SHARE SALE AND PURCHASE AGREEMENT

(1)  

Each of the persons described in Schedule 1 hereto (each a   “ Seller ” and together the “ Sellers ”); and

(2)  

Matthews Corporation Holding Company (UK) Limited a company incorporated in England and Wales with registered number 5215835 whose registered office is at Minerva House, 5 Montague Close, London SE1 9BB (the “ Buyer ”).

(A)  

The Company (as defined below) is a private company limited by shares having an authorised capital of £100,000 divided into 85,000 Ordinary A shares of £1 each and 15,000 Ordinary B shares of £1 each. Of these shares, 55,002 Ordinary A shares and 5,002 Ordinary B shares have been issued fully paid or credited as fully paid.

(B)  

The Sellers are beneficially entitled to all the issued share capital of the Company.

(C)  

The Company has a number of Group Members, and is the beneficial owner of the entire issued share capitals of each of the Group Members.

(D)  

The Sellers wish to sell and, in reliance upon (inter alia) the representations, warranties and undertakings set out in this Agreement, the Buyer wishes to purchase all the issued share capital of the Company on the terms and subject to the conditions set out in this Agreement.

(E)  

The parties intend that each of Robert Watkins, Brian Tottman, Graeme King and Geoffrey Roberts shall remain as employees of the Company for not less than 12 months following Completion, in accordance with the Service Agreements.

1.  

DEFINITIONS AND INTERPRETATION

1.1  

In this Agreement (unless the context requires otherwise), the following words shall have the following meanings:

(b)  

any amount raised by acceptance under any acceptance credit facility;

(c)  

any amount raised pursuant to any note purchase facility or the issue of bonds (other than performance bonds) , notes, debentures, loan stock or any similar instrument or security;

(d)  

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(e)  

any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

(f)  

any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(g)  

any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;

(h)  

the acquisition cost of assets or services to the extent payable on deferred payment terms of more than 90 days after the date of acquisition or possession thereof by the party liable, but excluding retentions or normal trade credit in the trade concerned not entered into primarily as a means of finance

(i)  

monies received in consideration for the supply of goods and for services to the extent received more than 90 days before the due date of such supply, but excluding any advance payment arrangement which represents trade credit which is normal in the trade concerned and any liability by way of bona fide advance payments and deposits received from customers in the ordinary course of trade; and

(j)  

the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in clauses (a) to (i) above

(a)  

trade secrets, know-how, ideas, computer systems and computer software;

(b)  

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

(c)  

the marketing of goods or services including customer names and lists, sales targets and statistics;

(a)  

negotiating with any Group Member for the supply by any Group Member of goods or services; or

(b)  

a client or customer of any Group Member; or

(c)  

in the habit of dealing with any Group Member;

1.2  

In this Agreement, unless the context requires otherwise:

1.2.1  

any reference to a Recital, Clause or Schedule is a reference to the relevant recital, clause or schedule of or to this Agreement;

1.2.2  

the index and Clause headings are included for convenience only and shall not affect the interpretation of this Agreement;

1.2.3  

use of the singular includes the plural and vice versa;

1.2.4  

use of any gender includes the other gender;

1.2.5  

any reference to a statute, statutory provision or subordinate legislation (“legislation”) shall (except where the context otherwise requires) be construed as referring to such legislation as amended and in force from time to time and to any legislation which re-enacts or consolidates (with or without modification) any such legislation provided that no such legislation which is enacted or made after the date of this Agreement shall be deemed to impose any additional liability on any of the Sellers or the Buyer under this Agreement;

1.2.6  

reference to “persons” includes natural persons, firms, partnerships, companies, corporations, associations, organisations, governments, governmental agencies and departments, states, foundations and trusts (in each case whether or not having separate legal personality);

1.2.7  

unless otherwise specified, where any Warranty refers to the knowledge, information, belief or awareness of the Warrantors (or similar expression), the Warrantors will be deemed to have such knowledge, information, belief or awareness as the Warrantors would have obtained had the Warrantors made all due and careful enquiries into the subject matter of that Warranty of each other, Sally Wood, Buckle Barton (the Group’s accountants and auditors) and Joe Zammit.

1.2.8  

all obligations, representations and warranties on the part of two or more persons are entered into, given or made by such persons jointly and severally;

1.2.9  

references to Clauses and Schedules are to clauses of and schedules to this Agreement, and references to paragraphs are to paragraphs in the Schedule in which such references appear;

1.2.10  

the Schedules form part of this Agreement and will have the same force and effect as if expressly set out in the body of this Agreement;

1.2.11  

any phrase introduced by the terms "include", "including", "in particular" or any similar expression will be construed as illustrative and will not limit the sense of the words preceding those terms;

1.2.12  

any reference to an English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to what most nearly approximates in that jurisdiction to the English legal term.

2.  

SALE AND PURCHASE AND PRE-COMPLETION CONDITIONS

2.1  

The Sellers will sell with full title guarantee, and the Buyer will buy, the Shares. The Shares will be sold free of any Encumbrance and with all rights attached or accruing to them at or after the date of this Agreement. 

2.2  

The Buyer shall not be obliged to complete the purchase of any of the Shares unless the purchase of all the Shares is completed simultaneously in accordance with this Agreement and the Sellers shall have delivered to the Buyer on or prior to Completion evidence to the satisfaction of the Buyer:

2.2.1  

of the re-registration of the Company as a private company in accordance with the provisions of s.53 Companies Act 1985 and adoption of new Articles of Association by way of a written resolution of the members of the Company;

2.2.2  

payment of the Loan Notes;

2.2.3  

discharge as at Completion of all indebtedness due from any Group Member to Alex Lawrie Factors Limited and the release of any security granted in favour of Alex Lawrie Factors Limited;

2.2.4  

duly stamped share transfers to the Company of all shares registered in the name of Graeme King in InTouch Meridian Limited and InTouch Reprographics Limited together with associated share certificates;

2.2.5  

duly stamped share transfers to the Company by the Warrantors and David McGowan of 51 per cent of the issued share capital of M3DIA Projects Limited together with associated share certificates and evidence that the transfer of such shares will immediately be registered by M3DIA Projects Limited upon presentation of the stamped share transfers;

2.2.6  

that the contract between the Company and United Biscuits Limited has been duly executed.

3.  

CONSIDERATION 

3.1  

The consideration for the sale of the Shares shall be £21,604,197 (twenty one million six hundred and four thousand one hundred and ninety seven pounds) payable in cash, subject to the provisions of Clause 16 below, Clause 3.2 and any adjustment pursuant to Clauses 14 and 15, on Completion, which Consideration shall be allocated between the different classes of Shares as follows:

3.1.1  

A Ordinary Shares:98.61109 per cent; and

3.1.2  

B Ordinary Shares:1.38891 per cent.

3.2  

The Consideration due to Robert Watkins on Completion shall be reduced by the amount of the Director’s Loan and the Buyer shall make such payment to the Company as agent on behalf of Robert Watkins.

4.  

COMPLETION

4.1  

Completion will take place at the offices of the Buyer’s Solicitors immediately after the signing of this Agreement.

4.2  

At Completion, the Sellers will produce and deliver:

4.2.1  

executed transfers of the Shares in favour of the Buyer (or its nominee(s)) together with the share certificates for the Shares (or in the case of any lost certificate an indemnity satisfactory to the Buyer in relation to it);

4.2.2  

any waiver, consent or other document necessary to give the Buyer (or its nominee(s)) full legal and beneficial ownership of the Shares;

4.2.3  

powers of attorney in the Agreed Form where the Sellers are unable to attend in person at Completion;

4.2.4  

a letter of resignation in the Agreed Form from each director of each Group Member, with the exception of the directors of InTouch By Design, Inc.;

4.2.5  

a letter of resignation in the Agreed Form from each secretary of each Group Member, with the exception of the secretary of the Company and InTouch By Design, Inc.;

4.2.6  

a copy of a letter to each Group Member from its auditors resigning from office with effect from Completion and containing the statement required by section 394 CA 1985, the original of the letter having been deposited at the registered office of the relevant company;

4.2.7  

the certificate of incorporation, any certificate(s) of incorporation on change of name, the common seal and the statutory books and registers (which will be written up to but not including Completion) of each Group Member;

4.2.8  

all deeds and documents relating to the title of any Group Member to the Property;

4.2.9  

a copy of the bank mandate of each Group Member and copies of bank statements in respect of each account of each Group Member as at the close of business on the last Business Day prior to Completion, together in each case with a reconciliation statement prepared by the Sellers to show the position at Completion (listing unpresented cheques drawn or received by the relevant Group Member and standing orders payable since the date of such bank statements);

4.2.10  

a deed in the Agreed Form from each of the Sellers acknowledging that neither of the respective Sellers nor any spouse or child of the respective Sellers nor any company of which the respective Seller, spouse or child has control (as defined in section 840 ICTA) has any claim against any Group Member and that there is no agreement or arrangement under which any Group Member has any actual, contingent or prospective obligation to any such person; and

4.2.11  

where any agreement or arrangement referred to in Clause 4.2.10 previously existed, evidence of the release or termination of it in a form satisfactory to the Buyer;

4.2.12  

a duly completed form 403 in respect of the discharge of security registered in favour of Alex Lawrie Factors Limited in respect of any Group Member; and

4.2.13  

the Tax Deed and Disclosure Letter duly executed by the Warrantors.

4.3  

The Sellers will procure that duly convened board meetings of each relevant Group Member are held at which:

4.3.1  

the transfers referred to in Clause 4.2.1 (subject to stamping if not previously effected) are approved for registration in the books of the relevant Group Members;

4.3.2  

the accounting reference date of each Group Member is changed to 30 September;

4.3.3  

the address of the registered office of each Group Member is changed to InTouch House, Riverside Drive, Cleckheaton, West Yorkshire BD19 4DH;

4.3.4  

the resignations of directors, secretaries and auditors referred to in each of paragraphs 4.2.4, 4.2.5 and 4.2.6 are accepted with effect from the end of the relevant board meeting and the relevant forms 288b are duly completed and the relevant company secretary be instructed to file the same at Companies House;

4.3.5  

such persons as are nominated by the Buyer as directors (being   David Kelly, Joseph Bartolacci, Steven Nicola and Franz Schwarz), secretary (being Sally Wood) and auditors (being PriceWaterhouse Coopers) of each Group Member are appointed with effect from the end of the relevant board meeting and the relevant forms 288a are duly completed and the relevant company secretary be instructed to file the same at Companies House; and

4.3.6  

the Company's execution of the Service Agreements in the Agreed Form are approved and authorised.

4.4  

Furthermore, the Warrantors will enter into the Service Agreements in the Agreed Form with the Company and the Sellers and Buyer will enter into the Escrow Agreement with the Escrow Agent;

4.5  

The Sellers will each repay, and will procure that any spouse or child of each respective Seller and any company of which each respective Seller, spouse or child has control (as defined in section 840 ICTA) will repay, all amounts owed to the any Group Member by the respective Seller, spouse, child or company whether due for payment or not

4.6  

Upon satisfaction of all of the matters referred to at Clauses 2.2 and 4.2 to 4.5 the Buyer will pay the Consideration by electronic funds transfer to the Sellers’ Solicitors client account with The Royal Bank of Scotland plc, 27 Park Row, Leeds LS1 5QB, Sort Code 16-23-37, Account Number 00194374 or by such other method as may be agreed between the parties.

4.7  

The Sellers’ Solicitors are authorised to receive the Consideration on behalf of the Sellers and payment to them will be a good and sufficient discharge to the Buyer and the Buyer will not be further concerned as to the application of the moneys so paid.

4.8  

If for any reason the provisions of Clauses 2.2 and 4.2 to 4.5 are not fully complied with the Buyer may elect (in addition and without prejudice to all other rights or remedies available to it) to rescind this agreement or to fix a new date for Completion.

5.  

POWER OF ATTORNEY

5.1  

For so long after Completion as the Sellers remain the registered holder of any of the Shares hereby sold to the Buyer, each of the Sellers shall hold them and any distributions, property and rights deriving from them in trust for the Buyer and shall deal with those Shares and any distributions, property and rights deriving from them as the Buyer directs; in particular, each of the Sellers shall exercise all voting rights as the Buyer directs or shall execute an instrument of proxy or other document which enables the Buyer or its representative to attend and vote at any meeting of the Company. Each of the Sellers appoints the Buyer to be his or her attorney from Completion granting to the Buyer full power on his or her behalf to exercise all voting and other related rights attaching to the Shares including power to:

5.1.1  

execute a form of proxy in favour of such person or persons as the Buyer may think fit to attend and vote as the Buyer's proxy at any general meeting of the members of the Company in respect of the Shares in such manner as the Buyer may decide;

5.1.2  

consent to the convening and holding of any such meeting and the passing of the resolutions to be submitted at any such meeting on short notice;

5.1.3  

execute written resolutions; and

5.1.4  

settle the terms of such resolutions and generally to procure that the Buyer or its nominees are duly registered as holder of those Shares.

5.2  

Each of the Sellers ratifies and confirms and agrees to ratify and confirm all and whatsoever the Buyer shall lawfully do or cause to be done in pursuance of the power of attorney granted in favour of the Buyer by clause 5.1. Each of the Sellers declares that the power of attorney in clause 5.1 shall be irrevocable.

6.  

GUARANTEES

6.1  

The Warrantors will procure that on Completion each Group Member is released from any guarantee, indemnity, counter-indemnity, letter of comfort or other obligation given by such Group Member to any third party in respect of a liability of any person other than a Group Member.

6.2  

The Buyer undertakes to the Sellers that as soon as reasonably practicable following Completion the Buyer will use all reasonable endeavours to obtain the release of the Sellers from any guarantee, indemnity, counter-indemnity, letter of comfort or other obligation given by the Sellers to any third party in respect of a liability of any Group Member and of which full particulars are contained in the Disclosure Letter. Pending such release, the Buyer undertakes to indemnify the Sellers against all amounts paid by the Sellers to any third party pursuant to any such obligation (and all costs incurred in connection with such obligation) arising after the date of this Agreement save that this indemnity will not extend to any matter giving rise to a Relevant Claim or a claim under Part 2 of Schedule 4 or any other indemnity set out in this Agreement.

7.  

WARRANTIES

7.1  

The Warrantors warrant to the Buyer in the terms of the Warranties. The Warrantors acknowledge that the Buyer is entering into this Agreement in reliance on each Warranty, which has also been given as a representation and with the intention of inducing the Buyer to enter into this Agreement.

7.2  

The Warranties are qualified by all facts and matters fully and fairly disclosed in the Disclosure Letter. No other information of which the Buyer has knowledge (actual or constructive) will prejudice or reduce any claim made by the Buyer in respect of the Warranties. The provisions of section 6(2) of the Law of Property (Miscellaneous Provisions) Act 1994 are hereby excluded.

7.3  

The Warrantors undertake to indemnify the Buyer on demand against all costs (including legal costs) expenses or other liabilities which the Buyer or any Group Member may incur before or after the commencement of any action in connection with:

7.3.1  

the settlement of any claim against the Sellers in respect of a breach or alleged breach of any provision of this Agreement;

7.3.2  

any legal proceedings in which the Buyer claims that any provision of this Agreement has been breached in which judgment is given for the Buyer; and

7.3.3  

the enforcement of any such settlement or judgment.

7.4  

The Sellers waive and may not enforce any right which the Sellers may have against any Group Member, or any director or employee of any Group Member, on which or on whom the Sellers may have relied in agreeing to any term of this Agreement or any statement in the Disclosure Letter.

7.5  

The Warrantors undertake to disclose immediately to the Buyer anything which comes to the notice of any of them which is or may be a breach of any of the Warranties.

7.6  

Each Warranty is to be construed independently and is not limited or restricted by any other Warranty or any other term of this Agreement.

8.  

LIMITATION ON WARRANTY CLAIMS

8.1  

The Warrantors will not be liable for any Relevant Claim:

8.1.1  

unless the Warrantors receive from the Buyer written particulars of the Relevant Claim (stating in reasonable detail the nature of the Relevant Claim):

8.1.1.1  

within a period ending on the 30 November 2006 in the case of a Relevant Claim for breach of any of the Warranties contained in Schedule 3; 

8.1.1.2  

within 7 years after Completion, in the case of a Relevant Claim for breach of any of the Warranties contained in Schedule 4.

8.1.2  

arising from any single circumstance or set of circumstances unless the amount of the Relevant Claim or a claim under the Tax Deed (in each case including interest and costs) exceeds £10,000 and if it does exceed that figure then the Warrantors shall be liable in respect of the whole amount; 

8.1.3  

unless the aggregate amount of all Relevant Claims including interest and costs for which the Warrantors would otherwise be liable exceeds £200,000 in which case if liability exceeds that figure then all claims previously admissible (but always excluding any claim which did not qualify as a Relevant Claim under Clause 8.1.2), including claims previously notified, shall accrue against the Warrantors;

8.1.4  

to the extent that the aggregate amount of the liability of the Warrantors for all such claims (including claims under the Tax Deed) would thereby exceed the Consideration.

8.1.5  

Clause 8.1.2 above shall not apply to the extent that the claim in question (Relevant Claim or a claim under the Tax Deed) arises as a result of persons treated as self employed consultants instead being treated as employees for tax purposes.

8.2  

Clause 8.1   will not apply in respect of a Relevant Claim concerning paragraphs 1   (capital) and 2 (capacity) of Schedule 3.

8.3  

The Buyer shall not be obliged to bring proceedings of any type against the Warrantors until the earlier of (i) the expiration of three years following Completion or (ii) termination of all of the Service Agreements. Subject to this proviso, any Relevant Claim shall, if it has not been previously satisfied settled or withdrawn, be deemed to have been withdrawn and shall become fully barred and unenforceable (and no new claim may be made in respect of the facts giving rise to such withdrawn claim) on the expiry of the period of 9 months commencing on the date on which the period referred to above shall expire unless by then proceedings in respect of that claim shall have been issued and served upon the Warrantors or the claim shall have been agreed or settled by the parties.

8.4  

Following notice of a Relevant Claim and upon reasonable request from the Warrantors, the Buyer shall allow the Warrantors and their accountants and professional advisers to investigate the matter or circumstances alleged to give rise to the Relevant Claim and whether and to what extent any amount is payable in respect of the Relevant Claim and for such purpose the Buyer shall give, subject to it being paid all reasonable costs and expenses, all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Warrantors or their accountants or professional advisers may reasonably request.

8.5  

The Warrantors shall have no liability:

8.5.1  

in respect of any matter fully and fairly disclosed in the Disclosure Letter;

8.5.2  

to the extent that such liability would not have arisen but for a change after the date of this Agreement in any legislation or government or governmental order or rule;

8.5.3  

to the extent that the Relevant Claim would not have arisen but for any claim, election, surrender or disclaimer made or notice or consent given by the Buyer or the Company pursuant to any enactments relating to Taxation after Completion;

8.5.4  

in respect of any matter or liability to the extent that a provision, allowance or reserve in respect thereof is adequate and expressly identified and financially quantified in the Completion Balance Sheet and factored into an adjustment to the Consideration in accordance with Clauses 14 or 15 regardless of whether an adjustment occurs such that the Buyer is unable to recover such liability more than once;

8.5.5  

for any asset acquired by the Company after Completion;

8.5.6  

for any change in the accounting reference date of the Company after Completion; or

8.5.7  

in circumstances where the loss or liability resulting from the Relevant Claim has been or is made good or otherwise compensated for at no expense to the Buyer or the Company.

8.6  

If the Warrantors pay to the Buyer an amount in respect of any liability and the Buyer or the Company subsequently recovers from a third party a sum in respect of the same loss to which that liability relates and the Buyer is now over compensated for such loss, then to the extent that the sum relates to such loss, the Buyer shall immediately repay to the Warrantors (in the same proportion as the Sellers made such payments to the Buyer) so much of the amount paid by the Warrantors as is equal to the over compensation less all reasonable third party costs, charges and expenses incurred by the Buyer or the Company in recovering that sum from the third party.

8.7  

If the Buyer or the Company shall receive any claim (“a Third Party Claim”) made by a third party against the Company, which might constitute or give rise to a liability under the Warranties, the Buyer shall notify the Warrantors as soon as practicable giving all reasonable details which the Buyer has concerning the same, provided that a failure to so notify shall not prejudice the Buyer’s further rights hereunder, and the Buyer shall further (subject to being indemnified against all reasonable costs and expenses for which it or the Company may become liable):-

8.7.1  

inform and keep the Warrantors informed in respect of such Third Party Claim and provide reasonable access to all relevant accounts, documents and records within its power, possession or control to enable the Warrantors and its professional advisers to examine such claim and to take copies thereof;

8.7.2  

at the expense in all respects of the Warrantors take such action as the Warrantors may reasonably request to avoid, dispute, resist, appeal, compromise or defend or mitigate any such Third Party Claims; and

8.7.3  

not make any admission of or settle or compromise any liability which the Company may have in relation to the Third Party Claim without the prior written consent of the Warrantors, such consent not to be unreasonably withheld or delayed.

8.8  

The Buyer shall not be entitled to recover damages, or obtain payment, reimbursement, restitution or indemnity more than once under this Agreement or the Tax Deed in respect of the same loss.

8.9  

The Buyer shall and shall procure that the Company shall take all reasonable steps to avoid or mitigate any loss or liability which would otherwise give rise to a claim under the Warranties.

8.10  

The sole remedy available to the Buyer in respect of any breach of the Warranties or the Tax Deed shall be in damages and the Buyer shall have no right to rescind this Agreement and any such right is hereby expressly excluded.

8.11  

Each limitation of liability under this Clause 8 shall be separate and independent and save as expressly otherwise provided in this Agreement shall not be limited by reference to any other such limitation or anything in this Agreement.

8.12  

Notwithstanding any other provision of this Agreement, Clause 8 will not apply to exclude or limit the liability of the Warrantors to the extent that any Relevant Claim arises by reason of any fraud or dishonest, reckless or wilful misconduct or omission by or on behalf of the Sellers or any of them.

8.13  

The Buyer acknowledges that:

8.13.1  

the Transaction Documents together with any other documents referred to in the Transaction Documents (together the " Contractual Documents ") constitute the entire agreement between the parties;

8.13.2  

it has not been induced to enter into any Contractual Document in reliance upon, nor has it been given, any warranty, representation, statement, agreement, undertaking, covenant or indemnity of any nature whatsoever other than as are expressly set out in the Contractual Documents and, to the extent that it has been the Buyer unconditionally and irrevocably waives any claims, rights or remedies which it might otherwise have had in relation to them.

8.14  

Any amounts payable by the Warrantors to the Company or the Buyer in relation to a Relevant Claim shall constitute a reduction of the Consideration received by them.

9.  

INDEMNITIES AND WAIVER

9.1  

The Warrantors shall indemnify, keep indemnified and hold harmless the Buyer, the Company and any Group Member from and against all liabilities, losses, damages, costs, claims or expenses (whether foreseeable or not) arising as a direct or indirect result of:

9.1.1  

against any Environmental Costs to the extent attributable to an Environmental Condition caused or existing on or prior to Completion, PROVIDED THAT the Environmental Condition is not the result of a change in EHS Laws (as defined in paragraph 27 of Schedule 3 to this Agreement) after Completion and subject always to Clause 10.

9.1.2  

any liabilities of any Group Member (or any company who prior to Completion was a Group Member) in respect of any freehold or leasehold property (whether currently or formerly owned or occupied) by the Group Member at any time prior to Completion arising as a direct or indirect result of any authorised guarantee agreements or dilapidations in connection therewith;

9.1.3  

the redundancy or termination of employment of the following employees of the relevant Group Member: Helen King, Josephine Tottman, Sally Watkins, Jennifer Roberts, Andrew Garnham, Paul Goldberg or Martyn Dykhoff;

9.1.4  

arising out of the failure to obtain landlord consent to the occupation of Alan Batham Digital Photography of the Property in London and resulting disapplication of the rights of tenure prescribed by the Landlord and Tenant Act 1954;

9.1.5  

any breach or failure to deliver or perform the obligations set out at Clauses 2.2 or 11.

9.2  

The Warrantor shall indemnify, keep indemnified and hold harmless the Buyer for itself and as trustee for the Company and each of the Group Members on an after tax basis in respect of all, claims, liabilities, costs and expenses incurred, suffered or paid at any time in connection with any liability to provide any relevant benefits (as defined in paragraph 35.1.2 of schedule 3) which would not have been a liability but for the operation of the Transfer of Undertakings (Protection of Employment) Regulations 1981 or European law.

9.3  

The Sellers waive and may not enforce any right which the Sellers may have against the Company, any Group Member or the Buyer arising out of or in connection with the Shareholders Agreement and irrevocably release and discharge the Company, each Group Member and the Buyer from any obligation or liability thereunder.

10.  

CONDUCT OF MATTER GIVING RISE TO ENVIRONMENTAL COSTS

A.  

10.1  

The Buyer shall (prior to taking any action against the Warrantors under Clause 9.1.1 and subject to the Buyer or the relevant Group Member being indemnified and secured to the reasonable satisfaction of the Buyer or the relevant Group Member by the Warrantors against all reasonable costs and expenses which may properly be incurred by reason of such action) and shall procure that any Group member shall likewise promptly and diligently take all such action as the Warrantors may reasonably request including the institution of proceedings and the instruction of professional advisers to act on behalf of the Buyer or the relevant Group Member to avoid, dispute, resist, compromise, defend or appeal against any such claim against the Buyer or any Group Member in accordance with the reasonable instructions of the Warrantors to the intent that such action shall be delegated entirely to the Warrantors and so long as the Warrantors shall have given adequate security therefor, not settle or compromise any liability or claim to which such action is referable without the prior written consent of the Warrantors which consent shall not be unreasonably withheld or delayed.

10.2  

The Warrantors shall not be liable under or in respect of any claim made under Clause 9.1.1 if and to the extent that such liability arose as a direct result of the Buyer or any Group Member deliberately performing any act (other than in accordance with law) which is intended to directly cause any Government Entity to investigate whether or not any Environmental Condition exists.

10.3  

No claim may be brought under Clause 9.1.1 and the Warrantors shall not be liable under Clause 9.1.1 unless proceedings are issued against the Warrantors on or before the dates set out below and notwithstanding the foregoing the Warrantors’ liability under Clause 9.1.1 shall in any event not exceed the limits set against each date:

Date

Limitation

1 September 2006

£4,000,000

1 September 2007

£3,000,000

1 September 2008

£2,000,000

1 September 2009

£1,000,000

11.  

POST COMPLETION UNDERTAKINGS

11.1  

The Warrantors undertake that as soon as reasonably practical and in any event within:

11.1.1  

30 Business Days following Completion to procure the transfer by David McGowan of 64 ordinary shares in M3DIA Projects Limited to the Company such that the Clause 2.2.5 is then satisfied. The Warrantors shall be liable for the payment of any stamp duty in connection therewith;

11.1.2  

procure the resignation without claim by Thomas Ward and Steven Wood of any directorship of any Group Member by no later than 30 August 2004;

11.1.3  

procure the resignation without claim by Donald Wells of any directorship of any Group Member by no later than 30 September 2004;

11.1.4  

procure the resignation without claim by Martin Dyckhoff of any directorship of any Group Member as soon as reasonable practical and in any event by 31 December 2004;

12.  

RESTRICTIVE COVENANTS

12.1  

In this Clause:

12.2  

The Warrantors undertake for the period of 18 months following Completion to the Buyer and each Group Member that they will not, and thereafter each of the Warrantors undertakes on a several basis to the Buyer and each Group Member that he will not, in each case whether alone or in conjunction with, or on behalf of, another person and whether directly or indirectly, without the prior written consent of the Buyer:

12.2.1  

for a period of 3 years immediately following Completion, canvass, solicit or approach, or cause to be canvassed, solicited or approached, any Relevant Customer for the sale or supply of Relevant Products or Services;

12.2.2  

for a period of 3 years immediately following Completion, deal or contact with any Relevant Customer in relation to the sale or supply of Relevant Products or Services;

12.2.3  

for a period of 3 years immediately following Completion, interfere, or seek to interfere, with the continuance of supplies to any Group Member from any supplier who has been supplying goods or services to that Group Member at any time during the 9 months immediately preceding Completion if such interference causes or would cause that supplier to cease supplying, or materially reduce its supply of, those goods or services;

12.2.4  

for a period of 3 years immediately following Completion, solicit or entice away, or endeavour to solicit or entice away, from any Group Member, or employ, any person employed in a managerial, supervisory, technical or sales capacity by, or who is or was a consultant to, any Group Member at Completion or at any time during the period of 9 months immediately preceding Completion where the person in question either has Confidential Information or would be in a position to exploit a Group Member's trade connections;

12.2.5  

within the United Kingdom for a period of 3 years immediately following Completion, be engaged, concerned, connected with or interested in (except as the owner for investment of securities in a company dealt in on a recognised stock exchange and which confer not more than 1 per cent of the votes which could be cast at a general meeting), any other business which supplies Relevant Products or Services;

12.2.6  

without prejudice to any rights relating to passing off or trade or service mark infringement (or similar rights in any territory), for a period of 3 years immediately following Completion use in connection with any business which is competitive with the business of any Group Member any name (in whatever form) which includes the name of any Group Member or any trading style or get up which is confusingly similar to that used by any Group Member as at Completion.

12.3  

Except so far as required by law or, to the extent relevant, the regulations of any stock exchange or listing authority or the Panel on Takeovers and Mergers or any other governmental or regulatory organisation and in those circumstances only after prior consultation with the Buyer, the Sellers will not at any time after Completion:

12.3.1  

disclose any Confidential Information to any person except to those authorised by the relevant Group Member to know;

12.3.2  

use any Confidential Information for their own purposes or for any purposes other than those of the relevant Group Member; or

12.3.3  

cause or permit any unauthorised disclosure of any Confidential Information.

12.4  

Each of the undertakings set out in this Clause is separate and severable and enforceable accordingly, and if any one or more of such undertakings or part of an undertaking is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade, the remaining undertakings or remaining part of the undertakings will continue in full force and effect and will bind the Sellers and Warrantors, as applicable.

13.  

COMPLETION ACCOUNTS

13.1  

Following Completion the Buyer shall deliver to the Warrantors a draft Completion Balance Sheet, not later than 90 Business Days following Completion.

13.2  

The Completion Balance Sheet shall be prepared in accordance with the specific accounting policies and principles set out in Schedule 6.

13.3  

In order to enable the Buyer to prepare the draft Completion Balance Sheet and, as far as possible, to eliminate any potential areas of disagreement between the parties, the Warrantors shall provide such reasonable assistance as the Buyer may reasonably require in that connection.

13.4  

Subject to timely compliance by the Buyer with its obligations pursuant to clause 13.1 if the Warrantors do not within 20 Business Days of presentation to them of the draft Completion Balance Sheet give notice to the Buyer that they disagree with the draft Completion Balance Sheet or any item thereof (which notice shall state the amounts and reasons for the disagreement in reasonable detail) (the " Warrantors’ Disagreement Notice "), the draft Completion Balance Sheet shall thereupon be deemed to constitute the Completion Balance Sheet, which shall be final and binding on the parties.

13.5  

If the Warrantors serve a Warrantors’ Disagreement Notice within the requisite timescale, the Buyer and the Warrantors shall attempt in good faith to reach agreement in respect thereof, and if they are unable to do so within 10 Business Days of the date of receipt by the Buyer of the Warrantors’ Disagreement Notice, either party may by notice (an " Appointment Notice ") to the other require that the Completion Balance Sheet be referred to an independent chartered accountant (the " Independent Accountant ") to resolve the outstanding matters in dispute (" Outstanding Matters in Dispute ") in accordance with Clause 13.6 below.

13.6  

Matters in dispute in relation to the Completion Balance Sheet shall be referred at the request of either the Warrantors or the Buyer for decision to the Independent Accountant to be appointed by agreement between the Warrantors and the Buyer or, in default of agreement within 10 Business Days of a request by either the Warrantors or the Buyer to the other for the appointment of a particular accountant, by the then President of the Institute of Chartered Accountants in England and Wales (the " ICAEW President ") on the application of either the Warrantors or the Buyer.

13.7  

The Independent Accountant shall be instructed to determine the Outstanding Matters in Dispute and the Independent Accountant shall decide the procedure to be followed in the determination subject to the following provisions which shall apply to the Independent Accountant 's role in any event:

13.7.1  

the Outstanding Matters in Dispute shall be notified to the Independent Accountant in writing by the Warrantors and/or the Buyer within 10 Business Days of the Independent Accountant 's appointment;

13.7.2  

the terms of reference of the Independent Accountant shall be to determine the Outstanding Matters in Dispute, including the finalisation of the form and content of the Completion Balance Sheet in accordance with the provisions of this agreement within 30 Business Days of receipt of the Warrantors’ and the Buyer's Submissions in Reply (referred to below), or as soon as practicable thereafter;

13.7.3  

the Buyer (and/or the Buyer's accountant on the Buyer's behalf) and the Warrantors (and/or the Warrantors accountant on the Warrantors behalf) shall each promptly prepare a written statement setting out their respective positions on the Outstanding Matters in Dispute ( "Opening Submissions" ) and shall, within 30 Business Days of the appointment of the Independent Accountant, submit to him and one another copies of their respective Opening Submissions;

13.7.4  

within 30 Business Days following the completion of clause 13.7.3 above, the Warrantors and the Buyer shall each be entitled to comment in writing upon the Opening Submissions and documentation submitted by the other party (" Submissions in Reply "). Copies of such Submissions in Reply should be addressed and delivered to the Independent Accountant and the Warrantors or the Buyer (as the case may be);

13.7.5  

the determination of the Independent Accountant pursuant to this clause shall be made in writing and such determination together with the final Completion Balance Sheet shall be delivered by the Independent Accountant to the Warrantors and the Buyer;

13.7.6  

the Independent Accountant shall act as an expert and not as an arbitrator and his determination of any matter falling within his jurisdiction shall be final and binding on the Warrantors and the Buyer (in the absence of fraud or manifest error). In particular, without limitation, his determination shall be deemed to be incorporated into the Completion Balance Sheet, which shall then be final and binding on the parties;

13.7.7  

the expenses of the Independent Accountant shall be borne as he shall direct at the time he makes any determination or, failing such direction, equally between the Warrantors, on the one hand, and the Buyer, on the other;

13.7.8  

the parties shall co-operate with the Independent Accountant and comply with his reasonable requests made in connection with the carrying out of his duties under this agreement with respect to the Completion Balance Sheet.

14.  

DEBT- CASH ADJUSTMENT

14.1  

If and to the extent that the Completion Balance Sheet shows Cash at Bank is less than or greater than £604,197 then within 10 Business Days of the Completion Balance Sheet being agreed or determined pursuant to Clause 13, the Sellers shall pay to the Buyer an amount equal to such deficiency, or the Buyer shall pay to the Sellers an amount equal to such excess, in each case together with interest accrued daily at a rate of 1 per cent. per annum above the base rate from time to time of The Royal Bank of Scotland plc from and including the date of Completion to and including the Business Day before the date of actual payment.

14.2  

If and to the extent that the Completion Balance Sheet shows the liability for Borrowed Monies (which for the avoidance of doubt shall exclude liability for any finance lease) is greater than £0 then within 10 Business Days of the Completion Balance Sheet being agreed or determined pursuant to Clause 13, the Sellers shall pay to the Buyer an amount equal to the excess, together with interest accrued daily at a rate of 1 per cent. per annum above the base rate from time to time of The Royal Bank of Scotland plc from and including the date of Completion to and including the Business Day before the date of actual payment.

15.  

NET ASSET ADJUSTMENT

16.  

ESCROW OF CONSIDERATION

16.1  

The Sellers agree that at Completion, without prejudice to any other remedy available to the Buyer, the Buyer shall be entitled to withhold from the payment of any sums due to the Sellers at Completion the aggregate sum of £1,000,000 (the “Escrow Monies”) against any potential liabilities of the Sellers to the Buyer under this Agreement until 30 November 2006, subject to the following conditions:

16.2  

The Escrow Monies referred above shall be held for the escrow period by the Escrow Agent and subject to the terms of the Escrow Agreement.

16.3  

Notwithstanding any period referred to in Clause 16.1 above, the following amounts shall be released to the Sellers upon the expiry of the time periods set out below upon production to the Escrow Agent of a duly executed release by not less than two Sellers and the Buyer:

16.3.1  

forty percent of the balance of the Escrow Monies held by the Escrow Agent to be released at the expiry of a period of 1 year from the date of Completion; and

16.3.2  

the balance of all Escrow Monies held by the Escrow Agent to be released at the expiry of 30 November 2006.

16.4  

The Sellers’ Solicitors are hereby authorised by the Sellers to receive on their behalf any Escrow Monies released by the Escrow Agent to the Sellers in accordance with this Clause 16 and payment to the Sellers’ Solicitors will be good and sufficient discharge to the Buyer and the Escrow Agent and the Buyer will not be further concerned as to the application of the monies so paid.

16.5  

Where an amount is continued to be withheld in respect of a claim in accordance with Clause 16.1 once that claim shall have been settled (by agreement between the parties or following the final judgement of a court of competent jurisdiction or if discontinued):

16.5.1  

if the claim is settled in favour of the Buyer payment of the amount of the settlement shall be paid out by the Escrow Agent to the Buyer;

16.5.2  

if the claim is settled in favour of the Sellers or has been discontinued payment of the amount of the settlement or in the case of a discontinuance the amount of the claim shall be paid out of the account to the Sellers under Clause 16.1 provided that:

16.6  

Upon the release of the whole or any part of the amount in the joint account to the Sellers, the Sellers shall be entitled to any interest or other sums which have accrued pro rata to the amounts so released, but otherwise the Buyer shall be entitled to all such interest.

16.7  

The Sellers and the Buyer shall operate the Escrow Monies in the manner provided for by this Clause 16 by giving the appropriate instructions to their respective solicitors.

17.  

ANNOUNCEMENTS

17.1  

No announcement or circular concerning the transactions contemplated by this Agreement or any matter ancillary to it and no disclosure of the terms of this Agreement will be made by any Party except with the prior written approval of the others.

17.2  

This Clause does not apply to any announcement, circular or disclosure required by law or, to the extent relevant, the regulations of any stock exchange or listing authority or the Panel on Takeovers and Mergers or any other governmental or regulatory organisation, provided, if practicable, that the party required to make it has first consulted and taken into account the reasonable requirements of the other party.

18.  

COSTS

19.  

INTEREST

20.  

NOTICES

20.1  

Any notice or other document to be served under this Agreement shall be given in writing to the party due to receive such notice and shall be delivered personally or sent by first class registered pre-paid post (or airmail if sent overseas) or by fax to the party to be served, at:

2 North Shore Center

Pittsburgh, PA 15212

20.2  

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

20.2.1  

if personally delivered, at the time of delivery; or

20.2.2  

if posted, at 10.00 a.m. on the second Business Day after it was put into the post (six days if sent overseas); or

20.2.3  

if sent by fax, at the expiration of 2 hours after the time of despatch, if despatched before 3.00 p.m. on any Business Day, and in any other case at 10.00 a.m. on the Business Day following the date of despatch.

20.3  

In proving service of a notice or document it shall be sufficient to prove that delivery was made or that the envelope containing the notice or document was properly addressed and posted as a first class registered pre-paid letter (or airmail letter if sent overseas) or that the fax message was properly addressed and despatched and printed confirmation of transmission has been received.

20.4  

Any notice or other communication given to the Sellers’ Solicitors, will be treated as validly given to the Sellers and/ or Warrantors.

20.5  

Any notice or other communication addressed to a deceased Seller or to a deceased Seller's personal representatives, notwithstanding that no grant of representation has yet been made in respect of such Seller's estate, at the Seller's address in accordance with the foregoing provisions of this Clause or at such other address as may have been notified by the personal representatives in writing to the sender as being their address for service, and otherwise served in accordance with the foregoing provisions, will be deemed valid service to that Seller.

20.6  

Any references to time in this Clause shall be construed as references to the relevant time in the United Kingdom.

20.7  

The provisions of this Clause will not apply, in the case of service of court documents, to the extent that such provisions are inconsistent with the Civil Procedure Rules.

21.  

ASSIGNMENT

21.1  

The Buyer may assign, transfer, charge, or deal in any other manner with all or any part of the benefit of, or any of its rights under, this Agreement to any member of the Buyer’s Group. Provided that the liability of the Sellers to a member of the Buyer’s Group shall cease on such member ceasing to be a member of the Buyer’s Group. For the avoidance of doubt the foregoing proviso shall not operate to extinguish or reduce the Sellers liability with respect to any other member of the Buyer’s Group.

21.2  

The Sellers may not assign, transfer, charge, or deal in any other manner with the benefit of, or any of their rights under, this Agreement.

21.3  

This Agreement will be binding and enure for the benefit of the personal representatives, successors in title and permitted assigns of each of the parties and references to the parties will be construed accordingly.

22.  

GENERAL

22.1  

Unless otherwise provided, any outstanding obligation contained in this Agreement will remain in force notwithstanding Completion.

22.2  

At any time after the date of this Agreement the Sellers shall, and shall use their reasonable endeavours to procure that any necessary third party shall execute such documents and do such acts and things as the Buyer may reasonably require for the purpose of giving to the Buyer the full benefit of all the provisions of this Agreement.

22.3  

If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, either under any enactment or rule of law, such provision or part shall to that extent be deemed not to form part of this Agreement but the legality, validity and enforceability of the remainder of this Agreement shall not be affected.

22.4  

All amounts due under this Agreement shall be paid in full without any deduction or withholding other than as required by law and save as expressly provided no party shall be entitled to assert any credit, set-off or counterclaim against any other party in order to justify withholding payment of any such amount in whole or in part.

22.5  

No failure of the party to exercise, and no delay by it in exercising, any right, power or remedy in connection with this Agreement will operate as a waiver of such right, power or remedy nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of such right, power or remedy or the exercise of any other rights, powers or remedies (whether provided by law or otherwise). No waiver of any breach of this Agreement shall be deemed to be a waiver of any subsequent breach.

22.6  

Any waiver of any breach of, or any default under, any of the terms of this Agreement will not be deemed a waiver of any subsequent breach or default and will in no way affect the other terms of this Agreement.

22.7  

Any liability to any party under this Agreement may, in that party’s absolute discretion, in whole or in part be released, compounded or compromised or time or indulgence given, as regards any of the parties under such liability without in any way prejudicing or affecting its rights against any other party under the same or a like liability, whether joint and several or otherwise.

22.8  

In the event of any claim being made against the Sellers under the Warranties or under Part 2 of Schedule 4, the Sellers will not plead against such claim the Limitation Act 1980 or any other statute (present or future) directly or indirectly consolidating, extending, replacing or re-enacting the same, or any other rule of law relating to limitation of time in which an action can be brought or claim made; provided that this Clause 22.8 is without prejudice to any express provision of this Agreement regarding time limits for notifying or making claims.

22.9  

The rights and remedies of the parties as set out in this Agreement are in addition to and do not in any way exclude any rights and remedies which the parties may have under statute, common law or otherwise.

22.10  

Each Group Member has the right to enforce only Clauses 12 and 22.12   of this Agreement and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999. Except as stated in this Clause, the parties to this Agreement do not intend that any of its terms will be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person not a party to it. 

22.11  

No variation of this Agreement will be valid unless it is in writing and signed by or on behalf of each party to this Agreement but no variation shall require the consent of any Group Member.

22.12  

Except as required by law, all payments by the Sellers pursuant to this Agreement will be made free and clear of all deductions and withholdings whether in respect of Taxation (as defined in Schedule 4) or otherwise. If any deduction or withholding is required by law to be made from any payment by the Sellers pursuant to this Agreement which is not governed by the provisions of Schedule 4 or if (ignoring any available relief or allowance) the Buyer or any Group Member is subject to Taxation in respect of any such payment which is not governed by the provisions of Schedule 4 then the Sellers will pay to the Buyer or the relevant Group Member such additional amount as is necessary to ensure that the net amount received and retained by them (after taking account of such deduction or withholding or Taxation) is equal to the amount which they would have received and retained had the payment in question not been subject to the deduction or withholding or Taxation.

23.  

GOVERNING LAW AND JURISDICTION

23.1  

This Agreement and the documents to be entered into pursuant to it shall be governed by and construed in accordance with English law.

23.2  

The parties irrevocably agree that the courts of England are to have non-exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and the documents to be entered into pursuant to it. The parties irrevocably submit to the jurisdiction of such courts and waive any objection to proceedings in any such court on the ground of venue or on the ground that the proceedings have been brought in an inconvenient forum.

23.3  

The jurisdiction provisions contained in this Clause are made for the benefit of the Buyer only, which accordingly retains the right to bring proceedings in any other court of competent jurisdiction.

24.  

COUNTERPARTS

25.  

PROCESS AGENT

Number and class of shares to be sold

Name and address of registered owner

Name and address of beneficial owner

16495 Ordinary A

Graeme Philip King

Ash Barn Syke Lane

Ogden

Halifax

HX2 9NU

Graeme Philip King

16495 Ordinary A

Brian Ernest Tottman

61 Greenhead Road

Huddersfield

HD1 4ER

Brian Ernest Tottman

16495 Ordinary A

Robert Greig Watkins

Brown Lodge Barn

Brown Lodge Street

Littleborough

Lancashire

OL15 0EP

Robert Greig Watkins

5517 Ordinary A

Geoffrey William Roberts

Low Lodge

Barnsdale Road Allerton

Bywater

WF10 2AX

Geoffrey William Roberts

1500 Ordinary B

Helen M King

Ash Barn Syke Lane

Ogden

Halifax

HX2 9NU

Helen M King

1500 Ordinary B

Josephine Tottman

61 Greenhead Road

Huddersfield

HD1 4ER

Josephine Tottman

1500 Ordinary B

Sally R Watkins

Brown Lodge Barn

Brown Lodge Street

Littleborough

Lancashire

OL15 0EP

Sally Watkins

502 Ordinary B

Jennifer R Roberts

Low Lodge

Barnsdale Road Allerton

Bywater

WF10 2AX

Jennifer R Roberts

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors' full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors’ full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

Name of Company:

Registered number:

Registered office:

Date of incorporation:

Authorised share capital:

Issued share capital:

Registered and beneficial shareholders:

Directors’ full names:

Secretary's full name:

Accounting reference date:

Mortgages over assets:

1.  

Capital

1.1  

The Shares and the issued shares of each Group Member are fully paid and are beneficially owned and registered as set out in Schedules 1 and 2 free from any Encumbrance or any claim to, or Contract to grant, any Encumbrance (including for the avoidance of doubt any put or call option, drag or tag along rights or other right or pre-emption). 

1.2  

No Group Member has allotted or issued any share capital other than the shares shown in Schedules 1 and 2 as being issued.

1.3  

No Contract has been entered into which requires or may require any Group Member to allot or issue any share or loan capital and no Group Member has allotted or issued any securities which are convertible into share or loan capital.

1.4  

No Group Member has any interest, or has at any time during the period of 6 years ending on the date of this Agreement had any interest, in the share capital of any body corporate save as specified in Schedule 2.

1.5  

Other than as specified in Schedule 2, no Group Member has, or ever has had, any subsidiary undertakings (as defined in sections 258 to 260 CA 1985).

1.6  

The information contained in Schedules 1 and 2 is true, complete and accurate in all respects.

1.7  

No shareholder agreement exists in relation to the shares of any Group Member other than InTouch by Design Inc., a copy of which is attached to the Disclosure Letter

2.  

Capacity

3.  

Insiders' interests

3.1  

For the purpose of this paragraph "Insider" means the Sellers, any person who is or was at the relevant time a director of any Group Member, or any person who is or was at the relevant time connected (as defined in section 839 ICTA) with the Sellers, or any such director.

3.2  

There is not outstanding and there has not at any time during the period of 3 years ending on the date of this Agreement been outstanding any Contract to which any Group Member is or was a party and in which any Insider is or was interested in any way whatsoever (excluding any Contract of employment between any Group Member and any of its directors fully and fairly disclosed in the Disclosure Letter).

3.3  

No Insider has any interest, direct or indirect, in any trade or business which competes or is likely to compete with any Group Member's business.

3.4  

There are no amounts due to any Group Member or amounts due from any Group Member to either GAP Systems Limited or M3DIA Projects Limited.

4.  

Dormant Companies

4.1  

Each of the Dormant Companies in the three month period ending at Completion:

4.1.1  

has been dormant and has not traded or otherwise carried on business or changed its name;

4.1.2  

has not disposed for value of any property, asset or rights which it would have disposed of for value in the normal course of trading or carrying on a business;

4.1.3  

has not engaged in any activity other than settling its affairs or meeting a statutory requirement;

4.1.4  

has no liabilities, claims or debts outstanding as at Completion;

4.1.5  

is not the subject of, nor the proposed subject of insolvency proceedings or a scheme under s.425 Companies Act 1985.

5.  

Information supplied to the Buyer

5.1  

The factual information set out in the Disclosure Letter is true, complete and accurate and the Documents attached to the Disclosure Letter are true copies of the originals. The factual information set out in the Information Memorandum dated January 2004 and attached as section 50 and replies to enquiries attached as section 50 by or on behalf of the Sellers or any Group Member as at the date hereof is true, complete and accurate in all respects and is not misleading providing that statements of opinion which have been expressed in writing to the Buyer or its professional advisers by the Sellers or their professional advisers or otherwise on behalf of the Sellers may only be relied upon to the extent that such statements of opinion are considered to be honestly and reasonably held and they are not to be taken as warranties of fact. For the avoidance of doubt the forecasts set out in the Information Memorandum do not fall within this warranty 5.1.

6.  

The Accounts

6.1  

For the purpose of this paragraph "Accounting Standards" means the statements of standard accounting practice referred to in section 256 CA 1985 issued by the Accounting Standards Board or such other body as may be prescribed by the Secretary of State from time to time, including the statements of standard accounting practice formerly issued by the Accounting Standards Committee and since adopted by the Accounting Standards Board, the Abstracts issued by the Urgent Issues Task Force and any financial reporting standards issued by the Accounting Standards Board or such other body referred to above.

6.2  

The Accounts (copies of which are attached to the Disclosure Letter):

6.2.1  

show a true and fair view of the assets, liabilities and state of affairs of each Group Member and the Group as at the Accounts Date and of the profits (or losses) of each Group member and the Group for the finan