Document:

Exhibit 10.4

SECOND AMENDED AND RESTATED

CHANGE OF CONTROL AGREEMENT

Effective January 1,
2007

(Original Date: February 1, 2000)

Dear Larry:

The Board of Directors
believes that it is in the best interests of Meritage Homes Corporation (“Meritage”),
and its shareholders to take appropriate steps to allay any concerns you (sometimes referred to herein as “Executive”)
may have about your future employment opportunities with Meritage and
its subsidiaries (Meritage and its subsidiaries are collectively referred to as
the “Company”).  As a result, the Board
has decided to offer to you the benefits described below.

1.             Term of Agreement.

This
Agreement is effective immediately and will continue in effect as long as you
are employed by Meritage, unless you and Meritage agree in writing to its
termination.

2.             Severance Payment.

If
your employment with the Company is terminated without “Cause” (as defined in
Section 7) at any time within 90 days prior to or within two years following a “Change
of Control” (as defined in Section 5), you will receive the “Severance Payment”
described below.  You will also receive
the Severance Payment if you terminate your employment for “Good Reason” (as
defined in Section 6) at any time within two years following a Change of
Control.

The
Severance Payment equals the sum of (i) two times the higher of (x) your annual
base salary on the date of termination of your employment, or (y) your annual
base salary on the date preceding the Change of Control, and (ii) two times the highest of the following:  (x) your average annual incentive
compensation for the two years prior to termination of your employment or
(y) your annual incentive compensation for the year preceding the year in
which the Change of Control occurred. 
Notwithstanding the above, the Severance Payment shall not exceed the
lesser of (i) an amount that could be paid on account of a Change of Control
that is not subject to the imposition of any excise tax under Code Section 4999
and is not otherwise subject to the non-deductibility provisions of Code
Section 280G, or (ii) $6 million.

The
Severance Payment will be paid in one lump sum as soon as administratively
feasible following termination of your employment, but in no event more than 30
days following termination of your employment; provided that if you are a “specified
employee” (as defined in Section 409A of the Internal Revenue Code of 1986, as
amended (“Code”)) and the payment does not comply with either the short-term
deferral or separation pay exception to the requirements of Code Section 409A,
as described in Prop. Treas. Reg. §§ 1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) (or
successor provisions in the final 409A regulations), or any other exception to
Section 409A, the above payment will be paid to you in one lump sum on the first
day any such payments may be made without incurring a penalty pursuant
to the Code along with accrued interest at the rate of interest announced by Bank of America, Arizona from time
to

 

time
as its prime rate (the “Prime Rate”) from the date that payments to you should
have been made under this Agreement.  If you die after your
termination of employment but before receiving the above payment, the Company
will distribute the benefits to your beneficiary as soon as administratively
feasible following the date of your death.

You
are not entitled to receive
the Severance Payment if your employment is terminated for Cause, if you
terminate your employment without Good Reason, or if your employment is
terminated by reason of your “Disability” (as defined in Section 8(d)) or your
death (unless death or Disability occurs after a Notice of Termination).  In addition, you are not entitled to receive
the Severance Payment if your employment is terminated by you or the Company
for any or no reason prior to 90 days before a Change of Control occurs or more
than two years after a Change of Control has occurred.

In
order to receive the Severance Payment, you must execute any mutual release reasonably requested by
the Company.

The
Severance Payment will be paid to you without regard to whether you look for or
obtain alternative employment following termination of your employment with the
Company.

3.             Benefits Continuation.

If
you are entitled to severance under Section 2, you will continue to receive
life, disability, accident and group health insurance benefits substantially similar to those
which you were receiving immediately prior to termination of your employment
for a period of 24 months following termination of your employment.  Such benefits shall be provided on substantially
the same terms and conditions as they were provided prior to the Change of
Control, provided that, if coverage for such benefits is not available under
the plans of the Company, the Company shall pay you an amount in cash equal to
the cost of your obtaining such alternative coverage.

Benefits
otherwise receivable pursuant to this Section also shall be reduced or
eliminated if and to the extent that you receive comparable benefits from any
other source (for example, another employer); provided, however, you shall have no obligation to seek,
solicit or accept employment from another employer in order to receive such
benefits.

4.             Stock Option Acceleration.

Notwithstanding
anything in this Agreement or in any option agreement to the contrary, upon a Change
of Control, any stock options and restricted stock granted to you shall
accelerate and become vested without further action and, to the extent
permitted under the plan’s governing documents, Executive shall have a period
of one year from the date of termination to exercise such options.  In addition, all restrictions on awards
granted shall lapse.

5.             Change of Control Defined.

For
purposes of this Agreement, the term “Change of Control” shall mean and include
the following transactions or situations:

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(a)           The acquisition of beneficial ownership, directly or indirectly, of
securities having 35% or more of the combined voting power of Meritage’s then
outstanding securities by any “Unrelated Person” or “Unrelated Persons” acting
in concert with one another.  For
purposes of this Section, the term “Person” shall mean and include any
individual, partnership, joint venture, association, trust, corporation, or
other entity (including a “group” as referred to in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the “Act”)). 
For purposes of this Section, the term “Unrelated Person” shall mean and
include any Person other than the Company, or an employee benefit plan of the
Company, or any officer, director, or 10% or more shareholder of the Company as
of the date of this Agreement.

(b)           A sale, transfer, or other disposition through a single transaction or
a series of transactions of all or substantially all of the assets of Meritage
to an Unrelated Person or Unrelated Persons acting in concert with one another.

(c)           Any consolidation or merger of Meritage with or into an Unrelated
Person, unless immediately after the consolidation or merger the holders of the
common stock of Meritage immediately prior to the consolidation or merger are
the Beneficial Owners of securities of the surviving corporation representing
at least 50% of the combined voting power of the surviving corporation’s then
outstanding securities.

(d)           A change during any period of two consecutive years of a majority of
the members of the Board of Directors of Meritage for any reason, unless the
election, or the nomination for election by the Company’s shareholders, of each
director was approved by the vote of a majority of the directors then still in
office who were directors at the beginning of the period.

6.             Good Reason Defined.

For
purposes of this Agreement, the term “Good Reason” shall include the following
circumstances:  (a) if the Company
assigns you duties that are materially inconsistent with, or constitute a
material reduction of powers or functions associated with, your position,
duties, or responsibilities with the Company, or a material adverse change in your
titles, authority, or reporting responsibilities, or in conditions of your
employment, (b) if your base salary is reduced, (c) if the Company fails to
cause any successor to expressly assume and agree to be bound by the terms of
this Agreement, (d) any purported termination by the Company of your employment
for grounds other than for “Cause,” (e) if the Company relieves you of your
duties other than for “Cause,” (f) if you are required to relocate to an
employment location that is more than fifty (50) miles from Scottsdale,
Arizona, or (g) the Company materially breaches its obligations under this
Agreement and such breach is not cured within a reasonable period of time after
written notice from the Executive.  The
Company and you further acknowledge and agree that, if following a Change of
Control, you do not serve or are not serving as Chief Financial Officer of the
parent corporation of the surviving organization, you have experienced a
material reduction of powers or functions associated with your position, duties
or responsibilities with the Company such that Good Reason shall be deemed to
exist.

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7.             Cause Defined.

For
purposes of this Agreement,
the term “Cause” will exist if Executive, during the term of this Agreement as
set forth in Section 1, (i) has engaged in malfeasance, willful or gross
misconduct, or willful dishonesty that materially harms the Company or its
stockholders, (ii) is convicted of a felony that is materially detrimental to
the Company or its stockholders, (iii) is convicted of or enters a plea of nolo contendere to a felony that materially damages the
Company’s financial condition or reputation or to a crime involving fraud; (iv)
is in material violation of the Company’s ethics/policy code, including breach
of duty of loyalty in connection with the Company’s business; (v) willfully
fails to perform duties under this Agreement or under the Second Amended and
Restated Employment Agreement between you and the Company effective as of
January 1, 2007 (“Employment Agreement”) after notice by the Board and an
opportunity to cure; (vi) impedes, interferes or fails to reasonably cooperate
with an investigation authorized by the Board or fails to follow a legal and
proper Board directive; and (vii) a restatement of financial results that
occurs as the result of your willful misconduct or gross negligence pursuant to
the Sarbanes-Oxley Act.

8.             Termination Notice And Procedure.

Any
termination by the Company
or you of your employment shall be communicated by written Notice of
Termination to you if such
Notice of Termination is delivered by the Company and to the Company if such
Notice of Termination is delivered by you, all in accordance with the following
procedures:

(a)           The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances alleged to provide a basis for termination.

(b)           Any Notice of Termination by the Company shall be in writing signed by
the Chairman of the Compensation Committee (the “Committee”) of the Board of
Directors of the Company specifying in detail the basis for such termination.

(c)           If the Company shall furnish a Notice of Termination for Cause and you
in good faith notify the Company that a dispute exists concerning such
termination within the 30-day period following your receipt of such notice, you
may elect to continue your employment (or you may be placed on paid
administrative leave, at the Company’s option), during such dispute.  If it is thereafter determined that (i) Cause
did exist, your “Termination Date” shall be the earlier of (A) the date on
which the dispute is finally determined, either by mutual written agreement of
the parties or pursuant to the alternative dispute resolution provisions of
Section 15, or (B) the date of your death; or (ii) Cause did not exist, your
employment shall continue as if the Company had not delivered its Notice of
Termination and there shall be no Termination Date arising out of such
notice.  A determination of Cause shall
be made by a majority of the members of the Board only after the Executive and
his counsel, if any, have been giving an opportunity to meet with the Board in
advance of the Board’s vote on the matter.

(d)           If the Company shall furnish a Notice of Termination by reason of
Disability and you in good faith notify the Company that a dispute exists
concerning such

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termination within the 30-day period following your
receipt of such notice, you may elect to continue your employment during such
dispute (or you may be placed on paid administrative leave, at the Company’s
option).  The dispute relating to the
existence of a Disability shall be resolved by the opinion of the licensed
physician selected by Meritage, provided, however, that if you do not accept
the opinion of the licensed physician selected by Meritage, the dispute shall
be resolved by the opinion of a licensed physician who shall be selected by
you; provided further, however, that if Meritage does not accept the opinion of
the licensed physician selected by you, the dispute shall be finally resolved
by the opinion of a licensed physician selected by the licensed physicians
selected by Meritage and you, respectively. 
If it is thereafter determined that (i) a Disability did exist, your
Termination Date shall be the earlier of (A) the date on which the dispute is
resolved, or (B) the date of your death, or (ii) a Disability did not exist,
your employment shall continue as if the Company had not delivered its Notice
of Termination and there shall be no Termination Date arising out of such
notice.  For purposes of this Agreement, “Disability”
shall be given the meaning ascribed to such term in your Employment Agreement
at the time the Disability determination is being made.

(e)           If you in good faith furnish a Notice of Termination for Good Reason
and the Company notifies you that a dispute exists concerning the termination
within the 30-day period following the Company’s receipt of such notice, you
may elect to continue your employment (or you may be placed on paid
administrative leave with pay, at the Company’s option), during such
dispute.  If it is thereafter determined
that (i) Good Reason did exist, your Termination Date shall be the earlier of
(A) the date on which the dispute is finally determined, either by mutual
written agreement of the parties or pursuant to the alternative dispute
resolution provisions of Section 15, (B) the date of your death, or (C) one day
prior to the second anniversary of a Change of Control, and your payments
hereunder shall reflect events occurring after you delivered Notice of
Termination; or (ii) Good Reason did not exist, your employment shall continue after
such determination as if you had not delivered the Notice of Termination
asserting Good Reason.  The Company shall
be given an opportunity to cure the event causing Good Reason within the 15-day
period following Executive’s Notice of Termination for Good Reason.

(f)            If you do not elect to continue employment
pending resolution of a dispute regarding a Notice of Termination, and it is
finally determined that the reason for termination set forth in such Notice of
Termination did not exist, if such notice was delivered by you, you shall be
deemed to have voluntarily terminated your employment other than for Good
Reason and if delivered by the Company, the Company will be deemed to have
terminated you other than by reason of Disability or with Cause.

9.             Successors.

Meritage
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Meritage or any of its subsidiaries to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Meritage
or any subsidiary would be required to perform it if no such succession had
taken place.  Failure of Meritage to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement by Meritage and shall
entitle you to compensation in the same amount and on the

 5
 

 

same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change of Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Termination Date. 
As used in this agreement “Company” shall mean Company, as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law or otherwise.

10.           Binding Agreement.

This
Agreement shall inure to the benefit of and be enforceable by you and your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. 
If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee
or, if there is no such designee, to your estate.

11.           Notice.

For
purposes of this Agreement, notices and all other communications provided for
in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed
by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as shown in the Employment Agreement, provided that
all notices to Meritage shall be directed to the attention of the Chairman of
the Committee with a copy to the Secretary of Meritage, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon receipt.

12.           Miscellaneous.

No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by you and
the Chairman of the Committee.  No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Arizona without regard to its conflicts of law principles.  All references to sections of the Act or the
Code shall be deemed also to refer to any successor provisions to such
sections.  Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law.  The
obligations of Meritage that arise prior to the expiration of this Agreement
shall survive the expiration of the term of this Agreement.

 6
 

 

13.           Validity.

The
invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

14.           Counterparts.

This
Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the same instrument.

15.           Alternative Dispute Resolution.

All
claims, disputes and other matters in question between the parties arising
under this Agreement shall, unless otherwise provided herein (such as in
Section 8), be resolved in accordance with the arbitration or mediation provisions included in your
Employment Agreement.

16.           Expenses and
Interest.

If
a good faith dispute shall arise with respect to the enforcement of your rights
under this Agreement or if any arbitration or legal proceeding shall be brought
in good faith to enforce or interpret any provision contained herein, or to recover damages for breach
hereof, the prevailing party shall recover any reasonable attorneys’ fees and
necessary costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained calculated
at the Prime Rate from the date that payments were or should have been made
under this Agreement.

17.           Payment Obligations Absolute.

Meritage’s
obligation to pay you the compensation and to make the arrangements in
accordance with the provisions herein shall be absolute and unconditional and
shall not be affected by any circumstances. 
All amounts payable by Meritage in accordance with this Agreement shall
be paid without notice or demand.  If Meritage
has paid you more than the amount to which you are entitled under this Agreement, Meritage shall have
the right to recover all or any part of such overpayment from you or from
whomsoever has received such amount.

18.           Effect on Employment Agreement.

This
Agreement supplements, and does not replace, your Employment Agreement.  If there is any conflict between the
provisions of this Agreement and your Employment Agreement, such conflict shall
be resolved so as to provide the greater benefit to you.  However, the Company does not intend to
provide duplicative payments, severance or benefits with in the Employment
Agreement or under any employee severance plan to the extent such a plan
exists or is subsequently implemented by the Company.  As a
result, benefits otherwise receivable pursuant to this Agreement shall be
reduced or eliminated if and to the extent that you receive severance,
consulting or non-competition payments or benefits pursuant to the Employment

 7
 

 

Agreement,
including, but not limited to, payments or benefits pursuant to Section 6 of
the Employment Agreement, or pursuant to an employee severance plan.

19.           Entire Agreement.

This
Agreement, your Employment Agreement and your option grant documents set forth
the entire agreement between you and the Company concerning the subject matter
discussed in this Agreement and supersede all prior agreements, promises, covenants, arrangements,
communications, representations, or warranties, whether written or oral, by any
officer, employee or representative of the Company.  Any prior agreements or understandings with
respect to the subject matter set forth in this Agreement are hereby terminated
and canceled.  Notwithstanding the
foregoing, nothing in this Agreement is intended to affect any previous agreements
pertaining to the grant of options to the Executive, including without
limitation, provisions set forth in Executive’s prior Change of Control
Agreement providing for acceleration upon a change of control.

20.           Deferral of Payments.

To
the extent that any payment under this Agreement, when combined with all other
payments received during the year that are subject to the limitations on
deductibility under Code Section 162(m), exceeds the limitations on
deductibility under Code Section 162(m), such payment shall be deferred to the
next calendar year.  The determination of
deductibility under the preceding sentence shall be made by legal counsel,
certified public accountants, and/or executive compensation consultants
selected by Meritage but who shall be reasonably acceptable to you.  Meritage will notify you as soon as it
becomes aware of specific information that may cause it to exercise its
discretion to require deferral and shall provide you with access to all information
on which its decision is based.  If the
date for payment of any amount is deferred pursuant to this Section 20, then
Meritage will transfer an amount in cash equal to the deferred amount to a
trust which shall be in substantially the same form as is set forth in Revenue
Procedure 92-64, 1992-2 C.B. 422.  The
terms of the trust, including the designation of trustee, shall be determined
by Meritage but shall be reasonably acceptable to you.  All deferred amounts held in the trust shall
bear interest at the Prime Rate from the date that the payment would have been
made to you but for this Section 20 to the date that such payment is actually
made to you.  Payment of the deferred
amounts shall be made no later than the 30th day after the end of the calendar
year in which the deferral occurs, provided that such payment, when combined
with any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under Code
Section 162(m).

21.           Parties.

This
Agreement is an agreement
between you and Meritage and all successors and assigns of Meritage.  In certain cases, though, obligations imposed
upon Meritage may be satisfied by a subsidiary of Meritage.  Any payment made or action taken by a
subsidiary of Meritage shall be considered to be a payment made or action taken
by Meritage for purposes of determining whether Meritage has satisfied its
obligations under this Agreement.

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If
you would like to participate in this special benefits program, please sign and
return the extra copy of this letter which is enclosed.

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  MERITAGE
  HOMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ray Oppel

  
	
   

  	
  Name:

  	
  Ray Oppel

  
	
   

  	
  Its:

  	
  Exec.
  Compensation Committee Chairman

  
					

 

Enclosure

ACCEPTANCE

I
hereby accept the offer to participate in this special benefits program and I
agree to be bound by all of the provisions noted above.

	
  

  	
  LARRY
  W. SEAY

  
	
   

  	
   

  
	
   

  	
  /s/ Larry W.
  Seay

  

 

 9Exhibit
10.1

	
   

  	
   

   

  	
  2007

  
	
   

  	
  (1)           A L WHEELER AND M L DONOVAN

  	
   

  
	
   

  	
  (2)          THORNTON PRECISION COMPONENTS LIMITED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SALE AND PURCHASE AGREEMENT

   

  	
   

  
	
   

  
	
   

  
	
  

  
	
  Princess
  House

  122
  Queen Street

  Sheffield

  S1
  2DW

  
	
   

  

 

 

 

 

	
  1.

  	
   

  	
  INTERPRETATION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  SALE AND
  PURCHASE AND WAIVER OF PRE-EMPTION RIGHTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  PURCHASE PRICE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  RETENTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  ADJUSTMENT OF
  PURCHASE PRICE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  COMPLETION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  WARRANTIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  LIMITATIONS ON CLAIMS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  TAX COVENANT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  INDEMNITIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  PREVIOUS YEAR PROFITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  RESTRICTIONS ON
  SELLERS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  CONFIDENTIALITY
  AND ANNOUNCEMENTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  FURTHER ASSURANCE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  ASSIGNMENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  WHOLE AGREEMENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  VARIATION AND WAIVER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  COSTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  NOTICE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  INTEREST ON LATE
  PAYMENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  SET OFF

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  SEVERANCE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  AGREEMENT
  SURVIVES COMPLETION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  THIRD PARTY RIGHTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  SUCCESSORS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  COUNTERPARTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  LANGUAGE

  	
   

  	
   

  	
   

  

 

 1
 

 

 

	
  28.

  	
   

  	
  GOVERNING LAW
  AND JURISDICTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  RELEASE OF GUARANTEE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  1     PARTICULARS OF SELLERS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 1.

  	
   

  	
  Particulars
  of sellers and apportionment of purchase price

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  2     PARTICULARS OF THE COMPANY AND SUBSIDIARIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 1.

  	
   

  	
  The Company

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 2.

  	
   

  	
  The Subsidiaries

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  3     COMPLETION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 1.

  	
   

  	
  What the
  Sellers shall deliver to the Buyer at Completion

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 2.

  	
   

  	
  Matters for
  the board meetings at Completion

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  4     WARRANTIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 1.

  	
   

  	
  General warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 2.

  	
   

  	
  Tax warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  5     TAX COVENANT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  6     INTELLECTUAL PROPERTY RIGHTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  1:

  	
   

  	
  Registered intellectual
  property rights

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  2:

  	
   

  	
  Material unregistered
  intellectual property rights

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  3.

  	
   

  	
  Intellectual property
  rights licensed from third parties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  4.

  	
   

  	
  Intellectual property
  rights licensed to third parties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  7     INFORMATION TECHNOLOGY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  8     PARTICULARS OF PROPERTIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  1:

  	
   

  	
  Freehold properties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part
  2.

  	
   

  	
  Leasehold properties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Freehold properties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  9     COMPLETION ACCOUNTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 1.

  	
   

  	
  General

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part 2.

  	
   

  	
  Accounting Policies.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  10     HP LIABILITIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  11     ESTIMATED DEBT

  	
   

  	
   

  	
   

  
																						

 

 2

 

THIS AGREEMENT
is dated January 9, 2007

PARTIES

(1)                                  The
several persons whose names and addresses are set out in Schedule 1 (Sellers).

(2)                                  THORNTON PRECISION COMPONENTS LIMITED incorporated and
registered in England and Wales with company number 00293190 whose registered
office is at Beulah Road, Sheffield S6 2AN (Buyer).

BACKGROUND

(A)                              Whedon
Limited, a company incorporated and registered in England and Wales with
Company Number 05696257 whose registered office is at Whitacre Industrial
Estate, Nuneaton, Warwickshire CV11 6BX (further details of which are set out
in Part 1 of Schedule 2) (“the Company”) 
has an issued share capital of £1000 divided into 1000 Ordinary Shares
of £1.00 each.

(B)                                Further
particulars of the Company and of the Subsidiaries at the date of this
agreement are set out in Schedule 2.

(C)                                The
Sellers are the legal and beneficial owners of, and are otherwise able to
procure the transfer of, the legal and beneficial title to the number of Sale
Shares set out opposite their respective names in Schedule 1 comprising in
aggregate the whole of the issued share capital of the Company.

(D)                               The
Sellers have agreed to sell and the Buyer has agreed to buy the Sale Shares
subject to the terms and conditions of this agreement on a debt free basis.

AGREED TERMS

1.                                      INTERPRETATION

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

Accounts: the audited financial statements of the Company and the
Subsidiaries of the Company as at and to the Accounts Date, comprising the
individual accounts of the Company and its Subsidiaries, and in the case of 

 3
 

 

Clamonta, the
consolidated Group accounts, including in each case the balance sheet, profit
and loss account together with the notes thereon and the auditor ́s and
Directors ́ reports (copies of which are attached to the Disclosure Letter).

Accounts Date: 31 October 2006.

Bank Instruction Letter:
the letter, in the agreed form, from the Escrow Agents to the Escrow Bank.

Business: the business of the Company and the Subsidiaries, namely
precision engineering within the machining network for engine furniture in the
aerospace industry.

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

Buyer ́s Solicitors: hlw Commercial Lawyers LLP of Princess House, 122 Queen
Street, Sheffield S1 2DW

CAA 2001: the Capital Allowances Act 2001.

Claim and Substantiated Claim: have the meanings set out respectively in clause 8.

Clamonta:
Clamonta Limited a company incorporated and registered in England and Wales
with Company Number 03816617 whose registered office is at Whitacre Industrial
Estate, Nuneaton, Warwickshire CV11 6BX, the Subsidiary of the Company.

Companies Acts: the Companies Act 1985 and the Companies Act 1989.

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

Completion Date: the date of this agreement.

Completion Payment:
the sum of £2,570,515.09.

Connected: in relation to a person, has the meaning contained in section
839 of the ICTA 1988.

 4
 

 

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

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

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

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

Crown
Place Liability: all sums (whether capital, interest or
otherwise) however in the future payable by, or any other Liability of the
Company or any of the Subsidiaries to Crown Place VCT plc on any grounds
whatsoever but including, without limitation, pursuant to (a) a share sale
agreement dated 19 April 2001 between the Sellers (1) Crown Place VCT plc (2)
the Company (3) and Clamonta (4); and/or (b) a Deed of Variation dated 19 April
2006 between Clamonta (1) Crown Place VCT plc (2) and the Company (3) (the “Deed of Variation”) and/or the Loan
referred to in the Deed of Variation but excluding any sums paid direct to
Crown Place VCT plc by the Sellers direct on behalf of the Company and/or the
Subsidiaries (whether before or after Completion) and which are not recoverable
by the Sellers from the Company and/or any of the Subsidiaries whether under
the principle of subrogation or otherwise.

Debt: shall mean the
following calculation:

A minus B = Debt (this is the level of debt net of positive cash
balances)

Where A shall collectively mean points (i) to (iv) below :

(i)                                     All sums and any
other liability due at the date of Completion or at any time in the future in
respect of any sums drawn or liability incurred prior to Completion pursuant to
the invoice discounting facility provided by HSBC Invoice Finance (UK) Limited
utilised by the Company and its Subsidiary and which facility is in existence as
at Completion but excluding any sum drawn down by the Company (and 

 5
 

 

any liability arising as a result
of any such draw down) after Completion;

(ii)                                  All sums and any
other liability due at the date of Completion or at any time in the future in
respect of any sums drawn or liability incurred prior to Completion pursuant to
the commercial mortgage loan for the Properties with HSBC Bank PLC;

(iii)                               All sums and any
other liability due at the date of Completion or at any time in the future  in respect of any sums drawn or liability
incurred prior to Completion pursuant to the flexible business loan dated 17
May 2005 from  HSBC Bank PLC to Clamonta;

(iv)                              All sums and any
other liability due at the date of Completion or at any time in the future in
respect of any sums drawn or liability incurred prior to Completion pursuant to
the loan from HSBC Bank PLC to the 
Company dated 19 April 2006;

(v)                                 All sums and any
other liability due at the date of Completion or at any time in the future (due
as at the Completion Date)  in respect of
the Crown Place Liability

(vi)                              The amount of
all Completion Liabilities.

(vii)                           The amount by
which the Completion MCT Provision exceeds the sum of £180,000.

in each case including interest but excluding all penalties early
repayment fees and exit fees.

Where B shall mean the cash at HSBC Bank PLC standing to the credit of
the Company and its Subsidiary as reconciled with and to derive the cash book
balance at the date of Completion but after deducting from such credit balance
the sum of £283,527.

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

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

 6
 

 

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

Due Amount:
the amount (if any) due to the Buyer by way of adjustment of the Purchase Price
in accordance with the terms of clause 5 of this Agreement or in respect of a
Substantiated Claim.

Escrow Agents:  the Sellers’ Solicitors.

Escrow Bank:The Royal Bank of Scotland  Colmore Row Branch Birmingham  Account Number  103 27844 Sort Code 16-13-18

Escrow Letter:
the letter, in the agreed form, to be signed by the parties instructing and
authorising the Escrow Agents to establish and operate the Retention Account.

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

Estimated Debt: those
debts of the Company and the Subsidiaries listed in Schedule 11.

Event: has the meaning given in Schedule 5.

FSMA: the Financial Services and Markets Act 2000.

Group: in relation to a company (wherever incorporated) that
company, any company of which it is a Subsidiary (its holding company) and any
other Subsidiaries of any such holding company; and each company in a group is
a member of the group.  Unless the
context otherwise requires, the application of the definition of Group to any
company at any time will apply to the company as it is at that time.

ICTA 1988: the Income and Corporation Taxes Act 1988.

IHTA 1984: the Inheritance Tax Act 1984.

 7
 

 

Intellectual Property Rights: has the meaning given in paragraph 17.1 of Part 1 of
Schedule 4.

Pension Scheme: Firstly, Standard Life Scheme (number J33445) known as the
Clamonta Limited GPPP for all employees. Secondly, a Scottish Widow’s directors’
pension scheme known as Scottish Widow’s Appropriate Personal Pension Scheme;
(scheme   number  for Leigh Donovan is 3171447 and scheme
number for Alan Wheeler is 3171345) and thirdly a personal pension plan known
as the Trustees of the Linford Engineering 
Company Directors Retirement Benefits Plan  (scheme number for both Alan Wheeler and
Leigh Donovan is 10P35D91). Fourthly life cover with St James Place the scheme
number for Alan Wheeler is 77B54E23  and
for Leigh Donovan the scheme number is 77B54C254.

Previous
Year Period: means the period from 1 November 2005 to 31
October 2006.

Previous  Year Profit:  means
the consolidated operating profit of Clamonta and its subsidiaries as shown in
the Accounts subject to the following adjustments;

(1)                                  Before
interest and dividends

(2)                                  Before
Tax

(3)                                  Before
all costs relating to the refinancing of the business and the management buy
out completed on 15 April 2006, and the refinancing of the Company’s borrowings
in May 2005 in the sum of £6,380, and professional fees incurred in respect of
the void share transaction in the sum of £30,000.

(4)                                  
Before amortisation of goodwill

(5)                                  Before
the writing back or releasing of the General Provisions

(6)                                  Before
taking into account any profit made on disposals of fixed capital assets since
1 November 2005

(7)                                  Before
taking into account any impairment review of the assets of Clamonta and its
Subsidiaries

 8
 

 

Previously-owned Land and
Buildings: has the
meaning given in paragraph  22.2 of Part
1 of Schedule 4  .

Properties: has the meaning given in paragraph 22.3 of Part 1 of
Schedule 4

Purchase Price: the purchase price for the Sale Shares to be paid by the
Buyer to the Sellers in accordance with clause 3.

Release Date:
has the meaning given in clause 4.

Retention Account:
the interest-bearing bank account at the Escrow Bank to be established in
accordance with the Escrow Letter.

Sale Shares: the 1000 Ordinary Shares of £1.00 each in the Company, all
of which have been issued and are fully paid.

Sellers ́ Solicitors: Hawkins Hatton LLP of Trafalgar House, 47-49 King Street,
Dudley DY2 8PS.

Subsidiary: in relation to a company wherever incorporated (a holding
company) means a “subsidiary” as defined in section 736 of the Companies Act
1985 and any other company which is a subsidiary (as so defined) of a company
which is itself a subsidiary of such holding company. Unless the context
otherwise requires, the application of the definition of Subsidiary to any
company at any time will apply to the company as it is at that time.

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

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

Tax Claim: has the meaning given in Schedule 5.

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

Taxation Authority: has the meaning given in Schedule 5.

Taxation Statute: has the meaning given in Schedule 5.

TCGA 1992: the Taxation of Chargeable Gains Act 1992.

TMA 1970: the Taxes Management Act 1970.

 9
 

 

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

VATA 1994: the Value Added Tax Act 1994.

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

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

1.3                                 A person includes a corporate or
unincorporated body.

1.4                                 Words in the singular
include the plural and in the plural include the singular.

1.5                                 A reference to one
gender includes a reference to the other gender.

1.6                                 A reference to a
particular law is a reference to it as it is in force for the time being taking
account of any amendment, extension, or re-enactment and includes any subordinate
legislation for the time being in force made under it.

1.7                                 Writing or written includes faxes but not e-mail.

1.8                                 Documents in agreed form are documents in the form
agreed by the parties or on their behalf and initialled by them or on their
behalf for identification.

1.9                                 References to clauses
and schedules are to the clauses and schedules of this agreement; references to
paragraphs are to paragraphs of the relevant schedule.

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

1.11                           References to Subsidiary or Subsidiaries  are
references to a Subsidiary or Subsidiaries of the Company and/or Clamonta (as
the case may be).

1.12                           Reference to this agreement
include this agreement as amended or varied in accordance with its terms.

2.                                      SALE
AND PURCHASE AND WAIVER OF PRE-EMPTION RIGHTS

2.1                                 On the terms of this
agreement, the Sellers shall sell and the Buyer shall buy, with effect from
Completion, the Sale Shares with full title guarantee, free 

 10
 

 

from all
Encumbrances and together with all rights that attach (or may in the future
attach) to them including, in particular, the right to receive all dividends
and distributions declared, or made or paid on or after the date of this agreement.

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

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

3.                                      PURCHASE
PRICE

3.1                                 The Purchase Price is
the Completion Payment as adjusted in accordance with clause 5 (Adjustment of
the Purchase Price) and Schedule 9 (Completion Accounts).

3.2                                 The Completion Payment
is payable in cash at Completion by the Buyer and shall be paid:

3.2.1                        as
£2,470,515.09 to Sellers’ Solicitors, who shall be responsible for ensuring
that such sum is apportioned between the Sellers in the proportions set out
opposite the Sellers’ names in Schedule 1; and

3.2.2                        as
the balance of £100,000 into the Retention Account, which shall be maintained
in accordance with the provisions of clause 4; and

3.3                                  The Purchase Price
shall be deemed to be reduced by the amount of any payment made to the Buyer:

3.3.1                        For
a breach of any warranty which is agreed in writing and/or adjudicated by a
Court of competent jurisdiction as provided herein and not appealed within 12
months thereof; or

3.3.2                        Under
clause 5 which is agreed in writing and/or adjudicated by a Court of competent
jurisdiction as provided herein and not appealed within 12 months thereof; or

 11
 

 

3.3.3                        Under
the Tax Covenant which is agreed in writing and/or adjudicated by a Court of
competent jurisdiction as provided herein and not appealed within 12 months
thereof.

4.                                      RETENTION

4.1                                 No amount shall be
released out of the Retention Account otherwise than in accordance with this
clause 4.

4.2                                 Subject as otherwise
provided by this clause 4, the amount (if any) standing to the credit of the
Retention Account (including any accrued interest but less any applicable bank
charges) on the date upon which any payment by way of adjustment of the
Purchase Price falls due for payment pursuant to clause -5.3 (“Release
Date”) shall be released to the Sellers’ Solicitors
(who shall be responsible for ensuring that such sum is apportioned between the
Sellers in the proportions set out opposite their names in Schedule 1).

4.3                                 Any interest that may
accrue on the credit balance on the Retention Account shall be credited to the
Retention Account and any payment of principal out of the Retention Account
shall include a payment of the interest earned on such principal sum by the
Retention Account.

4.4                                 The liability to
taxation on any interest on any amount in the Retention Account shall be borne
by the party ultimately entitled to that amount.

4.5                                 If, prior to the
Release Date, there is a Due Amount, the parties shall, unless such Due Amount
has been paid to the Buyer prior to the Release Date, instruct the Escrow
Agents to pay to the Buyer out of the Retention Account the lesser of the Due
Amount and the amount standing to the credit of the Retention Account (together
with any interest which has accrued on the amount so paid but less any
applicable bank charges).

4.6                                 Save as provided
elsewhere in this agreement:

4.6.1                        the
amount of the Purchase Price paid into the Retention Account shall not be
regarded as imposing any limit on the amount of any claims under this agreement
or under any of the documents executed pursuant to this agreement;

 

 12

 

4.6.2                        if a Due
Amount is not satisfied in full from the Retention Account, the Relevant Claim
(to the extent not so satisfied) shall remain fully enforceable against the
Sellers; and

4.6.3                        nothing in
this clause 4 shall prejudice, limit or otherwise affect any right, including
to make any claim, or remedy the Buyer may have from time to time against the
Sellers either under this agreement or under any of the documents executed
pursuant to this agreement.

5.                                      ADJUSTMENT OF PURCHASE PRICE

5.1                                 In
this agreement Completion
Net Assets,  Completion MCT Provision, and Completion
Liabilities have the meanings respectively given in the definitions
in paragraph 1 of Part 1 of  Schedule 9
(Completion accounts).

5.2                                 The
Purchase Price shall be reduced by deducting the following amounts from the
Purchase Price (and so that each such deduction is independent of all other
deductions so that the total deduction to be made from the Purchase Price shall
be the sum of the deductions under all of the sub-clauses of this sub-clause
5.2 and so that under no circumstances shall the Purchase Price be increased
above the Completion Payment other than set out in Clause 5.6):

5.2.1                        the
amount, if any, by which the Completion Net Assets are less than £2,050,000;

5.2.2                        the amount
by which the Debt exceeds the Estimated Debt.

5.3                                 Within
seven days, starting on the day after agreement or determination of the
Completion Accounts in accordance with the provisions of  Schedule 9 (Completion Accounts) if the
aggregate amount of the Completion Payment exceeds the Purchase Price, the
Sellers and the Buyer will irrevocably instruct the Escrow Agent to pay the
amount by which the Completion Payment exceeds the Purchase Price to the Buyer
from the Retention Account (up to a maximum of the sum (including interest)
standing to the credit of the Retention Account) and to the extent that such
payment does not fully discharge the sum payable  the Sellers shall repay to the Buyer the
balance of the amount required freely to discharge the amount by which the Completion
Payment exceeds the Purchase Price and after such payments (if 

 13
 

 

any) then such monies standing to the credit
of the Retention Account shall be  dealt
with in accordance with clause 4.2.

5.4                                 any
such repayment to be made by the Sellers under clause 5.3 shall be paid in the
same proportions as received sums under clause 3 (Purchase Price).

5.5                                 Any
payment or repayment to be made under clause 5.3 shall be made to the Buyer by
telegraphic transfer to an account notified by the Buyer to the Sellers not
later than five Business Days following the date on which the Completion
Accounts are agreed or determined.

5.6                                 If
the amount of the Estimated Debt exceeds the amount of the Debt, the Buyer
shall pay to the Sellers by way of additional consideration the amount by which
the Estimated Debt exceeds the Debt such sum to be determined in accordance
with the provisions of this clause 5 mutatis mutandis and paid by the Buyer to
the Sellers no later than five Business Days following the date upon which the
Completion Accounts are agreed or determined.

6.                                      COMPLETION

6.1                                 Completion
shall take place on the Completion Date:

6.1.1                        at the
offices of Buyer’s Solicitors immediately after the signing of this Agreement;
or

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

6.2                                 At
Completion the Sellers shall:

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

6.2.2                        procure
that a board meeting of the Company and each of the Subsidiaries is held at
which the matters identified in Part 2 of Schedule 3   are carried out; and

6.2.3                        deliver
any other documents referred to in this agreement as being required to be
delivered by them.

6.3                                 At
Completion the Buyer shall:

 14
 

 

6.3.1                        pay the
Completion Payment by telegraphic transfer to the Sellers’ Solicitors (who are
irrevocably authorised to receive the same) and otherwise in accordance with
clause 3.2 and so that such payment shall be applied by the Sellers’ Solicitors
as set out in clause 3.2. Payment made in accordance with this clause shall
constitute a valid discharge of the Buyer’s obligations under clause 3.2;

6.3.2                        deliver a
certified copy of the resolution adopted by the board of directors of the Buyer
authorising the Transaction and the execution and delivery by the officers
specified in the resolution of this agreement, and any other documents referred
to in this agreement as being required to be delivered by it

6.4                                 At
Completion, the Sellers and the Buyer shall sign the Escrow Letter and procure
that the Escrow Agents sign and deliver the Bank Instruction Letter to the
Escrow Bank.

6.5                                 As
soon as possible after Completion the Sellers shall send to the Buyer (at the
Buyer ́s registered office for the time being) all records, correspondence,
documents, files, memoranda and other papers relating to the Company and the
Subsidiaries not required to be delivered at Completion and which are not kept
at any of the Properties.

7.                                      WARRANTIES

7.1                                 The
Buyer is entering into this agreement on the basis of, and in reliance on, the
Warranties.

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

7.3                                 Without
prejudice to the right of the Buyer to claim on any other basis or take
advantage of any other remedies available to it, if any Warranty is breached or
proves to be untrue or misleading, the Sellers shall pay to the Buyer on
demand:

 15
 

 

7.3.1                        The amount
necessary to put the Company and each of the Subsidiaries into the position
they would have been in if the Warranty had not been breached or had not been
untrue or misleading; and

7.3.2                        All costs
and expenses (including, without limitation, damages, legal and other
professional fees and costs, penalties, expenses and consequential losses
whether directly or indirectly arising) incurred by the Buyer or the Company or
any of the Subsidiaries as a result of such breach or of the Warranty being
untrue or misleading.

A payment made in accordance with the
provisions of clause 7.3 shall include any amount necessary to ensure that,
after any Taxation of the payment, the Buyer is left with the same amount it
would have had if the payment was not subject to taxation.

7.4                                 Warranties
qualified by the expression so far as the
Sellers are aware or any similar expression are deemed to be given
to the best of the knowledge, information and belief of the Sellers after they
have made all reasonable enquiries.

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

7.6                                 With
the exception of the matters Disclosed, no information of which the Buyer
and/or its professional advisers has knowledge (actual constructive or implied,)
or which could have been discovered (whether by investigation made by the Buyer
or made on its behalf) shall prejudice or prevent any Claim or reduce any
amount recoverable thereunder.

7.7                                 The
Sellers agree that any information supplied by the Company or any of the
Subsidiaries or by or on behalf of any of the employees, directors, agents or
officers of the Company and any of the Subsidiaries (Officers)
to the Sellers or their advisers in connection with the Warranties, the
information Disclosed in the Disclosure Letter or otherwise shall not
constitute a warranty, representation or guarantee as to the accuracy of such
information in favour of the Sellers, and the Sellers hereby undertake to the
Buyer and to the Company, the Subsidiaries and each Officer that they waive any
and all 

 16
 

 

claims which they might otherwise have
against any of them in respect of such claims.

8.                                      LIMITATIONS
ON CLAIMS

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

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

Substantiated Claim: a Claim in respect of which liability is admitted in
writing by the party against whom such Claim is brought, or which has been
adjudicated on by a Court of competent jurisdiction and (if the Court of
competent jurisdiction is the County Court in England and Wales) no right of
appeal lies in respect of such adjudication, or the parties are debarred by
passage of time or otherwise from making an appeal.

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

8.2                                 This clause limits the
liability of the Sellers in relation to any Claim and any claim under the Tax
Covenant.

8.3                                 The liability of the
Sellers for all Substantiated Claims and all claims under the Tax Covenant when
taken together shall not exceed a sum equal to the aggregate of the Purchase
Price (but excluding interest in respect of such Substantiated Claims and the
reasonable and proper costs incurred by the Buyer in enforcing such
Substantiated Claims) PROVIDED that the maximum liability of each Seller for
all Substantiated Claims and any claim under the Tax Covenant shall not exceed
the sums set opposite the name of such Seller in Schedule 1.

8.4                                 The Sellers shall not
be liable for a Claim unless the liability exceeds £2,000 and the amount of all
Substantiated Claims when taken together, exceeds £25,000, in which case the
whole amount (and not just the amount by which the limit in this clause is
exceeded) is recoverable by the Buyer.

8.5                                 The Sellers are not
liable for a Claim to the extent that the Claim:

 17
 

 

8.5.1                        relates
to matters Disclosed; or

8.5.2                        relates
to any matter specifically provided for in the Completion Accounts.

8.6                                 The Sellers are not
liable for a Claim or a claim under the Tax Covenant or under the Indemnities
in clause 10 unless the Buyer has given the Sellers notice in writing of the
Claim or the claim under the Tax Covenant, summarising the nature of the Claim
or claim under the Tax Covenant as far as is known to the Buyer and the amount
claimed and proceeding in respect of such matter is served no later than 12
months after the date of the initial notice of the Claim or Claim under the Tax
Covenant:

8.6.1                        in
the case of a claim made under the Tax Warranties or the Tax Covenant, within
the period of 7 years beginning with the Completion Date; and

8.6.2                        in
any other case, within the period beginning with the Completion Date and ending
on 28 February 2009;

8.6.3                        in
the case of a claim under the Indemnities in clause 10  within 4 years beginning with the Completion
Date.

8.7                                 Conduct of Claims.

8.7.1                        The
Buyer shall procure that the conduct, negotiation, settlement or litigation of
the claim by or against such third party is, so far as is reasonably
practicable, carried out in accordance with the wishes of the Sellers and at
their cost, subject to their giving timely instructions to the Buyer and
providing reasonable security for any costs and expenses which might be
incurred by the Buyer or the Company.

8.7.2                        The
Buyer shall not be liable for any delay in giving any notice under Clause 8.7.1
and shall not by reason of such delay be precluded from bringing any such claim
against the Sellers.

8.7.3                        The
Buyer shall provide and shall procure that the Company provides to the Sellers
and the Sellers’ professional advisers reasonable access to premises and
personnel and to any relevant assets, documents and records within their power,
possession or control for 

 18
 

 

the purpose of
investigating any Claim and enabling the Sellers to take the action referred to
in Clause 8.7.2 and shall allow the Sellers and their advisers to take copies
of any relevant documents or records at their expense.

8.7.4                        PROVIDED
that nothing in this clause 8.7 shall oblige the Buyer to carry out any act or
to take any action or omit to do anything if the Buyer in its reasonable
opinion believes that act or omission would be materially damaging to the
goodwill of the Company or the reasonably material commercial interests of the
Buyer and/or the Company and/or any of the Subsidiaries.

8.8                                 Nothing in clause 8
applies to a Claim or a claim under the Tax Covenant that arises or is delayed
as a result of dishonesty or fraud, by the Sellers or their advisers.

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

8.10                           The Sellers shall not be
liable for any Claim and/or a claim under Tax Covenant to the extent that:

8.10.1                  the
Buyer has actual knowledge of any matter which could give rise to a Claim
and/or a claim under the Tax Covenant on or before Completion  and for the purposes of this Agreement, the
Buyer shall only be regarded as having actual knowledge of any such matter if
details of the matter (in sufficient detail to enable the Buyer to understand
the nature and extent of the matter) are contained in the due diligence report
dated 25 August 2006 prepared by Hawsons Chartered Accountants;

8.10.2                  it
would not have arisen or would have been reduced or eliminated but for:

8.10.2.1                  a
failure or omission on the part of the Company to make any claim, election,
surrender or disclaimer or the failure or omission after Completion to give any
notice or consent to do any other thing the making, giving or doing of which in
each 

 19
 

 

case was taken
into account in computing the provision or reserve for Tax in the Accounts and
was expressly referred to in the Disclosure Letter; or

8.10.2.2                  any
claim, election, surrender or disclaimer made or notice or consent given or any
other thing done after Completion by the Company or the Buyer or any person
connected with them;

8.10.3                  it
is attributable to or arises as a result of:

8.10.3.1                  any
voluntary act or omission of the Buyer (or any persons deriving title from it)
or the Company after Completion outside the ordinary course of business and
other than pursuant to a legally binding obligation entered into by the Company
before Completion and which the Buyer knew would give rise to such Claim.

8.10.3.2                  the
retrospective imposition of Taxation or any increase in rates of Taxation or by
a change in the law (whether retrospectively or not) occurring after Completion
or the withdrawal after Completion of any published concession or general
practice previously made by a Tax Authority;

8.10.3.3                  any
change after Completion in the bases upon which the Accounts of the Company are
prepared or any change in accounting practice or principles; or

8.10.3.4                  any
change after Completion in the date to which the Company makes up its accounts;

8.10.4                  the
Buyer is indemnified against any loss or damage suffered by it under the terms
of any insurance policy for the time being in force;

8.10.5                  the
liabilities under it are contingent, future or unascertainable, in which case
the Sellers shall not be liable to recompense the Buyer until such time as the
Buyer shall actually have suffered the loss or incurred the liability in
question PROVIDED that in the case of a Claim and/or a claim under the Tax
Covenant which is contingent only the time limits for bringing such Claim
and/or claim under the Tax Covenant pursuant to clause 8.6 shall be extended so
that the periods 

 20
 

 

in
clauses  8.6.1 and 8.6.2 shall only start
to run from the date upon which such liability becomes an actual liability and
not from the Completion Date but for the avoidance of doubt the period in
clause 8.6 shall remain the same.

8.11                           the Buyer shall not be
entitled to reimbursement or restitution more than once in respect of any one
Claim and to the extent that the Buyer has recovered monies in respect of any
such Claim from a third party howsoever then it shall immediately notify the
Sellers and repay to the Sellers the amount recovered less all reasonable costs
and expenses incurred by the Buyer the Company or any member of the Buyer’s
group of companies in obtaining such recovery.

9.                                      TAX
COVENANT

The
provisions of Schedule 5 apply in this agreement.

10.                               INDEMNITIES

10.1                           The Sellers undertake to
indemnify, and to keep indemnified, the Buyer, the Company and the Subsidiaries
against all losses or liabilities (including, without limitation any direct or
indirect consequential losses or loss of profit and loss of reputation,
damages, claims, demands, proceedings, costs, expenses, penalties, proper and
reasonable legal and other professional fees and costs) which may be suffered
or incurred by any of them and which arise directly or indirectly in connection
with the following:

10.1.1                  the
failure to have been insured against the following risks for any period of time
up to Completion:-

(a)     product liability

(b)     aviation product liability

(c)     aviation grounding insurance

                                              provided
always that the Sellers will not be liable for any claim pursuant to this
clause 10.1.1 for which the Buyer has or could reasonably have obtained
insurance;

 21
 

 

10.1.2                  failure
to remove from the Property all asbestos prior to Completion which should have
been removed under the asbestos report dated 25 May 2005 from Environcare
Midlands Limited

10.1.5 any liability of the
Company, Clamonta or the Buyer in respect of:

10.1.5.1.                              the void arrangements for
the purchase of own shares from Mr Harrison in March 2005 and/or May 2005;

10.1.5.2.                              any effect which the void
arrangements referred to in clause 10.1.5.1. have had or may have on the
financial assistance exercise which took place in April 2006.

10.1.5.3.the failure at any time to comply with the provisions of the
Articles of Association of Clamonta in respect of Mr Harrison and his rights as
a shareholder of Clamonta.

10.1.6              The
failure by the Sellers to discharge the Crown Place Liability within 30 days of
finalisation of the Completion Accounts provided always that the provisions of
clause 8.7 shall have effect with regard to the conduct of all negotiations
with Crown Place VCT PLC and that the Sellers shall have no liability pursuant
to this clause 10.1.6 to the extent that the amount claimed has been included
in and treated as Debt.

10.2                           Any
payment made in respect of a claim under this clause 10 shall include:

10.2.1                  an amount in
respect of all proper and reasonable costs and expenses incurred by the Buyer
or the Company or any of the Subsidiaries in relation to the bringing of the
claim ; and

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

11.                               PREVIOUS
YEAR PROFITS

The Sellers shall pay to the Buyer the sum
(if any) by which the Previous Year Profits are less than £900,000 such sum to
be paid within 7 days of the date upon which the statutory consolidated
accounts of the Clamonta and its 

 22
 

 

subsidiaries for the accounting period ending
on 31 October 2006 are approved PROVIDED that if there shall be any dispute as
to the amount of the Previous Year Profits such dispute shall be determined by
an expert (“the Year End Expert”) appointed in accordance with paragraph 3 of
Part 1 of Schedule 9 and acting in accordance with the provisions of such
paragraph 3 mutatis mutandis.

12.                               RESTRICTIONS
ON SELLERS

12.1                           Each of
the Sellers severally covenants with the Buyer that he shall not:

12.1.1                  at any time
during the period of 3 years beginning with the Completion Date, in any
geographic areas in which any business of the Company or any of the
Subsidiaries was carried on at the Completion Date, carry on or be employed,
engaged or interested in any business which would be in competition with any
part of the Business as the Business was carried on at the Completion Date; or

12.1.2                  at any time
during the period of 3 years beginning with the Completion Date, deal with any
person who is at the Completion Date, or who has been at any time during the
period of 12 months immediately preceding that date, a client or customer of
the Company or any of the Subsidiaries; or

12.1.3                  at any time
during the period of 3 years beginning with the Completion Date, canvass,
solicit or otherwise seek the custom of any person who is at the Completion
Date, or who has been at any time during the period of 12 months immediately
preceding that date, a client or customer of the Company or any of the
Subsidiaries; or

12.1.4                  at any time
during the period of 3 years beginning with the Completion Date:

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

 

 23

 

12.1.4.2                  procure or
facilitate the making of any such offer or attempt by any other person; or

12.1.5                  at any time
after Completion, use in the course of any business:

12.1.5.1                  the words “Clamonta”
and/or “Introfocus” ; or

12.1.5.2                  any trade or
service mark, business or domain name, design or logo which, at Completion, was
or had been used by the Company or any of the Subsidiaries; or

12.1.5.3                  anything which
is, in the reasonable opinion of the Buyer, capable of confusion with such
words, mark, name, design or logo; or

12.1.6                  at any time
during a period of 3 years beginning with the Completion Date, solicit or
entice away from the Company or any of the Subsidiaries any supplier to the
Company or any of the Subsidiaries who had supplied goods and/or services to
the Company or any of the Subsidiaries at any time during the 12 months
immediately preceding the Completion Date, if that solicitation or enticement
causes or would cause such supplier to cease supplying, or materially reduce
its supply of, those goods and/or services to the Company or any of the
Subsidiaries.

12.2                           The
covenants in clause 12 are intended for the benefit of the Buyer, the Company
and the Subsidiaries and apply to actions carried out by the Sellers in any
capacity and whether directly or indirectly, on the Sellers ́ own behalf, on
behalf of any other person or jointly with any other person.

12.3                           Nothing
in clause 12 prevents the Sellers or any of them from holding for investment
purposes only:

12.3.1                  any units of any
authorised unit trust; or

12.3.2                  not more than 1%
of any class of shares or securities of any company traded on the London Stock
Exchange or the Alternative Investment Market in London.

 24
 

 

12.4                           Each of
the covenants in clause 12 is a separate undertaking by each Seller in relation
to himself and his interests and shall be enforceable by the Buyer separately
and independently of its right to enforce any one or more of the other
covenants contained in clause 12. Each of the covenants in clause 12 is
considered fair and reasonable by the parties, but if any restriction is found
to be unenforceable, but would be valid if any part of it were deleted or the
period or area of application reduced, the restriction shall apply with such
modifications as may be necessary to make it valid and enforceable.

12.5                           The
consideration for the undertakings contained in clause 12 is included in the
Purchase Price.

12.6                           Nothing
in clause 12 shall prevent the Sellers or any of them from working for the
Company and/or the Subsidiaries and/or the Buyer and/or from holding shares in
PBI Solutions Limited but so that the relaxation of the provisions of the
covenants in this clause 12 in respect of the holding of shares in PBI
Solutions Limited shall not permit the Sellers 
to do any work (paid or unpaid) for PBI Solutions Limited (other than in
respect of winding up the same) in any capacity (including as employee
consultant or sub-contractor) or to lend money or provide other financial
assistance to that company, whether directly or indirectly.

13.                               CONFIDENTIALITY
AND ANNOUNCEMENTS

13.1                           Each of
the Sellers severally undertakes to the Buyer to keep confidential the terms of
this agreement and all information which they have acquired about the Company
and the Subsidiaries and the Buyer ́s Group (as such Group is constituted
immediately before Completion) and, in the case of the Buyer, all information
which it has acquired about the Company ́s Group (as such Group is constituted
immediately before Completion), and to use the information only for the
purposes contemplated by this agreement.

13.2                           The
Buyer undertakes to each of the Sellers to keep confidential the terms of this
agreement and all information that it has acquired about that Seller and to use
the information only for the purposes contemplated by this agreement.

13.3                           The
Buyer does not have to keep confidential or restrict its use of information
about the Company and the Subsidiaries after Completion.

 25
 

 

13.4                           A party
does not have to keep confidential or to restrict its use of:

13.4.1                  information that
is or becomes public knowledge other than as a direct or indirect result of a
breach of this agreement; or

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

13.5                           Any
party may disclose any information that it is otherwise required to keep
confidential under clause 13:

13.5.1                  to such
professional advisers, consultants and employees or officers of its Group as
are reasonably necessary to advise on this agreement, or to facilitate the
Transaction, if the disclosing party procures that the people to whom the
information is disclosed keep it confidential as if they were that party; or

13.5.2                  with the written
consent of all the other parties; or

13.5.3                  with the written
consent of one party, if such information relates only to that party; or

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

13.5.5                  to the extent
that the disclosure is required:

13.5.5.1                  by law; or

13.5.5.2                  by a regulatory
body, Taxation Authority or securities exchange; or

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

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

 26
 

 

13.5.5.5                  to protect the
disclosing party ́s interest in any legal proceedings,

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

13.6                           Each party shall supply any
other party with any information about itself, its Group or this agreement as
such other party may reasonably require for the purposes of satisfying the
requirements of a law, regulatory body or securities exchange to which such
other party is subject.

14.                               FURTHER
ASSURANCE

The Sellers
shall (at their expense) promptly execute and deliver all such documents, and
do all such things, as the Buyer may from time to time reasonably require for
the purpose of giving full effect to the provisions of this agreement.

15.                               ASSIGNMENT

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

15.2                           Each party that has rights
under this agreement is acting on its own behalf.

15.3                           The Buyer may assign its
rights under this agreement (or any document referred to in this agreement) but
not its obligations to a member of its Group (only after the Completion
Accounts have been finalised and determined as provided herein) subject always
to the assignee remaining within the Group.

15.4                           If there is an assignment:

15.4.1                  the
Sellers may discharge their obligations under this agreement to the assignor
until they receive notice of the assignment; and

15.4.2                  the
assignee may enforce this agreement as if it were a party to it, but the Buyer
shall remain liable for any obligations under this agreement.

 27
 

 

16.                               WHOLE
AGREEMENT

16.1                           This agreement, and any
documents referred to in it, constitute the whole agreement between the parties
and supersede any arrangements, understanding or previous agreement between
them relating to the subject matter they cover.

16.2                           Nothing in clause 16
operates to limit or exclude any liability for fraud.

17.                               VARIATION
AND WAIVER

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

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

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

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

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

17.6                           Unless specifically provided
otherwise, rights arising under this agreement are cumulative and do not
exclude rights provided by law.

18.                               COSTS

All costs in connection with the negotiation, preparation, execution
and performance of this agreement, and any documents referred to in it, shall
be borne by the party that incurred the costs.

 28
 

 

19.                               NOTICE

19.1                           A notice given under this
agreement:

19.1.1                  shall
be in writing in the English language (or be accompanied by a properly prepared
translation into English);

19.1.2                  shall be sent
for the attention of the person, and to the address or fax number, specified in
clause 19 (or such other address, fax number or person as each party may notify
to the others in accordance with the provisions of clause 19); and

19.1.3                  shall be:

19.1.3.1                  delivered
personally; or

19.1.3.2                  sent by fax; or

19.1.3.3                  sent by pre-paid
first-class post or recorded delivery; or

19.1.3.4                  (if the notice
is to be served by post outside the country from which it is sent) sent by
airmail.

19.2                           Any
notice to be given to or by all of the Sellers under this agreement is deemed
to have been properly given if it is given to or by the Sellers ́ representative
named in clause 19.3. Any notice required to be given to or by some only of the
Sellers shall be given to or by the Sellers concerned (and in the case of a
notice to the Sellers) at their address or fax number as set out in Schedule
1  .

19.3                           The
addresses for service of notice are:

19.3.1                  Sellers
Representative

19.3.1.1                  Name: Hawkins
Hatton LLP

19.3.1.2                  Address:
Trafalgar House, 47-49 King Street Dudley DY2 8PS

19.3.1.3                  for the
attention of: Colin Rodrigues

19.3.1.4                                                                                          fax
number: 01384 216 841

 29
 

 

19.3.2                  BUYER

19.3.2.1                  Address: Beulah
Road Sheffield S6 2AN:

19.3.2.2                  for the
attention of:Richard Senior

19.3.2.3                  fax number:0114
286 8843

19.4                           A
notice is deemed to have been received:

19.4.1                  if delivered
personally, at the time of delivery; or

19.4.2                  in the case of
fax, at the time of transmission; or

19.4.3                  in the case of
pre-paid first class post or recorded delivery 2 Business Days from the date of
posting; or

19.4.4                  in the case of
airmail, 7 Business Days from the date of posting; or

19.4.5                  if deemed
receipt under the previous paragraphs of clause 19.4 is not within business
hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a
public holiday in the place of receipt), when business next starts in the place
of receipt.

19.5                           To
prove service, it is sufficient to prove that the notice was transmitted by fax
to the fax number of the party or, in the case of post, that the envelope
containing the notice was properly addressed and posted.

20.                               INTEREST
ON LATE PAYMENT

20.1                           Where a
sum is required to be paid under this agreement (other than under the Tax
Covenant) but is not paid before or on the date the parties agreed, the party
due to pay the sum shall also pay an amount equal to interest on that sum for
the period beginning with that date and ending with the date the sum is paid
(and the period shall continue after as well as before judgment).

20.2                           The
rate of interest shall be 2% per annum above the base lending rate for the time
being of The Royal Bank of Scotland plc. 
Interest shall accrue on a daily basis and be compounded quarterly.

20.3                           Clause
20 is without prejudice to any claim for interest under the law.

 30
 

 

21.                               SET
OFF

Whenever under this agreement any sum of
money shall be recoverable from or payable by the Sellers, or either of them in
respect of a Due Amount, a Substantiated Claim or a claim pursuant to clause 10
(Indemnities) or a claim pursuant to clause 11 (Current Year Profits),  the same may be deducted from any sum then due
or which at any time thereafter may become due to the Sellers, or either of
them, under this or any other agreement with the Buyer or the Company or
Clamonta or any of the Subsidiaries including, without limitation, any Service
Agreements with the Sellers.  Exercise by
the Buyer, or any of them, of its rights under this clause shall be without
prejudice to any other rights or remedies available to the Buyer under the
Agreement, or otherwise howsoever, at law or in equity.  The right of set off provided for in this
clause shall not apply in respect of the basic salary payable pursuant to the
Service Agreements to the Sellers or either or them.

22.                               SEVERANCE

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

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

23.                               AGREEMENT
SURVIVES COMPLETION

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

24.                               THIRD
PARTY RIGHTS

24.1                           Subject
to clause 24.2, this agreement and the documents referred to in it are made for
the benefit of the parties and their successors and permitted assigns and are
not intended to benefit, or be enforceable by, anyone else.

24.2                           The
following provisions are intended to benefit future buyers of the Sale Shares
from the Buyer and, where they are identified in the relevant clauses, 

 31
 

 

the Company
and the Subsidiaries and shall be enforceable by them to the fullest extent
permitted by law:

24.2.1                  clause 7 and
Schedule 4  , subject to clause 8;

24.2.2                  clause 9 and
Schedule 5;

24.2.3                  clause 10;

24.2.4                  clause 11;

24.2.5                  clause 13; and

24.2.6                  clause 20.

24.3                           Each of
the parties represents to the others that their respective rights to terminate,
rescind or agree any amendment, variation, waiver or settlement under this
agreement are not subject to the consent of any person that is not a party to
this agreement.

25.                               SUCCESSORS

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

26.                               COUNTERPARTS

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

27.                               LANGUAGE

If this agreement is
translated into any language other than English, the English language text
shall prevail.

28.                               GOVERNING
LAW AND JURISDICTION

28.1                           This
agreement and any disputes or claims arising out of or in connection with its
subject matter are governed by and construed in accordance with the law of
England.

 32
 

 

28.2                           The
parties irrevocably agree that the courts of England have exclusive
jurisdiction to settle any dispute or claim that arises out of or in connection
with this agreement.

29.                               RELEASE
OF GUARANTEE

Following Completion the Buyer shall as soon
as practicably possible (and in any event no later than 60 days from the date
hereof) obtain the release of the Sellers from their respective obligations to
HSBC Invoice Finance (UK) Limited pursuant to the agreement dated 17 May 2005
until such time the Buyer shall indemnify the Sellers in full and at all times
as an ongoing obligation for all costs, losses, claims, damages, which the
Sellers may suffer as a result of breach of this clause by the Buyer.

This agreement has been
entered into on the date stated at the beginning of it.

 

 33

 

Schedule 1            Particulars of sellers

Part 1.           Particulars of sellers
and apportionment of purchase price

	
  Seller ́s
  name,

  and address

  	
   

  	
  Number of

  sale shares

  	
   

  	
  Cash

  consideration

  	
   

  	
  Proportion of

  purchase price

  	
   

  	
  Maximum

  Liability

  
	
  Alan Leslie Wheeler

  18 White House

  Green Solihull

  West Midlands

  B91 1SP

  	
   

  	
  635

  	
   

  	
  £1,632,277.06

  	
   

  	
  63.5%

  	
   

  	
  Cash

  Consideration

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael Leigh Donovan

  72 Sycamore Drive

  Hollywood

  Birmingham

  B47 5QX

  	
   

  	
  365

  	
   

  	
  £938,238.03

  	
   

  	
  36.5%

  	
   

  	
  Cash

  Consideration

  

 

 34
 

 

Schedule 2            Particulars of the company and subsidiaries

Part 1.           The Company

	
  Name:

  	
  Whedon Limited

  
	
  Registration number:

  	
  05696257 

  
	
  Registered office:

  	
  Whitacre Industrial Estate, Nuneaton, Warwickshire
  CV11 6BX

  
	
  Authorised share capital

  Amount:

  Divided into: 

  	
   

  1000 Ordinary shares of £1 each

  
	
  Issued share capital

  Amount:

   

  	
   

  £1000

  
	
  Registered shareholders (and number of Sale
  Shares held):

  	
  The Sellers as set out in Schedule 1

  
	
  Beneficial owners of Sale Shares (if different)
  and number of Sale Shares beneficially owned:

  	
  The Sellers as set out in Schedule 1

  
	
  Directors and shadow directors:

  	
  The Sellers

  
	
  Secretary:

  	
  Michael Leigh Donovan

  
	
  Auditor

  	
  PKF (UK) LLP of 45 Great George Street, Queensway,
  Birmingham B5 2LX

  
	
  Registered Charges

  	
  HSBC Bank plc — Debenture — 19 April 2006

  

 

Part 2.           The Subsidiaries

	
  Name:

  	
  Clamonta Limited

  
	
  Registration number:

  	
  03816617

  
	
  Registered office:

  	
  Whitacre Industrial Estate, Nuneaton, Warwickshire
  CV11 6BX

  
	
  Authorised share capital

  Amount:

  Divided into: 

  	
   

  £258,732

  150,000 ‘A’ Ordinary Shares of £1 each,  107,732 ‘B’ Ordinary Shares of £1 each and
  1,000 Preference Shares of £1 each

  
	
  Issued share capital

  Amount:

  Divided into: 

  	
   

  £239,982

  131,250 ‘A’ Ordinary Shares , 107,732 ‘B’ Ordinary
  Shares and 1,000 Preference Shares

  
	
  Registered shareholders (and number of shares
  held):

  	
  The Company — 100%

  
	
  Beneficial owner of shares (if different) and
  number of shares beneficially owned:

  	
  The Company — 100%

  
	
  Directors and shadow directors:

  	
  The Sellers

  
	
  Secretary:

  	
  Michael Leigh Donovan

  

 

 35
 

 

 

	
  Auditor

  	
  PKF (UK) LLP of 45 Great George Street, Queensway,
  Birmingham B5 2LX

  
	
  Registered Charges

  	
  Murray VCT 3 plc — Debenture — 29 October 1999

  Murray VCT 2 plc — Debenture — 29 October 1999

  Murray VCT plc — Debenture — 29 October 1999

  HSBC Bank plc — Debenture — 27 May 2005

  HSBC Invoice Finance (UK) Limited — Debenture — 6
  June 2005

  HSBC Invoice Finance (UK) Limited — Floating Charge —
  6 June 2005

  

 

	
  Name:

  	
  Introfocus Limited

  
	
  Registration number:

  	
  01639209

  
	
  Registered office:

  	
  Whitacre Industrial Estate, Nuneaton, Warwickshire
  CV11 6BX

  
	
  Authorised share capital

  Amount:

  Divided into: 

  	
   

  £36,000

  36,000 Ordinary Shares of £1

  
	
  Issued share capital

  Amount:

  Divided into: 

  	
   

  £36,000

  36,000 Ordinary Shares of £1

  
	
  Registered shareholders (and number of shares
  held):

  	
  Clamonta Limited - 100%

  
	
  Beneficial owner of shares (if different) and
  number of shares beneficially owned:

  	
   

  
	
  Directors and shadow directors:

  	
  Michael Leigh Donovan

  Alan Leslie Wheeler

  
	
  Secretary:

  	
  Michael Leigh Donovan

  
	
  Auditor

  	
  PKF (UK) LLP of 45 Great George Street, Queensway,
  Birmingham B5 2LX

  
	
  Registered Charges

  	
  HSBC Bank plc — Legal Mortgage — 17 May 2005

  HSBC Bank plc — Debenture — 17 May 2005

   

  

 

 36

 

Schedule 3            Completion

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

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

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

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

(c)                                  the
waivers, consents and other documents required to enable the Buyer to be
registered as the holder of the Sale Shares;

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

(e)                                  the
original of any power of attorney under which any document to be delivered to
the Buyer under this paragraph 1 has been executed;

(f)                                    certificates
in respect of all issued shares in the capital of each of the Company ́s
Subsidiaries and transfers, in favour of any person the Buyer directs, of all
shares in any Subsidiary held by a nominee for the Company or another
Subsidiary;

(g)                                 in
relation to the Company and each of the Subsidiaries, the statutory registers
and minute books (written up to the time of Completion), the common seal,
certificate of incorporation and any certificates of incorporation on change of
name;

(h)                                 the
written resignation executed as a deed and in the agreed form, of Janette
Donovan and Eileen Wheeler as employees of the Company and the Subsidiaries.

(i)                                     the
written resignation of the auditors of the Company and of each of the
Subsidiaries accompanied in each case by:

(i)                                              a
statement that there are no circumstances connected with the auditors ́
resignation which should be brought to the notice of the members or creditors
of the Company or, in the case of a Subsidiary, of the Subsidiary; and

(ii)                                           a
written assurance that the resignation and statement have been, or will be,
deposited at the registered office of the Company or Subsidiary (as the case
may be) in accordance with section 394 of the Companies Act 1985;

 37
 

 

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

(k)                                  in
relation to the Company and each of the Subsidiaries:

(i)                                              statements
from each bank at which any of those companies has an account, giving the
balance of each account at the close of business on the last Business Day
before Completion;

(ii)                                           all
cheque books in current use and written confirmation that no cheques have been
written since those statements were prepared;

(iii)                                        details
of their cash book balances;

(iv)                                       reconciliation
statements reconciling the cash book balances and the cheque books with the
bank statements delivered; and

(v)                                          redemption
figures from HSBC Bank plc showing the amount required to be paid on Completion
to discharge fully the amounts owing to HSBC Bank plc by the Company and the
Subsidiaries;

(vi)                                       redemption
figures from Crown Place VCT plc showing the amount required to be paid on
Completion to discharge fully the Crown Place Liability by the Company and the
Subsidiaries with the exception of the monies due under the anti embarrassment
provision which will be dealt with upon finalisation of the Completion Accounts
;

(l)                                     confirmation
in writing signed by the Sellers in a form satisfactory to the Buyer that
neither the Sellers nor any person Connected with the Sellers is indebted to
the Company or any of the Subsidiaries and that neither the Company nor any of
the Subsidiaries is indebted to or subject to any liability or obligation
(actual or contingent) to the Sellers or any person Connected to the Sellers.

(m)                               evidence,
in agreed form, that the Company and the Subsidiaries have been discharged from
any responsibility for the indebtedness, or for the default in the performance
of any obligation, of any other person; and

(n)                                 a
written statement showing the estimated amount at Completion of:

(i)                                              mainstream
corporation tax payable by the Company and the Subsidiaries; and

(ii)                                           the
Completion Net Assets; and

 38
 

 

(o)                                 a
letter from the Sellers’ Solicitors on headed paper addressed to the Buyer and
the Company confirming that:

(i)                                              all
sums whether or not invoiced and however payable to the Sellers’ Solicitors by
the Company and/or the Subsidiaries have been paid; and

(ii)                                           there
are no sums due or to become due from the Company or any of the Subsidiaries to
the Sellers’ Solicitors and

attached to the letter will be copies of all invoices
from the Sellers’ Solicitors to the Company and the Subsidiaries rendered or
paid in the period 4 months up to Completion.

Part 2.           Matters for the board
meetings at Completion

1.                                          The
Sellers shall cause a board meeting of the Company and each of the Subsidiaries
to be held at Completion at which the matters set out in Part 2 of Schedule
3   shall take place.

2.                                          A
resolution to register the transfer of the Sale Shares shall be passed at such
board meeting of the Company, subject to the transfers being stamped at the
cost of the Buyer.

3.                                          All
directors secretaries and auditors of the Company and the Subsidiaries shall
resign from their offices and employment with the Company and the Subsidiaries
with effect from the end of the relevant board meeting.

4.                                          Service
agreements in the agreed form shall be entered into between each of the
following persons and the Buyer:-

(a)          Alan Leslie Wheeler; and

(b)          Michael Leigh Donovan

5.                                          The
persons the Buyer nominates shall be appointed as directors and secretary of
the Company and of each of the Subsidiaries (but not exceeding any maximum
number of directors contained in the relevant company ́s articles of
association). The appointments shall take effect at the end of the board
meeting.

6.                                       Ernst
& Young shall be appointed as the auditors of the Company and each of the
Subsidiaries with effect from the end of the relevant board meeting.

6.                                          All
the existing instructions and authorities to bankers shall be revoked and
replaced with new instructions and authorities to those banks in the form the
Buyer requires.

7.                                          The
address of the registered office of the Company and of each of the Subsidiaries
shall be changed to the address required by the Buyer.

8.                                          The
accounting reference date of the Company and of each of the Subsidiaries shall
be changed to the date required by the Buyer.

 39
 

 

Schedule 4            Warranties

Part 1.           General warranties

1.                                      POWER TO SELL THE COMPANY

1.1                                 The Sellers have all requisite power
and authority to enter into and perform this agreement in accordance with its
terms and the other documents referred to in it.

1.2                                 This agreement and the other
documents referred to in it constitute (or shall constitute when executed)
valid, legal and binding obligations on the Seller in the terms of the
agreement and such other documents.

1.3                                 Compliance with the terms of this
agreement and the documents referred to in it shall not breach or constitute a
default under any of the following:

1.3.1      any agreement or instrument to which the Sellers
is a party or by which it is bound; or

1.3.2      any order, judgment, decree or other restriction
applicable to the Sellers.

2.                                      SHARES IN THE COMPANY AND SUBSIDIARIES

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

2.2                                 The Sellers are the sole legal and
beneficial owners of the Sale Shares.

2.3                                 Part 2 of Schedule 2  lists all the Subsidiaries as at the date of
this agreement and sets out particulars of their allotted and issued share
capital.

2.4                                 The Company is the sole legal and
beneficial owner of the whole allotted and issued share capital of Clamonta and
Clamonta is the sole legal and beneficial owner of the whole of each of the
Subsidiaries (other than Clamonta).

2.5                                 The issued shares of the
Subsidiaries are fully paid up.

2.6                                 The Sale Shares and the issued
shares of the Subsidiaries are free from all Encumbrances and no commitment has
been given to create an Encumbrance affecting the Sale Shares or the issued
shares of the Subsidiaries.

2.7                                 No right has been granted to any
person to require the Company or any of the Subsidiaries to issue any share
capital and no Encumbrance has been created and no commitment has been given to
create an Encumbrance in favour of any person affecting any unissued shares or
debentures or other unissued securities of the Company or any of the
Subsidiaries.

 40
 

 

2.8                                 Neither the Company nor any of the
Subsidiaries has at any time: -

2.8.1                        purchased, redeemed or repaid any of
its own share capital; or

2.8.2                        given any financial assistance in
connection with the purchase of its share capital or the share capital of its
holding company (as that expression is defined in section 736 of the Companies
Acts) as it would fall within sections 151 to 158 of the Companies Acts.

3.                                      INFORMATION

3.1                                 All information contained in the
Disclosure Letter is complete, accurate and not misleading.

3.2                                 The particulars relating to the
Company and the Subsidiaries in this agreement are accurate and not misleading.

4.                                      COMPLIANCE WITH LAWS

4.1                                 The
Company and each of the Subsidiaries has at all times conducted its business in
accordance with its memorandum and articles of association and with all
applicable laws and regulations which could have a material adverse effect on
the business.

5.                                      LICENCES AND CONSENTS

5.1                                 The Company and each of the
Subsidiaries has all necessary licences, consents, permits and authorities
necessary to carry on its business in the United Kingdom and in the manner in
which its business is now carried on, all of which are valid and subsisting.

5.2                                 So far as the Sellers are aware
there is no reason why any of those licences, consents, permits and authorities
should be suspended, cancelled, revoked or not renewed on the same terms.

6.                                      INSURANCE

6.1                                 The insurance policies maintained by
or on behalf of the Company and the Subsidiaries provide full indemnity cover
against all losses and liabilities including business interruption and other
risks that are normally insured against by a person carrying on the same type
of business as the Company and the Subsidiaries.

6.2                                 The particulars of insurance
policies maintained by or on behalf of the Company and the Subsidiaries are set
out in the Disclosure Letter are accurate and not misleading.

6.3                                 There are no material outstanding
claims under, or in respect of the validity of, any of those policies and so
far as the Sellers are aware there are no circumstances to give rise to any
claim under any of those policies.

6.4                                 All the insurance policies are in
full force and effect, are not void or voidable and so far as the Sellers are
aware nothing has been done or not done which 

 41
 

 

could make any of them void or
voidable and Completion will not terminate, or entitle any insurer to
terminate, any such policy.

6.5                                 Complete and accurate details of the
employers liability insurers for the Company and the Subsidiaries for all
periods since incorporation of the Company and each of the Subsidiaries have
been Disclosed.

7.                                      POWER OF ATTORNEY

There are no powers of
attorney in force given by the Company or any of the Subsidiaries and no person,
as agent or otherwise, is entitled or authorised to bind or commit the Company
or any of the Subsidiaries to any obligation not in the ordinary course of the
Company’s or any Subsidiary’s business.

8.                                      DISPUTES AND INVESTIGATIONS

8.1                                 Neither the Company nor any of the
Subsidiaries nor any of their respective Directors nor any person for whom the
Company or any of the Subsidiaries is vicariously liable:

8.1.1      is engaged in any litigation, administrative,
mediation or arbitration proceedings or other proceedings or hearings before
any statutory or governmental body, department, board or agency (except for
debt collection in the normal course of business); or

8.1.2      is the subject of any investigation, inquiry or
enforcement proceedings by any governmental, administrative or regulatory body.

8.2                                 No such proceedings, investigation
or inquiry as are mentioned in paragraph 8.1 of this Schedule 4   have been threatened in writing or are
pending and so far as the Sellers are aware there are no circumstances to give rise
to any such proceedings.

9.                                      DEFECTIVE PRODUCTS

Other than returns and
credit notes in the normal course of the Company’s business or that of the
Subsidiaries details of all of which are set out in the Disclosure Letter
neither the Company nor any of the Subsidiaries has manufactured or sold any
products which were at the time they were 
manufactured or sold, faulty or defective or did not comply with
warranties or representations expressly made or implied by or on behalf of the
Company or any relevant Subsidiary.

10.                               COMPETITION

10.1                           The definition in this paragraph
applies in this agreement.

10.2                           Competition Law:
the national and directly effective legislation of any jurisdiction which
governs the conduct of companies or individuals in relation to restrictive or
other anti-competitive agreements or practices (including, but not limited to,
cartels, pricing, resale pricing, market sharing, bid rigging, terms of
trading, purchase or supply and joint ventures), dominant or monopoly market
positions (whether held individually or collectively) and the control of
acquisitions or mergers.

 42
 

 

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

10.4                           Neither the Company nor any of the
Subsidiaries is affected by any existing or pending decisions, judgments,
orders or rulings of any relevant government body, agency or authority
responsible for enforcing the Competition Law of any jurisdiction and neither
the Company nor any of the Subsidiaries have given any undertakings or
commitments to such bodies which affect the conduct of any business carried on
at Completion of the Company or any of the Subsidiaries.

10.5                           Neither the Company nor any of the
Subsidiaries is in receipt of any payment, guarantee, financial assistance or
other aid from the government or any state body which was not, but should have
been, notified to the European Commission under Article 88 of the EC Treaty for
decision declaring such aid to be compatible with the common market.

11.                               CONTRACTS

11.1                           The definition in this paragraph
applies in this agreement.

11.2                           Material Contract: an agreement to which the Company or any of the
Subsidiaries is a party or is bound by and which is of material importance to
the business, profits or assets of the Company or any of the Subsidiaries.

11.3                           Except for the agreements Disclosed,
neither the Company nor any of the Subsidiaries is a party to or subject to any
agreement which:

11.3.1                  is a Material Contract; or

11.3.2                  is of a long term, unusual or exceptional
nature or restricts the freedom of the Company or any of the Subsidiaries; or

11.3.3                  is not in the ordinary and usual
course of business of the Company or any of the Subsidiaries; or

11.3.4                  involves agency or distributorship;
or

11.3.5                  involves partnership, joint venture,
consortium, joint development, shareholders or similar arrangements; or

11.3.6                  involves or is likely to involve an
aggregate consideration payable by or to the Company or any of the Subsidiaries
in excess of £5,000; or

11.3.7                   is not on arm’s length terms.

11.4                           Each Material Contract is in full
force and effect and binding on the parties to it. Neither the Company nor any
of the Subsidiaries have defaulted under or breached a Material Contract and:

 43
 

 

11.4.1                  no other party to a Material Contract
has defaulted under or breached such a contract; and

11.4.2                  no such default or breach by the
Company, any of the Subsidiaries or any other party so far as the Sellers are
aware is or has been threatened.

11.5                           No notice of termination of a
Material Contract has been received or served by the Company or any of the
Subsidiaries and there are no grounds for determination, rescission, avoidance,
repudiation or a material change in the terms of any such contract.

12.                               TRANSACTIONS WITH THE SELLERS

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

12.1.1                  the Sellers or  any person Connected with any of the Sellers;
or

12.1.2                  any director of a member of the
Company’s Group or any person Connected with such a member or director.

12.2                           None the Sellers, nor any person
Connected with the Sellers, is entitled to a claim of any nature against the
Company or any of the Subsidiaries or has assigned to any person the benefit of
a claim against the Company or any of those Subsidiaries to which the Sellers
or a person Connected with the Sellers would otherwise be entitled.

13.                               FINANCE AND GUARANTEES

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

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

13.3                           Neither the Company nor any of the
Subsidiaries has:

13.3.1                  factored any of its debts or
discounted any of its debts or engaged in financing of a type which would not
need to be shown or reflected in the Accounts; or

13.3.2                  waived any right of set-off it may
have against any third party.

13.4                           All debts (less any provision for
bad and doubtful debts) owing to the Company or any of the Subsidiaries
reflected in the Accounts and all debts 

 44
 

 

subsequently recorded in the books of
the Company and the Subsidiaries have either prior to the date of this
agreement been realised or will, within three months after the date of this
agreement, realise in cash their full amount 
as included in those Accounts or books and none of those debts nor any
part of them has been outstanding for more than two months from its due date
for payment.

13.5                           Full particulars of all money
borrowed by the Company and each of the Subsidiaries (including full particulars
of the terms on which such money has been borrowed) have been Disclosed.

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

14.                               INSOLVENCY

14.1                           Neither the Company nor any of the
Subsidiaries:

14.1.1                  is insolvent or unable to pay its
debts within the meaning of the Insolvency Act 1986 or any other insolvency
legislation applicable to the company concerned; and

14.1.2                  has stopped paying its debts as they
fall due.

14.2                           No step has been taken to initiate
any process by or under which:

14.2.1                  the ability of the creditors of the
Company, or any of the Subsidiaries, to take any action to enforce their debts
is suspended, restricted or prevented; or

14.2.2                   some or all of the creditors of the
Company or any of the Subsidiaries accept, by agreement or in pursuance of a
court order, an amount less than the respective sums owing to them in
satisfaction of those sums with a view to preventing the dissolution of the
Company or any of the Subsidiaries; or

14.2.3                  a person is appointed to manage the
affairs, business and assets of the Company, or any of the Subsidiaries, on
behalf of the Company’s or any of the Subsidiaries’ creditors; or

14.2.4                  the holder of a charge over the
Company’s assets or over any of the Subsidiaries’ assets is appointed to
control the business and assets of the Company or any of the Subsidiaries.

14.3                           In relation to the Company and each
of the Subsidiaries:

14.3.1                  no administrator has been appointed;

 45
 

 

14.3.2                  no documents have been filed with the
court for the appointment of an administrator; and

14.3.3                   no notice of intention to appoint an
administrator has been given by the relevant company, its directors or by a
qualifying floating charge holder (as defined in paragraph 14 of Schedule B1 to
the Insolvency Act 1986).

14.4                           No process has been initiated which
could lead to the Company or any of the Subsidiaries being dissolved and its
assets being distributed among the relevant company’s creditors, shareholders
or other contributors.

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

15.                               ASSETS

15.1                           The Company or one of the
Subsidiaries is the full legal and beneficial owner of, and has good and
marketable title to, all the assets included in the Accounts, any assets
acquired since the Accounts Date and all other assets used by the Company or
the Subsidiaries except for those disposed of since the Accounts Date in the
normal course of business and such assets are free from any Encumbrance.

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

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

15.4                           The assets of the Company and of
each of the Subsidiaries comprise all the assets necessary for the continuation
of the relevant company’s business in the manner in which such business has
been carried on as at the Accounts Date and as at Completion.

16.                               CONDITION OF PLANT AND EQUIPMENT AND STOCK IN TRADE

16.1                           The plant, machinery, equipment and
vehicles used in connection with any business carried on at Completion by the
Company or any of the Subsidiaries:

16.1.1                  are in working order and have been
regularly maintained;

16.1.2                  are capable of doing the work for
which they were designed; and

16.1.3                  are not surplus to the current or
proposed requirements of the Company and the Subsidiaries.

 

 46

 

16.1.4                  has been maintained and operated in
accordance with any associated lease or hire purchase agreement.

16.2                           The
stock-in-trade (including work-in-progress and net of any provisions made in
the ordinary course of business as set out in the Completion Accounts) of the
Company and the Subsidiaries is in good condition, is not excessive and is
adequate in relation to current trading requirements of the Company and the
Subsidiaries and is capable of being sold by the Company or relevant Subsidiary
in the ordinary course of its business in accordance with its current price
list without discount, rebate or allowance to a buyer.

17.                               INTELLECTUAL PROPERTY

17.1                           The definition in this paragraph
applies in this agreement.

17.2                           Intellectual Property Rights: all patents, rights to inventions, utility models,
copyright, trade marks, service marks, trade, business and domain names, rights
in trade dress or get-up, rights in goodwill or to sue for passing off, unfair
competition rights, rights in designs, rights in computer software, database
rights, topography rights, moral rights, rights in confidential information
(including know-how and trade secrets) and any other intellectual property
rights, in each case whether registered or material unregistered and including
all applications for and renewals or extensions of such rights, and all similar
or equivalent rights or forms of protection in any part of the world.

17.3                           Complete and
accurate particulars are set out in Schedule 8 of all registered and
unregistered Intellectual Property Rights (including applications for such
rights) and material unregistered Intellectual Property Rights owned, used or
held for use by the Company and the Subsidiaries.

17.4                           With the exception of rights in
confidential information and the matters referred to in paragraph 17.3 of this
Schedule 4  , no Intellectual Property
Rights are owned, used, or held for use by the Company or any of the
Subsidiaries, in connection with any business carried on at Completion by the
Company or any of the Subsidiaries. In relation to rights in confidential
information:

17.4.1                  the Company and the Subsidiaries have
not disclosed or permitted to be disclosed any such information (other than to
the extent necessary in the ordinary course of business or for the purpose of
disclosure to their professional advisers) to any person except the Buyer; and

17.4.2                  the Company and the Subsidiaries do
not own rights in any confidential information which may be capable of patent
protection or which, if disclosed other than subject to conditions of
confidentiality, might have a material adverse effect on any business carried
on at Completion by the Company or any of the Subsidiaries.

17.5                           The activities of the Company and
each of the Subsidiaries, and of any licensee of Intellectual Property Rights
granted by the Company or any of the Subsidiaries, have not infringed any
Intellectual Property Rights of any third party. No such activities constitute
or have constituted any breach of confidence, passing off or actionable unfair
competition in any jurisdiction. No 

 47
 

 

such activities give or have given
rise to any obligation to pay any royalty, fee, compensation or any other sum.

18.                               INFORMATION TECHNOLOGY

18.1                           The definitions in this paragraph
apply in this agreement.

18.2                           IT System:
all computer hardware (including network and telecommunications equipment) and
software (including associated preparatory materials, user manuals and other
related documentation) owned, used, leased or licensed by or in relation to any
business carried on [at Completion] by the Company or any of the Subsidiaries.

18.3                           Complete and
accurate particulars of the IT System and all IT Contracts are set out in
Schedule 7

18.4                           The Company is the owner of the IT
System, free from Encumbrances and all other rights exercisable by third
parties. The Company has obtained all necessary rights from third parties to
enable it to make exclusive and unrestricted use of the IT System.

18.5                           The elements of the IT System:

18.5.1                  are functioning properly and in
accordance with all applicable specifications;

18.5.2                  are not defective in any respect;

18.5.3                  have sufficient capacity and
performance to meet the current requirements of the business carried on at
Completion by the Company or any of the Subsidiaries;

18.5.4                  have not been and will not within the
next 12 months be affected by any changes in dates (past, present or future);
and

18.5.5                  are capable of performing functions
in multiple currencies, including the euro.

19.                               DATA PROTECTION

The Company and the
Subsidiaries have fully complied with the requirements of all applicable
legislation concerning rights in respect of privacy and personal data.

20.                               EMPLOYMENT

20.1                           The definitions in this paragraph
apply in this agreement.

20.2                           Employment Legislation: legislation applying in England and Wales affecting
contractual or other relations between employers and their employees or
workers, including but not limited to any legislation and any amendment,
extension or re-enactment of such legislation and any claim arising under
European treaty provisions or directives enforceable against the Company or any
of the Subsidiaries by any Employee or Worker.

 48
 

 

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

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

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

20.6                           The Disclosure Letter includes
details of all Employees and Workers of the Company and the Subsidiaries, the
particulars of each Employee and Worker and the principal terms of each
contract including:

20.6.1                  the company which employs or engages
them;

20.6.2                  their remuneration (including any
benefits and privileges provided or which the Company or the relevant
Subsidiary is bound to provide to them or their dependants, whether now or in
the future);

20.6.3                  the commencement date of each
contract and, if an Employee, the date on which continuous service began;

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

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

20.6.6                  date of birth;

20.7                           The Disclosure Letter includes
anonymised details of all persons who are not Workers and who are providing
services to the Company or any of the Subsidiaries under an agreement which is
not a contract of employment with the Company or the relevant Subsidiary
(including, in particular, where the individual acts as a consultant or is on
secondment from a company which is not a member of the Company’s Group) and the
particulars of the terms on which the individual provides services, including:

20.7.1                  the company which engages them;

20.7.2                  the remuneration of each individual
(including any benefits and privileges provided or which the Company or any of
the Subsidiaries is bound to provide);and

20.7.3                  the length of notice necessary to
terminate each agreement or, if a fixed term, the expiry date of the fixed term
and details of any previous renewals.

20.8                           The Disclosure Letter includes
anonymised details of all Employees and Workers of the Company and the
Subsidiaries who are on secondment, maternity, paternity, adoption or other
leave or absent due to ill-health or for any other reason.

20.9                           No notice to terminate the contract
of employment of any Employee or Worker of the Company or any of the
Subsidiaries (whether given by the 

 49
 

 

relevant employer or by the Employee
or Worker) is pending, outstanding or threatened  and (so far as the Sellers are aware) no
dispute under any Employment Legislation or otherwise is outstanding between
the Company or any of the Subsidiaries and any of the current or former
Employees or Workers relating to the relevant contract, its termination and any
reference given by the Company or any of the Subsidiaries regarding them.

20.10                     No questionnaire has been served on
the Company or any of the Subsidiaries by an Employee or Worker under any
Employment Legislation which remains unanswered in full or in part.

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

20.12                     All contracts between the Company or
any of the Subsidiaries and their Employees and Workers are terminable at any
time on three months’ notice or less without compensation (other than for unfair
dismissal or a statutory redundancy payment) or any liability other than wages,
commission or pension.

20.13                     Neither the Company nor any of the
Subsidiaries is a party to, bound by or proposing to introduce in respect of
any of its Directors or Employees any redundancy payment scheme in addition to
statutory redundancy pay, and there is no agreed procedure for redundancy
selection.

20.14                     Neither the Company nor any of the
Subsidiaries is a party to, bound by or proposing to introduce in respect of
any of its Directors, Employees or Workers any share option, profit sharing,
bonus, commission or any other scheme relating to the profit or sales of the
Company or any of the Subsidiaries.

20.15                     Neither the Company nor any of the
Subsidiaries has incurred any actual or contingent liability in connection with
any termination of employment of its Employees (including redundancy payments)
or for failure to comply with any order for the reinstatement or re-engagement
of any Employee.

20.16                     Neither the Company nor any of the
Subsidiaries has made or agreed to make a payment or provided or agreed to
provide a benefit to a present or former Director, officer, Employee or Worker
or to their dependants in connection with the actual or proposed termination or
suspension of employment or variation of an employment contract.

20.17                     Neither the Company nor any of the
Subsidiaries is involved in any material industrial or trade dispute or
negotiation regarding a claim with any trade union, group or organisation of
employees or their representatives representing Employees or Workers and there
is nothing likely to give rise to such a dispute or claim.

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

20.19                     Neither the Company nor any
Subsidiary has offered, promised or agreed to any future variation in the
contract of any Employee or Worker.

 50
 

 

20.20                     The Disclosure Letter includes true,
complete and accurate:

20.20.1            copies of all contracts, handbooks,
policies and other documents which apply to the Employees and Workers,
identifying which applies to which individual;

20.20.2            copies of all agreements or arrangements
with any trade union, employee representative or body of employees or their
representatives (whether binding or not) and details of any such unwritten
agreements or arrangements which may affect any Employee or Worker.

20.21                     In respect of each Employee and
Worker, the Company and the Subsidiaries have:

20.21.1            performed all  obligations and duties they are required to
perform (and settled all outstanding claims), arising under contract, statute,
at common law or in equity or under any treaties including the EC Treaty or laws
of the European Community or otherwise;

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

20.21.3            maintained adequate, suitable and up to
date records.

21.                               ENVIRONMENTAL

21.1                           The definitions in this paragraph
apply in this agreement.

21.2                           Environment:
air, water and land, all living organisms and natural or man-made structures.

21.3                           Environmental Law: any law in so far as it relates to Environmental Matters.

21.4                           Environmental Matters: the protection of human health, the protection and
condition of the Environment, the condition of the workplace, the generation,
transportation, storage, treatment, emission, deposit and disposal of any
Hazardous Substance or Waste.

21.5                           Hazardous Substance: any natural or artificial substance (whether solid, liquid
or gas and whether alone or in combination with any other substance or
radiation), capable of causing harm to any human or other living organism or
the Environment.

21.6                           Waste:
all waste, including any unwanted or surplus substance irrespective of whether
it is capable of being recycled or recovered or has any value.

21.7                           All permits, consents and licences
required or issued under Environmental Law which are necessary for carrying on
the business of the Company or any of the Subsidiaries are in full force and
effect and have been complied with and there are no circumstances (including,
but not limited to, the sale of the Sale Shares to the Buyer) likely to give
rise to the modification, suspension or 

 51
 

 

revocation of, or lead to the
imposition of unusual or onerous conditions on, or to prejudice the renewal of,
any of those permits, consents or licences.

21.8                           The Company and each of the
Subsidiaries have at all times materially complied with all Environmental Laws

21.9                            There are no Hazardous Substances
or Waste at any of the Properties in circumstances which constitute a breach of
Environmental Law or which may lead to a liability, obligation or duty being
imposed under Environmental Law on the Company or the Subsidiaries by any
competent authority or third party.

22.                               PROPERTY

22.1                           The definitions in this paragraph
apply in this agreement.

22.2                           Previously-owned Land and Buildings: any land and buildings that has or have, at any time
before the date of this agreement, been owned (under whatever tenure) and/or
occupied and/or used by the Company or any of the Subsidiaries, but which are
either:

(a)                                  no
longer owned, occupied or used by the Company or any of the Subsidiaries, or

(b)                                 owned,
occupied or used by one of them but pursuant to a different lease, licence,
transfer or conveyance.

22.3                           Properties:
the freehold and leasehold land and buildings, short particulars of which are
set out in Schedule 8 and
includes any part or parts of them and Property means
any one of them or any part or parts of any one of them.

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

22.5                           The Properties are the only land and
buildings owned, used or occupied by the Company and the Subsidiaries.

22.6                           Neither the Company nor any of the
Subsidiaries has any right of ownership, right to use, option, right of first
refusal or contractual obligation to purchase or any other legal or equitable
right affecting any land and buildings other than the Properties.

22.7                           Neither the Company, nor any company
that is or has at any time been a Subsidiary, has any actual or contingent
liability in respect of Previously-owned Land and Buildings.

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

22.9                           All written replies to enquiries
given by or on behalf of the Sellers in relation to the Properties were
complete and accurate at the date they were given and would still be complete
and accurate if the replies were instead being given on the Completion Date.

 52
 

 

23.                               ACCOUNTS

23.1                           The Accounts have been prepared in
accordance with the Companies Acts and with accounting standards, policies,
principles and practices generally accepted in the UK at the time when they
were signed off and in accordance with the law and give a true and fair view of
the state of affairs of the Company and the Subsidiaries, and of the Company’s
Group as a whole as at the Accounts Date and of the profit and loss of the
Company and the Subsidiaries, and of the Company’s Group, for the financial
year ended on that date.

23.2                           The Accounts:

23.2.1                  make proper and adequate provision
or reserve for all bad and doubtful debts, obsolete or slow-moving stocks, for
depreciation on fixed assets and for liabilities (including contingent
liabilities)_ and Taxation (including deferred Taxation);

23.2.2                  do not overstate the value of fixed
assets; and

23.2.3                  do not understate any liabilities
(whether actual or contingent).

23.3                           The Accounts are not affected by any
unusual or non-recurring items or any other factor that would make the
financial position and results shown by the Accounts unusual or misleading in
any material respect.

23.4                           The Accounts have been prepared on a
basis consistent with the audited accounts of, as the case may be, the Company,
the Subsidiaries or the consolidated accounts of the Company and the
Subsidiaries, for the two prior accounting periods without any change in
accounting policies used.

24.                               ACCOUNTING, FINANCIAL

24.1                           All accounting and financial records
of the Company and the Subsidiaries (including the statutory books of the
Company and each of the Subsidiaries):

24.1.1                  have been properly prepared, filed
and maintained;

24.1.2                  constitute an accurate record of all
matters required by law to appear in them;

24.1.3                  do not contain any material
inaccuracies or discrepancies;

24.1.4                  are in the possession of the Company
or the Subsidiary to which they relate; and

24.1.5                  comply with all applicable laws.

24.2                           No notice has been received or
allegation made that any of those records are incorrect or should be rectified.

25.                               CHANGES SINCE ACCOUNTS DATE

25.1                           Since
the Accounts Date:

 53
 

 

25.1.1                  the Company and each of the
Subsidiaries has conducted its business in the normal course and as a going
concern as regards the nature, extent and manner of carrying it on;

25.1.2                   there has been no material adverse
change in the turnover, financial position of the Company or any of the
Subsidiaries nor the loss of any supplier or customer;

25.1.3                  neither the Company nor any of the
Subsidiaries has issued or agreed to issue any share or loan capital;

25.1.4                  no dividend or other distribution of
profits or assets has been, or agreed to be, declared, made or paid by the
Company or any of the Subsidiaries;

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

25.1.6                  no shareholder resolutions of the
Company or any of the Subsidiaries have been passed other than as routine
business at an annual general meeting;

26.                               EFFECT OF SALE OF SALE SHARES

26.1                           Neither
the acquisition of the Sale Shares by the Buyer nor compliance with the terms
of this agreement will:

26.1.1                  cause the Company or any of the
Subsidiaries to lose the benefit of any right or privilege it presently enjoys;
or

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

26.1.3                  so far as the Sellers are aware
(without having investigated the same)result in any officer or senior Employee
leaving the Company or any of the Subsidiaries or receiving any payment or
benefit.

27.                               RETIREMENT BENEFITS

27.1                           Neither the Company nor any of the
Subsidiaries has or may have any obligation (whether or not legally binding) to
provide or contribute towards pension, lump sum, death, ill-health, disability
or accident benefits in respect of its past or present officers and employees (Pensionable Employees) and no proposal or announcement has
been made to any Employee or officer of the Company or any of the Subsidiaries
about the introduction, continuance, 

 54
 

 

increase or improvement of, or the
payment of a contribution towards, any pension, lump sum, death, ill-health,
disability or accident benefit.

27.2                           No proposal or announcement has been
made to any Employee or to any officer of the Company or any of the
Subsidiaries about the introduction, continuance, increase or improvement of
any pension, lump sum, death, ill-health, disability or accident benefit.

27.3                           The Company and the Subsidiaries
have facilitated access for its Pensionable Employees to a designated
stakeholder scheme as required by Section 3 of the Welfare Reform and Pensions
Act 1999.

27.4                            No discrimination on grounds of sex
is, or has at any stage been, made in the provision of pension, lump sum,
death, ill-health, disability or accident benefits by the Company or any of the
Subsidiaries in relation to any of the Pensionable Employees.

Part 2.           Tax warranties

1.                                      GENERAL

1.1                                 All notices, returns (including any
land transaction returns), reports, accounts, computations, statements,
assessments and registrations and any other necessary information submitted by
the Company or any Subsidiary to any Taxation Authority for the purposes of
Taxation have been made on a proper basis, were punctually submitted, were
accurate and complete when supplied and remain accurate and complete in all
material respects and none of the above is, or is likely to be, the subject of
any material dispute with any Taxation Authority.

1.2                                 All Taxation (whether of the United
Kingdom or elsewhere) for which the Company or any Subsidiary is or has been
liable or is liable to account for has been duly paid (insofar as such Taxation
ought to have been paid).

1.3                                 Neither the Company nor any
Subsidiary has made any payments representing instalments of corporation tax
pursuant to the Corporation Tax (Instalment Payments) Regulations 1998 in
respect of any current or preceding accounting periods and is not under any
obligation to do so.

1.4                                 Neither the Company nor any
Subsidiary has paid within the past [seven] years ending on the date of this
agreement, or will become liable to pay, any penalty, fine, surcharge or
interest charged by virtue of the provisions of the TMA 1970 or any other
Taxation Statute.

1.5                                 Neither the Company nor any
Subsidiary has within the past 12 months been subject to any visit, audit,
investigation, discovery or access order by any Taxation Authority and the
Seller is not aware (without having investigated the same) of any circumstances
existing which make it likely that a visit, audit, investigation, discovery or
access order will be made in the next 12 months.

1.6                                 The amount of Taxation chargeable on
the Company or any Subsidiary during any accounting period ending on or within
the six years before Completion has not, to any material extent, depended on
any concession, agreements or other formal or informal arrangement with any
Taxation Authority.

 55
 

 

1.7                                 All transactions in respect of which
any clearance or consent was required from any Tax Authority have been entered
into by the Company or any relevant Subsidiary after such consent or clearance
has been properly obtained, any application for such clearance or consent has
been made on the basis of full and accurate disclosure of all relevant material
facts and considerations, and all such transactions have been carried into
effect only in accordance with the terms of the relevant clearance or consent.

1.8                                 The Company and the Subsidiaries
have duly submitted all claims, disclaimers and elections the making of which
has been assumed for the purposes of the Accounts and none of such claims,
disclaimers or elections are likely to be disputed or withdrawn.

1.9                                 The Disclosure Letter contains full
particulars of all matters relating to Taxation in respect of which the Company
or any Subsidiary is or at Completion will be entitled to:

1.9.1      make any claim (including a supplementary claim),
disclaimer or election for relief under any Taxation Statute or provision;
and/or

1.9.2      appeal against any assessment or determination
relating to Taxation; and/or

1.9.3      apply for a postponement of Taxation.

1.10                           Neither the Company nor any
Subsidiary is or will become liable to make to any person (including any
Taxation Authority) any payment in respect of any liability to Taxation of any
other person where that other person fails to discharge liability to Taxation
to which he is or may be primarily liable.

1.11                           The Company and any Subsidiary has
sufficient records (on the basis of current law and practice) to determine the
tax consequence which would arise on any disposal or realisation of any asset
owned at the Accounts Date or acquired since that date but prior to Completion.

2.                                      CHARGEABLE GAINS

2.1                                 The
book value shown or adopted for the purposes of the Accounts as the value of
each of the assets of the Company or any Subsidiary on the disposal of which a
chargeable gain or allowable loss could arise does not exceed the amount which
on a disposal of such asset at the date of this agreement would be deductible
under section 38 of TCGA 1992.

3.                                      CAPITAL ALLOWANCES

3.1                                 No balancing charge under the CAA
2001 (or any other legislation relating to capital allowances) would be made on
the Company or any Subsidiary on the disposal of any pool of assets (that is,
all those assets whose expenditure would be taken into account in computing
whether a balancing charge would arise on a disposal of any of those assets) or
of any asset not in such a pool, on the assumption that the disposals are made
for a consideration equal to the book value shown in or adopted for the purpose
of the Accounts for the assets in the pool or (as the case may be) for the
asset.

 

 56

 

3.2                                 No event has occurred since the
Accounts Date (otherwise than in the ordinary course of business) whereby any
balancing charge may fall to be made against, or any disposal value may fall to
be brought into account by, the Company or any Subsidiary under the CAA 2001
(or any other legislation relating to capital allowances).

4.                                      DISTRIBUTIONS

4.1                                 No distribution or deemed
distribution within the meaning of sections 209, 210 or 211 of ICTA 1988 has
been made (or will be deemed to have been made) by the Company or any
Subsidiary after 5 April 1965 except dividends shown in their audited accounts
and neither the Company nor any Subsidiary is bound to make any such
distribution.

4.2                                 No rents, interest, annual payments
or other sums of an income nature paid or payable by the Company or any
Subsidiary or which the Company or any of the Subsidiaries are under an
existing obligation to pay in the future are or may be wholly or partially
disallowable as deductions, management expenses or charges in computing profits
for the purposes of corporation tax.

4.3                                 Neither the Company nor any
Subsidiary has within the period of seven years preceding Completion been
engaged in, nor been a party to, any of the transactions set out in sections
213 to 218 (inclusive) of ICTA 1988, nor has it made or received a chargeable
payment as defined in section 218(1) of ICTA 1988.

5.                                      LOAN RELATIONSHIPS

5.1                                 All
interests, discounts and premiums payable by the Company or any Subsidiary in
respect of its loan relationships (within the meaning of section 81 of the
Finance Act 1996) are eligible to be brought into account by the Company or the
Subsidiaries as a debit for the purposes of Chapter II of Part IV of the
Finance Act 1996 at the time and to the extent that such debits are recognised
in the statutory accounts of the Company or the Subsidiaries.

6.                                      CLOSE COMPANIES

6.1                                 Neither
the Company nor any Subsidiary has at any time during the last six years ending
at the Accounts Date been a close company within the meaning of sections 414
and 415 of ICTA 1988.

6.2                                 Neither the Company nor any
Subsidiary has in any accounting period beginning after 31 March 1989 been a
close investment-holding company as defined in section 13A of ICTA 1988.

6.3                                 No distribution within section 418
of ICTA 1988 has been made by the Company or any Subsidiary during the last six
years ending at the Accounts Date, nor have such distributions been made
between the Accounts Date and Completion.

6.4                                 Any loans or advances made or agreed
to be made by the Company or any Subsidiary within sections 419 and 420 or 422
of ICTA 1988 have been disclosed in the Disclosure Letter and neither the
Company nor any Subsidiary has released or written off or agreed to release or
write off the whole or any part of any such loans or advances.

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7.                                      GROUP RELIEF

7.1                                 Except
as provided in the Accounts, neither the Company nor any Subsidiary is or will
be obliged to make or be entitled to receive any payment for group relief as
defined in section 402(6) of ICTA 1988 in respect of any period ending on or
before the Accounts Date, or any payment for the surrender of the benefit of an
amount of advance corporation tax or any repayment of such a payment.

8.                                      GROUPS OF COMPANIES

8.1                                 Neither the Company nor any
Subsidiary has entered or agreed to enter into an election pursuant to section
171A of TCGA 1992 or paragraph 66 of Schedule 29 to the Finance Act 2002.

8.2                                 The execution or completion of this
agreement or any other event since the Accounts Date will not result in any
chargeable asset being deemed to have been disposed of and re-acquired by the
Company or any Subsidiary for Taxation purposes pursuant to section 179 of TCGA
1992, paragraphs 58 or 60 of Schedule 29 to the Finance Act 2002 or as a result
of any other Event (as defined in the Tax Covenant) since the Accounts Date.

8.3                                 Neither the Company nor any
Subsidiary has ever been party to any arrangements pursuant to section 36 of
the Finance Act 1998 (group payment arrangements).

8.4                                 Neither the Company nor any
Subsidiary has been, and is not, required by Schedule 28AA of ICTA 1988 to
compute its profits or losses as if an arm’s length provision had been made
instead of any actual provision.

9.                                      INTANGIBLE ASSETS

9.1                                 For
the purposes of this paragraph 9, references to intangible
fixed assets mean intangible fixed assets and goodwill within the
meaning of Schedule 29 to the Finance Act 2002 to which the provisions of that
Schedule apply and references to an intangible fixed asset
shall be construed accordingly.

9.2                                 The Disclosure Letter sets out the
amount of expenditure on each of the intangible fixed assets of the Company and
the Subsidiaries and provides the basis on which any debit relating to that
expenditure has been taken into account in the Accounts or, in relation to
expenditure incurred since the Accounts Date, will be available to the Company
or any Subsidiary. No circumstances have arisen since the Accounts Date by
reason of which that basis might change.

9.3                                 No claims or elections have been
made by the Company or any Subsidiary under Part 7 of, or paragraph 86 of
Schedule 29 to, the Finance Act 2002 in respect of any intangible fixed asset
of the Company or any Subsidiary.

9.4                                 Since the Accounts Date:

9.4.1                        neither the Company nor any
Subsidiary owns an asset which has ceased to be a chargeable intangible asset
in the circumstances described in paragraph 108 of Schedule 29 to the Finance
Act 2002;

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9.4.2                        neither the Company nor any
Subsidiary has realised or acquired an intangible fixed asset for the purposes
of Schedule 29 to the Finance Act 2002; and

9.4.3                        no circumstances have arisen
which have required, or will require, a credit to be brought into account by
the Company or any Subsidiary on a revaluation of an intangible fixed asset.

10.                               COMPANY RESIDENCE AND OVERSEAS INTERESTS

10.1                           The Company and the Subsidiaries
have within the past seven years been resident in the United Kingdom for
corporation tax purposes and have not at any time in the past seven years been
treated for the purposes of any double taxation arrangements having effect by
virtue of section 249 of the Finance Act 1994, section 788 of ICTA 1988 or for
any other tax purpose as resident in any other jurisdiction.

10.2                           Neither the Company nor any
Subsidiary has without the prior written consent of HM Treasury caused,
permitted or entered into any of the transactions specified in section 765 of
ICTA 1988 (migration of companies).

10.3                           Neither the Company nor any
Subsidiary holds shares in a company which is not resident in the United
Kingdom and which would be a close company if it were resident in the United
Kingdom in circumstances such that a chargeable gain accruing to the company
not resident in the United Kingdom could be apportioned to the Company and/or
any Subsidiary pursuant to section 13 of TCGA 1992.

10.4                           Neither the Company nor any
Subsidiary is holding or has held in the past seven years any interest in a
controlled foreign company within section 747 of ICTA 1988, and neither of them
has any material interest in an offshore fund as defined in section 759 of ICTA
1988.

10.5                           Neither the Company nor any
Subsidiary has a permanent establishment outside the UK.

11.                               ANTI-AVOIDANCE

11.1                           All transactions or arrangements
made by the Company or any Subsidiary have been made on fully arm’s length
terms and there are no circumstances in which section 770A of, or Schedule 28AA
to, ICTA 1988 or any other rule or provision could apply causing any Taxation
Authority to make an adjustment to the terms on which such transaction or
arrangement is treated as being made for Taxation purposes.

11.2                           Neither the Company nor any
Subsidiary has at any time been a party to or otherwise involved in a
transaction or series of transactions in relation to which advisers considered
that there was a risk that the Company or relevant Subsidiary could be liable
to taxation as a result of the principles in W.T Ramsey
Limited v IRC (54 TC 101) or Furniss v Dawson (55 TC
324), as developed in subsequent cases.

12.                               INHERITANCE TAX

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12.1                           Neither the Company nor any
Subsidiary has made any transfer of value within sections 94 and 202 of the
IHTA 1984, nor has it received any value such that liability might arise under
section 199 of the IHTA 1984, nor has it been a party to associated operations
in relation to a transfer of value as defined by section 268 of the IHTA 1984.

12.2                           There is no unsatisfied liability to
inheritance tax attached to or attributable to the Sale Shares or any asset of
the Company or any Subsidiary and none of them are subject to any HM Revenue
& Customs charge as mentioned in section 237 and 238 of the IHTA 1984.

12.3                           No asset owned by the Company or any
Subsidiary, nor the Sale Shares, are liable to be subject to any sale, mortgage
or charge by virtue of section 212(1) of the IHTA 1984.

13.                               VAT

13.1                           The Company and the Subsidiaries are
each taxable persons and are duly registered for the purposes of VAT with
quarterly prescribed accounting periods, such registration not being pursuant
to paragraph 2 of Schedule 1 to the VATA 1994 or subject to any conditions
imposed by or agreed with HM Revenue & Customs and neither the Company nor
any Subsidiary is (nor are there any circumstances by virtue of which they may
become) under a duty to make monthly payments on account under the Value Added
Tax (Payments on Account) Order 1993.

13.2                           The Company and each Subsidiary have
complied with all statutory provisions, rules, regulations, orders and
directions in respect of VAT.

13.3                           All supplies made by the Company or
any Subsidiary are taxable supplies and neither the Company nor any Subsidiary
has been or will be denied full credit for all input tax by reason of the
operation of sections 25 and 26 of the VATA 1994 and regulations made
thereunder or for any other reasons and no VAT paid or payable by the Company
or any Subsidiary is not input tax as defined in section 24 of the VATA 1994
and regulations made thereunder.

13.4                           Neither the Company nor any
Subsidiary is or has been for VAT purposes a member of any group of companies
(other than the group comprising the Company and the Subsidiaries alone) and no
act or transaction has been effected in consequence whereof the Company or any
Subsidiary is or may be held liable for any VAT arising from supplies made by
another company and no direction has been given nor will be given by HM Revenue
& Customs under Schedule 9A to the VATA 1994 as a result of which the
Company or any Subsidiary would be treated for the purposes of VAT as a member
of a group other than the group comprising the Company and the Subsidiaries
alone.

13.5                           For the purposes of paragraph 3(7)
of Schedule 10 to the VATA 1994, the Company or any Subsidiary or any relevant
associates of such companies (within the meaning of paragraph 3(7) of Schedule
10 to the VATA 1994) has exercised the election to waive exemption from VAT
(pursuant to paragraph 2 of Schedule 10 to the VATA 1994) only in respect of
those Properties listed (as having been the subject of such an election) in the
Disclosure Letter and:

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13.5.1                  all things necessary for the election
to have effect have been done and in particular any notification and
information required by paragraph 3(6) of Schedule 10 to the VATA 1994 has been
given and any permission required by paragraph 3(9) of Schedule 10 to the VATA
1994 has been properly obtained; and

13.5.2                  no election has or will be disapplied
or rendered ineffective by virtue of the application of the provisions of
paragraph 2(3AA) of Schedule 10 to the VATA 1994.

13.6                           Neither the Company nor any
Subsidiary owns or has at any time within the period of ten years preceding the
date hereof owned any assets which are capital items subject to the capital
goods scheme under Part XV of the VAT Regulations 1995.

13.7                           Neither the Company nor any
Subsidiary has made any claim for bad debt relief under section 36 of the VATA
1994 and there are no existing circumstances by virtue of which any refund of
VAT obtained or claimed may be required to be repaid or there could be a claw
back of input VAT from any Company or any Subsidiary under section 36(4) of the
VATA 1994.

14.                               STAMP DUTY AND STAMP DUTY LAND TAX

14.1                           Any document that may be necessary
or desirable in proving the title of the Company or any Subsidiary to any asset
which is owned by the Company or any Subsidiary at Completion or any document
which the Company or any Subsidiary may wish to enforce or produce in evidence
is duly stamped for stamp duty purposes.

14.2                           Neither entering into this agreement
nor Completion will result in the withdrawal of any stamp duty or stamp duty
land tax relief granted on or before Completion and which will affect the
Company or any Subsidiary.

14.3         The Disclosure Letter sets out full and
accurate details of any chargeable interest (as defined under section 48,
Finance Act 2003) acquired or held by the Company or any Subsidiary before
Completion in respect of which the Seller is aware or ought reasonably to be
aware that an additional land transaction return will be required to be filed
with a Taxation Authority and/or a payment of stamp duty land tax made on or
after Completion.

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Schedule 5            Tax
covenant

1.                     INTERPRETATION

1.1                The definitions and rules of
interpretation in this paragraph apply in this Tax Covenant.

Buyer’s Relief: means:

(1)                                 any
Accounts Relief (as defined in paragraph 1.1.1 of the definition of Liability
for Taxation) or Repayment Relief (as defined in paragraph 1.1.2 of the
definition of Liability for Taxation);

(2)                                 any
Post Completion Relief of the Company or any Subsidiary (as defined in
paragraph 1.1.3 of the definition of Liability for Taxation); and

(3)                                 any
Relief, whenever arising, of the Buyer or any member of the Buyer’s Tax Group
other than the Company or any Subsidiary.

Buyer’s Tax Group: the Buyer and any other company or companies which either
are or become after Completion, or have within the seven years ending at
Completion, been treated as members of the same group as, or otherwise
connected or associated in any way with, the Buyer for any Tax purpose.

Event: includes (without limitation) the expiry of a period of
time, the Company or any Subsidiary becoming or ceasing to be associated with
any other person for any Tax purpose or ceasing to be or becoming resident in
any country for any Tax purpose, the death or the winding up or dissolution of
any person, and any transaction (including the execution and completion of all
provisions of this agreement), event, act or omission whatsoever, and any
reference to an Event occurring on or before a particular date shall include
Events which, for Tax purposes, are deemed to have, or are treated or regarded
as having, occurred on or before that date.

Liability for Taxation: any liability of the Company or a Subsidiary to make a
payment of or in respect of Tax, whether or not the same is primarily payable
by the Company or the relevant Subsidiary and whether or not the Company or the
relevant Subsidiary has or may have any right of reimbursement against any
other person or persons and also includes:

1.1.1                        the
Loss of any Relief (Accounts Relief)
where such Relief has been taken into account in computing and so reducing or
eliminating any provision for deferred Tax which appears in the Completion
Accounts (or which, but for such Relief, would have appeared in the Completion
Accounts) or where such Relief was treated as an asset of the Company or the
relevant Subsidiary in the Completion Accounts or was taken into account in
computing any deferred Tax asset which appears in the Completion Accounts (Loss of an Accounts Relief), in
which case the amount of the Liability for Taxation shall be the amount 

 62
 

 

of Tax which would
(on the basis of Tax rates current at the date of such Loss) have been saved
but for such Loss, assuming for this purpose that the Company or the relevant
Subsidiary had sufficient profits or was otherwise in a position to use the
Relief;

1.1.2                        the
Loss of any right to repayment of Tax (including any repayment supplement) (Repayment Relief) which was treated
as an asset in the Completion Accounts (Loss
of a Repayment Relief), in which case the amount of
the Liability for Taxation shall be the amount of the Loss of the right to
repayment and any related repayment supplement;

1.1.3                        the
set off or use against income, profits or gains earned, accrued or received or
against any Tax chargeable in respect of an Event occurring on or before
Completion of any Relief (Post Completion Relief)
or right to repayment of Tax (including any repayment supplement) which is not
available before Completion, but arises after Completion in circumstances
where, but for such set off or use, the Company or the relevant Subsidiary would
have had a liability to make a payment of or in respect of Tax for which the
Buyer would have been able to make a claim against the Sellers under this Tax
Covenant (Loss of a Post-Completion
Relief), in which case the amount of the Liability for
Taxation shall be the amount of Tax saved by the Company or the relevant
Subsidiary as a result of such set off or use.

1.1.4                       any liability of the Company or
any Subsidiary to make a payment pursuant to an indemnity, guarantee or
covenant entered into before Completion under which the Company or the relevant
Subsidiary has agreed to meet or pay a sum equivalent to or by reference to
another person ́s Tax liability, in which case the Liability for Taxation shall
be equal to the amount of the liability.

Loss: any reduction, modification, loss, counteraction,
nullification, utilisation, disallowance or clawback for whatever reason.

Overprovision: the amount by which any provision in the Completion
Accounts relating to Tax (other than a provision for deferred Tax) is overstated
(except to the extent that such overstatement results from the utilisation of a
Buyer ́s Relief), applying the accounting policies, principles and practices
adopted in relation to the preparation of the Completion Accounts (and ignoring
the effect of any change in law made after Completion).

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

Saving: the reduction or elimination of any liability of the
Company or a Subsidiary to make an actual payment of corporation tax in respect
of which the Sellers would not have been liable under paragraph 2 by the use of
any Relief arising wholly as a result of a Liability for Taxation in respect of
which the Sellers have made a payment under paragraph 2 of this Tax Covenant.

Tax: all forms of taxation and statutory, governmental, state,
federal, provincial, local, government or municipal charges, duties, imposts,
contributions, levies, withholdings or liabilities wherever chargeable and 

 63
 

 

whether of the UK or any
other jurisdiction, and any penalty, fine, surcharge, interest, charges or
costs relating thereto, and Taxation
shall have the same meaning.

Tax Claim: any assessment (including self-assessment), notice,
demand, letter or other document issued or action taken by or on behalf of any
Taxation Authority from which it appears that the Buyer, the Company or a
Subsidiary is or may be subject to a Liability for Taxation or other liability
in respect of which the Sellers are or may be liable under this Tax Covenant.

Taxation Authority: HM Revenue & Customs, the Inland Revenue, HM Customs
& Excise, the Department of Social Security and any other governmental or
other authority whatsoever competent to impose any Tax, whether in the United
Kingdom or elsewhere.

Taxation Statute: any directive, statute, enactment, law or regulation
wheresoever enacted or issued, coming into force or entered into providing for
or imposing any Tax and including orders, regulations, instruments, bye-laws or
other subordinate legislation made under the relevant statute or statutory
provision and any directive, statute, enactment, law, order, regulation or
provision which amends, extends, consolidates or replaces the same or which has
been amended, extended, consolidated or replaced by the same.

1.2                References to gross
receipts, income,
profits or gains
earned, accrued or received shall include any gross receipts, income, profits
or gains deemed pursuant to the relevant Taxation Statute to have been or
treated or regarded as earned, accrued or received.

1.3                References to a repayment
of Tax shall include any repayment supplement or
interest in respect of it.

1.4                A reference to an Event occurring on or before Completion
includes a series or combination of Events, all of which were or the first of
which was an Event occurring on or before Completion or which commenced on or
before Completion.

1.5                Any reference to something occurring
in the ordinary course of business
shall, without prejudice to the generality thereof, be deemed not to include:

1.5.1                                    anything which
involves, or leads directly or indirectly to, any liability of the Company or
the relevant Subsidiary to Tax that is the primary liability of, or properly
attributable to, or due from another person (other than a member of the Buyer’s
Tax Group), or is the liability of the Company or the relevant Subsidiary only
because some other person, other than a member of the Buyer’s Tax Group, has
failed to pay it or is the liability of the Company or the relevant Subsidiary
because it has elected to be regarded as taxable or liable or to be regarded as
having made a disposal; or

1.5.2                                    anything which
relates to or involves the acquisition or disposal of an asset or the supply of
services (including the lending of money, or the hiring or licensing of
tangible or intangible property) in a transaction which is not entered into on
arm’s length terms; or

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1.5.3                                    anything which
relates to or involves the making of a distribution for Tax purposes, the
creation, cancellation or re-organisation of share or loan capital, the
creation, cancellation or repayment of any intra-Group debt or the Company or
any Subsidiary becoming or ceasing to be or being treated as ceasing to be a
member of a Group or as becoming or ceasing to be associated or connected with
any other company for any Tax purposes; or

1.5.4                                    anything which
relates to a transaction or arrangement which includes, or a series of
transactions or arrangements which include, any step or steps having no
commercial or business purpose apart from the reduction, avoidance or deferral
of a Liability for Taxation; or

1.5.5                                    anything which
gives rise to a Liability for Taxation on deemed (as opposed to actual) profits
or to the extent that it gives rise to a Liability for Taxation on an amount of
profits greater than the difference between the sale proceeds of an asset and
the amount attributable to that asset in the Accounts or, in the case of an
asset acquired since the Accounts Date, the cost of that asset; or

1.5.6                                    anything which
involves, or leads directly or indirectly to, a change of residence of the
Company or any of the Subsidiaries for Tax purposes.

1.6                Unless the contrary intention
appears, words and expressions defined in this agreement have the same meaning
in this Tax Covenant and any provisions in this agreement concerning matters of
construction or interpretation also apply in this Tax Covenant.

2.                     COVENANT

2.1                The Sellers covenant with the Buyer
that, subject to the provisions of this Tax Covenant, the Sellers shall be
jointly and severally liable to pay to the Buyer by way of repayment of the
Purchase Price for the Sale Shares, to the extent possible but not so as to
limit the amount payable where not wholly possible, an amount equal to any:

2.1.1                                    Liability for
Taxation resulting from or by reference to any Event occurring on or before
Completion or in respect of any gross receipts, income, profits or gains
earned, accrued or received by the Company or any of the Subsidiaries on or
before Completion;

2.1.2                                    Liability for
Taxation which arises solely as a result of the relationship for Tax purposes
of the Company or any of the Subsidiaries with any person other than a member
of the Buyer’s Tax Group whensoever arising;

2.1.3                                    any Liability for
Taxation falling within paragraph 1.1.1 to paragraph 1.1.4 of the definition of
Liability for Taxation;

2.1.4                                    any Liability for
Taxation which is a liability for inheritance tax which:

2.1.4.1               arises
as a result of a transfer of value occurring or being deemed to occur on or
before Completion (whether or not in 

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conjunction with
the death of any person whensoever occurring); or

2.1.4.2               has
given rise at Completion to a charge on any of the Sale Shares or assets of the
Company or any of the Subsidiaries; or

2.1.4.3               gives
rise after Completion to a charge on any of the Sale Shares in or assets of the
Company or any of the Subsidiaries as a result of the death of any person
within seven years of a transfer of value which occurred before Completion; and

2.1.5                                    costs and expenses
referred to in paragraph 10.

2.2                For the purposes of this Tax
Covenant, in determining whether a charge on the shares in or assets of the
Company or any of the Subsidiaries arises at any time or whether there is a
liability for inheritance tax, the fact that any Tax may be paid in instalments
shall be disregarded and such Tax shall be treated for the purposes of this Tax
Covenant as becoming due or to have become due and a charge as arising or having
arisen on the date of the transfer of value or other date or Event on or in
respect of which it becomes payable or arises.

2.3                The provisions of section 213 of
IHTA 1984 (refund by instalments) shall be deemed not to apply to any liability
for inheritance tax falling within this paragraph 2.

3.                     PAYMENT DATE AND INTEREST

3.1                Where the Sellers are liable to make
any payment under paragraph 2, the due date for the making of that payment (Due Date) shall be the earlier of
the date falling seven days after the Buyer has served a notice on the Sellers
demanding that payment and in a case:

3.1.1                                    that involves an
actual payment of Tax by the Company or any of the Subsidiaries, (including any
payment pursuant to paragraph 2.1.5) the date on which the Tax in question
would have had to have been paid to the relevant Taxation Authority in order to
prevent a liability to interest or a fine, surcharge or penalty from arising in
respect of the Liability for Taxation in question; or

3.1.2                        that falls within paragraph
1.1.1 of the definition of Liability for Taxation, the last date on which the
Tax is or would have been required to be paid to the relevant Taxation
Authority in respect of the period in which the Loss of the Relief occurs
(assuming for this purpose that the Company or the relevant Subsidiary had
sufficient profits or was otherwise in a position to use the Relief); or

3.1.3                        that falls within paragraph
1.1.2 of the definition of Liability for Taxation, the date on which the
repayment was due from the relevant Taxation Authority; or

3.1.4                        that falls within paragraph
1.1.3 of the definition of Liability for Taxation, the date on which the Tax
saved by the Company or the relevant Subsidiary is or would have been required
to be paid to the relevant Taxation Authority; or

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3.2         that
falls within paragraph 1.1.4 of the definition of Liability for Taxation not
later than the fifth day before the day on which the Company or the relevant
Subsidiary is due to make the payment or repayment. Any dispute as to the
amount specified in any notice served on the Sellers under paragraph 3.1.1 to
paragraph 3.1.5 shall be determined by the auditors of the Company or the
relevant Subsidiary for the time being, acting as experts and not as
arbitrators (the costs of that determination being shared equally by the
Sellers and the Buyer).

3.3         if
any sums required to be paid by the Sellers under this Tax Covenant are not
paid on the Due Date then, except to the extent that the Sellers ́ liability
under paragraph 2 compensates the Buyer for the late payment by virtue of it
extending to interest and penalties, such sums shall bear interest (which shall
accrue from day to day after as well as before any judgment for the same) at
the rate of 4% per annum over the base rate from time to time of HSBC Bank plc
or (in the absence thereof) at such similar rate as the Buyer selects from the
day following the Due Date up to and including the day of actual payment of
such sums, such interest to be compounded quarterly.

4.                     EXCLUSIONS

4.1                The covenant contained in paragraph
2 shall not cover any Liability for Taxation to the extent that:

4.1.1                                    a provision or
reserve in respect thereof is made in the Completion Accounts; or

4.1.2                                    it arises or is
increased as a result only of any change in the law of Tax announced and coming
into force after Completion (whether relating to rates of Tax or otherwise) or
the withdrawal of any extra-statutory concession previously made by a Taxation
Authority (whether or not the change purports to be effective retrospectively
in whole or in part); or

4.1.3                                    it would not have
arisen but for a change after Completion in the accounting bases on which the
Company or any of the Subsidiaries values its assets (other than a change made
in order to comply with UK GAAP); or

4.1.4                                    the Buyer is compensated
for any such matter under any other provision of this agreement; or

4.1.5                                    it would not have
arisen but for a voluntary act or transaction carried out by the Buyer, the
Company or any of the Subsidiaries after Completion, being an act which:

4.1.5.1                                       is
not in the ordinary course of business; or

4.1.5.2                                       could
reasonably have been avoided; or

4.1.5.3                                       the
Company or the relevant Subsidiary was not legally committed to do under a
commitment that existed on or before Completion; or

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4.1.5.4     the Buyer was aware would give rise to the
Liability for Taxation;

4.1.6                                    such
Liability to Tax was paid or discharged on or before Completion;

4.1.7                                    the
Liability for Taxation arises as a result of any income, profits or gains
earned, accrued or received, or any Event occurring after Completion in the
ordinary course of business of the Company;

4.1.8                                    such
Liability for Taxation was paid or discharged at no expense to the Buyer or the
Company; or

4.1.9                                    such
Liability for Taxation would not have arisen but for an increase in the number
of associated companies (within the meaning of Section 13(4) Taxes Act) of the
Company on or after Completion; or

4.1.10                  it
is a Liability for Taxation that arises due to the loss of the small companies
rate of Corporation Tax solely in consequence of joining the group of which the
Buyer is a member

4.1.11                  such
Liability for Tax is in respect of income, profits or gains earned or accrued
in respect of any period ended on or before the Completion Date and were
actually received by the Company but were not reflected in the Completion
Accounts; or

4.1.12                  such
Liability for Tax or other liability would not have arisen but for or is
increased by any failure by the Buyer or the Company to comply with its
obligations under this Deed ; or

4.1.13                  such
Liability for Tax consists of stamp duty or stamp duty reserve tax payable on
the transfer or agreement to transfer the Shares pursuant to the Agreement..

5.                     OVERPROVISIONS

5.1                If, on or before the seventh
anniversary of Completion, the auditors for the time being of the Company or
any of the Subsidiaries certify (at the request and expense of the Sellers)
that any provision for Tax in the Completion Accounts has proved to be an
Overprovision, then:

5.1.1                        the
amount of any Overprovision shall first be set off against any payment then due
from the Sellers under this Tax Covenant;

5.1.2                        to
the extent that there is an excess, a refund shall be made to the Sellers of
any previous payment or payments made by the Sellers under this Tax Covenant
(and not previously refunded under this Tax Covenant) or in respect of any
Claim up to the amount of such excess; and

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5.1.3                        to
the extent that such excess as referred to in paragraph 5.1.2 is not exhausted,
the remainder of that excess shall be carried forward and set off against any
future payment or payments which become due from the Sellers under this Tax
Covenant or in respect of any Claim.

5.2                After the Company ́s or the relevant
Subsidiary ́s auditors have produced any certificate under this paragraph 5, the
Sellers or the Buyer may, at any time before the seventh anniversary of
Completion, request the auditors for the time being of the Company or the
relevant Subsidiary (as the case may be) to review (at the expense of the
Sellers) that certificate in the light of all relevant circumstances, including
any facts of which they were not or it was not aware, and which were not taken
into account, at the time when such certificate was produced and to certify
whether, in their opinion, the certificate remains correct or whether, in light
of those circumstances, it should be amended.

5.3                If the auditors make an amendment to
the earlier certificate and the amount of the Overprovision is revised, that
revised amount shall be substituted for the previous amount and any adjusting
payment that is required shall be made by or to the Sellers (as the case may
be) as soon as reasonably practicable.

5.4              If the Buyer becomes aware that an
Overprovision may have been made at any time up to the date upon which the
statutory accounts of the Company and its Subsidiaries up to the first
accounting reference date after completion are signed, the Buyer shall ask the
auditors of the Company to certify whether there has been an Overprovision in
accordance with that Clause 5.

6.                     SAVINGS

6.1                If
(at the Sellers ́ request and expense) the auditors for the time being of the
Company or any Subsidiary determine that the Company or the relevant Subsidiary
has obtained a Saving, the Buyer shall, as soon as reasonably practicable
thereafter, repay to the Sellers the lesser of:

6.1.1                        the
amount of the Saving (as determined by the auditors) less any costs incurred by
the Buyer, the Company or the relevant Subsidiary; and

6.1.2                        the
amount paid by the Sellers under paragraph 2 in respect of the Liability for
Taxation which gave rise to the Saving less any part of that amount previously
repaid to the Sellers under any provision of this Tax Covenant or otherwise.

6.2                  If
the Buyer becomes aware that the Company has obtained a saving at anytime up to
the date upon which the statutory accounts of the Company and Subsidiaries up
to the first accounting reference date following completion are signed, the
Buyer shall request the auditors of the Company to certify whether there has
been a Saving.

6.3                  In
determining whether the Company has obtained a Saving, the auditors of the
Company will act as experts and not as arbitrators and that determination will
(in the absence of manifest error) be conclusive and binding on the parties.

7.                     RECOVERY FROM THIRD PARTIES

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7.1                Where the Sellers have paid an
amount in full discharge of a liability under paragraph 2 in respect of any
Liability for Taxation and the Buyer, the Company or any of the Subsidiaries is
or becomes entitled to recover from some other person (not being the Buyer, the
Company or any of the Subsidiaries or any other company within the Buyer ́s Tax
Group), any amount in respect of such Liability for Taxation, the Buyer shall
or shall procure that the Company or the relevant Subsidiary shall:

7.1.1                        notify
the Sellers of its entitlement as soon as reasonably practicable; and

7.1.2                        if
required by the Sellers and, subject to the Buyer, the Company or the relevant
Subsidiary being secured and indemnified by the Sellers against any Tax that
may be suffered on receipt of that amount and any costs and expenses incurred
in recovering that amount, take or procure that the Company or the relevant
Subsidiary takes all reasonable steps to enforce that recovery against the
person in question (keeping the Sellers fully informed of the progress of any
action taken), provided that the Buyer shall not be required to take any action
pursuant to this paragraph 7.1 which, in the Buyer ́s reasonable opinion, is
likely to harm its, the Company ́s or the relevant Subsidiary ́s commercial
relationship (potential or actual) with that or any other person.

7.2              If the Buyer, the Company or any of
the Subsidiaries recovers any amount referred to in paragraph 7.1 the Buyer
shall account to the Sellers for the lesser of:

7.2.1                        any
amount recovered (including any related interest or related repayment
supplement) less any Tax suffered in respect of that amount and any costs and
expenses incurred in recovering that amount (save to the extent that amount has
already been made good by the Sellers under paragraph 7.1.2); and

7.2.2                        the
amount paid by the Sellers under paragraph 2 in respect of the Liability for
Taxation in question.

8.                     CONDUCT OF TAX CLAIMS

8.1                If the Buyer, the Company or any of
the Subsidiaries becomes aware of a Tax Claim, the Buyer shall give or procure
that notice in writing is given to the Sellers as soon as is reasonably
practicable, provided that if any of the Sellers receive any Tax Claim for
whatever reason, they shall notify the Buyer in writing as soon as is
reasonably practicable and the Buyer shall be deemed, on receipt of such
notification, to have given the Sellers notice of such Tax Claim in accordance
with the provisions of this paragraphs 8, provided always that the giving of
such notice shall not be a condition precedent to the Sellers ́ liability under
this Tax Covenant.

8.2                                 Provided the Sellers indemnify and
secure the Buyer and the Company or the relevant Subsidiary to the Buyer ́s
reasonable satisfaction against all liabilities, costs, damages or expenses
which may be incurred thereby including any additional Liability for Taxation,
the Buyer shall take and shall procure that the 

 70
 

 

Company or the relevant Subsidiary shall take such action as
the Sellers may reasonably request by notice in writing given to the Buyer, the
Company or the relevant Subsidiary to avoid, dispute, defend, resist, appeal or
compromise any Tax Claim (such a Tax Claim where action is so requested being
hereinafter referred to as a Dispute),
provided that neither the Buyer, the Company nor the relevant Subsidiary shall
be obliged to appeal or procure an appeal against any assessment to Tax raised
on any of them if, the Sellers having been given written notice of the receipt
of such assessment, the Buyer, the Company or the relevant Subsidiary have not
within 14 days of the date of the notice received instructions in writing from
the Sellers to do so.

8.3                If:

8.3.1                        the
Sellers do not request the Buyer, the Company or the relevant Subsidiary to
take any action under paragraph 8.2 or fail to indemnify and secure the Buyer, the
Company or the relevant Subsidiary to the Buyer ́s reasonable satisfaction
within a period of time (commencing with the date of the notice given to the
Sellers) that is reasonable, having regard to the nature of the Tax Claim and
the existence of any time limit in relation to avoiding, disputing, defending,
resisting, appealing or compromising such Tax Claim, and which period shall not
in any event exceed a period of 14 days; or

8.3.2                        any
of the Sellers (or the Company or the relevant Subsidiary before Completion)
has been involved in a case involving fraudulent conduct or wilful default in
respect of the Liability for Taxation which is the subject matter of the
Dispute; or

8.3.3                        the
Dispute involves an appeal against a determination by the General or Special
Commissioners of the VAT and Duties Tribunal, unless the Sellers have obtained
the opinion of Tax counsel of at least 5 years ́ standing that there is a
reasonable prospect that the appeal will succeed,

the
Buyer, the Company or the relevant Subsidiary shall have the conduct of the
Dispute absolutely (without prejudice to its rights under this Tax Covenant)
and shall be free to pay or settle the Tax Claim on such terms as the Buyer,
the Company or the relevant Subsidiary may in its absolute discretion considers
fit.

8.4                                 Subject to paragraph 10.3, by
agreement in writing between the Buyer and the Sellers, the conduct of a
Dispute may be delegated to the Sellers on such terms as may be agreed from
time to time between the Buyer and the Sellers provided that, unless the Buyer
and the Sellers specifically agree otherwise in writing, the following terms
shall be deemed to be incorporated into any such agreement:

8.4.1                        the
Buyer, the Company or the relevant Subsidiary shall promptly be kept fully
informed of all matters pertaining to a Dispute and shall be entitled to see
and keep copies of all correspondence and notes or other written records of
telephone conversations or meetings and, in the event that there is no written
record, shall be given an immediate report of all telephone conversations with
any Taxation Authority to the extent that it relates to a Dispute;

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8.4.2                        the
appointment of solicitors or other professional advisers shall be subject to
the written approval of the Buyer, such approval not to be unreasonably
withheld or delayed;

8.4.3                        all
material written communications pertaining to the Dispute which are to be
transmitted to the relevant Taxation Authority shall first be submitted to the
Buyer, the Company or the relevant Subsidiary for approval and shall only be
finally transmitted if such approval is given, such approval not to be
unreasonably withheld or delayed; and

8.4.4                        the
Sellers shall make no settlement or compromise of the Dispute or agree any
matter in the conduct of the Dispute which is likely to affect the amount
thereof or the future liability to Tax of the Buyer, the Company or any
relevant Subsidiary without the prior approval of the Buyer, the Company or the
relevant Subsidiary (as may be appropriate), such approval not to be unreasonably
withheld or delayed.

8.5                                 The Buyer shall provide and shall
procure that the Company or relevant Subsidiary provides to the Sellers and the
Sellers’ professional advisers reasonable access to premises and personnel and
to any relevant assets, documents and records within their power, possession or
control for the purpose of investigating the matter and enabling the Sellers to
take such action as is referred to in this paragraph 8

8.6                                 Neither the Buyer, the Company nor
any of the Subsidiaries shall be subject to any claim by or liability to any of
the Sellers for non-compliance with any of the foregoing provisions of this
paragraph 10 if the Buyer, the Company or any of the Subsidiaries has bona fide
acted in accordance with the instructions of any one or more of the Sellers.

9.                     GROSSING UP

9.1                All sums payable by the Sellers to
the Buyer under this Tax Covenant shall be paid free and clear of all
deductions or withholdings whatsoever unless the deduction or withholding is
required by law.  If any deductions or
withholdings are required by law to be made from any of the sums payable under
this Tax Covenant, the Sellers shall pay to the Buyer such sum as will, after
the deduction or withholding has been made, leave the Buyer with the same
amount as it would have been entitled to receive in the absence of any such
requirement to make a deduction or withholding.

9.2                If the Buyer incurs a taxation
liability which results from, or is calculated by reference to, any sum paid
under this Tax Covenant, the amount so payable shall be increased by such
amount as will ensure that, after payment of the taxation liability, the Buyer
is left with a net sum equal to the sum it would have received had no such
taxation liability arisen.

9.3                If the Buyer would, but for the availability
of a Buyer ́s Relief, incur a taxation liability falling within paragraph 9.2,
it shall be deemed for the purposes of that paragraph to have incurred and paid
that liability.

10.              COSTS AND EXPENSES

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The covenant contained in
paragraph 2 of this Tax Covenant shall extend to all costs and expenses
incurred by the Buyer, the Company or any of the Subsidiaries in connection
with any matter included under paragraph 2 of this Tax Covenant and the
enforcement of rights under this Tax Covenant.

 

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Schedule 9            Completion
Accounts

Part 1.           General

DEFINITIONS

The definitions in this
paragraph apply in this agreement.

Completion Accounts: the consolidated profit and loss account and consolidated
balance sheet of the Company and its Subsidiaries, for the Completion Period
and stating the amount of the Completion Net Assets, the Completion Profit, the
Debt  the Completion MCT Provision, the
HP Liabilities and the Completion Liabilities prepared in accordance with and subject
to the provisions of this Schedule.

Completion Net Assets: the result of the following calculation:-

(1)
the aggregate of the amounts attributed in the Completion Accounts to the
following assets:-

·                  Property

·                  Plant, Machinery
and Tooling

·                  Office Equipment
Furniture and Computers

·                  Stock and Work
in Progress

·                  Debtors

·                  Prepayments

(2)           and then deducting from the aggregate
of the sums in (1) the aggregate of the amounts attributed in the Completion
Accounts to the following liabilities:-

·                  Trade Creditors
(Purchase Ledger)

·                  Accruals (excluding
accrued interest on Debt until the date of Completion)

·                  PAYE and NIC

·                  VAT

·                  the Completion
Liabilities (to the extent not taken into account in any other heading)

Completion Period: the period commencing on the day after the Accounts Date
up to and including the Completion Date.

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Completion Profit: the consolidated profit on ordinary activities before
Taxation of the Company and its Subsidiaries for the Completion Period as shown
in the Completion Accounts but without releasing the General Provision.

Draft Completion Accounts: a draft of the Completion Accounts prepared in accordance
with the requirements of this Schedule.

Expert: a person appointed in accordance with paragraph 3 of Part
1 of this Schedule to resolve any dispute arising in the preparation of the
Completion Accounts.

Sellers’ Accountants: PKF (UK) LLP of 45 Great Charles Street, Queensway,
Birmingham, B3 2LX.

UK GAAP: generally accepted accounting principles applied in the
UK, incorporating Statements of Standard Accounting Practice, Financial
Reporting Standards FRSSE and Urgent Issues Task Force Abstracts issued by the
Accounting Standards Board Limited, in each case as in force at the date of
this agreement.

“General Provision”  a
general provision standing as a charge against the consolidated profit of the
Company and its Subsidiaries and included in the balance sheet of the Company
and the Subsidiaries in the sum of £55,000

“Completion
Liabilities” All other Liabilities of the Company at
Completion other than:-

·             HP Liabilities in the sum of
£283,526.53

·             Taxation (including deferred tax)

·                                      Sums
payable to trade creditors in the ordinary and normal course of the business of
the Company and its Subsidiaries in respect of goods supplied.

·                                             Accruals

·                                             Debt

all as determined
in accordance with UK GAAP.

“Completion MCT Provision”: that part of the Completion Tax Provisions
which is mainstream corporation tax in respect of the Completion Period.

“HP Liabilities”: the aggregate of all sums owing by the
Company and its Subsidiaries at Completion in respect of the hire purchase
agreements listed in Schedule 10 and for the avoidance of doubt to exclude any
interest element which accrues and is payable after Completion.

2.             PREPARATION
OF COMPLETION ACCOUNTS

2.1                                 The Seller shall procure that the
Sellers’ Accountants prepare the Draft Completion Accounts as soon as
reasonably practical after the Completion Date and in any event not later than
28 days thereafter.

 75
 

 

2.2                                 The Buyer shall give such assistance
and access to information as the Sellers’ Accountants may reasonably require to
enable them to prepare the Draft Completion Accounts within the period referred
to in paragraph 2.1..

2.3                                 Subject to the preparation of the
Draft Completion Accounts in accordance with paragraph 2.1, the Sellers shall deliver
a copy of the Draft Completion Accounts to the Buyer no later than 28 days
after the Completion Date.

2.4                                 The Buyer shall ensure that, within
21 days starting on the day after delivery of the Draft Completion Accounts to
the Buyer, the Buyer  shall submit to the
Sellers and the Sellers’ Accountants a report stating whether or not they agree
with the Completion Accounts (and in the case of disagreement, the areas of
dispute).

2.5                                 If the Buyer agrees the Draft
Completion Accounts, the parties shall ensure that the Buyer ́ and the Sellers ́
Accountants  certify the Draft Completion
Accounts as being the Completion Accounts within 14 days of the Sellers’
Accountants receiving the report of the Buyer and the Completion Accounts shall
then become final and binding on the parties for the purpose of this agreement.

2.6                                 If the Buyer disagrees with the
Draft Completion Accounts, the parties shall endeavour to agree any matter in
dispute. If the matter in dispute is resolved by agreement between the parties,
the Buyer and the Sellers ́ Accountants shall certify the Draft Completion
Accounts (subject to any amendment agreed between the parties) as being the
Completion Accounts and they shall become final and binding on the parties for
the purpose of this agreement.

2.7                                 If the parties are unable to resolve
any disagreement within 28 days of the delivery of the report of the Buyer the
disagreement shall be referred to an Expert.

2.8                                 Save as provided in paragraph 3 and
that the prepared and reasonably incurred costs of the Sellers pursuant to this
clause 2 (but not any cost pursuant to clause 3) shall be payable by Clamonta
(up to £10,000 excluding VAT of the Sellers’ accountants will be borne by
Clamonta subject to a provision to the same as an accrual in the Completion Accounts
but not included in the Completion Liabilities with any excess over £10,000
plus VAT being treated as one of the Completion Liabilities) the Buyer and the
Sellers shall bear and pay their own costs incurred in connection with the
preparation and agreement of the Draft Completion Accounts and Completion
Accounts.

3.             EXPERT

3.1                                 An Expert is a person appointed in
accordance with this paragraph 3 to resolve a dispute arising in relation to
the Completion Accounts.

3.2           The parties shall agree on the appointment
of an independent Expert.

3.3                                 If the parties are unable to agree
on an Expert within seven days of either party serving details of a suggested
expert on the other, either party may request the President for the time being
of the Institute of Chartered Accountants in England and Wales (“the Institute”)
to appoint an Expert  Chartered
Accountant  of repute with experience in
the preparation of the Completion Accounts.

 76
 

 

3.4                                 The Expert shall prepare a written
decision and give notice (including a copy) of the decision to the parties
within a maximum of two months of the matter being referred to him.

3.5                                 If the Expert dies or becomes
unwilling or incapable of acting, or does not deliver the decision within the
time required by paragraph 3.4 then:

3.5.1      either party may apply to the Institute to
discharge the Expert and to appoint a replacement Expert with the required
expertise; and

3.5.2      this paragraph 3 applies in relation to the new
Expert as if he were the first Expert appointed.

3.6                                 All matters under this paragraph 3
shall be conducted, and the Expert ́s decision shall be written, in the English
language.

3.7                                 The parties are entitled to make
submissions to the Expert including oral submissions and shall provide (or
procure that others provide) the Expert with such assistance and documents as
the Expert reasonably requires for the purpose of reaching a decision.

3.8                                 To the extent not provided for by
this paragraph 3, the Expert may, in his reasonable discretion, determine such
other procedures to assist with the conduct of the determination as he
considers just or appropriate, including (to the extent he considers necessary)
instructing professional advisers to assist him in reaching his determination.

3.9                                 Each party shall, with reasonable
promptness, supply each other with all information and give each other access
to all documentation and personnel as each other reasonably requires to make a
submission under this paragraph 3.

3.10                           The Expert shall act as an expert
and not as an arbitrator. The Expert shall determine any dispute, which may
include any issue involving the interpretation of any provision of this
agreement, his jurisdiction to determine the matters and issues referred to him
or his terms of reference. The Expert ́s written decision on the matters
referred to him shall be final and binding in the absence of manifest error or
fraud.

3.11                           Each party shall bear its own costs
in relation to the Expert. The Expert’s fees and any costs properly incurred by
him in arriving at his determination (including any fees and costs of any
advisers appointed by the Expert) shall be borne by the parties equally or in
such other proportions as the Expert directs.

4.             BASIS
OF COMPUTATION

4.1                                 The Completion Accounts shall be
prepared in accordance with the provisions of Part 2 of this Schedule 9.

Part 2.           Accounting Policies.

1.             COMPLETION
ACCOUNT PRIORITIES

 77
 

 

The Completion Accounts shall be prepared in accordance with
UK GAAP and the accounting principles, practices, policies and procedures
applied in the Accounts (to the extent that these are consistent with UK GAAP)
as applicable to the Company and its Subsidiary at Completion. The policies
applied in the Accounts in respect of work in progress stock and stock
provisions shall be applied consistently in the Completion Accounts.

 78
 

 

Sale and Purchase Agreement

Schedules

SCHEDULE
1             PARTICULARS OF SELLERS

Part 1.  Particulars of sellers and apportionment
of purchase price

SCHEDULE
2             PARTICULARS OF THE COMPANY AND
SUBSIDIARIES

Part 1.  The Company

Part 2.  The Subsidiaries

SCHEDULE
3             COMPLETION

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

Part 2.  Matters for the board meetings at Completion

SCHEDULE
4             WARRANTIES

Part 1.  General warranties

Part 2.  Tax warranties

SCHEDULE
5             TAX COVENANT

SCHEDULE
6             INTELLECTUAL PROPERTY RIGHTS

Part 1.  Registered intellectual property rights

Part 2. 
Material unregistered intellectual property rights

Part 3.  Intellectual property rights licensed from
third parties

Part 4.  Intellectual property rights licensed to
third parties

SCHEDULE 7             INFORMATION TECHNOLOGY

 79
 

 

SCHEDULE
8             PARTICULARS OF PROPERTIES

Part 1.  Freehold properties

Part 2. 
Leasehold properties

Part 3. 
Freehold properties

SCHEDULE
9             COMPLETION ACCOUNTS

Part 1.  General

Part 2.  Accounting Policies

SCHEDULE
10           HP LIABILITIES

SCHEDULE
11           ESTIMATED DEBT

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  EXECUTED AS A DEED by the
  above named ALAN LESLIE WHEELER in the
  presence of:

  	
  )   /s/ Alan Leslie Wheeler

  )

  )

   

  
	
  Witness: /s/ Darnelia Tarbnok

   

  Name: Darnelia Tarbnok

   

  Address: 47, 49 King Street, Dudley

   

  Occupation: Solicitor

  	
   

  

 

	
  EXECUTED AS A DEED by the
  above named MICHAEL LEIGH DONOVAN in the
  presence of:

  	
  )   /s/ Michael Leigh Donovan

  )

  )

   

  
	
  Witness: /s/ Darnelia Tarbnok

   

  Name: Darnelia Tarbnok

   

  Address: 47, 49 King Street, Dudley

   

  Occupation: Solicitor

  	
   

  

 

	
  EXECUTED AS A DEED by the
  above named THORNTON PRECISION COMPONENTS LIMITED
  acting as its attorney

  Matthew Bell in the presence of

  /s/ Roger Dyson

  hlw Commercial Lawyers LLP

  	
  )   /s/ Matthew Bell

  )

  )

  )

  )

  )

  )

  	
   

   

   

   

   

   

   

  

 

 81

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