Private and Confidential

 

Dated:February 13, 2014

 

_____________________________

 

HUGH DOHERTY and LAURENCE SEYMOUR

 

and

 

THE PURCHASER

 

and

 

THE GUARANTORS

 

_____________________________________________

 

Share Sale Agreement 

relating to shares in 

OBAR Camden Holdings Limited

 

_____________________________________________

 

 

 

 

CONTENTS

 

Clause Heading Page       1. Sale of the Shares 1 2. Consideration 2 3.
Completion 2 4. Warranties 4 5. Tax 8 6. Protective Covenants 8 7. Definitions,
Interpretation and terms and conditions 8 Schedule 1 The Sellers, their
Shareholdings and Consideration 11 Schedule 2 Corporate Particulars 13 Schedule
3 The Warranties 15 Schedule 4 Adjustment to the Consideration 24 Schedule 5
Completion Obligations 28 Schedule 6 Limitations on Liabilities under the
Warranties 29 Schedule 7 Tax Covenant 33 Schedule 8 Protective Covenants 41
Schedule 9 Addresses for Notices 43 Schedule 10 Property 44 Schedule 11 Terms
and Conditions 45 Schedule 12 Definitions and Interpretation 49

 

 

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THIS AGREEMENT dated February 13, 2014 is made

 

BETWEEN

 

(1)The persons whose names and addresses are shown in column (1) of Part 1 of
Schedule 1 (The Sellers) (each a "Seller" and together the "Sellers");

 

(2)KOKO (CAMDEN) LIMITED, a private limited company registered in England and
Wales under company no. 08763877 and whose registered office is at 55 Colmore
Row, Birmingham, B3 2AS (the "Purchaser"); and

 

(3)The persons whose names and addresses are shown in column (1) of Part 2 of
Schedule 1 (The Guarantors).

 

BACKGROUND

 

(A)The Sellers are the registered holders and the beneficial owners of the
number of shares in the Company set opposite their names in column (2) of
Schedule 1 (the "Sale Shares"), which are fully paid or credited as fully paid.

 

(B)The Company is the beneficial owner of the entire issued share capital of the
Subsidiary, particulars of which are set out in Part 2 of Schedule 2 (Corporate
Particulars).

 

(C)The Sellers wish to sell and the Purchaser is willing to purchase all of the
Sale Shares (being all the shares in the Company currently registered in their
names) on the terms and conditions of this Agreement.

 

(D)The Guarantors have agreed to guarantee to the Sellers the performance of
this Agreement (including in particular, but without limitation, the payment of
all sums due to the Sellers from the Purchaser in accordance with this
Agreement) by the Purchaser subject to the terms and conditions set out below
and have agreed to provide security to the Sellers in respect of such
obligations.

 

Sale and Purchase

 

1.SALE OF THE SHARES

 

1.1Sale and Purchase

 

Each of the Sellers shall sell with full title guarantee those shares set out
opposite his name in Schedule 1 (The Sellers) and the Purchaser shall purchase
the Sale Shares on the terms of this Agreement free from all Encumbrances and
together with all rights attaching to them.

 

1.2Right to Sell

 

Each Seller agrees with the Purchaser that he has the right to sell and transfer
the full legal and beneficial interest in the Sale Shares set out opposite his
name in Schedule 1 (The Sellers) to the Purchaser on the terms set out in this
Agreement and acknowledges that the Purchaser is purchasing the Sale Shares in
reliance on the warranties and undertakings given by the Sellers in this
Agreement.

 

1.3Waiver of Pre-emption Rights

 

Each Seller waives all rights of pre-emption conferred upon him by the articles
of association of the Company or in any other way in respect of the sale and
transfer of the Sale Shares to the Purchaser and the transfer of any shares by
each other or either of Oliver Bengough and/or Alex Rutherford to the Purchaser,
whether such transfers are effected before, after or simultaneous with the
transfer of the Sale Shares pursuant to this Agreement.

 

1.4Conditionality of the Agreement

 

The sale of the Sale Shares pursuant to this Agreement is conditional upon the
delivery to the Sellers (or such person as they shall nominate):

 

(a)by Oliver Bengough of a share pledge in a form agreed between the Sellers,
Alex Rutherford and Oliver Bengough in favour of the Sellers and to Alex
Rutherford pursuant to which he grants to the Sellers and Alex Rutherford a
charge over his interests in shares in Mint Leisure Limited by way of security
in respect of his obligations under this Agreement to the Sellers and to Alex
Rutherford under the Alex SPA; and

 

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(b)by TRINAD Capital Master Fund Ltd, the Negative Pledge and Charge Agreement
duly executed by TRINAD Capital Master Fund Ltd in respect of the granting of
security in favour of the Sellers and Alex Rutherford in respect of the
respective obligations of TRINAD Capital Master Fund Ltd. under this Agreement
and under the Alex SPA;

 

(c)by the Subsidiary of a deed of debenture by way of fixed charge over the
Property executed by the Subsidiary in a form agreed between the Sellers and
Alex Rutherford pursuant to which the Subsidiary grants security in respect of
its obligations to the Sellers under this Agreement and to Alex Rutherford under
the Alex SPA

 

(d)a deed of reimbursement (the “Deed of Reimbursement”) in the agreed form to
be entered into between the Purchaser, Alex Rutherford, Hugh Doherty, Laurence
Seymour, Oliver Bengough and Mint Group Holdings Limited in relation to the
reimbursement of certain fees incurred by the parties thereto (other than the
Purchaser) in relation to entering into this transaction and all sums to be paid
thereunder to the Sellers, Alex Rutherford and Mint Group Holdings Limited have
been received into the Sellers’ Solicitors Client Account or otherwise properly
paid directly to the relevant payee thereunder

 

2.CONSIDERATION

 

2.1Consideration

 

The consideration for the sale of the Sale Shares (subject to adjustment in
accordance with Clause 2.2) (the “Consideration”) shall be:

 

(a)the payment of £127,500 to Hugh Doherty in respect of the 2,468 Ordinary
Shares registered in his name as at Completion; and

 

(b)the payment of £1 to Hugh Doherty in respect of the 2,750 Deferred Ordinary
Shares registered in his name as at Completion;

 

(c)the payment of £127,500 to Laurence Seymour in respect of the 2,468 Ordinary
Shares registered in his name as at Completion; and

 

(d)the payment of £1 to Laurence Seymour in respect of the 2,750 Deferred
Ordinary Shares registered in his name as at Completion

 

in each case in accordance with the remaining provisions of this Agreement.

 

2.2Adjustment of Consideration

 

The Consideration shall be adjusted as required in accordance with Schedule 4
(Adjustment to the Consideration).

 

3.COMPLETION

 

3.1Time and Place for Completion

 

Completion shall take place on 31 March 2014 (the “Completion Date”) at the
offices of Winston & Strawn London, City Point, One Ropemaker Street, London
EC2Y 9HU (or any other location agreed upon in writing by the Sellers and the
Purchaser)

 

3.2Sellers’ Completion Obligations

 

The Purchaser shall not be obliged to complete this Agreement unless each of the
Sellers complies with the requirements of Part 1 of Schedule 5 (Completion
Obligations) in relation to the relevant Completion.

 

3.3Purchaser's Completion Obligations

 

Upon completion of all the matters referred to in Part 1 of Schedule 5
(Completion Obligations) in relation to the relevant Completion, if the
Purchaser shall fail to comply with the requirements of Part 2 of Schedule 5
(Completion Obligations) and/or shall fail to complete the purchase of each of
the Sale Shares the Sellers shall not be obliged to complete this Agreement.

 

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3.4Conditionality of Completion

 

None of the Sellers nor the Purchaser shall be obliged to effect Completion
pursuant to this Agreement unless Alex Rutherford and the Purchaser have entered
into an agreement for the sale by Alex Rutherford to the Purchaser of the whole
of the issued share capital in the Company registered in the name of Alex
Rutherford.

 

3.5Interest

 

If either party is late in paying any sum due to the other under this Agreement,
the party under the obligation to make the payment (the “Payer”) shall pay
interest to the party owed the payment (the “Payee”) on the sum which is not
paid on the due date. Interest shall accrue at the rate of 4% above the base
rate of Barclays Bank PLC from time to time and shall accrue on a daily basis
and be paid on demand semi-annually in arrears and shall be compounded if not
paid. In the case of the Consideration, if not paid at Completion it shall bear
interest at the rate of 4% over the base rate from March 31, 2014 to June 30,
2014 and 8% over the base rate thereafter. The applicable rate shall apply both
before and after any judgment has been obtained.

 

3.6Consequences of Default

 

If any of the provisions of Part 1 of Schedule 5 (Completion Obligations) is not
complied with in relation to the relevant Completion:

 

(a)if such default is due to a failure of any Seller, the Purchaser shall not be
obliged to complete this Agreement and may (in addition and without prejudice to
all other rights or remedies available to it):

 

(i)defer the relevant Completion to a date not more than 28 days thereafter (and
so that the provisions of this Clause 3.5 shall apply to Completion as so
deferred);

 

(ii)proceed to the relevant Completion so far as practicable and without
prejudice to its rights under this Agreement;

 

(iii)waive all or any of the requirements contained in Part 1 of Schedule 5
(Completion Obligations) at its discretion

 

Provided always that save with the written agreement of the relevant Seller (the
“Non-Defaulting Seller”), the Non-Defaulting Seller shall not be obliged to
complete the sale of his Sale Shares unless the sale of the Sale Shares held by
the other Seller is completed;

 

(b)if such default is due to a failure of the Purchaser to comply with its
obligations under Schedule 5 as referred to in Clause 3.4(b):

 

(i)neither of the Sellers shall be obliged to complete this Agreement and may
(in addition and without prejudice to all other rights and remedies available to
them) and by joint notice signed by each of the Sellers:

 

(a)   defer the relevant Completion to a date not more than 28 days thereafter
(and so that the provisions of this Clause 3.5 shall apply to Completion as so
deferred);

 

(b)   proceed to the relevant Completion so far as practicable and without
prejudice to its rights under this Agreement;

 

(c)   waive all or any of the requirements contained in Part 2 of Schedule 5
(Completion Obligations) at their discretion; and

 

(ii)the Purchaser shall pay interest to the Sellers at the rate specified in
Clause 5 with effect from the due date until the date that all sums due to the
Sellers pursuant to Part 2 of Schedule 5 have been paid in full.

  

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4.WARRANTIES AND SPECIFIC INDEMNITIES

 

4.1Warranties

 

Each of the Sellers severally warrants to the Purchaser that each of the
Warranties in Schedule 3 is true and accurate as at the date of this Agreement.

 

4.2Reliance

 

The Sellers acknowledge that the Purchaser is entering into this Agreement in
reliance on each Warranty.

 

4.3Disclosure

 

The Warranties are given subject to matters fairly disclosed in this Agreement
or in the Disclosure Letter with sufficient detail to identify the nature and
scope of the matters disclosed but a matter shall be regarded as disclosed by
the Disclosure Letter only to the extent that accurate information, which is not
misleading, about that matter is contained in the Disclosure Letter in
sufficient detail for the Purchaser reasonably to identify the nature and scope
of that matter.

 

4.4Knowledge not to prevent claim

 

Except in relation to matters fairly disclosed in the Disclosure Letter in
accordance with Clause 4.3, none of the Warranties shall be qualified by any
imputed or constructive knowledge on the part of the Purchaser, its agents or
advisers and no such knowledge shall prejudice or be used as a defence to any
Warranty Claim or otherwise operate to reduce the amount recoverable. The
Purchaser warrants that as at the date hereof it is not intending to make a
Warranty Claim against the Sellers for breach of Warranty in respect of any
matter, event or circumstances it has actual knowledge of as at the date of this
Agreement and knows constitutes a breach of a Warranty.

 

4.5Construction of Warranties

 

Each of the Warranties set out in the several paragraphs of Schedule 3
(Warranties) is separate and independent and, except as expressly provided to
the contrary in this Agreement, is not limited by reference to any other
paragraphs of Schedule 3 (Warranties).

 

4.6Waiver of Rights

 

Each Seller agrees with the Purchaser (for itself and for the Companies and
their directors, officers, employees and consultants as Third Parties) that,
save in the case of fraud, he shall waive any rights or claims which such Seller
may have in respect of any misrepresentation, inaccuracy or omission in, or
from, any information or advice supplied or given by the Companies or their
directors, officers, employees or consultants on which the Seller may have
relied in connection with the giving of the Warranties and the preparation of
the Disclosure Letter.

 

4.7Non-discharge of Warranties

 

None of the Warranties or the Tax Covenant shall be deemed in any way modified
or discharged by reason of Completion nor shall the Purchaser be deemed to have
knowledge (as opposed to having actual knowledge) arising from any investigation
or inquiry made on behalf of the Purchaser and accordingly neither Completion
nor deemed, constructive or imputed knowledge which would otherwise be imputed
on the Purchaser shall prejudice any claim which the Purchaser shall be entitled
to bring or shall operate to reduce any amount recoverable under this Agreement.

 

4.8Reduction in Consideration

 

Any payment made by a Seller for any breach of the Warranties or under the Tax
Covenant shall be deemed to be a reduction in the Consideration in relation to
that Seller.

 

4.9Notifications by Purchaser

 

If the Purchaser becomes aware of a matter or circumstance which is likely to
give rise to a Warranty Claim, the Purchaser shall give notice to each of the
Sellers in writing specifying that matter or circumstance in reasonable detail
(given the level of detail available to the Purchaser at the time) as soon as
reasonably practicable after it becomes aware of that matter or circumstance.
Any failure by the Purchaser to give notice as contemplated by this clause shall
not prevent the Purchaser from making any Warranty Claim arising from that
circumstance but the Sellers shall not be liable for any losses or liabilities
incurred to the extent that they are foreseeably increased as a result of such
failure.

 

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4.10Specific Indemnities

 

Each Seller agrees and undertakes to the Purchaser that, subject to the
provisions of clause 4.11 below he shall indemnify the Purchaser in respect of
2.525% of any Losses arising in the Company or the Subsidiary:

 

(a)by reason of the Company and/or the Subsidiary not having registered with the
Data Protection Registrar prior to the date of this Agreement; and

 

(b)in relation to any claim from any third party (not being a Seller, Oliver
Bengough or Alex Rutherford or any person who is a connected person in relation
to a Seller, Oliver Bengough or Alex Rutherford) which has been received by the
Company and/or the Subsidiary and which has been notified to the insurers of the
Company or the Subsidiary on or before the date of this Agreement and which such
insurers refuse or otherwise fail to pay by reason of such insurance not
covering the claim, being void or voidable or otherwise (save to the extent that
such Losses relate to any excess payable by the Company or the Subsidiary under
the terms of the relevant insurance).

 

4.11Sellers’ Protections

 

Schedule 6 (Limitations) shall apply so as to limit the liability of the Sellers
in respect of the Warranties, the Tax Covenant and the indemnities provided
pursuant to clause 4.10 save that:

 

(a)Schedule 6 shall not apply to the extent that any claim arises out of fraud,
dishonesty, wilful misstatement or wilful concealment on the part of a Seller;

 

(b)The provisions of paragraphs 1, 2, 3 (mutatis mutandis), 7 (c), 8 (mutatis
mutandis) and 10 (mutatis mutandis) only of Schedule 6 shall apply to any claim
and any liability arising pursuant to clause 4.10(a) or 4.10(b).

 

4.12Sellers’ Covenants

 

Each of the Sellers covenants in respect of himself that:

 

(a)he has the requisite capacity and authority to enter into and perform this
Agreement and any other documents that are to be executed by him pursuant to
this Agreement (the "Sellers’ Completion Documents");

 

(b)this Agreement and the Sellers’ Completion Documents will, when executed by
him, constitute binding obligations on him enforceable in accordance with their
respective terms;

 

(c)no consent, approval, authorisation or order of any court of government or
local agency or body or any other person is required by him for the execution or
implementation of this Agreement and the Sellers’ Completion Documents and
compliance with the terms of this Agreement and the Sellers’ Completion
Documents does not:

 

(i)conflict with, result in the breach of or constitute a default under any
agreement, instrument or obligation by which he may be bound or any provision of
the articles of association of the Company or Subsidiary; or

 

(ii)result in the creation, imposition, crystallisation or enforcement of any
Encumbrance on, over or affecting any of the assets of the Company or the
Subsidiary;

 

(d)his shares in the Company, details of which are set out in column (2) of
paragraph (9) of part 1 of Schedule 2 constitute the whole of the allotted and
issued share capital of the Company (when taken with the shares in the Company
currently registered in the names of Oliver Bengough and Alex Rutherford on the
date of this Agreement) and are fully paid up or credited as fully paid up as to
their nominal value;

 

(e)he is the legal and beneficial owner of the Sale Shares shown against his
name in column 2 of Schedule 1 and is entitled to transfer the Sale Shares to
the Purchaser free from any Encumbrances;

 

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(f)there is no Encumbrance on, over or affecting any of the Sale Shares and no
person has claimed to be entitled to any such Encumbrance;

 

(g)apart from this Agreement, the Alex SPA and the share purchase agreement
between Oliver Bengough and the Purchaser, there is no agreement, arrangement or
commitment outstanding which calls for the allotment, issue or transfer of, or
accords to any person the right to call for the allotment, issue or transfer of,
any share or loan capital of the Company or the Subsidiary;

 

(h)neither he nor any person connected with him has any claim of any kind
(actual or contingent) against the Companies (or any one of them) on any account
as at the date of this Agreement;

 

(i)he irrevocably and unconditionally waives and undertakes to procure that each
person being a connected person shall waive with effect from Completion any
claim (actual or contingent) which any of them may have against the Companies
(or any one of them);

 

(j)there is no indebtedness outstanding at Completion from him to either of the
Companies;

 

(k)all indebtedness outstanding at Completion from either of the Companies to
him has either been repaid or irrevocably waived in full (including interest);

 

(l)no bankruptcy order has been made in respect of him, nor has any petition for
any such order been presented;

 

(m)no application has been made in respect of him for an interim order under
section 253 Insolvency Act 1986;

 

(n)he is not currently in a position whereby he is unable to pay or has no
reasonable prospect of being able to pay any debt as those expressions are
defined in section 268 Insolvency Act 1986;

 

(o)no person has been appointed by the court to prepare a report in respect of
him under section 273 Insolvency Act 1986;

 

(p)no interim receiver has been appointed of the property of him under section
286 Insolvency Act 1986; and

 

(q)he is not insolvent or bankrupt within the meaning of any applicable law;

 

and the transfer of the Sale Shares to the Purchaser shall be deemed to include
expressly and be made subject to all the above provisions of this clause 4.12.

 

4.13No Claims unless Completion Occurs

 

In the event that Completion does not occur then the Sellers shall not be liable
for breach of Warranty or any indemnity under this clause 4 or any claim under
Schedule 7.

 

4.14Reduction in liability under Warranty Claims in respect of prior recovery

 

The amount that the Purchaser shall be entitled to recover under a Warranty
Claim which arises out of events, facts, matters or circumstances in relation to
which the Sellers have indemnified the Purchaser pursuant to any of the
indemnities provided pursuant to Clause 4.10 shall be reduced by the amount paid
by the Sellers pursuant to the relevant indemnity.

 

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5.INTEREST ON LATE PAYMENT

 

5.1Applicable interest rate

 

If either party is late in paying any sum due to another under this Agreement,
the party under the obligation to make payment (the “Payer”) shall pay interest
to the party owed the payment (the “Payee”) on the sum which is not paid on the
due date. Interest shall accrue at the rate of 4% above the base rate of
Barclays Bank PLC from time to time and shall accrue on a daily basis and be
paid on demand monthly in arrears and shall be compounded if not paid. That rate
shall apply both before and after any judgment has been obtained.

 

5.2Interest not subject to deduction

 

Interest shall be paid without any deduction or withholding, except as required
by law. If interest payable under this Clause is subject to deduction or
withholding, the Payer shall increase the amount paid so that the net amount
received by the Payee is the amount which he would have received had no
deduction or withholding been made.

 

6.GUARANTEE

 

6.1Guarantee by the Guarantors

 

In consideration of the Sellers agreeing to enter into this Agreement with the
Purchaser, each of the Guarantors irrevocably and unconditionally jointly and
severally as primary obligor (and not just as surety) undertakes and guarantees
to the Sellers the performance by the Purchaser of all its obligations under
this Agreement including the due and punctual payment of all sums now or
subsequently payable by the Purchaser to each of the Sellers under this
Agreement. For the avoidance of doubt, all of the Guarantors obligations to the
Sellers under this Agreement or otherwise are to be read subject to clause 6.5.

 

6.2Default by the Purchaser

 

If the Purchaser defaults in the performance of any obligations under this
Agreement, the Guarantor shall on demand perform (or procure the performance of)
that obligation, so that the same benefits shall be conferred on the Sellers as
they would have received if the Purchaser had duly performed that obligation
(including, without limitation, the payment of interest with effect from the
relevant due date until the discharge of all sums due to the Sellers pursuant to
Part 2 of Schedule 5).

 

6.3Continuing Obligations

 

The obligations and liabilities of each Guarantor in this Clause:

 

(a)are continuing obligations and liabilities which shall remain in force until
all the obligations of the Purchaser under this Agreement have been performed.

 

(b)shall not be affected by anything which, but for this Clause, might operate
to release or otherwise exonerate him from or affect its obligations, including:

 

(i)any time, indulgence, waiver or consent given at any time to the Purchaser or
another person or any amendment to or variation of the terms of any of this
Agreement or another document referred to in this Agreement, save to the extent
that such time, indulgence, waiver, consent, amendment or variation has been
agreed in writing between the Purchaser and the Sellers and such agreement
specifically refers to such time, indulgence, waiver, consent, amendment or
variation being made in respect of this Agreement or the relevant document
referred to in this Agreement in which event the obligations of the Guarantor
will be deemed to have agreed to be bound by, and shall have the benefit of the
terms of such agreement for time, indulgence, waiver, consent, amendment or
variation to the same extent as such benefits have been granted to the
Purchaser;

 

(ii)any abstention from perfecting or enforcing any rights or remedies against
the Purchaser or another;

 

(iii)a legal limitation, disability, incapacity or other circumstances relating
to the Purchaser or another person;

 

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(iv)an irregularity, unenforceability or invalidity of the obligations of a
party to any of this Agreement;

 

(v)the dissolution, amalgamation or reconstruction of the Purchaser;

 

(vi)the insolvency of, or any other similar proceedings or arrangement in
relation to the Purchaser

 

Provided always and it is agreed by each of the Sellers, the Purchaser and the
Guarantor that in the event that the Sellers or any them releases in writing the
Purchaser from any obligation or liability arising under this agreement then
such release shall apply equally to the Guarantor to the effect that following
such release, the Guarantor shall not be under any greater obligation to the
Sellers than the Purchaser would be following such release.

 

6.4No Requirement to exhaust remedies against the Purchaser

 

The obligations and liabilities contained in this Clause may be enforced without
the Sellers having first taken any action against the Purchaser.

 

6.5Demands under this Guarantee

 

The Sellers may make one or more demands under this clause 6 provided always,
and the Seller hereby agrees that, in the case of a default in respect of the
payment of any monetary obligation of the Purchaser under this Agreement, such
demand shall not be made until the date being 10 days after such obligation
became due and owing and the Purchaser has remained in default, and in the case
of a non-monetary obligation, until the date being 30 days after such obligation
arose.

 

7.TAX

 

The provisions of Schedule 7 (Tax Covenant) shall have effect in relation to tax
liabilities of each of the Companies.

 

8.PROTECTIVE COVENANTS

 

The provisions of Schedule 8 (Protective Covenants) shall have effect following
Completion to protect the Purchaser.

 

9.DEFINITIONS, INTERPRETATION AND TERMS AND CONDITIONS

 

The definitions and rules of interpretation set out in Schedule 12 (Definitions)
and the terms and conditions set out in Schedule 11 (Terms and Conditions) shall
apply to this Agreement.

 

10.POWER OF ATTORNEY

 

10.1Each of the Sellers declares that until such time as the stock transfer
delivered pursuant to the Purchaser pursuant to Schedule 5 has been duly stamped
for stamp duty purposes, he shall, in respect of any of the Sale Shares after
Completion he shall:

 

(a)hold the Sale Shares and the dividends and other distributions of profits or
surplus or other assets declared, paid or made in respect of them after
Completion and all rights arising out of or in connection with them in trust for
the Purchaser and any successors in title to the Purchaser; and

 

(b)at the Purchaser’s cost, deal with and dispose of the Sale Shares and all
such dividends, distributions and rights as are described in clause 3.7(a) as
the Purchaser or any such successor may direct Provided that the Purchaser shall
not create or require such Seller to accept any further obligations or give any
warranties or representations or create any further liabilities in addition to
those arising under this agreement for or on the part of or on behalf of such
Seller in relation to such dealing or disposal.

 

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10.2Each of the Sellers appoints the Purchaser as his lawful attorney for the
purpose of signing any written resolution (or receiving notices of and attending
and voting at all meetings) of the members of the Company from Completion to the
day on which the Purchaser or its nominee is entered in the register of members
of the Company as the holder of the Sale Shares and for that purpose each of the
Sellers authorises:

 

(a)         the Company to send any written resolutions, notices or other
communications in respect of his holding of Sale Shares to the Purchaser; and

 

(b)         the Purchaser to complete in such manner as it thinks fit and to
return written resolutions, proxy forms, consents to short notice and any other
document required to be signed by him in his capacity as a member,

 

and this power of attorney (which is given by way of security to secure the
performance of obligations owed by the relevant Seller to the Purchaser under
this Agreement) shall be irrevocable.

 

10.3The Purchaser agrees and undertakes to each of the Sellers that it will, as
soon as reasonably practicable following Completion and, in any event, within 30
days, submit to HMRC and pay all stamp duty due and payable in respect of the
transfer of the Sale Shares pursuant to the stock transfers delivered by each
Seller to the Purchaser pursuant to Schedule 5.

 

11.Purchaser’s Warranties and Covenants

 

11.1The Purchaser hereby warrants to each of the Sellers as follows:

 

11.1.1The Purchaser has the requisite capacity and authority to enter into and
perform this Agreement and any other documents that are to be executed by the
Purchaser pursuant to this Agreement (the "Purchaser’s Documents").

 

11.1.2This Agreement and the Purchaser’s Documents will, when executed by the
Purchaser, constitute binding obligations of the Purchaser enforceable in
accordance with their respective terms.

 

11.1.3No consent, approval, authorisation or order of any court of government or
local agency or body or any other person is required by the Purchaser for the
execution or implementation of this Agreement and the Purchaser’s Documents and
compliance with the terms of this Agreement and the Purchaser’s Documents do
not:

 

(a)conflict with, result in the breach of or constitute a default under any
agreement, instrument or obligation by which the Purchaser may be bound or any
provision of the articles of association of the Purchaser; or

 

(b)result in the creation, imposition, crystallisation or enforcement of any
Encumbrance on, over or affecting any of the assets of the Purchaser.

 

11.2The Purchaser hereby covenants to each of the Sellers that:

 

11.2.1no administration order has been made, no petition for one has been
presented and no notice of intention to appoint an administrator has been given
in respect of the Purchaser;

 

11.2.2no administrator, receiver or administrative receiver has been appointed
in respect of the Purchaser or any of its assets and no application for the
appointment of an administrator has been made by the Purchaser or any of its
shareholders in accordance with the out of court procedure under the Enterprise
Act 2002;

 

11.2.3the Purchaser has not failed, nor is unable, to pay any of its debts as
they fall due, within the meaning of section 123 of the Insolvency Act 1986;

 

11.2.4no voluntary arrangement has been proposed under section 1 of the
Insolvency Act 1986 in respect of the Purchaser and the Purchaser has not made
or proposed any arrangement or composition with its creditors or any class of
them;

 

11.2.5no steps have been taken to obtain a moratorium under Schedule A1 of the
Insolvency Act 1986 or otherwise in respect of the Purchaser;

 

11.2.6no distress, execution or other process has been levied on Purchaser’s
assets or action taken at the Purchaser’s address to repossess goods in the
possession of the Purchaser;

 

9

 

 

11.2.7no unsatisfied judgment is outstanding against the Purchaser and no demand
has been served on the Purchaser under section 123(1)(a) of the Insolvency Act
1986;

 

11.2.8no meeting to approve a compromise or scheme of arrangement under the
Companies Act 2006 has been convened and no such compromise or scheme has been
agreed to or sanctioned in respect of the Purchaser;

 

11.2.9has not entered into any compromise or arrangement with its creditors or
any class of its creditors generally;

 

11.2.10the Purchaser is not insolvent according to any laws in any relevant
jurisdiction

 

and the transfer of the Sale Shares to the Purchaser and the agreement of the
Sellers to effect such transfer in accordance with the terms and conditions of
this Agreement shall be deemed to include expressly and be made subject to all
the above provisions of this clause 11.

 

IN WITNESS of which this Agreement has been executed and delivered as a deed by
the parties on the date at the beginning of this Agreement.

 

10

 

 

SCHEDULE 1

 

PART 1 – The Sellers, their Shareholdings and Consideration

 

Shareholder   Shares   Ownership Percentage   Cash Consideration
payable Hugh Doherty  

2,468 ordinary shares of 5p each

2,750 deferred ordinary shares of 5p each

 

 

2.525% of ordinary shares of 5p each

50% of deferred ordinary shares of 5p each

 

£127,500

£1

Laurence Seymour  

2,468 ordinary shares of 5p each

2750 deferred ordinary shares of 5p each

 

 

2.525% of ordinary shares of 5p each

50% of deferred ordinary shares of 5p each

 

£127,500

£1

 

11

 

 

PART 2
The Guarantors

 

Guarantor   Address Oliver Bengough   TRINAD Capital Master Fund Limited   OBAR
Camden Limited  

 

 

12

 

 

Schedule 3
The Warranties

 

Unless the context otherwise requires, references in this Schedule 3 to the
"Company" shall mean the Company and the Subsidiary.

 

1.            Company and Subsidiary

 

1.1           The information in parts 1 and 2 of Schedule 2 relating to the
Company and the Subsidiary respectively is true and accurate.

 

1.2           The Company has not allotted or issued any securities that are
convertible into shares of the Company.

 

1.3           No shares of the Company have been issued and no transfer of
shares in the Company has been registered, except in accordance with applicable
law and the then applicable articles of association or other constitutional
documents of the Company;

 

1.4           There has been no transaction pursuant to or as a result of which;
(i) any of the shares of the Company; or (ii) any asset owned, purportedly owned
or otherwise held by the Company is liable to be transferred or re-transferred
to another person or which gives or may give rise to a right of compensation or
other payment in favour of another person under the law of any relevant
jurisdiction.

 

1.5           No transaction at an undervalue (within the meaning of Section 423
of the Insolvency Act 1986) (a) relating to any of the shares of the Company or
(b) to which the Company has been a party, has been effected prior to the date
of this Agreement.

 

1.6           The Company has not at any time:

 

(a)           issued any loan capital;

 

(b)          reduced its share capital;

 

(c)          redeemed any share capital;

 

(d)          purchased any of its shares; or

 

(e)          forfeited any of its shares (or taken a surrender in lieu of any
forfeiture).

 

1.7           The Company has not directly or indirectly provided any financial
assistance for the purpose of the acquisition of shares in breach of the
provisions of the Companies Acts.

 

1.8           The Company is not, nor has it agreed to become, bound by any
guarantee, indemnity, surety or similar commitment.

 

1.9           The Company does not act or carry on business in partnership with
any other person and is not a member of any corporate or unincorporated body,
undertaking or association.

 

1.10         The Company is not a party to any joint venture agreement or
arrangement or any agreement or arrangement under which it is to participate
with any other person in any business.

 

1.11         The Company has never had any subsidiary or held any interest in
any shares in any other company other than the Subsidiary.

 

1.12         The Subsidiary has never held any interest in any shares in any
other company.

 

2.            Arrangements with the Seller

 

2.1           During the three year period prior to the date of this Agreement
there were no, and there are not currently outstanding, any contracts,
agreements or arrangements (including, without limitation, customer and supply
contracts) to which the Company is a party and in which any director or
shareholder of the Company or any person connected with any of them is
interested (and for the purposes of this paragraph a person shall be deemed to
be interested in a contract if, were he a director of the Company, he would be
interested in that contract for the purposes of section 177 of the Companies
Act).

 

2.2           The business of the Company does not depend on the use of assets
owned by or facilities or services provided by either Seller (other than those
services which are to be provided pursuant to the Transitional Services
Agreement or which may be provided by a Seller in his capacity as an officer or
employee of the Company) which are not being acquired pursuant to this
Agreement. 

 

13

 

 

3.             Insolvency of the Company

 

3.1           No order has been made, no resolution has been passed, no petition
has been presented and no meeting has been convened for the winding up of the
Company or for a provisional liquidator to be appointed in respect of the
Company and the Company has not been a party to any transaction which could be
avoided in a winding up.

 

3.2           No administration order has been made, no petition for one has
been presented and no notice of intention to appoint an administrator has been
given in respect of the Company.

 

3.3           No administrator, receiver or administrative receiver has been
appointed in respect of the Company or any of its assets. No application for the
appointment of an administrator has been made by the Company or either of the
Sellers in accordance with the out of court procedure under the Enterprise Act
2002.

 

3.4           The Company has not failed, nor is unable, to pay any of its debts
as they fall due, within the meaning of section 123 of the Insolvency Act 1986.

 

3.5           No voluntary arrangement has been proposed under section 1 of the
Insolvency Act 1986 in respect of the Company and the Company has not made or
proposed any arrangement or composition with its creditors or any class of them.

 

3.6           No steps have been taken to obtain a moratorium under Schedule A1
of the Insolvency Act 1986 or otherwise in respect of the Company.

 

3.7           No distress, execution or other process has been levied on the
Company's assets or action taken at the Company’s address to repossess goods in
the possession of the Company.

 

3.8           No unsatisfied judgment is outstanding against the Company and no
demand has been served on the Company under section 123(1)(a) of the Insolvency
Act 1986.

 

3.9           No meeting to approve a compromise or scheme of arrangement under
the Companies Act 2006 has been convened and no such compromise or scheme has
been agreed to or sanctioned in respect of the Company.

 

3.10         The Company has not entered into any compromise or arrangement with
its creditors or any class of its creditors generally.

 

3.11         The Company is not bankrupt or insolvent within the meaning of any
applicable law.

 

4.             Statutory books and documents filed

 

4.1           The statutory books, including all registers and minute books, of
the Company have been properly kept and are up to date and contain an accurate
and complete record of the matters with which those books should deal. No notice
or allegation has been received that any such books or registers are incomplete
or incorrect or should be rectified.

 

4.2           All documents which should have been delivered by the Company to
the Registrar of Companies in England and Wales are complete and accurate and
have been properly so delivered in accordance with any time-scale provided for
such delivery.

 

4.3           The copy of the memorandum and articles of association of the
Company Disclosed is currently in force, has embodied in it or annexed to it a
copy of each resolution as referred to in section 29 of the Companies Act 2006,
is accurate and complete in all respects and fully sets out the rights and
restrictions attaching to each class of shares in the Company.

 

4.4           Since the Accounts Date the members of the Company in general
meeting, or of any class of them, have not passed any resolution.

 

5.             Accounts

 

5.1           The Accounts have been prepared in all material respects in
accordance with the United Kingdom Generally Accepted Accounting Practice and
applicable laws and show a true and fair view of and accurately reflect the
state of affairs and the financial position of the Company as at the Accounts
Date and the profits/losses of the Company for the financial year ended on that
date.

 

5.2           Since the Accounts Date, the Company has carried on its business
in the ordinary and usual course and there has been no material adverse change
in the financial or trading position of the Company and, so far as the Sellers
are aware, no fact, matter, event or circumstance has occurred which they are
aware will give rise to any such change, which fact, matter, event or
circumstance is specific to the Company only.

 

14

 

 

5.3           The Management Accounts (a copy of which is attached to the
Disclosure Letter):

 

(a)          have been prepared on a prudent basis consistent with the basis for
the preparation of the management accounts for the Subsidiary over the period
since the Subsidiary became a subsidiary of the Company; and

 

(b)          so far as the Sellers are aware, contain no material errors or
omissions.

 

6.             Property

 

6.1           Schedule 10 contains a list of the real estate owned, controlled,
used or occupied by the Company or in which the Company has any interest or
liability (whether actual or contingent) and the information given in Schedule
10 is complete and accurate.

 

6.2           The written replies given by the Sellers or the Sellers'
Solicitors to any written enquiries raised in respect of the Property were, so
far as the Sellers are aware complete and accurate in all material respects and
contain no material omissions as at the date they were given and so far as the
Sellers are aware, no fact, matter, event or circumstance has occurred which the
Sellers are aware would result in any material changes to such replies. In this
paragraph, the expression "written" shall include e-mail.

 

6.3           The Company has not given any guarantee or indemnity for any
liability relating to the Property.

 

6.4           In relation to the Lease, the parties thereto have 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.

 

6.5           In relation to the Lease, all principal rent and additional rent
and all other sums payable by the Company ("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.

 

6.6           There is no pending rent review under the Lease.

 

6.7           The Deed of Variation dated 7 December 2004 (between the Company,
CGIS Camden Palace Limited and Scottish Courage Limited) which effected a
variation of the Lease did not oblige the Company (nor any party connected with
it) to pay rent under the Lease prior to 1 July 2005 (being the ‘Rent
Commencement Date’ as defined in the Lease), and was not treated as so obliging
the Company or any party connected with it and, for the avoidance of doubt,
neither the Company nor any party connected with it did otherwise pay rent in
relation to the Lease prior to 1 July 2005.

 

6.8           The Company properly pays Value Added Tax on rents due under the
Lease because the landlord under the lease has made an option to tax (or an
election to waive exemption) in relation to the Property.

 

7.             Assets and Contracts

 

7.1           So far as the Sellers are aware, there are no assets used by the
Company and which are necessary for the operation of the business which are not
owned by the Company, and the facilities and services to which the Company has a
contractual right, include all rights, properties, assets, facilities and
services necessary to enable the Company to carry on its business in the manner
in which it is currently carried on

 

7.2           Complete and accurate copies of the Material Contracts (being all
contracts with which annual costs or revenue exceeds £10,000 or are otherwise
material in the context of the business) being the contracts listed in Schedule
14 have been Disclosed.

 

8.             Compliance and Litigation

 

8.1           So far as the Sellers are aware the Company and its officers and
employees (past and present) in the course of their respective duties have
complied in all material respects with all applicable laws and regulations of
the United Kingdom (including in respect of immigration compliance).

 

8.2           The Subsidiary has:

 

(a)obtained and maintained in full force and effect and paid all sums due in
respect of:

 

15

 

 

(i)a Premises Licence granted under the Licensing Act 2003 in respect of the
Property authorising the licensable activities comprising the sale of alcohol,
the provision of late night refreshment and the provision of regulated
entertainment comprising of live music, recorded music, dancing and the showing
of film;

 

(ii)a licence from Phonographic Performance Limited in relation to the playing
in public of sound recordings; and

 

(iii)a licence from the Performing Rights Society for the playing in public of
copyrighted music (together the “Licences”);

 

(b)not received any notice that there has been any breach of the terms and
conditions of the Licences and the Seller is not aware of any fact, matter or
circumstance which he is aware is likely to lead to the Licences being breached,
withdrawn or terminated by the relevant issuing authority or body.

 

8.3           There is no other material licence, approval or authority (other
than the Licences referred to in paragraph 8,2 above) which is necessary for the
operation of the business of the Subsidiary as currently conducted by the
Subsidiary.

 

8.4           The Company has not received any notice in writing from any
authority with statutory powers to enforce the same, that the Company does not
have, or is otherwise in material breach of, nor is the Seller aware of any
circumstances which might result in the revocation of any of the licences,
consents, approvals, permissions, permits, certificates, qualifications,
registrations and other authorisations (public and private) necessary for the
operation of its business in the manner in which it is currently carried on.

 

8.5           Neither the Company nor the Seller is involved in any civil,
criminal, or arbitration proceedings in relation to the business and which would
involve any appearance before any court, tribunal or similar body with the
authority to make orders which are legally binding on the Company or the
relevant director in any jurisdiction (together the "Proceedings") and so far as
the Seller is aware:

 

(a)          no Proceedings nor any notice in writing threatening any such
Proceedings against the Company have been received by the Company; and

 

(b)          there are no facts or circumstances which the Seller is aware will
give rise to any such Proceedings being commenced by or against the Company.

 

9.            Employees

 

9.1           The schedule of the employees of the Company that has been
Disclosed includes complete and accurate details of all the employees of the
Company. No change to the remuneration or benefits of the employees is due or
expected within six months from the date of this Agreement. The Company has not
made any outstanding offer nor agreed to employ any person who is not an
employee of the Company at the date of this Agreement.

 

9.2           Complete and accurate details of the terms and conditions of
employment, including all remuneration, incentive arrangements and other
benefits, for any employee of the Company who is paid more than £50,000 per
annum have been Disclosed. No employees are entitled to receive a bonus or other
incentive payment or benefit.

 

9.3           Other than salary for the current months, reimbursement of
out-of-pocket expenses and pay in respect of accrued but untaken holiday for the
current holiday year, no amount is owing to any present or former officer,
employee or worker of the Company.

 

9.4           So far as the Sellers are aware the Company has complied in all
material respects at all relevant times with:

 

(a)                  all its obligations under the Employment Legislation; and

 

(b)                 all its obligations to applicants for employment, its
employees and workers and former employees and workers.

 

9.5           The Company has not offered, promised or agreed to vary the terms
of employment of any of its officers or employees.

 

16

 

 

9.6           The Company does not operate or contribute (and has never operated
or contributed) to a pension scheme or any like arrangement, save to the extent
required by law. Full details of all pension schemes operated by the Company are
set out in the Disclosure Letter.

 

9.7           Details of any existing consultancy and outsource service
arrangements entered into by the Company have been Disclosed.

 

9.8           The Company has obtained and maintained full and complete records
in relation to each of its employees' eligibility to work for the Company in the
United Kingdom in accordance with the provisions of the Immigration Acts which
were in force on the date when each individual's period of continuous employment
with the Company commenced.

 

9.9           All employees of the Company have valid and subsisting permission
or authority to remain in the UK and work for the Company and in relation to any
senior employee earning £50,000 per annum or more, no such permission or
authority will expire within the next six (6) months.

 

9.10         So far as the Sellers are aware, no individual is currently
employed or engaged in such a way or in such a role that could expose the
Company to or render it liable for a penalty (whether civil or criminal) under
the Immigration Acts.

 

9.11         No employee or worker of the Company is, or has within the last
three years been, involved in any criminal proceedings relating to the business
of the Company.

 

9.12         No officer or employee of the Company earning over £50,000 per
annum has given notice of resignation or is under notice of dismissal, nor is
there any plan or proposal to dismiss any officer such employee and so far as
the Sellers are aware no notice has been received from such an employee whereby
he or she proposes to resign from his or her employment.

 

10.           Indebtedness

 

10.1         The Company has no liability or contingent liability under any
guarantee, indemnity or other agreement to secure or incur a financial or other
obligation relating to the failure of another person to perform its obligations.

 

10.2         No part of the borrowings or indebtedness in the nature of
borrowings of the Company is dependent on the guarantee or indemnity of, or
security provided by, another person. No contract or arrangement to which the
Company is party is dependent on the guarantee or indemnity of, or security
provided by, another person.

 

10.3         The Disclosure Letter contains full details of each of the
investment, deposit and bank accounts maintained by or on behalf of the Company
and of the banks and other financial institutions at which they are kept.

 

10.4Neither the Company nor the Subsidiary have any overdraft, loan or other
financial facilities or any similar arrangement in the nature of borrowings from
any banks or financial institutions.

 

11.          Insurances

 

11.1         Copies of the insurance policies maintained by the Company
("Policies" and each a "Policy") have been Disclosed.

 

11.2         All premiums due under the Policies have been paid

 

11.3         There are no outstanding claims and so far as the Seller is aware
nothing has occurred which they are aware will result in a claim being made
under the Policies or which they consider would be required to be notified to
the insurers and so far as the Seller is aware, nothing has been done or omitted
to be done which they are aware has made or will make any Policy void or
voidable or as a result of which the renewal of any Policy might be refused or
the premiums due in respect of them may be liable to be materially increased.

 

11.4         None of the Policies will cease to be available as a result of
Completion.

 

11.5         The Company has at all times maintained all insurances which it is
required by law to carry and all such insurances continue in full force and
effect.

 

17

 

 

12.           Intellectual Property

 

12.1         Complete and accurate details of all registered Intellectual
Property Rights owned and/or used by the Company and copies of all licences and
other agreements relating to Intellectual Property Rights are contained in the
Disclosure Letter.

 

12.2         All registered Intellectual Property Rights owned by the Company
(including the domain names listed in Schedule 13 are in the sole legal and
beneficial ownership of the Company free from all licences, charges or other
encumbrances and in either case so far as the Sellers are actually aware nothing
has been done or omitted to be done whether by the Company or by any person
which would jeopardise the validity, enforceability or subsistence of any
Intellectual Property Rights

 

12.3         All Intellectual Property Rights which are material to the
operations of the Company and which are owned by third parties are the subject
of binding and enforceable licences from third parties in favour of the Company

 

(i)of which none will terminate, or be liable be to terminated by the other
party to such licence, by virtue of this Agreement, and of which no notice to
terminate has been received;

 

(ii)all parties to which have fully complied with all obligations in those
licences; and

 

(iii)in relation to which no claim, dispute or proceeding has arisen or is
foreseeable;

 

and in either case nothing has been done or omitted to be done whether by the
Company or as far as the Sellers are aware by any person who would jeopardise
the validity, enforceability or subsistence of any such licence.

 

12.4         Any Intellectual Property Rights and domain names owned and/or used
by the Company which are capable of registration have been registered or are the
subject of an application for registration, and is or will when duly registered
be valid, binding and enforceable and:

 

(a)          in the case of registrations, all renewal fees have been paid and
renewals made by their due date and all such action necessary to preserve and
maintain the registration has been taken;

 

(b)          in the case of registrations contained in the Disclosure Letter
each is presently used by the Group and is in full force and effect and has not
been abandoned;

 

(c)          in the case of pending applications, the Sellers are aware of no
reason why any such applications should not proceed to grant;

 

(d)          none of the Intellectual Property Rights are subject to any use,
claim, application, proceeding or attack by any other person; and

 

(e)          nothing is required to be done in relation to any such Intellectual
Property Right within 30 days of the date of this Agreement the omission of
which would jeopardise the Company's rights in relation to that Intellectual
Property Right.

 

12.5         No licences, registered user or other rights have been granted or
agreed to be granted by the Company to any person in respect of any registered
Intellectual Property Rights, except as Disclosed.

 

12.6         Except where the Company has a valid and subsisting licence to do
so, the Company does not use any Intellectual Property Rights in respect of
which any third party has any right, title or interest, and all such licences
are Disclosed.

 

12.7         So far as the Sellers are aware, at no time during the past 2 years
has there been any unauthorised use or infringement by any person of any
Intellectual Property Rights or domain names owned and/or used by the Company
which may jeopardise the validity or subsistence of such Intellectual Property
Rights or agreements relating to the same.

 

12.8         So far as the Sellers are actually aware none of the processes
employed, or products or services dealt in, by the Company infringes any rights
of any third party relating to intellectual property nor makes the Company
liable to pay a fee or royalty and no claims have been made, threatened or are
pending, in relation to any Intellectual Property Rights against the Company.

 

12.9         Except in the ordinary course of business and on a confidential
basis (and for the avoidance of doubt this includes disclosure to professional
advisors), no disclosure has been made of any of the confidential information,
Intellectual Property, financial or trade secrets or customer or supplier lists
of the Company.

 

18

 

 

12.10       In accordance with paragraph 12.9 above, any agreements or
arrangements relating to the confidentiality of information are valid and
enforceable.

 

12.11      Any names used by the Company other than its corporate name are
contained in the Disclosure Letter and do not infringe the rights of any person.

 

12.12      The Company does not use any software products, materials or IT
systems which incorporate, contain or use in any manner (in whole or in part)
any open source or general public licence materials.

 

12.13      The Company has not:

 

(a)          incorporated or combined open source or general public licence
materials with the Intellectual Property Rights; or

 

(b)          distributed or licensed open source or general public licence
materials in conjunction with any Intellectual Property Rights.

 

13.           Other

 

The Company is not liable to pay, in connection with the sale of any of the Sale
Shares or otherwise in connection with this Agreement or the transactions
contemplated by this Agreement:

 

(a)          any success or other fee, brokerage, commission or like payment; or

 

(b)          any sum whatsoever to any of its directors, employees, agents or
advisers (past or present).

 

14.          Effect of this Agreement

 

The execution and delivery of, and compliance with the terms of, this Agreement
does not and will not:

 

(a)          conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of any agreement or instrument
to which the Company or the Seller is a party;

 

(b)          relieve any person from any obligation to the Company (whether
contractual or otherwise) or enable any person to determine any such obligation
or any right or benefit enjoyed by the Company or to exercise any right whether
under an agreement with or otherwise in respect of the Company;

 

(c)          result in the creation, imposition, crystallisation or enforcement
of any Encumbrance on any of the Sale Shares or on any of the assets of the
Company; or

 

(d)          result in any present or future indebtedness of the Company
becoming due or capable of being declared due and payable prior to its stated
maturity.

 

15.          Accuracy of Information

 

All information contained in replies to written enquiries raised by the
Purchaser or its professional advisers with the Sellers or their professional
advisers in relation to the Company or its affairs, assets or liabilities are
true and accurate in all material respects at the time that the information was
given and so far as the Sellers are aware there is no other fact, matter or
circumstance which renders any such information misleading.

 

16.          Tax

 

16.1         Provision or reserve (as appropriate) has been made in the Accounts
for all Taxation liable to be assessed on the Company or for which the Company
is accountable in respect of all Profits earned, accrued or received on or
before the Accounts Date, and in respect of any Event occurring or deemed to
have occurred on or before the Accounts Date. Since the Accounts Date no
Taxation has or may have arisen to the Company (or would have arisen but for the
use of any available reliefs) other than in the ordinary course of the Company's
business.

 

16.2         The Company has made all returns, claims for relief, applications,
notifications, computations, reports, accounts, statements, supplies of
information, registrations and assessments ("Returns") it is or was required by
law to submit to a Taxation Authority. All Returns have been in the required
form and have been properly submitted by the Company within any relevant time
limits. The Returns were and remain complete, true and accurate and give full
disclosure of all material facts and circumstances. The Company has prepared,
kept and preserved full and sufficient records as required by law and to enable
it to deliver correct and complete Returns and to calculate any present or, so
far as possible, future liability for Taxation of the Company in respect of
assets held at Completion. Such records are accurate and up-to-date.

 

19

 

  

16.3         The Company has paid by the due date all Taxation which it has
become liable to pay. The Company has, where legally obliged to do so, deducted
or withheld amounts in respect of Taxation and has accounted by the due date to
the relevant Taxation Authority for the Taxation so deducted or withheld.

 

16.4         The Company has not, within the last four years, paid or become
liable to pay, nor so far as the Sellers are aware are there any circumstances
which may cause the Company to become liable to pay, any penalty, fine,
surcharge or interest in connection with Taxation. The Company is not and has
not within the last six years been, and is not so far as the Sellers are aware
likely to be, involved in a dispute (which term does not include a routine
audit) in relation to Taxation.

 

16.5         The entry into or Completion of this Agreement will not result in
any charge to Tax on the Company pursuant to section 179 of the Taxation of
Chargeable Gains Act 1992 or section 780 of the Corporation Tax Act 2009 or
otherwise.

 

16.6         The Company has not entered into any election pursuant to sections
171A or 179A of the Taxation of Chargeable Gains Act 1992 or section 792 of the
Corporation Tax Act 2009.

 

16.7         There are set out in the Disclosure Letter (with express reference
to this paragraph) particulars of all current arrangements relating to Group
Relief to which the Company is a party including particulars of all claims for
Group Relief which have been made within the last 4 years and:

 

(a)details of any payment which the Company has made or is liable to make under
any arrangement or agreement for the surrender of group relief to that group
company; and

 

(b)all payments due to the Company under any arrangement or agreement for
surrender of Group Relief by it for periods ending on or prior to Completion.

 

16.8         The Company is not, and has not in the last 4 years been, party to
any group payment arrangements under sections 59F to 59H of the Taxes Management
Act.

 

16.9         The Company is a registered and taxable person for the purposes of
the Value Added Tax Act 1994, such registration not being pursuant to paragraph
2 Schedule 1 Value Added Tax Act 1994 and not subject to any conditions imposed
by or agreed with HM Revenue & Customs.

 

16.10         There is set out in the Disclosure Letter with express reference
to this warranty full details of any option to tax exercised by the Company
under Part 1 schedule 10 of the Value Added Tax Act 1994. All such elections
have full effect and none is likely to be ineffective by virtue of paragraph 12
schedule 10 of the Value Added Tax Act 1994.

 

16.11         No person has acquired any securities, any securities option or
any interest in securities (in each case, within the meaning of Part 7 of the
Income Tax (Earnings and Pensions) Act 2003) where the right or opportunity to
acquire the same is or was available by reason of an employment of that or any
other person for the purposes of that Part.

 

16.12         No relevant steps (within the meaning of Part 7A of the Income Tax
(Earnings and Pensions) Act 2003) have been taken in pursuance of, or has some
connection with, arrangements concerned with the provision of rewards or
recognition or loans in connection with any employee or former employee (or any
associate of such person) of the Company.

 

16.13         The Disclosure Letter contains details of all land transactions
(as defined in section 43 of the Finance Act 2003) to which the Company was a
party, and of all interests which the Company holds in land, in respect of which
the Company may have any future obligations relating to stamp duty land tax
under Schedule 17A of the Finance Act 2003.

 

16.14         The Company was incorporated in, and is and always has been
resident in, the United Kingdom for taxation purposes and is not and has never
been resident or treated as resident or has or has had a branch, agency or
permanent establishment in any other jurisdiction (or constitutes or has
constituted an agent or permanent establishment of any person) for any tax
purpose or for the purposes of any double taxation agreement. The Company is not
liable to, and so far as the Sellers are aware, has at no time incurred any,
Taxation in any jurisdiction other than the United Kingdom.

 

16.15         The Company is a close company within the meaning of section 439
of the Corporation Tax Act 2010. The Company has never been a close
investment-holding company (as defined in Section 34 of the Corporation Tax Act
2010).

 

20

 

 

16.16         No loan or advance within sections 455, 459 and 460 of the
Corporation Tax Act 2010 has been made or released by the Company and there is
no agreement or arrangement for such loan advance or debt to be made or
released. The Company has not met any expenses for participators treated as a
distribution by virtue of section 1064 of the Corporation Tax Act 2010 and there
has been no alteration of the share or loan capital of the Company within
section 98 of the Inheritance Tax Act 1984 ("IHTA").The Company has not made any
transfers of value within sections 94 and 202 of the IHTA, nor has it received
any value such that a liability might arise under section 199 of the IHTA, nor
has it been a party to associated operations in relation to a transfer of value
as defined in section 268 of the IHTA.

 

16.17         No person has acquired any securities, any securities option or
any interest in securities (in each case, within the meaning of Part 7 of the
Income Tax (Earnings and Pensions) Act 2003) where the right or opportunity to
acquire the same is or was available by reason of an employment of that or any
other person for the purposes of that Part.

 

16.18         The Company has not received any asset as mentioned in section 282
of the TCGA.

 

16.19         So far as the Sellers are aware, there are no circumstances
whereby any such power as is mentioned in section 212 of the IHTA could be
exercised in relation to any shares in, securities of, or assets of the Company.

 

16.20         There is no unsatisfied inheritance tax liability attached to the
Sale Shares or any asset of the Company and none of them are subject to any HMRC
charge as mentioned in section 237 and 238 of the IHTA.

 

16.21         So far as the Seller are aware, all arrangements, transactions or
series of transactions between the Company and any person connected to or
associated with the Company have been and are on arm's length terms, and the
Company is not, nor has it been, liable to have its profits for Tax purposes
adjusted pursuant to Part 4 of the Taxation (International and Other Provisions)
Act 2010 (provisions not at arm's length).

 

16.22         The Company has not been involved in a demerger to which a
chargeable payment under Chapter 5 of Part 23 of the Corporation Tax Act 2010
could arise.

 

21

 

 

Schedule 4
Adjustment to the Consideration

 

Part 1 - Calculation of Adjustment

 

In this Schedule, unless the context otherwise requires:

 

"Adjustment" means the amount calculated and payable in cash by the Purchaser or
the Sellers (as the case may be) in accordance with this Schedule 4;

 

“Company’s auditors” for the purposes of this Schedule 4 shall be the auditors
of the Company current as at the Completion Date;

 

“Completion Balance Sheet” has the meaning given to it in paragraph 5(a) below;

 

"Net Working Capital" has the meaning given to it in paragraph 2 below; and

 

"Net Working Capital Statement" has the meaning given to it in paragraph 5(d)
below.

 

1.The Adjustment to the Consideration shall be calculated and payable as
follows:

 

(a)if the Net Working Capital is more than £57,000 the Adjustment payable by the
Purchaser to each of the Sellers shall be equal to 2.525% of the amount by which
Net Working Capital is more than £47,000; and

 

(b)if the Net Working Capital is less than of £37,000 (i.e the deficit in Net
Working Capital is more than £10,000 below the target Net Working Capital of
£47,000) the Adjustment repayable to the Purchaser by each of the Sellers shall
be equal to 2.525% of the amount by which the Net Working Capital is less than
£47,000

 

Provided always that no sum will be due and payable unless and until Completion
has been effected under this Agreement in accordance with Clause 3 and Schedule
5

 

2.For this purpose, "Net Working Capital" means the consolidated net working
capital of the Company and the Subsidiary as at the date of this agreement as
adjusted and ascertained in accordance with the following provisions of this
Schedule 4 and set out in the agreed or determined Net Working Capital
Statement;

 

3.The Net Working Capital shall be ascertained from the Completion Balance
Statement which shall be prepared:

 

(a)in accordance with the specific accounting treatments set out in Paragraph
5(c) of this Schedule 4; and, subject thereto.

 

(b)subject to paragraph 5(c) of this Schedule 4, in accordance with the
treatments, methods, practices, policies and principles adopted by the Company
and the Subsidiary for the preparation of the Accounts (and for the avoidance of
doubt containing a general provision for Taxation);

 

(c)insofar as no treatment, method, practice, policy or principal previously
adopted in the Accounts as referred to in (b) above, such, treatment, method,
practice, policy or principal which complies with generally accepted accounting
principles applied in the UK, incorporating Statements of Standard Accounting
Practice, Financial Reporting Standards and Urgent Issues Task Force Abstracts
issued by the Accounting Standards Board including in relation to the exercise
of accounting discretion and judgement.

 

4.For the avoidance of doubt:

 

(a)paragraph 3(a) shall take precedence over paragraphs 3(b) and 3(c); and

(b)paragraph 3(b) shall take precedence over paragraph 3(c).

 

5.For the purposes of calculating the Net Working Capital:

 

(a)the parties in conjunction with Alex Rutherford and Oliver Bengough shall
undertake a joint stock take of the Subsidiary in the morning of the day
immediately following the date of this Agreement to ascertain the level of stock
in the Subsidiary and the Sellers shall in conjunction with Alex Rutherford and
Oliver Bengough procure as soon as practicable (and in any event no later than
30 days after the date of this Agreement) the preparation of a consolidated
balance sheet of the Companies as at the date of this Agreement in the form set
out in part 3 of this Schedule 4 and otherwise in accordance with this Schedule
(the "Completion Balance Sheet") which shall be prepared by the Sellers in
conjunction with Alex Rutherford and Oliver Bengough and have been approved by
the Companies auditors;

 

22

 

 

(b)the Completion Balance Sheet shall only take account of information available
to the parties at the date of delivery of the Net Working Capital Statement from
the Sellers to the Purchaser in accordance with paragraph 6 below (the "First
Delivery Date") and not take account of any event happening after the First
Delivery Date (except in relation to information known to the parties about that
event at the First Delivery Date);

 

(c)the Completion Balance Sheet shall not take account of:

 

(i)          any event happening after Completion (save that information
allowing a more accurate quantification of a liability which existed on or
before Completion will be taken into account to the extent that such information
is available at the First Delivery Date; and

 

(ii)         any matter arising from the change of control of the Company
effected by the sale of the Sale Shares and the sale by Alex Rutherford and
Oliver Bengough of the other shares in the Company to the Purchaser.

 

(d)for the purposes of preparing the Completion Balance Sheet:

 

(i)a provision of £7,500 will be made for any stamp duty land tax payable in
relation to a Deed of Variation dated 7 December 2004 between the Company, CGIS
Camden Palace Limited and Scottish Courage Limited which effected a variation to
the Lease to the extent that the relevant stamp duty land tax has not been paid
such amount to include any penalties and interest payable in respect of the late
payment of such sum (calculated in reliance on the warranty at Schedule 3
paragraph 6.7 and without prejudice to any claim by the Purchaser under the Tax
Covenant or otherwise);

 

(ii)a liability shall be included in the Completion Balance Sheet for any
corporation tax on any income, profits or gains earned, accrued or received by
the Companies on or before the date of this Agreement calculated as if the
Completion Date were the end of an accounting period of the Companies;

 

(iii)no asset or liability shall be recorded in the Completion Balance Sheet in
respect of deferred tax;

 

(iv)stock-in-trade shall be valued at the lower of cost (excluding the cost of
warehousing, selling, distribution and administration) and market value (which
shall itself be taken as the lower of net realisable value and replacement
cost);

 

(v)normal adjustments and allowances will be made for unusable, unsaleable or
deteriorated stocks;     (vi)the unamortised amount of the contribution by the
landlord of the Property by way of any rent free period under the lease of the
Property and any contributions towards the refurbishment of the premises shall
be excluded from the calculation of the Net Working Capital;    
(vii)appropriate provisions will be made for bad or doubtful debts;

 

23

 

 

(viii)an accrual shall be included in the Completion Balance Sheet for VAT,
general sales tax or other similar sales taxes, payroll taxes (including
national insurance contributions) and any tax penalty payments and interest
charges thereon where a notice has been raised by HMRC or the relevant payment
was paid late or overdue as of the date of this Agreement; and

 

(ix)such further provisions, adjustments and allowances will be made as the
Company’s auditors agree to be appropriate.

 

(e)the Company’s auditors shall be instructed to certify the calculations of the
Net Working Capital (based on the amounts shown in the Completion Balance Sheet)
and produce a certified statement of the Net Working Capital (the “Net Working
Capital Statement”).

 

6.The Sellers in conjunction with Alex Rutherford shall procure that there is
delivered to the Purchaser a copy of the Net Working Capital Statement and the
Completion Balance Sheet as soon as reasonably practicable after they are
prepared and in any event not later than the date falling 30 days after the date
of this agreement. If the Sellers and Alex Rutherford fail to comply with his
obligations under this paragraph, the Purchaser will automatically have the
right to produce (in conjunction with the Company’s auditors and at the Sellers’
cost) the Net Working Capital Statement and the provisions of this schedule
shall be read mutatis mutandis.

 

7.Within 30 Business Days of delivery of the certified statement referred to in
Paragraph 6, the Purchaser may notify the Sellers in writing of any item or
items it wishes to dispute, failing which the Net Working Capital Statement
shall be final and binding on the parties.

 

8.If the amount of the Net Working Capital Statement is disputed in accordance
with Paragraph 7, the item or items in dispute shall be determined by:

 

(a)such firm of independent chartered accountants as the parties may agree in
writing; or

 

(b)failing agreement on the identity of the firm of independent chartered
accountants within a further seven days from the expiry of the period referred
to above in paragraph 7, such firm of chartered accountants as may be appointed
for this purpose on the application of any party to this Agreement by the
President for the time being of the Institute of Chartered Accountants in
England and Wales.

 

9.The Adjustment shall be payable within 21 days of its being ascertained under
the above provisions.

 

10.If there is a shortfall such that the Net Working Capital is less than
£37,000 the Adjustment shall be paid by payment to the Purchaser’s Solicitors
Client Account or such other account as the Purchaser may notify in writing to
the Sellers in immediately available funds by electronic transfer under the
CHAPS system.

 

11.If the Net Working Capital is more than £57,000 the Adjustment shall be paid
by payment to the Seller’s Solicitors Client Account or such other account as
the Sellers may notify in writing to the Purchaser in immediately available
funds by electronic transfer under the CHAPS system.

 

12.The Adjustment shall be deemed to be an increase in or, as the case may be,
reduction in the Consideration.

 

13.For the purposes of calculating, determining and agreeing the Net Working
Capital in accordance with this Schedule, the parties shall, and (to the extent
that they are able) shall procure that the Companies shall provide the Sellers
and Purchaser, the Company’s auditors and the accountants appointed in
accordance with paragraph 8 with all information, assistance and access to books
of account, documents, files and papers which they reasonably require.

 

Part 2 - Basis on which Independent Accountants are to act

 

14.The accountants appointed under paragraph 8 of Part 1 above (the "Independent
Accountants") shall act on the following basis:

 

(a)they shall act as experts and not as arbitrators;

 

24

 

 

(b)their terms of reference shall be to determine an amount which in their
opinion represents the item or items in dispute, as notified to them in writing
by either the Sellers or the Purchaser within 30 Business Days of their
appointment;

 

(c)the Sellers and the Purchaser shall each provide the Independent Accountants
with all information which they reasonably require and the Independent
Accountants shall be entitled (to the extent they consider it appropriate) to
base their opinion on such information and on the accounting and other records
of the Companies;

 

(d)the determination of the Independent Accountants shall (in the absence of
manifest error) be conclusive;

 

(e)their costs shall be borne equally as between the Sellers on the one hand and
the Purchaser on the other hand; and

 

(f)if they become unwilling or incapable of acting, then a new firm of chartered
accountants shall be appointed and the provisions of paragraph 8 above shall
apply mutatis mutandis in relation to the making of such appointment.

 

Part 3 – Form of Completion Balance Sheet

 

Completion Net Working Capital   £   £ CURRENT ASSETS       Bank & Cash X    
Stock X     Debtors & Prepayments X           X         CREDITORS      
Creditors & Accruals X     Other Creditors X     Directors Loan Account X    
VAT/NIC/Corporation Tax X           X         Adjustments:       [●] [X]     [●]
X           X         COMPLETION NET WORKING CAPITAL     X         Other net
assets/liabilities excluded from net working capital: X     Intangible Fixed
Assets X     Tangible Fixed Assets X     Other Creditors – unamortised Landlord
contributions (X)   X COMPLETION NET ASSETS      

 

25

 

 

Schedule 5
Completion Obligations

 

Part 1 - Sellers’ Completion Obligations

 

The matters to be undertaken by the Seller at Completion for the purposes of
Clause 5.2 are as follows:

 

1.Sellers’ Obligations at Completion

 

1.1At Completion the Sellers shall deliver or cause to be delivered to the
Purchaser:

 

(a)transfers of the Sale Shares duly completed in favour of the Purchaser or as
it may direct; and

 

(b)the share certificates representing the Sale Shares (or an express indemnity
in a form satisfactory to the Purchaser in the case of any found to be missing).

 

Part 2 - Purchaser's Completion Obligations

 

1.The Completion

 

The Purchaser shall, upon compliance by the Sellers with their obligations under
Part 1 above pay to such account of the Sellers’ Solicitors as they shall advise
in writing the sum of £255,002 in immediately available funds by electronic
transfer under the CHAPS system.

 

26

 

 

 

Schedule 6
Limitations on Liabilities under the Warranties, Tax Covenant and Indemnity

 

For the purposes of this Schedule 6, references to the Company shall be deemed
to include a separate reference to the Subsidiary.

 

Exclusions

 

1.The Sellers shall not be liable in respect of a Warranty Claim to the extent
that the matter or circumstance giving rise to that claim:

 

(a)was taken into account in the Completion Balance Sheet prepared for the
purposes of determining the Net Working Capital by way of an identified (as
opposed to general) provision in respect of such matter or circumstance or a
note constituting Disclosure of that matter or circumstance or a statement in
any report forming part of the Accounts constituting Disclosure of that matter
or circumstance; or

 

(b)is the subject of a claim under the Tax Covenant and the Purchaser receives a
payment in respect thereof under the Tax Covenant.

 

2.The Sellers shall not be liable in respect of a Warranty Claim to the extent
that the relevant liability would not have arisen but for:

 

(a)a change in legislation announced or the withdrawal of any extra-statutory
concession previously made by any Taxation Authority, after the date of this
Agreement (whether or not the change or withdrawal purports to be effective
retrospectively in whole or in part); or

 

(b)a change after the date of this agreement in the accounting policies,
practices, treatments or methods adopted by the Company other than a change made
in order to comply with generally accepted accounting principles applied in the
UK, incorporating Statements of Standard Accounting Practice, Financial
Reporting Standards and Urgent Issues Task Force Abstracts issued by the
Accounting Standards Board to the extent that the Company did not comply with
such generally accepted accounting principles applied in the UK prior to the
date of this agreement;

 

(c)in respect of Tax Warranties only, a change in the nature of, transfer,
winding up or cessation of a trade or business carried on by or by the Company
after the date of this Agreement;

 

(d)the Company or the Subsidiary failing to maintain the levels of insurance
applicable to the Company and the Subsidiary at the Completion Date at the date
the Warranty Claim is made;

 

(e)the Company or the Subsidiary having done (or omitted to do) something before
the Date of this Agreement at the Purchaser’s written request or with the
Purchaser’s prior written consent

 

  or is otherwise subject to the provisions of Schedule 6.

 

Direct Claims.

 

3.If the Purchaser becomes aware of facts which appear reasonably likely to give
rise to a Warranty Claim against the Sellers (other than any Third Party Claim
governed by paragraph 10 of this Schedule 6), the Purchaser shall, as reasonably
practicable, give the Sellers written notice in reasonable detail, given the
extent of the information available to the Purchaser, of all relevant
circumstances with respect to the Warranty Claim. Except in any case where, in
the reasonable belief of the Purchaser, immediate action is required by
Purchaser to avoid further prejudice to the Purchaser, Sellers shall have twenty
days from the date of the notice to remedy or cure the Warranty Claim.

 

This paragraph 3, and permitting the Sellers the opportunity to undertake
remedial action pursuant to this paragraph is without prejudice to:

 

27

 

 

(a)the rights of the Sellers under paragraph 10 (Conduct of Third Party Claims)
of this Schedule 6; and

 

(b)the rights and remedies of the Purchaser pursuant to this agreement to the
effect that if the remedy or cure is not, in the reasonable opinion of the
Purchaser, satisfactory or complete, or if the Sellers fail or refuse to
undertake and complete a remedy or cure within the 20 day period specified
above, the Purchaser shall thereafter have all rights and remedies with respect
to the Sellers afforded to the Purchaser under this Agreement pursuant and
subject to the remaining provisions of this Schedule 6 or applicable law to
recover with respect to the Warranty Claim.

 

De minimis claims

 

4.Subject to paragraph 4, the Sellers shall not be liable in respect of any
Warranty Claim unless the liability in respect of such Warranty Claim is at
least £10,000.

 

5.If more than one Warranty Claim arises from, or is caused by, the same or
similar matter, matters, circumstance or circumstances and the aggregate amount
of damages to which the Purchaser would be entitled as a result of those
Warranty Claims is equal to or exceeds the sum specified in paragraph 3,
paragraph 3 shall not apply to any of those Warranty Claims.

 

Threshold

 

6.Neither Seller shall be liable in respect of any Warranty Claim unless the
liability for all Warranty Claims together with the aggregate liability of all
other single Warranty Claims of £10,000 or more exceeds exceeds 2.525% of
£200,000, in which case the Purchaser shall be entitled to all amounts resulting
from those claims (and not just the excess over that sum).

 

Aggregate limit

 

7.Subject to paragraph 6, the maximum aggregate liability of each of the Sellers
in respect of:

 

(a)any and all liability in relation to Warranty Claims (excluding any and all
claims under those Warranties set out in paragraph 16 (Tax) of Schedule 3
(Warranties) or the Key Warranties but including all costs of recovery incurred
by the Purchaser and/or the Companies) shall not exceed:

 

(i)2.525% of the total liability for breach of the relevant Warranty; and

 

(ii)in aggregate as regards the total amount claimed against the Sellers an
amount equal to 50% of the Consideration

 

(b)any and all liability in relation to the Warranties set out in paragraph 16
(Tax) of Schedule 3 including all costs of recovery incurred by the Purchaser
and/or the Companies shall not exceed, in the case of each Seller, 2.525% of the
total liability for breach of the relevant Warranty set out in paragraph 16
(Tax);

 

(c)any and all claims under the Key Warranties or those Warranties set out in
paragraph 16 (Tax) of Schedule 3 (Warranties), or the indemnities in clause
4.10(a) and 4.10(b) and/or under the Tax Covenant (including in each case any
costs of recovery) shall not exceed, when added together with any liability in
respect of any Warranty Claim, an amount equal to 100% of the Consideration.

 

Actual Loss

 

8.No payment shall be due from the Sellers in respect of a Proven Claim until
actual loss in relation to the Warranty Claim has been suffered by the Purchaser
or the Company (as the case may be) as a consequence of the matter which is the
subject of the Warranty Claim.

 

Time limits

 

9.The liability of each Seller in respect of the Warranties and the Tax Covenant
shall terminate:

 

28

 

 

(a)subject to paragraph 9(c) below, in relation to a Warranty Claim if notice of
such claim has not been given within 15 calendar months of the date of this
Agreement.

  

(b)in relation to those Warranties set out in paragraph 16 (Tax) of Schedule 3
(Warranties) and of any other Warranties so far as they relate to Taxation or in
respect of the Tax Covenant notice of such claim has not been given before the
fifth anniversary of Completion; and

  

(c)in relation to a Warranty Claim (other than one relating to the Warranties
set out in paragraph 16 (Tax) of Schedule 3 (Warranties) or which relates to
Taxation) which has not been resolved on or before six months from the date on
which the Purchaser first served written notice on the Seller unless the
Purchaser has by then issued and served legal proceedings in respect of the
Warranty Claim on the Seller or, if later, in relation to a Warranty Claim where
notice has been served in accordance with, and within the time periods set out
in either sub-paragraph (a) or (b) above but in circumstances where no actual
loss has been suffered by the relevant party at the time of the notification of
the claim, the date being six months from the date upon which the actual loss
has been suffered by the relevant party

 

Provided Always that the Seller shall have no liability in respect of an
amendment or addition to a Warranty Claim in legal proceedings which would
constitute a Warranty Claim other than the original Warranty Claim unless notice
of the circumstances giving rise to the amendment or addition was served on the
Seller before the date set out in paragraph 9(c) above.

 

10.Conduct of Third Party Claims

 

10.1The Purchaser shall procure that, if either it or the Company or Subsidiary
becomes aware of circumstances which appears to it likely to give rise to a
Warranty Claim (a “Third Party Claim”) or that it is or is likely (in the
Purchaser’s reasonable opinion) to be entitled to make a recovery from a third
party in respect of circumstances which have given or are likely to give rise to
a Third Party Claim, it shall:

 

(a)as soon as reasonably practicable give to the Sellers written notice in
reasonable detail given the extent of the information available to the Purchaser
of all relevant circumstances and consult with the Sellers in relation to those
circumstances;

 

(b)keep the Sellers informed of material advice received and material
developments which would be likely to affect the amount the subject of a Third
Party Claim;

 

(c)shall not and shall procure that neither the Company nor the Subsidiary shall
admit or concede liability or agree a compromise or settlement with a third
party without first obtaining the Seller’s written agreement;

 

(d)save where to do so may breach legal or professional privilege of the
Purchaser or the Companies, give the Sellers and their advisers reasonable
access to the premises and personnel of the Purchaser or the Companies as they
may reasonably require and opportunity to examine and copy relevant documents
and records and photograph premises, asset or personnel within the control of
the Purchaser or the Companies and, if required by the Sellers, procure that all
personnel of the Purchaser or the Companies having knowledge of or involvement
with the facts and circumstances giving rise to the Third Party Claim afford the
Sellers all reasonable assistance to properly resist, contest, defend or appeal
against the Third Party Claim;

 

(e)take such action as the Sellers require in relation to the Third Party Claim
and permit the Sellers (in their own name or in the name of the Purchaser,
Company or Subsidiary or in any combination of those names) to conduct, settle,
compromise, defend or appeal relevant proceedings and to enforce any relevant
rights and entitlements;

 

29

 

 

(f)use all reasonable endeavours itself, and will procure that the Companies
each use their respective reasonable endeavours, to mitigate its or their loss
which is or is likely to become the subject matter of a Third Party Claim (but
for the avoidance of doubt the Purchaser shall not be required to take any steps
that may increase the amount of any future Tax liability of the Companies or
utilise any Relief of the Companies)

 

Provided always that if notice of a warranty claim has been given to Alex
Rutherford pursuant to the Alex SPA and Alex Rutherford has notified the
Purchaser that he wishes to exercise any of his rights under sub-paragraph
10.1(d) or (e) of Schedule 6 of that agreement in relation to a warranty claim
thereunder relating to the same subject matter as the Warranty Claim being made
against the Sellers then the rights of the Sellers in relation to paragraphs
10.1(c), 10.1(d) and (e) above shall be suspended in relation to that Warranty
Claim alone.

 

10.2Subject to the Seller having complied with the provisions of paragraph 10.4,
without limiting the provisions of sub-paragraph 10.1. where having discharged a
liability arising in respect of a Third Party Claim, the Seller requests the
assignment to it of any right of the Purchaser or of the Company or Subsidiary
to make recovery in whole or in part from any third party, the Purchaser will
assign or procure the assignment to the Seller of such right and, if that right
is not legally capable of effective assignment will pursue such right on behalf
of the Seller and promptly pay over and account to the Seller all amounts
recovered

 

10.3Subject to the Seller having complied with the provisions of paragraph 10.4
and a Third Party Claim having been notified in writing to the Purchaser, the
Purchaser shall use reasonable endeavours to procure that it and the Companies
shall preserve within its control originals (where it is so entitled) or (in
every other case) copies of all documents and other material information
relevant to matters giving rise to the Third Party Claim or a right of recovery
from a third party in respect of matters which may give rise to Third Party
Proven Claim relating to the relevant Third Party Claim.

 

10.4The Seller shall indemnify the Purchaser to its reasonable satisfaction in
respect of all liabilities, costs, charges and expenses that are reasonably and
properly incurred by the Purchaser or any of the Companies as a consequence of
it complying with its obligations under this paragraph 10 or as a consequence of
any actions taken at the request of the Seller in accordance with this paragraph
10.

 

10.5Nothing in this paragraph 10 shall require the Purchaser or the Companies to
take any action or refrain from taking any action, if the Purchaser in its
reasonable opinion and acting in good faith considers such action or omission is
or is likely to be materially prejudicial to the goodwill or business of the
Purchaser’s Group.

 

Mitigation

 

11.Nothing in this agreement shall be deemed to relieve the Purchaser from any
common law duty to take reasonable steps to mitigate any loss or damage suffered
or incurred by it as a result of any of the Warranties being untrue or
inaccurate or impose any higher duty on the Purchaser to mitigate its loss
beyond its common law duties.

 

Recovery from third parties

 

12.If:

 

(a)either of the Sellers makes a payment in respect of a Warranty Claim (a
“Damages Payment”);

 

(b)following the making of such payment any of the Companies or the Purchaser
receives any sum other than from the Sellers or Oliver Bengough or Alex
Rutherford which would not have been received but for the matter or circumstance
giving rise to the relevant Warranty Claim (the “Third Party Sum”);

 

(c)the receipt of the Third Party Sum was not taken into account in calculating
the Damages Payment; and

 

(d)the aggregate of the Third Party Sum and the Damages Payment exceeds the
amount required to compensate the Purchaser or the Companies concerned (as the
case may be) in full for the matter or circumstance which gave rise to the
relevant Warranty Claim (such excess being the “Excess Recovery”),

 

the Purchaser shall within 10 Business Days following receipt of the Third Party
Sum by it or the Companies concerned, repay to the relevant Seller or Sellers an
amount equal to the lower of 2.525% of (i) the Excess Recovery and (ii) the
Damages Payment, after deducting (in either case) all costs incurred by the
Purchaser or the Companies concerned in recovering the Third Party Sum and any
and all Taxation payable by the Purchaser or the Companies concerned by virtue
of its receipt.

 

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Schedule 7
Tax Covenant

 

1.Definitions and interpretation

 

1.1In this Schedule, unless the context otherwise requires, the following words
have the following meanings:

 

"Claim for Taxation" means any notice, demand, assessment, letter or other
document issued or action taken by or on behalf of any Tax Authority or any
person (including the Company) indicating that any person is or may be placed or
sought to be placed under either a liability to Taxation or a claim for Taxation
to which paragraph 5 may apply.

 

"CTA 2010" means the Corporation Tax Act 2010.

 

"Event" means any event, deed, transaction, act, omission, payment or receipt
and whether actual or deemed for Tax purposes, including entering into this
Agreement and including any combination of two or more Events.

 

"Group Companies" means the Company and the Subsidiary and reference to "Group
Company" means any one of them.

 

"ICTA" means the Income and Corporation Taxes Act 1988.

 

"ITA" means the Income Tax Act 2007.

 

"Profits" means income, profits and gains, the value of any supply and any other
consideration, value, measure or receipt used or charged for Taxation purposes
and references to "Profits earned, accrued or received" include Profits deemed
to have been earned, accrued or received for Taxation purposes.

 

"Tax Claim" means a claim by the Purchaser against the Sellers under the Tax
Covenant or for breach of any of the Tax Warranties or, as the case may be, a
claim by the Sellers against the Purchaser under the covenant in paragraph 5.

 

"Tax Counsel" means a barrister of at least 7 years call, experienced in tax
matters.

 

"Sellers’ Associate" means any Sellers and any other person with whom the
Sellers and/or the Company is either associated (within the meaning of section
448, CTA 2010) or connected (within the meaning of section 1122, CTA 2010 or, as
the case may be, section 993, ITA).

 

"Sellers’ Representative" means Hugh Doherty.

 

1.2In this Schedule:

 

(a)a reference to a jurisdiction shall include any union (including for the
avoidance of doubt, the European Union), country, state, province, district or
division of whatever nature which imposes or raises Taxation;

 

(b)a reference to any law shall include any statute, statutory instrument, law,
regulation, treaty, notice, directive or similar provision relating to Taxation,
whether of the United Kingdom or elsewhere; and

 

(c)references to specific parts of the law of the United Kingdom shall be taken
to include a reference to the law of any other jurisdiction so far as the same
may apply to any Group Company and may be similar to or have a similar purpose
to the law of the United Kingdom to which reference is made.

 

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2.Tax Covenant

 

2.1Save as hereinafter provided, each of the Sellers hereby covenant to pay to
the Purchaser such amount as is equal, on an after Tax basis (but subject to
paragraph 4.4. of Schedule 11) , to 2.525% of:

 

(a)any liability to Tax of the Company or the Subsidiary (including any
liability which would have been payable but for the application or set off of
any Relief against a liability to Tax, other than any Relief arising to the
Company or the Subsidiary on or before the date of this Agreement but which is
not shown as an asset in the Completion Balance Sheet or taken into account in
computing any corporation tax provision in the Completion Balance Sheet) arising
in respect of or as a consequence of or by reference to:

 

(i)any income, profits or gains actually or deemed to be earned, accrued or
received by the Company or the Subsidiary on or before the date of this
Agreement; or

 

(ii)any Event occurring or deemed to occur on or before the date of this
Agreement; or

 

(iii)the failure by any other person connected for Tax purposes with or in the
same group as the Company or the Subsidiary for any Tax purpose at any time
before the date of this Agreement (the "Pre-Completion Connection") to discharge
a liability to Tax which falls on the Company or the Subsidiary as a result of
that Pre-Completion Connection for which the Company or the Subsidiary is not
primarily liable; or

 

(iv)the sale of Sale Shares under this Agreement and any payments to the Sellers
in respect thereof; or

 

(v)arrangements made in connection with the transfer of the Subsidiary to the
Company; or

 

(b)any liability to Tax of the Company or the Subsidiary arising as a result of:

 

(i)any acquisition of a chargeable interest before the date of this Agreement
(whether deemed or actual) in relation to which stamp duty land tax compliance
(including, but not limited to the preparation and filing of necessary returns,
and the payment of any stamp duty land tax due) has not been properly or duly
undertaken; or

 

(ii)the submission or amendment (or notice of amendment) of any form or notice
for stamp duty land tax purposes after the date of this Agreement where a land
transaction return was submitted prior to the date of this Agreement calculating
stamp duty land tax by reference to an estimate except where such submission or
amendment is required as a result of an Event outside of the ordinary course of
business of the Company or the Subsidiary after the date of this Agreement which
gives rise to or increases any stamp duty land tax;

 

(c)the loss of any Relief shown as an asset in the Completion Balance Sheet; or

 

(d)any inheritance tax which is at the date of this Agreement or which
subsequently becomes as a result in whole or in part of a transfer of value
occurring on or before the date of this Agreement a charge or encumbrance on any
of the Sale Shares or assets of the Company or the Subsidiary; or

 

(e)any liability of the Company or Subsidiary to pay for Group Relief or to
repay, in whole or in part, any payment previously made for Group Relief
pursuant to any arrangement or agreement entered into prior to the date of this
Agreement save for any payment or repayment between the Company and the
Subsidiary; or

 

32

 

 

(f)the loss in whole or in part of the right to receive any payment for Group
Relief to the extent that such right to payment is provided for as an asset in
the Completion Balance Sheet;

 

together with all reasonable costs and expenses incurred by the Company, the
Subsidiary or the Purchaser in connection with any successful claim under
paragraph 2.1 (a)-(e) above or in successfully taking any action under this
Clause unless provision or reserve in respect of the liability has been made in
the Completion Balance Sheet.

 

2.2The provisions of Schedule 6 shall, to the extent specifically provided for
under that Schedule, apply to the Sellers’ liability under this Schedule as if
expressly stated herein save that paragraph 6 shall not apply to any liability
falling within paragraphs 2.1(a)(iii) and 2.1(a)(v) of this Schedule.

 

3.Amount of liability to Taxation

 

The amount of any liability under paragraphs 2.1(a) and (b) of the Tax Covenant
shall be:

 

(a)in the case of an actual payment of Tax or loss of a repayment, the amount of
the payment or repayment;

 

(b)in the case of the loss of a Relief,

 

(i)if the Relief is a right to repayment of Tax, the amount of the repayment
that is lost,

 

(ii)the amount of Taxation saved as a result of the loss of the Relief, if the
Relief was set off against Profits or set-off and credited against a liability
to pay Taxation,

 

(iii)in any other case, the amount of Taxation that would have been saved but
for the loss of the Relief on the assumption that the relevant Group Company
would have been able to fully utilise the Relief in the accounting period during
which the Relief was lost.

 

4.Date for payment

 

4.1Where the Sellers become liable to make any payment under the Tax Covenant,
the due date for the making of that payment shall be:

 

(a)in a case that involves an actual payment of Taxation by any Group Company,
the date that is two Business Days before the last date on which the relevant
Group Company is liable to pay to the appropriate Tax Authority the Taxation in
question in order to avoid incurring a liability to interest or penalties or, if
later, five Business Days following a written demand from the Purchaser giving
details of the payment in question;

 

(b)in the case of the set off or application of any Relief against a liability
to Taxation, the date that is the date on which the Taxation saved would
otherwise have become payable to the relevant Tax Authority the or, if later,
five Business Days following a written demand from the Purchaser giving details
of the payment in question;

 

(c)in the case of costs and expenses, the date falling five Business Days
following the date on which the Sellers’ Representative receives a written
demand for such amount from the Purchaser together with a copy of the relevant
third party invoice; or

 

(d)in any other case, the date falling five Business Days following the date on
which the Sellers’ Representative receives a written demand for such amount from
the Purchaser.

 

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5.Covenant to Sellers

 

5.1The Purchaser covenants with the Sellers to pay to each Seller an amount
equal to 2.525% of any Taxation which is assessed on the Seller or on any Seller
Associate pursuant to either section 710, CTA 2010 or section 713, CTA 2010 by
reason of Taxation assessed on or primarily or directly attributable to the
Purchaser, any member of the Purchaser's group, or the Subsidiary, or the
Company for any accounting period remaining unpaid provided that this covenant
shall not apply to any Taxation in respect of which the Purchaser is entitled to
bring a Tax Claim against the Sellers or would have been so entitled but for
paragraphs 6 (Limitations on liability), 7 (Repayment) and 8 (Over-provisions
and Reliefs) below or clause [4.10] of the Agreement (Sellers’ Protections).

 

5.2Each of the Sellers covenants that he shall make no claim under paragraph 5.1
above to the extent that they shall have recovered the Taxation in question
under section 717, CTA 2010) and that to the extent that they recover any amount
under paragraph 5.1 they shall not seek to recover payment under section 717,
CTA 2010.

 

6.Limitations on liability

 

6.1The liability of the Sellers under the Tax Covenant shall be reduced if and
to the extent that the liability shall have been recovered under the Warranties
or under any other part of the Tax Covenant or Agreement (and vice versa).

 

6.2The Sellers shall not be liable to the Purchaser for a Tax Claim in respect
of any liability:

 

(a)to the extent that provision or reserve in respect of that liability was
included in the Completion Balance Sheet or the obligation to make payment or
discharge of such liability was otherwise taken into account therein in
determining the Consideration;

 

(b)to the extent that the liability arises or is increased as a result only of:

 

(i)any increase in rates of Taxation;

 

(ii)any change in law or in the published practice of any Tax Authority;

 

(iii)any change in accounting practice or principles or any change in the bases
on which the accounts of the relevant Group Company are prepared except in
either case in order to comply with generally accepted accounting practice; or

 

(iv)any change in the date to which the relevant Group Company makes up its
accounts;

 

(c)the liability has been relieved or mitigated because the Sellers have
procured within a reasonable time for no consideration a surrender of Group
Relief to the Company or the Subsidiary, as the case may be;

 

(d)such liability would not have arisen but for a voluntary act or omission
carried out or effected by the Company, the Subsidiary or the Purchaser at any
time after the date of this Agreement, other than any act or omission carried
out or effected:

 

(i)under a legally binding commitment created on or before the date of this
Agreement;

 

(ii)in order to comply with any law or in order to comply with generally
accepted accounting principles; or

 

(iii)in the ordinary and normal course of the business carried on by the
Company;

 

(iv)that is or was required by law;

 

34

 

 

(e)such liability would not have arisen or would have been reduced but for a
failure or omission on the part of the Company, the Subsidiary or the Purchaser
after the date of this Agreement to make any claim or election, the making or
claiming of which was taken into account in computing the provision or reserve
for Taxation in the Completion Balance Sheet;

 

(f)there is or is made available to the relevant Group Company (at no cost to
the Buyer or the relevant Group Company) to relieve or mitigate such liability
to Taxation any Relief arising to the Company or the Subsidiary on or before the
date of this Agreement but which is not shown as an asset in the Completion
Balance Sheet or taken into account in computing any corporation tax provision
in the Completion Balance Sheet;

 

(g)the Purchaser or the relevant Group Company has already been compensated in
respect of such Liability to Taxation at no cost to the Purchaser or relevant
Group Company;

 

(h)such Liability to Taxation can be properly and fully discharged out of monies
deducted for the purpose from sums payable or paid by any Group Company provided
the Company still holds the monies at the date of this Agreement to discharge
the Liability to Taxation; or

 

(i)it arises or is increased as a consequence of any failure by the Purchaser or
the any Group Company to comply with any of their respective obligations under
the Agreement in so far as it relates to Taxation.

 

7.Repayment

 

7.1If the Sellers shall make any payment to the Purchaser in relation to any Tax
Claim and the Purchaser or any Group Company subsequently receives from any Tax
Authority or any person (other than another Group Company) any amount referable
to the subject matter of that Tax Claim, the Purchaser shall, once it or any
Group Company has received such amount, repay (after deducting the costs and
expenses of the Purchaser or any Group Company incurred in recovering such
amount and any Taxation payable on it or on any interest) to the Sellers either:

 

(a)a sum equal to 2.525% of such amount to each Seller; or

 

(b)if lesser a sum equal to the Tax Claim paid by the Sellers to the Purchaser,

 

together with any interest paid to the Purchaser or the relevant Group Company
in respect of such sum.

 

8.Over-provision and Reliefs

 

8.1If on or before the fourth anniversary of the date of this Agreement, the
auditors for the time being of the relevant Group Company shall confirm in
writing (on instruction of the relevant Group Company but at the request and
expense of the Sellers) that (applying the same policies, principles and
practices as used in preparing the Completion Balance Sheet) any provision for
Taxation (excluding any provision for deferred taxation) on the balance sheet in
the Completion Balance Sheet (other than by reason of the availability of a
Relief arising after the date of this Agreement and ignoring the effect of any
change in law made after the date of this Agreement) has proved to be an
over-provision and that over-provision reduces a liability to make an actual
payment of Tax of the relevant Group Company or the Purchaser (other than a
liability for which the Purchaser would be entitled to bring a Tax Claim), then
an amount equal to 2.525% of the amount of such over-provision shall be dealt
with in accordance with paragraph 8.3.

 

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Reliefs

 

8.2If on or before the fourth anniversary of the date of this Agreement, the
auditors for the time being of the relevant Group Company shall confirm in
writing (at the request and expense of the Sellers) that any liability which has
resulted in a payment having been made or becoming due from the Sellers under
the Tax Covenant will give rise to a Relief for a Group Company (other than a
Relief arising after the date of this Agreement) which would not otherwise have
arisen, then as and when such Relief reduces a liability to make an actual
payment of Tax (other than a liability for which the Purchaser would be entitled
to bring a Tax Claim), the amount of that reduction shall be dealt with in
accordance with paragraph 8.3 below.

 

Conduct

 

8.3Where it is provided under paragraphs 8.1 or 8.2 that any amount (the
"relevant amount") is to be dealt with in accordance with this sub-paragraph:

 

(a)the relevant amount shall first be set-off against any payment then due from
the Sellers under the Tax Covenant;

 

(b)to the extent that there is an excess, a refund shall be made to the Sellers
of any previous payment made by the Sellers under the Tax Covenant (to the
extent not previously refunded under this paragraph 8) up to the amount of such
excess; and

 

(c)to the extent that the excess referred to in paragraph 8.3(b) above is not
exhausted under that paragraph, the remainder of the excess shall be carried
forward and set off against any future payment or payments which become due from
the Sellers under the Tax Covenant.

 

8.4Where any written confirmation referred to in paragraphs 8.1 or 8.2 has been
made, the Sellers or the Purchaser or the Company may request, at the sole
expense of the party making the request, the auditors to review such written
confirmation in the light of all relevant circumstances, including any facts
which have become known only since such written confirmation, and to certify
whether such written confirmation remains correct or whether the amount in such
written confirmation should be amended.

 

8.5If the auditors certify under paragraph 8.4 that an amount previously
determined should be amended, that amended amount shall be substituted for the
purposes of paragraph 8.3 as the relevant amount in respect of the written
confirmation in question in place of the amount originally included, and such
adjusting payment (if any) as may be required shall be made as soon as
practicable by the Sellers or (as the case may be) to the Sellers to give effect
to the revised amount.

 

9.Claims Procedure

 

9.1On the Purchaser or the Company becoming aware of a Claim for Taxation which
may result in a Tax Claim the Purchaser shall:

 

(a)as soon as reasonably practicable (but not as a condition precedent to the
making of a Tax Claim) give written notice of that Claim for Taxation to the
Sellers’ Representative or, as the case may be, shall procure that the Company
forthwith give written notice of that Claim for Taxation to the Sellers’
Representative;

 

36

 

 

(b)subject always to the terms of this paragraph 9 and the Sellers indemnifying
the Purchaser and/or the relevant Group Company to its reasonable satisfaction
against all losses, costs, damages and expenses, which may be incurred (and
promptly reimbursing any costs actually incurred), procure that the Company take
such action and give such information and assistance in connection with the
affairs of the Company as the Sellers’ Representative may reasonably and
promptly by written notice request to avoid, resist, appeal or compromise the
Claim for Taxation; and

 

(c)procure that the Sellers’ Representative is promptly provided with copies of
any material correspondence with the Tax Authority.

 

9.2The Purchaser shall not be obliged to procure that the relevant Group Company
appeals against any tax assessment if, the Sellers’ Representative, having been
given written notice of the receipt of that Claim for Taxation in accordance
with paragraph 9.1 above, the Purchaser has not within 21 days (or, if there is
a statutory time limit of not more than 30 days, within 14 days) thereafter
received instructions promptly in writing from the Sellers’ Representative, in
accordance with the preceding provisions of this paragraph 9, to make that
appeal.

 

9.3The Purchaser shall not be obliged to procure that the relevant Group Company
take any action under paragraph 9.1 above which involves contesting any matter
with any Tax Authority (excluding the authority or body demanding the Tax in
question) or any court or tribunal unless the Sellers’ Representative furnishes
the Purchaser with the written opinion of Tax Counsel to the effect that the
appeal in question will, on the balance of probabilities, succeed. Such Tax
Counsel shall be instructed by the Sellers' Representative and at the Seller’s
expense but the Sellers’ Representative shall promptly provide the Purchaser
with a copy of such instructions and give the Purchaser or its representative a
reasonable opportunity to attend any conference with Tax Counsel.

 

9.4The Purchaser agrees to delegate the conduct of the submission of any stamp
duty land tax documentation or returns (which relate to any period prior to
Completion) to any Tax Authority in respect of the Lease of the Property (and
any action, negotiations, returns, correspondence or other documentation that
follow from any such submission) to the Seller and the Seller’s Representative
and paragraphs 9.1(b) and (c) above shall apply as if any such action,
documentation, returns, correspondence or negotiations are a “Claim for
Taxation” for eh purpose of those paragraphs and paragraph 9.1(b) shall apply as
if it includes an agreement to delegate all such matters to the Seller and the
Seller’s Representative. The Purchaser agrees, and agrees to procure that the
Company, shall not submit any documentation, returns or correspondence to, or
enter into negotiations with any Tax Authority in respect of the Lease of the
Property without the Seller’s prior written approval, such approval not to be
unreasonably withheld.

 

10.Tax Returns

 

10.1The Sellers or their duly authorised agent shall at the relevant Group
Company's expense (to the extent provided for in the Completion Balance Sheet)
prepare the corporation tax returns (including all computations and the
provision of financial information, together with all necessary claims,
elections, surrenders and notices required for such returns) of the Company and
the Subsidiary for all the accounting periods ended on the Accounts Date to the
extent that they have not been prepared prior to Completion. The Seller or his
duly authorised agent shall, at the relevant Group Company’s expense (to the
extent provided for in the Completion Balance Sheet) also deal with all matters
(including correspondence) relating to such corporation tax returns provided
that the Sellers Representative shall provide the Purchaser with copies of any
correspondence relating to such tax returns prior to submission, and copies of
any correspondence from the relevant Tax Authority. The Sellers shall give the
Purchaser a reasonable opportunity to comment on such correspondence prior to
submission and shall take account of the Purchaser’s reasonable comments.

 

37

 

 

10.2The Purchaser shall procure that the Company and the Subsidiary shall cause
the tax returns mentioned in paragraph 10.1 above to be authorised, signed and
submitted to the relevant Tax Authority without amendment or with such
amendments as the Sellers’ Representative shall reasonably agree provided that
the Purchaser shall not be obliged to procure that the Company or the Subsidiary
takes any such action as is mentioned in this paragraph 10 in relation to any
tax return that is not true and accurate in all material respects or conflicts
with anything agreed in respect of the Completion Balance Sheet.

 

10.3The Purchaser shall provide the Sellers’ Representative with a copy of the
corporation tax return relating to the accounting period current at Completion
at least 28 days prior to the date for submission of that corporation tax
return. The Purchaser shall give the Sellers a reasonable opportunity to comment
on such return prior to its submission to the relevant Tax Authority and shall
take account of the Sellers’ Representative reasonable comments in relation to
any period ending on or prior to the Completion.

 

10.4The Purchaser shall upon reasonable notice (having regard to the
circumstances) being given by the Sellers procure that the relevant Group
Company shall afford such access to such information and is given such
assistance as is necessary and reasonable to enable the Sellers or his duly
authorised agent to prepare those tax returns and conduct matters relating
thereto in accordance with the Sellers’ rights under this paragraph 10.

 

10.5The Purchaser shall procure that the relevant Group Company shall at the
reasonable request of the Sellers’ Representative do all such things which may
be reasonably necessary to ensure that full effect is given to any claim,
surrender or election made to or by the relevant Group Company and which is
reflected or taken into account in the Accounts or the Completion Balance Sheet
including for the avoidance of doubt signing and submitting any revised claim,
election or surrender and progressing any such claim, surrender or election or
revised claim surrender or election with the relevant Tax Authority.

 

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Schedule 8
Protective Covenants

 

1.Each of Sellers (for himself only) covenants with the Purchaser, the Company
and the Subsidiary as Third Parties that they shall not:

 

(a)for a period of twelve calendar months after Completion be concerned in any
business carrying on business within the Relevant North London Boroughs that
involves the operation of live music venues with a capacity of 500 or more
people; or

 

(b)for a period of twelve calendar months after Completion:

 

(i)canvass, solicit, induce or attempt to induce any person who is at the date
of this Agreement a director or employee of the Company earning over £50,000 per
annum (a “key employee”) to leave the employment of the Company; or

 

(ii)employ or attempt to employ any person who is at the date of this Agreement
a director or key employee of the Company; or

 

(iii)procure or facilitate the making of an offer of employment to any person
who is at the date of this Agreement a director or key employee of the Company;

 

(c)for a period of twelve calendar months after Completion induce or attempt to
induce any person, who is at the date of this Agreement or has been at any time
within the year prior to the date of this Agreement a supplier of goods or
services to the Company, to cease to supply, or to restrict or vary the terms of
supply, to that company; or

 

(d)for a period of twelve calendar months after Completion do or say anything
which may lead a person to cease to deal with any of the Companies on
substantially equivalent terms to those previously offered or at all; or

 

(e)after the date of this Agreement do or say anything which is harmful to the
reputation of any of the Companies, their shareholders or their officers; or

 

(f)after Completion make use of information of a secret or confidential nature
relating to, or to the business or affairs of, any of the Companies; or

 

(g)after Completion (except as required by law or any competent regulatory body)
disclose or divulge to any third party any information of a secret or
confidential nature relating to, or to the business or affairs of, any of the
Companies (save in so far as such disclosure may be necessary in order to enable
Mint Group Holdings Limited to carry out its duties and obligations under the
Transitional Services Agreement); or

 

(h)after Completion use or (insofar as he can reasonably do so) allow to be used
(except by the any of the Companies) any trade name, trade or service mark,
business or domain name, design or logo used by any of the Companies at
Completion or any other name, mark, domain name, design or logo intended or
likely to be confused with any trade name, trade or service mark, business or
domain name, design or logo used by any of the Companies at Completion; or

 

(i)after Completion present himself or permit himself to be presented as
connected in any way with any of the Companies (save in the normal course of his
employment by any of the Companies or as a former owner of Sale Shares in the
Company) or as interested in the Shares following Completion.

 

2.For the purposes of this schedule:

 

(a)a person is concerned in a business if it carries on the business as
principal or agent or if:

 

(i)he is a partner, director, employee, secondee, consultant or agent in, of or
to any person who carries on the business; or

 

(ii)he has any direct or indirect financial interest (as shareholder or
otherwise) in any person who carries on the business; or

 

39

 

 

(iii)he is a partner, director, employee, secondee, consultant or agent in, of
or to any person who has a direct or indirect financial interest (as shareholder
or otherwise) in any person who carries on the business; or

 

(iv)it is concerned or interested in, or otherwise assists the business in any
way;

 

(b)the restrictions in paragraph 1 apply to actions carried out by the Sellers
in any capacity and whether directly or indirectly on their own behalf or on
behalf of, or jointly with, any other person;

 

(c)no regard shall be had to any financial interest of a person in securities
which are held for investment purposes only and are listed on a recognised
securities exchange if that person, and any person connected with that person
(the “Investors”) are together interested in securities which amount to less
than 5% of the issued securities of that class and which, in all circumstances,
carry less than 5% of the voting rights (if any) attaching to the issued
securities of that class, and provided that none of the Investors is involved in
the management of the business of the issuer of the relevant securities or of
any person connected with it otherwise than by the exercise of voting rights
attaching to securities.

 

3.Each of the restrictions in each paragraph or sub clause above shall be
enforceable independently of each of the others and its validity shall not be
affected if any of the others is invalid.

 

4.If any of those restrictions is void but would be valid if some part of the
restriction were deleted, the restriction in question shall apply with such
modification as may be necessary to make it valid.

 

5.The Sellers acknowledge that the above provisions of this schedule are no more
extensive than is reasonable to protect the Purchaser as the purchaser of the
Sale Shares.

 

40

 

 

Schedule 10
Property

 

The leasehold property known as Camden Palace Nightclub, Camden High Street,
London NW1 0JH.

 

41

 

 

Schedule 11
Terms and Conditions

 

1.Further Assurance

 

1.1On or after Completion, Sellers will at their cost and expense, execute and
do (or procure to be executed and done by any necessary party) all such deeds,
documents, acts and things as they ought to have done on or prior to Completion
(acting reasonably) in order to vest any of the Sale Shares set opposite his
name in Schedule 1 (The Sellers) in the Purchaser or its assignee or otherwise
as may be necessary to give full effect to this Agreement.

 

2.Confidentiality

 

2.1Subject to paragraph 2.2 below each Seller undertakes to the Purchaser (for
itself and for each of the Companies as Third Parties) that he will (both before
and after Completion):

 

(a)not at any time after the date of this Agreement use, divulge or communicate
to any person other than to officers or employees of the Companies who need to
know the same any Confidential Information which may be in or come to his
knowledge; and

 

(b)use his reasonable endeavours at the cost of the Purchaser to prevent
publication or disclosure of any Confidential Information.

 

2.2Paragraph 2.1 shall not apply if and to the extent that the Seller, in
disclosing Confidential Information, can demonstrate that:

 

(a)such disclosure is required by law or by any securities exchange or
regulatory or governmental body having jurisdiction over it (including but not
limited to the UK Listing Authority, the London Stock Exchange, the Panel on
Takeovers and Mergers and the Serious Fraud Office) and whether or not the
requirement has the force of law, provided that the relevant Seller required to
disclose the Confidential Information shall promptly notify the Purchaser before
such disclosure is made (where it is lawful to do so) and shall co-operate with
the Purchaser at the Purchaser’s expense and subject to each of the relevant
Seller being duly secured and indemnified by the Purchaser if the Purchaser
wishes to challenge the need for such disclosure or the timing and content of
such disclosure; or

 

(b)such disclosure is to a professional or financial adviser for the purpose of
advising the relevant Seller in connection with the transactions contemplated by
this Agreement, provided that such disclosure is necessary for these purposes,
such adviser is made aware of the obligations of this paragraph 2 and such
adviser is bound by a duty of confidentiality (whether express or implied); or

 

(c)the Confidential Information concerned has come into the public domain other
than through the fault of any person to whom such Confidential Information has
been disclosed in accordance with paragraph 2.1

 

Provided always that the restrictions contained in this paragraph 2 shall
survive Completion and shall continue without limit of time.

 

3.Announcements

 

The Sellers and the Purchaser shall, as soon as practicable after Completion
procure that a joint announcement of the sale and purchase of the Sale Shares in
the agreed form is made. Otherwise no announcement shall be made about the deal
without the written approval of each of the parties save to the extent that the
Purchase is obliged to report to shareholders or is otherwise required by law or
the rules of any listing authority in which event the Sellers shall be consulted
by the Purchase (who shall consider carefully the inclusion of any comments
which the Sellers may make) prior to the issuing of such announcement.

 

42

 

  

4.Payments

 

4.1Unless otherwise expressly stated all payments to be made under this
Agreement shall be made in Sterling to the party to be paid by transfer in
immediately available funds by telegraphic transfer for the credit of such
account in the United Kingdom as the party to be paid ma specify or in such
other manner as the parties may agree.

 

4.2Any payment falling to be made or document falling to be delivered to the
Sellers under any provision of this Agreement may be made to the Sellers’
Solicitors Client Account whose receipt shall be sufficient discharge.

 

4.3Each payment to be made by the Sellers under this Agreement shall be made
free and clear of all deductions, withholdings, counterclaims or set-off of any
kind except for those required by law.

 

4.4In the event that:

 

(a)any deduction or withholding is required by law to be made from any sum
payable by a Seller to the Purchaser pursuant to this Agreement, such Seller
shall be obliged to pay such increased sum as will, after the deduction or
withholding has been made, leave the Purchaser with the same amount as it would
have been entitled to receive in the absence of such requirement to make a
deduction or withholding unless such withholding or deduction is required by
reason of the Purchaser being a US entity and which withholding or deduction
would not have been required if the Purchaser had been an entity incorporated in
the United Kingdom in which event no further sum in respect of such deduction or
withholding will be payable by the relevant Seller; and

 

(b)any sum paid to the Purchaser pursuant to this Agreement, is or will be
chargeable to Tax, the relevant Seller, shall be obliged to pay such further sum
as will, after payment of the Tax, leave a sum equal to the amount that would
otherwise have been payable if Tax had not been so chargeable.

 

5.Costs

 

5.1Subject to the payment of sums pursuant to the Deed of Reimbursement, each
party shall pay the costs and expenses incurred by him or it in connection with
the entering into and completion of this Agreement.

 

6.Constitution of this Agreement

 

6.1This Agreement, together with the documents referred to in it, contain the
entire agreement between the parties relating to the transactions contemplated
by this Agreement and replaces and extinguishes all prior drafts, previous
agreements, arrangements and understandings, whether in writing or oral, between
the parties relating to these transactions except to the extent that they are
repeated in this Agreement.

 

6.2Each Seller acknowledges to the Purchaser, and the Purchaser acknowledges to
the Sellers, that in agreeing to enter into this Agreement they, he or it has
not relied on any representation, warranty, undertaking, promise or other
assurance (whether contractual or otherwise) given by or on behalf of the other,
except the warranties and undertakings set out in this Agreement, and waives all
rights and remedies, which, but for this paragraph might be available to them,
him or it in respect of any such representation, warranty or other assurance,
provided that nothing in this paragraph shall limit or exclude any liability for
fraudulent misrepresentation or fraudulent concealment.

 

6.3This Agreement may be executed in any number of counterparts, but shall not
be effective until each party has executed at least one counterpart, all of
which, taken together shall constitute one and the same Agreement and any party
may enter into this Agreement by executing a counterpart.

 

6.4No variation of this Agreement shall be effective unless made in writing and
signed by each of the parties.

 

43

 

 

7.Rights

 

7.1The rights, powers, privileges and remedies provided in this Agreement are
cumulative and are not exclusive of any rights, powers, privileges or remedies
provided by law or otherwise.

 

7.2No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or affect its
exercise or operate as a waiver in whole or in part.

 

7.3No single or partial exercise of any right, power, privilege or remedy under
this Agreement shall prevent any further or other exercise or the exercise of
any other right, power, privilege or remedy.

 

7.4The provisions of this Agreement shall remain in full force and effect
notwithstanding Completion.

 

8.Liabilities

 

8.1The Purchaser may release or compromise in whole or in part the liability of
any one of the Sellers under this Agreement or grant any time or other
indulgence without affecting the liability of the other Sellers.

 

9.Successors and Assigns

 

9.1This Agreement shall be binding upon and benefit the successors of the
parties but, subject to paragraph 9.2, none of the rights or obligations under
this Agreement may be assigned, transferred, sub-licensed, charged or dealt with
in any other manner without the prior written consent of all the other parties.

 

9.2The Purchaser may, after having given prior written notice to the Seller,
assign any or all of its benefits under this Agreement to a member of the
Purchaser’s Group Provided Always that:

 

(a)if such assignee shall cease to be a member of the Purchaser’s Group, the
benefit of this Agreement shall be deemed to have been re-assigned to the
Purchaser;

 

(b)the liability of the Seller to the assignee shall not be greater than any
liability that the Seller would have had for that matter to the Purchaser.

 

10.Third Parties

 

10.1Except where expressly stated in this Agreement to the contrary:

 

(a)a person (other than Oliver Bengough or Alex Rutherford or Mint Group
Holdings Limited) who is not a party to this Agreement or any of the documents
referred to in this Agreement (or his successors or permitted assignees under
paragraph 9) has no rights under the Contract (Right of Third Parties) Act 1999
(the “Act”) or otherwise to enforce or enjoy the benefit of any term of this
Agreement; and

 

(b)no termination, amendment, compromise, waiver or settlement of this Agreement
or any dispute or claim arising out of or in connection with it or its subject
matter or formation (including non-contractual disputes or claims) require the
consent of any person who is not a party to it.

 

10.2Each of the Companies shall be entitled under the Act to enforce any term of
this Agreement which expressly or by implication confers any benefit on it and
each of the persons described in clause 4.6 shall have the benefit of clause 4.6
under the Act.

 

11.Illegality

 

If any provision of this Agreement shall be held to be illegal, void, invalid or
unenforceable under the laws of any jurisdiction, the legality, validity and
enforceability of the remainder of this Agreement in that jurisdiction shall not
be affected, and the legality, validity and enforceability of the whole of this
Agreement in any other jurisdiction shall not be affected.

 

12.Notices

 

12.1Any notice or other document to be served under this Agreement may be
delivered or sent by registered or recorded post (or equivalent in any other
jurisdiction) to the party to be served at his address appearing in this
Agreement or at such other address as he may have notified to the other parties
in accordance with this paragraph.

 

44

 

 

12.2Any notice or document shall be deemed to have been served:

 

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

 

(b)if posted inland, at 10.00 hours on the second Business Day after it was
posted; or

 

(c)if posted airmail, at 10.00 hours (local time at the recipient's address) on
the fifth Business Day after it was posted.

 

12.3In proving service of a notice or document it shall be sufficient to prove
that delivery was made or that the envelope containing the notice or document
was properly addressed and posted (first class if UK inland) as a prepaid
registered or recorded post (or equivalent in any other jurisdiction) letter.

 

12.4The address details of the parties for the purposes of this paragraph are
set out in Schedule 9 (Addresses).

 

13.Governing law and Jurisdiction

 

13.1This Agreement and any dispute or claim arising out of or in connection with
it or its subject matter (including any dispute or claim relating to
non-contractual obligations) shall be governed by and construed in accordance
with English law.

 

13.2The courts of England have exclusive jurisdiction to settle any dispute or
claim ("action") arising out of, or in connection with, this Agreement or its
subject matter or formation (including any dispute or claim relating to
non-contractual obligations).

 

13.3Each party irrevocably waives any right that it may have to object to an
action being in such courts on the grounds of venue, on the grounds that an
action has been brought in an inappropriate or inconvenient forum or that such
courts do not have jurisdiction.

 

13.4Each party agrees that without preventing any other mode of service allowed
by law, any document in an action (including, but not limited to, a claim form
or any other document to be served under the Civil Procedure Rules in England
and Wales) may be served on any party by being delivered to or left for that
party at its address for service of notices under Schedule 8 (Addresses).

 

45

 

 

Schedule 12
Definitions and Interpretation

 

1.Definitions

 

In this Agreement, unless the context otherwise requires:

 

"Accounts" means all or any one of:

 

(a)          the audited balance sheet of the Subsidiary; and

 

(b)          the audited profit and loss account of the Subsidiary;

 

together with the notes to such accounts and the directors reports and the other
documents required by law to be annexed thereto;

 

"Accounts Date" means 31 March 2013;

 

"agreed form" means, in relation to any document, the form of that document
which has been agreed and initialled by or on behalf of the Sellers and the
Purchaser for the purpose of identification immediately prior to the signing of
this Agreement;

 

“Alex SPA” means the sale and purchase agreement entered into on or around the
date of this Agreement relating to the sale of Alex Rutherford’s shares in the
Company to the Purchaser and made between Alex Rutherford(1); the Purchaser (2)
and the Guarantors (3);

 

"Business Day" means any day other than a Saturday or a Sunday or public holiday
in England;

 

“"Companies" means the Company and the Subsidiary;

 

"Companies Act" means Companies Act 2006 and all other statutes and subordinate
legislation from time to time in force concerning companies and other bodies
corporate;

 

"Company" has the meaning given to it in Recital (A);

 

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

 

"Completion Date" has the meaning given to it in clause 3.1;

 

"Confidential Information" means all information in any medium or format of a
confidential nature which (i) relates to the Purchaser or (ii) is used in or
otherwise relates to any of the Companies or their business, including but not
limited to:

 

(a)the accounts, finance or contractual arrangements or other dealings,
transactions or affairs or officers, employees or contractors of any of the
Companies;

 

(b)the marketing and supply of goods or services, including customer and
supplier names and lists and other details of customers and suppliers, sales
targets, sales statistics, market share statistics, prices, market research
reports and surveys, and advertising or other promotional materials; or

 

(c)future projects, business development or planning, commercial relationships
and negotiations;

 

“Deferred Share” means a deferred ordinary share of £0.05 in the Company;

 

"Disclosed" means disclosed in accordance with Clause 4.3;

 

"Disclosure Letter" means the letter in the agreed form from the Sellers to the
Purchaser of the same date as this Agreement and which has been delivered to the
Purchaser prior to the signing of this Agreement;

 

"Employment Legislation" means legislation applying in England and Wales
affecting contractual or other relations between employers and their current or
former employees or workers or applicants for employment or engagement
including, but not limited to, any legislation and any amendment, extension or
re-enactment of such legislation and any claim arising under European treaty
provisions or directives enforceable against the Company by any employee,
officer or worker;

 

46

 

 

"Encumbrance" includes any claim, interest or equity of any person (including
any right to acquire, option or right of pre-emption), any debenture, mortgage,
charge, pledge, lien, deposit by way of security, restriction, assignment,
hypothecation, security interest, option, right of pre-emption or assignment or
factoring or similar agreement (including any created by law), title retention
or transfer or other security or preferential agreement or arrangement, and any
rental, bill of sale, hire purchase, credit sale or other agreement for payment
on deferred terms or any agreement or commitment to give or create any of the
foregoing;

 

"Group Relief" means:

 

(i)any relief capable of being surrendered or claimed pursuant to Part 5 of the
Corporation Tax Act 2010; or

 

(ii)any Tax refund capable of being surrendered or claimed pursuant to Section
963 of the Corporation Tax Act 2010 (previously section 102 of the Finance Act
1989); or

 

(iii)the notional transfer of any asset or reallocation of a gain or loss in
accordance with section 171A or section 179A of the Taxation of Chargeable Gains
Act 1992 or any reallocation of a gain in accordance with section 792 of the
Corporation Tax Act 2009 (previously paragraph 66 of Schedule 29 to the Finance
Act 2002); or

 

(iv)any relief the subject of a surrender of eligible unrelieved foreign tax in
accordance with The Double Taxation Relief (Surrender of Relievable Tax Within a
Group) Regulations 2001 (S.I. 2001 No. 1163); or

 

(v)any other relief available to be transferred or surrendered between or
claimed from other members of a group for Tax purposes;

 

"Immigration Acts" means the Asylum & Immigration Act 1996 and the Immigration,
Asylum and Nationality Act 2006 together with any Statutory Instrument or Order
made by a Secretary of State in exercise of powers conferred by such acts and
any related or accompanying guidance issued by the UK Border Agency or other UK
Government Department responsible for immigration from time to time;

 

"Intellectual Property Rights" means:

 

(i)patents, designs, trade marks and trade names (whether registered or
unregistered), copyright and related rights, database rights, know how and
confidential information;

 

(ii)all other intellectual property rights and similar or equivalent rights
anywhere in the world which currently exist or are recognised in the future; and

 

(iii)applications, extensions and renewals in relation to any such rights;

 

“Key Warranties” means the warranties in paragraphs 3, 6, 8.1, 8.2, 8.4, 11.2
and 12.2.

 

"Lease" means the lease under which the Property is held;

 

"Losses" means direct losses, liabilities (including tax), damages, costs,
expenses, fines, penalties, legal and other professional fees and costs incurred
before, on or after Completion but shall exclude any indirect losses,
consequential losses or indirect loss of profits;

 

"Management Accounts" means the unaudited profit and loss accounts of the
Subsidiary and the unaudited balance sheet of the Subsidiary (copies of which
are attached to the Disclosure Letter) for each month starting on the day after
the Accounts Date and ending on 31 December 2013;

 

"parties" means the parties to this Agreement and includes their respective
successors and permitted assigns;

 

"proceedings" means any action or proceedings before a court or tribunal or a
statutory, governmental or regulatory body (including an arbitration) which has
the power and authority to hear such action and who have statutory power to
deliver and to enforce any judgement that such body may deliver;

 

"Property" means the property described in Schedule 10;

 

47

 

 

“Proven Claim” means a Warranty Claim or claim under the Tax Covenant against
the Sellers which is either agreed by the Sellers or otherwise finally
determined or resolved by a court or tribunal from which no leave to appeal is
permitted where such determination is in favour of the Purchaser and which
results in a liability being established against the Sellers;

 

"Purchaser’s Group" means any of the following from time to time: the Purchaser,
the Guarantor, Loton Corporation and any entity controlled or under common
control of any of them (including without limitation their subsidiaries and
subsidiary undertakings and any holding company of the Purchaser, the Guarantor
or Loton Corporation and all other subsidiaries and subsidiary undertakings of
any holding company of the Purchaser, including the Companies, the Guarantor or
Loton Corporation) and “member of the Purchaser’s Group” shall be construed
accordingly;

 

"Purchaser's Solicitors" means Wragge & Co LLP, 3 Waterhouse Square, 142
Holborn, London EC1N 2SW;

 

“Purchaser’s Solicitors Client Account” means the client account of Wragge & Co
LLP held with;

 

"Records" means the Company’s books and records (including, without limitation,
all bought and sold ledgers, purchase and sales day books and purchase and sales
invoices and the registration and renewal certificates for each Intellectual
Property Right registered at the date of this Agreement;

 

“Relevant North London Boroughs” means the London Boroughs of Camden, Islington,
Hackney and Haringey;

 

"Relief" shall include any loss, relief, allowance, credit, deduction, exemption
or set-off in respect of any Tax or relevant to the computation of any income,
profits or gains for the purposes of any Tax, or any right to repayment of or
saving of Tax;

 

"Sellers’ Solicitors" means Peter Martin of Hollow Combe, Dome Hill Park,
Sydenham Hill, London SE26 6SP;

 

“Sellers’ Solicitors Client Account” means the client account of Berwin Leighton
Paisner LLP held.

 

"Sale Shares" has the meaning given to it in Recital (B);

 

"Subsidiary" means the company, brief particulars of which are set out in Part 2
of Schedule 2 (Corporate Particulars);

 

"Tax" or "Taxation" means:

 

(a)          any and all forms of taxes, contributions, levies, imposts, duties
or charges in the nature of taxation and all withholdings or deductions in
respect thereof of any nature whenever created or imposed and whether of the
United Kingdom or elsewhere (including for the avoidance of doubt any liability
under section 455 of the Corporation Tax Act 2010 and employee and employer
National Insurance Contribution liabilities in the United Kingdom and
corresponding obligations elsewhere) chargeable by or accountable or payable to
or imposed by, any Tax Authority and whether directly or primarily chargeable
against, recoverable from or attributable to the Company or any other person;
and

 

(b)          all charges, interest, penalties, surcharges and fines incidental
or relating to any Taxation falling within (i) above or which arise as a result
of the failure to pay any Taxation on the due date or to comply with any
obligation relating to Taxation;

 

"Taxation Authority" means HM Revenue and Customs or any other taxing or other
authority (whether within or outside the United Kingdom) competent to impose,
administer or collect any tax;

 

48

 

 

"Tax Warranties" means each and every warranty contained in the Part of Schedule
3 (Warranties) entitled "Taxation";

 

"Tax Covenant" means the provisions of Schedule 7 (Tax Covenant);

 

"Third Party" means any person in whose favour any right or benefit under this
Agreement is extended by the express use of the term "Third Party", in which
case the terms of paragraph 10 of Schedule 11 (Terms and Conditions) shall
apply;

 

“Transitional Services Agreement” means the agreement to be entered into between
Mint Group Holdings Limited (1) and the Subsidiary(2) and to be delivered at
Completion;

 

"Warranties" means all and any of the warranties set out in Clause 4 and
Schedule 3 (Warranties);

 

"Warranty Claim" means a claim by the Purchaser the basis of which is that any
of the Warranties is, or is alleged to be untrue or inaccurate; and

 

2.Interpretation

 

In, and for the purposes of, this Agreement unless the context otherwise
requires:

 

2.1Gender, Number, Persons etc.

 

(a)The masculine gender shall include the feminine and vice versa.

 

(b)References to any person shall include any individual, body corporate and
unincorporated association.

 

(c)References to a company include any company and body corporate, wherever
incorporated, and includes any limited liability partnership under the law of
the United Kingdom.

 

(d)References to any party include a reference to the estate, legal personal
representative, successor, or permitted assigns of that party.

 

(e)A person shall be deemed to be connected with another if that person is
connected with that other within the meaning of section 993 Income Tax Act 2007
and section 1122 Corporation Tax Act 2010.

 

2.2Currency

 

(a)Sterling is the sole currency of account and payment for all sums payable
under or in connection with this Agreement, including damages.

 

2.3Concerning Warranties

 

(a)Where any statement is qualified by the expression "so far as the Sellers are
aware" or "to the best of the Sellers’ knowledge information and belief" or any
similar expression that statement shall be deemed to include an additional
statement that it has been made after having made (or authorised the making of)
diligent enquiry of each other Seller, Alex Rutherford and Oliver Bengough but
having made no other enquiry;

 

2.4Parts of this Agreement

 

(a)Except where the contrary is stated, any reference to a Clause or Schedule or
Annexure is to a Clause or Schedule or Annexure of this Agreement.

 

(b)The headings and sub-headings are inserted for convenience only and shall not
affect the construction of this Agreement.

 

(c)The Schedules and Annexures form part of this Agreement and shall have the
same force and effect as if set out in the body of this Agreement.

 

2.5Companies

 

(a)A "subsidiary undertaking" or "parent undertaking" has the meaning given in
section 1162 of the Companies Act 2006 and a "subsidiary" or "holding company"
is to be construed in accordance with section 1159 of the Companies Act 2006.

 

49

 

 

(b)References to "Group" in relation to any company mean that company, its
subsidiaries, its holding companies and every subsidiary of each such holding
company from time to time; and

 

(c)Terms defined in part 38 of the Companies Act 2006 (as applicable) shall bear
the same meanings in this Agreement.

 

2.6Statute and Law

 

(a)References to any enactment shall include (i) that enactment as respectively
amended, modified, consolidated or re-enacted from time to time, and (ii) any
enactment which that enactment re-enacts (with or without modification) and
(iii) any subordinate legislation made under that enactment (as so amended,
modified, consolidated or re-enacted) in each case before the date of this
Agreement provided always that any such amendment, modification, consolidation
or enactment or re-enactment or subordinate legislation shall not result in any
new liability or any increase in any liability which would not otherwise have
arisen under the original legislation or statute.

 

2.7Certain words

 

(a)Any undertaking by a party not to do any act or thing includes an undertaking
not to allow, cause or assist the doing of that act or thing and to exercise all
rights of control over the affairs of any other person which that party is able
to exercise (directly or indirectly) in order to secure performance of that
undertaking.

 

2.8Canons of Construction

 

(a)The rule known as the ejusdem generis rule shall not apply and accordingly
general words introduced by the word "other" shall not be given a restrictive
meaning by reason of the fact that they are preceded by words indicating a
particular class of acts, matters or things.

 

(b)General words shall not be given a restrictive meaning by reason of the fact
that they are followed by particular examples intended to be embraced by the
general terms.

 

2.9Certain Implied Terms

 

The Law of Property (Miscellaneous Provisions) Act 1994 applies to the
disposition of the Sale Shares and any other property made under or pursuant to
this Agreement, save that:

 

(a)the word "reasonably" shall be deleted from the covenant set out in Section
2(1)(b) of that Act;

 

(b)the covenant set out in Section 3(1) of that Act shall not be qualified by
the words "other than any charges, encumbrances or rights which that person does
not and could not reasonably be expected to know about"; and

 

(c)the provisions of Section 6(2) of that Act are excluded from this Agreement.

 

3.Language

 

The English language is the language of choice of the parties in relation to
this Agreement; notices, demands and other communications given in connection
with this Agreement shall be in the English language and if this Agreement is
translated into any language other than English, the English language text shall
prevail.

 

50

 

 

    Executed as a deed by ) HUGH DOHERTY ) in the presence of: ) Witness name:  
Signature of witness:       Address:       Occupation:       Executed as a deed
by ) LAURENCE SEYMOUR ) in the presence of: ) Witness name:   Signature of
witness:       Address:       Occupation:       Executed as a deed by KOKO
(CAMDEN) ) LIMITED acting by a director ) in the presence of: )     Witness
name:   Signature of witness:       Address:       Occupation:  

 

 

 

 

Executed as a deed by ) OLIVER BENGOUGH ) in the presence of: ) Witness name:  
    Signature of witness:       Address:       Occupation:  

 

Executed as a deed by TRINAD CAPITAL )

MASTER FUND LTD acting by a director

)  in the presence of: )     Witness name:       Signature of witness:      
Address:       Occupation:         )   )   )

 

 

 

 

Executed as a deed by OBAR CAMDEN ) LIMITED acting by a director ) in the
presence of: )   Witness name:       Signature of witness:       Address:      
Occupation: