Dated

8 June 2016

Clause

Heading

Page

1.

Interpretation

1

2.

Sale and purchase

7

3.

Consideration

7

4.

Deferred Consideration

10

5.

Completion

10

6.

Earn-out

11

7.

Buyer Warranties

13

8.

Warranties

13

9.

Limitations on claims

14

10.

Tax covenant

15

11.

Indemnities

15

12.

Conduct of Tax claims under the OLR Share Purchase Agreement

16

13.

Restrictions on Seller and Covenantor

17

14.

Set-off

20

15.

Guarantee

21

16.

Confidentiality and announcements

22

17.

Further assurance

24

18.

Assignment

24

19.

Entire agreement

25

20.

Variation and waiver

25

21.

Costs

25

22.

Notices

25

23.

Interest

27

24.

Severance

27

25.

Agreement survives Completion

27

26.

Third party rights

27

27.

Successors

28

28.

Counterparts

28

29.

Right and remedies

28

30.

Inadequacy of damages

28

31.

Governing law and jurisdiction

28

Schedule 1

Particulars of the Company

29

Schedule 2

Completion

30

Part 1.

What the Seller shall deliver to the Buyer at Completion

30

Clause

Heading

Page

Part 2.

Matters for the board meetings at Completion

31

Schedule 3

Warranties

32

Part 1.

General Warranties

32

Part 2.

Tax warranties

56

Schedule 4

Tax Covenant

62

Schedule 5

Completion Date Balance Sheet Adjustments

73

Schedule 6

Adjusted EBITDA

74

Schedule 7

Intellectual Property Rights

75

Part 1.

Registered Intellectual Property Rights

75

Part 2.

Material unregistered Intellectual Property Rights

75

Part 3.

Third party licences, agreements, authorisations and permissions

76

Part 4.

Licenses and consents in favour of third parties

76

Part 5.

Third Party Intellectual Property Rights

76

Schedule 8

Particulars of IT System and IT Contracts

77

Schedule 9

The Property

78

Schedule 10

Buyer Warranties

79

Schedule 11

Seller’s limitation of liability

81

THIS AGREEMENT is dated

8 June 2016

(1)

OLR (UK) LIMITED incorporated and registered in England and Wales with company number 6607378 whose registered office is at Eastlands One, London Road, Basingstoke, Hampshire, England, RG21 4FB (“Seller”);

(2)

PFSWEB INC incorporated in Delaware whose principal executive offices are at 505 Millennium Drive, Allen, Texas, USA (“Buyer”);

(3)

KENNETH WILLIAM WEHR of 3 Tenth Avenue, St. Peters, South Australia, 5069 (“Covenantor”); and

(4)

OLR GROUP PTY LTD incorporated and registered in Australia with company number 132 678187 whose registered office is at 204 Melbourne Street, North Adelaide SA 5006, Australia (“Guarantor”),

(A)

The Company is a private company limited by shares incorporated in England and Wales.

(B)

The Company has an issued share capital of £1,000 divided into the Sale Shares, each of which is fully paid up.

(C)

Further particulars of the Company at the date of this agreement are set out in Schedule 1.

(D)

The Seller is the legal and beneficial owner of the legal and beneficial title to the Sale Shares.

(E)

The Seller has agreed to sell and the Buyer has agreed to buy the Sale Shares subject to the terms and conditions of this agreement.

(F)

The Guarantor is the holding company of the Seller. The Guarantor has become a party to this agreement for the purpose of entering into the guarantee and indemnity set out in clause 15 and the undertakings set out in clause 16.

(G)

The Covenantor is the ultimate beneficial owner of the Seller and has become a party to this agreement for the purposes of the undertakings set out in clause 13 and clause 16.

1.

Interpretation

1.1

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

(a)

agreed in writing between the Buyer and the relevant party as to both liability and quantum;

(b)

finally determined by a court of competent jurisdiction from which there is no right of appeal, or from whose judgment the relevant party is debarred (by passage of time or otherwise) from making an appeal; or

(c)

unconditionally withdrawn by the Buyer in writing.

(a)

agreed in writing by the parties to the Claim, both as to liability and quantum; or

(b)

finally adjudicated by a court of competent jurisdiction and no right of appeal lies in respect of such adjudication, or the parties are debarred by passage of time or otherwise from making an appeal.

1.2

Clause, Schedule and paragraph headings shall not affect the interpretation of this agreement.

1.3

References to clauses and Schedules are to the clauses of and Schedules to this agreement and references to paragraphs are to paragraphs of the relevant Schedule.

1.4

The Schedules form part of this agreement and shall have effect as if set out in full in the body of this agreement. Any reference to this agreement includes the Schedules.

1.5

A reference to this agreement or to any other agreement or document referred to in this agreement is a reference to this agreement or such other agreement or document as varied or novated in accordance with its terms from time to time.

1.6

Unless the context otherwise requires, words in the singular shall include the plural and the plural shall include the singular.

1.7

Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders.

1.8

A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality) and that person’s personal representatives, successors and permitted assigns.

1.9

A reference to a party shall include that party’s personal representatives, successors and permitted assigns.

1.10

A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established. 

1.11

A reference to a holding company or a subsidiary means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006.

1.12

A reference to writing or written includes fax and e-mail.

1.13

Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.

1.14

Where the context permits, other and otherwise are illustrative and shall not limit the sense of the words preceding them.

1.15

References to a document in agreed form are to that document in the form agreed by the parties.

1.16

A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time provided that, as between the parties, no such amendment, extension 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 affect the rights of, any party.

1.17

A reference to a statute or statutory provision shall include all subordinate legislation made from time to time under that statute or statutory provision.

1.18

Any obligation on a party not to do something includes an obligation not to allow that thing to be done.

2.

Sale and purchase

2.1

On the terms of this agreement, the Seller shall sell and the Buyer shall buy, with effect from Completion, the Sale Shares with full title guarantee, free from all Encumbrances and together with all rights that attach (or may in the future attach) to the Sale Shares including, in particular, the right to receive all dividends and distributions declared, made or paid on or after the Completion Date.

2.2

The Seller waives, and shall before Completion procure the irrevocable waiver of all, rights of pre-emption or other restrictions on transfer in respect of the Sale Shares (or any of them) conferred on it, or any other person who is not a party to this agreement, under the articles of association of the Company or otherwise.

2.3

Each of the Seller, Covenantor and the Guarantor hereby confirms that none of them nor any person Connected with any of them has any claim outstanding against the Company or against any of its directors, officers or employees and no agreement or arrangement is outstanding under which the Company has or could have any obligation of any kind.

2.4

If any such claim or obligation as referred to in clause 2.3 exists, each of the Seller, the Covenantor and the Guarantor (as applicable) irrevocably and unconditionally waives and releases such a claim or obligation and shall procure that any person Connected with any of them shall irrevocably and unconditionally waive and release such a claim or obligation.

2.5

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

3.

Consideration

3.1

The Consideration shall consist of the following:

(a)

the sum of Five Million Eight Hundred and Fifty Five Thousand British Pounds (£5,855,000) (the “Completion Cash Payment”), as such amount is adjusted pursuant to the terms herein;

(b)

subject to the provisions of clause 4, the Deferred Consideration; and

(c)

subject to the provisions of clause 6 and clause 14, the Earn-out Payment.

3.2

All amounts referred to in this agreement are payable in British Pounds Sterling. 

3.3

Upon and subject to the terms herein, on Completion the Buyer will pay the Completion Cash Payment as follows:

(a)

to the client account of the Seller’s Solicitors (for the account of the Seller) (the Seller’s Solicitors being irrevocably authorised to receive the same) the cash sum of £3,449,397.00 (the “Seller’s Cash Consideration”) details as follows:

Bank name:

Yorkshire Bank

Address:

Leeds Central

Sort code:

05-00-20

Account:

11281393

(b)

to the client account of Dentons UKMEA LLP, as lawyers for the Bank  (in respect of repayment of “Facility A” under the BLME Finance Documents) the cash sum of £2,405,603.00 details as follows:

Bank:

Royal Bank of Scotland, Child & Co Branch

Account No:

67072440

Sort Code:

158000

IBAN:

GB63 RBOS 1580 00 6707 2440

SWIFT:

RBOSGB2L

3.4

The Seller’s Cash Consideration shall be adjusted and finally determined as set out in clauses 3.5 to 3.13 inclusive.

3.5

The Seller’s Cash Consideration shall be adjusted based upon the difference between the Completion Date Net Asset Value and the Net Asset Value Target as hereinafter provided. For the purposes of determining the Completion Date Net Asset Value, the Completion Date Balance Sheet shall be adjusted in accordance with the adjustments set forth in Schedule 5.

3.6

Not later than one hundred and twenty (120) days after the Completion Date, the Buyer shall cause to be prepared and delivered to the Seller the Buyer’s calculation of the Completion Date Balance Sheet (the “Buyer Completion Date Balance Sheet”), together with a calculation of the adjustment to the Seller’s Cash Consideration  by, as applicable (1) increasing the amount thereof by the excess, if any, of the Completion Date Net Asset Value shown on the Buyer Completion Date Balance Sheet over the Net Asset Value Target, or (2) decreasing the amount thereof by the excess, if any, of the Net Asset Value Target over the Completion Date Net Asset Value shown on the Buyer Completion Date Balance Sheet. The Completion Date Balance Sheet shall be prepared according to the Accounting Principles, applied consistently with those employed in the preparation of the Management Accounts, and applying the YTD Charges (as defined in Schedule 5).

3.7

If the Seller disagrees in whole or in part with the Buyer Completion Date Balance Sheet, then within sixty (60) days after its receipt thereof, the Seller shall notify the Buyer of such disagreement in writing (the “Completion Notice of Disagreement”), setting forth in reasonable detail the particulars of any such disagreement. To be effective, any such Completion Notice of Disagreement shall include a copy of the Buyer Completion Date Balance Sheet marked to indicate the specific line items of the Buyer Completion Date Balance Sheet that are in dispute (the “Disputed Completion Date Balance Sheet Line Items”) and shall be accompanied by Seller’s calculation of each of the Disputed Completion Date

Balance Sheet Line Items and the Seller’s calculation of the Completion Date Balance Sheet and its determination of the Seller’s Cash Consideration, as adjusted in accordance with clause 3.5. All items that are not Disputed Completion Date Balance Sheet Line Items shall be final, binding and conclusive for the purposes of determining the Seller’s Cash Consideration hereunder. If the Seller does not provide a Completion Notice of Disagreement within such sixty (60) day period, the Seller shall be deemed to have accepted in full the Buyer Completion Date Balance Sheet, and, for purposes of determining the adjustment to the Seller’s Cash Consideration, such Buyer Completion Date Balance Sheet shall become final, binding and conclusive upon Buyer and Seller. In the event any effective Completion Notice of Disagreement is provided, Buyer and Seller shall use their respective reasonable endeavours for a period of fifteen (15) days (or such longer period as they may mutually agree in writing) to resolve any Disputed Completion Date Balance Sheet Line Items. If, at the end of such period, Buyer and Seller are unable to resolve all Disputed Completion Date Balance Sheet Line Items, then either the Buyer or the Seller may refer any such remaining Disputed Completion Date Balance Sheet Line Items to an independent accounting firm of international standing and repute jointly designated by Buyer and Seller (the “Accounting Firm”); provided, that in the event Buyer and Seller cannot mutually agree as to the designation of the Accounting Firm, each such party will designate an accounting firm, and the two accounting firms will designate a third accounting firm to act as the Accounting Firm, except that neither Grant Thornton LLP nor BDO LLP (nor any of their affiliated offices) shall be selected as the Accounting Firm, unless Buyer and Seller mutually agree.  During the period from the Completion Date until the Completion Date Balance Sheet being finally agreed or determined as provided herein, the Buyer and the Seller shall cooperate with each other and shall have reasonable access to the books and records, working papers, schedules and calculations of the other, in order to prepare, or use in the preparation of, their respective Completion Date Balance Sheet. 

3.8

The Buyer and the Seller will enter into reasonable and customary arrangements for the services to be rendered by the Accounting Firm under clause 3.7, such services to be provided in the Accounting Firm’s capacity as an expert and not an arbitrator. The Accounting Firm shall be directed to determine as promptly as practicable (and the Buyer and the Seller shall use reasonable endeavours to cause such determination to occur within thirty (30) days) of the designation of the Accounting Firm the resolution of the Disputed Completion Date Balance Sheet Line Items. In making any determination of the Disputed Completion Date Balance Sheet Line Items, the Accounting Firm may not assign a value greater than the greatest value for such item claimed by either party or smaller than the smallest value for such item claimed by either party, and the Accounting Firm may only make a determination regarding the matters in dispute between the Buyer and the Seller. The Buyer and the Seller shall each furnish to the Accounting Firm such work papers and other documents and information relating to the Disputed Completion Date Balance Sheet Line Items, and shall provide access to personnel and answer questions, as such Accounting Firm may reasonably request. The determination of the Disputed Completion Date Balance Sheet Line Items by the Accounting Firm shall be set forth in writing and shall be final, conclusive and binding on the Buyer and the Seller for purposes of determining the Completion Date Balance Sheet, absent fraud or manifest error, and shall be based solely on the terms of this agreement and the written submissions by the Buyer and the Seller and not by independent review or investigation.

3.9

Subject to the next sentence, each of the Buyer and the Seller shall be responsible for its own fees and expenses incurred in connection with the matters set out in this clause 3. The Buyer and Seller shall each pay one half of the fees and expenses payable to the Accounting Firm in connection with resolving any dispute under clauses 3.7 and 3.8, except that in the event that one party’s, but not the other party’s, determination of the Disputed Completion Date Balance Sheet Line Items as a whole varies by 20% or more from the determination of the Disputed Completion Date Balance Sheet Line Items as a whole by the Accounting Firm hereunder, then such party shall be solely responsible for the fees and expenses of the Accounting Firm.

3.10

Promptly following the final determination of the Completion Date Balance Sheet pursuant to this clause 3, the Buyer shall prepare, and deliver to the Seller, the Completion Date Balance Sheet and the calculation of the Seller’s Cash Consideration , as adjusted by, as applicable (1) increasing the amount thereof by the excess, if any, of the Completion Date Net Asset Value shown on the Completion Date Balance Sheet over the Net Asset Value Target, or (2) decreasing the amount thereof by the excess, if any, of the Net Asset Value Target over the Completion Date Net Asset Value shown on the Completion Date Balance Sheet (the Seller’s Cash Consideration , as so adjusted, being hereinafter referred to as the “Final Completion Cash Payment”), whereupon the following payment shall be made as hereinafter provided:

(a)

if the Final Completion Cash Payment exceeds the Seller’s Cash Consideration  by £25,000 or more, then the Buyer shall pay to the Seller an amount in cash equal to such excess in accordance with clause 3.12; or

(b)

if the Seller’s Cash Consideration exceeds the Final Completion Cash Payment by £25,000 or more, then the Seller shall pay to the Buyer an amount in cash equal to such excess in accordance with clause 3.12.

3.11

For the avoidance of doubt, no payment shall be required under 3.10 if the difference between the Seller’s Cash Consideration and the Final Completion Cash Payment, as finally determined, is less than £25,000. 

3.12

Any amount payable pursuant to clause 3.10 shall be paid within five (5) Business Days after the delivery of the Completion Date Balance Sheet via wire transfer of cleared funds to:

(a)

in the case of a payment to the Seller, the account set out in clause 3.3(a); and

(b)

in the case of a payment to the Buyer, such account as the Buyer designates in writing.

3.13

Payments pursuant to clause 3.10 shall be treated for all purposes as adjustments to the Consideration.

4.

Deferred Consideration

4.1

Subject to receipt by the Buyer or the Company of documentation evidencing the Closing of one or more Considered Contracts and the limitation set forth in clause 4.2, the Buyer covenants and agrees to pay to the Seller by way of Deferred Consideration £75,000 in respect of each Considered Contract which is Closed within 90 days following Completion (such period to be referred to herein as the “Deferred Consideration Period”).

4.2

The total amount of Deferred Consideration payable pursuant to clause 4.1 shall not exceed £300,000.

4.3

Any and all amounts payable pursuant to clause 4.1 shall be paid by the Buyer via wire transfer of cleared funds to the account, details of which are set out in clause 3.3(a), within five (5) Business Days of a Considered Contract being Closed.

4.4

The Buyer hereby confirms, and will procure that the Company shall:

(a)

use reasonable commercial endeavours to effect the Closing of each Considered Contract within 90 days of Completion and that it shall not, and shall procure that the Company shall not do anything deliberately which could have the effect of delaying or preventing the Closing of any such Considered Contract; and

(b)

comply with the provisions of the PL Side Letter and not vary the terms of the PL Side Letter or put in place any other incentive arrangement in relation to any of the Considered Contracts other than with the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed).

4.5

At the end of the Deferred Consideration Period, the “Aggregate Unearned Deferred Consideration Amount” shall be determined by subtracting the total amount of all Deferred Consideration earned pursuant to clause 4.1 during the Deferred Consideration Period from £300,000. For the avoidance of doubt, the Aggregate Unearned Deferred Consideration Amount cannot be less than 0.

5.

Completion

5.1

Completion shall take place on the Completion Date at the offices of the Buyer’s Solicitors (or at any other place as may be agreed in writing by the parties).

5.2

At Completion:

(a)

the Seller shall:

(i)

deliver or cause to be delivered to the Buyer the documents and evidence set out in Part 1 of Schedule 2;

(ii)

procure that a board meeting of the Company is held at which the matters set out in Part 2 of Schedule 2 are carried out; and

(iii)

deliver any other documents referred to in this agreement as being required to be delivered by the Seller; and

(b)

the Buyer shall (subject to the Seller complying with its obligations in clause 5.2(a)): 

(i)

pay the Completion Cash Payment in accordance with clause 3.3;

(ii)

deliver to the Seller:

(A)

a signed acknowledgement of the Disclosure Letter; and

(B)

a copy of the resolution adopted by the board of directors of the Buyer approving the Transaction and the execution and delivery of this agreement and any other documents to be delivered by the Buyer at Completion.

5.3

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

5.4

In the event of any Claim, Indemnity Claim or claim under the Tax Covenant, the Consideration shall be deemed to be reduced by the amount of any payment made to the Buyer in respect thereof.

5.5

The Seller hereby assigns all of its rights, title, interest and benefit in and to the OLR Share Purchase Agreement to the Buyer with effect from the Completion Date pursuant to the provisions of clause 13.3(b) of the OLR Share Purchase Agreement. The Seller shall notify all parties to the OLR Share Purchase Agreement of such assignment in writing within seven days of Completion.

6.

Earn-out

6.1

Subject to the terms and provisions contained herein, the Buyer covenants and agrees to pay to the Seller an amount (the “2016 Earn-out”) equal to the amount determined according to the following formula:

6.2

For the avoidance of doubt, no Earn-Out Payment shall be payable if Adjusted EBITDA is £1,200,000 or less.

6.3

The right to receive the Earn-out Payment shall not be represented by any form of certificate or other instrument, is not assignable or transferable, may not be pledged or encumbered by the party entitled thereto and does not constitute an equity or ownership interest in the Buyer or the Company.

6.4

As promptly as practicable following the end of Calendar Year 2016, but in any event no later than 31 March 2017, the Buyer shall deliver to the Seller its calculation of the Earn-out Statement for Calendar Year 2016, accompanied by supporting documentation containing a sample of the actual calculations made by the Buyer, in order to enable the Seller to verify the calculations contained therein (the “Buyer Earn-out Statement”).

6.5

If the Seller disagrees in whole or in part with the Buyer Earn-out Statement, then within sixty (60) days after its receipt thereof, the Seller shall notify the Buyer of such disagreement in writing (the “Earn-out Notice of Disagreement”), setting forth in reasonable detail the particulars of any such disagreement. To be effective, any such Earn-out Notice of Disagreement shall include a copy of the Buyer Earn-out Statement marked to indicate the specific line items of the Buyer Earn-out Statement that are in dispute (the “Earn-out Disputed Line Items”) and shall be accompanied by the Seller’s calculation of each of the Earn-out Disputed Line Items and Seller’s calculation of the Earn-out Statement (the “Seller Earn-out Statement”). All items that are not Earn-out Disputed Line Items shall be final, binding and conclusive for the purposes of determining the Earn-out Payments hereunder. In the event that the Seller does not provide an Earn-out Notice of Disagreement within such sixty (60) day period, the Seller shall be deemed to have accepted in full the Buyer Earn-out Statement, and, for purposes of determining the corresponding Earn-out Payment, such Buyer Earn-out Statement shall become final, binding and conclusive upon Buyer and Seller. In the event any Earn-out Notice of Disagreement is provided in accordance with this clause 6.5 and the time limits prescribed by it, Buyer and Seller shall use their respective commercially reasonable efforts for a period of fifteen (15) days (or such longer period as they may mutually agree) to

resolve any Earn-out Disputed Line Items. If, at the end of such period, Buyer and Seller are unable to resolve all Earn-out Disputed Line Items, then either Buyer or Seller may refer any such remaining Earn-out Disputed Line Items to an Accounting Firm. The Buyer and the Seller shall cooperate with each other and shall have reasonable access to the books and records, working papers, schedules and calculations of the other, in order to prepare, or use in the preparation of, their respective Earn-out Statement. 

6.6

The Buyer and Seller will enter into reasonable and customary arrangements for the services to be rendered by the Accounting Firm under clause 6.5, such services to be provided in the Accounting Firm’s capacity as an expert and not an arbitrator. The Accounting Firm shall be directed to determine as promptly as practicable (and Buyer and Seller shall use commercially reasonable efforts to cause such determination to occur within thirty (30) days) of the designation of the Accounting Firm the resolution of the Earn-out Disputed Line Items. In making any determination of the Earn-out Disputed Line Items, the Accounting Firm may not assign a value greater than the greatest value for such item claimed by either party or smaller than the smallest value for such item claimed by either party, and the Accounting Firm may only make a determination regarding the matters in dispute between Buyer and Seller. The Buyer and the Seller shall each furnish to the Accounting Firm such work papers and other documents and information relating to the Earn-out Disputed Line Items, and shall provide access to personnel and answer questions, as such Accounting Firm may reasonably request. The determination of the Earn-out Disputed Line Items by the Accounting Firm shall be set forth in writing and shall be final, conclusive and binding on the Buyer and Seller for purposes of determining the Earn-out Payment absent fraud or manifest error and shall be based solely on the terms of this agreement and the written submissions by Buyer and Seller and not by independent review or investigation.

6.7

Subject to the next sentence, each party shall be responsible for its own fees and expenses incurred in connection with this clause 6. The Buyer and Seller shall each pay one half of the fees and expenses payable to the Accounting Firm in connection with resolving any dispute under clause 6.5 or 6.6, except that in the event that one party’s, and not the other party’s, determination of the Earn-out Disputed Line Items as a whole varies by 20% or more from the determination of the Earn-out Disputed Line Items as a whole by the Accounting Firm hereunder, then such party shall be solely responsible for the fees and expenses of the Accounting Firm. In the Buyer’s sole discretion, up to forty percent (40%)  of the Earn-out Payment (but not to exceed Four Hundred and Fifty Thousand British Pounds (£450,000) may be satisfied by the allotment and issue fully paid to the Seller of unregistered shares of Buyer Stock, such number of Shares to be calculated pursuant to clause 6.10.

6.8

Promptly following the agreement or final determination of the Earn-out Statement pursuant to clauses 6.5 or 6.6, the Buyer shall prepare and deliver to the Seller the Earn-out Statement, the calculation of the Earn-out Payment and confirmation of the amount of the Earn-out Payment to be satisfied by the allotment and issue fully paid to the Seller of unregistered shares of Buyer Stock.

6.9

Within ten (10) Business Days after the delivery of the Earn-out Statement pursuant to clause 6.8 above, the Buyer shall:

(a)

pay the cash element of the Earn-out Payment to the Seller in cleared funds by wire transfer to the bank account detailed in clause 3.3(a); and

(b)

pay the balance of the Earn-out Payment (the “Balance”) by the allotment and issuance of shares of Buyer Stock to the Seller, which shares when issued in accordance with the terms of this agreement, shall be validly issued, fully paid and non-assessable, and which shares shall be restricted and not transferable for a period of not more than six months from the date of issuance and issued in certificate form and bear such restrictive legends as may be required under Applicable Law (the “Earn-out Shares”). Buyer shall deliver certificates representing the Earn-out Shares as promptly as possible following the issuance thereof, to such address as Seller shall designate in writing, subject to the ordinary policies and procedures of the transfer agent for the Buyer Stock.

6.10

For the purposes of clause 6.9(b), the number of Earn-out Shares shall be calculated by converting the amount of the Balance from British Pounds Sterling into U.S. Dollars by applying the exchange rate for the conversion of British Pounds Sterling into U.S. Dollars as shown in The Wall Street Journal on 31 March 2017 and then issuing to the Seller a number of shares of the Buyer Stock in equal value in U.S. Dollars equal to the amount of the Balance (in U.S. Dollars) divided by the volume weighted average price of the Buyer Stock upon the NASDAQ Capital Market during the twenty (20) Business Days in the United States ending on 31 March 2017.

6.11

The Buyer agrees that, for the duration of the Earn-out Period it will, and will cause each member of its Group (including the Company following the Completion) to, act in good faith and refrain from taking any action specifically intended to diminish the value of the Earn-out Payment.  During the Earn-out Period, the Buyer will permit the Company to be operated in a manner consistent with the past practices of the Company in the ordinary course of business of the Company.  In particular, the Buyer undertakes, and shall procure that each member of its Group undertakes, that at all times for the duration of the Earn-out Period: 

(a)

it shall procure that the Company shall not sell, transfer or otherwise dispose of all or a material part of its business, assets or undertaking (or enter into any agreement to do so);

(b)

it shall not cause or permit a material change to the scope or nature of the business of the Company;

(c)

all intra-group transactions between the Company and another member of the Buyer’s Group shall be undertaken on an arm’s length basis and upon reasonable commercial terms;

(d)

it shall not cause or permit the Company to cease to carry on all or a material part of its business;

(e)

it shall limit the Company’s use of third party contractors for professional services and managed services to those resources reasonably necessary to perform its obligations under customer contracts and shall charge any professional services and managed services resources provided by other companies in the Buyer’s Group at the rate structure set forth in the Disclosure Letter; and

(f)

it shall procure that no material overheads, permanent professional services staff (excluding contractors) or permanent managed services staff (excluding contractors), will be added to the Business without the consent of Paul Lynch (or if he is not employed by the Company, the Seller, in which case such  consent shall not be unreasonably withheld, delayed or conditioned).

6.12

The Buyer further undertakes that it shall for the duration of the Earn-out Period, procure that the Company shall not, except with the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed) acquire any shares or other membership interest in another entity or all (or a material part) of the assets or undertaking of another entity.

6.13

Notwithstanding anything to the contrary contained herein, the Buyer shall be entitled to deduct and withhold from payments made in connection with any of the transactions contemplated by this agreement such Tax amounts as it is required to deduct and withhold with respect to the making of such payment under any Applicable Law. To the extent that amounts are so deducted and withheld by the Buyer, such deducted and withheld amounts (i) shall be remitted by Buyer to the applicable Governmental Entity and (ii) shall be treated for all purposes of this agreement as having been paid to the person in respect of which such deduction and withholding was made by the Buyer.

7.

Buyer Warranties

7.1

On the date of this agreement, the Buyer warrants to the Seller that each Buyer Warranty is true in all respects.

8.

Warranties

8.1

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

8.2

On the date of this agreement, except as Disclosed, the Seller warrants that each Warranty is true in all respects.

8.3

Subject to clause 8.7, Warranties qualified by the expression so far as the Seller is aware or any similar expression are deemed to be given to the best of the knowledge, information and belief of the Seller after it has made reasonable enquiries of Paul Lynch, the Covenantor, David Barrett and Marc Jones, and the Seller shall be deemed to be aware of all matters that are within the actual and constructive knowledge of Paul Lynch, the Covenantor, David Barrett and Marc Jones.

8.4

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

8.5

The Seller agrees that the supply of any information by or on behalf of the Company, or any of its employees, directors, agents or officers (“Officers”) to the Seller or its advisers in connection with the Warranties, the Disclosure Letter or

otherwise shall not constitute a warranty, representation or guarantee as to the accuracy of such information in favour of the Seller. The Seller unconditionally and irrevocably waives all and any rights and claims that it may have against the Company or the persons on whom that Seller has, or may have, relied in connection with the preparation of the Disclosure Letter, or agreeing the terms of this agreement, and further undertakes to the Buyer and the Company not to make any such claims. 

8.6

The rights and remedies of the Buyer in respect of any Claim, Indemnity Claim or claim under the Tax Covenant shall not be affected by Completion.

8.7

Warranties qualified by the expression since 22 January 2014 or any similar expression are deemed to be repeated by the Seller in relation to matters prior to 22 January 2014 so far as the Seller is aware.

9.

Limitations on claims

9.1

Save as provided in clause 9.7, the provisions of:

(a)

this clause 9.1 and Schedule 11 limit the liability of the Seller in relation to any Claim and (where specifically provided) any claim under the Tax Covenant; and

(b)

paragraph 5 of Schedule 4 (Tax Covenant) limits the liability of the Seller in relation to any claim under the Tax Covenant.

9.2

The aggregate liability of the Seller for all Substantiated Claims, Relevant Indemnity Claims and all claims under the Tax Covenant shall not exceed the aggregate value and amount of:

(a)

the Consideration actually paid in cash pursuant to this agreement;

(b)

the sum paid to Dentons UKMEA LLP, as lawyers for the Bank  (in respect of repayment of “Facility A” under the BLME Finance Documents) pursuant to clause 3.3(b) of this agreement;

(c)

an amount equal to the aggregate value assigned to the Earn-out Shares under clause 6;

(d)

any sums actually paid in cash to Paul Lynch under Schedule 1 of his service agreement with the Company and the PL Side Letter; and

(e)

an amount equal to the aggregate value assigned to any  shares of Buyer Stock allotted and issued to Paul Lynch under Schedule 1 of his service agreement with the Company and the PL Side Letter.

9.3

The Seller shall not be liable for a Claim unless:

(a)

the Seller’s liability in respect of such Claim (together with any connected Claims) exceeds £5,000; and

(b)

the amount of the Seller’s liability in respect of such Claim (together with any connected Claims), when aggregated with the Seller’s liability for all Claims that are not excluded under clause 9.3(a) and all claims under the Tax Covenant, exceeds £30,000, in which case the Seller shall be liable for the whole amount claimed (and not just the amount by which the threshold in this clause 9.3(b) is exceeded).

9.4

The Seller shall not be liable for a Claim or Indemnity Claim unless notice in writing summarising the nature of the Claim or Indemnity Claim (in so far as it is known to the Buyer) and, as far as is reasonably practicable, the amount claimed, has been given by or on behalf of the Buyer to the Seller:

(a)

in the case of a claim made under the Tax Warranties, on or before the seventh anniversary of Completion; or

(b)

in respect of any other Claim or an Indemnity Claim, prior to the expiry of the period of two years commencing on the Completion Date.

9.5

The Claim or Indemnity Claim shall be deemed to have been withdrawn (if not previously satisfied, settled or withdrawn) six months after notice of it has been given pursuant to this clause unless proceedings in respect of it have been issued and served on the Seller. 

9.6

The Seller shall not be liable for a Claim to the extent that the Claim:

(a)

relates to matters Disclosed;

(b)

relates to any matter specifically and fully provided for in the Accounts or the Management Accounts; or

(c)

is based on a liability which is contingent only unless and until such contingent liability becomes an actual liability and is due and payable in which case the period as set out in clause 9.4(b) shall run from the date on which the liability becomes an actual liability.

9.7

Nothing in this clause 9, Schedule 4 or Schedule 11 applies to exclude or limit the liability of the Seller:

(a)

to the extent that a Claim, Indemnity Claim or a claim under the Tax Covenant arises or is delayed as a result of dishonesty, fraud, wilful misconduct or wilful concealment by the Seller, its agents or advisers; or

(b)

in respect of a breach of any of the warranties in paragraph 1.1, paragraph 1.2, paragraph 2.1, paragraph 2.2, paragraph 2.3, paragraph 2.4, paragraph 13.2, the second sentence of paragraph 14.12, paragraph 17 or paragraph 31 of Part 1 of Schedule 3.

9.8

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

9.9

Where the Company is entitled to recover from a third party or claim reimbursement of all or any part of a sum which forms all or part of any Claim  (other than in relation to an OLR SPA Tax Claim), the Buyer shall procure that it takes reasonable steps to enforce the recovery or reimbursement before making a Claim.

9.10

If the Seller pays to the Buyer an amount in respect of a Claim or Indemnity Claim and the Buyer subsequently receives from a third party a sum which is referable to that matter the Buyer shall, as soon as reasonably practicable, repay to the Seller the amount so received less the reasonable costs and expenses incurred by the Buyer in obtaining or recovering that sum, provided that the Seller shall not receive more than the aggregate amount paid by it in respect of that Claim or Indemnity Claim.

9.11

Nothing in this agreement shall be deemed to relieve the Buyer from its common law duty to mitigate its loss.

9.12

Neither the Buyer nor any member of the Buyer’s Group shall be entitled to recover damages or any other amount in respect of any Claim or Indemnity Claim or otherwise obtain reimbursement or restitution more than once in respect of the same matter, loss or liability.

10.

Tax covenant

11.

Indemnities

11.1

The Seller shall indemnify the Buyer and the Company against, and shall pay to the Buyer a sum equal to, all liabilities, costs, expenses, damages and direct losses and all interest, penalties and reasonable legal costs (calculated on a full indemnity basis), and all other reasonable professional costs and expenses suffered or reasonably incurred by the Buyer or the Company arising out of or in connection with any or all of the following matters:

(a)

any claims following the Completion Date in connection with any of the BLME Finance Documents;

(b)

any third party claims (excluding in relation to Taxation) arising from and/or in connection with: (a) any contractors engaged either directly or indirectly via Usha Martin or any other agency in respect of which there is no written contract with the Company, signed by both the Company and the relevant contractor or a third party

agency on behalf of the relevant contractor, at Completion and included in the Disclosure Bundle (“Contractors”); and/or (b) an infringement of Intellectual Property Rights and/or any other rights in respect of services and/or work created by Contractors; and/or (c) a breach of (i) the second sentence in paragraph 23.2; and/or (ii) paragraph 23.12 of Part 1 of Schedule 3; and/or (d) an infringement of Intellectual Property Rights and/or any other rights in respect of the Conexus logo created by a third party; and/or (e) loss of, damage to, or unauthorised disclosure, processing or other use of Commercial Data (as defined in Schedule 3) or personal data (as defined under the DPA 1998); 

(c)

a breach of the second sentence of paragraph 14.12 of Part 1 of Schedule 3;

(d)

non-compliance by the Company with Microsoft software licences on or prior to the Completion Date, including but not limited to circumstances where such non-compliance is a result of such licences not being adequate to cover the number of users of the relevant software in the course of the Business;

(e)

termination by the Company of the employment of the employee who has undergone an internal grievance process as Disclosed prior to Completion, and/or the bringing of any claim by such employee as a direct result of any of the issues which form part of such Disclosed internal grievance procedure;

(f)

any claims relating to or in connection with any Disputed Contract and arising, directly or indirectly, from any services provided by the Company thereunder or any failure by the Company to perform any obligations thereunder, or any dispute related thereto, in each case, on or prior to the Completion Date, to the extent that such matters (and corresponding amounts) have not been Disclosed; and

(g)

a breach of paragraph 31 of Part 1 of Schedule 3 to the extent not Disclosed.

11.2

Any payment made by the Seller in respect of an Indemnity Claim shall include any amount necessary to ensure that, after any Taxation of the payment, the Buyer or the Company (as the case may be) is left with the same amount it would have had if the payment was not subject to Taxation.

11.3

The Buyer shall use its reasonable endeavours to procure that the Company enters into written contracts with the Contractors within a reasonable time following Completion in respect of the engagement of those Contractors by the Company.  For the avoidance of doubt, the foregoing shall be without prejudice to: (i) the indemnity set out at clause 11.1 (and a failure by the Buyer or the Company to comply with this clause 11.3 shall not prejudice any claim the Buyer may have pursuant to clause 11.1); and (ii) any third party claims arising prior to Completion.

12.

Conduct of Tax claims under the OLR Share Purchase Agreement

12.1

Subject to clause 12.2, if the Buyer or the Company becomes aware of any claim or circumstance arising which might constitute a claim against any or all of the sellers under the OLR Share Purchase Agreement (the “Original Sellers”) in respect of Part 2 of Schedule 4 of the OLR Share Purchase Agreement (Tax Warranties) or Schedule 5 of the OLR Share Purchase Agreement (Tax Covenant) (any such claim against the Original Sellers being an “OLR SPA Tax Claim”), the Buyer shall give or procure that notice in writing specifying in reasonable detail, to the extent then known, the nature of an existing or potential OLR SPA Tax Claim is given to the Seller as soon as is reasonably practicable.

12.2

If the Seller becomes aware of an OLR SPA Tax Claim, it shall notify the Buyer in writing as soon as is reasonably practicable, and on receipt of such notice, the Buyer shall be deemed to have given the Seller notice of the OLR SPA Tax Claim in accordance with the provisions of clause 12.1.

12.3

Subject to the Seller indemnifying the Buyer and the Company to the Buyer’s reasonable satisfaction against all liabilities, reasonable costs, damages or reasonable expenses that may be reasonably incurred (including any additional Liability for Taxation) in relation to pursuing an OLR SPA Tax Claim (a) the conduct of an OLR SPA Tax Claim shall be delegated at all times and exclusively to the Seller and/or (b) if the Seller so elects at any time (including after any delegation under sub clause 12.3(a) above, the Buyer shall (in so far as it is able to do so) assign to the Seller any rights to pursue an OLR SPA Tax Claim, and  in each case the Seller shall be entitled to receive any damages, compensation or other remedy and any costs, expenses or interest arising from such OLR SPA Tax Claim, provided that the Seller shall:

(a)

promptly inform the Buyer of all matters relating to the OLR SPA Tax Claim and in so far as it is practicable shall provide the Buyer with copies of any material correspondence and notes, or other written records relating to the OLR SPA Tax Claim; and

(b)

where reasonably practicable not settle or compromise the OLR SPA Tax Claim without prior consultation with the Buyer (and shall take into account the Buyer’s reasonable requests and opinions in relation thereto). 

12.4

Notwithstanding clause 12.3, the Seller shall not be entitled to take action in respect of an OLR SPA Tax Claim (a) in the name of the Company or (b) that (in the Buyer’s reasonable opinion), is likely to harm the Buyer’s or the Company’s commercial or employment relationship (potential or actual) with any person.

12.5

If the Seller fails to indemnify the Buyer and the Company in relation to pursuing an OLR SPA Tax Claim to the Buyer’s reasonable satisfaction within 15 days of demand by the Buyer, then the Buyer or the Company shall have the conduct of the OLR SPA Tax Claim absolutely and (without prejudice to their respective rights under this clause 12), shall be free to settle the OLR SPA Tax Claim on such terms as the Buyer or the Company may in its absolute discretion consider fit and shall be entitled to retain any proceeds arising from such OLR SPA Tax Claim.

12.6

Neither the Buyer nor the Company shall assign (at law or in equity), transfer, charge, make the subject of a trust or deal in any other manner with any of its rights or benefits relating to OLR SPA Tax Claim (a “Claim Transfer”) without prior written consent of the Seller other than as the same is included (and provided that any such Claim Transfer shall not operate to transfer the restrictions on and obligations of the Buyer under this clause 12 (which restrictions and obligations shall remain fully binding on the Buyer) and the Seller has been given written notification of such Claim Transfer promptly upon such transfer taking place by the Buyer) in a sale of all or substantially all of the assets of the Buyer or the Company.

12.7

The Buyer shall or shall procure that the Company provides the Seller and the Seller’s professional advisors with access to material documents, information or personnel that the Seller reasonably considers is necessary to pursue any OLR SPA Tax Claim on the basis that the Seller so far as is reasonably practicable will provide the Buyer or the Company not less than two Business Days written notice.

12.8

To the extent that the Seller or the Company is required to do anything pursuant to its obligations to the Original Sellers to enable it to pursue an OLR SPA Tax Claim, following Completion the Buyer shall or shall procure that the Company shall (in each case at the Seller’s cost) perform such reasonable obligations and take such reasonable steps and actions as are required by the Seller subject to the Seller so far as is reasonably practicable first giving the Buyer or the Company not less than two Business Days’ written notice.

13.

Restrictions on Seller and Covenantor

13.1

In this clause 13, the following words and expressions shall have the following meanings:

13.2

The Seller covenants with the Buyer and the Company that it shall not:

(a)

at any time during the period of three years commencing on the Completion Date, carry on or be employed, engaged, concerned or interested in a Restricted Business; or

(b)

at any time during the period of three years commencing on the Completion Date:

(i)

canvass, solicit or otherwise seek the custom of any Restricted Customer or Prospective Customer in competition with the Business (or any part of it) as it was carried on at the Completion Date; or

(ii)

induce or attempt to induce a Restricted Customer or Prospective Customer to cease or refrain from conducting business with, or to reduce the amount of business conducted with or to vary adversely the terms upon which it conducts business with the Company, or do any other thing which is reasonably likely to have such an effect; or 

(c)

at any time during the period of three years commencing on the Completion Date, have any business dealings with a Restricted Customer or a Prospective Customer in competition with the Business (or any part of it) as it was carried on at the Completion Date; or

(d)

at any time during the period of three years commencing on the Completion Date, have any business dealings with, solicit, entice or attempt to entice away any person who is at Completion, or has been at any time during the period of 12 months immediately preceding the Completion Date, a supplier of goods or services to the Company, if such dealings, solicitation or enticement causes or is reasonably likely to cause such supplier to cease supplying, or reduce its supply of goods or services to the Company, or to vary adversely the terms upon which it conducts business with the Company; or

(e)

at any time during the period of three years commencing on the Completion Date:

(i)

offer employment to, enter into a contract for the services of, or otherwise entice or attempt to entice away from the Company, any Restricted Person; or

(ii)

procure or facilitate the making of any such offer or attempt by any other person in relation to a Restricted Person,

(f)

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

(i)

the words “Conexus”, “Keystone” or “Velocity”, other than in respect of “Velocity”, pursuant to the terms of the Velocity Licence; or

(ii)

any trade or service mark, business or domain name, design or logo which, at Completion, was or had been used by the Company in connection with the Business; or

(iii)

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

(g)

at any time after Completion, present itself or permit itself to be presented as:

(i)

connected in any capacity with the Company; or

(ii)

interested or concerned in any way in the Sale Shares (or any of them); or

(h)

at any time after Completion, do or say anything which may be harmful to the reputation of the Company (or allow any of its officers, directors or employees to do so).

13.3

The Covenantor covenants with the Buyer and the Company that he shall not:

(a)

at any time during the period of two years commencing on the Completion Date, carry on or be employed, engaged, concerned or interested in a Restricted Business; or

(b)

at any time during the period of two years commencing on the Completion Date:

(i)

canvass, solicit or otherwise seek the custom of any Restricted Customer or Prospective Customer in competition with the Business (or any part of it) as it was carried on at the Completion Date; or

(ii)

induce or attempt to induce a Restricted Customer or Prospective Customer to cease or refrain from conducting business with, or to reduce the amount of business conducted with or to vary adversely the terms upon which it conducts business with the Company, or do any other thing which is reasonably likely to have such an effect; or 

(c)

at any time during the period of two years commencing on the Completion Date, have any business dealings with a Restricted Customer or a Prospective Customer in competition with the Business (or any part of it) as it was carried on at the Completion Date; or

(d)

at any time during the period of two years commencing on the Completion Date, have any business dealings with, solicit, entice or attempt to entice away any person who is at Completion, or has been at any time during the period of 12 months immediately preceding the Completion Date, a supplier of goods or services to the Company, if such dealings, solicitation or enticement causes or is reasonably likely to cause such supplier to cease supplying, or reduce its supply of goods or services to the Company, or to vary adversely the terms upon which it conducts business with the Company; or

(e)

at any time during the period of two years commencing on the Completion Date:

(i)

offer employment to, enter into a contract for the services of, or otherwise entice or attempt to entice away from the Company, any Restricted Person; or

(ii)

procure or facilitate the making of any such offer or attempt by any other person in relation to a Restricted Person;

(f)

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

(i)

the words “Conexus”, “Keystone” or “Velocity”, other than in respect of “Velocity”, pursuant to the terms of the Velocity Licence; or

(ii)

any trade or service mark, business or domain name, design or logo which, at Completion, was or had been used by the Company in connection with the Business; or

(iii)

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

(g)

at any time after Completion, present himself or permit himself to be presented as:

(i)

connected in any capacity with the Company; or

(ii)

interested or concerned in any way in the Sale Shares (or any of them); or

(h)

at any time after Completion, do or say anything which may be harmful to the reputation of the Company.

13.4

The covenants in clauses 13.2 and 13.3 are intended for the benefit of, and shall be enforceable by, each of the Buyer and the Company and apply to actions carried out by the Seller or Covenantor, as applicable, in any capacity (including as shareholder, partner, director, principal, consultant, officer, employee, agent or otherwise) and whether directly or indirectly, on the Seller's, or Covenantor's, as applicable, own behalf or on behalf of, or jointly with, any other person.

13.5

Nothing in clause 13.2 or 13.3 shall prevent the Seller or Covenantor from holding for investment purposes only:

(a)

units of any authorised unit trust; or

(b)

not more than 5% of any class of shares or securities of any company traded on a recognised investment exchange (within the meaning of FSMA).

13.6

Each of the covenants in clauses 13.2 or 13.3 is a separate undertaking by the Seller and Covenantor, as applicable, in relation to himself or itself and his or its interests and shall be enforceable by the Buyer and the Company separately and independently of their right to enforce any one or more of the other covenants contained in that clause. 

13.7

The parties acknowledge that the Seller and Covenantor have confidential information relating to the Business and that the Buyer is entitled to protect the goodwill of the Business as a result of buying the Sale Shares. Accordingly, each of the covenants in clauses 13.2 and 13.3 is considered fair and reasonable by the parties.

13.8

The obligations and liability of the Seller and Covenantor under this clause 12 shall be given by each for his or its own part only and not on the part of the other and extend only to any loss or damage arising out of his or its own breaches.

14.

Set-off

14.1

If on the Earn-out Payment Date:

(a)

a Due Amount (or any part of it) is outstanding, the Buyer shall be entitled (at its sole discretion) to satisfy all (to the extent possible) or part of the relevant party's liability to pay the Due Amount by way of set-off against the Earn-out Payment, and to treat its obligation to make the Earn-out Payment as being reduced pro tanto by the amount so set off; and/or

(b)

there is an Outstanding Claim, the Buyer shall be entitled (at its sole discretion) to, subject to the provisions of clause 14.4:

(i)

withhold from the Earn-Out Payment an amount equal to the Estimated Liability or, if lower, the full amount of the Earn-out Payment (“Reserved Sum”); and

(ii)

defer payment of the Reserved Sum until such time as the Outstanding Claim has become a Resolved Claim.

14.2

Where the provisions of clause 14.1(b) apply, the Buyer and the relevant party shall use all reasonable endeavours to agree the Estimated Liability in respect of the Outstanding Claim as soon as possible and in any event within the period of 10 Business Days following the Deferred Payment Date. In the absence of such agreement, the following procedure shall apply:

(a)

the determination of the Estimated Liability shall be referred to Counsel at the request of either party;

(b)

Counsel shall be requested to provide his determination of the Estimated Liability within 15 Business Days of accepting his appointment (or such other period as the Buyer and the party concerned may otherwise agree with Counsel);

(c)

Counsel shall act as an expert and not as arbitrator and his determination regarding the amount of the Estimated Liability shall, in the absence of manifest error, be final and binding on all the parties; and

(d)

Counsel's fees in making his determination of the Estimated Liability shall be borne by the Buyer and the relevant party equally or as Counsel may otherwise direct having regard to the respective conduct of the parties.

14.3

Where a Reserved Sum has been withheld by the Buyer pursuant to clause 14.1(b) in respect of an Outstanding Claim, upon that claim becoming a Resolved Claim the Buyer shall:

(a)

be entitled (at its sole discretion) to satisfy all (to the extent possible) or part of the relevant party's liability to pay the Due Amount in respect of the relevant Resolved Claim by way of set-off against the corresponding Reserved Sum, and to treat its obligation to pay the Reserved Sum as being reduced pro tanto by the amount so set off; and

(b)

pay to the Seller the balance of the corresponding Reserved Sum (if any) on the later of the applicable date due for payment hereunder or after the Buyer has exercised its rights pursuant to clause 14.3(a). Such payment shall be made by the Buyer within 10 Business Days of the Outstanding Claim becoming a Resolved Claim.

14.4

If on the expiry of six (6) months following notification of an Outstanding Claim by the Buyer to the Seller: 

(a)

such Outstanding Claim has not become a Resolved Claim; or

(b)

legal proceedings have not been issued by the Buyer; or

(c)

the Buyer and the Seller have not agreed in writing that the Outstanding Claim be settled in favour of the Buyer; or

(d)

the Seller has not acknowledged that liability is accepted in respect of such Outstanding Claim,

14.5

Nothing in this clause 14 shall prejudice, limit or otherwise affect:

(a)

any right or remedy the Buyer may have against any party from time to time, whether arising under this agreement or any of the documents executed pursuant to this agreement; or

(b)

the Buyer's right to recover against any party, whether before or after the Earn-out Payment is made in accordance with this agreement.

14.6

The amount of a Reserved Sum withheld by the Buyer in accordance with this clause 14 shall not be regarded as imposing any limit on the amount of any claims under this agreement or any of the documents executed pursuant to this agreement.

14.7

If a Due Amount is not satisfied in full by way of set-off under clause 14.1(a) or clause 14.3, nothing in this agreement shall prevent or otherwise restrict the Buyer's right to recover the balance from the party concerned and the Due Amount (to the extent not so satisfied) shall remain fully enforceable against that party.

15.

Guarantee

15.1

In consideration of the Buyer entering into this agreement, the Guarantor guarantees to the Buyer the due and punctual performance, observance and discharge by the Seller of all the Guaranteed Obligations if and when they become performable or due under this agreement (or (as the case may be) any agreement entered into pursuant to or in connection with it).

15.2

If the Seller defaults in the payment when due of any amount that is a Guaranteed Obligation the Guarantor shall, immediately on demand by the Buyer, pay that amount to the Buyer in the manner prescribed by this agreement (or (as the case may be) any agreement entered into pursuant to or in connection with it) as if it was the Seller.

15.3

The Guarantor, as principal obligor and as a separate and independent obligation and liability from its obligations and liabilities under clause 15.1 and clause 15.2, agrees to indemnify and keep indemnified the Buyer in full and on demand from and against all and any direct losses, reasonable costs, claims, liabilities, damages, demands and expenses suffered or reasonably incurred by the Buyer arising out of, or in connection with, the Guaranteed Obligations not being recoverable for any reason, or the Seller's failure to perform or discharge any of the Guaranteed Obligations.

15.4

The guarantee in this clause 15 is and shall at all times be a continuing security and shall cover the ultimate balance of all monies payable by the Seller in respect of the Guaranteed Obligations, irrespective of any intermediate payment or discharge in full or in part of the Guaranteed Obligations.

15.5

The liability of the Guarantor under the guarantee in this clause 15 shall not be reduced, discharged or otherwise adversely affected by:

(a)

any act, omission, matter or thing which would have discharged or affected the liability of the Guarantor had it been a principal obligor instead of a guarantor or indemnifier; or

(b)

anything done or omitted by any person which, but for this provision, might operate or exonerate or discharge the Guarantor or otherwise reduce or extinguish its liability under the guarantee in this clause 15.

15.6

The Guarantor waives any right it may have to require the Buyer (or any trustee or agent on its behalf) to proceed against or enforce any other right or claim for payment against any person before claiming from the Guarantor under this clause 15. 

15.7

The Guarantor shall, on a full indemnity basis, pay to the Buyer on demand the amount of all reasonable costs and expenses (including legal and out-of-pocket expenses and any value added tax on them) reasonably and properly incurred by the Buyer in connection with:

(a)

the preservation, or exercise and enforcement, of any rights under or in connection with the guarantee in this clause 15 or any attempt so to do; and

(b)

any discharge or release of this guarantee.

15.8

Until all amounts which may be or become payable by the Seller under or in connection with this agreement have been irrevocably paid in full, and unless the Buyer otherwise directs in writing, the Guarantor shall not exercise any security or other rights it may have by reason of performing its obligations under this clause 15, whether such rights arise by way of set-off, counterclaim, subrogation, indemnity or otherwise.

15.9

The guarantee in this clause 15 shall be in addition to and independent of all other security which the Buyer may hold from time to time in respect of the discharge and performance of the Guaranteed Obligations.

16.

Confidentiality and announcements

16.1

Each of the Seller, the Covenantor and the Guarantor severally undertakes, for its own part only, to each of the Buyer and the Company that it shall:

(a)

keep confidential all confidential information or trade secrets in his possession concerning the business, affairs, customers, clients or suppliers of the Company or any member of the Buyer's Group;

(b)

not disclose any of the information referred in clause 16.1(a) in whole or in part to any third party, except as expressly permitted by this clause 16; and

(c)

not make any use of any of the information referred in clause 16.1(a), other than to the extent necessary for the purpose of exercising or performing his rights and obligations under this agreement.

16.2

The Buyer undertakes to the Seller that it shall:

(a)

keep confidential all confidential information or trade secrets in its possession concerning the business, affairs, customers, clients or suppliers of the Seller;

(b)

not disclose any of the information referred in clause 16.2(a) in whole or in part to any third party, except as expressly permitted by this clause 16; and

(c)

not make any use of any of the information referred in clause 16.2(a), other than to the extent necessary for the purpose of exercising or performing its rights and obligations under this agreement.

16.3

Nothing in this agreement shall be construed as imposing on the Buyer an obligation to keep confidential, or restrict its use after Completion, of any information relating to the Company.

16.4

Notwithstanding any other provision of this agreement, no party shall be obliged to keep confidential or to restrict its use of any information that:

(a)

is or becomes generally available to the public (other than as a result of its disclosure by the receiving party or any person to whom it has disclosed the information in accordance with clause 16.5(a) in breach of this agreement); or

(b)

was, is or becomes available to the receiving party on a non-confidential basis from a person who, to the receiving party's knowledge, is not bound by a confidentiality agreement with the disclosing party or otherwise prohibited from disclosing the information to the receiving party.

16.5

Any party may disclose any information that it is otherwise required to keep confidential under this clause 16: 

(a)

to those of its employees, officers, consultants, representatives or advisers (or those of any member of its Group) who need to know such information to enable them to advise on this agreement, or to facilitate the Transaction, provided that the party making the disclosure informs the recipient of the confidential nature of the information before disclosure and procures that each recipient shall, in relation to any such information disclosed to him, comply with the obligations set out in this clause 16 as if they were that party. The party making a disclosure under this shall, at all times, be liable for the failure of its recipients to comply with the obligations set out in this clause 16; or

(b)

in the case of the Buyer only, to a proposed transferee of the Sale Shares for the purpose of enabling the proposed transferee to evaluate the proposed transfer; or

(c)

in the case of the Buyer only, to its funders, potential investors and their respective advisers, employees, officers, representatives or consultants in connection with the financing of the Transaction; or

(d)

with the prior consent in writing of all the other parties bound by this clause 16; or

(e)

if such information relates to one party only, with the prior consent in writing of that party; or

(f)

to confirm that the Transaction has taken place, or the date of the Transaction (but without otherwise revealing any other terms of the Transaction or making any other announcement); or

(g)

to the extent that the disclosure is required:

(i)

by the laws of any jurisdiction to which that party is subject; or

(ii)

by an order of any court of competent jurisdiction, or any regulatory, judicial, governmental or similar body, or any Taxation Authority or securities exchange of competent jurisdiction; or

(iii)

to make any filing with, or obtain any authorisation from, a regulatory, governmental or similar body, or any Taxation Authority or securities exchange of competent jurisdiction; or

(iv)

to protect that party's interest in any legal proceedings,

16.6

Subject to clause 16.7, clause 16.8 and clause 16.9, no party shall make, or permit any person to make, any public announcement, communication or circular (“announcement”) concerning this agreement or the Transaction without the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed).

16.7

Nothing in clause 16.6 shall prevent any party from making any announcement required by law or any governmental or regulatory authority (including, without limitation, any relevant securities exchange), or by any court or other authority of competent jurisdiction provided that the party required to make the announcement consults with the other parties and takes into account the reasonable requests of the other parties in relation to the content of such announcement before it is made.

16.8

The parties shall issue a press release in agreed form immediately after Completion.

16.9

The Buyer may, at any time after Completion announce its acquisition of the Sale Shares to any employees, clients, customers or suppliers of the Company or any other member of the Buyer's Group.

17.

Further assurance 

17.1

The Seller shall (at its own expense) promptly execute and deliver such documents and perform such acts as the Buyer may reasonably require from time to time to vest full title in the Sale Shares to the Buyer and to give full effect to clauses 2.2 and 2.3 of this agreement.

17.2

The Seller undertakes to the Buyer that, if and for so long as it remains the registered holder of any of the Sale Shares after Completion, it shall:

(a)

hold such Sale Shares together with all dividends and any other distributions of profits, surplus or other assets in respect of such Sale Shares and all rights arising out of or in connection with them, in trust for the Buyer;

(b)

at all times after Completion, deal with and dispose of such Sale Shares, dividends, distributions, assets and rights as the Buyer shall direct;

(c)

exercise all voting rights attached to such Sale Shares in such manner as the Buyer shall direct; and

(d)

if required by the Buyer, execute all instruments of proxy or other documents as may be necessary to enable the Buyer to attend and vote at any meeting of the Company,

18.

Assignment

18.1

Subject to the further provisions of this clause 18, no party shall assign, transfer, mortgage, charge, declare a trust of, or deal in any other manner with any or all of its rights and obligations under this agreement (or any other document referred to in it).

18.2

Each party confirms it is acting on its own behalf and not for the benefit of any other person.

18.3

The Buyer may assign or transfer its rights (but not its obligations) under this agreement (or any document referred to in this agreement) to:

(a)

another member of its Group; or

(b)

any person to whom the Sale Shares are sold or transferred by the Buyer following Completion,

18.4

The Buyer may grant security over, or assign by way of security, any or all of its rights under this agreement for the purposes of, or in connection with, the financing (whether in whole or in part) by the Buyer of the Transaction. On the enforcement of any security of a kind referred to in this clause, the Buyer, or any administrative receiver, receiver, administrator or liquidator of the Buyer or any person having the benefit of such security may assign any or all of the relevant rights to any person, but the continuing parties' liability to any assignee in respect of those rights shall not be greater than if no assignment had taken place.

18.5

If there is an assignment or transfer of the Buyer's rights in accordance with clause 18.3 or clause 18.4:

(a)

the Seller may discharge its obligations under this agreement to the Buyer until it receives notice of the assignment; and

(b)

the assignee may enforce this agreement as if it were named in this agreement as the Buyer, but the Buyer shall remain liable for any obligations and liabilities under this agreement.

19.

Entire agreement 

20.

Variation and waiver

20.1

No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).

20.2

A waiver of any right or remedy under this agreement or by law is only effective if it is given in writing and is signed by the person waiving such right or remedy. Any such waiver shall apply only to the circumstances for which it is given and shall not be deemed a waiver of any subsequent breach or default.

20.3

A failure or delay by any person to exercise any right or remedy provided under this agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy.

20.4

No single or partial exercise of any right or remedy provided under this agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy.

20.5

A party that waives a right or remedy provided under this agreement or by law in relation to one party, or takes or fails to take any action against that party, does not affect its rights in relation to any other party.

20.6

The Buyer may take action against, grant time or other indulgence to, or release or compromise in whole or part the liability of, any party in respect of any warranty, indemnity or other obligation under this agreement without affecting the liability of any of the other parties who are liable (whether jointly and severally or otherwise) in respect of that warranty, indemnity, or other obligation.

21.

Costs

22.

Notices

22.1

For the purposes of this clause 22, but subject to clause 22.7, notice includes any other communication.

22.2

A notice given to a party under or in connection with this agreement:

(a)

shall be in writing and in English;

(b)

shall be signed by or on behalf of the party giving it;

(c)

shall be sent to the relevant party for the attention of the contact and to the address specified at the start of this agreement or clause 22.3 (as the case may be), or such other address or person as that party may notify to the others in accordance with the provisions of this clause 22;

(d)

shall be:

(i)

delivered by hand; or

(ii)

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

(iii)

sent by airmail or by reputable international overnight courier (if the notice is to be served by post to an address outside the country from which it is sent); or

(iv)

sent by email; and

(e)

is deemed received as set out in clause 22.5. 

22.3

The addresses for service of notices on the Seller, Guarantor, Covenantor and the Buyer are:

(a)

Seller

(i)

address: 40 St. Paul's Square, Birmingham B3 1FQ

(ii)

email: ken.wehr@OLRretail.com

(iii)

for the attention of: Ken Wehr

(b)

Buyer

(i)

address: 505 Millennium Drive, Allen, Texas, USA

(ii)

email: tmadden@pfsweb.com

(iii)

for the attention of: Tom Madden

(c)

Guarantor

(i)

address: 204 Melbourne Street, North Adelaide SA 5006, Australia

(ii)

email: ken.wehr@OLRretail.com

(iii)

for the attention of: Ken Wehr

(d)

Covenantor

(i)

address: 3 Tenth Avenue, St. Peters, South Australia, 5069

22.4

A party may change its details for service of notices as specified in clause 22.3 by giving notice to each of the other parties. Any change notified pursuant to this clause shall take effect at 9.00am on the later of:

(a)

the date (if any) specified in the notice as the effective date for the change; or

(b)

five Business Days after deemed receipt of the notice of change.

22.5

Delivery of a notice is deemed to have taken place (provided that all other requirements in this clause have been satisfied):

(a)

if delivered by hand, on signature of a delivery receipt or at the time the notice is left at the address; or

(b)

if sent by pre-paid first class post, recorded delivery or special delivery to an address in the UK, at 9.00am on the second Business Day after posting; or

(c)

if sent by pre-paid airmail to an address outside the country from which it is sent, at 9.00am on the fifth Business Day after posting; or

(d)

if sent by reputable international overnight courier to an address outside the country from which it is sent, on signature of a delivery receipt or at the time the notice is left at the address; or

(e)

if sent by email, at 9.00am on the next Business Day after transmission;

(f)

if deemed receipt under the previous paragraphs of this clause 22.5 would occur outside business hours (meaning 9.00am to 5.30pm Monday to Friday on a day that is not a public holiday in the place of receipt), at 9.00am on the day when business next starts in the place of deemed receipt. For the purposes of this clause, all references to time are to local time in the place of deemed receipt.

22.6

To prove service, it is sufficient to prove that: 

(a)

if delivered by hand or by reputable international overnight courier, the notice was delivered to the correct address; or

(b)

if sent by post or by airmail, the envelope containing the notice was properly addressed, paid for and posted; or

(c)

if sent by email, that it was sent to the email address provided in clause 22.3 above.

22.7

This clause 22 does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution.

23.

Interest

24.

Severance

25.

Agreement survives Completion

26.

Third party rights

26.1

Except as expressly provided in clause 26.2, a person who is not a party to this agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement.

26.2

The following provisions are intended to benefit future buyers of the Sale Shares and (to the extent that they are identified in the relevant clauses as recipients of rights or benefits under that clause), the Company and the Officers (as defined in clause 8.5), and shall be enforceable by each of them to the fullest extent permitted by law:

(a)

clause 2.3;

(b)

clause 2.4;

(c)

clause 8 (Warranties) and Schedule 3 (Warranties) (subject to clause 9 (Limitations on claims) and Schedule 11 (Seller’s limitation of liability);

(d)

clause 10 (Tax covenant) and Schedule 4 (Tax covenant);

(e)

clause 11 (Indemnities);

(f)

clause 12 (Conduct of claims under the OLR Share Purchase Agreement);

(g)

clause 13 (Restrictions on seller and covenantor);

(h)

clause 14 (Set-off);

(i)

clause 15 (Guarantee);

(j)

clause 16 (Confidentiality and announcements); 

(k)

clause 23 (Interest);

(l)

clause 28 (Counterparts);

(m)

clause 29 (Rights and remedies);

(n)

clause 30 (Inadequacy of damages); and

(o)

clause 31 (Governing law and jurisdiction).

26.3

The rights of the parties to terminate, rescind or agree any variation, waiver or settlement under this agreement are not subject to the consent of any other person.

27.

Successors

28.

Counterparts

28.1

This agreement may be executed in any number of counterparts, each of which when executed shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement.

28.2

Transmission of the executed signature page of a counterpart of this agreement by e-mail (in PDF, JPEG or other agreed format) shall take effect as delivery of an executed counterpart of this agreement. If either method of delivery is adopted, without prejudice to the validity of the agreement thus made, each party shall provide the others with the original of such counterpart as soon as reasonably possible thereafter.

28.3

No counterpart shall be effective until each party has executed at least one counterpart.

29.

Right and remedies

30.

Inadequacy of damages

31.

Governing law and jurisdiction

31.1

This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.

31.2

Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of the Buyer to take proceedings against any other party in any other court of competent jurisdiction in any state in Australia, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any of England and Wales or Australia, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.

Name:

Conexus Limited

Registration number:

3616118

Registered office:

Eastlands One, London Road, Basingstoke, Hampshire RG21 4FB

Issued share capital:

Amount: £1,000

Divided into:

1,000 ordinary shares of £1 each

Registered shareholders (and number of Sale Shares held):

The Seller – 1,000 ordinary shares of £1 each

Directors:

Kenneth Wehr

Secretary:

None

Auditors:

Grant Thornton LLP

Registered charges:

Charge (0361 6118 0003) in favour of Bank of London and Middle East plc dated 22 January 2014 (to be released before Completion)

1.

At Completion, the Seller shall deliver or cause to be delivered to the Buyer the following:

(a)

transfers of the Sale Shares, in agreed form, executed by the registered holder in favour of the Buyer;

(b)

the share certificate for the Sale Shares in the name of the registered holder;

(c)

a duly certified copy of any power of attorney under which any document to be delivered to the Buyer under this paragraph 1 has been executed;

(d)

the statutory registers and minute books (duly written up to the time of Completion) of the Company, the common seal (if any), certificate of incorporation and any certificates of incorporation on change of name;

(e)

the written resignation, in agreed form and executed as a deed, of the sole Director of the Company, from his office with the Company;

(f)

signed minutes, in agreed form, of each of the board meetings required to be held pursuant to Part 2 of this Schedule 2;

(g)

in relation to the Company:

(i)

statements from each bank at which it has an account, giving the balance of each account at the close of business on the last Business Day before Completion;

(ii)

all cheque books in current use and written confirmation that no cheques have been written since the statements delivered above were prepared;

(iii)

all credit cards issued on the Company's account and held by the Covenantor;

(iv)

details of its cash book balances; and

(v)

reconciliation statements reconciling the cash book balances and the cheque books with the bank statements delivered above;

(h)

all title deeds and other documents relating to the Property;

(i)

board minutes (or the equivalent corporate authority) of the Guarantor, in agreed form, authorising its entry into this agreement;

(j)

an opinion of Australian counsel that the guarantee given by the Guarantor under and pursuant to clause 15 is duly authorised and enforceable and that the Guarantor is in current good standing;

(k)

the most recent audited accounts of the Guarantor (on an individual company and not a consolidated basis);

(l)

board minutes of the Seller, in agreed form, authorising its entry into this agreement;

(m)

in connection with the BLME Finance Documents:

(i)

a deed of release and termination, in agreed form, duly executed the Bank, the Seller and the Company;

(ii)

an amendment letter, in agreed form, duly executed by the Bank, the Seller, the Company, the Guarantor and OLR Australia Pty Limited;

(iii)

duly completed and executed Form MR04 (statement of satisfaction in full or in part of mortgage or charge), in agreed form;

(iv)

duly completed and executed Form MR05, in agreed form; 

(v)

duly executed release in agreed form confirming that the Company is released from all of its obligations to each member of the Seller’s Group under the BLME Finance Documents;

(n)

the service agreement, in agreed form, to be made between the Company and Paul Lynch, duly executed by Paul Lynch;

(o)

a release, in agreed form, duly executed by Paul Lynch and the Company releasing the Company from any pre-Completion liability to him;

(p)

the Transitional Services Agreement, duly executed by the Seller;

(q)

the Velocity Licence duly executed by the Seller;

(r)

the PL Side letter, duly executed by Paul Lynch;

(s)

the Disclosure Letter, duly executed by the Seller;

(t)

evidence, in agreed form, that Conexus, Inc has been dissolved;

(u)

evidence, in agreed form, that the Seller has changed its registered office and no companies in the Seller's Group share the same registered office as the Company;

(v)

all instruments or documents necessary to change the names of the individuals who have access to or are authorised in respect of all bank accounts, other accounts, certificates of deposits, marketable securities, other investments (including bank mandate forms), safe deposit boxes, lock boxes and safes of the Company, if any; and

(w)

to the extent not at the Property, all keys and combinations to all locks (including building, room, and file cabinet locks) and all safe deposit boxes, lock boxes and safes of the Company (if any) all vehicle keys and registration documents, and any filing codes in respect of online filing made by the Company with the Registrar of Companies or any other governmental entity.

1.

The Seller shall cause a board meeting of the Company to be held at Completion at which the following matters shall take place:

(a)

the approval of the registration of the transfer of the Sale Shares, subject only to the transfers being stamped at the cost of the Buyer;

(b)

acceptance of the resignation referred to in paragraph 1(e) of Part 1 of this Schedule 2 with effect from the end of the relevant board meeting;

(c)

approval of the appointment of the persons nominated by the Buyer as directors of the Company (but not exceeding any maximum number of directors contained in the Company's articles of association) with effect from the end of the relevant board meeting;

(d)

the accounting reference date of the Company shall be changed to such date as is required by the Buyer;

(e)

all existing instructions and authorities to the bankers of the Company shall be revoked and replaced with new instructions and authorities as the Buyer requires; and

(f)

the approval of the entry by the Company into the service agreement and any other documents to which the Company is a party, in each case as referred to in Part 1 of this Schedule 2.

1.

Power to sell the Sale Shares

1.1

The Seller and each Guarantor has taken all necessary actions and has all requisite power and authority to enter into and perform this agreement and the other documents referred to in it (to which they are a party) in accordance with their respective terms.

1.2

This agreement and the other documents referred to in it constitute (or shall constitute when executed) valid, legal and binding obligations on the Seller and the Guarantor in accordance with their respective terms.

1.3

The execution and delivery by the Seller and the Guarantor of this agreement and the documents referred to in it, and compliance with their respective terms shall not breach or constitute a default:

(a)

under any agreement or instrument to which the Seller or either Guarantor is a party or by which the Seller or the Guarantor is bound; or

(b)

of any order, judgment, decree or other restriction applicable to the Seller.

2.

Shares in the Company

2.1

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

2.2

The Seller is the legal and beneficial owner of the Sale Shares and is entitled to transfer the legal and beneficial title to the Sale Shares to the Buyer free from all Encumbrances, without the consent of any other person.

2.3

No person has any right to require, at any time, the transfer, creation, issue or allotment of any share, loan capital or other securities (or any rights or interest in them) of the Company, and neither the Seller nor the Company has agreed to confer any such rights, and no person has claimed any such right.

2.4

No Encumbrance has been granted to any person or otherwise exists affecting:

(a)

the Sale Shares; or

(b)

any unissued shares, debentures or other unissued securities of the Company.

2.5

The Company:

(a)

does not hold or beneficially own, nor has it agreed to acquire, any shares, loan capital or any other securities in any company; or

(b)

has not at any time since 22 January 2014 had any subsidiaries or subsidiary undertakings; or

(c)

is not or has not agreed to become, a member of any partnership or other unincorporated association, joint venture or consortium (other than recognised trade associations); or

(d)

does not control or takes part in the management of any company or business organisation, nor has it agreed to do so; or

(e)

does not have any branch or permanent establishment, outside its country of incorporation.

2.6

The Company has not since 22 January 2014: 

(a)

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

(b)

allotted or issued any securities that are convertible into shares.

2.7

No shares in the capital of the Company have been issued, and no transfer of any such shares has been registered, except in accordance with all applicable laws and the memorandum and articles of association of the Company and all such transfers have been duly stamped (where applicable).

2.8

Conexus Inc has been dissolved and did not trade since its incorporation.

3.

Constitutional and corporate documents

3.1

Copies of the articles of association (or other constitutional and corporate documents) of the Company have been Disclosed. Such copy documents:

(a)

are true, accurate and complete in all respects;

(b)

have attached to them copies of all resolutions and agreements required by applicable law to be so attached; and

(c)

fully set out all the rights and restrictions attaching to each class of shares in the capital of the Company.

3.2

All statutory books and registers of the Company have been properly kept, are written up to date and contain a true, complete and accurate record of all matters which should be contained in them. Neither the Seller nor the Company has received any notice or allegation that any such books or registers are incorrect or should be rectified.

3.3

Since 22 January 2014, all returns, particulars, resolutions and other documents that the Company is required by law to file with, or deliver to, any authority in any jurisdiction (including, in particular, the Registrar of Companies in England and Wales) have been correctly made up and duly filed or delivered.

3.4

Since 22 January 2014, all dividends or distributions declared, made or paid by the Company have been declared, made or paid in accordance with its articles of association, all applicable laws and regulations and any agreements or arrangements made with any third party regulating the payment of dividends and distributions.

3.5

All deeds and documents belonging to the Company, or to which any of them is a party, are in the possession or control of the Company.

3.6

The Seller has not brought any warranty or indemnity claim under OLR Share purchase Agreement, nor has it assigned or waived any of its rights under that agreement.

3.7

So far as the Seller is aware no party to the OLR Share Purchase Agreement has raised any defence or counterclaim under that agreement.

4.

Information

4.1

The particulars of the Company set out in Schedule 1 are complete and accurate and not misleading in respect of the matters dealt with.

4.2

All replies to the Buyer’s enquiries contained in the Disclosure Bundle at documents 18.1 to 18.6 (inclusive) given by or on behalf of the Seller or the Company (or their advisers) to the Buyer (or its advisers) in the course of the negotiations leading up to this agreement together with the Seller’s and the Company’s written replies to the CPSE 1 and CPSE 4 enquiries raised by the Buyer (contained in the Disclosure Bundle at documents 9.2.19 and 9.2.20), were when given and are now true and accurate in all material respects.

5.

Compliance with laws 

5.1

Since 22 January 2014 the Company has at all times conducted its business in accordance with, and has acted materially in compliance with, all applicable laws and regulations of any relevant jurisdiction.

5.2

Neither the Company, nor any of its directors or employees (current or past), has been convicted of an offence in relation to the business or affairs of the Company.

6.

Licences and consents

6.1

The Company holds all licences, consents, permits and authorities necessary to carry on its business in the places and in the manner in which it is carried on at the date of this agreement (“Consents”).

6.2

Each of the Consents is valid and subsisting, and the Company is not in breach of the terms or conditions of the Consents (or any of them).

6.3

So far as the Seller is aware there is no reason why any of the Consents may be revoked, suspended or cancelled (in whole or in part), or may not be renewed on the same terms.

7.

Insurance

7.1

The Company maintains, and has at all material times since 22 January 2014 maintained, in the honest opinion of the Seller, adequate insurance cover against all losses and liabilities, including business interruption, and all other risks that are normally insured against by a person carrying on the same type of business as the Business.

7.2

Accurate details of all insurance policies maintained by or on behalf of the Company (“Policies”) have been Disclosed.

7.3

The Policies are in full force and effect, all premiums due on them have been paid and all other conditions of the Policies have been performed and observed.

7.4

The Company has not done, or omitted to do, anything that may result in an increase in the premium payable for any of the Policies, or that may adversely affect the renewal of any of the Policies.

7.5

None of the Policies:

(a)

are subject to any special or unusual terms or restrictions, or to the payment of any premium in excess of the normal rate; or

(b)

are void or voidable and nothing has been done, or omitted to be done, which could make any of them void or voidable; or

(c)

are capable of being terminated, or will otherwise cease to be available to the Company as a result of Completion.

7.6

The Disclosure Letter contains accurate details of all insurance claims made by the Company during the period of 12 months ending on the date of this agreement.

7.7

There are no material outstanding claims under, or in respect of the validity of, any of the Policies and, so far as the Seller is aware, there are no circumstances likely to give rise to a claim under any of the Policies.

8.

Powers of attorney

8.1

There are no powers of attorney granted by the Company which are currently in force.

8.2

No person is entitled or authorised in any capacity to bind or commit the Company to any obligation outside the ordinary course of the Business.

9.

Disputes and investigations 

9.1

Neither the Company, nor any of its Directors, nor so far as the Seller is aware, any person for whose acts the Company may be vicariously liable, is engaged or involved in, or otherwise subject to any of the following matters (such matters being referred to in this paragraph 9 as “Proceedings”):

(a)

any litigation or administrative, mediation, arbitration or other proceedings, or any claims, actions or hearings before any court, tribunal or any governmental, regulatory or similar body, or any department, board or agency (except for debt collection in the normal course of business); or

(b)

any dispute with, or any investigation, inquiry or enforcement proceedings by, any governmental, regulatory or similar body or agency in any jurisdiction.

9.2

No Proceedings have been threatened or are pending by or against the Company, any Director or any person for whose acts the Company may be vicariously liable, and so far as the Seller is aware there are no circumstances likely to give rise to any such Proceedings.

9.3

The Company:

(a)

is not affected by any existing or pending judgment, order or other decision or ruling of a court, tribunal, arbitrator, or any governmental, regulatory or similar body or agency in any jurisdiction; or

(b)

has not given any undertaking to any court, tribunal, arbitrator, or any governmental, regulatory or similar body or any other third party arising out of, or in connection with, any Proceedings which remains in force.

10.

Defective products and services

10.1

So far as the Seller is aware, the Company has not produced or sold any products or supplied any services which were at the time they were produced, sold or supplied, faulty or defective or did not or do not comply in all material respects with:

(a)

any warranties or representations expressly or impliedly made by or on behalf of the Company in connection with such products or services; or

(b)

any laws, regulations, standards and requirements applicable to such products or services.

10.2

No proceedings have been started or, so far as the Seller is aware, are pending or have been threatened against the Company:

(a)

in which it is claimed that any product manufactured or sold by the Company is defective, not appropriate for its intended use or has caused bodily injury or material damage to any person or property when applied or used as intended; or

(b)

in respect of any services supplied by the Company.

10.3

There are no disputes between the Company and any of its customers, clients or any other third parties in connection with any products or services manufactured, sold or supplied by the Company.

11.

Customers and suppliers

11.1

The definition in this paragraph applies in this agreement.

11.2

In the period of 12 months ending on the date of this agreement:

(a)

no Material Counterparty has ceased, or threatened to cease to do business with, or reduced, or threatened to reduce in any material respect the extent to which it does business with, the Company;

(b)

there has been no material adverse change in the basis or terms on which any Material Counterparty does business with the Company; and 

(c)

the Business has not been materially affected in an adverse manner as a result of (either individually or in combination) the loss of, or reduction in trading with, any customer, client or supplier of the Company, or a change in the terms on which any such customer, client or supplier does business with the Company.

11.3

The Seller is not aware of any fact that may reasonably be likely to give rise to any matter listed in paragraph 11.2.

11.4

No customer, client or supplier accounted for more than 10% of the aggregate sales or purchases (as applicable) made by the Company during the period of 12 months ending on the date of this agreement.

12.

Contracts

12.1

The definition in this paragraph applies in this agreement.

12.2

Except as Disclosed, the Company is not a party to, or otherwise subject to any agreement, arrangement, understanding or commitment which:

(a)

is a Material Contract; or

(b)

is of an unusual or exceptional nature; or

(c)

is not in the ordinary and usual course of the Business; or

(d)

may be terminated as a result of a change of Control of the Company; or

(e)

restricts the freedom of the Company to carry on the whole or any part of the Business in any part of the world in such manner as it thinks fit; or

(f)

involves agency or distributorship; or

(g)

involves partnership, joint venture, consortium, joint development, shareholder or similar arrangements; or

(h)

involves the grant of any sole or exclusive rights by or to the Company; or

(i)

cannot be readily fulfilled or performed by the Company on time and without undue or unusual expenditure of money and effort; or

(j)

involves or is likely to involve an aggregate consideration payable by or to the Company in excess of £100,000; or

(k)

requires the Company to pay any commission, finders’ fee, royalty or the like; or

(l)

is for the supply of goods and/or services by or to the Company on terms under which retrospective or future discounts, price reductions or other financial incentives are given; or

(m)

is not on arm’s-length terms; or

(n)

is a finance lease, hire purchase, rental or credit sale agreement or which otherwise provides for the purchase or right to purchase any asset by instalment payments.

12.3

There are no outstanding or ongoing negotiations of material importance to business, profits or assets of the Company, or any outstanding quotations or tenders for a contract that, if accepted, would give rise to a Material Contract, or a contract of any other type as referred to in paragraph 12.2 of Part 1 of this Schedule 3. 

12.4

Each Material Contract is in full force and effect and binding on the parties to it.

12.5

Neither the Company, nor so far as the Seller is aware any other counterparty is (or will, with the lapse of time, be) in default of:

(a)

any Material Contract; or

(b)

any other agreement, arrangement, undertaking or commitment a default of which would be material having regard to the trading, profits or financial position of the Company.

12.6

No such default has been threatened, and so far as the Seller is aware there are no facts or circumstances likely to give rise to any such default.

12.7

No notice of termination of a Material Contract has been received or served by the Company, and so far as the Seller is aware there are no grounds for the termination, rescission, avoidance, repudiation or a material change in the terms of any such contract.

12.8

Each of the Material Contracts has been entered into on the Company’s usual terms and in the ordinary course of the Company’s business.

13.

Transactions with the Seller and the Seller’s interests

13.1

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

(a)

the Seller, or any person Connected with the Seller;

(b)

a Director, or any person Connected with a Director; or

(c)

any person relating to payments to or arrangements made with those persons listed in sub-paragraphs (a) and (b) of this paragraph 13.1.

13.2

Neither the Seller, nor any person Connected with a Seller, has a claim of any nature against the Company, or has assigned to any person the benefit of any such claim.

13.3

The Seller is not at the Completion Date, nor has it been at any time during the period of two years immediately preceding the Completion Date, concerned, interested or engaged, directly or indirectly and in whatever capacity, in any other business competitive with all or any part of the Business as it is carried on at the Completion Date.

14.

Finance and guarantees

14.1

The Disclosure Letter contains full particulars of:

(a)

all money borrowed by the Company; and

(b)

all loans, overdrafts or other financial facilities currently outstanding or available to the Company (“Financial Facilities”), including copies of all material documents relating to such Financial Facilities.

14.2

The total amount borrowed by the Company (whether pursuant to the Financial Facilities or otherwise) does not exceed any limitations on the borrowing powers of the Company contained in:

(a)

its articles of association; or

(b)

any debenture or other deed or document binding on the Company.

14.3

There are no circumstances or matters which could affect the continuance of any of the Financial Facilities, or which may result in an amendment of their terms. 

14.4

No indebtedness of the Company is due and payable and no Encumbrance over any of the assets of the Company is now enforceable, whether by virtue of the stated maturity date of the indebtedness having been reached or otherwise.

14.5

The Company has not received any notice (whose terms have not been fully complied with or carried out) from any creditor requiring any payment to be made in respect of any indebtedness (whether arising pursuant to the Financial Facilities or otherwise), or intimating the enforcement of any Encumbrance which it holds over the assets of the Company.

14.6

No Encumbrance, guarantee, indemnity or other similar security arrangement has been given or entered into by the Company or any third party in respect of borrowings or other obligations of the Company (whether arising pursuant to the Financial Facilities or otherwise), nor has any such person agreed to do so.

14.7

The Company has not given or entered into, or agreed to give or enter into, any Encumbrance, guarantee, indemnity or other similar security arrangement in respect of the indebtedness of, or the default in the performance of any obligation by, of any other person.

14.8

The Company has not:

(a)

factored or discounted any of its debts; or

(b)

engaged in financing of a type which would not need to be shown or reflected in the Accounts; or

(c)

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

14.9

The Company has no outstanding loan capital, nor has it lent any money that has not been repaid, and there are no debts owing to the Company other than debts that have arisen in the normal course of the Business.

14.10

The debts owing to the Company as reflected in the Accounts, and all debts subsequently recorded in the books of the Company since the Accounts Date:

(a)

have been realised in full;

(b)

have not been outstanding (in whole or in part) for more than two months from its due date for payment; and

(c)

are not subject to any right of set-off or counterclaim.

14.11

The Company is not subject to any arrangement for receipt or repayment of any grant, subsidy or financial assistance from any government department or other body.

14.12

Particulars of the balances of all the bank accounts of the Company, showing the position as at the day immediately preceding the date of this agreement, have been Disclosed and the Company has no other bank account. Since the date of those particulars, there have been no payments out of those bank accounts other than routine payments in the ordinary course of the Business.

15.

Liabilities

15.1

The Company has no liabilities (including contingent liabilities) other than as disclosed in the Accounts, the Management Accounts or incurred in the ordinary and proper course of the Business.

15.2

No sum is owing by the Company to their auditors, solicitors or other professional advisers, and no accrual ought properly be made by it in respect of any such sum.

16.

Effect of sale of Sale Shares 

16.1

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

(a)

so far as the Seller is aware, cause the Company to lose the benefit of any asset, right or privilege it presently enjoys; or

(b)

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

(c)

result in any customer, client or supplier being entitled to cease dealing with the Company, or materially reducing its level of business, or changing the terms on which it deals, with the Company; or

(d)

result in the loss or impairment of, or any default under, any licence, authorisation or consent required by the Company for the purposes of the Business; or

(e)

so far as the Seller is aware, result in any officer or senior employee leaving the Company; or

(f)

result in the creation, imposition, crystallisation or enforcement of any Encumbrance on any of the assets of the Company; or

(g)

result in any present or future indebtedness of the Company becoming due and payable, or capable of being declared due and payable prior to its stated maturity date, or cause any Financial Facility to be terminated or withdrawn; or

(h)

entitle any person to receive from the Company any finders fee, brokerage or other commission in connection with the Transaction; or

(i)

give rise to, or cause to become exercisable, any right of pre-emption over the Sale Shares; or

(j)

entitle any person to acquire, or affect the entitlement of any person to acquire, shares in the Company.

17.

Insolvency

17.1

Neither the Seller, the Guarantor nor the Company:

(a)

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

(b)

has stopped paying its debts as they fall due.

17.2

No step has been taken in any applicable jurisdiction to initiate any process by or under which:

(a)

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

(b)

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

(c)

a person is appointed to manage the affairs, business and assets of the Company, the Seller or the Guarantor on behalf of their creditors; or

(d)

the holder of a charge over any of the assets of the Company, the Seller or the Guarantor is appointed to control the business and/or any assets of the Company, the Seller or either Guarantor.