 of this Agreement, then the Indemnity Cap shall be
reduced by the number of such shares multiplied by the Acquiror Share Price.


        SECTION 9.3. SPECIAL INDEMNIFICATION FOR PENSION AND OTHER MATTERS.

               (a) The Shareholders hereby agree to indemnify and hold the
Acquiror Indemnified Persons harmless against all Losses resulting from, imposed
upon or incurred by any Acquiror Indemnified Person, directly as a result of the
failure by the Company at any time prior to the Closing Date to deduct
contributions to the Scottish Equitable Group Pension Scheme at the correct rate
from the remuneration of any eligible current or former member of the Scottish
Equitable Group Pension Scheme. For the avoidance of doubt, such Losses shall
include, without limitation, the costs of employing advisors to determine how
the individuals affected are to be compensated for the incorrect deductions from
their



                                      -53-
<PAGE>   62
remuneration in respect of contributions to the Scottish Equitable Group Pension
Scheme, the reasonable costs of compensating each individual affected for his or
her loss (including an allowance representing the investment return which would
have accumulated on any over-deducted amounts (or, where insufficient monies
have been deducted from the individual's remuneration and this shortfall has not
been paid to the Scottish Equitable Group Pension Scheme, any under-deducted
amounts) had they been paid to the Scottish Equitable Group Pension Scheme at
the time they were deducted from remuneration (or, in the case of the
under-deductions, at the time they should have been deducted from remuneration)
and the amount required to compensate the individual should such individual's
tax position have been or be adversely affected by the incorrect deductions or
the proposed compensation) and the reasonable costs of communicating and
liaising with the individuals affected about this matter. Notwithstanding the
foregoing, the Shareholders shall only have liability for claims for Losses
asserted under this Section 9.3 if and to the extent that the aggregate amount
of such Losses exceeds Pound Sterling25,000. For the avoidance of doubt, no
claims for Losses asserted under this Section 9.3(a) shall be applied towards or
be subject to the Basket Amount.

               (b) The Management Shareholders hereby jointly and severally
agree to indemnify and hold the Acquiror Indemnified Persons harmless against
all Losses resulting from, imposed upon or incurred by any Acquiror Indemnified
Person as a result of (i) any amounts paid or payable to E. Saunders before, on
or after Closing in respect of the termination of such Person's consulting
service arrangements with the Company under the letter agreement dated March 16,
2000, or otherwise, and (ii) any amounts paid or payable by the Company to E.
Saunders after the date of this Agreement under any ongoing consulting
arrangements with the Company, whether under the new March 16, 2000, letter
agreement or otherwise; provided, that after the date of this Agreement, the
Company shall be permitted to make one payment of Pound Sterling2,500 to E.
Saunders for prior consulting services rendered to the Company without the
Management Shareholders incurring liability for Losses under this clause (ii).
For the avoidance of doubt, no claims for Losses asserted under this Section
9.3(b) shall be applied towards or be subject to the Basket Amount.

        SECTION 9.4. THIRD PARTY CLAIMS.

               The obligations and liabilities of the Shareholders pursuant to
Section 9.2 and Section 9.3 resulting from any Third Party Claim shall be
subject to the following terms and conditions:

               (a) The Acquiror Indemnified Person seeking indemnification (the
"Indemnified Party") must give the Shareholders notice of any Third Party Claim
which is asserted against, resulting to, imposed upon or incurred by the
Indemnified Party and which may give rise to liability of the Shareholders



                                      -54-
<PAGE>   63

(collectively, the "Indemnifying Party") pursuant to this Article IX, stating
(to the extent known or reasonably anticipated) the nature and basis of such
Third Party Claim and the amount thereof; provided that the failure to give such
notice shall not affect the rights of the Indemnified Party hereunder except to
the extent (i) that the Indemnifying Party shall have suffered actual material
damage by reason of such failure, or (ii) such failure or delay materially
adversely affects the ability of the Indemnifying Party to defend, settle or
compromise such Third Party Claim.

               (b) Subject to Section 9.4(c) below, if the Indemnifying Party
assumes responsibility for Losses arising out of such Third Party Claim, then
the Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense of such Third Party Claim at
the Indemnifying Party's risk and expense.

               (c) In the event that (i) the Indemnifying Party shall elect not
to undertake such defense, (ii) within a reasonable time after notice from the
Indemnified Party of any such Third Party Claim, the Indemnifying Party shall
fail to undertake to defend such Third Party Claim, (iii) there is a reasonable
probability that such Third Party Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other money
payments, or (iv) there is a reasonable probability that the amount of Losses
asserted under such Third Party Claim may exceed the Indemnifying Party's
obligations under this Article IX, then the Indemnified Party (upon further
written notice to the Indemnifying Party) shall have the right to undertake the
defense, compromise or settlement of such Third Party Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of the Indemnifying Party. In the event that the Indemnified Party undertakes
the defense of a Third Party Claim under this Section 9.4(c), the Indemnifying
Party shall pay to the Indemnified Party, in addition to the other sums required
to be paid hereunder, the reasonable costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.

               (d) Anything in this Section 9.4 to the contrary notwithstanding,
(i) neither Party shall, without the other party's written consent (which
consent shall not be unreasonably withheld or delayed), settle or compromise
such Third Party Claim or consent to entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such Third Party Claim in form and substance reasonably satisfactory to the
Indemnified Party; (ii) in the event that a party hereto undertakes defense of
such Third Party Claim in accordance with this Section 9.4, the other parties,
by counsel or other representative of their own choosing and at their sole cost
and expense, shall have the right to participate in the defense, compromise or
settlement thereof and each



                                      -55-
<PAGE>   64
party and its counsel and other representatives shall cooperate with the other
party and its counsel and representatives in connection therewith; and (iii) the
party that undertakes the defense of such Third Party Claim in accordance with
this Section 9.4, shall have an obligation to keep the other parties informed of
the status of the defense of such Third Party Claim and furnish the other
parties with all documents, instruments and information that the other parties
shall reasonably request in connection therewith.

               (e) Any claim for indemnification under this Article IX must be
made (i) on or prior to the Claims Deadline (as defined in the Indemnity Escrow
Agreement) for any claims against the Indemnity Escrow Stock, and (ii) on or
prior to the expiration of the applicable survival period set forth in Section
9.1 otherwise.

        SECTION 9.5. NO RECOURSE AGAINST THE COMPANY.

               Each Shareholder hereby irrevocably waives any and all right to
recourse against the Company or any director, officer or employee of the Company
with respect to any misrepresentation or breach of any representation, warranty
or indemnity, or noncompliance with any conditions or covenants, given or made
by any Shareholder in this Agreement or any of the other agreements and
documents executed or to be executed by the parties in order to consummate the
transactions contemplated by this Agreement. No Shareholder shall be entitled to
contribution from, subrogation to or recovery against the Company or any
director, officer or employee of the Company with respect to any liability of
any Shareholder that may arise under or pursuant to this Agreement or any of the
other agreements and documents executed or to be executed by the parties in
order to consummate the transactions contemplated by this Agreement or such
other agreements and documents contemplated hereby.

        SECTION 9.6. SPECIFIC PERFORMANCE.

               In addition to any other remedies which Acquiror may have at law
or in equity, the Shareholders hereby acknowledge that the Company and its
capital stock are unique, and that the harm to Acquiror resulting from breaches
by the Shareholders of their respective obligations cannot be adequately
compensated by damages. Accordingly, the Shareholders agree that Acquiror shall
have the right to have all obligations, undertakings, agreements, covenants and
other provisions of this Agreement specifically performed by the Shareholders,
and that Acquiror shall have the right to obtain an order or decree of such
specific performance in any of the courts of the United States of America or of
any state or other political subdivision thereof.


                                      -56-
<PAGE>   65
        SECTION 9.7. REMEDIES CUMULATIVE.

               Subject to the limitations and qualifications set forth in this
Article IX, the remedies provided herein shall be cumulative and shall not
preclude the assertion by the parties hereto of any other rights or the seeking
of any other remedies against the other parties, or their respective successors
or assigns; provided that no party shall be entitled under such a combination of
remedies to recover monetary Losses (along or in combination with any other
party entitled to recover with respect to such monetary Losses) more than one
hundred percent (100%) of the Losses for which such remedies are sought. Without
limiting the rights and remedies of the Acquiror Indemnified Persons, in
connection with any claim for indemnification of monetary Losses under this
Article IX by any Acquiror Indemnified Person, recovery for such Losses shall
first be satisfied out of the Indemnity Escrow Stock.

        SECTION 9.8. JOINT AND/OR SEVERAL LIABILITY OF THE SHAREHOLDERS.

               Notwithstanding anything herein to the contrary, the liability of
each Management Shareholder for the representations, warranties, covenants,
agreements and indemnities of the Shareholders under this Agreement shall be
joint and several to the extent of the aggregate Percentage Interests (as
defined below) of all such Management Shareholders with respect to such
liability. The liability of the non-Management Shareholders for the
representations, warranties, covenants, agreements and indemnities of the
Shareholders under this Agreement shall be several to the extent of the
Percentage Interest of each such Shareholder with respect to such liability. The
"Percentage Interest" of each Shareholder shall mean a percentage determined by
dividing (a) the number of Company Ordinary Shares held by such Shareholder
immediately prior to the Closing Date, by (b) the total number of Company
Ordinary Shares issued immediately prior to the Closing Date. Notwithstanding
the foregoing, the liability of each Shareholder for the representations and
warranties of such Shareholder in Article III of this Agreement shall be several
with respect to such Shareholder (without regard to the Percentage Interest of
such Shareholder). Acquiror acknowledges that the non-Management Shareholders
have not been actively involved in the day-to-day management of the Company;
provided, that such acknowledgement shall in no way relieve or limit the
liability or responsibility of the non-Management Shareholders under this
Agreement or the rights and remedies of Acquiror in connection with any breaches
of representations, warranties, covenants or agreements of the Shareholders set
forth in this Agreement.

        SECTION 9.9.  CURRENCY EXCHANGE RATE.

               If the Losses for which any Acquiror Indemnified Person shall
submit an indemnification claim under this Article IX shall be measured in terms
of



                                      -57-
<PAGE>   66
English pounds, then, for purposes of this Article IX, such amount of Losses
shall be converted into an amount of U.S. Dollars pursuant to the currency
exchange rate in effect at the time such claim is satisfied by the Shareholders.

                                    ARTICLE X

                               GENERAL PROVISIONS

        SECTION 10.1. NOTICES.

               All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered, sent
by overnight courier or mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by telecopy, addressed
as follows:

               (a)    If to Acquiror:

                      Proxicom, Inc.
                      11600 Sunrise Valley Drive
                      Reston, Virginia  20191
                      Telecopy:  (703) 716-2550
                      Attention:  David Fontaine
                                  General Counsel

                      With a copy (which shall not constitute notice) to:

                      Hogan & Hartson L.L.P.
                      8300 Greensboro Drive
                      Suite 1100
                      McLean, Virginia  22102
                      Telecopy:  (703) 610-6200
                      Attention:  Thomas E. Repke

                      and to:

                      Clifford Chance L.L.P.
                      200 Aldersgate Street
                      London ECIA 4JJ
                      ENGLAND
                      Telecopy:  44-207-600-5555
                      Attention:  Richard Sutton-Mattocks

                                      -58-
<PAGE>   67

               (b)    If to the Shareholders:

                      Mr. Martin Chilcott
                      c/o Leadenhall Secretaries Limited
                      Ibex House
                      42-47 Minories
                      London  EC3N 1HA
                      ENGLAND
                      Telecopy:  011-44-207-480-6097
                      Attention:  Alex Woodfield

                      with a copy (which shall not constitute notice) to:

                      Thomas Cooper & Stibbard
                      Ibex House
                      42-47 Minories
                      London  EC3N 1HA
                      ENGLAND
                      Telecopy:  011-44-207-480-6097
                      Attention:  Alex Woodfield

                      and to:

                      Schnader Harrison Segal & Lewis
                      300 Madison Avenue
                      14th Floor
                      New York, New York  10017-5092
                      Telecopy:  (212) 972-8798
                      Attention:  J. Manghisi/J. Bradley

               Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, telecopied or telexed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at such
time as it is delivered to the addressee (with the return receipt, the delivery
receipt, or (with respect to a telecopy or telex) the answerback being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.


                                      -59-
<PAGE>   68
        SECTION 10.2. CERTAIN DEFINITIONS.

               For purposes of this Agreement, the term:

               "Act" means the UK Companies Act 1985.

               "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.

               "Assets" means the assets, rights and properties, whether owned,
leased or licensed, real, personal or mixed, tangible or intangible, that are
used, useful or held for use in connection with the business of an entity.

               "business day" means any day other than a day on which banks in
either the Commonwealth of Virginia or the City of London are authorized or
obligated to be closed.

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

               "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of equity or as trustee or
executor, by contract or credit arrangement or otherwise.

               "Encumbrances" means mortgages, liens, pledges, encumbrances,
security interests, deeds of trust, options, encroachments, reservations,
orders, decrees, judgments, restrictions, charges, contract rights or claims of
any kind.

               "Financial Advisor" means Scotland & Associates.

               "Government Entity" means any national, federal, state, municipal
or local government, domestic or foreign, any subdivision, agency, entity,
commission or authority thereof, any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority or any body exercising, or entitled to exercise,
any administrative, executive, judicial, police, regulatory or taxing authority
or power of any nature.

               "HSR Act" means the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

               "Intellectual Property" means all (i) patents and patent
applications, (ii) trademarks, service marks, trade dress, logos, trade names,
and corporate names and registrations and applications for registration thereof,
(iii) copyrights and

                                     - 60 -
<PAGE>   69

registrations and applications for registration thereof, (iv) computer software,
data, and documentation, (v) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (vi) Internet domain names and applications for domain names, (vii)
other proprietary rights, and (viii) copies and tangible embodiments thereof (in
whatever form or medium).

               "Laws" means all foreign, federal, state, domestic and local
laws, statutes, ordinances, regulations, rules, resolutions, orders,
determinations, writs, injunctions, awards (including, without limitation,
awards of any arbitrator), judgments and decrees applicable to the specified
Persons or entities.

               "Losses" means all liabilities, losses, claims, damages, punitive
damages, causes of action, lawsuits, administrative proceedings (including
informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
interest (including interest from the date of such damages) and costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements of every kind, nature and description) suffered, sustained or
incurred.

               "Material Adverse Effect" means, with respect to a specified
Person any change, event or effect that individually or in the aggregate (taking
into account all other such changes, events or effects) has had, or would be
reasonably likely to have, a material adverse effect on the business,
operations, earnings or condition (financial or otherwise) of such Person and
its Subsidiaries, if any, taken as a whole, except to the extent in the case of
Acquiror that any such change, event or effect is caused by a decline in the
price of a share of Acquiror Common Stock or a change in the trading volume of
Acquiror Common Stock.

               "Organizational Documents" means any memorandum or articles of
association, certificate or articles of incorporation, bylaw, board of
directors' or shareholders' resolution, or other corporate document or action
comparable to any of the foregoing currently in effect.

               "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as amended).

               "Real Property Permit" means a permit, license, consent or other
authorization or a filing of a notification, report or assessment in relation to
the


                                     - 61 -
<PAGE>   70

Real Property, in each such case necessary for the effective operation of the
Company's business from, and occupation of, the Real Property.

               "Related Agreements" means the Indemnity Escrow Agreement, the
Deferred Payment Escrow Agreement, the Employment Agreements, the Registration
Rights Agreement, the Tax Deed and all other agreements entered into pursuant to
this Agreement.

               "Subsidiary" means any corporation, partnership, joint venture or
other legal entity of which such Person (either alone or through or together
with any other Subsidiary) (i) owns, directly or indirectly, fifty percent (50%)
or more of the stock, partnership interests or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, joint
venture or other legal entity; or (ii) possesses, directly or indirectly,
control over the direction of management or policies of such corporation,
partnership, joint venture or other legal entity (whether through ownership of
voting securities, by agreement or otherwise).

               "Tax" and "Taxation" (including the term "Taxes") mean any form
of taxation, levy, duty, charge, contribution, withholding or impost of whatever
nature (including any related fine, penalty, surcharge or interest) imposed,
collected or assessed by, or payable to, a Tax Authority.

               "Tax Authority" and "Taxation Authority" mean any government,
state or municipality or any local, state, federal or other fiscal, revenue,
customs or excise authority, body or official anywhere in the world including,
without limitation, the Inland Revenue and H.M. Customs & Excise.

               "Third Party Claim" means any claim or other assertion of
liability by any third party.

        SECTION 10.3. HEADINGS.

               The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

        SECTION 10.4. SEVERABILITY.

               If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such

                                     - 62 -
<PAGE>   71

determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.

        SECTION 10.5. ENTIRE AGREEMENT; AMENDMENT.

               This Agreement (together with the Exhibits, the Schedules and the
other documents delivered pursuant hereto), together with the Related
Agreements, constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
Person any rights or remedies hereunder. This Agreement may not be amended
except by an instrument in writing signed by Acquiror and the Shareholders'
Representative.

        SECTION 10.6. ASSIGNMENT.

               Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party; provided, however, that Acquiror shall have the right to assign this
Agreement without the prior written consent of the Shareholders' Representative
to a direct or indirect subsidiary of Acquiror, but no such assignment shall
relieve Acquiror of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.

        SECTION 10.7. THIRD PARTY BENEFICIARIES.

               This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.

        SECTION 10.8. GOVERNING LAW.

               This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the principles of
conflicts of law of such State.

                                     - 63 -
<PAGE>   72

        SECTION 10.9. COUNTERPARTS.

               This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.

        SECTION 10.10.FEES AND EXPENSES.

               Except as otherwise provided for in this Agreement, whether or
not the Exchange is consummated, all fees and expenses incurred in connection
with the Exchange including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
incurred by a party in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby ("Expenses"), shall be the
obligation of (a) Acquiror with respect to all Expenses incurred by Acquiror;
and (b) the Shareholders with respect to all Expenses incurred by the
Shareholders; provided, however, that, unless this Agreement is terminated by
Acquiror pursuant to Section 8.1(b) or Section 8.1(f), Acquiror shall pay the
following Expenses incurred by the Shareholders to the extent that such Expenses
are reasonable and documented in reasonable detail: (i) the fees and expenses of
Thomas Cooper & Stibbard and Schnader Harrison Segal & Lewis LLP, as counsel to
the Shareholders in connection with the Exchange, (ii) Grant Thornton, as
taxation and accounting advisors to the Shareholders in connection with the
Exchange, and (iii) if the Closing shall occur, the cash portion of the fee
payable to the Financial Advisor pursuant to the Shareholders' agreement with
the Financial Advisor. Expenses payable by Acquiror pursuant to clauses (i) and
(ii) above shall be paid by Acquiror after Closing or termination of this
Agreement, as the case may be, within fifteen (15) days after Acquiror's receipt
of an invoice describing such Expenses in reasonable detail. The amount of cash
payable to the Financial Advisor pursuant to clause (iii) above shall be paid at
Closing in accordance with wire transfer instructions provided to Acquiror prior
to Closing. For the avoidance of doubt, the portion of the fee of the Financial
Advisor payable in Acquiror Common Stock pursuant to the Shareholders' agreement
with the Financial Advisor shall be satisfied by the transfer by the
Shareholders to the Financial Advisor of the number of shares of Acquiror Common
Stock set forth under the column titled "Stock Transferable to Financial
Advisor", all as provided for in Section 1.4 of this Agreement.

        SECTION 10.11.SUBMISSION TO JURISDICTION.

               Each of the Shareholders and Acquiror irrevocably submits to the
exclusive jurisdiction of the federal and state courts located in the Southern
District of New York and the Borough of Manhattan for the purposes of any suit,
action or

                                     - 64 -
<PAGE>   73

other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Shareholders and Acquiror further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in such courts with respect to any matters to which
it has submitted to jurisdiction in this Section 10.11. Each of the Shareholders
and Acquiror irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the federal and state courts located in the
Southern District of New York and the Borough of Manhattan, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]


                                     - 65 -
<PAGE>   74



               IN WITNESS WHEREOF, the parties hereto have caused this SHARE
EXCHANGE AGREEMENT to be executed and delivered as of the date first written
above.

                                            PROXICOM, INC.

                                            By: /S/ CHRISTOPHER CAPUANO
                                               ----------------------------
                                            Name:   Christopher Capuano
                                                 --------------------------
                                            Title:  Senior Vice President of
                                                  -------------------------
                                                    Corporate Development

                                            SHAREHOLDERS

                                             /s/  MARTIN CHILCOTT
                                            -------------------------------
                                            Martin Chilcott

                                             /s/  MARTIN CHILCOTT
                                            -------------------------------
                                            Sophie MacCallum

                                             /s/  JAMES TARIN
                                            -------------------------------
                                            James Tarin

                                             /s/  JAMES TARIN
                                            -------------------------------
                                            Pamela J. Tarin

                                             /s/  JAMES TARIN
                                            -------------------------------
                                            Clare L. Rock

                                             /s/  ANDREW SKATES
                                            -------------------------------
                                            Andrew Skates

<PAGE>   75

                                              /s/  ANDREW SKATES
                                            ------------------------------------
                                            Patricia A. Skates

                                              /s/  ANDREW SKATES
                                            ------------------------------------
                                            Gordon B. Skates

                                              /s/  ANDREW SKATES
                                            ------------------------------------
                                            Andrew Skates, as trustee for
                                            H.M. Skates


                                            Skates Discretionary Settlement
                                            No. 1


                                            By:   /s/ ANDREW WOODFIELD
                                               ---------------------------------
                                            Name:  Andrew Woodfield
                                                 -------------------------------
                                            Title: Trustee and Attorney-in-fact
                                                  ------------------------------

                                            Skates Discretionary Settlement
                                            No. 2


                                            By:   /s/ ANDREW WOODFIELD
                                               ---------------------------------
                                            Name:  Andrew Woodfield
                                                 -------------------------------
                                            Title: Trustee and Attorney-in-fact
                                                  ------------------------------

                                            Pinecray Limited


                                            By:  /s/ C. COLOMBOTTI
                                               ---------------------------------
                                            Name:  C. Colombotti
                                                 -------------------------------
                                            Title: Director
                                                  ------------------------------

<PAGE>   76

                                            Amun Management S.A.

                                            By: /s/ C. COLOMBOTTI
                                               ----------------------------
                                            Name: C. Colombotti
                                                 --------------------------
                                            Title:
                                                  -------------------------

                                              /s/ JAMES TARIN
                                            -------------------------------
                                            Dawn Darling

                                              /s/ JAMES TARIN
                                            -------------------------------
                                            David Tarin

                                              /s/ MARTIN CHILCOTT
                                            -------------------------------
                                            John Richard Hesketh Richards

                                              /s/ C. COLOMBOTTI
                                            -------------------------------
                                            Gary A.C. Luddington

                                              /s/ MARTIN CHILCOTT
                                            -------------------------------
                                            Keith Eden

                                              /s/ C. COLOMBOTTI
                                            -------------------------------
                                            Christopher Kohut

                                              /s/ C. COLOMBOTTI
                                            -------------------------------
                                            Janice Kohut


<PAGE>   77


The following exhibits and schedules to this Exhibit 2.1 have been omitted
pursuant to applicable SEC rules. Proxicom agrees to supplementally
provide copies of such exhibits and schedules to the Commission upon
request.


Exhibit A - List of Shareholders
Exhibit B - Form of Indemnity Escrow Agreement
Exhibit C - Form of Deferred Payment Escrow Agreement
Exhibit D - Form of Tax Deed
Exhibit E - Form of Registration Rights Agreement
Schedule 2.18 - Tax
Schedule 2.20 - Pensions and Other Benefits

<PAGE>   1

                                                                 Exhibit 99.1

             PROXICOM ACQUIRES A LEADING U.K. E-BUSINESS CONSULTANCY

         RESTON, Va., April 11, 2000--Proxicom, Inc. (Nasdaq: PXCM), a leading
e-business consulting and development company, today announced that it has
acquired Clarity IBD Limited, one of the United Kingdom's leading e-business
consultancies, for 1.29 million shares and US$16 million in cash. Clarity, with
a team of more than 80 consulting professionals based in London, will merge with
Proxicom's existing U.K. operations.

         "This acquisition is a reflection of our focus on building a genuinely
international business structure with an emphasis on bringing in local expertise
for providing e-business solutions," said Heiner Rutt, President of Proxicom.
"As a U.K. company with an impressive client roster and a leadership position
for developing multi-channel e-business strategies including interactive TV and
wireless, Clarity fits well within our growth strategy. Clarity strengthens
Proxicom's ability to cater to leading European clients and promotes the
company's international expansion strategy."

         The Clarity acquisition is Proxicom's latest strategic initiative to
accelerate the company's international operations. Earlier in the year, Proxicom
announced the appointment of two European nationals to its executive management
team. Heiner Rutt, a former Senior Vice President and Regional Chair of the
Americas for Boston Consulting Group (BCG), was appointed President of Proxicom.
Michael Hansen, former co-leader of BCG's E-commerce practice, was appointed
Senior Vice President in charge of Proxicom's international operations. Proxicom
currently has offices in London, Munich, Rome and Madrid.

         On completion of the acquisition, Proxicom's London office will become
its largest international operation.

         "As part of the Proxicom team, we will leverage our combined strengths
to penetrate entirely new markets for our e-services and grow our international
client work and client base," said Martin Chilcott, Chairman and co-founder of
Clarity. "Proxicom is a premier provider of e-business solutions and we're
excited about extending our capabilities for our clients internationally and
across a breadth of platforms and channels. In addition, our belief in the

<PAGE>   2


value of investing in people is remarkably similar to that of Proxicom.
Through the utilization of individuals in multi-disciplinary teams, we can make
the most of their strategic, creative and technical knowledge. We attribute
Clarity's remarkable success to this kind of corporate culture."

         Through proven, go-to-market methodologies, Clarity provides a complete
range of e-business services from strategy to implementation, complementing its
clients' existing activities or creating entirely new businesses and brands.
This profitable company has high-level, long-term relationships with some of the
U.K.'s largest and most committed e-businesses. It is also a recognized leader
in e-commerce strategy development and implementation for four rapidly evolving
digital markets: IT and Telecommunications; Retail; Travel; and Financial
Services.

         "Clarity also represents a good strategic fit for us as it builds on
Proxicom's U.K. customer base with premium, blue-chip brands," Rutt continued.
"We already see a number of strategic opportunities to expand these client
relationships and further penetrate their respective sectors."

         Clarity's staff will be retained by Proxicom in its entirety and will
be integrated with Proxicom U.K. Ltd. Clarity Managing Director Andrew
Skates will be in charge of Proxicom, U.K. Ltd.'s operations. Clarity Chairman
and co-founder Martin Chilcott and current Proxicom U.K. Ltd. Managing Director
Carina Smith will take on senior-level business development roles across
Proxicom's pan-European operations.

ABOUT CLARITY IBD:

Clarity IBD Ltd. (www.marketing.co.uk) - Building Business Online

Clarity IBD Ltd is the UK's leading independent e-business development
consultancy. It develops and implements customer-centric strategies to help
organizations create competitive advantage through interactive digital media.
These strategies are multi-channel and designed to support existing
infrastructure and assets or to create entirely new businesses and brands.
Clarity is a European leader in developing multi-channel e-business strategies
and the application of Internet, interactive television, wireless and multimedia
technologies to create innovative solutions for its clients. Clients include:
Abbey National Group, cahoot, British Telecom, BT Worldwide, Dixons Stores
Group, Currys, @Jakarta, Eurostar, Railtrack and Royal & SunAlliance. Clarity
IBD Ltd was formed in 1996 and currently employs 80 staff at its offices in
London.

ABOUT PROXICOM:

Proxicom, Inc. is an Internet development and e-business consulting company that
delivers innovative Internet-based solutions and applications for Fortune 500
companies and other global, forward-thinking businesses.

<PAGE>   3

         Our 800 strategy, creative and technology professionals provide
specialized e-business development expertise for the following global
industries: Energy & Telecom; Financial Services; Retail & Manufacturing; and
the Service Industries, which include the media and entertainment, travel and
transportation businesses. Founded in 1991 as a systems integrator, Proxicom has
developed and built e-businesses for such blue-chip companies as America
Online, General Electric, General Motors, Merrill Lynch, Marriott International,
Mercedes-Benz Credit Corp., and NBC, among many others. With its headquarters in
Reston, Va., Proxicom has U.S. offices in New York, Los Angeles, Chicago, San
Francisco, Houston, and Sausalito, Calif., and European offices in London,
Munich, Rome and Madrid.

         For more information, please visit www.proxicom.com or call
1-877-PROXICOM.

Proxicom is a registered trademark of Proxicom, Inc. All other product, service
and company names are trademarks, registered trademarks or service marks of
their respective owners.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: Statements in this release regarding Proxicom, Inc.'s business which are
not historical facts are "forward-looking statements" that involve risks and
uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements in this release, see the "Risk Factors" section in the company's
prospectus dated April 19, 1999.





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