HERLEY INDUSTRIES INC /NEW
EXHIBIT 10.17 EWST STOCK PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex1017ewst.txt
<DESCRIPTION>EXHIBIT 10.17 EWST STOCK PURCHASE AGREEMENT
<TEXT>
Exhibit 10.17
-------------


Share Purchase Agreement



Herley Industries, Inc.

And

Dr Robert S. Andrews

And

Mrs Ann Andrews

And

EW Simulation Technology Limited

for  the  sale  and  purchase  of all  of the  issued  shares  of EW  Simulation
Technology Limited


           September 2002



<PAGE>


                                    CONTENTS

CLAUSE                                                               PAGE
------                                                               ----
1.     Service Agreement...............................................2
2.     List of Contracts...............................................2
3.     Business Plan...................................................2
1.     INTERPRETATION..................................................3
2.     SALE AND PURCHASE...............................................6
3.     COMPLETION......................................................7
4.     WARRANTIES, INDEMNITIES AND CONTRIBUTIONS......................10
5.     PROTECTION OF GOODWILL.........................................11
6.     INTELLECTUAL PROPERTY..........................................12
7.     CONFIDENTIAL INFORMATION.......................................13
8.     ANNOUNCEMENTS..................................................13
9.     ASSIGNMENT.....................................................13
10.    COSTS..........................................................14
11.    EFFECT OF COMPLETION...........................................14
12.    FURTHER ASSURANCES.............................................14
13.    ENTIRE AGREEMENT...............................................14
14.    VARIATIONS.....................................................15
15.    WAIVER.........................................................15
16.    INVALIDITY.....................................................16
17.    NOTICES........................................................16
18.    COUNTERPARTS...................................................17
19.    GOVERNING LAW AND JURISDICTION.................................17
20.    THIRD PARTY RIGHTS.............................................17

SCHEDULE 1............................................................19
Particulars relating to the Sellers...................................19
SCHEDULE 2............................................................20
Particulars relating to the Company...................................20
SCHEDULE 3............................................................21
The Warranties........................................................21
SCHEDULE 4............................................................65
Form of Resignation...................................................65
SCHEDULE 5............................................................66
Sellers' Limitations on Liability.....................................66
SCHEDULE 6............................................................69
The Property..........................................................69

AGREED FORM DOCUMENTS

1.       Service Agreement
2.       List of Contracts
3.       Business Plan
4.       List of Employees



<PAGE>


                                     - 36 -
JAA\2784198.05
THIS AGREEMENT is made on                                                2002

BETWEEN:

(1)  HERLEY  INDUSTRIES,  INC. whose  corporate and principal  office is at 3061
     Industry  Drive,  Lancaster,  PA 17603-4025,  United States of America (the
     "Buyer");

(2)  DR ROBERT S. ANDREWS whose address is 2 Mayfield, Rowledge, Farnham, Surrey
     GU10 4DZ ("Dr. Andrews");

(3)  MRS ANN ANDREWS whose address is 2 Mayfield Rowledge,  Farnham, Surrey GU10
     4DZ ("Mrs Andrews"); and

(4)  EW SIMULATION  TECHNOLOGY  LIMITED (No. 3155211) whose registered office is
     at 2 Mayfield, Rowledge, Farnham, Surrey GU10 4DZ (the "Company").

THE PARTIES AGREE AS FOLLOWS:

1.       INTERPRETATION

1.1       In this agreement the following words and expressions and
          abbreviations have the following meanings, unless the context
          otherwise requires:

          "Accounts Date" means 31 March 2002;

          "associated company" has the meaning given to it in sections 416
           et seq. TA;

          "Business Day" means a day (excluding Saturdays) on which banks
          generally are open in London for the transaction of normal banking
          business;

          "Buyer's Group" means the Buyer, its holding companies and the
          subsidiary undertakings and associated companies from time to time of
          it and of such holding companies, all of them and each of them as the
          context admits;

          "Buyer's Solicitors" means Ashurst Morris Crisp of Broadwalk House,
          5 Appold Street, London EC2A 2HA;

          "Company Intellectual Property" means Intellectual Property, used by,
          owned by or licensed to the Company together with the goodwill
          relating thereto including without prejudice to the generality of the
          foregoing the registered Intellectual Property and the unregistered
          Intellectual Property rights set out in the document headed
          Intellectual Property in the agreed terms;

          "Completion" means the completion of the sale and purchase of the
          Shares in accordance with clause 3;

          "Completion Date" means the date on which Completion occurs;

          "Confidential Information" means all information relating to the
          Company's business, or financial or other affairs (including future
          plans and targets of the Company) which is of a confidential nature
          and not in the public domain;

          "connected  person" means a person who is connected  with another for
          the purpose of  section 839  of the TA;

          "Disclosure Letter" means a letter of today's date together with the
          attachments thereto addressed by the Warrantor to the Buyer disclosing
          exceptions to the Warranties;

          "Encumbrance" means any mortgage, charge (fixed or floating), pledge,
          lien, hypothecation, trust, right of set off or other third party
          right or interest (legal or equitable) including any right of
          pre-emption, assignment by way of security, reservation of title or
          any other security interest of any kind however created or arising or
          any other agreement or arrangement (including a sale and repurchase
          arrangement) having similar effect;

          "Intellectual Property" means any and all patents, trade marks, rights
          in designs, get-up, trade, business or domain names, copyrights, and
          topography rights, (whether registered or not and any applications to
          register or rights to apply for registration of any of the foregoing),
          rights in inventions, Know-How, trade secrets and other confidential
          information, rights in databases and all other intellectual property
          rights of a similar or corresponding character which may now or in the
          future subsist in any part of the world;

          "Know-How" means confidential or proprietary industrial or technical
          information and techniques in any form (including paper,
          electronically stored data, magnetic media, files and micro-film)
          including, without limitation, drawings, data relating to inventions,
          formulae, test results, reports, research reports, project reports and
          testing procedures, shop practices, instruction and training manuals,
          specifications, lists and particulars of customers and suppliers,
          marketing methods and procedures;

          "Loan Notes" means the Loan Notes to be issued pursuant to the Loan
          Note Instrument;

          "Loan Note Instrument" means the instrument constituting the
          Guaranteed Unsecured Loan Notes 2005 of the Buyer in the agreed terms;

          "London Stock Exchange" means the London Stock Exchange plc;

          "Permit" means a permit, licence, consent, approval, certificate,
          qualification, specification, registration and other authorisation and
          a filing of a notification report or assessment necessary in any
          jurisdiction for the proper and efficient operation of the Company's
          business, its ownership, possession, occupation or use of an asset or
          the execution and performance of this agreement;

          "Property" means the property described in schedule 6 or any part or
          parts thereof;

          "Related Person" means in relation to the Buyer its holding companies
          and the subsidiary undertakings and associated companies from time to
          time of it and any such holding company, all of them and each of them
          as the context admits;

          "Sellers" means Dr. Andrews and Mrs Andrews;

          "Sellers' Solicitors" means Mundays of Crown House, Church Road,
          Claygate, Esher, Surrey KT10 0LP;

          "Service  Agreement"  means the service  agreement to be entered into
          on Completion between the Company and Dr. Andrews in the agreed terms;

          "Shares" means all of the issued shares in the capital of the Company;

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

          "Tax Deed" means a deed of indemnity in the agreed terms;

          "UK Listing Authority" means the Financial Service Authority in its
          capacity as the competent authority for the purposes of Part VI of the
          Financial Services and Markets Act 2000;

          "Warranties" means the warranties and representations set out in
          schedule 3; and

          "Warrantor" means Dr. Andrews.

1.2      In this agreement unless otherwise specified, reference to:

(a)               a "subsidiary undertaking" is to be construed in accordance
                  with section 258 of the Companies Act 1985 and a "subsidiary"
                  or "holding company" is to be construed in accordance with
                  section 736 of that Act;

(b)      a document  in the  "agreed  terms" is a  reference  to that  document
         in the form  approved  and for the purposes of identification signed by
         or on behalf of each party;

(c)      "FA" followed by a stated year means the Finance Act of that year;

(d)      "includes" and "including" shall mean including without limitation;

(e)               a "party" means a party to this agreement and includes its
                  permitted assignees (if any) and/or the successors in title to
                  that part of its undertaking which includes this agreement
                  and, in the case of an individual, to his or her estate and
                  personal representatives;

(f)               a "person" includes any person, individual, company, firm,
                  corporation, government, state or agency of a state or any
                  undertaking (whether or not having separate legal personality
                  and irrespective of the jurisdiction in or under the law of
                  which it was incorporated or exists);

(g)               a "statute" or "statutory instrument" or "accounting standard"
                  or any of their provisions is to be construed as a reference
                  to that statute or statutory instrument or accounting standard
                  or such provision as the same may have been amended or
                  re-enacted before the date of this agreement;

(h)      "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of
         and schedules to this agreement;

(i)               "writing" includes any methods of representing words in a
                  legible form (other than writing on an electronic or visual
                  display screen) or other writing in non-transitory form;

(j)      words denoting the singular shall include the plural and vice versa and
         words  denoting any gender shall include all genders; and

(k)      the time of day is reference to time in London, England.

1.3       The schedules form part of the operative provisions of this agreement
          and references to this agreement shall, unless the context otherwise
          requires, include references to the schedules.

1.4       The index to and the headings and the descriptive notes in brackets
          relating to provisions of taxation statutes in this agreement are for
          information only and are to be ignored in construing the same.

1.5      The obligations and liabilities of the Sellers under this agreement
         shall be joint and several.

1.6       Any question of whether a person is connected with another shall be
          determined in accordance with section 839 of the TA (except that in
          construing section 839 "control" has the meaning given by section 840
          or section 416 of the TA so that there is control whenever section 840
          or 416 requires) which shall apply in relation to this agreement as it
          applies in relation to the TA.

2.       SALE AND PURCHASE

2.1       Upon the terms and subject to the conditions of this agreement, the
          Sellers as legal and beneficial owners and with full title guarantee
          shall sell and the Buyer shall purchase the respective numbers of
          Shares of which each of the Sellers is the registered holder and
          beneficial owner being set out opposite his or her name in column 2 of
          schedule 1 with effect from Completion free from any Encumbrance,
          together with all accrued benefits and rights attached thereto and all
          dividends declared (other than as set out in the Disclosure Letter
          (but excluding any attachments thereto)) after the Accounts Date in
          respect of the Shares.

2.2       Each of the Sellers waives or agrees to procure the waiver of any
          rights or restrictions conferred upon any of them or any other person
          which may exist in relation to the transfer of the Shares under the
          articles of association of the Company or otherwise.

2.3       The Buyer shall not be obliged to complete the purchase of any of the
          Shares unless the Sellers complete the sale of all of the Shares
          simultaneously, but completion of the purchase of some Shares shall
          not affect the rights of the Buyer with respect to its rights to the
          other Shares.

2.4       The consideration for such sale and purchase shall be the sum of
          US$3,000,000 and (pound)965,001 to be satisfied on Completion in
          accordance with the following provisions of this clause 2.

2.5      The consideration for such sale and purchase shall be satisfied at
         Completion by:

(a)      the payment in cash to the Sellers of the amounts set out opposite
         their  respective  names in schedule 1;

                  and

(b)               the remainder to be satisfied by the issue to the Sellers of
                  such number of Loan Notes as are set out opposite their
                  respective names in schedule 1 credited as fully paid.

3.       COMPLETION

3.1      Completion shall take place at the offices of the Buyer's  Solicitors
         immediately  after the execution of this agreement.

3.2      On Completion, the Sellers shall deliver to or, if the Buyer shall so
         agree, make available to the Buyer:

(a)      transfers  in common form  relating  to all the Shares duly  executed
         in favour of the Buyer (or as it may direct);

(b)      share certificates relating to the Shares;

(c)               any waivers or consents by the Company or other persons which
                  the Buyer has reasonably specified prior to Completion so as
                  to enable the Buyer or its nominees to be registered as the
                  holders of the Shares;

(d)               a resignation in the form set out in schedule 4 duly executed
                  as a deed by Mrs Andrews together with delivery to the Buyer
                  of all property of the Company in her possession or under her
                  control;

(e)               the written resignation of the auditors of the Company
                  containing an acknowledgement that they have no claim against
                  the Company for compensation for loss of office, professional
                  fees (save as stated in such letter of resignation) or
                  otherwise and a statement under section 394(1) of the
                  Companies Act 1985;

(f)      the common seals,  certificates of incorporation  and statutory books,
         share certificate books and cheque books of the Company;

(g)      the Tax Deed duly executed by the Warrantor;

(h)      the Service Agreement duly executed by Dr. Andrews;

(i)               all land certificates, charge certificates, leases, title
                  deeds and other documents relating to the Property (except to
                  the extent that the same are in the possession of mortgagees
                  pursuant to mortgages disclosed in schedule 6);

(j)      to the extent not in the  possession  of the Company,  all books of
         account or  references as to customers and/or  suppliers  and other
         records of the Company and all  insurance  policies  relating to the
         Company; and

(k)               to the extent not in the possession of the Company, all
                  licences, consents, permits and authorisations obtained by or
                  issued to the Company or any other person in connection with
                  the business carried on by any of them.

3.3      At  Completion,  the Sellers shall procure the passing of board
         resolutions  of the Company in the agreed terms:

(a)      sanctioning for registration, subject to due stamping, the transfers in
         respect of the Shares;

(b)      authorising the delivery to the Buyer of share certificates in respect
         of the Shares;

(c)      appointing  Mr Myron  Levy to be a director  (in  addition  to
         Dr  Andrews) and Mr John Kelley to be the secretary of the Company;

(d)               revoking all mandates to bankers and giving authority in
                  favour of the directors appointed under clause 3.3(c) above or
                  such other persons as the Buyer may nominate to operate the
                  bank accounts thereof;

(e)               resolving that the registered office of the Company be changed
                  to Unit 1, The Royston Centre, Lynchford, Ash Vale, Aldershot,
                  Hampshire GU12 5PQ;

(f)      changing the accounting reference date of the Company to 31 July;

(g)      resolving that the Company and Dr. Andrews enter into the Service
         Agreement;

(h)      resolving that(pound)38,432 owed by the Company to the Seller are
         repaid forthwith.

3.4      The Sellers shall procure that at Completion:

(a)               there is repaid all sums (if any) owing to the Company by any
                  of the Sellers or by the director or the secretary of the
                  Company or any of their connected persons (other than the
                  Company) and whether or not such sums are due for repayment;

(b)               the Company is released from any guarantee, indemnity, bond,
                  letter of comfort or Encumbrance or other similar obligation
                  given or incurred by it which relates in whole or in part to
                  debts or other liabilities or obligations, whether actual or
                  contingent, of any person other than the Company,

          and prior to such repayment or release the Sellers undertake to the
          Buyer (on behalf of themselves and as trustee on behalf of the
          Company) to keep the Company fully indemnified against any failure to
          make any such repayment or any liability arising under any such
          guarantee, indemnity, bond, letter of comfort or Encumbrance.

3.5      Upon compliance by the Sellers with the provisions of clauses 3.2, 3.3
         and 3.4, the Buyer shall:

(a)               provide for the transfer of US$3,000,000 to the Sellers'
                  Solicitors at Barclays Bank plc, Barclays Business Centre, PO
                  Box 193, 8/12 Church Street, Walton on Thames, Surrey KT12 2YW
                  Sort Code 20-90-56, Account No. 63196677 and receipt by such
                  bank of such sum shall be good discharge to the Buyer;

(b)               allot to the Sellers such amount of Loan Notes as are set out
                  opposite their respective names in schedule 1 and enter the
                  names of the Sellers in the register of loan note holders of
                  the Buyer as the holders of such amounts of Loan Notes as
                  aforesaid; and

(c)      deliver to the Sellers' Solicitors:

(i)      a counterpart of the Tax Deed duly executed by the Buyer;

(ii)     a counterpart of the Service Agreement duly executed by Dr. Andrews;

         and

(iii)    definitive certificates in respect of the Loan Notes.

3.6      If in any  respect the  obligations  of the Sellers (or Buyer) are not
         complied  with on  Completion  the party not in default may:

(a)               defer Completion to a date not more than 28 days after
                  Completion should have taken place but for the default (and so
                  that the provisions of this clause 3, apart from this clause
                  3.6(a), shall apply to Completion as so deferred); or

(b)      proceed to Completion so far as practicable (without prejudice to its
         rights hereunder); or

(c)               terminate this agreement without prejudice to the rights and
                  liabilities which accrued prior to termination which shall
                  continue to subsist including those under clauses 8, 10 and 13
                  to 20 (inclusive),

          by means of a notice in  writing  served by Dr. Andrews  on the Buyer,
          if the Buyer is in  default,  or served by the Buyer on Dr. Andrews if
          either or both of the Sellers are in default.

3.7      Forthwith after  Completion,  the Buyer and Dr. Andrews shall use their
         reasonable  endeavours to procure that the Company:

(a)      and each of Mike Barton, Neil Chapman and Elizabeth O' Conner enter
         into service agreements; and

(b)               Geoff Hawkins and Paul Shepard acting on behalf of the
                  consultancy company in which they are shareholders, Aware
                  Simulation Limited, enter into consultancy agreements.

         It is hereby acknowledged that it is the intention of the Buyer that,
         as an incentive to sign such service agreements and consultancy
         agreements, such persons will be granted options in the Buyer.

3.8      Within six months of Completion, Dr. Andrews shall:

(a)      use his best endeavours to dispose of his 60 per cent. shareholding in
         EWST Australia Pty Limited; and

(b)      resign from his position as a director of EWST Australia Pty Limited.

3.9       The Sellers shall assign, or shall procure the assignment of, to the
          Buyer of the benefit of any confidentiality undertakings given to
          either of them by any person within the last two years in relation to
          a sale or potential sale by the Sellers of the Company or its assets
          and undertakings or to any investment, by way of the subscription of
          equity or otherwise, in the Company.

4.       WARRANTIES, INDEMNITIES AND CONTRIBUTIONS

4.1      The Warrantor warrants with the Buyer in the terms of the Warranties.

4.2       Any information supplied by or on behalf of the Company to or on
          behalf of the Warrantor in connection with the Warranties, the
          Disclosure Letter or otherwise in relation to the business and affairs
          of the Company shall not constitute a representation or warranty or
          guarantee as to the accuracy thereof by the Company and each of the
          Sellers agrees with the Buyer and the Company (and their respective
          directors, officers, employees, agents and advisers) that he and/or
          she hereby irrevocably waives any and all claims which he and/or she
          and/or their connected persons might otherwise have against the
          Company or any of their respective directors, officers, employees,
          agents or advisers in respect thereof and any and all other claims
          against the Company (unless such claim is covered by insurance) or any
          such persons in respect of any cause, matter or thing whatsoever and
          hereby releases the Company and each such persons from any liability
          or obligation to him and/or her whatsoever (save, in the case of Dr
          Andrews, for obligations and liabilities under his Service Agreement
          with the Company).

4.3       Each of the Warranties shall be construed as a separate warranty and
          representation and (unless expressly provided to the contrary) shall
          not be limited by the terms of any of the other Warranties or by any
          other term of this agreement.

4.4       The liability of the Warrantor under the Warranties shall be limited
          if and to the extent that the limitations referred to in schedule 5
          apply.

4.5       No information relating to the Company of which the Buyer has
          knowledge (actual or constructive) other than that contained in or
          referred to in this agreement and/or included in the Disclosure Letter
          and no investigation by or on behalf of the Buyer shall prejudice any
          claim by the Buyer under the Warranties or reduce any amount
          recoverable thereunder.

4.6       The Sellers shall give to the Buyer all such information and
          documentation relating to the Company as the Buyer shall reasonably
          require to enable it to satisfy itself as to whether there has been
          any breach of the Warranties, provided that the Sellers have
          reasonable grounds for believing that there has been such a breach.

4.7       The Sellers irrevocably and unconditionally agree with the Buyer and
          their professional advisers that they will not bring any claim or
          other action (including a claim for contribution under the Civil
          Liability (Contributions) Act 1978) of whatever nature and which
          exists now or may exist in the future and whether known or not known
          to the Sellers or either of them at the date hereof and whether in
          relation to a matter which is past, present or future and in respect
          of negligence or otherwise ("Claim") against any professional advisers
          of the Buyer in relation to any matter arising (directly or
          indirectly) out of or in connection with this agreement. To the extent
          that any such Claim exists (if any and without prejudice to the
          aforesaid), the Sellers irrevocably and unconditionally waive the
          right to bring any form of claim against or recover any sums from any
          of the Buyer's professional advisers in relation to any Claim and
          unconditionally and irrevocably release the Buyer's professional
          advisers from any liability in respect of any such Claim. It is
          intended that any relevant professional adviser of the Buyer shall be
          entitled to the benefit of the undertakings, releases and waivers
          provided for in this clause for the purpose of, inter alia, the
          Contracts (Rights of Third Parties) Act 1999.

4.8       Nothing in this clause 4 shall exclude or limit liability in respect
          of Claims arising directly out of any statements made fraudulently or
          arising as a direct result of wilful concealment by the Buyer's
          professional advisers.

4.9       The Sellers agree with and undertake to the Buyer and each of its
          Related Persons (including, without limitation, the Company together
          with its directors, officers or employees) to indemnify and hold each
          of them harmless from and against any and all costs (including,
          without limitation, legal costs and registration or administrative
          costs or fees), liabilities, losses, expenses and claims whatsoever
          incurred by any of them arising out of the employment or termination
          of employment by the Company of Mrs Andrews.

4.10      In the event that any independent or self employed contractors or
          consultants of the Company bring an employment related claim against
          the Company, the Sellers shall indemnify the Company on demand against
          all liabilities, obligations, costs, claims and demands arising from
          or in respect of any such employment related claim (including without
          limitation any claim for unfair dismissal, in relation to redundancy
          rights or under the Working Time Regulations 1998 or the Part Time
          Workers (Prevention of Less Favourable Treatment) Regulations 2000)).

5.       PROTECTION OF GOODWILL

5.1       The Sellers hereby undertake to procure that (except as otherwise
          agreed in writing with the Buyer) they will not (and their respective
          connected persons will not) either directly or indirectly and either
          solely or jointly with any other person (either on their own account
          or as the agent of any other person) and in any capacity whatsoever:

(a)               subject to clause 5.2, for a period of three years from
                  Completion carry on or be engaged or concerned or (except as
                  the holder of shares in a listed company which confer not more
                  than five per cent. of the votes which can generally be cast
                  at a general meeting of the company) interested in a business
                  which competes with the type of business carried on by the
                  Company at Completion in any of the countries in which the
                  business was then carried on;

(b)               for a period of three years from Completion solicit or accept
                  the custom of any person in respect of goods or services
                  competitive with those manufactured or supplied by the Company
                  during the period of 12 months prior to Completion, such
                  person having been a customer of the Company in respect of
                  such goods or services during such period;

(c)               for a period of three years from Completion induce, solicit or
                  endeavour to entice to leave the service or employment of the
                  Company, any person who during the period of 12 months prior
                  to Completion was an employee of the Company occupying a
                  senior or managerial position and likely (in the opinion of
                  the Buyer) to be:

(i)      in possession of confidential information relating to; or

(ii)     able to influence the customer relationships or connections of

                  the Company; or

(d)               use any trade or domain name (including the expressions "EWST"
                  and "EW Simulation Technology") or e-mail address used by the
                  Company at any time during the three years immediately
                  preceding the date of this agreement or any other name
                  intended or likely to be confused with any such trade or
                  domain name or e-mail address.

5.2       For a period of six months from Completion, Dr. Andrews shall be
          permitted to hold not more than 60 per cent. of the issued share
          capital of EWST Australia Pty Limited, provided such company shall
          only perform the services that it is currently performing, details of
          which are set out in the Disclosure Letter.

5.3       The Sellers agree that the undertakings contained in this clause 5 are
          reasonable and are entered into for the purpose of protecting the
          goodwill of the business of the Company and that accordingly the
          benefit of the undertakings may be assigned by the Buyer and its
          successors in title without the consent of any of the Sellers.

5.4       Each undertaking contained in this clause 5 is and shall be construed
          as separate and severable and if one or more of the undertakings is
          held to be against the public interest or unlawful or in any way an
          unreasonable restraint of trade or unenforceable in whole or in part
          for any reason the remaining undertakings or parts thereof, as
          appropriate, shall continue to bind the Sellers.

5.5       If any undertaking contained in this clause 5 shall be held to be void
          but would be valid if deleted in part or reduced in application, such
          undertaking shall apply with such deletion or modification as may be
          necessary to make it valid and enforceable. Without prejudice to the
          generality of the foregoing, such period (as the same may previously
          have been reduced by virtue of this clause 5.5) shall take effect as
          if reduced by six months until the resulting period shall be valid and
          enforceable.

6.       INTELLECTUAL PROPERTY

6.1       Following Completion, to the extent it subsequently transpires that
          any Company Intellectual Property is vested in the Sellers or any
          other third party employed or contracted by the Company to develop
          such Intellectual Property, the Sellers shall do and execute or
          procure that there shall be done and executed all such documents,
          deeds, matters, acts and things as the Buyer may at any time require
          properly to vest such Intellectual Property in the Company or
          otherwise to perfect the Company's title thereto.

6.2       The Sellers shall be responsible for all costs that have been or may
          be incurred as a result of any assignment of Company Intellectual
          Property executed between any of the Sellers or any of their connected
          persons prior to Completion including the costs of recordal of such
          assignments.

7.       CONFIDENTIAL INFORMATION

7.1       The Sellers shall not and shall procure that none of their connected
          persons shall use or disclose to any person Confidential Information.

7.2      Clause 7.1 does not apply to:

(a)      disclosure of Confidential Information to or at the written request of
          the Buyer;

(b)      use or disclosure of Confidential  Information required to be disclosed
         by law, regulation, any revenue authority or the London Stock Exchange
         or the UK Listing Authority;

(c)      disclosure of Confidential Information to professional advisers for the
         purpose of advising the Sellers;
                  or

(d)      Confidential  Information  which is in the public  domain other than by
         a breach by any of the Sellers of clause 7.1.

8.       ANNOUNCEMENTS

8.1       Save for an announcement in the agreed terms between the parties, no
          party shall disclose the making of this agreement nor its terms nor
          any other agreement referred to in this agreement (except those
          matters set out in the press release in the agreed terms and subject
          to clause 9.3) and in the case of the Buyer shall procure that its
          Related Persons and its professional advisers shall not make any such
          disclosure without the prior consent of the other party unless
          disclosure is:

(a)      to its professional advisers; or

(b)      required by law or the rules or standards of the London Stock  Exchange
         or the Listing  Rules of the UK Listing Authority or the rules and
         requirements of any other regulatory body;

          provided that this clause 8.1 does not apply to announcements,
          communications or circulars made or sent by the Buyer and/or the
          Company after Completion to customers, clients or suppliers of the
          Company to the extent that it informs them of the Buyer's acquisition
          of the Shares or to any announcements containing only information
          which has become generally available.

8.2      The  restrictions  contained  in clause 8.1 shall apply  without  limit
         of time and  whether or not this agreement is terminated.

9.       ASSIGNMENT

9.1       This agreement is personal to the parties and accordingly. Subject to
          clause 9.2 no party without the prior written consent of the other
          shall assign, transfer or declare a trust of the benefit of all or any
          of any other party's obligations nor any benefit arising under this
          agreement.

9.2       The Buyer may (without the consent of any of the Sellers) assign to
          any member of the Buyer's Group the benefit of all or any of any of
          the Sellers' obligations or any benefit it enjoys under this agreement
          provided however that such assignment shall not be absolute but shall
          be expressed to have effect only for so long as the assignee remains a
          member of the Buyer's Group and that immediately before ceasing to be
          such a member the assignee shall assign the benefit to a member of the
          Buyer's Group.

          The sale or transfer of all or part of the business of the Company to
          any member of the Buyer's Group shall not affect the liability of any
          of the Sellers under any provision of this agreement whatsoever.

9.3       The Buyer may disclose to a proposed assignee information in its
          possession relating to the provisions of this agreement the subject
          matter of this agreement and the other parties which it is necessary
          to disclose for the purposes of the proposed assignment,
          notwithstanding the provisions of clause 9 provided that such
          disclosure shall be made only after notice has been given to the other
          party of the identity of the proposed assignee.

10.      COSTS

          Unless expressly otherwise provided in this agreement each of the
          parties shall bear its own legal, accountancy and other costs, charges
          and expenses connected with the sale and purchase of the Shares,
          provided that no costs, charges or expenses shall be charged to the
          Company.

11.      EFFECT OF COMPLETION

11.1      The terms of this agreement (insofar as not performed at Completion
          and subject as specifically otherwise provided in this agreement)
          shall continue in force after and notwithstanding Completion.

11.2     The  remedies  of the Buyer in respect of any breach of any of the
         Warranties  shall  continue to subsist notwithstanding Completion.

12.      FURTHER ASSURANCES

          Following Completion the Sellers shall from time to time forthwith
          upon request from the Buyer at the Sellers' expense do or procure the
          doing of all acts and/or execute or procure the execution of all such
          documents in a form reasonably satisfactory to the Buyer for the
          purpose of vesting in the Buyer the full legal and beneficial title to
          the Shares and otherwise giving the Buyer the full benefit of this
          agreement.

13.      ENTIRE AGREEMENT

          Each party on behalf of itself and, in the case of the Buyer, as agent
          for each of its Related Persons or, in the case of the Sellers, their
          connected persons, acknowledges and agrees with each of the other
          party (each such party acting on behalf of itself and as agent for
          each of its Related Persons or, in the case of the Sellers, their
          connected persons) that:

     (a)  this agreement  together with any other documents  referred to in this
          agreement (together the "Transaction Documents") constitute the entire
          and only agreement  between the parties and their  respective  Related
          Persons  or,  in the case of the  Sellers,  their  connected  persons,
          relating to the subject matter of the Transaction Documents;

     (b)  neither  it nor any of its  Related  Persons  or,  in the  case of the
          Sellers,  their connected persons,  has been induced to enter into any
          Transaction  Document  in reliance  upon,  nor has any such party been
          given, any warranty,  representation,  statement, assurance, covenant,
          agreement,   undertaking,   indemnity  or  commitment  of  any  nature
          whatsoever  other  than as are  expressly  set out in the  Transaction
          Documents  and, to the extent that any of them has been, it (acting on
          behalf of itself and as agent on behalf of each of its Related Persons
          or,  in  the  case  of  the   Sellers,   their   connected   persons),
          unconditionally and irrevocably waives any claims,  rights or remedies
          which any of them might otherwise have had in relation thereto;

          PROVIDED THAT the provisions of this clause 13 shall not exclude any
          liability which any of the parties or, where appropriate, their
          Related Persons in the case of the Buyer or, in the case of the
          Sellers, their connected persons, would otherwise have to any other
          party or, where appropriate, to any other party's Related Persons in
          the case of the Buyer or, in the case of the Sellers, their connected
          persons, or any right which any of them may have in respect of any
          statements made fraudulently by any of them prior to the execution of
          this agreement or any rights which any of them may have in respect of
          fraudulent concealment by any of them.

14.      VARIATIONS

          This agreement may be varied only by a document signed by each of the
Sellers and the Buyer.

15.      WAIVER

15.1      A waiver of any term, provision or condition of, or consent granted
          under, this agreement shall be effective only if given in writing and
          signed by the waiving or consenting party and then only in the
          instance and for the purpose for which it is given.

15.2      No failure or delay on the part of any party in exercising any right,
          power or privilege under this agreement shall operate as a waiver
          thereof, nor shall any single or partial exercise of any such right,
          power or privilege preclude any other or further exercise thereof or
          the exercise of any other right, power or privilege.

15.3      No breach of any provision of this agreement shall be waived or
          discharged except with the express written consent of the Sellers and
          the Buyer.

15.4      The rights and remedies herein provided are cumulative with and not
          exclusive of any rights or remedies provided by law.

16.      INVALIDITY

16.1 If any  provision  of this  agreement  is or  becomes  invalid,  illegal or
     unenforceable in any respect under the law of any jurisdiction:

     (a)  the  validity,  legality  and  enforceability  under  the  law of that
          jurisdiction of any other provision; and

     (b)  the validity,  legality and enforceability  under the law of any other
          jurisdiction of that or any other provision,

          shall not be affected or impaired in any way.

17.      NOTICES

17.1      Any notice, demand or other communication given or made under or in
          connection with the matters contemplated by this agreement shall be in
          writing and shall be delivered personally or sent by fax or prepaid
          first class post (air mail if posted to or from a place outside the
          United Kingdom):

         In the case of the Buyer to:
         Herley Industries, Inc.
         3061 Industry Drive
         Lancaster
         Pennsylvania
         Fax:                                     001 717 3979503
         Attention:                               Chief Executive Officer



         In the case of the Sellers to:
         2 Mayfield
         Rowledge
         Farnham
         Surrey GU10 4DZ
         Attention:                               Dr. Andrews

          and shall be deemed to have been duly given or made as follows:

     (a)  if personally delivered,  upon delivery at the address of the relevant
          party;

     (b)  if sent by first  class  post,  two  Business  Days  after the date of
          posting;

     (c)  if sent by air mail,  seven  Business  Days after the date of posting;
          and

     (d)  if sent by fax, when despatched,

          provided that if, in accordance with the above provisions, any such
          notice, demand or other communication would otherwise be deemed to be
          given or made after 5.00 p.m. on a Business Day such notice, demand or
          other communication shall be deemed to be given or made at 9.00 a.m.
          on the next Business Day.

17.2      A party may notify the other party to this agreement of a change to
          its name, relevant addressee, address or fax number for the purposes
          of clause 17.1 provided that such notification shall only be effective
          on:

     (a)  the date specified in the notification as the date on which the change
          is to take place; or

     (b)  if no date is  specified  or the  date  specified  is less  than  five
          Business  Days  after  the date on which  notice  is  given,  the date
          falling  five  Business  Days after notice of any such change has been
          given.

18.      COUNTERPARTS

          This agreement may be executed in any number of counterparts which
          together shall constitute one agreement. Any party may enter into this
          agreement by executing a counterpart and this agreement shall not take
          effect until it has been executed by all parties.

19.      GOVERNING LAW AND JURISDICTION

19.1      This agreement (and any dispute, controversy, proceedings or claim of
          whatever nature arising out of or in any way relating to this
          agreement or its formation) shall be governed by and construed in
          accordance with English law.

19.2      Each of the parties to this agreement irrevocably agrees that the
          courts of England shall have exclusive jurisdiction to hear and decide
          any suit, action or proceedings, and/or to settle any disputes, which
          may arise out of or in connection with this agreement or its formation
          (respectively, "Proceedings" and "Disputes") and, for these purposes,
          each party irrevocably submits to the jurisdiction of the courts of
          England.

20.      THIRD PARTY RIGHTS

20.1      Any person (other than the parties to this agreement) who is given any
          rights or benefits under clauses 4.2, 4.9 and 14 (a "Third Party")
          shall be entitled to enforce those rights or benefits against the
          parties in accordance with the Contracts (Rights of Third Parties) Act
          1999.

20.2 Save as  provided  in clause  20.1  above the  operation  of the  Contracts
     (Rights of Third Parties) Act 1999 is hereby excluded.

20.3      The parties may amend, vary or terminate this agreement in such a way
          as may affect any rights or benefits of any Third Party which are
          directly enforceable against the parties under the Contracts (Rights
          of Third Parties) Act 1999 without the consent of such Third Party.

20.4      Any Third Party entitled pursuant to the Contracts (Rights of Third
          Parties) Act 1999 to enforce any rights or benefits conferred on it by
          this agreement may not veto any amendment, variation or termination of
          this agreement which is proposed by the parties and which may affect
          the rights or benefits of the Third Party.

IN WITNESS whereof this agreement has been executed as a deed on the date first
above written.


<PAGE>

<TABLE>
<CAPTION>

                                   SCHEDULE 1

                       Particulars relating to the Sellers
<S>             <C>                         <C>                <C>      <C>              <C>

Column          1                            2                 3.                        4.
                Names & Address of           Number of         Cash     Consideration    Loan Notes ((pound))
                Sellers                      Shares held       (US$)

--------------- ---------------------------- ----------------- ------------------------- -------------------------
1.              Dr. Robert S Andrews               51                1,530,000                  492,151
                2 Mayfield
                Rowledge
                Farnham
                Surrey GU10 4DZ

--------------- ---------------------------- ----------------- ------------------------- -------------------------
2.              Mrs Ann Andrews                    49                1,470,000                  472,850
                2 Mayfield
                Rowledge
                Farnham
                Surrey GU10 4DZ

--------------- ---------------------------- ----------------- ------------------------- -------------------------
                Totals:                           100          US$3,000,000              (pound)965,001
--------------- ---------------------------- ----------------- ------------------------- -------------------------

</TABLE>






<PAGE>


                                   SCHEDULE 2

                       Particulars relating to the Company




Registration number:                  3155211

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

Issued share capital:                 100 ordinary shares of(pound)1 each

Shareholders (number of shares)       Dr. Andrews (51)
                                      Mrs Andrews (49)

Director:                             Dr. Andrews

Secretary:                            Mrs Andrews

Auditors:                             Brebner Allen & Trapp

Accounting reference date:            31 March

Registered Office:                    2 Mayfield
                                      Rowledge
                                      Farnham
                                      Surrey GU10 4DZ




<PAGE>


                                   SCHEDULE 3

                                 The Warranties






Any Warranty expressed to be given "to the best of the Warrantor's knowledge and
belief" or "so far as the Warrantor is aware" or otherwise qualified by
reference to the knowledge of the Warrantor shall not be qualified in the manner
stated unless the Warrantor can establish that, where it is reasonable for him
to do so, he has made all reasonable enquiries of the company secretary,
employees and agents of the Company and relevant third parties to establish the
truth and accuracy of that Warranty.

In this schedule 3, the following words have the following meanings, unless the
context otherwise requires:

"Accounts" means the audited financial statements of the Company, comprising the
balance sheet, profit and loss account and cash flow statement of the Company
together with the notes thereon, directors' report and auditors' certificate, as
at and for the financial period ended on the Accounts Date;

"2001 Accounts" means the audited financial statements of the Company,
comprising the balance sheet, profit and loss account and cash flow statement of
the Company together with the notes thereon, directors' report and auditors'
certificate, as at and for the financial period ended on the 2001 Accounts Date;

"2001 Accounts Date" means 31 March 2001;

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

"Business Plan" means the agreed form document 3 entitled "Business Plan for the
Expansion of EW Simulation Technology Ltd" dated 19 March 2002 and initialled,
for the purposes of identification only, by the parties hereto;

"Claim for Tax" means any of the following:

(a)  any liability to make a payment of Tax and any claim,  assessment,  demand,
     notice or other  document  issued  or  action  taken by or on behalf of any
     person, authority or body whatsoever and of whatever country, including any
     Tax Authority, which claims payment of Tax;

(b)  any  non-availability  or loss of or reduction of any relief  (including in
     particular a right to repayment);

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

"Environment" means any and all living organisms (including man), ecosystems,
property and the media of air (including air in buildings, natural or man-made
structures, below or above ground) water, (as defined in section 104(1) of the
Water Resources Act 1991 and within drains and sewers) and land (including under
any water as described above and whether above or below surface);

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

"Environmental Laws" means all international, EU, national, federal, state or
local statutes, (which for the avoidance of doubt shall include section 57 and
schedule 22 of the Environment Act 1995 and the guidance and regulations adopted
under those provisions,) by-laws, orders, regulations or other law or
subordinate legislation or common law, all orders, ordinances, decrees or
regulatory codes of practice, circulars, guidance notes and equivalent controls
concerning the protection of human health or which have as a purpose or effect
the protection or prevention of harm to the Environment or health and safety
which are binding in relation to the Property and/or upon the Company in the
relevant jurisdiction in which the Company has been or is operating (including
by the export of its products, or its waste thereto) on or before Completion;

"ERA" means the Employment Rights Act 1996;

"Hazardous Substance" means any natural or artificial substance (whether solid,
liquid, gas, noise, ion, vapour, electromagnetic or radiation, and whether alone
or in combination with any other substance) which is capable of causing harm to
or have a deleterious effect on the Environment, being a nuisance, or which
restricts or makes more costly the use, development, ownership or occupation of
the Property;

"IHTA" means the Inheritance Tax Act 1984;

"Leases" means the leases specified in the Disclosure Letter;

"List of Contracts" means the agreed form document 2 entitled "List of
Contracts", dated the same date of this agreement and initialled, for the
purposes of identification only, by the parties hereto;

"List of Workers" means the agreed form document 4 entitled "List of Workers",
dated the same date of this agreement and initialled, for the purposes of
identification only, by the parties hereto;

"Permit" means a permit, licence, consent, approval, certificate, qualification,
specification, registration and other authorisation and a filing of a
notification report or assessment necessary in any jurisdiction for the proper
and efficient operation of the Company's business, its ownership, possession,
occupation or use of an asset or the execution and performance of this
agreement;

"Substantial  Customer" means a customer accounting for more than five per cent.
of the Company's sales in the financial year ended on the Accounts Date;

"Substantial  Supplier" means a supplier accounting for more than five per cent.
of the Company's purchases in the financial year ended on the Accounts Date;

"Systems" means all plant, equipment, systems, devices and components which
contain or are controlled or monitored by computer systems, microprocessors or
software;

"Tax" or "tax" means any tax, and any duty, contribution, impost, withholding,
levy or charge in the nature of tax, whether domestic or foreign, and any fine,
penalty, surcharge or interest connected therewith and includes corporation tax,
advance corporation tax, income tax (including income tax required to be
deducted or withheld from or accounted for in respect of any payment), national
insurance and social security contributions, capital gains tax, inheritance tax,
value added tax, customs excise and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air passenger duty, rates and water rates,
land fill tax, petroleum revenue tax, advance petroleum revenue tax, gas levy
and any other payment whatsoever which any person is or may be or become bound
to make to any person and which is or purports to be in the nature of taxation;

"Taxation Authority" means any local, municipal, governmental, state, federal or
fiscal, revenue, customs or excise authority, body, agency or official anywhere
in the world having or purporting to have power or authority in relation to Tax
including the Inland Revenue and HM Customs and Excise;

"Taxation Statutes" means all statutes, statutory instruments, orders
enactments, laws, by-laws, directives and regulations, whether domestic or
foreign decrees, providing for or imposing any Tax;

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

"TMA" means the Taxes Management Act 1970;

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

"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) Act 1992;

"VATA" means the Value Added Tax Act 1994 and "VAT legislation" means VATA and
all regulations and orders made thereunder;

"Waste" means waste including anything which is discarded or which the holder
intends or is required to discard and anything which is abandoned, unwanted or
surplus irrespective of whether it is capable of being recovered or recycled or
has any value such that there is likely to be a breach of Environmental Law or
such that any investigation, treatment or remediation of the Property is or
would be required or would be undertaken by a prudent owner or occupier;

"Workers" means the employees,  directors,  officers, workers and consultants of
the Company;

"Year 2000 Conformity" shall have the meaning set out in the document published
with reference number DISC PD2000-1 by the part of the British Standards
Institution called DISC entitled "A Definition of Year 2000 Conformity
Requirements". In construing the meaning of this definition, regard shall be had
to the Amplification of the Definition and Rules set out in the same document.

1.       THE COMPANY AND THE SHARES

1.1      Incorporation and Existence

          The Company is a limited company incorporated under English law and
          has been in continuous existence since incorporation.

1.2      The Shares

(a)      The Sellers are the only legal and beneficial owners of the Shares.

(b)               The Company has not allotted any shares other than the Shares
                  and the Shares are fully paid or credited as fully paid.

(c)               There is no Encumbrance in relation to any of the Shares or
                  unissued shares in the capital of the Company. No person has
                  claimed to be entitled to an Encumbrance in relation to any of
                  the Shares and the Company is not under any obligation
                  (whether actual or contingent) to sell, charge or otherwise
                  dispose of any of the Shares or any interest therein to any
                  person.

(d)               Other than this agreement, there is no agreement, arrangement
                  or obligation requiring the creation, allotment, issue, sale,
                  transfer, redemption or repayment of, or the grant to a person
                  of the right (conditional or not) to require the allotment,
                  issue, sale, transfer, redemption or repayment of, a share in
                  the capital of the Company (including an option or right of
                  pre-emption or conversion).

1.3      The Subsidiaries

(a)  The Company does not have any subsidiaries nor any subsidiary undertakings.

(b)  The Company  does not own any shares or stock in the capital of nor does it
     have  any   beneficial  or  other  interest  in  any  company  or  business
     organisation nor does the Company control or take part in the management of
     any other company or business organisation.

2.       ACCOUNTS

2.1      General

(a)      The Accounts and the 2001 Accounts show a true and fair view of the:

     (i)  assets,  liabilities,  financial  position and state of affairs at the
          Accounts  Date (or, in the case of the 2001  Accounts,  as at the 2001
          Accounts Date); and

     (ii) the profits and losses for the  financial  year ended on the  Accounts
          Date (or, in the case of the 2001  Accounts,  as at the 2001  Accounts
          Date),

                  of the Company.

(b)               The Accounts and the 2001 Accounts have been prepared and
                  audited in accordance with the standards, principles and
                  practices specified on the face of the Accounts and the 2001
                  Accounts applied on a consistent basis and subject thereto in
                  accordance with the law and Generally Accepted Accounting
                  Standards, Principles and Policies in the United Kingdom
                  consistently applied.

(c)               The Accounts and the 2001 Accounts have been prepared on a
                  basis consistent with the basis upon which all audited
                  accounts of the Company have been prepared in respect of the
                  three years before the Accounts Date (or, in the case of the
                  2001 Accounts, the 2001 Accounts Date).

2.2      Liabilities

          The Accounts and the 2001 Accounts make full provision or reserve for
          or disclose all liabilities (including all contingent or deferred
          liability to Tax) of the Company whether actual, contingent or
          otherwise.

2.3      Extraordinary and Exceptional Items

          The results shown by the audited profit and loss account of the
          Company for each of the three financial years of the Company ended on
          the Accounts Date (or, in the case of the 2001 Accounts, the 2001
          Accounts Date) have not (except as disclosed in those accounts) been
          affected by an extraordinary, exceptional or non recurring item or by
          any other matter making the profits or losses for a period covered by
          any of those accounts unusually high or low.

2.4      Valuation of Stock

          In the Accounts and the 2001 Accounts:

     (a)  stock  was  valued in the same way as in the two  preceding  financial
          years to such  accounts  and on the basis of the lower of cost and net
          realisable value; and

     (b)  all  redundant and obsolete  stock was written off and full  provision
          was made for all slow-moving and damaged stock.

2.5      Depreciation

          The rates of depreciation and amortisation used in the audited
          accounts of the Company for the three financial years of the Company
          ended on the Accounts Date (or, in the case of the 2001 Accounts, the
          2001 Accounts Date) were sufficient to ensure that each fixed asset of
          the Company will be written down to nil by the end of its useful life.

2.6      Fixed Assets

          The value of all of the fixed assets of the Company as shown in the
          Accounts and the 2001 Accounts is at cost thereof less depreciation
          deducted from time to time in a consistent manner and there has been
          no revaluation of such fixed assets since their acquisition.

2.7      Off Balance Sheet Financing

          The Company is not engaged in any financing (including the incurring
          of any borrowing or any indebtedness in the nature of acceptances or
          acceptance credits) of a type which would not be required to be shown
          or reflected in the Accounts and the 2001 Accounts.

2.8      Accounting and other Records

(a)               The books of account and all other records of the Company
                  (including any which it may be obliged to produce under any
                  contract now in force) are up-to-date, in its possession and
                  are true and complete in accordance with the law and
                  applicable standards, principles and practices generally
                  accepted in the United Kingdom.

(b)               All deeds and documents (properly stamped where stamping is
                  necessary for enforcement thereof) belonging to the Company or
                  which ought to be in the possession of the Company are in the
                  possession of the Company.

2.9      Accounting Reference Date

          The accounting reference date of the Company under section 224 of the
          Companies Act 1985 is, and during the last six years has always been,
          31 March.

2.10     Management Accounts

          The management accounts of the Company for the period from the
          Accounts Date to 31 July 2002 (a copy of which are annexed to the
          Disclosure Letter) have been prepared on a basis consistent with the
          Accounts and, to the best of the knowledge, information and belief of
          the Warrantor, give a true and fair view of the assets and liabilities
          (whether present or future, actual or contingent) of the Company as at
          such date and of the state of affairs, financial position and results
          of the Company for the period from the Accounts Date to such date and
          comply with the terms of Warranties 2.2 - 2.6 (inclusive) above.

3.       CHANGES SINCE THE ACCOUNTS DATE

3.1      General

          Since the Accounts Date:

     (a)  the Company has carried on its business  prudently and in the ordinary
          and  usual  course  and so as to  maintain  the  business  as a  going
          concern;

     (b)  there has been no material  adverse change in the financial or trading
          position or prospects of the Company; and

     (c)  there  has been no  material  reduction  in the  value of those  fixed
          assets  specified  in the  Accounts,  to the extent still owned by the
          Company.

3.2      Specific

          Since the Accounts Date:

     (a)  the Company has not, other than in the ordinary course of trading:

          (i)  disposed of, or agreed to dispose of, an asset; or

          (ii) assumed,  incurred  or paid or agreed to assume or incur or pay a
               liability,  obligation or expense  (actual or contingent) or made
               any payment,

                  and in the case of a disposal or agreement to dispose of an
                  asset for an amount which is lower than book value or an open
                  market arm's length value, whichever is the higher;

     (b)  the  Company  has not  acquired  or agreed to  acquire an asset for an
          amount which is higher than open market arm's length value;

     (c)  the  Company  has not made,  or agreed  to make,  capital  expenditure
          exceeding in total  (pound)10,000  or incurred,  or agreed to incur, a
          commitment  or connected  commitments  involving  capital  expenditure
          exceeding in total (pound)10,000;

     (d)  no  Substantial   Supplier  or  Substantial  Customer  has  ceased  or
          substantially  reduced  its trade with the  Company or has altered the
          terms of trade to the Company's disadvantage;

     (e)  the  Company  has  not  declared,  paid or made a  dividend  or  other
          distribution  (including a distribution  within the meaning of the TA)
          except to the extent provided in the Accounts;

     (f)  no  resolution  of the  shareholders  of the  Company  has been passed
          (except  for those  representing  the  ordinary  business of an annual
          general meeting);

     (g)  the Company has not repaid or redeemed share or loan capital,  or made
          (whether or not subject to  conditions) an agreement or arrangement or
          undertaken an obligation to do any of those things;

     (h)  the  Company  has not repaid any sum in the  nature of  borrowings  in
          advance of any due date or made any loan or incurred any  indebtedness
          (including in each case inter group);

     (i)  the Company has not incurred or paid any liability for any  financial,
          legal, accountancy,  surveyors, valuers or other professional advisers
          fees; and

     (j)  the  Company  has not  paid  nor is  under  an  obligation  to pay any
          service,  management  or similar  charges or any interest or amount in
          the nature of interest to any other person or incurred  any  liability
          to make such a payment or made any  payment  to any of the  Sellers or
          any of their connected persons whatsoever.

4.       ASSETS

4.1      Title and Condition

(a)               There are no Encumbrances, nor has the Company agreed to
                  create any Encumbrances, over any part of its undertaking or
                  assets and each asset used by the Company (tangible or
                  intangible) is:

(i)      legally and beneficially owned by the Company; and

(ii)     where capable of possession, in the possession of the Company.

(b)               The Company owns each asset (tangible or intangible) necessary
                  for the operation of its business as currently conducted and
                  without limitation no rights (other than rights as
                  shareholders in the Company) relating to the business of the
                  Company are owned or otherwise enjoyed by or on behalf of any
                  of the Sellers of any of their connected persons.

(c)               All plant, machinery, vehicles and equipment owned or used by
                  the Company are in good condition and working order and have
                  been regularly and properly maintained. None is dangerous or
                  in need of renewal or replacement.

4.2      Hire Purchase and Leased Assets

          Copies of any bill of sale or any hiring or leasing agreement, hire
          purchase agreement, credit or conditional sale agreement, agreement
          for payment on deferred terms or any other similar agreement to which
          the Company is a party are annexed to the Disclosure Letter.

4.3      Stock of components

     (a)  The Company's stock of components is of  satisfactory  quality for the
          purpose for which they are used.

     (b)  So far as the  Warrantor is aware,  the Company has not  supplied,  or
          agreed to supply,  goods  which have been,  or will be,  defective  or
          which fail, or will fail, to comply with their terms of sale.

     (c)  The Company's level of stock of components is reasonable having regard
          to current and anticipated demand.

     (d)  The Company has not acquired  nor agreed to acquire any material  part
          of its stock of components on terms that the property therein does not
          pass until full payment is made.

4.4      Debts

          Except to the extent to which specific provision or reserve has been
          made in the Accounts, all indebtedness owed to the Company and whether
          included in the Accounts or arising since the Accounts Date will be
          duly paid in the ordinary course of business and none of such debts
          has been factored, sold or agreed to be sold by the Company.

5.       INTELLECTUAL PROPERTY

     (a)  Save for Intellectual Property licensed to the Company, the Company is
          the  sole and  absolute  legal  and  beneficial  owner of all  Company
          Intellectual Property .

     (b)  All Intellectual Property created by any individual or any other party
          on  the  Company's   behalf,   as  an  employee,   a   consultant,   a
          sub-contractor  or otherwise  has been assigned by such parties to the
          Company  and  forms  part of the  Company  Intellectual  Property.  No
          further  steps  are  necessary  in  order  to vest  each  Intellectual
          Property in the Company.

     (c)  The  interest of the Company in the Company  Intellectual  Property is
          free from  Encumbrances  and in the case of confidential  information,
          any disclosure obligation and are subsisting,  valid,  exercisable and
          enforceable.

5.2      Renewals/maintenance

     (a)  Neither the Company nor the Sellers are the registered  proprietors of
          any registered Company Intellectual Property.

     (b)  All  steps  have  been  taken   diligently  for  the  maintenance  and
          protection of unregistered Company Intellectual Property.

     (c)  All taxes and other  payments  have been made in  respect  of  Company
          Intellectual  Property and all  governmental  approvals  have wherever
          necessary for the exercise of the Company  Intellectual  Property been
          obtained.

5.3      Sufficiency

(a)               The Company Intellectual Property is all the Intellectual
                  Property necessary for the operation of the business of the
                  Company as now conducted and it will not be adversely affected
                  by the transaction contemplated by this agreement. Neither of
                  the Sellers owns any Intellectual Property used by the Company
                  or necessary for the operation of the business of the Company
                  as it was conducted at Completion.

5.4      Licences

(a)               Completion will not affect the rights of the Company under any
                  such licences. Save as disclosed neither the Company nor
                  either of the Sellers is obliged to enter into any such
                  agreement relating to Company Intellectual Property. There has
                  been or is no breach nor is there any fact or matter which
                  would or may create a breach of such agreement, consent,
                  undertaking or licence.

(b)               The terms of any order given or measure imposed by a court or
                  other body of competent jurisdiction relating to the Company
                  Intellectual Property against or in favour of the Company or
                  the Sellers or their connected persons are set out in the
                  Disclosure Letter and there is no breach of any such orders.

5.5      Infringement

(a)               The use by the Company of the Company Intellectual Property
                  and the Business Intellectual Property does not and is not
                  likely to infringe and the processes or methods employed,
                  services provided, the business conducted and the products
                  used, manufactured and dealt in or supplied by the Company, do
                  not nor did they at the time used, manufactured, dealt in or
                  supplied, infringe the Intellectual Property of any other
                  person.

(b)               No proceedings claims or complaints have been brought or
                  threatened by any third party or competent authority in
                  relation to the Company Intellectual Property and/or
                  Intellectual Property licensed to the Company including any
                  concerning title, subsistence, validity or enforceability or
                  grant of any right or interest in such Intellectual Property.

(c)               So far as the Warrantor is aware no third party is infringing
                  or misusing or threatening to infringe or misuse the Company
                  Intellectual Property and/or Intellectual Property licensed to
                  the Company.

(d)               The Company is not subject to any injunction, undertaking or
                  court order or order of any other authority of competent
                  jurisdiction not to use or restricting the use any Company
                  Intellectual Property.

5.6      Use of name

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

5.7      Confidential Agreements

          Save as disclosed, the Company has not and none of the Sellers nor any
          of their connected persons have entered into any confidentiality or
          other agreement or is subject to any duty which restricts the free use
          or disclosure of any information used in the business of the Company
          and there is no breach of any such agreement or duty.

5.8      Documents

          All documents material to the title to the Company Intellectual
          Property form part of the records or materials in the possession and
          ownership of the Company.

6.       EFFECT OF SALE

6.1       So far as the Warrantor is aware, neither the execution nor
          performance of this agreement or any document to be executed at or
          before Completion will:

(a)               result in the Company losing the benefit of a Permit or an
                  asset, licence, grant, subsidy, right or privilege which it
                  enjoys at the date of this agreement in any jurisdiction; or

(b)               conflict with, or result in a breach of, or give rise to an
                  event of default under, or require the consent of a person
                  under, or enable a person to terminate, or relieve a person
                  from an obligation under, an agreement, arrangement or
                  obligation to which the Company is a party or a legal or
                  administrative requirement in any jurisdiction; or

(c)               result in any Substantial Customer being entitled (and if a
                  Substantial Customer is so entitled, so far as the Warrantor
                  is aware, it will not exercise any such entitlement) to cease
                  dealing with the Company or substantially to reduce its
                  existing level of business or to change the terms upon which
                  it deals with the Company; or

(d)               result in any Substantial Supplier being entitled (and if a
                  Substantial Supplier is so entitled, so far as the Warrantor
                  is aware, it will not exercise any such entitlement) to cease
                  supplying the Company or substantially to reduce its supplies
                  to or to change the terms upon which it supplies the Company;

(e)      result in any officer or senior employee leaving the Company; or

(f)               make the Company liable to offer for sale, transfer or
                  otherwise dispose of or purchase or otherwise acquire any
                  assets, including shares held by it in other bodies corporate
                  under their articles of association or any agreement or
                  arrangement.

7.       CONSTITUTION

7.1      Intra Vires

          The Company has the power to carry on its business as now conducted
          and the business of the Company has at all times been carried on intra
          vires.

7.2      Memorandum and Articles

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

7.3      Register of Members

          The register of members of the Company has been properly kept and
          contains true and complete records of the members from time to time of
          the Company and the Company has not received any notice or allegation
          that any of them is incorrect or incomplete or should be rectified.

7.4      Powers of Attorney

          The Company has not executed any power of attorney or conferred on any
          person other than its directors, officers and employees any authority
          to enter into any transaction on behalf of or to bind the Company in
          any way and which power of attorney remains in force or was granted or
          conferred within three years of the Completion Date.

7.5      Statutory Books and Filings

     (a)  The statutory  books of the Company are up to date, in its  possession
          and are true and complete in accordance with the law.

     (b)  All  resolutions,  annual returns and other  documents  required to be
          delivered to the  Registrar of Companies  (or other  relevant  company
          registry or other corporate  authority in any jurisdiction)  have been
          properly  prepared  and filed and are true and complete and the common
          seal of the Company is in its possession.

8.       INSURANCE

8.1      Policies

          The Disclosure Letter contains a list of each current insurance and
          indemnity policy in respect of which the Company has an interest
          (together the "Policies"). Each of the Policies is valid and
          enforceable and is not void or voidable. There are no circumstances
          which might make any of the Policies void or voidable or enable any
          insurer to refuse payment of all or part of any claim under the
          Policies.

8.2      Insurance of Assets

          Each insurable asset of the Company has at all material times been and
          is at the date of this agreement insured to its full replacement value
          (with no provision for deduction or excess) against each risk normally
          insured against by a prudent person operating the types of business
          operated by the Company.

8.3      Other Insurance

          The Company has at all material times been and is at the date of this
          agreement adequately insured against accident, damage, injury, third
          party loss (including product liability), loss of profits and any
          other risk normally insured by a prudent person operating the types of
          business operated by the Company and has at all times effected all
          insurances required by law.

8.4      Claims

          No claim is outstanding under any of the Policies and no matter exists
          which might give rise to a claim under any of the Policies.

8.5      Premiums

          The Company has paid all premiums due in respect of all the Policies
          and has not done or omitted to do anything which might result in an
          increase in the premium payable under any of the Policies.

9.       CONTRACTUAL MATTERS

9.1      Validity of Agreements

(a)               Neither the Company nor the Sellers have any knowledge of the
                  invalidity of, or a ground for termination, avoidance or
                  repudiation of, an agreement, arrangement or obligation to
                  which the Company is a party. No party with whom the Company
                  has entered into an agreement, arrangement or obligation has
                  given notice of its intention to terminate, or has sought to
                  repudiate or disclaim, the agreement, arrangement or
                  obligation.

(b)               No party with whom the Company has entered into an agreement
                  or arrangement is in material breach of the agreement or
                  arrangement. No matter exists which might give rise to such
                  breach.

(c)               The Company is not in breach of any agreement or arrangement
                  and, so far as the Warrantor is aware, no matter exists which
                  might give rise to such breach.

9.2      Standard Terms and Conditions

          A copy of the standard terms and conditions of business of the Company
          are annexed to the Disclosure Letter and the Company has not entered
          into an agreement or arrangement with a customer or supplier different
          from these.

9.3      Supply Contracts

          Full and accurate details of all agreements or arrangements for the
          supply of stock, raw materials, products or goods to or by the Company
          which involve or are likely to involve the supply of goods the
          aggregate sale value of which will represent in excess of five per
          cent. of the turnover for the financial year of the Company ended on
          the Accounts Date are contained in the Disclosure Letter and copies
          annexed to it.

9.4      Material Agreements

          (a)  The  Company  is not a  party  to and is  not  liable  under  any
               contract,  transaction,  arrangement or liability which involves,
               or is likely to involve  obligations  or  liabilities  which,  by
               reason of their nature or magnitude,  ought reasonably to be made
               known to an intending buyer of the Shares including any which:

               (i)  is of an unusual or abnormal nature, or outside the ordinary
                    and proper course of business;

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

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

               (iv) cannot  readily be  fulfilled or performed by the Company on
                    time without undue or unusual  expenditure of money,  effort
                    or personnel;

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

               (vi) involves  an  aggregate  outstanding  expenditure  or  other
                    liability by the Company of more than(pound)10,000; or

               (vii)restricts  its freedom to engage in any activity or business
                    or confines its activity or business to a particular place;

     (b)  The Company is not a party to and is not liable under:

               (i)  an agreement, arrangement or obligation by which the Company
                    is a member of a joint venture,  consortium,  partnership or
                    association (other than a bona fide trade association); or

               (ii) a   distributorship,   agency,   marketing,   licensing   or
                    management agreement or arrangement.

9.5      Contracts with Connected Persons

          There is, and during the three years ending on the date of this
          agreement there has been, no agreement or arrangement (legally
          enforceable or not) to which the Company or any employee of the
          Company is or was a party and in which any of the Sellers or a person
          connected with any of them is or was interested in any way. The
          Company does not owe any obligation or sum to nor does it and neither
          will it nor any of its employees immediately after Completion have any
          contractual or other arrangements of any sort with the Sellers or any
          of their connected persons and since the Accounts Date no payment or
          benefit has been made or given or received or agreed to be made given
          or received (including in particular interest) between or for the
          benefit of any of the Sellers or any of the Sellers' connected persons
          on the one hand and the Company or any employee of the Company on the
          other hand.

9.6      Conditions and Warranties in respect of Goods or Services

          Except for a condition or warranty implied by law or contained in its
          standard terms of business or otherwise given in the usual course of
          trading, the Company has not given a condition or warranty, or made a
          representation, in respect of goods or services supplied or agreed to
          be supplied by it, or accepted an obligation that could give rise to a
          liability after the goods or services have been supplied by it.

9.7      Backlog contracts

               (a)  The List of Contracts is a full and complete list of all the
                    current unfulfilled  contracts with customers of the Company
                    in existence at the date of the management accounts referred
                    to in  Warranty  2.10 which  were,  at that date,  wholly or
                    partly uninvoiced.

               (b)  The terms of the contracts included in the List of Contracts
                    have  been  fully  and  fairly  disclosed  to the  Buyer  on
                    -------- September 2002.

               (c)  The figures  shown in List of Contracts  are true,  accurate
                    and not misleading.

               (d)  Each  contract  included  in the List of  Contracts  will be
                    profitable.  The two  contracts  known to the parties as the
                    "Mercury" and the "Wodin"  contracts shall be aggregated for
                    the purposes of determining profitability in accordance with
                    this  warranty  9.7(d).  For the  avoidance  of doubt,  such
                    aggregation  shall only apply in the case of these two named
                    contracts.

               (e)  Each contract  included in the List of Contracts  requires a
                    Permit. Other than the Permits relating to projects Zeus and
                    Vulcan, the Company has obtained and complied with the terms
                    and conditions of such Permits.

9.8      EDO Corporation "(EDO")

          In respect of all products produced by the Company sold by or through
          EDO in the USA (whether under the EWST name, the EDO name or otherwise
          and whether as principal or as the Company's agent), no
          misrepresentation as to their origin has been made.

9.9      EWST Australia Pty Limited

(a)               EWST Australia Pty Limited has no other business other than
                  performing those services set out in the Disclosure Letter.

(b)               The only transactions that EWST Australia Pty Limited have
                  entered into in the last two financial years are set out in
                  the Disclosure Letter.

10.      INFORMATION TECHNOLOGY AND DATA PROTECTION

10.1     Future Adequacy of Systems

          The Systems used in connection with the business of the Company are
          adequate for the immediate needs of that business, including without
          limitation as to system capacity and ability to process current peak
          volumes and anticipated volumes in a timely manner.

10.2     No Systems failures

          In the 12 months prior to the date hereof the Company has not suffered
          and so far as the Warrantor is aware no other person has suffered any
          failures or bugs in or breakdowns of Systems used in connection with
          the business of the Company which have caused any substantial
          disruption or interruption in or to its use and the Warrantor is not
          aware of any fact or matter which may substantially disrupt or
          interrupt or affect the use of such equipment following the
          acquisition by the Buyer of the Shares pursuant to this agreement on
          the same basis as it is presently used.

10.3     Data Compliance

          All Systems used in the business of the Company are and have been Date
          Compliant and will not cease to be so. In this clause, "Date
          Compliant" means the ability to process eight digit date and four
          digit year data and to otherwise function in all respects without
          being adversely affected by any date or change of date, including any
          date in any century or leap year, in each case without workarounds.

10.4     Copyright in Technical Manuals

          None of the software or technical manuals used by the Company has been
          copied wholly or substantially by the Company from any material in
          which the Company does not own copyright.

10.5     Ownership of Systems

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

10.6     Litigation in respect of Software

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

10.7     Internet Presence

          Other than the Company's web site, www.ewst.co.uk, the Company does
          not have any public, private or reserved presence on the world wide
          web, multi-party extranet, virtual private network or similar
          internet-based, linked system ("Internet Presence"). The Company's
          domain name(s), if any, are currently registered, are transferable to
          the Buyer and are in good standing. The Company's Internet Presence,
          if any, is wholly passive and informational in nature and involves no
          interactivity between third parties and the Company including
          purchases, sales, leases or other commercial transactions conducted in
          any degree by or through the Internet Presence.

10.8     Data Protection Act

          The Company complies in full with, and has in place all necessary
          registrations and procedures to comply with the Data Protection Act
          1984 and the Data Protection Act 1998, as applicable.

11.      LIABILITIES

11.1     Borrowings

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

11.2     Continuance of Facilities

          Full and accurate details of all overdrafts, loans or other financial
          facilities outstanding or available to the Company are set out in the
          Disclosure Letter and whether or not of a type which would be required
          to be shown in or reflected in the Accounts (including any
          indebtedness for moneys borrowed or raised under any acceptance
          credit, bond, note, bill of exchange or commercial paper, finance
          lease, hire purchase agreement, trade bills (other than those on terms
          normally obtained) forward sale or purchase agreement or conditional
          sale agreement or other transaction having the commercial effect of a
          borrowing) and copies of all documents relating to such matters are
          annexed to the Disclosure Letter. None of the Sellers' nor any of
          their connected persons has done anything whereby the continuance of
          any such facilities in full force and effect might be affected or
          prejudiced.

11.3     Bank Accounts

          A statement being in the agreed terms of all the bank accounts of the
          Company and of the credit or debit balances on such accounts as at a
          date not more than seven days before the date of this agreement has
          been supplied to the Buyer. The Company does not have any other bank
          or deposit accounts (whether in credit or overdrawn) not included in
          such statement. Since such statement there have been no payments out
          of any such accounts except for routine payments and the balances on
          current account are not now substantially different from the balances
          shown on such statements.

11.4     Working Capital

          Having regard to existing bank and other facilities, the Company has
          sufficient working capital for the purposes of continuing to carry on
          its business in its present form and at its present level of turnover
          for a period of 12 months from Completion and for the purposes of
          executing, carrying out and fulfilling in accordance with their terms
          all orders, projects and contractual obligations which have been
          placed with, or undertaken by, the Company.

11.5     Guarantees and Indemnities

(a)               The Company is not a party to and is not liable (including
                  contingently) under a guarantee, indemnity or other agreement
                  to secure or incur a financial or other obligation with
                  respect to another person's obligation.

(b)               No part of the loan capital, borrowing or indebtedness in the
                  nature of borrowing of the Company is dependent on the
                  guarantee or indemnity of, or security provided by, another
                  person.

11.6     Events of Default

          No event has occurred or is subsisting or been alleged or so far as
          the Warrantor is aware is likely to arise which:

(a)               constitutes an event of default, or otherwise gives rise to an
                  obligation to repay, or to give security under an agreement
                  relating to borrowing or indebtedness in the nature of
                  borrowing (or will do so with the giving of notice or lapse of
                  time or both);

(b)               will lead to an Encumbrance constituted or created in
                  connection with borrowing or indebtedness in the nature of
                  borrowing, a guarantee, an indemnity or other obligation of
                  the Company becoming enforceable (or will do so with the
                  giving of notice or lapse of time or both); or

(c)               with the giving of notice and/or lapse of time constitute or
                  result in a default or the acceleration of any obligation
                  under any agreement or arrangement to which the Company is a
                  party or by which it or any of its property, revenues or
                  assets is bound.

11.7     Grants

          The Company is not liable to repay an investment or other grant or
          subsidy made to it by any person (including the Department of Trade
          and Industry or its predecessor). No matter (including the execution
          and performance of this agreement) exists which might entitle a body
          to require repayment of, or refuse an application by the Company for,
          the whole or part of a grant or subsidy.

12.      PERMITS

12.1     Compliance with Permits

               (a)  Other than the Permits referred to in paragraph 9.7(e),  the
                    Company does not have any Permits.

               (b)  So far as the  Warrantor  is aware,  other than the  Permits
                    referred to in paragraph  9.7(e),  the Company does not need
                    or  require  any  Permit to operate  the  business  that the
                    Company is currently operating.

12.2     Status of Permits

          There are no pending or threatened proceedings which might in any way
          affect the Permits and the Warrantor is not aware of any other reason
          why any of them should be suspended, threatened or revoked or be
          invalid.

13.      INSOLVENCY

13.1     Winding up

          No order has been made, petition presented or resolution passed for
          the winding up or for the appointment of a provisional liquidator to
          the Company or any of the Sellers.

13.2     Administration

          No administration order has been made and no petition for an
          administration order has been presented in respect of the Company or
          any of the Sellers.

13.3     Receivership

          No receiver, receiver and manager or administrative receiver has been
          appointed of the whole or part of the Company's or the whole or part
          of any of the Seller's business or assets.

13.4     Compromises with Creditors

(a)               No voluntary arrangement under section 1 of the Insolvency Act
                  1986 has been proposed or approved in respect of the Company
                  or any of the Sellers.

(b)               No compromise or arrangement under section 425 of the
                  Companies Act 1985 has been proposed, agreed to or sanctioned
                  in respect of the Company or any of the Sellers.

(c)               Neither the Company nor any of their Sellers have entered into
                  any compromise or arrangement with any of the respective
                  creditors or any class of their respective creditors
                  generally.

13.5     Insolvency

          Neither the Company nor any of the Sellers are unable to pay their
          respective debts within the meaning of section 123 of the Insolvency
          Act 1986 (but for this purpose ignoring the reference to "if it is
          proved to the satisfaction of the court that" in section 123(1)(e) and
          123(2)).

13.6     Payment of Debts

          Neither the Company nor any of the Seller's have stopped paying their
debts as they fall due.

13.7     Distress etc.

          No distress, execution or other process has been levied on an asset of
          the Company or any of the Sellers.

13.8     Unsatisfied Judgments

          There is no unsatisfied judgment or court order outstanding against
the Company or any of the Sellers.

13.9     Striking Out

          No action is being taken by the Registrar of Companies to strike the
          Company nor any of the Sellers off the register under section 652 of
          the Companies Act 1985.

13.10    Bankruptcy

          None of the Sellers has been made bankrupt or a petition presented to
make any of the Sellers bankrupt.

14.      LITIGATION AND COMPLIANCE WITH LAW

14.1     Litigation

(a)               Neither the Company nor a person for whose acts or defaults
                  the Company may be vicariously liable is involved, or has
                  during the five years ending on the date of this agreement
                  been involved, in a civil, criminal, arbitration,
                  administrative or other proceeding in any jurisdiction. No
                  civil, criminal, arbitration, administrative or other
                  proceeding in any jurisdiction is pending or threatened by or
                  against the Company or a person for whose acts or defaults the
                  Company may be vicariously liable.

(b)               So far as the Warrantor is aware, no matter exists which might
                  give rise to a civil, criminal, arbitration, administrative or
                  other proceeding in any jurisdiction involving the Company or
                  a person for whose acts or defaults the Company may be
                  vicariously liable.

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

14.2     Compliance with Law

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

14.3     Investigations

          The Company is not and has not been subject to any investigation,
          enquiry or disciplinary proceeding (whether judicial, quasi-judicial
          or otherwise) in any jurisdiction and none is pending or threatened,
          and neither has it received any request for information from, any
          court or governmental authority (including any national competition
          authority and the Commission of the European Communities and the EFTA
          Surveillance Authority) under any anti-trust or similar legislation in
          any jurisdiction. So far as the Warrantor is aware no matter exists
          which might give rise to such an investigation, enquiry, proceeding or
          request for information.

14.4     Competition Law

(a)               The Company is not nor has been a party to or concerned in any
                  agreement or arrangement, or conducted itself (whether by
                  omission or otherwise) in a manner, which:

(i)                       constitutes a breach of any relevant undertaking,
                          order, assurance or other measure made under the Fair
                          Trading Act 1973, the Restrictive Trade Practices Acts
                          1976 and 1977, the Resale Prices Act 1976, the Trade
                          Descriptions Acts 1968 and 1972, the Competition Act
                          1980 or the Competition Act 1998;

(ii)                      so far as the Warrantor is aware, infringes the
                          Chapter I prohibition and/or the Chapter II
                          prohibition of the Competition Act 1998 or Articles 81
                          and/or 82 of the Treaty of Rome or their equivalent
                          provisions under the European Economic Area Agreement
                          or any other anti-trust or similar legislation in any
                          jurisdiction; or

(iii)                     so far as the Warrantor is aware, is registrable,
                          unenforceable or void (whether in whole or in part) or
                          renders it liable to civil, criminal or administrative
                          proceedings by virtue of any anti-trust,
                          anti-monopoly, anti-cartel, consumer law or any other
                          similar legislation in any jurisdiction including (in
                          relation to the UK) any legislation now repealed by
                          the Competition Act 1998.

(b)               The Company is aware of the provisions of, and is taking all
                  reasonably necessary steps to comply with, the Competition Act
                  1998.

(c)               The Company has not given an undertaking or written assurance
                  (whether legally binding or not) to any court or governmental
                  authority (including any national competition authority
                  (including the UK Office of Fair Trading) and the European
                  Commission and the EFTA Surveillance Authority) under any
                  anti-trust or similar legislation in any jurisdiction.

(d)               The Company is not subject to any order, regulation or
                  decision made by any court or governmental authority
                  (including any national competition authority (including the
                  UK Office of Fair Trading) and the European Commission and the
                  EFTA Surveillance Authority) under any anti-trust or similar
                  legislation in any jurisdiction.

(e)               The Company is not and has not been a party to or concerned in
                  any agreement, arrangement or concerted practice in respect of
                  which an application for negative clearance and/or an
                  exemption has been made to the UK Office of Fair Trading, the
                  European Commission or the EFTA Surveillance Authority.

(f)               The Company has not received a written communication or
                  request for information in relation to any aspect of its
                  business from or by the Director General of Fair Trading (or
                  any officer of the Office of Fair Trading), the Competition
                  Commission (or, formerly, the Monopolies and Mergers
                  Commission), the Secretary of State for Trade and Industry,
                  the European Commission or the EFTA Surveillance Authority or
                  from any other authority under any anti-trust or similar
                  legislation in any other jurisdiction and no such
                  communication or request is currently expected.

(g)               The Company is not in a dominant position in a market in the
                  UK (or any part of it), in the European Community or the
                  European Economic Area, or a substantial part of a market in
                  the European Community or European Economic Area, for the
                  purposes of Chapter II of the Competition Act 1998, Article 82
                  of the Treaty of Rome and Article 54 of the European Economic
                  Area Agreement.

(h)               The Company has never received, nor is expecting to receive
                  any aid (in whatever form) from a Member State of the European
                  Community or from State resources such as could be regarded as
                  State aid for the purposes of Articles 87 to 89 of the Treaty
                  of Rome.

14.5     Unlawful Payments

          Neither the Company nor a person for whose acts or defaults the
Company may be vicariously liable has:

     (a)  induced a person to enter into an  agreement or  arrangement  with the
          Company by means of an unlawful or immoral payment, contribution, gift
          or other inducement;

     (b)  offered or made an unlawful or immoral payment, contribution,  gift or
          other inducement to a government official or employee; or

     (c)  directly or indirectly  made an unlawful  contribution  to a political
          activity.

          All references to the Company in this paragraph 14 should be deemed to
          include the Company's officers, agents and employees.

15.      BROKERAGE OR COMMISSIONS

          No person is entitled to receive from the Company or any Seller or any
          connected person of the Sellers a finder's fee, brokerage or
          commission or other benefit in connection with this agreement or
          anything in it and, in particular, the Company is not liable to pay or
          give to any of its directors, officers, employees, agents and advisers
          any sum or benefit whatsoever in connection with the sale of the
          Shares and no such person has any interest in such sale.

16.      DIRECTORS, WORKERS AND EMPLOYEES

16.1     Workers

          The List of Workers shows a complete true and up to date list of all
the Workers.

16.2     Particulars of Workers

          The particulars of all Workers provided in List of Workers show the
          names, job title, date of commencement of employment and date of birth
          of every Worker of the Company.

16.3     Remuneration and Benefits

          The particulars of all Workers provided in List of Workers together
          with the information set out in the Disclosure Letter show all
          remuneration and other benefits:

(a)      actually provided; or

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

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

16.4     Terms and Conditions

(a)               The Disclosure Letter contains copies of all the terms and
                  conditions, staff handbooks and policies which apply to the
                  Workers.

(b)               There are no terms and conditions in any contract with any
                  Worker pursuant to which such person will be entitled to
                  receive any payment or benefit or such person's rights will
                  change as a direct consequence of the transaction contemplated
                  by this agreement.

(c)               There are no service agreements or contracts of employment
                  between the Company and any of its Workers containing any
                  provision in addition to the matters required to be contained
                  therein under section 1 of the ERA.

(d)               All employees of the Company have received a written statement
                  of particulars of their employment as required by section 1 of
                  the ERA.

16.5     Operation of the Schemes

(a)               The Schemes have at all times been operated in accordance with
                  their governing rules or terms and all applicable laws and all
                  documents which are required to be filed with any regulatory
                  authority have been so filed and all tax clearances and
                  approvals necessary to obtain favourable tax treatment for the
                  Company and/or the participants in the Schemes have been
                  obtained and not withdrawn and no act or omission has occurred
                  which has or could prejudice any such tax clearance and/or
                  approval.

(b)               No past or present Worker or any dependant thereof or any
                  other participant in any Scheme has made any claim against the
                  Company in respect of any Scheme and no event has occurred
                  which could or might give rise to any such claim.

16.6     Notice Periods

          The terms of employment or engagement of all Workers, agents and
          professional advisers of the Company are such that their employment or
          engagement may be terminated by not more than three months' notice
          given at any time without liability for any payment including by way
          of compensation or damages (except for unfair dismissal or a statutory
          redundancy payment).

16.7     Changes since the Accounts Date

          Since the Accounts Date the Company has not made, announced or
          proposed any changes to the emoluments or benefits of or any bonus to
          any Worker and the Company is under no express or implied obligation
          to make any such changes with or without retrospective operation.

16.8     Loans

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

16.9  Notice  of  Termination,   Leave  of  Absence,  Disciplinary  Warning  and
Outstanding Offers

     (a)  No Worker has given or received  notice to terminate his employment or
          engagement.

     (b)  There are no Workers who are on secondment,  maternity leave or absent
          on grounds of disability or other leave of absence  (other than normal
          holidays or absence of no more than one week due to illness).

     (c)  No  Worker  is  subject  to a current  disciplinary  warning  or other
          procedure.

     (d)  There are no  outstanding  offers of  employment  or engagement by the
          Company and no person has accepted  such an offer but not yet taken up
          the position accepted.

16.10    Payment up to Completion

          All salaries, fees and wages and other benefits of all Workers have,
          to the extent due, been paid or discharged in full together with all
          related payments to third party benefit providers and the relevant
          authorities.

16.11    Industrial Relations

     (a)  No Workers  are members of a trade  union,  staff  association  or any
          other body representing workers and no such union, association or body
          is   recognised   by  the  Company  for  the  purposes  of  collective
          bargaining.

     (b)  The  Disclosure  Letter  contains  copies of and full  details  of all
          rights  and  liabilities   relating  or  pursuant  to  any  collective
          agreements (whether with a trade union, staff association or any other
          body  representing   Workers  and  whether  legally  binding  or  not)
          concerning the Company.

     (c)  Within the three years  preceding  the date hereof the Company has not
          been  engaged or involved in any trade  dispute (as defined in section
          218 of the TULR(C)A) with any Worker,  trade union,  staff association
          or any other body representing workers and no event has occurred which
          could or might give rise to any such dispute and no industrial  action
          involving  Workers,  official  or  unofficial,  is  now  occurring  or
          threatened nor has any industrial  relations or employment matter been
          referred  either by the  Company or its  Workers or by any trade union
          staff association or any other body  representing  Workers to ACAS for
          advice, conciliation or arbitration.

16.12    Claims by Workers

          So far as the Warrantor is aware, no past or present Worker or any
          workers of a predecessor in business has any claim or right of action
          against the Company including any claim:

     (a)  in respect of any  accident  or injury  which is not fully  covered by
          insurance; or

     (b)  for breach of any contract of services or for services; or

     (c)  for loss of office or arising out of or connected with the termination
          of his office or  employment  and no event or  inaction  has  occurred
          which could or might give rise to any such claim.

16.13    Enquiries and Discrimination

(a)               There are no enquiries or investigations existing, pending or
                  threatened affecting the Company in relation to any Workers by
                  the Equal Opportunities Commission, the Commission for Racial
                  Equality, the Disability Rights Commission or the Health and
                  Safety Executive or any other bodies with similar functions or
                  powers in relation to workers.

(b)               There are no terms or conditions under which any Worker is
                  employed or engaged, nor has anything occurred or not occurred
                  prior to Completion that may give rise to any claim for sex
                  discrimination, race discrimination, disability discrimination
                  or equal pay either under domestic United Kingdom or European
                  Law whether by such Worker or a prospective Worker or
                  otherwise.

16.14    Redundancy

          Full and accurate details are disclosed in the Disclosure Letter of
          any redundancy payment (whether pursuant to a redundancy scheme or
          formula or policy or otherwise whether contractual or discretionary)
          the Company has made in excess of the statutory redundancy entitlement
          to any Worker or former Worker in the last 5 years, and there is no
          provision in any occupational pension scheme in which Workers
          participate which provides enhanced benefits on redundancy.

16.15    Health and Safety

          Full details of all health and safety policies and procedures, health
          and safety committees, health and safety representatives, and any
          complaints, recommendations, investigations or claims relating to
          health and safety issues made or carried out in the last 5 years and
          affecting the Company and its Workers have been disclosed in the
          Disclosure Letter.

16.16    Compliance with Laws

          There are no training schemes, arrangements or proposals, whether past
          or present, in respect of which a levy may henceforth become payable
          by the Company under the Industrial Training Act 1982 and pending
          Completion no such schemes, arrangements or proposals will be
          established or undertaken.

16.17    Transfer Regulations

          The Company has not within the three years preceding the date hereof
          entered into any agreement which involved or may involve the Company
          (and no event has occurred which may involve the Company in the
          future) acquiring or disposing of any undertaking or part of one such
          that the Transfer Regulations applied or may apply thereto.

16.18    Duty to Inform and Consult

          The Sellers and the Company have complied with their obligations to
          inform and consult with trade unions and other representatives of
          workers and to send notices to the Secretary of State pursuant to
          sections 188 to 194 of the TULR(C)A and regulations 10 and 11 of the
          Transfer Regulations.

16.19    Records

          The Company has maintained adequate and suitable records regarding the
          service of its Workers and, in particular, has maintained all records
          required under the Working Time Regulations 1998. All such records
          comply with the requirements of the Data Protection Act 1998.

16.20    Business is Conducted by Workers

          The Company has not entered into any agreement or arrangement for the
          management or operation of its business or any part thereof other than
          with its Workers.

17.      PROPERTY

17.1     All Property

          The Property comprises all the freehold and leasehold land owned, used
          or occupied by and all the rights vested in the Company and all
          agreements whereby the Company has any financial entitlement relating
          to any land at the date hereof.

17.2     No Other Liabilities

          The Company has no actual or contingent obligations or liabilities (in
          any capacity including as principal contracting party or guarantor) in
          relation to any lease, licence or other interest in, or agreement
          relating to, land apart from the Property.

17.3     Title Deeds and Documents

          The Company has under its control all title deeds and documents
          necessary to prove its title to the Property and the same are original
          documents or properly examined abstracts.

17.4     No Overriding Interests

          The Property is not to the best of the Warrantor's knowledge and
          belief subject to any overriding interests within the meaning of
          section 70 of the Land Registration Act 1925.

17.5     No Default

          The Company has duly performed, observed and complied with all of the
          terms of any lease, underlease or tenancy agreement under which any
          part of the Property is held and (in the case of leasehold property)
          all rents and service charges have been paid to date and no notice of
          any alleged breach of any of the terms of any such lease or tenancy
          agreement as aforesaid has been served on the Company.

17.6     Leasehold Property

          The Property which is leasehold is held under the lease brief details
          of which are set out in schedule 6 and no licences or collateral
          arrangements or concessions have been entered into or granted each
          such lease being a head lease

17.7     Occupational Interests

          All such leases, tenancies, licences and agreements to which the
          Property are subject are correctly summarised in the particulars
          thereof set out in schedule 6 and subject thereto the Company is in
          exclusive occupation of each and every part of the Property.

17.8     Due Compliance by Occupational Tenants

          Each lessee, tenant, licensee or occupier of any such lease,
          underlease, tenancy, licence or agreement has in all material respects
          observed and performed all covenants, obligations, conditions and
          restrictions therein and no breach has been waived or acquiesced in
          and all rent has been paid promptly and has not been commuted, waived
          or paid in advance nor have any collateral assurances, undertakings or
          concessions been made or entered into in connection therewith.

17.9     Use

          The existing use of the Property is only that specified in schedule 6.

17.10    No Compulsory Acquisition or Enforcement Proceedings

          To the best of the Warrantor's knowledge and belief but on the basis
          that the Warrantor has made no enquiries relating thereto there are no
          outstanding enforcement or other notices or proceedings issued in
          respect of the Property and there is no resolution or proposal for
          compulsory acquisition by the local or any other authority nor any
          outstanding order, notice or other requirement of any such authority
          that affects such existing use as aforesaid or involves expenditure in
          complying with it nor any other circumstances known which may result
          in any such order or notice being made or served or which may
          otherwise affect the Property.

17.11    Replies to Enquiries

          All disclosures and replies to enquiries and requisitions relating to
          the Property made or given by or on behalf of the Sellers or the
          Company to the Buyer or its solicitors are now and will at Completion
          be complete and correct in all material respects.

17.12    No Litigation

          The Company is not engaged in any litigation or arbitration
          proceedings in connection with any of the Property.

17.13    No Disputes

          The Property is not affected by any outstanding disputes, notices or
          complaints which affect the use of the Property for the purposes for
          which it is now used or proposed to be used.

18.      TAXATION
                                   COMPLIANCE

18.1     Returns

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

18.2     Disclosures

          All statements and disclosures made to any Taxation Authority in
          connection with any provision of the Taxation Statutes whatsoever were
          when made and remain complete and accurate in all material respects.

18.3     Clearances

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

18.4     Payment of Tax

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

18.5     Instalment Payments

          The Company is not required, under the Corporation Tax (Instalment
          Payments) Regulations 1998 (SI 1998/3175), to pay corporation tax by
          instalments.

18.6     Withholdings

          The Company has duly and punctually complied with its obligations to
          deduct, withhold or retain amounts of or on account of Tax from any
          payments made by it and to account for such amounts to the relevant
          Taxation Authority and has complied with all its reporting obligations
          to the relevant Taxation Authority in connection with any such
          payments made.

18.7     Pay As You Earn

          The Company has properly operated the PAYE system deducting Tax as
          required by law from all payments to or treated as made to or benefits
          provided for employees, ex-employees or independent contractors of the
          Company (including any such payments within section 134 of the TA) and
          duly accounted to the Inland Revenue for Tax so deducted and has
          complied with all its reporting obligations to the Inland Revenue in
          connection with any such payments made or benefits provided, and no
          PAYE audit in respect of the Company has been made by the Inland
          Revenue nor has the Company been notified that any such audit will be
          made.

18.8     Give As You Earn

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

                 TAX IN THE ACCOUNTS AND SINCE THE ACCOUNTS DATE

18.9     General

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

18.10    Post-Accounts Date Events

          Since the Accounts Date:

     (a)  the Company has not been involved in any transaction  which has given,
          may give or would, but for the  availability of any relief,  give rise
          to any Tax  other  than in  respect  of  actual  income  earned by the
          Company in the course of its trade;

     (b)  the Company has not made any payment of a revenue  nature (or incurred
          any liability to make any such payment) which could be disallowed as a
          deduction  in  computing  the  taxable  profits of the Company or as a
          charge on the Company's income including (but without prejudice to the
          generality  of the  foregoing)  any payment  which could be disallowed
          under section 74 (general rules as to deductions not  allowable),  125
          (annual payments for non-taxable consideration), 338-340 (allowance of
          charges on income),  779-785  (leased  assets) or 787  (restriction of
          relief for payments of interest) of the TA;

     (c)  the Company has not been  involved  in any  transaction  other than on
          arm's length terms;

     (d)  the Company has not paid any Tax after its due date for payment;

     (e)  the  Company has not  declared or paid any  dividend or made any other
          distribution or deemed distribution for Tax purposes;

     (f)  no  accounting  period  (as  defined  in  section 12 of the TA) of the
          Company has ended as referred to in section 12(3) of the TA;

     (g)  no  disposal  has taken place or other  event  occurred  such that the
          Company  would be required to bring a disposal  value into account for
          the purposes of the CAA or such that a chargeable  gain could or would
          accrue to the Company;

     (h)  the  Company  has not ceased to be a member of a group (as  defined in
          section 170 of the TCGA).

                                 CORPORATION TAX

18.11    Changes in Trade etc.

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

(b)               Within the period of three years ending with the date hereof
                  there has been no cessation or discontinuance of any trade or
                  business carried on by the Company nor has the scale of
                  activities in any trade or business carried on by the Company
                  within three years hereof become small or negligible.

(c)               Prior to the execution of this agreement no change of
                  ownership of the Company has taken place such that either or
                  both of sections 245 or 768 of the TA has or may be applied to
                  deny relief in respect of a loss or losses of the Company or
                  any set off of advance corporation tax.

18.12    Trading Assets

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

18.13    Sales at Undervalue/Overvalue

          All transactions entered into by the Company have been entered into on
          an arm's length basis and the consideration (if any) charged or
          received or paid by the Company on all transactions entered into by it
          has been equal to the consideration which might have been expected to
          be charged received or paid (as appropriate) between independent
          persons dealing at arm's length. No notice or enquiry pursuant to
          section 770 of the TA or the transfer pricing provisions of any
          arrangements made under section 788 of the TA (relief by agreement
          with other countries) has been made in connection with any of such
          transactions and the Company has retained sufficient records in
          connection with its transfer pricing arrangements to satisfy the
          conditions of Section 12B TMA 1970 and paragraph 21, Schedule 18 FA
          1998.

18.14    Interest Rate Contracts etc.

          The Company is not and has not since the Accounts Date been a party to
          contract which is a qualifying contract for the purposes of section
          147 of the Finance Act 1994 or a contract which may become a
          qualifying contract.

18.15    Exchange Gains and Losses

          The Company is not and has not since the Accounts Date been:

(a)      the holder of a qualifying asset;

(b)      subject to a qualifying liability; or

(c)      party to a currency contract,

          for the purposes of chapter II of the FA 1993.

18.16    Loan Relationships

          The Company is and has since the Accounts Date been taxed on an
          authorised accruals basis of accounting in relation to all loan
          relationships which are creditor relationships as defined in section
          103 of the FA 1996 and in relation thereto:

          (a)  the accruals on which the Company is taxable are computed only by
               reference to interest;

          (b)  if any such debt were to be repaid at its face value the  Company
               would not suffer  any charge to Tax in excess of Tax on  interest
               accrued; and

          (c)  there is no  connection  between  the  Company  and the debtor as
               mentioned in section 87 of the FA 1996.


18.17              (a) The Company obtains and has since the Accounts Date
                   obtained Tax relief on an authorised accruals basis of
                   accounting in relation to all loan relationships which are
                   debtor relationships as mentioned in section 103 of the FA
                   1996 and in relation to each such relationship:

                    (i)  the deduction given in computing the taxable profits of
                         the Company in consequence of that  relationship is not
                         less  than  the   interest   accruing  for  the  period
                         concerned;

                    (ii) the Company  would  suffer no adverse Tax  consequences
                         were such  debts to be repaid at face  value  save that
                         the Tax deduction for interest accrued would cease.

                    (b) The Company has not since the Accounts Date held or been
               the  debtor  under any deep  discount  securities  as  defined in
               paragraph 1 of  schedule 4 of the TA or any deep gain  securities
               as defined in  paragraph  1 of  schedule 11 of the FA 1989 or any
               relevant  discounted  security as mentioned in schedule 13 of the
               FA 1996.

                         CAPITAL ASSETS/CHARGEABLE GAINS

18.18    Capital Allowances

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

                    (b)  All necessary conditions for all capital allowances (as
                         defined  in  section  832(1) of the TA)  claimed by the
                         Company were at all material times satisfied and remain
                         satisfied.

                    (c)  The  capital  allowances  computations  for the  period
                         ending on the Accounts Date are  complete,  correct and
                         annexed to the Disclosure Letter.

                    (d)  The Company does not own any asset which is a long life
                         asset for the  purposes  of Chapter 10 of Part 2 of the
                         Capital Allowances Act 2001.

18.19    Sales at Book Value

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

18.20    Value Shifting

          The Company has not been involved in any scheme or affected by any
          arrangements whereby section 30 of the TCGA (tax-free benefits) might
          be applicable in relation to any disposal by the Company since the
          Accounts Date or on any asset of the Company being disposed of after
          the date hereof.

18.21    Valuation of Assets

(a)               The Company has not held at any time since the Accounts Date
                  any asset where on the disposal of that asset the amounts
                  deductible under section 38 TCGA fall or would fall to be
                  determined by reference to the application of section 42 TCGA
                  (part disposal of assets) to a previous transaction.

(b)               The Company has not since the Accounts Date held or had any
                  interest in any asset where section 17 TCGA might apply to
                  reduce the consideration deemed to be given on the acquisition
                  of that asset.

18.22    Reconstructions

          The Company has not been involved in any share for share exchange or
          any scheme of reconstruction or amalgamation such as are mentioned in
          sections 135 and 136 of the TCGA or section 139 of the TCGA under
          which shares or debentures have been or will be issued or assets have
          been or will be transferred.

18.23    Depreciatory Transactions

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

18.24    Receipt of Gift

          The Company has not received any assets by way of gift as mentioned in
section 282 of the TCGA.

                                  DISTRIBUTIONS

18.25    Repayments of Share Capital

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

(b)               The Company has not made (and will not be deemed to have made)
                  any distribution within the meaning of sections 209 and 210
                  (bonus issue following repayment of capital) of the TA since 5
                  April 1965 except dividends properly authorised and shown in
                  its Accounts nor is the Company bound to make any such
                  distribution.

(c)               The Company has not been party to any transaction involving an
                  exempt distribution within section 213 of the TA within the
                  period commencing five years prior to the Accounts Date.

18.26    Payments to be treated as Distributions

          The Company has not since the Accounts Date been subject to any debt
          or security where the interest payable thereon fell or falls or could
          on its assignment fall to be treated as a distribution for Tax
          purposes.

                                 FOREIGN ELEMENT

18.27    Company Residence

          The Company has always been resident in the territory in which it was
          incorporated and has never been resident in any other territory or
          treated as so resident for the purposes of any double Tax agreement.

18.28    Treasury Consents

          Neither the Company nor any subsidiary of the Company has been party
          to any transaction or transactions within section 765 or 765A of the
          TA save in circumstances where either the Treasury General Consents
          1988 applied or where the Company applied for and obtained consent of
          the Treasury to the transaction or transactions.

18.29    Company Migration

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

18.30    Transfers to Non-Resident Company

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

18.31    Double Taxation

          The Company has received or is entitled to receive credit against its
          UK Tax liability for all Tax charged (whether by Tax being withheld or
          through direct assessment) on the Company's income from any foreign
          jurisdiction and the Company holds all deduction certificates or other
          documents necessary to claim all relief due to it under part XVIII of
          the TA.

18.32    Controlled Foreign Companies

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

18.33    Gains of Non-Resident Companies

          The Company does not have and has never had any interest in any
          company, body of persons or unit trust scheme not resident in the UK
          where had that entity been a company resident in the UK it would have
          been a close company.

18.34    Offshore Funds

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

18.35    Withholding of Tax and Agency for Non-Residents

          The Company is not and has not been assessable to Tax by virtue of
          section 78 of the TMA or section 42A or 43 of the TA or section 126 of
          the FA 1995.

                               GROUPS OF COMPANIES

18.36    General

          The Company is not, nor has it ever been, a member of a group of
          companies as defined by section 170 of the TCGA.

18.37    Advance Corporation Tax

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

                    (a)  the  Company  has not paid nor is liable to pay for the
                         benefit of any advance  corporation tax which is or may
                         become  incapable  of set  off  against  the  Company's
                         liability to corporation tax;

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

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

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

18.38    Group Income Election

          The Company has not made nor been subject to any election pursuant to
section 247 of the TA.

18.39    Group Payment Arrangements

          The Company has not made nor been party to any arrangements with the
          Inland Revenue with respect to payment of corporation tax pursuant to
          section 36 of the FA 1998.

                                  CLOSE COMPANY

18.40    Close Companies - Transfers of Value

          The Company has made no transfer of value such as is specified in
          section 94(1) (or section 99(2)) of the IHTA.

18.41    Close Companies - Loans to Participators

          The Company has not made any loan advance or payment or given any
          consideration falling within sections 419-420 or 422 of the TA.

18.42    Close Companies - Distributions

          The Company has made no payments and conferred no benefits falling to
          be treated as distributions under section 418 of the TA.

18.43    Close Investment Holding Company

          The Company is not and never has been a close investment-holding
          company as defined at section 13A of the TA.

18.44    Close Companies - Transfers at Undervalue

          The Company has not made a transfer at an undervalue so that section
125 of the TCGA could apply.

                                 INHERITANCE TAX

18.45    Inheritance Tax

(a)               The Company is not, and will not become, liable to be assessed
                  to inheritance tax as donor or donee of any gift or transferor
                  or transferee of value (actual or deemed) nor as a result of
                  any disposition chargeable transfer or transfer of value
                  (actual or deemed) made by or deemed to be made by any other
                  person.

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

                              SECONDARY LIABILITIES

18.46    Secondary Liability

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

18.47    Indemnities etc

          The Company has not entered into any indemnity, guarantee or covenant
          under which the Company has agreed to pay or discharge any amount
          equivalent to or by reference to any other person's liability to Tax.

18.48    Finance Leases

(a)               The Company is not and has not been the lessee under any
                  leases of plant or machinery save for the leases specified in
                  the Disclosure Letter (the "Leases").

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

(c)               The Warrantor, after making due and reasonable enquiry, is not
                  aware of any revenue investigation, revenue enquiry or other
                  circumstance which indicates that any person who is or was a
                  lessor or owner of equipment subject to any of the Leases will
                  or may be denied the first year allowances and/or writing-down
                  allowances by reference to which the initial rental under that
                  Lease was calculated.

                            ANTI-AVOIDANCE PROVISIONS

18.49    Tax Schemes

          The Company has not entered into nor been a party to nor otherwise
          involved in any scheme or arrangement in relation to which the Company
          may be liable to Tax under the principles set out in W.T. Ramsay
          Limited v IRC (1981 STC 174) or Furniss v Dawson (1984 STC 153) as
          developed in subsequent cases.

18.50    Transactions in Securities

          The Company has not:

                    (a)  become liable for Tax; or

                    (b)  received  and will not  receive or be the subject of or
                         be  adversely  affected  by any Claim  for Tax  arising
                         under or imposed by or resulting  from the operation of
                         sections  703-709  of  the  TA  (whether  alone  or  in
                         conjunction  with any other  provisions of any Taxation
                         Statutes whatsoever) and which wholly or partly results
                         or  arises  from  or  is  computed  by   reference   to
                         circumstances  existing or events occurring at any time
                         on or  before  the  date  hereof  whether  alone  or in
                         conjunction with other circumstances  arising before or
                         after completion.

18.51    Transactions in Land

          The Company has not:

                    (a)  become liable for Tax; or

                    (b)  received  and will not  receive or be the subject of or
                         be  adversely  affected  by any claim  for Tax  arising
                         under or imposed by or resulting  from the operation of
                         sections  776-778  of  the  TA  (whether  alone  or  in
                         conjunction  with any other  provisions of any Taxation
                         Statutes whatsoever) and which wholly or partly results
                         or  arises  from  or  is  computed  by   reference   to
                         circumstances  existing or events occurring at any time
                         on or  before  the  date  hereof  whether  alone  or in
                         conjunction with other circumstances  arising before or
                         after completion.

18.52    Sale and Leaseback of Land

          The Company has not entered into any transaction as is mentioned in
          sections 34-37 or section 780 of the TA.

18.53    Transactions between Dealing and Associated Company

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

18.54    Loans or Credit

          The Company has been involved in no transactions such that section 786
          of the TA (transactions associated with loans or credit) might apply.

                                    TAX FRAUD

18.55 The Company has not been party to any  transaction  within  section 144 of
the FA 2000 (offence of fraudulent evasion of income tax).

                                 VALUE ADDED TAX

18.56    Value Added Tax

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

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

          (c)  That (without  prejudice to the  generality of clause (b) of this
               clause) the Company has not:

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

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

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

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

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

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

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

18.57    Capital Goods Scheme

          There are set out in the Disclosure Letter with express reference to
          this Warranty full details of each of the assets of the Company of a
          kind described in part XV of the Value Added Tax Regulations 1995 (SI
          No 2518) (adjustments to the deduction of input tax on capital items)
          in relation to which that part could operate to adjust the amount of
          input tax deducted, including in particular:

(a)               a description (including, in the case of land, or a building
                  or part of a building the nature of the tenure and the time
                  that the tenure has to run), the date of acquisition (or, in
                  the case of a lease, the date of grant) and the price paid and
                  VAT upon the purchase or acquisition of the capital item in
                  question;

(b)               the proportion of the VAT on the purchase price for which
                  credit has been claimed, including any adjustments made under
                  part XV, Value Added Tax Regulations 1995.

18.58    Leases

          The Company has not at any time after 10 March 1997 granted any lease
          or entered into any agreement for any lease where it was a developer
          of the land for the purposes of paragraph 2(3AA) of Schedule 10 of
          VATA 1994 and it was, at the time of the grant (or at the time the
          grant was treated as made under paragraph 2(3AAA)), the intention or
          expectation of the Company or any person within paragraph
          2(3AA)(a)(ii) that the land would become exempt land for the purposes
          of that paragraph.

                                   STAMP DUTY

18.59    Stamp Duty

          All documents in the enforcement of which the Company is or may be
          interested have been duly stamped and since the Accounts Date the
          Company has not been a party to any transaction whereby the Company
          was or is or could become liable to stamp duty reserve tax.

18.60    Relief on Transfer of Land

          The Company does not at the date hereof hold any estate or interest in
          land in the United Kingdom, or any estate or interest which was
          derived from such an estate or interest, that was transferred to it by
          an instrument executed within two years prior to the date hereof, such
          instrument having been stamped on the basis that either group relief
          under section 42 of the Finance Act 1930, section 11 of the Finance
          Act (Northern Ireland) 1954 or section 151 of the Finance Act 1995
          applied or that relief under section 76 of the Finance Act 1986
          applied.

19.      ENVIRONMENTAL MATTERS

19.1     Liability

          To the best of the Warrantor's knowledge and belief but on the basis
          that the Warrantor has made no enquiries relating thereto the Company
          and the Property comply and have at all times complied with all
          Environmental Laws and there are no facts or circumstances which
          interfere or prevent compliance with any Environmental Laws.

19.2     Notices and Complaints

          The Company has not received any notice of enforcement, prohibition,
          improvement, remediation or other notice of equivalent nature, or any
          judgment, order, decree, award, demand or decision in respect of the
          Environment from any court, tribunal, arbitrator or governmental or
          regulatory authority and there have been no complaints,
          investigations, enquiries, requests for information or other formal or
          informal indications of any possible claims or legal actions in
          respect of the Environment from any person including any neighbour,
          governmental or regulatory authority, current or former employee or
          third party.

19.3     Contaminated Land

(a)               To the best of the Warrantor's knowledge and belief but on the
                  basis that the Warrantor has made no enquiries relating
                  thereto there has not been and there is not present on, at or
                  under the Property and there is and has been no release,
                  migration, leakage, spill, discharge, entry, deposit or
                  emission onto or from the Property of any Hazardous Substance
                  or Waste.

(b)               To the best of the Warrantor's knowledge and belief there has
                  not been any disposal, storage, release, leakage, migration,
                  spill, discharge, entry, deposit or emission of any Hazardous
                  Substance or Waste into the Environment caused by the
                  Activities.

20.      PENSIONS

20.1     Pensions arrangements disclosed

          Save under the EW Simulation Technology Limited Pension Scheme (the
          "Disclosed Scheme") the Company is not under obligation or commitment,
          nor is it a party to any custom or practice, to pay, provide or
          contribute towards any relevant benefits within the meaning of section
          612 of the TA (ignoring the exception contained in that section),
          including the making of any payment of contributions to, or
          remuneration specifically referable to contributions to, any personal
          pension scheme, stakeholder pension scheme, retirement annuity
          contract or similar arrangement ("Relevant Benefits") to or in respect
          of any person and nothing has been done to create a reasonable
          expectation that any such payments, provision or contributions will be
          made. The Company has not at any time participated in or contributed
          towards any former scheme or arrangement ("Former Scheme") which has
          as its purpose or one of its purposes the provision of Relevant
          Benefits (other than schemes which have been fully wound up).

20.2     Money purchase scheme

          Other than lump sum death in service benefits, the Disclosed Scheme
          provides only money purchase benefits (as defined in section 181 of
          the Pension Schemes Act 1993) and no promise or assurance (oral or
          written) has been given to any person that his or her benefits under
          the Disclosed Scheme (other than lump sum death in service benefits)
          will be calculated by reference to any person's remuneration or equate
          (approximately or exactly) to any particular amount.

20.3     Ex gratia payments and undertakings

          The Company has not made or proposed any voluntary or ex gratia
          payments of Relevant Benefits to or in respect of any person and is
          not due to make any such payments in the future. No undertaking or
          assurance (whether legally binding or not) has been given by the
          Company to any person as to the introduction, continuance, increase or
          improvement of any Relevant Benefits.

20.4     Disclosure of documents

          Full details of the Disclosed Scheme have been supplied to the Buyer
          including copies of the current governing trust documentation, current
          booklet and any announcements made to members; all relevant approval
          letters from the Inland Revenue; all relevant contracting-out
          certificates; the most recent actuarial valuation and trustees' annual
          report and accounts; the payment schedule; all documents evidencing
          compliance with the Pensions Act 1995; all correspondence with the
          Occupational Pensions Regulatory Authority, OPAS and the Pensions
          Ombudsman; and full membership details.

20.5     Winding-up, termination or closure of the Disclosed Scheme

          No event has occurred and no action has been taken which would or
          could result in the winding-up, termination or closure of the
          Disclosed Scheme in whole or in part.

20.6     Regulatory matters

          The Disclosed Scheme is an exempt approved scheme within the meaning
          of section 592(1) of the TA and has been with effect from its date of
          commencement and there is no reason why such exempt approved status
          might be withdrawn or cease to apply.

20.7     Payment of contributions and fees and expenses

          All contributions and premiums which have become payable to or under
          the Disclosed Scheme by or in respect of any current and former
          employees and officers have been duly paid within any applicable
          prescribed period under the Pensions Act 1995 and the Disclosed
          Scheme's governing documentation. The aggregate of all actuarial,
          consultancy, legal and other fees and charges and all taxation and
          other expenses for which liability has arisen but which has not yet
          been discharged and the value of all services which have been provided
          but in respect of which an account has not yet been rendered in
          relation to the Disclosed Scheme does not exceed (pound)5,000.

20.8     Legal compliance

          The Disclosed Scheme has at all times been operated in accordance with
          the trusts, powers and provisions of its governing documentation, all
          applicable EC and domestic legislation, and the general requirements
          of law and regulatory practice and no report has been made to the
          Occupational Pensions Regulatory Authority in relation to any
          potential or actual non-compliance. The Company has fulfilled all of
          its obligations in relation to and under the Disclosed Scheme in
          respect of any current and former employees and officers. Prior to the
          date of this agreement all benefits which have been, or will be,
          transferred into the Disclosed Scheme (whether on an individual or
          bulk basis) have been, or will be, so transferred on a sex equal
          basis.

20.9     Access to membership

          Every employee and former employee who is or has been a part-time
          employee is not and has never been excluded from membership of any
          Disclosed Scheme. Every employee and officer and former employee and
          officer who is or has been entitled to, or eligible for, membership of
          the Disclosed Scheme, whether under a contract of employment or under
          the rules of the Disclosed Scheme, has joined or been invited to join
          as of the date on which he became so entitled or eligible. The Company
          has complied at all times with its obligation to designate and provide
          access to a stakeholder pension scheme for all its relevant employees.

20.10    Claims and litigation

          No claim or complaint has been made or threatened against any current
          or former trustee, manager or administrator of the Disclosed Scheme or
          any employer participating therein (including, without limitation, any
          complaint under the internal dispute resolution procedure, or to OPAS
          or the Pensions Ombudsman) in respect of any act, event, omission or
          other matter arising out of or in connection with the Disclosed Scheme
          (other than routine claims for benefits) or generally in respect of
          the provision of Relevant Benefits (whether payable under the
          Disclosed Scheme or otherwise) and there are no circumstances which
          may give rise to any such claim or complaint.

20.11    Records and assets of the scheme

          The records of the Disclosed Scheme (including all books of account
          and trustees' minutes) have been properly and accurately maintained
          and all such records are in the possession of, or under the control
          of, the trustees of the Disclosed Scheme. The trustees of the
          Disclosed Scheme have legal title to all of the assets of that scheme.
          None of the assets of the Disclosed Scheme constitute
          "employer-related investments" for the purpose of section 40 of the
          Pensions Act 1995. There are no charges or encumbrances over any of
          the assets of the Disclosed Scheme and all such assets are either held
          directly by the trustees of the Disclosed Scheme or by investment
          managers (or nominees properly appointed by the trustees) and are not
          subject to any stock lending arrangements.

20.12    Current trustees and scheme documentation

          The current trustees of the Disclosed Scheme are the Warrantor and
          Universal Pension Trustees Limited. They and the Disclosed Scheme are
          all resident in the United Kingdom for tax purposes and the trustees
          of the Disclosed Scheme are the administrators for the purposes of
          Chapter 1 of Part XIV of the TA. The trust deeds, rules and other
          documents which have at any time governed the Disclosed Scheme were
          all validly adopted and accurately record the benefits payable under
          them as referred to in all announcements, explanatory booklets and
          other literature or communications issued in relation to the Disclosed
          Scheme.

20.13    Insured death benefits

          All death benefits which may be payable (other than a refund of
          members' contributions with interest, where appropriate) are fully
          insured with an insurance company authorised under the Financial
          Services and Markets Act 2000 to carry on long-term insurance
          business. All policies and contracts under which such benefits are
          insured are enforceable and there is no ground on which the insurance
          company concerned might avoid liability under such policy or contract.
          Each member and beneficiary has been covered for such insurance by
          such insurance company at its normal rates and on its normal terms for
          persons in good health.

21.      INFORMATION

21.1     General

     (a)  So far as the Warrantor is aware, all written information given by, or
          on behalf of, the Sellers or the Company to the Buyer, its advisers or
          agents before or during the negotiations  leading to this agreement is
          true, complete, accurate and not misleading;

     (b)  In relation to the Business Plan, as at 19 March 2002:

          (i)  all  statements of fact  contained in the Business Plan were true
               and accurate in all material respects and not misleading;

          (ii) all expressions of opinion or intention or expectation  contained
               in the  Business  Plan were made on  reasonable  grounds and were
               truly and honestly  held by the  Warrantor and were fairly based;
               and

          (iii)there were no facts  known or which could on  reasonable  enquiry
               have been known to the  Warrantor and which are not stated in the
               Business Plan the omission of which would make any such statement
               or expression in such document misleading.

     (c)  As at 19  March  2002,  there  were no facts  known or which  could on
          reasonable  enquiry have been known to the Warrantor and which are not
          stated in the Business  Plan which are, nor might be,  material in the
          context  of this  agreement  or the  acquisition  by the  Buyer of the
          Shares.

21.2     This Agreement and the Disclosure Letter

          The information set out in schedules 1, 2 and 6 of this agreement and
          in the Disclosure Letter is true, complete, accurate in all material
          respects and not misleading.

21.3     Material Information

          So far as the Warrantor is aware, all information about the Shares and
          the Company's business which might be material to a buyer of the
          Shares has been disclosed to the Buyer in writing.



<PAGE>


                                   SCHEDULE 4

                               Form of Resignation

TO:      The Directors
         EW Simulation Technology Limited (the "Company")
         and each of its directors, officers, agents and advisers

Date:    ------- September 2002


I hereby resign as secretary, and if applicable, as employee of the Company with
effect from today. I confirm that I have no claims against the Company or any of
you in respect of any cause, matter or thing whatsoever (including unpaid
remuneration) but to the extent any such claims exists or may exist I (unless
such claim is covered by insurance) hereby irrevocably waive such claim and
release the Company and each of you from any liability or obligation whatsoever
in respect thereof.

EXECUTED as a DEED                  )
and DELIVERED by MRS ANN   )
ANDREWS in the presence of :                )


(Witness):

Name:

Address:

Occupation:


<PAGE>


                                   SCHEDULE 5

                        Sellers' Limitations on Liability






1.        TIME LIMIT FOR CLAIMS

          Save in the case of any liability based upon fraud and including
          without limitation fraudulent concealment by the Warrantor, the
          Warrantor shall not be liable in respect of a claim under the
          Warranties unless written notice of such claim setting out reasonable
          details of the relevant claim is served upon the Warrantor:

          (a)  in the  case of a claim  under  the  Warranties  (other  than the
               Warranties  relating  to Tax or  Environment),  by not later than
               5.00 p.m. on the second anniversary of Completion; and

          (b)  in the case of a claim  under the  Warranties  relating to Tax or
               Environment  by not later  than  5.00  p.m.  on the day one month
               after the seventh anniversary of Completion.

2.       MONETARY LIMIT ON CLAIMS

          Save in the case of any liability based upon fraud and including
          without limitation fraudulent concealment by the Warrantor, the
          Warrantor shall not be liable in respect of a claim under the
          Warranties unless and until the aggregate amount of all such claims
          (when aggregated with all claims under the Tax Deed) against the
          Warrantor exceeds US$50,000 in which event the Warrantor's liability
          shall be for the total amount of such claims and shall not be limited
          to the excess provided that (save in the case of fraud or fraudulent
          concealment by the Warrantor) the aggregate liability of the Warrantor
          in respect of all claims under the Warranties and the Tax Deed shall
          not in any circumstances exceed US $4,500,000.

3.       DISCLOSURE

          The Warrantor shall not be liable in respect of a claim under the
          Warranties to the extent that the same or circumstances giving rise
          thereto are fairly disclosed in the Disclosure Letter or are expressly
          provided for or noted in the Accounts. No letter, document or other
          communication shall be deemed to be disclosed except and to the extent
          that the same is referred to in, and a copy attached to, the
          Disclosure Letter.

4.       NO LIABILITY FOR CERTAIN EVENTS

          No liability shall attach to the Warrantor in respect of a breach of
          any of the Warranties to the extent that:

          (a)  such claim arises as a consequence  of a change in the law by the
               English courts enacted after the date hereof;

          (b)  such claim arises as a result of any provision or reserve made in
               respect  thereof in the Accounts being  insufficient by reason of
               any  increase in rates of taxation  made after the date hereof or
               arises as a result of the retrospective imposition of taxation as
               a consequence of a change in the law in England and Wales enacted
               after the date hereof;

          (c)  the breach or the events  giving  rise to such  breach  would not
               have arisen but for an act omission or  transaction  of the Buyer
               or the Company which could  reasonably have been avoided effected
               after Completion otherwise than in the ordinary and proper course
               of trade as  presently  carried on by the  Company  and which the
               Buyer knew or ought  reasonably  to have known would give rise to
               the breach in question;

          (d)  it has been made good or  compensated  by payment  made under the
               Tax Deed;

          (e)  such claim arises as a result of a change of accounting policy or
               practice of or change of the date to which  accounts  are made up
               in each year by the Buyer or the Company  introduced  on or after
               the date  hereof  other  than any change  introduced  in order to
               ensure  that  the  Company   complies  with  generally   accepted
               accounting principles in the UK; and

          (f)  the claim would not have arisen but for any act or omission prior
               to  Completion  by the Sellers or the Company  carried out at the
               request of or with the written approval of the Buyer.

5.       MISCELLANEOUS

5.1       Any of the Warranties to the extent remediable if breached shall not
          entitle the Buyer to compensation unless the Warrantor is given
          written notice of such breach and such breach is not remedied to the
          reasonable satisfaction of the Buyer within 30 days after the date
          such notice is received.

5.2       In the event of the Warrantor having paid to the Buyer an amount in
          respect of a claim for breach of any of the Warrantor and subsequent
          to the date of making such payment the Buyer or the Company recovers
          from a third party a sum which is referable to that payment then the
          Buyer shall forthwith repay or procure the repayment by the Buyer or
          the Company to the Warrantor of the lesser of: (a) the amount
          recovered (less costs and any tax thereon); and (b) the sum paid by
          the Warrantor to the Buyer.

5.3       The amount of any liability arising in respect of any claim or claims
          for breach of any of the Warranties or under the Tax Deed shall be
          treated as a reduction of the consideration for the Shares.

5.4       In addition to the duty of the Buyer under the general law to mitigate
          loss or damage the Warrantor shall be entitled to require the Company
          and the Buyer (or either of them) at the Warrantor's expense to take
          all such further reasonable steps or proceedings in order to mitigate
          any claim for breach of any of the Warranties and the Buyer shall
          procure that the Company shall, in so far as is reasonable to do so,
          act in accordance with any such written requirements of the Warrantor
          subject to the Company and the Buyer being fully indemnified by the
          Warrantor against all reasonable costs and expenses incurred in
          connection therewith.

5.5       For the purpose of enabling the Warrantor to remedy the breach or to
          mitigate or otherwise determine the amount of any claim in respect of
          the Warranties the Buyer shall notify the Warrantor within 40 days of
          the breach or circumstances giving rise to the breach coming to its
          notice and the Buyer shall make or procure to be made available to the
          Warrantor and his duly authorised agents on reasonable notice during
          normal business hours all relevant books of account records and
          correspondence for the purpose of enabling the Warrantor to ascertain
          or extract any information relevant to the claim.

5.6       The Buyer shall keep the Warrantor informed of all material
          developments in relation to any claim under the Warranties, and shall
          consult with the Warrantor regarding the conduct of any such claim.



<PAGE>


                                   SCHEDULE 6
                                  The Property


     Tenure                  Leasehold

     Description             Unit 1  The Royston Centre  Ash Vale  Farnborough

     Mortgages or Charges    Lloyds Bank plc debenture registered on 01/02/1997


    Permitted uses/existing use
                                   Light Industrial with
                                   ancillary office
                                   and/or B1(c) of the
                                   Town and Country
                                   Planning (use Clauses)
                                   Order 1987

    Sublettings

    Description            Ground Floor Offices Unit 1  The Royston Centre  Ash
                           Vale  Farnborough






<PAGE>



Executed as a deed by DR ROBERT ANDREWS in the ) presence of: )
                                                  )
Witness name:                                     )
Witness address:                                  )
                                                  )







<PAGE>


Executed as a deed by MRS ANN ANDREWS in the      )
presence of:                                      )

Witness name:                                     )
Witness address:                                  )
                                                  )





<PAGE>


Executed as a deed by EW SIMULATION TECHNOLOGY ) LIMITED acting by ) in the
presence of: )
                                                  )
Witness name:                                     )             Director
Witness address:                                  )
                                                  )   Director/Secretary


Executed as a deed by                             )
HERLEY INDUSTRIES, INC.                           )
acting                                            )
by
in the presence of:
                                                  )             Director
Witness name:                                     )
Witness address:                                  )   Director/Secretary

</TEXT>
</DOCUMENT>
