Document:

Share
      Purchase Agreement

    

    

    Dated
      as of August 29, 2006

    

    

    

    By
      and Among

    

    

    

    Anthony
      Frere, Geoffrey Rose, David Zelkha And Others

    

    Nu
      Horizons Electronics Corp.

    

    and

    

    Nu
      Horizons Electronics Europe Limited

    

    

    

    
      

      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE
      OF CONTENTS

    

    Page

    

    
      	
              ARTICLE
                1 DEFINITIONS

            	
              1

            
	
               

            	 
	
              SECTION1.1.
                Certain Definitions

            	
              1

            
	
              SECTION1.2.
                Index of Other Defined Terms

            	
              8

            
	
               

            	
               

            
	
              ARTICLE
                2 PURCHASE AND SALE OF SHARES

            	
              10

            
	
               

            	
               

            
	
              SECTION2.1.
                Purchase and Sale of the Shares

            	
              10

            
	
              SECTION2.2.
                Purchase Price

            	
              10

            
	
              SECTION2.3.
                Closing

            	
              10

            
	
              SECTION2.4.
                Deliveries by Seller at Closing

            	
              11

            
	
              SECTION2.5.
                Deliveries by the Buyer Parties at Closing

            	
              11

            
	
              SECTION2.6.
                Deferred Purchase Price

            	
              11

            
	
               

            	
               

            
	
              ARTICLE
                3 WARRANTIES

            	
              12

            
	
               

            	
               

            
	
              SECTION3.1.
                Organization and Qualification

            	
              12

            
	
              SECTION3.2.
                Capitalization of the Company

            	
              12

            
	
              SECTION3.3.
                Subsidiaries, Joint Ventures and Branches

            	
              13

            
	
              SECTION3.4.
                Authority Relative to this Agreement

            	
              13

            
	
              SECTION3.5.
                Consents and Approvals; No Violations

            	
              13

            
	
              SECTION3.6.
                Financial Statements

            	
              14

            
	
              SECTION3.7.
                Litigation

            	
              15

            
	
              SECTION3.7.
                Litigation

            	
              15

            
	
              SECTION3.8.
                Compliance with Applicable Law

            	
              15

            
	
              SECTION3.9.
                Labour Matters

            	
              16

            
	
              SECTION3.10.
                Taxes

            	
              20

            
	
              SECTION3.11.
                Brokers

            	
              26

            
	
              SECTION3.12.
                Material Contracts

            	
              26

            
	
              SECTION3.13.
                Intellectual Property

            	
              28

            
	
              SECTION3.14.
                Property

            	
              31

            
	
              SECTION3.15.
                Environmental Compliance

            	
              34

            
	
              SECTION3.16.
                Absence of Certain Changes

            	
              35

            
	
              SECTION3.17.
                Insurance

            	
              37

            
	
              SECTION3.18.
                Inventory and Debts

            	
              37

            
	
              SECTION3.19.
                Assets of the Company

            	
              38

            
	
              SECTION3.20.
                Absence of Undisclosed Liabilities

            	
              38

            
	
              SECTION3.21
                Product Warranties, Defects and Liabilities

            	
              38

            
	
              SECTION3.22
                Affiliate Transactions

            	
              39

            
	
              SECTION3.23.
                Customers and Suppliers

            	
              39

            
	
              SECTION3.24.
                Illegal Payments

            	
              40

            
	
              SECTION3.25.
                Information Technology

            	
              40

            
	
              SECTION3.26.
                Employee Plans

            	
              41

            

    

    
      	
              SECTION3.27.
                Books and Records; Possession

            	
              43

            
	
              SECTION3.28.
                Insolvency.

            	
              43

            
	
              SECTION3.29.
                Competition

            	
              45

            
	
              SECTION3.30.
                Disclosure

            	
              45

            
	
               

            	
               

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ARTICLE
                4 WARRANTIES OF BUYER PARTIES

            	
              45

            
	
               

            	
               

            
	
              SECTION4.1.
                Organization

            	
              45

            
	
              SECTION4.2.
                Authority Relative to this Agreement.

            	
              46

            
	
              SECTION4.3.
                Consents and Approvals; No Violations

            	
              46

            
	
              SECTION4.4.
                Litigation

            	
              46

            
	
               

            	
               

            
	
              ARTICLE
                5

            	
              47

            
	
               

            	
               

            
	
               

            	
               

            
	
              UNDERTAKINGS

            	
              47

            
	
               

            	
               

            
	
              SECTION5.1.
                Further Assurance

            	
              47

            
	
              SECTION5.2.
                Public Announcements

            	
              47

            
	
              SECTION5.3.
                Use of Confidential Information; Non-competition;
                Non-solicitation

            	
              47

            
	
              SECTION5.4.
                Expenses

            	
              50

            
	
               

            	
               

            
	
              ARTICLE
                6

            	
              50

            
	
               

            	
               

            
	
               

            	
               

            
	
              TAX
                MATTERS

            	
              50

            
	
               

            	
               

            
	
              SECTION6.2.
                Cooperation

            	
              50

            
	
              SECTION6.3.
                Allocation of Taxes

            	
              51

            
	
              SECTION6.3.
                Over Provisions and Reliefs

            	
              55

            
	
              SECTION6.5.
                Third Party Claims

            	
              56

            
	
               

            	
               

            
	
              ARTICLE
                7

            	
              60

            
	
               

            	
               

            
	
               

            	 
	
              SELLERS’
                LIMITATIONS ON LIABILITY

            	
              60

            
	
               

            	
               

            
	
              SECTION7.1.
                Survival of Representations

            	
              60

            
	
              SECTION7.2.
                Indemnification

            	
              60

            
	
              SECTION7.3.
                Limitation on Indemnity

            	
              63

            
	
              SECTION7.4.
                Exclusivity of Remedy, No Special Indirect, Punitive or Consequential
                Damages

            	
              64

            
	
              SECTION7.5.
                Notice of Claims

            	
              65

            
	
              SECTION7.5.
                Notice of Claims

            	
              65

            
	
              SECTION8.1.
                Entire Agreement; Assignment, Amendments and Waivers

            	
              65

            
	
              SECTION8.2.
                Validity

            	
              66

            
	
              SECTION8.3.
                Notices

            	
              66

            
	
              SECTION8.4.
                Governing Law; Forum Selection; Jurisdiction

            	
              67

            
	
              SECTION8.5.
                Waiver of Jury Trial

            	
              68

            
	
              SECTION8.6.
                Interpretation

            	
              69

            
	
              SECTION8.7.
                Third Party Rights

            	
              70

            
	
              SECTION8.9.
                Personal Liability

            	
              70

            
	
              SECTION8.10.
                Specific Performance

            	
              70

            
	
              SECTION8.11.
                Disclosure Generally

            	
              70

            
	
              SECTION8.12.
                Authority of Buyer

            	
              70

            
	
              SECTION8.13.
                Counterparts

            	
              71

            
	
               

            	
               

            
	 	
               

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULES
      TO AGREEMENT

    

    
      	
              Schedule
                A

            	
              Sellers

            
	 	 
	
              Schedule
                2.4

            	
              Sellers
                Closing Deliveries

            
	 	 
	
              Schedule
                2.5

            	
              Buyer
                Closing Deliveries

            

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SHARE
      PURCHASE AGREEMENT

    

    THIS
      SHARE PURCHASE AGREEMENT (this "Agreement"),
      dated
      as of August 29, 2006, by and among those persons whose names and addresses
      are
      set out in Schedule A (collectively, "Sellers"),
      Nu
      Horizons Electronics Corp., a Delaware corporation ("Buyer"),
      and
      Nu Horizons Electronics Europe Limited, a company registered in England and
      Wales with registered number 3507689 and a wholly-owned subsidiary of Buyer
      ("Acquisition
      Sub";
      together with Buyer, the "Buyer
      Parties").

    

    RECITALS

    

    WHEREAS,
      DT Electronics Limited, a company registered in England and Wales with
      registered number 2181478 (the "Company"),
      is
      currently engaged in the distribution of high technology active and passive
      electronic components (the "Business");
      

    

    WHEREAS,
      Sellers are the sole legal and beneficial owners of shares, of £1 each as set
      out in Schedule A (the "Shares"),
      of
      the Company's share capital, which Shares constitute all of the issued share
      capital of the Company;

    

    WHEREAS,
      on the terms and subject to the conditions hereof, Sellers desire to sell to
      Acquisition Sub and Acquisition Sub desires to purchase from Sellers all of
      the
      Shares.

    

    AGREEMENT

    

    NOW
      THEREFORE in consideration of the premises and the warranties and agreements
      herein contained and intending to be legally bound hereby, Sellers, Acquisition
      Sub and Buyer hereby agree as follows: 

     

    ARTICLE 1

    

    DEFINITIONS

    

    SECTION 1.1.
      Certain
      Definitions. The
      following terms, as used herein, have the following meanings:

    

    “1st
      Deferred
      Purchase Price Period” means the twelve-month period ending March 31,
      2007.

    

    “2nd
      Deferred
      Purchase Price Period” means the twelve-month period ending March 31,
      2008.

    

    “3rd
      Deferred
      Purchase Price Period” means the twelve-month period ending March 31,
      2009.

    

    "Accounts
      Date" means 31 March 2006.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    "Accounts
      Relief" means:

    

    (a)
      any
      Relief which was taken into account in computing and so reducing or eliminating
      any provision for Tax (including any provision for deferred Tax) which appears
      in the Last Accounts (or which, but for such Relief, would have appeared in
      the
      Last Accounts); and

    

    (b)
      any
      Relief to the extent that it was treated as an asset in the Last
      Accounts.

    

    "Affiliate"
      means, in respect of any Person, a Person that, directly or indirectly, through
      one or more intermediaries controls, is controlled by or is under common control
      with the first-mentioned Person; provided that in relation to Buyer the Company
      shall not be an Affiliate prior to the Closing.

    

    "Applicable
      Law" means, with respect to any Person, any statute, law, ordinance, policy,
      guidance, rule, administrative interpretation, regulation, order, writ,
      injunction, directive, judgment, decree, code of practice or other requirement
      of any Governmental Authority of the United Kingdom or European Union (or,
      in
      relation to the Buyer, of the United States of America) applicable from time
      to
      time to such Person or any of its Affiliates or any of their respective
      properties, assets, officers, directors, employees, consultants or agents (in
      connection with such officer's, director's, employee's, consultant's or agent's
      activities on behalf of such Person or any of its Affiliates).

    

    "APAC
      orders" means orders, sourced through the Company, for supply to customers
      in
      the Asia Pacific region of products other than Atmel or Elec and Eltek
      products.

    

    "Business
      Day" means a day (other than a Saturday) on which clearing banks in the City
      of
      London, England are open for the transaction of normal sterling
      business.

    

    "Business
      Intellectual Property" means any patent, patent application (or renewal) and
      docketed invention, trademark, trade name, trademark or trade name registration
      or application (or renewal), copyright (including rights in computer software)
      or copyright registration or application (or renewal) for copyright
      registration, service mark, brand mark or brand name or any pending application
      (or renewal) related thereto, or any trade secret, proprietary know-how,
      programs or processes, logos, get-up, internet domain names, rights in designs,
      database rights, semi-conductor topography rights, utility models, or any
      similar rights relating to the Business, in each case whether registered or
      unregistered and including applications for registration, and all other rights
      or forms of protection having equivalent or similar effect anywhere in the
      world
      and each license or licensing agreement for any of the foregoing.

    

    "Buyer's
      Relief" means any Relief which arises in respect of, by reference to or in
      consequence of or any period ending after the Accounts Date any Event occurring
      after the Accounts Date.

    

    "Buyer's
      Solicitors" means Pinsent Masons of 1 Park Row, Leeds, LS1 5AB.

    

    "CA
      1985"
      means the Companies Act 1985 (as amended) in force in England and
      Wales.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Claim
      for Tax” means:

    

    (a)
      any
      claim, assessment, demand, notice, determination or other document issued or
      action taken by or on behalf of any Governmental Authority or any other person
      by virtue of which the Company is or may have a Liability for Tax;
      and/or

    

    (b)
      any
      self assessment made by the Company in respect of any Liability for Tax which
      it
      considers that it is or may become liable to pay.

    

    "Company
      Material Adverse Effect" means any circumstance, change or effect that,
      individually or when taken together with all other such circumstances, changes
      or effects, is materially adverse to the Business; provided,
      however,
      that
      the foregoing definition excludes the effects of changes that are generally
      applicable to (i) the industries and markets in which the Business
      operates, (ii) the United Kingdom economy or securities
      markets.

    

    "Contracts"
      means all contracts, agreements, options, leases, licenses, sales and accepted
      purchase orders, commitments and other instruments of any kind, whether written
      or oral, that relate to the Business and to which the Company is a party or
      is
      otherwise bound by on the Closing Date, including the Material
      Contracts.

    

    "Damages"
      means all demands, claims, actions or causes of action, assessments, losses,
      damages, costs, expenses, liabilities, obligations, judgments, awards, fines,
      sanctions, penalties, charges and amounts paid in settlement, including
      reasonable costs, fees and expenses of solicitors, accountants, consultants
      and
      other agents, advisers or independent contractors incurred in connection with,
      or in investigating, preparing for and defending any thereof.

    

    “EBIT”
      shall be an amount equal to the Company’s earnings before interest and taxes,
      including earnings generated due to the Buyer’s acquisition of the Company and
      excluding goodwill amortization, the effect of any dividends paid to Buyer
      and
      any allocated management charges from Buyer, to the extent consistent with
      Local
      GAAP and Past Practice. Earnings will include all earnings of the Company;
      provided that, to the extent the Company has provided design services or
      supported the supply of stock or fulfilment, whether through the provision
      of
      stock intra-group or on a normal after sales basis, earnings will include (i)
      100% of the revenue from sales by the Buyer or Buyer Affiliates of stock
      supplied by Atmel and Elec & Eltek and (ii) in respect of fulfilment by the
      Buyer or any Buyer Affiliate of APAC orders, a percentage of revenue determined
      in accordance with the Buyer’s standard revenue sharing arrangement which
      percentage shall be not lower than 20% in the two years following Closing and
      50% in the third year and beyond.

    

    "EBIT
      2006" means the EBIT of the Company for the twelve month period ending 31 March
      2006.

    

    "EBIT
      2007/2008/2009" means the EBIT of the Company for the 1st, 2nd or 3rd Deferred
      Purchase Price Period as applicable.

    

    "Employee
      Plan" means any bonus, share option, share purchase, incentive, deferred
      compensation, supplemental retirement, pension, severance and other similar
      fringe or employee benefit plan, program or arrangement and any current or
      former employment or executive compensation or severance agreement written
      or
      otherwise maintained or contributed to for the benefit of or relating to any
      employee of the Company, excluding former agreements under which the Company
      has
      no remaining obligations and any of the foregoing that are required to be
      maintained by the Company under the laws of any foreign
      jurisdiction.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    "Employment
      Agreements" means the employment agreements in the agreed form entered into
      between the Company and each of the Sellers as at the date of this
      Agreement.

     

    "Environment"
      means any ambient, workplace or indoor air, surface water, drinking water,
      groundwater, land surface, subsurface strata, river or other aquatic sediment,
      plant, human or animal life, natural resources, workplace and real property
      and
      the physical buildings, structures, improvements and fixtures thereon.

    

    "Environmental
      Laws" means all laws, rules, regulations and directives having the force of
      law;
      all judicial, administrative, and regulatory orders, judgments, decrees and
      common law relating to (a) the protection, investigation, remediation or
      restoration of the Environment, (b) the handling, use, storage, treatment,
      disposal, release or threatened release of any Hazardous Material, (c) noise,
      odour, pollution, contamination, species protection, land use or any injury
      or
      threat of injury to Persons or property or (d) the health and safety of Persons,
      but excluding any amendment or modification of Environmental Laws and any new
      Environmental Laws, in each case, introduced after the Closing Date.

    

    "Environmental
      Liabilities" means all Damages incurred (a) to comply with, or by reason of
      the
      violation of, any Environmental Law; (b) to investigate, respond to, remediate
      or otherwise which result from the release or threatened release of a Hazardous
      Material; or (c) by reason of any harm to the Environment or any injury to
      person, property or the natural resources caused by or resulting from any
      environmental conditions present at, created by, or arising out of the current
      or former operations of the Company.

    

    "Environmental
      Permits" means all or any permits, licenses, authorizations, consents,
      approvals, certificates, qualifications, including any conditions thereof
      required at any time under any Environmental Laws for the activities of the
      Company at any time or the occupation or use by the Company of any premises
      or
      the property in relation to the activities of the Company at any
      time.

    

    "Equipment"
      means all plant, machinery, equipment, furniture, office equipment, computer
      equipment (including all hardware, software and software codes and other
      Information Technology) communications equipment, vehicles, spare and
      replacement parts and other tangible property and assets (and interests in
      any
      of the foregoing) of the Company used in connection with the Business and
      reflected on the balance sheet contained in the Financial Statements, together
      with all warranties and licenses issued to the Company in connection with the
      Equipment, and any claims, credits and rights of recovery with respect to the
      Equipment.

    

    "Event"
      includes any event (including the death, winding up or dissolution of any
      person), act, failure, omission, transaction, arrangement or change in
      circumstances, whether or not the Company was a party thereto. For the avoidance
      of doubt, any reference to an Event which has occurred includes an Event deemed
      to have or treated as having or regarded as having occurred, as the case may
      be.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    "Exchange
      Rate" means the rate of exchange between United States dollars and pounds
      sterling, being the rate at which pounds sterling may be bought and United
      States dollars sold, which is equal to the average of (i) 1.7659 and (ii) the
      exchange rate as quoted in the London edition of the Financial Times on the
      day
      immediately prior to the date of this Agreement.

    

    "Governmental
      Authority" means any foreign, domestic, federal, territorial, state or local
      governmental authority, quasi-governmental authority, instrumentality, court,
      government or self-regulatory organization, commission, tribunal or organization
      or any regulatory, administrative or other agency, or any political or other
      subdivision, department or branch of any of the foregoing and, for the avoidance
      of doubt, including any such body having functions in relation to
      Tax.

    

    "Hazardous
      Material" means any substance or material (whether in solid or liquid form
      or in
      the form of a gas or vapour): (a) the presence of which requires investigation
      or remediation under any Environmental Law; (b) that is defined as a "hazardous
      waste" or "hazardous substance" under any Environmental Law; (c) that is toxic,
      explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
      mutagenic or otherwise capable of causing harm to the Environment and is
      regulated by any governmental authority having or asserting jurisdiction over
      each of the Company; or (d) that otherwise may subject the Company to liability
      under any Environmental Laws.

    

    "ICTA"
      means the Income and Corporation Taxes Act 1988 as in force in England and
      Wales
      and as amended from time to time.

    

    "Income
      Tax" means any federal, state, local, or foreign income, franchise, or similar
      tax imposed or measured based on income or profits, whether actual or deemed,
      and in each instance any interest, penalties or additions to tax attributable
      thereto including for the avoidance of doubt, United Kingdom corporation tax
      and
      any tax of a similar nature in any other jurisdiction.

    

    "Indebtedness"
      of any Person means all obligations of such Person (a) for borrowed money,
      (b) evidenced by notes, bonds, debentures or similar instruments,
      (c) under capital leases and (d) in the nature of guarantees of the
      obligations described in (a) through (c) above of any other
      Person.

    

    "Information
      Technology" means all computer hardware, software, microprocessors, networks,
      firmware, peripherals, communication links, storage media, networking equipment
      and other information technology and communications equipment used in the
      operation of the IT systems of the Business.

     

    "Interest
      Paid 2006/2007/2008/2009" means the interest paid or payable by the Company
      in
      respect of the relevant year to 31 March 2006, 2007, 2008 or 2009, as
      applicable.

    

    "Inventory"
      means all items of inventory owned or maintained by the Company for or in
      connection with the Business, including all stock in trade, supplies,
      containers, packaging materials, raw materials, work-in-progress, finished
      goods
      and samples, and any claims, credits and rights of recovery in respect of such.
      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    "Knowledge
      of Warrantors" means the actual knowledge of the individuals set forth on
Section 1(a)
      of the
      Warrantors Disclosure Schedule, and shall be deemed to include a representation
      that such individuals have made all reasonable inquiries of any other
      individuals reasonably expected to have knowledge of the subject matter,
      including enquiries of Gerard Hewitt, Matthew Humphreys and Stephen
      Price.

    

    "Last
      Accounts" means the audited balance sheet of the Company as at, and the audited
      profit and loss account of the Company for the accounting period ended, on
      the
      Accounts Date.

    

    "Liability"
      means, with respect to any Person, any liability or obligation of such Person
      of
      any kind, character or description, whether known or unknown, absolute or
      contingent, accrued or unaccrued, liquidated or unliquidated, secured or
      unsecured, joint or several, due or to become due, vested or unvested,
      executory, determined, determinable or otherwise.

    

    "Liability
      for Tax" means:

    

    (a) any
      liability (including a liability which is a primary liability of some other
      person and whether or not there is a right of recovery against another person)
      to make an actual payment or increased payment of or in respect of Tax whether
      or not such liability has been discharged prior to Closing;

    

    (b) any
      liability (including a liability which is a primary liability of some other
      person and whether or not there is a right of recovery against another person)
      to make a payment or increased payment of Tax which would have arisen but for
      being satisfied, avoided or reduced by any Accounts Relief or Buyer's Relief;
      and

    

    (c) the
      disallowance, loss, clawback, reduction, restriction or modification of any
      Accounts Relief.

    

    "Lien"
      means, with respect to any asset, any mortgage, title defect or objection,
      lien,
      pledge, charge, security interest, hypothecation, restriction, encumbrance,
      right to acquire, right of pre-emption, option, conversion right, third party
      right or interest right of set off or counterclaim, equities, trust arrangement
      or any other type of preferential agreement (such as a retention of title
      arrangement) having similar effect or any rights exercisable by or claims by
      third parties.

    

    "Local
      GAAP" means all applicable laws and accounting conventions, standards,
      principles and practices generally accepted in the United Kingdom and all
      financial reporting standards, statements of standard accounting practice,
      interim statements, urgent issues task force abstracts, exposure drafts,
      technical releases and statements of recommended practice required to be used
      in
      the preparation of accounts which accounts are intended to show, when audited,
      a
      true and fair view as required by CA 1985. 

    

    "Past
      Practices" means accounting practices of the Company during the period from
      April 1, 2003 to Closing to the extent consistent with Local GAAP. 

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    "Permitted
      Liens" means (i) Liens for Taxes or governmental assessments, charges or
      claims the payment of which is not yet due, or for Taxes the validity of which
      are being contested in good faith by appropriate proceedings and for which
      adequate reserves are maintained on the Financial Statements in accordance
      with
      Local GAAP; (ii) statutory Liens of landlords and other Liens imposed by
      Applicable Law incurred in the ordinary course of business for sums not yet
      due
      or being contested in good faith and for which adequate reserves are maintained
      on the Financial Statements in accordance with Local GAAP; (iii) Liens
      relating to deposits made in the ordinary course of business to secure the
      performance of leases, trade contracts or other similar agreements; and
      (iv)  Liens securing executory obligations under any Lease that constitutes
      an "operating lease" under Local GAAP.

    

    "Person"
      means an individual, corporation, partnership, limited liability company,
      association, trust, unincorporated organization or other legal entity and
      includes a reference to that person's legal personal representatives and
      successors.

    

    "Related
      Agreements" means the Employment Agreements and all other agreements,
      instruments or documents executed in connection herewith and
      therewith.

    

    "Relevant
      Benefits" means any pension (including an annuity), lump sum, gratuity or other
      like benefit given or to be given on retirement or on death, or by virtue of
      a
      pension sharing order or provision, or in anticipation of retirement, or, in
      connection with past service, after retirement or death, or to be given on
      or in
      anticipation of or in connection with any change in the nature of the service
      of
      the employee in question. For the purpose of this definition "employee" includes
      (a) any officer of the company, any director of the company and any other person
      taking part in the management of the affairs of the company, and (b) a person
      who is to be or has been an employee; and the terms "service" and "retirement"
      are to be construed accordingly.

    

    "Relief"
      includes any relief, allowance, deduction, exemption or set-off relevant to
      the
      computation of any Liability for Tax, any credit against Tax or any right to
      a
      repayment of Tax.

    

    "Sellers'
      Solicitors" means Fladgate Fielder of 25 North Row, London W1K 6DJ.

    

    "Subsidiary"
      has the meaning ascribed to it in section 736 CA 1985.

    

    "Tax"
      or
      "Taxes" includes (without limitation):-

    

    (a) capital
      gains tax, corporation tax, customs and excise duties, income tax (including
      PAYE), inheritance tax, insurance premium tax, national insurance contributions,
      stamp duty, stamp duty land tax, stamp duty reserve tax and VAT; 

    

    (b) all
      former and foreign taxes;

    

    (c) all
      other
      levies, imposts, duties, charges or withholdings in the nature of taxes imposed
      by any person and any amount of tax which is the subject of or results in a
      charge, security or right to sell imposed by, or provided by statute to, a
      Governmental Authority over any of the assets of the Company;

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (d) any
      payment which the Company may be or become bound to make to any person in
      respect of any tax or as a result of any enactment relating to any tax;
      and

    

    (e) all
      interest, penalties, surcharges, fines and other charges relating to any of
      the
      above or to a failure to make any return, comply with any reporting requirements
      or supply any information in connection with any of the above and the cost
      of
      removing any charge or other encumbrance imposed by a Governmental
      Authority;  

    

    "Tax
      Return" means all notices, elections, accounts, computations, documentation,
      returns, reports, forms or other information required to be filed with respect
      to any Tax.

    

    "Tax
      Warranties" means the warranties set out in Section 3.10 of this
      Agreement.

    

    "Value
      Added Tax" or "VAT" means value added tax charged under VATA and any charge
      or
      tax similar to or replacing it.

    

    "VATA"
      means the Value Added Tax Act 1994 as in force in England and Wales and as
      amended from time to time.

    

    “Warranties”
      means the warranties given by the Warrantors set out in Article 3.

    

    "Warrantors"
      means Anthony Frere, Geoffrey Rose and David Zelkha.

    

    "Warrantors
      Disclosure Schedule" means the disclosure schedule in the agreed form (together
      with all documents annexed to it) with respect to this Agreement delivered
      by
      Sellers to the Buyer Parties immediately prior to Closing.

    

    SECTION 1.2.
      Index
      of Other Defined Terms.
      In
      addition to those terms defined above, the following terms shall have the
      respective meanings given thereto in the sections indicated below: 

     

    
      	
              Defined
                Term 

            	
              Section

            
	 	 
	
              "1st
                Deferred Purchase Price Payment Date"

            	
              2.6(a)

            
	
              "2nd
                Deferred Purchase Price Payment Date"

            	
              2.6(b)

            
	
              "Acquisition
                Sub"

            	
              Preamble

            
	
              "Agreement"

            	
              Preamble

            
	
              "Association"

            	
              8.4(b)

            
	
              "Balance
                Sheet"

            	
              3.6(a)

            
	
              "Business"

            	
              Recitals

            
	
              "Buyer"

            	
              Preamble

            
	
              "Buyer
                Material Adverse Effect"

            	
              4.1

            
	
              "Buyer
                Parties"

            	
              Preamble

            
	
              "Cap"

            	
              2.2(b)

            
	
              "Claim"

            	
              7.2(a)

            
	
              "Closing"

            	
              2.3

            
	
              "Closing
                Date"

            	
              2.3

            
	
              "Company"

            	
              Recitals

            

    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              Defined
                Term 

            	
              Section

            
	 	 
	
              "Company
                Permits"

            	
              3.8

            
	
              "Confidential
                Information"

            	
              5.3(a)

            
	
              "Financial
                Statements"

            	
              3.6(a)

            
	
              "ICDR"

            	
              8.4(b)

            
	
              "Initial
                Purchase Price"

            	
              2.2(a)

            
	
              "Luso"

            	
              5.3(h)(ii)

            
	
              "Management
                Accounts"

            	
              3.6(b)

            
	
              "Material
                Contracts"

            	
              3.12(a)

            
	
              "PAYE"

            	
              3.10(E)(i)

            
	
              "Properties"

            	
              3.14(a)(i)

            
	
              "Relevant
                Amount"

            	
              6.3(d)

            
	
              "Sellers"
                

            	
              Preamble

            
	
              "Shares"

            	
              Recitals

            
	
              "Superior
                Lease"

            	
              3.14(c)

            
	
              "Total
                Deferred Purchase Price"

            	
              2.2(b)

            
	
              "Total
                Purchase Price"

            	
              2.2(b)

            

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    ARTICLE 2

    

    PURCHASE
      AND SALE OF SHARES

    

    SECTION 2.1.
      Purchase
      and Sale of the Shares.

    

    (a) Upon
      the
      terms and subject to the conditions of this Agreement and in reliance upon
      the
      warranties and agreements herein set forth, Acquisition Sub agrees to purchase
      from Sellers and Sellers agree to sell to Acquisition Sub all of the legal
      and
      beneficial interest in the Shares with all rights attached or accruing to them
      at closing.

    

    (b) Sellers
      covenant to the Acquisition Sub that they have the right to transfer the whole
      of the legal and beneficial interest in and title to the Shares and the Sellers
      warrant to the Acquisition Sub that the Shares shall be sold free from all
      Liens.

    

    (c) The
      Sellers covenant to the Acquisition Sub that the Acquisition Sub will on Closing
      be entitled to exercise all rights attached or accruing to the Shares including,
      without limitation, the right to receive all dividends or other distributions
      or
      any return of capital declared, made or paid by the Company on or after the
      Closing Date.

    

    (d) Part
      I of
      the Law of Property (Miscellaneous Provisions) Act 1994 shall not apply for
      the
      purpose of this Agreement.

    

    SECTION 2.2.
      Purchase
      Price.
      

    

    (a) In
      consideration for the transfer of the Shares to Acquisition Sub, on the Closing
      Date, Buyer, on behalf of Acquisition Sub, shall pay the pounds sterling
      equivalent of US$5,500,000 calculated using the Exchange Rate (the "Initial
      Purchase Price"),
      which
      shall be paid by wire transfer as designated by Sellers in Section 2.2(a)(i)
      of the
      Warrantors Disclosure Schedule in immediately available funds; and

    

    (b) Subject
      to the terms and conditions set forth in Section 2.6, as additional
      consideration for the Shares sold hereunder, Buyer, on behalf of Acquisition
      Sub, shall pay to Sellers a maximum of £2,548,276 (the “Cap”)
      paid
      in cash (the “Total Deferred
      Purchase Price”
and,
      together with the Initial Purchase Price, the “Total
      Purchase Price”).
      

    

    (c) The
      Total
      Purchase Price shall be divisible amongst the Sellers as set out in Schedule
      A
      and the Buyer will not be required to ensure that the sum transferred is applied
      in paying the Sellers in accordance with their respective
      entitlements.

    

    SECTION 2.3.
      Closing.
      The
      closing (the "Closing")
      of the
      transactions contemplated by this Agreement shall take place at the offices
      of
      the Buyer's Solicitors (or at such other place as may be mutually agreed by
      the
      parties hereto) on the date of this Agreement after signature and exchange
      of
      this Agreement (the "Closing
      Date").

    

    SECTION 2.4.
      Deliveries
      by Sellers at Closing.
      At the
      Closing, Sellers shall deliver to Buyer on behalf of Acquisition Sub the items
      listed in Schedule 2.4 attached hereto. The Buyer is not obliged to complete
      unless each of the Sellers has fulfilled all of his or her obligations under
      this clause.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    SECTION 2.5.
      Deliveries
      by the Buyer Parties at Closing.
      At the
      Closing, the Buyer Parties shall deliver to Sellers the items listed in Schedule
      2.5 attached hereto. 

    

    SECTION 2.6.
      Deferred
      Purchase Price.
      The
      Buyer will pay to the Sellers the Total Deferred Purchase Price (subject always
      to the Cap) in three instalments consisting of the 1st
      Deferred
      Purchase Price, the 2nd
      Deferred
      Purchase Price and the 3rd
      Deferred
      Purchase Price, as follows:

     

    
      	 	
              a)

            	
              1st
                Deferred Purchase Price
                -
                The amount of the 1st
                Deferred Purchase Price will be the higher of £283,142 and an amount equal
                to: (i)(x) the EBIT 2007 minus (y) the EBIT 2006 (ii) minus the excess
                of
                (x) Interest Paid 2007 minus (y) Interest Paid 2006 (iii) multiplied
                by
                4.

            

    

     

    The
      resultant 1st
      Deferred
      Purchase Price amount will be paid in cash within 120 days following the end
      of
      the 1st
      Deferred
      Purchase Price Period (the “1st
      Deferred Purchase Price Payment Date”);
      provided, that the amount of the 1st
      Deferred
      Purchase Price in excess of £849,425 shall be paid on the one-year anniversary
      of the 1st
      Deferred
      Purchase Price Payment Date. If the 1st
      Deferred
      Purchase Price does not amount to £849,425, then the shortfall shall be the
“First Deficit.” 

     

    
      	 	
              b)

            	
              2nd
                Deferred Purchase Price
                -
                The amount of any 2nd
                Deferred Purchase Price will be the higher of £283,142 and an amount equal
                to: (i)(x) the EBIT 2008 minus (y) the EBIT 2007, (ii) minus the
                excess of
                (x) Interest Paid 2008 and (y) Interest Paid 2007 and (iii) multiplied
                by
                3. In the event that the EBIT 2007 is less than the EBIT 2006, the
                amount
                of the 2nd
                Deferred Purchase Price will be calculated by subtracting from EBIT
                2008
                the amount of EBIT 2006.

            

    

     

    The
      resultant 2nd
      Deferred
      Purchase Price amount will be paid in cash within 120 days following the end
      of
      the 2nd
      Deferred
      Purchase Price Period (the “2nd
      Deferred Purchase Price Payment Date”);
      provided that to the extent that the amount of the 2nd
      Deferred
      Purchase Price exceeds the sum of (a) £849,425; plus (b) the First Deficit, then
      the amount of such excess shall be paid on the one-year anniversary of the
      2nd
      Deferred
      Purchase Price Payment Date. If the 2nd
      Deferred
      Purchase Price does not amount to £849,425 then the shortfall shall be the
“Second Deficit.” 

     

    
      	 	
              c)

            	
              3rd
                Deferred Purchase Price
                -
                The amount of any 3rd
                Deferred Purchase Price will be the higher of £283,142 and an amount equal
                to: (i)(x) the EBIT 2009 minus (y) the EBIT 2008, (ii) minus the
                excess of
                (x) Interest Paid 2009 and (y) Interest Paid 2008 and (iii) multiplied
                by
                3. In the event that the EBIT 2008 is less than the EBIT 2007, the
                amount
                of the 3rd
                Deferred Purchase Price will be calculated by subtracting from EBIT
                2009
                the amount of EBIT 2007.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    The
      resultant 3rd
      Deferred
      Purchase Price amount will be paid in cash within 120 days following the end
      of
      the 3rd
      Deferred
      Purchase Price Period. If the 3rd
      Deferred
      Purchase Price is sufficient to permit payment of the First Deficit (to the
      extent not already paid) and the Second Deficit without the Total Deferred
      Purchase Price exceeding the Cap then such sums shall also be paid at that
      time.
      In no event shall the Total Deferred Purchase Price exceed
£2,548,276.

     

    ARTICLE 3

    

    WARRANTIES

    

    Warrantors
      hereby jointly and severally warrant to the Buyer Parties:

    

    SECTION 3.1.
      Organization
      and Qualification.
      The
      Company is a private company duly organized and validly existing under the
      laws
      of England and Wales and has all corporate power and authority to own, lease
      and
      operate its assets and to carry on its businesses as now being conducted. The
      particulars of the Company contained in Section
      3.1
      of the
      Warrantors Disclosure Schedule are true, accurate and not misleading. The
      Company is in good standing and qualified or licensed in each jurisdiction
      where
      the nature of the activities conducted by it or the character of the property
      or
      assets owned, leased or operated by it makes such qualification or licensing
      necessary. The Company has the necessary power and authority to operate its
      business as conducted at the date of this Agreement. Warrantors have heretofore
      delivered to Buyer (a) complete and correct copies of the Memorandum and
      Articles of Association, as currently in effect, of the Company; and (b)
      complete and correct copies of all resolutions passed or entered into which
      would be required to be forwarded to the UK registrar of companies pursuant
      to
      Section 380 of the CA 1985. 

    

    SECTION 3.2.
      Capitalization
      of the Company.

    

    (a) The
      authorized share capital of the Company consists of 7,000 Ordinary shares and
      1,000 class B Ordinary shares of £1 each, of which 7,000 Ordinary shares and 210
      class B Ordinary shares are issued. The Shares constitute all of the issued
      share capital of the Company. All of the Shares have been duly authorized and
      validly allotted and issued in compliance with Applicable Law, are fully paid
      or
      credited as fully paid.

    

    (b) There
      are
      no outstanding options, warrants, rights or other securities convertible into
      or
      exchangeable or exercisable for share or loan capital of the Company or any
      other commitments or agreements providing for the issuance, sale or transfer
      of
      share or loan capital of the Company or for the repurchase or redemption of
      share or loan capital of the Company. There are no agreements of any kind that
      obligate the Company to issue, purchase, redeem or otherwise acquire any of
      its
      share or loan capital.

    

    (c) All
      of
      the Shares are owned legally and beneficially by the Sellers. There
      is
      no Lien on, over or affecting any of the Shares or any unissued shares,
      debentures or other securities of the Company. Upon consummation of the
      transactions contemplated hereby, the Shares will be transferred to Acquisition
      Sub free and clear of all Liens. 

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    SECTION 3.3.
      Subsidiaries,
      Joint Ventures and Branches.
      

    

    (a) The
      Company does not have and never has had any Subsidiaries. The Company does
      not
      hold any legal or beneficial interest in and is not a member of any Corporation,
      partnership, joint venture or other unincorporated association or other entity,
      whether in the United Kingdom or otherwise and is not party to any agreement
      to
      become a member of the same. If and to the extent the foregoing warranty is
      not
      accurate, the warranties in this Section 3 will be deemed repeated mutatis
      mutandis in respect of such interest. 

    

    (b) The
      Company has no liability as a former member, officer or shadow director of
      any
      person nor are there any circumstances in which such liability could
      arise.

    

    (c) No
      person
      is or has been a shadow director of the Company within the meaning of section
      741(2) of the CA 1985.

    

    (d) The
      Company has no branches or representative offices save as referred to in
Section
      3.1
      of the
      Warrantors Disclosure Schedule and carries on all its business under its
      corporate name.

    

    SECTION 3.4.
      Authority
      Relative to this Agreement.
      The
      Sellers have the legal capacity to execute, deliver and perform their
      obligations under this Agreement and each document to be executed by the Sellers
      individually or together at or before Closing in accordance with this Agreement
      and such execution, delivery, performance and the consummation by Sellers of
      the
      transactions contemplated hereby have been duly authorized by all requisite
      action on the part of Sellers. This Agreement when executed, will constitute
      a
      legal, valid and binding agreement of each of the Sellers enforceable against
      them in accordance with its terms.

    

    SECTION 3.5.
      Consents
      and Approvals; No Violations.

    

    (a) Except
      as
      set forth in Section 3.5(a)
      of the
      Warrantors Disclosure Schedule, no filing with or notice to and no permit,
      authorization, consent or approval of any Governmental Authority is necessary
      for the execution and delivery by Sellers of this Agreement or the consummation
      by Sellers of the transactions contemplated hereby, except where the failure
      to
      obtain such permits, authorizations, consents or approvals or to make such
      filings or give such notice would not, individually or in the aggregate, have
      a
      Company Material Adverse Effect.

    

    (b) Neither
      the execution, delivery and performance of this Agreement or any Related
      Agreement by Sellers nor the consummation by Sellers of the transactions
      contemplated hereby will (i) conflict with or result in any breach of any
      provision of the constitutional documents of the Company, (ii) except as
      set forth in Section 3.5(b)
      of the
      Warrantors Disclosure Schedule, result in a violation or breach of conflict
      with
      or constitute (with or without due notice or lapse of time or both) a default
      (or give rise to any right of termination, amendment, cancellation or
      acceleration or Lien) under any of the terms, conditions or provisions of any
      Contract to which the Company is a party or by which the Company may be bound,
      (iii) violate any Applicable Law binding on or applicable to the Company or
      (iv) result in the loss of the benefits of any Company Permit.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    SECTION 3.6.
      Financial
      Statements.
      

    

    (a) Copies
      of
      the (i) balance sheet dated March 31, 2006 (the "Balance
      Sheet")
      and
      profit and loss account for the Company for the years ended March 31, 2006
      and
      2005, audited by an independent, registered public accounting firm together
      with
      the notes and directors' report and auditors' report and all other documents
      or
      statements annexed thereto or incorporated therein, have been provided to Buyer
      and are set forth in Schedule
      3.6(a)
      (collectively, the “Financial
      Statements”)
      (the
      "date
      of the Financial Statements"
      being
      taken to mean March 31, 2006).

    

    (b) A
      copy of
      the profit and loss account for the Company for the period ended June 30, 2006
      has been provided by Buyer and is set forth in Schedule 3.6(b) (the
“Management
      Accounts”)
      (the
      "date
      of the Management Accounts"
      being
      taken to mean June 30, 2006).

    

    (c) The
      Financial Statements (i) are complete, (ii) were prepared in conformity with
      Local GAAP applied on a consistent basis, (iii) subject to clause (ii), in
      accordance with Past Practice, (iv) give a true and fair view of the financial
      position and results of operations of the Company, as of the dates thereof
      and
      for the periods then ended as referred to therein, and (v) have been audited
      in
      accordance with the CA 1985. 

    

    (d) Other
      than to the extent disclosed or reserved for in the Balance Sheet, or otherwise
      disclosed in the Warrantors Disclosure Schedule, the Company has no Liabilities,
      commitments or obligations of any nature whatsoever (whether accrued, absolute,
      contingent, known, unknown, asserted, unasserted or otherwise, and whether
      due
      or to become due) except Liabilities, commitments and obligations incurred
      in
      the ordinary course of business since the date of the Financial
      Statements.

    

    (e) The
      books
      of account and other financial records of the Company are up to date, complete
      and accurate, are in the Company's possession or under its control and contain
      all matters required to be entered in them by the CA 1985, Local GAAP and other
      relevant legislation.

    

    (f) The
      Company's accounting reference date is set out in the Warrantors Disclosure
      Schedule and has not at any time been any other date.

    

    (g) The
      Company's profits or loss as shown by the accounts and by the Company's audited
      profit and loss account for the previous three financial periods delivered
      to
      the Buyer and the trend of profits thereby indicated have not (save as disclosed
      in such accounts) been affected by changes or inconsistencies in Local GAAP,
      by
      the inclusion of non-recurring items of expenditure or income, by transactions
      of an unusual nature or entered into otherwise than on normal commercial terms
      or by any other factors rendering the Company's profits or loss for all or
      any
      part of such periods unusually high or low.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    SECTION 3.6.1
      Management
      Accounts.
      

    

    The
      Management Accounts:

    

    (a) have
      been
      prepared on a basis consistent with the Financial Statements as regards bases
      and policies of accounting;

    

    (b) except
      as
      disclosed on Schedule
      3.6.1(b),
      have
      been prepared in accordance with GAAP;

    

    (c) give
      a
      fair view of the profits of the Company for the period from April 1, 2006 to
      June 30, 2006; and

    

    (d) are
      not
      affected by an extraordinary, exceptional or non-recurring item.

    

    SECTION 3.7.
      Litigation.
      

    

    (a) Except
      as
      disclosed in Section
      3.7(a)
      of the
      Warrantors Disclosure Schedule, there is, and has been during the 2 years
      preceding the date of this Agreement, no suit, claim, action, proceeding or
      investigation pending or, to the Knowledge of Warrantors, threatened (a) by
      or
      against the Company or any director of the Company or any person for whose
      acts
      or defaults the Company may be vicariously liable or any of its assets or (b)
      by
      or against any of the Sellers and affecting the Business before any Governmental
      Authority in which the amount of damages asserted exceeds £25,000 and to the
      Knowledge of Warrantors there is no matter or fact in existence which might
      give
      rise to the same.

    

    (b) The
      Company has not given any undertaking to any court or to any third party arising
      out of any legal proceedings and there is no order, judgment, injunction, decree
      or arbitral award of any Governmental Authority outstanding against the Company
      or any of its property or assets.

    

    (c) There
      are
      no claims or applications pending or threatened in respect of rectification
      of
      the shareholders' register of the Company pursuant to Section 359 CA
      1985.

    

    SECTION 3.8.
      Compliance
      with Applicable Law.
      

    

    Except
      as
      set forth in Section 3.8
      of the
      Warrantors Disclosure Schedule, the Company holds all permits, licenses,
      variances, exemptions, orders, approvals, certificates, consents, filing of
      notifications, reports and assessments, registration or authorization necessary
      for the lawful conduct of the Business, its ownership, use, possession or
      occupation of any asset or the performance of this Agreement (the "Company
      Permits")
      required for the proper carrying on of its business in the United Kingdom and
      each Company Permit is valid, in force unconditional or subject only to a
      condition that has been fulfilled and under which no further action is required.
      Except as set forth in Section 3.8
      of the
      Warrantors Disclosure Schedule, (a) there has been no violation of or default
      with respect to any Applicable Law or the memorandum and articles of association
      relating to the Company, or the operation of the Business, nor, to the Knowledge
      of Warrantors, is there any threatened claim of such violation or default which
      has or could have an adverse effect on the assets of the Company or the
      Business, (including any investigation) or any basis therefore and (b) the
      Business has been conducted in compliance with all Applicable Laws.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    SECTION 3.9.
      Labour
      Matters.

    

    Employees
      

    

    (a) The
      employees listed in Section
      3.9(a)
      of the
      Warrantors Disclosure Schedule were all employed or had been offered employment
      by the Company as at Closing and, other than such employees, no person is an
      employee of the Company, and, except as disclosed in Section
      3.9(a)
      of the
      Warrantors Disclosure Schedule:

    

    (i) the
      Company has no subsisting Contracts with any apprentices, trainees, consultants,
      sub-contractors, non-executive directors, secondees, night workers (for the
      purpose of the Working Time Regulations 1998) volunteers or persons who
      personally perform work for the Company (except for any such Contract that
      provides for a payment by the Company of less than ₤3,500 per annum);
      and

    

    (ii) no
      person
      is currently engaged by the Company under a contract for services or as a worker
      or contract worker provided by an agency (except for any such Contract that
      provides for a payment by the Company of less than ₤3,500 per
      annum).

    

    (b) Except
      as
      disclosed in Section 3.9(b) of the Warrantors Disclosure Schedule, each employee
      is employed by the Company exclusively in the business of the
      Company.

    

    (c) Other
      than David Zelkha, and except as disclosed in Section 3.9(c) of the Warrantors
      Disclosure Schedule, each employee works on a full time basis.

    

    (d) The
      Company has maintained current and adequate records in relation to its employees
      and workers including, without limitation, records relating to statutory sick
      pay, statutory maternity pay, disciplinary matters, grievances, health and
      safety, working time and parental leave. 

    

    (e) Except
      as
      disclosed in Section
      3.9(e)
      of the
      Warrantors Disclosure Schedule, there are no directors, officers or employees
      of
      the Company who are or who have notified the Company that they will be absent
      for one month or more on secondment or other leaves of absence including sick
      leave (other than normal holidays, maternity, paternity or adoption
      leave).

    

    (f) The
      Company has not within the period of 12 months preceding the date of this
      Agreement:-

    

    (i) been
      a
      party to any relevant transfer as defined in the Transfer of Undertakings
      (Protection of Employment) Regulations 1981 for the purpose of any transfers
      of
      undertakings taking place before 6 April 2006, and in the Transfer of
      Undertakings (Protection of Employment) Regulations 2006 for the purpose of
      any
      transfers or service provision changes taking place on or after 6 April
      2006;

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (ii) failed
      to
      comply with any duty to inform and consult any appropriate representative
      arising under either of the said Regulations.

    

    Terms
      and Conditions

    

    (g) Copies
      of
      the contracts of employment (or standard terms) staff handbooks, policies and
      procedures (including, without limitation, any disciplinary or grievance policy
      and procedure and any equal opportunities policies and procedures) which apply
      to the employees listed in Section
      3.9(a)
      of the
      Warrantors Disclosure Schedule are attached to the Warrantors Disclosure
      Schedule, all of which are true, complete and accurate. The Warrantors warrant
      that other than such documents and Employee Plans there are no other terms
      and
      conditions of employment or engagement applicable to such listed persons with
      respect to their current employment by the Company.

    

    (h) Except
      as
      disclosed in Section
      3.9(h)
      of the
      Warrantors Disclosure Schedule, the Company has or within the last 3 years
      has
      had no profit-sharing, share option or share incentive schemes or other Employee
      Plans in relation to any director, employee or worker or former director,
      employee or worker or any person associated with it. No obligations or
      liabilities under or in relation to any such share option or share incentive
      schemes (but excluding obligations or liabilities under or in relation to any
      other Employee Plan) shall remain with the Company after the Closing
      Date.

    

    Termination
      

    

    (i) The
      contract of employment of each of the employees can be terminated without the
      payment of damages or compensation (other than that payable under statute)
      by
      giving three months' notice or less.

    

    (j) No
      employee will be entitled as a result of or in connection with any change of
      control of the Company or as a result of this Agreement:

    

    (k) to
      terminate his employment with the Company; or

    

    (l) to
      treat
      himself as being dismissed on the ground of redundancy or otherwise released
      from any obligation to the Company.

    

    (m) no
      employee of the Company has given/received written notice of his or her
      intention to resign/dismissal prior to the Closing Date or within twelve (12)
      months thereafter or, to the Knowledge of Warrantors, is intending to do
      so.

    

    Changes
      in Remuneration

    

    (n) The
      aggregate level of remuneration payable to Employees has not increased by more
      than 5% per cent within the last 12 months.

    

    (o) The
      Company is not obliged to increase the remuneration payable to any employee
      on
      an annual basis.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (p) The
      Company has not within the last 12 months (i) increased or offered to increase
      the remuneration or benefits of any employee, or (ii) offered or sought to
      alter
      any of the terms and conditions of employment of any employee.

    

    (q) the
      Company is not a party to any written or oral agreement, or arrangement imposing
      a legal obligation on it to, following Closing, to make any bonus or incentive
      payments or any benefits of any kind or any other payments to or on behalf
      of,
      any of its former or present officers or employees other than in accordance
      with
      annual pay reviews.

    

    Accrued
      and Potential Liabilities

    

    (r) There
      is
      no liability, outstanding or contingent or anticipated, to any present or former
      employee or worker other than remuneration accrued for the current wage or
      salary period or for reimbursement of normal business expenses.

    

    (s) No
      present or former employee or worker or any applicant for any role in the
      Company has issued or threatened to issue proceedings against the Company
      arising out of an act or omission by the Company on or before the date of this
      Agreement and to the Knowledge of the Warrantors there are no facts or
      circumstances that might give rise to the same.

    

    (t) So
      far as
      the Company is aware, none of the employees is in breach of his contract of
      employment or any other obligation or duty he owes to the Company.

    

    (u) No
      employee has any current disciplinary sanction in force against him or is the
      subject of any current disciplinary investigation or procedure (whether under
      the Company's disciplinary policy, the Employment Act 2002 (Dispute Resolution)
      Regulations or otherwise), and no employee has brought a grievance or otherwise
      raised a complaint against the Company or any of its employees, officers or
      workers within the last 2 years (whether under the Company's grievance policy,
      the Employment Act 2002 (Dispute Resolution) Regulations 2004 or
      otherwise).

    

    (v) There
      are
      no past, current, pending or, to the Knowledge of Warrantors, threatened facts
      which might give rise to any charges, applications, claims, complaints,
      petitions or written grievances before any Governmental Authority or otherwise
      relating to or predicated upon a violation of Applicable Law regarding
      employment, employment practices, consultation and terms and conditions of
      employment, including charges of unfair labour practices, unlawful discharge,
      unfair dismissal, discrimination, harassment or hostile work environment, or
      failure to consult which applications, claims, charges, applications, claims,
      complaints, petitions or grievances have had or could have, individually or
      in
      the aggregate, a Company Material Adverse Effect, nor to the Knowledge of
      Warrantors, is there any basis for any such charges, applications, claims,
      complaints, petitions or grievances..

    

    (w) No
      present or former employee or worker has at the Closing Date any:

    

    
      	 	
              (i)

            	
              accrued
                rights to holiday pay or to pay in lieu of
                holidays;

            

    

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    
      	 	
              (ii)

            	
              advance
                or has received any financial assistance from the
                Company;

            

    

    

    
      	 	
              (iii)

            	
              outstanding
                claim under any PHI or medical expenses insurance scheme provided
                by the
                Company;

            

    

    

    
      	 	
              (iv)

            	
              right
                now:-

            

    

    

    A. to
      return
      to work (whether for reasons connected with maternity, paternity, adoption
      or
      parental leave or absence by reason of illness or incapacity, secondment or
      otherwise;

    

    B. to
      be
      reinstated or re-engaged by the Company; or

    

    C. to
      any
      other compensation.

    

    
      	 	
              (v)

            	
              To
                the Knowledge of Warrantors, none of the employees is suffering from
                or
                has suffered from within the last 12 months any medical or other
                condition
                which impairs or might impair his or her ability to continue to perform
                their employment duties and/or which require or might require any
                arrangement or adjustment within the
                workplace.

            

    

    

    (x) No
      arrangements or adjustments have been made, nor to the Knowledge of Warrantors,
      need or will need to be made by virtue of the provisions of the Disability
      Discrimination Act 1995 to any of the Employees.

    

    (y) No
      employee has at any time in the last six months exercised a right to request
      a
      contract variation under section 80F of the Employment Rights Act
      1996.

    

    Restrictive
      Covenants

    

    (z) So
      far as
      the Warrantors are aware, no employee is currently bound by a restrictive
      covenant entered into with a former employee or any other business or
      undertaking.

    

    (aa) No
      person
      who was a senior employee of the Company and who has left its employment in
      the
      last 12 months is currently bound by a restrictive covenant containing
      non-compete, non-disclosure and/or non-solicitation provisions which on the
      face
      of it is enforceable by the Company.

    

    Trade
      Unions, representation, collective issues and disputes

    

    (bb) Except
      as
      disclosed in Section 3.9(bb)
      of the
      Warrantors Disclosure Schedule, the Company is not a party to any collective
      bargaining agreement or other trade union works council or employee
      representative body contract applicable to persons employed by the Company.
      To
      the Knowledge of Warrantors, no activities or proceedings of any trade union
      to
      organize any employees of the Company have occurred and no valid requests for
      union or works council or other employee representative body recognition have
      been received nor has the Company done any act that might be construed as
      recognition. The Company is not involved in any industrial or trade dispute
      or
      any dispute or negotiation with any trade union or association of trade unions
      or organization or works council or body of employees, and there are no
      circumstances likely to give rise to any such dispute.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    (cc) The
      Company has not within the period of 12 months preceding the date of this
      Agreement:

    

    (i) given
      notice of any redundancies to the Secretary of State or

    

    (ii) started
      consultations with any appropriate representative

    

    under
      the
      provisions of Part IV of the Trade Union and Labour Relations (Consolidation)
      Act 1992, nor has the Company failed to comply with such obligation under that
      Part.

    

    Training

    

    (dd) The
      Company does not have and never has had any training scheme, arrangement or
      proposal in respect of which a levy is currently (or may as a result of Closing
      become) payable by the Company under the Industrial Training Act
      1982.

    

    Asylum
      and Immigration

    

    (ee) All
      Employees have leave to enter and remain in the United Kingdom and are entitled
      to work in the United Kingdom under the Asylum and Immigration Act
      1996.

    

    SECTION 3.10.
      Taxes.
      Except
      as set forth in Section 3.10
      of the
      Warrantors Disclosure Schedule:

    

    (a) General
      and Compliance Matters

    

    (i) The
      Company has within the relevant time limits correctly filed all Tax Returns
      that
      it was required to file under Applicable Law. All such Tax Returns were when
      provided, correct, accurate and complete in all material respects and are not
      the subject of any material dispute nor, to the Knowledge of Warrantors, are
      likely to become the subject of any material dispute with any Governmental
      Authority. All Taxes which have fallen due for payment by the Company within
      the
      last six years (whether or not shown on any Tax Return and including Tax payable
      in instalments) have been paid in full on the due date therefore. The Company
      is
      not currently the beneficiary of any extension of time within which to file
      any
      such Tax Return. There are no Liens on the assets of the Company that arose
      in
      connection with any failure (or alleged failure) to pay any Tax. The Company
      has
      created and preserved all records required to be preserved under Applicable
      Law
      and to the Knowledge of the Warrantors all such records remain true, complete
      and accurate. In particular, without limitation, the Company has sufficient
      records to enable it to calculate any present, or so far as is reasonably
      possible, future liability to Tax of the Company or its entitlement to any
      deduction, relief or repayment of Tax. All Tax Returns made by the Company
      have
      been agreed with the appropriate Governmental Authority. The Company has not
      within the past six (6) years paid or become liable to pay, nor to the Knowledge
      of the Warrantors are there any circumstances by reason of which the Company
      is
      likely to become liable to pay, any penalty, fine, surcharge or interest in
      relation to a pre-Closing Liability for Tax. All material or unusual
      arrangements, permissions, dispensations, concessions, agreements or
      undertakings relating to Taxes between the Company and any Governmental
      Authority have been disclosed in the Warrantors Disclosure Schedule and no
      such
      arrangement disclosed in the Warrantors Disclosure Schedule is to the Knowledge
      of Warrantors liable to be withdrawn for any reason. The Company has not taken
      any action which has had or might have the result of altering, prejudicing
      or in
      any way disturbing any arrangement or agreement which it has previously
      negotiated with any taxation authority and the Warrantors Disclosure Schedule
      contains details of such arrangements or agreements.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (ii) All
      clearances and rulings obtained by the Company have been properly obtained
      and
      all information supplied to any relevant Governmental Authority in connection
      with such clearances was complete and accurate in all respects and any
      transaction for which such clearance was obtained has been carried out only
      in
      accordance with the terms of the clearance given therefore and the application
      on which the clearance was based.

    

    (iii) The
      Company has properly withheld and within the relevant time limits paid or
      accounted for all Taxes required to have been withheld and paid or accounted
      for.

    

    (iv) There
      is
      no dispute, audit, investigation, proceeding or claim concerning any Tax
      Liability of the Company either (i) claimed or raised by any Governmental
      Authority in writing or (ii) to the Knowledge of the Warrantors, threatened
      based upon contact with any such Governmental Authority. The Company has not
      waived any Statute of Limitations in respect of Taxes or agreed to any extension
      of time with respect to a Tax assessment or deficiency.

    

    (v) The
      Company is not a party to or bound by any tax indemnity, tax sharing or tax
      allocation agreement and, to the Knowledge of Warrantors, is not nor will it
      become liable to pay or make reimbursement or indemnity in respect of any Tax
      arising in respect of income or events prior to Closing for which it is not
      primarily liable in consequence of the failure by any other person (other than
      Buyer, a company connected with the Buyer, or the Company) to discharge that
      Tax.

    

    (vi) The
      Company has not within the past six years suffered any investigation audit
      or
      visit by any other taxation or excise authority and the Company has not received
      notice that any such investigation will be instituted.

    

    (vii) The
      Company has made and submitted each claim, disclaimer, election, notice and
      consent assumed to have been made for the purposes of the Financial
      Statements.

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (viii) The
      Company has not and will not become liable to pay or make reimbursement or
      indemnity in respect of any taxation for which it is not primarily liable in
      consequence of the failure by (1) any person connected with the Sellers or
      (2)
      to the Knowledge of Warrantors, any other person (other than, in either case,
      a
      member of the Buyer's Group or the Company after Closing) to discharge that
      taxation within any specified period or otherwise, where such taxation relates
      to a profit, income or gain, transaction, event, omission or circumstances
      arising, occurring or deemed to arise or occur (whether wholly or partly) prior
      to Closing.

    

    (ix) The
      Company is a close company as defined in section 414 ICTA but it:

    

    (A) is
      not
      and has never been a close investment holding company for the purposes of
      Section 13A of ICTA; and

    

    (B) has
      not
      made any loan to a participator or any associate for the purposes of Section
      419
      of ICTA or provided any payment or benefit to a participant which has or could
      be treated as a distribution for the purposes of Section 418 of
      ICTA.

    

    (b) Deductibility

    

    (i) The
      Company has no securities (within the meaning of Part VI ICTA) in issue where
      any interest or other distribution out of assets in respect of such securities
      is either not deductible or is deductible other than on the same basis as such
      payments are recognized in the accounts of the Company and the Company has
      not
      agreed to issue any such securities.

    

    (ii) All
      rents, annual payments and other sums of a material amount and of an income
      nature paid since March 31, 2006 and payable by the Company prior to Closing
      (other than entertainment expenditure or other categories of expenditure
      incurred in the ordinary course of trade that are not generally deductible
      for
      tax purposes) are wholly allowable as deductions or charges in computing income
      for the purposes of Income Tax.

    

    (c) US
      Tax
      Warranties

    

    The
      Company is not, and has not at any time been, required to file Tax Returns
      in
      the United States. 

    

    (d) Value
      Added Tax

    

    (i) Registration.
      The
      Company is duly registered for the purposes of Value Added Tax with quarterly
      prescribed accounting periods and such registration is not subject to any
      conditions imposed by or agreed with any Governmental Authority and the Company
      is not (nor, to the Knowledge of Warrantors, are there any circumstances by
      virtue of which any of them may become) under a duty to make payments other
      than
      on a quarterly basis.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (ii) VAT
      group.
      The
      Company is not, nor has it been treated for Value Added Tax purposes as, a
      member of any group of companies. 

    

    (iii) Security.
      The
      Company has not at any time been required to give security in respect of Value
      Added Tax.

    

    (iv) The
      Company is not nor was it partially exempt in its current or preceding value
      added tax year and to the Knowledge of Warrantors there are no circumstances
      by
      reason of which the Company might not be entitled to credit for all Value Added
      Tax chargeable on supplies received and imports and acquisitions made (or agreed
      or deemed to be received or made) by it in its current or preceding value added
      tax year.

    

    (v) No
      direction has been or could have been made to the Company under paragraph 1
      of
      Schedule 6 or paragraph 1 of Schedule 7 to VATA.

    

    (vi) The
      Warrantors Disclosure Schedule sets out full and accurate particulars of all
      assets held by the Company which are capital items for the purposes of Part
      XV
      of the Value Added Taxes Regulations 1995 (SI 1995/2518) and of all adjustments
      that have arisen under that Part XV.

    

    (vii) The
      Company has not been given any penalty liability notice within Section 64 VATA,
      any surcharge liability notice within Section 59 or 59A VATA or any written
      warning within Section 76(2) VATA.

    

    (e) PAYE

    

    (i) The
      Company has operated properly the United Kingdom Pay As You Earn and complied
      with all of its obligations in respect of National Insurance and all similar
      systems in any jurisdiction which applied to the Company ("PAYE")
      making
      all deductions and accounting within the correct time limits for all sums in
      respect of all payments (including notional payments) to, or treated as made
      to,
      employees and directors (including ex-employees and former directors of them)
      and has accounted within the correct time limits to the relevant Governmental
      Authority for all Tax so deducted or required to be accounted for and all Tax
      chargeable on benefits provided to employees or directors (including former
      employees or directors) of the Company or others and all returns required and
      regulations made thereunder have been made within the correct time limits and
      were at the time of submission (and to the Knowledge of Warrantors remain)
      accurate and complete in all material respects and the Company has not been
      subject to a PAYE audit in the last two (2) years. 

    

    (ii) The
      Company is not under an obligation to pay nor has it since March 31, 2006 paid
      or agreed to pay any compensation for loss of office or any gratuitous payment
      not deductible in computing its income for the purposes of Income
      Tax.

    

    (iii) The
      Warrantors Disclosure Schedule sets out details of all current dispensations
      or
      notices granted by any Governmental Authority to the Company.

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (iv) No
      employee or director or former employee or director of the Company or any person
      associated with any of them holds or has within the last 3 years held any shares
      or securities or options over or interests in any shares or securities of the
      Company and the Company could not be liable after Closing to pay national
      insurance contributions or account for income tax or national insurance under
      PAYE in respect of, or the consequence of, any event occurring in relation
      to,
      any such shares, securities, options or interests.

    

    (f) Groups
      of Companies

    

    (i) The
      Company is not and has never been a member of a group of companies for any
      Tax
      purpose.

    

    (g) Overseas
      Interests

    

    Residence.
      The
      Company is, and, to the Knowledge of Warrantors, has throughout the past seven
      years been, resident for Income Tax purposes in the jurisdiction in which it
      is
      incorporated and has not been treated as resident or subject to Income Tax
      in
      any other jurisdiction. The Company has no branch, agency or permanent
      establishment outside the jurisdiction in which it is incorporated.

    

    (h) Anti-Avoidance

    

    (i) No
      transactions or arrangements involving the Company or any connected company
      have
      taken place or are in existence which are such that any transfer pricing
      legislation have been or could be applied to them. 

    

    (ii) The
      Company has not been a party to any transaction the main purpose of which,
      or
      one of the main purposes of which was the avoidance of any tax or duty or the
      obtaining of a tax advantage, whether as part of a scheme, arrangement, series
      of transactions or otherwise.

    

    (i) Stamp
      Duty and Stamp Duty Reserve Tax

    

    (i) All
      documents in the enforcement of which the Company may be interested have been
      submitted for adjudication (where desirable) and duly stamped in the United
      Kingdom or elsewhere where any such document attracts duty and no such document
      has not been stamped by reason of it being executed and retained
      abroad.

    

    (ii) There
      has
      been no conditional agreement within section 87(1) Finance Act 1986 of the
      United Kingdom which could lead to the Company incurring a liability to stamp
      duty reserve tax or becoming so accountable.

    

    (iii) No
      relief
      from stamp duty or stamp duty land tax previously granted will or may be
      withdrawn on or in connection with the sale of the Company pursuant to this
      Agreement.

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (iv) The
      Company has not since 1 December 2003:

    

    (A) entered
      into a contract to purchase any land or an agreement to take a lease of any
      land
      which in either case has not been completed by a conveyance or the grant of
      a
      lease; or

    

    (B) entered
      into a land transaction where there will or may be an obligation in the future
      to make a further land transaction return; or

    

    (C) applied
      to defer payment of stamp duty land tax under section 90 Finance Act
      2003.

    

    (j) Loan
      relationships and derivative contracts

    

    (i) All
      debits and credits in respect of the Company's loan relationships, within the
      meaning of Chapter II of Part IV of the Finance Act 1996 of the United Kingdom
      or derivative contracts, within the meaning of Paragraph 2 Schedule 26 of the
      Finance Act 2002 of the United Kingdom, are capable of being brought into
      account by the Company as debits or credits for the purposes of Chapter II
      Part
      IV Finance Act 1996 or Schedule 26 Finance Act 2002 (as the case may be) as
      and
      to the extent that they are from time to time recognized in the Company's
      statutory accounts (assuming that the accounting policies and methods adopted
      for the purpose of the accounts continue to be so adopted).

    

    (ii) In
      respect of every loan relationship (as defined by Section 81 of the Finance
      Act
      1996 of the United Kingdom) to which the Company is or has been a party, the
      Company has used in its statutory accounts an accruals basis of accounting
      which
      is an authorized accounting method for the purposes of Chapter II of Part IV
      of
      CA 1985 and has used that method consistently and without variation for all
      relevant accounting periods.

    

    (iii) Profits
      and losses on all qualifying contracts (as defined for the purposes of Chapter
      II of Part IV of the Finance Act 1994) and derivative contracts (as defined
      in
      Finance Act 2002 of the United Kingdom, Schedule 26, paragraph 2) which are
      or
      have at any time been held by the Company are and have at all times been
      computed on an accruals basis of accounting which satisfies the requirements
      of
      section 156 of the Finance Act 1994 and that Schedule 26.

    

    (k) Inheritance
      Tax

    

    Neither
      the assets nor the shares of the Company are or may be subject to any charge
      by
      virtue of section 237 Inheritance Tax Act 1984, no person has or may have the
      power under section 212 Inheritance Tax Act 1984 to raise inheritance tax by
      sale or mortgage of, or a terminable charge on, any of the Company's assets
      or
      shares and the Company has not made any transfer of value to which Part IV
      Inheritance Tax Act 1984 might apply.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (l) Intangible
      Assets

    

    All
      debits and credits in respect of the Company's intangible fixed assets (as
      defined in paragraph 3 Schedule 29 Finance Act 2002 and to which that Schedule
      applies) are brought into account by the Company as debits or credits (as the
      case may be) for the purpose of Schedule 29 Finance Act 2002 at the time and
      to
      the extent that such debits and credits are recognized in the statutory accounts
      of the Company.

    

    SECTION 3.11.
      Brokers.
      No
      broker, finder or investment banker is entitled to any brokerage, finder's
      or
      other fee or commission in connection with the transactions contemplated by
      this
      Agreement or any Related Agreements.

    

    SECTION 3.12.
      Material
      Contracts.
      

    

    (a) Section 3.12
      of the
      Warrantors Disclosure Schedule lists all Contracts described in
      clauses (i) through (xvii) below to which the Company is a party
      or is otherwise bound and which have not, as of the date hereof, been terminated
      or fully performed ("Material
      Contracts").
      A
      true, correct and complete copy of each such Material Contract has been made
      available to Buyer:

    

    (i) any
      Contracts providing for a commitment of employment or consultation services
      requiring payments in any one year in excess of £50,000;

    

    (ii) any
      Contracts with any Person containing any provision or covenant prohibiting
      or
      materially limiting the ability of the Company to engage in any business
      activity or compete with any Person other than by reason of
      confidentiality;

    

    (iii) any
      Contracts relating to any Indebtedness of the Company or under which any Lien
      (other than Permitted Liens) has been imposed on any asset of the
      Company;

    

    (iv) any
      Contracts providing for (i) the future disposition or acquisition of any
      assets or properties of the Business, other than dispositions or acquisitions
      of
      Inventory in the ordinary course of business, and (ii) any merger or other
      business combination;

    

    (v) any
      Employee Plans for the benefit of any of the directors, officers or employees
      of
      the Company including, but not limited to, any profit sharing, stock option,
      stock purchase, stock appreciation, deferred compensation, pension, retirement,
      executed compensation, severance or other plan or arrangement;

    

    (vi) any
      Contract under which the Company has loaned or advanced or is committed to
      advance or loan money to its Affiliates, directors, officers, employees or
      any
      connected person of any of them;

    

    (vii) any
      Contract between or among the Company and any of its Affiliates which is not
      of
      an entirely arm's length nature;

    

    (viii) any
      Contract for the lease of personal property to or from any Person;

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (ix) any
      Contract (other than this Agreement) that limits or contains restrictions on
      the
      ability of the Company to incur or suffer to exist any Lien (other than in
      respect of the Company's rights under such Contract), to purchase or sell any
      assets, to change the lines of business in which it participates or engages
      or
      to engage in any merger or other business combination; 

    

    (x) any
      other
      Contracts (excluding warranty obligations of the Company) that (A) involve
      the payment, pursuant to the terms of any such Contract, (1) by the Company
      of
      more than £25,000 annually or (2) to the Company of more than £100,000
      annually and (B) cannot be terminated within sixty (60) days after giving
      notice of termination without resulting in any cost or penalty to the
      Company;

    

    (xi) any
      Contract concerning the issuance of a permit, franchise or license which is
      material to the Business requiring an annual payment of £25,000 Sterling or more
      in fees, royalties or otherwise by the Company;

    

    (xii) any
      Contract the particulars of which are required to be furnished to any
      competition or regulatory authority and any undertaking that has been given
      or
      order made pursuant to any competition legislation or in response to any request
      for information or statement of objection from any Governmental
      Authority;

    

    (xiii) any
      bid,
      tender, proposal or offer which, if accepted, will result in the Company
      becoming a party to any agreement or arrangement which would fall within this
      Section 3.12(a);

    

    (xiv) any
      Contracts pursuant to which the Company has guaranteed, indemnified or given
      surety for the performance or payment of any obligation of any Person (other
      than Contracts relating to Indebtedness) or pursuant to which another person
      has
      guaranteed, indemnified or given surety for the performance or payment of any
      obligation of the Company (other than Contracts relating to
      Indebtedness);

    

    (xv) any
      Contracts not otherwise described in any of clauses (i) through (xiv) above
      that
      were not made in the ordinary course of business and at arm's length or
      different from the Company's standard terms of business;

    

    (xvi) any
      Contract not otherwise described in any of clauses (i) through (xv) above under
      which the consequences of a default or termination could have a Company Material
      Adverse Effect; and

    

    (xvii) any
      amendment to any of the Contracts described in this
      Section 3.12.

    

    (b) Except
      as
      disclosed in Section 3.12(b) of the Warrantors Disclosure Schedule, (i) each
      Material Contract is legal, valid, binding and enforceable by and against the
      Company in accordance with its terms, except to the extent such enforceability
      may be limited by applicable bankruptcy or other laws affecting creditors'
      rights, or by general equity principles, and is in full force and effect on
      the
      date hereof; (ii) such Material Contracts are fully performable by the Company
      in accordance with their terms. The Company has performed all material
      obligations required to be performed by it to date under each such Material
      Contract, and is not in material default under any such Material Contract;
      (iii)
      no event has occurred which, with due notice or lapse of time or both, would
      constitute a material default of any such Material Contract; and (iv) to the
      Knowledge of Warrantors, no other party to any such Material Contract is in
      default of any Material Contract, and no event has occurred which, with due
      notice of lapse of time or both, would constitute such a default; and (vi)
      otherwise there are no grounds for the termination, rescission, avoidance,
      repudiation or worsening of terms or cancellation of such Material
      Contract.

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (c) The
      Company is not nor has been within the past three years a party to, or subject
      to, any contract, arrangement, obligation or liability which:-

    

    
      	 	
              (i)

            	
              is
                onerous (i.e. cannot readily be performed by the Company on time
                or
                without undue or unusual expenditure of money, effort or
                personnel;

            

    

    

    
      	 	
              (ii)

            	
              is
                loss making;

            

    

    

    
      	 	
              (iii)

            	
              is
                likely to involve aggregate sales values which will represent in
                excess of
                ten per cent of turnover for the preceding financial year of the
                Company;

            

    

    

    
      	 	
              (iv)

            	
              involves
                obligations or liabilities which by reason of their magnitude or
                nature
                ought reasonably to be disclosed or made known to the Buyer;
                or

            

    

    

    
      	 	
              (v)

            	
              has
                been registered under the RTPA, notified to the Commission of the
                European
                Communities under Article 81 of the Treaty of Rome or the EFTA
                Surveillance Authority under Article 53 of the Agreement on the European
                Economic Area (or for which application for negative clearance under
                such
                articles has been made).

            

    

    

    SECTION 3.13.
      Intellectual
      Property.

    

    (a) The
      Company owns or possesses adequate licenses or other valid rights to use all
      existing material Business Intellectual Property;

    

    (b) Except
      as
      disclosed by the documents in Section
      3.13(b)
      of the
      Warrantors Disclosure Schedule;

    

    (i) the
      validity of the owned Business Intellectual Property and the title thereto
      of
      the Company is not being questioned or threatened in any litigation, arbitration
      or proceeding to which the Company is a party;

    

    (ii) to
      the
      Knowledge of Warrantors, the conduct of the Business has not infringed upon
      and
      does not infringe upon, misappropriate, conflict or interfere with any valid
      patents, trademarks, trade names, service marks, copyrights or intellectual
      property rights of any other Person;

    

    (iii) the
      Company has not received any claim, charge, complaint or notice alleging any
      such interference, infringement, misappropriation, conflict or violation with
      respect to such Business Intellectual Property, including any claim that the
      Company must license or refrain from using such rights of a third party to
      the
      Knowledge of Warrantors there are no circumstances likely to give rise to the
      same;

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (iv) the
      consummation of the transactions completed by this Agreement will not result
      in
      the loss or impairment of any Business Intellectual Property;

    

    (v) to
      the
      Knowledge of Warrantors, no third party is interfering with, infringing upon,
      or
      misappropriating the Business Intellectual Property;

    

    (vi) the
      Company has not taken or threatened any action against a third party in respect
      of the Business Intellectual Property including in respect of any application
      for any intellectual property registrations and there are no matters which
      might
      give rise to such action.

    

    (c) Section
      3.13(c)
      of the
      Warrantors Disclosure Schedule identifies each patent or registration which
      has
      been issued to the Company with respect to the Business Intellectual Property,
      identifies each pending patent application or application for trade mark or
      other Business Intellectual Property registration which has been made by the
      Company with respect to the Business Intellectual Property, and identifies
      each
      license, agreement, or other permission which the Company has granted to any
      third party with respect to any of the Business Intellectual Property (together
      with any exceptions). Warrantors have caused to be delivered to Buyer true,
      correct and complete copies of all such patents, registrations, applications,
      licenses, agreements, and permissions (as amended to date) and have made
      available to Buyer correct and complete copies of all other written
      documentation evidencing ownership and prosecution (if applicable) of each
      such
      item. Section
      3.13(c)
      of the
      Warrantors Disclosure Schedule also identifies each trade name or unregistered
      trademark used by the Company in the conduct of the Business. With respect
      to
      Business Intellectual Property required to be identified in Section
      3.13(c)
      of the
      Warrantors Disclosure Schedule and except as disclosed in Section
      3.13(c)
      of the
      Warrantors Disclosure Schedule:

    

    (i) the
      Company possesses all right, title and interest in and to the right free and
      clear of any Lien;

    

    (ii) the
      right
      is not subject to any outstanding injunction, judgment, order, decree, ruling,
      charge, undertaking, agreement or arrangement which restricts disclosure, use
      or
      assignment;

    

    (iii) no
      action
      is pending nor, to the Knowledge of Warrantors, is threatened or expected which
      challenges the legality, validity, enforceability, use or ownership of the
      right, nor, to the Knowledge of Warrantors, is there any basis for such
      action;

    

    (iv) the
      Company has not agreed to indemnify any Person for or against any interference,
      infringement, misappropriation, or other conflict with respect to such
      right.

    

    (d) Section
      3.13(d)
      of the
      Warrantors Disclosure Schedule identifies each Business Intellectual Property
      that any third party owns which the Company uses in connection with the Business
      pursuant to an existing Contract. Warrantors have caused to be delivered to
      Buyer true, correct and complete copies of all such Contracts (as amended
      through the date hereof) where written or an accurate summary of the main terms
      and conditions if unwritten. With respect to each such Business Intellectual
      Property required to be so identified in Section
      3.13(d)
      of the
      Warrantors Disclosure Schedule:

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (i) the
      Contract covering the right is legal, valid, binding and enforceable in
      accordance with its terms, except as may be limited by applicable bankruptcy,
      insolvency or similar laws affecting creditors' rights generally, and is in
      full
      force and effect;

    

    (ii) subject
      to obtaining any required third party consents, the Contracts covering the
      rights will be enforceable and in full force and effect on identical terms
      following the consummation of the transactions contemplated hereby;

    

    (iii) neither
      the Company nor, to the Knowledge of Warrantors, any other party to the Contract
      is in breach or default and, to the Knowledge of Warrantors, no event has
      occurred which with notice or lapse of time or both would constitute a breach
      or
      default or permit termination, modification, or acceleration
      hereunder;

    

    (iv) to
      the
      Knowledge of Warrantors, no party to the Contract has repudiated any provision
      thereof.

    

    (e) No
      employee of the Company or other person has claimed or, to the Knowledge of
      Warrantors, is entitled to claim or is entitled to claim any ownership or
      payment in respect of any Business Intellectual Property.

    

    (f) Except
      as
      disclosed in Section
      3.13(f)
      of the
      Warrantors Disclosure Schedule, the Company has not (i) allowed any Person
      to
      use any of its Business Intellectual Property without entering into proper
      licenses (written and executed) or (ii) permitted or knowingly acquiesced in
      any
      unauthorized use or infringement of any such Business Intellectual Property,
      in
      each case, otherwise than in the ordinary course of the Business.

    

    (g) All
      applicable filings and all registration, renewal and other fees payable by
      the
      Company in respect of Business Intellectual Property have been paid and, to
      the
      Knowledge of Warrantors, (i) nothing has been done or omitted to be done by
      which any of such Business Intellectual Property may be rendered invalid,
      cancelled or rectified and (ii) there are no circumstances which may prevent
      relevant applications proceeding to registration.

    

    (h) To
      the
      Knowledge of Warrantors, the Company has complied with all requirements of
      applicable data protection legislation and no such company has received any
      enforcement, deregistration, transfer prohibition or other notice or written
      communication thereunder.

    

    (i) So
      far as
      recognized and permitted by any Applicable Law, no moral rights of the author
      relating to any copyright in any Business Intellectual Property owned or
      developed by the Company have been waived save in favour of the
      Company.

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    SECTION 3.14.
      Property. 

    

    (a) Title

    

    (i) The
      particulars of the properties set out in the Warrantors Disclosure Schedule
      (the
      "Properties")
      are
      true, complete and accurate.

    

    (ii) The
      Properties comprise all the leasehold land and premises owned, used or occupied
      by the Company in connection with the business or businesses of the Company
      and
      the Warrantors are not aware of any further documents (including any collateral
      agreements) relating to the Property other than those set out in the Warrantors
      Disclosure Schedule and all consents required (including the consent of any
      superior landlord or mortgagee) have been obtained.

    

    (iii) The
      Company has a good and marketable title (legal and beneficial) to each of the
      Properties vested in the Company without exception or reservation and the
      Company is absolutely entitled to their proceeds of sale. If the Properties
      are
      not registered at the Land Registry no event has occurred which could have
      resulted in compulsory registration.

    

    (iv) The
      Company (or its mortgagees) has in its possession all deeds and documents of
      title necessary to prove good title to the Properties.

    

    (v) The
      Properties and title deeds are not subject to any Lien or any agreement to
      create the same.

    

    (vi) To
      the
      Knowledge of Warrantors there are no matters affecting the Properties capable
      of
      registration but not registered at the Land Charges Department, the Land
      Registry or any Local Land Charges Registry; no entries in any such registers
      affecting the Properties and no applications for such entries have been made
      in
      the last 30 days and there are no circumstances which might give rise to any
      such entries.

    

    (b) Adverse
      Interests

    

    (i) To
      the
      Knowledge of Warrantors there are no public or private rights, agreements,
      interests, covenants, restrictions, conditions, reservations, licences or
      easements or any disputes or outstanding notices or any other matters or things
      whether or not apparent from an inspection of the Properties which may
      materially or adversely affect the value of the Properties or the proper use
      and
      enjoyment of the Properties for the purpose of the business now being carried
      on
      or intended to be carried on at the Properties by the Company.

    

    (ii) There
      are
      no insurance policies relating to any issue of title affecting the
      Properties.

    

    (iii) The
      Properties are not subject to any agreement for sale, estate contract, option
      or
      right of pre-emption.

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (iv) There
      are
      no circumstances which would entitle or require a lessor or any other person
      to
      exercise any power of entry upon or to break the term of any lease of, or of
      taking possession of, the Properties or which would otherwise restrict or
      terminate the Company's continued possession or occupation or which could
      prevent any development for which planning permission has been or is expected
      to
      be obtained.

    

    (c) Performance

    

    (i) The
      Company has duly performed and observed all material covenants, restrictions,
      reservations, conditions, agreements, statutory requirements, byelaws, orders,
      building regulations and other stipulations and regulations affecting the
      Properties and the use of the Properties and to the Knowledge of Warrantors
      there are no outstanding complaints alleging breach or non-observance has been
      received in respect of them.

    

    (ii) Without
      prejudice to the generality of Section 3.13(c)(i) the Company has duly performed
      and observed all material covenants and other terms of the lease, tenancy
      agreement or license under which the Properties are held and all outgoings
      have
      been paid to date including rent, service charge and insurance and to the
      Knowledge of Warrantors no notice of any alleged breach or non-observance of
      any
      of the terms of any such lease, tenancy agreement or licence has been served
      on
      the Company and there are no rent reviews in the course of being determined
      or
      exercisable by the landlord from a date prior to the date of this Agreement.
      To
      the Knowledge of Warrantors the documents referred to in the fourth schedule
      to
      the superior lease dated 30 November 1999 made between (a) the Council of the
      City of Nottingham and (2) Daniel Lynch Limited (the "Superior
      Lease")
      and
      the Lease whereby premises at 480 Salisbury House, London Wall, London EC2M
      5QQ
      were demised to Luso Electronic Products limited do not contain any unusual
      or
      onerous covenants and any covenants, restrictions or obligations which
      contradict the terms of any documents disclosed relating to the
      Properties.

    

    (d) Occupation

    

    (i) Save
      as
      set out in the Warrantors Disclosure Schedule the Company is entitled to, and
      has exclusive vacant possession and occupation of the Properties and none of
      the
      Properties are subject to any lease, tenancy, license to occupy or agreement
      to
      grant any of them or in the case of any unregistered property the Warrantors
      are
      not aware of any unregistered interest which will override first registration
      at
      the Land Registry (or would do if the property were an estate able to be
      registered) or in the case of any registered property the Warrantors are not
      aware of an unregistered interest which will override a registered disposition
      at the Land Registry nor any person who has or claims to have any interest,
      right or easement of any kind in respect of the Properties adverse to the
      interest or title of the Company.

    

    (e) Disputes

    

    (i) To
      the
      Knowledge of the Warrantors there are no disputes concerning boundaries,
      easements, covenants or other matters relating to the Properties or their use
      and occupation and there are no pending or anticipated disputes, actions, claims
      or demands in respect of the Properties.

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    (ii) The
      Company has not (nor has anyone on its behalf) expressly or impliedly waived
      any
      breach by any person of any covenant, agreement, restriction, stipulation or
      obligation relating to the Properties or of which the Properties have the
      benefit.

    

    (f) Use
      and Planning

    

    (i) All
      of
      the Properties are actively used by the Company in connection with the business
      of the Company.

    

    (ii) The
      existing use of the Properties is the lawful permitted use whether under any
      applicable town and country planning legislation or in the case of leasehold
      property under the terms of its lease, tenancy or license agreement or otherwise
      and is not a temporary use or personal to the Company and all necessary consents
      to such existing use have been obtained and are valid, subsisting and
      unimpeachable and either unconditional or subject only to any condition which
      has been satisfied so that nothing further remains to be done under the
      condition.

    

    (iii) All
      necessary building regulation consents have been obtained both in relation
      to
      the existing use of the Properties and any alterations and improvements to
      them.

    

    (iv) The
      relevant development plan does not contain any proposals in relation to the
      Properties that may prejudice the existing use or any other use reasonably
      ancillary to the existing use.

    

    (v) No
      planning application relating to the Properties has been submitted which awaits
      determination or which has been refused.

    

    (vi) To
      the
      Knowledge of Warrantors no claim or liability (contingent or otherwise) under
      the town and country planning legislation in respect of the Properties, or
      any
      statutory agreement affecting the Properties, are outstanding, nor are the
      Properties the subject of a notice to treat or a notice of entry, and no notice,
      order resolution or proposal has been published for the compulsory acquisition,
      closing, demolition or clearance of the Properties, and the Company is not
      aware
      of any matter or circumstances which would lead to any such notice, order,
      resolution or proposal.

    

    (vii) No
      compensation in respect of the Properties has been received consequent upon
      the
      refusal or revocation of any planning consent or the imposition of any
      restrictions in any planning consent and no planning consent is
      suspended.

    

    (g)
      Liabilities

    

    (i) The
      Company has not been the tenant, licensee, assignee or guarantor of any lease,
      license or tenancy agreement other than in relation to the
      Properties.

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (ii) The
      Company has not at any time acquired, assigned or otherwise disposed of any
      freehold or leasehold property in such a way that it retains any residual
      liability in respect of it.

    

    (iii) Since
      March 31, 2006 the Company has not acquired or disposed of, or agreed to acquire
      or dispose of, or granted any option in respect of, any interest in any land
      or
      premises nor will it do so before Closing without the prior written consent
      of
      the Buyer.

    

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

    

    (v) The
      Company does not have any legal or equitable estate or interest in any land
      or
      buildings other than the Properties.

    

    (vi) There
      is
      not outstanding any monetary claim or liability (contingent or otherwise)
      affecting the Properties nor is there any material expense likely in respect
      of
      the repair of the Properties in the next five years.

    

    (h) Replies
      to enquiries/Certificates

    

    (i) Replies
      to all enquiries before contract in respect of the Properties raised by the
      Buyer's Solicitors in writing or in correspondence with the Sellers' Solicitors
      were when given and are now complete and accurate and not misleading in any
      respect.

    

    SECTION 3.15.
      Environmental
      Compliance.
      Except
      as described in Section
      3.15
      of the
      Warrantors Disclosure Schedule: 

    

    (a) The Company
      is not required to hold any Environmental Permits under applicable Environmental
      Laws for any of its current operations or for any property currently owned,
      leased or otherwise operated by it;

    

    (b) To
      the
      Knowledge of the Warrantors, the Company is and has been in compliance with
      all
      Environmental Law in all material respects (including but not limited to the
      restriction of the use of certain Hazardous Substances in Electrical and
      Electronic Equipment Regulations 2006 and the Control of Asbestos at Work
      Regulations 2002);

    

    (c) (i) There
      have never been any (nor to the Knowledge of Warrantors are there any
      circumstances likely to give rise to any) civil or criminal actions, notices
      of
      violations, administrative proceedings of any Governmental Authority under
      any
      Environmental Law against the Company relating to the Properties for which
      there
      has been or could be imposed any Environmental Liability under applicable
      Environmental Law;

    

    (ii) To
      the
      Knowledge of Warrantors, none of the operations of the Business has involved
      the
      release or discharge into the Environment of any substance causing harm to
      the
      Environment to give rise to any regulatory action or liability in relation
      to or
      arising from any Environmental Law.

    

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    SECTION 3.17
      Absence
      of Certain Changes.
      Except
      as set forth in Section 3.16
      of the
      Warrantors Disclosure Schedule or as otherwise disclosed in this Agreement,
      since March 31, 2006, the Business has been conducted in the ordinary course
      consistent with Past Practices and:

    

    (a) There
      has
      not been any commitment made, or any Contract entered into, by the Company,
      or
      any waiver, amendment, termination or cancellation of any Contract by the
      Company, or any relinquishment of any rights hereunder by the Company, or of
      any
      other right or debt owed to the Company;

    

    (b) There
      has
      not been any change by the Company in its accounting principles, methods or
      practices or in the manner it keeps its books and records or any change by
      the
      Company of current practices with regard to sales, expenses, assets or
      liabilities;

    

    (c) There
      have not been (i) any capital expenditures or commitments in an aggregate
      amount in excess of ₤100,000 for additions to property, plant, equipment or
      intangible capital assets or capital expenditures or (ii)  any sale,
      assignment, transfer, lease or other disposition of or agreement to sell,
      acquire, assign, transfer, lease or otherwise dispose of any asset or property
      having an aggregate value in excess of ₤100,000 other than in the ordinary
      course of business;

    

    (d) There
      has
      not been any payment, discharge or satisfaction of any Liabilities of the
      Company, other than payments, discharges or satisfactions in the ordinary course
      of business;

    

    (e) There
      has
      not been the creation or imposition of any Lien (other than a Permitted Lien)
      upon any of the assets and properties of the Company;

    

    (f) There
      has
      not been any cancellation, compromise, waiver, or release of any right or claim
      (or series of related rights and claims) or any Indebtedness owing to the
      Company;

    

    (g) There
      has
      not been any issuance, sale or other disposition of any shares or loan capital
      of the Company, or grant of any options, warrants, or other rights to purchase
      or obtain (including upon conversion, exchange, or exercise) any shares or
      loan
      capital of the Company;

    

    (h) There
      has
      not been declared and/or paid any dividend or distribution (whether in cash
      or
      in kind) nor has there been any repurchase, redemption or retirement, repayment
      or allotment of any shares or loan capital of the Company;

    

    (i) There
      has
      not been any threat or notification, orally or in writing, by one or more of
      the
      customers or suppliers who, individually or in the aggregate, are material
      to
      the Business of an intention to terminate or materially alter their respective
      business relationships or Contracts with the Business, nor has any such
      termination or material alteration of such relationships or Contracts occurred
      and nor is it likely to;

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    (j) There
      has
      not been any material damage, destruction, or loss (whether or not covered
      by
      insurance) to the property or assets of the Company nor any reduction in the
      value thereof, using the same valuations used in the Financial
      Statements;

    

    (k) There
      has
      not been any loan to any of the current or former directors, officers, and
      employees of the Company; 

    

    (l) There
      has
      not been any payment of any amount to any Person outside the ordinary cause
      of
      business with respect to any Liability (excluding any costs and expenses
      incurred or which may be incurred in connection with this Agreement and the
      transactions contemplated hereby); 

    

    (m) There
      have not been any changes in the memorandum or articles of association or other
      constitutional documents of the Company and no resolution of shareholders of
      the
      Company has been adopted;

    

    (n) The
      Company has not entered into any employment, compensation or other similar
      agreement (or any amendment to any such existing agreement) with, or increased
      compensation, bonus or other benefits payable or potentially payable to any
      director, officer or employee or increased benefits payable or potentially
      payable under any severance, continuation or termination pay policies or
      employment agreements for the benefit of employees generally;

    

    (o) No
      material change has been made in the practices of pricing or discounting for
      sales of finished goods, ordering supplies and raw materials, shipping finished
      goods, accepting returns or honouring warranties, invoicing customers and
      collecting debts; 

    

    (p) There
      has
      been no decrease in the monthly turnover (whether by value or by volume) or
      in
      the gross or net profit margins of the Business (or any material part of the
      Business) as compared with the corresponding months in the financial year ended
      on March 31, 2006;

     

    (q) There
      has
      been no material adverse change in the financial, cashflow, trading position
      or
      prospects of the Company;

     

    (r
      ) The
      Business has not been adversely affected by any factor not affecting similar
      businesses to a like extent;

     

    (t) No
      provision or reserve included in the accounts dated March 31, 2006 has proved
      to
      be inadequate in the light of subsequent circumstances and there are no
      circumstances which indicate that any such provision or reserve may prove to
      be
      inadequate; and

     

    (p) No
      legally binding Contract, conditional or otherwise, to do any of the foregoing
      has been made.

    

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    SECTION 3.17.
      Insurance.
      As of
      immediately prior to the Closing, the assets, Properties and operations of
      the
      Company are and have at all material times been insured under various policies
      of insurance and indemnity against all such risks normally insured against
      by a
      prudent person carrying on a similar business to the Company. The assets and
      Properties have and have at all material times been insured to their full
      re-instatement or replacement value. Warrantors have heretofore delivered to
      Buyer complete and correct copies of such insurance and indemnity policies
      and a
      schedule that details for each policy the risks insured against, coverage limits
      currently applicable and deductible amounts. All such policies are valid and
      in
      full force and effect, no notice of cancellation has been received, and there
      is
      no existing default, or event which with the giving of notice or lapse of time
      or both, would constitute a default, by any insured hereunder. To the Knowledge
      of Warrantors, there currently are no claims and there is no basis for an
      insurance claim under any of such policies.

    

    SECTION
      3.18. Inventory
      and Debts.
      

    

    (a) Except
      as
      disclosed in Section
      3.18
      of the
      Warrantors Disclosure Schedule, the Inventory of the Company included in the
      Balance Sheet is in good condition, of a quantity and quality usable in the
      ordinary course of the business of the Company and is adequate and appropriate
      for the Business as conducted on the Closing Date and the anticipated level
      of
      business. Obsolete, discontinued, returned and overage goods have been written
      off and defective goods are written down appropriately reflected in the Balance
      Sheet at realizable market value. Since March 31, 2006, no items of Inventory
      have been disposed of at less than their value as included in the audited
      accounts dated March 31, 2006 and no Inventory has been acquired since March
      31,
      2006 which now has a net realizable value of less than its cost.

     

    (b) The
      debts
      owed to the Company reflected in the Balance Sheet have been generated in the
      ordinary course of business and reflect bona fide obligations for the payment
      of
      products sold by the Company and, to the Knowledge of Warrantors, will be
      collectible, net of any provision. The provision with respect to the debts
      shown
      in the Balance Sheet is adequate and has been established consistent with Past
      Practice. 

    

    SECTION 3.19.
      Assets
      of the Company.
      

    

    (a) Section
      3.19
      of the
      Warrantors Disclosure Schedule is a true, complete and accurate record of all
      Equipment of the Company as of the date of the Financial Statements. All of
      the
      Equipment owned or used by the Company:-

    

    (i) is
      in
      good and safe operating condition, ordinary wear and tear excepted, has been
      and
      is being used in the Business in compliance in Applicable Law, is capable of
      being used for the purposes for which such Equipment is now used by the Company
      and has been properly maintained on a regular basis by competent
      personnel.

    

    (ii) is
      not
      expected to require renewal, replacements or additions within six months from
      Closing and is not to any extent surplus to requirements; and

    

    (iii) is
      all
      capable and will remain capable throughout the respective periods of time during
      which it is written down to a nil value in the accounts of the Company (in
      accordance with existing Local GAAP consistently applied) of doing the work
      for
      which it was designed or purchased.

    

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (b) The
      Company owns or has valid rights to use, free and clear of all Liens except
      Permitted Liens, all of the assets used in the conduct of the Business. Such
      assets are in the possession of or under the exclusive control of the Company
      and will be sufficient for the Buyer Parties to continue to operate the Business
      in the ordinary course in the same manner as it is conducted currently.

    

    (c) Maintenance
      contracts are in full force and effect in respect of all assets of the Company
      which it is normal or prudent to have maintained by independent or specialist
      contractors and in respect of all assets which the Company is obliged to
      maintain or repair under any hire purchase, leasing, rental, insurance or other
      agreement.

    

    SECTION
      3.20. Absence
      of Undisclosed Liabilities.
      The
      Company has no Liability except for (i) Liabilities set forth on the Balance
      Sheet (or in any notes thereto), (ii) Liabilities described in Section
      3.20
      of the
      Warrantors Disclosure Schedule, and (iii) Liabilities which have arisen
      after the date of the Financial Statements in the ordinary course of the
      Business that would not, individually or in the aggregate, have a Company
      Material Adverse Effect.

    

    SECTION
      3.21 Product
      Warranties, Defects and Liabilities.
      There
      exists no pending or,
      to the
      Knowledge of Warrantors, threatened
      action, suit, inquiry, proceeding or investigation by or before any court or
      governmental or regulatory or administrative agency, authority or commission
      relating to any product alleged to have been distributed or sold by the Business
      to others, and alleged to have been defective or improperly designed or unfit
      for its purpose or manufactured or in breach of any express or implied product
      warranty. The Company has not supplied any product, and has no product in stock,
      which is or was dangerous or injurious to health or likely to cause loss or
      damage or which it would be illegal to supply or use or having a defect in
      it
      within the meaning of section 3 of the Consumer Protection Act 1987. There
      exists no pending or,
      to
the
      Knowledge of Warrantors,
      threatened
      product liability or warranty claims relating to the Business, except to the
      extent reserved for on the face of the Balance Sheet, and to the Knowledge
      of
      Warrantors, there is no reasonable basis for any such suit, inquiry, action,
      proceeding, investigation or claim. Warrantors have heretofore delivered to
      Buyer copies of the standard terms and conditions of sale or lease of the
      products and services of the Business (containing applicable guaranty, warranty,
      and indemnity provisions). Except as set forth in Section
      3.21
      of the
      Warrantors Disclosure Schedule, there are no express product or service
      guarantees or warranties or representation in respect of goods or services
      supplied or contracted to be supplied by it save for any warranty or guarantee
      implied by law and (save as aforesaid) has not accepted any obligation which
      could give rise to any liability after any such goods or services have been
      supplied by it.

    

    SECTION
      3.22 Affiliate
      Transactions.
      Except
      as set forth in Section
      3.22
      of the
      Warrantors Disclosure Schedule (a) the Company is not a party to, or bound
      by,
      any Contract with any of its Affiliates, other than on arms-length terms which
      are no less favourable to the Company than those which could be obtained with
      a
      third party which is not an Affiliate and (b) no Affiliate of the Company owns
      or otherwise has any rights to or interests in any asset, tangible or
      intangible, which is used in the conduct of the Business. 

    

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    SECTION
      3.23. Customers
      and Suppliers. 

    

    (a) Section
      3.23(a)
      of the
      Warrantors Disclosure Schedule sets forth a complete and accurate list (with
      volumes included) of (i) the ten largest customers (by volume) of the products
      of the Business during the twelve (12) month period ended March 31, 2006; and
      (ii) the ten largest suppliers (by volume) of materials or services to the
      Business during the twelve (12) month period ended March 31,
      2006.

    

    (b) Except
      as
      described in Section
      3.23(b)
      of the
      Warrantors Disclosure Schedule, there are no Contracts to which the Company
      is a
      party under the terms of which (i) the Company is obligated to purchase any
      product or services from, or sell any product or services to, any other Person
      on an exclusive basis with respect to any geographic area or group of potential
      customers; or (ii) any other Person may be similarly obligated to the Company.
      

    

    (c) During
      the six months preceding the date of this Agreement there has been no
      substantial change in the basis or terms on which any person (including any
      supplier) is prepared to enter into contracts or do business with the Company
      (apart from normal price changes) and no such change is likely.

    

    (d) The
      loss
      of any single supplier to or customer of the Company would not have a material
      effect on its business, and during the financial year ended on March 31, 2006
      or
      in the period since then not more than ten per cent of the goods purchased
      by
      the Company were derived from the same supplier, and not more than ten per
      cent
      of the goods sold by the Company were purchased by the same customer and for
      the
      purposes of this paragraph groups of companies shall be deemed a single
      person.

    

    (e) To
      the
      Knowledge of Warrantors the attitudes, actions or prices of customers, suppliers
      and employees with regard to the Company will not be prejudicially affected
      by
      the execution or completion of this Agreement or a Related
      Agreement.

    

    SECTION
      3.24. Illegal
      Payments.
      Except
      as disclosed in Section
      3.24
      of the
      Warrantors Disclosure Schedule, neither the Company nor any of its directors,
      officers, employees or agents, has (a) directly or indirectly given or agreed
      to
      give any illegal gift, contribution, payment or similar benefit to any supplier,
      customer, governmental official or employee or other person to assist in
      connection with any actual or proposed transaction or made or agreed to make
      any
      illegal contribution, or reimbursed any illegal political gift or contribution
      made by any other person, to any candidate for federal, state, local or foreign
      public office (i) which violates any Applicable Law, or might subject the
      Buyer Parties to any Damages or penalties in any civil, criminal or governmental
      litigation or proceeding or (ii) the non-continuation of which has had or might
      have a Company Material Adverse Effect or (b) established or maintained any
      unrecorded fund or asset or made any false entries on any books or records
      for
      any purpose.

    

    SECTION
      3.25. Information
      Technology.
      Except
      as disclosed in Section
      3.25
      of the
      Warrantors Disclosure Schedule:

    

    (a) The
      Warrantors have heretofore provided the Buyer with an accurate list of all
      material Information Technology owned or used by the Company in the conduct
      of
      the Business and copies of all material and currently in force agreements or
      arrangements (including amendments and modifications thereto) relating to the
      maintenance and support, security, disaster recovery management and utilization
      (including facilities management, escrow agreements relating to the deposit
      of
      software source codes and computer bureau services agreements) and leases or
      licenses of the Information Technology owned or used by the Company.

    

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    (b) All
      Information Technology is leased or licensed to the Company. No notice of a
      defect has been sent or received by the Company in respect of any license or
      lease under which the Company receives Information Technology and there are
      no
      grounds on which they might be terminated.

    

    (c) The
      Information Technology owned or used by the Company in the conduct of the
      Business has the capacity and performance necessary to fulfil the requirements
      it currently performs.

    

    (d) The
      Company has not received any written notification of any breach of any of the
      agreements or arrangements referred to in Section 3.25(a) and the Company is
      not
      in breach of any of the agreements or arrangements referred to in Section
      3.25(a).

    

    (e) None
      of
      the Information Technology referred to in Section 3.25(a) has been affected
      by
      any downtimes, equipment breakdowns, data losses, viruses or malfunctions,
      failure or any other defect which has resulted in Company Material Adverse
      Effect.

    

    (f) No
      term
      of any of the Contracts referred to in Section 3.25(a) allows a party to such
      Contract to terminate such Contract as a consequence of the Sellers entering
      into this Agreement.

    

    (g) None
      of
      the records, systems, controls, and/or data used by the Company to conduct
      the
      Business is recorded, stored, maintained, operated or otherwise wholly or partly
      dependent on or held by any means (including any electronic, mechanical or
      photographic process whether computerized or not) which (including all means
      of
      access to it and from it) are not under the exclusive ownership and direct
      control of the Company.

    

    (h) The
      Warrantors Disclosure Schedule contains details of all websites and domain
      names
      used or required to be used by or owned by the Company for the Business as
      presently carried on in accordance with the current documented plans for the
      business. All fees which have become due and payable have been paid in relation
      to the domain names and, there are not and have not been any challenges or
      disputes relating to the Company use or ownership of such domain
      names.

    

    (i) The
      Company has formulated a documented disaster recovery plan under which the
      Company has set out procedures that will be implemented if any or all of the
      data or records used by the Company to conduct the Business suffers a material
      disruption or malfunction. To the Knowledge of Warrantors, the disaster recovery
      plan is sufficient to ensure that any such material disruption or malfunction
      does not lead to a Company Material Adverse Effect.

    

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    SECTION
      3.26. Employee
      Plans.

    

    (a) United
      States Employee Plans.
      There
      are no employees of the Company that work in the United States on a permanent
      basis. 

    

    (b) United
      Kingdom Employee Plans. 

    

    (i) Section
      3.26(b)(i)
      of the
      Warrantors Disclosure Schedule sets forth a true and complete list of all
      Employee Plans which are and have been maintained by the Company or to which
      the
      Company has contributed, contributes or is liable to contribute, all the
      material details of which (including contribution rates) are set forth therein.
      Other than as contained in that list, there are no schemes, agreements, customs
      or practices in operation for the payment of or contribution towards any
      pensions, allowances, lump sums, or other like benefits on retirement or death,
      or in respect of sickness or disablement; and the Company has not given any
      undertaking nor is under any obligation to pay, provide, procure or contribute
      towards any such benefits.

    

    (ii) There
      have been delivered to the Buyer true and complete copies of all material
      documentation in relation to the Employee Plans.

    

    (iii) All
      benefits under the Employee Plans are provided on a money purchase basis. No
      assurance, promise or guarantee (whether oral or written) has been given by
      the
      Company to any person as to the level or amount of benefits to be provided
      under
      the Employee Plans.

    

    (iv) The
      Company and the trustees of any Employee Plans are not engaged or involved
      in
      any proceedings which relate to or are in connection with any of the Employee
      Plans or the benefits thereunder and, to the Knowledge of Warrantors, no such
      proceedings are threatened nor are there any facts likely to give rise to any
      such proceedings. For purposes of this Section, "proceedings" includes any
      claim, complaint, dispute, litigation, mediation or arbitration and also
      includes any investigation or determination by the Pensions Ombudsman, the
      Pensions Advisory Service, the Occupational Pensions Regulatory Authority or
      the
      Pensions Regulator.

    

    (v) The
      Company has at all times complied with the provisions of all relevant statutes,
      regulations and requirements in relation to the Employee Plans. The Employee
      Plans have at all times complied with, and been administered in accordance
      with
      the trusts, powers and provisions of the Employee Plans, the general
      requirements of law and the provisions of all relevant statutes, regulations
      and
      requirements.

    

    (vi) Every
      person employed by the Company who has at any time been entitled to membership
      in any of the Employee Plans has been invited to join as of the date on which
      he
      or she became so entitled.

    

    (vii) All
      contributions and premiums which are payable by the Company and all
      contributions due from current employees of the Company who are members of
      any
      of the Employee Plans or in respect of whom benefits may be provided under
      any
      of the Employee Plans have been duly paid when due and have been fully paid
      in
      respect of the period up to the Closing Date.

    

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    (viii) The
      Company has complied with its obligations (if any) under section 3 of the
      Welfare Reform and Pensions Act 1999 and all other legislation and regulation
      applicable to the Company relating to pension and benefit provision for
      employees.

    

    (ix) Each
      of
      the Employee Plans referred to in warranty (i) above is a registered pension
      scheme within the meaning of section 150(2) of the Finance Act 2004 and there
      is
      no reason why such approval or registration may be withdrawn.

    

    (x) Each
      of
      the Employee Plans referred to in warranty (i) above is and remains a
      contracted-out plan within the meaning of Chapter 1 of Part III of the Pension
      Schemes Act 1993. There is in force one or more contracting-out certificates
      and
      there are no circumstances which might cause the certificate(s) to be
      withdrawn.

    

    (xi) All
      death
      in service benefits which may be payable under the Employee Plans are fully
      insured and all insurance premiums payable in respect of the Employee Plans
      by
      the Company have been duly paid to the relevant insurance company and there
      is
      no ground on which the relevant insurance company could avoid liability under
      any policy of insurance applicable to such benefits.

    

    (xii) The
      Company has no liability or potential liability under section 144 of the Pension
      Schemes Act 1993 or section 75 of the Pensions Act 1995, section 38
      (Contribution Notices) of the Pensions Act 2004, section 43 of the Pensions
      Act
      2004 (Financial support directions) or section 47 of the Pensions Act 2004
      (Contribution notices where non-compliance with financial support direction)
      as
      a debt due to or in respect of any occupational pension scheme (as defined
      for
      the purposes of the Pension Schemes Act 1993).

    

    (xiii) The
      Company is not providing and has not at any time paid an ex gratia payment
      in
      respect of Relevant Benefits.

    

    (xiv) No
      employees of the Company have transferred under the Transfer of Undertakings
      (Protection of Employment) Regulations 1981 or 2006 from the employment of
      Sellers or any subsidiary (as defined in section 838 of the Income and
      Corporation Taxes Act 1988) of Sellers.

    

    SECTION
      3.27. Books
      and Records; Possession.
      

    

    (a)
       The
      books
      and all corporate (including minute books and stock records books) and financial
      records of the Company are complete, up-to-date and correct in all material
      respects and have been maintained in accordance with sound business practices
      and Applicable Law and other requirements and no notice has been received or
      allegation made that a register or book is incorrect or should be rectified.
      The
      register of shareholders and the other statutory books and records of the
      Company and are up to date, true, accurate and complete and are in the
      possession or control of the Company respectively.

    

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    (b) All
      title
      deeds relating to the assets of the Company and an executed copy of all
      agreements to which the Company is a party or by which it is bound and the
      original copies of all other documents which are owned by, or which ought to
      be
      in the possession of, the Company, are in the possession or under the control
      of
      the Company. Deeds and documents relating to the Properties are either original
      or copies marked by a solicitor as examined with the original. All documents
      are
      whole, undefaced, duly executed and where relevant stamped with the correct
      amount of stamp duty.

    

    SECTION
      3.28 Insolvency.

    

    
      	 	
              (a)

            	
              In
                relation to the Company:-

            

    

    

    (i) no
      resolution has been passed (and no meeting has been convened, and no written
      resolution has been circulated with a view to any resolution being passed),
      no
      petition has been presented and no order has been made, for the purpose of
      its
      winding up and no application or order has been made for a provisional
      liquidator to be appointed;

    

    (ii) no
      notice
      of intention to appoint an administrator has been filed, no application for
      the
      appointment of an administrator has been made and no other steps in relation
      to
      the appointment of an administrator have been taken nor has any administrator
      been appointed; 

    

    (iii) no
      procedure has been commenced, by the Registrar of Companies or any other person,
      with a view to striking off under section 652 of the Act; 

    

    (iv) no
      administrative receiver, receiver, administrator, liquidator or provisional
      liquidator or similar officer has been appointed and no Lien has been
      enforced;

    

    (v) no
      floating charge has crystallized and no holder of a floating charge has taken
      any steps to enforce such security;

    

    (vi) no
      event
      has occurred or will occur by virtue of the execution and performance of this
      Agreement and the Related Agreements which would cause, or entitle any person
      to
      cause, any of the events cited at subsection (iv) and (v) above;

    

    (vii) it
      has
      not stopped paying its creditors, is not insolvent, and is not unable to pay
      its
      debts within the meaning of section 123 of the Insolvency Act 1986;

    

    (viii) no
      distress, attachment, execution or other process has been levied against any
      of
      its assets; 

    

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    (ix) no
      meeting of its creditors, or any class of them, has been held or summoned and
      no
      proposal has been made for a moratorium, composition or arrangement in relation
      to any of its debts, or for a voluntary arrangement under Part 1 of the
      Insolvency Act 1986; and

    

    (x) no
      event
      analogous to any of the above has occurred in any jurisdiction.

    

    (b) In
      relation to each Seller:-

    

    
      	 	
              (i)

            	
              no
                statutory demand has been issued against him or her nor are there
                are any
                reasonable grounds for believing that he or she is unable to pay
                any debts
                within the meaning of section 268 of the Insolvency Act 1986 as
                amended;

            

    

    

    
      	 	
              (ii)

            	
              no
                petition has been presented and no order made for his or her bankruptcy
                or
                for the appointment of a receiver over any of his or her
                assets;

            

    

    

    
      	 	
              (iii)

            	
              no
                Lien has been enforced and no distress, execution or other process
                has
                been levied, on or over any of the Shares or any assets held by him
                or
                her; 

            

    

    

    
      	 	
              (iv)

            	
              no
                proposal has been made in respect of an individual voluntary arrangement
                of him or her, pursuant to the Insolvency Act 1986 as amended;
                and

            

    

    

    
      	 	
              (v)

            	
              no
                event analogous to any of the above has occurred in any
                jurisdiction.

            

    

    

    SECTION
      3.29 Competition.
      The
      Company is not and has not been a party to, or directly or indirectly concerned
      in, any agreement, arrangement or course of conduct which in whole or in
      part:-

    

    
      	 	
              (a)

            	
              has
                been or should have been notified to the Office of Fair Trading or
                to the
                European Commission, or referred by the Office of Fair Trading to
                the
                Competition Commission under Part 3 of the Enterprise Act
                2002;

            

    

    

    
      	 	
              (b)

            	
              is
                capable of giving rise to an investigation by the Office of Fair
                Trading
                or the Serious Fraud Office or a reference to the Competition Commission
                or an investigation by the Secretary of State for Trade and Industry
                or
                the European Commission or any other person or body in any jurisdiction
                or
                been the subject of a report or decision or order or judgment of
                such
                person or bodies; or

            

    

    

    
      	 	
              (c)

            	
              contravenes
                or is under investigation in relation to any anti-trust, anti-monopoly
                or
                anti-cartel legislation or regulations in any
                jurisdiction.

            

    

    

    SECTION
      3.30. Disclosure.
      The
      warranties contained in this Article 3 and any certificate furnished or to
      be
      furnished by Sellers to Buyer pursuant to this Agreement do not contain and
      will
      not contain any untrue statement of a material fact or omit to state any
      material fact necessary,
      in
      light of the circumstances in which they were made and taking into account
      the
      express limitations set forth in each such warranty, in order to make such
      warranties not misleading.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

       

    

    ARTICLE 4

    

    WARRANTIES
      OF BUYER PARTIES

    

    The
      Buyer
      Parties hereby warrant to Sellers as follows:

    

    SECTION 4.1.
      Organization.
      Each of
      the Buyer Parties is duly organized, validly existing and in good standing
      under
      the laws of its jurisdiction of incorporation and has all requisite power and
      authority to own, lease and operate its properties and to carry on its
      businesses as now being conducted. Each of the Buyer Parties is duly qualified
      or licensed and in good standing to do business in each jurisdiction in which
      the property owned, leased or operated by it or the nature of the business
      conducted by it makes such qualification or licensing necessary, except in
      such
      jurisdictions where the failure to be so duly qualified or licensed and in
      good
      standing would not have a Buyer Material Adverse Effect (as defined below).
      The
      term "Buyer
      Material Adverse Effect"
      means
      any circumstance, change or effect that, individually or when taken together
      with all other such circumstances, changes or effects, is materially adverse
      to
      the business, operations or financial condition of Buyer and its Subsidiaries
      taken as a whole or would materially impair the ability of the Buyer Parties
      to
      consummate the transactions contemplated hereby or by any Related Agreement;
      provided,
      however,
      that
      the foregoing definition excludes the effects of changes that are generally
      applicable to (i) the United States economy or securities markets or (ii) the
      world economy or international securities markets or result from the outbreak
      of
      war, other hostilities or terrorist activities.

    

    SECTION 4.2.
      Authority
      Relative to this Agreement.
      Each of
      the Buyer Parties has all necessary corporate power and authority to execute
      and
      deliver this Agreement and to consummate the transactions contemplated hereby.
      The execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby have been duly and validly authorized by the
      Boards of Directors of the Buyer Parties and no other corporate proceedings
      on
      the part of any Buyer Party are necessary to authorize this Agreement or to
      consummate the transactions contemplated hereby. This Agreement has been duly
      and validly executed and delivered by each of the Buyer Parties and constitutes
      a valid, legal and binding agreement of each of the Buyer Parties enforceable
      against each of the Buyer Parties in accordance with its terms. 

    

    SECTION 4.3.
      Consents
      and Approvals; No Violations.

    

    (a) Except
      for filings, permits, authorizations, consents and approvals as may be required
      under applicable competition legislation or regulations of any foreign
      jurisdictions, no filing with or notice to, and no permit, authorization,
      consent or approval of, any Governmental Authority is necessary for the
      execution and delivery by any Buyer Party of this Agreement or the consummation
      by the Buyer Parties of the transactions contemplated hereby, except where
      the
      failure to obtain such permits, authorizations, consents or approvals or to
      make
      such filings or give such notice would not have a Buyer Material Adverse
      Effect.

    

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    (b) Neither
      the execution, delivery and performance of this Agreement by any Buyer Party,
      nor the consummation by the Buyer Parties of the transactions contemplated
      hereby will (i) conflict with or result in any breach of any provision of
      the Certificate of Incorporation or Bylaws of Buyer or the Articles of
      Organization of Acquisition Sub, (ii) result in a violation or breach of or
      constitute (with or without due notice or lapse of time or both) a default
      (or
      give rise to any right of termination, amendment, cancellation or acceleration
      or Lien) under any of the terms conditions or provisions of any Contract to
      which any Buyer Party is a party or by which any of them or any of their
      respective properties or assets may be bound or (iii) violate any
      Applicable Law binding on or applicable to the Buyer Parties or any of their
      respective properties or assets except, in the case of (ii) or (iii), for
      violations, breaches or defaults which would not have a Buyer Material Adverse
      Effect.

    

    SECTION 4.4.
      Litigation.
      There
      are no judicial or administrative actions, proceedings or investigations pending
      or, to Buyer's knowledge, threatened that question the validity of this
      Agreement or any Related Agreements or documents or any action to be taken
      by
      any Buyer Party in connection with this Agreement or any such Related Agreements
      or documents or that if adversely determined, would have a Buyer Material
      Adverse Effect.

    

    SECTION
      4.5 Survival.
      All of
      the Warranties of Buyer contained in this Article 4 shall survive the Closing
      for a period of two years. 

     

    ARTICLE 5

     

    UNDERTAKINGS

    

    SECTION 5.1.
      Further
      Assurance.
      

    

    (a) Each
      of
      the Sellers undertakes to provide the Buyer Parties before or after Closing
      with
      all such information as he or she has in his or her possession relating to
      the
      business and affairs of the Company and for this purpose each of the Sellers
      shall give the Buyer and any persons authorized by the Buyer full access to
      all
      such information, and the Buyer may copy any such documents.

    

    (b) Each
      of
      the Sellers at its own cost shall:-

    

    (i) at
      any
      time after Closing do or procure the doing of all such acts and things and/or
      execute or procure the execution of such documents in a form satisfactory to
      the
      Buyer as the Buyer considers reasonably necessary for the purpose of vesting
      the
      Shares in the Acquisition Sub or giving the Acquisition Sub and the Buyer (as
      applicable) the full benefit of all the provisions of this Agreement;
      and

    

    (ii) for
      a
      period not exceeding two years from the date of this Agreement give to the
      Buyer
      and the Acquisition Sub such assistance as the Buyer may reasonably require
      in
      connection with any dispute or threatened dispute directly or indirectly
      relating to the Company.

    

    
      
        
        

      

      
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    (c) If
      any or
      all of the Warrantors cease to be directors of the Company prior to the
      calculation of each of the 1st Deferred Purchase Price, the 2nd Deferred
      Purchase Price and the 3rd Deferred Purchase Price, the Buyer Parties undertake
      to provide the Warrantors with access to all copy records and copy accounts
      of
      the Company as are reasonably necessary to enable the Warrantors to calculate
      EBIT.

    

    SECTION 5.2.
      Public
      Announcements.
      The
      parties shall consult with each other before issuing any press releases or
      otherwise making any public statements on the Closing Date with respect to
      this
      Agreement or the transactions contemplated hereby, and none of the parties
      shall
      issue any press release or make any public statement prior to obtaining the
      other parties' written approval, which approval shall not be unreasonably
      withheld, except that no such approval shall be necessary to the extent
      disclosure may be required by Applicable Law or applicable stock exchange rule
      or any listing agreement of any party hereto or made to the Company's customers,
      clients or suppliers advising them of the change of control of the
      Company.

    

    SECTION 5.3.
      Use
      of
      Confidential Information; Non-competition; Non-solicitation.

    

    (a) The
      Sellers hereby warrant with Buyer that from the Closing Date until the date
      that
      is three (3) years following the Closing Date, neither Sellers nor any of their
      respective Affiliates shall (except as otherwise specifically permitted herein)
      (i) use or utilize any Confidential Information in the conduct of their
      respective businesses nor (ii) without the prior written consent of Buyer,
      disclose any Confidential Information to any third party. As used herein,
      "Confidential
      Information"
      shall
      mean any proprietary
      information, technical data, trade secrets or know-how, including, but not
      limited to, research, product plans, products, methods, strategies, services,
      customer lists, prospective customer and supplier lists, customer and supplier
      records, telephone lists and all other information with respect to customers
      and
      suppliers (including, but not limited to, customers of any Seller or the
      Company), documents, notes, working papers, records, systems, contracts,
      agreements, market data and related information, software, developments,
      inventions, processes, formulas, technology, designs, drawings, engineering
      information, hardware configuration information, marketing plans, finances,
      pricing and credit documents and policies, service development techniques or
      plans, business acquisition plans, new personnel acquisition plans or other
      business information presently owned or at any time hereafter developed by
      any
      Seller or the Company, or any of their respective agents or consultants or
      used
      presently or at any time hereafter; provided,
      however,
      that
      (i) Confidential Information does
      not
      include the following: (A) any information that was available to Sellers on
      a
      non-confidential basis prior to Sellers’ receipt of such information from Buyer;
      (B) any information that is obtained from any source other than Buyer or any
      of
      its Affiliates (or their respective directors, officers, employees, agents,
      representatives or advisors),
      provided
      that
      such source has not to the Knowledge of Sellers entered into a confidentiality
      agreement with any Seller or any of their Affiliates with respect to such
      information or obtained the information from an entity or person party to a
      confidentiality agreement with Buyer or any of its Affiliates; or (C) any
      information that becomes publicly available not as a result of a breach by
      any
      Seller or any of their Affiliates of this Agreement and (ii) if
      Sellers or any party to whom a Seller has provided Confidential Information
      becomes legally compelled (by oral question, deposition, interrogatory, request
      for documents, subpoena, civil investigative demand or similar process) to
      disclose any Confidential Information, Sellers shall promptly notify Buyer
      of
      such requirement and they further agree that only that portion of the
      Confidential Information that is legally required to be disclosed (as advised
      by
      a written opinion of Sellers' counsel) will be disclosed, and the Sellers will
      exercise as commercially reasonable best efforts to obtain assurance that the
      Confidential Information will be treated confidentially upon disclosure.
Information
      shall be deemed "publicly available" if it becomes a matter of public knowledge
      or is contained in materials available to the public.

    

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    (b) Sellers
      hereby undertake with the Buyer Parties that from the Closing Date until the
      date that is three (3) years following the Closing Date, neither Sellers nor
      any
      of their respective Affiliates shall, directly or indirectly, for its own
      account, or as a partner, member, advisor or agent of any partnership or joint
      venture, or as a trustee, officer, director, shareholder, advisor or agent
      of
      any corporation, trust, or other business organization or entity, own, manage,
      join, participate in, encourage, support, finance, promote, be engaged in,
      have
      an interest in, give financial assistance or advice to, or be concerned in
      any
      way in the ownership, management, operation or control of any Person that is
      engaged, concerned or interested in any activity which is the same as or
      substantially similar to the Business or which competes with the Business in
      commercial markets in the United Kingdom or any other country in which the
      Company conducts the Business as of the Closing Date.

    

    (c)
       For
      a
      period of three (3) years following the Closing Date, except as expressly
      permitted or required pursuant to this Agreement or the Related Agreements,
      Sellers shall refrain from, either alone or in conjunction with any other
      Person, directly or indirectly, through its present or future Affiliates,
      soliciting for hire or endeavouring to entice away, employ or offer employment
      to any employee of any of the Buyer Parties or the Company nor do any act or
      thing likely to have the effect of causing any such employee to terminate his
      employment with any of the Company or Buyer Parties whether or not such employee
      would thereby breach his contract of employment.

    

    (d) For
      a
      period of three (3) years from the Closing Date the Sellers will not either
      alone or in conjunction with any other person, directly or indirectly, through
      its present or future affiliates for the purpose of any business supplying
      products or services similar to or capable of being used in substitution for
      any
      product or service supplied by the Company within the 12 months preceding
      Closing canvass, solicit or endeavour to entice away from the Company any person
      who during the period of two years prior to Closing has been a customer of
      the
      Company or has purchased or agreed or offered to purchase goods from the Company
      or has employed its services or who has been canvassed by the Company (otherwise
      than by general advertising) with a view to becoming a customer of the
      Company.

    

    (e) For
      a
      period of three (3) years from the Closing Date the Sellers will not either
      alone or in conjunction with any other person, directly or indirectly, through
      its present or future affiliates do any act or thing likely to have the effect
      of causing any supplier of or other person in the habit of dealing with the
      Company to be unable or unwilling to deal with the Company either at all or
      in
      part or on the terms on which it had previously dealt with the Company or likely
      to have the effect of causing any person having a contract or arrangement with
      the Company to breach, terminate or modify that contract or arrangement or
      to
      exercise any right under it.

    

    (f) The
      Sellers will not either alone or in conjunction with any other person, directly
      or indirectly, through its present or future affiliates at any time in
      connection with any business carried on by him or her or otherwise howsoever
      use
      directly or indirectly or authorize any person to use directly or indirectly
      any
      of the Intellectual Property Rights including any of the names or words "DT
      Electronics" or any names or words similar to or likely to be confused with
      them
      or use any distinctive mark, style or logo used by the Company or any mark,
      style or logo similar to or likely to be confused with them in any manner which
      is likely to or may result in confusion between or other association with the
      business, goods, services or other activities of the Company including by using
      the name "DT Electronics" as part of a corporate name, trade name or
      otherwise.

    

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    (g) The
      parties hereto agree that the duration and area for which the undertakings
      set
      forth in this Section 5.3 is to be effective are reasonable. In the event
      that any court (or quasi-judicial body including, without limitation, the ICDR
      or the Association) determines that the time period or the area or both of
      them,
      are unreasonable and that such undertaking is to that extent unenforceable,
      the
      parties hereto agree that the undertaking shall remain in full force and effect
      for the greatest time period and in the greatest area that would not render
      it
      unenforceable. The parties intend that this undertaking shall be deemed to
      be a
      series of separate undertakings in each jurisdiction in which this undertaking
      is intended to be effective. The parties hereto agree that damages are an
      inadequate remedy for any breach of this undertaking and that the parties shall,
      whether or not pursuing any potential remedies at law, be entitled to equitable
      relief in the form of preliminary or permanent injunctions without bond or
      other
      security upon any actual or threatened breach of this undertaking.

     

    (h) The
      Buyer
      agrees that nothing in this Section 5.3 shall prevent the Sellers
      from:

    

    (i) being
      or
      becoming a holder of securities and/or debentures representing not more than
      a
      5% interest in any one company which is dealt in on a recognised investment
      exchange (as defined in the Financial Services and Markets Act 2000);
      or

    

    (ii) in
      the
      case of David Zelkha, being or continuing to be engaged, concerned or interested
      in the business of Luso Electronics Limited ("Luso")
      provided that Luso does not sell in the United Kingdom products which are
      competitive with the products sold by the Company as at Closing.

    

    SECTION 5.4.
      Expenses.
      Each of
      the parties hereto shall bear its own expenses incurred in connection with
      this
      Agreement and the transactions contemplated hereby and in connection with all
      obligations required to be performed by such party under this Agreement and
      the
      Related Agreements to which it is a party. 

     

    ARTICLE
      6

     

    TAX
      MATTERS

    

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    SECTION
      6.1 Cooperation.
      Buyer
      Parties and Sellers shall reasonably cooperate, and shall cause their respective
      Affiliates, officers, employees, agents, auditors and representatives reasonably
      to cooperate, in preparing and filing all returns, reports and forms relating
      to
      Taxes, including maintaining and making available to each other all records
      necessary in connection with Taxes and in resolving all disputes and audits
      with
      respect to all Taxable periods relating to Taxes. Each of Buyer Parties and
      Sellers recognize that Buyer Parties and Sellers may need access, from time
      to
      time, after the Closing Date, to certain accounting and Tax records and
      information held by Sellers or Buyer Parties, respectively, to the extent such
      records and information pertain to events occurring prior to the Closing Date;
      therefore, Sellers and Buyer Parties each agrees, (a) to properly retain
      and maintain such records for a period of six (6) years commencing as of the
      date hereof and (b) to allow the other party and its agents and
      representatives, at times and dates mutually acceptable to the parties, to
      inspect, review and make copies of such records as such party or its
      representatives may deem necessary or appropriate from time to time, such
      activities to be conducted during normal business hours and at the expense
      of
      the requesting party. Each party agrees to maintain the confidentiality of
      all
      information of the other party disclosed pursuant to this Section 6.1, except
      to
      the extent it is required to disclose the same pursuant to Applicable Law or
      the
      directive of a Governmental Authority. 

     

    SECTION
      6.2 Seller’s
      Tax Covenant. 

     

    (a) The
      Sellers jointly and severally covenant with Acquisition Sub to pay to
      Acquisition Sub an amount equal to:-

    

    (i) any
      Liability for Tax of the Company arising in respect of, by reference to or
      in
      consequence of:-

    

    (A) any
      income, profits or gains earned, accrued or received on or before Closing,
      including for the avoidance of doubt, any income, profits or gains deemed to
      be
      earned, accrued or received on or before Closing; or

    

    (B) any
      Event
      which occurred on or before Closing;

    

    (ii) any
      Liability for Tax of the Company arising in consequence of an Event occurring,
      or any income profits or gains earned, accrued or received at any time for
      which
      the Company is liable only as a result of having at any time before Closing
      been
      under the control of any person or associated with any person and that person
      or
      any other person failing to discharge any Liability for Tax;

    

    (iii) any
      liability of the Buyer Parties or the Company to account for income tax under
      the PAYE system or for employee's national insurance contributions which arises
      in consequences of or in connection with the payment of the Deferred Purchase
      Price together with any related fine, penalty or interest;

    

    (iv) all
      costs, expenses, disbursements and professional fees reasonably incurred by
      the
      Company in connection with any liability falling within Sections (i) to (iii)
      above or in successfully taking or defending any action under this Section
      6.2.

    

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    (b) The
      covenant contained in Section 6.2(a) shall not apply and the Buyer Parties
      shall
      have no claim against the Sellers under it or under the Tax Warranties to the
      extent that:-

    

    (i) provision
      or reserve (excluding a provision for deferred tax) in respect of the liability
      in question was made in the Last Accounts;

    

    (ii) it
      arises
      as a result of a transaction in the ordinary course of business of the Company
      after the Accounts Date but on or before Closing excluding any of the following
      liabilities:

    

    
      	
            	(A)	
              a
                liability for Tax for which the Company is not primarily
                liable;

            

    

    

    
      	 	
              (B)

            	
              a
                liability arising as a result of the acquisition, disposal or supply
                or
                deemed acquisition, disposal or supply of any asset, service or facility
                (including a loan of money or the letting, hiring or licensing of
                tangible
                or intangible property) for consideration deemed for Tax purposes
                to be
                different from that (if any) actually received, or any other transaction
                or series of transactions where the consideration paid or provision
                made
                or imposed differs from the consideration that would have been paid
                or the
                provision that would have been made as between independent enterprises,
                in
                each case to the extent of that
                difference;

            

    

     

    

    
      	 	
              (C)

            	
              a
                liability arising as a result of the making of a distribution, the
                creation, cancellation or reorganisation of any share or loan capital
                or
                the cancellation assignment or writing off of any
                debt;

            

    

    

    
      	 	
              (D)

            	
              a
                liability arising as a result of any company becoming or ceasing
                to be a
                member of a group of companies for any Tax
                purpose;

            

    

    

    
      	 	
              (E)

            	
              a
                liability to Tax which the Company is obliged to deduct, charge or
                recover, to the extent that the Company has failed to properly deduct,
                charge, recover or account to a Tax Authority for the Tax in question
                and
                any liability to interest or penalties arising as a result of the
                failure;

            

    

    

    
      	 	
              (F)

            	
              a
                liability arising as a result of the disposal of a capital
                asset;

            

    

    

    
      	 	
              (G)

            	
              a
                liability under Part XVII ICTA (tax avoidance) or a liability arising
                as a
                result of a transaction or arrangement the sole or main purpose of
                which
                was the reduction, avoidance or deferral of a Liability for Tax;
                and

            

    

    

    
      	 	
              (H)

            	
              a
                liability under sections 126 to 129 or Schedule 23 FA 1995 (UK
                representatives of non-residents).

            

    

    

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    (ii) in
      the
      case of a claim under this Section 6.2(a), the Buyer Parties has recovered
      damages from the Sellers for breach of any of the Tax Warranties or already
      under Section 6.2(a) in respect of the same liability; or

    

    (iii) it
      has
      been paid on or before Closing at no cost to the Buyer Parties including for
      the
      avoidance of doubt, in circumstances such that there is no corresponding
      decrease in the net assets, including cash, of the Company;

    

    (iv) it
      shall
      have arisen in consequence of any act, omission or transaction of the Company
      and/or the Buyer Parties after Closing outside the ordinary course of business
      of the Company as at present carried on and which the Buyer Parties knew or
      ought reasonably to have known would give rise to the liability in question
      other than any of the following:-

    

    (a) an
      act
      carried out pursuant to a legally binding obligation entered into before
      Closing;

    

    (b) an
      act
      which the Company was required to do by any legislation (whether relating to
      Tax
      or otherwise); or

    

    (c) any
      disclosure to a Governmental Authority;

    

    (v) it
      would
      not have arisen or is increased as a result of any failure by the Company or
      the
      Buyer Parties to comply with its obligations under this Agreement;

    

    (vi) it
      would
      not have arisen but for the passing of or any change in, after the date of
      Closing, any law, rule, regulation, interpretation of the law or administrative
      practice of any government, governmental department, agency, or regulatory
      body
      or an increase in the rate of Tax or any imposition of Tax announced after
      Closing and not actually or prospectively in force at the date of this Agreement
      or any withdrawal of any extra statutory concession after such
      date;

    

    (vii) it
      would
      not have arisen but for:

    

    (A) any
      claim, election, surrender or disclaimer made, or notice or consent given,
      or
      any other thing done after the date of Closing (other than one the making,
      giving or doing of which was taken into account in computing any provision
      or
      reserve for Tax in the Last Accounts) under or in connection with the provisions
      of any taxation statutes by the Buyer Parties or the Company or any member
      of
      the Buyers Affiliates; or

    

    (B) the
      failure or omission by the Company to make any claim, election, surrender or
      disclaimer, or give any notice or consent or do any other thing the making,
      giving or doing of which was taken into account in computing any provision
      or
      reserve for Tax in the Last Accounts where the Buyer Parties were aware or
      should reasonably have been expected to be aware that such claim, election,
      surrender, disclaimer, notice or consent was required to avoid a claim arising
      under Section 6.2(a);

    

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    (viii) it
      would
      not have arisen but for some act, omission, transaction or arrangement carried
      out at the written request or with the written approval of the Buyer Parties
      prior to Closing or which was expressly authorised by this
      Agreement;

    

    (ix) any
      Relief (other than an Accounts Relief or a Buyer's Relief) is available to
      the
      Company to set against or otherwise mitigate the Liability for Tax in question
      or would be available on the making of an appropriate claim;

    

    (x) it
      arises
      as a result of any change after Closing in any accounting policy (including
      the
      length of any accounting period for Tax purposes), any Tax or accounting basis
      or practice of the Company save where such change is necessary to comply with
      generally accepted accounting practice as it applies to the Company at
      Closing;

    

    (xi) it
      would
      not have arisen but for a cessation of or any change in the nature or conduct
      of
      any trade carried on by the Company being a cessation or change occurring on
      or
      after Closing; 

    

    (xii) it
      arises
      as a result of the Company ceasing on or after Closing to be eligible for the
      small companies rate of Tax;

    

    (xiii) any
      amount in respect of such Liability for Tax has been recovered under the Tax
      Warranties or otherwise under this Agreement (or in either case would have
      been
      so recovered but for a threshold or de minimis provision limiting liability)
      or
      the Sellers have made payment in respect of such Liability for Tax pursuant
      to
      sections 767A and 767AA of the TA 1988 or any other provision in the United
      Kingdom or elsewhere imposing liability on the Sellers for Tax primarily
      chargeable against the Company;

    

    (xiv) the
      liability of the Covenantor in respect thereof is limited or restricted pursuant
      to the provisions of Section 7.2 of this Agreement.

    

    (c) No
      claim
      shall be made in connection with Section 6.2(a) or under the Tax Warranties
      unless the claim has been notified in writing to the Sellers before the sixth
      anniversary following the end of the accounting period in which Closing falls
      PROVIDED THAT this Section 6.2(c) shall not apply where a Governmental Authority
      can assess the Company in respect of the Tax to which the claim relates after
      such date because of fraudulent or negligent conduct of the Sellers or the
      Company prior to Closing.

    

    (d) Any
      amount which the Sellers are obliged to pay to the Buyer Parties under this
      Section 6.2 shall be paid in cleared funds on or before the following dates
      which shall be its due date for payment:-

    

    (i) to
      the
      extent that a Liability for Tax involves a liability of the Company to make
      an
      actual payment or increased payment of Tax, the amount of such payment or
      increased payment;

    

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    (ii) to
      the
      extent that a Liability for Tax involves a liability of the Company to make
      a
      payment or increased payment of Tax which would have arisen but for being
      satisfied, avoided or reduced by any Accounts Relief or Buyer's Relief, the
      amount of Tax which the Accounts Relief or Buyer's Relief in fact
      saves;

    

    (iii) to
      the
      extent that a Liability for Tax involves the disallowance, loss, clawback,
      reduction, restriction or modification of any Accounts Relief (other than a
      right to a repayment of Tax) the amount of Tax which the use of the Accounts
      Relief would have saved had the Accounts Relief been used by the Company in
      the
      period in which the relevant Governmental Authority first disallows, withdraws,
      claws-back, reduces, restricts or modifies the Accounts Relief or threatens
      to
      do so (irrespective of whether the Company then had sufficient profits or was
      otherwise in a position actually to use the Accounts Relief); and

    

    (iv) to
      the
      extent that a Liability for Tax involves the disallowance or reduction by any
      Governmental Authority of a right to a repayment of Tax, the amount of the
      repayment so disallowed or lost.

    

    (e) If
      any
      amount payable by either party under this Article 6 is not paid on or before
      the
      due date for payment, that sum shall carry interest at 2% above the base rate
      of
      Barclays Bank plc from the due date until payment.

    

    (f) Any
      payment made under this Article 6 between the parties shall be treated as an
      adjustment to the consideration paid by the Acquisition Sub under this Agreement
      for the shares of the Company.

    

    SECTION
      6.3
Over-Provisions
      and Reliefs

     

    (a) If
      the
      auditors for the time being of the Company shall on or before the seventh
      anniversary of Closing determine (as experts and not as arbitrators and at
      the
      request and expense of the Sellers) that any provision for Tax (excluding any
      provision for deferred Tax) in the Last Accounts has proved to be an
      over-provision, then the amount of such over-provision calculated in accordance
      with Section 6.3(b) shall be dealt with in accordance with
      Section 6.3(d).

     

    (c) If
      the
      auditors for the time being of the Company shall determine (at the request
      and
      expense of the Sellers) that any Liability for Tax which has resulted in a
      payment having been made by the Sellers under this Section 6.3 has given rise
      to
      a Relief for the Company or the Buyer Parties (other than an Accounts Relief
      or
      a Buyer's Relief) which would not otherwise have arisen, then, as and when
      the
      liability of the Company or the Buyer Parties to make an actual payment of
      or in
      respect of Tax is reduced by reason of that Relief (after taking account of
      the
      effect of all other Reliefs that are or become available to the Company or
      the
      Buyer Parties including any Relief derived from a subsequent accounting period)
      the amount by which that liability is so reduced shall be dealt with in
      accordance with Section 6.3(d).

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    (d) Where
      it
      is provided under Section 6.3(a) or 6.3(c) that any amount (the
      "Relevant
      Amount")
      is to
      be dealt with in accordance with this Section 6.3(d):-

    

    (i) the
      Relevant Amount shall first be set off against any payment then due from the
      Sellers under Section 6.2; and

     

    (ii) to
      the
      extent there is an excess, a refund shall be made to the Sellers of any previous
      payment or payments made by the Sellers under Section 6.2 and not previously
      refunded under this Section up to the amount of such excess; and

    

    (iii) to
      the
      extent that the excess referred to in Section 6.3(d)(ii) is not exhausted
      under that Section, 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 Section 6.2.

     

    (e) Where
      any
      such determination as is mentioned in Section 6.3(a) or 6.3(c) has been
      made the Buyer Parties or the Company may on or before the seventh anniversary
      of Closing request the auditors for the time being of the Company to review
      such
      determination (at the expense of the party making the request) in the light
      of
      all relevant circumstances, including any facts which have become known only
      since such determination, and to certify whether such determination remains
      correct or whether, in the light of those circumstances, the amount that was
      the
      subject of such determination should be amended.

     

    (f) If
      the
      auditors determine under Section 6.3(e) that an amount previously
      determined should be amended, that amended amount shall be substituted for
      the
      purposes of Section 6.3(d) in place of the amount originally determined,
      and such adjusting payment (if any) as may be required by virtue of the
      above-mentioned substitution shall forthwith be made by the Sellers or, as
      the
      case may be, by the Buyer Parties to the Sellers.

    

    SECTION
      6.4 Third
      Party Claims 

     

    (a) Where
      the
      Sellers have made a payment in full satisfaction of a liability under Section
      6.2 and the Buyer Parties or the Company are entitled to recover from any third
      party (including a Governmental Authority but excluding the Buyer Parties or
      any
      member of the Buyer's Group) any sum in respect of the matter to which the
      payment made by the Sellers relates, the Buyer Parties shall or shall procure
      that the Company shall (at the request and expense of the Sellers and upon
      the
      Sellers indemnifying the Buyer Parties and the Company to their reasonable
      satisfaction against all reasonable third party costs or expenses which may
      thereby be properly incurred) promptly notify the Sellers of such entitlement
      and subject to Section 6.4(c), take such action as the Sellers may
      reasonably request to enforce such recovery against the person in
      question.

    

    (b) The
      Buyer
      Parties shall account to the Sellers for any sums recovered (within 7 days
      of
      such recovery) in accordance with Section 6.4(a) (including any interest or
      repayment supplement paid by such a person) net of Tax (if any) on such sum
      and
      after deduction of any third party costs or expenses reasonably and properly
      incurred by the Buyer Parties or the Company in recovering such
      sum.

    

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    (c) The
      Buyer
      Parties as the Company shall not be obliged to take any action pursuant to
      Section 6.4(a) which they consider, acting in good faith, is materially
      prejudicial to the Tax position or business of the Buyer Parties or the
      Company.

    

    SECTION
      6.5 Refunds

    

    (a) The
      Buyer
      Parties shall promptly notify the Sellers of any repayment or right to a
      repayment of Tax which the Company is or becomes entitled to or receives in
      respect of an Event occurring in a period prior to Closing, where or to the
      extent that such right or repayment was not included in the Last Accounts as
      an
      asset (Refund).

    

    (b) Any
      Refund obtained (less any reasonable third party costs of obtaining it) shall
      be
      paid within 7 days by the Buyer Parties and/or the Company to the
      Sellers.

    

    SECTION
      6.6 Resistance
      of claims

    

    
      	
              (a)

            	
              If
                the Buyer Parties or the Company become aware of any Claim for Tax
                which
                may result in the Buyer Parties having a claim against the Sellers
                under
                this Article 6 (or which would so result in any such case but for
                the
                provisions of Section 7.2(a)) the Buyer Parties shall give notice
                to the
                Sellers in the manner provided by this Agreement and in any event
                at least
                21 days prior to the expiry of any time limit in which an appeal
                against
                the Claim for Tax has to be made.

            

    

    

    
      	
              (b)

            	
              The
                Sellers shall be entitled at their sole discretion (but after consultation
                with the Buyer Parties) to resist such Claim for Tax in the name
                of the
                Buyer or the Company or any of them but at the expense of the Sellers
                and
                to have the conduct of any appeal or incidental negotiations provided
                that:

            

    

    

    
      	
              (i)

            	
              the
                Sellers have indemnified and secured the Buyer Parties and the Company
                against an loss, liability, costs or damages which may be incurred
                by them
                as a result of any actions taken by the Sellers pursuant to this
                Section
                6.6;

            

    

    

    
      	
              (ii)

            	
              the
                Buyer Parties shall be kept informed of all relevant material matters
                pertaining to the Claim for Tax;
                and

            

    

    

    
      	
              (iii)

            	
              no
                material written communication pertaining to the Claim for Tax (and
                in
                particular no proposal for or consent to any settlement or compromise
                thereof) shall be transmitted to H M Revenue & Customs or other
                Governmental Authority without the same having been submitted to
                and
                approved by the Buyer Parties such approval not to be unreasonably
                withheld or delayed.

            

    

    

    
      	(c)	
              The
                Buyer Parties agree to take and procure that the Company shall take
                such
                action and give such information and assistance as the Sellers may
                reasonably request to resist, appeal or compromise any Claim for
                Tax
                notified to the Sellers in accordance with Section
                6.6(a) provided that:-

            

    

    

    
      	(i)	
              the
                Sellers have indemnified and secured the Buyer Parties and the Company
                to
                 the
                 reasonable
                satisfaction of the Buyer Parties against any loss, liability, costs
                or
                 damages
                which may thereby be incurred including the Tax the subject matter
                of the
                 claim;

            

    

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    
      	
              (ii)

            	
              the
                Buyer Parties or the Company shall not be obliged to comply with
                any
                request of the Sellers that involves contesting any Claim for Tax
                before
                any tribunal, court or appellate body unless leading Tax counsel
                instructed by agreement between the Buyer Parties and the Sellers
                (and
                with the Buyer Parties approving the Instructions to Counsel and
                being
                invited to any conference with Counsel) and at the sole expense of
                the
                Sellers have agreed that the course of action will on the balance
                of
                probabilities succeed;

            

    

    

    
      	
              (iii)

            	
              the
                Buyer Parties or the Company shall not be obliged to take any step
                which
                it reasonably considers, acting in good faith, would be materially
                prejudicial to the Tax affairs of the Buyer Parties or the Company
                or
                their dealings with any Tax Authority or would otherwise materially
                prejudice the commercial position of the Buyer Parties or the Company;
                and

            

    

    

    
      	
              (iv)

            	
              the
                provisions of this Section shall not apply to any claim under Section
                6.2(a) where any Governmental Authority alleges fraudulent or negligent
                conduct or conduct involving dishonesty on the part of the Company
                or any
                person acting on its behalf in relation to the matter giving rise
                to the
                claim.

            

    

    

    
      	
              (d)

            	
              A
                Seller's rights under this Section 6.6 cease if that Seller is declared
                bankrupt.

            

    

    

    
      	(e)	
              If
                the Sellers do not request the Buyer to take any action under Section
                6.6(c) within the  earlier
                of 21 Business Days of notice to the Sellers or 7 Business Days before
                the
                expiry  of
                any relevant time limit or no action is required to be taken by virtue
                of
                any of the  provisions
                of Section 6.6(c) the Buyer Parties shall be free to satisfy or settle
                the
                relevant  Claim
                for Tax on such terms as it may in its absolute discretion think
                fit.

            

    

    

    
      	(f)	
              The
                Sellers agree that David Zelkha will act as their representative
                in giving
                 instructions
                and requests for action under this Section 6.6 and the Buyer Parties
                shall
                 be
                entitled to rely on the instructions and requests given by David
                Zelkha
                alone.

            

    

    

    
      	(g)	
              The
                Buyer Parties shall give and shall procure that the Company gives
                the
                Sellers all reasonable co-operation, access and assistance, technical
                or
                otherwise, for the purpose of resisting such Claim for
                Tax.

            

    

    

    
      	
              (h)

            	
              The
                compliance of the Buyer Parties and/or the Company with the provisions
                of
                this Section 6.6 shall not be a condition precedent to the liability
                of
                the Sellers under Section 6.2(a) or the Tax
                Warranties.

            

    

    

    SECTION
      6.7 Tax
      returns 

    

    
      	
              (a)

            	
              The
                Buyer Parties or their duly authorised agents shall (subject to section
                6.7(b)) be responsible for and have the conduct of preparing, submitting
                and agreeing all Tax Returns for all accounting period beginning
                on or
                before Closing subject to such Tax Return being submitted in draft
                form to
                the Sellers or their duly authorised agent for comment a reasonable
                time
                before the same is due to be sent to the relevant Governmental Authority.
                The Sellers or their agent shall comment within 21 days of such submission
                and if the Buyer Parties have not received comments within that period,
                the Sellers or their agents shall be deemed to have approved such
                draft
                computations. If the Sellers or their agents have any comments or
                suggestions, the Buyer Parties or their agents shall not unreasonably
                refuse to adopt such comments or suggestions provided always that
                nothing
                herein shall oblige the Buyer Parties to submit any computation or
                other
                document unless the Buyer Parties are satisfied that the same is
                accurate
                and complete in all material respects. The Sellers and the Buyer
                Parties
                shall respectively afford (or procure to be afforded) to the other
                or
                their duly authorised agents such information and assistance as may
                reasonably be required to prepare, submit and agree such Tax
                Return.

            

    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    
      	(b)	
              In
                relation to any action referred to in section 6.7(a), the Buyer Parties
                shall:

            

    

    

    
      	
            	(i)	
              keep
                the Sellers informed of all matters relating thereto and deliver
                to the
                Sellers copies
                of all material correspondence with any Governmental Authority relating
                thereto;
                and

            

    

    

    
      	
            	(ii)	
              submit
                to the Sellers for comments all material correspondence and documents
                which
                it intends to submit to the Governmental Authority and take into
                account
                all
                such reasonable comments as the Sellers may
                make.

            

    

    

    SECTION
      6.8 Buyer
      Parties’ covenant

    

    
      	
            	(a)	
              The
                Buyer Parties hereby covenant with the Sellers to pay to the Sellers
                by
                way of adjustment
                to the consideration for the sale of the Shares, an amount equal
                to:-

            

    

    

    
      	
            	(i)	
              any
                liability for Tax for which the Sellers or any other person failing
                within
                section 767A(2) or 767AA(4) of ICTA becomes liable by virtue of the
                operation of sections 767A, 767AA and 767B of ICTA in circumstances
                where
                the taxpayer company (as referred to in section 767A(1) of ICTA)
                and/or
                the transferred company (as referred to in section 767AA(1) of ICTA)
                is
                the Company;

            

    

    

    
      	 	
              (ii)

            	
              any
                liability or increased liability for Tax of the Sellers which arises
                as a
                consequence of the Company ceasing after Closing to be resident in
                the
                United Kingdom for the purposes of any Tax; and

            

    

    

    
      	 	
              (iii)

            	
              any
                other liability for Tax for which the Sellers become liable as a
                result of
                the failure by the Company or any member of the Buyer Parties’ group
                undertaking to discharge the same.

            

    

    

    
      	
            	(b)	
              The
                covenant contained in section 6.8(a)
                shall:

            

    

    

    (i) extend
      to
      all costs reasonably and properly incurred by the Sellers or such other person
      in connection with such liability for Tax under section 6.8(a);

    

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    (ii) not
      apply
      to any liability for Tax to the extent that the Buyer Parties could claim
      payment in respect of it under section 6.2 or could claim but for the provisions
      of Section 7.2(a); and

    

    (iii) apply
      mutatis mutandis to any liability for Tax for which the Sellers or any other
      person is liable as a result of the application in any jurisdiction other than
      the United Kingdom of any rule of law or legislation equivalent to that
      mentioned in section 6.8(a)(i).

    

    (c) If
      the
      Buyer Parties make a payment under this Section the Sellers agree:-

    

    (i) to
      discharge, or procure the discharge of, the liability for Tax in question
      promptly and to indemnify the Buyer for any liability falling on the Buyer
      Parties or the Company as a result of a failure to do so;

    

    (ii) not
      to
      enforce its statutory right of recovery under Section 767(2) of ICTA in respect
      of the liability in question.

    

    (d) Section
      6.2(d) and 6.6 of this Article 6 (due date for payment and conduct of disputes)
      shall apply to the covenants contained in this section 6.8 as they apply to
      the
      covenants contained in section 6.2, replacing references to the Sellers by
      the
      Buyer Parties (and vice versa) and making any other necessary
      modifications.

    

    SECTION
      6.9 Gross
      up

    

    (a) All
      sums
      payable by either party to the other under this Article 6 shall be paid free
      and
      clear of all deductions or withholdings (including Tax) unless the deduction
      or
      withholding is required by law, in which event, or in the event that the
      recipient shall incur any Liability for Tax chargeable or assessable in respect
      of any payment pursuant to this deed, the payer shall pay such additional
      amounts as shall be required to ensure that the net amount received and retained
      by the recipient (after Tax) will equal the full amount which would have been
      received and retained by it had no such deduction or withholding been made
      and/or no such Liability for Tax been incurred and, in applying this section
      6.9, no account shall be taken of the extent to which any Liability for Tax
      may
      be mitigated or offset by any Relief available to the recipient so that where
      such Relief is available the additional amount payable hereunder shall be the
      amount which would have been payable in the absence of such
      availability.

    

    (b) If,
      following the payment of an additional amount under section 6.9(a) above, the
      recipient subsequently obtains a saving, reduction, credit or payment in respect
      of the deduction or withholding giving rise to such additional amount, the
      recipient shall pay to the payer a sum equal to the amount of such saving,
      reduction, credit or payment (in each case to the extent of the additional
      amount) such payment to be made within seven days of the receipt of the saving,
      reduction, credit or payment as the case may be.

    

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

    ARTICLE 7

     

    SELLERS’
      LIMITATIONS ON LIABILITY

    

    SECTION 7.1.
      Survival
      of Warranties.
      

    

    (a) This
      Agreement and in particular (but without limitation) Article 3 (Warranties)
      and
      Article 6 (Tax Matters) in so far as any of its provisions remain to be, or
      are
      capable of being, performed or observed, shall remain in full force and effect
      after Completion.

    

    (b) Each
      of
      the Warranties shall be interpreted as a separate and independent Warranty
      so
      that the Buyer Parties shall have a separate claim and right of action in
      respect of every breach of each Warranty.

    

    SECTION 7.2.
      Limitations
      on liability.
      

    

    (a) The
      Sellers will not be liable in respect of any claim for breach of the Warranties
      (other than the Warranties in Section 3.2) ("Claim")
      unless:

    

    (i) the
      amount of the individual Claim including any claim under Section 6.2(a) (or
      series of related Claims including any claims under Section 6.2(a) with respect
      to related facts or circumstances) exceeds $2,500; and

    

    (ii) the
      aggregate amount of all such Claims exceeds $70,000 (in which event the Sellers
      will be liable for the whole amount of such Claims and not just the excess
      above
      $70,000).

    

    (b) Other
      than as expressly stated in this Article 7, the total aggregate amount of the
      liability of the Sellers in respect of all Claims including any claim under
      Section 6.2(a) will be limited to the aggregate of the Initial Purchase Price,
      the 1st
      Deferred
      Purchase Price, the 2nd
      Deferred
      Purchase Price and the 3rd Deferred Purchase Price.

    

    (c) The
      Purchaser shall be entitled to set off the amount of a substantiated claim
      against the 3rd
      Deferred
      Purchase Price. For the purpose of this Section 7.2 (c) a substantiated claim
      is
      one which a barrister of at least 10 years call agreed between the Buyer and
      the
      Sellers has provided an opinion in writing confirming that the Claim is more
      likely to succeed than not. No other right of set off shall apply. In the event
      that the Buyer and the Sellers cannot agree on the identity of such a barrister
      within a period of 14 days, then the either the Buyer or the Sellers (or all
      of
      them) shall be entitled to request that such a barrister be nominated by the
      President of the Bar Council of England and Wales.

    

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    (d) Except
      in
      the case of fraud or wilful non-disclosure on the Sellers’ part, the Sellers
      will be under no liability in respect of any Claim unless the Buyer has given
      to
      the Sellers written particulars of the breach:

    

    (i) on
      or
      before two years after the Closing Date if the claim relates to any of the
      Warranties, other than the Tax Warranties set out in Section 3.10 and Article
      6,
      inclusive;

    

    (ii) on
      or
      before six years and six months after the Closing Date if the claim relates
      to
      any such Tax Warranties; and

    

    (iii) proceedings
      have been issued and served against Sellers within twelve months of the Sellers
      receiving the written particulars referred to in section 7.2 (d) (i) and section
      7.2 (d) (ii).

    

    (e) The
      Sellers will have no liability in respect of any Claim (excluding a Tax Warranty
      claim) to the extent that:

    

    (i) the
      liability arises or is increased as a result of the passing of any legislation
      or the making of any subordinate legislation, with retrospective effect;
      or

    

    (ii) the
      liability is increased by any negligent act of the Buyer after the date of
      this
      Agreement.

    

    (f) The
      liability of the Sellers for any such Claim (excluding a Tax Warranty claim)
      will be reduced or extinguished to the extent that the Company successfully
      claims under a policy of insurance held by the Company after Closing, where
      the
      terms of such policy are similar to a policy of insurance held by the Company
      before Closing. The Buyer will procure that the Company considers in good faith
      whether to claim under any such policy of insurance to seek to recover all
      such
      claims from the insurers.

    

    (g) The
      Sellers will not be liable in respect of any Claim (excluding a Tax Warranty
      claim) to the extent that it is attributable to:

    

    (i) any
      voluntary act, omission, transaction or arrangement carried out at the written
      request of the Buyer before the Closing Date;

    

    (ii) any
      voluntary act, omission, transaction or arrangement carried out by the Sellers
      and/or the Company in accordance with a written request from the Buyer before
      the Closing Date

    

    (h) If
      the
      liability of the Sellers or the Company in respect of any Claim is contingent
      only, the Sellers will not be under any obligation to make any payment in
      respect of the claim until the liability ceases to be contingent and the time
      limit set out in paragraph (c) above shall not apply until such contingent
      liability becomes an actual liability, references in paragraph (c) to the
      "Closing Date" being taken for the purposes of this paragraph (g) to be
      references to the date on which such contingent liability becomes an actual
      liability.

    

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    (i) The
      Warranties (excluding the Tax Warranties) are given subject to and are qualified
      by:

    

    (i) any
      matters specifically referred to in this agreement and/or fairly and accurately
      disclosed in the Warrantors Disclosure Schedule (for the avoidance of doubt,
      "fair" disclosure meaning disclosure with sufficient detail to enable the Buyer
      to understand the nature, scope and, where applicable, the quantum of any
      liability relating to the matter disclosed).

    

    (ii) any
      matters for which specific allowance or provision has been made in the Financial
      Statements and the Management Accounts save in respect of the Warranties
      contained in paragraph 3.6 of Article 3 (Financial Statements).

    

    (iii) any
      matter which could be revealed by the Buyer making searches and enquiries of
      the
      local authorities, drainage and water suppliers and the coal authority in
      connection with the Properties (other than the property at 480 Salisbury House,
      London Wall, London EC2M 5QQ).

    

    (j) Nothing
      in this section 7 will derogate from the Buyer’s common law obligation to
      mitigate any loss which it suffers in consequence of a breach of any term of
      this Agreement.

    

    (k) In
      calculating the liability of the Sellers for any breach of the Warranties
      (excluding the Tax Warranties) there will be taken into account the amount
      by
      which any Tax for which the Company is now or will be liable, is reduced or
      extinguished as a result of the matter giving rise to such
      liability.

    

    (l) The
      Sellers will not be liable in respect of any Claim (excluding a Tax Warranty
      claim) if the breach would not have arisen but for:

    

    (i) any
      change in the basis of, method of calculation of, or increase in the rates
      of
      Tax coming into effect after the date of this Agreement with retrospective
      effect; 

    

    (ii) any
      assessment of Tax arising as a result of a transaction in the ordinary course
      of
      business of the Company since the date of the Last Accounts;

    

    (iii) the
      failure on the part of the Buyer or the Company to make any claim, election,
      surrender or disclaimer or give notice or consent to do any other thing under
      the provisions of any Tax laws after the Closing Date; or

    

    (iv) any
      winding up or cessation of any trade or business of the Company after the
      Closing Date.

    

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

    SECTION 7.3.
      Conduct
      of litigation.

    

    In
      relation to any Claim in the Buyer will and will procure that the Company will:
      

    

    (a) within
      ten Business Days of the Buyer or the Company becoming aware of such a claim
      or
      circumstances likely to give rise to such a claim, notify each of the Sellers
      in
      writing specifying in reasonable detail to the extent then available the nature
      of the potential liability and, so far as is practicable, the likely amount
      of
      such claim; provided further that no delay on the part of the Buyer or Company
      in timely notifying the Sellers shall relieve the Sellers from any obligation
      under this Agreement except to the extent the Sellers are actually prejudiced
      thereby;

    

    (b) subject
      to the Sellers entering into a confidentiality undertaking in a form acceptable
      to the Buyer (acting reasonably) give such information and access to personnel,
      premises, documents and records to the Sellers and their duly authorised
      representatives and professional advisers as the Sellers may reasonably request
      in order to enable the Sellers to take such action as is referred to in
      paragraphs (d) and (e) below;

    

    (c) subject
      to the Sellers entering into a confidentiality undertaking in a form acceptable
      to the Buyer (acting reasonably) permit the Sellers and those representatives
      and advisers to make copies (at the Sellers’ cost) of those records and
      information;

    

    (d) take
      such
      action and institute such proceedings and give such information and assistance,
      as the Sellers may reasonably request to:-

    

    (i) dispute,
      resist, appeal, compromise, defend, remedy or mitigate the claim;
      or

    

    (ii) enforce
      against any person the rights of the Company in relation to the claim;
      and

    

    (e) in
      connection with any proceedings related to the claim use professional advisers
      nominated by the Buyer and, if the Sellers so request, permit the Sellers to
      have exclusive conduct of the negotiations and/or proceedings,

    

    paragraphs
      (d) and (e) above in each case being on the basis that the Sellers shall
      indemnify the Buyer and the Company in respect of all reasonably incurred costs
      and expenses as a result of any request or nomination by the Sellers, save
      that
      the Buyer is not obligated to permit the Sellers to have (or to continue to
      have) conduct of the negotiations and/or proceedings in circumstances where
      the
      Buyer acting reasonably considers that it is not in the commercial interests
      of
      the Buyer and/or the Company and the said paragraphs (d) and (e) are subject
      always to the Buyer's right to retain or take over the exclusive conduct of
      any
      such matters as it sees fit.

    

    SECTION 7.4.
      Buyer’s
      remedies.

    

    (a)
       The
      Buyer
      irrevocably and unconditionally waives any right it may have to sue the Sellers
      or any of them in misrepresentation or to rescind this agreement, in either
      case
      for any non-fraudulent misrepresentation made by or on behalf of a Seller,
      whether or not contained in this agreement or to terminate this agreement for
      any other reason. The Buyer's sole remedy in respect of any such
      misrepresentation is an action for breach of contract if and to the extent
      that
      the misrepresentation in question constitutes a breach of the
      Warranties.

    

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

    (b) The
      Buyer
      acknowledges that the Buyer's solicitors have explained to it the effect of
      clause 7.4(a) above and the Buyer accepts that clause 7.4(a) above is reasonable
      in all the circumstances.

    

    (c) The
      Sellers will indemnify the Buyer against all damages, costs, expenses or other
      liabilities which the Buyer may be awarded or may incur either before or after
      the commencement of any action in connection with:

    

    (i) the
      settlement of any claim that any of the Warranties set out in Section 3.2(a),
      (b) and (c) are untrue or misleading or have been breached or that any sum
      is
      payable under clause 7.3.

    

    (ii) the
      enforcement of any such settlement or judgment.

    

    (d) Without
      limiting the rights of the Buyer Parties or their ability to claim damages
      on
      any basis, if there is a breach of any of the Warranties or any of the
      Warranties is untrue or misleading, and:-

    

    (i) the
      Company incurs or becomes subject to a liability or an increase in any liability
      which it would not have incurred or been subject to had the breach not occurred;
      or

    

    (ii) the
      value
      of any asset of the Company is less or becomes less than the value would have
      been had the breach not occurred,

    

    then
      the
      Sellers undertake to the Buyer (for itself and as trustee of the benefit of
      this
      paragraph (d) for the Company) to pay to the Buyer (as the Buyer elects) in
      cash
      on demand a sum equal to:-

    

    (iii) the
      liability or increased liability or, the reduction in the value of the asset
      (as
      appropriate); or

    

    (iv) the
      reduction in the value of the Shares caused by the breach.

     

    SECTION 7.5.
      Exclusion
      of limitations in case of fraudulent or negligent
      non-disclosure

    

    None
      of
      the limitations contained in Article 7 apply to any Claim where there has been
      fraud or negligent non-disclosure on the part of the Sellers.

    

    SECTION 7.6:
      Representative
      of the Sellers

    

    The
      Sellers agree that David Zelkha will act as their representative in giving
      instructions and requests for action under this section and the Buyer Parties
      shall be entitled to rely on the instructions and requests given by David Zelkha
      alone.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

    ARTICLE 8

    

    MISCELLANEOUS

    

    SECTION 8.1.
      Entire
      Agreement; Assignment; Amendments and Waivers.
      

    

    (a) This
      Agreement (including the Warrantors Disclosure Schedule), and the Related
      Agreements constitute the entire agreement between the parties hereto with
      respect to the subject matter hereof and thereof and supersede all other prior
      agreements and understandings both written and oral between the parties with
      respect to the subject matter hereof and thereof. No representation, warranty,
      promise, inducement or statement of intention has been made by any party that
      is
      not embodied in this Agreement or such other documents, and none of the parties
      shall be bound by, or be liable for, any alleged representation, warranty,
      promise, inducement or statement of intention not embodied herein or
      therein.

    

    (b) Neither
      party may assign, transfer, sub-licence or otherwise dispose of its rights
      or
      obligations under this Agreement in whole or part without the prior written
      consent of the other party which may be granted or withheld in that party’s sold
      discretion; provided,
      however,
      that
      Buyer may assign any or all of its rights and obligations under this Agreement
      to any subsidiary of Buyer.

    

    (c) This
      Agreement may not be amended or modified, and any of the terms, warranties,
      or
      conditions hereof may not be waived, except by a written instrument executed
      by
      all of the parties hereto, or in the case of a waiver, by the party waiving
      compliance. Any waiver by any party of any condition, or of the breach of any
      provision, term, or warranty contained in this Agreement, in any one or more
      instances, shall not be deemed to be nor construed as a further or continuing
      waiver of any such condition or of the breach of any other provision, term,
      or
      warranty of this Agreement. 

    

    SECTION 8.2.
      Validity.
      If any
      provision of this Agreement or the application thereof to any person or
      circumstance is held invalid or unenforceable, then the remainder of this
      Agreement and the application of such provision to other persons or
      circumstances shall not be affected thereby and to such end the provisions
      of
      this Agreement are agreed to be severable.

    

    SECTION 8.3.
      Notices.
      

    

    (a) All
      notices, requests, claims, demands and other communications hereunder shall
      be
      in writing and shall be given by delivery in person, by facsimile or by first
      class pre-paid recorded delivery post (air mail if overseas) to each other
      party
      as follows:

     

    
 

    
      	if to Buyer or Acquisition
              Sub:	
              Nu
                Horizons Electronics Corp.

              70
                Maxess Road

              Melville,
                NY 11747

              Fax:
                (631) 396-5060

              Attention:
                Arthur Nadata, Chairman 

            
	 	 
	with a copy to:	Farrell Fritz, P.C.
              1320
                Reckson Plaza

              Uniondale,
                NY 11556-1320

              Fax:
                (516) 336-2778

              Attention:
                Nancy D. Lieberman, Esq.

            
	 	 

    

     

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    
      	 	 
	 	
              and

              Pinsent
                Masons

              1
                Park Row

              Leeds

              LS1
                5AB

              Attention:
                Andrew Black, Esq.

            
	 	 
	if to Sellers to:	
              David
                Zelkha

              35
                Albion Street

              London

              W2
                2AX

            
	 	 
	 	
              Fax:
                + 44 207 638 7674

              Attention:
                David Zelkha

            
	 	 
	with a copy to:	
              Fladgate
                Fielder

              25
                North Row

              London
                WIK 6DS

              Fax:
                44 20 7629 4414

              Attention:
                Jeff McGeachie, Esq. 

            

    

     

    
    

    or
      to
      such other address as the person to whom notice is given may have previously
      furnished to the others in writing in the manner set forth above.

    

    (b) Subject
      to (c), any notice or other communication shall be deemed to have been
      served:-

    

    (i) if
      delivered personally, when left at the address referred to in Clause
      8.3(a);

    

    (ii) if
      sent
      by pre-paid recorded delivery post (other than air mail), two days after posting
      it; or

    

    (iii) if
      sent
      by air mail, six days after posting it.

    

    (c) If
      a
      notice is given or deemed given at a time or on a date which is not a Business
      Day, it shall be deemed to have been given on the next Business
      Day.

    

    SECTION 8.4.
      Governing
      Law, Forum Selection, Jurisdiction.
      

    

    (a) this
      Agreement shall be governed by and construed in accordance with the laws of
      England and Wales without regard or giving effect to the principles of conflicts
      of law thereof.

    

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

    (b) all
      disputes or controversies (whether of law of fact) of any nature whatsoever
      arising from or relating to this Agreement and the transactions contemplated
      hereby shall be decided by arbitration by the International Centre for Dispute
      Resolution (“ICDR”)
      of the
      American Arbitration Association (the “Association”)
      in
      accordance with the rules and regulations of the ICDR, except that either party
      shall have the right to seek equitable relief independently, including, but
      not
      limited to, temporary restraining orders, provisional and/or permanent
      injunctive relief, specific performance or any other equitable remedy as may
      be
      appropriate to enforce or prevent the violation of, any of the terms and
      conditions of this Agreements.

    

    In
      the
      event a dispute or controversy arises and the same cannot be resolved prior
      to
      the elapse of any prescribed negotiation period, either party may then submit
      the dispute to the ICDR located at 1633 Broadway, New York, N. Y. for
      arbitration in accordance with, and subject to, the rules of the ICDR then
      in
      effect, and, specifically, those procedures relating to Large, Complex Disputes.
      The parties agree that the arbitration shall be conducted before three (3)
      arbitrators selected in accordance with the ICDR Rules. Additionally, the
      parties agree that prior to the conduct of hearings, they will cooperate in
      the
      exchange of documents, exhibits and information pursuant to detailed demands
      therefor, and such other discovery, including a limited number of depositions,
      as they may agree upon in writing or the arbitrators may deem appropriate in
      the
      circumstances after a Preliminary Hearing before them is held. The decision
      of a
      majority of the arbitrators shall be binding upon all parties, and a judgment
      or
      decree upon the decision rendered by the arbitrators may be entered in any
      court
      of competent jurisdiction. Each party required to participate shall be
      responsible for its pro rata share of the fees and costs of arbitration,
      including, but not limited to, the cost of a full stenographic record of the
      proceedings which the parties hereby agree in advance will be required;
      provided, however, that the arbitrators shall be authorized, but not required,
      to award legal fees and costs to the prevailing party, based upon their
      consideration of the merits of the claims, the merits of the defences, and
      the
      results obtained from the arbitration.

    

    At
      the
      request of either the Buyer or the Seller, arbitration proceedings shall be
      conducted confidentially, in which case all documents, testimony and records
      shall be received, heard and maintained by the arbitrators in confidence under
      seal, available for the inspection only by the ICDR, the parties and their
      respective attorneys and experts, each of whom shall agree in writing to receive
      such information confidentially and to maintain such information in confidence.
      Hearings in the arbitration proceeding must be scheduled to commence actually
      on
      a date within one hundred twenty (120) days after the selection of the
      arbitrators. Such Hearings must be concluded within ninety (90) days thereafter
      (the “Hearing Period”), absent agreement by the parties in writing to extend the
      Hearing Period for an additional period not to exceed sixty (60) days.

    

    The
      Arbitrators shall be required to issue a reasoned award within sixty (60) days
      after the close of the Hearings and the submission of Post Hearing Memoranda,
      if
      any.

    

    (c) Except
      with respect to the matters to be resolved through arbitration pursuant to
      Section 8.4(b), each of the parties irrevocably agrees that the Courts of
      England and Wales shall have exclusive jurisdiction to hear and determine any
      suit, claim, proceeding or action relating to or arising in connection with
      equitable matters as provided in Section 8.4(b) above and for such limited
      purpose irrevocably submits to the jurisdiction of such Courts with respect
      thereto. Each party agrees that a final non-appealable judgment in any such
      suit, action or proceeding brought in such a court shall be conclusive and
      binding.

    

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

    SECTION
      8.5. WAIVER
      OF JURY TRIAL.
      TO THE
      EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE
      PARTIES HERETO HEREBY WAIVES, AND UNDERTAKES THAT IT WILL NOT ASSERT (WHETHER
      AS
      PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN RESPECT OF
      ANY
      ISSUE OR ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY RELATED
      AGREEMENT OR THE SUBJECT MATTER HEREOF, OR THEREOF OR IN ANY WAY CONNECTED
      WITH
      OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
      WHETHER NOW EXISTING OR HEREAFTER ARISING. ANY PARTY HERETO MAY FILE AN ORIGINAL
      COUNTERPART OR A COPY OF THIS SECTION 8.5 WITH ANY COURT AS WRITTEN EVIDENCE
      OF
      THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
      JURY.

    

    SECTION 8.6.
      Interpretation.
      

    

    (a) In
      this
      Agreement, reference to:-

    

    (i) a
      Clause
      or Schedule is a reference to a clause of or schedule to this
      Agreement;

    

    (ii) a
      document "in
      the agreed form"
      is a
      reference to a document in the form approved and, for the purposes of
      identification only, signed by or on behalf of the Buyer, the Acquisition Sub
      and the Sellers;

    

    (iii) a
      statutory provision includes a reference to that provision as modified,
      replaced, amended and/or re-enacted from time to time (before or after the
      date
      of this Agreement) and any prior or subsequent subordinate legislation made
      under it and, where the context so requires, references to an Article of the
      EC
      Treaty shall include a reference to the equivalent Article in the EC Treaty
      prior to its re-numbering by the Treaty of Amsterdam;

    

    (iv) "costs"
      includes a reference to costs, charges and expenses of every
      description;

    

    (v) a
      "subsidiary",
      "holding
      company"
      and
      "body
      corporate"
      has the
      respective meaning set out in sections 736 and 740 of CA 1985;

    

    (vi) a
      "company"
      has the
      meaning set out in section 735 of CA 1985;

    

    (vii) a
      "subsidiary
      undertaking"
      or a
      "parent
      undertaking"
      has the
      meaning set out in sections 258 and 259 of CA 1985;

    

    (viii) a
      "group
      undertaking"
      has the
      meaning set out in section 259 of CA 1985;

    

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

    (ix) the
      singular includes the plural and vice versa and reference to any gender includes
      the other gender.

    

    (b) The
      descriptive headings herein are inserted for convenience of reference only
      and
      are not intended to be part of or to affect the meaning or interpretation of
      this Agreement.

    

    (c) The
      Schedules form part of this Agreement and shall be interpreted and construed
      as
      though they were set out in this Agreement.

    

    (d) In
      construing this Agreement the ejusdem generis principle shall not apply and
      general words are not to be given a restrictive meaning because they are
      followed by particular examples intended to be embraced by the general
      words.

    

    (e) Any
      agreement, warranty, indemnity or undertaking on the part of two or more persons
      shall, except where the contrary is stated, be deemed to be given or made by
      such persons jointly and severally.

    

    SECTION 8.7.
      Third
      Party Rights.
      Except
      as expressly provided in this Agreement, a person who is not a party to this
      Agreement shall have no rights under the Contracts (Rights of Third Parties)
      Act
      1999 to rely upon or enforce any term of this Agreement provided that this
      does
      not affect any right or remedy of the third party which exists or is available
      apart from that Act. No party may declare itself as a trustee of the rights
      under this Agreement for the benefit of any third party save as expressly
      provided in this Agreement.

    

    SECTION 8.8.
      Personal
      Liability.
      This
      Agreement shall not create or be deemed to create or permit any personal
      liability or obligation on the part of any direct or indirect stockholder of
      any
      Seller or Buyer or any officer, director, employee, agent, representative or
      investor of any party hereto, except in the event of actual fraud or wilful
      misconduct by such Person.

    

    SECTION 8.9.
      Specific
      Performance.
      The
      parties hereby acknowledge and agree that the failure of any party to perform
      its agreements hereunder, including its failure to take all actions as are
      necessary on its part to the consummation of the transactions contemplated
      hereby, will cause irreparable injury to the other parties, for which damages,
      even if available, will not be an adequate remedy. Accordingly, each party
      hereby consents to the issuance of injunctive relief by any court of competent
      jurisdiction to compel performance of such party's obligations and to the
      granting by any court of the remedy of specific performance of its obligations
      hereunder without the requirement of posting a bond.

    

    SECTION 8.10
      Disclosure
      Generally.
      If and
      to the extent any information required to be furnished in any section of the
      Warrantors Disclosure Schedule is contained in this Agreement or disclosed
      in
      any section of the Warrantors Disclosure Schedule, such information shall be
      deemed to be included in any other section of the Warrantors Disclosure Schedule
      to the extent that such disclosure is specifically identified in such other
      section. 

    

    SECTION 8.11
      Authority
      of Buyer.
      

    

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

    Acquisition
      Sub hereby authorizes Buyer to take any action on behalf Acquisition Sub under
      this Agreement and any action so taken by Buyer on Acquisition Sub's behalf
      shall for all purposes herein be deemed to have been taken by Acquisition Sub
      and shall be binding upon Acquisition Sub for purposes hereof.

    

    SECTION 8.12
      Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original but all of which shall constitute one and the same
      agreement.

    

    SECTION 8.13
      Costs.
      The
      Buyer Parties and the Sellers shall pay their own costs in relation to the
      negotiation, preparation, execution and implementation of this Agreement, the
      Warrantors Disclosure Schedule and each of the Related Agreements. For the
      avoidance of doubt, the Sellers acknowledge that their own costs in relation
      to
      such matters are to be met by them as individuals and not by the Company and
      hereby confirm to the Buyer Parties that the Company has not paid any such
      costs
      to date.

     

     

    
 

    [signatures
      on following page]

    

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

    

    IN
      WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
      executed as a deed on its behalf as of the day and year first above
      written.

    

    

    
      	 	Executed as a Deed (but
              not
              delivered until dated) by: NU
              HORIZONS ELECTRONICS CORP.
	 	 
	 	Acting by Kurt
              Freudenberg
	 	 
	 	 s/Kurt
              Freudenberg
	 	 
	 	
              Authorised
                Signatory

            
	 	 
	 	 
	 	Executed as a Deed (but
              not
              delivered until dated) by: NU
              HORIZONS ELECTRONICS EUROPE LIMITED
	 	 
	 	Acting by two Directors
              or a
              Director and the Secretary
	 	 
	 	Arthur Nadata 	Director
	 	 
	 	Kurt Freudenberg 	Director/Secretary
	 	 
	 	 
	 	 
	 	 Executed as a deed
              by:
	 	 
	 	     
              s/Anthony
              Frere                        
                        
	 	Name: Anthony Frere
	 	 
	 	As witnessed by s/AD
              Eden
	 	 
	 	Name A D Eden
	 	 
	 	Address 40 John Shelton
              Drive
              Coventry
	 	 
	 	Occupation Franchise
              Manager

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	 	Executed as a deed by:
	 	 
	 	          s/Geoffrey
              Rose                     
              
	 	Name: Geoffrey Rose
	 	 
	 	As witnessed by s/ Ben Clarke
	 	 
	 	Name Ben Clarke
	 	 
	 	Address 16 Stirling Ave, Leanington
              SPA
	 	 
	 	Occupation Franchise Manager
	 	 
	 	 
	 	Executed as a deed by:
	 	 
	 	      
              s/David Soloman
              Zelkha            
              
	 	Name: David Soloman Zelkha
	 	 
	 	As witnessed by s/ A B Frere
	 	 
	 	Name A B Frere
	 	 
	 	Address Holly House The Poplars Gatnry
              Leanington SPA
	 	 
	 	Occupation Director
	 	 
	 	 
	 	Executed as a deed by:
	 	 
	 	         s/Gerard Patrick
              Hewitt             
              
	 	Name: Gerard Patrick Hewitt
	 	 
	 	As witnessed by s/ AD Eden
	 	 
	 	Name AD Eden
	 	 
	 	Address 40 John Shelton Drive,
              Coventry
	 	 
	 	Occupation Franchising Manager
	 	 

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	 	Executed as a deed by:
	 	 
	 	         s/Matthew
              Humphreys            
              
	 	Name: Matthew Humphreys
	 	 
	 	 
	 	As witnessed by Bernard Rondeau
	 	 
	 	Name Bernard Rondeua
	 	 
	 	Address [illegible]
	 	 
	 	Occupation public relations
	 	 
	 	 
	 	 
	 	Executed as a deed by:
	 	 
	 	         s/Stephen
              Price          
                      
	 	Name: Stephen Price
	 	 
	 	As witnessed by Catalina Bauza
	 	 
	 	Name Catalina Bauza
	 	 
	 	Address Apts Binimar Calan
              Forcat
	 	 
	 	Occupation
              Receptionist

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    SELLERS

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            
	 	 	 
	
              Names
                and Addresses of Sellers

            	
              Number
                and Class of Shares

            	
              Total
                Consideration

            
	 	 	 
	
              Anthony
                Frere

              Holly
                House The Poplars

              Eathorpe

              Leamington
                Spa

              Warwickshire

              CV33
                9DE

            	
              3167
                Ordinary

            	 
	 	 	 
	
              Geoffrey
                Rose

              Roseden

              214
                Hinckley Road

              Nuneaton

              Warwickshire

              CV11
                6LW

            	
              666
                Ordinary

            	 
	 	 	 
	
              David
                Soloman Zelkha

              35
                Albion Street

              London

              W2
                2AX

            	
              3167
                Ordinary

            	 
	 	 	 
	
              Gerard
                Patrick Hewitt

              126
                Loxley Road

              Stratford
                Upon Avon

              Warwickshire

              CV37
                7DS

            	
              70
                B Ordinary

            	 
	 	 	 
	
              Matthew
                Humphreys

              2
                Towerview Crescent

              Nuneaton

              Warwickshire

              CV10
                8PP

            	
              70
                B Ordinary

            	 
	 	 	 
	
              Stephen
                Price

              4
                Spring Lane

              Yielden

              Bedfordshire

              MK44
                1AT

            	
              70
                B Ordinary

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      2.4

    

    Sellers
      Closing Deliveries

    (a) duly
      executed stock transfer forms into the name of Acquisition Sub or its nominee
      in
      respect of all of the Shares together with the share certificates for all of
      the
      Shares (or an express indemnity in a form satisfactory to the Buyer Parties
      in
      the case of any missing certificate); 

     

    (b) the
      Certificates of Incorporation, Common Seal, Share Register and Share Certificate
      Book (with any unissued share certificates) and all minute books and other
      statutory books (which shall be written-up to but not including Closing) of
      the
      Company;

     

    (c) powers
      of
      attorney from each of the Sellers in respect of voting rights attached to the
      Shares in the agreed form duly executed by Sellers; 

     

    (d) a
      written
      resolution in the agreed form signed by each of the Sellers inter alia adopting
      new articles of association for the Company together with a notice in the agreed
      form signed by each of the Sellers appointing Arthur Stanley Nadata and Charles
      David Bowers as directors of the Company in terms of Article 24 of such new
      articles of association.

    (e) letter
      of
      resignation from the company secretary of the Company in the agreed
      form;

     

    (f) the
      Employment Agreements duly executed by the relevant Seller;

     

    (g) a
      declaration from each of the Sellers in the agreed form duly executed by the
      respective Sellers;

     

    (h) board
      minutes of the Company in the agreed form approving the registration of the
      transfers referred to in paragraph (a) above (subject only to due stamping)
      and
      the execution of the documents referred to in paragraph (e) above. Revoking
      all
      existing authorities to bankers regarding the operation of the Company’s bank
      accounts and give authority in favour of the persons nominated by the
      Acquisition Sub to operate such accounts, change the Company's registered office
      address as the Buyer directs and change the Company's accounting reference
      date
      as the Buyer directs;

     

    (i) a
      letter
      of resignation from the auditors of the Company accompanied by a statement
      under
      section 394 of CA 1985 in the agreed form together with evidence that any letter
      required by CA 1985 to be deposited by the auditors at the registered office
      of
      the Company has been so delivered pending which the resignation is not
      effective;

     

    (j) bank
      statements together with certificates from Barclays Bank certifying the current
      and deposit account balances of the Company at the close of business on the
      Business Day preceding Closing; and

     

    (k) the
      cash
      book balances of the Company as at Closing with reconciliation statements
      reconciling such cash book balances with the certificates referred to in
      (j).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      2.5

    

    Buyer
      Closing Deliveries

    

    (a) the
      Initial Purchase Price; 

    

    (b) the
      Employment Agreements duly executed by the Company;

    

    (c) deliver
      to the Sellers a copy, certified to be a true copy by a director or secretary
      of
      the Acquisition Sub, of a resolution of the Acquisition Sub board of directors
      (or an authorized committee of that board) authorizing the execution and
      completion of this Agreement and the Related Agreements; and

    

    (d) deliver
      to the Sellers a copy, certified to be a true copy by a director or secretary
      of
      the Buyer, of a resolution of the Buyer board of directors (or an authorized
      committee of that board) authorizing the execution and completion of this
      Agreement and the Related Agreements.Unassociated Document

    ALTEON
      INC.

     

    2005
      STOCK PLAN

     

    (as
      amended on July 19, 2006)

     

    
      	
              1.

            	
              DEFINITIONS.

            

    

     

    Unless
      otherwise specified or unless the context otherwise requires, the following
      terms, as used in this Alteon Inc. 2005 Stock Plan, have the following
      meanings:

     

    Administrator
      means
      the Board of Directors, unless it has delegated power to act on its behalf
      to
      the Committee, in which case the Administrator means the Committee.

     

    Affiliate
      means a
      corporation which, for purposes of Section 424 of the Code, is a parent or
      subsidiary of the Company, direct or indirect.

     

    Agreement
      means an
      agreement between the Company and a Participant delivered pursuant to the Plan,
      in such form as the Administrator shall approve.

     

    Board
      of Directors
      means
      the Board of Directors of the Company.

     

    Code
      means
      the United States Internal Revenue Code of 1986, as amended.

     

    Committee
      means
      the committee of the Board of Directors to which the Board of Directors has
      delegated power to act under or pursuant to the provisions of the
      Plan.

     

    Common
      Stock
      means
      shares of the Company’s common stock, $.01 par value per share.

     

    Company
      means
      Alteon Inc., a Delaware corporation.

     

    Disability
      or
Disabled
      means
      permanent and total disability as defined in Section 22(e)(3) of the
      Code.

     

    Employee
      means
      any employee of the Company or of an Affiliate (including, without limitation,
      an employee who is also serving as an officer or director of the Company or
      of
      an Affiliate), designated by the Administrator to be eligible to be granted
      one
      or more Stock Rights under the Plan.

     

    Fair
      Market Value
      of a
      Share of Common Stock means:

     

    (1) If
      the
      Common Stock is listed on a national securities exchange or traded in the
      over-the-counter market and sales prices are regularly reported for the Common
      Stock, the closing or last price of the Common Stock on the composite tape
      or
      other comparable reporting system for the trading day on the applicable date
      and
      if such date is not a trading day, the last market trading day prior to such
      date;

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

     

    (2) If
      the
      Common Stock is not traded on a national securities exchange but is traded
      on
      the over-the-counter market, if sales prices are not regularly reported for
      the
      Common Stock for the trading day referred to in clause (1), and if bid and
      asked
      prices for the Common Stock are regularly reported, the mean between the bid
      and
      the asked price for the Common Stock at the close of trading in the
      over-the-counter market for the trading day on which Common Stock was traded
      on
      the applicable date and if such date is not a trading day, the last market
      trading day prior to such date; and

     

    (3) If
      the
      Common Stock is neither listed on a national securities exchange nor traded
      in
      the over-the-counter market, such value as the Administrator, in good faith,
      shall determine.

     

    ISO
      means an
      option meant to qualify as an incentive stock option under Section 422 of the
      Code.

     

    Non-Compensated
      Director
      means a
      director of the Company who is neither an Employee nor a consultant rendering
      services to the Company or any Affiliate more than one day per
      week.

     

    Non-Qualified
      Option
      means an
      option which is not intended to qualify as an ISO.

     

    Option
      means an
      ISO or Non-Qualified Option granted under the Plan.

     

    Participant
      means an
      Employee, director or consultant of the Company or an Affiliate to whom one
      or
      more Stock Rights are granted under the Plan. As used herein, “Participant”
shall include “Participant’s Survivors” where the context requires.

     

    Plan
      means
      this Alteon Inc. 2005 Stock Plan.

     

    Shares
      means
      shares of the Common Stock as to which Stock Rights have been or may be granted
      under the Plan or any shares of capital stock into which the Shares are changed
      or for which they are exchanged within the provisions of Paragraph 3 of the
      Plan. The Shares issued under the Plan may be authorized and unissued shares
      or
      shares held by the Company in its treasury, or both.

     

    Stock-Based
      Award
      means a
      grant by the Company under the Plan of an equity award or equity based award
      which is not an Option or Stock Grant.

     

    Stock
      Grant
      means a
      grant by the Company of Shares under the Plan.

     

    Stock
      Right
      means a
      right to Shares or the value of Shares of the Company granted pursuant to the
      Plan — an ISO, a Non-Qualified Option, a Stock Grant or Stock-Based
      Award.

     

    Survivor
      means a
      deceased Participant’s legal representatives and/or any person or persons who
      acquired the Participant’s rights to a Stock Right by will or by the laws of
      descent and distribution.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

    
      	
              2.

            	
              PURPOSES
                OF THE PLAN.

            

    

     

    The
      Plan
      is intended to encourage ownership of Shares by Employees and directors of
      and
      certain consultants to the Company in order to attract such people, to induce
      them to work for the benefit of the Company or of an Affiliate and to provide
      additional incentive for them to promote the success of the Company or of an
      Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options,
      Stock Grants and Stock-Based Awards.

     

    
      	
              3.

            	
              SHARES
                SUBJECT TO THE PLAN.

            

    

     

    The
      number of Shares which may be issued from time to time pursuant to this Plan
      shall be 10,000,000, or the equivalent of such number of Shares after the
      Administrator, in its sole discretion, has interpreted the effect of any stock
      split, stock dividend, combination, recapitalization or similar transaction
      in
      accordance with Paragraph 24 of the Plan.

     

    If
      an
      Option ceases to be outstanding, in whole or in part (other than by exercise),
      or if the Company shall reacquire (at no more than its original issuance price)
      any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any
      Stock Right expires or is forfeited, cancelled, or otherwise terminated or
      results in any Shares not being issued, the unissued Shares which were subject
      to such Stock Right shall again be available for issuance from time to time
      pursuant to this Plan.

     

    
      	
              4.

            	
              ADMINISTRATION
                OF THE PLAN.

            

    

     

    The
      Administrator of the Plan will be the Board of Directors, except to the extent
      the Board of Directors delegates its authority to the Committee, in which case
      the Committee shall be the Administrator. Subject to the provisions of the
      Plan,
      the Administrator is authorized to:

     

    
      	 	
              a.

            	
              Interpret
                the provisions of the Plan and all Stock Rights and to make all rules
                and
                determinations which it deems necessary or advisable for the
                administration of the Plan;

            

    

     

    
      	 	
              b.

            	
              Determine
                which Employees, directors and consultants shall be granted Stock
                Rights;

            

    

     

    
      	 	
              c.

            	
              Determine
                the number of Shares for which a Stock Right or Stock Rights shall
                be
                granted; provided, however, that in no event shall (i) Stock Rights
                with
                respect to more than 1,000,000 Shares be granted to any Participant
                in any
                fiscal year and (ii) more than 1,000,000 Shares be issued as Stock
                Grants;

            

    

     

    
      	 	
              d.

            	
              Specify
                the terms and conditions upon which a Stock Right or Stock Rights
                may be
                granted; and

            

    

     

    
      	 	
              e.

            	
              Adopt
                any sub-plans applicable to residents of any specified jurisdiction
                as it
                deems necessary or appropriate in order to comply with or take advantage
                of any tax or other laws applicable to the Company or to Plan Participants
                or to otherwise facilitate the administration of the Plan, which
                sub-plans
                may include additional restrictions or conditions applicable to Stock
                Rights or Shares issuable pursuant to a Stock
                Right;

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    provided,
      however, that all such interpretations, rules, determinations, terms and
      conditions shall be made and prescribed in the context of preserving the tax
      status under Section 422 of the Code of those Options which are designated
      as
      ISOs. Subject to the foregoing, the interpretation and construction by the
      Administrator of any provisions of the Plan or of any Stock Right granted under
      it shall be final, unless otherwise determined by the Board of Directors, if
      the
      Administrator is the Committee. In addition, if the Administrator is the
      Committee, the Board of Directors may take any action under the Plan that would
      otherwise be the responsibility of the Committee.

     

    To
      the
      extent permitted under applicable law, the Board of Directors or the Committee
      may allocate all or any portion of its responsibilities and powers to any one
      or
      more of its members and may delegate all or any portion of its responsibilities
      and powers to any other person selected by it. The Board of Directors or the
      Committee may revoke any such allocation or delegation at any time.

     

    
      	
              5.

            	
              ELIGIBILITY
                FOR PARTICIPATION.

            

    

     

    The
      Administrator will, in its sole discretion, name the Participants in the Plan,
      provided, however, that each Participant must be an Employee, director or
      consultant of the Company or of an Affiliate at the time a Stock Right is
      granted. Notwithstanding the foregoing, the Administrator may authorize the
      grant of a Stock Right to a person not then an Employee, director or consultant
      of the Company or of an Affiliate; provided, however, that the actual grant
      of
      such Stock Right shall be conditioned upon such person becoming eligible to
      become a Participant at or prior to the time of the execution of the Agreement
      evidencing such Stock Right. ISOs may be granted only to Employees.
      Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to
      any
      Employee, director or consultant of the Company or an Affiliate. The granting
      of
      any Stock Right to any individual shall neither entitle that individual to,
      nor
      disqualify him or her from, participation in any other grant of Stock
      Rights.

     

    
      	
              6.

            	
              TERMS
                AND CONDITIONS OF OPTIONS.

            

    

     

    Each
      Option shall be set forth in writing in an Option Agreement, duly executed
      by
      the Company and, to the extent required by law or requested by the Company,
      by
      the Participant. The Administrator may provide that Options be granted subject
      to such terms and conditions, consistent with the terms and conditions
      specifically required under this Plan, as the Administrator may deem appropriate
      including, without limitation, subsequent approval by the shareholders of the
      Company of this Plan or any amendments thereto. The Option Agreements shall
      be
      subject to at least the following terms and conditions:

     

    
      	 	
              A.

            	
              Non-Qualified
                Options:
                Each Option intended to be a Non-Qualified Option shall be subject
                to the
                terms and conditions which the Administrator determines to be appropriate
                and in the best interest of the Company, subject to the following
                minimum
                standards for any such Non-Qualified
                Option:

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    
      	 	
              a.

            	
              Option
                Price:
                Each Option Agreement shall state the option price (per share) of
                the
                Shares covered by each Option, which option price shall be determined
                by
                the Administrator but shall not be less than the Fair Market Value
                per
                share of Common Stock.

            

    

     

    
      	 	
              b.

            	
              Number
                of Shares:
                Each Option Agreement shall state the number of Shares to which it
                pertains.

            

    

     

    
      	 	
              c.

            	
              Option
                Periods:
                Each Option Agreement shall state the date or dates on which it first
                is
                exercisable and the date after which it may no longer be exercised,
                and
                may provide that the Option rights accrue or become exercisable in
                installments over a period of months or years, or upon the occurrence
                of
                certain conditions or the attainment of stated goals or
                events.

            

    

     

    
      	 	
              d.

            	
              Option
                Conditions:
                Exercise of any Option may be conditioned upon the Participant’s execution
                of a Share purchase agreement in form satisfactory to the Administrator
                providing for certain protections for the Company and its other
                shareholders, including requirements
                that:

            

    

     

    
      	 	
              i.

            	
              The
                Participant’s or the Participant’s Survivors’ right to sell or transfer
                the Shares may be restricted; and

            

    

     

    
      	 	
              ii.

            	
              The
                Participant or the Participant’s Survivors may be required to execute
                letters of investment intent and must also acknowledge that the Shares
                will bear legends noting any applicable
                restrictions.

            

    

     

    
      	 	
              e.

            	
              Directors’
                Options:
                On the date of each annual meeting of shareholders of the Company,
                whether
                or not such director is up for election or reelection, provided that
                on
                such dates such director is serving as a director of the Company,
                such
                Non-Compensated Director shall be granted a Non-Qualified Option
                to
                purchase 20,000 Shares. If a Non-Compensated Director is first elected
                or
                appointed to the Board other than at an annual meeting of shareholders,
                on
                the date of his or her initial election or appointment he or she
                shall be
                granted a Non-Qualified Option to purchase the number of Shares determined
                by multiplying 1,667 by the number of whole or partial months from
                the
                date of his or her election or appointment to the Company’s next annual
                meeting of shareholders. For purposes of the preceding sentence,
                a month
                shall mean a period of 30 consecutive
                days.

            

    

     

    Each
      such
      Option shall (i) have an exercise price equal to the Fair Market Value (per
      share) of the Shares on the date of grant of the Option, (ii) have a term of
      ten
      years, (iii) shall vest and become exercisable upon completion of one full
      year
      of service on the Board after the date of grant provided that on such date
      the
      Non-Compensated Director is serving as a director of the Company, and (iv)
      shall
      remain exercisable regardless of whether or not the Non-Compensated Director
      holding the Option later ceases to be a director of the Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

     

    
      	 	
              B.

            	
              ISOs:
                Each Option intended to be an ISO shall be issued only to an Employee
                and
                be subject to the following terms and conditions, with such additional
                restrictions or changes as the Administrator determines are appropriate
                but not in conflict with Section 422 of the Code and relevant regulations
                and rulings of the Internal Revenue
                Service:

            

    

     

    
      	 	
              a.

            	
              Minimum
                standards:
                The ISO shall meet the minimum standards required of Non-Qualified
                Options, as described in Paragraph 6(A) above, except clauses (a)
                and (e)
                thereunder.

            

    

     

    
      	 	
              b.

            	
              Option
                Price:
                Immediately before the ISO is granted, if the Participant owns, directly
                or by reason of the applicable attribution rules in Section 424(d)
                of the
                Code:

            

    

     

    
      	 	
              i.

            	
              10%
                or less of the total combined voting power of all classes of stock
                of the
                Company or an Affiliate, the Option price per share of the Shares
                covered
                by each ISO shall not be less than 100% of the Fair Market Value
                per share
                of the Shares on the date of the grant of the Option;
                or

            

    

     

    
      	 	
              ii.

            	
              More
                than 10% of the total combined voting power of all classes of stock
                of the
                Company or an Affiliate, the Option price per share of the Shares
                covered
                by each ISO shall not be less than 110% of the Fair Market Value
                on the
                date of grant.

            

    

     

    
      	 	
              c.

            	
              Term
                of Option:
                For Participants who own:

            

    

     

    
      	 	
              i.

            	
              10%
                or less of the total combined voting power of all classes of stock
                of the
                Company or an Affiliate, each ISO shall terminate not more than ten
                years
                from the date of the grant or at such earlier time as the Option
                Agreement
                may provide; or

            

    

     

    
      	 	
              ii.

            	
              More
                than 10% of the total combined voting power of all classes of stock
                of the
                Company or an Affiliate, each ISO shall terminate not more than five
                years
                from the date of the grant or at such earlier time as the Option
                Agreement
                may provide.

            

    

     

    
      	 	
              d.

            	
              Limitation
                on Yearly Exercise:
                The Option Agreements shall restrict the amount of ISOs which may
                become
                exercisable in any calendar year (under this or any other ISO plan
                of the
                Company or an Affiliate) so that the aggregate Fair Market Value
                (determined at the time each ISO is granted) of the stock with respect
                to
                which ISOs are exercisable for the first time by the Participant
                in any
                calendar year does not exceed
                $100,000.

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

     

    
      	
              7.

            	
              TERMS
                AND CONDITIONS OF STOCK GRANTS.

            

    

     

    Each
      offer of a Stock Grant to a Participant shall state the date prior to which
      the
      Stock Grant must be accepted by the Participant, and the principal terms of
      each
      Stock Grant shall be set forth in an Agreement, duly executed by the Company
      and, to the extent required by law or requested by the Company, by the
      Participant. The Agreement shall be in a form approved by the Administrator
      and
      shall contain terms and conditions which the Administrator determines to be
      appropriate and in the best interest of the Company, subject to the following
      minimum standards:

     

    
      	 	
              a.

            	
              Each
                Agreement shall state the purchase price (per share), if any, of
                the
                Shares covered by each Stock Grant, which purchase price shall be
                determined by the Administrator but shall not be less than the minimum
                consideration required by the Delaware General Corporation Law on
                the date
                of the grant of the Stock Grant;

            

    

     

    
      	 	
              b.

            	
              Each
                Agreement shall state the number of Shares to which the Stock Grant
                pertains; and

            

    

     

    
      	 	
              c.

            	
              Each
                Agreement shall include the terms of any right of the Company to
                restrict
                or reacquire the Shares subject to the Stock Grant, including the
                time and
                events upon which such rights shall accrue and the purchase price
                therefore, if any.

            

    

     

    
      	
              8.

            	
              TERMS
                AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

            

    

     

    The
      Board
      shall have the right to grant other Stock-Based Awards based upon the Common
      Stock having such terms and conditions as the Board may determine, including,
      without limitation, the grant of Shares based upon certain conditions, the
      grant
      of securities convertible into Shares and the grant of stock appreciation
      rights, phantom stock awards or stock units. The principal terms of each
      Stock-Based Award shall be set forth in an Agreement, duly executed by the
      Company and, to the extent required by law or requested by the Company, by
      the
      Participant. The Agreement shall be in a form approved by the Administrator
      and
      shall contain terms and conditions which the Administrator determines to be
      appropriate and in the best interest of the Company.

     

    
      	
              9.

            	
              EXERCISE
                OF OPTIONS AND ISSUE OF SHARES.

            

    

     

    An
      Option
      (or any part or installment thereof) shall be exercised by giving written notice
      to the Company or its designee, together with provision for payment of the
      full
      purchase price in accordance with this Paragraph for the Shares as to which
      the
      Option is being exercised, and upon compliance with any other condition(s)
      set
      forth in the Option Agreement. Such notice shall be signed by the person
      exercising the Option, shall state the number of Shares with respect to which
      the Option is being exercised and shall contain any representation required
      by
      the Plan or the Option Agreement. Payment of the purchase price for the Shares
      as to which such Option is being exercised shall be made (a) in United States
      dollars in cash or by check, or (b) at the discretion of the Administrator,
      through delivery of shares of Common Stock having a Fair Market Value equal
      as
      of the date of the exercise to the cash exercise price of the Option, or (c)
      at
      the discretion of the Administrator, by having the Company retain from the
      shares otherwise issuable upon exercise of the Option, a number of shares having
      a Fair Market Value equal as of the date of exercise to the exercise price
      of
      the Option, or (d) at the discretion of the Administrator, by delivery of the
      grantee’s personal recourse note, bearing interest payable not less than
      annually at no less than 100% of the applicable Federal rate, as defined in
      Section 1274(d) of the Code, with or without the pledge of such Shares as
      collateral, or (e) at the discretion of the Administrator, in accordance with
      a
      cashless exercise program established with a securities brokerage firm, and
      approved by the Administrator, or (f) at the discretion of the Administrator,
      by
      any combination of (a), (b), (c), (d) and (e) above, or (g) at the discretion
      of
      the Administrator, payment of such other lawful consideration as the Board
      may
      determine. Notwithstanding the foregoing, the Administrator shall accept only
      such payment on exercise of an ISO as is permitted by Section 422 of the
      Code.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    The
      Administrator may specify a reasonable minimum number of shares that may be
      purchased on any exercise of an Option, provided that such minimum number will
      not prevent the Participant from exercising that full number of Shares as to
      which the Option is then exercisable.

     

    The
      Company shall then reasonably promptly deliver the Shares as to which such
      Option was exercised to the Participant (or to the Participant’s Survivors, as
      the case may be). In determining what constitutes “reasonably promptly,” it is
      expressly understood that the issuance and delivery of the Shares may be delayed
      by the Company in order to comply with any law or regulation (including, without
      limitation, state securities or “blue sky” laws) which requires the Company to
      take any action with respect to the Shares prior to their issuance. The Shares
      shall, upon delivery, be fully paid, non-assessable Shares.

     

    The
      Administrator shall have the right to accelerate the date of exercise of any
      installment of any Option; provided that the Administrator shall not accelerate
      the exercise date of any installment of any Option granted to an Employee as
      an
      ISO (and not previously converted into a Non-Qualified Option pursuant to
      Paragraph 27) if such acceleration would violate the annual vesting limitation
      contained in Section 422(d) of the Code, as described in Paragraph
      6.B.d.

     

    The
      Administrator may, in its discretion, amend any term or condition of an
      outstanding Option provided (i) such term or condition as amended is permitted
      by the Plan, (ii) any such amendment shall be made only with the consent of
      the
      Participant to whom the Option was granted, or in the event of the death of
      the
      Participant, the Participant’s Survivors, if the amendment is adverse to the
      Participant, and (iii) any such amendment of any ISO shall be made only after
      the Administrator determines whether such amendment would constitute a
“modification” of any Option which is an ISO (as that term is defined in Section
      424(h) of the Code) or would cause any adverse tax consequences for the holder
      of such ISO.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

     

    
      	
              10.

            	
              ACCEPTANCE
                OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

            

    

     

    A
      Stock
      Grant or Stock-Based Award (or any part or installment thereof) shall be
      accepted by executing the applicable Agreement and delivering it to the Company
      or its designee, together with provision for payment of the full purchase price,
      if any, in accordance with this Paragraph for the Shares as to which such Stock
      Grant or Stock-Based Award is being accepted, and upon compliance with any
      other
      conditions set forth in the applicable Agreement. Payment of the purchase price
      for the Shares as to which such Stock Grant or Stock-Based Award is being
      accepted shall be made (a) in United States dollars in cash or by check, or
      (b)
      at the discretion of the Administrator, through delivery of shares of Common
      Stock having a Fair Market Value equal as of the date of acceptance of the
      Stock
      Grant or Stock-Based Award to the purchase price of the Stock Grant or
      Stock-Based Award, or (c) at the discretion of the Administrator, by delivery
      of
      the grantee’s personal recourse note bearing interest payable not less than
      annually at no less than 100% of the applicable Federal rate, as defined in
      Section 1274(d) of the Code, or (d) at the discretion of the Administrator,
      by
      any combination of (a), (b) and (c) above.

     

    The
      Company shall then, if required pursuant to the applicable Agreement, reasonably
      promptly deliver the Shares as to which such Stock Grant or Stock-Based Award
      was accepted to the Participant (or to the Participant’s Survivors, as the case
      may be), subject to any escrow provision set forth in the applicable Agreement.
      In determining what constitutes “reasonably promptly,” it is expressly
      understood that the issuance and delivery of the Shares may be delayed by the
      Company in order to comply with any law or regulation (including, without
      limitation, state securities or “blue sky” laws) which requires the Company to
      take any action with respect to the Shares prior to their issuance.

     

    The
      Administrator may, in its discretion, amend any term or condition of an
      outstanding Stock Grant, Stock-Based Award or applicable Agreement provided
      (i)
      such term or condition as amended is permitted by the Plan, and (ii) any such
      amendment shall be made only with the consent of the Participant to whom the
      Stock Grant or Stock-Based Award was made, if the amendment is adverse to the
      Participant.

     

    
      	
              11.

            	
              RIGHTS
                AS A SHAREHOLDER.

            

    

     

    No
      Participant to whom a Stock Right has been granted shall have rights as a
      shareholder with respect to any Shares covered by such Stock Right, except
      after
      due exercise of the Option or acceptance of the Stock Grant or as set forth
      in
      any Agreement and tender of the full purchase price, if any, for the Shares
      being purchased pursuant to such exercise or acceptance and registration of
      the
      Shares in the Company’s share register in the name of the
      Participant.

     

    
      	
              12.

            	
              ASSIGNABILITY
                AND TRANSFERABILITY OF STOCK RIGHTS.

            

    

     

    By
      its
      terms, a Stock Right granted to a Participant shall not be transferable by
      the
      Participant other than (i) by will or by the laws of descent and distribution,
      or (ii) as approved by the Administrator in its discretion and set forth in
      the
      applicable Agreement. Notwithstanding the foregoing, an ISO transferred except
      in compliance with clause (i) above shall no longer qualify as an ISO. The
      designation of a beneficiary of a Stock Right by a Participant, with the prior
      approval of the Administrator and in such form as the Administrator shall
      prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except
      as provided above, a Stock Right shall only be exercisable or may only be
      accepted, during the Participant’s lifetime, by such Participant (or by his or
      her legal representative) and shall not be assigned, pledged or hypothecated
      in
      any way (whether by operation of law or otherwise) and shall not be subject
      to
      execution, attachment or similar process. Any attempted transfer, assignment,
      pledge, hypothecation or other disposition of any Stock Right or of any rights
      granted thereunder contrary to the provisions of this Plan, or the levy of
      any
      attachment or similar process upon a Stock Right, shall be null and
      void.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

     

    
      	
              13.

            	
              EFFECT
                ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
                DISABILITY.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Option Agreement, in the event of a
      termination of service (whether as an employee, director or consultant) with
      the
      Company or an Affiliate before the Participant has exercised an Option, the
      following rules apply:

     

    
      	 	
              a.

            	
              A
                Participant who ceases to be an employee, director or consultant
                of the
                Company or of an Affiliate (for any reason other than termination
“for
                cause”, Disability, or death for which events there are special rules in
                Paragraphs 14, 15, and 16, respectively), may exercise any Option
                granted
                to him or her to the extent that the Option is exercisable on the
                date of
                such termination of service, but only within such term as the
                Administrator has designated in a Participant’s Option
                Agreement;

            

    

     

    
      	 	
              b.

            	
              Except
                as provided in Subparagraph (c) below, or Paragraph 15 or 16, in
                no event
                may an Option intended to be an ISO, be exercised later than three
                months
                after the Participant’s termination of
                employment;

            

    

     

    
      	 	
              c.

            	
              The
                provisions of this Paragraph, and not the provisions of Paragraph
                15 or
                16, shall apply to a Participant who subsequently becomes Disabled
                or dies
                after the termination of employment, director status or consultancy;
                provided, however, in the case of a Participant’s Disability or death
                within three months after the termination of employment, director
                status
                or consultancy, the Participant or the Participant’s Survivors may
                exercise the Option within one year after the date of the Participant’s
                termination of service, but in no event after the date of expiration
                of
                the term of the Option;

            

    

     

    
      	 	
              d.

            	
              Notwithstanding
                anything herein to the contrary, if subsequent to a Participant’s
                termination of employment, termination of director status or termination
                of consultancy, but prior to the exercise of an Option, the Board
                of
                Directors determines that, either prior or subsequent to the Participant’s
                termination, the Participant engaged in conduct which would constitute
                “cause”, then such Participant shall forthwith cease to have any right to
                exercise any Option;

            

    

     

    
      	 	
              e.

            	
              A
                Participant to whom an Option has been granted under the Plan who
                is
                absent from the Company or an Affiliate because of temporary disability
                (any disability other than a Disability as defined in Paragraph 1
                hereof),
                or who is on leave of absence for any purpose, shall not, during
                the
                period of any such absence, be deemed, by virtue of such absence
                alone, to
                have terminated such Participant’s employment, director status or
                consultancy with the Company or with an Affiliate, except as the
                Administrator may otherwise expressly provide;
                and

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

     

    
      	 	
              f.

            	
              Except
                as required by law or as set forth in a Participant’s Option Agreement,
                Options granted under the Plan shall not be affected by any change
                of a
                Participant’s status within or among the Company and any Affiliates, so
                long as the Participant continues to be an employee, director or
                consultant of the Company or any
                Affiliate.

            

    

     

    
      	
              14.

            	
              EFFECT
                ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Option Agreement, the following rules
      apply if the Participant’s service (whether as an employee, director or
      consultant) with the Company or an Affiliate is terminated “for cause” prior to
      the time that all his or her outstanding Options have been
      exercised:

     

    
      	 	
              a.

            	
              All
                outstanding and unexercised Options as of the time the Participant
                is
                notified his or her service is terminated “for cause” will immediately be
                forfeited;

            

    

     

    
      	 	
              b.

            	
              For
                purposes of this Plan, “cause” shall include (and is not limited to)
                dishonesty with respect to the Company or any Affiliate, insubordination,
                substantial malfeasance or non-feasance of duty, unauthorized disclosure
                of confidential information, breach by the Participant of any provision
                of
                any employment, consulting, advisory, nondisclosure, non-competition
                or
                similar agreement between the Participant and the Company, and conduct
                substantially prejudicial to the business of the Company or any Affiliate.
                The determination of the Administrator as to the existence of “cause” will
                be conclusive on the Participant and the
                Company;

            

    

     

    
      	 	
              c.

            	
              “Cause”
                is not limited to events which have occurred prior to a Participant’s
                termination of service, nor is it necessary that the Administrator’s
                finding of “cause” occur prior to termination. If the Administrator
                determines, subsequent to a Participant’s termination of service but prior
                to the exercise of an Option, that either prior or subsequent to
                the
                Participant’s termination the Participant engaged in conduct which would
                constitute “cause”, then the right to exercise any Option is forfeited;
                and

            

    

     

    
      	 	
              d.

            	
              Any
                provision in an agreement between the Participant and the Company
                or an
                Affiliate, which contains a conflicting definition of “cause” for
                termination and which is in effect at the time of such termination,
                shall
                supersede the definition in this Plan with respect to that
                Participant.

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

     

    
      	
              15.

            	
              EFFECT
                ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Option Agreement, a Participant who ceases
      to be an employee, director or consultant of the Company or of an Affiliate
      by
      reason of Disability may exercise any Option granted to such
      Participant:

     

    
      	 	
              a.

            	
              To
                the extent that the Option has become exercisable but has not been
                exercised on the date of Disability;
                and

            

    

     

    
      	 	
              b.

            	
              In
                the event rights to exercise the Option accrue periodically, to the
                extent
                of a pro rata portion through the date of Disability of any additional
                vesting rights that would have accrued on the next vesting date had
                the
                Participant not become Disabled. The proration shall be based upon
                the
                number of days accrued in the current vesting period prior to the
                date of
                Disability.

            

    

     

    A
      Disabled Participant may exercise such rights only within the period ending
      one
      year after the date of the Participant’s termination of employment, directorship
      or consultancy, as the case may be, notwithstanding that the Participant might
      have been able to exercise the Option as to some or all of the Shares on a
      later
      date if the Participant had not become Disabled and had continued to be an
      employee, director or consultant or, if earlier, within the originally
      prescribed term of the Option.

     

    The
      Administrator shall make the determination both of whether Disability has
      occurred and the date of its occurrence (unless a procedure for such
      determination is set forth in another agreement between the Company and such
      Participant, in which case such procedure shall be used for such determination).
      If requested, the Participant shall be examined by a physician selected or
      approved by the Administrator, the cost of which examination shall be paid
      for
      by the Company.

     

    
      	
              16.

            	
              EFFECT
                ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
                CONSULTANT.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Option Agreement, in the event of the
      death of a Participant while the Participant is an employee, director or
      consultant of the Company or of an Affiliate, such Option may be exercised
      by
      the Participant’s Survivors:

     

    
      	 	
              a.

            	
              To
                the extent that the Option has become exercisable but has not been
                exercised on the date of death; and

            

    

     

    
      	 	
              b.

            	
              In
                the event rights to exercise the Option accrue periodically, to the
                extent
                of a pro rata portion through the date of death of any additional
                vesting
                rights that would have accrued on the next vesting date had the
                Participant not died. The proration shall be based upon the number
                of days
                accrued in the current vesting period prior to the Participant’s date of
                death.

            

    

     

    If
      the
      Participant’s Survivors wish to exercise the Option, they must take all
      necessary steps to exercise the Option within one year after the date of death
      of such Participant, notwithstanding that the decedent might have been able
      to
      exercise the Option as to some or all of the Shares on a later date if he or
      she
      had not died and had continued to be an employee, director or consultant or,
      if
      earlier, within the originally prescribed term of the Option.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

     

    
      	
              17.

            	
              EFFECT
                OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.

            

    

     

    In
      the
      event of a termination of service (whether as an employee, director or
      consultant) with the Company or an Affiliate for any reason before the
      Participant has accepted a Stock Grant, such offer shall terminate.

     

    For
      purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom
      a
      Stock Grant has been offered and accepted under the Plan who is absent from
      work
      with the Company or with an Affiliate because of temporary disability (any
      disability other than a permanent and total Disability as defined in Paragraph
      1
      hereof), or who is on leave of absence for any purpose, shall not, during the
      period of any such absence, be deemed, by virtue of such absence alone, to
      have
      terminated such Participant’s employment, director status or consultancy with
      the Company or with an Affiliate, except as the Administrator may otherwise
      expressly provide.

     

    In
      addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change
      of employment or other service within or among the Company and any Affiliates
      shall not be treated as a termination of employment, director status or
      consultancy so long as the Participant continues to be an employee, director
      or
      consultant of the Company or any Affiliate.

     

    
      	
              18.

            	
              EFFECT
                ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH
                OR DISABILITY.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Agreement, in the event of a termination
      of service (whether as an employee, director or consultant), other than
      termination “for cause,” Disability, or death for which events there are special
      rules in Paragraphs 19, 20, and 21, respectively, before all Company rights
      of
      repurchase shall have lapsed, then the Company shall have the right to
      repurchase that number of Shares subject to a Stock Grant as to which the
      Company’s repurchase rights have not lapsed.

     

    
      	
              19.

            	
              EFFECT
                ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Agreement, the following rules apply if
      the Participant’s service (whether as an employee, director or consultant) with
      the Company or an Affiliate is terminated “for cause”:

     

    
      	 	
              a.

            	
              All
                Shares subject to any Stock Grant shall be immediately subject to
                repurchase by the Company at the purchase price, if any,
                thereof;

            

    

     

    
      	 	
              b.

            	
              For
                purposes of this Plan, “cause” shall include (and is not limited to)
                dishonesty with respect to the employer, insubordination, substantial
                malfeasance or non-feasance of duty, unauthorized disclosure of
                confidential information, breach by the Participant of any provision
                of
                any employment, consulting, advisory, nondisclosure, non-competition
                or
                similar agreement between the Participant and the Company, and conduct
                substantially prejudicial to the business of the Company or any Affiliate.
                The determination of the Administrator as to the existence of “cause” will
                be conclusive on the Participant and the
                Company;

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

    
      	 	
              c.

            	
              “Cause”
                is not limited to events which have occurred prior to a Participant’s
                termination of service, nor is it necessary that the Administrator’s
                finding of “cause” occur prior to termination. If the Administrator
                determines, subsequent to a Participant’s termination of service, that
                either prior or subsequent to the Participant’s termination the
                Participant engaged in conduct which would constitute “cause,” then the
                Company’s right to repurchase all of such Participant’s Shares shall
                apply; and

            

    

     

    
      	 	
              d.

            	
              Any
                provision in an agreement between the Participant and the Company
                or an
                Affiliate, which contains a conflicting definition of “cause” for
                termination and which is in effect at the time of such termination,
                shall
                supersede the definition in this Plan with respect to that
                Participant.

            

    

     

    
      	
              20.

            	
              EFFECT
                ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Agreement, the following rules apply if a
      Participant ceases to be an employee, director or consultant of the Company
      or
      of an Affiliate by reason of Disability: to the extent the Company’s rights of
      repurchase have not lapsed on the date of Disability, they shall be exercisable;
      provided, however, that in the event such rights of repurchase lapse
      periodically, such rights shall lapse to the extent of a pro rata portion of
      the
      Shares subject to such Stock Grant through the date of Disability as would
      have
      lapsed had the Participant not become Disabled. The proration shall be based
      upon the number of days accrued prior to the date of Disability.

     

    The
      Administrator shall make the determination both of whether Disability has
      occurred and the date of its occurrence (unless a procedure for such
      determination is set forth in another agreement between the Company and such
      Participant, in which case such procedure shall be used for such determination).
      If requested, the Participant shall be examined by a physician selected or
      approved by the Administrator, the cost of which examination shall be paid
      for
      by the Company.

     

    
      	
              21.

            	
              EFFECT
                ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
                CONSULTANT.

            

    

     

    Except
      as
      otherwise provided in a Participant’s Agreement, the following rules apply in
      the event of the death of a Participant while the Participant is an employee,
      director or consultant of the Company or of an Affiliate: to the extent the
      Company’s rights of repurchase have not lapsed on the date of death, they shall
      be exercisable; provided, however, that in the event such rights of repurchase
      lapse periodically, such rights shall lapse to the extent of a pro rata portion
      of the Shares subject to such Stock Grant through the date of death as would
      have lapsed had the Participant not died. The proration shall be based upon
      the
      number of days accrued prior to the Participant’s death.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

     

    
      	
              22.

            	
              PURCHASE
                FOR INVESTMENT.

            

    

     

    Unless
      the offering and sale of the Shares to be issued upon the particular exercise
      or
      acceptance of a Stock Right shall have been effectively registered under the
      Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”),
      the Company shall be under no obligation to issue the Shares covered by such
      exercise unless and until the following conditions have been
      fulfilled:

     

    
      	 	
              a.

            	
              The
                person(s) who exercise(s) or accept(s) such Stock Right shall warrant
                to
                the Company, prior to the receipt of such Shares, that such person(s)
                are
                acquiring such Shares for their own respective accounts, for investment,
                and not with a view to, or for sale in connection with, the distribution
                of any such Shares, in which event the person(s) acquiring such Shares
                shall be bound by the provisions of the following legend which shall
                be
                endorsed upon the certificate(s) evidencing their Shares issued pursuant
                to such exercise or such grant:

            

    

     

    “The
      shares represented by this certificate have been taken for investment and they
      may not be sold or otherwise transferred by any person, including a pledgee,
      unless (1) either (a) a Registration Statement with respect to such shares
      shall
      be effective under the Securities Act of 1933, as amended, or (b) the Company
      shall have received an opinion of counsel satisfactory to it that an exemption
      from registration under such Act is then available, and (2) there shall have
      been compliance with all applicable state securities laws.”

     

    
      	 	
              b.

            	
              At
                the discretion of the Administrator, the Company shall have received
                an
                opinion of its counsel that the Shares may be issued upon such particular
                exercise or acceptance in compliance with the 1933 Act without
                registration thereunder.

            

    

     

    
      	
              23.

            	
              DISSOLUTION
                OR LIQUIDATION OF THE COMPANY.

            

    

     

    Upon
      the
      dissolution or liquidation of the Company, all Options granted under this Plan
      which as of such date shall not have been exercised and all Stock Grants and
      Stock-Based Awards which have not been accepted will terminate and become null
      and void; provided, however, that if the rights of a Participant or a
      Participant’s Survivors have not otherwise terminated and expired, the
      Participant or the Participant’s Survivors will have the right immediately prior
      to such dissolution or liquidation to exercise or accept any Stock Right to
      the
      extent that the Stock Right is exercisable or subject to acceptance as of the
      date immediately prior to such dissolution or liquidation. Upon the dissolution
      or liquidation of the Company, any outstanding Stock-Based Awards shall
      immediately terminate unless otherwise determined by the Administrator or
      specifically provided in the applicable Agreement.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

     

    
      	
              24.

            	
              ADJUSTMENTS.

            

    

     

    Upon
      the
      occurrence of any of the following events, a Participant’s rights with respect
      to any Stock Right granted to him or her hereunder shall be adjusted as
      hereinafter provided, unless otherwise specifically provided in a Participant’s
      Agreement:

     

    
      	 	
              A.

            	
              Stock
                Dividends and Stock Splits.
                If (i) the shares of Common Stock shall be subdivided or combined
                into a
                greater or smaller number of shares or if the Company shall issue
                any
                shares of Common Stock as a stock dividend on its outstanding Common
                Stock, or (ii) additional shares or new or different shares or other
                securities of the Company or other non-cash assets are distributed
                with
                respect to such shares of Common Stock, the number of shares of Common
                Stock deliverable upon the exercise of an Option or acceptance of
                a Stock
                Grant may be appropriately increased or decreased proportionately,
                and
                appropriate adjustments may be made including, in the purchase price
                per
                share, to reflect such events. The number of Shares subject to options
                to
                be granted to directors pursuant to Paragraph 6(A)(e) and the number
                of
                Shares subject to the limitations in Paragraphs 3 and 4(c) shall
                also be
                proportionately adjusted upon the occurrence of such
                events.

            

    

     

    
      	 	
              B.

            	
              Corporate
                Transactions.
                If the Company is to be consolidated with or acquired by another
                entity in
                a merger, sale of all or substantially all of the Company’s assets other
                than a transaction to merely change the state of incorporation (a
                “Corporate Transaction”), the Administrator or the board of directors of
                any entity assuming the obligations of the Company hereunder (the
                “Successor Board”), shall, as to outstanding Options, either (i) make
                appropriate provision for the continuation of such Options by substituting
                on an equitable basis for the Shares then subject to such Options
                either
                the consideration payable with respect to the outstanding shares
                of Common
                Stock in connection with the Corporate Transaction or securities
                of any
                successor or acquiring entity; or (ii) upon written notice to the
                Participants, provide that all Options must be exercised (either
                (a) to
                the extent then exercisable or, (b) at the discretion of the
                Administrator, all Options being made fully exercisable for purposes
                of
                this Subparagraph), within a specified number of days of the date
                of such
                notice, at the end of which period the Options shall terminate; or
                (iii)
                terminate all Options in exchange for a cash payment equal to the
                excess
                of the Fair Market Value of the Shares subject to such Options (either
                (a)
                to the extent then exercisable or, (b) at the discretion of the
                Administrator, all Options being made fully exercisable for purposes
                of
                this Subparagraph) over the exercise price
                thereof.

            

    

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    With
      respect to outstanding Stock Grants, the Administrator or the Successor Board,
      shall either (i) make appropriate provisions for the continuation of such Stock
      Grants by substituting on an equitable basis for the Shares then subject to
      such
      Stock Grants either the consideration payable with respect to the outstanding
      Shares of Common Stock in connection with the Corporate Transaction or
      securities of any successor or acquiring entity; or (ii) upon written notice
      to
      the Participants, provide that all Stock Grants must be accepted (to the extent
      then subject to acceptance) within a specified number of days of the date of
      such notice, at the end of which period the offer of the Stock Grants shall
      terminate; or (iii) terminate all Stock Grants in exchange for a cash payment
      equal to the excess of the Fair Market Value of the Shares subject to such
      Stock
      Grants over the purchase price thereof, if any. In addition, in the event of
      a
      Corporate Transaction, the Administrator may waive any or all Company repurchase
      rights with respect to outstanding Stock Grants.

     

    
      	 	
              C.

            	
              Recapitalization
                or Reorganization.
                In the event of a recapitalization or reorganization of the Company,
                other
                than a Corporate Transaction, pursuant to which securities of the
                Company
                or of another corporation are issued with respect to the outstanding
                shares of Common Stock, a Participant upon exercising an Option or
                accepting a Stock Grant after the recapitalization or reorganization
                shall
                be entitled to receive for the purchase price paid upon such exercise
                or
                acceptance the number of replacement securities which would have
                been
                received if such Option had been exercised or Stock Grant accepted
                prior
                to such recapitalization or
                reorganization.

            

    

     

    
      	 	
              D.

            	
              Adjustments
                to Stock-Based Awards.
                Upon the happening of any of the events described in Subparagraphs
                A, B or
                C above, any outstanding Stock-Based Award shall be appropriately
                adjusted
                to reflect the events described in such Subparagraphs. The Administrator
                or the Successor Board shall determine the specific adjustments to
                be made
                under this Paragraph 24 and, subject to Paragraph 4, its determination
                shall be conclusive.

            

    

     

    
      	 	
              E.

            	
              Modification
                of ISOs.
                Notwithstanding the foregoing, any adjustments made pursuant to
                Subparagraph A, B or C above with respect to ISOs shall be made only
                after
                the Administrator determines whether such adjustments would constitute
                a
                “modification” of such ISOs (as that term is defined in Section 424(h) of
                the Code) or would cause any adverse tax consequences for the holders
                of
                such ISOs. If the Administrator determines that such adjustments
                made with
                respect to ISOs would constitute a modification of such ISOs, it
                may
                refrain from making such adjustments, unless the holder of an ISO
                specifically requests in writing that such adjustment be made and
                such
                writing indicates that the holder has full knowledge of the consequences
                of such “modification” on his or her income tax treatment with respect to
                the ISO.

            

    

     

    
      	
              25.

            	
              ISSUANCES
                OF SECURITIES.

            

    

     

    Except
      as
      expressly provided herein, no issuance by the Company of shares of stock of
      any
      class, or securities convertible into shares of stock of any class, shall
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number or price of shares subject to Stock Rights. Except as expressly provided
      herein, no adjustments shall be made for dividends paid in cash or in property
      (including without limitation, securities) of the Company prior to any issuance
      of Shares pursuant to a Stock Right.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

     

    
      	
              26.

            	
              FRACTIONAL
                SHARES.

            

    

     

    No
      fractional shares shall be issued under the Plan and the person exercising
      a
      Stock Right shall receive from the Company cash in lieu of such fractional
      shares equal to the Fair Market Value thereof.

     

    
      	
              27.

            	
              CONVERSION
                OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS.

            

    

     

    The
      Administrator, at the written request of any Participant, may in its discretion
      take such actions as may be necessary to convert such Participant’s ISOs (or any
      portions thereof) that have not been exercised on the date of conversion into
      Non-Qualified Options at any time prior to the expiration of such ISOs,
      regardless of whether the Participant is an employee of the Company or an
      Affiliate at the time of such conversion. At the time of such conversion, the
      Administrator (with the consent of the Participant) may impose such conditions
      on the exercise of the resulting Non-Qualified Options as the Administrator
      in
      its discretion may determine, provided that such conditions shall not be
      inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
      Participant the right to have such Participant’s ISOs converted into
      Non-Qualified Options, and no such conversion shall occur until and unless
      the
      Administrator takes appropriate action. The Administrator, with the consent
      of
      the Participant, may also terminate any portion of any ISO that has not been
      exercised at the time of such conversion.

     

    
      	
              28.

            	
              WITHHOLDING.

            

    

     

    In
      the
      event that any federal, state, or local income taxes, employment taxes, Federal
      Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are
      required by applicable law or governmental regulation to be withheld from the
      Participant’s salary, wages or other remuneration in connection with the
      exercise or acceptance of a Stock Right or in connection with a Disqualifying
      Disposition (as defined in Paragraph 29) or upon the lapsing of any right of
      repurchase, the Company may withhold from the Participant’s compensation, if
      any, or may require that the Participant advance in cash to the Company, or
      to
      any Affiliate of the Company which employs or employed the Participant, the
      statutory minimum amount of such withholdings unless a different withholding
      arrangement, including the use of shares of the Company’s Common Stock or a
      promissory note, is authorized by the Administrator (and permitted by law).
      For
      purposes hereof, the fair market value of the shares withheld for purposes
      of
      payroll withholding shall be determined in the manner provided in Paragraph
      1
      above, as of the most recent practicable date prior to the date of exercise.
      If
      the fair market value of the shares withheld is less than the amount of payroll
      withholdings required, the Participant may be required to advance the difference
      in cash to the Company or the Affiliate employer. The Administrator in its
      discretion may condition the exercise of an Option for less than the then Fair
      Market Value on the Participant’s payment of such additional
      withholding.

     

    
      	
              29.

            	
              NOTICE
                TO COMPANY OF DISQUALIFYING
                DISPOSITION

            

    

     

    Each
      Employee who receives an ISO must agree to notify the Company in writing
      immediately after the Employee makes a Disqualifying Disposition of any shares
      acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is
      defined in Section 424(c) of the Code and includes any disposition (including
      any sale or gift) of such shares before the later of (a) two years after the
      date the Employee was granted the ISO, or (b) one year after the date the
      Employee acquired Shares by exercising the ISO, except as otherwise provided
      in
      Section 424(c) of the Code. If the Employee has died before such stock is sold,
      these holding period requirements do not apply and no Disqualifying Disposition
      can occur thereafter.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

     

    
      	
              30.

            	
              TERMINATION
                OF THE PLAN.

            

    

     

    The
      Plan
      will terminate on April 19, 2015, the date which is ten years from the earlier
      of the date of its adoption by the Board of Directors and the date of its
      approval by the shareholders of the Company. The Plan may be terminated at
      an
      earlier date by vote of the shareholders or the Board of Directors of the
      Company; provided, however, that any such earlier termination shall not affect
      any Agreements executed prior to the effective date of such
      termination.

     

    
      	
              31.

            	
              AMENDMENT
                OF THE PLAN AND AGREEMENTS.

            

    

     

    The
      Plan
      may be amended by the shareholders of the Company. The Plan may also be amended
      by the Administrator, including, without limitation, to the extent necessary
      to
      qualify any or all outstanding Stock Rights granted under the Plan or Stock
      Rights to be granted under the Plan for favorable federal income tax treatment
      (including deferral of taxation upon exercise) as may be afforded incentive
      stock options under Section 422 of the Code, and to the extent necessary to
      qualify the shares issuable upon exercise or acceptance of any outstanding
      Stock
      Rights granted, or Stock Rights to be granted, under the Plan for listing on
      any
      national securities exchange or quotation in any national automated quotation
      system of securities dealers. Any amendment approved by the Administrator which
      the Administrator determines is of a scope that requires shareholder approval
      shall be subject to obtaining such shareholder approval. Any modification or
      amendment of the Plan shall not, without the consent of a Participant, adversely
      affect his or her rights under a Stock Right previously granted to him or her.
      With the consent of the Participant affected, the Administrator may amend
      outstanding Agreements in a manner which may be adverse to the Participant
      but
      which is not inconsistent with the Plan. In the discretion of the Administrator,
      outstanding Agreements may be amended by the Administrator in a manner which
      is
      not adverse to the Participant.

     

    
      	
              32.

            	
              EMPLOYMENT
                OR OTHER RELATIONSHIP.

            

    

     

    Nothing
      in this Plan or any Agreement shall be deemed to prevent the Company or an
      Affiliate from terminating the employment, consultancy or director status of
      a
      Participant, nor to prevent a Participant from terminating his or her own
      employment, consultancy or director status or to give any Participant a right
      to
      be retained in employment or other service by the Company or any Affiliate
      for
      any period of time.

     

    
      	
              33.

            	
              GOVERNING
                LAW.

            

    

     

    This
      Plan
      shall be construed and enforced in accordance with the law of the State of
      Delaware.

     

    
      
         

      

      
        19

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