Exhibit 10.1

 

Execution Version

 

THE SELLERS (AS DEFINED HEREIN)

WIRELESS TELECOMMUNICATIONS GROUP, LTD. (AS BUYER)

WIRELESS TELECOM GROUP, INC.

 

SHARE PURCHASE AGREEMENT RELATING TO THE SALE AND PURCHASE OF SHARES IN
COMMAGILITY LIMITED

 

Date: FEBRUARY 17, 2017

 

Execution Version

 

CONTENTS

 

1. Interpretation 1 2. Sale and purchase and waiver of pre-emption rights 12 3.
Purchase price 12 4. Completion 15 5. Employee loyalty bonus 17 6. Deferred
payment 18 7. Warranties 19 8. Limitations on claims 20 9. Tax covenant 24 10.
Indemnities 24 11. Buyer and WTG Warranties 24 12. Guarantee and Indemnity 25
13. Clawback Escrow Agreement Indemnities 26 14. Restrictions on Sellers 26 15.
Sellers’ Representative 28 16. Confidentiality and announcements 28 17. Further
assurance 30 18. Assignment 30 19. Whole agreement 31 20. Variation and waiver
31 21. Costs 31 22. Notice 31 23. Severance 33 24. Agreement survives completion
33 25. Third party rights 33 26. Successors 33

 

Execution Version

 

27. Counterparts 33 28. Inadequacy of Damages 33 29. Broker’s Fees 34 30.
set-off rights 34 31. Governing law and jurisdiction 34 Schedule 1. Particulars
of  Sellers 24 Schedule 2. Particulars of the Company 27 Schedule 3. Completion
29 Schedule 4. Warranties 32 Schedule 5. Tax covenant 68 Schedule 6.
Intellectual Property Rights 83 Schedule 7. Information technology 89 Schedule
8. Particulars of Properties 92 Schedule 9. Earn-out Payments 94 Schedule 10.
Completion Working Capital and Completion Net Debt 108

 

Execution Version

 

THIS AGREEMENT is made as a deed on                                  2017

 

Parties

 

(1)The several persons whose names are set out in Schedule 1 and whose addresses
(for the purposes of this Agreement) shall be the addresses set out for each of
them in the Disclosure Letter (the “Sellers”).

 

(2)Wireless Telecommunications Group, Ltd. a private company limited by shares
incorporated in England and Wales with company registration number 10614152
whose registered office is at C/O Bryan Cave, 88 Wood Street, London EC2V 7AJ
(the “Buyer”).

 

(3)Wireless Telecom Group Inc. of 25 Eastmans Road, Parsippany, New Jersey 07054
(“WTG”).

 

Background

 

(A)The Company (as defined below) is a private company limited by shares
incorporated in England and Wales. Further particulars of the Company at the
date of this Agreement are set out in Schedule 2.

 

(B)The Company has an issued share capital of £12 divided into 12 ordinary
shares (of various classes) of £1 each.

 

(C)The Sellers are the legal and beneficial owners of, or are otherwise able to
procure the transfer of, the legal and beneficial title to the number of Sale
Shares (as defined below) set out opposite their respective names in Schedule 1.

 

(D)The Sellers have agreed to sell and the Buyer has agreed to buy the Sale
Shares subject to the terms and conditions of this Agreement.

 

(E)WTG is a party to this Agreement for the purposes, inter alia, of entering
into the guarantee and indemnity set out in clause 12 and of agreeing to the
obligation to issue the Consideration Shares (subject always to the warranties
and confirmations to be given by the Sellers in relation thereto and the
execution of a Lock Up Agreement and Clawback Escrow Agreement (as defined
below) by each of the Sellers).

 

Agreed terms

 

1.Interpretation

 

1.1The definitions and rules of interpretation in this clause apply in this
Agreement.

 

Accounts: the financial statements of the Company as at and for the 12 month
period to the Accounts Date, comprising the accounts of the Company including
the balance sheet, profit and loss account together with the notes on them, the
cash flow statement and the directors’ reports (a copy of which is attached to
the Disclosure Letter).

 

Accounts Date: 30 September 2016.

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Adjustment Date: the fifth Business Day following the date on which the
Completion Accounts and the Completion Accounts Statement are agreed or
determined in accordance with Schedule 10.

 

Aeroflex Agreement: the board manufacture and supply agreement between the
Company and Aeroflex Limited dated 24 June 2013.

 

Bonus Tax Saving: the amount of any Tax saved by or repaid to any member of the
Company’s Group in consequence of a Relief arising to any member of the
Company’s Group by reason of the payment by the Company of the Employee Loyalty
Bonus or any part thereof to any employee of the Company’s Group (less any sum
payable by the Buyer in respect of stamp duty by virtue of the Purchase Price
being increased in connection with the Bonus Tax Saving).

 

Business: the sale and licensing of advanced embedded signal processing products
and LTE software carried on by the Company and its Group.

 

Business Day: a day (other than a Saturday, Sunday or public holiday) when banks
in the City of London and New York are open for business.

 

Buyer’s Solicitors: Bryan Cave, 88 Wood Street, London EC2V 7AJ.

 

CAA 2001: the Capital Allowances Act 2001.

 

Cash: the aggregate amount of (i) cash in hand, (ii) cash standing to the credit
of any account with a bank or financial institution derived from bank
statements, and (iii) cash equivalents, in each case to which the Company and/or
the US Subsidiary are beneficially entitled at the Completion Date and for the
purposes of the Completion Statement, as shown in the Completion Accounts but
excluding (a) Debt Cash, (b) Working Capital Cash (c) the amounts of any
cheques, drafts and wires issued by or commenced by the Company or its
Subsidiaries but not yet cleared or withdrawn from the applicable account (only
to the extent, if such cheques, drafts and wires, as applicable, are issued or
commenced to pay a Completion Working Capital, or Indebtedness liability, that
such liability is no longer reflected as Completion Working Capital or
Indebtedness), and (d) any cash equivalents not convertible to cash within 30
days.

 

Claim: has the meaning set out in clause 8.

 

Clawback Consideration Shares: the percentage of Consideration Shares of each of
the Sellers as set out in column 8 opposite their respective names in Schedule 1
which shall be subject to the forfeiture and return to WTG in accordance with
clause 3.2(b).

 

Clawback Escrow Agreement: the agreement in the agreed form to be entered into
on Completion between the Seller Representative, WTG and the Escrow Agent
appointed as such pursuant to that agreement relating to the forfeiture and
return of the Clawback Consideration Shares in the circumstances set out in
clause 3.2(b) and in, and on the terms of, that agreement.

 

Consideration Shares: the WTG Shares each to be allotted and issued to the
Sellers in accordance with clause 3.1(b) in consideration for the sale of the
Sale Shares.

 

Company: Commagility Limited a private limited company incorporated in England
and Wales with registration number 05914025 and whose registered office is
located at

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Charnwood Building, Holywell Park, Ashby Road, Loughborough, Leicestershire LE11
3AQ further details of which are set out in Part 1, Schedule 2.

 

Completion: completion of the sale and purchase of the Sale Shares in accordance
with this Agreement.

 

Completion Cash: means Cash plus Debt Cash plus Working Capital Cash.

 

Completion Accounts: the consolidated statement of the financial position of the
Company and the US Subsidiary as at the Completion Accounts Date set out in Part
2 of Schedule 10.

 

Completion Accounts Date means 31 December 2016.

 

Completion Accounts Price Increase: has the meaning set out in paragraph 4.2(a)
of Schedule 10.

 

Completion Cash Statement: means a statement to be delivered by the Sellers to
the Buyer at Completion confirming estimated figures for (i) Completion Working
Capital (ii) Cash (iii) Debt Cash (iv) Working Capital Cash (v) Indebtedness and
(vi) the Completion Net Debt or the Completion Net Cash.

 

Completion Date: means the date of this Agreement.

 

Completion Net Debt: if Indebtedness is greater than Completion Cash at 31
December 2016, the Indebtedness less the Completion Cash as determined pursuant
to Schedule 10.

 

Completion Net Cash: if Completion Cash is greater than Indebtedness at 31
December 2016, the Completion Cash less the Indebtedness as determined pursuant
to Schedule 10.

 

Completion Payment: the sum of GBP £9,000,000 (nine million pounds).

 

Completion Statement: the written statement derived from the Completion Accounts
setting out the Cash, the Indebtedness and the Completion Working Capital as at
the close of business on 31 December 2016 set out in Part 2 of Schedule 10.

 

Completion Working Capital: as determined pursuant to Schedule 10, the working
capital of the Company and the US Subsidiary (being (i) current assets
(excluding Cash but including, for the avoidance of doubt, any cash equivalents
not convertible to cash within 30 days), stock and accounts receivable net of
reasonable reserves (based on past practices of the Company and the US
Subsidiary), deposits and prepayments, but excluding current and other
receivables owing from any Related Party of the Company or the US Subsidiary or
any Seller to the Company or the US Subsidiary) minus (ii) current liabilities
(including without duplication trade payables, commissions, inclusive contracts
and other current payables, accruals, deferred income, VAT, PAYE and NIC
balances) (excluding all Indebtedness), in each case as at the close of business
on 31 December 2016 and as shown in the Completion Statement.

 

Connected: in relation to a person, has the meaning given in section 1122 of the
Corporation Tax Act 2010.

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Control: in relation to a body corporate, the power of a person to secure that
the affairs of the body corporate are conducted in accordance with the wishes of
that person:

 

(a)by means of the holding of shares, or the possession of voting power, in or
in relation to that or any other body corporate; or

 

(b)by virtue of any powers conferred by the constitutional or corporate
documents, or any other document, regulating that or any other body corporate,

 

and a Change of Control occurs if a person who controls any body corporate
ceases to do so or if another person acquires control of it.

 

Counsel: a barrister, chosen by the Buyer, of not less than 10 years standing
having experience in disputes in relation to share purchase agreements (and who,
save for the fact that he/she will be instructed and paid for by the Buyer, is
independent of the parties).

 

CTA 2009: Corporation Tax Act 2009.

 

CTA 2010: Corporation Tax Act 2010.

 

Data Room: means the virtual data room containing documents and information
relating to the Company and its Group made available by or on behalf of the
Sellers to the Buyer, the contents of which are listed in the appendix to the
Disclosure Letter.

 

Debt Cash: means an amount of cash equal to the Disclosed Debts to be retained
by the Company at Completion.

 

Deferred Payment: the sum of GBP £1,000,000 (one million pounds).

 

Deferred Payment Dates: means 30 June 2017, 30 September 2017, 31 December 2017,
and 31 March 2018.

 

Director: each person who is a director of the Company, the names of whom are
set out in Schedule 2.

 

Disclosed: fairly and accurately disclosed (with sufficient details to identify
the nature, scope and associated risk of the matter disclosed), in or under the
Disclosure Letter.

 

Disclosed Debts: means the aggregate value as at 31 December 2016 of the MimoOn
Deferred Consideration and any unpaid corporation tax of the Company and the
Subsidiaries for the period up to and including 31 December 2016, being the sum
of £237,325 in aggregate.

 

Disclosure Letter: the letter from the Sellers to the Buyer with the same date
as this Agreement and described as the disclosure letter, including the bundle
of documents attached to it (the “Disclosure Bundle”).

 

Due Amount: the amount (if any) due for payment by the Sellers to the Buyer in
respect of a Resolved Claim.

 

Earn-out Payments: has the meaning given in Schedule 9.

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Employee Loyalty Bonus: the gross sum of £1,000,000, (which includes an amount
to be paid in respect of employers NICs, which will reduce the amount payable to
the recipients of the bonus) comprised of the Initial Employee Loyalty Bonus and
the Future Employee Loyalty Bonus from which all income tax, employees’ NICs and
other relevant payroll taxes shall be deducted by the relevant member of the
Company’s Group.

 

Employee Loyalty Bonus Letters: the letters in the form to be agreed between the
Buyer and the Seller’s Representative from the Company to the persons to whom
the Employee Loyalty Bonus will be paid.

 

Employee Loyalty Bonus Allocation Schedule means the schedule in the agreed form
setting out the proposed allocation of the Employee Loyalty Bonus.

 

Encumbrance: any interest or equity of any person (including any right to
acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien,
assignment, hypothecation, trust, security interest, title retention or any
other security agreement or arrangement.

 

Escrow Agent: Wilmington Trust National Association.

 

Estimated Liability: in relation to an Outstanding Claim, an amount agreed by
the Buyer and the Seller’s Representative in writing to be a reasonable and bona
fide estimate of the amount of the Seller’s liability to the Buyer if the
Outstanding Claim were to be resolved in the Buyer’s favour, or, in the absence
of such agreement, the amount specified to be a reasonable and bona fide
estimate of the amount of the Sellers’ liability to the Buyer in respect of such
Outstanding Claim in a written opinion of Counsel to be addressed to the Buyer
and the Sellers’ Representative (provided that Counsel is prepared to address
his opinion to both the Buyer and the Sellers’ Representative) in which Counsel
opines that the Outstanding Claim has a greater than 50% chance of succeeding.

 

Event: has the meaning given in Schedule 5.

 

Expert: an independent firm of chartered accountants of international repute
appointed to resolve any dispute between the parties in connection with this
Agreement as specified herein.

 

Extraordinary Payments: means any payments made by the Company in the period
after the Completion Accounts date up to and including the Completion Date which
were not in the ordinary course of the Company’s business, including payments
relating to any or fees and expenses relating to the Transaction (including the
PKF Fee to the extent that it is not a Permitted Payment) less any VAT charged
in respect of such payments which is capable of recovery by the Company, but
excluding any payments which are specified on the Payments Schedule and in
respect of which the description of the payment given on the Payments Schedule
is accurate and such payment was made in the ordinary course of business.

 

Final Deferred Payment Date: means 31 March 2018.

 

FSMA: the Financial Services and Markets Act 2000.

 

Fundamental Warrant(y)(ies): Warranties in paragraphs 1 and 2 of Part 1 of
Schedule 4.

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Future Employee Loyalty Bonus: the gross sum of £666,667 in cash (which includes
an amount to be paid in respect of employers NICs, which will reduce the amount
payable to the recipients of the bonus) to be paid as a discretionary loyalty
bonus to employees of the Company in accordance with clause 5.3 from which all
income tax, employees’ NICs and other relevant payroll Taxes shall be deducted
by the relevant member of the Company’s Group.

 

German Branch: means the German business located at Duisburg, Germany and which
is operated by the Company, consisting inter alia of assets, contracts and
employees which have been acquired by the Company from the insolvency
administrator Dr. Andreas Röpke as insolvency administrator over the assets of
MimoOn GmbH with asset purchase agreement dated 27 February 2015, with effect as
of 1 March 2015.

 

Governmental Authority: means any supranational, national, foreign, federal,
state, provincial or local governmental or regulatory commission, board, bureau,
agency, court, arbitral tribunal or regulatory or administrative body.

 

Grant Agreements: (i) Grant Agreement between the European Union (represented by
the European Commission) and (1) Tecknologian Tutkimuskeskus VTT OY, (2)
Eurecom, (3) Create-Net, (4) Aalto-Korkeakoulusaatio, (5) SICS Swedish ICT AB,
(6) European Center for Information, (7) Thales Communication & Security SAS,
(8) the Company, (9) Universitaet Duisburg-Essen, (10) Hellenic
Telecommuncations Organization S.A., (11) Goldhamer Mariana, (12) Politechnika
Poznanska, (13) Inea Spolka Akcyjna and (14) Fairspectrum OY (the “EU Grant”);
and (ii) Granting decision dated 27 June 2016 relating to grant of the federal
state North Rhine-Westphalia in use of funds of the European Regional
Development Fund (“EFRE”) 2014-2020 “Investment in Growth and Employment” (the
“German Grant”).

 

Group: in relation to a company, that company, its subsidiaries, any company of
which it is a subsidiary (its holding company) and any other subsidiaries of any
such holding company; and each company in a group is a member of the group.

 

Unless the context otherwise requires, the application of the definition of
Group to any company at any time will apply to the company as it is at that
time.

 

Guaranteed Obligations: all present and future payment obligations and financial
liabilities of the Buyer to the Sellers from time to time due, owing or incurred
by the Buyer under this Agreement (subject always to any right of set-off which
the Buyer may have pursuant to the terms hereof).

 

holding company and subsidiary: a “holding company” and “subsidiary” as defined
in section 1159 of the Companies Act 2006 and a company shall be treated, for
the purposes only of the membership requirement contained in subsections
1159(1)(b) and (c), as a member of another company even if its shares in that
other company are registered in the name of (a) another person (or its nominee),
by way of security or in connection with the taking of security, or (b) its
nominee. In the case of a limited liability partnership which is a subsidiary of
a company or another limited liability partnership, section 1159 of the
Companies Act 2006 shall be amended so that: (a) references in sub sections
1159(1)(a) and (c) to voting rights are to the members’ rights to vote on all or
substantially all matters which are decided by a vote of the members of the
limited liability partnership; and (b) the reference in section 1159(1)(b) to
the right to

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Execution Version

 

appoint or remove a majority of its board of directors is to the right to
appoint or remove members holding a majority of the voting rights.

 

IHTA 1984: the Inheritance Tax Act 1984.

 

Indebtedness: means in relation to the Company and the Subsidiaries, the
aggregate amount of their respective borrowings and other financial indebtedness
in the nature of borrowing, including (without double counting): (a) borrowings
from any bank, financial institution or other entity; (b) indebtedness arising
under any bond, note, loan stock, debenture, commercial paper or similar
instrument; (c) obligations under any conditional sale, title retention, forward
sale or purchase or any similar agreement or arrangement creating obligations
with respect to the deferred purchase price of property (other than customary
trade credit given in the ordinary course of trading); (d) indebtedness under
any hire purchase agreement or finance lease (whether for land, machinery,
equipment or otherwise) which is a liability under accounting standards; (e) any
indebtedness for monies borrowed or raised under any other transaction that has
the commercial effect of borrowing; (f) any off balance sheet guarantees; (g)
any preference shares or element of preference shares shown as liabilities as
required by applicable accounting standards; (h) the Disclosed Debts; and (i)
the Employee Loyalty Bonus, and all unpaid accrued interest on any borrowings or
indebtedness referred to in the paragraphs above, but excluding current and
other receivables owing to any Related Party of the Company or the US Subsidiary
or any Seller from the Company or the US Subsidiary, in each case as at 31
December 2016 and for the purposes of the Completion Statement, as shown in the
Completion Accounts.

 

Indemnity Claim: a claim for breach of any of the indemnities referred to in
clause 10 and set out in Part C of the Disclosure Letter.

 

Initial Employee Loyalty Bonus: the gross sum of £333,333 in cash (which
includes an amount to be paid in respect of employers NICs, which will reduce
the amount payable to the recipients of the bonus) to be paid as a discretionary
Loyalty bonus to employees of the Company within one month of Completion
pursuant to the Employee Loyalty Bonus Letters and from which all income tax,
employees NICs and other relevant payroll Taxes shall be deducted by the
relevant member of the Company’s Group.

 

Intellectual Property Rights: has the meaning given in paragraph 20.1 of
Schedule 4.

 

Interest Rate: 4% per annum.

 

ITA 2007: Income Tax Act 2007.

 

ITEPA 2003: Income Tax (Earnings and Pensions) Act 2003.

 

Law: means any national, international (including that of the European Union),
federal, state, local, municipal, foreign or other order, constitution, law,
statute, sub-ordinate legislation, ordinance, directive, rule, regulation,
statute, treaty, principle of common law, code, judgements, decisions and
injunctions of any court or tribunal, or other legal requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Authority.

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Leakage: means the value attributable to the occurrence of any of the following
after the Completion Accounts Date and on or before the Completion Date but
excluding, for the avoidance of doubt, any Permitted Payments:

 

(a) any transfers of value (including, without limitation, dividends,
distributions, returns of capital and any acquisition or disposal of assets)
made to any of the Sellers or any person Connected with any of them by the
Company or the US Subsidiary; and/or

 

(b) any debt or other amount owing to the Company or the US Subsidiary by any of
the Sellers or any person Connected with them which has been waived, forgiven or
otherwise released (in whole or in part); and/or

 

(c) any indemnity or waiver granted by the Company or the US Subsidiary in
favour of any of the Sellers or any person Connected with them; and /or

 

(d) any costs or expenses of the Sellers or any person Connected with them
incurred by the Company in connection with the Transaction, including any fees
or expenses of any professional or other advisers.

 

Lock Up Agreement: means an agreement in the agreed form to be entered into by
each of the Sellers with WTG at Completion confirming certain restrictions which
will apply in relation to the Consideration Shares for an agreed period.

 

Losses: all and any claims, losses, damages, liabilities, fines, fees, penalties
and reasonable and properly incurred expenses or costs.

 

Management Accounts: the unaudited consolidated balance sheet and the unaudited
consolidated profit and loss account of the Company (including any notes
thereon) for the period of 3 months ended 31 December 2016 (a copy of which is
attached to the Disclosure Letter).

 

MimoOn APA: the asset purchase agreement dated 27 February 2015 relating to the
business operations of MimoOn GmbH, Duisburg by and between Dr. Andreas Röpke,
insolvency administrator over the assets of MimoOn GmbH and the Company,
effective as of 1 March 2015.

 

MimoOn Deferred Consideration: the total outstanding liabilities of the Company
under the MimoOn APA, amounting to €383,000, payable on 1 January 2018.

 

Net Working Capital PEG: £2,370,000.

 

Outstanding Claim: a Relevant Claim that has been notified by the Buyer to the
Seller in accordance with this agreement but which is not yet a Resolved Claim.

 

Payments Schedule: means the schedule in the agreed form setting out the
payments made by the Company in the period after the Completion Accounts Date up
to and including the Completion Date.

 

Permitted Payments: means:

 

(a)any and all salary and other emoluments and entitlements which have been
Disclosed and which are properly payable to or for the benefit of the Sellers as
employees, directors or officers of the Company in the

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ordinary course and due or accrued up to the Completion Date under any service
or other agreement or by virtue of their employment or directorship;

 

(b)any and all expenses properly payable to the Seller as employees, directors,
consultants or officers of the Company and/or the US Subsidiary in the ordinary
course and in a manner which is consistent with past practice properly due or
accrued up to the Completion Date; and

 

(c)50 per cent. of the PKF Fee (for the avoidance of doubt the other 50% will
constitute an Extraordinary Payment).

 

PKF Fee: means the full amount of the fees charged to the Company by PKF (up to
a maximum of £40,000 (inclusive of VAT)) relating to: the US GAAP footnote and
inventory observations post 30 September 2016; the opening balance sheet of the
Company at the Completion Date; the FY15 opening balance sheet opinion prepared
at the request of the Buyer; the stub period between 31 December 2016 and the
Completion Date.

 

Previously-owned Land and Buildings: has the meaning given in paragraph 24 of
Schedule 4.

 

Properties: has the meaning given in paragraph 24 of Schedule 4.

 

Purchase Price: the purchase price for the Sale Shares to be paid by the Buyer
to the Sellers in accordance with clause 3.1.

 

Reconciliation Statement: a statement showing the Cash at Completion and
reconciliation from the Cash position shown in the Completion Statement.

 

Registration Rights Agreement: means an agreement in the agreed form to be
entered into by each of the Sellers with WTG at Completion setting out certain
rights in connection with the registration of the Consideration Shares.

 

Related Party: means in relation to any Seller or the Company or the US
Subsidiary any Connected person of that Seller or the Company or the US
Subsidiary (as the case may be).

 

Relevant Claim: a Claim, an Indemnity Claim, a claim under the Tax Covenant or
any other claim under this Agreement.

 

Relief: includes any loss, relief, allowance, credit, exemption or set off for
Tax or any deduction in computing income, profits or gains for the purposes of
Tax and any right to a repayment of Tax or to a payment in respect of Tax.

 

Resolved Claim: a Relevant Claim that has been:

 

(a)agreed in writing between the Buyer and the Seller as to both liability and
quantum;

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(b)finally determined by a court of competent jurisdiction from which there is
no right of appeal, or from whose judgment the relevant party is debarred (by
passage of time or otherwise) from making an appeal; or

 

(c)unconditionally withdrawn by the Buyer in writing.

 

Sale Shares: the 12 ordinary shares of £1 each (of various different classes) in
the Company owned by the Sellers, all of which have been issued and fully paid,
further details of which are set out in Schedule 1.

 

Sellers’ Representative: is Edward de Salis Young or, in the event of the death
or incapacity of Edward Young, Paul Moakes.

 

Sellers’ Solicitors: means Rosenblatt Solicitors, of 9-13 St. Andrew Street,
London EC4A 3AF.

 

Subsidiaries: the companies, further details of which are set out in Part 2 of
Schedule 2, each a Subsidiary.

 

Tax or Taxation: has the meaning given in Schedule 5.

 

Tax Covenant: the tax covenant as set out in Schedule 5.

 

Tax Claim: has the meaning given in Schedule 5.

 

Tax Warranties: the Warranties in Part 2 of Schedule 4.

 

Taxation Authority: has the meaning given in Schedule 5.

 

Taxation Statute: has the meaning given in Schedule 5.

 

TCGA 1992: the Taxation of Chargeable Gains Act 1992.

 

TIOPA 2010: Taxation (International and Other Provisions) Act 2010.

 

Transaction: the transaction contemplated by this Agreement or any part of that
transaction.

 

UK GAAP: generally accepted accounting principles, standards and practices
applied in the United Kingdom and the applicable accounting requirements of the
Companies Act 2006.

 

UK Property: the property known as Part Area GB, Charnwood Building, Holywell
Park, Ashby Road, Loughborough, Leicestershire LE11 3AQ occupied by the Company.

 

US Lease: means a lease dated 19 October 2016 between Rialto Melbourne Investor,
LLC (the “Landlord”) and the US Subsidiary (the “Tenant”) in respect of premises
known as Office No. 718, 100 Rialto Place, Melbourne, FL 32901.

 

US Subsidiary: means Commagility, Inc., a Delaware corporation whose principal
office address is at Office N0 718, 100 Rialto Place, Melbourne, FL 32901, USA..

 

VAT: has the meaning given in Schedule 5.

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VATA 1994: the Value Added Tax Act 1994.

 

Voting Agreement: means an agreement in the agreed form to be entered into by
each of the Sellers with WTG at Completion confirming certain restrictions on
the exercise of voting rights which will apply in relation to the Consideration
Shares.

 

Warranties: the warranties and representations in clause 7 and Schedule 4.

 

Working Capital Cash: means the sum of GBP£750,000 (seven hundred and fifty
thousand pounds), comprised of the Working Capital Deferred Payment and the
Future Employee Loyalty Bonus, which will be retained by the Company at
Completion and subsequently applied in accordance with clause 4.4(d).

 

Working Capital Deferred Payment: means a sum of GBP£83,000 (eighty three
thousand pounds).

 

Working Capital Deferred Payment Date: means the date which is 90 days following
the Completion Date.

 

WTG Shares: shares of WTG being the common stock of WTG with a par value of
$0.01 each.

 

1.2Clause and schedule headings do not affect the interpretation of this
Agreement.

 

1.3A person includes a natural person, corporate or unincorporated body (whether
or not having separate legal personality) and that person’s personal
representatives, successors or permitted assigns.

 

1.4Unless the context otherwise requires, words in the singular include the
plural and in the plural include the singular.

 

1.5Unless the context otherwise requires, a reference to one gender includes a
reference to the other genders.

 

1.6Subject to clause 18, a reference to any party shall include that party’s
personal representatives, successors and permitted assigns.

 

1.7A reference to a company shall include any company, corporation or other body
corporate, wherever and however incorporated or established.

 

1.8A reference to a particular statute, statutory provision or subordinate
legislation is a reference to it as it is in force from time to time taking
account of any amendment or re-enactment and includes any statute, statutory
provision or subordinate legislation which it amends or re-enacts and
subordinate legislation for the time being in force made under it, provided that
no such amendment or re-enactment shall create or increase any liability of the
Sellers pursuant to this Agreement.

 

1.9Writing or written excludes faxes and e-mail.

 

1.10Documents in agreed form are documents in the form agreed by the parties or
on their behalf.

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1.11References to clauses and schedules are to the clauses and schedules of this
Agreement; references to paragraphs are to paragraphs of the relevant schedule.

 

1.12The Schedules form part of this Agreement and have effect as if set out in
full in the body of this Agreement. Any reference to this Agreement includes the
Schedules.

 

1.13Unless otherwise expressly provided, the obligations and liabilities of the
Sellers under this Agreement are joint and several.

 

1.14Reference to this Agreement include this Agreement as amended or varied in
accordance with its terms.

 

1.15Any words following the terms including, include, in particular or any
similar expression shall be construed as illustrative and shall not limit the
sense of the words, description, definition, phrase or term preceding those
terms.

 

2.Sale and purchase and waiver of pre-emption rights

 

2.1On the terms of this Agreement, the Sellers shall sell and the Buyer shall
buy, with effect from Completion, the Sale Shares with full title guarantee,
free from all Encumbrances and together with all rights that attach (or may in
the future attach) to them including, in particular, the right to receive all
dividends and distributions declared, made or paid on or after the date of this
Agreement.

 

2.2Each of the Sellers severally waives any right of pre-emption or other
restriction on transfer in respect of the Sale Shares or any of them conferred
on him under the articles of association of the Company or otherwise and shall
procure the irrevocable waiver of any such right or restriction conferred on any
other person who is not a party to this Agreement.

 

2.3The Buyer is not obliged to complete the purchase of any of the Sale Shares
unless the purchase of all the Sale Shares is completed simultaneously.

 

3.Purchase price

 

3.1The Purchase Price shall be satisfied as follows:

 

(a)on Completion the Buyer shall pay the Completion Payment to the Sellers in
the amounts set out opposite the Sellers’ names in column 5 of Schedule 1 in
accordance with the provisions of clause 4.4(a) below;

 

(b)on Completion, subject to the provisions of clause 3.2, WTG shall allot and
issue to each of the Sellers, free from all Encumbrances and credited as fully
paid, the number of Consideration Shares having an aggregate value (as
determined in accordance with clause 3.2(a)) of GBP £5,000,000 (five million
pounds) in the proportions set out opposite the Sellers’ names in column 7 of
Schedule 1.

 

(c)the Deferred Payment, which shall be paid by the Buyer to the Sellers in the
amounts and proportions set out opposite the Sellers’ names in column 6 of
Schedule 1 in accordance with the provisions of clause 4.4(b) below;

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(d)the Bonus Tax Saving, which shall be paid by the Buyer to the Sellers (if
applicable) in accordance with clause 5.6 below;

 

(e)any Completion Accounts Price Increase payable in accordance with Schedule 10
of this Agreement, which shall be paid by the Buyer to the Sellers in the
amounts and proportions set out opposite the Sellers’ names in column 10 of
Schedule 1 in accordance with the provisions of clause 4.4(c) below;

 

(f)the Working Capital Deferred Payment, which shall be paid by the Buyer to the
Sellers in the amounts and proportions set out opposite the Sellers’ names in
column 9 of Schedule 1 in accordance with the provisions of clause 4.4(d) below;
and

 

(g)through the payment of the Earn-out Payments (if applicable) by the Buyer to
the Sellers in the proportions set out opposite the Sellers’ name in column 11
of Schedule 1 and in accordance with Schedule 9.

 

3.2Consideration Shares

 

(a)For the purposes of clause 3.1(b) the value of each Consideration Share shall
be US$1.7921 (GBP£1.4337).

 

(b)In the event that:

 

(i)2017 EBITDA (as defined in, and as may be adjusted in accordance with,
Schedule 9) is less than £2,400,000 as determined by an audit of the Company
conducted by the accountants of the Buyer; or

 

(ii)2018 EBITDA (as defined in, and as may be adjusted in accordance with,
Schedule 9) is less than £2,400,000 as determined by an audit of the Company
conducted by the accountants of the Buyer,

 

the Buyer shall send a written notice to the Sellers, upon receipt of which the
Sellers shall forfeit and return to WTG the Clawback Consideration Shares in
accordance with the Clawback Escrow Agreement.

 

(c)In connection with the issue of the Consideration Shares each Seller hereby
severally warrants to WTG that each of the following statements are true and
correct on the date hereof:

 

(i)he is aware that the Consideration Shares have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and that the
Consideration Shares are deemed to constitute “restricted securities” under Rule
144 promulgated under the Securities Act (“Rule 144”). He also understands that
the Consideration Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon each
Seller’s warranties contained in this clause 3.2;

 

(ii)he is obtaining the Consideration Shares for his own account and has no
present intention of distributing or selling the Consideration Shares

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except as permitted under the Securities Act, applicable state securities Laws
and the Lock Up Agreement;

 

(iii)he has sufficient knowledge and experience in business and financial
matters to evaluate WTG, its proposed activities and the risks and merits of
this investment. He has the ability to accept the high risk and lack of
liquidity inherent in this type of investment;

 

(iv)he had an opportunity to discuss the WTG’s business, management and
financial affairs with directors, officers and management of WTG. He has also
had the opportunity to ask questions of and receive answers from WTG and its
management regarding the terms and conditions of this investment. He understands
the significant risks of this investment;

 

(v)each Seller has the capacity to protect its own interests in connection with
the issuance of the Shares by virtue of its business or financial expertise;

 

(vi)he understands that the Consideration Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. He has been advised or is aware of the
provisions of Rule 144, as in effect from time to time, which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the availability of certain
current public information about WTG, the resale occurring following the
required holding period under Rule 144, and the number of shares being sold
during any three month period not exceeding specified limitations;

 

(vii)hereby confirms that he has satisfied himself as to the full observance of
the Laws of his jurisdiction of residence in connection with the receipt of the
Consideration Shares including (i) the legal requirements within his
jurisdiction for the receipt of the Consideration Shares (ii) any foreign
exchange restrictions applicable to such acquisition, (iii) any government or
other consents that may need to be obtained in connection with such acquisition,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Consideration
Shares.

 

(viii)he is a certified high net worth individual within the meaning of article
48 of the Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (as amended);

 

(ix)he resides at the address set forth next to his name in Schedule 1 hereto;
and

 

(x)following execution of this Agreement, he has an individual net worth, or a
joint net worth with his spouse, in excess of $1,000,000; excluding the value of
his primary residence and any indebtedness secured by such residence (except to
the extent that the indebtedness exceeds the estimated fair market value of the
residence, in which case such excess shall be included in the determination of
his net worth); or has had an individual income in excess of $200,000 in each of
the two most recent

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years; or a joint income with his spouse in excess of $300,000 in each of those
years, and has a reasonable expectation of reaching the same income level in the
current year.

 

3.3The Purchase Price shall be adjusted in accordance with paragraph 4 of
Schedule 10.

 

3.4The Purchase Price shall be deemed to be reduced by:

 

(a)the amount of any payment made to the Buyer, or reduction in amounts payable
by the Buyer to the Sellers pursuant to:

 

(i)a breach of any Warranty;

 

(ii)under clause 10 (Indemnities); and/or

 

(iii)under the Tax Covenant;

 

(iv)Schedule 10;

 

(b)the value of the Clawback Consideration Shares which are subject to
forfeiture and return in accordance with this Agreement and the Clawback Escrow
Agreement.

 

4.Completion

 

4.1Completion shall take place on the Completion Date:

 

(a)at the offices of the Buyer’s Solicitors; or

 

(b)at any other place or time as agreed in writing by the Sellers and the Buyer.

 

4.2At Completion the Sellers shall:

 

(a)deliver or cause to be delivered the documents and evidence set out in Part 1
of Schedule 3;

 

(b)procure that board meetings of the Company are held at which the matters
identified in Part 2 of Schedule 3 are carried out; and

 

(c)deliver any other documents referred to in this Agreement as being required
to be delivered by them at Completion.

 

4.3At the Completion Date, all records, correspondence, documents, files,
memoranda and other papers belonging to the Company and in the possession of (or
under the control of) the Sellers shall be delivered to the UK Property.

 

4.4The Buyer shall:

 

(a)on Completion pay the Completion Payment by way of telegraphic transfer to
the Sellers’ Solicitors (who are irrevocably authorised by the Sellers to
receive the same);

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(b)on each Deferred Payment Date and subject always to clause 6, pay the sum of
£250,000 (less any deductions permitted under clauses 6.1 and 6.2) to the
Sellers by way of a telegraphic transfer to the Sellers’ Solicitors (who are
irrevocably authorised by the Sellers’ to receive the same);

 

(c)on the Adjustment Date and subject always to clause 6 and paragraph 5 of
Schedule 10 pay any Completion Accounts Price Increase (less any deductions
permitted under clauses 6.2 or paragraph 5 of Schedule 10) to the Sellers by way
of a telegraphic transfer to the Sellers’ Solicitors (who are irrevocably
authorised by the Sellers’ to receive the same);

 

(d)on the Working Capital Deferred Payment Date:

 

(i)pay the Working Capital Deferred Payment to the Sellers by way of a
telegraphic transfer to the Sellers’ Solicitors (who are irrevocably authorised
by the Sellers’ to receive the same); and

 

(ii)procure that the Company deposits the an amount equal to the Future Employee
Loyalty Bonus into a separate deposit account in the name of the Company from
which the joint instructions of the Sellers’ Representative and a representative
of the Buyer are required to make withdrawals or otherwise operate the account.

 

(payment made in accordance with clauses 4.4(a), 4.4(b), 4.4(c), above shall
constitute a valid discharge of the Buyer’s payment obligations in relation to
such amount to the Sellers under the terms of this agreement); and

 

(e)on Completion deliver to the Sellers:

 

(i)a copy of the resolution adopted by the board of directors of the Buyer
authorising the Transaction and the execution of any documents relating thereto;

 

(ii)a copy of the resolution adopted by the board of directors of WTG
authorising the Transaction and the execution of any documents relating thereto,
and the authorisation and issuance of the Consideration Shares to the Sellers
(subject, as applicable, to the terms of the Clawback Escrow Agreement) in
accordance with this Agreement;

 

(iii)a counterpart of the Disclosure Letter duly executed by or on behalf of the
Buyer;

 

(iv)a counterpart of the Lock Up Agreement duly executed by or on behalf of WTG;

 

(v)a counterpart of the Clawback Escrow Agreement duly executed by WTG;

 

(vi)a counterpart of the Registration Rights Agreement duly executed by or on
behalf of WTG; and

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(vii)a counterpart of the Voting Agreement duly executed by or on behalf of WTG.

 

5.Employee loyalty bonus

 

5.1The Sellers and the Buyer shall use reasonable endeavours to procure that the
Company provides Employee Transaction Letters to the persons specified on the
Employee Loyalty Bonus Allocation Schedule within two weeks of Completion.

 

5.2The Buyer and the Sellers shall procure that the Company pays the Initial
Employee Loyalty Bonus to the persons and in the amounts as specified on the
Employee Loyalty Bonus Allocation Schedule by the end of the calendar month
following the month in which Completion occurs (provided it is reasonably
practicable to do so and if not it shall be paid by the end of the following
month).

 

5.3The Buyer and the Sellers shall procure that, subject to clause 5.4, the
Future Employee Loyalty Bonus is paid to the employees of the Company in
accordance with the Employee Loyalty Bonus Allocation Schedule and the Employee
Loyalty Bonus Letters:

 

(a)as to £333,333, within one month of the end of the First Earn-out Year (as
defined in Schedule 9);

 

(b)as to £333,334, within one month of the end of the Second Earn-out Year (as
defined in Schedule 9).

 

5.4The Buyer and the Sellers shall procure that no amount of the Employee
Loyalty Bonus shall be paid by the Company to any person who, on the relevant
date on which payment is made by the Company:

 

(a)is no longer employed or engaged by the Company;

 

(b)has given notice of their resignation from their employment with the Company
or termination of their engagement with the Company;

 

(c)has been given notice by the Company of the termination of their employment
or engagement with the Company.

 

5.5The Buyer and the Sellers shall procure that any amount of the Employee
Loyalty Bonus which is not paid to the persons specified on the Employee Loyalty
Bonus Allocation Schedule for any of the reasons specified in clause 5.4 shall,
at the discretion of the Sellers’ Representative be reallocated to other persons
on the Employee Loyalty Bonus Allocation Schedule in equal proportion to their
original allocation contained in the Employee Loyalty Bonus Letters.

 

5.6The Bonus Tax Saving shall be paid by the Buyer to the Sellers (if
applicable) in three tranches, each tranche being paid in the proportions set
out opposite the Sellers’ name in column 12 of Schedule 1 within 30 Business
Days of the submission of the relevant Tax return for each of the accounting
periods in which the three tranches of the Employee Loyalty Bonus is paid.

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6.Deferred payment

 

6.1If, on or at any time prior to the Final Deferred Payment Date, the
Adjustment Date, a Due Amount is outstanding, the Buyer shall be entitled to
satisfy all (to the extent possible) or part of the Seller’s liability to pay
the Due Amount by way of set-off against any Deferred Payment or the Completion
Accounts Price Increase (if any), and to treat its obligation to make the
Deferred Payment or Completion Accounts Price Increase (if any) as being reduced
pro tanto by the amount so set off.

 

6.2If on the Adjustment Date, or any Deferred Payment Date there is an
Outstanding Claim, the Buyer shall be entitled (at its sole discretion) to
withhold from the Completion Accounts Price Increase (if any), the Deferred
Payment an amount equal to an Estimated Liability (if any) or, if the Completion
Accounts Price Increase (if any) or Deferred Payment is lower than the Estimated
Liability, the full amount of the Completion Accounts Price Increase (if any) or
Deferred Payment (as applicable) (“Deferred Payment Reserved Sum”), and shall
pay the balance of the Completion Accounts Price Increase (if any), Deferred
Payment to the Sellers in accordance with clause 4.4. For the avoidance of
doubt, no amount may be withheld pursuant to this clause 6.2 in respect of an
Outstanding Claim in respect of which no Estimated Liability has been agreed by
the Buyer and the Sellers or opined by Counsel in accordance with the definition
of Estimated Liability set out in clause 1.1.

 

6.3Where a Deferred Payment Reserved Sum has been withheld by the Buyer pursuant
to clause 6.2 in respect of an Outstanding Claim, upon that claim becoming a
Resolved Claim the Buyer shall:

 

(a)be entitled (at its sole discretion) to satisfy all (to the extent possible)
or part of the Seller’s liability to pay the Due Amount in respect of the
relevant Resolved Claim by way of set-off against the corresponding Deferred
Payment Reserved Sum, and to treat its obligation to pay the Deferred Payment
Reserved Sum as being reduced pro tanto by the amount so set off; and

 

(b)to the extent that the Due Amount is less than the Deferred Payment Reserved
Sum, pay to the Sellers the balance of the corresponding Deferred Payment
Reserved Sum (if any) after the Buyer has exercised its rights pursuant to
clause 6.3(a) in accordance with the proportions set out in Schedule 1. Such
payment shall be made by the Buyer within 5 Business Days of the Outstanding
Claim becoming a Resolved Claim.

 

6.4Nothing in this clause 6 shall prejudice, limit or otherwise affect:

 

(a)any right or remedy the Buyer may have against the Sellers from time to time,
whether arising under this agreement or any of the documents executed pursuant
to this Agreement; or

 

(b)the Buyer’s right to recover against the Sellers, whether before or after any
Deferred Payment or Working Capital Deferred Payment is made in accordance with
this agreement,

 

save to the extent that any such right or remedy, or Losses relating thereto,
has been satisfied by the application of this clause 6.

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6.5The amount of a Deferred Payment Reserved Sum withheld by the Buyer in
accordance with this clause 6 shall not be regarded as imposing any limit on the
amount of any claims under this Agreement or any of the documents executed
pursuant to this agreement.

 

6.6If a Due Amount is not satisfied in full by way of set-off under clause 6.1
or clause 6.3, nothing in this agreement shall prevent any right of the Buyer to
recover the balance of the Due Amount from the Sellers (to the extent not so
satisfied) in accordance with the terms of this Agreement.

 

6.7For the avoidance of doubt, the liability of the Sellers for any Due Amount
shall be extinguished to the extent of any set-off pursuant to this clause 6.

 

7.Warranties

 

7.1The Buyer is entering into this Agreement in reliance, inter alia, on the
Warranties.

 

7.2The Sellers jointly and severally warrant and represent to the Buyer that
each Warranty is true, accurate and not misleading on the date of this Agreement
except as Disclosed.

 

7.3Unless expressly stated to the contrary, Warranties qualified by the
expression so far as the Sellers are aware or any similar expression are deemed
to be given to the best of the knowledge, information and belief of any of the
Sellers after they have made reasonable enquiries of each other and of Brian
Meads and Jan Westmeijer.

 

7.4Each of the Warranties is separate and, unless otherwise specifically
provided, is not limited by reference to any other Warranty or any other
provision in this Agreement.

 

7.5The Sellers agree that any information supplied by the Company or by or on
behalf of any of the employees, directors, agents or officers of the Company
(“Representative”) to the Sellers or their advisers in connection with the
Warranties, the information Disclosed in the Disclosure Letter or otherwise
shall not constitute a warranty, representation or guarantee as to the accuracy
of such information in favour of the Sellers, and the Sellers hereby undertake
to the Buyer, to the Company and each Representative that they irrevocably waive
any and all claims which they might otherwise have against any of them in
respect of such claims, save in the event of fraud, dishonesty or wilful
concealment.

 

7.6The rights and remedies of the Buyer in respect of any Claim or claim under
the Tax Covenant shall not be affected by Completion.

 

7.7For the avoidance of doubt, and without limitation to any other provision
within this Agreement, any action of the Company or the Sellers relating to the
German Branch which breaches any of the Warranties (or any other provision
within this Agreement) shall be deemed to be an action of the Company for the
purposes of this Agreement.

 

7.8Each of the Sellers (on their own behalf and on behalf of any persons from
whom Sale Shares have been transferred to them) hereby releases and forever
discharges

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the Buyer (and each member of its Group), the Company and each of their
respective individual, joint or mutual, past, present and future subsidiaries,
successors and assigns (individually, a “Releasee” and collectively,
“Releasees”) from any and all claims, demands, proceedings, causes of action,
orders, obligations, contracts, agreements; debts and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity,
which the Sellers now have or have ever had against the respective Releasees
arising contemporaneously with or prior to the Completion Date or on account of
or arising out of any matter, cause or event occurring contemporaneously with or
prior to the Completion Date, including, but not limited to, any rights to
indemnification or reimbursement from the Company, whether pursuant to
organizational documents, contract or otherwise, and whether or not relating to
claims pending on, or asserted after, the Completion Date; provided, however,
that nothing contained herein shall operate to release (i) any obligations of
the Buyer or WTG arising under this Agreement or any other agreement being
entered into at Completion in relation to the Transaction and/or (ii) any
obligations of the Company for accrued and unpaid employee remuneration and
benefits disclosed in the Disclosure Letter.

 

8.Limitations on claims

 

8.1The definitions and rules of interpretation in this clause apply in this
Agreement.

 

Claim: a claim for breach of any of the Warranties.

 

A Claim is connected with another Claim if they all arise out of the occurrence
of the same event or set of circumstances or relate to the same subject matter.

 

8.2This clause limits the liability of the Sellers in relation to any Claim.

 

8.3The liability of each of the Sellers for all Relevant Claims when taken
together shall not exceed the amount of the Purchase Price actually received by
him.

 

8.4The Sellers shall not be liable for a Claim, other than a Claim in relation
to the Fundamental Warranties, unless:

 

(a)the amount of a Claim, or of a series of connected Claims of which that Claim
is one, exceeds £25,000; and

 

(b)the amount of all Claims that are not excluded under clause 8.4(a) when taken
together, exceeds £250,000 in which case the whole amount (and not just the
amount by which the limit in this clause 8.4(b) is exceeded) is recoverable by
the Buyer.

 

8.5The Sellers shall not be liable for a Claim, an Indemnity Claim or claim
under the Tax Covenant unless the Buyer has given the Sellers notice in writing
(in accordance with the provisions of this Agreement) of the Claim or claim
under the Tax Covenant, summarising in reasonable detail the matter giving rise
to and the nature of the Claim or claim under the Tax Covenant, and, as far as
is reasonably practicable, the amount claimed (or an estimate of such amount):

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(a)in the case of a claim made under the Tax Warranties or the Tax Covenant
within the period of seven years beginning with the Completion Date; and

 

(b)in the case of an Indemnity Claim as set out at Part C of the Disclosure
Letter.

 

(c)in any other case other than a Claim under the Fundamental Warranties, within
the period of two years beginning with the Completion Date.

 

8.6Any Claim notified in accordance with clause 8.5 shall (if not previously
satisfied, settled or withdrawn):

 

(a)in the case of a claim made under the Tax Warranties or the Tax Covenant be
deemed to have been irrevocably withdrawn 12 months after the end of the period
referred to at clause 8.5(a) (and no new Claim or claim under the Tax Covenant
may be made in respect of the same facts unless material new information
relevant to such facts has come to light) unless on or before that date, legal
proceedings have been issued and served on the Sellers in respect of the
relevant claim; or

 

(b)in the case of all other Claims or Indemnity Claims be deemed to have been
irrevocably withdrawn 9 months after the date on which notice of the relevant
Claim was given (and no new Claim may be made in respect of the same facts
unless material new information relevant to such facts has come to light) unless
on or before that date, legal proceedings have been issued and served on the
Sellers in respect of the relevant claim.

 

8.7The Sellers shall have no liability in respect of a Relevant Claim (which for
the purposes of this clause 8.7 shall not include a claim under the Tax
Covenant) if and to the extent of any specific allowance, provision or reserve
(which is clearly identifiable as such) which was made in the Completion
Accounts in respect of the matter or circumstances giving rise to the Relevant
Claim.

 

8.8If, in respect of any matter or circumstance which gives rise to a Claim or
Indemnity Claim, the Company, the US Subsidiary or any other member of the
Buyer’s Group (the “Insured Party”) is entitled to claim under any policy of
insurance, then the relevant Insured Party shall (provided it is not materially
prejudicial to the Buyer’s commercial interests to do so) make a claim against
its insurers in respect of the relevant matter or circumstance, and use
reasonable endeavours to pursue such claim. The Sellers’ liability in respect of
any related Claim or Indemnity Claim shall then be reduced by any amount
actually recovered under such policy of insurance (less all reasonable costs,
charges and expenses incurred by the Insured Party in recovering that sum), or
extinguished if the amount so recovered exceeds the amount of the Claim.

 

8.9If the Buyer, the Company, the US Subsidiary or any other member of the
Buyer’s Group (the “Entitled Claimant”) is at any time entitled to recover or
otherwise claim reimbursement from a third party in respect of any matter or
circumstance giving rise to a Claim or Indemnity Claim:

 

(a)the Buyer shall (or shall procure that any the Entitled Claimant shall) use
reasonable endeavours to enforce such recovery or seek such reimbursement from
the relevant third party provided always that it is not materially prejudicial

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to the Buyer’s (or relevant Entitled Claimant’s) commercial interests to do so;
and

 

(b)the Sellers’ liability in respect of any subsequent related Claim or
Indemnity Claim shall be reduced by the amount (if any) recovered by the
Entitled Claimant from the relevant third party (less all reasonable costs,
charges and expenses incurred by the Entitled Claimant in recovering that sum),
or extinguished if the amount actually recovered exceeds the amount of the
relevant Claim or Indemnity Claim.

 

8.10If the Sellers make a payment to the Buyer in respect of a Claim or
Indemnity Claim and the Company, the US Subsidiary or any other member of the
Buyer’s Group subsequently recovers from a third party or insurer (pursuant to
clause 7.9 or 7.10 above) a sum which is referable to that Claim or Indemnity
Claim, the Buyer shall promptly repay to the Seller the lower of:

 

(a)the amount recovered from such third party (less all reasonable costs,
charges and expenses incurred by the Buyer, the Company, the US Subsidiary or
other member of the Buyer’s Group in recovering that sum); and

 

(b)the amount paid to the Buyer by the Sellers in respect of the relevant Claim.

 

8.11This clause 8.11 applies in the event that any claim, action or demand is
made by any third party against the Company, the US Subsidiary or any other
member of the Buyer’s Group which would reasonably be expected to give rise to a
Claim or Indemnity Claim (a “Third Party Claim”).

 

(a)In the event of a Third Party Claim, the Buyer shall (provided that it is not
precluded from doing so by Law or any duty of confidentiality):

 

(i)as soon as reasonably practicable after the Buyer (or any other member of the
Buyer’s Group) becomes aware of the Third Party Claim give written notice of the
Third Party Claim to the Sellers, specifying in reasonable detail the matter
giving rise to, and the nature of, the relevant claim;

 

(ii)keep the Sellers informed of any significant developments in relation to,
the Third Party Claim, including providing copies of material information and
correspondence relating to the Third Party Claim; and

 

(iii)make no legally binding admission of liability, agreement, compromise,
settlement or payment in relation to the Third Party Claim (and shall procure
that no other member of the Buyer’s Group shall do so) without first consulting
with, and taking reasonable account of the view of the Sellers.

 

8.12The Sellers shall not be liable in respect of a Claim to the extent that the
event, matter or circumstance giving rise to such Claim is attributable to, or
the Sellers’ liability pursuant to such Claim is increased (in which case the
limit on liability contemplated under this clause 8.12 shall apply only to the
increased amount of such liability) as a result of:

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(a)any voluntary act or deliberate omission carried out by the Buyer, or by the
Company or the US Subsidiary on or after Completion at the direction of the
Buyer, but excluding such acts or omissions carried out or effected in the
ordinary course of business and/or pursuant to a legally binding obligation
entered into on or before the date of this Agreement;

 

(b)any voluntary act or deliberate omission carried out by the Company or the US
Subsidiary at the request, or with the specific written consent, of the Buyer
before Completion; or

 

(c)any material change after Completion in the accounting standards, policies,
practices or methods applied in preparing the annual accounts, or valuing any
assets or liabilities of the Company or its Group for the purpose of preparing
the annual accounts compared to those used prior to Completion except for
changes required because of a change in law or generally accepted accounting
principles.

 

8.13The Buyer shall not be entitled to make a Claim if and to the extent that
the facts, matters, events or circumstances giving rise to the Claim:

 

(a)are Disclosed; or

 

(b)were within the actual knowledge of the Buyer (and for the purposes of this
clause the Buyer shall be deemed to have the actual knowledge of Tim Whelan,
Paul Genova, Luke Getto, Joe Debold and Dan Monopoli), on or before Completion,
whether as a result of the Buyer’s due diligence investigations or otherwise and
the Buyer actually knows (without having reviewed the Warranties for such
purposes) that such facts, matters, events or circumstances, and the detrimental
effect, loss or negative consequence resulting from such facts, matters, events
or circumstances which gives rise to the Claim, have already arisen as at the
date hereof.

 

8.14The Sellers shall not be liable in respect of a Claim to the extent that the
Claim is attributable to, or the value of the Claim is increased (in which case
the limit on liability contemplated under this clause 8.14 shall apply only to
the increased amount of such liability) by a change in any law, legislation,
rule or regulation that comes into force with retrospective effect after the
date of this Agreement, which, in each case, was not publicised prior to the
date of this Agreement.

 

8.15The Buyer shall not be entitled to recover damages, or obtain payment,
reimbursement, restitution or indemnity more than once in respect of the same
loss, shortfall, damage, deficiency, breach or other event or circumstance.

 

8.16The Buyer agrees that rescission shall not be available as a remedy for any
Relevant Claim and it agrees not to seek that remedy.

 

8.17Nothing in this clause 8 applies to a Claim or a claim under the Tax
Covenant that arises or is delayed as a result of dishonesty, fraud or wilful
concealment by the Sellers.

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Execution Version

 

8.18The Sellers shall not plead the Limitation Act 1980 in respect of any claims
made under the Tax Warranties or Tax Covenant up to seven years after the
Completion Date.

 

9.Tax covenant

 

The provisions of Schedule 5 apply in this Agreement.

 

10.Indemnities

 

10.1The Sellers shall jointly and severally hold the Buyer harmless and
indemnify and keep indemnified the Buyer from and against, and the Sellers waive
any claim or contribution for contribution from the Buyer or the Company or the
US Subsidiary with respect to, any and all Losses, including, for the avoidance
of doubt, reasonable and properly incurred professional fees and expenses
incurred in connection with the enforcement of this Agreement and interest on
the amount of such Losses at the Interest Rate, from the date such Losses were
incurred until the date of payment to the Buyer Indemnified Persons determined
based on a 360 day year (in all, “Indemnified Losses”) suffered or incurred by
any of them resulting from or arising out of any of the items listed at Part C
of the Disclosure Letter (“Indemnified Matters”).

 

10.2Any payment made in respect of a claim under this clause shall include:

 

(a)an amount in respect of all costs and expenses incurred by the Buyer or the
Company or the US Subsidiary in relation to the bringing of the claim (including
a reasonable amount in respect of management time); and

 

(b)any amount necessary to ensure that, after any Taxation of the payment, the
Buyer is left with the same amount it would have had if the payment was not
subject to Taxation.

 

11.Buyer and WTG Warranties

 

The Buyer and WTG jointly and severally warrant to each of Sellers that:

 

(a)they have all requisite power and authority to enter into, deliver and
perform this agreement and any other document relating to the Transaction to
which it is or they are a party;

 

(b)this agreement and any other document relating to the Transaction to which it
is or they are a party shall, upon execution, constitute valid, legal and
binding obligations of them in accordance with their respective terms;

 

(c)the execution, delivery and performance by the Buyer and WTG of this
agreement and any other document relating to the Transaction to which it is or
they are a party shall not result in:

 

(i)a breach of any provision of the Buyer’s or WTG’s certificate of
incorporation or other constitutional document;

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Execution Version

 

(ii)a breach of, or constitute a default under, any agreement or instrument to
which the Buyer and/or WTG is a party or by which either of them is otherwise
bound; or

 

(iii)a breach of any order, judgment or decree of any court, governmental agency
or regulatory body to which either of them is subject or by which either of them
is bound;

 

which would affect the rights of the Sellers hereunder.

 

(d)the Consideration Shares shall be issued free from all Encumbrances; and

 

(e)WTG is duly authorised and empowered to issue the Consideration Shares to the
Sellers in accordance with the terms of this Agreement, and all other
requirements to ensure that the valid issuance of the Consideration Shares will,
prior to their issuance, have been duly complied with.

 

12.Guarantee and Indemnity

 

12.1WTG guarantees to the Sellers the due and punctual performance, observance
and discharge by the Buyer of all the Guaranteed Obligations if and when they
become performable or due.

 

12.2If the Buyer defaults in the payment when due of any amount that is a
Guaranteed Obligation WTG shall on demand by the Sellers, pay that amount to the
Sellers in the manner prescribed by this Agreement as if it were the Buyer.

 

12.3WTG as principal obligor and as a separate and independent obligation and
liability from its obligations and liabilities under clause 12.1 and clause
12.2, agrees to indemnify and keep indemnified the Sellers in full and on demand
from and against all and any Losses suffered or incurred by the Sellers (or any
of them) arising out of, or in connection with, the Guaranteed Obligations not
being recoverable for any reason, or the Buyer’s failure to perform or discharge
any of the Guaranteed Obligations, including in relation to the preservation or
exercise or enforcement of any rights under or in connection with the guarantee
in this clause 12 or any attempt so to do.

 

12.4The guarantee in this clause 12 is and shall at all times be a continuing
security and shall cover the ultimate balance of all monies payable by the Buyer
to the Sellers in respect of the Guaranteed Obligations.

 

12.5The liability of WTG under the guarantee in this clause 12 shall not be
reduced, discharged or otherwise adversely affected by:

 

(a)any act, omission, matter or thing which would have discharged or affected
the liability of WTG had it been a principal obligor instead of a guarantor or
indemnifier; or

 

(b)anything done or omitted by any person which, but for this provision, might
operate or exonerate or discharge WTG or otherwise reduce or extinguish its
liability under the guarantee.

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Execution Version

 

12.6WTG waives any right it may have to require the Sellers (or any of them, or
any trustee or agent on their behalf) to proceed against or enforce any other
right or claim for payment against any person before claiming from WTG under
this clause 12.

 

12.7In no circumstances shall the liability of WTG to make a payment pursuant to
this clause 12 exceed the relevant underlying liability of the Buyer to make
such payment under the relevant provision of this Agreement.

 

13.Clawback Escrow Agreement Indemnities

 

13.1WTG agrees to indemnify and keep indemnified the Sellers in full and on
demand from and against all and any Losses suffered or incurred by the Sellers
(or any of them) arising out of, or in connection with, any failure by WTG to
comply fully with its obligations and liabilities pursuant to the Clawback
Escrow Agreement.

 

13.2The Sellers jointly and severally agree to indemnify and keep indemnified
WTG in full and on demand from and against all and any Losses suffered or
incurred by the WTG arising out of, or in connection with, any failure by the
Sellers (or the Sellers’ Representative on behalf of the Sellers) to comply
fully with their obligations and liabilities pursuant to the Clawback Escrow
Agreement.

 

14.Restrictions on Sellers

 

14.1The Sellers severally covenant(s) with the Buyer and the Company that they
shall not, in each case other than in their capacity as an officer, consultant,
or employee of the Company (as applicable) (or any member of its Group);

 

(a)at any time during the period of three years beginning with the Completion
Date, in the EU, North America, the Middle East and Africa carry on or be
employed, engaged or interested in any business which would be in competition
with any part of the Business as the Business was carried on at the Completion
Date; or

 

(b)at any time during the period of three years beginning with the Completion
Date:

 

(i)offer employment to, enter into a contract for the services of, or attempt to
entice away from the Company, any individual who is at the time of the offer or
attempt, and was at the Completion Date, employed or directly or indirectly
engaged in an executive or managerial position with the Company; or

 

(ii)procure or facilitate the making of any such offer or attempt by any other
person; or

 

(c)at any time after Completion, use in the course of any business:

 

(i)the words “Commagility” or “MimoOn”; or

 

(ii)any trade or service mark, business or domain name, design or logo which, at
Completion, was or had been used by the Company; or

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Execution Version

 

(iii)anything which is reasonably likely to be confused with such words, mark,
name, design or logo;

 

(d)at any time during a period of three years beginning with the Completion
Date, solicit or entice away from the Company any customer of the Company who
purchased services or goods or was provided a license from the Company at any
time during the twelve months immediately preceding the Completion Date; or

 

(e)at any time during a period of three years beginning with the Completion
Date, sell or provide any goods or services competing with or similar to the
goods or services provided by the Business to any customer of the Company who
purchased services or goods or was provided a license from the Company at any
time during the twelve months immediately preceding the Completion Date; or

 

(f)at any time during a period of three years beginning with the Completion
Date, solicit or entice away from the Company any supplier to the Company who
had supplied goods and/or services to the Company at any time during the twelve
months immediately preceding the Completion Date, if that solicitation or
enticement causes or would cause such supplier to cease supplying, or materially
reduce its supply of, those goods and/or services to the Company; or

 

(g)at any time after the Completion Date, deliberately disparage in any way, or
deliberately communicate anything intended to damage the reputation of, the
Business, the Company or any of its products or services, its shareholders,
Directors or employees.

 

14.2The covenants in clause 14 are intended for the benefit of the Buyer and the
Company and apply to actions carried out by the Sellers in any capacity and
whether directly or indirectly, on their own behalf, on behalf of any other
person or jointly with any other person.

 

14.3Nothing in clause 14 prevents a Seller from holding for investment purposes
only:

 

(a)any units of any authorised unit trust; or

 

(b)not more than 5% of any class of shares or securities of any company traded
on an investment exchange recognised by the Financial Conduct Authority under
Part XVIII of the FSMA, such that a recognition order is in force in respect of
it; or

 

(c)the Consideration Shares.

 

14.4Each of the covenants in clause 14 is a separate undertaking by the Sellers
in relation to himself and his interests and shall be enforceable by the Buyer
separately and independently of its right to enforce any one or more of the
other covenants contained in clause 14. Each of the covenants in clause 14 is
considered fair and reasonable by the parties, but if any restriction is found
to be unenforceable, but would be valid if any part of it were deleted or the
period or

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Execution Version

 

area of application reduced, the restriction shall apply with such modifications
as may be necessary to make it valid and enforceable.

 

14.5The consideration for the undertakings contained in clause 14 is included in
the Purchase Price.

 

15.Sellers’ Representative

 

15.1The Sellers’ Representative shall, and shall have full power and authority
to, give on behalf of all the Sellers any approval, consent, action,
notification or instruction which the Sellers or any of them are entitled or
required to give under the terms of this Agreement in their capacity as Sellers.

 

15.2Subject to clause 15.4, by giving notice to the Sellers’ Representative in
the manner provided in clause 22, the Buyer shall be deemed to have given notice
to all of the Sellers and any action taken by the Sellers’ Representative may be
considered by the Buyer to be the action of each Seller for whom such action was
taken for all purposes of this Agreement.

 

15.3The Sellers irrevocably authorise the Sellers’ Representative to be their
representative for the purposes specified in clause 15.1.

 

15.4In the event of the death or incapacity of the Sellers’ Representative, the
Sellers agree that the successor representative shall be Paul Moakes and shall
be deemed a Sellers’ Representative for the purposes of this clause 15.

 

16.Confidentiality and announcements

 

16.1Each party severally undertakes to the others to keep confidential:

 

(a)the terms of this Agreement; and

 

(b)in the case of the Sellers, all information which they have acquired or may
possess relating to the Company and the US Subsidiary; and

 

(c)all information which they have acquired relating to the other parties (and,
in relation to the Buyer, its Group).

 

and to use such information only as and to the extent reasonably required for
the performance of his obligations and the exercise of his rights under and in
connection with:

 

(d)this Agreement; and/or

 

(e)in relation to the Sellers, any engagement, employment and/or appointment
agreement entered into with the Company, the US Subsidiary or any member of the
Buyer’s Group on the date hereof or at any time hereafter.

 

16.2The parties do not have to keep confidential or to restrict its use of:

 

(a)information that is or becomes public knowledge other than as a direct or
indirect result of a breach of this Agreement or a breach of any other agreement
relating to such information; or

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Execution Version

 

(b)information that it receives from a source not connected with the party to
whom the duty of confidence is owed that it acquires free from any obligation of
confidence to any other person.

 

16.3The parties may disclose any information that it is otherwise required to
keep confidential under clause 16:

 

(a)to such professional advisers, consultants and employees or officers of its
Group as and to the extent reasonably required in connection with this Agreement
or to facilitate the Transaction, if the disclosing party procures that the
persons to whom the information is disclosed keep it confidential as if they
were that party; or

 

(b)in the case of the Buyer only (and excluding information relating to the
Sellers personally which does not relate to the Sellers ownership of or title to
the Sale Shares), to a proposed transferee of the Sale Shares for the purpose of
enabling the proposed transferee to evaluate the proposed transfer;

 

(c)in the case of the Buyer only (and excluding information relating to the
Sellers personally which does not relate to the Sellers ownership of or title to
the Sale Shares), to its funders, potential investors and their respective
advisors, employees, officers, representatives or consultants;

 

(d)with the prior written consent of all the other parties; or

 

(e)with the prior written consent of one party, if such information relates only
to that party; or

 

(f)to confirm that the sale has taken place and the date of the sale (but
without otherwise revealing any other items of sale or making any other
announcement); or

 

(g)to the extent that the disclosure is required:

 

(i)by Law; or

 

(ii)by a regulatory body, Taxation Authority or securities or investment
exchange; or

 

(iii)to make any filing with, or obtain any authorisation from, a regulatory
body, Taxation Authority or securities exchange; or

 

(iv)under any arrangements in place under which negotiations relating to terms
and conditions of employment are conducted; or

 

(v)to protect the disclosing party’s interest in any legal proceedings,

 

but shall use reasonable endeavours to consult the other parties and to take
into account any reasonable requests they may have in relation to the disclosure
before making it.

 

16.4Each party shall supply any other party with any information about itself,
its Group or this Agreement as such other party may reasonably require for the
purposes of

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Execution Version

 

satisfying the requirements of a Law, regulatory body or securities exchange to
which such other party is subject.

 

Subject to clause 16.5 and to clause 16.6 (inclusive), no party shall make, or
permit any person to make, any public announcement, communication or circular
concerning this agreement or the Transaction (announcement) without the prior
written consent of the other parties (such consent not to be unreasonably
withheld or delayed) and the parties shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement. The Parties agree that the initial press release
to be issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the Parties.

 

16.5Nothing in clause 16 shall prevent any party from making an announcement
required by Law or any Governmental Authority, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system, or by any court or other authority of
competent jurisdiction, provided that, to the extent permitted by Law, the party
required to make the announcement consults with the other parties and takes into
account their reasonable requests in relation to the content of such
announcement before it is made.

 

16.6The Buyer may at any time after Completion announce its acquisition of the
Sale Shares to any employees, clients, customers or suppliers of the Company,
the Subsidiaries or any other member of the Buyer’s Group.

 

17.Further assurance

 

17.1Each of the parties agrees that it will from time to time on or after the
Completion promptly do, execute, acknowledge and deliver and will cause to be,
done, executed, acknowledged and delivered, all such further acts, deeds,
certificates, and other documents as may be reasonably requested by any of the
other parties to give full effect to the terms of this Agreement.

 

18.Assignment

 

18.1Except as provided otherwise in this Agreement, no party may assign, or
grant any Encumbrance or security interest over, any of its rights under this
Agreement or any document referred to in it.

 

18.2Each party that has rights under this Agreement is acting on its own behalf.

 

18.3The Buyer may assign its rights under this Agreement (or any document
referred to in this Agreement) to (i) a member of its Group or (ii) to any
person to whom it transfers the Sale Shares or (iii) to a third party provider
of finance, provided that no such assignment shall have the create or increase
any liability of the Sellers to any party.

 

18.4If there is an assignment:

 

(a)the Sellers may discharge their obligations under this Agreement to the
assignor until they receive notice of the assignment; and

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Execution Version

 

(b)the assignee may enforce this Agreement as if it were a party to it, but the
Buyer shall remain liable for any obligations under this Agreement.

 

19.Whole agreement

 

19.1This Agreement constitutes the whole agreement between the parties and
supersedes and extinguishes all previous drafts, agreements, arrangements and
understandings between them, whether written or oral, relating to its subject
matter.

 

19.2Each party agrees that it shall not have any claim for innocent or negligent
misrepresentation or negligent misstatement based on any statement or warranty
in this agreement.

 

20.Variation and waiver

 

20.1Any variation of this Agreement shall be in writing and signed by or on
behalf of the parties.

 

20.2Any waiver of any right under this Agreement is only effective if it is in
writing and it applies only to the party to whom the waiver is addressed and to
the circumstances for which it is given and shall not prevent the party who has
given the waiver from subsequently relying on the provision it has waived.

 

20.3A party that waives a right in relation to one party, or takes or fails to
take any action against that party, does not affect its rights in relation to
any other party.

 

20.4No failure to exercise or delay in exercising any right or remedy provided
under this Agreement or by Law constitutes a waiver of such right or remedy or
shall prevent any future exercise in whole or in part thereof.

 

20.5No single or partial exercise of any right or remedy under this Agreement
shall preclude or restrict the further exercise of any such right or remedy.

 

20.6Unless specifically provided otherwise, rights arising under this Agreement
are cumulative and do not exclude rights provided by Law.

 

21.Costs

 

21.1Unless otherwise provided, all costs in connection with the negotiation,
preparation, execution and performance of this Agreement, and any documents
referred to in it, shall be borne by the party that incurred the costs.

 

22.Notice

 

22.1A notice given under this Agreement:

 

(a)shall be in writing;

 

(b)shall be sent for the attention of the person, and to the address, specified
in clause 22 (or such other address, or person as each party may notify to the
others in accordance with the provisions of clause 22); and

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Execution Version

 

(c)shall be:

 

(i)delivered personally; or

 

(ii)sent by pre-paid first-class post or recorded delivery; or

 

(iii)(if the notice is to be served by post outside the country from which it is
sent) sent by express mail courier.

 

22.2The addresses for service of notice are:

 

(a)To the Sellers’ Representative:

 

(i)name: Edward de Salis Young

 

(ii)address: (as set out in the Disclosure Letter)

 

(iii)for the attention of: Edward de Salis Young

 

with a copy to Sellers’ Solicitors:

 

Rosenblatt Solicitors

 

9-13 St Andrew Street, London, EC4A 3AF

 

FAO: Tom Ferns / Martin Montgomery

 

(b)BUYER

 

(i)Name: Wireless Telecom Group, Inc.

 

(ii)Address: 25 Eastmans Road, Parsippany, New Jersey 07054, USA

 

(iii)for the attention of: Michael Kandell, CFO

 

with a copy to:

 

Buyer’s Solicitors:

 

Bryan Cave

88 Wood Street

London EC2V 7AJ

 

FAO: Tara Newell/ Andrew Hart

 

22.3A notice is deemed to have been received:

 

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

 

(b)in the case of pre-paid first class post or recorded delivery two Business
Days from the date of posting; or

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Execution Version

 

(c)in the case of express mail courier, three Business Days from the date of
posting; or

 

(d)if deemed receipt under the previous paragraphs of clause 22.3 is not within
business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not
a public holiday in the place of receipt), when business next starts in the
place of receipt and all references to time are to local time in the place of
deemed receipt.

 

22.4To prove service, it is sufficient to prove that, in the case of post, the
envelope containing the notice was properly addressed and posted.

 

23.Severance

 

23.1If any provision of this Agreement (or part of a provision) is found by any
court or administrative body of competent jurisdiction to be invalid,
unenforceable or illegal, the other provisions shall remain in force.

 

23.2If any invalid, unenforceable or illegal provision would be valid,
enforceable or legal if some part of it were deleted, the provision shall apply
with whatever modification is necessary to give effect to the commercial
intention of the parties.

 

24.Agreement survives completion

 

24.1This Agreement (other than obligations that have already been fully
performed) remains in full force after Completion.

 

25.Third party rights

 

25.1This Agreement and the documents referred to in it are made for the benefit
of the parties and their successors and permitted assigns and are not intended
to benefit, or be enforceable by, anyone else.

 

25.2Each of the parties warrants to the others that their respective rights to
agree any amendment, variation, waiver or settlement under this Agreement are
not subject to the consent of any person that is not a party to this Agreement.

 

26.Successors

 

26.1The rights and obligations of the Sellers and the Buyer under this Agreement
shall continue for the benefit of, and shall be binding on, their respective
successors and assigns.

 

27.Counterparts

 

27.1This Agreement may be executed in any number of counterparts, each of which
is an original and which together have the same effect as if each party had
signed the same document.

 

28.Inadequacy of Damages

 

28.1Without prejudice to any other rights or remedies that the Buyer may have,
the Sellers acknowledge and agree that damages alone may not be an adequate

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Execution Version

 

remedy for the breach of clause 14 and 16 of this Agreement. Accordingly, the
Buyer shall be entitled to the seek remedies of injunction, specific performance
or other equitable relief for any threatened or actual breach of the terms of
clause 14 and 16 of this Agreement.

 

29.Broker’s Fees

 

29.1The Sellers shall be responsible for, and shall hold the Buyer and each
member of the Buyer’s Group harmless against, any fees or commissions for which
any such Seller is liable to any broker, finder or agent (except to the extent
such broker, finder or agent is retained by the Buyer) with respect to the
transactions contemplated by this Agreement (including brokers engaged by the
Company or the Subsidiary prior to Completion).

 

30.set-off rights

 

30.1Without prejudice to any other provisions set out herein the Buyer shall not
be entitled to withhold and set off against any sum which is payable to the
Sellers under this Agreement (or any other agreement referred to herein) any
amount due and payable by the Sellers to the Buyer in respect of any claim under
this Agreement save as expressly stated in this Agreement.

 

31.Governing law and jurisdiction

 

31.1This Agreement and any disputes or claims arising out of or in connection
with its subject matter or formation (including non-contractual disputes or
claims) are governed by and construed in accordance with the laws of England.

 

31.2The parties irrevocably agree that the courts of England have non-exclusive
jurisdiction to settle any dispute or claim that arises out of or in connection
with this Agreement or its subject matter or formation (including
non-contractual disputes and claims). Notwithstanding the above, nothing shall
prevent the Buyer and/or the Company and/or the US Subsidiary from seeking
injunctive or similar equitable relief in a competent court in any jurisdiction.

 

This Agreement has been executed as a deed and is delivered and takes effect on
the date stated at the beginning of it.

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Execution Version

 

Schedule 1. Particulars of Sellers

 

Particulars of Sellers and apportionment of purchase price

 

1 2 3 4 5 6 7 8 9 10 11 12 Seller’s name Number
of
shares Share
Class Amount
paid per
share
(including
nominal
value) Amount of
entitlement to
Completion
Payment Entitlement
to receive
any
Deferred
Payment
payable
(%) Entitlement
to receive
Consideration
Shares
(%) Proportion of
Consideration
Shares
subject to
Clawback
(%) Entitlement
to receive
Working
Capital
Deferred
Payment
(%) Entitlement to
receive any
payments on
Adjustment
Date
/responsibility
for liability to
make
payments on
Adjustment
Date (%) Entitlement
to receive
Earn-out
Payments
(%) Entitlement
to receive
Bonus Tax
Payment
(%) Paul Moakes 1 Ordinary Share £1 £2,250,000 25% 25% 25% 25% 25% 25% 25% 1
Ordinary G Share £1 1 Ordinary H Share £1 Edward de Salis Young 1 Ordinary Share
£1 £2,250,000 25% 25% 25% 25% 25% 25% 25% 1 Ordinary
C Share £1

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Execution Version

 

1 2 3 4 5 6 7 8 9 10 11 12 Seller’s name Number
of
shares Share
Class Amount
paid per
share
(including
nominal
value) Amount of
entitlement to
Completion
Payment Entitlement
to receive
any
Deferred
Payment
payable
(%) Entitlement
to receive
Consideration
Shares
(%) Proportion of
Consideration
Shares
subject to
Clawback
(%) Entitlement
to receive
Working
Capital
Deferred
Payment
(%) Entitlement to
receive any
payments on
Adjustment
Date
/responsibility
for liability to
make
payments on
Adjustment
Date (%) Entitlement
to receive
Earn-out
Payments
(%) Entitlement
to receive
Bonus Tax
Payment
(%)   1 Ordinary D Share £1                 Simon Pack 1 Ordinary Share £1
£2,250,000 25% 25% 25% 25% 25% 25% 25% 1 Ordinary A Share £1 1 Ordinary
B Share £1 Martin Hollingshead 1 Ordinary Share £1 £2,250,000 25% 25% 25% 25%
25% 25% 25% 1 Ordinary
E Share £1

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Execution Version

 

1 2 3 4 5 6 7 8 9 10 11 12 Seller’s name Number
of
shares Share
Class Amount
paid per
share
(including
nominal
value) Amount of
entitlement to
Completion
Payment Entitlement
to receive
any
Deferred
Payment
payable
(%) Entitlement
to receive
Consideration
Shares
(%) Proportion of
Consideration
Shares
subject to
Clawback
(%) Entitlement
to receive
Working
Capital
Deferred
Payment
(%) Entitlement to
receive any
payments on
Adjustment
Date
/responsibility
for liability to
make
payments on
Adjustment
Date (%) Entitlement
to receive
Earn-out
Payments
(%) Entitlement
to receive
Bonus Tax
Payment
(%)   1 Ordinary
F Share £1                

26

Execution Version

 

Schedule 2. Particulars of the Company

 

Part 1.

 

THE COMPANY

 

Name: Commagility Limited Registration number: 05914025 Registered office:
Charnwood Building, Holywell Park, Ashby Road, Loughborough, Leicestershire LE11
3AQ Authorised share capital amount: None Issued share capital: £12 comprising 4
Ordinary shares of £1 each, 1 Ordinary A share of £1, 1 Ordinary B share of £1,
1 Ordinary C share of £1, 1 Ordinary D share of £1, 1 Ordinary E share of £1, 1
Ordinary F share of £1, 1 Ordinary G share of £1 and 1 Ordinary H share of £1.
Registered shareholders (and number of Sale Shares held): As set out in Schedule
1 Beneficial owners of Sale Shares (if different) and number of Sale Shares
beneficially owned: N/A Directors and shadow directors: Edward Stanley de Salis
Young
Martin Rupert Hollingshead
Dr Paul Alan Moakes
Simon Edward Pack Secretary: Dr Paul Alan Moakes Registered Charges None

 

Part 2. The US Subsidiary

 

Name: Commagility, Inc. Principal office: Office No. 718, 100 Rialto Place,
Melbourne, FL 32901, USA Authorised share capital amount: 5,000 shares of common
stock of par value $0.01 Issued share capital: $10.00 Shareholder: Commagility
Limited Beneficial owner (if different): N/A Directors: Edward de Salis Young
Martin Hollingshead
Paul Moakes Secretary: Paul Moakes

28

Schedule 3. Completion

 

Part 1. What the Sellers shall deliver to the Buyer at Completion

 

1.At Completion, the Sellers shall deliver or cause to be delivered to the Buyer
the following documents and evidence:

 

(a)transfers of the Sale Shares executed by the registered holders in favour of
the Buyer or its nominees;

 

(b)the share certificates for the Sale Shares and the shares held in the US
Subsidiary in the names of the registered holders or an indemnity in the agreed
form for any lost certificates;

 

(c)an irrevocable power of attorney in agreed form given by each of the Sellers
in favour of the Buyer or its nominees to enable the beneficiary (or its
proxies) to exercise all voting (if any) and other rights attaching to the Sale
Shares before the transfer of the Sale Shares is registered in the register of
members;

 

(d)the original of any power of attorney under which any document to be
delivered to the Buyer under this paragraph 1 has been executed (in respect of
Simon Pack it is acknowledged that the original will be sent to the Buyer’s
Solicitors within 3 Business Days of Completion);

 

(e)in relation to the Company and the US Subsidiary, the statutory registers and
minute books (written up to immediately prior to Completion), the common seal
(if any), certificate of incorporation and any certificates of incorporation on
change of name;

 

(f)the written resignation, executed as a deed and in the agreed form, of any
Directors and the Secretary of the Company and the US Subsidiary from their
offices as notified by the Buyer to the Sellers prior to Completion;

 

(g)a copy of the executed consent to change of control from Texas Instruments
Incorporated;

 

(h)a copy of the minutes of the board meetings held pursuant to Part 2 of
Schedule 3;

 

(i)statements from each bank at which the Company or the US Subsidiary has an
account, giving the balance of each account at the close of business on the last
Business Day before Completion; and reconciliation statements reconciling the
cash book balances of the Company and the US Subsidiary and the cheque books of
the Company and the US Subsidiary with the bank statements delivered;

 

(j)the Completion Cash Statement;

 

(k)executed copies of employment agreements in the agreed form to be entered
into between the Company and each of Edward Stanley De Salis Young, Martin
Rupert Hollingshead, Dr Paul Alan Moakes and Simon Edward Pack (“Employment
Agreements”);

29

(l)the Clawback Escrow Agreement executed by the Seller Representative;

 

(m)a Lock Up Agreement executed by each of the Sellers;

 

(n)the Registration Rights Agreement executed by each of the Sellers;

 

(o)the Voting Agreement executed by each of the Sellers;

 

(p)Financial Promotion Order High Net Worth Statements for each of the Sellers
(in respect of Simon Pack it is acknowledged that the original will be sent to
the Buyer’s Solicitors within 10 Business Days of Completion).

30

Part 2. Matters for the board meeting at Completion

 

1.The Sellers shall cause a board meeting of the Company to be held at
Completion at which the matters set out below shall take place:

 

(a)A resolution to register the transfer of the Sale Shares shall be passed at
such board meeting of the Company, subject to the transfers being stamped.

 

(b)Those Directors and the Secretary (nominated by the Buyer) shall resign from
their offices with the Company conditional upon and with effect from Completion.

 

(c)The persons the Buyer nominates shall be appointed as directors of the
Company. The appointments shall take effect conditional upon and with effect
from Completion.

 

(d)All the existing instructions and authorities to bankers shall be amended or
revoked and replaced with new instructions and authorities to those banks in the
form the Buyer requires.

 

(e)The address of the registered office of the Company shall be changed to the
address required by the Buyer.

 

(f)The accounting reference date of the Company shall be changed to 31 December.

 

(g)Execution of the Employment Agreements shall be approved.

 

2.The Sellers shall cause a board meeting of the US Subsidiary to be held at
Completion at which the persons the Buyer nominates shall be appointed as
directors and officers of the US Subsidiary.

31

Schedule 4. Warranties

 

Part 1. General warranties

 

1.Power to sell the company

 

1.1The Sellers have all requisite power and authority to enter into and perform
this Agreement in accordance with its terms and the other documents referred to
in it to which they are a party.

 

1.2This Agreement and the other documents relating to the Transaction referred
to in it to which the Sellers are parties constitute (or shall constitute when
executed) valid, legal and binding obligations on the Sellers in the terms of
the agreement and such other documents.

 

1.3Compliance with the terms of this Agreement and the documents relating to the
Transaction referred to in it to which they are a party shall not breach or
constitute a default under any of the following:

 

(a)any agreement or instrument to which any of the Sellers is a party or by
which any of them is bound; or

 

(b)any order, judgment, decree or other restriction applicable to any of the
Sellers.

 

2.Shares in the company

 

2.1The particulars of the Company and the US Subsidiary given in Schedule 1 are
true, accurate and not misleading.

 

2.2The Sale Shares constitute the whole of the allotted share capital of the
Company and are fully paid.

 

2.3Each of the Sellers is the sole legal and beneficial owner of the number of
Sale Shares set against his name in Schedule 1.

 

2.4Each of the issued shares in the capital of the US Subsidiary:

 

(a)is solely legally and beneficially owned by the Company;

 

(b)have been properly authorised and issued; and

 

(c)are fully paid and are non-assessable.

 

2.5Other than the US Subsidiary, the Company has no subsidiary or subsidiaries,
nor any other interests in any other company, corporation, entity, venture or
person.

 

2.6The Sale Shares and the issued shares in the capital of the US Subsidiary are
free from all Encumbrances.

 

2.7No option, warrant or other right has been granted to any person to require,
at any time, the transfer, creation, issue or allotment of any share, loan
capital or other securities (or any rights or interest in them) of the Company
or the US Subsidiary

32

and none of the Company, the US Subsidiary nor the Sellers have agreed to confer
any such rights, and no person has claimed any such right.

 

2.8No Encumbrance has been created in favour of any person affecting any
unissued shares or debentures or other unissued securities of the Company or the
US Subsidiary.

 

2.9No commitment has been given to create an Encumbrance affecting the Sale
Shares or the issued shares in the capital of the US Subsidiary (or any unissued
shares or debentures or other unissued securities of the Company or the US
Subsidiary) and the Sellers have not received notice that any person has claimed
any rights in connection with any of those things.

 

2.10Each of the Company and the US Subsidiary:

 

(a)does not hold or beneficially own, nor has agreed to acquire, any securities
of any corporation (other than the US Subsidiary); or

 

(b)is not nor has agreed to become a member of any partnership or other
unincorporated association, joint venture, LLC or consortium (other than
recognised trade associations); or

 

(c)other than in relation to the German Branch, neither has, nor has ever had,
outside its country of incorporation, any branch or permanent establishment; or

 

(d)has not, allotted or issued any securities that are convertible into shares.

 

2.11Each of the Company and the US Subsidiary has not at any time:

 

(a)purchased, redeemed or repaid any of its own share capital; or

 

(b)given any financial assistance for the purchase of its own shares in
contravention of any applicable Law or regulation.

 

2.12All dividends or distributions declared, made or paid by the Company or the
US Subsidiary have been declared, made or paid in accordance with (as
applicable) its memorandum, articles of association, certificate of
incorporation all applicable Laws and regulations and any agreements or
arrangements made with any third party regulating the payment of dividends and
distributions.

 

3.Constitutional and corporate documents

 

3.1The Data Room contains a copy of the memorandum and articles of association,
certificate of incorporation and by-laws (with regards to the US Subsidiary) or
other constitutional documents of the Company and the US Subsidiary, which are
true, complete and accurate in all respects, and copies of all the resolutions
and agreements required to be annexed to or incorporated in those documents by
the Law applicable are annexed or incorporated, all of which are Disclosed to
the Buyer. Such documents fully set out all the rights and restrictions
attaching to each class of shares in the capital of the Company or the US
Subsidiary (as the case may be).

 

3.2Other than the documents referred to at paragraph 3.1 above, which have been
Disclosed, there are no shareholders agreements (or similar contractual

33

arrangements) in place between the Sellers in relation to the Sale Shares or the
shares in the US Subsidiary.

 

3.3All registers required by law to be maintained by the Company and/or the US
Subsidiary have been properly kept in all material respects and no notice or
allegation that any of them is incorrect or should be rectified has been
received by the Company or the US Subsidiary.

 

3.4All returns, particulars, documentation and resolutions which the Company and
the US Subsidiary is required by Law to file with or deliver to any authority in
any jurisdiction (including, in particular, the Registrar of Companies in
England and Wales) have in all material respects been correctly made up and
filed or, as the case may be, delivered.

 

3.5In relation to its PSC Register, the Company has at all times complied with
its duties under section 790D (Duty to investigate and obtain information) and
section 790E (Duty to keep information up-to-date) of the Companies Act 2006.

 

4.Information

 

The Sellers are not actually aware that any of the information provided to the
Buyer in the Data Room was, having due regard to all of the other information
provided to the Buyer, inaccurate or misleading in any material respect at the
time it was provided.

 

5.Compliance with laws

 

5.1The Company and the US Subsidiary has at all times conducted its business in
accordance with, and has acted in compliance with, all applicable Laws and
regulations.

 

5.2Neither the Company, the US Subsidiary nor any of their respective directors
or employees (current or past), has been convicted of an offence in relation to
the business or affairs of the Company or the US Subsidiary.

 

6.Licences and consents

 

6.1The Company and the US Subsidiary has all necessary licences, consents,
permits and authorities necessary to carry on its business in the places and in
the manner in which its business is now carried on (“Permissions”), all of which
are valid and subsisting.

 

6.2The Company has not received notice that any Permission will be suspended,
cancelled, revoked or not renewed on the same terms and, so far as the Sellers
are aware, there is no reason why any Permission should be.

 

6.3No consent, approval, license, permit, order, qualification or authorization
of, action by or in respect of, or registration, declaration or filing with, any
Governmental Authority is required in respect of any Permission in connection
with the execution, delivery and performance by the Sellers of this Agreement.

34

7.Insurance

 

7.1Details of the insurance policies maintained by or on behalf of the Company
and the US Subsidiary are Disclosed to the Buyer in the Data Room and the
particulars of those policies are accurate and not misleading.

 

7.2There are no material outstanding claims under, or in respect of the validity
of, any of those policies (and the Company has not received notice that any such
claims are or have been threatened), and the Sellers are not aware of any
circumstances which would reasonably be expected to give rise to any claim under
any of those policies.

 

7.3All the insurance policies of the Company and the US Subsidiary are in full
force and effect, are not void or voidable, and nothing has been done or not
done by the Sellers, the Company or the US Subsidiary or, so far as the Sellers
are aware, by any other person, which could make any of them void or voidable
and Completion will not terminate, or entitle any insurer to terminate, any such
policy prior to Completion.

 

8.Power of attorney

 

8.1There are no powers of attorney in force given by the Company or the US
Subsidiary.

 

8.2No person, as agent or otherwise, is entitled or authorised to bind or commit
the Company the US Subsidiary to any obligation not in the ordinary course of
the Company or the US Subsidiary’s business.

 

8.3The Disclosure Letter sets out details of all persons (other than their
respective directors and officers) who have authority to bind the Company or the
US Subsidiary in the ordinary course of business.

 

9.Disputes and investigations

 

9.1Neither the Company, the US Subsidiary nor, so far as the Sellers are aware,
any person for whom the Company or the US Subsidiary is vicariously liable:

 

(a)is engaged in any litigation, administrative, mediation or arbitration
proceedings or other proceedings or any claims, actions or hearings before any
statutory or Governmental Authority, department, board or agency ; or

 

(b)so far as the Sellers are aware, is the subject of any investigation, inquiry
or enforcement proceedings by any Governmental Authority.

 

9.2No Director is, to the extent that it relates to the business of the Company
or the US Subsidiary, engaged in or subject to any of the matters mentioned in
paragraph 9.1 of Schedule 4.

 

9.3So far as the Sellers are aware, no such proceedings, investigation or
inquiry as are mentioned in paragraph 9.1 or paragraph 9.2 of Schedule 4 have
been threatened or are pending and, so far as the Sellers are aware, there are
no circumstances which would reasonably be expected to give rise to any such
proceedings.

35

9.4The Company and the US Subsidiary are not the subject of any existing or
pending judgments or rulings and nor has the Company or the US Subsidiary given
any undertakings arising from legal proceedings to a court, Governmental
Authority or third party.

 

10.Defective products and services

 

10.1The Company and the US Subsidiary have not manufactured or sold any products
which were, at the time they were manufactured or sold, faulty or defective, or
did not comply with:

 

(a)warranties or representations expressly made or implied by or on behalf of
the Company or the US Subsidiary; or

 

(b)all Laws, regulations, standards and requirements applicable to the products
in all material respects.

 

10.2No proceedings or disputes have been started, or, so far as the Sellers are
aware, are pending or have been threatened against the Company the US Subsidiary
in which it is claimed that any products manufactured or sold by the Company or
the US Subsidiary are defective, not appropriate for their intended use or have
caused bodily injury or material damage to any person or property when applied
or used as intended.

 

10.3No proceedings have been started and, so far as the Sellers are aware, there
are no outstanding liabilities or claims pending or threatened against the
Company or the US Subsidiary in respect of any services supplied by the Company
or the US Subsidiary for which the Company or the US Subsidiary is or may become
liable and no dispute exists between the Company or the US Subsidiary and any of
its respective customers or clients.

 

11.Customers and suppliers

 

11.1In the 12 months ending with the date of this Agreement, the business of the
Company or the US Subsidiary has not been materially affected in an adverse
manner as a result of any one or more of the following things happening to the
Company or the US Subsidiary:

 

(a)the loss of any of its customers or suppliers; or

 

(b)a reduction in trade with its customers or in the extent to which it is
supplied by any of its suppliers; or

 

(c)a change in the terms on which it trades with or is supplied by any of its
customers or suppliers.

 

11.2The Disclosure Letter sets out (i) each customer who has paid aggregate
consideration to Company or the US Subsidiary for goods or services rendered in
an amount greater than or equal to £75,000 for each of the two most recent
financial years (collectively, the “Material Customers”); and (ii) the amount of
consideration paid by each Material Customer during such periods. Neither the
Sellers, the Company or the US Subsidiary has received any notice that any of
the Material Customers has ceased, or intends to cease after Completion, to use
the

36

goods or services of the Company or the US Subsidiary or to otherwise terminate
or materially reduce its relationship with the Company or the US Subsidiary.

 

11.3The Disclosure Letter sets out (i) each supplier to whom the Company or the
US Subsidiary has paid consideration for goods or services rendered in an amount
greater than or equal to £75,000 for each of the two most recent financial years
(collectively, the “Material Suppliers”); and (ii) the amount of purchases from
each Material Supplier during such periods. Neither the Sellers, the Company or
the US Subsidiary has received any notice that any of the Material Suppliers has
ceased, or intends to cease, to supply goods or services to the Company or the
US Subsidiary or to otherwise terminate or materially reduce its relationship
with the Company or the US Subsidiary.

 

12.Competition

 

12.1The definition in this paragraph applies in this Agreement.

 

Competition Law: the national and directly effective Laws of any jurisdiction
which governs the conduct of companies or individuals in relation to restrictive
or other anti-competitive agreements or practices (including cartels, pricing,
resale pricing, market sharing, bid rigging, terms of trading, purchase or
supply and joint ventures), dominant or monopoly market positions (whether held
individually or collectively) and the control of acquisitions or mergers.

 

12.2Neither the Company nor the US Subsidiary are engaged in any agreement,
arrangement, practice or conduct which amounts to an infringement of the
Competition Law of any jurisdiction in which the Company or the US Subsidiary
conducts business and no Director is engaged in any activity which would be an
offence or infringement under any such Competition Law.

 

12.3Neither the Company nor the US Subsidiary has received notice that it is the
subject of any investigation, inquiry or proceedings by any relevant
Governmental Authority in connection with any actual or alleged infringement of
the Competition Law of any jurisdiction in which the Company or the US
Subsidiary conducts business, and so far as the Sellers are aware, no such
investigation, inquiry or proceedings have been threatened or are pending.

 

12.4Neither the Company nor the US Subsidiary is the subject of any existing or,
so far as the Sellers are aware, pending decisions, judgments, orders or rulings
of any relevant Governmental Authority responsible for enforcing the Competition
Law of any jurisdiction and neither the Company nor the US Subsidiary has given
any undertakings or commitments to such bodies which affect the conduct of the
Business.

 

12.5Neither the Company nor the US Subsidiary are in receipt of any payment,
guarantee, financial assistance or other aid from the government or any state
body which was not, but should have been, notified to the European Commission
under Article 88 of the EC Treaty or Article 108 of the Treaty on the
Functioning of the European Union for decision declaring such aid to be
compatible with the internal market.

37

13.Contracts

 

13.1The definition in this paragraph applies in this Agreement.

 

Material Contract: an agreement or arrangement to which the Company or the US
Subsidiary is a party or is bound by and which is of material importance to the
business, profits or assets of the Company or the US Subsidiary, regardless of
whether it is written, including any contract:

 

(a)for the sale by the Company or the US Subsidiary of materials, supplies,
goods, services, equipment or other assets, which, for the 12 months ending on
the Accounts Date, had annual GBP£ sales amount of £50,000 or more;

 

(b)for the purchase by the Company or the US Subsidiary of materials, supplies,
goods, services, equipment or other assets which provides for annual payments of
£20,000 or more;

 

(c)that is a mortgage, indenture, note, debenture, bond, pledge, security
agreement, letter of credit, loan or other contract for the borrowing or lending
of money or granting a lien upon any rights, assets or properties of the Company
or the US Subsidiary, an agreement or arrangement for a line of credit, pledge
or undertaking of the Indebtedness of any other person, or under which (A) any
person has directly or indirectly guaranteed Indebtedness of the Company or the
US Subsidiary; or (ii) the Company or the US Subsidiary has directly or
indirectly guaranteed Indebtedness of any person;

 

(d)that is a lease or agreement under which the Company or the US Subsidiary is
lessor or lessee of or holds or operates or permits any person to hold or
operate, as applicable, any personal property owned by any other person,
providing for annual payments in excess of £20,000;

 

(e)that is a settlement, conciliation or similar agreement, the performance of
which will involve payment after the Completion Date of consideration in excess
of £10,000;

 

(f)that relate to an acquisition, divestiture, merger or similar transaction,
regardless of whether such transaction has yet been consummated, that contain
warranties, indemnities, representations or other obligations (including
payment, indemnification, “earn-out” or other contingent obligations) that are
in effect; or

 

that have an aggregate future liability of a Seller in excess of £50,000 per
annum and are not terminable by the Company or the US Subsidiary by notice of
not more than 30 days without penalty.

 

13.2Except for the agreements and arrangements Disclosed, neither the Company
nor the US Subsidiary is a party to or subject to any agreement or arrangement
which:

 

(a)is a Material Contract; or

 

(b)is of an unusual or exceptional nature; or

 

(c)is not in the ordinary and usual course of business of the Company or the US
Subsidiary; or

38

(d)may be terminated or materially altered as a result of any Change of Control
of the Company or the US Subsidiary; or

 

(e)includes a specific restriction on the freedom of the Company or the US
Subsidiary to carry on the whole or any part of its business in any part of the
world or with any person in any line of business in such manner as it thinks
fit; or

 

(f)involves any person acting as a distributor; or

 

(g)involves any person acting as an agent; or

 

(h)involves partnership, joint venture, consortium, joint development,
shareholders, limited liability or similar arrangements or agreements or related
to the formation of the same; or

 

(i)involves the grant of any sole or exclusive rights, right of first refusal,
right of first offer or similar right by or to the Company or the US Subsidiary;
or

 

(j)is incapable of complete performance in accordance with its terms within six
months after the date on which it was entered into; or

 

(k)cannot be readily fulfilled or performed by the Company or the US Subsidiary
on time and without undue or unusual expenditure of money and effort; or

 

(l)involves or is likely to involve an aggregate consideration payable by or to
the Company or the US Subsidiary in excess of £50,000.

 

(m)requires the Company or the US Subsidiary to pay any commission, finders’
fee, royalty or the like; or

 

(n)is for the supply of goods and/or services by or to the Company or the US
Subsidiary on terms under which retrospective or future discounts, price
reductions or other financial incentives are given; or

 

(o)is not on arm’s length terms; or

 

(p)is a finance lease, hire purchase, rental or credit sale agreement or which
otherwise provides for the purchase or right to purchase any asset by instalment
payments.

 

13.3There are no outstanding or on-going negotiations of material importance to
business, profits or assets of the Company or the US Subsidiary, or any
outstanding quotations or tenders for a contract that, if accepted, would give
rise to a Material Contract.

 

13.4Each Material Contract is binding on the Company and the US Subsidiary (as
the case may be) and, so far as the Sellers are aware, each Material Contract is
in full force and effect and binding on the other counterparties to it. Neither
the Company nor the US Subsidiary has defaulted under or breached a Material
Contract, nor, so far as the Sellers are aware, has any other party to a
Material Contract defaulted under or breached such a Material Contract and, so
far as the Sellers are aware, no such breach is likely or threatened.

39

13.5No notice of termination of a Material Contract has been received or served
by the Company or the US Subsidiary and so far as the Sellers are aware there
are no grounds for determination, rescission, avoidance, repudiation or a
material change in the terms of any such Material Contract.

 

14.Transactions with Sellers

 

14.1There is no outstanding indebtedness or other liability (actual or
contingent) and no outstanding contract, commitment or arrangement between the
Company or the US Subsidiary and any of the following:

 

(a)any of the Sellers or any person Connected with any of the Sellers; or

 

(b)any Director, secretary, officer or employee of the Company or the US
Subsidiary or any person Connected with such Director, secretary, officer or
employee.

 

14.2None of the Sellers, nor, so far as the Sellers are aware, any person
Connected with any of the Sellers, is entitled to a claim of any nature against
the Company or the US Subsidiary or has assigned to any person the benefit of a
claim against the Company or the US Subsidiary to which the Sellers or a person
Connected with the Sellers would otherwise be entitled.

 

14.3None of the Sellers are, at the date of this Agreement, or have been at any
time during the period of 5 of years immediately preceding the date of this
Agreement, concerned, interested or engaged, directly or indirectly and in
whatever capacity, in any other business similar to or competitive with all or
any part of the Business as it is carried on at the date of this Agreement.

 

15.Finance and guarantees

 

15.1Neither the Company nor the US Subsidiary has Indebtedness, save for trade
payables and liabilities incurred in the ordinary course of business.

 

15.2No guarantee, mortgage, charge, pledge, lien, assignment or other security
agreement or arrangement has been given by or entered into by the Company, the
US Subsidiary or any third party in respect of borrowings or other obligations
of the Company or the US Subsidiary.

 

15.3The total amount of Indebtedness of the Company and the US Subsidiary does
not exceed any limitations on the borrowing powers contained:

 

(a)in the memorandum and articles of association of the Company or the US
Subsidiary (as the case may be); or

 

(b)in any debenture or other deed or document binding on the Company or the US
Subsidiary (as the case may be).

 

15.4Neither the Company nor the US Subsidiary has outstanding loan capital, nor
lent any money that has not been repaid, and there are no debts owing to the
Company or the US Subsidiary other than debts that have arisen in the normal
course of business.

40

15.5Neither the Company nor the US Subsidiary has :

 

(a)factored any of its debts or discounted any of its debts or engaged in
financing of a type which would not need to be shown or reflected in the
Accounts or the accounts of the US Subsidiary; or

 

(b)waived any right of set-off it may have against any third party.

 

15.6All debts (less any provision for bad and doubtful debts) owing to the
Company are reflected in the Accounts or the Completion Accounts (as at the date
to which they have been made up) or the accounts of the US Subsidiary. No debts
subsequently recorded in the books of the Company or the US Subsidiary has been
outstanding for more than two months from its due date for payment.

 

15.7No Indebtedness of the Company or the US Subsidiary is overdue or
outstanding for payment and no security over any of the assets of the Company or
the US Subsidiary is now enforceable, whether by virtue of the stated maturity
date of the indebtedness having been reached or otherwise. Neither the Company
nor the US Subsidiary has received any notice whose terms have not been fully
complied with and/or carried out from any creditor requiring any payment to be
made and/or intimating the enforcement of any security which it may hold over
the assets of the Company or the US Subsidiary.

 

15.8Neither the Company nor the US Subsidiary has given or entered into any
guarantee, mortgage, charge, pledge, lien, assignment or other security
agreement or arrangement or is responsible for the indebtedness, or for the
default in the performance of any obligation, of any other person.

 

15.9Neither the Company nor the US Subsidiary are subject to any arrangement for
receipt or repayment of any grant, subsidy or financial assistance from any
government department or other body.

 

15.10Particulars of the balances of all the bank accounts of the Company and the
US Subsidiary, showing the position as at the day immediately preceding the date
of this Agreement, have been Disclosed and the Company and the US Subsidiary
have no other bank accounts. Since those particulars were given, there have been
no payments out of those accounts other than routine payments in the ordinary
course of business.

 

15.11No Indebtedness of the Company or the US Subsidiary will become due, or
capable of being declared due and payable, prior to its stated maturity as a
result of a Change of Control of the Company or the US Subsidiary.

 

16.Insolvency

 

16.1The Company:

 

(a)is not insolvent or unable to pay its debts within the meaning of the
Insolvency Act 1986; and

 

(b)has not stopped paying its debts as they fall due.

41

16.2There are no attachments, executions or assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy or under any
other debtor relief Laws, contemplated by or, so far as the Sellers are aware,
pending or threatened against the US Subsidiary or any of its directors or
officers, as the case may be. Without limiting the generality of the foregoing,
none of the following have been done by, against or with respect to the US
Subsidiary: (i) the commencement of a case under Title 11 of the U.S. Code as
now constituted or hereafter amended, or under similar Law; (ii) the appointment
of a trustee or receiver of any property interest; (iii) an assignment for the
benefit of creditors; (iv) an attachment, execution or other judicial seizure of
a substantial property interest; (v) the taking of, failure to take, or
submission to, any action indicating an inability to meet its financial
obligations as they accrue; or (vi) a dissolution or liquidation

 

16.3No step has been taken by the Company or the US Subsidiary, and so far as
the Sellers are aware no other person has taken any step in any applicable
jurisdiction to initiate any process by or under which:

 

(a)the ability of the creditors of the Company or the US Subsidiary, to take any
action to enforce their debts is suspended, restricted or prevented; or

 

(b)some or all of the creditors of the Company or the US Subsidiary accept, by
agreement or in pursuance of a court order, an amount less than the sums owing
to them in satisfaction of those sums with a view to preventing the dissolution
of the Company or the US Subsidiary; or

 

(c)a person is appointed to manage the affairs, business and assets of the
Company or the US Subsidiary, on behalf of the Company or the US Subsidiary’s,
creditors; or

 

(d)the holder of a charge over all or any of the Company or the US Subsidiary’s
assets is appointed to control the business and/or all or any assets of the
Company or the US Subsidiary.

 

16.4In relation to the Company:

 

(a)no administrator has been appointed;

 

(b)no documents have been filed with the court for the appointment of an
administrator; and

 

(c)no notice of an intention to appoint an administrator has been given by the
Company, the US Subsidiary, any of their Directors or by a qualifying floating
charge holder (as defined in paragraph 14 of Schedule B1 to the Insolvency Act
1986).

 

16.5So far as the Sellers are aware, no process has been initiated which could
lead to the Company or the US Subsidiary being dissolved and its assets being
distributed among the relevant company’s creditors, shareholders or other
contributors.

 

16.6No distress, execution or other analogous process has been levied on any
asset of the Company or the US Subsidiary

 

16.7None of the Sellers have:

42

(a)had a bankruptcy petition presented against him or been declared bankrupt; or

 

(b)been served with a statutory demand, or is unable to pay any debts within the
meaning of the Insolvency Act 1986; or

 

(c)entered into, or has proposed to enter into, any composition or arrangement
with, or for, his creditors (including an individual voluntary arrangement); or

 

(d)been subject of any other event analogous to the foregoing in any
jurisdiction.

 

17.Assets

 

17.1The Company is the full legal and beneficial owner of to all the assets
included in the Accounts, and any assets acquired since the Accounts Date and
all other assets used by the Company, except for those disposed of since the
Accounts Date in the normal course of business.

 

17.2None of the assets shown in the Accounts or acquired by the Company or the
US Subsidiary since the Accounts Date or other assets used by the Company or the
US Subsidiary is the subject of any lease, lease hire agreement, hire purchase
agreement or agreement for payment on deferred terms or is the subject of any
licence or factoring arrangement.

 

17.3Either the Company or the US Subsidiary is in possession and control of all
the assets included in the Accounts or acquired since the Accounts Date and all
other assets used by the Company or the US Subsidiary, except for those
Disclosed as being in the possession of a third party in the normal course of
business.

 

17.4None of the assets, undertaking or goodwill of the Company or the US
Subsidiary is subject to an Encumbrance, or to any agreement or commitment to
create an Encumbrance, and the Company has not received notice from any person
claiming to be entitled to create such an Encumbrance.

 

18.Condition of equipment

 

18.1The equipment used in connection with the Business:

 

(a)is in reasonable working order having regard to its age and useful life, and
has been properly maintained; and

 

(b)is capable of doing the work for which it was designed.

 

19.Environment and health and safety

 

  19.1 The definitions in this paragraph apply in this agreement.

 

CRC: the CRC Energy Efficiency Scheme established by the CRC Order.

 

CRC Order: the CRC Energy Efficiency Scheme Order 2010 (SI 2010/768) and the CRC
Energy Efficiency Scheme Order 2013 (SI 2013/1119).

 

Environment: the natural and man-made environment including all or any of the
following media: air (including air within buildings and other natural or man-

43

made structures above or below the ground), water, land, and any ecological
systems and living organisms (including man) supported by those media.

 

EHS Laws: all applicable Laws to the extent that they relate to or apply to the
Environment or to the health and safety of any person.

 

EHS Matters: all matters relating to:

 

(a)pollution or contamination of the Environment;

 

(b)the presence, disposal, release, spillage, deposit, escape, discharge, leak,
migration or emission of Hazardous Substances or Waste;

 

(c)the exposure of any person to Hazardous Substances or Waste;

 

(d)the health and safety of any person, including any accidents, injuries,
illnesses and diseases;

 

(e)the creation or existence of any noise, vibration, odour, radiation, common
law or statutory nuisance or other adverse impact on the Environment; or

 

(f)the condition, protection, maintenance, remediation, reinstatement,
restoration or replacement of the Environment or any part of it.

 

EHS Permits: any permits, licences, consents, certificates, registrations,
notifications or other authorisations required under any EHS Laws for the
operation of the Business or in relation to any of the Properties.

 

Harm: harm to the Environment, and in the case of man, this includes harm caused
to any of his senses or to his property.

 

Hazardous Substances: any material, substance or organism which, alone or in
combination with others, is capable of causing Harm, including radioactive
substances, materials containing asbestos and Japanese knotweed.

 

Waste:  any waste, including any by-product of an industrial process and
anything that is discarded, disposed of, spoiled, abandoned, unwanted or
surplus, irrespective of whether it is capable of being recovered or recycled or
has any value.

 

19.2The Company and the US Subsidiary have obtained and complied at all times
with all EHS Permits. All EHS Permits are in full force and effect, and the
Company and the US Subsidiary have not received notice that any EHS Permit will
be revoked, suspended, varied or not renewed (following application, as
necessary).

 

19.3The Company and the US Subsidiary have at all times operated in compliance
with all EHS Laws in force from time to time (including relating to the CRC).

 

19.4So far as the Sellers are aware, there are no Hazardous Substances at, on or
under, nor have any Hazardous Substances been emitted, escaped or migrated from,
any of the Properties.

 

19.5So far as the Sellers are aware, there are, and have been, no landfills,
underground storage tanks, or uncontained or unlined storage treatment or
disposal areas for

44

Hazardous Substances or Waste (whether permitted by EHS Laws or otherwise)
present or carried out at, on or under any of the Properties or within 200
metres of any of the Properties, and they are not aware that any such operations
are proposed.

 

19.6Neither the Company nor the US Subsidiary has ever been required to hold,
nor have ever applied for, a waste disposal licence, a waste management licence
or an environmental permit for waste operations under any EHS Laws.

 

19.7There have been no claims, investigations, prosecutions or other proceedings
against or, so far as the Sellers are aware, threatened against the Sellers, the
Company, the US Subsidiary or any of their respective directors, officers or
employees in respect of Harm arising from the operation of the Business or
occupation of any of the Properties or for any breach or alleged breach of any
EHS Permits or EHS Laws and, so far as the Sellers are aware, there are no facts
or circumstances that may lead to any such claims, investigations, prosecutions
or other proceedings.

 

19.8Neither the Sellers, the Company nor the US Subsidiary has received any
enforcement, prohibition, stop, remediation, improvement or any other notice
from, or been subject to any civil sanction imposed by, any enforcement
authority, including (but not limited to) the Environment Agency, Natural
Resources Wales, the Health and Safety Executive or the relevant local
authority, with regard to any EHS Matters or any breach of EHS Laws in respect
of the Business, the Company, the US Subsidiary or any of the Properties.

 

19.9Copies of all:

 

(a)current EHS Permits;

 

(b)environmental and health and safety policy statements;

 

(c)reports in respect of environmental and health and safety audits,
investigations or other assessments;

 

(d)registrations, reports and evidence packs required to be submitted or kept by
the CRC Order;

 

(e)anonymised records of accidents, illnesses and reportable diseases;

 

(f)assessments of substances hazardous to health;

 

(g)correspondence on EHS Matters between the Company or the US Subsidiary and
any relevant enforcement authority; and

 

(h)copies or details of all Waste disposal contracts,

 

relating to the Business or any of the Properties have been Disclosed.

 

19.10Neither the Company nor the US Subsidiary has received notice of any actual
or potential liability under any EHS Laws by reason of it having owned, occupied
or used any Previously-owned Land and Buildings.

45

19.11Neither the Company nor the US Subsidiary has given or received any
warranties or indemnities or entered into any other agreement in respect of any
liabilities, duties or obligations that arise under EHS Laws.

 

20.Intellectual property

 

20.1The definition in this paragraph applies in this Agreement.

 

Intellectual Property Rights: all rights in intellectual property of any type
throughout the world, including, but not limited to: (i) patents, patent
applications and statutory registrations, including, but not limited to,
continuations, continuations-in-part, divisions, provisional and non-provisional
applications, re-examinations, reissues and extensions; (ii) all copyrights,
whether registered or at common law, and registrations and applications for
registration thereof, including the right to make derivative works and all other
associated rights that a copyright owner possesses, including rights in computer
software; (ii) trademarks and service marks, trade names, logos, business names,
and other indicia of source of origin, whether or not registered, including all
common law rights thereto and all goodwill associated therewith, and
registrations and applications for registration thereof, and domain names, (iv)
trade secrets, proprietary know-how, technical, business and other information,
such as design processes and methods, design materials, algorithms and customer
lists, in each case whether registered or unregistered and including all
applications and rights to apply for and be granted any of the same and
including renewals or extensions thereof, and rights to claim priority
therefrom, and all similar or equivalent rights or forms of protection which
subsist in any part of the world; (iv) the right and power to assert, defend and
recover title to any of the foregoing; and (v) all rights to assert, defend and
recover for any past or present infringement, misuse, misappropriation,
impairment, unauthorized use or other violation of any of the foregoing.

 

20.2Brief particulars are set out in Part 1 of Schedule 6 of all material
registered Intellectual Property Rights owned by the Company and the US
Subsidiary. The Company and the US Subsidiary do not own any other registration
for registered Intellectual Property Rights that are required to be listed in
Part 1 of Schedule 6.

 

20.3Brief particulars are set out in Part 2 of Schedule 6 of all material
registered Intellectual Property Rights owned by a third party and used,
licensed to or held for use by the Company or the US Subsidiary, excluding only
any Intellectual Property Rights in the IT System or under any IT Contracts.

 

20.4Brief particulars are set out in Part 3 of Schedule 6 of all material
unregistered Intellectual Property Rights owned by the Company and the US
Subsidiary, including a description of the right, the date when the right first
accrued and the owner of such rights.

 

20.5Brief particulars are set out in Part 4 of Schedule 6 of all material
unregistered Intellectual Property Rights (excluding non-bespoke “off-the-shelf”
software which is available for licence on the licensor’s standard commercial
licence terms and related configuration information provided that the software
is not incorporated in the Company or the US Subsidiary’s products), and any
open source software incorporated in the Company or the US Subsidiary’s
products, all owned by a third party and used, licensed or held for use by the
Company or the US Subsidiary, and

46

excluding any Intellectual Property Rights in the IT System or under any IT
Contracts.

 

20.6Brief particulars are set out in Part 5 of Schedule 6 of all material
licences, agreements, authorisations and permissions (in whatever form and
whether express or implied) under which the Company or the US Subsidiary has
licensed, sublicensed, or agreed to license or sublicense Intellectual Property
Rights identified in Part 2, Part 3 or Part 4 of Schedule 6 to, or otherwise
permitted the use of any such Intellectual Property Rights by, any third party.

 

20.7The Company or the US Subsidiary is the sole legal and beneficial owner of
(or applicant for) the Intellectual Property Rights set out in Part 1 and Part 3
of Schedule 6, free from all Encumbrances, save only as Disclosed and subject to
the licences, agreements, authorisations and permissions set out in Part 6 of
Schedule 6.

 

20.8Neither the Company nor the US Subsidiary require any material Intellectual
Property Rights other than those set out in Part 1, Part 2, Part 3 and Part 4 of
Schedule 6 (or as required under the IT System and IT Contracts) in order to
carry on its activities.

 

20.9In relation to the Intellectual Property Rights set out in Part 1 and Part 3
of Schedule 6 are valid, subsisting and enforceable, and, so far as the Sellers
are aware, nothing has been done or not been done as a result of which any of
them has ceased or might cease to be valid, subsisting or enforceable and, in
particular, and so far as the Sellers are aware:

 

(a)all application and renewal fees and other steps required for the maintenance
or protection of such rights have been paid on time or taken;

 

(b)all confidential information (including know-how and trade secrets) owned or
used by the Company has been kept confidential and has not been disclosed to
third parties (other than parties who have signed written confidentiality
undertakings in respect of such information, details of which are Disclosed);

 

(c)no mark, trade name or domain name identical or similar to any mark, trade
name or domain name listed in Part 1 or Part 3 of Schedule 6 has been
registered, or is being used by any person in the same or a similar business to
that of the Company or the US Subsidiary, in any country in which the Company or
the US Subsidiary has registered or is using its mark, trade name or domain
name;

 

(d)there are and have been no claims, challenges, disputes or proceedings,
pending or threatened, in relation to the ownership, validity or use of any
Intellectual Property Rights set out in Part 1 or Part 3 of Schedule 6;

 

(e)all employees or subcontractors of the Company have signed agreements
obligating them to protect the confidential information of Company, and
assigning their interests in any Intellectual Property Rights created for the
Company or the US Subsidiary to the Company.

 

20.10As far as Sellers are aware, there has been no infringement by any third
party of any of the Intellectual Property Rights set out in part 1 and Part 3 of
Schedule 6, and the

47

Company and the US Subsidiary have not made or threatened any claim against any
third party asserting any unauthorized use or disclosure, infringement,
misappropriation or other violation of any of the Company’s Intellectual
Property Rights set out in Part 1 and Part 3 of Schedule 6.

 

20.11No Intellectual Property Rights have been deposited by the Company or the
US Subsidiary with any software escrow agents.

 

20.12So far as the Sellers are aware, each of the agreements and licences set
out in Part 2 and Part 4 of Schedule 6:

 

(a)is valid and binding on the parties thereto;

 

(b)has not been the subject of any breach or default by any party or the subject
of any event which, with the giving of notice or lapse of time, could constitute
such a breach or default;

 

(c)is not the subject of any claim, dispute or proceeding, pending or
threatened.

 

20.13So far as the Sellers are aware:

 

(a)the Company and/or the US Subsidiary has/have the necessary permissions to
use, exploit and/or sublicense the Intellectual Property Rights set out in Part
2 and Part 4 of Schedule 6;

 

(b)there are and have been no claims, challenges, disputes or proceedings
against the Company or the US Subsidiary pending or threatened, in relation to
the ownership, validity or use of any Intellectual Property Rights set out in
Part 2 and Part 4 of Schedule 6 which might have a material effect on the use of
such Intellectual Property Rights by the Company or the US Subsidiary under and
pursuant to any of the licenses, agreements, authorisations or permissions set
out in Part 2 and Part 4 of Schedule 6.

 

20.14Except as set forth in Part 6 of Schedule 6, Company and the US Subsidiary
are not bound by any agreement that in any way limits or restricts the ability
of Company or its US Subsidiary to use, exploit, license or sublicense (whether
or not through multiple tiers of sublicenses) any Intellectual Property Rights
set out in Part 1 and Part 3 of Schedule 6

 

20.15The activities of the Company and the US Subsidiary:

 

(a)have not infringed and do not infringe the Intellectual Property Rights of
any third party;

 

(b)have not constituted and do not constitute any breach of confidence, passing
off or actionable act of unfair competition;

 

(c)have not given and do not give rise to any obligation to pay any royalty,
fee, compensation or any other sum whatsoever; and

 

(d)there has been no claim made or threatened by any third party against Company
or the US Subsidiary (and neither the Company nor the US Subsidiary has been a
party to any action including such a claim) asserting any unauthorized use or

48

disclosure, infringement, misappropriation or other violation of any third party
Intellectual Property Rights.

 

21.Information technology

 

21.1The definitions in this paragraph apply in this Agreement.

 

IT System: all computer hardware (including network and telecommunications
equipment) and software (including associated preparatory materials, user
manuals and other related documentation) owned, used, leased or licensed by or
to the Company or the US Subsidiary excluding only (i) any software created by
the Company or the US Subsidiary; (ii) non-bespoke “off-the-shelf” software
which is available for licence on the licensor’s standard commercial licence
terms; and (iii) any other material software incorporated in any products
created, developed, manufactured or supplied by the Company or the US
Subsidiary, all of which software is identified in Schedules 6 and 7.

 

IT Contracts: all arrangements and agreements under which any third party
(including without limitation any source code deposit agents) provides any
material element of, or services relating to, the IT System, including leasing,
hire purchase, licensing, maintenance and services agreements.

 

21.2Brief particulars of the IT System and all IT Contracts are set out in
Schedule 7.

 

21.3Save to the extent provided in the IT Contracts, the Company or the US
Subsidiary is the owner of the IT System free from Encumbrances.

 

21.4So far as the Sellers are aware, the IT Contracts are valid and binding and
no act or omission has occurred which would, if necessary with the giving of
notice or lapse of time, constitute a breach of any such IT Contract.

 

21.5There are and have been no claims, disputes or proceedings arising or
threatened against the Company and/or the US Subsidiary under any IT Contracts.

 

21.6The Company or the US Subsidiary has either (i) possession or control of the
source code of all software in the IT System, or (ii) has the right to gain
access to such code under the terms of source code deposit agreements with the
owners of the rights in the relevant software and reputable deposit agents
(particulars of which are set out in Schedule 7).

 

21.7So far as the Sellers are aware, the elements of the IT System:

 

(a)are not materially defective in any respect and have not been materially
defective or materially failed to function during the last two years;

 

(b)have industry-standard antivirus software that is updated regularly and
require user authentication before access;

 

(c)have sufficient capacity and performance to meet the current business
requirements of the Company or the US Subsidiary;

 

(d)have been regularly maintained and the IT System has the benefit of those
maintenance and support agreements, brief particulars of which are set out in
Schedule 7.

49

21.8The Disclosure Letter contains brief details of the procedures of the
Company and the US Subsidiary for ensuring the security of the IT System.

 

21.9The Disclosure Letter contains brief details of the disaster recovery plan
in relation to the IT System of the Company and the US Subsidiary, and the plan
is in effect and all of its components have been put in place and are
executable.

 

22.Data protection

 

22.1The Disclosure Letter contains details of the registrations of the Company
nor the US Subsidiary pursuant to the Data Protection Act 1998.

 

22.2No personal data have been transferred outside the European Economic Area.

 

22.3The Company and the US Subsidiary have complied in all respects with the
Data Protection Act 1998 and has established the procedures necessary to ensure
continued compliance with such legislation.

 

22.4The Company and the US Subsidiary have complied with the requirements of the
seventh principle of the Data Protection Act 1998 in respect of any processing
of data carried out by a data processor on behalf of the Company or the US
Subsidiary, including by entering into a written contract with the data
processor (copies of which are Disclosed).

 

22.5Neither the Company nor the US Subsidiary has received any:

 

(a)notice or complaint under the Data Protection Act 1998 alleging
non-compliance with such Act (including any information or enforcement notice,
or any transfer prohibition notice); or

 

(b)claim for compensation for loss or unauthorised disclosure of data; or

 

(c)notification of an application for rectification or erasure of personal data,

 

and the Sellers are not aware of any circumstances which may give rise to the
giving of any such notice or the making of any such notification.

 

22.6The Company and the US Subsidiary have complied with its obligations under
the Privacy and Electronic Communications (EC Directive) Regulations 2003 in
respect of the use of electronic communications (including e-mail, text
messaging, fax machines, automated calling systems and non-automated telephone
calls) for direct marketing purposes.

 

23.Employment

 

23.1The definitions in this paragraph apply in this agreement.

 

Employment Legislation: legislation applying in the United Kingdom or Germany
affecting contractual and other employment relations between employers and their
employees or workers including, but not limited to, any legislation and any
amendment, extension or re-enactment of such legislation and/or legal
obligations arising under European treaty provisions or directives enforceable
against the Company by any Employee or Worker.

50

Employee: any person employed by the Company under a contract of employment.

 

Worker: any person who personally performs work for the Company but who is not
in business on their own account or in a client/customer relationship with the
Company.

 

23.2The name of each person who is a Director is set out in Schedule 2.

 

23.3The Disclosure Letter includes anonymised details of all Directors,
Employees and Workers as follows and the principal terms of their contract
including:

 

(a)the Company which employs or engages them;

 

(b)their remuneration (including any benefits or insurances which the Company is
legally bound to provide to them or their dependants, whether now or in the
future);

 

(c)the commencement date of the current contract and, if an Employee, the date
on which their continuous service began;

 

(d)the length of notice necessary to terminate each contract or, if a fixed
term, the expiry date of the fixed term (and details of any previous renewals);

 

(e)the type of contract (whether full or part-time or other);

 

(f)their job title;

 

(g)their standard hours of work;

 

(h)their date of birth;

 

(i)their normal place of work; and

 

(j)the law governing their employment contract.

 

23.4The Disclosure Letter also includes anonymised details of all persons who
are not Employees or Workers and who are providing services to the Company
(including, in particular, where the individual acts as a consultant or is on
secondment from an employer which is not the Company) and the particulars of the
terms on which the individual provides services, including:

 

(a)the entity which engages them;

 

(b)the fee paid in respect of the service provision (including any benefits or
insurance provided directly by the Company);

 

(c)the length of notice necessary to terminate each agreement or, if a fixed
term, the expiry date of the fixed term and details of any previous renewals;

 

(d)any country in which the individual provides services, if the individual
provides services wholly or mainly outside the United Kingdom; and

 

(e)the law governing the agreement, if the individual provides services wholly
or mainly outside the United Kingdom.

51

23.5The Disclosure Letter includes anonymised details of all Employees and
Workers of the Company who are on secondment, maternity, paternity, parental or
adoption leave, sabbatical or ill health leave or any other leave or who have
otherwise been absent for any reason for over three months.

 

23.6So far as the Sellers are aware, no notice to terminate the contract of
employment of any Employee or Worker of the Company (whether given by the
Company or by the Employee or Worker) is pending, outstanding or threatened and
no dispute under any Employment Legislation or otherwise is outstanding between:

 

(a)the Company and any of its current or former Employees relating to their
employment, its termination and any reference given by the Company regarding
them; or

 

(b)the Company and any of its current or former Workers relating to their
contract, its termination and any reference given by the Company regarding them.

 

23.7No statutory questionnaire or similar request has been served on the Company
by an Employee or Worker under any Employment Legislation which remains
unanswered in full or in part.

 

23.8Every Employee or Worker of the Company who requires permission to work in
the country in which they are employed or engaged has current and appropriate
permission to work in that country.

 

23.9No offer of employment or engagement has been made by the Company that has
not yet been accepted, or which has been accepted but where the employment or
engagement has not yet started.

 

23.10Save as provided for elsewhere in this agreement, the acquisition of the
Sale Shares by the Buyer and compliance with the terms of this Agreement will
not entitle any Directors, officers, Employees or Workers of the Company to
terminate their employment or receive any payment or other benefit or treat
himself as being released from any obligation nor so far as the Sellers are
aware are there any facts which suggest that any current Director, Employee or
Consultant is likely to leave his office or employment or engagement as a result
within the 12 months following Completion.

 

23.11All contracts between the Company and its Employees and Workers are
terminable at any time on not more than three months’ notice without
compensation (other than for unfair dismissal, a statutory redundancy payment or
a payment-in-lieu-of-notice) or any liability on the part of the Company other
than accrued wages, benefits, commission, pension or holiday pay.

 

23.12All agreements entered into by the Company with agencies or other
organisations to engage temporary or permanent Workers will terminate prior to
Completion with no liability on the Company to make any payment or provide any
compensation as a consequence.

 

23.13All contracts between the Company and its Directors comply with any
relevant requirements of section 188 of the Companies Act 2006.

52

23.14The Company is not a party to, bound by or proposing to introduce in
respect of any of its Directors, Employees or Workers any redundancy payment
scheme in addition to statutory redundancy pay, and there is no pre-agreed
procedure for redundancy selection.

 

23.15The Disclosure Letter includes full particulars of any incentive scheme
(including, without limitation, any share option arrangement, commission, profit
sharing or bonus scheme) which the Company is a party to, bound by or proposing
to introduce, in respect of its Directors, Employees or Workers.

 

23.16The Disclosure Letter lists all Employees whose employment was terminated
and consultants whose contracts were terminated in the 6 months ending on the
date of this agreement, the reason for termination and any payments made to the
Employees or consultants on or in connection with termination.

 

23.17The Company has no outstanding liability in connection with any termination
of employment of its Employees (including redundancy payments) or for failure to
comply with any order for the reinstatement or re-engagement of any Employee.

 

23.18The Company has not incurred any actual or contingent liability for failure
to provide information or to consult with Employees under any Employment
Legislation, and as far as Sellers are aware, there is nothing likely to give
rise to such a dispute or claim.

 

23.19The Company has not made or agreed to make a payment or agreed to provide a
benefit to a present or former Director, Employee or Worker or their dependants
in connection with the actual or proposed termination of employment or variation
of an employment contract in the six months prior to Completion.

 

23.20The Company is not currently involved in any material industrial or trade
dispute or negotiation regarding a claim with any trade union, group or
organisation of employees or their representatives representing Employees or
Workers and as far as Sellers are aware, there is nothing likely to give rise to
such a dispute or claim.

 

23.21No data subject access requests made to the Company pursuant to the Data
Protection Act 1998 or, so far as the Sellers are aware, pursuant to the Federal
Data Protection Act (Bundesdatenschutzgesetz) by Employees or Workers are
outstanding and, so far as the Sellers are aware, the Company has complied with
the provisions of data protection legislation in respect of personal data held
or processed by it relating to their respective Employees, Workers, and former
Employees and Workers.

 

23.22The Company has not transferred or agreed to transfer any Employee or
Worker from working for the Company or induced any Employee or Worker to resign
their employment with the Company in the six months prior to Completion.

 

23.23Within the period of one year preceding the date of this agreement the
Company has not been a party to any relevant transfer as defined in the Transfer
of Undertakings (Protection of Employment) Regulations 2006 (the “Regulations”)
nor so far as the Sellers are aware has the Company failed to comply with any
duty to inform and consult any appropriate representative under the Regulations
or failed to comply with its duty under Regulation 11 of the Regulations.

53

23.24There are no sums owing to or from any Employee or Worker other than
reimbursement of expenses, wages and benefits for the current salary period and
holiday pay for the current holiday year.

 

23.25Since the Accounts Date the Company has not offered, promised or agreed to
any future variation in the contract of any Employee or Worker or made any
material change in the rate or basis of remuneration, fees or the pension or
other benefits paid to or provided for any current Director, Employee or Worker
and no changes are due to be considered.

 

23.26In the twelve months prior to Completion, the Company has not received an
application for recognition nor entered into any union membership, security of
employment, redundancy, recognition or other collective agreement with a trade
union (whether recognised or unrecognised), association of trade unions, works
council, staff association or other organisation or body of Employees, nor so
far as the Sellers are aware has the Company done any act which might be
construed as recognition, nor has the Company in respect of any Employee entered
into any agreement with any trade union or other employee body representing
employees concerning the introduction of new equipment or technology.

 

23.27The Sellers have provided to the Buyer prior to the Completion Date
complete:

 

(a)anonymised copies of all contracts, handbooks and policies which apply to any
of the Employees and Workers;

 

(b)copies of all agreements or arrangements with any trade union, employee
representative or body of employees or their representatives and details of any
such unwritten agreements or arrangements which may affect any Employee or
Worker.

 

23.28So far as the Sellers are aware, in respect of each Employee and Worker,
the Company has:

 

(a)performed all legal obligations and duties it is required to perform (and
settled all outstanding claims), where legally binding and whether arising under
contract, statute, at common law or in equity or under any treaties including
the EC Treaty or the Treaty on the Functioning of the European Union or Laws of
the European Union or otherwise;

 

(b)complied with the terms of any relevant agreement or arrangement with any
trade union, employee representative or body of employees or their
representatives;

 

(c)maintained adequate, suitable and up to date records.

 

23.29No Employee is subject to a current disciplinary warning or procedure, or
so far as the Sellers are aware is about to be subject to any such warning or
procedure.

 

23.30The Sellers are not aware of any fact or matter affecting any Employee
which might reasonably be considered grounds for dismissal or for a written
warning that the continuation of any conduct or behaviour might lead to
dismissal and no such warning has been given to any Employee

54

23.31There are no outstanding loans or notional loans to any Director or former
Director, or any Employee or Worker (or any of their nominees or associates)
made or arranged by the Company.

 

23.32No employment-related securities or securities options (as defined in Part
7 of ITEPA 2003) (including, without limitation, shares in the Company and
options over them) have been issued, granted or transferred by any person in
connection with any current, former or proposed employment or office with the
Company.

 

23.33There are no securities, options over securities or interests in securities
(other than those securities or options referred to in paragraph 22.32 above) in
respect of which the Company may have to account for income tax or national
insurance contributions liabilities issued, granted or transferred to any
current or former director, Employee or Worker.

 

23.34There are no employee benefit trusts, family benefit trusts or similar
arrangements under which any current or former Director, Employee or Worker or
any of their nominees or associates may benefit in any form.

 

24. Property

 

24.1The definitions in this paragraph apply in this agreement.

 

Current Use: the use for the Properties as set out in Schedule 8.

 

Lease: the lease under which a Leasehold Property is held.

 

Leasehold Properties: the Leasehold Properties set out in Schedule 8 and
Leasehold Property means any one of them or part or parts of any one of them.

 

Previously-owned Land and Buildings: land and buildings that have, at any time
before the date of this Agreement, been owned (under whatever tenure) and/or
occupied and/or used by the Company, but which are no longer owned, occupied or
used by the Company or the US Subsidiary.

 

Properties: the leasehold premises occupied by the Company or the US Subsidiary
as set out in Schedule 8 and “Property” shall mean any of them.

 

24.2The particulars of the Properties set out in Schedule 8 are true, complete
and accurate.

 

24.3The Properties are the only land and buildings owned, used or occupied by
the Company and the US Subsidiary.

 

24.4Neither the Company nor the US Subsidiary has any right of ownership, right
of use, option, right of first refusal or contractual obligation to purchase, or
any other legal or equitable right, estate or interest in, or affecting, any
land or buildings other than the Properties.

 

24.5Neither the Company nor the US Subsidiary (nor any other company that has at
any time been a subsidiary of the Company) has any actual or contingent
liability in respect of Previously-owned Land and Buildings.

55

24.6Neither the Company nor the US Subsidiary (nor any other company that has at
any time been a subsidiary of the Company) has given any guarantee or indemnity
for any liability relating to any of the Properties, any Previously-owned Land
and Buildings or any other land or buildings.

 

24.7All written replies to written enquiries given by or on behalf of the
Seller, the Company, any Subsidiary or any other member of the Seller’s Group,
in relation to the Properties, and all written replies given in response to any
written enquiries raised by or on behalf of the Buyer in relation to the
Properties were true and accurate at the date they were given, and would still
be true and accurate if the replies were instead being given on the date of this
Agreement.

 

24.8The Company or the Subsidiary identified as the proprietor in Schedule 8 is
solely legally and beneficially entitled to each of the Properties.

 

24.9The Company or the Subsidiary identified as the proprietor in Schedule 8 is
in possession and actual occupation of the whole of each of the Properties on an
exclusive basis, and no right of occupation or enjoyment has been acquired or is
in the course of being acquired by any third party, or has been granted or
agreed to be granted to any third party.

 

24.10The Seller has in its possession and control and has Disclosed:

 

(a)copies of all the title deeds and documents necessary to prove title to the
Properties; and

 

(b)in relation to each Lease:

 

(i)evidence of the reversioner’s title to the Lease;

 

(ii)all consents required under the Lease;

 

(iii)copies of all assignments of the Lease; and

 

(iv)evidence of the current annual rent payable under the Lease.

 

24.11The original of each Lease will be delivered to the Buyer on Completion
and, in the case of each of the Leases of the UK Property, will be accompanied
by the proper stamp duty land tax return, where required.

 

24.12There is no circumstance that could render any transaction affecting the
title of the Company or the US Subsidiary to any of the Properties liable to be
set aside under the Insolvency Act 1986.

 

24.13No written notice in relation to each of the Properties has been received
nor is expected to be received which (with or without taking other action) would
entitle any third party to take possession of all or any part of any of the
Properties, or which would in any other way affect or restrict the continued
possession, enjoyment or use of any of the Properties.

 

24.14There are no insurance policies effected by the Company or the US
Subsidiary relating to any issue of title affecting any of the Properties.

56

24.15There are, appurtenant to each of the Properties, all rights and easements
necessary for their Current Use and enjoyment (without restriction as to time or
otherwise).

 

24.16There are no development works, redevelopment works or fitting-out works
outstanding in respect of any of the Properties.

 

24.17The unexpired residue of the term granted by each Lease is vested in the
Company or a Subsidiary and is valid and subsisting against all persons,
including any person in whom any superior estate or interest is vested.

 

24.18In relation to each Lease, the Company and the US Subsidiary has and, so
far as the Sellers are aware, the landlord of each Lease has observed and
performed in all material respects all covenants, restrictions, stipulations and
other encumbrances and there has not been (expressly or impliedly) any waiver of
or acquiescence to any breach of them.

 

24.19In relation to each Lease, all principal rent and additional rent and all
other sums payable by the Company or the US Subsidiary under each Lease (Lease
Sums) have been paid as and when they became due and no Lease Sums have been:

 

(a)set off or withheld; or

 

(b)commuted, waived or paid in advance of the due date for payment.

 

24.20No collateral assurances, undertakings or concessions have been made by any
party to any Lease.

 

24.21No premium or principal rent has been taken or accepted from or agreed with
the Company or the US Subsidiary under any Lease beyond what is legally
permitted.

 

24.22Any consents (if required) for the grant of each Lease and for any
assignment of each Lease have been obtained and placed with the documents of
title along with evidence of the registration of grant where required.

 

24.23The Properties are free from:

 

(a)any mortgage, debenture, charge (whether legal or equitable and whether fixed
or floating), rent charge, lien or other right in the nature of security; and

 

(b)any agreement for sale, estate contract, option, right of pre-emption or
right of first refusal,

 

(c)and there is no agreement or commitment to give or create any of them.

 

24.24The Properties are not subject to the payment of any outgoings other than
non-domestic local business rates and water and sewerage charges (and, in the
case of the Leasehold Properties, principal rent, insurance premiums and service
charges) and all outgoings have been paid when due and none is disputed.

 

24.25No written notices, complaints or requirements have been issued or made
(whether formally or informally) by any competent authority or undertaking
exercising statutory or delegated powers in relation to any of the Properties,
the Current Use of the Properties or any machinery, plant or equipment in them.

57

24.26No dispute exists between the Company or the US Subsidiary and the owner or
occupier of any other premises adjacent to or neighbouring the Properties, and
the Sellers do not expect, and is not aware of, any circumstances that may give
rise to any such dispute after the date of this Agreement.

 

25.Accounts

 

25.1The Accounts and the Completion Accounts have been prepared in accordance
with accounting standards, policies, principles and practices generally accepted
in the UK and in accordance with the applicable Law and regulation of that
jurisdiction.

 

25.2The Accounts and the Completion Accounts:

 

(a)make proper provision for all bad and doubtful debts, obsolete or slow-moving
stocks and for depreciation on fixed assets;

 

(b)do not overstate the value of current or fixed assets by an aggregate amount
of more than £10,000 (in which case the whole amount (and not just the amount by
which the £10,000 is exceeded) shall be capable of being included in any
Warranty claim brought by the Buyer); and

 

(c)do not understate any liabilities (whether actual or contingent) by an
aggregate amount of more than £10,000 (in which case the whole amount (and not
just the amount by which the £10,000 is exceeded) shall be capable of being
included in any Warranty claim brought by the Buyer)

 

25.3The Accounts give a true and fair view of the state of affairs of the
Company as at the Accounts Date and of the profit or loss of the Company, for
the period ended on that date.

 

25.4The Accounts and the Completion Accounts do not overstate the profits of the
Company in respect of the period up to which it relates by an aggregate amount
of more than £10,000 (in which case the whole amount (and not just the amount by
which the £10,000 is exceeded) shall be capable of being included in any
Warranty claim brought by the Buyer).

 

25.5The Accounts and the Completion Accounts contain either provision adequate
to cover, or particulars in notes of, all Taxation (including deferred Taxation)
and other known liabilities (whether quantified, contingent, disputed or
otherwise) of the Company in respect of which provision is required to be made
in accordance with UK GAAP as at the Accounts Date (in relation to the Accounts)
and the Completion Accounts Date (in relation to the Completion Accounts).

 

25.6As at the Accounts Date and the Completion Accounts Date, the level of
debtors had not been influenced in any respect by calling in debtors in advance
of the usual debtor days and the level of creditors had not been influenced in
any respect by paying creditors outside the usual creditor days. The Accounts
and the Completion Accounts are not affected by any unusual or non-recurring
items save as stated therein.

58

25.7The Accounts have been filed in accordance with the requirements of all
applicable Laws and regulations.

 

25.8The Accounts and the Completion Accounts have been prepared on a basis
consistent with the audited accounts of, the Company, for the two prior
accounting periods without any change in accounting policies used.

 

25.9Having regard to the purpose for which they are prepared, the Management
Accounts have been prepared on a basis consistent with that employed preparing
the Accounts and fairly represent the assets and liabilities and the profits and
losses, or income and expenditure of the Company as at and to the date for which
they have been prepared.

 

25.10There are no legal restrictions or limitations on any cash held by the
Company or its Subsidiaries which would restrict its use or distribution.

 

26. Financial records

 

26.1All financial records of the Company and the US Subsidiary required by Law
to be maintained:

 

(a)have been properly prepared and maintained;

 

(b)constitute an accurate record of all matters required by Law to appear in
them;

 

(c)do not contain any material inaccuracies or discrepancies; and

 

(d)are in the possession of the Company or the US Subsidiary.

 

26.2No notice has been received by the Company or the US Subsidiary that any of
those records are incorrect or should be rectified.

 

26.3All deeds and documents belonging to the Company and the US Subsidiary are
in the possession of the Company or the US Subsidiary (as the case may be).

 

27. Changes since accounts date

 

27.1Since the Accounts Date:

 

(a)the Company and the US Subsidiary has conducted its business in the normal
course and as a going concern;

 

(b)there has been no material adverse change in the turnover, financial position
or prospects of the Company or the US Subsidiary;

 

(c)Neither the Company nor the US Subsidiary has issued or agreed to issue any
share or loan capital;

 

(d)Neither the Company nor the US Subsidiary has incurred any liabilities, save
as Disclosed in the Accounts or the Management Accounts or incurred in the
ordinary and proper course of business;

59

(e)no dividend or other distribution of profits or assets has been, or agreed to
be, declared, made or paid by the Company or the US Subsidiary;

 

(f)Neither the Company nor the US Subsidiary has borrowed or raised any money or
taken any form of financial security and no capital expenditure has been
incurred on any individual item by the Company or the US Subsidiary in excess of
£10,000 and Neither the Company nor the US Subsidiary has acquired, invested or
disposed of (or agreed to acquire, invest or dispose of) any individual item by
the Company or the US Subsidiary in excess of £10,000;

 

(g)no shareholder resolutions of the Company or the US Subsidiary have been
passed other than as routine business at the annual general meeting;

 

(h)there has been no abnormal increase or reduction of stock-in-trade;

 

(i)none of the stock-in-trade reflected in the Accounts has realised an amount
less than the value placed on it in the Accounts;

 

(j)neither the Company nor the US Subsidiary has offered price reductions or
discounts or allowances on sales of stock-in-trade, or sold stock-in- trade at
less than cost price; and

 

(k)the Company and the US Subsidiary has paid its creditors within the
applicable periods agreed with the relevant creditor and there are no amounts
owing by the Company or any of the Subsidiaries which have been overdue for more
than 60 days.

 

28. Effect of sale on sale shares

 

28.1Neither the acquisition of the Sale Shares by the Buyer nor compliance with
the terms of this Agreement will:

 

(a)cause the Company or the US Subsidiary to lose the benefit of any right or
privilege it presently enjoys; or

 

(b)relieve any person of any obligation to the Company or the US Subsidiary
(whether contractual or otherwise), or enable any person to determine any such
obligation or any right or benefit enjoyed by the Company or the US Subsidiary,
or to exercise any right in respect of the Company or the US Subsidiary; or

 

(c)give rise to, or cause to become exercisable, any right of pre-emption over
the Sale Shares or the issued share capital in the US Subsidiary; or

 

(d)entitle any person to receive from the Company or the US Subsidiary any
finder’s fee, brokerage or other commission in connection with the purchase of
the Sale Shares by the Buyer; or

 

(e)entitle any customer or supplier to cease dealing with the Company or the US
Subsidiary or to reduce substantially its existing level of business or to
change the terms on which it deals with the Company the US Subsidiary; or

 

(f)so far as the Sellers are aware, result in any officer or senior Employee
leaving the Company or the US Subsidiary; or

60

(g)constitute a breach of contract, Law, regulation, order, judgment,
injunction, undertaking, decree or other like imposition by the Sellers, the
Company or the US Subsidiary; or

 

(h)constitute the loss or impairment of or any default under any licence,
authorisation or consent required by the Company or the US Subsidiary for the
purposes of its business; or

 

(i)cause the creation, imposition, crystallisation or enforcement of any
Encumbrance on any of the assets of the Company or the US Subsidiary; or

 

(j)cause any present or future indebtedness of the Company or the US Subsidiary
to become due and payable, or capable of being declared due and payable, prior
to its stated maturity date; or

 

(k)entitle any person to acquire, or affect the entitlement of any person to
acquire shares in the Company or the US Subsidiary.

 

29.Retirement benefits

 

Pension Scheme: the defined contribution personal pension scheme operated by
Aviva with policy number TK064945 on behalf of the Company.

 

29.1Save for the Pension Scheme and for the auto-enrolment obligations detailed
in paragraph 29.4, the Company does not have (nor may it have) so far as the
Sellers are aware any liability or obligation to provide, contribute towards or
meet expenses in relation to any pension, lump sum, death, ill-health,
disability or accident benefits (Relevant Benefits) in respect of its current or
former officers or employees (Pensionable Employees) and no proposal or
announcement has been made to any Employee or Director about the introduction,
continuance, increase or improvement of, or the payment of a contribution
towards, any Relevant Benefits.

 

29.2All contributions paid or remitted by the Company to the Pension Scheme have
been paid or remitted in accordance with statutory requirements.

 

29.3All material documentation relating to the Pension Scheme has been
Disclosed.

 

29.4The Company has complied with its automatic enrolment obligations as
required by the Pensions Act 2008 and associated legislation. Details of this
compliance are set out in the Disclosure Letter, including any documents
relating to the Company’s staging date, copies of any correspondence between the
Company and the Pensions Regulator regarding auto-enrolment, copies of any
records kept in accordance with regulations 5 to 8 of the Employers’ Duties
(Registration and Compliance) Regulations 2010 in respect of the Employees and
details of any Employees who have opted out and copies of any opt-out letters in
respect of those Employees.

 

29.5No notices, fines, or other sanctions have been issued by the Pensions
Regulator and no instances of non-compliance with the automatic enrolment
obligations have been notified to the Pension Regulator in respect of the
Company.

 

29.6So far as the Sellers are aware, the Company has not discriminated against
any Pensionable Employee on any grounds in providing any Relevant Benefits.

61

29.7No claims or complaints have been made, or so far as the Sellers are aware,
are pending or threatened in respect of the provision of (or failure to provide)
any Relevant Benefits by the Company in relation to any of the Pensionable
Employees and as far as Sellers are aware, there is no fact or circumstance
likely to give rise to such claims or complaints.

 

29.8So far as the Sellers are aware, neither the Company nor any person who is
an “associate” of or “connected” with it (as defined in the Insolvency Act 1986)
has, at any time since 19 December 1996, contributed towards, participated in or
had employees who participated in, an occupational pension scheme to which
section 75 of the Pensions Act 1995 applies, has applied or can apply.

 

29.9No one has been employed by the Company as a result of a “relevant transfer”
(for the purposes of either the Transfer of Undertakings (Protection of
Employment) Regulations 1981 (before those Regulations were revoked) or the
Transfer of Undertakings (Protection of Employment) Regulations 2006 which has
or might have resulted in the continuation of any rights or obligations in
relation to or connected with any defined benefit pension scheme.

 

30.The US Subsidiary

 

30.1At the date of this agreement, the US Subsidiary has not carried on any
business, has no assets liabilities or Indebtedness, has no employees and is not
a party to any contracts, except in relation to the US Lease.

 

Part 2. Tax warranties

 

1.GENERAL

 

1.1Provision or reserve has been made in the Accounts in accordance with
generally accepted accounting principles for all Taxation for which the Company
is accountable (whether primarily or otherwise) in respect of all income,
profits or gains earned, accrued or received on or before the Accounts Date or
deemed to have been or treated as earned, accrued or received for Taxation
purposes on or before the Accounts Date and/or in respect of any event occurring
or deemed to have occurred on or before the Accounts Date, including
distributions made on or before the Accounts Date or provided for in the
Accounts.

 

1.2Provision has been made in the Accounts for deferred Taxation in relation to
the Company in accordance with generally accepted accounting principles.

 

1.3Neither the execution nor completion of this agreement, nor any other event
since the Accounts Date, will result in any chargeable asset being deemed to
have been disposed of and re-acquired by any member of the Company’s Group for
Tax purposes or to the clawback of any relief previously given.

 

2.PAYMENT OF TAX

 

2.1Each member of the Company’s Group has properly paid all Taxation (whether of
the UK or elsewhere) prior to Completion which it has become liable to pay prior
to Completion and it has never paid or become liable to pay, nor are there any

62

circumstances which may cause it to become liable to pay, any penalty, fine,
surcharge or interest in connection with Taxation.

 

2.2All Taxation and national insurance contributions and other similar payments
that are deductible and payable under the PAYE system and/or any other Taxation
Statute has, so far as is required to be deducted, been deducted from all
payments made (or treated as made) by any member of the Company’s Group. All
amounts due to be paid to the relevant Tax Authority on or before to the date of
this agreement have been so paid by the due date, including, without limitation,
all Tax chargeable on benefits provided for directors, employees or former
employees of any member of the Company’s Group or any persons required to be
treated as such.

 

3.COMPLIANCE

 

3.1Each member of the Company’s Group has made all returns, claims for relief,
applications, notifications, computations, reports, accounts, statements,
registrations and assessments (whether physically in existence or electronically
stored) (“Returns”) it is required by Law to make. All Returns have been
properly submitted by the relevant Company within any relevant time limits to
each relevant Taxation Authority and the Returns give full disclosure of all
material facts and circumstances and are not likely to be the subject of any
question or dispute with any Taxation Authority.

 

3.2Each member of the Company’s Group has prepared, kept and preserved records
it is required to keep in relation to Taxation to enable it to make and complete
returns for Taxation purposes and to calculate the liability to Taxation or the
amount of a Relief arising on the disposal of any asset owned at the Accounts
Date or acquired since the Accounts Date but before Completion and otherwise as
required by Law.

 

3.3No member of the Company’s Group is involved in any dispute with any Taxation
Authority nor have any of them, within the past 12 months, been subject to any
non-routine visit, audit, investigation, discovery or access order by any
Taxation Authority. The Sellers are not aware of any circumstances existing
which make it likely that a visit, audit, investigation, discovery or access
order will be made in the next 12 months. No Taxation Authority has investigated
or indicated in writing that it may investigate the Taxation affairs of any
member of the Company’s Group and so far as the Sellers are aware no member of
the Company’s Group is subject to any ongoing investigation.

 

3.4All particulars furnished to any Taxation Authority in connection with an
application for any consent or clearance made on behalf of or affecting any
member of the Company’s Group during the last six years were made to the
appropriate office, section, department or body and disclosed all material
facts, circumstances and (where appropriate) Law material to the decision of the
relevant Taxation Authority and any such consent or clearance given remains
valid and effective and any transaction for which such consent or clearance has
previously been obtained has been carried into effect (if at all) in all
material respects in accordance with the terms of the relevant application,
consent or clearance.

 

3.5The amount of Tax chargeable on any member of the Company’s Group during any
accounting period ending in the last six years (or in respect of the accounting
period current at Completion) has not depended on any concession, agreements or

63

arrangements with any Taxation Authority (other than published extra-statutory
concessions, statements of practice and statements of a similar nature).

 

3.6No member of the Company’s Group is liable nor may become liable to pay, or
make reimbursement or indemnity in respect of, any Taxation (or amounts
corresponding to any Taxation) payable by or chargeable on or attributable to
any other person, whether in consequence of the failure by that person to
discharge that Taxation within any specified period or otherwise, where such
Taxation relates to profits, income, gains or a transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur on or prior to
Completion.

 

3.7Each member of the Company’s Group has duly submitted all claims, disclaimers
and elections the making of which has been assumed for the purposes of the
Accounts. No such claims, disclaimers or elections are likely so far as the
Sellers are aware to be disputed or withdrawn.

 

4.CORPORATION TAX/CAPITAL ALLOWANCES

 

4.1Each member of the Company’s Group has sufficient records to determine
whether, on a disposal of all of its assets by any member of the Company’s Group
for (in the case of each asset owned by the relevant member of the Company’s
Group at the Accounts Date) a consideration equal to the value attributed to
that asset in preparing the Accounts or (in the case of each asset acquired
since the Accounts Date) a consideration equal to the actual consideration given
for the acquisition then (in the case of each asset so owned) the liability to
Tax (if any) which would be incurred by the relevant member of the Company’s
Group would not exceed the amount (if any) taken into account in respect of that
asset in computing the liability of the relevant member of the Company’s Group
to deferred Tax as provided for in the Accounts and (in the case of assets so
acquired) whether any Tax Liability would be incurred by any member of the
Company’s Group in respect of that asset.

 

4.2No member of the Company’s Group has claimed any first year tax credits
within the meaning of Schedule A1 of CAA 2001, business renovation allowances
under Part 3 of CAA 2001 or flat conversion allowances under Part 4A of CAA
2001.

 

4.3No member of the Company’s Group has made any distribution or deemed
distribution (or will be deemed to have made) within the meaning of section 1000
or sections 1022-1027 of CTA 2010 save for any dividend disclosed in the
Accounts nor is it bound to make such a distribution.

 

4.4The Company has not, within the period of six years preceding Completion,
been engaged in, nor been a party to, any of the transactions set out in Chapter
5 of Part 23 of CTA 2010, nor has it made or received a chargeable payment as
defined in Section 1086 of CTA 2010.

 

4.5The Company has not received, and is not likely to receive, a dividend which
is not exempt within the provisions set out in Chapters 2 and 3 of Part 9A of
CTA 2009.

 

4.6Where any rents, interest, annual payments or other sums of an income nature,
paid by any Member of the Company’s Group have been treated as wholly or
partially

64

allowable as deductions, management expenses or charges in computing taxable
profits for Taxation purposes, this treatment has been correct.

 

5.CLOSE COMPANIES

 

5.1Any loans or advances made, or agreed to be made, by the Company within
sections 455, 459 and 460 of CTA 2010 have been Disclosed in the Disclosure
letter. The Company has not released or written off, or agreed to release or
write off, the whole or any part of any such loans or advances.

 

5.2No Member of the Company’s Group has ever been a close investment-holding
company (as defined in section 34 of CTA 2010, for financial years before the
financial year commencing 1 April 2015).

 

6.TAX AVOIDANCE

 

6.1No member of the Company’s Group has entered into or been a party to any
scheme, arrangement or transaction designed wholly or mainly, or containing
artificial steps or stages designed wholly or mainly, for the purpose of
avoiding or deferring Taxation or reducing a liability to Taxation.

 

6.2No member of the Company’s Group has been party to any arrangements,
transaction or series of transactions which it has or may become liable to
notify to any Taxation Authority under any legislation requiring the disclosure
of tax avoidance schemes.

 

7.VALUE ADDED TAX

 

7.1The Company is a taxable person for the purposes of VATA 1994 and/or Council
Directive 2006/112/EC and is duly registered for the purposes of VATA 1994 and
has been registered at all times since inception. The Company has a fixed
establishment for VAT purposes in Germany and is duly registered in Germany in
accordance to the German VAT Act (Umsatzsteuergesetz).

 

7.2Neither the Company nor any relevant associate (within the meaning of
paragraph 3(7) Schedule 10 VATA 1994) has made any election under paragraph 2(1)
Schedule 10 VATA 1994 in respect of any land in, over or in respect of which the
Company has any interest, right or licence to occupy and the Company has no
obligation to make such an election.

 

7.3The Company does not own nor has at any time within the period of ten years
preceding the date of this Agreement owned any assets which are capital items
subject to the Capital Goods Scheme under Part XV of the VAT Regulations 1995.

 

8.EMPLOYEES

 

No profit sharing, share option, share incentive or bonus schemes or other
employment-related schemes or arrangements are currently operated by the Company
for the benefit of their current or former officers or employees.

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9.INTERNATIONAL

 

9.1The Company was incorporated in and is and always has been resident only in
the United Kingdom for Taxation purposes. The Company has not, at any time in
the past seven years, been treated as resident in any other jurisdiction for the
purposes of any double taxation arrangements having effect under Clause 18 of
CTA 2009 and Clause 2 of TIOPA 2010 or for any other tax purpose.

 

9.2The Subsidiary was incorporated in and is and always has been resident only
in the United States of America for Taxation purposes and for the purposes of
any double taxation agreement. The Subsidiary is not liable to, and has not at
any time incurred any, or is required to be registered for any Taxation in any
jurisdiction other than the United Kingdom or had a branch outside the United
Kingdom or any permanent establishment outside the United Kingdom.

 

9.3Neither the Company nor the Subsidiary is an agent or permanent establishment
of another company, person, business or enterprise for the purpose of assessing
such company, person, business or enterprise to Tax in the country of residence
of the Company or any Subsidiary.

 

9.4Neither the Company nor the Subsidiary is, or has been within the past seven
years, a dual resident company.

 

10.GROUPS OF COMPANIES

 

10.1The Company has not within the seven years prior to Completion been a 51 per
cent subsidiary of any person within the meaning of section 1154 CTA 2010
(subsidiaries) or otherwise been a member of a group of companies for tax
purposes.

 

11.STAMP DUTIES

 

11.1There is no instrument to which any member of the Company’s Group is a party
and which is necessary to establish the relevant Company’s rights or the
relevant Company’s title to any asset, which is liable to stamp duty and which
has not been duly stamped, or which would attract stamp duty, interest or
penalties if brought into the United Kingdom.

 

11.2The Company is not nor may become liable to pay stamp duty land tax after
Completion by reference to any land transaction, as defined in section 43
Finance Act 2003, to which it has been a party prior to Completion.

 

12.LOAN RELATIONSHIPS

 

12.1There are no outstanding debts owed to or by the Company, or any securities
issued by the Company or the Company owns or in which it has an interest, which
will not be repaid at Completion, other than trade debts which fall within the
exemption in section 251(1) TCGA 1992 and which do not arise out of loan
relationships of the Company for the purposes of section 302 (1) and (2) CTA
2009.

 

12.2The Company is not, and has not in the six years prior to the date of this
agreement, been party to a debtor relationship (within the meaning of section
302(6) of CTA 2009), to which Chapter 8 of Part 5 of CTA 2009 applies or may
apply.

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13.TRANSFER PRICING

 

13.1All transactions or arrangements made by any member of the Company’s Group
have been made on arm’s length terms. There are no circumstances in which Part 4
of TIOPA 2010 or any other rule or provision could apply causing any Taxation
Authority to make an adjustment to the terms on which such transaction or
arrangement is treated as being made for Taxation purposes. No notice, enquiry
or adjustment has been made by any Taxation Authority in connection with any
such transactions or arrangements.

 

13.2In relation to each transaction for the supply of goods or services or the
lending or borrowing of money into which any member of the Company’s Group has
entered with a party with which it was connected, the relevant member of the
Company’s Group has documentary evidence of the process and policy used to
establish that arm’s length terms applied.

 

14.CONSTRUCTION INDUSTRY SUB-CONTRACTORS’ SCHEME

 

14.1The Company is not required to register as a Contractor under the provisions
of Clause 59 of the Finance Act 2004 and the expenditure incurred by each member
of the Company’s Group on construction, refurbishment and fitting-out works in
each of the three years ending on 31 December 2016 is less than £1 million.

 

15.INHERITANCE TAX

 

15.1The Company has not:

 

(a)made any transfer of value within Clauses 94 and 202 of IHTA 1984; or

 

(b)received any value such that liability might arise under Clause 199 of IHTA
1984; or

 

(c)been a party to associated operations in relation to a transfer of value as
defined by Clause 268 of IHTA 1984.

 

15.2There is no unsatisfied liability to inheritance tax attached to, or
attributable to, the Shares or any asset of the Company. None of them are
subject to any Inland Revenue charge as mentioned in Clauses 237 and 238 of IHTA
1984.

 

No asset owned by the Company or the Shares, are subject to any power of sale,
mortgage or charge by virtue of Clause are liable to be 212(1) of IHTA 1984.

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Schedule 5. Tax covenant

 

1.Definitions and Interpretation

 

1.1The definitions and rules of interpretation in this paragraph apply in this
Tax Covenant.

 

1.2Defined terms:

 

“Buyer Associate” means:

 

(a)the Buyer;

 

(b)any member of the Company’s Group; and

 

(c)any company or person (other than any member of the Company’s Group) that may
be treated for the purposes of any Taxation as being at any time after
Completion either a member of the same group of companies as the Buyer or any
member of the Company’s Group or otherwise associated with the Buyer or the
Company;

 

“Buyer’s Relief” means any Relief or right to repayment of Taxation (including
any repayment supplement) which:

 

(a)arises to any member of the Company’s Group, to the extent the Relief arises
in respect of an Event occurring after Completion or in the ordinary course of
business between the Completion Accounts Date and Completion; or

 

(b)arises to any Buyer Associate (other than any member of the Company’s Group)
(whenever such Relief or right to repayment of Taxation arises); or

 

(c)is treated as an asset of any member of the Company’s Group in the Completion
Accounts or is taken into account in computing any deferred Tax asset which
appears in the Completion Accounts or which is taken into account in computing
and so reducing or eliminating any provision for Tax or deferred Tax which
appears in the Completion Accounts (or which but for such Relief would have
appeared in the Completion Accounts);

 

“Dispute” means any Tax Claim where conduct is delegated to the Sellers pursuant
to sub-paragraph 8.4 of this Tax Covenant or where any member of the Company’s
Group is requested to take any action pursuant to sub-paragraph 8.2 of this Tax
Covenant;

 

“Event” means (without limitation) the expiry of a period of time, any member of
the Company’s Group becoming or ceasing to be associated or connected with any
other person for any Tax purpose, the earning, receipt or accrual for any Tax
purpose of any income, profits or gains, the incurring of any loss or
expenditure and any payment, transaction, act, omission or occurrence of
whatever nature whether or not any member of the Company’s Group or the Buyer is
a party thereto and for the avoidance of doubt includes the execution of this
Agreement and completion of the sale of the Sale Shares to the Buyer, a change
in residence, the death or the winding up or the dissolution of any person and
the non-compliance with German tax registration and references to an Event
occurring on or before Completion shall include an Event deemed, pursuant to any

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Taxation Statute, to occur or which is otherwise treated or regarded as
occurring on or before Completion;

 

“IHT Liability” means:

 

(a)any liability of any member of the Company’s Group that arises as a result of
a transfer of value occurring or being deemed to occur on or before Completion
(whether or not in conjunction with the death of any person whensoever
occurring);

 

(b)any amount of inheritance tax in respect of which, as at Completion, any
Taxation Authority or any other person has a charge on or a power to sell,
mortgage or charge any of the Shares or assets of any member of the Company’s
Group; or

 

(c)any amount of inheritance tax for which any member of the Company’s Group
becomes primarily or secondarily liable after Completion as a result of the
death of any person or which gives rise after Completion to a charge on or to a
power to sell, mortgage or charge any of the Shares or assets of any member of
the Company’s Group; and

 

(d)in determining for the purposes of this Tax Covenant whether a charge on or
power to sell, mortgage or charge any of the Shares or assets of any member of
the Company’s Group exists at any time the fact that any inheritance tax is not
yet payable or may be paid by instalments shall be disregarded and such
inheritance tax shall be treated as becoming due and a charge or power to sell,
mortgage or charge as arising, on the date of the transfer of value or other
date or event on or in respect of which it becomes payable or arises and the
provisions of section 213 of the IHTA 1984 shall not apply;

 

“Liability for Taxation” means:

 

(a)any liability of any member of the Company’s Group to make a payment of
Taxation whether or not the same is primarily payable by any member of the
Company’s Group and whether or not any member of the Company’s Group has or may
have any right of reimbursement against any other person or persons;

 

(b)the Loss of any Relief where such Relief was treated as an asset of any
member of the Company’s Group in the Completion Accounts or was taken into
account in computing any deferred Tax asset which appears in the Completion
Accounts or where such Relief was taken into account in computing and so
reducing or eliminating any provision for deferred Tax which appears in the
Completion Accounts (or which but for such Relief would have appeared in the
Completion Accounts) in which case the amount of the Liability for Taxation
shall be the amount of Taxation which would (on the basis of tax rates current
at the date of such Loss) have been saved but for such Loss assuming for this
purpose that the relevant member of the Company’s Group had sufficient profits
or was otherwise in a position to use the Relief;

 

(c)the Loss of any right to repayment of Taxation (including any repayment
supplement) which was treated as an asset in the Completion Accounts of any
member of the Company’s Group in which case the amount of the Liability for

69

Taxation shall be the amount of the right to repayment and any related repayment
supplement; and

 

(d)the set-off or use against gross receipts, income, profits or gains earned,
accrued or received or against any Tax chargeable in respect of an Event
occurring on or before Completion of a Buyer’s Relief in circumstances where,
but for such set-off or use, a member of the Company’s Group would have had a
liability to make a payment of or in respect of Taxation for which the Buyer
would have been able to make a claim against the Sellers under this Tax Covenant
in which case the amount of the Liability for Taxation shall be the amount of
Taxation saved by the relevant member of the Company’s Group as a result of such
set-off or use;

 

“Loss” means the unavailability, non-existence, reduction, modification, loss,
counteraction, nullification, disallowance, withdrawal or clawback for whatever
reason;

 

“Relief” means any loss, relief, allowance, credit, exemption or set-off in
respect of Taxation or any deduction in computing gross receipts, income,
profits or gains for the purposes of Taxation (including any interest and/or
repayment supplement in respect of such Tax);

 

“Seller Associate” means:

 

(a)a Seller;

 

(b)any company or person (other than any member of the Company’s Group) that may
be treated for the purposes of any Taxation at any time (whether before, on or
after Completion) as being associated with the Sellers (or any of them); and

 

(c)any company or person (other than any member of the Company’s Group) that may
be treated for the purposes of any Taxation as being at any time prior to
Completion associated with any member of the Company’s Group;

 

“Tax” or ”Taxation” means:

 

(a)all forms of direct and indirect taxation and statutory, governmental, state,
federal, provincial, local government or municipal charges, duties (including
stamp duties), imposts, contributions, levies, tax assessment duties,
withholdings or liabilities wherever chargeable and whether of the UK or any
other jurisdiction and whether levied by reference to income, profits, gains,
net wealth, asset values, turnover, added value or other measure (including
without limitation national insurance and social security contributions and any
other payroll taxes and including local authority rates) however imposed
(whether by way of a withholding or deduction for on an account of tax or
otherwise); and

 

(b)any penalty, fine, surcharge, interest, charges or costs payable in
connection with any Taxation within sub-paragraph (a) above;

 

“Taxation Authority”  means HM Revenue & Customs, the Inland Revenue, Customs &
Excise, the Department for Work and Pensions and any other Governmental
Authority or other authority whatsoever competent to impose any Taxation whether
in the United Kingdom or elsewhere;

70

“Taxation Statute”  means any Law wheresoever enacted or issued, coming into
force or entered into providing for or imposing any Taxation and shall include
orders, regulations, instruments, bylaws or other subordinate legislation made
under the relevant statute or statutory provision and any Law or provision which
amends, extends, consolidates or replaces the same or which has been amended,
extended, consolidated or replaced by the same;

 

“Tax Claim”  means any assessment, self-assessment, notice, demand, letter or
other document issued or action taken by or on behalf of any Taxation Authority
from which it appears that any member of the Company’s Group or the Buyer is or
may be subject to a Liability for Taxation or other liability in respect of
which the Sellers are or may be liable under this Tax Covenant; and

 

“VAT”  means value added tax whether of the UK or elsewhere and any equivalent
tax on sales or turnover and any tax supplementing or replacing the same.

 

1.3The headings and sub-headings are for convenience only and shall not affect
the construction of this Tax Covenant.

 

1.4References to gross receipts, income, profits or gains earned, accrued or
received shall include any gross receipts, income, profits or gains deemed
pursuant to the relevant Taxation Statute to have been or treated or regarded as
earned, accrued or received.

 

1.5Any reference to something occurring in the ordinary course of business shall
not include:

 

(a)anything that involves, or leads directly or indirectly to, any liability of
any member of the Company’s Group to Tax that is, or but for an election would
have been, the primary liability of, or properly attributable to, or due from
another person (other than a member of the Purchaser’s Tax Group or any other
member of the Company’s Group);

 

(b)anything that relates to or involves the acquisition or disposal of an asset
or the supply of services (including the lending of money, or the hiring or
licensing of tangible or intangible property) in a transaction which is not
entered into on arm’s length terms;

 

(c)anything that relates to or involves the making of a distribution for Tax
purposes, the creation, cancellation or re-organisation of share or loan
capital, the creation, cancellation or repayment of any connected-party debt or
any member of the Company’s Group becoming or ceasing to be or being treated as
ceasing to be a member of a group of companies or becoming or ceasing to be
associated or connected with any other company for any Tax purposes;

 

(d)anything which relates to any scheme, transaction or arrangement designed
primarily or wholly or containing steps or stages primarily or wholly for the
purpose of avoiding a Liability for Taxation;

 

(e)anything that involves, or leads to, a change of residence of the Company for
Tax purposes; or

71

(f)any liability arising as a result of the failure to properly deduct or
account for Tax, or to comply with the provisions of any Tax legislation or
subordinate legislation (including regulations) and any act, omission or
transaction that gives rise to any fine, penalty, surcharge, interest or other
imposition relating to any Tax.

 

1.6Any stamp duty which is charged on any document, or in the case of a document
which is outside the UK, any stamp duty which would be charged on the document
if it were brought into the UK, which is necessary to establish the title of any
member of the Company’s Group to any asset, and any interest fine or penalty
relating to such stamp duty, shall be deemed to be a liability of the relevant
member of the Company’s Group to make an actual payment of Taxation in
consequence of an Event arising on the last day on which it would have been
necessary to pay such stamp duty in order to avoid any liability to interest or
penalties arising on it.

 

2.Covenant

 

The Sellers covenant with the Buyer that, subject to the provisions of this Tax
Covenant, the Sellers shall be jointly and severally liable to pay to the Buyer
an amount equal to:

 

2.1any Liability for Taxation resulting from or by reference to any Event
occurring on or before Completion or in respect of any gross receipts, income,
profits or gains earned, accrued or received by any member of the Company’s
Group on or before Completion;

 

2.2any Liability for Taxation falling within sub-paragraph (d) of that
definition (the set-off or use of a Buyer’s Relief);

 

2.3any Liability for Taxation which arises at any time (being a liability for
any Group Company to account for income tax or National Insurance contributions)
in respect of the grant, exercise, surrender, exchange or other disposal of an
option or other right to acquire securities or in respect of any acquisition,
holding or disposal of employment-related securities (as defined for the
purposes of Part 7 of ITEPA 2003), in each case, where the acquisition of the
security or the grant of the option or other right to acquire the security
occurred exclusively before Completion;

 

2.4any Liability for Taxation that arises at any time under Part 7A of ITEPA
2003 including any liability arising as a consequence of any payments or loans
made to, any assets made available or transferred to, or any assets earmarked,
however informally, for the benefit of, any employee or former employee of any
member of the Company’s Group, or for the benefit of any relevant person, by an
employee benefit trust or another third party where the arrangement giving rise
to the charge was entered into at a time when the third party was acting on the
instructions of, or for the benefit of, the Sellers or an associate of any of
the Sellers;

 

2.5any IHT Liability;

 

2.6any Liability for Taxation, including liability for payments in respect of
Tax, that arises solely due to the relationship for Tax purposes before
Completion of any member of the Company’s Group with any person other than a
Buyer Associate, whether arising before or after Completion;

72

2.7any Liability for Taxation of any member of the Company’s Group which arises
either before or after Completion in consequence of any liability to account for
income tax or NICs (or social security contributions or any other payroll taxes)
arising in respect of any payments made prior to Completion to Veselin Ivanov
and/or Muhammad Fadhli and/or Brian Meads who have been engaged by the Company
as self-employed consultants;

 

2.8any Liability for Tax that is a liability of the Company to account for
income tax or NICs arising in respect of any payments to the Sellers under this
agreement that shall include, for the avoidance of doubt, any payments in the
nature of deferred consideration (whether and without limitation satisfied in
cash, shares or loan notes);

 

2.9all legal and accounting costs and expenses properly and reasonably incurred
and payable by any member of the Company’s Group or the Buyer in connection with
any action taken to avoid resist or settle any Tax Claim, Liability for Taxation
or other liability under this paragraph 2 or otherwise taking or defending any
action under this Tax Covenant.

 

3.LIMITATION OF SELLERS’ LIABILITY

 

3.1The covenant given by paragraph 2 above shall not cover any Liability for
Taxation or under the Tax Warranties:

 

(a)to the extent that provision or reserve in respect thereof (other than a
deferred taxation provision) is made in the Completion Accounts or the Accounts;

 

(b)to the extent recovery (less costs and expenses) has been made by the Buyer
under any other provision of this Agreement in respect of the same loss, damage
or deficiency;

 

(c)to the extent that such Liability for Taxation arises or is increased as a
result only of any change in Law (other than a change targeted specifically at
countering a tax avoidance scheme) announced and coming into force after the
date of Completion with retrospective effect;

 

(d)to the extent that such liability arises as a result of a change after
Completion in any accounting policy of any member of the Company’s Group (other
than any change necessary to comply with the Law or intended to bring the
accounting policy into line with generally accepted accounting practice as at
Completion);

 

(e)to the extent that such Liability for Taxation would not have arisen but for
a voluntary act or transaction of the Buyer or any member of the Company’s Group
after the date hereof otherwise than in the ordinary course of business and
otherwise than as compelled by Law or pursuant to a legally binding obligation
created on or before the date hereof and where the Buyer knew (or ought
reasonably to have known) that such action or transaction would give rise to
such liability;

 

(f)to the extent that such liability would not have arisen or would have been
reduced but for a failure or omission on the part of the Buyer or any member of
the Company’s Group after Completion to make any election, claim, surrender

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or disclaimer, or give any notice or consent, in relation to Taxation, the
anticipated making giving or doing of which was taken into account in computing
any provision or reserve for Taxation in preparing the Completion Accounts,
provided that sufficient information in respect of the making or giving of which
was notified by the Sellers in writing to the Buyer within a reasonable time
before the date for doing so;

 

(g)to the extent that any Relief (other than a Buyer’s Relief) is made available
to any member of the Company’s Group at no cost and is or may be actually used
by the Company or any member of the Company’s Group to set against or otherwise
mitigate the Liability for Taxation, and for the purposes of this paragraph
3.1(g) it shall be assumed that such a Relief (other than a Buyer’s Relief) is
or may be actually used to the extent that such use is allowed by law and to the
extent that it is reasonable to do so, provided that the Relief in question
shall be disregarded for the purposes of this exclusion if the use of such
Relief to eliminate or reduce the Liability for Taxation would result in any
Buyer’s Relief otherwise being lost;

 

(h)to the extent that such liability arises directly or indirectly as a result
of the cessation of, or any change in the nature or conduct of, any business
carried on by a member of the Company’s Group occurring after Completion;

 

(i)to the extent that such liability arises or is increased due to the fact that
any instalment of corporation tax (within the meaning of CTA 2010) paid prior to
Completion pursuant to the Corporation Tax (Instalment Payments) Regulations
1998 (SI 1998/3175) is insufficient or such liability comprises interest or
penalties arising by virtue of an underpayment of tax prior to Completion, where
the payments made prior to Completion (or the decision to make no payment at
all) would not subsequently have proved to have been insufficient but for the
profits and gains earned by the Group Company after Completion proving to be
greater than those reasonably expected (based on a bona fide estimate) at the
date of the relevant instalment payment to be earned, accrued or received by the
Group Company after Completion;

 

(j)to the extent that such liability arises by virtue of any claim, election,
surrender or disclaimer made after Completion by or on behalf of the Buyer
(including the disclaimer of the whole or part of any Relief) other than where
the making, giving or doing of such thing is taken into account in the
preparation of the Completion Accounts (comprising the consolidated statements
of the financial position of the Company and the US Subsidiary); or

 

(k)to the extent that such liability has been made good by insurers or otherwise
compensated for without cost to the Buyer or any Buyer Associate; or

 

(l)to the extent that such liability arises or is increased as a consequence of
any failure by the Buyer or (after Completion) by a member of the Company’s
Group to comply with its obligations under  paragraph 8 (Conduct of Claims) or
paragraph 7 (Tax Returns); or

 

(m)to the extent that such Liability for Taxation arises as a result of an Event
occurring or income, profits or gains earned, received or accrued in the
ordinary course of business between the Completion Accounts Date and Completion,

74

provided that the profits in question have not been distributed by way of
dividend by the Company as at Completion.

 

4.PAYMENT DATE AND INTEREST

 

4.1Where the Sellers are liable to make any payment under paragraph 2, the due
date for the making of that payment by way of cleared immediately available
funds (the “Due Date”) shall be the date falling 3 Business Days after the Buyer
has served a notice on the Sellers demanding that payment or, if later:

 

(a)in a case that involves a Liability for Taxation falling within sub-paragraph
(a) of that definition (an actual payment of Taxation) 5 Business Days prior to
the last date on which the Taxation in question has to be paid to the relevant
Taxation Authority in order to prevent a liability to interest or a fine,
surcharge or penalty from arising in respect of the Liability for Taxation in
question; or

 

(b)in any case that involves a Liability for Taxation falling within
sub-paragraph (b) of that definition (the Loss of any Relief), 5 Business Days
prior to the last date upon which Taxation is or would have been required to be
paid to the relevant Taxation Authority in respect of the period in which the
Loss of the Relief occurs (assuming for this purpose that any member of the
Company’s Group had sufficient profits or was otherwise in a position to use the
Relief); or

 

(c)in any case that involves a Liability for Taxation falling within
sub-paragraph (c) of that definition (the Loss of any right to repayment of
Taxation), the date falling 3 Business Days after the Buyer notifies the Sellers
that the loss of the right to repayment has occurred; or

 

(d)in any case that involves a Liability for Taxation falling within
sub-paragraph (d) of that definition (the set-off or use of a Buyer’s Relief),
the date upon which the Taxation saved by any member of the Company’s Group
would have been required to be paid to the relevant Taxation Authority.

 

4.2Any dispute as to the amount specified in any notice served on the Sellers
under sub-paragraph 4.1 or as to the Due Date shall, unless the parties agree
otherwise, be determined by the auditors of any member of the Company’s Group
for the time being, acting as expert and not as arbitrator (the costs of that
determination being shared equally by the Sellers and the Buyer).

 

4.3If any sum required to be paid by the Sellers under this Tax Covenant is not
paid on the Due Date, then, except to the extent that the Sellers’ liability
under paragraph 2 compensates the Buyer for the late payment by virtue of it
extending to interest and penalties, such sum shall bear interest (which shall
accrue after as well as before any judgment for the same) at the rate of 4 per
cent per annum over the base rate from time to time of Barclays Bank plc or (in
the absence thereof) at such similar rate as the Buyer shall select. The
interest will accrue from day to day on the basis of the actual number of days
elapsed and a 365-day year.

 

5.Recovery from other persons

 

5.1Where the Buyer or any member of the Company’s Group is or becomes entitled
to recover from some other person not being a Buyer Associate (but including any

75

Taxation Authority) any amount which is referable to a Liability for Taxation
which has resulted in a payment being made by the Sellers under this Tax
Covenant, the Buyer shall or shall procure that the relevant member of the
Company’s Group shall:

 

(a)notify the Sellers of its entitlement; and

 

(b)if required by the Sellers and, subject to the Buyer and any member of the
Company’s Group being indemnified by the Sellers against any Taxation that may
be suffered on receipt of that amount and any costs and expenses incurred in
recovering that amount, take or procure that the relevant member of the
Company’s Group takes all reasonable endeavours to enforce that recovery,
provided that the Buyer and any member of the Company’s Group shall not be
required to take any action either (i) against any current employees of the
Group Companies, which have not given a contractual right to any member of the
Company’s Group to do so, or (ii) which, in the Buyer’s reasonable opinion, is
likely to be materially prejudicial to its or any member of the Company’s
Group’s commercial relationship with that or any other person.

 

5.2If the Buyer or any member of the Company’s Group recovers any amount
referred to in this paragraph 6 then the Buyer shall account to the Sellers for
the lesser of:

 

(a)any amount recovered (including any related interest or related repayment
supplement) less any Taxation suffered (or that would be suffered ignoring the
availability of any Buyer’s Relief) in respect of that amount and less any costs
and expenses incurred in recovering that amount (save to the extent that that
amount has already been made good by the Sellers under this Tax Covenant or
under the Sale Agreement); and

 

(b)the amount paid by the Sellers under paragraph 2 in respect of the Liability
for Taxation in question.

 

6.Overprovisions and Savings

 

6.1If the auditors of any member of the Company’s Group for the time being (the
“Auditors”) (at the Sellers’ request and expense) determine in writing:

 

(a)that any provision for Taxation in the Completion Accounts (other than a
provision for deferred Taxation) is an overprovision (an “Overprovision”) except
where that overprovision arises due to:

 

(A)a change in law;

 

(B)a change in the accounting bases on which the Company values its assets; or

 

(C)a voluntary act or omission of the Buyer,

 

that, in each case, occurs after Completion;

 

(b)that any Liability for Taxation which has resulted in a payment being made by
the Sellers under this Tax Covenant has given rise to a repayment of any
Taxation or a Relief for the Buyer or any member of the Company’s Group

76

which is attributable to the Liability for Taxation in question and which would
not otherwise have arisen (a “Saving”);

 

then the Overprovision or Saving will be dealt with in accordance with this
paragraph 7.

 

6.2The amount of the Overprovision or Saving (as determined by the Auditors)
less any costs incurred by any member of the Company’s Group or the Buyer in
obtaining the Overprovision or Saving:

 

(a)shall first be set-off against any payment then due from the Sellers under
this Tax Covenant;

 

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

 

(c)to the extent that such excess as referred to in paragraph (b) above is not
exhausted, the remainder of that excess shall be carried forward and set off
against any future payment or payments which become due from the Sellers under
this Tax Covenant.

 

6.3Where any determination in relation to an Overprovision or Saving has been
made, the Sellers or the Buyer may request the Auditors (at the expense of the
party making the request) to review such determination in the light of all
relevant circumstances including facts which have become known only since such
determination and to determine whether such determination remains correct and
whether the amount that was the subject of such determination should be amended.
If the Auditors determine that the amount should be amended, an adjusting
payment shall be made as soon as practicable by the Sellers or (as the case may
be) to the Sellers.

 

7.Corporation Tax Returns

 

7.1Subject to sub-paragraph 7.2 and to sub-paragraph 7.4, for all accounting
periods ended on or prior to Completion, the Sellers or their duly authorised
agents shall, at the Company’s sole cost and expense (to the extent that an
appropriate provision has been made in the Completion Accounts for the
preparation of such returns), prepare the tax returns and computations of any
member of the Company’s Group for accounting periods ending on or before
Completion (the “Pre Completion Returns”) and shall prepare all related
documentation and correspondence and shall have conduct of the negotiation and
agreement of the Pre Completion Returns.

 

7.2The Sellers shall or shall procure that their duly authorised agents shall:

 

(a)submit any Pre Completion Return which has not before Completion been
submitted to the applicable Taxation Authority to the Buyer at least 30 days
before the date upon which it is required to be filed with the applicable
Taxation Authority without incurring interest and penalties;

77

(b)submit copies of all other correspondence and other documents that are to be
submitted to any Taxation Authority in connection with the Pre Completion
Returns to the Buyer at least 10 Business Days before submission;

 

(c)take account of all reasonable comments made by the Buyer in relation to the
Pre Completion Returns, correspondence and other documents;

 

(d)not without the prior written consent of the Buyer (not to be unreasonably
withheld or delayed) transmit any communication (written or otherwise) to any
Taxation Authority or agree any matter with any Taxation Authority;

 

(e)keep the Buyer fully and promptly informed of the progress of any
negotiations with any Taxation Authority; and

 

(f)take all reasonable steps and use its best endeavours to ensure that the Pre
Completion Returns are prepared and agreed with the applicable Taxation
Authority as soon as possible.

 

7.3The Buyer shall procure that the Pre Completion Returns and other
documentation mentioned in sub-paragraph 7.1 shall, subject to sub-paragraph 7.2
to the extent not authorised signed or submitted before Completion, be
authorised, signed and submitted to the applicable Taxation Authority without
amendment or with such amendments as the Buyer reasonably considers to be
necessary and shall give the Sellers or their agents all such assistance as may
reasonably be required (at the Sellers’ cost and expense) to agree the Pre
Completion Returns with the applicable Taxation Authority PROVIDED THAT the
Buyer shall not be obliged to incur any material cost or expense in doing so or
to take any such action in relation to any Pre Completion Return that is not
full, true and accurate in all respects.

 

7.4The Sellers rights under this paragraph 7 shall cease if in the reasonable
opinion of the Buyer:

 

(a)the Sellers are in material non-remediable breach of their obligations under
sub-paragraph 7.2 or are in material remediable breach and fail to remedy such
breach within 14 days following service by the Buyer of a written notice
specifying the breach and requiring it to be remedied; or

 

(b)any Pre Completion Return or other document prepared by or on behalf of the
Sellers pursuant to sub-paragraph 7.2 is false, misleading, incomplete or
inaccurate in any material respect.

 

7.5The Buyer or its duly authorised agents shall prepare the tax returns and
computations for all accounting periods which end after Completion (including
for the avoidance of doubt the accounting period which starts before and ends
after Completion).

 

7.6For the avoidance of doubt, this paragraph 7 shall not apply or shall cease
to apply to any matter that is or becomes the subject of a Tax Claim and that is
therefore governed by paragraph 8 of this Tax Covenant.

78

8.Disputes and Conduct of Tax Claims

 

8.1If the Buyer or any member of the Company’s Group shall receive notice of or
become aware of a Tax Claim, the Buyer shall give or shall procure that notice
in writing is given to the Sellers as soon as reasonably practicable and in the
case of any Tax Claim in respect of which appeal or response is subject to a
time limit, within 20 Business Days of such limit.

 

8.2Subject to sub-paragraph 8.3, if the Sellers shall indemnify the relevant
member of the Company’s Group and/or (as the case shall require) the Buyer to
the Buyer’s reasonable satisfaction against all liabilities, costs, damages or
expenses which may be incurred thereby including any additional Liability for
Taxation, the Buyer shall and shall procure that the relevant member of the
Company’s Group shall take such action as the Sellers may reasonably request by
notice in writing given to the relevant member of the Company’s Group and the
Buyer to avoid, dispute, defend, resist, appeal, compromise or settle such Tax
Claim.

 

8.3The Sellers’ rights under this paragraph 8 shall cease and the Buyer shall
have the conduct of a Dispute absolutely (without prejudice to its rights under
this Tax Covenant) and shall be free to pay or settle any Tax Claim on such
terms as the Buyer or the relevant member of the Company’s Group may in its
discretion consider fit if:

 

(a)the Sellers do not request that the Buyer or the relevant member of the
Company’s Group take any action under sub-paragraph 8.2 of this Tax Covenant (or
if the Sellers fail to indemnify the Buyer and the relevant member of the
Company’s Group to the Buyer’s reasonable satisfaction) within a period of time
and which period shall not:

 

(i)exceed a period of 21 days commencing with the date of the notice given
pursuant to sub-paragraph 8.1 to the Sellers; or

 

(ii)end later than 5 Business Days prior to the last date on which an appeal may
be made in relation to the Dispute in question PROVIDED THAT the Sellers have
had or are deemed to have had at least 5 Business Days’ notice of the Tax Claim
in question;

 

(b)the Sellers notify the Buyer or the relevant member of the Company’s Group to
the effect that they no longer wish to pursue the Dispute;

 

(c)the Sellers fail within 10 Business Days of a reasonable written request by
the Buyer or any member of the Company’s Group to provide reasonable
clarification of any action that any member of the Company’s Group or the Buyer
is requested to take under sub-paragraph 8.2;

 

(d)a Taxation Authority alleges that (prior to Completion) there was any action
or omission by any member of the Company’s Group or that (at any time) there was
any action or omission by the Sellers or any of them which constitutes
fraudulent conduct;

 

(e)the dispute involves an appeal against a determination by the Tax Chamber of
the First-tier Tribunal or higher tribunal, unless the Sellers have obtained the

79

opinion of Tax counsel of at least 5 years standing that there is a reasonable
prospect that the appeal will succeed.

 

8.4Subject to sub-paragraph 8.3, by agreement in writing between the Buyer and
the Sellers, the conduct of a Tax Claim may be delegated to the Sellers upon
such terms as may be agreed from time to time between the Buyer and the Sellers
PROVIDED THAT, unless the Buyer and the Sellers specifically agree otherwise in
writing, the following terms shall be deemed to be incorporated into any such
agreement:

 

(a)the appointment of solicitors or other professional advisers shall be subject
to the approval of the Buyer, such approval not to be unreasonably withheld or
delayed;

 

(b)all communications (written or otherwise) pertaining to the Dispute which are
to be transmitted to the relevant Taxation Authority shall first be submitted to
the Buyer and any member of the Company’s Group for approval and shall only be
finally transmitted if such approval is given, such approval not to be
unreasonably withheld or delayed;

 

(c)the Sellers shall take account of all reasonable comments made by the Buyer
in relation to the conduct of the Dispute;

 

(d)reasonable advance written notice of any meeting that is to take place with a
representative or representatives of any Taxation Authority together with an
outline of the issues that it is anticipated will be addressed shall be given to
the Buyer and the relevant member of the Company’s Group and the Buyer shall be
entitled to nominate a person or persons to attend any such meeting;

 

(e)the Sellers shall keep the Buyer fully and promptly informed in writing of
the progress of any Dispute and the Buyer shall be promptly sent copies of all
correspondence and notes or other written records of telephone conversations or
meetings and, in the event that there is no written record, shall be given an
immediate report of any telephone conversation with any Taxation Authority to
the extent that it relates to a Dispute;

 

(f)the Sellers shall take all reasonable steps and use their best endeavours to
agree any Dispute with the applicable Taxation Authority within a reasonable
time; and

 

(g)the Sellers shall make no settlement or compromise of the Dispute or agree
any matter in the conduct of the Dispute which is likely to affect the amount
thereof or the future liability to Taxation of any Buyer Associate without the
prior written approval of the relevant member of the Company’s Group or the
Buyer (not to be unreasonably withheld or delayed).

 

8.5The Buyer shall provide and procure that the relevant member of the Company’s
Group provides to the Sellers and the Sellers’ professional advisors reasonable
access to premises and personnel and to any relevant assets, documents and
records within their power, possession or control for the purpose of
investigating the matter and enabling the Sellers to take such action as is
referred to in this paragraph 8.

80

8.6For the avoidance of doubt, no obligation imposed on the Buyer pursuant to
this paragraph 8 shall be a condition precedent to the liability of the Sellers
under this Tax Covenant and neither the Buyer nor any member of the Company’s
Group shall be subject to any claim by or liability to any of the Sellers for
non-compliance with any of the foregoing provisions of this paragraph 8 if (in
either case) the Buyer or the relevant member of the Company’s Group has bona
fide acted in accordance with the instructions of any one or more of the
Sellers.

 

9.General

 

For the purposes of determining whether a Liability for Taxation or a Relief
relates to a pre or post Completion period, an accounting period of each member
of the Company’s Group shall be deemed to have ended on Completion.

 

10.Buyer’s covenant

 

10.1The Buyer shall pay to the Sellers an amount equal to any tax liability of
the Sellers relating to any of the following Events occurring or deemed to occur
after Completion:

 

(a)Tax levied on the Sellers under sections 710, 713 or 716 of CTA 2010 or under
paragraph 54 of Schedule 7 to TIOPA 2010: or

 

(b)the Company ceasing to be resident in the United Kingdom for Tax purposes,

 

in each case in circumstances where a member of the Company’s Group fails to pay
any Tax levied by a Tax Authority for which it is liable and for which the Buyer
has not made or would not have been entitled to make a claim against the Seller
under this schedule if the Company had paid that liability.

 

10.2Any payment made by the Buyer under paragraph 10.1 shall be made five days
before the last day on which the relevant payment of Tax is due to be made to
the relevant Tax Authority without incurring any liability to interest or
penalties.

 

10.3The Buyer shall pay to the Seller an amount equal to reasonable legal and
accounting costs and expenses reasonably and properly incurred by the Seller in
connection with any tax liability as described in paragraph 10.1 or any action
taken under this paragraph.

 

11.GROSSING UP

 

11.1Any sum payable by the Sellers to the Buyer under this Tax Covenant shall be
paid free and clear of any deduction or withholding whatsoever, save only as may
be required by law.

 

11.2If any deduction or withholding is required by law to be made from any
payment by the Sellers under this Tax Covenant (other than a payment of interest
made pursuant to sub-paragraph 4.3), the Sellers shall increase the amount of
the payment by such additional amount as is necessary to ensure that the net
amount received and retained by the Buyer (after taking account of any deduction
or withholding) is equal to the amount which it would have received and retained
had the payment in question not been subject to any deduction or withholding.

81

11.3If the Buyer is subject to Taxation in respect of any payment by the Sellers
under this Tax Covenant (other than a payment of interest made pursuant to
sub-paragraph 4.3) or if the Buyer would have been subject to Taxation but for
the availability to the Buyer of any Buyer’s Relief, the Sellers shall increase
the amount of the payment by such additional amount as is necessary to ensure
that the net amount received and retained by the Buyer (after taking account of
all Taxation) (or the net amount that would have been received and retained but
for the availability of the Buyer’s Relief) is equal to the amount which it
would have received and retained had the payment in question not been subject to
Taxation.

 

11.4This paragraph shall not apply if the payment described in paragraph 11.3 is
subject to tax outside the UK.

 

12.Section 431 Election

 

12.1The Buyer will procure that the Company shall jointly elect with each Seller
(at Completion or within 14 days thereafter) pursuant to section 431(1) of ITEPA
2003 that for the relevant tax purposes the WTG Shares acquired by each relevant
Seller pursuant to this Agreement and their market value shall be treated as if
they were not restricted securities and that sections 425 to 430 ITEPA are not
to apply to such WTG Shares.

82

Schedule 6. Intellectual Property Rights

 

Part 1. Registered Intellectual Property Rights owned by the Company or the US
Subsidiary

 

The following web domain names are registered with Amazon web services:

 

·commagility.com

 

·commagility.co

 

·comagility.com

 

·mimoon.com

 

·4gility.com

 

·5gility.com

 

Please refer to the list of patents at document and their particulars at
document VIII.1 of the appendix to the Disclosure Letter.

83

Part 2. Registered Intellectual Property Rights owned by a third party and used
or held for use by the Company or the US Subsidiary

 

Neither the Company nor the US Subsidiary licenses any patents. Below are the
licensed technologies we use in our products which may include registered and
unregistered Intellectual Property Rights.

 

Technology Provider Format Schedule Data Room Document Reference LTE UE Stack
L&T Technology Services Ltd Source LTE UE Stack
Documentation
Support Tools 7.06 L & T Software License Agreement.pdf SDK and Run-Time Library
TI Node License C/C++ Compiler SDK Evolution\IP Owned and Licensed 01050702.pdf
Source C/C++ Run-Time Libraries Essential IPR embedded in the 3GPP LTE
specification   No licenses acquired   It is common practice in the industry to
pass on the responsibility for licensing to the end product manufacturer. Our
customer software licenses all do this. LTE PHY License Agreement TI Source  
7.06 TI LTE License Agreement .pdf
7.06 CA TI amend #5 Backhaul and NLOS Backhaul LTE TI Source   7.06 TI Backhaul
Contract.pdf PICMG MMC Firmware PigeonPoint Source   7.06 Pigeon Point Systems
FPGA RapidIO IP Core Xilinx Compiled IP Off-the-shelf license Fee-based Xilinx
LogiCORE IP FPGA CPRI IP Core Xilinx Compiled IP Off-the-shelf license Fee-based
Xilinx LogiCORE IP LabVIEW National Instruments Application binary Off-the-shelf
license Used for RF configuration in AMC-RF2x2 and AMC-D24A4-RF4

 

For Xilinx IP core licenses, see
https://www.xilinx.com/ipcenter/ip_license/xilinx_ip_license_agreements.htm#ip_license_agreements.

84

Part 3. Material unregistered Intellectual Property Rights owned by the
Company  or the US Subsidiary

 

The original hardware designs of the Company’s products is covered by
unregistered copyright. The following table lists unregistered IPR owned by the
Company, with the right first accrued at the point of design creation.

 

Technology Schedule Format For all CommAgility Hardware Including but not
limited to:-
- AMC-D4F1
- AMC-V7-2C66
- AMC-RF2x2
- AMC-D24A4-RF4
- AMC-K2L-RF2
- CA-D8A4-RF4
- AMC-4C6678 Schematics Mentor Graphics PCB Design Files Mentor Graphics FPGA
configuration Vivado Board Support Package C Source Code Datasheets MS Publisher
Word/PDF Manuals MS Word/PDF SmallCellPHY-TI Software C Source Code   Manuals MS
Word/PDF SmallCellPSTACK Software C Source Code   Manuals MS Word/PDF MobilePHY
Software C Source Code   Manuals MS Word/PDF MobilePSTACK Software C Source Code
  Manuals MS Word/PDF

 

Part 4. Material unregistered Intellectual Property Rights owned by a third
party and used or held for use by the Company or the US Subsidiary

 

Please refer to Part 2 which includes third party unregistered Intellectual
Property Rights. In addition, the Company unavoidably uses open source software.
However it separates this software from its developments and to not modify the
software.

 

1.          uIP (micro IP) light weight Ethernet IP stack ported to CommAgility
TI DSP HW without ARM cores (i.e. prior to Linux support).

AMC-V7-2C66 BSP

AMC-D24A4-RF4 (on C6678 devices) BSP

BSD license, see https://en.wikipedia.org/wiki/UIP_(micro_IP)

 

2.          lwIP lightweight Ethernet TCP/IP stack. Uses on CommAgility Xilinx
FPGA HW with an Ethernet connection and MicrBlaze processor core.

AMC-V7-2C66 BSP

AMC-RF2x2 BSP

85

Modified BSD license, see http://savannah.nongnu.org/projects/lwip/

 

3.          U-boot. Used as a software bootloader for Linux on the Company’s
hardware featuring TI devices with ARM cores:-

AMC-D24A4-RF4 BSP

AMC-K2L-RF2 BSP

VPX-D16A4 BSP

License GNU GPL V2, see http://www.denx.de/wiki/U-Boot/

 

4.          Linux. Used as the OS on the Company’s and third party hardware
featuring TI devices with ARM cores:-

AMC-D24A4-RF4 BSP

AMC-K2L-RF2 BSP

VPX-D16A4 BSP

SmallCellPHY-TI, SmallCellSTACK, MobilePHY, MobileSTACK.

License GNU GPL V2, see https://www.kernel.org/category/faq.html

 

5.          Linux GNU core utilities. Used on all products with Linux. Mixture
of GNU GPL, GNU LGPL, BSD.

 

Please refer to the licence manifest file at document VII.F.21 of the Data Room.

 

6.          Texas Instruments RFSDK and MCSDK.

All the Company’s Texas Instruments based software development.

3-clause BSD licenses as follows:

 

“Redistribution and use in source and binary forms, with or without
modification, are permitted provided that the following conditions are met:

 

Redistributions of source code must retain the above copyright notice, this list
of conditions and the following disclaimer. Redistributions in binary form must
reproduce the above copyright notice, this list of conditions and the following
disclaimer in the documentation and/or other materials provided with the
distribution.

 

Neither the name of Texas Instruments Incorporated nor the names of its
contributors may be used to endorse or promote products derived from this
software without specific prior written permission.

 

THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS “AS IS” AND
ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT OWNER OR CONTRIBUTORS BE LIABLE FOR
ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES
(INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES;
LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON

86

ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT
(INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS
SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.”

 

7.          SCTP Lib http://www.sctp.de/sctp-download.html

eNodeB Protocol Stack test cases which are distributed

 

8.          OpenAES https://github.com/jhjin/OpenAES

Used for eNodeB Protocol Stack test cases

See link for license

 

9.          minmea https://github.com/cloudyourcar/minmea

GPS NMEA 0183 sting processing library used by eNodeB and UE Stack in ground to
air solution

See https://github.com/cloudyourcar/minmea/blob/master/COPYING for licensing

 

10.        rapidxml http://rapidxml.sourceforge.net/

XML file parser for UE protocol stack

Boost Software License see http://rapidxml.sourceforge.net/license.txt

 

Part 5. Particulars of licenses, agreements, authorisations, and permissions
granted by the Company or the US Subsidiary relating to Intellectual Property
Rights listed in Parts 1 to 4 of Schedule 6.

 

All licenses and agreements are available in the Data Room at folders VII.E,
VII.E.2, II, VII.B, VII.C, VII, and VII.F.

 

The following particulars specifically relate to co-developed Intellectual
Property Rights between the Company and the specified third party.

 

Technology Provider Format Schedule Data Room Document
Reference LTE UE Stack L&T Technology Services Ltd Source LTE UE Stack
Documentation
Support Tools 7.06 L & T Software License Agreement.pdf LTE PHY License
Agreement TI Source   7.06 TI LTE License Agreement .pdf
7.06 CA TI amend #5

 

Part 6. Particulars of agreements which restrict use by the Company or the US
Subsidiary of Intellectual Property Rights listed in Parts 1 and 3 of Schedule
6.

 

Aeroflex Board Manufacture and Supply Agreement, May 2013, restricts supply of
AMC-V7-2C6678-SFP to a list of 6 competitors named in Appendix 6 of that
agreement.

87

The Company uses Japanese components in most of its hardware products. Japanese
suppliers have a restriction on weapons and military end use policy. For example
see Murata’s policy:-

http://www.murata.com/en-eu/support/militaryrestriction.

Cards designed specifically for military end-use equipment have these components
designed out, e.g. VPX-D16A4 and AMC-V7-2C66 ruggedized products.

 

Aeroflex Board Manufacture and Supply Agreement, May 2013, has an escrow
agreement clause for the AMC-V7-2C6678-SFP, AMC-2C6678-550-SFP, and AMC-V6-SAS
at the request of Aeroflex. ESCROW has not been requested by Aeroflex and as
such no the Company product information is held in escrow.

 

TI LTE PHY License Agreement Amendment #5 Clause 7 27th May 2015 requires TI’s
written approval for CommAgility to sublicense the LTE Rel.9 and Rel.10
SmallCellPHY-TI software to the Company’s customers. This approval has never
been withheld.

88

Schedule 7. Information technology

 

Part 1 - Particulars of IT System

 

Overview

The IT network within the Company has been developed and is maintained by two
full-time IT Engineers and provides a sophisticated and fully integrated IT
network to employees in both sites and to VPN users. The Company’s IT department
does not contract external resources or professional services to support it.

In-house Private Server Cloud

At the heart of the Company’s IT infrastructure is a VSphere virtualization
platform. This currently hosts 49 Virtual Machines (VMs) on 6 actual server
platforms across the two sites. Some of these VMs are providing file service
shares including Windows Server, SAP, Microsoft Exchange, Jira, Confluence, FTP
services and Linux Samba shares. The remainder of these VMs facilitate Domain
Controllers, test workstations, GitLab repositories, licence servers, KACE,
Teamcity, certificates and web and intranet servers and other support functions
to the business.

Server Backups

Cross-site server backups are conducted to endeavour to provide business
continuity and mitigate data loss and this is implemented automatically with
Veeam Backup & Recovery software. The back up server is located at a different
location to the primary server. Project data is mirrored and backed-up between
the Loughborough and Duisburg servers every weekday night.

Workstations

There are 74 workstations which mostly run Microsoft Windows 7 or Windows 10.
The Company has:

·11 x Office 365 subscriptions;

 

·11 x Office 2013 Licences;

 

·11 x Office 2010 Licences;

 

·48 x Office 2010 Microsoft Volume Licences; and

 

·40 x Office 2007 Licences.

 

A small number of the workstations run Linux. These workstations are used in the
office and lab environment.

Dell is the preferred solutions provider and most users are issued with a Dell
E-Series laptop with up to two additional screens.

All employees use Microsoft Office and the applications software inventory on
these workstations includes: SAP Business One, Mentor Expedition/xDX Designer,
TI’s Code Composer Studio, GitLab, TeamCity, LabView, XJTAG, Solidworks and
Solidworks Flow and Microsoft Project.

Workstation Backups

Office workstations are backed-up using Acronis Backup and this runs to an
automated schedule storing data on dedicated server platforms.

89

Development Environment

Jira project management tool is used in all aspects of software and hardware
development and support. GitLab is the repository for software and firmware and
provides strict version control. In-house Wiki is provided with a Confluence
site allowing project spaces to be built for each project team. Instant
messaging and communication is facilitated between all team members, whatever
their location using Skype.

Security

The network has been architected with security in mind. Both sites operate
sophisticated firewall apparatus which can screen all traffic entering or
leaving the network. The on-site Microsoft Exchange email service operates in
conjunction with GFI MailEssentials screening and virus checking to protect the
network from email-borne threats. Workstations are provisioned, managed and
secured using KACE Endpoint Systems Management suite. This allows the IT team to
push security patches and upgrades to all corporate users immediately or as
required. This toolkit is also used to assure software licence compliance and
inventory. All workstations are protected with Trend Worry-Free Business
Security and this is centrally administered to ensure each workstation is
up-to-date. Security risks are reviewed and tested periodically.

Please refer to the Company’s IT inventory at document VII.G.3 of the appendix
to the Disclosure Letter.

 

Part 2. Particulars of IT Contracts

 

Corporate

Domain hosting: Amazon Web Services Wildcard Certificate hosting for
commagility.com : Digicert 3 years prepaid from 12 Mar 2015

Loughborough

Telephone: Loughborough University (Data Room 8.01)
Internet: Loughborough University

Duisburg

Telephone: Immobilien Management Duisburg (Data Room 8.01)
Internet 1: Immobilien Management Duisburg (Data Room 8.01)
Internet 2: University Duisbrg Essen

US

Telephone : None Provided

Internet: Rialto Melbourne Investor LLC (Data Room 8.01)

Software

Software Supplier Licence(s) Maintenance Office 365 Bechtle 11 user
subscriptions (see ‘Workstations’ above) N/A Veeam Backup and Recovery Bechtle 8
socket perpetual licence Annual maintenance expires December 2017 VMware
vSphere/vCenter Bechtle perpetual licence Maintenance expired. Jira Atlassian
250 User perpetual licence V5.2 Maintenance expired 13 Aug 2015 Confluence
Atlassian 100 user perpetual licence Maintenance expires 7 May 2017

90

Dell Kace Bechtle Subscription expires 10 July 2017 N/A Microsoft Exchange.
Bechtle 2 licences. N/A GFI Email Protection Suite Bechtle 250 mailbox
subscription expires September 2017 N/A Sophos Antivirus Bechtle subscription
N/A LabView Developer Suite National Instruments subscription expires 17
September 2017 N/A Solidworks Solid Solutions 2 standard licences and 1 Flow
licence Maintenance expires 31 October 2017 XJTAG Developer licence XJTAG 1
licence Maintenance expires 2 July 2017 Mentor xPCB Layout 100 Mentor 1 licence
Maintenance expires 27 May 2017. Mentor xDX Designer 200 Mentor 3 licences
Maintenance expires 27 May 2017. SAP Business 1 Broadgate 9 licences Maintenance
expires Jan 2018. Genesys RF simulation Keysight Lease of software expires 9 Feb
2017 N/A Code Composer Studio 6 TI 25 floating licences N/A

91

Schedule 8. Particulars of Properties

 

Description of the Property Part of Area GB together with Gas Pod, Charnwood
Building, Holywell Park, Loughborough Description of Lease Lease dated 22
December 2015 Landlord Loughborough University Tenant CommAgility Limited Term
Term commencing 1 January 2016 and expiring 1 November 2020. Current Use Office
space, laboratory space, cycle storage Current level of rent per annum
(exclusive of VAT) £32,920 per annum Next rent review date N/A Option to
determine The Tenant is entitled to terminate the Lease with respect to those
areas in the Premises covering Part Area GB if the Tenant gives the Landlord 6
months’ written notice and, at the expiry of the notice, there is no outstanding
arrears of Basic rent, Service Charge or Insurance Rent (Service Charge and
Insurance Rent having been invoiced) and vacant possession has been given.

 

Description of the Property Part of Area GB, Charnwood Building, Holywell Park,
Loughborough Description of Lease Lease dated 2 November 2015 Landlord
Loughborough University Tenant CommAgility Limited Term Term commencing 2
November 2016 and expiring 1 November 2020. Current Use Office space, laboratory
space Current level of rent per annum (exclusive of VAT) £14,310 per annum Next
rent review date N/A Option to determine The Tenant is entitled to terminate the
Lease with respect to those areas in the Premises covering Part Area GB on any
anniversary of the Term if the Tenant gives the Landlord 6 months’ written
notice and, at the expiry of the notice, there is no outstanding arrears of
Basic rent, Service Charge or Insurance Rent (Service Charge and Insurance Rent
having been invoiced) and vacant possession has been given.

 

Description of the Property Office No. 718, 100 Rialto Place, Melbourne, FL
32901 Description of Lease Lease dated October 19, 2016 Landlord Rialto
Melbourne Investor, LLC Tenant CommAgility Inc. Term Term commencing November 1,
2016, and continuing on a month-to-month basis until either party provides the
other party with 30 days’ prior written notice to vacate. Current Use Office
space Current level of rent (exclusive of VAT) $625.00 per month (November 1,
2016 to October 31, 2017) Next rent review date 1 November 2017 Option to
determine N/A

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Description of the Property Tec-Center, Bismarckstr. 142, 47057 Duisburg
Description of Lease Lease dated 31 March/24 March 2015 as amended 30 April/11
April 2015 Landlord City of Duisburg Tenant CommAgility Limited Term Indefinite
period. Notice period 3 month to the end of the month; notice period applies for
landlord and tenant Current Use Office space, laboratory space Current level of
rent per annum (exclusive of VAT) EUR 66,747.00 and EUR 4,140.00 for parking
spaces. Next rent review date N/A Option to determine N/A

 

Description of the Property Furnished apartment, Krummacherstrasse 24, 47051
Duisburg Description of Lease Lease dated 15 April 2012 Landlord Dr. Rolf Böhnke
Tenant CommAgility Limited Term Indefinite period. Notice period 3 month; notice
period applies for landlord and tenant Current Use Accomodation Current level of
rent per annum (exclusive of VAT) EUR 3,600.00. Next rent review date N/A Option
to determine N/A

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Schedule 9. Earn-out Payments

Part 1

 

1.Definitions

 

2017 EBITDA: EBITDA for the First Earn-out Year.

 

2018 EBITDA: EBITDA for the Second Earn-out Year.

 

Earn-out Payments: has the meaning set out in paragraph 2.1 of this Schedule.

 

EBITDA: means EBITDA of the Company and the US Subsidiary as determined in
accordance with paragraph 7 of this Schedule.

 

2017 Earn-out Payment: the Earn-out Payment in respect of the First Earn-out
Year.

 

2018 Earn-out Payment: the Earn-out Payment in respect of the Second Earn-out
Year.

 

Earn-out Period: the First Earn-out Year or the Second Earn-out Year, as the
case may be.

 

Earn-out Year: means the First Earn-out Year and/or the Second Earn-out Year.

 

First Earn-out Year: the Financial Year beginning on 1 January 2017 ending on 31
December 2017.

 

Earn-out Statement: has the meaning set out in paragraph 3.2(b) of this
Schedule.

 

Expert: a member of an independent firm of chartered accountants of
international repute appointed in accordance with paragraph 4 of this Schedule
to resolve any dispute arising between the parties in connection with the
preparation of any Earn-out Statement or the calculation of the corresponding
Earn-out Payment in relation to a Financial Year.

 

Financial Year: each and any financial year (within the meaning of section 390
of the Companies Act 2006) of the Company and the US Subsidiary.

 

Objection Notice: has the meaning set out in paragraph 3.3 of this Schedule.

 

Reference Accounts: in relation to each Earn-out Period, the audited
consolidated accounts of the Company and the US Subsidiary for such Earn-out
Period and prepared in accordance with UK GAAP in force for that Financial Year
and otherwise in accordance with this Schedule.

 

Resolution Notice: has the meaning set out in paragraph 3.6 of this Schedule.

 

Review Period: has the meaning set out in paragraph 3.3 of this Schedule.

 

Second Earn-Out Year: the Financial Year beginning on 1 January 2018 and ending
on 31 December 2018.

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2.Earn-out Payments

 

2.1As additional consideration for the Sale Shares, the Buyer shall make the
following payments to the Sellers, which shall be apportioned between the
Sellers as set out opposite their respective names in Schedule 1 (together the
“Earn-out Payments”, each an “Earn-out Payment”):

 

(a)A 2017 Earn-out Payment of up to £10,000,000 (ten million pounds), based on
2017 EBITDA being greater than £2,000,0000 (two million pounds) in the First
Earn-out Year, calculated by reference to the indicative table setting out the
methodology for calculating the 2017 Earn-out Payment and the 2018 Earn-out
Payment included at Part 2 of this Schedule, as further described in paragraphs
2.2 to 2.5 (inclusive) of this Schedule; and

 

(b)A 2018 Earn-out Payment of up to £10,000,000 (ten million pounds) LESS the
value of the 2017 Earn-out Payment (if any), based on 2018 EBITDA being between
greater than the EBITDA figure actually achieved in the First Earn-out Year (and
in any event greater than £2,000,0000 (two million pounds)) in the Second
Earn-out Year calculated by reference to the indicative table setting out the
methodology for calculating the 2017 Earn-out Payment and the 2018 Earn-out
Payment included at Part 2 of this Schedule as further described in paragraphs
2.2 to 2.5 (inclusive) of this Schedule.

 

2.2As indicated in the table at Part 2 of this Schedule, each incremental
increase in EBITDA of up to £100,000 shall be multiplied by the appropriate
multiplier set out adjacent to that increment in the table in calculating each
Earn-out Payment.

 

2.3For the avoidance of doubt, each £1 of EBITDA in respect of the First
Earn-out Year and the Second Earn-out Year shall be included in the calculation
of the relevant Earn-out Payment and not just complete increments of £100,000.

 

2.4In respect of the Second Earn-out Year, the 2018 Earn-out Payment shall, if
the 2018 EBITDA is greater than £2,000,000 and greater than the 2017 EBITDA, be
calculated:

 

(a)first by reference to the table at Part 2 of this Schedule, disregarding any
2017 Earn-out Payment; and

 

(b)second, by deducting from the amount so determined the value of the 2017
Earn-out payment.

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2.5The following are illustrative examples of the calculation of the Earn-out
Payments, which are included as an aide to interpretation only:

 

2017 EBITDA 2017 Earn-out Payment 2018 EBITDA 2018 Earn-out Payment £1,800,000
zero (as EBITDA below £2,000,000) £1,900,000 zero (as EBITDA below £2,000,000)
£1,800,000 zero (as EBITDA below £2,000,000) £2,500,000

£1,000,000 less zero

 

= £1,000,000

 

£1,800,000 zero (as EBITDA below £2,000,000) £3,792,500

£4,600,000 plus (£92,500*3) less zero

 

= £4,600,000 plus £277,500 less zero

 

= £4,877,500

 

£3,000,000 £2,500,000 £2,500,000 zero (as 2018 EBITDA lower than 2017 EBITDA)
£3,000,000 £2,500,000 £3,100,000

£2,800,000 less £2,500,000

 

= £300,000

 

£3,000,000 £2,500,000 £4,015,860

£5,500,000 plus (£15,860*3.5) less £2,500,000

 

=£5,500,000 plus £55,510 less £2,500,000

 

= £3,055,510

 

£4,375,100

£6,550,000 plus (£75,100*3.5)

 

= £6,550,000 plus £262,850

 

= £6,812,850

 

£4,690,000

£7,600,000 plus (£90,000*3.5) less £6,812,850

 

= £7,600,000 plus £315,000 less £6,812,850

 

= £1,102,150

 

£4,375,100

£6,550,000 plus (£75,100*3.5)

 

= £6,550,000 plus £262,850

 

= £6,812,850

 

£5,002,000

£9,000,000 plus (£2,000*2) less £6,812,850

 

= £9,000,000 plus £4,000 less £6,812,850

 

= £2,191,150

 

£5,700,000 £10,000,000 (maximum) £7,000,000 zero (as maximum earned in 2017)

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2.6Subject always to paragraph 6 of this Schedule 9 (Set-Off Rights) the Buyer
shall pay the amount due (if any) in respect of each Earn-out Payment in cash
(and through the issue of a loan note if applicable):

 

(a)by the later of:

 

(i)5 Business Days following the date that the parties agree in writing that the
relevant Earn-out Payment is agreed; or

 

(ii)31 March in the Financial Year that follows the relevant Earn-out Period; or

 

(b)if an Objection Notice is served in accordance with paragraph 3.3 of this
Schedule the Buyer shall pay such amount of the relevant Earn-out Payment as is
not in dispute between the parties by the date referred to at paragraph 2.6(a)
and shall pay the balance (if any) of the relevant Earn-out Payment within 10
days of the parties:

 

(i)agreeing in writing all disputed matters concerning the relevant Earn-out
Statement and the calculation of the corresponding Earn-out Payment; or

 

(ii)receiving notice of the Expert’s determination of the relevant Earn-out
Payment in accordance with paragraph of this Schedule.

 

2.7To the extent that the 2017 Earn-out Payment exceeds the 2017 EBITDA and/or
the 2018 Earn-out Payment exceeds the 2018 EBITDA (in either such case an
“Earn-out Surplus”), the Buyer may, by notice in writing to the Sellers’
Representative delivered with the draft Earn-out Statement referred to in
paragraph 3.2 below elect to satisfy the Earn-out Surplus by issuing the Sellers
with a loan note (which shall carry an interest rate of 5% and a redemption
period of 2 years (in relation to the 2017 Earn-out Payment) and 1 year (in
relation to the 2018 Earn-out Payment)) issued by WTG to the Sellers for the
full amount of the Earn-out Surplus in proportion to their respective
entitlements to the relevant Earn-out Payment, subject only to the Sellers’, the
Buyer and WTG agreeing to the terms of such loan note (provided always that the
terms referred to above relating to interest and redemption shall be deemed to
be agreed). For the avoidance of doubt, the balance of the Earn-out Payment
(excluding the Earn-out Surplus) shall be made in cash in accordance with
paragraph 2.6.

 

2.8EBITDA results will be calculated in accordance with UK GAAP (in a manner
consistent with past practice of the Company in the normal course of business)
save where specific accounting policies and procedures have been specified in
paragraph 7 of this Schedule (in which case those specific policies and
procedures shall apply and not UK GAAP).

 

3.Earn-out Statement and agreeing the Earn-out Payments

 

3.1In relation to each Earn-out Period, the Buyer shall procure that the
Reference Accounts for that Earn-out Period are prepared and audited as soon as
practicable and in any event within 90 days of the last day of the relevant
Earn-out Period.

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3.2Within 10 Business Days of completion of the audit of the Reference Accounts
in respect of an Earn-out Period, the Buyer shall deliver to the Sellers:

 

(a)a copy of the relevant Reference Accounts; and

 

(b)a statement prepared by the Buyer’s accountants (“Earn-out Statement”)
setting out:

 

(i)its calculation of the EBITDA for that Earn-out Period;

 

(ii)any adjustments made to the Reference Accounts or any figures stated therein
in preparing the Earn-out Statement, including, without limitation, those made
to reflect the specific accounting policies and procedures set out in paragraph
7 of this Schedule; and

 

(iii)its calculation of the resulting Earn-Out Payment (if any) payable in
respect of that Earn-out Period.

 

(c)if the Buyer elects to satisfy an Earn-out Surplus by the issue of a loan
note by WTG in accordance with paragraph 2.7:

 

(i)written notice of that election; and

 

(ii)a draft of the loan note instrument pursuant to which such loan notes are
proposed to be issued together with details of any other terms or restrictions
to which such loan notes would be subject.

 

3.3The Sellers shall, within 10 Business Days from receipt of the Reference
Accounts and the Earn-out Statement for an Earn-out Period (“Review Period”),
deliver to the Buyer a written notice stating whether they agree with the
Earn-out Statement and the Buyer’s calculation of the Earn-out Payment. In the
case of any disagreement, the notice (“Objection Notice”) shall specify the
areas disputed by the Sellers and describe, in reasonable detail, the basis for
the dispute.

 

3.4If the Sellers fail to deliver an Objection Notice during the Review Period
they shall, with effect from the expiry of the Review Period, be deemed to agree
the Earn-out Statement and the amount of Earn-out Payment specified in it.

 

3.5During each Review Period, the Buyer shall upon reasonable notice and during
normal business hours, permit the Sellers (and their agents or advisers) to
review such books and records of the Company and the US Subsidiary as the
Sellers (or their agents or advisers) may reasonably require for the purpose of
reviewing the Earn-out Statement and the Buyer’s calculation of the
corresponding Earn-out Payment.

 

3.6If the Sellers serve an Objection Notice in accordance with paragraph 3.3 of
this Schedule, the parties shall seek in good faith to resolve the disputed
matters and agree the amount of the Revenue and the Earn-out Payment for the
relevant Earn-out Period as soon as reasonably possible. If the parties are
unable to reach

98

agreement within 15 Business Days of the service of the Objection Notice, then
at any time following the expiry of such period either party may, by written
notice to the other (“Resolution Notice”), require the disputed matters to be
referred to an Expert for determination in accordance with paragraph 4 of this
Schedule.

 

3.7Each party shall bear and pay its own costs incurred in connection with the
preparation, review and agreement of each Earn-out Statement and the calculation
of each Earn-out Payment.

 

4.Expert determination

 

4.1If a Resolution Notice is served by either party, the parties shall use all
reasonable endeavours to reach agreement regarding the identity of the person to
be appointed as the Expert and to agree terms of appointment with the Expert as
soon as reasonably possible. Neither party shall unreasonably withhold its
agreement to the terms of appointment proposed by the Expert or the other party.

 

4.2If the parties fail to agree on an Expert and his terms of appointment within
ten (10) Business Days of either party serving details of a proposed Expert on
the other, either party shall be entitled to request the President for the time
being of the Institute of Chartered Accountants of England and Wales to appoint
the Expert and to agree his of terms of appointment on behalf of the parties.

 

4.3Except for any procedural matters, or as otherwise expressly provided in this
Schedule, the scope of the Expert’s determination shall be limited to
determining the unresolved matters in the Objection Notice relating to:

 

(a)whether the Earn-out Statement has been prepared, and the corresponding
calculation of the Earn-out Payment has been made, in accordance with the
requirements of this Schedule;

 

(b)whether any errors have been made in the preparation of the Earn-out
Statement and the corresponding calculation of the Earn-out Payment; and

 

(c)any consequential adjustments, corrections or modifications that are required
for the Earn-out Statement to have been prepared, and the corresponding
calculation of the Earn-out Payment to have been made, in accordance with the
requirements of this Schedule.

 

4.4The parties shall co-operate with the Expert and shall provide (and in the
case of the Buyer shall procure that the Company and each of the US Subsidiary
provides) such assistance and access to such documents, personnel, books and
records as the Expert may reasonably require for the purpose of making his
determination.

 

4.5The parties shall be entitled to make submissions to the Expert and each
party shall, with reasonable promptness, supply the other party with all such
information and access to its documentation, books and records as the other
party may reasonably require in order to make a submission to the Expert in
accordance with this paragraph.

99

4.6To the extent not provided for in this paragraph 4, the Expert may in his
reasonable discretion determine such other procedures to assist with the conduct
of his determination as he considers just or appropriate including (to the
extent he considers necessary) instructing professional advisers to assist him
in reaching his determination.

 

4.7Unless otherwise agreed by the parties, the Expert shall be required to make
his determination in writing (including the reasons for his determination) and
to provide a copy to each party as soon as reasonably practicable and in any
event within thirty (30) Business Days of his appointment.

 

4.8The Expert shall act as an expert and not as an arbitrator. Save in the event
of manifest error or fraud the Expert’s determination of any matters referred to
him in accordance with this Schedule shall be final and binding on the parties.

 

4.9If an appointed Expert dies or becomes unwilling or incapable of acting, or
does not deliver his determination within the period required by this paragraph
4:

 

(a)the parties shall use all reasonable endeavours to agree the identity and
terms of appointment of a replacement Expert;

 

(b)if the parties fail to agree and appoint a replacement Expert within ten (10)
Business Days of a replacement being proposed in writing by one party, then
either party may apply to the President for the time being of the Institute of
Chartered Accountants of England and Wales to discharge the appointed Expert and
to appoint a replacement Expert; and

 

(c)this paragraph 4 shall apply in relation to each and any replacement Expert
as if he were the first Expert appointed.

 

4.10Each party shall act reasonably and co-operate to give effect to the
provisions of this paragraph 4 and shall not do anything to hinder or prevent
the Expert from reaching his determination.

 

4.11Each party shall bear its own costs in relation to the reference to the
Expert. The Expert will direct that his fees shall be borne by the parties on
the general principle that costs should follow the event on a proportionate
basis, except where it appears to the Expert that, in the circumstances, this is
not appropriate in relation to the whole or part of such costs.

 

5.Conduct of business during the Earn-out Period

 

5.1In order to protect and safeguard the Sellers’ potential entitlement to the
Earn-out Payments, the Buyer covenants with the Sellers that, during the
Earn-out Period:

 

(a)the Buyer will act in good faith towards the Sellers having regard to the
interest of the Sellers in relation to the Earn-out Payments;

 

(b)the business of the Company shall be under the day to day management of Paul
Moakes, Edward De Salis Young, Simon Pack and Martin Hollingshead (for as long
as each of them continues to be an employee of the Company);

100

(c)the Buyer will maintain sufficient working capital in the Company to allow it
to operate normally. The Buyer may move cash out of the Company to other WTG
Group companies, including by way of loans, provided that this does not create
insolvency or working capital constraints which interfere in the normal course
of Company’s business;

 

(d)the Sellers are supplied with:

 

 (i)monthly financial reports;      (ii)quarterly financial statements; and    
(iii)a quarterly earn-out statement reflecting the latest Earn-Out Payment
projections;

 

5.2The Sellers agree that the Buyer will be allowed to undertake any and all
actions necessary to run the business.

 

5.3If the Buyer or any member of the Buyer’s Group proposes to do or impose on
the Company any deliberate act which will or would reasonably be expected to
have a negative effect on the 2017 EBITDA and/or the 2018 EBITDA of not less
than £25,000 then the Buyer may only carry out such act if one of the following
applies:

 

(a)the written consent of the Sellers’ Representative has been given; or

 

(b)if the Buyer elects the acceleration of the Earn-out Payments by paying in
full of the maximum possible Earn-out Payment (being £10,000,000 less the amount
of any Earn-out Payment already made), or as otherwise agreed in writing with
the Sellers; or

 

(c)if the following process is followed:

 

(i)the Buyer shall give the Sellers’ Representative at least 10 Business Days’
prior written notice before carrying out the act in question, including details
of any mitigating actions and/or adjustments it proposes to make to the
calculation of the 2017 EBITDA and/or the 2018 EBITDA to compensate for the
proposed act or omission (a “Buyer Adjustment Notice”);

 

(ii)the Sellers’ representative may, within 10 Business Days of receiving a
Buyer Adjustment Notice provide the Buyer with a notice in writing stating his
good-faith estimate of the adjustments required to be made to the calculation of
the 2017 EBITDA and/or the 2018 EBITDA to compensate for the proposed act or
omission (a “Seller Adjustment Notice”) AND if he fails to give notice under
this paragraph (ii) above he shall be deemed to consent to the proposed act and
accept the mitigating actions and/or adjustments (if any) proposed by the Buyer,
in each case as set out in the Buyer Adjustment Notice;

 

(iii)if the Sellers’ Representative delivers a Seller Adjustment Notice in
accordance with paragraph (ii), the Buyer and the Sellers shall have a period of
5 Business Days in which they will negotiate in good faith to agree the amount
of a write back (of an amount necessary to

101

compensate for the adverse impact on EBITDA) into the relevant Earn-out
Statement in respect of the First Earn-out Year and/or the Second Earn-out Year
(as appropriate). If the Buyer and Sellers cannot agree on the amount of such
adjustment, within those 5 Business Days of the delivery of a Seller Adjustment
Notice, the matter shall be referred to the decision of an Expert in accordance
with the provisions of paragraph 4 of this Schedule 9 as if the proposed
adjustment were a Resolution Notice; and

 

(iv)for the avoidance of doubt so long as the process outlined above is followed
there shall be no requirement for the Buyer to wait for completion of the
process before carrying out the relevant act.

 

5.4The Buyer and Sellers agree, without limitation, that the following actions
impact the Earn-out calculations and would require one of the steps referred to
at paragraph 5.3(a), 5.3(b) or 5.3(c) to be followed:

 

(a)the disposal (by any means) outside of the ordinary course of business of any
material part of the assets or material undertaking of the Company and/or the US
Subsidiary as carried on at Completion, including, by way of example, the sale
of the Company IPR or similar material assets of the Company;

 

(b)the termination of the employment of any of the Sellers by the Company by any
means unless for gross misconduct entitling summary dismissal without
compensation pursuant to the relevant Employment Agreement or criminal acts;

 

(c)a reduction-in-force of headcount by 15% or more in any fiscal year from the
headcount at the beginning of that fiscal year imposed upon the business unit by
the Buyer (excluding retirement/resignation in the ordinary course);

 

(d)any actions to integrate the sales channel, engineering teams or any other
significant portions of the business or operations of the Company (such that the
acts reduce or diminish the Company’s level of or access to resources) with the
business or operations of the WTG Group;

 

(e)the diversion or redirection of the business carried on by, or the custom of
any customer or client of the Company and/or the US Subsidiary at Completion
away from the Company and/or the US Subsidiary unless such diversion or
redirection is accompanied by and conditional upon inter-company accounting
which, in the reasonable opinion of the Sellers’ Representative and the Buyer,
compensates the full amount of the effect on EBITDA;

 

(f)any step for the winding up or dissolution of, or appointment of an
administrator, receiver or receiver and manager, to the Company and/or the US
Subsidiary or any part of their assets or undertaking, or any similar or
analogous process unless the Company and/or the US Subsidiary (as applicable)
becomes unable to pay its debts as they fall due;

 

(g)any restriction imposed on the Sellers by the Buyer in connection with the
use of the Company’s name, but not including any changes to branding, marketing
or communications which relate solely to the use of any of Buyer’s brands or

102

corporate trading names alongside and with the Company name in websites,
marketing materials, emails, tradeshows, or business cards;

 

(h)any transfer to the Company and/or the US Subsidiary of any onerous or
unprofitable activity, undertaking or obligation of the Buyer or any member of
the Buyer’s Group or for which the Buyer or any member of the Buyer’s Group
receives a benefit unless such transfer is accompanied by and conditional upon
inter-company accounting which, in the reasonable opinion of the Sellers’
Representative and the Buyer, compensates the full amount of the effect on
EBITDA;

 

(i)the imposition of any management or service charge on the Company and/or the
US Subsidiary by the Buyer or any member of its Group unless such imposition is
accompanied by and conditional upon inter-company accounting which, in the
reasonable opinion of the Sellers’ Representative and the Buyer, compensates the
full amount of the effect on EBITDA;

 

(j)the acquisition by the Company and/or the US Subsidiary (by any means) of any
share or loan capital or other interest in any corporate body, partnership or
other venture;

 

(k)the giving of any guarantee, indemnity or other agreement by the Company/or
the US Subsidiary to secure or incur financial or other obligations relating to
the obligations of any other person.

 

5.5The Buyer and Sellers agree, without limitation, that the following actions
would not impact the Earn-out calculations and would not require one of the
steps referred to at paragraph 5.3(c) to be followed: the integration of IT and
accounting systems; administrative process; accounting process, finance and
financial reporting; IT systems; internal controls, and other corporate
governance functions, including reporting lines in relation to such functions.

 

5.6The Sellers agree that they shall operate the business in accordance with
good industry practice during the Earn-out Period and use their reasonable
endeavours to allocate such expenditure as is reasonable to ensure the business
operates in manner which is compliant with all tax, legal, regulatory and
commercial licensing arrangements which are relevant to the business.

 

6.set-off rights

 

6.1If, on or at any time prior to the date that the Earn-Out Payments fall due
(each an “Earn-out Payment Date” or together the “Earn-out Payment Dates”), a
Due Amount is outstanding, the Buyer shall be entitled to satisfy all (to the
extent possible) or part of the Sellers’ liability to pay the Due Amount by way
of set-off against either one or both of the Earn-Out Payments, and to treat its
obligation to make the relevant Earn-Out Payment(s) as being reduced pro tanto
by the amount so set off.

 

6.2If on any Earn-out Payment Date there is an Outstanding Claim, the Buyer
shall be entitled (at its sole discretion) to withhold from the Earn-out Payment
an amount equal to the Estimated Liability (if any) or, if the Earn-out Payment
is lower than the

103

Estimated Liability, the full amount of the Earn-out Payment (“Earn-Out Reserved
Sum”) and shall pay the balance of the Earn-out Payment in accordance with
paragraph 6.3 of this Schedule. For the avoidance of doubt, no amount may be
withheld pursuant to this paragraph 6.2 in respect of an Outstanding Claim in
respect of which no Estimated Liability has been agreed by the Buyer and the
Sellers or opined by Counsel in accordance with the definition of Estimated
Liability set out in clause 1.1

 

6.3Where an Earn-Out Reserved Sum has been withheld by the Buyer pursuant to
paragraph 6.2 in respect of an Outstanding Claim, upon that claim becoming a
Resolved Claim the Buyer shall:

 

(a)be entitled (at its sole discretion) to satisfy all (to the extent possible)
or part of the Seller’s liability to pay the Due Amount in respect of the
relevant Resolved Claim by way of set-off against the corresponding Earn-Out
Reserved Sum, and to treat its obligation to pay the Earn-Out Reserved Sum as
being reduced pro tanto by the amount so set off; and

 

(b)to the extent that the Due Amount is less than the Earn-out Reserved Sum pay
to the Sellers the balance of the corresponding Earn-Out Reserved Sum (if any)
after the Buyer has exercised its rights pursuant to paragraph 6.3(a) in
accordance with the proportions set out in Schedule 1. Such payment shall be
made by the Buyer within 5 Business Days of the Outstanding Claim becoming a
Resolved Claim.

 

6.4Nothing in this paragraph 6 shall prejudice, limit or otherwise affect:

 

(a)any right or remedy the Buyer may have against the Sellers from time to time,
whether arising under this Agreement or any of the documents executed pursuant
to this agreement; or

 

(a)the Buyer’s right to recover against the Sellers, whether before or after any
Earn-out Payment is made in accordance with this agreement,

 

save to the extent that any such right or remedy, or Losses relating thereto,
has been satisfied by the application of this paragraph 6.

 

6.5The amount of a Earn-Out Reserved Sum withheld by the Buyer in accordance
with this paragraph 6 shall not be regarded as imposing any limit on the amount
of any claims under this agreement or any of the documents executed pursuant to
this agreement.

 

6.6If a Due Amount is not satisfied in full by way of set-off under paragraph
6.1 or 6.3, nothing in this agreement shall prevent any right of the Buyer to
recover the balance of the Due Amount from the Sellers (to the extent not so
satisfied) in accordance with the terms of this Agreement.

 

6.7In the event that the Company’s agreement with Texas Instruments Incorporated
(“TI”) relating to the Company’s use of TI’s Release 10 Intellectual Property is
terminated by TI then the Sellers agree that the Buyer’s obligation to pay and
the Seller’s right to receive any unearned Earn-out Payments shall immediately
lapse

104

unless the Company is lawfully able to continue to use the Release 10
Intellectual Property of Texas Instruments for the remainder of the Earn-out
Period on materially the same terms and which allow such Release to be used in a
manner which is consistent with past practice and in accordance with the
Company’s business requirements in relation thereto, and for these purposes
“unearned Earn-out Payments” shall mean any Earn-out Payment in respect of an
Earn-out Year which has not ended at the time of such termination. For the
avoidance of doubt, any Earn-out Payment in respect of an Earn-out Year which
has ended on the date of termination shall remain payable by the Buyer
notwithstanding that it has not been paid, or has not been agreed or determined
pursuant to this Schedule 9.

 

7.ACCOUNTING POLICIES AND PROCESSES

 

7.1There will be no capitalization of R&D expenses for the purposes of
calculating the 2017 EBITDA and/or the 2018 EBITDA;

 

7.2Deferred revenue recognition will assign fair value measurement, consistent
with UK GAAP and past practice of the Company in the UK (so the amounts assigned
to software will be consistent with the Company’s existing price lists and
previous sales), of any multiple element arrangements such that, there will be
deferred revenue liabilities recorded for any undelivered elements of a
contract, specifically, software development requirements which require
additional R&D and software customization requirements which require additional
costs and R&D. Fair value will be assigned and separate revenue recognition for
the following, to the extent included in the contract:

 

(a)the software license;

 

(b)obligations related to software development or next generation releases, or
customization requirements; and

 

(c)continued support or maintenance.

 

7.3Any adjustments which have been agreed or determined in accordance with
paragraph 5.3(c) of this Schedule 9.

 

7.4The Sellers acknowledge the need for:

 

(a)a qualified Chief Financial Officer and agrees to work with Buyer for the
recruitment, selection, and employment of a full time and permanent Chief
Financial Officer; and

 

(b)legal counsel involvement in customer contract drafting, negotiation and
execution.

 

Accordingly the Sellers agree that the costs of the above matters will be
included in the Earn-out Payments calculations up to a maximum of £200,000 over
and above the original 2017/2018 budgeted plan costs of £22,759. For the
avoidance of doubt, the cost of UK regulatory compliance and legal
representation (for matters other than those referred to above) are considered
to be part of the ordinary course of business and will be fully recognized in
the earn-out calculations with no cap.

 

7.5The Sellers and Buyer agree:

105

(a)to follow the accounting principles of matching, whereby the business unit
which recognizes revenue will also recognize the direct costs of that revenue.
So, in the instance whereby the Company or the US Subsidiary is assisted in
winning and recognizing new business through the Buyer’s direct and indirect
channels, the cost of that new business in the form of commission payments will
be recognized by the Company or the US Subsidiary through intercompany accounts
(if paid directly by the Buyer or any member of its Group), or directly by the
Company or the US Subsidiary (if paid direct) and recognised in the relevant
Earn-out Statement;

 

(b)that no indirect corporate overhead allocations relating to the US operations
of the Buyer’s Group (which have no benefit to the Company) such as that related
to public company costs, filing costs, executive management, or compliance are
to be recognized in the Earn-out Statement calculations;

 

(c)no time keeping for R&D time and inquiries are to be included in intercompany
accounting for purposes of the Earn-out Statement calculations, unless, Tim
Whelan and Edward de Salis Young agree in writing before-hand either on a
project scope and cost or in respect of a sufficiently material level of
on-going and/or ad hoc time and inquiries, which in either such case would then
be included in intercompany charges and the Earn-out Statement calculations;

 

(d)any employees hired in the US for the benefit of the Company or the US
Subsidiary (with the approval of the Sellers) will be included as an appropriate
intercompany cost transfer and recognized in the Earn-out Statement
calculations;

 

(e)all T&E costs are to be borne by each side respectively, with the Company’s
T&E costs being reflected in the Earn-Out Payment calculations;

 

(f)to the extent that EBITDA is reduced by any payment of the Employee Loyalty
Bonus, such reduction will be reversed in the Earn-out Statement; and

 

(g)to the extent that EBITDA is reduced by any matter giving rise to an
Indemnity Claim, the reduction will be reversed in the Earn-out Statement to the
extent of any payment by the Sellers pursuant to such Indemnity Claim.

 

7.6The full amount of the PKF Fee will be added back to EBITDA.

 

7.7To the extent that any act or acts of the Buyer or any member of the Buyer’s
Group which would have required one of the steps referred to at paragraph
5.3(a), 5.3(b) or 5.3(c) of this Schedule to be followed but for the requirement
in paragraph 5.3 for such act to have a negative effect on the 2017 EBITDA
and/or the 2018 EBITDA of not less than £25,000 have, in the aggregate, had a
negative effect on the 2017 EBITDA and/or the 2018 EBITDA of not less than
£50,000, there shall be added back to the relevant EBITDA an amount equal to
such negative effect. For the avoidance of doubt, no act in respect of which any
of the steps referred to at paragraph 5.3(a), 5.3(b) or 5.3(c) was taken shall
be included in such aggregate calculation.

106

Part 2

 

Indicative Table of 2017 Earn-out Payment and

2018 Earn-out Payment

 

EBITDA    Total
Increment    Increment    Mutiplier    Eo Amt    EO 1+2
Total (,000)     (,000)      (,000)             (,000)      (,000)  £2,000    
                                £2,100     £100     £100      2.00     £200    
£200  £2,200     £200     £100      2.00     £200     £400  £2,300     £300    
£100      2.00     £200     £600  £2,400     £400     £100      2.00     £200  
  £800  £2,500     £500     £100      2.00     £200     £1,000  £2,600    
£600     £100      3.00     £300     £1,300  £2,700     £700     £100    
 3.00     £300     £1,600  £2,800     £800     £100      3.00     £300    
£1,900  £2,900     £900     £100      3.00     £300     £2,200  £3,000    
£1,000     £100      3.00     £300     £2,500  £3,100     £1,100     £100    
 3.00     £300     £2,800  £3,200     £1,200     £100      3.00     £300    
£3,100  £3,300     £1,300     £100      3.00     £300     £3,400  £3,400    
£1,400     £100      3.00     £300     £3,700  £3,500     £1,500     £100    
 3.00     £300     £4,000  £3,600     £1,600     £100      3.00     £300    
£4,300  £3,700     £1,700     £100      3.00     £300     £4,600  £3,800    
£1,800     £100      3.00     £300     £4,900  £3,900     £1,900     £100    
 3.00     £300     £5,200  £4,000     £2,000     £100      3.00     £300    
£5,500  £4,100     £2,100     £100      3.50     £350     £5,850  £4,200    
£2,200     £100      3.50     £350     £6,200  £4,300     £2,300     £100    
 3.50     £350     £6,550  £4,400     £2,400     £100      3.50     £350    
£6,900  £4,500     £2,500     £100      3.50     £350     £7,250  £4,600    
£2,600     £100      3.50     £350     £7,600  £4,700     £2,700     £100    
 3.50     £350     £7,950  £4,800     £2,800     £100      3.50     £350    
£8,300  £4,900     £2,900     £100      3.50     £350     £8,650  £5,000    
£3,000     £100      3.50     £350     £9,000  £5,100     £3,100     £100    
 2.00     £200     £9,200  £5,200     £3,200     £100      2.00     £200    
£9,400  £5,300     £3,300     £100      2.00     £200     £9,600  £5,400    
£3,400     £100      2.00     £200     £9,800  £5,500     £3,500     £100    
 2.00     £200     £10,000 

107

Schedule 10. Completion Working Capital and Completion Net Debt

 

Part 1. General

 

1.BASIS OF PREPARATION OF THE COMPLETION ACCOUNTS AND COMPLETION - STATEMENT

 

1.1The Completion Accounts are to be drawn up in accordance with the bases that
appear, and in the order shown, below:

 

(a)to the extent it gives rise to a treatment which complies with UK GAAP, on a
basis consistent with and using the same accounting principles, policies,
practices and bases applied by the Company in the preparation of the Accounts
provided that:

 

(i)there will be no capitalization of R&D expenses;

 

(ii)deferred revenue recognition will assign fair value measurement, consistent
with past practice of the Company in the UK (so the amounts assigned to software
will be consistent with the Company’s existing price lists and previous sales),
of any multiple element arrangements such that, there will be deferred revenue
liabilities recorded for any undelivered elements of a contract, specifically,
software development requirements which require additional R&D and software
customization requirements which require additional costs and R&D. Fair value
will be assigned and separate revenue recognition for the following, to the
extent included in the contract:

 

(1)the software license;

 

(2)obligations related to software development or next generation releases, or
customization requirements; and

 

(3)continued support or maintenance;

 

(b)to the extent not covered by paragraph 1.1(a) in accordance with UK GAAP.

 

1.2The Completion Statement has been be derived from the Completion Accounts.

 

1.3The Completion Statement specifies (i) Completion Working Capital (ii) Cash
(iii) Debt Cash (iv) Working Capital Cash and (v) Indebtedness and (vi) the
Completion Net Debt or the Completion Net Cash.

 

2. DELIVERY OF THE COMPLETION STATEMENT

 

2.1The draft Completion Accounts and draft Completion Statement and the draft
Reconciliation Statement prepared by the Sellers are set out in Part 2 of this
Schedule 10.

 

2.2The Buyer must within 45 days (“Objection Period”) notify the Sellers either
that it agrees with the Completion Accounts, the draft Completion Statement and
the draft Reconciliation Statement or it disputes the Completion Accounts, the
draft Completion Statement and/or the draft Reconciliation Statement, explaining
in reasonable detail the

108

matters it disagrees with and the adjustments it considers should be made
(“Dispute Notice”).

 

2.3If the Buyer has notified the Sellers that it agrees with the Completion
Accounts, the draft Completion Statement or if it has not delivered a Dispute
Notice relating to the Completion Accounts or the draft Completion Statement to
the Sellers during the Objection Period, the Completion Accounts and the draft
Completion Statement will be final and binding on the Buyer and the Sellers.

 

2.4If the Buyer has notified the Sellers that it agrees with the draft
Reconciliation Statement or if it has not delivered a Dispute Notice relating to
the draft Reconciliation Statement to the Sellers during the Objection Period,
the draft Reconciliation Statement will be final and binding on the Buyer and
the Sellers.

 

2.5The costs of preparing the Completion Accounts, the Completion Statement and
the Reconciliation Statement will be borne by the Sellers, and the Buyer will
bear the costs of its review of the Completion Accounts, the Completion
Statement and the Reconciliation Statement.

 

2.6If the Buyer serves a Dispute Notice, the Buyer and the Sellers must use
their reasonable endeavours to reach agreement as to the matter or matters in
dispute within 20 Business Days of the date of delivery of such Dispute Notice
(“Resolution Period”).

 

2.7If, before the expiry of the Resolution Period, agreement is reached between
the Buyer and the Sellers as to all matters in dispute, the Sellers must, within
5 Business Days of such agreement being reached, procure the delivery to the
Buyer of a revised draft of the statement(s) in dispute incorporating such
agreed adjustments. The revised Completion Statement or Reconciliation Statement
(as appropriate) will be final and binding on the Buyer and the Sellers from the
date of its delivery to the Buyer.

 

2.8The Buyer and the Sellers shall use all reasonable endeavours to procure that
all working papers and other information as may be reasonably required by any of
them shall be made available and shall generally provide such assistance to each
other (and to the Expert pursuant to paragraph 3) as may be necessary for the
preparation and agreement of the Completion Statement and Reconciliation
Statement.

 

3. REFERENCE TO EXPERT

 

3.1In respect of any matters included in the Dispute Notice on which no
agreement is reached within the Resolution Period, such matters will be
referred, on the application of either the Buyer or the Sellers, to the Expert
for determination. The Expert will act as an expert and not as an arbitrator.

 

3.2If the Buyer and the Sellers are unable to agree on an Expert within 5
Business Days, either the Buyer or the Sellers may request the president for the
time being of the Institute of Chartered Accountants in England and Wales to
appoint an accountant of repute and with relevant experience as the Expert.

 

3.3The Expert’s decision will be communicated in writing to the Sellers and the
Buyer. Within 5 Business Days of the Expert’s decision, the Sellers must send to
the Buyer a revised Completion Statement and/or Reconciliation Statement (as
appropriate) incorporating such adjustments (if any) as have been determined by
the Expert and that

109

Completion Statement and/or Reconciliation Statement will be final and binding
on the Buyer and the Sellers from the date of its delivery to the Buyer.

 

3.4Each party shall bear its own costs in relation to the reference to the
Expert. The Expert will direct that his fees shall be borne by the parties on
the general principle that costs should follow the event on a proportionate
basis, except where it appears to the Expert that, in the circumstances, this is
not appropriate in relation to the whole or part of such costs.

 

4.ADJUSTMENT OF PURCHASE PRICE FOR COMPLETION STATEMENT

 

4.1The Purchase Price shall be:

 

(a)in respect of working capital as at 31 December 2016:

 

(i)increased by the amount by which the Completion Working Capital exceeds the
Net Working Capital PEG; or

 

(ii)reduced by the amount by which the Completion Working Capital is less than
the Net Working Capital PEG; and

 

(b)in respect of cash/debt as at 31 December 2016:

 

(i)increased by the Completion Net Cash (if Completion Cash exceeds
Indebtedness); or

 

(ii)reduced by the Completion Net Debt (if Indebtedness exceeds Completion
Cash),

 

provided that no adjustment shall be made to the Purchase Price unless the
£100,000 thresholds referred to at paragraph 4.2 below have been passed.

 

4.2On the Adjustment Date:

 

(a)if following the adjustments referred to at paragraph 4.1 of this Schedule
10, the Purchase Price is to be increased by a sum which is in excess of
£100,000 (a “Completion Accounts Price Increase”), the Buyer shall (subject to
paragraph 5 below pay to the Sellers (in the proportions set out opposite the
Sellers’ names in Schedule 1) an amount equal to the whole of the Completion
Accounts Price Increase (and, for the avoidance of doubt not, not just the
excess above £100,000) by way of telegraphic transfer to the Sellers’ Solicitors
(who are authorised by the Sellers’ to accept the same), by way of an increase
in the Purchase Price in accordance with clauses 3.1(e) and 4.4(c) of this
Agreement; or

 

(b)if following the adjustments referred to at paragraph 4.1 of this Schedule
10, the Purchase Price is to be reduced by a sum which is in excess of £100,000
(a “Completion Accounts Price Decrease”):

 

(i)the Buyer’s liability to pay the Deferred Payment pursuant to clause 4.4(b)
shall be reduced:

110

(A)on a £ for £ basis by an amount equal to the whole of the Completion Accounts
Price Decrease (and, for the avoidance of doubt not, not just the excess above
£100,000); and

 

(B)on the basis that the payment made on each Deferred Payment Date is reduced
by one-quarter of the aggregate Completion Accounts Price Decrease; and

 

(ii)to the extent that the aggregate of any Completion Accounts Price Decrease
and any Reconciliation Statement Price Decrease exceed the Deferred Payment, the
Sellers shall pay to the Buyer an amount equal to the shortfall,

 

by way of a reduction in the Purchase Price.

 

5.ADJUSTMENT OF PURCHASE PRICE FOR RECONCILIATION STATEMENT

 

5.1The Purchase Price shall be reduced by:

 

(a)the amount of any Leakage; and

 

(b)the aggregate amount of the Extraordinary Payments.

 

(the aggregate of such amounts being a “Reconciliation Statement Price
Decrease”)

 

5.2On the Adjustment Date:

 

(a)the Buyer’s liability to pay the Deferred Payment pursuant to clause 4.4(b)
shall be reduced:

 

(i)on a £ for £ basis by an amount equal to any Reconciliation Statement Price
Decrease; and

 

(ii)on the basis that the payment made on each Deferred Payment Date is reduced
by one-quarter of the aggregate Reconciliation Statement Price Decrease; and

 

(b)to the extent that the aggregate of any Reconciliation Statement Price
Decrease and any Completion Accounts Price Decrease exceeds the Deferred
Payment, the Sellers shall pay to the Buyer an amount equal to the shortfall,

 

by way of a reduction in the Purchase Price

 

6.SET-OFF

 

6.1Where a payment is due from the Sellers to the Buyer pursuant to paragraph 4
of this Schedule 10, the Buyer may (at its sole discretion) satisfy all (to the
extent possible) or part of the shortfall amount by payment out of the Deferred
Payment (in accordance with the provision of clause 6) or any Earn-out Payments
(in accordance with the provisions of Schedule 9).

111

6.2If, on or at any time prior to the Adjustment Date, a Due Amount is
outstanding, the Buyer shall be entitled to satisfy all (to the extent possible)
or part of the Seller’s liability to pay the Due Amount by way of set-off
against any Completion Accounts Price Increase, and to treat its obligation to
make the Completion Accounts Price Increase as being reduced pro tanto by the
amount so set off.

 

6.3If on the Adjustment Date there is an Outstanding Claim, the Buyer shall be
entitled (at its sole discretion) to withhold from the Completion Accounts Price
Increase an amount equal to the Estimated Liability (if any), or if the
Completion Accounts Price Increase is lower than the Estimated Liability, the
full amount of the Completion Accounts Price Increase (“Price Increase Reserved
Sum”), and shall pay the balance of the Completion Accounts Price Increase in
accordance with paragraph 4.2(a) of this Schedule 10. For the avoidance of
doubt, no amount may be withheld pursuant to this paragraph 6.3 in respect of an
Outstanding Claim in respect of which no Estimated Liability has been agreed by
the Buyer and the Sellers or opined by Counsel in accordance with the definition
of Estimated Liability set out in clause 1.1.

 

6.4Where a Price Increase Reserved Sum has been withheld by the Buyer pursuant
to paragraph 6.3 in respect of an Outstanding Claim, upon that claim becoming a
Resolved Claim the Buyer shall:

 

(a)be entitled (at its sole discretion) to satisfy all (to the extent possible)
or part of the Seller’s liability to pay the Due Amount in respect of the
relevant Resolved Claim by way of set-off against the corresponding Price
Increase Reserved Sum, and to treat its obligation to pay the Price Increase
Reserved Sum as being reduced pro tanto by the amount so set off; and

 

(a)to the extent that the Due Amount is less than the Price Increase Reserved
Sum pay to the Sellers the balance of the corresponding Price Increase Reserved
Sum (if any) after the Buyer has exercised its rights pursuant to paragraph
6.4(a) in accordance with the proportions set out in Schedule 1. Such payment
shall be made by the Buyer within 5 Business Days of the Outstanding Claim
becoming a Resolved Claim.

 

6.5Nothing in this paragraph 6 shall prejudice, limit or otherwise affect:

 

(a)any right or remedy the Buyer may have against the Sellers from time to time,
whether arising under this agreement or any of the documents executed pursuant
to this agreement; or

 

(b)the Buyer’s right to recover against the Sellers, whether before or after any
Completion Accounts Price Increase is made in accordance with this agreement,

 

save to the extent that any such right or remedy, or Losses relating thereto,
has been satisfied by the application of this paragraph 6.

 

6.6The amount of any Price Increase Reserved Sum withheld by the Buyer in
accordance with this paragraph 6 shall not be regarded as imposing any limit on
the amount of any claims under this agreement or any of the documents executed
pursuant to this agreement.

112

6.7If a Due Amount is not satisfied in full by way of set-off under paragraph
6.2 or 6.4, nothing in this agreement shall prevent any right of the Buyer to
recover the balance of the Due Amount from the Sellers (to the extent not so
satisfied) in accordance with the terms of this Agreement.

113

Part 2. Completion Accounts and Statement and Reconciliation Statement

 

Project Penrose           Completion Accounts Balance sheet - 31 Dec 2016      
Project Penrose     Balance Sheet (£’000)  Dec-16           Tangible assets 
 223  IP   314  FIXED ASSETS   537         CURRENT ASSETS      Stock   834 
Debtors Control Account   3,308  Prepayments   12  Loans to CA Inc   2 
Corporation Tax - UK   103  Cash at bank   1,886      6,145         CURRENT
LIABILITIES      Creditors Control Account   728  Accruals   51  GRNI   (20)
VAT   175  PAYE and NI   78  Payroll liabilities   56  Corporation Tax - DE 
 12  Deferred tax   24  Deferred revenue   266      1,371         TOTAL ASSETS
LESS CURRENT LIABILITIES   5,312         LONG TERM LIABILITIES      Deferred
Purchase Liability   328         NET ASSETS   4,984         CAPITAL AND
RESERVES      Reserves   4,604  Profit and loss account period   380        
TOTAL CAPITAL AND RESERVES   4,984         Check   (0)

114

Project Penrose

 

Completion Statement             £           (i) Completion Working Capital
2,820,329           (ii) Cash (101,095)         (iii) Debt Cash 1,237,325      
    (iv) Working Capital Cash 750,000           (v) Indebtedness (1,237,325)    
      (vi) Completion Net Cash 648,905           (vii) Purchase Price Adjustment
1,099,235  

115

Project Penrose

 

Cash reconciliations           Summary           £GBP  1 Lloyds Current account 
 2,933,429.98  2 Lloyds Euro a/c   24,919.12  3 Lloyds USD a/c   415,361.44  4
Co-Op Bank Current Ac   98,273.06  5 Deutsche Bank EUR a/c   148,520.56  Total 
 3,620,504.16        

 

Cash reconciliations:                                 1 Lloyds Current
account                                      £GBP Lloyds bank current ac  Per
Statement             2,974,699.95  Lloyds bank current ac  Per SAP           
 2,933,429.98  Variance                (41,269.97)                    
Difference being:                   PAYE payment 17.2.17              
 41,269.97  Variance                -0                      2 Lloyds Euro a/c 
                        EUR   FX    £GBP Lloyds bank current ac EURO  Per
Statement   30,382.90    1.16    26,118.32  Lloyds Euro a/c  Per SAP 
 28,987.90    1.16    24,919.12  Variance      1,395.00         (1,199.20)      
              Difference being:                   Payment to Fadhli (Supplier
payment)      1,395.00    1.16    1,199.20  Revised variance      -         - 
                    3 Lloyds USD a/c                          USD   FX    £GDP
Lloyds USD a/c  Per Statement   617,471.02    1.25    493,976.82  Lloyds USD
a/c  Per SAP   519,201.80    1.25    415,361.44  Revised variance    
 (98,269.22)        (78,615.38)                     Difference being:         
         Payment to Ramco (supplier payment)      98,269.22    1.25  
 78,615.38  Revised variance      -         -                      4 Co-Op Bank
Current Ac                                    £GBP Co-Op Bank Current Ac  Per
SAP             98,273.06  Co-Op Bank Current Ac  Per Statement           
 98,273.06  Variance                -                      5 Deutsche Bank EUR
a/c                          EUR   FX    £GBP                     Deutsche Bank
EUR a/c  Per Statement   173,088.27    1.17    148,520.56  Deutsche Bank EUR
a/c  Per SAP   173,088.27    1.17    148,520.56  Variance      -         - 

116

SIGNATURE PAGE

 

SIGNED as a DEED but not delivered until the date set out on page 1 by PAUL
MOAKES
in the presence of:   /s/ Paul Moakes           Witness Signature:   /s/ Hollie
Whyman           Witness Name:   Hollie Whyman           Witness Address:   9-13
St. Andrew Street
London EC4A 3AF   Occupation:   Trainee Solicitor           SIGNED as a DEED but
not delivered until the date set out on page 1 by EDWARD DE SALIS YOUNG
in the presence of:   /s/ Edward de Salis Young           Witness Signature:  
/s/ Hollie Whyman           Witness Name:   Hollie Whyman           Witness
Address:   9-13 St. Andrew Street
London EC4A 3AF   Occupation:   Trainee Solicitor           SIGNED as a DEED but
not delivered until the date set out on page 1 by SIMON PACK by his attorney
Edward de Salis Young under a Power of Attorney dated 15 February 2017 in the
presence of:   /s/ Edward de Salis Young           Witness Signature:   /s/
Hollie Whyman           Witness Name:   Hollie Whyman           Witness Address:
  9-13 St. Andrew Street
London EC4A 3AF  

117

Occupation:   Trainee Solicitor           SIGNED as a DEED but not delivered
until the date set out on page 1 by MARTIN HOLLINGSHEAD
in the presence of:   /s/ Martin Hollingshead           Witness Signature:   /s/
Hollie Whyman           Witness Name:   Hollie Whyman           Witness Address:
  9-13 St. Andrew Street
London EC4A 3AF   Occupation:   Trainee Solicitor  

118

SIGNED as a DEED but not delivered until the date set out on page 1 on behalf of
Wireless Telecommunications Group, Inc. by Timothy Whelan, a director
in the presence of:   /s/ Timothy Whelan           Witness Signature:   /s/ Dale
A. Long           Witness Name:   /s/ Dale A. Long           Witness Address:  
25 Eastmans Rd., Parsippany, NY           Occupation:   Controller          
SIGNED as a DEED but not delivered until the date set out on page 1 on behalf of
WIRELESS TELECOM GROUP INC. a company incorporated in New Jersey by Timothy
Whelan being a person who, in accordance with the laws of that territory, is
acting under the authority of the company
in the presence of:   /s/ Timothy Whelan           Witness Signature:   /s/ Dale
A. Long           Witness Name:   /s/ Dale A. Long           Witness Address:  
25 Eastmans Rd., Parsippany, NY           Occupation:   Controller  

119