EX-99.2 4 ex99_2-f8k11042011.htm SHARE PURCHASE AGREEMENT, DATED NOVEMBER 4, 2011 ex99_2-f8k11042011.htm


Exhibit 99.2
 
 
Gately

 
 
DATED       November 4,
2011
 
         
         
         
 
(1)
JONATHAN DRIVER, PATRICIA DAWSON AND OTHERS
 
       
 
(2)
LIFETIME BRANDS UK LIMITED
 
       
 
(3)
NEW GOAL DEVELOPMENT LIMITED
 
       
 
(4)
LIFETIME BRANDS, INC.
 
         
         
         
 
 
SHARE PURCHASE AGREEMENT
relating to
CREATIVE TOPS HOLDINGS LIMITED and
CREATIVE TOPS FAR EAST LIMITED
 
 
         
         
 

 
 

 
 

 
 
One Eleven
Edmund Street
Birmingham
B3 2HJ
 
DX 13033 Birmingham-1
 
t: +44 (0) 121 234 0000
f: +44 (0) 121 234 0001
 
www.gateleyuk.com



 
 

 

 
 
CONTENTS

1
Definitions and interpretation
1
2
Sale and purchase of the Sale Shares
  16
3
HK Consideration
  17
4
UK Consideration
  17
5
Completion
  23
6
Warranties and indemnities
  24
7
Tax
  27
8
Restrictions on the Sellers
  27
9
Further undertakings and obligations of the Sellers
  30
10
Confidential Information
  31
11
Announcements
  32
12
Assignment and successors in title
  32
13
Third party rights
  33
14
The Sellers' Representative
  33
15
Notices
  33
16
General
  34
17
Lifetime Guarantee
  35
18
Governing law
  36
SCHEDULE 1 - Sellers   37
 
Part 1 – UK Sellers
  37
 
Part 2 – HK Sellers
  40
SCHEDULE 2
  42
 
Part 1 -  The UK Company
  42
 
Part 2 - The UK Subsidiary
  44
 
Part 3 – The HK Company
  45
SCHEDULE 3 - Completion   47
SCHEDULE 4 - General Warranties   53
SCHEDULE 5 - Limitations on Warrantors liability   88
SCHEDULE 6 - Taxation
  91
 
Part 1 – Definitions and Interpretation
  91
 
Part 2 - Tax Covenant
  95
 
Part 3 - Tax Warranties in respect of UK resident companies
  104
 
Part 4 - Tax Warranties in respect of companies not resident in the UK
  112
  SCHEDULE 7 - Property   114
 
 

 
 

 

 
Part 1 – Freehold
  114
 
Part 2 – Leasehold
  114
 
Part 3 – Licences
  116
 
Part 4 – Leases / Licences granted
  116
 
Part 5 – Property Warranties
  117
  SCHEDULE 8 - Company Intellectual Property   120
 
Part 1 – Registered IPR - Registered trade marks
  120
 
Part 2 – Unregistered Company Intellectual Property
  121
  SCHEDULE 9 – Completion Accounts   123
  Appendix A to Schedule 9   125
  Appendix B to Schedule 9   126
Appendix C to Schedule 9
  127
SCHEDULE 10 - Consideration Shares
  128
Appendix A to Schedule 10
  132
SCHEDULE 11 - Fourth Retention
  135

Agreed Form Documents
Disclosure Letter and Disclosure Documents
Letters of resignation (officers)
Letters of resignation (auditors)
Deed of release
Schedule of title deeds/original leases
UK Service Agreements
HK Service Agreement
Compromise Agreement
First Deposit Account Instruction Letter
Second Deposit Account Instruction Letter
Third Deposit Account Instruction Letter
Fourth Deposit Account Instruction Letter
Deed of Variation
Deed of Substitution
Investor Questionnaire



 
 

 


 
DATE   November 4, 2011
 
 
PARTIES
 
 
(1)
THE PERSONS whose names and addresses are set out in schedule 1 (the "Sellers");
 
 
(2)
LIFETIME BRANDS UK LIMITED, a company incorporated and registered in England and Wales (company number 07762596), whose registered office is at One Eleven, Edmund Street, Birmingham, B3 2HJ (the "UK Buyer");
 
 
(3)
NEW GOAL DEVELOPMENT LIMITED, a company incorporated and registered in Hong Kong (company number 1421678), of Suite 4020, Jardine House, 1 Connaught Place, Central, Hong Kong (the "HK Buyer"); and
 
 
(4)
LIFETIME BRANDS, INC. a company incorporated in Delaware (IRS Employer Identification  number 11-2682486), of 1000 Stewart Avenue, Garden City, New York 11530, United States of America ("Lifetime").
 
 

 
 
BACKGROUND
 
 
(A)
Creative Tops Holdings Limited is a private company limited by shares registered in England and Wales.
 
 
(B)
Creative Tops Limited is a private company limited by shares registered in England and Wales and a wholly owned subsidiary of Creative Tops Holdings Limited.
 
 
(C)
Creative Tops Far East Limited is a private company limited by shares incorporated in Hong Kong.
 
 
(D)
The Sellers have agreed to sell and Lifetime has (through purchasing vehicles in the United Kingdom and Hong Kong, being the UK Buyer and the HK Buyer respectively) agreed to purchase the entire issued share capital of Creative Tops Holdings Limited and Creative Tops Far East Limited on the terms and conditions set out in this agreement.
 
 

 
 
IT IS AGREED
 
 
1.
Definitions and interpretation
 
 
1.1
In this agreement the following definitions will apply:
 
"Accounts Date"
31 March 2011;
 
"Act"
the Companies Act 2006;
 
“Actual Net Indebtedness”
the amount by which Indebtedness exceeds Cash as shown in the Completion Accounts;
 
"Actual Working Capital"
in relation to the Group, the aggregate amount  of stock, trade and other debtors (excluding amounts due from the Sellers and/or associated companies), work in progress and prepayments less the amount of trade and other creditors, accruals and VAT, PAYE or National Insurance or equivalent sale or employment taxes payable or accrued as at the close of business on 31 October 2011, as shown in the Completion Accounts;
 
"Actual Working Capital Excess"
the amount (if any) by which the Actual Working Capital exceeds £6,462,000;
 
 
 
 
1

 
 
“Actual Working Capital Shortfall”
the amount (if any) by which the Actual Working Capital is less than £6,462,000;
 
"Agreed Form"
any document in a form agreed between the relevant parties and, for the purpose of identification only, signed or initialled by or on behalf of each of them;
 
"Bonus/China Tax Determined Claim"
any claim under paragraph 1.1.11 and/or paragraph 1.1.12 of the Tax Covenant:
 
  (a)

which is agreed in writing between the Warrantors, on the one hand, and a Buyer on the other; or

  (b) in respect of which final judgment has been obtained from a court of competent jurisdiction which judgment is not (or no longer) appealable;
 
"Bonus/China Tax Due Amount "
the amount settled or agreed as being due to a Buyer in respect of any Buyer Bonus/China Tax Determined Claim;
 
"Bonus/China Tax Undetermined Claim"
any claim under paragraph 1.1.11 and/or paragraph 1.1.12 of the Tax Covenant which has been notified to the Warrantors in accordance with this agreement prior to the Third Retention Release Date but which has not become a Bonus/China Tax Determined Claim;
 
"Business Day"
any day (other than a Saturday, Sunday or public holiday) during which clearing banks in the City of London are open for normal business;
 
"Buyer Determined Claim"
a Determined Claim which is agreed, or in respect of which judgment is given, in favour of a Buyer;
 
"Buyer Bonus/China Tax Determined Claim"
a Bonus/China Tax Determined Claim which is agreed, or in respect of which judgment is given, in favour of a Buyer;
 
"Buyers"
together the UK Buyer and the HK Buyer (and "Buyer" means either of them, as the context requires);
 
"Buyers’ Group"
each Buyer, its ultimate holding company and/or immediate holding company and/or any intermediate holding company from time to time, its subsidiaries from time to time and the subsidiaries from time to time of its ultimate holding company and/or of any immediate holding company and/or of any intermediate holding company;
 
“Cash”
in relation to the Group and as shown in the Completion Accounts, the aggregate of all cash in hand or at bank as at the close of business on 31 October 2011 and (in the latter case) credited to an account in the name of a Group Company and to which that Group Company (or any one or more Group Companies) is alone beneficially entitled and for so long as (a) that cash is repayable on demand and (b) repayment of that cash is not contingent on the prior discharge of any other indebtedness of any Group Company or of any other person whatsoever or on the satisfaction of any other condition;
 
 
 
 
2
 
 
 
"Claim"
any one or more claims made by a Buyer for breach of a General Warranty or a Property Warranty;
 
"Company Intellectual Property"
all Intellectual Property which is used in, or required for, or material to the conduct of the Company's business at the date of this agreement, or which relates to any of the assets of the Company set out in schedule 8;
 
"Completion"
completion of the sale and purchase of the Sale Shares in accordance with this agreement;
 
"Completion Accounts"
the accounts of the Group as at the close of business on 31 October 2011 referred to in clauses 4.6 to 4.9 (inclusive) and prepared in accordance with schedule 9;
 
"Completion Date"
the date on which Completion occurs pursuant to clause 5;
 
"Completion Period"
the period commencing on the day after the Accounts Date and ending on 31 October 2011;
 
"Compromise Agreement"
the compromise agreement to be entered into between Jonathan Driver and each Group Company on the date of this agreement in the Agreed Form;
 
"Computer Equipment"
all computer hardware owned by the Company and/or used in the Company's business including all disks, disk drives, display screens, keyboards, printers, microprocessors (whether embedded in a computer or any other piece of equipment), associated and peripheral equipment and firmware and any other items that connect with any or all of them, together with all relevant technical documentation;
 
"Computer Software"
all computer software owned by the Company and/or used in the Company's business, including all executable versions of computer programs in both source and object code form, all operating systems software comprised in the Computer Equipment and all application software and all other software owned and/or used by the Company or which by virtue of the Company's interest in the Computer Equipment, or in software owned and/or used by the Company, the Company is entitled to have or use or is capable of having or using;
 
 
 
 
3
 
 
 
"Computer Systems"
the Computer Software and the Computer Equipment;
 
"Confidential Information"
all or any information of a secret or proprietary or confidential nature (however stored) and not publicly known which is owned by the Company or which is used in or otherwise relates to the business, customers, suppliers, licensors or financial or other affairs of the Company, including information relating to:     
 
  (a) the business methods, technical processes, corporate plans, management systems, finances, new business opportunities or development projects of the Company;
 
  (b) the marketing or sales of any past or present or future products, goods or services of the Company including customer, licensor and supplier names and lists and other details of customers, licensors, suppliers, sales targets, sales statistics, market share statistics, prices, market research reports and surveys and advertising and other promotional materials;
  (c) future projects, business development or planning, commercial relationships and negotiations;
  (d) any trade secrets or other information relating to the provision of any product or service of or by the Company;
  (e) the Company Intellectual Property; or
  (f) lists of employees and details of remuneration and benefits paid to those employees;
 
"Consideration"
the aggregate of the HK Consideration and the UK Consideration;
 
"Consideration Shares"
the Lifetime common stock to be issued by Lifetime to the relevant UK Sellers in part satisfaction of the UK Consideration in the amounts specified in column 4 of part 1 of schedule 1 (and which will bear the legends referred to in schedule 10);
"Critical Person"
any person who is or was an employee, agent, director, consultant or independent contractor employed, appointed or engaged by the Company at any time within the Relevant Period who by reason of such employment, appointment or engagement and in particular his/her seniority and expertise or knowledge of trade secrets or Confidential Information or knowledge of, or influence over the customers, licensors or suppliers of the Company is likely to be able to assist or benefit a business in or proposing to be in competition with the Company;
 
 
 
4
 
 
 
"CTA 2010"
the Corporation Tax Act 2010;
 
"Customer"
any person who is or was at any time during the Relevant Period a customer of the Company for the sale or supply of Products or Services;
 
"Data Protection Legislation"
any and all data protection and privacy legislation in force from time to time in those parts of the world in which the Company operates and/or processes personal data (either directly or via a third party) including the Data Protection Act 1984, the Data Protection Act 1998, the Telecommunications (Data Protection and Privacy) Regulations 1999, the Privacy and Electronic Communications (EC Directive) Regulations 2003 and the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong);
 
“Dataroom”
the Dataroom set up by the Sellers' Solicitors, a copy of which is attached to the Disclosure Letter;
"Deed of Substitution"
the deed of substitution, amendment and withdrawal relating to the SSAS in the Agreed Form to be entered into between the UK Company (1), the UK Subsidiary (2), the new principal employer (3), Pensions Partnership SSAS Trustees Limited (4) and Jonathan Driver, Patricia Dawson and Carole Goodley (5);
 
"Deed of Variation"
the deed of variation relating to the lease dated 29 March 2010 in the Agreed Form to be entered into between CH Property Trustee Creative Limited (1) and the UK Subsidiary (2);|
 
"Determined Claim"
any Claim or Tax Claim or claim under clause 6 of this agreement:  
 
  (a)  which is agreed in writing between the Warrantors, on the one hand, and a Buyer on the other; or
  
  (b)
in respect of which final judgment has been obtained from a court of competent jurisdiction which judgment is not (or no longer) appealable;
 
"Disclosed"
fairly disclosed in the Disclosure Letter (and not elsewhere) in such manner and with sufficient detail and clarity to enable the Buyers to assess the scope, nature and impact (including financial) of the matter disclosed;
 
"Disclosure Documents"
the two identical CDs and bundles of documents (as listed in the schedule, and attached, to the Disclosure Letter) in the Agreed Form;
 
 
 
 
5
 
 
 
"Disclosure Letter"
the letter, described as such, in the Agreed Form with the same date as this agreement from the Warrantors to the Buyers relating to the Warranties;
 
"Distance Selling Legislation"
any and all distance selling legislation in force from time to time in those parts of the world in which the Company operates including the Consumer Protection (Distance Selling) Regulations 2000;
 
"Draft Completion Accounts"
a draft of the Completion Accounts prepared in accordance with schedule 9;
 
"Due Amount"
the amount settled or agreed as being due to a Buyer in respect of any Buyer Determined Claim;
 
"E-Commerce Legislation"
any and all e-commerce legislation in force from time to time in those parts of the world in which the Company operates including the Electronic Commerce (EC Directive) Regulations 2002;
 
"Encumbrance"
any mortgage, charge (fixed or floating), pledge, lien, option, hypothecation, restriction, right to acquire, right of pre-emption or interest (legal or equitable) including any assignment by way of security, reservation of title, guarantee, trust, right of set off or other third party right or any other security interest having a similar effect howsoever arising;
 
"Environmental Laws"
all statutes, rules, regulations, statutory instruments, treaties, directives, directions, by-laws, codes of practice, circulars, guidance notes, orders, notices, demands or injunctions of any governmental authority or agency or any regulatory or other body, or any common law duty of care in any jurisdiction in relation to Environmental Matters;
 
"Environmental Licences"
every licence, registration, permit, authorisation, approval, consent or like matter relating to Environmental Matters which are necessary or desirable in connection with the commencement and continuation of the use of any Property or any process or activity carried on at any Property, including any conditions or limitations imposed on, or any subsequent amendment or alteration made to, any such licence, registration, permit, authorisation, approval, consent or like matter;
 
            "Environmental Matters" any of the following:
     
  (a) the release, emission, entry or introduction of any Relevant Substance into the air including the air within buildings and other natural or man-made structures, whether above or below ground;
 
  (b) the discharge, release or entry of any Relevant Substance into water (whether natural or artificial, above or below ground) including into any river, water course, lake, loch, pond or reservoir or the surface of the river bed or of other land supporting such waters, ground waters (as defined in section 1(12) of the EPA), sewer or the sea;
 
 
 
 
6
 
 
 
  (c) the release, deposit, keeping or disposal of any Relevant Substance in or on land, whether or not covered by the sea or other waters;
 
  (d) the deposit, disposal, keeping, treatment, importation, exportation, transportation, handling, processing, manufacture, collection, sorting or presence of any Relevant Substance;
 
  (e) any deposit, disposal, keeping, treatment, importation, production or carrying of any waste, including any substance which constitutes scrap material or any effluent or other unwanted surplus substance arising from the application of any process or activity (including making it re-usable or re-claiming substances from it) and any substance or article which requires to be disposed of as being broken, worn out, contaminated or otherwise spoiled;
 
  (f) nuisance, noise, defective premises, health and safety at work, industrial illness, industrial injury due to environmental factors, environmental health problems, the conservation, preservation and protection of the natural or built environment or of man or any living organisms supported by the environment; or
 
  (g) any other matter whatsoever affecting the environment or any part of it;
 
      "EPA"
the Environmental Protection Act 1990;
 
"First Deposit Account"
an interest bearing joint account to be opened with HSBC Bank plc in the joint names of Lifetime's Solicitors and the Sellers' Solicitors into which the First Retention shall be paid and thereafter dealt with as described in clauses 4.2 to 4.9 (inclusive);
  
"First Deposit Account Instruction Letter"
the joint letter of instruction in the Agreed Form from the UK Buyer and the UK Sellers to Lifetime's Solicitors and the Sellers' Solicitors in relation to the First Deposit Account and the First Retention;
 
“First Retention”
the sum of £150,000 (one hundred and fifty thousand pounds) to be paid into the First Deposit Account and dealt with in accordance with clause 4.1.3 and clauses 4.2 to 4.9 (inclusive);
 
 
 
 
7
 
 
 
"First Retention Proportions"
the relevant proportions set opposite the UK Sellers respective names in column 5 of part 1 of schedule 1;
 
"Fourth Deposit Account"
an interest bearing joint account to be opened with HSBC Bank plc in the joint names of Lifetime’s Solicitors and the Sellers' Solicitors into which the Fourth Retention shall be paid and thereafter dealt with as described in schedule 11;
 
"Fourth Deposit Account Instruction Letter"
the joint letter of instruction in the Agreed Form from the UK Buyer and the UK Sellers to Lifetime's Solicitors and the Sellers' Solicitors in relation to the Fourth Deposit Account and the Fourth Retention;
 
"Fourth Retention"
the sum of £120,000.00 (one hundred and twenty thousand pounds) to be paid into the Fourth Deposit Account and dealt with in accordance with clause 4.1.6 and schedule 11;
 
"Fourth Retention Proportions"
the relevant proportions set opposite the UK Sellers respective names in column 5 of part 1 of schedule 1;
 
"General Warranties"
the statements in schedule 4;
 
"Group"
together the UK Company, the UK Subsidiary and the HK Company and "Group Company" shall be construed accordingly;
 
"Health & Safety Laws"
all applicable statutes, statutory legislation, common law, treaties, regulations, directives, codes of practice and guidance notes (which have legal effect) in force from time to time concerning the health and safety of those who work for the Company whether as employees or otherwise, or are in any way affected by the activities of the Company or by persons working for or on behalf of the Company;
 
"Health & Safety Matters"
any matters relating to the Company which arise under Health & Safety Laws;
 
"HK Accounts"
the audited financial statements of the HK Company for the period ended on the Accounts Date, comprising the audited balance sheet and audited profit and loss account together with the notes and cashflow statement relating to them and the directors' and auditors' reports on them;
 
"HK Auditors"
Roger K.C Tou & Co. of Flat B, 12th Floor, Winbase Centre, 208 Queens Road Central, Hong Kong;
 
"HK Company"
Creative Tops Far East Limited, further details of which are set out in part 3 of schedule 2;
 
 
 
 
8
 
 
 
"HK Consideration"
the aggregate consideration for the HK Shares to be paid or satisfied in accordance with clause 3;
 
"HK Management Accounts"
the unaudited management accounts of the HK Company for the period from the Accounts Date to the Management Accounts Date;
 
"HK Pension Scheme"
the HK Company's Mandatory Provident Fund Scheme administered by Bestserve Financial Limited;
 
“HK Prohibited Activities”
the business of the HK Company as undertaken by the HK Company during the Relevant Period being the design, development, manufacture, sourcing, export, distribution and supply of co-ordinated tableware, kitchenware, other houseware and giftware products including 'Creative Tops' branded products, 'own label' products for retailers and licensed products;
 
"HK Sellers"
the persons whose names and addresses are set out in part 2 of schedule 1;
 
"HK Service Agreement"
the service agreement to be entered into between the HK Company and Wong Lai Ho on the date of this agreement in the Agreed Form;
 
"HK Shares"
10,000 ordinary shares of HKD 1 each in the capital of the HK Company, comprising the whole of the share capital of the HK Company;
 
"Indebtedness"
(as shown in the Completion Accounts), the aggregate of all indebtedness of the Group as at the close of business on 31 October 2011 (other than trading debts arising in the ordinary course of business) and which shall include moneys borrowed and debit balances at banks or other financial institutions, customer advances, receivables sold or discounted, any liability in respect of finance leases or hire purchase agreements or similar, any one-off or off balance sheet liabilities including those relating to financial instruments, any note purchase facility, bonds, notes, debentures, loan stock or any similar financial instrument, capital equipment creditors and capital commitments, any interest rate swap including the breakage costs payable by any UK Group Company in respect of termination of any interest rate hedging agreement between any UK Group Company and its bank, foreign exchange contract, any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution, any liability under an advance or deferred purchase agreement, earn-outs and any other material contingent liabilities, giftwrapt liability, corporation tax liabilities accrued to 31 October 2011, any other amount raised under any transaction having the commercial effect of a borrowing or a non-trading debt or obligation, any liability in respect of any guarantee for any of the foregoing items, any loans, bonuses (or payments in advance) in respect of Jonathan Driver and/or Patricia Dawson, any fees and expenses payable to advisers and other third parties in respect of the transactions contemplated by this agreement and all costs, expenses, interest, penalties or other payments (whether contractual or not) that relate to or are incurred in respect of any change of control provisions in contracts with licensors, customers or suppliers;
 
 
 
 
9
 
 
 
"Intellectual Property"
all intellectual property rights, including:
 
  (a) patents, registered and unregistered trade and service marks, business names, domain names, copyright, rights in designs, rights in inventions, database rights and topography rights (whether or not registered);
 
  (b) applications for any of the rights in (a) above, together with the right to apply for registration of such rights where applicable;
 
  (c) know-how, trade secrets, confidential information, technical information, customer, licensor and supplier lists and any other proprietary knowledge and/or information of whatever nature and howsoever arising,
 
  together with any rights or types of protection of the same or of a similar nature to those listed in (a), (b) or (c) insofar as they may subsist anywhere in the world and in each case for their full term and/or effect;
 
"Intellectual Property Agreement"
any licence, consent or permission to use any Intellectual Property (including any unwritten or informal arrangement) including those material licenses, consents or permissions the particulars of which are set out in part 3 of schedule 8;
 
"Investor Questionnaire"
the document, described as such, in the Agreed Form (and attached in appendix A to schedule 10) to be completed and executed by each Seller receiving Consideration Shares pursuant to this agreement;
 
"Lifetime's Accountants"
Ernst & Young LLP of 400 Capability Green, Luton, LU1 3LU, United Kingdom;
 
"Lifetime's Solicitors"
Gateley LLP of One Eleven, Edmund Street, Birmingham B3 2HJ, United Kingdom;
 
"Losses"
any losses (including loss of profits, loss of reputation and consequential losses), claims, judgments, costs (including costs of enforcement and legal costs), damages, awards, charges, demands, proceedings, penalties, fines, expenses and/or any other liabilities incurred or sustained, or which may, directly or indirectly, be incurred or sustained;
 
 
 
 
10
 
 
 
"Management Accounts Date"
30 September 2011;
 
“Net Adjustment”
the net amount to be added to (or deducted from, as the case may be) the UK Consideration pursuant to clause 4.7;
 
"Ordinance"
the Companies Ordinance (Cap. 32 of the Laws of Hong Kong);
 
"Products or Services"
products or services which are of the same kind as or of a materially similar kind to or competitive with any products or services sold or supplied by the Company within the Relevant Period;
 
"Properties"
all the properties owned or occupied by the Company, brief details of which are set out in parts 1,2 and 3 of schedule 7 and "Property" shall mean any one of them;
 
"Property Warranties"
the statements in part 5 of schedule 7;
 
"Recognised Investment Exchange"
has the meaning given in section 285(1) of the Financial Services and Markets Act 2000;
 
"Records"
together:  
  (a)
accounts, books, ledgers, financial and other records of whatsoever kind of the Company, including all documentation relating to the contracts and employees of the Company, all invoices and other records required for VAT purposes, tax records and all lists of customers, licensors and suppliers of the Company in each case however stored and howsoever connected to the Company and the Computer Systems; and
 
  (b) all technical and sales material of the Company, including plans, technical and sales publications, designs, drawings and any negatives, blocks, plates and other similar material;
 
"Relevant Period"
the period of 12 months immediately prior to Completion;
 
"Relevant Substance"
any hazardous, dangerous, toxic, poisonous, noxious, offensive, radioactive, flammable, explosive, infectious or polluting substance, including asbestos, polychlorinated biphenyls or terphenyls (PCBs or PCTs), petroleum (including crude oil any fractions of crude oil and any petroleum produce and distillates), radon gas, batteries and any other substance or waste described or listed in or pursuant to any Environmental Laws as hazardous, dangerous, special, toxic, radioactive, noxious or offensive and any other substance which is included under or regulated by or pursuant to any Environmental Laws relating to matters which come within the scope of the definition of Environmental Matters or anything made using any of those substances;
 
 
 
 
11
 
 
 
"Restricted Territory"
any territory in which the Group has carried on business during the Relevant Period and for this purpose it is acknowledged that, whilst the UK Group and the HK Company are based at one location in each of the UK and Hong Kong respectively, sourcing efforts are carried out throughout China and sales and marketing efforts are carried out on a worldwide basis;
 
"Retention Holders"
together Lifetime's Solicitors and the Sellers' Solicitors;
 
"Sale Shares"
together the UK Shares and the HK Shares;
 
“Second Deposit Account"
an interest bearing joint account to be opened with HSBC Bank plc in the joint names of Lifetime’s Solicitors and the Sellers’ Solicitors into which the Second Retention shall be paid and thereafter dealt with as described in clauses 4.10 to 4.20 (inclusive);
 
“Second Deposit Account Instruction Letter”
the joint letter of instruction in the Agreed Form from the UK Buyer and Jonathan Driver to Lifetime’s Solicitors and the Sellers’ Solicitors in relation to the Second Deposit Account and the Second Retention;
 
"Second Retention"
the sum of £600,000 (six hundred thousand pounds) to be paid into the Second Deposit Account and dealt with in accordance with clause 4.1.4 and clauses 4.10 to 4.20  (inclusive);
 
"Second Retention Release Date"
the second anniversary of the date of this agreement;
 
"Sellers' Accountants"
Varney Barfield & Co Limited of 6 Corunna Court, Corunna Road, Warwick CV34 5HQ;
 
"Sellers' Representative"
Patricia Dawson or such other person resident in the United Kingdom as may be nominated by the Sellers;
 
"Sellers' Solicitors"
Shakespeares Legal LLP of Somerset House, Temple Street, Birmingham, B2 5DJ, United Kingdom;
 
"SSAS"
the small self-administered scheme known as the Creative Tops SSAS, governed by rules adopted by a deed dated 25 July 2007 (as amended);
 
 
 
 
12
 
 
 
"Tax"
has the meaning given in schedule 6;
 
"Tax Authority"
has the meaning given in schedule 6;
 
"Tax Claim"
has the meaning given in schedule 6;
 
"Tax Covenant"
the covenants relating to Tax contained in part 2 of schedule 6;
 
"Tax Warranties"
the statements in parts 3 and 4 of schedule 6;
 
"TCGA 1992"
the Taxation of Chargeable Gains Act 1992;
 
"Technical Information"
all data, formulae, techniques, trade secrets, expertise, proprietary knowledge, know-how, designs, drawings, recipes, specifications, instructional materials and other such information, of whatever nature, owned and/or used by the Company in connection with its business;
 
"Third Deposit Account"
an interest bearing joint account to be opened with HSBC Bank plc in the joint names of Lifetime’s Solicitors and the Sellers’ Solicitors into which the Third Retention shall be paid and thereafter dealt with as described in clauses 4.21 to 4.31 (inclusive);
 
"Third Deposit Account Instruction Letter"
the joint letter of instruction in the Agreed Form from the UK Buyer and Jonathan Driver to Lifetime’s Solicitors and the Sellers’ Solicitors in relation to the Third Deposit Account and the Third Retention;
 
"Third Retention"
the sum of £750,000 (seven hundred and fifty thousand pounds) to be paid into the Third Deposit Account and dealt with in accordance with clause 4.1.5 and clauses 4.21 to 4.31 (inclusive);
 
"Third Retention Release Date"
the fourth anniversary of the date of this agreement;
 
"UK Accounts"
the audited financial statements of each of the UK Company and the UK Subsidiary for the period ended on the Accounts Date, comprising, in each case, the audited balance sheet and audited profit and loss account together with the notes and cashflow statement relating to them and the directors' and auditors' reports on them (and, in the case of the UK Company, being consolidated financial statements);
 
"UK Auditors"
Varney Barfield Audit Limited of 6 Corunna Court, Warwick, CV34 5HQ;
 
"UK Company"
Creative Tops Holdings Limited, further details of which are set out in part 1 of schedule 2;
 
"UK Consideration"
the aggregate consideration for the UK Shares to be paid or satisfied in accordance with (and as adjusted by) clause 4;
 
 
 
 
13
 
 
 
“UK Group”
together the UK Company and the UK Subsidiary and “UK Group Company” shall be construed accordingly;
 
"UK Group Prohibited Activities"
the business of the UK Group as undertaken by the UK Group during the Relevant Period being the design, development, manufacture, sourcing, importation, distribution and supply of co-ordinated tableware, kitchenware, other houseware and giftware products including ‘Creative Tops’ branded products, 'own label' products for retailers and licensed products;
 
"UKLA"
the United Kingdom Listing Authority or any other competent authority for the time being for the purposes of Part VI of the Financial Services and Markets Act 2000;
"UK Management Accounts"
the unaudited management accounts of the UK Company (and the UK Subsidiary) for the period from the Accounts Date to the Management Accounts Date (in the case of the UK Company, being consolidated management accounts for the UK Group);
 
"UK Pension Schemes"
(a)the UK Group's stakeholder pension scheme administered by Scottish Widows;
(b)the UK Group's stakeholder pension scheme administered by Aviva;
(c)the UK Group's death in service scheme administered by Legal & General;
 
"UK Sellers"
the persons whose names and addresses are set out in part 1 of schedule 1;
 
"UK Service Agreements"
the service agreements to be entered into between the UK Subsidiary and each of Patricia Dawson, Martin Duddy, Robert Blackburn, Christine Harriman, Ian Ball and Dom Politano on the date of this agreement in the Agreed Form;
 
"UK Shares"
100,000 ordinary 'A' shares of £0.01 each and 27,930 ordinary 'C' shares of £0.01 each in the capital of the UK Company, comprising the whole of the share capital of the UK Company;
 
"UK Subsidiary"
Creative Tops Limited, further details of which are set out in part 2 of schedule 2;
 
"Undetermined Claim"
any Claim or Tax Claim or claim under clause 6 of this agreement which has been notified to the Warrantors in accordance with this agreement prior to the Second Retention Release Date but which has not become a Determined Claim;
 
"VAT"
value added tax within the meaning of the VATA;
 
 
 
 
14
 
 
 
"VATA"
the Value Added Tax Act 1994;
 
"Warranties"
the General Warranties, the Tax Warranties and the Property Warranties and references to "Warranty" shall be construed accordingly; and
 
"Warrantors"
Jonathan Driver and Patricia Dawson.
 
1.2
In this agreement, a reference to:
 
 
 
1.2.1
a clause or schedule or appendix is, unless otherwise stated, a reference to a clause of, or a schedule or appendix to, this agreement;
 
 
 
1.2.2
a paragraph is, unless otherwise stated, a reference to a paragraph of a schedule;
 
 
 
1.2.3
a statutory provision includes a reference to that statutory provision as replaced, modified or re-enacted from time to time and any subordinate legislation made under that statutory provision from time to time, in each case whether before or after the date of this agreement  Provided that, as between the parties, no such amendment or re-enactment made after the date of this agreement shall apply for the purposes of this agreement to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely effect the rights of, any party;
 
 
 
1.2.4
any English statutory provision or English legal term for any action, remedy, method of judicial proceeding, document, legal status, court, official or any other legal concept or thing shall, in respect of any person incorporated or resident or ordinarily resident or domiciled in any jurisdiction other than England and Wales, be deemed to refer to and include any equivalent or analogous action, remedy, method of judicial proceeding, document, legal status, court, official or other legal concept or thing or what most nearly approximates in that jurisdiction to the relevant English statutory provision or English legal term;
 
 
 
1.2.5
a "subsidiary" shall include a reference to a "subsidiary" and a "subsidiary undertaking" (each as defined in the Act) and a reference to a "holding company" shall include a reference to a "holding company" and a "parent undertaking" (each as defined in the Act);
 
 
 
1.2.6
a person includes a reference to an individual, body corporate, association, government, state, agency of state or any undertaking (whether or not having a legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists);
 
 
 
1.2.7
a party means a party to this agreement and includes its permitted assignees and/or the successors in title to substantially the whole of its undertaking and, in the case of an individual, to his estate and personal representatives;
 
 
 
1.2.8
a company (other than the "Company") shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established;
 
 
 
1.2.9
writing shall, subject to clause 15.4, include any mode of reproducing words in a legible and non-transitory form; and
 
 
 
1.2.10
this agreement or any provision of this agreement or any other document are to this agreement, that provision or that document as in force for the time being and as amended from time to time in accordance with the terms of this agreement or that document or with the agreement of the relevant parties (as the case may be).
 
 
 
15
 
 
 
1.3
The schedules and appendices form part of this agreement and have the same effect as if expressly set out in the body of this agreement and shall be interpreted and construed as though they were set out in this agreement.
 
 
1.4
The contents table and headings in this agreement are for convenience only and do not affect the interpretation or construction of this agreement.
 
 
1.5
Words importing the singular include the plural and vice versa, words importing a gender include every gender and reference to any party to this agreement comprising more than one person includes each person constituting that party.
 
 
1.6
The words "other", "include", "including" and "in particular" do not limit the generality of any preceding words and any words which follow them shall not be construed as being limited in scope to the same class as the preceding words where a wider construction is possible.
 
 
1.7
All agreements, covenants, warranties, undertakings, indemnities, representations, obligations and liabilities on the part of the Sellers (or, for the avoidance of doubt, the UK Sellers or the HK Sellers or the Warrantors, as the case may be) or any two or more of the Sellers (or, for the avoidance of doubt, any two or more of the UK Sellers or the HK Sellers or the Warrantors) contained in or arising under this agreement are, save where expressly stated to the contrary, joint and several and shall be construed accordingly.
 
 
1.8
Any question as to whether a person is connected with another shall be determined in accordance with section 1122 of the CTA 2010 (except that in construing section 1122 "control" has the meaning given by section 1124 or section 450 of the CTA 2010 so that there is control whenever section 1124 or 450 requires) which shall apply in relation to this agreement as it applies in relation to the CTA 2010.
 
 
1.9
Unless specified otherwise, or where the context otherwise requires, a reference to the "Company" (including in this clause 1) shall be deemed to include a reference to each Group Company so that, for the avoidance of doubt but without any limitation, the Warranties and the Tax Covenant and the indemnities in clause 6 shall be given in respect of and in relation to each Group Company.
 
 
1.10
Where in this agreement any party gives an indemnity in favour of another party, the obligation of the indemnifying party shall be to make the relevant payment in full on demand and without any set-off, counterclaim or other deduction.
 
 
2.
Sale and purchase of the Sale Shares
 
 
2.1
Each UK Seller shall sell with full title guarantee and free from any Encumbrance, and the UK Buyer shall buy, the number of UK Shares set opposite the name of that UK Seller in part 1 of schedule 1.
 
 
2.2
Each HK Seller shall sell with full title guarantee and free from any Encumbrance, and the HK Buyer shall buy, the number of HK Shares set opposite the name of that HK Seller in part 2 of schedule 1.
 
 
2.3
Each Seller covenants that he has the right to sell and transfer the legal and beneficial title to the Sale Shares to be transferred by him pursuant to this agreement and that such Sale Shares are free from any Encumbrance. Section 6(2) of the Law of Property (Miscellaneous Provisions) Act 1994 shall not apply for the purpose of this agreement.  Each Seller covenants that the Warranties in paragraphs 1 and 2 of schedule 4 are true and accurate.
 
 
 
16
 
 
 
2.4
Title to and beneficial ownership of the UK Shares shall pass to the UK Buyer on Completion. Title to and beneficial ownership of the HK Shares shall pass to the HK Buyer on Completion.  The Sale Shares shall be sold and purchased together with all rights and benefits attached to or accruing to them (including all dividends and distributions declared, made or paid) at, or at any time after, Completion.
 
 
2.5
Each of the Sellers:
 
 
 
2.5.1
waives any right of pre-emption over or in respect of the Sale Shares (or any of them) which may have been conferred on him, whether under the articles of association of the UK Company, the constitutional documents of the HK Company or otherwise;
 
 
 
2.5.2
undertakes to procure that any right of pre-emption over any of the Sale Shares which may be vested in any other person is waived;
 
 
 
2.5.3
covenants that the UK Shares are fully paid (or credited as fully paid) and constitute the whole of the share capital of the UK Company; and
 
 
 
2.5.4
covenants that the HK Shares are fully paid (or credited as fully paid) and constitute the whole of the share capital of the HK Company.
 
 
2.6
The Buyers shall not be required to complete the purchase of any of the Sale Shares unless all of the Sale Shares are transferred at the same time.
 
 
3.
HK Consideration
 
 
3.1
The HK Consideration is the sum of £750,000 (seven hundred and fifty thousand pounds) which shall be paid by the HK Buyer in cash at Completion.
 
 
3.2
The HK Consideration shall be apportioned between the HK Sellers in the amounts set opposite their respective names in part 2 of schedule 1.
 
 
3.3
Subject to clause 14.2 or unless otherwise agreed in writing between the parties, any sum due from one party to another under any provision of this agreement (whether under this clause 3, clause 4 or otherwise and including any payment out of the First Deposit Account or the Second Deposit Account or the Third Deposit Account or the Fourth Deposit Account) shall be paid by telegraphic transfer of funds to the receiving party's solicitors. The receipt of the receiving party's solicitors will give a full and valid discharge to the paying party who shall not be obliged to see to the application of such monies (including, for the avoidance of doubt, as between Sellers be they UK Sellers or HK Sellers).
 
 
4.
UK Consideration
 
 
4.1
The UK Consideration is, subject to adjustment pursuant to the provisions of this clause 4 (and schedules 9 and 11), the sum of £11,482,000 (eleven million four hundred and eighty two thousand pounds) which shall be paid or satisfied by:
 
 
 
4.1.1
the payment of £7,941,143 by the UK Buyer in cash at Completion (to be apportioned between the UK Sellers in the amounts set opposite their respective names in column 3 of part 1 of schedule 1); and
 
 
 
4.1.2
the issue to the UK Sellers (excluding Jonathan Driver) by Lifetime (on behalf of the UK Buyer) on Completion of the Consideration Shares (credited as fully paid and to be allocated between those UK Sellers in the amounts set opposite their respective names in column 4 of part 1 of schedule 1) (and together satisfying £1,920,857 of the UK Consideration); and
 
 
 
4.1.3
the payment by the UK Buyer of the First Retention into the First Deposit Account to be dealt with as described in clauses 4.2 to 4.9 (inclusive) below; and
 
 
 
17
 
 
 
 
4.1.4
the payment by the UK Buyer of the Second Retention into the Second Deposit Account to be dealt with as described in clauses 4.10 to 4.20 (inclusive) below; and
 
 
 
4.1.5
the payment by the UK Buyer of the Third Retention into the Third Deposit Account to be dealt with as described in clauses 4.21 to 4.31 (inclusive) below; and
 
 
 
4.1.6
the payment by the UK Buyer of the Fourth Retention into the Fourth Deposit Account to be dealt with as described in schedule 11.
 
 
First Retention
 
 
4.2
On Completion the UK Buyer will pay the First Retention into the First Deposit Account pursuant to clause 4.1.3.  The Retention Holders shall hold the First Retention in the First Deposit Account as stakeholders on trust for the UK Buyer and the UK Sellers.  The First Deposit Account shall be maintained and instructions for the release of funds from such account shall be given in accordance with the First Deposit Account Instruction Letter.
 
 
4.3
No amount shall be released from the First Deposit Account other than in accordance with these ‘First Retention’ provisions in this clause 4 or as agreed in writing between the UK Buyer and the UK Sellers from time to time.
 
 
4.4
Any interest accruing on the balance in the First Deposit Account from time to time shall be credited to the First Deposit Account and any payment of principal from the First Deposit Account shall include a payment of the interest earned on such principal sum in the First Deposit Account.
 
 
4.5
The liability to Tax on any interest on any amount in the First Deposit Account shall be borne by the party ultimately entitled to that amount.  Any costs incurred in establishing and maintaining the First Deposit Account shall be debited to the First Deposit Account.
 
 
4.6
The Completion Accounts shall be prepared, ascertained and agreed in accordance with the provisions of schedule 9.
 
 
4.7
The UK Consideration shall be adjusted on determination or agreement of the Completion Accounts as follows:
 
 
 
4.7.1
if the Completion Accounts determine that the Actual Net Indebtedness is less than £2,630,000 (two million six hundred and thirty thousand pounds) there shall be added to the UK Consideration a sum equal to the amount by which the Actual Net Indebtedness is less than £2,630,000 on a £1 for £1 basis;
 
 
 
4.7.2
if the Completion Accounts determine that the Actual Net Indebtedness is greater than £2,630,000 there shall be deducted from the UK Consideration a sum equal to the amount by which the Actual Net Indebtedness is greater than £2,630,000 on a £1 for £1 basis;
 
 
 
4.7.3
if the Completion Accounts determine that there is an Actual Working Capital Excess, there shall be added to the UK Consideration an amount equal to the Actual Working Capital Excess on a £1 for £1 basis; and
 
 
 
4.7.4
if the Completion Accounts determine that there is an Actual Working Capital Shortfall, there shall be deducted from the UK Consideration an amount equal to the Actual Working Capital Shortfall on a £1 for £1 basis.
 
 
4.8
The Completion Accounts shall determine the Net Adjustment pursuant to clause 4.7.  For the avoidance of doubt, if the Completion Accounts determine that there is either (a) an addition to the UK Consideration pursuant to clause 4.7.1 and a deduction to the UK Consideration pursuant to clause 4.7.4 or (b) a deduction to the UK Consideration pursuant to clause 4.7.2 and an increase to the UK Consideration pursuant to clause 4.7.3, the relevant amounts shall be offset in determining the Net Adjustment.
 
 
 
18
 
 
 
4.9
Within 10 Business Days of the date on which the Completion Accounts are agreed or determined in accordance with schedule 9:
 
 
 
4.9.1
if the Net Adjustment is an increase in the UK Consideration:
 
 
 
4.9.1.1
the parties shall instruct the Retention Holders to pay to the UK Sellers out of the First Deposit Account an amount equal to the balance standing to the credit of the First Deposit Account (together with any accrued interest on such amount but less any applicable bank charges); and
 
 
 
4.9.1.2
the UK Buyer shall pay to the UK Sellers an amount equal to the Net Adjustment;
 
 
in each case, such amounts to be apportioned between the UK Sellers in the First Retention Proportions;
 
 
 
4.9.2
if the Net Adjustment is a reduction in the UK Consideration (of an amount up to and including £150,000) the parties shall instruct the Retention Holders to:
 
 
 
4.9.2.1
pay to the UK Buyer out of the First Deposit Account an amount equal to the Net Adjustment (together with accrued interest on such amount but less any applicable bank charges); and
 
 
 
4.9.2.2
(after first making payment to the UK Buyer pursuant to clause 4.9.2.1) pay to the UK Sellers out of the First Deposit Account an amount equal to the balance (if any) standing to the credit of the First Deposit Account (together with any accrued interest on such amount but less any applicable bank charges), such amount to be apportioned between the UK Sellers in the First Retention Proportions;
 
 
 
4.9.3
if the Net Adjustment is a reduction in the UK Consideration of more than £150,000:
 
 
 
4.9.3.1
the parties shall instruct the Retention Holders to pay to the UK Buyer out of the First Deposit Account an amount equal to the balance standing to the credit of the First Deposit Account (together with any accrued interest on such amount but less any applicable bank charges); and
 
 
 
4.9.3.2
the UK Sellers shall repay to the UK Buyer an amount equal to the amount by which the Net Adjustment is greater than £150,000, such amount to be repaid by the Sellers in the First Retention Proportions.
 
 
Second Retention
 
 
4.10
On Completion the UK Buyer will pay the Second Retention into the Second Deposit Account pursuant to clause 4.1.4.  The Retention Holders shall hold the Second Retention in the Second Deposit Account as stakeholders on trust for the UK Buyer and Jonathan Driver.  The Second Deposit Account shall be maintained and instructions for the release of funds from such account shall be given in accordance with the Second Deposit Account Instruction Letter.
 
 
 
19
 
 
 
4.11
No amount shall be released from the Second Deposit Account other than in accordance with these “Second Retention” provisions in this clause 4 or as agreed in writing between the UK Buyer and Jonathan Driver from time to time.
 
 
4.12
Any interest accruing on the balance in the Second Deposit Account from time to time shall be credited to the Second Deposit Account and any payment of principal from the Second Deposit Account shall include a payment of the interest earned on such principal sum in the Second Deposit Account.
 
 
4.13
The liability to Tax on any interest on any amount in the Second Deposit Account shall be borne by the party ultimately entitled to that amount.  Any costs incurred in establishing and maintaining the Second Deposit Account shall be debited to the Second Deposit Account.
 
 
4.14
For the avoidance of doubt:
 
 
 
4.14.1
if a Due Amount is not satisfied in full from the Second Deposit Account, the relevant Buyer Determined Claim (to the extent not so satisfied) shall remain fully enforceable against the Warrantors; and
 
 
 
4.14.2
nothing in these “Second Retention” provisions shall prejudice, limit or otherwise affect any other right or remedy which either Buyer may have from time to time against the Warrantors either under this agreement or any of the documents executed pursuant to this agreement or as provided by law.
 
 
4.15
If at any time prior to the Second Retention Release Date there is a Buyer Determined Claim then, unless the Due Amount has otherwise been paid by the Warrantors to the relevant Buyer, the parties shall, as soon as practicable following the relevant claim becoming a Buyer Determined Claim, instruct the Retention Holders to pay to that Buyer (in accordance with clause 3.3) the Due Amount in respect of that Buyer Determined Claim or, if less, the amount standing to the credit of the Second Deposit Account (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.16
On the Second Retention Release Date Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay to Jonathan Driver an amount equal to the balance (if any) standing to the credit of the Second Deposit Account (for the avoidance of doubt, after all payments due (if any) pursuant to clause 4.15 have been made) less the aggregate of any amounts to be retained in the Second Deposit Account in accordance with clause 4.17 (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.17
(Without prejudice to clause 4.14) on the Second Retention Release Date there shall be retained in the Second Deposit Account the relevant Buyer's reasonable estimate of the maximum amount which may be claimed by that Buyer in respect of any Undetermined Claim.  If an amount is retained in the Second Deposit Account  beyond the Second Retention Release Date in respect of an Undetermined Claim, the relevant Buyer shall be required to:
 
 
 
4.17.1
issue legal proceedings in respect of that Undetermined Claim (provided that Undetermined Claim has not been previously satisfied, settled or withdrawn) within nine months of the notification of such Undetermined Claim to the Warrantors (or, in the case of the Tax Covenant, within nine months of the due date for payment under paragraph 9 of the Tax Covenant) or, in the case of any Undetermined Claim based upon liability which is contingent only, within nine months after the date on which such contingent liability becomes an actual liability (or, in each case, if later, within nine months of the end of any and all action which any Warrantor has requested the relevant Buyer (or the relevant Group Company) to take in accordance with paragraph 7.2.1 of schedule 5 of this agreement (or paragraph 12 of the Tax Covenant)); or
 
 
 
20
 
 
 
 
4.17.2
if legal proceedings are not issued by the relevant expiry date referred to in clause 4.17.1 then (provided that Undetermined Claim has not been previously satisfied, settled or withdrawn), together with Jonathan Driver, instruct the Retention Holders to release the amount retained in respect of such Undetermined Claim to Jonathan Driver.
 
 
4.18
As soon as practicable after an Undetermined Claim becomes a Determined Claim following the Second Retention Release Date, Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay:
 
 
 
4.18.1
where that Undetermined Claim becomes a Buyer Determined Claim, to the relevant Buyer (in accordance with clause 3.3), the Due Amount in respect of that Determined Claim (or, if less, the amount standing to the credit of the Second Deposit Account) (together with any accrued interest on such amount but less any applicable bank charges); and
 
 
 
4.18.2
to Jonathan Driver (in accordance with clause 3.3), the balance (if any) of the amount retained in the Second Deposit Account in relation to that Determined Claim in accordance with clause 4.17 (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.19
As soon as practicable after the last Undetermined Claim becomes a Determined Claim following the Second Retention Release Date and following the payment of any amount due to the relevant Buyer in respect of that Determined Claim in accordance with paragraph 4.18.1, Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay to Jonathan Driver (in accordance with clause 3.3), the balance (if any) standing to the credit of the Second Deposit Account (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.20
For the avoidance of doubt, although the Second Retention is withheld in respect of UK Consideration, the UK Buyer shall be entitled to direct that the Second Retention is used to satisfy (or part satisfy, as the case may be), a Determined Claim which is agreed, or in respect of which judgment is given, in favour of the HK Buyer.
 
 
Third Retention
 
 
4.21
On Completion the UK Buyer will pay the Third Retention into the Third Deposit Account pursuant to clause 4.1.5.  The Retention Holders shall hold the Third Retention in the Third Deposit Account as stakeholders on trust for the UK Buyer and Jonathan Driver.  The Third Deposit Account shall be maintained and instructions for the release of funds from such account shall be given in accordance with the Third Deposit Account Instruction Letter.
 
 
4.22
No amount shall be released from the Third Deposit Account other than in accordance with these “Third Retention” provisions in this clause 4 or as agreed in writing between the UK Buyer and Jonathan Driver from time to time.
 
 
4.23
Any interest accruing on the balance in the Third Deposit Account from time to time shall be credited to the Third Deposit Account and any payment of principal from the Third Deposit Account shall include a payment of the interest earned on such principal sum in the Third Deposit Account.
 
 
4.24
The liability to Tax on any interest on any amount in the Third Deposit Account shall be borne by the party ultimately entitled to that amount.  Any costs incurred in establishing and maintaining the Third Deposit Account shall be debited to the Third Deposit Account.
 
 
 
21
 
 
 
4.25
For the avoidance of doubt:
 
 
 
4.25.1
if a Bonus/China Tax Due Amount is not satisfied in full from the Third Deposit Account, the relevant Buyer Bonus/China Tax Determined Claim (to the extent not so satisfied) shall remain fully enforceable against the Warrantors; and
 
 
 
4.25.2
nothing in these “Third Retention” provisions shall prejudice, limit or otherwise affect any other right or remedy which either Buyer may have from time to time against the Warrantors either under this agreement or any of the documents executed pursuant to this agreement or as provided by law.
 
 
4.26
If at any time prior to the Third Retention Release Date there is a Buyer Bonus/China Tax Determined Claim then, unless the Bonus/China Tax Due Amount has otherwise been paid by the Warrantors to the relevant Buyer, the parties shall, as soon as practicable following the relevant claim becoming a Buyer Bonus/China Tax  Determined Claim, instruct the Retention Holders to pay to that Buyer (in accordance with clause 3.3) the Bonus/China Tax Due Amount in respect of that Buyer Bonus/China Tax Determined Claim or, if less, the amount standing to the credit of the Third Deposit Account (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.27
On the Third Retention Release Date Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay to Jonathan Driver an amount equal to the balance (if any) standing to the credit of the Third Deposit Account (for the avoidance of doubt, after all payments due (if any) pursuant to clause 4.26 have been made) less the aggregate of any amounts to be retained in the Third Deposit Account in accordance with clause 4.28 (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.28
(Without prejudice to clause 4.25) on the Third Retention Release Date there shall be retained in the Third Deposit Account the relevant Buyer's reasonable estimate of the maximum amount which may be claimed by that Buyer in respect of any Bonus/China Tax Undetermined Claim. If an amount is retained in the Third Deposit Account beyond the Third Retention Release Date in respect of a Bonus/China Tax Undetermined Claim, the relevant Buyer shall be required to:
 
 
 
4.28.1
issue legal proceedings in respect of that Bonus/China Tax Undetermined Claim (provided that Bonus/China Tax Undetermined Claim has not been previously satisfied, settled or withdrawn) within nine months of the notification of such Bonus/China Tax Undetermined Claim to the Warrantors (or, in the case of the Tax Covenant, within nine months of the due date for payment under paragraph 9 of the Tax Covenant) or, in the case of any Bonus/China Tax Undetermined Claim based upon liability which is contingent only, within nine months after the date on which such contingent liability becomes an actual liability (or, in each case, if later, within nine months of the end of any and all action which any Warrantor has requested the relevant Buyer (or the relevant Group Company) to take in accordance with paragraph 7.2.1 of schedule 5 of this agreement (or paragraph 12 of the Tax Covenant)); or
 
 
 
4.28.2
if legal proceedings are not issued by the relevant expiry date referred to in clause 4.28.1 then (provided that Bonus/China Tax Undetermined Claim has not been previously satisfied, settled or withdrawn), together with Jonathan Driver, instruct the Retention Holders to release the amount retained in respect of such Bonus/China Tax Undetermined Claim to Jonathan Driver.
 
 
 
22
 
 
 
4.29
As soon as practicable after a Bonus/China Tax Undetermined Claim becomes a Bonus/China Tax Determined Claim following the Third Retention Release Date, Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay:
 
 
 
4.29.1
where that Bonus/China Tax Undetermined Claim becomes a Buyer Bonus/China Tax Determined Claim, to the relevant Buyer (in accordance with clause 3.3), the Bonus/China Tax Due Amount in respect of that Bonus/China Tax Determined Claim (or, if less, the amount standing to the credit of the Third Deposit Account) (together with any accrued interest on such amount but less any applicable bank charges); and
 
 
 
4.29.2
to Jonathan Driver (in accordance with clause 3.3), the balance (if any) of the amount retained in the Third Deposit Account in relation to that Bonus/China Tax Determined Claim in accordance with paragraph 4.28 (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.30
As soon as practicable after the last Bonus/China Tax Undetermined Claim becomes a Bonus/China Tax Determined Claim following the Third Retention Release Date and following the payment of any amount due to the relevant Buyer in respect of that Bonus/China Tax Determined Claim in accordance with clause 4.29.1, Jonathan Driver, on the one hand, and the UK Buyer on the other, shall instruct the Retention Holders to pay to Jonathan Driver (in accordance with clause 3.3), the balance (if any) standing to the credit of the Third Deposit Account (together with any accrued interest on such amount but less any applicable bank charges).
 
 
4.31
For the avoidance of doubt, although the Third Retention is withheld in respect of UK Consideration, the UK Buyer shall be entitled to direct that the Third Retention is used to satisfy (or part satisfy, as the case may be), a Bonus/China Tax Determined Claim which is agreed, or in respect of which judgment is given, in favour of the HK Buyer.
 
 
Fourth Retention
 
 
4.32
The Fourth Retention shall be dealt with as described in schedule 11.
 
 
5.
Completion
 
 
5.1
Completion shall take place at the office of Lifetime’s Solicitors on the date of this agreement when each of the matters set out in schedule 3 shall occur.
 
 
5.2
Upon completion of the matters referred to in schedule 3:
 
 
 
5.2.1
The HK Buyer shall pay the HK Consideration in the manner specified in clause 3.3;
 
 
 
5.2.2
The UK Buyer shall pay the amount referred to in clause 4.1.1 in the manner specified in clause 3.3;
 
 
 
5.2.3
The UK Buyer shall pay the First Retention into the First Deposit Account pursuant to clause 4.1.3;
 
 
 
5.2.4
The UK Buyer shall pay the Second Retention into the Second Deposit Account pursuant to clause 4.1.4;
 
 
 
5.2.5
Lifetime shall issue the number of Consideration Shares set opposite the UK Sellers respective names in column 4 of part 1 of schedule 1, receipt of the stock certificates relating thereto (together with a copy of the corporate authorisations required to validly issue the Consideration Shares) by the Sellers’ Solicitors shall be a sufficient discharge to Lifetime (and the UK Buyer) for that part of the UK Consideration to be satisfied by the allotment of the Consideration Shares;
 
 
 
23
 
 
 
 
5.2.6
The UK Buyer shall pay the Third Retention into the Third Deposit Account pursuant to clause 4.1.5; and
 
 
 
5.2.7
The UK Buyer shall pay the Fourth Retention into the Fourth Deposit Account pursuant to clause 4.1.6.
 
 
5.3
The provisions of schedule 10 shall apply.
 
 
6.
Warranties and indemnities
 
 
6.1
The Warrantors warrant to each Buyer (for itself and on behalf of each member of the Buyers’ Group) in the terms of the Warranties.
 
 
6.2
The Warranties are subject only to:
 
 
 
6.2.1
any matter which is Disclosed; and
 
 
 
6.2.2
the provisions of schedule 5, provided that none of the limitations in schedule 5 shall apply in respect of a breach of any of the Warranties in paragraphs 1, 2, 3, 4 or 35 in schedule 4.
 
 
6.3
The Warrantors acknowledge that each Buyer is entering into this agreement in reliance on each of the Warranties with the intention of inducing each Buyer to enter into this agreement.
 
 
6.4
Save as provided in clause 6.2.1:
 
 
 
6.4.1
no information of which either Buyer or Lifetime has knowledge (actual, constructive or imputed) shall prevent or limit a claim made by either Buyer for breach of clause 6.1; and
 
 
 
6.4.2
neither the rights and remedies of each Buyer, nor the Warrantors liability in respect of the Warranties, shall be affected by any investigation made by or on behalf of either Buyer or Lifetime into the Company.
 
 
6.5
The Warrantors waive and may not enforce any right which they may have in respect of any misrepresentation, inaccuracy or omission in or from any information or advice supplied or given by the employees or officers of the Company for the purpose of assisting the Warrantors to make a representation, give a Warranty, provide the Tax Covenant or prepare the Disclosure Letter.
 
 
6.6
Each of the Warranties (and each sub-paragraph within each Warranty) shall be interpreted as a separate and independent warranty so that each Buyer shall have a separate claim and right of action in respect of every breach of each Warranty. Each Warranty shall be construed independently and, except where this agreement provides otherwise, is not limited by the terms of any other Warranty or any other provision of this agreement.
 
 
6.7
Unless otherwise specified, where any Warranty refers to the knowledge, information, belief or awareness of the Warrantors (or any similar expression), the Warrantors shall be deemed to have such knowledge, information, belief and awareness as the Warrantors ought reasonably to have given their particular past and current positions in and responsibilities to the Company and such knowledge, information, belief and awareness as the Warrantors would have obtained had they made all due and careful enquiries (having regard to the confidentiality of the matters referred to in this agreement) into the subject matter of that Warranty and the knowledge, information, belief and awareness of the Warrantors shall be deemed to include the knowledge of each other.
 
 
 
24
 
 
 
6.8
Without prejudice to any other right or remedies available to each Buyer, the Warrantors shall indemnify each Buyer and the Company (and each other member of the Buyers' Group) against all Losses which either Buyer or the Company (or any other member of the Buyers' Group) incurs, suffers or sustains directly or indirectly, in any way whatsoever, as a result of or in the event of or in connection with:
 
 
 
6.8.1
any indebtedness as at Completion to or from the Sellers and/or their connected persons to or from the Company (save in respect of salary and other employment related benefits properly accrued but not yet paid);
 
 
 
6.8.2
any facts, matters or circumstances giving rise to a breach of the Warranties at paragraphs 14.6 and/or 22.5 of schedule 4;
 
 
 
6.8.3
any facts, matters or circumstances giving rise to a breach of the Warranties at paragraph 38 of schedule 4;
 
 
 
6.8.4
any failure of the Company to comply with Data Protection Legislation (including arising from a failure to have an appropriate registration in relation thereto);
 
 
 
6.8.5
any facts, matters or circumstances giving rise to a breach of the Warranties at paragraph 31.11 of schedule 4;
 
 
 
6.8.6
the termination of employment of any employee or employees of the Company in the six months immediately preceding the date of this agreement including any such Losses arising pursuant to an Employment Tribunal claim or claims instigated by any one or more of Danny Claxton, Matthew McCafferty, James Piazza and Holly York;
 
 
 
6.8.7
the SSAS;
 
 
 
6.8.8
any facts, matters or circumstances giving rise to a breach of the Warranties at paragraph 29 of schedule 4;
 
 
 
6.8.9
the accident at work to Lee Harris and any compensation claim arising from it save to the extent such claim is covered by insurance;
 
 
 
6.8.10
the termination of David Barnes' employment (whether by dismissal, resignation or otherwise) with the UK Subsidiary including any Employment Tribunal claim relating thereto;
 
 
 
6.8.11
the occupation by any UK Group Company of any property other than the Properties at any time on or before the date of this agreement including pursuant to a guarantee and/or covenant given to a lessor or assignor of any such property.
 
 
6.9
Any payment required to be made by the Warrantors pursuant to this clause 6 shall be:
 
 
 
6.9.1
paid in cash; and
 
 
 
6.9.2
deemed to be a reduction in the Consideration.
 
 
6.10
The parties acknowledge that following Completion a Buyer may transfer some or all of the Sale Shares or the business and/or any assets of the Group to any other member of the Buyers’ Group at a price and on terms as to payment to be determined at the time (the "Intra Group Transfer").  The parties agree that for the purposes of calculating the value of any claim by a Buyer for breach of any term of this agreement, that Buyer shall (if the Intra Group Transfer has occurred) be entitled to claim against the relevant Sellers as if the Intra Group Transfer had not taken place.
 
 
25

 
 
6.11
Excluding all transactions conducted by the UK Subsidiary and/or HK Company in the normal and proper course of business, the Warrantors warrant and undertake to each Buyer (for itself and on behalf of each member of the Buyer's Group) that in the period from the close of business on 31 October 2011 until and including the Completion Date:
 
 
 
6.11.1
the Group has not incurred or agreed to incur any Indebtedness;
 
 
 
6.11.2
the cash in hand and at bank is no less than at the close of business on 31 October 2011;
 
 
 
6.11.3
the amount of Working Capital of the Group is not less than the amount of Working Capital as at the close of business on 31 October 2011;
 
 
 
6.11.4
no management charge or fee has been levied by any of the Sellers or any of their connected persons against any Group Company and there has been no payment (or agreement to pay) any management, service or other fees or compensation from any Group Company to any of the Sellers or any of their connected persons save for employment salary and benefits in the ordinary course;
 
 
 
6.11.5
no Group Company has:
 
 
 
6.11.5.1
waived or agreed to waive its right to any cash or compensation or any benefit from the Sellers or any connected person of any of the Sellers;
 
 
 
6.11.5.2
paid, assumed or discharged or agreed to pay, assume or discharge any obligation of the Sellers or any of their connected persons;
 
 
 
6.11.5.3
paid or incurred or agreed to pay or incur any costs or expenses relating to the sale of the Sale Shares or to the other transactions contemplated by this agreement and any documents in Agreed Form;
 
 
 
6.11.5.4
paid or incurred or agreed to pay or incur a bonus, success bonus or success fee in relation to the transaction and matters that are the subject matter of this agreement and the documents in Agreed Form;
 
 
 
6.11.5.5
made or agreed to make any payment to or for the direct benefit of any of the Sellers or any of their connected persons;
 
 
 
6.11.5.6
entered into any transaction or arrangement with or for the direct benefit of any of the Sellers or any of their connected persons, other than to the extent such is both in the normal and ordinary course of conduct of the business of a Group Company and on arm's length, fair market terms;
 
 
 
6.11.5.7
created, issued, redeemed, purchased or repaid any share or loan capital;
 
 
 
6.11.5.8
paid or declared or made any dividend or distribution of profits or assets to or in favour of any person;
 
 
 
6.11.5.9
traded otherwise than in the proper and normal course of business on an arm's length basis.
 
 
6.12
The Warrantors agree to indemnify and keep indemnified each Buyer and each Group Company (and each other member of the Buyer's Group) without set off, counterclaim or other deduction from and against all Losses which either Buyer or the Group (or any other member of the Buyer's Group) incurs or suffers in any way whatsoever from any breach of clause 6.11.
 
 
 
26
 
 
 
7.
Tax
 
 
The provisions of schedule 6 shall apply.
 
 
8.
Restrictions on the Sellers
 
 
8.1
As further consideration for the Buyers agreeing to purchase the Sale Shares on the terms of this agreement and with the intent of assuring to the Buyers the full benefit and value of the goodwill of the Group, each UK Seller severally undertakes to the UK Buyer (for the benefit of itself, the UK Company and the UK Subsidiary) that he will not, either solely or jointly, directly or indirectly, alone or in conjunction with or on behalf of or through any other person and whether as a principal, shareholder, director, employee, agent, consultant, partner, member or in any other capacity, for a period of three years following the Completion Date:
 
 
 
8.1.1
within the Restricted Territory carry on or be engaged, concerned or interested in, or provide technical, commercial, professional or other advice to, any other business which supplies or proposes to supply  Products or Services in competition with the UK Company and/or the UK Subsidiary;
 
 
 
8.1.2
within the Restricted Territory carry on or be engaged, concerned or interested in, or provide technical, commercial, professional or other advice to, any other business which carries on or proposes to carry on any UK Group Prohibited Activities in competition with the UK Company and/or the UK Subsidiary;
 
 
 
8.1.3
within the Restricted Territory be employed, engaged, concerned or interested, directly or indirectly, in any business which at any time during the Relevant Period has supplied or licensed products or services to the UK Company and/or the UK Subsidiary;
 
 
 
8.1.4
do or attempt to do anything which causes or may cause any supplier who has supplied products or services to the UK Company and/or the UK Subsidiary during the Relevant Period to cease, alter or materially reduce its supplies to the UK Company and/or the UK Subsidiary or to alter the terms on which it supplies the UK Company and/or the UK Subsidiary;
 
 
 
8.1.5
do or attempt to do anything which causes or may cause any licensor who has licensed products (and/or licensed the use of that licensor’s brand, name or logo) to the UK Company and/or the UK Subsidiary during the Relevant Period to withdraw that licence or to alter the terms of such licence;
 
 
 
8.1.6
in competition with the UK Company and/or the UK Subsidiary, solicit any order, enquiry or business in respect of any UK Group Prohibited Activities, or for the sale or supply of any Products or Services, from any Customer;
 
 
 
8.1.7
in competition with the UK Company and/or the UK Subsidiary, accept any order, enquiry or business in respect of any UK Group Prohibited Activities, or for the sale or supply of any Products or Services, from any Customer;
 
 
 
8.1.8
solicit, induce or entice away from the UK Company and/or the UK Subsidiary, or attempt to solicit, induce or entice away from the UK Company and/or the UK Subsidiary, in any case in connection with a business in or proposing to be in competition with the UK Company and/or the UK Subsidiary , a Critical Person, whether or not such person would commit any breach of his contract of employment or engagement by leaving the service of the UK Company and/or the UK Subsidiary; or
 
 
27
 
 
 
 
8.1.9
employ or engage, or offer to employ or engage, in any case in connection with a business in or proposing to be in competition with the UK Company and/or the UK Subsidiary, a Critical Person, whether or not such person would commit any breach of his contract of employment or engagement by accepting such employment or engagement.
 
 
8.2
As further consideration for the Buyers agreeing to purchase the Sale Shares on the terms of this agreement and with the intent of assuring to the Buyers the full benefit and value of the goodwill of the Group, each HK Seller severally undertakes to the HK Buyer (for the benefit of itself and the HK Company) that he will not, either solely or jointly, directly or indirectly, alone or in conjunction with or on behalf of or through any other person and whether as a principal, shareholder, director, employee, agent, consultant, partner, member or in any other capacity, for a period of three years following the Completion Date:
 
 
 
8.2.1
within the Restricted Territory carry on or be engaged, concerned or interested in, or provide technical, commercial, professional or other advice to, any other business which supplies or proposes to supply Products or Services in competition with the HK Company;
 
 
 
8.2.2
within the Restricted Territory carry on or be engaged, concerned or interested in, or provide technical, commercial, professional or other advice to, any other business which carries on or proposes to carry on any HK Prohibited Activities in competition with the HK Company;
 
 
 
8.2.3
within the Restricted Territory be employed, engaged, concerned or interested, directly or indirectly, in any business which at any time during the Relevant Period has supplied or licensed products or services to the HK Company;
 
 
 
8.2.4
do or attempt to do anything which causes or may cause any supplier who has supplied products or services to the HK Company during the Relevant Period to cease, alter or materially reduce its supplies to the HK Company or to alter the terms on which it supplies the HK Company;
 
 
 
8.2.5
do or attempt to do anything which causes or may cause any licensor who has licensed products (and/or licensed the use of that licensor’s brand, name or logo) to the HK Company during the Relevant Period to withdraw that licence or to alter the terms of such licence;
 
 
 
8.2.6
in competition with the HK Company, solicit any order, enquiry or business in respect of any HK Prohibited Activities, or for the sale or supply of any Products or Services, from any Customer;
 
 
 
8.2.7
in competition with the HK Company, accept any order, enquiry or business in respect of any HK Prohibited Activities, or for the sale or supply of any Products or Services, from any Customer;
 
 
 
8.2.8
solicit, induce or entice away from the HK Company, or attempt to solicit, induce or entice away from the HK Company, in any case in connection with a business in or proposing to be in competition with the HK Company, a Critical Person, whether or not such person would commit any breach of his contract of employment or engagement by leaving the service of the HK Company; or
 
 
 
28
 
 
 
 
8.2.9
employ or engage, or offer to employ or engage, in any case in connection with a business in or proposing to be in competition with the HK Company, a Critical Person, whether or not such person would commit any breach of his contract of employment or engagement by accepting such employment or engagement.
 
 
8.3
References to “the Company” in the clause 1 definitions of “Customer”, Critical Person” and “Products or Services” shall:
 
 
 
8.3.1
for the purposes of the clause 8.1 restrictions, relate to “the UK Company and/or the UK Subsidiary"; and
 
 
 
8.3.2
for the purposes of the clause 8.2 restrictions, relate to “the HK Company”.
 
 
8.4
Each Seller severally undertakes to each Buyer (for the benefit of itself and each Group Company) that he will not, either solely or jointly, directly or indirectly, alone or in conjunction with or on behalf of or through any other person and whether as a principal, shareholder, director, employee, agent, consultant, partner, member or in any other capacity, at any time after Completion, use, whether as a company name, trading name or otherwise, the name "Creative Tops" or any other name used by any Group Company in connection with its business activities (or any other names which are similar to or may be confused with such names).  Without prejudice to the generality of the foregoing, the Sellers shall procure that the name of CTL (as defined in paragraph 38 of schedule 4) is changed on or before Completion.
 
 
8.5
Jonathan Driver undertakes to each Buyer (for the benefit of itself and each Group Company) that he will not, either solely or jointly, directly or indirectly, alone or in conjunction with or on behalf of or through any other person and whether as a principal, shareholder, director, employee, agent, consultant, partner, member or in any other capacity, at any time after Completion, hold himself out as having any continuing involvement with the Group.
 
 
8.6
Each of the restrictions contained in clauses 8.1, 8.2, 8.4 and 8.5 are to be treated as separate obligations, independent of the others.
 
 
8.7
The parties consider the restrictions contained in clauses 8.1, 8.2, 8.4 and 8.5 to be reasonable as between themselves and the public interest and in particular reasonable and necessary to protect the legitimate business interests of the Group. If, however, any of them are found by a court to be unreasonable or unenforceable, but would be reasonable and enforceable if deleted in part or reduced in application, then the restrictions shall apply with such deletion or modification as may be necessary to make it reasonable and enforceable.
 
 
8.8
Nothing in this clause 8 shall prevent any Seller from being the holder of or beneficially interested in any class of securities in any company if such class of securities is listed or dealt in on any other Recognised Investment Exchange and confers not more than 3% of the votes which can generally be cast at a general meeting of that company.
 
 
8.9
Each Seller agrees with each Buyer that he will, at a Buyer's request and cost, enter into a direct undertaking (or undertakings, as the case may be) executed as a deed (or deeds, as the case may be) with the relevant Group Companies whereby he will accept restrictions corresponding to those restrictions accepted by that Seller in this clause 8.
 
 
8.10
Each Seller shall procure that any person connected with him complies with those restrictions accepted by that Seller set out in this clause 8.
 
 
29
 
 
 
9.
Further undertakings and obligations of the Sellers
 
 
9.1
Waiver of claims
 
 
The Sellers confirm that at the date of this agreement:
 
 
 
9.1.1
neither they nor any person connected with any of them has any claim against the Company on any account whatsoever;
 
 
 
9.1.2
there are no agreements or arrangements under which the Company has any actual, contingent or prospective obligation to or in respect of any of the Sellers or any person connected with any of them; and
 
 
 
9.1.3
any claim which the Sellers or any person connected with any of them have or has against the Company is waived in full, any obligation owed to the Sellers or any such connected person by the Company is released and the Sellers indemnify each Buyer and the Company against all Losses which that Buyer or the Company incurs or suffers, directly or indirectly, in any way whatsoever in connection with any such claim or obligation.
 
 
9.2
Further assurance
 
 
 
9.2.1
The Sellers covenant with each Buyer that they will at their own cost do everything possible to give the UK Buyer full and unrestricted legal and beneficial title to the UK Shares, the HK Buyer full and unrestricted legal and beneficial title to the HK Shares and to give effect to the provisions of this agreement including, on receiving a Buyer's request:
 
 
 
9.2.1.1
doing and executing, or arranging for the doing and executing of, each act, document and thing necessary to implement this agreement; and
 
 
 
9.2.1.2
giving to that Buyer all information they possess or to which they have access relating to the Company's business and allowing that Buyer to copy any document containing that information.
 
 
 
9.2.2
Immediately following Completion the Sellers shall (and shall procure that any other person shall) send to the relevant Buyer at its registered office for the time being all records, correspondence, documents, files, memoranda and other papers belonging to the Company and which are not located at a Property or delivered at Completion (whether or not such documents are referred to in schedule 3).
 
 
 
9.2.3
Each Seller confirms that he will promptly refer to the relevant Group Company all enquiries and other communications which he receives after the date of this agreement and which relate to the business of that Group Company.
 
 
9.3
Dealing with Sale Shares pending registration
 
 
 
9.3.1
The UK Sellers undertake to the UK Buyer that for so long as any of them remains the registered holder of any of the UK Shares after Completion they will:
 
 
 
9.3.1.1
hold the UK Shares and the dividends and other distributions of profits or surplus or other assets declared, paid or made in respect of the UK Shares after Completion and all rights arising out of or in connection with the UK Shares in trust for the UK Buyer;
 
 
 
30
 
 
 
 
9.3.1.2
deal with and dispose of the UK Shares and all such dividends, distributions and rights as the UK Buyer may direct;
 
 
 
9.3.1.3
vote at all meetings which they are entitled to attend as the registered holder of the UK Shares in such manner as the UK Buyer shall direct; and
 
 
 
9.3.1.4
execute all instruments of proxy or other documents which the UK Buyer may require to enable the UK Buyer to attend and vote at any such meeting.
 
 
 
9.3.2
For the purpose of giving effect to clause 9.3.1 each of the UK Sellers appoints the UK Buyer (acting by any of its directors from time to time) to be his attorney in his name and on his behalf to exercise all or any of the rights in relation to the UK Shares as the UK Buyer in its absolute discretion sees fit from Completion to the day on which the UK Buyer or its lawful nominee is registered in the register of members of the UK Company as the holder of the relevant UK Shares, including:
 
 
 
9.3.2.1
receiving notice of, attending and voting at a general meeting, class meeting or other meeting of the UK Company;
 
 
 
9.3.2.2
completing and returning any meeting requisition, form of proxy, consent to short notice, written resolution or other document required to be signed by the registered holder of the UK Shares;
 
 
 
9.3.2.3
dealing with, and giving directions as to, any moneys, securities, benefits, documents, notices or other communications (in whatever form) arising by right of the UK Shares or received in connection with the UK Shares from the UK Company or any other person; and
 
 
 
9.3.2.4
executing, delivering and doing all deeds, instruments and acts in that UK Seller's name as may be done in that UK Seller's capacity as the registered holder of the relevant UK Shares,
 
 
and for that purpose each UK Seller consents to the UK Company sending any written resolutions, notices or other communications in respect of the UK Shares registered in his name to the UK Buyer. The power of attorney granted by this clause 9.3.2 is granted by each UK Seller to secure the interest of the UK Buyer in the UK Shares and, accordingly, shall be irrevocable.
 
 
 
9.3.3
The provisions of clauses 9.3.1 and 9.3.2 shall be deemed repeated mutatis mutandis but so as to apply to the “HK Sellers”, “HK Buyer”, “HK Shares” and “HK Company” (instead of the “UK Sellers”, “UK Buyer”, “UK Shares” and “UK Company” respectively).
 
 
10.
Confidential Information
 
 
10.1
Each of the Sellers undertakes with each Buyer (for itself and for the benefit of the Company) that he will:
 
 
 
10.1.1
not use or disclose to a person Confidential Information he has or acquires; and
 
 
31
 
 
 
 
10.1.2
make every effort to prevent the use or disclosure of Confidential Information.
 
 
10.2
Clause 10.1 does not apply to:
 
 
 
10.2.1
disclosure of Confidential Information to a director, officer or employee of a Buyer or the Company or another member of the Buyers’ Group whose function requires him to have the Confidential Information;
 
 
 
10.2.2
use or disclosure of Confidential Information required to be used or disclosed by law or by any governmental or regulatory body but only to the extent required by law;
 
 
 
10.2.3
disclosure of Confidential Information to an adviser for the purpose of advising the Sellers but only on terms that clause 10.1 applies to use or disclosure by the adviser; or
 
 
 
10.2.4
Confidential Information which becomes publicly known except by a breach of clause 10.1.
 
 
11.
Announcements
 
 
11.1
Subject to clause 11.2, neither the Buyers nor the Sellers shall make or authorise any press or public announcement or other communication or circular concerning the terms of any matter contemplated by or ancillary to this agreement without the prior written consent of Lifetime.
 
 
11.2
The Buyers or the Sellers may:
 
 
 
11.2.1
make or authorise an announcement required by law or by any regulatory or governmental body (whether or not such requirement has the force of law) provided that:
 
 
 
11.2.1.1
the relevant party has consulted with and taken into account the requirements of Lifetime; and
 
 
 
11.2.1.2
the relevant party has used reasonable endeavours to obtain confidentiality undertakings from any relevant securities exchange or regulatory or governmental body; and
 
 
 
11.2.2
make a communication to their professional advisers in connection with advice relating to the interpretation of this agreement or proceedings relating to the enforcement of the terms of this agreement.
 
 
12.
Assignment and successors in title
 
 
12.1
No party shall assign, transfer, charge, make the subject of a trust or deal in any other manner with this agreement or any of its rights under this agreement or purport to do any of the same without the prior written consent of the other parties except that Lifetime and/or either Buyer may assign or transfer the benefit of any provision to which it is entitled from time to time, in whole or in part and without restriction:
 
 
 
12.1.1
to a member of the Buyers' Group, save that if such assignee ceases to be a member of the Buyers' Group, immediately prior to such cessation it shall assign the benefit to another member of the Buyers' Group; or
 
 
 
12.1.2
to any person providing funding to Lifetime and/or either Buyer, by way of security for facilities and/or funding made available to Lifetime and/or either Buyer.
 
 
12.2
This agreement shall be binding upon and shall survive for the benefit of the personal representatives and successors-in-title of each party.
 
 
 
32
 
 
 
13.
Third party rights
 
 
13.1
Subject to clauses 13.2 and 13.3, a person who is not a party to this agreement shall have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce or rely upon a provision of this agreement. No party to this agreement may hold itself out as trustee of any rights under this agreement for the benefit of any third party unless specifically provided for in this agreement.
 
 
13.2
The Company, any person to whom the benefit of any provision of this agreement is assigned in accordance with clause 12.1, each member of the Buyers' Group and each person falling within the category of persons described in clause 12.2 is entitled under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement which confers (expressly or impliedly) any benefit on any such person.
 
 
13.3
The employees of the Company may enforce the provisions of clause 6.5.
 
 
14.
The Sellers' Representative
 
 
14.1
Any consent, agreement, direction or waiver given or made by the Sellers' Representative for the purpose of this agreement shall be binding upon all of the Sellers.
 
 
14.2
Delivery of any notice, document or payment required to be made to the Sellers or any of them pursuant to this agreement may be made to the Sellers' Representative whose receipt for such delivery or payment shall be an absolute discharge of the party making the same who shall not be concerned as to the destination of such delivery or the application of such payment (as the case may be).
 
 
14.3
The Sellers authorise the Sellers' Representative to act in the way contemplated by this agreement and to take such decisions as she shall at her entire discretion determine and, provided she acts in good faith, the Sellers' Representative shall have, and accepts, no liability to any of the Sellers or to any other person other than the Buyers in connection with or as a result of anything which the Sellers' Representative does, refrains from doing or neglects or omits to do in connection with any matter relating to the agreement.
 
 
14.4
As between the Sellers, the Sellers' Representative shall not be required to expend any of her own money on or in relation to the matters referred to in this agreement and without prejudice to the generality of the foregoing may decline to take any steps to dispute any Claim or Tax Claim unless the Sellers' Representative has been indemnified and secured (if and to the extent she so requires, to her full satisfaction) in respect of the maximum amount of the expenses and other liabilities of any kind which she considers that she will or may incur in connection with or as a result of such proceedings and such indemnity and security shall be such as to ensure that the Sellers' Representative has immediate access to all such funds as she may require in order to meet all such expenses or other liabilities as they fall due provided always that the Sellers' Representative shall be obliged to bear her appropriate proportion of such expenses and liabilities.
 
 
15.
Notices
 
 
15.1
Any notice given pursuant to this agreement shall be in writing signed by, or on behalf of, the person issuing the notice. Notices shall be served by personal delivery,  or prepaid recorded delivery first class post (or registered airmail in the case of an address for service outside the United Kingdom) or fax to:
 
 
 
15.1.1
in the case of each Seller, his address (or fax number, if there is one) set out in schedule 1;
 
 
 
15.1.2
in the case of the UK Buyer, its registered office address for the time being or fax number 0121 234 0003 marked for the attention of Jeffrey Siegel c/o Andrew Madden (and copied to Lifetime as described in clause 15.1.4);
 
 
33
 
 
 
 
15.1.3
in the case of the HK Buyer, its registered office address for the time being or fax number (011)86 21 6862 2530 marked for the attention of Patrick Xin Zhou, Director and Legal Representative (and copied to Lifetime as described in clause 15.1.4);
 
 
 
15.1.4
in the case of Lifetime, its registered office address for the time being or fax number (001)516 566 2203 marked for the attention of Jeffrey Siegel, Chairman of the Board, President and Chief Executive Officer.
 
 
or, in relation to any party, such other address for service in the United Kingdom (or, in the case of Lifetime, the United States of America) as that party may from time to time notify to the others.
 
 
15.2
In the absence of evidence of earlier receipt and subject to clause 15.3, notices served in accordance with clause 15.1 shall be deemed to have been received:
 
 
 
15.2.1
if delivered personally, at the time of actual delivery to the address referred to in clause 15.1; and
 
 
 
15.2.2
if served by prepaid recorded delivery first class post, two Business Days from the date of posting; and
 
 
 
15.2.3
if served by registered airmail, five Business Days from the date of posting; and
 
 
 
15.2.4
if served by fax, upon receipt of confirmation that the notice has been correctly transmitted.
 
 
15.3
If deemed receipt under clause 15.2 occurs on a day which is not a Business Day or after 5.00 p.m. on a Business Day, the relevant notice shall be deemed to have been received at 9.00 a.m. on the next Business Day.
 
 
15.4
For the avoidance of doubt, notice given under this agreement shall not be validly served if sent by e-mail.
 
 
16.
General
 
 
16.1
Except where this agreement provides otherwise, each party shall pay its own costs (including in relation to financial, accounting and legal advice) incurred in relation to the negotiation, preparation, execution and performance of this agreement and the matters referred to in this agreement.
 
 
16.2
This agreement, together with any documents in the Agreed Form and all documents entered into or to be entered into pursuant to the terms of this agreement, constitutes the entire agreement between the parties with respect to all matters referred to in this agreement. This agreement supersedes and extinguishes all previous agreements between the parties relating to such matters, other than in relation to any fraud or fraudulent misrepresentation.
 
 
16.3
No variation to this agreement shall be effective unless made in writing and signed by or on behalf of all the parties to this agreement. None of the Buyers, the Sellers or Lifetime shall be required to obtain the consent of the Company or any other third party on whom a benefit is conferred under this agreement to the termination or variation of this agreement or to the waiver or settlement of any right or claim arising under it.
 
 
16.4
Each provision of this agreement is severable and distinct from the others. If at any time any provision of this agreement is or becomes unlawful, invalid or unenforceable to any extent or in any circumstances for any reason, it shall to that extent or in those circumstances be deemed not to form part of this agreement but (except to that extent or in those circumstances in the case of that provision) the legality, validity and enforceability of that and all other provisions of this agreement shall not be affected in any way.
 
 
34
 
 
 
16.5
If any provision of this agreement is found to be unlawful, invalid or unenforceable in accordance with clause 16.4 but would be lawful, valid or enforceable if some part of the provision were deleted, the provision in question shall apply with such modification(s) as may be necessary to make it lawful, valid or enforceable.
 
 
16.6
The failure or delay in exercising a right or remedy provided by this agreement or by law does not constitute a waiver of that (or any other) right or remedy.  No single or partial exercise, or non-exercise or non-enforcement of any right or remedy provided by this agreement or by law prevents or restricts any further or other exercise or enforcement of that (or any other) right or remedy.
 
 
16.7
A Buyer may release or compromise the whole or any part of the liability of any one or more of the Sellers under any provision of this agreement, or grant to any Seller time or other indulgence, without affecting the liability of any other Seller. No waiver by a Buyer of, or delay in enforcing, any of the provisions of this agreement shall release any Seller from full performance of his remaining obligations under this agreement.
 
 
16.8
Each Buyer's rights, powers and remedies contained in this agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.
 
 
16.9
Except to the extent that they have been performed or where this agreement provides otherwise, the obligations contained in this agreement remain in force after Completion.
 
 
16.10
If any amount payable by the Sellers (and/or any one or more of them) to a Buyer under this agreement is subject to Tax in the hands of that Buyer or is subject to any deduction or withholding required by law to be made, the relevant Sellers shall pay to that Buyer such additional amount as is required to put that Buyer in the position it would have been in had such sum not been subject to Tax or to the deduction or withholding.
 
 
16.11
This agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original. All the counterparts shall together constitute one and the same agreement, which shall be deemed executed when counterparts executed by all of the parties to this agreement are delivered.
 
 
16.12
The UK Buyer shall procure that the UK Subsidiary pays to the SSAS the sum of  £425,000 (plus VAT thereon, if and the extent applicable) as soon as practicable after the Completion Date, such amount representing the premium referred to in paragraph 7 of appendix A to schedule 9.  The UK Buyer further undertakes to procure that the UK Subsidiary pays any Stamp Duty Land Tax on such payment within the time limits required by law.
 
 
16.13
The Sellers shall procure that CTL (as defined in paragraph 38 of Schedule 4) will change its name to SP Macbeth 6 Limited as soon as practicable after Completion, and in any event within 21 days.  A certified copy of the change of name certificate issued by the Hong Kong Companies Registry shall be provided to the UK Buyer within 14 days of issue.
 
 
17.
Lifetime Guarantee
 
 
17.1
Lifetime guarantees the punctual performance of all the obligations and liabilities of each of the Buyers under clauses 3 and 4 of this Agreement.
 
 
35
 
 
 
17.2
If any obligation or liability of a Buyer expressed to be the subject of the guarantee contained in this clause 17 (the "Guarantee") is not, or ceases to be, valid or enforceable against that Buyer on any ground whatsoever including:
 
 
 
17.2.1
any defect in or want of powers of that Buyer or the irregular exercise of any such powers;
 
 
 
17.2.2
any lack of authority on the part of any person purporting to act on behalf of that Buyer;
 
 
 
17.2.3
any legal or other limitation, disability or incapacity of that Buyer;
 
 
 
17.2.4
any change in the constitution of that Buyer;
 
 
 
17.2.5
any amalgamation or reconstruction of that Buyer; or
 
 
 
17.2.6
the liquidation, administration or insolvency of, that Buyer,
 
 
Lifetime shall nevertheless be liable to the Sellers, in respect of that purported obligation or liability as if that obligation or liability were fully valid and enforceable and Lifetime was the principal obligor in respect of that obligation or liability.
 
 
17.3
The Sellers shall not be obliged to take any steps to proceed against or to enforce any right or remedy against a Buyer under clauses 3 and 4 of this agreement before enforcing the Guarantee.
 
 
17.4
The Guarantee is in addition to any other right, security or remedy available to the Sellers from time to time and is a continuing security notwithstanding any liquidation, administration, insolvency or other incapacity of a Buyer or Lifetime.
 
 
18.
Governing law
 
 
18.1
This agreement shall be governed by and interpreted in accordance with English law. Non-contractual obligations (if any) arising out of or in connection with this agreement (including its formation) shall be governed by English law.
 
 
18.2
The parties agree to submit to the non-exclusive jurisdiction of the English Courts in relation to any claim or matter (whether contractual or non-contractual) arising under this agreement or any of the documents in the Agreed Form.
 
 
18.3
Each party irrevocably waives any objection which it might at any time have to the courts of England being nominated as the forum to decide any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this agreement (including non-contractual disputes and claims) and agrees not to claim that the courts of England are not a convenient or appropriate forum.
 
 
THE PARTIES have executed this agreement as a deed and delivered it on the date first set out above
 
 

 

 
36

 

 
SCHEDULE 1
 
Sellers
 
Part 1 – UK Sellers
 
 

 
(1) Name and address
(2) Number and class of UK Shares sold
(3) Cash Consideration payment on Completion
(Clause 4.1.1)
(4) Consideration Shares
 
(Clause 4.1.2)
(5) First Retention Proportions
(Clauses 4.1.3)
(6) Second Retention
(Clause 4.1.4)
(7) Third Retention
(Clause 4.1.5)
(8) Fourth Retention Proportions
(Clause 4.1.6)
Jonathan Albert Driver
Flat D, 12/F, BLK1
Carmen’s Garden
Cox Road
Kowloon
66,600 ordinary 'A' shares of £0.01 each
£5,495,484
NIL
60.72%
£600,000
£750,000
61.04%
Patricia Anne Dawson
Grange Cottage
2 Mill Road
Islip
Kettering
Northamptonshire
NN14 3LB, England
33,400 ordinary 'A' shares of £0.01 each
£1,939,755
198,932
30.52%
Nil
Nil
30.62%
Robert Blackburn
Mayburn
Ringstead Road
Great Addington
Kettering
Northants
NN14 4BW, England
5,320 ordinary 'C' shares of £0.01 each
£89,737
11,709
1.80%
Nil
NIl
1.59%
 
 
37
 
 
 
Wong Lai Ho
Flat C, 10/F
No 49 Broadway
Mei Foo Sun Chuen
Kowloon
Hong Kong
5,320 ordinary 'C' shares of £0.01 each
£89,737
11,709
1.80%
Nil
Nil
1.59%
Martin Roger Duddy
27 Lister Drive
Northampton
NN4 9XE, England
5,320 ordinary 'C' shares of £0.01 each
£89,737
11,709
1.80%
Nil
Nil
1.59%
Christine Harriman
51 High Street
Spaldwick
Nr Huntingdon
Cambridgeshire
PE28 0TD, England
3,990 ordinary 'C' shares of £0.01 each
£78,898
7,283
1.12%
Nil
Nil
1.19%
Ian Ball
115A Malvern Road
Worcester
WR2 4LJ, England
3,990 ordinary 'C' shares of £0.01 each
£78,898
7,283
1.12%
Nil
Nil
1.19%
Dom Politano
16 Ashdown Close
Barton Seagrave
Northants
NN15 6TY, England
3,990 ordinary 'C' shares of £0.01 each
£78,898
7,283
1.12%
Nil
Nil
1.19%
 
 
 
38
 
 
 
TOTAL
100,000 ordinary 'A' shares  of £0.01 each and 27,930 ordinary 'C' shares of £0.01 each
£7,941,143
255,911 (being an aggregate value of the Consideration Shares of £1,920,857 (or £7.51 per unit, being a sum equal to the average of the closing prices of Lifetime common stock on the last five trading days preceding the date of Completion as reported on the NASDAQ Stock Exchange).
100%
 
£600,000
£750,000
100%

 
39

 
 
 
Part 2 – HK Sellers
 
 

 
(1) Name and address
(2) Number and class of HK Shares sold
HK Consideration
(£)
Jonathan Albert Driver
Flat D, 12/F, BLK1
Carmen’s Garden
Cox Road
Kowloon
5,600 ordinary shares of HKD 1 each
£420,000
Patricia Anne Dawson
Grange Cottage
2 Mill Road
Islip
Kettering
Northamptonshire
NN14 3LB, England
2,900 ordinary shares of HKD 1 each
£217,500
Robert Blackburn
Mayburn
Ringstead Road
Great Addington
Kettering
Northants
NN14 4BW, England
500 ordinary shares of HKD 1 each
£37,500
Wong Lai Ho
Flat C, 10/F
No 49 Broadway
Mei Foo Sun Chuen
Kowloon
Hong Kong
500 ordinary shares of HKD 1 each
£37,500
 
 
 
40
 
 
 
Martin Roger Duddy
27 Lister Drive
Northampton
NN4 9XE, England
500 ordinary shares of HKD 1 each
£37,500
TOTAL
10,000 ordinary shares of HKD 1 each
£750,000
 
 
 

 
 
41

 


 
SCHEDULE 2
 
Part 1 -  The UK Company
 
 

 
   
Name
Creative Tops Holdings Limited
 
Registered number
3930464
 
Previous names
Sevco 1136 Limited  - 27 March 2000
 
Date of incorporation
22 February 2000
 
Place of incorporation
England and Wales
 
Registered office address
6 Corunna Court, Corunna Road, Warwick, CV34 5HQ
 
Share capital
£1,279.30 divided into 100,000 ordinary 'A' shares of £0.01 each and 27,930 ordinary 'C' shares of £0.01 each, registered as follows:
 
 
Shareholder
No. of shares
 
Jonathan Albert Driver
 
66,600 ordinary 'A' shares of £0.01 each
 
Patricia Anne Dawson
 
33,400 ordinary 'A' shares of £0.01 each
 
Robert Blackburn
 
5,320 ordinary 'C' shares of £0.01 each
 
Wong Lai Ho
 
5,320 ordinary 'C' shares of £0.01 each
 
Martin Roger Duddy
 
5,320 ordinary 'C' shares of £0.01 each
 
Christine Harriman
 
3,990 ordinary 'C' shares of £0.01 each
 
Ian Ball
 
3,990 ordinary 'C' shares of £0.01 each
 
Dom Politano
 
3,990 ordinary 'C' shares of £0.01 each
Directors
Patricia Anne Dawson
Jonathan Albert Driver
Martin Roger Duddy
Secretary
Jonathan Albert Driver
 
Accounting reference date
31 March
 
Last accounts made up to
31 March 2011
 
Last annual return made up to
22 February 2011
 
Auditors
Varney Barfield Audit Limited
6 Corunna Court, Corunna Road, Warwick, CV34 5HQ
 
Bank
Barclays Bank plc
Midlands Corporate Banking, 1 Snowhill, Snowhill Queensway, Birmingham, B3 2WN
 
 
 
 
42
 
 
 
Charges
Date registered
Document
Chargee
 
3 August 2000
Guarantee and Debenture
Barclays Bank plc
 
VAT number
GB764 3419 20
Tax district and reference number
508 51064 01733

 
43

 

 
 Part 2 - The UK Subsidiary
 
 

 
   
Name
Creative Tops Limited
 
Registered number
3165273
 
Previous names
None
 
Date of incorporation
27 February 1996
 
Place of incorporation
England and Wales
 
Registered office address
47-48 Causeway Road, Earlstrees Industrial Estate, Corby, Northamptonshire, NN17 4DU
 
Share capital
£102 divided into 102 ordinary shares of £1 each, registered as follows:
 
 
Shareholder
No. of shares
 
Creative Tops Holdings Limited
102 ordinary shares of £1 each
 
Directors
Patricia Anne Dawson
Jonathan Albert Driver
Martin Roger Duddy
 
Secretary
None
Accounting reference date
31 March
 
Last accounts made up to
31 March 2011
 
Last annual return made up to
27 February 2011
 
Auditors
Varney Barfield Audit Limited
6 Corunna Court, Corunna Road, Warwick, CV34 5HQ
 
Bank
Barclays Bank plc
Midlands Corporate Banking, 1 Snowhill, Snowhill Queensway, Birmingham, B3 2WN
 
Charges
Date registered
Document
Chargee
 
3 August 2000
Guarantee and Debenture
Barclays Bank plc
 
VAT number
GB660 5699 10
 
Tax district and reference number
508 13984 21971
 
 

 
 

 

 
44

 

 
Part 3 – The HK Company
 
 

 
   
Name
Creative Tops Far East Limited
 
Registered number
898448
 
Previous names
None
 
Date of incorporation
30 April 2004
 
Place of incorporation
Hong Kong
 
Registered office address
Flat G, 3/F, Hop Hing Industrial Building, 704 Castle Peak Road, Lai Chi Kok, Hong Kong
 
Share capital
HKD 10,000 divided into 10,000 ordinary shares of HKD 1 each, registered as follows:
 
 
Shareholder
No. of shares
 
Jonathan Albert Driver
 
5,600 ordinary shares of HKD 1 each
 
Patricia Anne Dawson
 
2,900 ordinary shares of HKD 1 each
 
Robert Blackburn
 
500 ordinary shares of HKD 1 each
 
Wong Lai Ho
 
500 ordinary shares of HKD 1 each
 
Martin Roger Duddy
 
500 ordinary shares of HKD 1 each
Directors
Patricia Anne Dawson
Jonathan Albert Driver
Wong Lai Ho
Robert Blackburn
Martin Roger Duddy
 
Secretary
Wong Lai Ho
 
Accounting reference date
31 March
 
Last accounts made up to
31 March 2011
 
Last annual return made up to
30 April 2011
 
Auditors
Roger K.C. Tou & Co.
Flat B 12th Floor, Winbase Centre, 208 Queens Road Central, Hong Kong
 
Bank
Standard Chartered Bank
447 Central Branch, 6/F 4-4a Des Voeux Road Central, Hong Kong
 
Charges
Date registered
Document
Chargee
 
None
 
   
VAT number
Not applicable
 
 
 
 
45
 
 
 
Tax district and reference number
20/34518326
 
 

 
46

 

 
SCHEDULE 3
 
Completion
 

 
1.
Items for delivery by the UK Sellers
 
 
The UK Sellers shall deliver to the UK Buyer:
 
 
1.1
duly executed transfers of the UK Shares in favour of the UK Buyer (or such other person as the UK Buyer directs);
 
 
1.2
the certificates for the UK Shares (or a duly executed indemnity in the Agreed Form in respect of any missing, lost or destroyed certificates);
 
 
1.3
such waivers or consents as the UK Buyer may require to enable full beneficial ownership of the UK Shares to vest in the UK Buyer or its nominee and for the UK Buyer or its nominee to be registered as the holder of the UK Shares;
 
 
1.4
a certified copy of any power of attorney under which any document to be delivered to the UK Buyer pursuant to this schedule 3 has been executed;
 
 
1.5
the certificates for the shares in the capital of the UK Subsidiary (or a duly executed indemnity in the Agreed Form in respect of any missing, lost or destroyed certificates);
 
 
1.6
the common seal (if any), certificate of incorporation, certificate(s) of incorporation on change of name (if any) and statutory books of each of the UK Company and the UK Subsidiary (including each register, minute book and other book required to be kept under the Act) made up to the date of Completion;
 
 
1.7
the written resignations in the Agreed Form of each director and secretary of the UK Company (and the UK Subsidiary) (save that Patricia Dawson and Martin Duddy shall not be required to resign on Completion as directors of the UK Subsidiary);
 
 
1.8
the written resignation in the Agreed Form of the UK Auditors resigning from their office as auditors of the UK Company and the UK Subsidiary;
 
 
1.9
the UK Service Agreements duly executed by the relevant employees;
 
 
1.10
the Compromise Agreement duly executed by Jonathan Driver;
 
 
1.11
the following documents, duly executed by the UK Company (and/or the UK Subsidiary, as appropriate):
 
 
 
1.11.1
the Deed of Substitution;
 
 
 
1.11.2
the UK Service Agreements;
 
 
 
1.11.3
the Compromise Agreement;
 
 
 
1.11.4
the Deed of Variation;
 
 
 
1.11.5
the documents referred to in paragraphs 1.12 to 1.15 below.
 
 
1.12
a duly executed deed of release from Barclays Bank plc in the Agreed Form evidencing the discharge and release of all security and guarantees of the UK Company (and the UK Subsidiary) to Barclays Bank plc;
 
 
1.13
forms MG02 duly sworn, completed and filed in respect of a legal mortgage dated 31 July 2006 in favour of Barclays Bank plc, a legal charge dated 1 October 2007 in favour of Barclays Bank plc and a rent deposit deed dated 13 August 2007 in favour of Capel House Property Trust Limited;
 
 
 
47
 
 
 
1.14
a letter from Barclays Bank plc confirming that upon receipt of the redemption figure that the CID facility is terminated and confirming that it will provide documentary evidence that it has reassigned the UK Group's debts;
 
 
1.15
evidence in a form satisfactory to the UK Buyer that all guarantees, bonds and indemnities, securities or Encumbrances given by the UK Company (and/or the UK  Subsidiary) in respect of the indebtedness, liabilities or obligations of any of the Sellers or any person connected with any of the Sellers have been released;
 
 
1.16
in relation to each bank account maintained by the UK Company (and the UK Subsidiary):
 
 
 
1.16.1
a statement for that account as at the close of business on the Business Day immediately prior to Completion, and a statement reconciling those balances with the cash book of the UK Company (or UK Subsidiary, as appropriate) as at Completion;
 
 
 
1.16.2
a copy of the mandate for that account; and
 
 
 
1.16.3
all cheque books in respect of that account;
 
 
1.17
all credit, debit or other cards in the name of or for the account of the UK Company (and/or the UK Subsidiary) in the possession of any person resigning from his office or employment on Completion;
 
 
1.18
the title deeds and original leases/licenses to the Properties (and a schedule of the same in the Agreed Form);
 
 
1.19
the First Deposit Account Instruction Letter duly executed by the UK Sellers;
 
 
1.20
the Second Deposit Account Instruction Letter duly executed by Jonathan Driver;
 
 
1.21
the Third Deposit Account Instruction Letter duly executed by Jonathan Driver;
 
 
1.22
the Fourth Deposit Account Instruction Letter duly executed by the UK Sellers;
 
 
1.23
the Disclosure Letter duly executed by the Warrantors;
 
 
1.24
evidence in a form satisfactory to the UK Buyer that the following have given their consent to the change in control of the UK Group:
 
 
 
1.24.1
RGB Kew Enterprises;
 
 
 
1.24.2
V&A Enterprises
 
 
 
1.24.3
Hasbro International Inc.
 
 
 
1.24.4
Katie Alice
 
 
 
1.24.5
Paper Island
 
 
 
1.24.6
Twentieth Century Fox
 
 
 
1.24.7
Asda Stores
 
 
 
1.24.8
Dunelm (Soft Furnishings)
 
 
 
1.24.9
Homebase
 
 
 
1.24.10
Homestore & More
 
 
 
1.24.11
Marks and Spencer
 
 
 
1.24.12
Sainsbury's Supermarket
 
 
 
1.24.13
Dissero Brands
 
 
1.25
the Deed of Substitution duly executed by all parties thereto;
 
 
48
 
 
 
1.26
the Investor Questionnaire duly completed and executed by each of the Sellers receiving Consideration Shares pursuant to this agreement;
 
 
1.27
evidence in a form satisfactory to the UK Buyer that all of the following domain names are registered in the name of the UK Subsidiary (as owner and account holder):
 
 
 
1.27.1
icookanddine.com;
 
 
 
1.27.2
justincap.co.uk;
 
 
 
1.27.3
justin-cap.co.uk;
 
 
 
1.27.4
justin-cap.com;
 
 
 
1.27.5
justincapp.co.uk;
 
 
 
1.27.6
justin-capp.co.uk;
 
 
 
1.27.7
katiealice.co.uk;
 
 
 
1.27.8
katie-alice.co.uk;
 
 
 
1.27.9
precious-planet.co.uk;
 
 
 
1.27.10
creative-tops.com;
 
 
 
1.27.11
english-table.com;
 
 
 
1.27.12
justincap.com;
 
 
 
1.27.13
justincapp.com;
 
 
 
1.27.14
justin-capp.com;
 
 
 
1.27.15
katiealice.com;
 
 
 
1.27.16
katie-alice.com;
 
 
 
1.27.17
precious-planet.com;
 
 
1.28
the Deed of Variation duly executed by CH Property Trustee Creative Limited;
 
 
1.29
consent to the Deed of Variation from Barclays Bank plc in a form satisfactory to the UK Buyer;
 
 
1.30
letters of no indebtedness duly executed by each outgoing director of each Group Company;
 
 
1.31
a W8BEN form duly completed and executed by each of the Sellers receiving Consideration Shares pursuant to this agreement;
 
 
1.32
evidence in a form satisfactory to the Buyers that any and all loans to directors (from each Group Company) have been repaid by those directors on or before Completion.
 
 
2.
Items for delivery by the HK Sellers
 
 
2.1
duly executed bought and sold notes of the HK Shares in favour of the HK Buyer (or such other person as the HK Buyer directs);
 
 
2.2
the duly executed instruments of transfer of the HK Shares in favour of the HK Buyer (or such other person as the HK Buyer directs);
 
 
2.3
the shareholders' certificates for the HK Shares (or a duly executed indemnity in the Agreed Form in respect of any missing, lost or destroyed certificates);
 
 
2.4
such waivers or consents as the HK Buyer may require to enable full beneficial ownership of the HK Shares to vest in the HK Buyer or its nominee and for the HK Buyer or its nominee to be registered as the holder of the HK Shares;
 
 
 
49
 
 
 
2.5
a certified copy of any power of attorney under which any documents to be delivered to the HK Buyer pursuant to this schedule 3 has been executed;
 
 
2.6
the common seal (if any), certificate of incorporation, certificate(s) of change of name (if any) and statutory books of the HK Company (including each register, minute book and other book required to be kept under the Companies Ordinance) made up to the date of Completion;
 
 
2.7
the written resignations in the Agreed Form of each director and the secretary of the HK Company (save that Patricia Dawson and Wong Lai Ho shall not be required to resign on Completion as directors of the HK Company);
 
 
2.8
the written resignation in the Agreed Form of the HK Auditors resigning from their office as auditors of the HK Company;
 
 
2.9
the HK Service Agreement duly executed by Wong Lai Ho;
 
 
2.10
the following documents, duly executed by the HK Company:
 
 
 
2.10.1
the HK Service Agreement;
 
 
 
2.10.2
the Compromise Agreement
 
 
2.11
evidence in a form satisfactory to the HK Buyer that all guarantees, bonds and indemnities, securities or encumbrances given by the HK Company in respect of the indebtedness, liabilities or obligations of any of the Sellers or any person connected with any of the Sellers have been released;
 
 
2.12
in relation to each bank account maintained by the HK Company;
 
 
 
2.12.1
a statement for that account as at the close of business on the Business Day immediately prior to Completion, and a statement reconciling those balances with the cash book of the HK Company as at Completion;
 
 
 
2.12.2
a copy of the mandate for that account; and
 
 
 
2.12.3
all cheque books in respect of that account;
 
 
2.13
all credit, debit or other cards in the name of or for the account of the HK Company in the possession of any person resigning from his office or employment on Completion;
 
 
2.14
the title deeds and original leases/licenses to the Properties (and a schedule of the same in the Agreed Form);
 
 
2.15
a certified copy of the HK Accounts;
 
 
2.16
a certified copy of the HK Management Accounts.
 
 
3.
UK Board meetings
 
 
The UK Sellers shall procure that board meetings of the UK Company and the UK Subsidiary are held at which:
 
 
3.1
in the case of the UK Company, the share transfers referred to in paragraph 1.1 above are approved, subject only to stamping;
 
 
3.2
the resignations provided for above will be tendered and accepted and such persons as the UK Buyer may nominate as directors and secretary are appointed;
 
 
3.3
in the case of the UK Company its registered office is changed to One Eleven, Edmund Street, Birmingham, B3 2HJ;
 
 
3.4
Ernst & Young LLP are appointed as its auditors;
 
 
3.5
its accounting reference date is changed to 31 December;
 
 
 
50
 
 
 
3.6
existing authorities and instructions to bankers in respect of the operation of the relevant company's bank accounts are revoked and new authorities and instructions are issued in such terms as the UK Buyer may require; and
 
 
3.7
the relevant company entering into the following documents is approved and authorised:
 
 
 
3.7.1
the Deed of Substitution;
 
 
 
3.7.2
the UK Service Agreements;
 
 
 
3.7.3
the Compromise Agreement;
 
 
 
3.7.4
the Deed of Variation;
 
 
 
3.7.5
the documents referred to in paragraphs 1.12 to 1.15 above
 
 
4.
HK Board meeting
 
 
The HK Sellers shall procure that a board meeting of the HK Company is held at which:
 
 
4.1
the share transfers referred to in paragraph 2.1 above are approved, subject only to stamping;
 
 
4.2
the resignations provided for above will be tendered and accepted and such persons as the HK Buyer may nominate as directors and secretary are appointed;
 
 
4.3
Ernst & Young LLP are appointed as its auditors;
 
 
4.4
its accounting reference date is changed to 31 December;
 
 
4.5
existing authorities and instructions to bankers in respect of the operation of the HK Company's bank accounts are revoked and new authorities and instructions are issued in such terms as the HK Buyer may require; and
 
 
4.6
the HK Company entering into the following documents is approved and authorised;
 
 
 
4.6.1
the HK Service Agreement;
 
 
 
4.6.2
the Compromise Agreement.
 
 
5.
Obligations of the UK Buyer
 
 
The UK Buyer shall deliver to the UK Sellers:
 
 
5.1
each of the First Deposit Account Instruction Letter, Second Deposit Account Instruction Letter, Third Deposit Account Instruction Letter and Fourth Deposit Account Instruction Letter duly executed by the UK Buyer;
 
 
5.2
a certified copy of board minutes of the UK Buyer authorising the acquisition of the UK Shares on the terms of this agreement and the execution and delivery of this agreement and any agreements or documents required to be executed and delivered by the UK Buyer pursuant to the terms of this agreement;
 
 
5.3
a counterpart Disclosure Letter duly executed by the UK Buyer.
 
 
6.
Obligations of the HK Buyer
 
 
The HK Buyer shall deliver to the HK Sellers:
 
 
6.1
a certified copy of board minutes of the HK Buyer authorising the acquisition of the HK Shares on the terms of this agreement and the execution and delivery of this agreement and any agreements or documents required to be executed and delivered by the HK Buyer pursuant to the terms of this agreement;
 
 
6.2
a counterpart Disclosure Letter duly executed by the HK Buyer.
 
 
 
51
 
 
 
7.
Obligations of Lifetime
 
 
Lifetime shall deliver to the UK Sellers the documents referred to in clause 5.2.5.
 
 

 

 
52

 

 
SCHEDULE 4
 
General Warranties
 
 
1.
Capacity
 
 
1.1
Each Seller has full power and authority, and has taken all action necessary (including obtaining all necessary consents or approvals) to enter into and perform this agreement and any other deeds, agreements or documents to be entered into pursuant to this agreement.
 
 
1.2
This agreement (and the agreements or documents to be entered into pursuant to this agreement) will, when executed, constitute obligations binding on the Sellers in accordance with their terms.
 
 
2.
Ownership of Sale Shares
 
 
2.1
The UK Shares are fully paid or credited as fully paid and constitute the whole of the share capital of the UK Company.
 
 
2.2
The HK Shares are fully paid or credited as fully paid and constitute the whole of the share capital of the HK Company.
 
 
2.3
No Sale Share was allotted at a discount.
 
 
2.4
The UK Sellers are the only legal and beneficial owners of the UK Shares. There is no Encumbrance on, over or affecting any of the UK Shares or any unissued shares, debentures or other securities of the UK Company nor is there any agreement, arrangement or obligation to create or give an Encumbrance in relation to any of the UK Shares or any unissued shares, debentures or securities of the UK Company.
 
 
2.5
The HK Sellers are the only legal and beneficial owners of the HK Shares. There is no Encumbrance on, over or affecting any of the HK Shares or any unissued shares, debentures or other securities of the HK Company nor is there any agreement, arrangement or obligation to create or give an Encumbrance in relation to any of the HK Shares or any unissued shares, debentures or securities of the HK Company.
 
 
2.6
No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the issue, allotment, conversion, redemption, repayment, sale or transfer of any shares, debentures or other securities of the UK Company.
 
 
2.7
No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the issue, allotment, conversion, redemption, repayment, sale or transfer of any shares, debentures or other securities of the HK Company.
 
 
2.8
The Sellers are entitled to sell the Sale Shares with full title guarantee on the terms of this agreement without the consent of any third party and such sale will not result in any breach of or default under any agreement or obligation binding upon the Sellers (or any of them).
 
 
2.9
None of the Sale Shares was, or represents assets which were, the subject of a transfer at an undervalue (within the meaning of Part IX or Part VI of the Insolvency Act 1986) within the 5 years immediately prior to the date of this agreement.
 
 
2.10
There is no litigation, arbitration, prosecution, administrative or other legal proceedings or dispute in existence or threatened against any of the UK Sellers or the UK Company in respect of the UK Shares or any unissued shares, debentures or securities of the UK Company or the UK Sellers' entitlement to dispose of the UK Shares and there is no fact or circumstance which might give rise to any such proceedings or dispute.
 
 
2.11
There is no litigation, arbitration, prosecution, administrative or other legal proceedings or dispute in existence or threatened against any of the HK Sellers or the HK Company in respect of the HK Shares or any unissued shares, debentures or securities of the HK Company or the HK Sellers' entitlement to dispose of the HK Shares and there is no fact or circumstance which might give rise to any such proceedings or dispute.
 
 
 
53
 
 
 
3.
Share capital
 
 
3.1
No shares in the capital of the Company have been issued, nor has any transfer of shares been registered, otherwise than in accordance with the Company’s constitution in force at the relevant time.
 
 
3.2
Each necessary permission for each issue and transfer of shares has been validly obtained and any stamp duty or other tax payable upon such issue or transfer has been paid.
 
 
3.3
The Company has not at any time:
 
 
 
3.3.1
purchased or redeemed or agreed to purchase or redeem any shares of any class of its share capital;
 
 
 
3.3.2
otherwise reduced or agreed to reduce its share capital or any class of its share capital; or
 
 
 
3.3.3
issued any shares for a consideration payable otherwise than in cash.
 
 
3.4
There are no rights of pre-emption over or restrictions relating to the transfer of the UK Shares (whether contained in the UK Company's articles of association or otherwise) which could apply on the sale of the UK Shares to the UK Buyer.
 
 
3.5
There are no rights of pre-emption over or restrictions relating to the transfer of the HK Shares (whether contained in the HK Company's constitutional documents or otherwise) which could apply on the sale of the HK Shares to the HK Buyer.
 
 
4.
The Group
 
 
4.1
The Group Companies
 
 
 
4.1.1
The UK Company and the UK Subsidiary are limited companies incorporated under English law and the HK Company is a limited company incorporated under the laws of Hong Kong and all Group Companies have been in continuous existence since incorporation. Each Group Company has the right, power, capacity and authority to conduct its business as conducted at the date of this agreement.
 
 
 
4.1.2
Neither the UK Company nor the HK Company has been a subsidiary of any body corporate (wherever incorporated) at any time since its incorporation.
 
 
4.2
Subsidiaries
 
 
 
4.2.1
No Group Company has at any time been, and will not at Completion be, the owner or registered holder of any share, loan capital, interest or equity in, or other security of, any body corporate (wherever incorporated) other than (in the case of the UK Company) the UK Subsidiary nor has it agreed to become the owner or registered holder of any such share, loan capital, interest, equity or other security.
 
 
 
4.2.2
No Group Company has ever had a participating interest in any other company or undertaking other than (in the case of the UK Company) the UK Subsidiary.
 
 
 
4.2.3
The UK Company is the owner of each allotted and issued share in the capital of the UK Subsidiary and each such share is fully paid or credited as fully paid.
 
 
 
54
 
 
 
 
4.2.4
There is no Encumbrance on, over or affecting any of the shares in the UK Subsidiary or any unissued shares, debentures or other securities of the UK Subsidiary nor is there any agreement, arrangement or obligation to create or give an Encumbrance in relation to any such shares, debentures or securities.
 
 
 
4.2.5
No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the issue, allotment, conversion, redemption, repayment, sale or transfer of any shares, debentures or other securities of the UK Subsidiary.
 
 
 
4.2.6
There is no litigation, arbitration, prosecution, administrative or other legal proceedings or dispute in existence or threatened against the UK Company or the UK Subsidiary or any of their respective officers in respect of any shares, debentures or securities of the UK Subsidiary and there is no fact or circumstance which might give rise to any such proceedings or dispute.
 
 
 
4.2.7
None of the shares in the capital of the UK Subsidiary was, or represents assets which were, the subject of a transfer at an undervalue (within the meaning of Part IX or Part VI of the Insolvency Act 1986) within the 5 years immediately prior to the date of this agreement.
 
 
5.
Directors
 
 
5.1
The only directors of the UK Company are the persons listed as such in part 1 of schedule 2, the only directors of the UK Subsidiary are the persons listed as such in part 2 of schedule 2 and the only directors of the HK Company are the persons listed as such in part 3 of schedule 2.
 
 
5.2
No person is a shadow director of any Group Company.
 
 
6.
Company administration
 
 
6.1
A true, complete and accurate copy of the memorandum and articles of association of the Company at the date of this agreement is included in the Disclosure Documents, which memorandum and articles of association contain all documents required to accompany them under section 36 of the Act.
 
 
6.2
The Company has at all times carried on its business and affairs in accordance with its constitution (at the relevant time).
 
 
6.3
Each register, minute book and other book which the Company is required by law to keep has been properly kept and contains a true, complete and accurate record of the matters which it is required to record. No notice has been received or allegation made that a register or book is incorrect or should be rectified.
 
 
6.4
The Company, its directors, officers and employees have all complied with all the provisions of the Act (or in the case of the HK Company and its respective directors, officers and employees, the Ordinance) in relation to the activities of the Company, and all returns, particulars, resolutions and other documents required by the provisions of the Act (or, in the case of the HK Company, the Ordinance) to be delivered on behalf of the Company to the Registrar of Companies (or the Hong Kong Companies Registry) or to any other authority, organisation, person or body:
 
 
 
6.4.1
have been properly made, delivered and filed;
 
 
 
6.4.2
were true, complete and accurate; and
 
 
 
6.4.3
were submitted within the relevant time period.
 
 
6.5
Neither the Company nor any class of its members has passed any resolution at annual general meetings which was special business.
 
 
 
55
 
 
 
6.6
There is no written resolution of the Company with a circulation date prior to the date of this agreement which has not yet been passed by the members or else lapsed in accordance with the Act.
 
 
6.7
All dividends and distributions declared, made or paid by the Company have been declared, made or paid in accordance with its constitution (at the relevant time), all applicable legislation and any agreement or arrangement made with any third party regulating the payment of dividends and distributions by the Company, true, complete and accurate copies of which agreements or arrangements are included in the Disclosure Documents.
 
 
6.8
The Company has not given any power of attorney or other authority by which a person may enter into an agreement, arrangement or obligation on the Company's behalf (other than an authority for a director, officer or employee to enter into an agreement in the normal and ordinary course of his duties).
 
 
7.
Information
 
 
7.1
The information set out in schedules 1, 2, 7 (other than part 5 of schedule 7) and 8 to this agreement is true, complete, accurate and not misleading.
 
 
7.2
The contents of the Dataroom (save for the reply to Gateley's due diligence questionnaire dated 5 September 2011 Question 27.2) is true, complete, accurate and not misleading and does not omit anything which makes such information untrue, inaccurate or misleading.
 
 
7.3
The financial information set out in the information memorandum dated May 2011 has been prepared on a combined (or aggregated) basis and a consolidation of that combined (or aggregated) financial information will not give materially different results. The financial projections for the fiscal year ending 31 March 2012 and the profit and loss and cash flow projections for the fiscal year ending 31 March 2013, provided to the Buyers in the course of the negotiations leading to this agreement, have been honestly and carefully prepared, having made all reasonable enquiries to ascertain, and taking into account, all information which is (or could reasonably be expected to be) relevant and are based on reasonable assumptions.
 
 
7.4
The information contained in the specific disclosures in the Disclosure Letter and the Disclosure Documents is true, complete, accurate and not misleading and does not omit anything which makes such information untrue, inaccurate or misleading.
 
 
8.
Accounts
 
 
8.1
General - UK
 
 
The UK Accounts (a true, complete and accurate copy of which is included in the Disclosure Documents):
 
 
 
8.1.1
comply with the Act and all other relevant statutes and statutory instruments;
 
 
 
8.1.2
have been prepared in accordance with generally accepted accounting principles and practices in the United Kingdom at the date on which the UK Accounts were approved by the directors;
 
 
 
8.1.3
comply with all financial reporting standards adopted or issued by The Accounting Standards Board applicable to a United Kingdom company as at the date on which the UK Accounts were approved by the directors;
 
 
 
8.1.4
have been audited by an auditor or firm of accountants qualified to act as auditors in the United Kingdom and the auditor's report on the UK Accounts is unqualified;
 
 
 
56
 
 
 
 
8.1.5
show a true and fair view of the financial position and state of affairs of the UK Group as at the Accounts Date and of its profit (or loss) and cash flow for the financial period ended on that date;
 
 
 
8.1.6
fully disclose all assets owned and/or used by the UK Group, make full reserve against all assets and fully provide for all bad and doubtful debts, accruals, liabilities and capital commitments of the UK Group (in each case whether actual, contingent, unquantified or disputed) and whether or not known or discernable by the UK Group or the Sellers;
 
 
 
8.1.7
make full provision for depreciation of fixed assets having regard to their original cost and estimated life;
 
 
 
8.1.8
contain or make direct reference to all information and factors necessary to determine accurately the gross profit margin (as that term is commonly understood) on the manufacture, sale or supply of products and/or supply of services by the UK Group;
 
 
 
8.1.9
do not overstate the value of any asset or understate any liability of the UK Group as at the Accounts Date;
 
 
 
8.1.10
have been prepared on a basis wholly consistent with that used for the preparation of the UK Group's accounts for the last three financial periods; and
 
 
 
8.1.11
have been filed in accordance with the requirements of the Act.
 
 
8.2
General - HK
 
 
The HK Accounts (a true, complete and accurate copy of which is included in the Disclosure Documents):
 
 
 
8.2.1
comply with the Ordinance and all other relevant statutes and statutory instruments;
 
 
 
8.2.2
have been prepared in accordance with generally accepted accounting principles and practices in Hong Kong at the date on which the HK Accounts were approved by the directors including all applicable Hong Kong Financial Reporting Standards (HKFRSs) which includes all applicable individual HKFRSs, Hong Kong Accounting Standards (HKASs) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), accounting principles generally accepted in Hong Kong and the requirements of the Ordinance;
 
 
 
8.2.3
comply with all financial reporting standards adopted or issued by the Hong Kong Institute of Certified Public Accountants applicable to a Hong Kong company as at the date on which the HK Accounts were approved by the directors;
 
 
 
8.2.4
have been audited by an auditor or firm of accountants qualified to act as auditors in Hong Kong and the auditor's report on the HK Accounts is unqualified;
 
 
 
8.2.5
show a true and fair view of the financial position and state of affairs of the HK Company as at the Accounts Date and of its profit (or loss) and cash flow for the financial period ended on that date;
 
 
 
8.2.6
fully disclose all assets owned and/or used by the HK Company, make full reserve against all assets and fully provide for all bad and doubtful debts, accruals, liabilities and capital commitments of the HK Company (in each case whether actual, contingent, unquantified or disputed) and whether or not known or discernable by the HK Company or the Sellers;
 
 
 
57
 
 
 
 
8.2.7
make full provision for depreciation of fixed assets having regard to their original cost and estimated life;
 
 
 
8.2.8
contain or make direct reference to all information and factors necessary to determine accurately the gross profit margin (as that term is commonly understood) on the manufacture, sale or supply of products and/or supply of services by the HK Company;
 
 
 
8.2.9
do not overstate the value of any asset or understate any liability of the HK Company as at the Accounts Date;
 
 
 
8.2.10
have been prepared on a basis wholly consistent with that used for the preparation of the HK Company's accounts for the last three financial periods; and
 
 
 
8.2.11
have been filed in accordance with the requirements of the Ordinance.
 
 
8.3
Tax - UK
 
 
 
8.3.1
Full provision or reserve has been made in the UK Accounts for all Tax assessed or liable to be assessed on the UK Group, or for which the UK Group is accountable, in respect of:
 
 
 
8.3.1.1
profits, gains or income earned, arising, accruing or received (or deemed to arise, accrue or to have been earned or received for any purpose);
 
 
 
8.3.1.2
transactions effected or deemed to have been effected; and
 
 
 
8.3.1.3
distributions made or deemed to have been made,
 
 
in each case as at the Accounts Date.
 
 
 
8.3.2
Full provision has been made in the UK Accounts for deferred Tax in accordance with generally accepted accounting principles and practices in the United Kingdom.
 
 
8.4
Tax - HK
 
 
 
8.4.1
Full provision or reserve has been made in the HK Accounts for all Tax assessed or liable to be assessed on the HK Company, or for which the HK Company is accountable, in respect of:
 
 
 
8.4.1.1
profits, gains or income earned, arising, accruing or received (or deemed to arise, accrue or to have been earned or received for any purpose);
 
 
 
8.4.1.2
transactions effected or deemed to have been effected; and
 
 
 
8.4.1.3
distributions made or deemed to have been made,
 
 
in each case as at the Accounts Date.
 
 
 
8.4.2
Full provision has been made in the HK Accounts for deferred Tax in accordance with generally accepted accounting principles and practices in Hong Kong.
 
 
8.5
Exceptional items
 
 
The results shown by the UK Accounts (and, in the case of the HK Company, the HK Accounts) were not materially affected by:
 
 
 
8.5.1
transactions of a nature not usually undertaken by the Company;
 
 
 
8.5.2
transactions or circumstances of an extraordinary, exceptional or non-recurring nature;
 
 
58
 
 
 
 
8.5.3
charges or credits relating to prior or subsequent financial periods; or
 
 
 
8.5.4
any change in the accounting policies or practices from those applied in the preparation of previous audited financial statements of the Company.
 
 
8.6
Valuation of stock and long-term contract balances
 
 
In the UK Accounts (and, in the case of the HK Company, the HK Accounts):
 
 
 
8.6.1
stock (except long-term contract balances) was valued in the same way as in the three preceding financial years and on the basis of the lower of cost or net realisable value based on a physical stock count;
 
 
 
8.6.2
the long-term contract balances were valued in the same way as in the three preceding financial years and on the basis of net cost less foreseeable losses and payments on account; and
 
 
 
8.6.3
all redundant and obsolete stock was written off and all slow-moving and damaged stock was written down appropriately.
 
 
8.7
Depreciation
 
 
 
8.7.1
The rates of depreciation and amortisation used in the audited accounts of the Company for the three financial years of the Company ended on the Accounts Date were sufficient to ensure that each fixed asset of the Company will be written down to nil by the end of its useful life.
 
 
 
8.7.2
The value of the fixed assets of the Company shown in the UK Accounts (and, in the case of the HK Company, the HK Accounts), is at cost less depreciation deducted from time to time in a consistent manner and there has been no revaluation of such fixed assets since their acquisition.
 
 
8.8
Off balance sheet financing
 
 
The Company has not engaged in any financing (including incurring any borrowing or indebtedness in the nature of acceptances or acceptance credits) of a type which would not be required to be shown or reflected in the UK Accounts (or, in the case of the HK Company, the HK Accounts).
 
 
8.9
Management reports
 
 
 
8.9.1
There have been no reports concerning the Company by financial or management consultants within the three years ending on the date of this agreement.
 
 
 
8.9.2
There have been no management recommendation letters received by the Company or its board of directors from any auditor.
 
 
8.10
Auditor liability limitation agreements
 
 
The Company has not at any time entered into a liability limitation agreement (as defined in section 534 of the Act) with its auditors and there is no arrangement or agreement in place to do so.
 
 
9.
Management Accounts
 
 
9.1
The UK Management Accounts (and, in the case of the HK Company, the HK Management Accounts) (a true, complete and accurate copy of each of which is included in the Disclosure Documents):
 
 
 
9.1.1
have been prepared with due care and attention;
 
 
 
9.1.2
have been prepared in accordance with good management accounting practice on a basis consistent with previous management accounts prepared by the Company and the UK Accounts (or, in the case of the HK Company, the HK Accounts);
 
 
 
59
 
 
 
 
9.1.3
fully disclose all assets owned and/or used by the Company, make full reserve against all assets and fully provide for all bad and doubtful debts, accruals, liabilities (including Tax and deferred Tax) and capital commitments of the Company (in each case whether actual, contingent, unquantified or disputed);
 
 
 
9.1.4
accurately reflect the financial position and state of affairs of the Company as at the Management Accounts Date;
 
 
 
9.1.5
accurately reflect the trading and profit of the Company for the period from the Accounts Date to the Management Accounts Date; and
 
 
 
9.1.6
are consistent with the accounting records of the Company.
 
 
9.2
The results shown by the UK Management Accounts (and, in the case of the HK Company, the HK Management Accounts) were not materially affected by:
 
 
 
9.2.1
transactions of a nature not usually undertaken by the Company;
 
 
 
9.2.2
transactions or circumstances of an extraordinary, exceptional or non-recurring nature;
 
 
 
9.2.3
charges or credits relating to any prior or subsequent periods; or
 
 
 
9.2.4
any change in the accounting policies or practices from those applied in the preparation of previous management accounts of the Company.
 
 
10.
Records
 
 
10.1
The Records:
 
 
 
10.1.1
are in the Company's possession;
 
 
 
10.1.2
have at all times been fully and properly kept;
 
 
 
10.1.3
have at all times been kept in accordance with the law and generally accepted principles, standards and practices relating to all matters recorded in them;
 
 
 
10.1.4
are complete and accurate in respect of what should ordinarily be contained in them; and
 
 
 
10.1.5
show a true and fair view of all transactions entered into by the Company, its financial, contractual and trading position and its plant, machinery, vehicles, equipment, fixed and current assets and liabilities (actual and contingent), debtors, creditors, stock and work in progress.
 
 
10.2
None of the Records are recorded, stored, maintained, operated or otherwise dependent upon or held by any means which are not under the exclusive ownership and direct control of the Company.
 
 
10.3
No notice or allegation has been received or made that any of the Records are incorrect or should be rectified.
 
 
11.
Business since the Accounts Date
 
 
Since the Accounts Date:
 
 
11.1
the Company's business has been carried on in the normal and ordinary course without any interruption and substantially in the same manner (including nature and scope) and so as to maintain it as a going concern;
 
 
60
 
 
 
11.2
there has been no adverse change in the turnover or the financial or trading position  of the Company and trading has remained in line with the current year's budget and there is no fact or circumstance known to the Warrantors which might give rise to any such adverse change;
 
 
11.3
the Company has not, other than in the normal and ordinary course of its business:
 
 
 
11.3.1
acquired or disposed of, or agreed to acquire or dispose of, any business or asset; or
 
 
 
11.3.2
assumed or incurred, or agreed to assume or incur, a liability, obligation, expense or capital expenditure (whether, in any case, actual or contingent);
 
 
11.4
none of the fixed assets of the Company shown in the UK Accounts (or, in the case of the HK Company, the HK Accounts) or acquired by the Company since the Accounts Date has been lost, damaged or destroyed and there has been no material reduction in their value;
 
 
11.5
the Company has not made, or agreed to make, any material price reductions or allowances or price increases on sales of stock or the provision of its services other than in the ordinary course of business;
 
 
11.6
the value of the Company's net assets has not been reduced below that shown in the UK Accounts (or, in the case of the HK Company, the HK Accounts);
 
 
11.7
the Company has not incurred any expense or made any payment otherwise than in the normal and ordinary course of business and all payments received by the Company have been paid into a bank account of the Company and appear in the appropriate books of account;
 
 
11.8
the Company has not borrowed any money which it has not repaid (other than in the normal and ordinary course of its business within limits agreed with the Company's bankers) and no loan to or loan capital of the Company has been repaid, in whole or in part, or has become due and payable or liable (with or without notice or lapse of time or both) to be declared due and payable;
 
 
11.9
the Company has not been adversely affected by the termination, or a change in the terms, of an important agreement or by the loss of or material reduction in orders from a customer or the loss of or material reduction in any source of supply or product licence or by any abnormal factor not affecting similar businesses to a similar extent and there is no fact or circumstance known to the Warrantors which might give rise to any such adverse effect;
 
 
11.10
the Company has not paid or declared any dividend or other distribution, whether of capital or income;
 
 
11.11
the Company has not created, allotted, issued or acquired any share or loan capital, or made an agreement or arrangement or undertaken an obligation to do any of those things;
 
 
11.12
no resolution of the members of the Company (or any class thereof) has been passed; and
 
 
11.13
no payments have been made by the Company to or on behalf of any of the Sellers (or any person connected with any of the Sellers) other than the payment of salaries in the normal and ordinary course of business and at the rates set out in the Disclosure Letter.
 
 
12.
Assets
 
 
12.1
Each asset included in the UK Accounts (or, in the case of the HK Company, the HK Accounts) or acquired by the Company since the Accounts Date (other than stock disposed of in the normal and ordinary course of business) and each asset used by the Company or which is in the reputed ownership of the Company is:
 
 
 
61
 
 
 
 
12.1.1
legally and beneficially owned by the Company free from any Encumbrance;
 
 
 
12.1.2
where capable of possession, in the possession or under the control of the Company; and
 
 
 
12.1.3
situated in the United Kingdom (or, in the case of the HK Company, Hong Kong).
 
 
12.2
The Company has not sold or transferred or agreed to sell or transfer any of the assets referred to in paragraph 12.1 and the Company has not granted or agreed to grant any Encumbrance on or over any such assets. There has been no exercise or purported exercise of a claim for any Encumbrance on or over any of those assets and there is no dispute directly or indirectly relating to any of those assets.
 
 
12.3
None of the assets referred to in paragraph 12.1 has been purchased on terms that title does not pass to the Company until full payment is made by it to the supplier.
 
 
12.4
All plant, machinery, vehicles and equipment owned or used by the Company:
 
 
 
12.4.1
are in a good and safe state of repair and condition and are in working order;
 
 
 
12.4.2
have been regularly and properly maintained in accordance with manufacturers' recommendations;
 
 
 
12.4.3
are not expected to require replacement, enhancement, addition and/or repair within 12 months of Completion; and
 
 
 
12.4.4
will be capable of being used efficiently in the business of the Company following Completion.
 
 
12.5
The Company owns each asset necessary or desirable for the effective
 
 
 
operation of its business as carried on at the date of this agreement and the Company does not make use of any asset which is not included in the UK Accounts (or, in the case of the HK Company, the HK Accounts).
 
 
12.6
There are maintenance contracts with independent specialist contractors in respect of all material assets of the Company, true, complete and accurate copies of which contracts are included in the Disclosure Documents.
 
 
12.7
The asset registers of the Company, true, complete and accurate copies of which are included in the Disclosure Documents, comprise a true, complete and accurate record of all the plant, machinery, vehicles and equipment owned or used by the Company and necessary for the continuation of the business of the Company.
 
 
13.
Hire purchase and leased assets
 
 
13.1
A true, complete and accurate list of all the assets (the "Leased Assets") used by the Company which are subject to a lease or hire, hire purchase, credit sale or conditional sale agreement, together with true, complete and accurate copies of all the contracts, agreements or arrangements to which those assets are subject, is included in the Disclosure Documents.
 
 
13.2
No circumstance has arisen or so far as the Warrantors are aware is likely to arise in relation to any Leased Asset whereby the rental payable has been or is likely to be increased.
 
 
13.3
All payments due under the relevant lease or hire, hire purchase, credit sale or conditional sale agreement in respect of the Leased Assets have been paid on the relevant due dates and such payments are fully up to date.
 
 
 
62
 
 
 
13.4
There are maintenance contracts with independent specialist contractors in respect of each Leased Asset which the Company is obliged to maintain or repair under the relevant lease or hire, hire purchase, credit sale or conditional sale agreement, true, complete and accurate copies of which contracts are included in the Disclosure Documents.
 
 
14.
Stock
 
 
14.1
The Company's stock (which term shall, in this paragraph 14, include raw materials, components, parts, work in progress, finished and partly finished goods and packaging material consumables) is:
 
 
 
14.1.1
not excessive and is adequate for the normal requirements of its business having regard to current orders and reasonably anticipated orders;
 
 
 
14.1.2
of satisfactory quality, in good condition and capable of being sold by the Company in the normal and ordinary course of its business in accordance with current prices, without rebate or allowance;
 
 
 
14.1.3
not damaged, slow moving, obsolete, unusable, or of limited value; and
 
 
 
14.1.4
included in the books of accounts of the Company at the lower of cost or net realisable value.
 
 
14.2
None of the stock referred to in the UK Accounts (or, in the case of the HK Company, the HK Accounts) has realised an amount less than the value that was placed on it in the UK Accounts (or HK Accounts).
 
 
14.3
All items of stock which are stored within containers or in other packaged form are properly labelled or marked and correspond accurately with the descriptions of the stock on such labels or markings or in the stock records to which such labels or markings clearly refer.
 
 
14.4
None of the Company's stock contains any defect (whether of design, manufacture, assembly, the use of materials therein or otherwise) which could give rise to a liability on the part of the Company to any third party if that stock or product incorporating it were subsequently sold by the Company.
 
 
14.5
The Company's stock complies fully, and will on sale in the normal and ordinary course of the Company's business comply fully, with all applicable laws, regulations and standards (including all applicable United Kingdom, Hong Kong, China and European Union laws, regulations and standards and those of any other country or jurisdiction into which such stock is sold) and any specifications agreed with customers of the Company.
 
 
14.6
None of the Company's stock contains Bisphenol A (BPA).
 
 
15.
Debts
 
 
15.1
No debt shown in the UK Accounts (or, in the case of the HK Company, the HK Accounts) or the Company's accounting records is overdue by more than 12 weeks or is the subject of an arrangement not made in the normal and ordinary course of business.
 
 
15.2
No debt which was included in the balance sheet to the UK Accounts (or, in the case of the HK Company, the HK Accounts) or which has arisen since the Accounts Date, has been realised for less than its full face value, has been released, deferred, subordinated or written off or has become irrecoverable in whole or in part.
 
 
15.3
A true, complete and accurate list of all trade debts owed to the Company as at 30 September 2011 is included in the Disclosure Documents.  So far as the Warrantors are aware, save as Disclosed, all trade debts owing at Completion will realise their full face value in the normal and ordinary course of business and, in any event, within 120 days of Completion and none of them is subject to dispute, counterclaim or set off nor so far as the Warrantors are aware is there any fact or circumstance which might give rise to any such dispute, counterclaim or set off.
 
 
 
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15.4
The Company is not entitled to the benefit of any debt shown in the UK Accounts (or, in the case of the HK Company, the HK Accounts) or the Company's accounting records otherwise than as the original creditor and (save as Disclosed) is not, and has not agreed to become, a party to any factoring or discounting arrangement in respect of any such debts.
 
 
15.5
No debt owed to the Company has arisen otherwise than as a result of the supply of goods and/or services by the Company in the normal and ordinary course of its business.
 
 
15.6
The HK Company is not owed any sums other than amounts outstanding between the UK Group and the HK Company.
 
 
16.
Intellectual Property
 
 
16.1
Ownership
 
 
 
16.1.1
So far as the Warrantors are aware, the Company Intellectual Property is valid and nothing has been done or omitted to be done by which it may cease to be valid.
 
 
 
16.1.2
The Company Intellectual Property is either legally and beneficially owned by the Company alone, free from any Encumbrance or it is licensed to the Company, pursuant to an Intellectual Property Agreement.
 
 
 
16.1.3
All moral rights subsisting in relation to the Company Intellectual Property owned by the Company have been irrevocably and unconditionally waived.
 
 
 
16.1.4
The Company has not granted in the three years preceding the date of this agreement and is not obliged to grant a licence, assignment or other right in respect of any of the Company Intellectual Property.
 
 
16.2
Claims and infringements
 
 
 
16.2.1
So far as the Warrantors are aware, the Company Intellectual Property is not and, will not be the subject of a claim or opposition from any person (including an employee or former employee of the Company) as to title, validity, enforceability, entitlement or otherwise.
 
 
 
16.2.2
There is, and has been, no civil, criminal, arbitration, administrative or other proceeding, including any infringement proceedings, or so far as the Warrantors are aware, any other dispute against the Company in any jurisdiction concerning any of the Company Intellectual Property (except that it is understood to exclude proceedings issued but not yet served).  No civil, criminal, arbitration, administrative or other proceeding concerning any of the Company Intellectual Property is pending or threatened by or against the Company.  So far as the Warrantors are aware, no fact or circumstance exists which might give rise to a proceeding of that type.
 
 
 
16.2.3
The activities, processes, methods, products or services carried out, used, manufactured, dealt in or supplied on or before the date of this agreement by the Company:
 
 
 
16.2.3.1
do not involve the unlicensed use of a third party's Intellectual Property or confidential information;
 
 
 
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16.2.3.2
do not at the date of this agreement, nor did they at the time carried out, used, manufactured, dealt in or supplied, infringe the Intellectual Property (including moral rights) of another person; and
 
 
 
16.2.3.3
have not given, and, so far as the Warrantors are aware, will not give, rise to a claim against the Company or a liability to pay compensation.
 
 
 
16.2.4
So far as the Warrantors are aware, no third party has made, is making or is likely to make any unauthorised use of any of the Company Intellectual Property or has infringed or is infringing any Company Intellectual Property.
 
 
 
16.2.5
So far as the Warrantors are aware, neither the Company nor any other contracting party to any Intellectual Property Agreement is in breach of such agreement.
 
 
16.3
Adequacy of Company Intellectual Property
 
 
 
16.3.1
The Company Intellectual Property comprises all the Intellectual Property necessary for the Company to operate its business as carried on at the date of this agreement.
 
 
 
16.3.2
There is no Company Intellectual Property or Intellectual Property Agreement, due to lapse, expire or terminate within the next three calendar years, the loss, termination or expiry of which would cause material adverse effect to the Company.
 
 
 
16.3.3
All Company Intellectual Property will either be owned by the Company, or available for use subject to an Intellectual Property Agreement, on substantially the same terms and conditions immediately following Completion and none of these rights shall, so far as the Warrantors are aware, be adversely affected by anything contemplated by this agreement.
 
 
16.4
Creation of Intellectual Property
 
 
All Company Intellectual Property which is owned by and has been created, developed or discovered by any persons retained, commissioned, employed or otherwise engaged by the Company from time to time is fully vested in the Company and no claim for compensation under section 40 of the Patents Act 1977 or section 58 of the Patents Ordinance (cap.154 of the laws of Hong Kong)  (or otherwise under any analogous or equivalent legislation anywhere in the world) has been made or, so far as the Warrantors are aware, is likely to be made against the Company.
 
 
16.5
Dealings in and maintenance of Company Intellectual Property
 
 
 
16.5.1
So far as the Warrantors are aware any use of Company Intellectual Property by any third party is subject to an Intellectual Property Agreement, details of which are set out in the Disclosure Letter and a true, complete and accurate copy of which is included in the Disclosure Documents. The Company has not authorised any use of, or granted any rights under, the Company Intellectual Property other than as set out in the Disclosure Letter.
 
 
 
16.5.2
So far as the Warrantors are aware nothing has been done or omitted to be done which jeopardises the validity or subsistence of any Company Intellectual Property or constitutes a breach of any Intellectual Property Agreement concerning the Company Intellectual Property.
 
 
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16.5.3
All Intellectual Property Agreements concerning the Company Intellectual Property, which are material to the Company's business as at the date of this agreement, are valid (in the Warrantors opinion) and in force (and where applicable have been recorded at the relevant registry).  Details of those agreements are set out in the Disclosure Letter and true, complete and accurate copies of them are included in the Disclosure Documents.
 
 
 
16.5.4
All material documents concerning title to and interest in the Company Intellectual Property (including registration certificates) form part of the records of the Company.
 
 
 
16.5.5
The Company has received no adverse opinion either from its advisors or from any applicable registry in respect of an application for any Company Intellectual Property, the failure to gain registration of which would adversely affect the Company.
 
 
 
16.5.6
So far as the Warrantors are aware the Company has taken all steps necessary to maintain and protect the Company Intellectual Property.
 
 
17.
Confidential Information and Technical Information
 
 
17.1
So far as the Warrantors are aware the Confidential Information and Technical Information is legally and beneficially owned by the Company alone, free from any licence, Encumbrance or restriction on use.
 
 
17.2
So far as the Warrantors are aware the Confidential Information and Technical Information has at all times been kept strictly confidential by the Company and this confidentiality has not at any time been breached.
 
 
17.3
So far as the Warrantors are aware the Company has not disclosed any Confidential Information or Technical Information to any person except where such disclosure was properly made in the normal and ordinary course of the Company's business pursuant to a legally binding confidentiality agreement (the details of which are set out in the Disclosure Letter and a true, complete and accurate copy of which is included in the Disclosure Documents) which requires the recipient to keep such information confidential, to use it only for the purpose for which it was disclosed by the Company and which prevents the recipient from further disclosing it.
 
 
18.
Computer Systems
 
 
18.1
The Company is the owner of all elements of the Computer Equipment free from all Encumbrances.
 
 
18.2
The Computer Systems have sufficient capacity for the efficient carrying on of the Company's business as at the date of this agreement.
 
 
18.3
Details of the Computer Equipment and of all Computer Software are set out in the Disclosure Letter and true, complete and accurate copies of all escrow agreements and (where the warranties have not expired) development agreements in respect of that Computer Software are included in the Disclosure Documents.  Details of all licences of Computer Software are set out in the Disclosure Letter.  The licences of that Computer Software have been complied with in all material respects by the Company.
 
 
18.4
Details of any Computer Software used by the Company in which the Intellectual Property is owned by the Company are set out in the Disclosure Letter.
 
 
18.5
True, complete and accurate copies are included in the Disclosure Documents of all maintenance and support agreements in place in respect of the Computer Systems.
 
 
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18.6
The individual components and items which together constitute the Computer Systems are compatible with each other and are not to any material extent redundant.
 
 
18.7
The Company's employees at the date of this agreement include a sufficient number of persons who are sufficiently technically competent and appropriately trained to ensure the proper operation and use of the Computer Systems.
 
 
18.8
No third party has any right to prevent the Company from continuing to use the Computer Systems except pursuant to provisions contained in the documents referred to in paragraph 18.3 and no such right has been exercised or, so far as the Warrantors are aware, has arisen.
 
 
18.9
None of the Company's records, systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process whether computerised or not) which (including all means of access to or from such records, systems, controls, data or information) are not under the exclusive ownership and direct control of the Company.
 
 
18.10
Details of the Company's disaster recovery plan in respect of damage to or destruction of some or all of the Computer Systems is set out in the Disclosure Letter.
 
 
18.11
The Company has prudent procedures in place to ensure the security of the Computer Systems and data stored on it.  Details of the Company's procedures for taking and storing on site and off site back up copies of the Computer Software and all data stored on the Computer Equipment are set out in the Disclosure Letter.
 
 
18.12
The Company is not a party to a facilities management agreement (whether as a provider or a recipient of services) nor is the Company a subscriber to or provider of bureau, out sourcing or similar services.
 
 
18.13
In the 12 month period immediately preceding the date of this agreement, the Company has not suffered any failure or breakdown of any of the Computer Systems which caused a material interruption to its business.
 
 
18.14
The Company has in its possession or control all executable versions of all Computer Software in both source and object code as disclosed pursuant to in paragraph 18.3.
 
 
18.15
The Computer Software is able to perform where necessary for Company's business all the monetary transactions of the Company's business in euro and in HK dollars in addition to sterling; and
 
 
19.
Contracts
 
 
19.1
The Disclosure Documents contain true, complete and accurate copies of all material contracts to which the Company is a party, whether or not in the normal and ordinary course of business.
 
 
19.2
No unfulfilled order has been received, and no tender, quotation or offer has been made, by the Company otherwise than in the normal and ordinary course of business on terms calculated to yield a gross profit margin consistent with the prudent conduct of the business of the Company.
 
 
19.3
The Company is not a party to or subject to any contract, agreement, transaction or arrangement or subject to any liability which:
 
 
 
19.3.1
is of an unusual, onerous or abnormal nature or is not of an entirely arms' length nature;
 
 
 
19.3.2
is outside the normal and ordinary course of business:
 
 
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19.3.3
is for a fixed term of more than six months or for an indefinite term incapable of termination in accordance with its terms on not more than 90 days' notice served by the Company at any time;
 
 
 
19.3.4
is of a long term nature (that is unlikely to have been fully performed in accordance with its terms within six months of the date on which it was entered into);
 
 
 
19.3.5
involves an aggregate outstanding expenditure by the Company of more than £10,000;
 
 
 
19.3.6
cannot be readily performed by the Company without undue expenditure or application of money, effort or personnel;
 
 
 
19.3.7
is one by which the Company grants or is granted sole or exclusive rights;
 
 
 
19.3.8
is a distributorship, agency, franchise or management agreement or arrangement;
 
 
 
19.3.9
involves payment by any party by reference to fluctuations in the index of retail prices or any other index or in a currency other than sterling or Hong Kong dollars;
 
 
 
19.3.10
is for a loan, guarantee, indemnity or suretyship;
 
 
 
19.3.11
is of a loss making nature (that is likely to result in a loss to the Company on completion of the Company's obligations);
 
 
 
19.3.12
involves, or is likely to involve, the manufacture, sale or supply of goods the aggregate sales value of which will be more than 5% of the Company's turnover for the preceding financial year;
 
 
 
19.3.13
has or is likely to have a material adverse effect on the financial or trading position or prospects of the Company;
 
 
 
19.3.14
confers or purports to confer a benefit or right on any person who is not a party to the relevant contract, agreement or arrangement.
 
 
19.4
All the material contracts, agreements or arrangements to which the Company is a party are in full force and effect and constitute valid and binding obligations on the parties to such contracts, agreements and arrangements which are enforceable in accordance with their terms.
 
 
19.5
Neither the Company nor the Warrantors have any knowledge of the invalidity of, or a ground for termination, avoidance or repudiation of, a contract, agreement or arrangement to which the Company is a party. No party with whom the Company has entered into a contract, agreement or arrangement has given notice of its intention to terminate, or has sought to repudiate or disclaim, the contract, agreement or arrangement. The Company has received no written notice of any actual or proposed changes to the prices, royalties or any other material terms of any contract, agreement or arrangement to which it is a party.
 
 
19.6
The contracts, agreements and arrangements entered into by the Company have been duly complied with, no party to such a contract, agreement or arrangement is in material breach of any such contract, agreement or arrangement and so far as the Warrantors are aware there is no fact or circumstance which might give rise to a such breach. No contract, agreement or arrangement to which the Company is a party is the subject of any dispute or claim and so far as the Warrantors are aware there is no fact or circumstance which might give rise to any such dispute or claim.
 
 
19.7
There has been no delay, negligence or other default on the part of the Company and no event has occurred which, with the giving of notice or passage of time, could constitute a material breach by the Company of any of its obligations under any contract, agreement or arrangement to which it is a party.
 
 
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19.8
So far as the Warrantors are aware none of the other parties to any contract, agreement or arrangement to which the Company is a party is entitled to exercise any set off or counterclaim or to delay or withhold payment of any monies falling due under that contract, agreement or arrangement or to make payment to any party other than the party specified in such contract, agreement or arrangement.
 
 
19.9
The Company has not been a party to a transaction to which sections 190, 197, 198, 201, 203 or 223 of the Act apply.
 
 
19.10
The Company has not, within the 5 year period prior to Completion, paid any compensation to a third party agent in accordance with the terms of the Commercial Agents (Council Directive) Regulations 1993, and/or the national implementing legislation of the European Directive relating to Self Employed Commercial Agents (861/653/EE) in other European Union member states. There is no fact or circumstance which might give rise to a claim for such compensation being made against the Company.
 
 
20.
Joint ventures and partnerships
 
 
20.1
The Company is not, nor has it agreed to become, a member of any joint venture, consortium, European Economic Interest Grouping, partnership or other unincorporated association or a party to any agreement or arrangement for sharing profit, commissions or other income.
 
 
20.2
The Company is not a member of any partnership, trade association, society or other group, whether formal or informal, and whether or not having a separate legal identity and no such body is relevant to or has any material influence over the Company.
 
 
21.
Trading
 
 
21.1
General
 
 
 
21.1.1
The Company does not use any name for any purpose other than its full corporate name.
 
 
 
21.1.2
The Company does not have, and has not conducted any part of its business through, any branch, place of business or agency outside the United Kingdom or Hong Kong. The Company does not have any substantial assets outside the United Kingdom or Hong Kong.
 
 
 
21.1.3
No agent, distributor, representative, supplier or other party (not being an employee) is entitled to any fixed or varying payment or credit in connection with the Company's business past, present or future.
 
 
 
21.1.4
During the year ending on the date of this agreement no substantial customer or supplier or licensor of the Company has:
 
 
 
21.1.4.1
stopped, or indicated an intention to stop, trading with or supplying the Company;
 
 
 
21.1.4.2
reduced, or indicated an intention to reduce, to a material extent its trading with or supplies to the Company; or
 
 
 
21.1.4.3
changed, or indicated an intention to change, the terms on which it is prepared to trade with or supply the Company (other than normal price and quota changes).
 
 
 
21.1.5
So far as the Warrantors are aware no substantial customer or supplier or licensor of the Company is likely to:
 
 
 
21.1.5.1
stop trading with or supplying the Company;
 
 
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21.1.5.2
reduce to a material extent its trading with or supplies to the Company; or
 
 
 
21.1.5.3
change the terms on which it is prepared to trade with or supply the Company (other than normal price and quota changes).
 
 
 
21.1.6
So far as the Warrantors are aware the attitude of clients, customers, suppliers, licensors and employees with regard to the Company will not be prejudicially affected by the execution or performance of this agreement or a document to be executed at or before Completion.
 
 
21.2
Customers
 
 
 
21.2.1
No customer (including any person connected with such customer) accounts for more than 5% of the aggregate value of all sales made by the Company in the 12 months ending on the date of this agreement.
 
 
 
21.2.2
A true, complete and accurate list of all customers of the Company who have made purchases from the Company having an aggregate value in excess of £25,000 during the 12 months preceding the date of this agreement is included in the Disclosure Documents.
 
 
 
21.2.3
The Company has not entered into an agreement or arrangement with a client, customer or supplier on terms materially different to its standard terms of business, a true, complete and accurate copy of which is included in the Disclosure Documents.
 
 
 
21.2.4
Except for a condition or warranty implied by law or contained in its standard terms of business or otherwise given in the normal and ordinary course of business, the Com