VI Group PLC – ‘20-F’ for 12/31/02 – EX-12.(A)(II)

On:  Monday, 6/30/03, at 10:30am ET   ·   For:  12/31/02   ·   Accession #:  1015402-3-2566   ·   File #:  1-31469

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report of a Foreign Private Issuer   —   Form 20-F
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer             90    382K 
 2: EX-4.(A)    Sale and Purchase Agreement                           46    139K 
 3: EX-8        Consulting Agreement                                   1      4K 
 4: EX-12.(A)(II)  Software Licensing Agreement                       55    228K 
 5: EX-12.(A)(III)  Property Lease                                     4      7K 

EX-12.(A)(II)   —   Software Licensing Agreement
Exhibit Table of Contents

EX-12.(A)(II)
1st Page of 55
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
E-48

EX-12.(A)(II)
2nd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 2nd
                                                        [Enlarge/Download Table]


                                Table of Contents                                             

                                                                                          PAGE
                                                                                          ----
                                                                                              

ARTICLE I    INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   54
                1.1  Definitions  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   54
                1.2  Rules of Construction  . . . . . . . . . . . . . . . . . . . . . . .   61
ARTICLE II   AMOUNT AND TERMS OF CONVERTIBLE LOAN AND PREFERRED INVESTMENT. . . . . . . .   62
                2.1  Commitment to Make Convertible Loan  . . . . . . . . . . . . . . . .   62
                2.2  Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   62
                2.3  Interest; Default Interest . . . . . . . . . . . . . . . . . . . . .   62
                2.4  Interest and Principal Payments  . . . . . . . . . . . . . . . . . .   62
                2.5  Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . . .   62
                2.6  Prepayment Premium . . . . . . . . . . . . . . . . . . . . . . . . .   63
                2.7  Optional Conversion  . . . . . . . . . . . . . . . . . . . . . . . .   63
                2.8  Company Conversion . . . . . . . . . . . . . . . . . . . . . . . . .   65
                2.9  Taxes on Conversion  . . . . . . . . . . . . . . . . . . . . . . . .   65
               2.10  Ordinary Shares, American Depositary Receipts  . . . . . . . . . . .   65
               2.11  Gross-Up Protection  . . . . . . . . . . . . . . . . . . . . . . . .   66
ARTICLE III  CONDITIONS OF OBLIGATIONS OF THE LENDER  . . . . . . . . . . . . . . . . . .   66
                3.1  Conditions to Lender's Obligations to make the Convertible Loan  . .   66
ARTICLE IV   REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . .   68
                4.1  Representations and Warranties of the Company  . . . . . . . . . . .   68
                4.2  Representations and Warranties of the Lender . . . . . . . . . . . .   73
ARTICLE V    AFFIRMATIVE COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . .   73
                5.1  Reports  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   73
                5.2  Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . .   74
                5.3  Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   74
                5.4  Use of Proceeds  . . . . . . . . . . . . . . . . . . . . . . . . . .   74
                5.5  Ordinary Shares/AIM  . . . . . . . . . . . . . . . . . . . . . . . .   75
                5.6  American Depositary Receipts/AMEX  . . . . . . . . . . . . . . . . .   75
                5.7  Observer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   75
                5.8  Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . .   75
                5.9  Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . .   75
               5.10  Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   76
               5.11  Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   76
ARTICLE VI   NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   76
                6.1  Borrowed Money Indebtedness  . . . . . . . . . . . . . . . . . . . .   76
                6.2  Liens  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   77
                6.3  Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . .   77
                6.4  Mergers, Consolidations and Dispositions and Acquisitions of Assets    77
                6.5  Redemption, Dividends and Distributions  . . . . . . . . . . . . . .   78
                6.6  Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . .   78
                6.7  Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . .   78
                6.8  Loans and Investments  . . . . . . . . . . . . . . . . . . . . . . .   78
                6.9  Organizational Documents . . . . . . . . . . . . . . . . . . . . . .   78

                                      E-49                                                    

EX-12.(A)(II)
3rd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 3rd
               6.10  Sale/Leasebacks  . . . . . . . . . . . . . . . . . . . . . . . . . .   78
               6.11  Issuance of Stock  . . . . . . . . . . . . . . . . . . . . . . . . .   78
               6.12  Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .   78
               6.13  Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . .   79
               6.14  Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   79
ARTICLE VII  DEFAULTS AND REMEDIES  . . . . . . . . . . . . . . . . . . . . . . . . . . .   79
                7.1  Events of Default  . . . . . . . . . . . . . . . . . . . . . . . . .   79
                7.2  Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80
                7.3  Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . .   81
                7.4  Waiver of Past Defaults  . . . . . . . . . . . . . . . . . . . . . .   81
ARTICLE VIII INDEMNIFICATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   81
                8.1  Indemnification  . . . . . . . . . . . . . . . . . . . . . . . . . .   81
                8.2  Shareholder Communications . . . . . . . . . . . . . . . . . . . . .   81
                8.3  Indemnification Process  . . . . . . . . . . . . . . . . . . . . . .   82
ARTICLE IX   RESTRICTIONS ON TRANSFER OF CONVERTIBLE DEBENTURE  . . . . . . . . . . . . .   82
                9.1  Securities Laws Restrictions on Transfer . . . . . . . . . . . . . .   82
                9.2  Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . .   83
                9.3  Transfer to Affiliates . . . . . . . . . . . . . . . . . . . . . . .   83
                9.4  Transfer to Competitors. . . . . . . . . . . . . . . . . . . . . . .   84
ARTICLE X    MISCELLANEOUS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   84
               10.1  Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   84
               10.2  Amendment, Supplement and Waiver . . . . . . . . . . . . . . . . . .   85
               10.3  Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   85
               10.4  Duplicate Originals  . . . . . . . . . . . . . . . . . . . . . . . .   85
               10.5  Governing Law  . . . . . . . . . . . . . . . . . . . . . . . . . . .   85
               10.6  Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . .   86
               10.7  No Adverse Interpretation of Other Agreements  . . . . . . . . . . .   86
               10.8  Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . .   87
               10.9  Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .   87
              10.10  Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   87
              10.11  Confidentiality  . . . . . . . . . . . . . . . . . . . . . . . . . .   87

<FN>                                                                                          
Exhibit A -Convertible Debenture                                                              
Exhibit B -Preferred Shares                                                                   
Exhibit C -Registration Rights Agreement                                                      
Exhibit D -Competitors                                                                        

E-50

EX-12.(A)(II)
4th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 4th
    This  LOAN  AND  INVESTMENT  AGREEMENT (the "Agreement") is dated as of 10
                             ---------
January 2002 between VI Group plc, a public limited company organized in England
and  Wales  (the  "Company"),  and  Hemisphere  Capital  LLC  a Delaware limited
-------                                   
liability  company  (the "Lender" and together with the Company, the "Parties").
                       ------                                      -------
     WHEREAS,  the Lender proposes to make (a) a convertible loan to the Company
in an aggregate principal amount of $1,000,000 upon the terms and conditions set
forth  herein  and  in  the  Convertible Debenture and (b) a further convertible
preferred  equity investment in the Company of between $2,000,000 and $4,000,000
in  aggregate  principal  amount  upon the terms and conditions set forth herein
(the "Preferred  Investment");                                                  
---------------------                                                 

    WHEREAS,  the  Lender  has  agreed that, provided all of the conditions to
conversion  of  the  loan  set  forth herein shall have been completed, the loan
shall  convert  to  Ordinary  Shares,  subject  to  an  ADR  Election;          

    NOW,  THEREFORE, in consideration of the mutual covenants contained herein
and  other good and valuable consideration the receipt, adequacy and sufficiency
of  which  are hereby acknowledged, it is agreed by and among the Parties hereto
as  follows:                                                                    

 ARTICLE I
INTERPRETATION

1.1     Definitions.  Capitalized terms not otherwise defined herein shall have 
-----------                                                   
the  meanings  set  forth  in  this  Section  1.1.                              
      ------------

    "Accelerated  Repayment Election" has the meaning set forth in Section 2.5
     -------------------------------                               -----------
of  this  Agreement.                                                            

    "Accelerated Repayment Period" has the meaning set forth in Section 2.5 of
  ----------------------------                               -----------
this  Agreement.                                                                

    "Act" means the Companies Act 1985 and 1989 of England and Wales and every
---                                                                 
statutory  re-enactment  thereof.                                               

"ADR"  means  American  Depositary  Receipt.                          
---                                                                 

    "ADR Election" has the meaning set forth in Section 2.7 of this Agreement.
------------                               -----------              

    "Affiliate"  means,  in  relation  to  any  Person, any other Person that,
---------                                                           
directly  or  indirectly,  controls, is controlled by or is under common control
with  such  Person.  For purposes of this definition, "control" will mean, as to
any  Person,  the  power  direct  or  indirect: (i) to vote more than 50% of the
securities  having  ordinary  voting power for the election of directors of such
Person,  or (ii) to direct or cause the direction of the management and policies
of such Person, whether by ownership of securities, contract or otherwise.  With
respect to the Lender, Affiliates shall also include Persons advising or advised
by  it  and  the  partners, managers, members, shareholders and employees of the
Lender,  its  Affiliates  and  their  respective  advisors.                     

E-51

EX-12.(A)(II)
5th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 5th
    "Agreement"  has  the meaning set forth in the preamble of this Agreement.
---------                                                           

    "AIM" means the Alternative Investment Market of the London Stock Exchange
---                                                                 
plc.                                                                            

    "AMEX"  means  the  American  Stock  Exchange  and  any successor thereto.
----                                                                
 "Board  Certificate"  has  the  meaning  set  forth  in  Section  6.14.
 ------------------                                      -------------

    "Board  of  Directors"  means the Board of Directors of the Company or any
--------------------                                                
committee  of  the  Board  authorized  to  act  for  it  hereunder.             

    "Borrowed  Money Indebtedness" means, with respect to any Person as of the
----------------------------                                        
date  hereof,  without  duplication:                                            

(a)     all  obligations  of  such  Person  for  borrowed  money;     

    (b)     all  obligations  of  such  Person evidenced by bonds, debentures,
notes  or  similar  instruments;                                                

    (c)     all  obligations  of  such  Person under conditional sale or other
title  retention  agreements  relating  to  Property  purchased  by such Person;

    (d)     all  obligations  of such Person issued or assumed as the deferred
purchase  price of Property or services (excluding obligations of such Person to
creditors  for  raw  materials,  inventory,  services  and supplies and deferred
payment  for services to employees and former employees incurred in the ordinary
course  of  such  Person's  business);                                          

(e)     all  capital  lease  obligations;                             

    (f)     all  obligations  of  others  secured  by  any Lien on Property or
assets  owned or acquired by such Person, whether or not the obligations secured
thereby  have  been  assumed;                                                   

    (g)     all  outstanding letters of credit, surety bonds and currency swap
or  similar  agreements  issued  for  the  account  of  such  Person;  and      

    (h)     all  guarantees  of  such  Person  for  obligations  of  the  type
described  above.                                                               

    "Business  Day" means any day which is neither a Saturday nor a Sunday nor
-------------                                                       
a  legal  holiday  on  which  banks  are  authorized or required to be closed in
London,  England  or  New  York,  New  York.                                    

    "Capital  Stock"  means  any  and all shares, interests, participations or
--------------                                                      
other equivalents of or interests in (however designated) equity of the Company,
including  any  preferred  stock,  but excluding any debt securities convertible
into  such  equity  prior  to  such  conversion.                                

    "Change  of Control" means a transaction in which (i) any unrelated Person
------------------                                                  
becomes  the  beneficial  owner of (x) more than 50% of the voting equity of the
Company,  or  (y) any unrelated Person obtains the power to designate a majority
of  the  Board  of Directors of the Company or ensure that the Company's affairs
are  conducted  in  accordance  with  the  directions  of  such  Person         

E-52

EX-12.(A)(II)
6th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 6th
or  (z)  any  merger,  consolidation,  recapitalization  or  other  significant 
corporate  transaction  as a result of which the beneficial owners of the voting
equity  of  the Company immediately before such transaction do not hold at least
60%  of  the  equity  interests  in  the  surviving  or  resulting  entity.     

    "Company"  means  the  party  named  as such in the preamble above until a
-------                                                             
successor replaces it pursuant to the applicable provision hereof and thereafter
means  the  successor  to  such  party.                                         

    "Company  Intellectual  Property"  has  the  meaning  set forth in Section
     -------------------------------                                   -------
4.1.12  of  this  Agreement.                                                    
-                                                                     

    "Company's  Bank Account" means Barclays Bank plc, 18 King Street, Stroud,
-----------------------                                             
Gloucestershire  GL5  3DF,  England,  Account:  Vero  International  Software UK
Limited,  Sort  Code: 20-33-83, Account No.:79726400, or such other bank account
as  the  Company  may  specify  to the Lender prior to the Loan Completion Date.

    "Company  Conversion"  has  the  meaning  set forth in Section 2.8 to this
-------------------                                   -----------   
Agreement.                                                                      

    "Company  Conversion Election" has the meaning set forth in Section 2.8 to
  ----------------------------                               -----------
this  Agreement.                                                                

"Competitor"  means  any  Person  listed  on  Exhibit  D.             
----------                                   ----------             
"Convertible  Debenture"  means the convertible debenture of the Company, in the
----------------------                                                        
form  attached  as  Exhibit  A  hereto,  evidencing  the  Convertible  Loan.    
----------                              

    "Convertible  Loan"  means  the  loan  made  by  the Lender to the Company
-----------------                                                 
pursuant  to  Section  2.1  of  this  Agreement.                                
------------                                        

"Depository"  means  the  Bank  of  New  York.                        
----------                                                          

    "Depository  Agreement"  means  that agreement between the Company and the
---------------------                                               
Bank of New York dated as of 31 January 2002 relating to the deposit of Ordinary
Shares  and  the  issue  of  ADRs.                                              

    "Derivative  Securities"  has the meaning set forth in Section 4.1.2(a) of
  ----------------------                                ----------------
this  Agreement.                                                                

 "EBITDA"  means  earnings  before  interest,  taxes,  depreciation  and
------                                                              
amortization.                                                                   
--                                                                

"Environmental  Laws"  means  all  laws,  rules,  regulations,  codes,
-------------------                                                 
ordinances,  orders, decrees, judgments, injunctions, written notices or binding
agreements  issued,  promulgated  or  entered  into, by or with any Governmental
Authority,  relating  in any way to the environment, preservation or reclamation
of  natural  resources,  the handling, treatment, storage, management, disposal,
release  or threatened release of any Hazardous Material or to the effect of the
environment  (including  workplaces)  on  health  and  safety.                  

E-53

EX-12.(A)(II)
7th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 7th
    "Environmental  Liability"  means  any  liability, contingent or otherwise
------------------------                                            
(including  any  liability  for  damages,  natural  resource  damage,  costs  of
environmental  remediation,  administrative oversight costs, fines, penalties or
indemnities),  of the Company or any Subsidiary directly or indirectly resulting
from  or based upon (a) an actual or alleged violation of any Environmental Law,
(b)  the  generation,  use,  handling,  transportation,  storage,  treatment  or
disposal  of  any  Hazardous  Materials,  (c)  actual or alleged exposure to any
Hazardous  Materials,  (d) the actual or alleged presence, release or threatened
release  of  any  Hazardous  Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or  imposed  with  respect  to  any  of  the  foregoing.                        

    "Event  of  Default"  has  the  meaning  set  forth in Section 7.1 of this
------------------                                    -----------   
Agreement.                                                                      

    "Excess"  has  the  meaning  set forth in Section 2.7.5 of this Agreement.
------                                   -------------              

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

"Final  Maturity  Date"  means  10  January  2005.                    
---------------------                                               

    "Financial  Statements"  has  the meaning set forth in Section 4.1.8(a) of
  ---------------------                                 ----------------
this  Agreement.                                                                

    "GAAP"  means  generally  accepted accounting principles as in effect from
----                                                                
time  to  time.                                                                 

    "Governmental  Authority"  means  the  government  of  any  nation  or any
-----------------------                                             
political  subdivision  thereof,  whether  state  or  local,  and  any  agency, 
authority, instrumentality, regulatory body, court, central bank or other entity
exercising  executive,  legislative,  judicial,  taxing,  regulatory  or        
administrative  powers  or  functions  of  or  pertaining  to  government.      

    "Hazardous  Materials"  means  all  explosive or radioactive substances or
--------------------                                                
wastes  and  all  hazardous  or  toxic  substances,  wastes or other pollutants,
including  petroleum  or  petroleum distillates, asbestos or asbestos containing
materials,  polychlorinated  biphenyls, radon gas, infectious or medical wastes,
and  all  other  substances  or  wastes  of any nature regulated pursuant to any
Environmental  Law.                                                             

    "Historical  Financial  Statements"  has  the meaning set forth in Section
     ---------------------------------                                 -------
4.1.8(a)  of  this  Agreement.                                                  
--------                                                                        

"Indebtedness"  means  and  includes:                                 
------------                                                        

    (a)     all  items  which  in accordance with US GAAP would be included on
the liability side of a balance sheet on the date as of which Indebtedness is to
be  determined (excluding capital stock, surplus reserves and deferred credits);

  (b)     all  guaranties,  letter  of  credit,  contingent  reimbursement
obligations  and  other contingent obligations in respect of, or any obligations
to  purchase  or  otherwise  acquire,  indebtedness  of  others;  and           

E-54

EX-12.(A)(II)
8th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 8th
    (c)     all  indebtedness  secured by any Lien existing on any interest of
the  Person  with  respect to which indebtedness is being determined in Property
owned subject to such Lien whether or not the indebtedness secured thereby shall
have  been  assumed.                                                            

    "Indemnified  Party"  has  the  meaning  set  forth in Section 8.1 of this
------------------                                    -----------   
Agreement.                                                                      

    "Indemnifying  Party"  has  the  meaning  set forth in Section 8.3 of this
-------------------                                   -----------   
Agreement.                                                                      

    "Intellectual  Property"  has  the  meaning set forth in Section 4.1.12 of
  ----------------------                                  --------------
this  Agreement.                                                                

    "Interest  Cover"  means in respect of any period, the aggregate amount of
---------------                                                     
the  interest  (including  the  interest  element  of finance leasing or capital
leasing,  and  hire  purchase  payments), commissions, fees, discounts and other
finance  payments  accrued  by the Company and any Subsidiary, but (a) including
any commission, fees, discounts and other finance payments payable by any of the
Company  and  its  Subsidiaries under any interest rate hedging agreement during
such  period,  and  (b)  deducting any interest receivable by the Company or any
Subsidiary  on  any  deposit  or  bank  account.                                

    "Investment"  means  the purchase or other acquisition of any Indebtedness
----------                                                          
of,  or  the  making  of  any  loan,  advance or capital contribution to, or the
incurring  of  any  liability,  contingent  or  otherwise,  in  respect  of  the
Indebtedness  of,  any  Person.                                                 

    "Lender"  has  the  meaning  set  forth in the preamble to this Agreement.
------                                                              

    "Lien" means any mortgage, pledge, charge, encumbrance, security interest,
----                                                                
collateral assignment or other lien or restriction of any kind, whether based on
common  law,  constitutional  provision,  statute or contract, and shall include
reservations,  exceptions,  encroachments,  easements, rights of way, covenants,
conditions,  restrictions  and  other  title  exceptions.                       

    "Loan  Completion  Date" means the date on which all of the conditions set
----------------------                                              
forth  in  Section 3.1 shall have been satisfied or waived by the Lender or such
-----------                                               
other  date  as  may  be  agreed  between  the  Parties.                        

    "Loan  Documents"  means  this  Agreement  and  the Convertible Debenture.
---------------                                                     

    "Loss"  has  the  meaning  set  forth  in  Section  8.1of  this Agreement.
----                                      ------------              

    "Mandatory  Prepayment"  has  the meaning set forth in Section 2.5 of this
---------------------                                 -----------   
Agreement.                                                                      

"Mandatory  Prepayment  Date"  means  30  June  2003.                 
---------------------------                                         

    "Material Adverse Effect" means, when used in connection with the Company,
-----------------------                                             
any  development,  change  or effect that is materially adverse to the business,
Properties  (including,  without limitation, Intellectual Property), assets, net
worth,  financial  condition,  results  of  operations  or  future  prospects   
(including,  without  limitation,  future  equity  value) of the Company and its
Subsidiaries  taken  as  a  whole.                                              

E-55

EX-12.(A)(II)
9th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 9th
    "New  Convertible Debenture" has the meaning set forth in Section 2.7.2 of
  --------------------------                               -------------
this  Agreement.                                                                

    "Optional  Conversion  Date" has the meaning set forth in Section 2.7.2 of
  --------------------------                               -------------
this  Agreement.                                                                

    "Optional Conversion Election" has the meaning set forth in Section 2.7.1.
    ----------------------------                               -------------

    "Ordinary  Shares"  means  the  ordinary  shares of the Company having the
----------------                                                    
rights set forth in the Articles of Association of the Company in the form filed
with  Companies  House  as  of  the  Loan  Completion  Date.                    

    "Party"  has  the  meaning  set  forth  in the preamble of this Agreement.
-----                                                               

"Permitted  Liens"  means  each  of  the  following:                  
----------------                                                    

    (a)     artisans'  or  mechanics'  Liens arising in the ordinary course of
business, and Liens for taxes, but only to the extent that payment thereof shall
not  at  the  time  be  due  or  if due, the payment thereof is being diligently
contested  in  good  faith  and adequate reserves computed in accordance with US
GAAP  have  been  set  aside  with  respect  thereto;                           

    (b)     Liens  in  effect on the Loan Completion Date and disclosed to the
Lender  in  the  Financial  Statements, provided that neither the Borrowed Money
Indebtedness  secured  thereby  nor  the Property covered thereby shall increase
after  the Loan Completion Date without the prior written consent of the Lender,
provided  that, for purposes of this sub-section (b), the accrual of interest on
such  Borrowed  Money Indebtedness, so long as it is not converted to principal,
shall  not  be  deemed  to  increase  such  Borrowed  Money  Indebtedness;      

    (c)     normal  encumbrances and restrictions on title which do not secure
Borrowed  Money  Indebtedness and which do not have a material adverse effect on
the  value  or  utility  of  the  applicable  Property;                         

    (d)     Liens incurred or deposits made in the ordinary course of business
(i)  in  connection  with workmen's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure insurance in the ordinary course
of  business,  the  performance  of  bids, tenders, contracts, leases, licenses,
statutory  obligations,  surety,  appeal and performance bonds and other similar
obligations  incurred in the ordinary course of business, but not, in any of the
cases  specified  in this clause (ii), incurred in connection with the borrowing
of  money,  the  obtaining  of  advances or the payment of the deferred purchase
price  of  Property;                                                            

  (e)     attachments,  judgments  and  other  similar  Liens  arising  in
connection  with  court proceedings, provided that the execution and enforcement
of  such  Liens  are effectively stayed and the claims secured thereby are being
actively  contested  in  good  faith  with  adequate  reserve  made therefore in
accordance  with  US  GAAP;                                                     

 (f)     Liens  imposed  by  law,  such  as  carriers',  warehousemen's,
mechanics',  materialmen's  and  vendors'  liens  incurred  in good faith in the
ordinary  course  of  business and securing obligations which are not yet due or
which  are  being  contested  in  good  faith  by                               

E-56

EX-12.(A)(II)
10th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 10th
appropriate proceedings if adequate reserves with respect thereto are maintained
in  accordance  with  US  GAAP;                                                 

(g)     zoning  restrictions,  easements,  licenses,  reservations,   
provisions,  covenants,  conditions,  waivers,  and  restrictions  on the use of
Property,  and  which  do  not in any case singly or in the aggregate materially
impair  the  present use or value of Property subject to any such restriction or
materially  interfere  with  the ordinary conduct of the business of the Company
and  its  Subsidiaries,  if  any;  and                                          

    (h)     extensions,  renewals  and  replacements  of  Liens referred to in
subsections  (a)  through (g) of this Section; provided that any such extension,
   -------
renewal  or  replacement Lien shall be limited to the Property or assets covered
by  the  Lien  extended,  renewed  or  replaced  and  that  the  Borrowed  Money
Indebtedness secured by any such extension, renewal or replacement Lien shall be
in an amount not greater than the amount of the Indebtedness secured by the Lien
extended,  renewed  or  replaced.                                               

    "Person" means any individual, corporation, association, company, business
------                                                              
trust,  partnership,  joint  venture,  joint-stock  company,  limited  liability
company,  trust, unincorporated organization or association or government or any
agency  or  political  subdivision  thereof.                                    

    "Preference  Shares"  means  the proposed senior participating convertible
------------------                                                  
preference  shares  of the Company to be issued to the Lender on or prior to the
Mandatory  Prepayment Date with the rights and obligations set forth in Annex A.
                                                                       -------

    "Preferred  Investment"  has the meaning set forth in the preamble to this
---------------------                                               
Agreement.                                                                      

    "Prepayment Percentage" means (a) between the Loan Completion Date and the
---------------------                                               
first  anniversary  thereof, 2.0%, (b) between the first anniversary of the Loan
Completion  Date  and  the  date  falling  180  days  thereafter,  1.0%, and (c)
thereafter,  0%.                                                                

    "Prepayment  Premium"  has  the  meaning  set forth in Section 2.6 of this
-------------------                                   -----------   
Agreement.                                                                      

    "Property"  means  any  interest in any kind of property or asset, whether
--------                                                            
real,  personal  or  mixed,  tangible  or  intangible  of  the  Company.        

    "Ratio"  has  the  meaning  set  forth  in Section 5.11 of this Agreement.
-----                                                               

    "Registration  Rights  Agreement"  means the registration rights agreement
-------------------------------                                     
between  the  Company  and  the Lender in the form attached hereto as Exhibit C.
                                                                     ---------

    "Requirements"  has  the  meaning  set  forth  in  Section  2.7.4  of this
------------                                    ----------------  
Agreement.                                                                      
-                                                                 

    "Sale"  means  the  sale  of all or substantially all of the assets of the
----                                                                
business  of  the  Company.                                                     

   "SEC"  means  the  United  States  Securities  and  Exchange  Commission.
---                                                                 

E-57

EX-12.(A)(II)
11th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 11th
    "Securities"  means  (i)  the  Convertible Debenture and (ii) the Ordinary
----------                                                          
Shares  and  ADRs  issuable  pursuant to Sections 2.7 and 2.8 of this Agreement.
                      ------------     ---

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

    "Shareholders"  means, at any time, the holders of shares of Capital Stock
------------                                                        
in  the  Company  at  such  time.                                               

    "Significant  Event" means a (a) Change of Control or (b) a Sale, provided
     ------------------                                               --------
that if the Lender shall have approved a Change of Control or Sale in writing in
advance  of  the  completion  thereof  and  waived  application  of  Section 2.5
                                                                     -----------
(Mandatory  Prepayment)  with  respect  thereto,  then such Change of Control or
Sale,  as  the  case  may  be,  shall  not  constitute  a  Significant  Event.  

    "Subscription  Election"  has the meaning set forth in Section 2.5 of this
----------------------                                -----------   
Agreement.                                                                      

    "Subscription  Period"  has  the  meaning set forth in Section 2.5 of this
--------------------                                  -----------   
Agreement.                                                                      

    "Subscription  Price"  has  the  meaning  set forth in Section 2.5 of this
-------------------                                   -----------   
Agreement.                                                                      

    "Subsidiary"  of a Person means any corporation, association, partnership,
----------                                                          
joint venture or other business entity of which more than fifty percent (50%) of
the  voting  stock  or other equity interests (in the case of Persons other than
corporations),  is  owned or controlled directly or indirectly by the Person, or
one  or  more  of  the  Subsidiaries  of  the  Person, or a combination thereof.

    "Westminster Engagement Letter" means the engagement letter dated as of 15
-----------------------------                                       
November  2001  between  the Company and Westminster Securities Corp. as amended
from  time  to  time.                                                           

    "2002  Financial Statements" has the meaning set forth in Section 4.1.9(a)
     --------------------------                               ----------------
of  this  Agreement.                                                            

1.2     Rules  of  Construction.  Unless  the  context  otherwise  requires:    
----------------------                                          

1.2.1     a  term  has  the  meaning  assigned  to  it;               

    1.2.2     an  accounting term not otherwise defined herein has the meaning
assigned  to  it  in  accordance  with  US  GAAP;                               

1.2.3     "or"  is  not  exclusive;                                   

    1.2.4     words  in  the  singular  include  the  plural and in the plural
include  the  singular;                                                         

    1.2.5     provisions  apply  to  successive  events  and transactions; and

    1.2.6     "herein",  "hereof"  and  other words of similar import refer to
this  Agreement  as  a whole and not to any particular Article, Section or other
subdivision.                                                                    

E-58

EX-12.(A)(II)
12th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 12th
ARTICLE II
AMOUNT AND TERMS OF CONVERTIBLE LOAN

2.1     Commitment  to  Make  Convertible  Loan.  In  reliance  upon  the       
---------------------------------------                         
representations and warranties of the Company as set forth herein and subject to
the  terms  and  conditions  contained  in  this  Agreement  and the Convertible
Debenture,  the Lender agrees to lend to the Company on the Loan Completion Date
an  aggregate  principal  amount  of  $1,000,000 (the "Convertible  Loan").  The
                                               -----------------
proceeds of the Convertible Loan shall be disbursed by wire transfer on the Loan
Completion  Date  to  the  Company's  Bank  Account.                            

2.2     Maturity. The Convertible  Loan will mature and the aggregate principal 
--------                                                        
amount  outstanding and all accrued but unpaid interest shall be immediately due
and  payable  on  the  earliest to occur of (a) the Final Maturity Date, (b) the
date  of  the  Optional  Conversion  Election, (c) a Mandatory Prepayment, (d) a
Significant  Event,  (e)  an  Event  of  Default,  and  (f) a Company Conversion
Election.                                                                       

2.3     Interest.                                                               
--------                                                        

    2.3.1     Interest  Rate.  Interest on the unpaid principal balance of the
--------------                                    
Convertible  Loan  and  all accrued but unpaid interest thereon will accrue from
the  Loan  Completion  Date  at  a  rate  per  annum  equal  to  9%.            

    2.3.2     Basis  of  Computation  of  Interest;  Payment of Interest.  All
        ----------------------------------------------------------
interest  shall  be calculated for actual days elapsed on the basis of a 360-day
year  and  shall  be  payable  in  cash  quarterly  in  arrears.                

2.4     Interest  and  Principal  Payments. All amounts paid with respect to the
----------------------------------                              
Convertible Loan shall first be applied to any accrued but unpaid interest.  All
payments  required  to  be  made  by  the  Company  under this Agreement and the
Convertible  Debenture  shall  be  paid  to  the  Lender  by  wire  transfer  in
immediately  available funds to an account of the Lender notified to the Company
in  writing.                                                                    

2.5     Mandatory  Prepayment.  The  principal  amount  outstanding  of  the    
---------------------                                           
Convertible  Loan  and  any accrued but unpaid interest thereon shall be due and
payable  immediately  by the Company on the date which is 90 days after: (a) the
earliest  to  occur  of  (i)  the  date  on which the Board of Directors and the
shareholders  of  the Company hold an extraordinary general meeting prior to the
Mandatory Prepayment Date which considers but does not authorize the creation of
the  Preference  Shares  by  adoption  of  new  Articles  of Association and all
necessary  Shareholder  resolutions  in  compliance  with  the  Act and (ii) the
Mandatory Prepayment Date, if the Board of Directors and the shareholders of the
Company  fail  to  hold  an extraordinary general meeting prior to the Mandatory
Prepayment Date to consider authorizing the creation of the Preference Shares by
adoption  of  new  Articles  of  Association  and  all  necessary  Shareholder  
resolutions  in  compliance  with  the  Act,  and  (iii)  the  last  day  of the
Subscription  Period  if the Preference Shares have not been issued and allotted
to  the  Lender in conformance with the Act and a Subscription Election has been
made  by  the Lender, and (b) the Lender elects by written notice to the Company
to  require  immediate  repayment  of  the  Convertible  Loan  (collectively,   
the"Mandatory  Prepayment").  In  the  event that (x) the Board of Directors and
the  Shareholders  of  the  Company                                             

E-59

EX-12.(A)(II)
13th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 13th
shall  have  authorized  the  terms  and  conditions of the Preference Shares in
compliance  with  the  Act and (y) offered to issue the Preference Shares to the
Lender,  then  the  Lender  shall  have  120  days from the date of offer of the
Preference  Shares  to  it by the Company (the "Subscription Period") to deliver
                                   -------------------
notice  of  its  election  to  subscribe  for  such  Preference  Shares  (the   
"Subscription  Election") and payment of the subscription price thereof (being a
-----------------------                                                       
minimum  aggregate  amount  of  $2,000,000  and  a  maximum  aggregate amount of
$4,000,000  (the  "Subscription  Price").  Subject  in  all circumstances to the
-------------------                       
Lender's  right  to convert the Convertible Loan pursuant to Section 2.7, if the
                                                     -----------
Company  makes the Preference Shares available to the Lender but the Lender does
not  subscribe for such Preference Shares within the Subscription Period and for
the  Subscription  Price,  then  the  Company  may,  from  the  date immediately
following  the last day of the Subscription Period to the date ninety days later
(such  period,  the  "Accelerated  Repayment  Period"),  at  its  election  (the
------------------------------      
"Accelerated  Repayment Election") and upon 7 Business Days prior written notice
-------------------------------                                               
to  the Lender, repay the entire principal amount outstanding of the Convertible
Loan  and  any  accrued  but  unpaid interest thereon, but no Prepayment Premium
shall  be  payable  in  the  event  of  a  repayment pursuant to this sentence. 

2.6     Prepayment  Premium. In  the  event  of  a  Mandatory  Prepayment  or  a
-------------------                                             
Significant  Event,  in  addition to payment by the Company to the Lender of the
outstanding principal in accordance therewith, the Company shall also pay to the
Lender  a  premium  amount  equal to the Prepayment Percentage multiplied by the
principal  amount  of  the Convertible Loan to be repaid pursuant to Section 2.5
(Mandatory  Payment),  Section  2.2  (Maturity  upon  Significant  Event),  as  
applicable  (such  amount,  the"Prepayment  Premium").                          

2.7     Optional  Conversion.                                                   
--------------------                                            

    2.7.1     Subject  to  Section  2.7.2,  the Lender may at any time, in its
--------------        
sole  discretion,  elect  to  convert  some  or all of the outstanding principal
amount  of  the  Convertible  Loan  (the  "Optional Conversion Election") into a
                                  ----------------------------
number of Ordinary Shares to be issued by the Company to it or its nominee, with
such  number  of  Ordinary Shares determined by dividing the principal amount of
the  Outstanding  Loan  to  be  converted  by $4.5429 (the "Effective Conversion
                                                            --------------------
Price"),  and  multiplying  the  resulting  number by 20 as adjusted pursuant to
Section  2.7.3.  Upon  conversion  of  a  portion of the principal amount of the
--------------                                                                  
Convertible  Loan  calculated  in  accordance  with  the preceding sentence, all
accrued and unpaid interest on such portion of principal amount shall be paid in
full  in  cash  as  of  the  date of conversion.  For the avoidance of doubt, no
redemption,  Significant Event or action of the Company shall interfere with the
Lender's  ability  to  covert  some or all of the Convertible Loan into Ordinary
Shares  pursuant  to this Section 2.7.  In the event of a conversion pursuant to
-----------                 
this  Section  2.7  or  a Company Conversion pursuant to Section 2.8, either the
Lender or the Company may elect to require such Ordinary Shares as may be issued
upon  such  conversion  be  deposited  with  the  Depositary in exchange for the
issuance  of  ADRs  reflecting  the American Depositary Shares arising from such
deposit  (an  "ADR  Election"),  provided that this sentence shall only apply so
long  as  the Company maintains an ADR program on terms substantially similar to
the  terms  of  the  Depositary  Agreement and provided further that the Company
undertakes  to  the  Lender  and  its  transferees  to  use  its best efforts to
facilitate  the prompt issuance of ADRs to the Lender and its transferees by the
Depositary  following  any  ADR  Election.                                      

E-60

EX-12.(A)(II)
14th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 14th
    2.7.2     The  Lender shall notify the Company promptly of its election to
convert  a portion of the principal amount of the Convertible Loan in accordance
with Section 2.7.1 above.  The Company shall allot and issue the Ordinary Shares
-------------                                                         
into  which  the  relevant portion of the Convertible Loan shall be converted no
later  than  three  Business  Days  after  receipt  of  notice  of  the Optional
Conversion  Election  from  the  Lender.  The  date of issuance of such Ordinary
Shares  to  the  Lender  or  its nominee pursuant to this Section 2.7.2 shall be
                                                 -------------
referred  to  herein as the "Optional Conversion Date".  The Company agrees that
  ------------------------
in  addition to the Ordinary Shares to be issued to the Lender or its nominee on
the  Optional  Conversion  Date  it  shall, following receipt of the Convertible
Debenture  from  the  Lender,  cancel such Convertible Debenture and execute and
deliver  a  new  convertible  debenture  (the "New Convertible Debenture") in an
                                       -------------------------
aggregate  principal  amount  equal  to  the  original  principal  amount of the
Convertible Debenture less that portion of the principal converted into Ordinary
Shares in accordance with the terms of Section 2.7.1 above.  Any New Convertible
           -------------
Debenture  issued in accordance with this Section 2.7.2 shall be dated as of the
                 -------------
Loan  Completion  Date  and all interest which shall have accrued since the Loan
Completion  Date  on  the principal amount of such New Convertible Debenture and
remain  unpaid  as  of  the  Optional  Conversion  Date  shall remain payable in
accordance  with  the  terms  of  this Agreement.  Upon issue, a New Convertible
Debenture shall be deemed to be a Convertible Debenture for the purposes of this
Agreement.                                                                      

    2.7.3     If and whenever on or after the date of issue of the Convertible
Debenture the Company allots, issues or sells any Ordinary Shares (or securities
convertible  into  or  exchangeable for Ordinary Shares) for a consideration per
Ordinary  Share  less  than an amount equal to the Effective Conversion Price in
effect  immediately prior to such time divided by 20, then immediately upon such
issue or sale (or deemed issue or sale) the Effective Conversion Price specified
above  shall  be  reduced to an amount equal to the product of 20 and the lowest
net  price  per  share at which any such Ordinary Share has been issued or sold.
If  the  Company  at  any  time  subdivides (by any stock split, stock dividend,
recapitalization  or otherwise) its ordinary share capital into a greater number
of  shares  then  the  Effective Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced (based on an initial Effective
Conversion  Price of $4.5429 per ADR (representing 20 Ordinary Shares)).  If the
Company  at  any  time  combines  or  consolidates  (by  reverse  stock split or
otherwise)  its  ordinary  share  capital  into  a smaller number of shares, the
Effective Conversion Price in effect immediately prior to such combination shall
be  proportionately increased (based on an initial Effective Conversion Price of
$4.5429 per ADR (representing 20 Ordinary Shares)).  If and whenever on or after
the  date  of issue of the Convertible Debenture the Company issues or sells any
Ordinary  Shares  (or  securities  convertible into or exchangeable for Ordinary
Shares,  including  ADRs)  pursuant  to  the  Westminster  Engagement Letter and
warrants  arising therefrom, then immediately upon such allotment, issue or sale
(or  deemed  issue  or  sale)  the  Lender or its nominee shall be issued by the
Company such number of bonus Ordinary Shares (which shall in the event of an ADR
Election,  be  deposited  with  the Depository and exchanged for ADRs) as shall,
when  aggregated  with the conversion rights of the outstanding Convertible Loan
and  any  securities  previously  issued  upon  conversion of some or all of the
Convertible  Loan,  cause the Lender to retain the same fully-diluted percentage
ownership  of the Company as the Lender held prior to the allotment, issuance or
sale  resulting  from  the  Westminster  Engagement  Letter.                    

E-61

EX-12.(A)(II)
15th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 15th
    2.7.4     Notwithstanding  Section  2.7.1, following the Lender making one
--------------  
or more Optional Conversion Elections or the Company making a Company Conversion
Election,  the  maximum aggregate  principal amount of the Convertible Loan that
can  be converted pursuant to this Section 2.7 shall be that principal amount of
 -----------
Convertible  Loan that can be converted into Ordinary Shares without causing the
Lender  to  acquire a voting interest greater than 29.9% of the aggregate voting
rights  in  the Company or such other maximum number of Ordinary Shares as shall
not trigger the tender offer or compulsory acquisition requirements under Rule 9
of  the City Code on Takeovers and Mergers, as amended from time to time, or any
similar  requirement  (such  requirements,  collectively,  the  "Requirements").
                                                              ------------

    2.7.5     In  the  event of one or more Optional Conversion Elections or a
Company Conversion Election which would, but for the operation of Section 2.7.4,
                                                                 -------------
cause the issue of Ordinary Shares carrying voting rights in the Company greater
than  29.9% of the aggregate voting rights in the Company or otherwise trigger a
tender  offer  requirement  under  the  Requirements  (the  excess  amount,  the
"Excess"),  then  the  Company shall, unless otherwise agreed with the Lender at
the  time  of  conversion,  pay  such  amount  of  the  Convertible  Loan  as is
represented  by  the  Excess in cash and not by conversion into Ordinary Shares.

2.8     Company  Conversion.  Notwithstanding  Section  2.2,  the  Company  may 
-------------------                                             
elect, by  prior written notice to the Lender (a "Company Conversion Election"),
                                               ---------------------------
to convert all of the outstanding principal amount of the Convertible Loan as of
the  Final  Maturity Date into Ordinary Shares at the Effective Conversion Price
in effect immediately prior to such time divided by 20 (a "Company Conversion"),
                                                        ------------------
provided that the Company shall pay to the Lender in cash all accrued but unpaid
--------                                                                        
interest  on  the  Convertible  Loan  as a condition precedent to the conversion
described  herein.                                                              

2.9     Taxes  on  Conversion.  The  Company  agrees  that  it  shall  pay  any 
---------------------                                           
documentary, stamp or similar issue or transfer tax due on the issue of Ordinary
Shares  and  ADRs  to  the  Lender  and  on  the issuance of any New Convertible
Debenture  to  the  Lender, provided that the obligations of the Company in this
--------                
Section  2.9  shall  not  cause the net assets of the Company to be reduced by a
-------                                                                         
material extent within the meaning of Section 152(1)(a)(iv) of the Companies Act
1985  (as  amended).                                                            

2.10     Ordinary  Shares,  American  Depositary  Receipts                      
-------------------------------------------------             

    2.10.1     At  all  times  prior  to the full repayment of the Convertible
Loan,  the  Company  shall  maintain  sufficient  authorized  but  unalloted and
unissued  Ordinary  Shares  to  permit the conversion of the aggregate principal
amount  of  the Convertible Loan into Ordinary Shares in accordance with Section
                                                                         -------
2.7  and  2.8.  If  upon  conversion  of the Convertible Loan to Ordinary Shares
-------------                                                                   
pursuant  to Section 2.7 or 2.8, a residual principal amount remains outstanding
-----------    ---                                    
which  is  insufficient  to  entitle the Lender to an additional Ordinary Share,
then  such  principal amount shall be paid in cash to the Lender and such amount
of  Convertible  Loan  cancelled.                                               

   2.10.2     The  Company  will  comply,  at  its  own  expense,  with  all
securities laws regulating the delivery of the Ordinary Shares, the ADRs and any
New  Convertible  Debenture on any Optional Conversion Date or in the event of a
Company  Conversion.                                                            

E-62

EX-12.(A)(II)
16th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 16th
2.11     Gross-Up  Protection                                                   
--------------------                                          

    2.11.1     .  The  Company  shall make all payments to be made by it under
this  Agreement  and  the  Convertible  Debenture without deduction for any tax,
unless such deduction is required by law.  If a tax deduction is required by law
to  be made by the Company, the amount of the payment to the Lender due from the
Company  will  be  increased by an amount which (after making the tax deduction)
leaves  an  amount equal to the payment which would have been due if no such tax
deduction  had  been  required.  The Company shall promptly notify the Lender of
any  tax  deduction  required  by  law  and  the  date of payment by the Company
thereof.                                                                        

 ARTICLE III
CONDITIONS OF OBLIGATIONS OF THE LENDER 

3.1     Conditions  to Lender's Obligations to make the Convertible Loan.    The
----------------------------------------------------------------
obligation  of  the  Lender  to  make  the  Convertible  Loan  is subject to the
fulfillment  to its reasonable satisfaction, or, the waiver by the Lender, on or
prior to the Loan Completion Date of each of the following conditions precedent:

3.1.1     Representations  and  Warranties.  The  representations  and
--------------------------------                  
warranties  of the Company in Article IV hereof shall be (x) true and correct on
----------          
and  as  of  the  date  hereof  and  (y)  true and correct on and as of the Loan
Completion  Date  with the same force and effect as if they had been made on and
as  of  the  Loan  Completion  Date.                                            

    3.1.2     Compliance Certificate.  The Company shall have delivered to the
----------------------                            
Lender a certificate of the Company's Secretary, dated the Loan Completion Date,
certifying  to the fulfillment of the conditions specified in Sections 3.1.4 and
                                                          --------------
3.1.5.                                                                          
-----                                                                           

    3.1.3     No  Impediments.  No  statute,  judgment, order or decree of any
---------------                                   
court,  regulatory  body, administrative agency or any other governmental agency
or  body  of any jurisdiction shall be in effect which would impose any material
limitation on the ability of the Lender to exercise its full rights of ownership
of  the  Securities.                                                            

    3.1.4     No  Defaults.  The  Company  shall  not  be in default under any
------------                                      
indenture,  mortgage,  agreement,  instrument  or commitment evidencing or under
which  there  is  at the time outstanding any Indebtedness of the Company or any
Subsidiary,  in  excess of $50,000, or which results in such Indebtedness, in an
aggregate  amount  (with  other  defaulted  Indebtedness)  in  excess of $50,000
becoming  due  and  payable  prior  to  its  due  date.                         

    3.1.5     No  Material  Adverse  Events.  Since June 30, 2002, there shall
-----------------------------                     
have  been  no  Material  Adverse  Effect  with  respect  to  the  Company.     

    3.1.6     Legal  Investment.  The purchase of the Convertible Debenture by
-----------------                                 
the  Lender  hereunder  shall  be  legally  permitted by all statutes, rules and
regulations of any jurisdiction to which the Lender and the Company are subject.

    3.1.7     Qualifications.  All  authorizations,  approvals  or permits, if
--------------                                    
any, of any Governmental Authority or stock exchange or regulatory body that are
now  required in connection with the lawful issuance and sale of the Convertible
Debenture  and  the  Ordinary  Shares pursuant to this Agreement shall have been
duly  obtained  and  shall  be  in  full  force  and  effect.                   

E-63

EX-12.(A)(II)
17th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 17th
    3.1.8     Issuance Taxes.  All taxes imposed by law in connection with the
--------------                                    
initial issuance, sale and delivery of the Convertible Debenture shall have been
fully  paid  by  the  Company,  and all laws imposing such taxes shall have been
fully  complied  with  at  the  time  of  such  issuance.                       

   3.1.9     Proceedings  and  Other  Documents.  All  corporate  and  other
----------------------------------                
proceedings  in  connection with the transactions contemplated by this Agreement
shall  have  been taken, and the Lender shall have received such other documents
and  instruments  in  form  and  substance reasonably satisfactory to it and its
counsel,  as  to  such  other  matters  incident to the transaction contemplated
hereby  as  it  may  reasonably  request.                                       

    3.1.10     Opinion  of Counsel.  The Lender shall have received an opinion
-------------------                             
(i)  of  Kleban  &  Samor,  P.C.,  New  York counsel to the Company, and (ii) of
Theodore Goddard, English counsel to the Company, each opinion to be dated as of
the  Loan  Completion Date and in form and substance satisfactory to the Lender.

    3.1.11     Consents,  Waivers,  Etc.  The  Company shall have obtained all
------------------------                        
consents  or  waivers  necessary  to  execute and deliver this Agreement and the
other  Loan  Documents,  issue  the  Securities  and  carry out the transactions
contemplated  hereby  and thereby, and all such consents and waivers shall be in
full  force  and  effect.                                                       

    3.1.12     Documents.  The  Company  shall  have  delivered to the Lender:
---------                                       

    (a)     the  Convertible  Debenture  executed  by  the  Company;

         (b)     a  certified copy of the Company's Memorandum and Articles of
Association;                                                                    

         (c)     the  Registration  Rights  Agreement executed by the Company;
and                                                                             

         (d)     certified  copies  of  all shareholder, board and third-party
approvals  obtained  in  accordance  with  this  Section  3.1.                  
                              ------------

    3.1.13     Diligence.  Satisfactory  completion  (in  the  Investor's sole
---------                                       
discretion) of the Investor's business, technical, legal, accounting and tax due
diligence.                                                                      

    3.1.14     Investment  Committee Approval.  The Lender shall have received
------------------------------                  
final  written  approval  from  its internal investment committee to provide the
Convertible  Loan.                                                              

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.1     Representations and Warranties of the Company .  The Company represents 
---------------------------------------------                   
and  warrants  to  the  Lender  as  follows:                                    

    4.1.1     Organization  and  Existence,  etc.  The Company and each of its
----------------------------------                
Subsidiaries  (i)  is  duly  incorporated, validly existing and in good standing
under  the  laws  of  its  jurisdiction  of  organization, and has all requisite
corporate  power  and  authority  to  carry  on  its  business  as  now         

E-64

EX-12.(A)(II)
18th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 18th
conducted  and  as  proposed  to  be conducted, and (ii) is duly qualified to do
business in each jurisdiction in which the conduct of its business requires such
qualification.                                                                  

4.1.2     Capitalization.                                             
--------------                                    

          (a)     As  of  the  date  hereof,  (x)  Schedule 4.1.2 (a) accurately
                                        ------------------
reflects  the  Company's  authorized  and issued Capital Stock; and (y) Schedule
                                                                        --------
4.1.2  (b)  accurately  reflects  the Company's outstanding securities which are
----------                                                                      
convertible  into  or  exercisable  or  exchangeable  for  Common  Stock  (the  
"Derivative  Securities").                                                      
-----------------------                                                         

        (b)     All  issued  and  outstanding  Capital  Stock  are  free  of
preemptive  and similar rights and have been offered, issued, sold and delivered
by  the  Company  in transactions in compliance with the securities laws of each
applicable  jurisdiction.  There  are  no  outstanding agreements or commitments
requiring  the  Company  to  issue Capital Stock or Derivative Securities and no
such  agreements  are  currently  contemplated.                                 

4.1.3     Authorization;  Binding  Obligations.                       
------------------------------------              

          (a)     The  Company  has full power and authority to execute, deliver
and perform this Agreement and such other documents furnished or to be furnished
by  the Company hereunder. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the  Company,  enforceable  against  the  Company  in accordance with its terms,
subject  to  bankruptcy,  insolvency,  reorganization  and other laws of general
applicability  relating  to  or  affecting  creditors'  rights  and  to  general
principles  of  equity.  The  issuance  of  the  Securities  pursuant  to  this 
Agreement,  the compliance by the Company with the provisions of this Agreement,
the  Convertible Debenture and the Securities, and the consummation of the other
transactions  contemplated  hereby or thereby will not result in the creation or
imposition  of  any  Lien  upon any of the assets of the Company pursuant to the
terms  or  provisions of, or result in a breach or violation of or conflict with
any  of  the  terms or provisions of, or constitute a default under, or give any
other  party a right to terminate any of its obligations under, or result in the
acceleration  of  any  obligation  under,  (A)  the  Memorandum  or  Articles of
Association  (or  similar  organizational documents) of the Company or of any of
its  Subsidiaries,  (B)  any contract or other agreement to which the Company or
any  of  its  Subsidiaries  is  a  party  or  by which the Company or any of its
Subsidiaries  or  any  of  their  respective  properties  is  bound,  or (C) any
judgment,  ruling,  decree,  order,  statute, rule or regulation of any court or
other  governmental  agency  or  body,  domestic  or  foreign, applicable to the
business  or  properties  of  the  Company  or  any  of  its  Subsidiaries.     

         (b)     The  Convertible  Debenture  has  been  duly  authorized  for
issuance  and,  prior  to  the  Optional  Conversion  Date,  the Ordinary Shares
issuable  upon conversion of the Convertible Debenture and the ADRs to be issued
in  the event of an ADR Election will have been duly authorized and reserved for
issuance  to  the Lender.  When the Convertible Debenture has been duly executed
and delivered by the Company in accordance with its terms and this Agreement (A)
the  Convertible  Debenture  will  constitute  the  valid  and  legally  binding
obligation  of  the  Company, enforceable against the Company in accordance with
its  terms,  subject to bankruptcy, insolvency, reorganization and other laws of
general  applicability relating to or affecting creditors' rights and to general
principles  of  equity  and  (B)  the  Ordinary  Shares                         

E-65

EX-12.(A)(II)
19th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 19th
issuable  on an Optional Conversion Date or pursuant to Section 2.8, when issued
                                           -----------
and  delivered  in  accordance  with  the  provisions  of this Agreement and the
Convertible  Debenture,  will  be validly issued, fully paid and non-assessable.

     4.1.4     Compliance with Instruments, etc.  Neither the Company nor any of
--------------------------------                  
its  Subsidiaries is in breach or violation of, or in default under, any term or
provision  of  (i)  its  Memorandum  and  Articles  of Incorporation (or similar
organizational  documents),  (ii) any indenture, mortgage, deed of trust, voting
trust  agreement,  stockholders  agreement,  note  agreement, debt instrument or
other  agreement or instrument to which it is a party or by which it is bound or
to  which  any of its Property is subject, the effect of which breach, violation
or  default,  individually  or in the aggregate, would reasonably be expected to
have  a  Material  Adverse  Effect,  or  (iii) any applicable statute, judgment,
decree,  order,  rule  or  regulation  of  any  arbitrator  or  any Governmental
Authority having jurisdiction over the Company or any of its Subsidiaries or any
of  their  respective  activities  or properties and the effect of which breach,
violation  or  default,  individually  or  in the aggregate, would reasonably be
expected  to  have  a  Material  Adverse  Effect.                               

4.1.5     Properties.                                                 
----------                                        

          (a)     Each of the Company and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to its
business.                                                                       

          (b)     Schedule 4.1.5(b) sets forth the address of each real property
that is owned or leased by the Company or any of its Subsidiaries as of the date
hereof.                                                                         

4.1.6     Litigation  and  Environmental  Matters.                    
---------------------------------------           

          (a)     There  are  no  actions,  suits, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, against the Company or
any  of  its Subsidiaries before or by any arbitrator or Governmental Authority,
which  would, individually or in the aggregate, reasonably be expected to have a
Material  Adverse  Effect,  or any actions, suits, proceedings or investigations
pending,  or,  to the knowledge of the Company, threatened, which challenges the
validity  of  any  action taken or to be taken pursuant to or in connection with
this  Agreement  or the issuance of the Securities, which would, individually or
in  the  aggregate,  reasonably  be  expected to have a Material Adverse Effect.

          (b)     Except  with  respect  to any matters that, individually or in
the  aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Company nor any of its Subsidiaries (i) has failed to comply
with  any  Environmental  Law  or to obtain, maintain or comply with any permit,
license  or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received written notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any  Environmental  Liability.                                                  

     4.1.7     Investment  Company  Act.  Neither  the  Company  nor  any of its
------------------------                          
Subsidiaries  is  (a)  an  "investment  company"  as  defined  in, or subject to
regulation  under, the United States Investment Company Act of 1940, as amended.
The  consummation  of  the  transactions  described                             

E-66

EX-12.(A)(II)
20th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 20th
herein  does  not  and  will  not violate any provision of such act or any rule,
regulation  or  order  issued  by  the  SEC  thereunder.                        

4.1.8     Financial  Statements;  Taxes.                              
-----------------------------                     

          (a)     The  Company  has  previously  delivered  to the Lender, true,
correct and complete copies of (i) its audited financial statements for the year
ended  31  December  2001  (the  "Historical  Financial  Statements"),  (ii) its
                     ---------------------------------
unaudited  financial  statements  for  the 10 months ended  31 October 2002, and
(iii)  unaudited  management  projections  since 31 October 2002 ((ii) and (iii)
together,  the  "2002  Financial  Statements",  and together with the Historical
---------------------------                   
Financial  Statements  the  "Financial  Statements").  The  Financial Statements
--------------------- 
through  30  June  2002  have  been  prepared in accordance with US GAAP and the
Financial  Statements  dated after 30 June 2002 have been prepared in accordance
with  UK  GAAP  and all of the Financial Statements fairly present the financial
position  of  the  Company as of the respective dates thereof and the results of
operations  and cash flows of the Company for the periods then ended (subject to
normal  year-end  adjustments in the case of the 2002 Financial Statements).  As
of the respective dates of the Financial Statements, the Company had no material
liabilities  or  obligations  of  any  nature  (absolute, accrued, contingent or
otherwise) whether or not required by GAAP to be reflected on a balance sheet or
disclosed  in the notes thereto except as were reflected on any balance sheet or
disclosed  in  any  notes  contained  in  the  Financial  Statements.           

          (b)     The Company has filed or obtained extensions for all necessary
income, franchise and other material tax returns, domestic and foreign, all such
returns are correct in all material respects, and the Company has paid all taxes
shown as due thereunder (except in the case where the Company is contesting such
matter  in  good faith and except in such circumstances where such failure would
not  reasonably  be expected to have a Material Adverse Effect), and the Company
has  no  knowledge  of  any  tax  deficiency which might be assessed against the
Company  which  would  reasonably be expected to have a Material Adverse Effect.

          (c)     The  Company  has withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent  contractor,  creditor,  stockholder,  or  other  third  party.     

     4.1.9     Offering.  Subject to the Lender's representations and warranties
--------                                          
in  Section 4.2, the issuance of the Securities to the Lender as contemplated by
-----------                                                             
this Agreement is not subject to the registration requirements of the Securities
Act  and neither the Company, nor anyone acting on its behalf, has taken or will
take  any  action  that  would  cause  such  registration  requirements  to  be 
applicable.                                                                     

     4.1.10     Permits;  Governmental and Other Approvals.  The Company has all
------------------------------------------      
licenses,  permits,  consents,  orders,  approvals  and  other  authorizations  
necessary  for the conduct of its business as now being conducted.  No approval,
consent,  authorization  or  other  order  of,  and  no  designation,  filing,  
registration,  qualification  or  recording  with,  any  Governmental Authority,
domestic  or  foreign,  is  required  for  the  Company's  performance  of  this
Agreement,  the  Convertible  Debenture  or the consummation of the transactions
contemplated  hereby.                                                           

E-67

EX-12.(A)(II)
21st Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 21st
     4.1.11     Sales  Representatives,  Customers  and  Key  Employees.  To the
       -------------------------------------------------------
knowledge  of (a) the directors of the Company and (b) the senior mangers of the
Company  responsible  for  such  matters,  after  reasonable  investigation,  no
independent  sales  representative  or key employee or group of employees of, or
customer  of,  or  party  or  Person  providing services to, the Company has any
intention  to terminate his, her or its relationship with the Company or, in the
case  of  employees,  to  leave  the  employ of the Company and the entry of the
Company  into  this  Agreement  and  the  consummation  of  the  transactions   
contemplated  hereby,  will  not  cause  any  such  termination  or  departures.

4.1.12     Intellectual  Property.                                    
----------------------                          

          (a)     To the Company's knowledge, the Company has full and exclusive
right,  title  and  interest  in and to, or, to the extent set forth in Schedule
                                                                        --------
4.1.12(a),  license  rights to, all (A) patents, patent applications, registered
---------                                                                       
or  unregistered  trademarks,  service  marks,  tradenames,  and  applications  
therefor,  registered  or  unregistered  copyrights  and  applications therefor,
know-how,  proprietary  rights  and  processes,  trade  secrets, customer lists,
methodologies  (to  the  extent  practicable),  proprietary  developments  and  
marketing information, (B) know-how, inventions, inventors' notes (to the extent
such  notes  exist),  drawings and designs associated with the foregoing and (C)
other  confidential  information,  (all  of  the  foregoing  collectively,      
"Intellectual  Property")  used  in  or necessary for the ongoing conduct of its
-----------------------                                                         
business  ("Company  Intellectual Property"), free and clear of all Liens of any
------------------------------                          
nature  and,  except  as  set  forth  on  Schedule 4.1.12(a), the Company has no
                      ------------------
material  obligation  to  any  other  Person  or  entity with respect to Company
Intellectual  Property  or any developed or under development product or process
of  the  Company  utilizing  or  embodying  any  Company  Intellectual Property.
Schedule  4.1.12(a)  is  a complete and accurate schedule of all patents, patent
-------------------                                                             
applications, registered trademarks, service marks, trade names and applications
therefor,  registered  copyrights  and  applications  therefor,  and  license   
agreements  used  in  or  necessary  for  the  ongoing  conduct of the Company's
business.                                                                       

          (b)     There  is  (A)  no infringement, misuse or misappropriation of
any  Intellectual  Property  owned,  licensed  or  controlled by any third party
arising  out  of any product or process now being used, manufactured, developed,
under  development,  or  distributed,  or  ever  having been used, manufactured,
developed,  under  development,  or distributed at any time previously, by or on
behalf  of  the  Company,  (B)  no  pending or, to the knowledge of the Company,
threatened  claim  or  challenge  of  or  proceeding for infringement, misuse or
misappropriation  of  or  interference  with  any  Intellectual  Property owned,
licensed  or controlled by any third party arising out of any product or process
now  being  used,  manufactured,  developed  or distributed, or ever having been
used,  manufactured,  distributed  or developed at any time previously, by or on
behalf  of  the  Company,  (C)  no  pending or, to the knowledge of the Company,
threatened claim, challenge or proceeding by the Company against any third party
for  infringement,  misuse  or  misappropriation  of  or  interference  with any
Intellectual  Property  owned,  licensed  or controlled by the Company or (D) no
notice  from  any  another  party  to the Company to the effect that, or, to the
knowledge  of the Company, facts or information which, in the reasonable opinion
of the Company, would render any Company Intellectual Property owned, invalid or
unenforceable,  nor  is  there any allegation that any such Company Intellectual
Property  is  invalid  or  unenforceable.                                       

E-68

EX-12.(A)(II)
22nd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 22nd
          (c)     The  Company  has  not  disclosed  any  material  confidential
information  developed or utilized by the Company to any third party except on a
confidential  basis and pursuant to a written confidentiality agreement, nor, to
the  knowledge  of  the  Company,  has  any  third  party disclosed confidential
information  developed  or  utilized  by  the  Company to any Person in material
breach  of  such  confidentiality  agreement.                                   

     4.1.13     Ordinary  Course.  Except as disclosed on Schedule 4.1.13, since
         ----------------                          ---------------
June  30,  2002,  the Company has conducted its business in the ordinary course,
has  not  incurred  any  material obligation, absolute or contingent, or entered
into  any  material  transactions not in the ordinary course of business and has
not  declared  or  paid  any  dividends or distributions on its Capital Stock or
reacquired  any  shares  of  its  Capital  Stock.                               

    4.1.14     Disclosure.  The  Company  has  disclosed  to  the  Lender  all
----------                                      
agreements, instruments and corporate or other restrictions to which the Company
or  any  of  the  Subsidiaries  is  subject,  and all other matters known to the
Company  that, individually or in the aggregate, could reasonably be expected to
result  in  a  Material  Adverse  Effect.                                       

     4.1.15     Subsidiaries.  Schedule  4.1.15  sets forth the name of, and the
------------   ----------------                 
ownership  interest  of  the  Company  in,  each  Subsidiary.                   

     4.1.16     Insurance.  Schedule  4.1.16  sets  forth  a  description of all
---------   ----------------                    
insurance  maintained  by or on behalf of the Company and its Subsidiaries as of
the  date  hereof.  As  of  the date hereof, all required premiums in respect of
such  insurance  have  been  paid.  The  Company  believes  that  the  insurance
maintained  by  or  on  behalf  of the Company and the Subsidiaries is adequate.

     4.1.17     Labor  Matters.  There  are  no  strikes,  lockouts or slowdowns
--------------                                  
against  the  Company or any of its Subsidiaries pending or, to the knowledge of
the  Company, threatened.  The hours worked by and payments made to employees of
the  Company  and  its Subsidiaries have not been in violation of any applicable
law dealing with such matters.   All payments due from the Company or any of its
Subsidiaries,  or  for which any claim may be made against the Company or any of
its  Subsidiaries, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of the
Company  or  such  Subsidiary.  The  consummation  of the transactions described
herein  will not give rise to any right of termination or right of renegotiation
on  the part of any union under any collective bargaining agreement to which the
Company  or  any  Subsidiary  is  bound.                                        

4.1.18     Solvency.  Immediately  after  the  consummation  of  the  
--------                                        
transactions to occur on the Loan Completion Date and after giving effect to the
application  of  the proceeds of the Convertible Loan, (a) the fair value of the
assets  of  the  Company,  at  a  fair  valuation,  will  exceed  its  debts and
liabilities,  subordinated,  contingent  or  otherwise;  (b)  the  present  fair
saleable  value  of  the  property  of  the  Company and each Subsidiary will be
greater  than  the amount that will be required to pay the probable liability of
its  debts and other liabilities, subordinated, contingent or otherwise, as such
debts  and  other  liabilities  become absolute and matured; (c) the Company and
each  Subsidiary  will  be  able to pay its debts and liabilities, subordinated,
contingent  or  otherwise,  as  such  debts  and liabilities become absolute and
matured;  and  (d)  each  Company and each Subsidiary will not have unreasonably
small  capital with which to conduct the business in which it is engaged as such
business  is  now  conducted  and  is  proposed  to  be  conducted              

E-69

EX-12.(A)(II)
23rd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 23rd
following  the  Loan  Completion  Date.  No  administrator,  receiver  or       
administrative  receiver  or any other equivalent officers has been appointed in
respect of the Company or any Subsidiary or in respect of any part of the assets
or  undertakings  of  any such Person.  No petition has been presented, no order
has  been  made,  no resolution has been passed and no meeting has been convened
for  the  winding  up  of the Company or any Subsidiary or for an administration
order  or other form of bankruptcy in any jurisdiction.  No distress, distraint,
charging  order,  garnishee  order, execution or other equivalent process in the
jurisdiction of formation has been levied or applied for in respect of the whole
or  any material part of the property, assets and/or undertakings of the Company
or  any  Subsidiary  and  remains  outstanding.                                 

4.2     Representations  and  Warranties  of the Lender .  Lender represents and
-----------------------------------------------                 
warrants  to  the  Company  that:                                               

     4.2.1     it  is  an  "accredited investor" as that term is defined in Rule
501(a)  promulgated  under  the  Securities  Act;                               

     4.2.2     it  has  the  requisite knowledge and experience in financial and
business  matters  to  be  capable  of  evaluating  the  merits  and risks of an
investment  in  the  Company;                                                   

     4.2.3     it  has  had  an  opportunity  to discuss the Company's business,
management  and  financial  affairs  with  the  Company's  management;          

     4.2.4     it is acquiring the Securities for investment for its own account
and  not  with  a  view  to,  or for resale in connection with, any distribution
thereof, nor with any present intention of distributing or selling the same; and
Lender  has  no  present  or  contemplated  agreement, undertaking, arrangement,
obligation,  indebtedness  or  commitment providing for the disposition thereof;
and                                                                             

     4.2.5     it understands that the Securities have not been registered under
the Securities Act and it will not offer, sell, transfer, pledge, hypothecate or
otherwise  dispose  of  any  Securities except pursuant to an exemption from, or
otherwise  in a transaction not subject to, the registration requirements of the
Securities  Act  or  pursuant  to  an effective registration statement under the
Securities  Act,  and,  in  each  case,  in accordance with any applicable state
securities  or  "blue  sky"  laws.                                              

 ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY

5.1     Reports  .  The  Company  will  deliver  to  the  Lender  the following:
-------                                                         

     5.1.1     promptly  after  transmission  thereof,  copies  of all financial
statements, proxy statements, reports and other communications which the Company
sends  to  its  stockholders,  copies  of  all  registration  statements and all
regular,  special  or  periodic  reports which it files with the SEC or with any
securities  exchange  on  which  any  of  the securities of the Company are then
listed or proposed to be listed, and copies of all press releases made generally
available  by  the Company to the public concerning material developments in the
business  of  the  Company  and  its  Subsidiaries,  if  any;                   

E-70

EX-12.(A)(II)
24th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 24th
     5.1.2     promptly  after  the  occurrence thereof (but in any event within
two  (2)  days  after  such  occurrence  is  known to the Company) notice of any
condition  or event which constitutes  (i) an event which would lead the Company
to  believe  that the Company is not in compliance in material respects with the
covenants  in this Agreement, (ii) an Event of Default, (iii) the institution or
threatened  institution  of an action, suit or proceeding against the Company or
any  of  its  Subsidiaries  by  or  before  any  court,  regulatory  authority, 
administrative  agency  or  any  other  governmental agency or body, domestic or
foreign,  which,  if  adversely decided, could have a Material Adverse Effect or
(iv)  any  other development that results in, or could reasonably be expected to
result  in,  a  Material  Adverse  Effect;                                      

     5.1.3     within  30 days of the Closing Date, evidence satisfactory to the
Lender that the Company and each of its Subsidiaries is in good standing in each
jurisdiction in which the conduct of its business requires such qualification by
reason  of  the  ownership  or  leasing  of  property  or  otherwise;           

     5.1.4     within 90 days of the Loan Completion Date, its audited financial
statements  for  the year ended December 31, 2002, such statements to include an
unqualified  audit  opinion  from  the  auditors.                               

5.2     Accounts  and Records.  The Company shall keep true records and books of
---------------------                                           
account  in  which  entries  will  be  made  of  all dealings or transactions in
relation  to  the  business  and affairs of the Company and its Subsidiaries, if
any,  in  accordance  with  US  GAAP,  to  the  extent  applicable, applied on a
consistent  basis.                                                              

5.3     Inspection.  The Company shall permit the Lender or any of its officers,
----------                                                      
employees,  representatives  or  such  other Person as the Lender may designate,
during  regular  business hours of the Company, upon reasonable prior notice, to
visit  and  inspect  the offices and properties of the Company and to (i) review
and  make  extracts or copies of the books, accounts and records of the Company,
and  (ii)  discuss  the  affairs, finances and accounts of the Company, with the
Company's  directors,  independent  accountants,  consultants  and  attorneys.  

5.4     Use  of  Proceeds.  The Company shall use the proceeds received from the
-----------------                                               
Convertible  Loan  and  the Preferred Investment to support the expansion of the
Company's operations, through mergers, acquisitions and organize growth, and for
general  corporate  purposes.                                                   

5.5     Ordinary  Shares/AIM.  The Company shall maintain a sufficient number of
--------------------                                            
authorized  but  un-issued  Ordinary  Shares  to  permit  the  conversion of the
Convertible  Loan  pursuant to Sections 2.7 and 2.8.  The Company shall maintain
  ------------     ---
its  listing  of  Ordinary  Shares  on AIM (including any Ordinary Shares issued
pursuant  to  the terms of this Agreement) and shall comply in all respects with
the  rules  and  regulations  relating  thereto.                                

5.6     American  Depositary  Receipts/AMEX.  The  Company shall maintain an ADR
-----------------------------------                             
program  on  substantially  the same terms set forth in the Depository Agreement
and  shall  (and shall use best efforts to cause the Depository to) maintain the
listing  of  its  ADRs  (including ADRs issued hereunder) on AMEX and shall (and
shall  use  best efforts to cause the Depository to) comply in all respects with
the  rules  and  regulations  thereto.  The  Company  shall  (and shall use best
efforts to cause the Depository to) at all times maintain a sufficient number of
authorized  but  un-issued                                                      

E-71

EX-12.(A)(II)
25th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 25th
ADRs  to  allow  the  immediate  conversion  of  Ordinary  Shares  into  ADRs in
accordance  with  an  ADR  Election.                                            

5.7     Observer.  For so long as the Board of Directors shall not have a member
--------                                                        
nominated  or  appointed  by  the  Lender or its Affiliates, the Lender shall be
entitled  to appoint one observer to receive notice of, attend and speak at (but
not  vote  at)  meetings  of  the Board of Directors and any committees thereof.
Such observer shall receive all materials forwarded to the Board of Directors at
the  same  time  and  in  the same manner as the Board of Directors.  The Lender
acknowledges  that  the  Issuer  is  a  public  company  and  that  the  use  or
transmission  of any confidential information received by the observer appointed
pursuant  to  this  Section  5.7 may be subject to restrictions under applicable
------------                            
securities  laws  and  the  rules  and  regulations of AMEX and the London Stock
Exchange  plc  as  they  relate  to  AIM.                                       

5.8     Shareholders Meeting.  The Company covenants to the Lender that it shall
--------------------                                            
convene  and  hold  an  extraordinary general meeting of shareholders no earlier
than 27 February 2003 and no later than 30 June 2003 in order to (a) adopt a new
Memorandum and Articles of Association of the Company incorporating the terms of
the  Preference  Shares  and  (b)  authorize  the  allotment  and  issue of such
Preference  Shares  to  the  Lender  should  the  Lender  choose  to  subscribe.

5.9     Further  Assurances.  From  time  to  time the Company shall execute and
-------------------                                             
deliver to Lender such other instruments, certificates, agreements and documents
and  take  such  other  action  and  do  all  other  things as may be reasonably
requested by Lender in order to implement or effectuate the terms and provisions
of  this  Agreement,  including  but  not  limited  to  the  conversion  of  the
Convertible  Debenture  and  the  authorization,  allotment  and issuance of the
Preferred  Shares.                                                              

5.10     Milestones.  The  Company acknowledges that it has discussed a business
----------                                                    
development  plan  prepared  in  conjunction with the Lender.  In furtherance of
such  business  development  plan, the Company covenants with the Lender that it
shall  use  its  best efforts to achieve the following goals by the end of 2003:

          (a)     the  development,  documentation  and adoption by the Board of
Directors  of  a strategic framework for sales and organizational development in
conjunction  with  the  Lender;                                                 

          (b)     the  articulation  to  the  Lender  of  the  Company's  future
investment  and  acquisition  criteria;                                         

          (c)     the  adoption  of  a  policy  for the improvement of operating
credit  metrics  including  days  sales  outstanding;  and                      

         (d)     the  completion  of  a  review  of  market  opportunities  in
non-Japan  Asia,  specifically  China.                                          

5.11     Ratio  Test.  For  so  long  as  the  Company  shall  not be subject to
-----------                                                   
Sections  6.1  to  6.12  and  Sections 5.7 and 5.10 pursuant to the operation of
-------------      ----       ------------     ----                             
Section  6.14,  the  Company  shall  use  its  best  efforts not to undertake or
-------------                                                                   
complete any action or transaction without the consent of the Lender which could
be  reasonably  expected to cause the Company to have a EBITDA to Interest Cover
ratio  (the  "Ratio")  of  less  than  3:1  as  of  the  date  of such action or
-----                                               
transaction.                                                                    

E-72

EX-12.(A)(II)
26th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 26th
5.12     Termination.  The  covenants and agreements of the Company set forth in
-----------                                                   
this Article V shall terminate and be of no further force or effect at such time
---------                                                             
as  no  principal  or  interest  on  the  Convertible  Debenture are outstanding
(whether  as  a  result  of the payment of all outstanding principal and accrued
interest  on  the  Convertible  Debenture  or  the conversion of the Convertible
Loan).                                                                          

ARTICLE VI
NEGATIVE COVENANTS

     Subject  to Sections 6.14 and 6.15 hereof, the Company hereby covenants and
-------------     ----                        
agrees  that  it  will not, will not agree to, and will not suffer or permit any
Subsidiary  of the Company (except with respect to Section 6.5) to do any of the
following  without  the  consent  of  the  Lender:                              

6.1     Borrowed Money Indebtedness .  Create, incur, suffer or permit to exist,
---------------------------                                     
or  assume or guarantee, or become or remain liable with respect to any Borrowed
Money  Indebtedness,  except  the  following:                                   

     6.1.1     the  Convertible  Debenture  and  any  New Convertible Debenture;

     6.1.2     the  Borrowed  Money  Indebtedness  existing  on the date of this
Agreement  and  disclosed  in  the  Financial  Statements,  and  all  renewals, 
extensions  and  replacements of any of the foregoing, provided that the accrual
of  interest  on  such liabilities, so long as it is not converted to principal,
shall  not  be  deemed  to  increase  such  liabilities;  and                   

     6.1.3     reasonable  bank debt or other commercial financings entered into
in  the  ordinary  course  of  business  on  market  terms.                     

6.2     Liens .  Create or suffer to exist any Lien upon any of its Property now
-----                                                           
owned  or  hereafter acquired, or acquire any Property upon any conditional sale
or  other  title  retention device or arrangement or any purchase money security
agreement;  provided,  however, that the Company and Subsidiaries of the Company
may  create  or  suffer  to  exist  Permitted  Liens.                           

6.3     Contingent  Liabilities  .  Directly  or  indirectly  guarantee  the    
-----------------------                                         
performance  or  payment  of,  or  purchase  or  agree to purchase, or assume or
contingently  agree  to  become  or  be  secondarily  liable  in respect of, any
obligation  or  liability  of  any  other  Person  except  for:                 

     6.3.1     the  endorsement of checks or other negotiable instruments in the
ordinary  course  of  business;                                                 

     6.3.2     obligations  disclosed to Lender in the Financial Statements (but
not  increases  of  such  obligations  after  the date hereof, provided that the
accrual  of  interest  on  such  obligations,  so long as it is not converted to
principal,  shall  not  be  deemed  to  increase  such  obligations);           

6.3.3     those  liabilities  permitted  under  Section  6.1  hereof. 
                                      ------------

E-73

EX-12.(A)(II)
27th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 27th
6.4     Mergers,  Consolidations  and  Dispositions and Acquisitions of Assets .
      ----------------------------------------------------------------------
In  any  single  transaction  or  series  of  related  transactions, directly or
indirectly:                                                                     

(a)     liquidate,  wind  up  or  dissolve;                 

(b)     be  a  party  to  any  merger  or  consolidation;   

          (c)     sell,  convey or lease all or substantially all of its assets;

          (d)     acquire all or a substantial portion of the assets or stock of
any  Person  whether  by  merger  or  otherwise;  or                            

          (e)     pledge,  transfer  or otherwise dispose of any equity interest
in  any  of its Subsidiaries or issue or permit any of its Subsidiaries to issue
any  additional  equity  interests  except  to  the  Company  or  another of its
Subsidiaries.                                                                   

6.5     Redemption,  Dividends  and  Distributions  .  At  any time, (a) redeem,
------------------------------------------                      
retire  or otherwise acquire, directly or indirectly, any equity interest of the
Company  or  (b)  make any distributions of any property or cash or dividends in
respect  of  any  of  the  Capital  Stock  of  the  Company.                    

6.6     Nature  of  Business  .  Change the nature of its business or enter into
--------------------                                            
any  business which is substantially different from the business conducted by it
as  of  the  date  hereof.                                                      

6.7     Affiliate  Transactions  .  Enter into any transaction or agreement with
-----------------------                                         
any  officer,  director,  employee  or  beneficial owner of Capital Stock in the
Company  or any of its Subsidiaries (or any Affiliate of any such Person) unless
the  transaction  is upon no less favorable terms than those that are obtainable
from  wholly  unrelated  sources.                                               

6.8     Loans  and Investments .  Make any loan, advance, extension of credit or
----------------------                                          
capital  contribution to, or make or have any Investment in, any Person, or make
any  commitment  to  make  any  such  extension  of  credit  or  Investment.    

6.9     Organizational  Documents  .  Amend,  modify,  restate or supplement its
-------------------------                                       
Memorandum  and  Articles  of  Association  or  other  organizational documents.

6.10     Sale/Leasebacks  .  Enter  into  any  sale/leaseback  transactions.    
---------------                                               

6.11     Issuance  of  Stock  .  Issue  or allot or become obligated to issue or
-------------------                                           
allot  shares of Capital Stock or Derivative Securities, except for (i) Ordinary
Shares and Preference Shares the allotment and issuance of which is contemplated
by  this  Agreement  and  (ii) rights, warrants, convertible notes or options to
purchase Capital Stock issued or granted prior to the date hereof and previously
disclosed  to  the  Lender.                                                     

6.12     Subsidiaries  .  Form,  create  or acquire any Subsidiary or permit any
------------                                                  
Person  other  than  the  Company or a wholly owned Subsidiary to hold an equity
interest  in  any  Subsidiary.                                                  

E-74

EX-12.(A)(II)
28th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 28th
6.13     Capital  Expenditures.     The  Company  shall  not  make  any  capital
---------------------                                         
expenditures  (or  series of related capital expenditures) either involving more
than  $  100,000  or  outside  the  ordinary  course  of  business.             

6.14     Abeyance  .  Subject  to delivery of the Board Certificate described in
--------                                                      
the  next  two sentences and the requirements of Section 5.11, in the event that
                              ------------
(a)  the  Board  of  Directors  and  the  Shareholders of the Company shall have
authorized  the terms and conditions of the Preference Shares in compliance with
the Act and offered to issue the Preference Shares to the Lender, (b) the Lender
does  not  make  a Subscription Election to acquire Preference Shares during the
Subscription  Period, and (c) the Company does not make an Accelerated Repayment
Election  to repay the Convertible Loan during the Accelerated Repayment Period,
then,  for  so long thereafter as the Company maintains a Ratio of at least 3:1,
the  negative  covenants and agreements of the Company set forth in Sections 6.1
                                                                    ------------
to 6.13 and the affirmative covenants and agreements of the Company set forth in
----                                                                      
Sections  5.7  (Observer)  and  5.10  (Milestones)  shall  be non-binding on the
-------------                   ----                                            
Company.  On  the last day of the Accelerated Repayment Period the Company shall
deliver to the Lender a certificate of the Board of Directors of the Company (i)
setting  forth  the Company's calculation of the Ratio on an un-audited basis as
of  such  date, and (ii) representing and warranting that such directors believe
after  reasonable investigation and review that the calculation of the Ratio set
forth  in the certificate is true and correct in all material respects (a "Board
                                                                           -----
Certificate").  Thereafter,  the  Company  shall,  in  conjunction  with  the   
-----------                                                                     
preparation of each set of audited accounts of the Company after delivery of the
initial  Board  Certificate (whether monthly, quarterly or annual and regardless
of  the reason for the Company's preparation thereof (e.g., pursuant to the Act,
securities  laws or applicable stock exchange regulation)) deliver to the Lender
on each date of release of such audited accounts a Board Certificate in the form
described  in  the  preceding sentence (except that the calculation of the Ratio
shall  be  audited  in  all  Board  Certificates  except  for  the initial Board
Certificate), with such Board Certificate and the Ratio contained therein taking
the  place  of  the  preceding  Board Certificate and Ratio for purposes of this
Section  6.14  thereafter.  In  the  event  the Company ceases to maintain a 3:1
-------------                                                                   
Ratio  as  demonstrated by the most recent Board Certificate, then the provision
of  Sections 6.1 to 6.13 and Sections 5.7 and 5.10 shall again be binding on the
------------    ----     ------------     ----                          
Company.                                                                        

6.15     Termination .  The covenants and agreements of the Company set forth in
-----------                                                   
this  Article  VI  shall  terminate and be of no further force or effect at such
-----------                                                         
time  as no principal or interest on the Convertible Debenture is outstanding or
payable  (whether  a  result  of  the  payment  of all outstanding principal and
accrued  interest  on  the  Convertible  Debenture  or  the  conversion  of  the
Convertible  Debenture  and  payment  of  the  interest  thereon).              

 ARTICLE VII
 DEFAULTS AND REMEDIES

7.1     Events  of  Default  .  An  "Event  of  Default"  occurs  if:           
-------------------          ------------------                 

     7.1.1     the  Company  defaults  in  the  payment  of  interest  on or the
principal  of  the  Convertible Debenture when the same becomes due and payable,
upon  acceleration  or otherwise and such default is not remedied by the Company
within  5  Business  Days  after  notice  from  the  Lender;                    

E-75

EX-12.(A)(II)
29th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 29th
     7.1.2     the  Company  defaults  in the performance of any covenants under
Article  VI  of  this  Agreement;                                               
-----------                                                                     

     7.1.3     the  Company  fails  to comply with any of the provisions of this
Agreement  (other  than  Article  VI)  and  such  failure is not remedied by the
-----------                   
Company  within  5  Business  Days  after  notice  from  the  Lender;           

     7.1.4     the  Company  defaults  in payment on Borrowed Money Indebtedness
(giving effect to any applicable grace periods and any extensions thereof) of at
least  $100,000  aggregate  principal  amount;                                  

     7.1.5     there  has  been  an acceleration of the final stated maturity of
any Borrowed Money Indebtedness of the Company if the aggregate principal amount
of  such  Borrowed Money Indebtedness, together with the principal amount of any
other  such  Borrowed Money Indebtedness in default for failure to pay principal
at  maturity  or  which has been accelerated, aggregates $100,000 or more at any
time;                                                                           

    7.1.6     any  representation  or  warranty  of  the  Company  under  this
Agreement  shall prove to have been incorrect in any material respect when made;

     7.1.7     there  exists  an  outstanding  unsatisfied final judgment which,
either  alone  or  together  with  other outstanding unsatisfied final judgments
against the Company, exceeds an aggregate of $100,000 (to the extent not covered
by  insurance)  and  such judgment shall have continued undischarged or unstayed
for  20  Business  Days  after  entry  thereof;                                 

     7.1.8     if  the Company is declared insolvent, or a receiver or custodian
is  appointed  with  respect  to  any  Property;                                

     7.1.9     if  any distress, execution, sequestration, or other processes is
levied  or  enforced or issued against any Property and is not discharged within
seven  days  of  being  levied;                                                 

     7.1.10     if  the Company is unable to pay its debts within the meaning of
any  applicable  statute or law or is certified as being unable to pay its debts
as  and  when  they  fall  due  or  is  declared  insolvent                     

    7.1.11     if  the  Company  makes  any  voluntary  arrangement  with  its
creditors  or  becomes  subject  to  an  administration  order;                 

     7.1.12     if  the  Company  ceases  or  threatens  to  cease  to  carry on
business;  or                                                                   

7.1.13     a  Material  Adverse  Effect  occurs.                      

7.2     Acceleration.    If  an  Event  of Default occurs and is continuing, the
------------                                                    
Lender  by  notice  to the Company, may declare the principal of and any accrued
interest  on  the  Convertible  Debenture  to  be  due  and  payable.  Upon such
declaration  such  principal  and interest shall be due and payable immediately.
If  an Event of Default specified in Sections 7.1.8 to 7.1.12 occurs, all unpaid
                  --------------    ------
principal  and  accrued  interest  on the Convertible Debenture then outstanding
shall  ipso  facto                                                              

E-76

EX-12.(A)(II)
30th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 30th
become  and  be immediately due and payable without any declaration or other act
on  the  part  of  the  Lender.                                                 

7.3     Other Remedies .  Notwithstanding any other provision of this Agreement,
--------------                                                  
if  an  Event  of  Default  occurs  and is continuing, the Lender may pursue any
available  remedy  by proceeding at law or in equity to collect the principal of
or  interest  then  due  on  the  Convertible  Debenture.  Without  limiting the
foregoing, the Company and the Lender acknowledge and agree that the remedies of
the  Lender at law for a breach or threatened breach of any of the provisions of
this Agreement would be inadequate and, in recognition of that fact, agree that,
in  the  event  of  a  breach  or threatened breach by the Company of any of the
provisions  of  this Agreement, in addition to any remedies specified herein, at
law or otherwise, the Lender, without posting any bond shall be entitled to seek
equitable  relief  in  the form of specific performance, a temporary restraining
order,  a  temporary or permanent injunction or any other equitable remedy which
may  then  be  available.  A  delay  or omission by the Lender in exercising any
right  or remedy accruing upon an Event of Default shall not impair the right or
remedy  or  constitute a waiver of or acquiescence in the Event of Default.  All
remedies  shall  be  cumulative.                                                

7.4     Waiver of Past Defaults .  Any Event of Default and its consequences may
-----------------------                                         
be  waived  in  accordance  with  Section  10.2.                                
 -------------

ARTICLE VIII
 INDEMNIFICATION

8.1     Indemnification  .  Each  Party  shall  indemnify  each other Party (the
---------------                                                 
"Indemnified  Parties")  for  all  actions,  suits,  proceedings,  hearings,    
---------------------                                                           
investigations,  charges,  complaints,  claims, demands, injunctions, judgments,
orders,  decrees,  rulings, damages, dues, penalties, fines, costs, amounts paid
in  settlement,  liabilities,  obligations,  taxes,  liens, losses, expenses and
fees,  (including,  without limitation, reasonable attorneys' fees and expenses)
(each  a  "Loss"  and  collectively,  the  "Losses") suffered by the Indemnified
----                             ------                   
Parties resulting from, arising out of, relating to, in the nature of, or caused
by  (a)  a  breach  of  any  representation  or  warranty or covenant of a Party
contained  in  this  Agreement.                                                 

8.2     Shareholder  Communications  .  The  Company  will  indemnify  and  hold
---------------------------                                     
harmless the Lender, each of its directors and officers and each Person, if any,
who  controls  the  Lender  against  any  Losses, joint or several, to which the
Lender  may  become  subject  under  applicable securities laws, insofar as such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any communication to Shareholders as
of the date on which it is distributed to the Shareholders and as of the date of
and  meeting  of  Shareholders, (ii) any omission or alleged omission to state a
material  fact  required  to  be  stated in any communication to shareholders or
necessary  to  make  the statements therein, in light of the circumstances under
which  they  were made, not misleading as of the date on which any communication
to  Shareholders  is  distributed  to the Shareholders and as of the date of the
Shareholders Meeting, and the Company will reimburse the Lender for any legal or
any  other  expenses  reasonably  incurred  by  the  Lender  in  connection with
investigating  or  defending  any such loss, claim, damage, liability or action;
provided,  however,  that the Company will not be liable in any such case to the
extent  that any such loss, claim, damage or liability arises out of or is based
upon  any untrue statement or omission made in any communication to shareholders
in                                                                              

E-77

EX-12.(A)(II)
31st Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 31st
reliance  upon  and  in conformity with information furnished to the Company, in
writing,  by  or on behalf of the Lender specifically for use in the preparation
thereof.                                                                        

8.3     Indemnification  Process  .  Each Indemnified Party shall give notice to
------------------------                                        
the  party  required  to  provide  indemnification  (the  "Indemnifying  Party")
                                                         -------------------
promptly  after  such  Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the  defense  of any such claim or any litigation resulting therefrom; provided,
                                                                      --------
that  counsel  for the Indemnifying Party, who shall conduct the defense of such
claim  or litigation, shall be approved by the Indemnified Party (whose approval
shall  not  be unreasonably withheld);  and, provided, further, that the failure
                  --------
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying  Party  of  its  obligations  under  this Section 8.3 except to the
                                         -----------
extent  that  the Indemnifying Party is adversely affected by such failure.  The
Indemnified  Party  may  participate  in  such  defense at such party's expense;
provided,  however,  that  the  Indemnifying  Party  shall  pay  such expense if
representation  of  such  Indemnified  Party  by  the  counsel  retained  by the
Indemnifying Party would be inappropriate due to actual or potential conflicting
interests  between the Indemnified Party and any other party represented by such
counsel  in  such  proceeding;  provided  further  that  in  no  event shall the
--------        
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction  as counsel for the Indemnified Party.  The Indemnifying Party also
shall  be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense.  No Indemnifying Party, in the defense of
any  such claim or litigation shall, except with the consent of each Indemnified
Party,  consent to entry of any judgment or enter into any settlement which does
not  include  as  an  unconditional  term  thereof the giving by the claimant or
plaintiff  to  such Indemnified Party of a release from all liability in respect
of  such claim or litigation, and no Indemnified Party shall consent to entry of
any  judgment  or  settle  such  claim  or  litigation without the prior written
consent  of  the  Indemnifying  Party,  which  consent shall not be unreasonably
withheld.                                                                       

ARTICLE IX
 RESTRICTIONS ON TRANSFER OF CONVERTIBLE DEBENTURE

9.1     Securities  Laws  Restrictions  on  Transfer  .  None of the Convertible
--------------------------------------------                    
Debenture, or the Ordinary Shares issuable as a result of an Optional Conversion
Election  or a Company Conversion shall be sold or transferred unless either (a)
they  first  shall  have  been  registered  under  the Securities Act or (b) the
Company  shall  have been furnished with an opinion of legal counsel, reasonably
satisfactory  to  the Company, to the effect that such a transfer is exempt from
the  registration  requirements  of  the  Securities  Act.                      

9.2     Restrictive  Legend .  For so long as such securities are not registered
-------------------                                             
or  otherwise  transferable under the Securities Act, the Convertible Debenture,
any  New  Convertible  Debenture,  any  Ordinary Shares and any ADRs issued upon
conversion  pursuant  to  Sections  2.7  and  2.8  shall be stamped or otherwise
-------------       ---     
imprinted  with  a  legend  in  the  following  form  (in addition to any legend
required  under  applicable  state  securities  laws):                          

     "THESE  SECURITIES  HAVE  NOT  BEEN  REGISTERED  UNDER  THE  UNITED  STATES
     SECURITIES  ACT  OF  1933,  AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
                       ---
LAWS  AND  MAY  NOT  BE  TRANSFERRED,  SOLD  OR                       

E-78

EX-12.(A)(II)
32nd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 32nd
     OFFERED  FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS
     TO THE SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
     AN  OPINION  OF  COUNSEL  REASONABLY  SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION  IS  NOT  REQUIRED."                                     

     The  foregoing  legend  may  be removed after the second anniversary of the
     later  of  (a)  the  issue  date of the security and (b) the last date upon
     which  the  Company  or  any Affiliate of the Company was the owner of such
     security  (or such shorter period of time as permitted by Rule 144(k) under
the  Securities  Act  or  any  successor  provision).                 

9.3     Transfer  to  Affiliates.                                               

     9.3.1     This  Agreement,  the  Convertible  Debenture  and the rights and
obligations  hereunder and thereunder may be transferred or assigned in whole or
in  part by the Lender to any of its Affiliates or any Person managed or advised
by  it;  provided,  that  (a)  the  transferee  provides  written notice of such
--------                                                      
assignment to the Company stating its name and address, (b) the Company receives
the  written  instrument  provided  in  Section  9.3.2  below, and (c) that such
              --------------
transfers  or  assignments  are  in conformance with applicable securities laws.
Any  transferee  to  whom  a transfer is made in accordance with the immediately
preceding  sentence  shall  be  deemed  to  be  the  Lender for purposes of this
Agreement  and any convertible debenture held by such transferee shall be deemed
to  be  a  Convertible  Debenture  for  purposes  of  this  Agreement.          

     9.3.2     Any transferee to whom rights hereunder are transferred shall, as
a  condition  to  such  transfer, deliver to the Company a written instrument by
which  such  transferee  agrees  to be bound by the obligations imposed upon the
Lender  under  this  Agreement  to  the same extent as if such transferee were a
party  hereto.  Upon  transfer  of  a  portion of the Convertible Debenture, the
holders  shall deliver the pre-existing Convertible Debenture to the Company for
cancellation and the Company shall reissue Convertible Debentures to the holders
reflecting  the  aggregate  principal  amounts  of  such Convertible Debentures.

     9.3.3     A transferee to whom such rights are transferred pursuant to this
Section  9.3  may not again transfer such rights to any other Person, other than
------------                                                                    
as  provided  in  this  Section  9.3.                                           
------------                    

9.4     Transfer  to  Competitors.                                              

     9.4.1     Notwithstanding the transfer rights set forth in this Article IX,
                                                                    ----------
neither  this  Agreement  nor  any  part  of  the  Convertible  Debenture may be
transferred  to  any Competitor of the Company or any Person who holds more than
10%  of  the  fully  diluted  equity  of  a Competitor without the prior written
consent  of  the  Company.                                                      

 ARTICLE X
 MISCELLANEOUS

10.1     Notices  .  All  notices,  requests,  demands,  claims,  and  other    
-------                                                       
communications  to  any party hereunder or pursuant to the terms hereof shall be
-                                                             
in  writing.  Any such notice, request, demand, claim, or other communication to
any  party hereunder shall be deemed duly delivered (a) five Business Days after
it  is  sent  by registered or certified mail, return receipt requested, postage

E-79

EX-12.(A)(II)
33rd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 33rd
prepaid,  or (b) one Business Day after it is sent via a reputable international
overnight  courier  service, in each case to the intended recipient as set forth
below:                                                                          

If to the Lender, to:                                                 
--------------------                                                  

Hemisphere Capital LLC                                                
20 Farnham Circle                                                     
Needham, MA 02492                                                     
UNITED STATES OF AMERICA                                              
Facsimile:     +44-20-7968-4801                                       
Attention:  Daniel W. Sasaki                                          

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

Kirkland & Ellis International                                        
Tower 42                                                              
25 Old Broad Street                                                   
London EC2N 1HQ                                                       
ENGLAND                                                               
Attention:  Matthew H. Hurlock                                        

If to the Company, to:                                                
---------------------                                                 

VI Group plc                                                          
The Mill                                                              
Briscombe Port                                                        
Stroud, Gloucestershire                                               
GL5 2QG                                                               
ENGLAND                                                               
Facsimile:     +44-8707-429-771                                       
Attention:     Peter Wharton                                          

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

Kleban & Samor, P.C.                                                  
2425 Post Road                                                        
Southport, CT 06890                                                   
UNITED STATES OF AMERICA                                              
Facsimile:     +1-213-259-9617                                        
Attention:     Alexander W.  Samor                                    

Any  Party  may  give  any  such  notice,  request,  demand,  claim,  or  other 
communication  using  any  other  means  (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but  no  such  notice,  request,  demand, claim, or other communication shall be
deemed  to  have been duly given unless and until it actually is received by the
Party  for  whom  it  is  intended.  Any  Party  may change the address to which
notices,                                                                        

E-80

EX-12.(A)(II)
34th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 34th
requests,  demands,  claims,  and  other  communications  hereunder  are  to  be
delivered  by  giving  the  other Parties notice in the manner herein set forth.

10.2     Amendment,  Supplement  and Waiver .  No provision of this Agreement or
----------------------------------                            
the  Convertible  Debenture  may  be amended, supplemented or waived without the
written  consent of the Lender and the Company, and no existing Event of Default
(other  than  a Event of Default in the payment of the principal of, premium, if
any,  or  interest  on  the  Convertible Debenture, other than a payment default
resulting  from  an acceleration that has been rescinded) and no compliance with
any  provision  of  this  Agreement  or  the Convertible Debenture may be waived
without  the  written  consent  of  the  Lender.                                

10.3     Survival  .  All  covenants, agreements, representations and warranties
--------                                                      
made  by  the  Company  in  the  Loan Documents and in the certificates or other
instruments  delivered  in  connection with or pursuant to this Agreement or any
other  Loan  Document shall be considered to have been relied upon by the Lender
and  shall  survive  the  execution  and  delivery of the Loan Documents and the
making  of  the  Convertible  Loan,  regardless of any investigation made by the
Lender  or on its behalf and notwithstanding that the Lender may have had notice
or  knowledge of any Event of Default or incorrect representation or warranty at
the  time  the  Convertible  Loan was made, and shall continue in full force and
effect  as  long  as the principal of or any accrued interest on the Convertible
Loan  or any fee or any other amount payable under this Agreement is outstanding
and  unpaid.  The  provisions  of  Article VIII shall survive and remain in full
  ------------
force and effect regardless of the consummation of the transactions contemplated
hereby,  the  repayment  of  the  Convertible  Loan  or  the termination of this
Agreement  or  any  provision  hereof.                                          

10.4     Duplicate  Originals  .  The  parties  may  execute  this  Agreement by
--------------------                                          
separate counter-part, all of which when taken together shall constitute one and
the  same  agreement.                                                           

10.5     Governing  Law.                                                        
--------------                                                

     10.5.1     The  laws  of  the  State  of  New  York,  without regard to the
principles  of  conflicts  of law contained therein, shall govern this Agreement
and  the  Convertible  Debenture.                                               

     10.5.2     The  Company  hereby  irrevocably and unconditionally submits to
the  nonexclusive  jurisdiction  of  the  Supreme Court of the State of New York
sitting  in  New  York  County  and  of  the United States District Court of the
Southern  District of New York, and any appellate court from any thereof, in any
action  or  proceeding  arising  out  of  or  relating  to this Agreement or the
Convertible  Debenture,  or  for recognition or enforcement of any judgment, and
each  of  the  parties hereto hereby irrevocably unconditionally agrees that all
claims  in  respect of any such action or proceeding may be heard and determined
in  such  New  York  State  or,  to the extent permitted by law, in such federal
court.  Each  of  the  parties  hereto  agrees that a final judgment in any such
action  or  proceeding  shall  be  conclusive  and  my  be  enforced  in  other 
jurisdictions  by  suit  on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Lender may otherwise have to bring any action or proceeding relating to this
Agreement  or  any  other Loan Document against the Company, its Subsidiaries or
any  of  their  respective  properties  in  the  courts  of  any  jurisdiction. 

E-81

EX-12.(A)(II)
35th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 35th
     10.5.3     The  Company  hereby  irrevocably and unconditionally waives, to
the  fullest  extent it may legally and effectively do so, any objection that it
may  now  or  hereafter have to the extent it may legally and effectively do so,
any  objection  that  it may now or hereafter have to the laying of venue of any
suit,  action  or proceeding arising out of or relating to this Agreement or any
other  Loan  Document  in  any court referred to in Section 10.5.2.  Each of the
                                      --------------
Parties  hereto  hereby  irrevocably  waives, to the fullest extent permitted by
law,  the  defense of an inconvenient forum to the maintenance of such action or
proceeding  in  any  such  court.                                               

     10.5.4     Each  Party to this Agreement irrevocably consents to service of
process  in  the  manner  provided for notices in Section 10.1.  Nothing in this
                                ------------
Agreement  or any other Loan Document will affect the right of any party to this
Agreement  to  serve  process  in  any  other  manner  permitted  by  law.      

10.6     Waiver of Jury Trial .  Each Party hereto hereby waives, to the fullest
--------------------                                          
extent  permitted by applicable law, any right it may have to a trial by jury in
any  legal  proceeding directly or indirectly arising out of or relating to this
Agreement,  any  other  Loan  Document  or  the transactions contemplated hereby
(whether  based  on  contract, tort or any other theory).  Each Party hereto (a)
certifies  that  no  representative,  agent  or  attorney of any other Party has
represented,  expressly  or  otherwise,  that such other Party would not, in the
event  of  litigation, seek to enforce the foregoing waiver and (b) acknowledges
that  it  and  the  other  Parties  hereto  have been induced to enter into this
Agreement  by, among other things, the mutual waivers and certifications in this
Section  10.6.                                                                  
-------------                                                                   

10.7     No Adverse Interpretation of Other Agreements .  This Agreement may not
---------------------------------------------                 
be used to interpret another indenture, loan or debt agreement of the Company or
a  Subsidiary.  No  such  indenture,  loan  or debt agreement may not be used to
interpret  this  Agreement.                                                     

10.8     Successors  and  Assigns  .  All  agreements  of  the  Company  in this
------------------------                                      
Agreement  and  the  Securities  shall  bind  its  successors  and assigns.  All
agreements  of  the  Lender  in  this  Agreement  shall  bind its successors and
assigns.                                                                        

10.9     Severability  .  In  case  any  provision  in  this  Agreement  or  the
------------                                                  
Convertible Debenture shall be invalid, illegal or unenforceable for any reason,
the  validity, legality and enforceability of the remaining provisions shall not
in  any  way  be  affected  or  impaired  thereby.                              

10.10     Headings  .  The Headings of the Articles, Sections and subsections of
--------                                                    
this  Agreement have been inserted for convenience of reference only, are not to
be  considered  a  part hereof and shall in no way modify or restrict any of the
terms  or  provisions  hereof.                                                  

10.11     Confidentiality  .  The  Lender  agrees that it will keep confidential
---------------                                             
and  will not disclose, divulge or use for any purpose other than to monitor its
investment  in  the  Company any confidential, proprietary or secret information
which  Lender  may  obtain  from  the  Company pursuant to financial statements,
reports  and  other materials submitted by the Company to the Lender pursuant to
this  Agreement,  or  pursuant  to  visitation  or  inspection  rights  granted 
hereunder,  unless  such information is known, or until such information becomes
known,  to  the public (other than as a result of a breach of this Section 10.11
                                                                   -------------
by  the  Lender);  provided,  that  the  Lender may disclose such information if
--------                                  
required  by  law,  provided  that  the  Lender  provides  prior                
--------                                

E-82

EX-12.(A)(II)
36th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 36th
written  notice  to the Company of such proposed disclosure and takes reasonable
steps  to avoid and/or minimize the extent of any such required disclosure.  The
Lender  further  acknowledges  and  agrees  that  certain  of  the confidential,
proprietary  or secret information which it may obtain hereunder may be material
non-public  information  and  that  neither  it  nor any of its Affiliates shall
engage  in  any  acquisition, disposition or other similar transaction involving
the  Company's  securities on the basis of such material non-public information.

 *     *     *     *     *

E-83

EX-12.(A)(II)
37th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 37th
IN  WITNESS  WHEREOF, the parties hereto have duly executed this Agreement as of
the  day  and  year  first  above  set  forth.                                  

            VI  GROUP  PLC

                                    By:     ______________________________

                          Name:     Elliot  I.  Miller

                         Title:     Deputy  Chairman

                      HEMISPHERE  CAPITAL  LLC

                                    By:     ______________________________

   Name:

    Title:

E-84

EX-12.(A)(II)
38th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 38th
SCHEDULE 4.1.2

CAPITALIZATION
--------------

(a)  Share Capital                                                              

                                                 SHARES    NOMINAL VALUE

Authorized share capital of 0.5p ordinary shares:  80,000,000  Pounds400,000    

Issued share capital of 0.5p ordinary shares       37,261,166  Pounds186,305    

(b)  Derivative Securities                                                      

Share  Options                                                                  

   NUMBER OF OPTIONS  OPTION PRICE  PERIOD EXERCISABLE
OUTSTANDING                               

Approved              142,857           21p       21/10/01-21/10/08             
Approved               51,000           50p           2/4/01-2/4/08             
Unapproved            283,000           50p           2/4/01-2/4/05             
-------                             
TOTAL                 476,857                                                   

Authority  was  given in the Annual General Meeting held on 18 June 2002 for the
Board  of Directors to adopt in addition to the existing share option schemes of
the  Company,  such further employee incentive schemes as they deem fit provided
the  aggregate  nominal  amount of shares which may be placed under option shall
not  exceed  10%  of  the  ordinary  capital of the Company from time to time in
issue.                                                                          

Other  obligations  to  issue  shares  or  derivatives to issue convertible into
--------------------------------------------------------------------------------
shares                                                                          
------                                                                          

The  Company  has  an obligation to Westminster Securities Corp. acting in their
capacity as placement agent, to issue warrants equal to 10% of the amount raised
and exercisable at the same price paid by the Lender in relation to the issue of
Capital  Stock  or  other  security.                                            

E-85

EX-12.(A)(II)
39th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 39th
Schedule 4.1.5

                                                        [Enlarge/Download Table]


                                   Properties                                        
                                   ----------                                        

                                                                             LEASE   
           COMPANY           ADDRESS                     OWNED/LEASED      EXPIRATION
                                                                              DATE   
                                                                                     
Vero International Software  The Mill                    Leased                  2008
(UK) Ltd                                                                             
                             Brimscombe Port                                         

                             Stroud                                                  

                             Gloucestershire                                         

                             GL5 2SG                                                 

Vero International Software  Unit 2                      Leased                  2007
(UK) Ltd                                                                             
                             Bowden Drive                                            

                             Padge Road                                              

                             Beeston                                                 

                             Nottingham                                              

Vero International Software  29 Bis                      Leased                      
(UK) Ltd                     Chemin de Genas                                         
                             69800 Saint Priest                                      
                             France                                                  

Vero International Software  Via Prelle, 30              Partially               2003
S.r.l                        10090                       owned/                      
                             Romano Canavese (To)        partially leased            
                             Italy                                                   

Vero Sistemi & Consulenze    Viale San Marco             Leased                  2004
S.r.l                        38 30020                                                
                             Marcon (ve)                                             
                             Italy                                                   

                                      E-86                                           

EX-12.(A)(II)
40th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 40th
Vero Tecnologie Spa          Via Maestri del Lavoro 29   Leased                  2013
                             I-20025 LEGANO (MI)                                     
                             Italy Principal offices of                              
                             Vero Tecnologie S.p.A                                   

Vero International Inc.      30150 Telegraph Road        Leased                  2005
                             Suite 183                                               
                             Bingham Farms                                           
                             MI  48025                                               
                             USA                                                     

Vero Tooling Solutions       3600 Billingscourt          Leased                  2005
                             Unit 109                                                
                             Burlington                                              
                             Ontario                                                 
                             Canada                                                  

E-87

EX-12.(A)(II)
41st Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 41st
Schedule 4.1.12 

The  Company  has  full  exclusive, title and interest in the following software
products:                                                                       

VISI-CAD                                                                        
VISI-CAM                                                                        
VISI-Series                                                                     
Machining  Strategist                                                           

VISI-CAD,  VISI-CAM, VISI-Series and Machining Strategist are copyrights of Vero
International  Software  UK  Ltd                                                

The  copyrights  are  not  registered                                 

Machining  Strategist  was  acquired  from  NC  Graphics (Cambridge) Ltd passing
exclusive use of the name to the UK subsidiary of the Company. The copyright was
passed  as  a  joint  copyright  with  the  prior owners, allowing both entities
distribution  and  development  rights. The prior owner passed all rights to the
Machining  Strategist  name  to  the  Company and so no longer promotes or sells
Machining  Strategist  as  a  product.                                          

The  following  trade  marks  are  registered:                                  

VISI-CAD in USA, Canada, UK                                                     
VISI-CAM in USA, Canada, UK                                                     
VISI in UK                                                                      

The  following  trade  marks  have  been  applied  for:                         

VISI-CAD applied to World Intellectual Property Organisation                    
VISI-CAM applied to World Intellectual Property Organisation                    
VISI applied to World Intellectual Property Organisation, USA and Canada        
VISI-Series applied to World Intellectual Property Organisation, USA and Canada 

E-88

EX-12.(A)(II)
42nd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 42nd
Schedule 4.1.13 

 MATERIAL TRANSACTIONS SINCE JUNE 30, 2002

a)   American Stock Exchange Listing                                  

b)   Acquisition of Vero Tooling Solutions, Inc.                      

     c)       Events  reported  in  Forms  6K filed with the U.S. Securities and
     Exchange Commission dated September 13, 2002, October 10, 2002, October 22,
2002,  October  29,  2002  and  December  2,  2002.                   

E-89

EX-12.(A)(II)
43rd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 43rd
Schedule 4.1.15 

                                                                [Download Table]

                            Ownership of Subsidiaries                           
                            -------------------------                           

VI  Group  plc  has  the  following  Subsidiaries:                              

                                        PROPORTION OF SHARE                     
                                                 %                              

                                                                                
Vero International Software S.r.l.              100                             

Vero International Software UK Limited          100                             

Vero International, Inc.                        100                             

Vero Tooling Solution Inc.                      100                             

*Vero Tecnologie S.p.A.                         100                             

*Vero Sistemi e Consulenze S.r.l.               100                             

**Vero Japan                                    100                             

<FN>                                                                            
*Vero  Tecnologie and Vero Sistemi e Consulenze S.r.l. are due to be merged into
Vero  International  Software  Srl  during  the  first  quarter  of  2003.      

**  The  Board  of  VI has approved the formation of a 100% subsidiary in Japan.
Steps  are  in  progress  to  form  the  company  early  on  in  2003.          

E-90

EX-12.(A)(II)
44th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 44th
                                                        [Enlarge/Download Table]


Schedule  4.1.16                                                                                                          
----------------                                                                                                          

Insurance                                                                                                                 

POLICY HOLDER                   INSURANCE POLICY                 LIMIT OF              UNDERWRITER            NOTE        
                                                                INDEMNITY                                                 
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          

Vero International         MBertipaglia's               Death: Euro                 Allianz Subalpina                     
Sw srl                     accident insurance           258.228,00                  spa                                   

                           Policy no.72041189           Total permanent                                                   
                                                        incapacity:                                                       

                                                        Euro 361.519,00                                                   

--------------------------------------------------------------------------------------------------------------------------
Vero International         MBertipaglia's               Euro 144.608,00             Allianz Subalpina                     
Sw srl                     illness insurance                                        spa                                   

                           Policy no. 607790                                                                              

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office Insurance             Euro 101.225,00             Allianz Subalpina                     
Sw srl                     (computers)                                              spa                                   

                           Policy no.                                                                                     
                           72.67910539                                                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office insurance             Euro 516.456,00             Allianz Subalpina                     
Sw srl                                                                              spa                                   
                           (s/w info's dissemination)                                                                     

                           Policy no.                                                                                     

                           30.61452835                                                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office insurance             Euro 67.139,00              Allianz Subalpina                     
Sw srl                     (theft)                                                  spa                                   

                           Policy                                                                                         
                           no.10.61454591                                                                                 

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office insurance             Euro 67.139,00              Allianz Subalpina                     
Sw srl                     (fire)                                                   spa                                   

                           Policy no.                                                                                     
                           00.61454534                                                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office insurance             Euro 361.519,00             Allianz Subalpina  This insurance     
Sw srl                     (fire for loan bank                                      spa                expired the        

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

                                      E-91                                                                                

EX-12.(A)(II)
45th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 45th
--------------------------------------------------------------------------------------------------------------------------
                           CRT)                                                                        16/12/2002         

                           Policy no.                                                                                     
                           00.67912220                                                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         Office insurance             Euro 578.431,00             Allianz Subalpina  This insurance will
Sw srl                     (fire for loan bank                                      spa                expires on         
                           Bcc Vische)                                                                 18/04/2003         

                           Policy no. 00.49218332                                                                         

--------------------------------------------------------------------------------------------------------------------------
Vero International         Business Travel              Death Euro 51.645,00        Allianz Subalpina                     
Sw srl                     Insurace employees                                       spa                                   
                                                        Total permanent incapacity                                        
                           Policy no.                                                                                     
                           72042062                     Euro 51.645,00                                                    

                                                        Refund cost hospital                                              
                                                        Euro 10.329,00                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         MCignetti's                  Death Euro 154.937,00       Allianz Subapina                      
Sw srl                     accident insurance                                       spa                                   
                                                        Total permanent                                                   
                           Policy no. 72042351          incapacit                                                         

                                                        Euro 361.519,00                                                   

--------------------------------------------------------------------------------------------------------------------------
Vero International Sw srl  EGalardo's accident          DeathEuro 361.519,00        Allianz Subapina   For year 2003 this 
                           insurance                                                spa                insurance has not  
                                                        Total permanent                                been renewed       
                           Policy no.                   incapacity                                                        
                           20.89341093                  Euro 361.519,00                                                   

--------------------------------------------------------------------------------------------------------------------------
Vero International         EGalardo'illness insurance   Euro 51.645,00              Allianz Subalpina  For year 2003 this 
Sw srl                                                                              spa                insurance has not  
                           Policy no.                                                                  been renewed       
                           26.89341077                                                                                    

--------------------------------------------------------------------------------------------------------------------------
Vero International         EGalardo's illness           Total permanent             Allianz Subalpina  For year 2003 this 
Sw srl                     insurance                    incapacity                  spa                insurance has not  
                                                        Euro 154.937,00                                been renewed       
                           Policy no.                                                                                     
                           26.89341101                                                                                    

--------------------------------------------------------------------------------------------------------------------------
                           MVergerio's                  Unlimited.                  Allianz Subalpina                     
                           business travel                                          spa                                   
                           Insurance                                                                                      

                                      E-92                                                                                

EX-12.(A)(II)
46th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 46th
--------------------------------------------------------------------------------------------------------------------------
Vero Internartional        Policy no.                                                                                     
      Sw sr                104524665                                                                                      

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

                                                        [Enlarge/Download Table]

                                          CARS                                                    

POLICY HOLDER         INSURANCE         LIMIT OF INDEMNITY         UNDERWRITER     NOTE           
                        POLICY                                                                    
--------------------------------------------------------------------------------------------------
                                                                                                  

Vero International  Fiat Multipla   Euro                        Allianz Subalpina                 
Sw srl                              12.911,00fire&theft  spa                                      
                    Policy                                                                        
                    no.13142611               +                                                   

                                    unlimited for personal                                        
                                    liability                                                     

--------------------------------------------------------------------------------------------------
Vero International  Peugeot 607     Euro27.633,00fire&theft     Allianz Subalpina                 
Sw srl                                                          spa                               
                    Policy no.               +                                                    
                    103489020                                                                     
                                    unlimited for persona                                         
                                    liability                                                     

--------------------------------------------------------------------------------------------------
Vero International  Peugeot 307     Euro 18.000,00fire& theft   Allianz Subalpina                 
Sw srl                                                          spa                               
                    Policy no.               +                                                    
                    104667163                                                                     
                                    unlimited for personal                                        
                                    liability                                                     

--------------------------------------------------------------------------------------------------
Vero International  Fiat Ulisse     Euro 12.950,00fire&theft    Allianz Subalpina                 
Sw srl                                                          spa                               
                    Policy no.               +                                                    
                    103142550                                                                     
                                    unlimited for personal                                        
                                    liability                                                     

--------------------------------------------------------------------------------------------------
Vero International  Fiat Marengo    Euro 15.593,00fire& theft   Allianz Subalpina                 
Sw srl                                                          spa                               
                    Policy no.               +                                                    
                    101001858                                                                     
                                    Euro 1549370,00 for                                           

                                      E-93                                                        

EX-12.(A)(II)
47th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 47th
--------------------------------------------------------------------------------------------------
                                    personal liability                                            

--------------------------------------------------------------------------------------------------
Vero International  Renault Scenic  Euro 5.500,00 fire & theft  Allianz Subalpina                 
Sw srl                                                          spa                               
                    Policy no.               +                                                    
                    103142886                                                                     
                                    unlimited for personal                                        
                                    liability                                                     

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

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

                                                        [Enlarge/Download Table]

POLICY HOLDER          INSURANCE POLICY           LIMIT OF INDEMNITY      UNDERWRITER             

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

Vero Tecnologie  Office Insurance               General property         Toro                     
SpA                                             Euro 53,143              Assicurazioni            
                 Policy No. F15.59.00804828                                                       
                                                Liabilities Euro 531,434                          

--------------------------------------------------------------------------------------------------
                 Car Insurance (plate CB738LB)                           Genialloyd               

                 Policy No. 177235091                                                             

--------------------------------------------------------------------------------------------------
                 Car Insurance (plate CC298JE)                           Genialloyd               

                 Policy No. 177631349                                                             

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

                                                        [Enlarge/Download Table]

POLICY HOLDER             INSURANCE POLICY          LIMIT OF INDEMNITY      UNDERWRITER           

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

VI Group plc        Directors and Officers       5,000,000 Pounds          New Hampshire          
                                                                           Insurance              
                    Policy No. 33561571                                    Company                

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

                                      E-94                                                        

EX-12.(A)(II)
48th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 48th
POLICY HOLDER             INSURANCE POLICY          LIMIT OF INDEMNITY      UNDERWRITER           

--------------------------------------------------------------------------------------------------
                    Don Babbs, Key Man            1,000,000 Pounds         Swiss Life             

--------------------------------------------------------------------------------------------------
                    Gerry O'Driscoll, Key Man     500,000 Pounds           Swiss Life             

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

--------------------------------------------------------------------------------------------------
Vero International  Professional Indemnity        250,000 Pounds any one   MMA Insurance          
Software UK Ltd     Insurance                     claim and in all                                

                    Policy No. F2903HAAMF         10,000 Pounds excess                            
                                                  each and every claim                            

--------------------------------------------------------------------------------------------------
                    Public and Product Liability  1,000,000 Pounds         Norwich Union          

                    Policy No. 23623525                                                           

--------------------------------------------------------------------------------------------------
                    Office Insurance              Stroud                   Norwich Union          
                                                  Contents 52,353 Pounds                          
                    Policy No. CSJ 2344 6174                                                      
                                                  Tenants improvements                            
                                                  10,791 Pounds                                   

                    Includes Employers Liability                                                  
                    and Public Liability                                                          
                                                  Cambridge                                       

                                                  Contents 20,000 Pounds                          

                                                  Nottingham                                      

                                                  Contents 30,000 Pounds                          

                                                  Tenants improvements                            
                                                  10,000 Pounds                                   

                                      E-95                                                        

EX-12.(A)(II)
49th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 49th
POLICY HOLDER             INSURANCE POLICY          LIMIT OF INDEMNITY      UNDERWRITER           

--------------------------------------------------------------------------------------------------
                    Computer Insurance            Anywhere required in     Norwich Union          
                                                  UK 67,000 Pounds                                
                    Policy no. JX925903057                                                        
                                                  Brimscombe Mill,                                
                                                  Telecoms equip                                  
                                                  12,000 Pounds                                   

--------------------------------------------------------------------------------------------------
                    Motor Fleet Insurance         All vehicles, owned,     Norwich Union          
                                                  hired, borrowed or                              
                    Policy No. 34FLW1372032       leased                                          

--------------------------------------------------------------------------------------------------
                    Business Travel Insurance     Includes unlimited       Royal and              
                                                  medical insurance        Sunalliance            
                    Policy No. PARKK150629        outside UK                                      

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

--------------------------------------------------------------------------------------------------
Vero International  Commercial General Liability  Each occurrence          Cincinnati             
Inc                                               $1,000,000               Insurance Co.          
                    Policy No. CPP0742324                                                         
                                                  Fire damage $100,000                            

                                                  Med Exp $5,000                                  

                                                  Personal & adv injury                           
                                                  $1,000,000                                      

--------------------------------------------------------------------------------------------------
                    Workers compensation and      Each accident $100,000   Cincinnati             
                    employers liability                                    Casualty               
                                                  Disease ea. Emp.         Company                
                                                  $100,000                                        

                                                  Disease policy limit                            
                                                  $500,000                                        

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

E-96

EX-12.(A)(II)
50th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 50th
                                                                [Download Table]


POLICY HOLDER  INSURANCE POLICY       LIMIT OF       UNDERWRITER   NOTE    
                                      INDEMNITY                            
---------------------------------------------------------------------------
                                                                           

Vero Sistemi   Office insurance   Euro 67.139,00     Generali Spa          
               (theft)                                                     
srl                                                                        
               Policy                                                      
               no.998008481                                                

---------------------------------------------------------------------------
Vero Sistemi   Office insurance   Euro 11.070,00     Generali Spa          
               (fire)             goods                                    
srl                                                                        
               Policy no.         Euro 16.600,00                           
               998008480          computers                                

                                  Euro 221.300,00                          
                                  damages to thirds                        

                                  Euro 110.700,00                          
                                  damages to                               
                                  builder's owner                          

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

                                                                [Download Table]

                                      CARS                                 

POLICY HOLDER  INSURANCE POLICY        LIMIT OF        UNDERWRITER  NOTE   
                                      INDEMNITY                            
---------------------------------------------------------------------------
                                                                           

Vero Sistemi   Skoda Octavia SW  Euro 18.650,00 fire&  Reale Mutua         
                                 theft                                     
Srl            Policy no.324458                                            

                                         +                                 

                                 Euro 1.549.370,00                         
                                 personal liability                        

---------------------------------------------------------------------------
Vero Sistemi   Ford Mondeo SW    Euro 28.000,00 fire&  Reale Mutua         
                                 theft                                     
Srl            Policy no.324201                                            

                                         +                                 

                                 Euro 1.549.370,00                         
                                 personal liability                        

---------------------------------------------------------------------------
Vero Sistemi   Chrysler Vojager  Euro 18.950,00 fire&  Reale Mutua         

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

                                      E-97                                 

EX-12.(A)(II)
51st Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 51st
---------------------------------------------------------------------------
Srl            Policy no.324202 theft                                      

                                         +                                 

                                 Euro 1.549.370,00                         
                                 personal liability                        

---------------------------------------------------------------------------
Vero Sistemi   Fiat Bravo        Euro 1.549.370,00     Reale Mutua         
                                 personal liability                        
Srl            Policy no.323078                                            

---------------------------------------------------------------------------
Vero Sistemi   Ford Escori SW    Euro 1.549.370,00     Reale Mutua         
                                 personal liability                        
Srl            Policy no.321206                                            

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

E-98

EX-12.(A)(II)
52nd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 52nd
 Exhibit A

E-99

EX-12.(A)(II)
53rd Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 53rd
 Exhibit B

 E-100

EX-12.(A)(II)
54th Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 54th
 Exhibit C

 E-101

EX-12.(A)(II)
Last Page of 55
TOC
1st
Previous
Next
↓Bottom
Just 55th
 Exhibit D

Competitors 
----------- 

Cimatron                                                                        

Delcam plc                                                                      

Pathtrace plc                                                                   

IBM/Dassault Systemes                                                           

EDS PLM Solutions                                                               

Missler Infomatique                                                             

Hitachi Zosen                                                                   

Think3 Inc                                                                      

Graphic Products                                                                

Parametric Technology Corp                                                      

Tebis                                                                           

Open Mind                                                                       

Mensch und Maschine                                                             

DP Technology                                                                   

CNC Software                                                                    

Gibbs                                                                           

Camtek                                                                          

Surfware                                                                        

Teksoft                                                                         

SolidCAM                                                                        

Sescoi                                                                          

Auton                                                                           

Lightworks                                                                      

NC Graphics                                                                     

Jetcam                                                                          

Radan                                                                           

Autodesk                                                                        

Cadkey                                                                          

VX Corporation                                                                  

 E-102

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘20-F’ Filing		Date		First		Last			Other Filings
Filed on:		6/30/03
For Period End:		12/31/02		24					5
		12/2/02		42					6-K
		10/29/02		42					6-K
		10/22/02		42
		10/10/02		42
		9/13/02		42
		6/30/02		16		42
									List all Filings