EXHIBIT 10.1

 
Dated 27th November 2006
 
------------
 
Share purchase agreement
 

between

 
CEH Limited
 
and
 
Jardin International Holding BV
 
and
 
Katy Industries, Inc.
 

 
HOWARD KENNEDY
19 Cavendish Square
London W1A 2AW
DX 42748 Oxford Circus North
telephone +44(0)20 7636 1616
fax +44 (0)20 7491 2899
 
Ref :kl1/ drl1/ 027043.1 [2688192]
 

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Contents
 
Clause
 
1. 
Interpretation.....................................................................................................................4
2.  this paragraph has been intentionally
deleted..............................................................9
3.  Sale and
purchase..............................................................................................................9
4.  Purchase
price....................................................................................................................9
5. 
Completion..........................................................................................................................9
6. 
Warranties.........................................................................................................................11
7.  Limitations on
claims.......................................................................................................12
8.  Conduct of
claims............................................................................................................15
9.  Tax
covenant....................................................................................................................18
10.            working capital
statement...............................................................................................18
11.            Restrictions on
Seller......................................................................................................18
12.           
Guarantee..........................................................................................................................19
13.            Confidentiality and
announcements.............................................................................19
14.            Further
assurance............................................................................................................21
15.            Provision of Assistance by the
Company...................................................................21
16.           
Assignment......................................................................................................................22
17.            Entire
Agreement.............................................................................................................22
18.            Variation and
Waiver......................................................................................................23
19.           
Costs..................................................................................................................................23
20.           
Notice................................................................................................................................23
21.            Interest on Late
Payment................................................................................................25
22.           
Severance..........................................................................................................................25
23.            Agreement Survives
Completion..................................................................................25
24.            Third Party
Rights...........................................................................................................25
25.           
Counterparts.....................................................................................................................26
26.           
Language..........................................................................................................................26
27.            Governing Law and
Jurisdiction....................................................................................26

Schedules
 
Schedule 1  Particulars of the
Company............................................................................27
 
Schedule 2 
Completion........................................................................................................28
 
Part 1.  What the Seller shall deliver to the Buyer at
Completion..................................28
 
Part 2.  Matters for the board meeting at
Completion......................................................30
 
Schedule 3 
Warranties.........................................................................................................31
 
Part 1.  General
warranties....................................................................................................31
1.                      Power to sell the
company......................................................................................31
 
Page 1

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2.  Shares in the
company....................................................................................................31
3.  Constitutional and corporate
documents....................................................................32
4. 
information........................................................................................................................33
5.  Compliance with
laws......................................................................................................33
6.  Licences and
consents...................................................................................................33
7. 
Insurance..........................................................................................................................33
8.  Power of
attorney............................................................................................................33
9.  Disputes and
investigations..........................................................................................34
10.            Defective products and
services...................................................................................34
11.            Customers and
suppliers................................................................................................35
12.           
Competition......................................................................................................................35
13.           
Contracts...........................................................................................................................35
14.            Transactions with the
seller...........................................................................................37
15.            Finance and
guarantees..................................................................................................37
16.           
Insolvency........................................................................................................................39
17.           
Assets...............................................................................................................................40
18.            Condition of plant and
equipment................................................................................40
19.           
property.............................................................................................................................40
20.            Intellectual
property........................................................................................................41
21.            Information
technology..................................................................................................48
22.           
Employment......................................................................................................................49
23.           
Accounts..........................................................................................................................53
24.            Financial and other
records............................................................................................53
25.            Changes since accounts
date........................................................................................54
26.            Effect of sale on sale
shares...........................................................................................55
27.            Retirement
benefits..........................................................................................................56
 
Part 2. 
 
Tax
warranties...................................................................................................................................56 
1. 
General...............................................................................................................................56
2.  Capital
allowances...........................................................................................................58
3. 
Distributions.....................................................................................................................59
4.  Loan
relationships...........................................................................................................59
5.  Close
companies..............................................................................................................60
6.  Group
relief.......................................................................................................................60
7.  Groups of
companies......................................................................................................60
8.  Company residence and overseas
interests................................................................61
9. 
Anti-avoidance.................................................................................................................61
10.           
VAT...................................................................................................................................62
11.            Stamp duty and stamp duty land
tax............................................................................63
12.            INHERITANCE
TAX......................................................................................................64
13.            Employee
taxation...........................................................................................................64
 
Part 3.  Buyer’s
Warranties..................................................................................................65
 
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1.  Power to Buy the
company............................................................................................65
 
Schedule 4  Tax
Covenant...................................................................................................66
2. 
Interpretation....................................................................................................................66
3. 
Covenant...........................................................................................................................70
4.  Payment date and
interest..............................................................................................70
5. 
Exclusions.........................................................................................................................71
6.  Savings, Overprovisions, Tax
Refunds........................................................................72
7.  Recovery from third
parties............................................................................................73
8.  Surrender of group
relief................................................................................................74
9.  Corporation tax
returns...................................................................................................74
10.            Conduct of tax
claims......................................................................................................77
11.            Grossing
up......................................................................................................................78
12.            BUYER’S
COVENANT...................................................................................................79
13.            Value added tax
groups..................................................................................................79
 
Schedule 5  Intellectual property
rights.............................................................................81
 
Part 1.  Registered Intellectual Property
Rights................................................................81
 
Part 2.  Material unregistered Intellectual Property
Rights.............................................81
 
Part 3.  Intellectual property rights licensed from third
parties......................................82
 
Part 4.  Intellectual property rights licensed to third
parties..........................................82
 
Schedule 6  Working Capital
Statement............................................................................83

 

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THIS AGREEMENT is dated 27th November 2006
 
Parties
 
 

(1)  
CEH Limited incorporated and registered in England and Wales with company number
04992300 whose registered office is at Cardew Way, Redruth, Cornwall, TR15 1ST
(Seller);

 
 

(2)  
JARDIN INTERNATIONAL HOLDING BV incorporated and registered in the Netherlands ,
with its corporate seat in Rijen and with a registered office at Ericssonstraat
17, 5121 MK Rijen, the Netherlands (Buyer);

 
 

(3)  
Katy Industries, Inc. incorporated in Delaware, USA, whose principal office is
at 2461 South Clark Avenue, Suite 630, Arlington, Virginia 22022, as guarantor
(Guarantor).

 
 
Background
 
 

(A)  
The Company has an issued share capital of £10.00 divided into ten ordinary
shares of £1.00 each;

 
 

(B)  
Further particulars of the Company at the date of this agreement are set out in
Schedule 1;

 
 

(C)  
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;

 
 

(D)  
The Guarantor is the ultimate holding company of the Seller and has become a
party to this agreement for the purpose of entering into the guarantee set out
in clause 12.

 
 
Agreed terms
 
 

1.  
Interpretation

 

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

 
Accounts: the audited financial statements of the Company as at and to the
Accounts Date, including the balance sheet, profit and loss account together
with the notes thereon, the cash flow statement and the auditor´s and Directors´
reports (a copy of which is attached to the Disclosure Letter).
 
Accounts Date: 31 December 2005.
 
Affiliate: of a Party shall mean an entity: (i) which is directly or indirectly
controlling such Party; (ii) which is under the same direct or indirect
ownership or control as such Party; or (iii) which is directly or indirectly
owned or controlled by such Party. For these purposes, an entity shall be
treated as being controlled by another if that other entity has more than fifty
(50%) of the votes in such entity or is able to control the composition of its
board of directors or any other equivalent body.
 
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Business: the business of the Company that consists of the marketing and sale of
plastic products for home storage or garage organisation, gardening, food
storage, laundry, bath, cleaning, closet or cupboard organisation and refuse
removal into a primarily consumer distribution market, and the manufacture of
such products for sale into a primarily consumer distribution market, except
with respect to certain garden storage and related products manufactured for and
sold to the independent garden retail market, excluding Wyevale. For purposes of
clarification, a “primarily consumer distribution market” shall not include any
business which substantially serves a commercial market, even if such business
also serves a consumer market.
 
Business Day: a day (other than a Saturday, Sunday or public holiday) when banks
in the City of London are open for business.
 
Buyer’s Warranties: the warranties given by the Buyer in clause 6 and Part 3 of
Schedule 3.
 
CAA 2001: the Capital Allowances Act 2001.
 
Change in Control: shall mean (a) the Seller is a party to a merger,
consolidation or other reorganization (each, a “Reorganization”) with a
non-Affiliate, or the Seller or its parent Continental Commercial Products, LLC
(“CCP”) or its ultimate parent Katy Industries, Inc. (“Katy”, together with CCP,
the “Parents”) is a party to a sale, assignment, lease, conveyance or other
transfer of substantially all of its assets (each, a “Sale”) to a non-Affiliate,
as a consequence of which members of the Board of Directors of the Seller or a
Parent, as the case may be, in office immediately prior to such Reorganization
or Sale constitute less than a majority of the Board of Directors of the Seller
or a Parent, as the case may be, thereafter; or (b) there is a sale, assignment,
conveyance or other transfer of over 50% of the voting stock of the Seller or a
Parent to a non-Affiliate, as a consequence of which members of the Board of
Directors of the Seller or a Parent, as the case may be, in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors of the Seller or a Parent, as the case may be, thereafter.
 
CML: Contico Manufacturing Limited (Company Number: 01338772)
 
Company: Contico Europe Limited, a company incorporated and registered in
England and Wales with company number 04992337 whose registered office is at
Cardew Way, Redruth, Cornwall, TR15 1ST, further details of which are set out in
Schedule 1.
 
Companies Acts: the Companies Act 1985 and the Companies Act 1989 (as amended).
 
Completion: completion of the sale and purchase of the Sale Shares in accordance
with this agreement.
 
Completion Date: the date upon which Completion occurs.
 
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Completion Payment: the sum of US$4,000,000 (four million US dollars) in cash to
be paid by the Buyer to the Seller on Completion.
 
Conditions: the conditions set out in clause 2.1.
 
Connected: in relation to a person, has the meaning contained in section 839 of
the ICTA 1988.
 
Control: in relation to a body corporate, the power of a person to secure that
the affairs of the body corporate are conducted in accordance with the wishes of
that person:
 

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

 

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

 
and a Change of Control occurs if a person who controls any body corporate
ceases to do so or if another person acquires control of it.
 
Director: each person who is a director or shadow director of the Company, the
names of whom are set out in Schedule 1.
 
Disclosed: fairly disclosed in the Disclosure Letter.
 
Disclosure Letter: the letter from the Seller to the Buyer with the same date as
this agreement that is described as the disclosure letter, including the bundle
of documents attached to it (Disclosure Bundle).
 
Environment: air, water and land, all living organisms and natural or man-made
structures.

Environmental Law: all applicable laws, statutes, regulations, secondary
legislation, bye-laws, common law, directives, treaties and other measures,
judgements and decisions of any court or tribunal, codes of practice and
guidance notes which are legally binding and in force as at the date of this
agreement in so far as they relate to or apply to the Environment, including
Part IIA of the Environmental Protection Act 1990 and any legally binding
regulations and guidance made or issued thereunder.

 
Encumbrance: any interest or equity of any person (including any right to
acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien,
assignment, hypothecation, security, title, retention or any other security
agreement or arrangement.
 
Event: has the meaning given in Schedule 4.
 
Group: in relation to a company (wherever incorporated) that company, any
company or group of companies which is owned directly or indirectly by the same
ultimate beneficial owners as that company, any company of which it is a
Subsidiary (its holding company) and any other Subsidiaries of any such holding
company; and each company in a group is a member of the group. Unless the
context otherwise requires, the application of the definition of Group to any
company at any time will apply to the company as it is at that time.
 
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ICTA 1988: the Income and Corporation Taxes Act 1988.
 
IHTA 1984: the Inheritance Tax Act 1984.
 
Intellectual Property Rights: has the meaning given in paragraph 20.1 of Part 1
of Schedule 3.
 
Lease means the Lease of the Property to be granted by the Seller to the Company
on the Completion Date in the agreed form.
 
Management Accounts: the unaudited balance sheet and the unaudited profit and
loss account of the Company for the period of ten months ended 31 October 2006
(a copy of which is attached to the Disclosure Letter).
 
Pension Scheme: the Contico Group Personal Pension Plan administered by Scottish
Mutual Assurance Plc.
 
Purchase Price: the purchase price for the Sale Shares to be paid by the Buyer
to the Seller in accordance with clause 4.
 
Property: the land and buildings on the east side of Cardrew Way, Redruth,
Cornwall, TR15 1ST being the entire land and buildings registered at the Land
Registry under title number: CL84586.
 
Receivable: the sum of £512,515 owed by the Seller to the Company as at 2359hrs
GMT on Friday 17 November 2006 represented by the note in agreed form issued by
the Seller.
 
Sale Shares: the ten ordinary shares of £1.00 each in the Company, all of which
have been issued and are fully paid.
 
Subsidiary: in relation to a company wherever incorporated (a holding company)
means a "subsidiary" as defined in section 736 of the Companies Act 1985 and any
other company which is a subsidiary (as so defined) of a company which is itself
a subsidiary of such holding company. Unless the context otherwise requires the
application of the definition of Subsidiary to any company at any time will
apply to the company as it is at that time.
 
Sterling Consideration: the sum equal to the Receivable
 
Sub-Lease means the sublease of part of the Property to be granted by the
Company to CML on the Completion Date in the agreed form.
 
Tax Covenant: the tax covenant as set out in Schedule 4.
 
Tax or Taxation: has the meaning given in Schedule 4.
 
Tax Claim: has the meaning given in Schedule 4.
 
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Tax Warranties: the Warranties in Part 2 of Schedule 3.
 
Taxation Authority: has the meaning given in Schedule 4.
 
Taxation Statute: has the meaning given in Schedule 4.
 
TCGA 1992: the Taxation of Chargeable Gains Act 1992.
 
TMA 1970: the Taxes Management Act 1970.
 
Transaction: the transaction contemplated by this agreement or any part of that
transaction.
 
VATA 1994: the Value Added Tax Act 1994.
 
Warranties: the warranties given by the Seller in clause 6 and Parts 1 and 2 of
Schedule 3.
 
Working Capital: the amount of the Company’s working capital as at 2359hrs GMT
on Friday 17 November 2006 as determined in accordance with Schedule 6 and shown
in the Working Capital Statement.
 
Working Capital Statement: the statement of Working Capital to be prepared
pursuant to clause 10 and in accordance with Schedule 6.
 
 

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

 
 

1.3  
A person includes a corporate or unincorporated body.

 
 

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

 
 

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

 
 

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

 
 

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

 
 

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

 
 

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

 
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1.10  
Reference to this agreement include this agreement as amended or varied in
accordance with its terms.

 
 

2.  
this paragraph has been intentionally deleted

 

3.  
Sale and purchase

 
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 them including, in particular, the right to receive all dividends and
distributions declared, made or paid on or after the date of this agreement.
 
 

4.  
Purchase price

 

4.1  
The Purchase Price is the aggregate of US$4,000,000 (four million US dollars)
and the Sterling Consideration, subject to adjustment in accordance with clause
4.2. 

 
 

4.2  
The Purchase Price shall be adjusted as follows:

 

(a)  
the Purchase Price shall be increased by the amount which is the amount, if any,
by which the Working Capital exceeds £2,467,000 (two million four hundred and
sixty seven thousand pounds); and

 

(b)  
the Purchase Price shall be reduced by the amount which is the amount, if any,
by which the Working Capital is less than £2,467,000 (two million four hundred
and sixty seven thousand pounds).

 
 

4.3  
The Purchase Price shall be deemed to be reduced by the amount of any payment
made to the Buyer:

 

(a)  
for a breach of any Warranty; or

 

(b)  
under the Tax Covenant.

 
 

5.  
Completion

 

5.1  
Completion shall take place forthwith following signature of this agreement:

 

(a)  
at the offices of Howard Kennedy; or

 

(b)  
at any other place or time as agreed in writing by the Seller and the Buyer.

 
 

5.2  
Immediately upon Completion the Seller shall:

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

 

(b)  
procure that any indebtedness in the nature of borrowing owed by the Company to
a bank or other financial institution or any member of its Group as at the
Completion Date or any other indebtedness which has not been incurred in the
normal course of business (it being acknowledged that any debt which has arisen
in the ordinary course of business between the Company and CML shall not be
required to be discharged on the Completion Date, but in the normal course) is
repaid or otherwise discharged and the Seller undertakes to indemnify and keep
indemnified the Company against all losses or liabilities which it may suffer or
incur as a result of the Seller’s or the Company’s failure to do so;

 

(c)  
procure that a board meeting of the Company is held at which the matters
identified in Part 2 of Schedule 2 are carried out or that such matters are
otherwise approved by the board of the Company; and

 

(d)  
deliver any other documents referred to in this agreement as being required to
be delivered by the Seller.

 

 
 

5.3  
At Completion the Buyer shall:

 

(a)  
pay the Completion Payment in cash by telegraphic transfer to the Seller;

 

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

 

(c)  
deliver to the Seller any other documents referred to in this agreement as being
required to be delivered by the Buyer;

 

(d)  
deliver to the Seller an original of the Transition Services Agreement between
the Company and CML in the agreed form duly executed by the Company; 

 

(e)  
deliver to the Seller an original of the Lease between the Seller, the Company
and the Buyer in the agreed form duly executed by the Company and the Buyer;

 

(f)  
deliver to the Seller an original of the Sub Lease between the Company and CML
in the agreed form duly executed by the Company;

 

(g)  
deliver to the Seller an original of the Trademark Licence Agreement between the
Company and the Guarantor in the agreed form duly executed by the Company;

 

(h)  
deliver to the Seller an original of the Trademark Licence Agreement between the
Company and CML in the agreed form duly executed by the Company; and

 
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(i)  
deliver to the Seller an original of the note in the agreed form duly executed
by the Buyer in satisfaction of the Sterling Consideration.

 
 

5.4  
As soon as reasonably practicable after Completion the Seller shall send to the
Buyer (at the Buyer´s registered office for the time being) all records,
correspondence, documents, files, memoranda and other papers belonging to the
Company not required to be delivered at Completion and which are not kept at any
of the properties used by the Company.

 
5.5  
The Seller shall pay to the Buyer within 5 Business Days of demand by the Buyer
a sum equal to 0.5% of the Sterling Consideration (as adjusted, if applicable,
in accordance with clause 5.7).

5.6 
The Seller shall pay to the Buyer or the Company within 5 Business Days of
demand by the Buyer an amount equal to the professional costs (including
counsel’s fees) and expenses reasonably incurred by the Company in connection
with the proposed reduction in the Company’s share premium account for the
purposes of creating distributable reserves of the Company such costs not to
exceed £20,000 (excluding VAT if payable) without the Seller’s consent (such
consent not to be unreasonably withheld or delayed). The Buyer shall provide to
the Seller copies of all relevant invoices if requested by the Seller.

5.7 
In the event that the net amount due to the Company by members of the Seller’s
Group as at 2359hrs GMT on 17 November 2006 as recorded in the accounting
records of the Company is more or less than the amount of the Receivable the
Seller and the Buyer agree that the amount of the Receivable and the amount of
the Sterling Consideration shall be adjusted so that they both equal such net
amount and the Notes in the agreed form shall be amended accordingly.

5.8 
It is recognised that the Working Capital is likely to be less than £2,467,000.
The Seller shall therefore within 4 Business Days following the Completion Date
pay to the Buyer the sum of £370,000 on account of monies which are anticipated
to be due pursuant to paragraph 8 (b) of Schedule 6 hereof. No interest will be
payable on such sum of ££370,000 for the period of 4 Business Days referred to
above.

5.9 
The Seller will procure that there shall be repaid to the Company as soon as
reasonably practicable following Completion and in any event within 4 Business
Days of Completion any sums which have been swept by Bank of America from the
Company's bank accounts after 2359hrs on Friday 17 November 2006.

 

6.  
Warranties

 

6.1  
The Buyer is entering into this agreement on the basis of, and in reliance on,
the Warranties.

 
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6.2  
The Seller warrants to the Buyer that each Warranty is true on the date of this
agreement except as Disclosed.

 
 

6.3  
Warranties qualified by the expression so far as the Seller is aware or to the
Seller’s knowledge (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
all reasonable enquiries.

 
 

6.4  
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; provided, however, that notwithstanding any provision in this
agreement to the contrary, any matter Disclosed for any purpose shall be deemed
Disclosed for all purposes to the extent that such disclosure amounts to a fair
disclosure.

 
 

6.5  
The Seller waives and may not enforce any right which he may have in respect of
any misrepresentation, inaccuracy or omission in or from any information or
advice supplied or given by the Company or its officers or employees in enabling
the Seller to give the Warranties or to prepare the Disclosure Letter unless
such right arises as a result of fraud or deliberate non-disclosure or dishonest
deception.

 
 

6.6  
The Seller and the Guarantor are each entering into this agreement on the basis
of, and in reliance on, the Buyer’s Warranties.

 
 

6.7  
The Buyer warrants to the Seller and the Guarantor that each Buyer’s Warranty is
true on the date of this agreement.

 
 

7.  
Limitations on claims

 

7.1  
The definition and rules of interpretation in this clause apply in this
agreement.

 
 
Claim: a claim for breach of any of the Warranties, the Tax Warranties, the Tax
Covenant or this Agreement
 
 

7.2  
The Seller is not liable for a Claim to the extent that the Claim relates to
matters Disclosed.

 
 

7.3  
The Seller is not liable for a Claim unless the Buyer has given the Seller
notice in writing of the Claim, summarising the nature of the Claim as far as it
is known to the Buyer and the amount claimed, within the period of two years
beginning with the Completion Date except that the period in which the Buyer may
make a Claim in respect of the Tax Warranties or the Tax Covenant shall be seven
years beginning with the Completion Date.

 
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7.4  
Nothing in clause 7 applies to a Claim that arises or is delayed as a result of
dishonesty, fraud, wilful misconduct or wilful concealment by the Seller, its
agents, officers or advisers.

 
 

7.5  
The aggregate liability of the Seller in respect of all Claims notified in
accordance with clause 7.3 on or prior to the date which is 6 months after the
Completion Date shall not exceed an amount equal to 100% (one hundred per cent.)
of the Purchase Price. The aggregate liability of the Seller in respect of all
Claims notified after the date which is 6 months after the Completion Date but
within the period of two years beginning with the Completion Date (other than
Claims under clause 7.14 (“Environment Claims”)) shall not exceed an amount
equal to “A” minus “B”, where “A” equals 50% (fifty per cent.) of the Purchase
Price and “B” equals the aggregate liability (if any) of the Seller in respect
of all Claims notified on or prior to the date which is 6 months after the
Completion Date (if any). The aggregate liability of the Seller in respect of
all Environment Claims notified in accordance with clause 7.3 after the date
which is 6 months after the Completion Date but within the period of two years
beginning with the Completion Date shall not exceed an amount equal to “C” minus
“D”, where “C” equals 100% (one hundred per cent.) of the Purchase Price and “D”
equals the aggregate liability (if any) of the Seller in respect of all other
Claims notified within the period of two years beginning with the Completion
Date (if any). Subject to Clause 7.4, in no circumstances shall the aggregate
liability of the Seller in respect of Claims (whenever notified) exceed an
amount equal to 100% (one hundred per cent.) of the Purchase Price.

 
 

7.6  
No amount shall be payable by the Seller in respect of any Claim unless and
until:

 

(a)  
the liability for that individual Claim exceeds £20,000 (twenty thousand pounds)
but provided always that individual Claims arising out of the same subject
matter fact or circumstances shall be aggregated for this purpose; and

 

(b)  
the aggregate cumulative liability of the Seller in respect of all such Claims
exceeds £50,000 (fifty thousand pounds) in which case the Seller shall be liable
for both the initial £50,000 (fifty thousand pounds) and the excess.

 
 

7.7  
No Claim shall be admissible and the Seller shall not be liable under any Claim:

 

(a)  
to the extent that provision, reserve or allowance has been made in the
Management Accounts or the Accounts in respect thereof; or

 

(b)  
to the extent that such liability arises or is increased as a result of any
change or changes in legislation after Completion (primary or delegated) and
whether or not with retrospective effect; or

 

(c)  
to the extent that such liability occurs or arises as a result of or is
otherwise attributable wholly or partly to any voluntary act, transaction or
omission of the Company or the Buyer or their respective directors, employees or
agents on or after Completion (including any act, transaction or omission which
does or might reasonably be expected to subject the Company to a greater risk of
enforcement action or any investigation under Environmental Law) otherwise than:

 
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(i)  
in the ordinary and proper course of business; or

 

(ii)  
pursuant to a legally binding commitment created on or before Completion by the
Company; or

 

(d)  
to the extent that any Claim or the subject matter thereof has been or is made
good or is otherwise compensated for (otherwise than by the Buyer or any member
of the Buyer´s Group); or

 

(e)  
to the extent that the matter to which it relates is recovered by the Company
from its insurers save that the Seller hereby agrees to pay any increases in
insurance costs shown to be directly related to such Claim but only to the
extent that such increase is shown to amount to a sum greater than that figure
set out in clause 7.6 (a) per annum ; or

 

(f)  
if a Claim results from or is increased or extended by the change of the
accounting reference date of the Company on Completion or any subsequent change
thereafter or by any change in the accounting policies of the Company after
Completion unless such change is necessary to comply with generally accepted
accounting principles subsisting at Completion; or

 

(g)  
to the extent that the Buyer has actual knowledge at the date of this Agreement
of a matter which it is aware would enable a Claim to be brought.

 
 

7.8  
In assessing the liability of the Seller in respect of any Claim there shall be
taken into account any benefit (including Taxation benefit) accruing to the
Buyer or the Company solely and directly as a consequence of the matter or
circumstances giving rise to the Claim.

 
 

7.9  
The Buyer shall not be entitled to recover any sum more than once in respect of
any claim under the Warranties or the Tax Covenant or otherwise obtain
reimbursement more than once in respect of any loss which arises out of the same
act, matter or thing to the extent that the Buyer has already made a recovery or
obtained reimbursement under the Warranties or the Tax Covenant in respect of
that act, matter or thing.

 
 

7.10  
Where the Buyer and/or the Company is/are at any time entitled to recover from
some other person any sum in respect of any matter giving rise to a Claim the
Buyer shall and shall procure that the Company shall take all reasonable steps
to enforce such recovery prior to taking any action against the Seller (other
than notifying the Seller of the Claim) and in the event that the Buyer or the
Company shall recover any amount from such other person the amount of the Claim
against the Seller shall be reduced by the amount recovered less all costs and
expenses reasonably incurred by the Buyer or the Company in recovering that sum
from such other person.

 
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7.11  
If the Seller or the Guarantor pays at any time to the Buyer or to the Company
an amount pursuant to a Claim or the Company subsequently becomes entitled to
recover from some other person any sum in respect of any matter giving rise to
such Claim, the Buyer shall and shall procure that the Company shall take all
reasonable steps to enforce such recovery and shall, as soon as reasonably
practicable, repay to the Seller or the Guarantor (as the case may be) so much
of the amount paid by it to the Buyer or the Company as does not exceed the sum
recovered from such other person less all costs and expenses reasonably incurred
by the Buyer or the Company in recovering that sum from such other person.

 
 

7.12  
The Parties acknowledge and agree that for the purposes of clause 7.10 and 7.11
hereof in taking “all reasonable steps” neither the Company nor the Buyer shall
be required to institute legal proceedings against any of the top five customers
identified pursuant to schedule 3 paragraph 11.

 
 

7.13  
The provisions of this clause 7 shall apply, in relation to claims made by the
Seller in respect of the Buyer’s Warranties mutatis mutandis but with the
substitution of the word Seller with Buyer, Buyer with Seller and Claim with the
words claim under the Buyer’s Warranties.

 
7.14  
The parties agree and acknowledge that the Seller shall remain liable to comply
with any notice served or requirement made by any competent authority under any
Environmental Law or rules of common law applicable from time to time to the
Property in respect of any matter, event or circumstance arising as a result of
the use and/or operation of the Property prior to the date hereof and that the
Seller shall indemnify the Buyer against all actions, proceedings, costs,
claims, demands or liabilities whatsoever, howsoever arising as a result of any
pollution or contamination, whatsoever or such matters, event or circumstance
prior to the date hereof. The Seller’s liability under this clause 7.14 is
subject to all of the provisions of this clause 7 relating to Claims.

 
 

8.  
Conduct of claims

 

8.1  
If either the Buyer or the Company become aware of a matter which they
reasonably consider might give rise to a Claim (other than a Claim in respect of
Tax to which the provisions of paragraph 9 of the Tax Covenant shall apply) or
the Seller becomes aware of a matter which it reasonably considers might give
rise to a claim pursuant to the Buyer’s Warranties then such party:

 

(a)  
shall (or, in the case of the Buyer, shall procure that the Company shall) as
soon as reasonably practicable give notice to the Seller or the Buyer as the
case may be of the matter and shall consult with the Seller or the Buyer as the
case may be with respect to such matter but such notice shall not be a condition
precedent to the liability of the Seller or the Buyer as the case may be;

 
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(b)  
shall provide to the Seller or the Buyer as the case may be and its advisers
reasonable access (at reasonable hours and with reasonable prior notice having
been given) to premises and personnel and to relevant assets, documents and
records within the Buyer´s or the Seller’s Group (as the case may be) for the
purposes of investigating the matter;

 

(c)  
(at the requesting party’s cost) may take copies of the documents or records,
and photograph the premises or assets, referred to in clause 8.1(b);

 

(d)  
subject to the following provisions of this clause 8 and clause 7.12, shall (and
in the case of the Buyer shall procure that the Company shall) take such action
and give such information and assistance in connection with the affairs of the
Buyer or the Company or the Seller as the requesting party may reasonably
request in writing to negotiate, avoid, dispute, resist or defend against the
matter;

 

(e)  
shall indemnify the other party against all costs and expenses reasonably
incurred by that other party or any member of such party’s Group in complying
with their obligations under this clause 8.

 
 

8.2  
The Buyer and, as the case may be, the Seller shall not be obliged to take or
procure the taking of any of the following actions pursuant to its obligations
contained in clause 8.1(d):

 

(a)  
the submission of any proposal to settle or compromise the relevant matter made
by the Seller or the Buyer (as the case may be) of which the Buyer (or the
Seller as the case may be) (acting reasonably) does not approve;

 

(b)  
agreeing to the settlement or compromise of any claim or any proposal for the
same which is likely to affect the future liability of the Company, the Buyer or
any member of the Buyer´s Group or the Seller or any member of the Seller’s
Group unless the Seller (or the Buyer as the case may be) indemnifies the Buyer
(or the Seller as the case may be), or the Company or the relevant member of the
Buyer´s Group or the Seller’s Group (as the case may be) against any such future
liability;

 

(c)  
complying with any unreasonable instruction of the Seller or the Buyer as the
case may be or taking any action or procuring the taking of any action which the
Buyer or the Seller (as the case may be) considers (acting reasonably) to be
onerous or prejudicial to the Buyer or any member of the Buyer´s Group or the
Seller or any member of the Seller’s Group (as the case may be).

 
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8.3  
If a Party does not request the other to take action pursuant to clause 8.1(d)
or shall fail to indemnify the other Party or the Company concerned in
accordance with clause 8.1(e) within 14 days of the written notice to the Seller
(or the Buyer as the case may be) served in accordance with clause 8.1(a) the
Buyer (or the Seller as the case may be) or the Company shall be free to pay or
settle the relevant matter on such terms as it may in its absolute discretion
think fit.

 
 

8.4  
Any Claim or claim under the warranties given by the Buyer shall (if it has not
been previously satisfied, settled or withdrawn) be deemed to be irrevocably
withdrawn and waived at the expiration of twelve months from the date of giving
notice of such Claim (or claim under the Buyer’s Warranties) unless legal
proceedings in respect thereof have been commenced by the other party by issuing
and serving such proceedings on the Seller (or the Buyer as the case may be) and
the loss giving rise to any such Claim (or claim under the warranties given by
the Buyer) which shall be so deemed withdrawn and waived shall not be capable of
being the subject of a further Claim (or claim under the Buyer’s Warranties).

 
 

8.5  
The Seller acknowledges that if any Warranty is breached or proves to be untrue
or misleading or if a Claim is made and in assessing the loss to the Company or
the Buyer all costs and expenses reasonably and properly incurred by the Buyer
or the Company as a result of such breach or of the Warranty being untrue or
misleading shall be taken into account and form part of any Claim.

 
 

8.6  
Notwithstanding any failure by the Buyer to notify the Seller or of the Seller
to notify the Buyer (as the case may be) pursuant to clause 8.1(a) the Buyer (or
the Seller as the case may be) shall not (and shall procure, only in the case of
the Buyer, that the Company shall not) settle or compromise any such claim or
make any admission of liability without the prior written consent of the Seller
or the Buyer (as the case may be) (which shall not be unreasonably withheld or
delayed).

 
 

8.7  
If any Claim (or claim under the warranties given by the Buyer) shall arise by
reason of some liability which, at the time the Claim (or claim under the
Buyer’s Warranties) is notified to the Seller (or the Buyer as the case may be),
is contingent only, the Seller (or the Buyer as the case may be) shall not be
under any obligation to make any payment in respect of such Claim (or claim
under the Buyer’s Warranties) unless and until the contingent liability
crystallises as an actual liability. Provided that such Claim shall have been
notified to the Seller or the Buyer (as the case may be) in accordance with
clause 7.3 then clause 8.4 shall be amended in relation to such Claim (or claim
under the Buyer’s Warranties) so as to require that legal proceedings be
commenced within twelve months from the date on which the said liability ceases
to be contingent or becomes capable of being quantified, as the case may be.

 
 

8.8  
Nothing in this agreement shall be deemed to relieve the Buyer or of the Seller
(as the case may be) from any duty to mitigate any loss or damage incurred by
it.

 
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9.  
Tax covenant

 

9.1  
The provisions of Schedule 4 apply with effect from Completion.

 
 

10.  
Working capital statement

 
The Working Capital Statement shall be prepared and agreed or determined in
accordance with Schedule 6.
 
 

11.  
Restrictions on Seller

 

11.1  
The Seller and the Guarantor covenant with the Buyer that each of them shall not
and in the case of the Guarantor shall procure that none of its Subsidiaries
shall:

 

(a)  
at any time during the period beginning on the Completion Date and ending upon
the earlier to occur of (i) the date which is 2 years from and after the
Completion Date, and (ii) the date of a Change in Control in the United Kingdom
of Great Britain and Northern Ireland or the European Economic Area and
Switzerland, directly or indirectly for its own or another’s account or benefit
carry on or be employed, engaged or interested in any part of the Business as
the Business was carried on at the Completion Date; or

 

(b)  
at any time during the period of one year beginning with the Completion Date,
attempt to entice away from the Company any individual who is at the time of the
attempt, and was at the Completion Date, employed or directly engaged in an
executive or managerial position with the Company; or

 

(c)  
at any time after Completion, except as otherwise permitted by the Buyer or its
Affiliates under this agreement or otherwise, use in the course of any business:

 

(i)  
any trade or service mark, business or domain name, design or logo the rights to
which, at Completion, were owned by the Company; or

 

(ii)  
anything which is likely to be confused with such words, mark, name, design or
logo.

 
 

11.2  
The covenants in this clause 11 are intended for the benefit of the Buyer and
apply to actions carried out by the Seller and the Guarantor in any capacity and
whether directly or indirectly, on the Seller´s or the Guarantor´s own behalf,
on behalf of any other person or jointly with any other person.

 
 

11.3  
Each of the covenants in this clause 11 is a separate undertaking and shall be
enforceable by the Buyer separately and independently of its right to enforce
any one or more of the other covenants contained in this clause 11. Each of the
covenants in this clause 11 is considered fair and reasonable by the parties,
but if any restriction is found to be unenforceable, but would be valid if any
part of it were deleted or the period or area of application reduced, the
restriction shall apply with such modifications as may be necessary to make it
valid and enforceable.

 
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11.4  
The consideration for the undertakings contained in this clause 11 is included
in the Purchase Price.

 
 

12.  
Guarantee

 

12.1  
In consideration of the Buyer entering into this agreement, the Guarantor, at
the request of the Seller, unconditionally and irrevocably guarantees as a
primary obligation to the Buyer and its permitted assignees the due and punctual
performance and observance by the Seller of all the Seller´s obligations and
restrictions, and the punctual discharge by the Seller of all the Seller´s
liabilities to the Buyer, arising under this agreement and under the Tax
Covenant provided, however, that all limitations and defences available to the
Seller shall apply to such obligation of the Guarantor.

 
 

12.2  
If the Seller defaults in the payment when due of any amount payable to the
Buyer under this agreement, the Guarantor shall, immediately on written demand
by the Buyer, unconditionally pay that amount to the Buyer in the manner
prescribed in this agreement as if it were the Seller.

 
 

12.3  
This guarantee is a continuing guarantee and shall extend to the ultimate
balance of sums payable by the Seller under this agreement, regardless of any
intermediate payment or discharge in whole or in part. It shall not be affected
by any act, omission, matter or thing which, but for this clause 12.3, would
reduce, release or prejudice any of the Guarantor´s obligations under this
clause 12 (without limitation and whether or not known to it or the Buyer).

 
 

12.4  
If any payment by the Seller, or any discharge given by the Buyer, is avoided or
reduced as a result of insolvency or any similar event, the liability of the
Seller and Guarantor shall continue as if the payment, discharge, avoidance or
reduction had not occurred.

 
 

12.5  
The obligations of the Guarantor shall be in addition to and independent of all
other security which the Buyer may at any time hold in respect of any of the
obligations of the Seller under this agreement.

 
 

13.  
Confidentiality and announcements

 

13.1  
The Seller and the Guarantor undertake to the Buyer to keep confidential the
terms of this agreement and all information which it has acquired about the
Company and the Buyer´s Group (as such Group is constituted immediately before
Completion) and to use the information only for the purposes contemplated by
this agreement.

 
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13.2  
The Buyer undertakes to the Seller and the Guarantor to keep confidential the
terms of this agreement and all information that it has acquired about the
Seller and the Seller’s Group (other than the Company) and to use the
information only for the purposes contemplated by this agreement.

 
 

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

 
 

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

 

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

 

(b)  
information that it receives from a source not connected with the party to whom
the duty of confidence is owed that it acquires free from any obligation of
confidence to any other person; or

 

(c)  
information that it independently develops without otherwise violating the terms
of this clause 13.

 
 

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

 

(a)  
to such persons as the disclosing party, acting reasonably and in good faith,
deems reasonably necessary if the disclosing party procures that the people to
whom the information is disclosed first enter into a non-disclosure agreement in
a customary form and that such people keep the information confidential in
accordance with the terms of such agreement; or

 

(b)  
with the written consent of all the other parties; or

 

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

 

(d)  
to members and shareholders of its Group if the disclosing party procures that
the people to whom the information is disclosed keep the information
confidential and otherwise comply with the provisions of this clause as if they
were bound by them; or

 

(e)  
to bona fide third party purchasers of the entire issued share capital of the
Seller or the Buyer or members of their Group if the disclosing party procures
that the people to whom the information is disclosed first enter into a
non-disclosure agreement in a customary form and that such people keep the
information confidential in accordance with the terms of such agreement; or

 
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(f)  
to the extent that the disclosure is required:

 

(i)  
by law; or

 

(ii)  
by a regulatory body, Taxation Authority or securities exchange; or

 

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

 

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

 

(v)  
to protect the disclosing party´s interest in any legal proceedings; or

 

(g)  
after the expiry of a period of 10 years from the Completion Date

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

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

 
 

14.  
Further assurance

 
During the period which is one year from and after Completion, the Buyer and the
Seller shall (at their own expense) promptly execute and deliver all such
documents, and do all such things, as the other party may require for the
purpose of giving full effect to the provisions of this agreement.
 
 

15.  
Provision of Assistance by the Company

 

15.1  
The Buyer undertakes to the Seller that it will procure that the Company will
make available during normal business hours and on reasonable notice (and shall
use its reasonable endeavours to procure that the auditors of the Company make
available) to the Seller, its advisers and its agents, all such information and
assistance (including access to properties and any of the Company´s books,
correspondence or other documents or records and the right to copy the same and
making available employees and directors to give assistance in each case during
normal business hours and on reasonable notice) as may reasonably be required by
the Seller in connection with the preparation of the Seller´s audited accounts
and corporation tax computations for the year ending 31 December 2006.

 
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16.  
Assignment

 

16.1  
Except as otherwise provided herein, no party may assign, or grant any
Encumbrance or security interest over, any of its rights under this agreement or
any document referred to in it.

 
 

16.2  
Each party that has rights under this agreement is acting on its own behalf.

 
 

16.3  
The Buyer may assign its rights under this agreement (or any document referred
to in this agreement) but not its obligations to a member of its Group
(Permitted Assignor).

 
 

16.4  
In the event of any Permitted Assignor itself subsequently becoming the subject
of a sale or transfer other than to a Permitted Assignor then the Buyer shall
procure that the rights assigned under this agreement are assigned to a
Permitted Assignor prior to the completion of any such sale or transfer. For the
avoidance of doubt nothing in this Agreement shall restrict or prohibit the
ability of the Purchaser or the Company to deal with the Sale Shares or any
assets of the Company.

 
 

17.  
Entire Agreement

 

17.1  
This agreement (including the schedules to it) and any documents in the agreed
form and the Disclosure Letter (Acquisition Documents) constitute the entire
agreement between the parties with respect to the subject matter of this
agreement.

 
 

17.2  
Except for any misrepresentation or breach of warranty which constitutes fraud:

 

(a)  
the Acquisition Documents supersede and extinguish all previous agreements
between the parties relating to the subject matter thereof and any
representations and warranties previously given or made other than those
contained in the Acquisition Documents;

 

(b)  
each party acknowledges to the other (and shall execute the Acquisition
Documents in reliance on such acknowledgement) that it has not been induced to
enter into any such documents by nor relied on any representation or warranty
other than the warranties contained in such documents;

 

(c)  
each party hereby irrevocably and unconditionally waives any right it may have
to claim damages or to rescind this agreement or any of the other Acquisition
Documents by reason of any misrepresentation and/or warranty not set forth in
any such document;

 

(d)  
no breach of this agreement shall in any event give rise to a right on the part
of the Buyer to rescind or terminate this agreement; and

 
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(e)  
the Buyer has no rights against and may not make a claim against any employee,
director (save to the extent that such claim arises from any matters not
disclosed in their letters of resignation, in the agreed form), agent or adviser
of any member of the Seller´s Group on whom it may have relied before entering
into this agreement.

 
 

17.3  
Each of the parties acknowledges and agrees for the purposes of the
Misrepresentation Act 1967 and the Unfair Contract Terms Act 1977 that the
provisions of this clause 17 are reasonable.

 
 

18.  
Variation and Waiver

 

18.1  
Any variation of this agreement shall be in writing and signed by or on behalf
of each party.

 
 

18.2  
Any waiver of any right under this agreement is only effective if it is in
writing and signed by the waiving or consenting party and it applies only in the
circumstances for which it is given and shall not prevent the party who has
given the waiver from subsequently relying in a different instance or occurrence
on the provision it has waived.

 
 

18.3  
No failure to exercise or delay in exercising any right or remedy provided under
this agreement or by law constitutes a waiver of such right or remedy or shall
prevent any future exercise in whole or in part thereof.

 
 

18.4  
No single or partial exercise of any right or remedy under this agreement shall
preclude or restrict the further exercise of any such right or remedy.

 
 

18.5  
Unless specifically provided otherwise, rights arising under this agreement are
cumulative and do not exclude rights provided by law.

 
 

19.  
Costs

 

19.1  
All costs in connection with the negotiation, preparation, execution and
performance of this agreement, and any documents referred to in it, shall be
borne by the party that incurred the costs.

 
 

20.  
Notice

 

20.1  
A notice given under this agreement:

 

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

 
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(b)  
shall be sent for the attention of the person, and to the address or fax number,
specified in this clause 20 (or such other address, fax number or person as each
party may notify to the others in accordance with the provisions of this
clause 20); and

 

(c)  
shall be:

 

(i)  
delivered personally; or

 

(ii)  
sent by fax; or

 

(iii)  
sent by pre-paid first-class post or recorded delivery; or

 

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

 
 

20.2  
The addresses for service of notice are:

 

(a)  
In the case of the Seller or the Guarantor, Katy Industries, Inc.

 

(i)  
address: 2461 South Clark Avenue, Suite 630, Arlington, Virginia 22022

 

(ii)  
for the attention of: Amir Rosenthal, CFO

 

(iii)  
fax number: +1 (703) 236-3170

 

(b)  
In the case of the Buyer:

 

(i)  
address: Keter, 2 Sapir St Industrial Area, Herzelia, 46852 Israel

 

(ii)  
for the attention of: Nir Palistrant

 

(iii)  
fax number:972-9-9554990 or +97299568314

 
 

20.3  
A notice is deemed to have been received:

 

(a)  
if delivered personally, at the time of delivery; or

 

(b)  
in the case of fax, at the time of transmission; or

 

(c)  
in the case of pre-paid first class post or recorded delivery, two Business Days
from the date of posting; or

 

(d)  
in the case of airmail, 5 Business Days from the date of posting; or

 

(e)  
if deemed receipt under the previous paragraphs of this clause 20.3 is not
within business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that
is not a public holiday in the place of receipt), when business next starts in
the place of receipt.

 
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20.4  
To prove service, it is sufficient to prove that the notice was transmitted by
fax to the fax number of the party or, in the case of post, that the envelope
containing the notice was properly addressed and posted.

 
 

21.  
Interest on Late Payment

 

21.1  
Where a sum is required to be paid under this agreement but is not paid before
or on the date the parties agreed, the party due to pay the sum shall also pay
an amount equal to interest on that sum for the period beginning with that date
and ending with the date the sum is paid (and the period shall continue after as
well as before judgment). For purposes of clarification, the term “required to
be paid under this agreement” shall not include (i) any amounts which are the
subject of a dispute among the parties hereto or (ii) amounts payable in respect
of a Claim, unless and until such amount is agreed among the parties to be due
and owing or after final resolution of such Claim.

 
 

21.2  
The rate of interest shall be 3% per annum above the base lending rate for the
time being of Barclays Bank Plc. Interest shall accrue on a daily basis and be
compounded quarterly.

 
 

21.3  
This clause 21 is without prejudice to any claim for interest under the law.

 
 

22.  
Severance

 

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

 
 

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

 
 

23.  
Agreement Survives Completion

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

24.  
Third Party Rights

 

24.1  
Save as set out herein, a person who is not a party to this agreement shall have
no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this agreement.

 
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24.2  
This agreement and the documents referred to in it are made for the benefit of
the parties and Permitted Assignors and are not intended to benefit, or be
enforceable by, anyone else.

 
 

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

 
 

25.  
Counterparts

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

26.  
Language

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

27.  
Governing Law and Jurisdiction

 

27.1  
This agreement and any disputes or claims arising out of or in connection with
its subject matter are governed by and construed in accordance with the law of
England.

 
 

27.2  
The parties irrevocably agree that the courts of England have exclusive
jurisdiction to settle any dispute or claim that arises out of or in connection
with this agreement.

 
This document has been executed as a deed and is delivered and takes effect on
the date stated at the beginning of it.
 
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 Schedule 1  
Particulars of the Company

 

Name:
Contico Europe Limited 
Registration number:
04992337 
Registered office:
Cardew Way
Redruth
Cornwall
TR15 1ST
 
Authorised share capital:
Amount: £1,000
Divided into: 1,000 ordinary shares of £1 each 
Issued share capital:
Amount: £10
Divided into: 10 ordinary shares of £1 each 
Registered shareholder (and number of Sale Shares held):
CEH Limited (all of the Sale Shares)
Beneficial owner of Sale Shares (if different) and number of Sale Shares
beneficially owned:
CEH Limited (all of the Sale Shares) 
Directors and shadow directors:
T Mathers
C Lacovara
C Anderson 
A Castor
K Mills
Secretaries:
A Elkins
Amir Rosenthal
 
Auditors:
PricewaterhouseCoopers LLP
Registered Charges:
Guarantee and debenture dated 20th April 2004 made between, inter alios, the
Company and Fleet National Bank, London U.K. branch

 
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 Schedule 2  
Completion

 
 

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

 
 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)  
the written resignation, executed as a deed and in the agreed form, of the
directors (other than T Mathers) and A Rosenthal as joint secretary of the
Company from their offices and employment with the Company;

 

(h)  
a certified copy of the minutes of the board meetings held or resolutions
approved pursuant to Part 2 of this Schedule 2;

 

(i)  
in relation to the Company:

 

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

 

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

 

(iii)  
details of its cash book balances; and

 

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

 
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(j)  
evidence that any indebtedness of the Company to banks or other financial
institutions has been discharged;

 

(k)  
all charges, mortgages, debentures and guarantees to which the Company is a
party and, in relation to each such instrument and any covenants connected with
it

 
a sealed discharge or release in the agreed form;
 

(l)  
certified copy of the resolution adopted by the board of directors of the Seller
authorising and approving the Transaction;

 

(m)  
an original of the Transition Services Agreement between the Company and CML in
the agreed form duly executed by CML;

 

(n)  
an original of the Lease between the Seller, the Company and the Buyer in the
agreed form duly executed by the Seller;

 

(o)  
an original of the Sub-Lease between the Company and CML in the agreed form duly
executed by CML;

 

(p)  
an original of the Trademark Assignment Letter between Continental Commercial
Products, LLC and the Company in the agreed form duly executed by Continental
Commercial Products, LLC (Trademark Assignment Letter); and

 

(q)  
a certified true copy of a full release of security interest in respect of the
trademark which are the subject of the Trademark Assignment Letter in the agreed
form duly executed by Bank of America N.A.;

 

(r)  
an original of the Trademark Licence Agreement between the Company and the
Guarantor in the agreed form duly executed by the Guarantor;

 

(s)  
an original of the Trademark Licence Agreement between the Company and CML in
the agreed form duly executed by CML;

 

(t)  
a form of election under section 569 of CAA 2001 in respect of the Property
executed by the Seller and containing all information required under section 569
of CAA 2001 to validly make such election;

 

(u)  
A form of election under section 198 CAA 2001 in respect of the plant and
machinery duly containing all information required and duly executed by the
Seller and the Company; and

 
         (v) an original of the note in respect of the Receivable in the agreed
form duly executed by the Seller.
 

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Part 2.  
Matters for the board meeting at Completion

 
 
           1. The Seller shall cause a board meeting of the Company to be held
at Completion at which the matters set out in this Part 2 of this Schedule 2
shall take place.
 
 

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

 
 

3.  
All directors, (other than T Mathers) and A Rosenthal as joint secretary of the
Company shall resign from their offices and employment with the Company with
effect from the end of the relevant board meeting.

 
 

4.  
The persons the Buyer nominates shall be appointed as directors of the Company
(but not exceeding any maximum number of directors contained in the Company´s
articles of association). The appointments shall take effect at the end of the
board meeting.

 
 

5.  
All the existing instructions and authorities to bankers shall be revoked and
replaced with new instructions and authorities to those banks in the form the
Buyer requires.

 
 

6.  
The address of the registered office of the Company shall be changed to the
address required by the Buyer.

 
 

7.  
The accounting reference date of the Company shall be changed to the date
required by the Buyer.

 
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 Schedule 3   
Warranties

 
 

Part 1.  
General warranties

 
 

1.  
Power to sell the company

 

1.1  
The Seller has taken all necessary action and has all requisite power and
authority to enter into and perform this agreement in accordance with its terms
and the other documents referred to in it.

 
 

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

 
 

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

 

(i)  
any agreement or instrument to which the Seller is a party or by which it is
bound; or

 

(ii)  
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.

 
 

2.2  
The Seller is the sole legal and beneficial owner of the Sale Shares.

 
 

2.3  
The Sale Shares are free from all Encumbrances.

 
 

2.4  
No right has been granted to any person to require the Company to issue any
share capital and no Encumbrance has been created in favour of any person
affecting any unissued shares or debentures or other unissued securities of the
Company.

 
 

2.5  
No commitment has been given to create an Encumbrance affecting the Sale Shares
(or any unissued shares or debentures or other unissued securities of the
Company) or for the Company to issue any share capital and no person has
notified the Company of any claim to be entitled to any rights in connection
with any of those things.

 
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2.6  
The Company:

 

(i)  
does not hold or beneficially own, nor has it agreed, nor has it ever agreed to
acquire, any securities of any corporation;

 

(ii)  
is not, nor has agreed to become, a member of any partnership or other
unincorporated association, joint venture or consortium (other than recognised
trade associations);

 

(iii)  
has not, outside its country of incorporation, any branch or permanent
establishment; and

 

(iv)  
has not allotted or issued any securities that are convertible into shares.

 
 

2.7  
The Company has not at any time:

 

(i)  
purchased, redeemed or repaid any of its own share capital; or

 

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

 
 

2.8  
All dividends or distributions declared, made or paid by the Company have been
declared, made or paid in accordance with its memorandum, articles of
association, the applicable provisions of the Companies Acts and any agreements
or arrangements made with any third party regulating the payment of dividends
and distributions.

 
 

3.  
Constitutional and corporate documents

 

3.1  
The copies of the memorandum and articles of association or other constitutional
and corporate documents of the Company Disclosed to the Buyer or its advisers
are true, accurate and complete in all respects and copies of all the
resolutions and agreements required to be annexed to or incorporated in those
documents by the law applicable are annexed or incorporated.

 
 

3.2  
All statutory books and registers of the Company have been properly kept and no
notice or allegation that any of them is incorrect or should be rectified has
been received.

 
 

3.3  
All returns, particulars, resolutions and other documents which 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 filed or, as the case may be, delivered save where
the failure to so file or deliver would not have a material adverse effect.

 
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4.  
information

 

4.1  
The particulars relating to the Company set out in Schedule 1 are accurate and
not misleading.

 
 

5.  
Compliance with laws

 
The Company has at all times conducted its business materially in accordance
with all applicable laws and regulations.
 
 

6.  
Licences and consents

 

6.1  
The Company has all licences, consents, permits and authorities necessary to
carry on its business in the places and in the manner in which its business is
now carried on, all of which are valid and subsisting.

 
 

6.2  
The Company has not received notice of any reason why any of those licences,
consents, permits and authorities should be suspended, cancelled, revoked or not
renewed on the same terms.

 
 

7.  
Insurance

 

7.1  
To the Seller´s knowledge there are no outstanding claims under, or in respect
of the validity of, any of the insurance policies maintained by or on behalf of
the Company and so far as the Seller is aware, there are no circumstances likely
to give rise to any claim under any of those policies.

 
 

7.2  
To the Seller´s knowledge all such insurance policies are in full force and
effect, are not void or voidable, nothing has been done or not done which could
make any of them void or voidable and Completion will not terminate, or entitle
any insurer to terminate, any such policy.

 
 

8.  
Power of attorney

 

8.1  
There are no powers of attorney in force given by the Company.

 
 

8.2  
No person, as agent or otherwise, is entitled or authorised to bind or commit
the Company to any obligation not in the ordinary course of the Company´s
business.

 
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8.3  
The Disclosure Letter sets out details of all persons who have authority to bind
the Company in the ordinary course of business.

 
 

9.  
Disputes and investigations

 

9.1  
Neither the Company nor any person for whom the Company is vicariously liable:

 

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

 

(ii)  
to the Seller´s knowledge, is the subject of any investigation, inquiry or
enforcement proceedings by any governmental, administrative or regulatory body.

 
 

9.2  
To the Seller´s knowledge, no such proceedings, investigation or inquiry as are
mentioned in paragraph 9.1 have been threatened or are pending and there are no
circumstances likely to give rise to any such proceedings.

 
 

9.3  
The Company is not affected by any existing or, to the Seller’s knowledge,
pending judgments or rulings (save in respect of any ex-parte judgments of which
it is unaware) and has not given any undertakings arising from legal proceedings
to a court, governmental agency, regulator or third party.

 
 

10.  
Defective products and services

 

10.1  
The Company has not manufactured or sold any products which were, at the time
they were manufactured or sold, in any material respect faulty or defective or
did not materially comply with:

 

(i)  
warranties or representations expressly made or implied by or on behalf of the
Company; or

 

(ii)  
all laws, regulations, standards and requirements applicable to the products.

 
 

10.2  
No proceedings have been started or to the Seller´s knowledge are pending or
have been threatened against the Company in which it is claimed that any
products manufactured or sold by the Company are defective, not appropriate for
their intended use or have caused bodily injury or material damage to any person
or property when applied or used as intended.

 
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11.  
Customers and suppliers

 

11.1  
In the 12 months ending with the date of this agreement, the business of the
Company has not been materially affected in an adverse manner as a result of any
one or more of the following things happening to the Company:

 

(i)  
the loss of any of its top five customers ranked by reference to sales to the
Company’s customers in the financial year ended 31 December 2005 (“Top Five
Customers”) or top five suppliers ranked by reference to purchases from the
Company’s suppliers in the financial year ended 31 December 2005 (“Top Five
Suppliers”); or

 

(ii)  
a reduction in trade with its Top Five Customers or in the extent to which it is
supplied by any of its Top Five Suppliers; or

 

(iii)  
a change in the terms on which it trades with or is supplied by any of the Top
Five Customers or Top Five Suppliers.

 
 

11.2  
The Disclosure Letter contains the names of and copies of the relevant
agreements for the Top Five Customers.

 
 

12.  
Competition

 

12.1  
The definition in this paragraph applies in this agreement.

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

12.2  
The Company is not engaged in any agreement, arrangement, practice or conduct
which amounts to an infringement of the Competition Law of any jurisdiction in
which the Company conducts business.

 
 

13.  
Contracts

 

13.1  
The definition in this paragraph applies in this agreement.

 
Material Contract: an agreement to which the Company is a party or is bound by
and which is of material importance to the business, profits or assets of the
Company.
 
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13.2  
Except for the agreements and arrangements Disclosed, the Company is not a party
to or subject to any agreement which:

 

(i)  
is a Material Contract; or

 

(ii)  
contains a contractual right for the other party to terminate such agreement as
a result of any Change of Control of the Company; or

 

(iii)  
restricts the freedom of the Company to carry on the whole or any part of its
business in any part of the world in such manner as it thinks fit; or

 

(iv)  
is not on arm´s length terms;

 

(v)  
involves agency or distributorship; or

 

(vi)  
involves partnership, joint venture, consortium, joint development, shareholders
or similar arrangements; or

 

(vii)  
requires the Company to pay any commission, finders fee, royalty or the like.

 
 

13.3  
To the Seller´s knowledge, each Material Contract is in full force and effect
and binding on the parties to it and the Company has not defaulted under or
breached a Material Contract in any material respect and:

 

(i)  
to the Seller´s knowledge, no other party to a Material Contract has defaulted
under or breached such a contract; and

 

(ii)  
to the Seller´s knowledge, no such default or breach by the Company or any other
party is likely or has been threatened.

 
 

13.4  
No notice of termination of a Material Contract has been received or served by
the Company and to the Seller´s knowledge there are no grounds for
determination, rescission, avoidance, repudiation or a material change in the
terms of any such contract.

 
 

13.5  
All contracts entered into or purportedly entered into by any member of the
Seller’s Group and relating to the Business and the Company and Disclosed have
been performed by the Company and the relevant counterparty has not objected to
the same and has treated the Company for all purposes as the relevant
contracting party.

 
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14.  
Transactions with the seller

 

14.1  
Except in respect of trading in the ordinary course of business with CML there
is no outstanding indebtedness or other liability (actual or contingent) and
there is no outstanding contract or commitment between the Company and any of
the following:

 

(i)  
the Seller or any member of the Seller´s Group or any person Connected with the
Seller; or

 

(ii)  
any director of a member of the Seller´s Group or any person Connected with such
a member or director.

 
 

14.2  
Except in respect of trading in the ordinary course of business with CML neither
the Seller, nor any person Connected with the Seller, is entitled to a claim of
any nature against the Company or has assigned to any person the benefit of a
claim against the Company to which the Seller or a person Connected with the
Seller would otherwise be entitled.

 
 

15.  
Finance and guarantees

 

15.1  
Full particulars of all money borrowed by the Company (including full
particulars of the terms on which such money has been borrowed) have been
Disclosed.

 
 

15.2  
No guarantee, mortgage, charge, pledge, lien, assignment or other security
agreement or arrangement has been given by or entered into by the Company or any
third party in respect of borrowings or other obligations of the Company.

 
 

15.3  
The total amount borrowed by the Company does not exceed any limitations on the
borrowing powers contained:

 

(i)  
in the memorandum and articles of association of the Company; or

 

(ii)  
in any debenture or other deed or document binding on the Company.

 
 

15.4  
The Company has no outstanding loan capital, or has not 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 business.

 
 

15.5  
The Company has not:

 

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

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

 
 

15.6  
All debts (less any provision for bad and doubtful debts) owing to the Company
reflected in the Accounts and all debts subsequently recorded in the books of
the Company:

 

(i)  
have arisen out of bona fide transactions in the ordinary course of business;
and

 

(ii)  
reflect actual transactions and/ or the granting of credit to customers in a
manner consistent with past practices of the Company.

 
 

15.7  
No indebtedness of the Company in the nature of borrowing is due and payable and
no security 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. The Company has received no notice in relation to any such
indebtedness whose terms have not been fully complied with and/or carried out
from any creditor requiring any payment to be made and/or stating that it
intends to enforce any security which it may hold over the assets of the
Company.

 
 

15.8  
The Company has not given or entered into any guarantee, mortgage, charge,
pledge, lien, assignment or other security agreement or arrangement or is
responsible for the indebtedness, or for the default in the performance of any
obligation, of any other person.

 
 

15.9  
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.

 
 

15.10  
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 accounts. Since those
particulars were given, there have been no payments out of those accounts other
than payments in the ordinary course of business.

 
 

15.11  
A Change of Control of the Company will not result in:

 

(i)  
termination of or material effect on any financial or, to the Seller’s
knowledge, other agreement to which the Company is a party or subject; or

 

(ii)  
any indebtedness of the Company becoming due, or capable of being declared due
and payable, prior to its stated maturity.

 
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16.  
Insolvency

 

16.1  
The Company:

 

(i)  
is not insolvent or unable to pay its debts within the meaning of the Insolvency
Act 1986; and

 

(ii)  
has not stopped paying its debts as they fall due.

 
 

16.2  
No step has been taken to initiate any process by or under which:

 

(i)  
the ability of the creditors of the Company to take any action to enforce their
debts is suspended, restricted or prevented; or

 

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

 

(iii)  
a person is appointed to manage the affairs, business and assets of the Company
on behalf of the Company´s creditors; or

 

(iv)  
the holder of a charge over the Company´s assets is appointed to control the
business and assets of the Company.

 
 

16.3  
In relation to the Company :

 

(i)  
no administrator has been appointed;

 

(ii)  
no documents have been filed with the court for the appointment of an
administrator; and

 

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

 
 

16.4  
No process has been initiated which could lead to the Company being dissolved
and its assets being distributed among the Company´s creditors, shareholders or
other contributors.

 
 

16.5  
No distress, execution or other process has been levied on an asset of the
Company.

 
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17.  
Assets

 

17.1  
The Company is the full legal and beneficial owner of, and has good and
marketable title to, all the assets included in the Accounts and any assets
acquired since the Accounts Date except for those disposed of since the Accounts
Date in the normal course of business and the freehold property which has been
sold to the Seller or a member of the Seller’s Group.

 
 

17.2  
None of the assets shown in the Accounts or acquired by the Company since the
Accounts Date is the subject of any lease, lease hire agreement, hire purchase
agreement or agreement for payment on deferred terms or is the subject of any
licence or factoring arrangement.

 
 

17.3  
The Company is in possession and control of all the assets included in the
Accounts or acquired since the Accounts Date and all other assets used by the
Company, except for those in the possession of a third party in the normal
course of business, those disposed of since the Accounts Date in the normal
course of business and the freehold property which has been sold to the Seller
or a member of the Seller’s Group.

 
 

17.4  
None of the assets, undertakings or goodwill of the Company is subject to an
Encumbrance, or to any agreement or commitment to create an Encumbrance, and to
the Seller’s knowledge no person has claimed to be entitled to create such an
Encumbrance.

 
 

18.  
Condition of plant and equipment

 

18.1  
The plant, machinery, equipment and vehicles used in connection with the
Business are in a reasonable condition taking account of their age, fair wear
and tear excepted.

 
 

19.  
Property

      19.1 Interests in Property
 

(a)  
Other than the Lease (when granted), the Company does not own, use, occupy or
have any interest in or liability for or in respect of any land or buildings.

 

(b)  
The Company has not owned, used, occupied or had any interest in or liability
for or in respect of any land or buildings save that the Company has occupied
the part of the Property not demised in the Sub-Lease for the purposes of the
Business.

 

(c)  
The particulars of the Property set out above are correct and not misleading.

 
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(d)  
The Company has disclosed to the Buyer true, complete and accurate copies of all
documents in its possession (including documents in possession of Continental
Commercial Products LLC (formerly known as Contico International LLC), the
Seller and any member of the Company’s Group and any mortgagee) relating to the
Property.

 

(e)  
The Company has not entered into any agreement to acquire or dispose of any land
or interest therein.

 

(f)  
Save for the interest conferred by the Sublease, the Company is in physical
possession and actual occupation of the Property on an exclusive basis for the
purposes of the Business.

 

 
      19.2 Replies to Enquiries
 
The replies to enquires relating to the Property given by Denton Wilde Sapte (on
behalf of the Seller) to the Buyer are true and accurate in all material
respects.
 

 
      19.3 Other involvement in relation to real property
 
The Company has not at any time:-
 

(a)  
had vested in it (whether as an original tenant or undertenant or as an
assignee, transferee or otherwise) any freehold or leasehold properties other
than the Property; or

 

(b)  
given any covenant or entered into any agreement, deed or other document
(whether as a tenant or undertenant or as an assignee, transferee, guarantor or
otherwise) in respect of any freehold or leasehold properties other than those
disclosed to the Buyer in writing in relation to those properties in respect of
which any contingent or potential liability remains with the Company.

 
 

20.  
Intellectual property

 

20.1  
The definition in this paragraph applies in this agreement.

 
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Intellectual Property Rights: means all right, title and interest in, to, and
under all patents and design patents, rights to inventions, utility models,
copyright, trade marks, service marks, trade, business and domain names, rights
in trade dress or get-up, rights in goodwill or to sue for passing off, unfair
competition rights, rights in designs, technology design rights, rights in
computer software, database rights, topography rights, moral rights, rights in
confidential information (including know-how and trade secrets) and any other
intellectual property rights, in each case whether registered or unregistered
and including all applications for and renewals or extensions of such rights,
and all similar or equivalent rights or forms of protection in any part of the
world.
 
 
Trademarks: means the trademarks and domain name set forth in Part 1 of Schedule
5 together with the goodwill associated therewith to be assigned and transferred
to the Buyer by Continental Commercial Products LLC (“CCP”) under the terms set
forth in the Trademarks Assignment Letter.
 
Use: means use, sell, exploit, commercialize, modify, improve, utilize, license,
transfer, assign, distribute and otherwise dispose of any of the Trademarks or
any portion thereof.
 
 
 

20.2  
Complete and accurate particulars are set out in Part 1 and Part 2 of Schedule 5
respectively of all registered Intellectual Property Rights (including
applications for such rights) and material unregistered Intellectual Property
Rights owned, used or held for use by the Company.

 
 

20.3  
Complete and accurate particulars are set out in Part 3 and Part 4 of Schedule 5
respectively of all licences, agreements, authorisations and permissions (in
whatever form and whether express or implied) under which:

 

(i)  
the Company uses or exploits Intellectual Property Rights owned by any third
party; or

 

(ii)  
the Company has licensed or agreed to license Intellectual Property Rights to,
or otherwise permitted the use of any Intellectual Property Rights by, any third
party.

 
 

20.4  
Except as set out in Part 3 and Part 4 of Schedule 5, the Company is the sole
legal and beneficial owner of (or applicant for) the Intellectual Property
Rights set out in Part 1 and Part 2 of Schedule 5, free from all Encumbrances.
The Company has the sole right to bring actions for infringement of any
Intellectual Property Rights set out in Part 1 and Part 2 of Schedule 5. The
Company has not transferred, assigned or licensed any of its rights in any
Intellectual Property Rights except as set out in Part 3 and Part 4 of Schedule
5. Except as set out in Part 3 and Part 4 of Schedule 5, there are no
outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property Rights set out in Part 1 and Part 2 of Schedule 5, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the Intellectual Property Rights of any other person or
entity.

 
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20.5  
Part 1 and Part 2 of Schedule 5 contain details of all material Intellectual
Property Rights required in order to carry on the Company’s activities and
Business. The Intellectual Property Rights set out in Part 1 and Part 2 of
Schedule 5 constitutes all of the intellectual property rights used by the
Company in order to conduct the Business as currently conducted.

 
 

20.6  
The Intellectual Property Rights set out in Part 1 and Part 2 of Schedule 5 are
valid, subsisting and enforceable and nothing has been done or not been done by
the Company as a result of which any of them has ceased or might cease to be
valid, subsisting or enforceable. And in respect of such Intellectual Property
Rights, to the Seller’s knowledge:

 

(i)  
all application and renewal fees and other steps required for the maintenance or
protection of such rights have been paid on time or taken;

 

(ii)  
all material Intellectual Property Rights and confidential information
(including know-how and trade secrets) owned or used by the Company has been
kept confidential and has not been disclosed to third parties (other than
parties who have signed written confidentiality undertakings in respect of such
information, details of which are set out in the Disclosure Letter). The Company
has not taken any action or, failed to take an action that directly or
indirectly caused its Intellectual Property Rights and related confidential
information to enter into the public domain or in any way affected its value or
the Company’s absolute and unconditional ownership thereof;

 

(iii)  
no mark, trade name or domain name identical or similar to any such rights and
which is material to the business of the Company has been registered, or is
being used by any person in the same or a similar business to that of the
Company, in any country in which the Company or has registered or is using that
mark, trade name or domain name, except as set forth in paragraph 20.6.1 below;
and

 

(iv)  
there are and have been no claims, challenges, disputes or proceedings, pending
or threatened, which was not favourably resolved, in relation to the ownership,
validity or use of such rights and none of Company nor any of their directors
and officers has ever received any charge, complaint, claim, demand, or notice,
which was not favourably resolved, alleging any interference, infringement,
misappropriation or violation by the Company of any third party’s rights.

 
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(v)  
Seller owns U.S. Trademark Registration No. 1,448,359 for the trademark TUFF BOX
for plastic tool boxes, granted July 21, 1987. On or about July 1, 2005, Seller
became aware of use of the mark TUFF BOX in connection with utility and tool
storage boxes by Sunshine Home Products of Cerritos, California (“Sunshine”).
Seller has taken commercially reasonable steps to enforce its trademark rights
against Sunshine Home Products, including a written demand that Sunshine cease
use of the subject mark. The parties are still engaged in discussions as of the
date of this agreement.

 
 

20.7  
Nothing is due to be done within 60 days of Completion the omission of which
would jeopardise the maintenance or prosecution of any of the Intellectual
Property Rights owned or used by the Company which are registered or the subject
of an application for registration. Part 1 of Schedule 5 includes a list of
actions due to be done within 180 days of Completion with respect to the
maintenance and/or prosecution of any of the Intellectual Property Rights owned
or used by the Company which are registered or the subject of an application for
registration.

 
 

20.8  
To the Seller’s knowledge there has been no infringement, interference or
misappropriation by any third party of any Intellectual Property Rights set out
in Part 1 and Part 2 of Schedule 5, which was not favourably resolved, except as
set forth in paragraph 20.6.1 above, nor any third party breach of confidence,
passing off or actionable act of unfair competition in relation to the business
or assets of the Company, and no such infringement, breach of confidence,
passing off or actionable act of unfair competition is current or anticipated.

 
 

20.9  
The agreements and licences set out in Part 3 and Part 4 of Schedule 5:

 

(i)  
are legal, valid, binding and enforceable and in full force and effect and shall
stay such on identical terms following the consummation of the transactions
contemplated hereby;

 

(ii)  
have not been the subject of any breach or default by any party or of any event
which, with the giving of notice or lapse of time, would constitute a default or
permit termination, modification, or acceleration, under such agreement or
license;

 

(iii)  
are not to the Seller’s knowledge the subject of any claim, dispute or
proceeding, pending or threatened;

 

(iv)  
have, where required, been duly recorded or registered; and

 

(v)  
neither the Company nor to the Seller’s knowledge any of the other parties to
the agreements and licenses has repudiated any provision of the agreement and/or
license.

 
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20.10  
A Change of Control of the Company will not automatically result in the
termination of any of the Intellectual Property Rights set out in Schedule 5.

 
 

20.11  
To the Seller’s knowledge the activities of the Company:

 

(i)  
have not infringed, do not infringe and are not likely to infringe the
Intellectual Property Rights or any other rights of any third party; or

 

(ii)  
have not given and do not give rise to any obligation to pay any royalty, fee
compensation or any other sum whatsoever.

 
 

20.12  
Each Employee, consultant and officer of the Company has executed an agreement
with the Company pertaining to non-competition, confidentiality and assignment
of inventions, or has otherwise sufficiently vested in the Company good title to
the work product or result of endeavours of every employee, officer or
contractor, free of any retained rights or royalty or similar obligations,
except where such a failure would not have a material adverse effect to the
business of the Company. To the Seller’s knowledge: (i) none of the said
employees, officers or consultants is in violation thereof; (ii) no such
employees, officers or consultants breached any third party contract with
respect to any item of the Intellectual Property Rights set out in Part 1 and
Part 2 of Schedule 5; (iii) no such employees, officers or consultants retained
by the Company has, or has alleged to have any right, title or interest in the
Intellectual Property Rights set out in Part 1 and Part 2 of Schedule 5. 

 
 

20.13  
The Trademarks. In connection with the Trademarks and without derogating from
the provisions of Sections 20.1 .20.12, (it is hereby agreed that warranties
herein with respect to the Trademarks shall only apply to such period in which
the Trademarks or any portion thereof were owned by any member of the Seller’s
Group) For purposes of clarification, to the extent that the records of the
relevant Patent and Trademark Office indicated in 2006 that Contico
International, Inc. is the owner of any of the Trademarks CCP has corrected such
records to properly reflect that CCP is the owner of the Trademarks effective as
of the date Contico International, Inc. assigned such Trademarks to Contico
International, LLC, which thereafter changed its name to that of CCP:

 

(i)  
CCP has full power and authority (including full corporate power and authority)
to execute and deliver the Trademark Assignment Letter and to perform its
obligations thereunder. The Trademark Assignment Letter constitutes the valid
and legally binding obligation of CCP, enforceable in accordance with its terms
and conditions, except to the extent that enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium, receivership and
similar laws affecting the enforcement of creditors’ rights generally.

 
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(ii)  
Neither the execution and the delivery of the Trademark Assignment Letter, nor
the consummation of the transactions contemplated thereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which CCP is subject; or (ii) result in any lien against the
Trademarks.

 

(iii)  
CCP does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government, governmental agency or
any third party in order to consummate the transactions contemplated by the
Trademark Assignment Letter, other than the filing of the Trademark Assignment
Letter to the relevant patent and/or trademark office. No consent, approval,
license, permit, declaration, registration or authorization of the action by, or
filing with, any person, or entity including any court, governmental or
regulatory authority, commission, board, administrative agency or
non-governmental third party, on the part of CCP, is required in connection with
the execution and performance of the Trademark Assignment Letter or the
consummation of the transactions contemplated thereunder other than the filing
of such Trademark Assignment Letter.

 

(iv)  
The Trademarks are owned solely by CCP, and, except as set forth in part 4 of
Schedule 5, CCP has not transferred, assigned or licensed to any third party
(including to any Affiliate and related party) any of its rights in the
Trademarks.

 

(v)  
CCP has, and immediately following the Completion Date, the Buyer shall have,
good and marketable title to the Trademarks, free and clear of all Encumbrances,
or restrictions on transfer. There are no agreements or arrangements between CCP
and any third party that are reasonably likely to have a material effect upon
CCP’s title to the Trademarks. Except as set forth in part 4 of Schedule 5, (i)
with respect to the assignment of rights in and to the Trademarks under the
Trademark Assignment Letter, no party nor person other than Buyer shall have any
right, title or interest in the Trademarks, and (ii) Buyer shall be subject to
no limitations, obligations or restrictions with regard to the Use or other
transfer or exploitation of the Trademarks. CCP is under no obligation to pay
any other party any royalties or other fixed or contingent amounts based upon
the sale, distribution or other use or exploitation of the Trademarks (the
“Royalties”). Buyer, by entering into the Trademark Assignment Letter and
consummating the transactions contemplated thereby, is not assuming or agreeing
to pay or otherwise become liable for any contracts, indebtedness, obligations
or liabilities CCP, or any of CCP’s Affiliates of any type or nature whatsoever,
except for Buyer’s assumption as of the Completion Date of the rights and
obligations arising from Buyer’s ownership or use of the Trademarks from and
after the Completion Date.

 
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(vi)  
To Seller’s and Guarantor’s best knowledge, CCP has complied with all applicable
laws with regard to the Trademarks (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges there under) of
federal, state, local, and foreign governments (and all agencies thereof). No
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against CCP in connection with the
Trademarks alleging any failure so to comply. There are no judgments outstanding
and unsatisfied against the Trademarks.

 

(vii)  
To Seller’s and Guarantor’s best knowledge, no claim (which was not favourably
resolved) has been made against CCP that the Trademarks infringes,
misappropriates, or otherwise comes into conflict with any intellectual property
rights of third parties, and CCP has not received any charge, complaint, claim,
demand, or notice (which was not favourably resolved) alleging any such
interference, infringement, misappropriation, or violation. To Seller’s and
Guarantor’s best knowledge, no third party is currently interfering with,
infringing upon, misappropriating, or otherwise coming into conflict with any of
the Trademarks, except as set forth in paragraph 20.6.1; and no third party has
in the past interfered with, infringed upon, misappropriated, or otherwise come
into conflict with the Trademarks, except for instances which were favourably
resolved following CCP taking commercially reasonable action to protect the
Trademarks. CCP has the sole right to bring actions for infringement of the
Trademarks.

 

(viii)  
There are no instances in which CCP (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge in respect of the
Trademarks; or (ii) is party or, to their best knowledge, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any state,
local, or foreign jurisdiction or before any arbitrator in respect of the
Trademarks. To their best knowledge, there is no litigation pending or
threatened against CCP (a) that would have a material adverse effect on the
ability of Seller to perform its obligations under the Trademark Assignment
Letter; or (b) that seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated thereby.

 
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(ix)  
Following the Completion Date, CCP shall fully cooperate with the Buyer in
protecting the Buyer’s rights in the Trademarks including but not limited to by
making its personnel available, and providing such testimony and access to its
books and records as shall be reasonably necessary in connection with any
contest or defense, all at Buyer’s cost.

 

(x)  
Except to the extent described in the Trademark License Agreements in the agreed
form, as soon as practicable after the Completion Date, Seller, Guarantor and
CCP shall cease any use of the word “Contico” or any other name which includes
any of the Trademarks or any derivation thereof.

 

(xi)  
As of the Completion Date, the license agreement between CCP and the Company
dated December 31, 2003 shall immediately terminate and shall be deemed null and
void.

 

(xii)  
The Seller shall notify the Buyer as soon as reasonably practicable following
the date upon which the purchaser of Contico Manufacturing (Ireland) Limited
becomes obliged to change that company’s name to a name which does not include
the word “Contico”.

 

(xiii)  
Nothing in the Sale Agreement between CEH Limited and Brendan Murphy and Carolyn
Murphy (the "Sale Agreement") and/or in the Distribution Agreement between
Contico Manufacturing Limited and Contico Manufacturing (Ireland) Ltd (the
"Distribution Agreement") contradicts, prevents or prohibits Buyer and/or its
assigns from utilizing the name CONTICO in any form or manner, including without
limitation, as a trade name, trademark, service mark, logo, domain name or
otherwise in any territory, including but not limited to the territories of the
Sale Agreement and/or the aforementioned Distribution Agreement

 

 
 

21.  
Information technology 

 

21.1  
The definitions in this paragraph apply in this agreement.

 
IT System: all computer hardware (including network and telecommunications
equipment) and software (including associated preparatory materials, user
manuals and other related documentation) owned, used, leased or licensed by or
to the Company.
 
IT Contracts: all material agreements under which any third party (including
without limitation any member of the Seller´s Group and any source code deposit
agents) provides any element of, or services relating to, the IT System,
including leasing, hire purchase, licensing, maintenance and services
agreements.
 
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21.2  
Save to the extent provided in the IT Contracts, the Company is the owner of the
IT System free from Encumbrances. The Company has obtained all necessary rights
from third parties to enable it to use the IT System.

 
 

21.3  
The IT Contracts are valid and binding and to the Seller’s knowledge no act or
omission has occurred which would, if necessary with the giving of notice or
lapse of time, constitute a breach of any such contract.

 
 

21.4  
There are and have been no claims, disputes or proceedings arising or to the
Seller’s knowledge threatened under any IT Contracts.

 
 

21.5  
To the Seller´s knowledge, none of the IT Contracts is liable to be terminated
by a Change of Control of the Company, and the Seller has no reason to believe
that any IT Contracts will not be renewed on the same or substantially the same
terms when they expire.

 
 

21.6  
The Company is duly licensed to use the IT System and no further licences are
required for the operation of the IT System.

 
 

21.7  
The IT System is functioning to the level necessary for the conduct of the
Business as it has been carried on by the Company.

 
 

22.  
Employment 

 

22.1  
The definitions in this paragraph apply in this agreement.

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

22.2  
The name of each person who is a Director is set out in Schedule 1.

 
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22.3  
The Disclosure Letter includes details of all Employees of the Company, the
particulars of each Employee and the principal terms of their contract
including:

 

(i)  
the company which employs or engages them;

 

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

 

(iii)  
the commencement date of each contract and the date on which their continuous
service began;

 

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

 

(v)  
the type of employment contract (whether full or part-time);

 

(vi)  
their date of birth;

 

(vii)  
any country in which the Employee works and/or is paid, if the Employee works or
is paid outside England and Wales; and

 

(viii)  
the law governing the contract, if the Employee works or is paid outside England
and Wales,

 

(ix)  
which information is accurate and complete.

 
 

22.4  
The Disclosure Letter includes details of all Employees of the Company who are
on secondment, maternity, paternity, adoption or other leave or absent due to
ill-health or for any other reason for more than 3 months.

 
 

22.5  
No notice to terminate the contract of employment of any Employee of the Company
(whether given by the Company or by the Employee) has been issued or received by
the Company or to the Seller’s knowledge is pending or threatened and no dispute
under any Employment Legislation or otherwise is outstanding between the Company
and any of its current or former Employees relating to their employment or its
termination.

 
 

22.6  
No questionnaire has been served on the Company by an Employee under any
Employment Legislation which remains unanswered in full or in part.

 
 

22.7  
To the Seller´s knowledge, every Employee of the Company who requires a work
permit or other permission to work in the United Kingdom has a current and
appropriate work permit or other permission and all necessary permissions to
remain in the United Kingdom.

 
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22.8  
No offer of employment or engagement has been made by the Company that has not
yet been accepted, or which has been accepted but where the employment or
engagement has not yet started.

 
 

22.9  
The acquisition of the Sale Shares by the Buyer and compliance with the terms of
this agreement will not entitle any senior Employees of the Company to terminate
their employment or receive any payment or other benefit.

 
 

22.10  
All contracts between the Company and its Employees are terminable at any time
on not more than three months' notice without compensation (other than for
unfair dismissal or a statutory redundancy payment or any other express
contractual liability on the part of the Company).

 
 

22.11  
The Company is not a party to, bound by or proposing to introduce in respect of
any of its Employees any redundancy payment scheme in addition to statutory
redundancy pay, nor is there any agreed procedure for redundancy selection.

 
 

22.12  
The Company is not a party to, bound by or proposing to introduce in respect of
any of its Employees any share option, profit sharing, bonus, commission or any
other scheme relating to the profit or sales of the Company.

 
 

22.13  
The Company has not incurred any actual or contingent liability in connection
with any termination of employment of its Employees (including redundancy
payments) or for failure to comply with any order for the reinstatement or
re-engagement of any Employee.

 
 

22.14  
The Company has not incurred any liability for failure to provide information or
to consult with Employees under any Employment Legislation.

 
 

22.15  
The Company has not made or agreed to make a payment or provided or agreed to
provide a benefit to a present or former Director or officer, Employee or to
their dependants in connection with the actual or proposed termination or
suspension of employment or variation of an employment contract.

 
 

22.16  
The Company is not involved in any industrial or trade dispute or negotiation
regarding a claim with any trade union, group or organisation of employees or
their representatives representing Employees and to the Seller’s knowledge there
is nothing likely to give rise to such a dispute or claim.

 
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22.17  
The Company has not in the last 12 months materially altered nor entered into
negotiations to alter or proposed to alter any of the terms of employment or
engagement of any of the Employees.

 
 

22.18  
There are no sums owing to or from any Employee other than reimbursement of
expenses, wages for the current salary period and holiday pay for the current
holiday year.

 
 

22.19  
The Disclosure Letter includes true, complete and accurate:

 

(i)  
copies of all contracts, handbooks, policies and other documents which apply to
any of the Employees whose basic annual salary exceeds £15,000;

 

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

 
 

22.20  
In respect of each Employee, the Company has:

 

(i)  
performed all obligations and duties they are legally required to perform (and
settled all outstanding claims);

 

(ii)  
complied with the terms of any relevant agreement with any trade union, employee
representative or body of employees or their representatives;

 

(iii)  
maintained adequate and up to date records.

 
 

22.21  
There are no consultants or independent contractors who currently provide
services to the Company or who have provided services to the Company in the
twelve months prior to the date of this Agreement and in respect of whom a fee
exceeding £10,000 or more has been paid or is payable. There is no person who
has accepted an offer to provide services to the Company but his engagement has
not yet started.

 
 

22.22  
No former Employee has the right to return to work for whatever reason, or has,
or may have, the right to be reinstated.

 
 

22.23  
The Company does not recognise and has not in the last six months received a
request for recognition of a trade union for the purposes of collective
bargaining in relation to any of its Employees.

 
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22.24  
There is no works council or other body of Employees convened for the purpose of
providing information to or consulting with the Employees which represents or is
elected by its Employees.

 
 

22.25  
The Seller is not aware of any disciplinary or grievance issue that has been
raised by or against any Employee or any allegation of discrimination,
harassment or bullying within the last twelve months.

 
 

22.26  
During the last 12 months no Employee has been made redundant or has been given
notice of redundancy and the Company is not obliged or accustomed to make any
payments to any Employee of the Company by way of an enhanced redundancy
payment.

 
 

23.  
Accounts

 

23.1  
The Accounts have been prepared in accordance with the Companies Acts and with
accounting standards, policies, principles and practices generally accepted in
the UK and in accordance with the law of that jurisdiction.

 
 

23.2  
The Accounts have been audited by an auditor or firm of accountants qualified to
act as auditors in the UK and the auditors´ report(s) required to be annexed to
the Accounts is unqualified.

 
 

23.3  
The Accounts show a true and fair view of the state of the Company’s affairs as
at the Accounts Date and of the profit of the Company for the financial year
ended on that date.

 
 

23.4  
The Accounts have been filed and laid before the Company in general meeting in
accordance with the requirements of the Companies Acts.

 
 

23.5  
The Management Accounts have been prepared on a basis consistent with that
employed in preparing the Accounts and fairly represent the income and
expenditure of the Company to the date for which they have been prepared.

 
 

24.  
Financial and other records

 

24.1  
All financial and other records of the Company:

 

(i)  
have been properly prepared and maintained;

 

(ii)  
constitute an accurate record of all matters required by law to appear in them;

 

(iii)  
do not contain any material inaccuracies or discrepancies; and

 
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(iv)  
are in the possession of the Company to which they relate.

 
 

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

 
 

24.3  
All statutory records, including accounting records, required to be kept or
filed by the Company have been properly kept or filed and comply with the
requirements of the Companies Acts.

 
 

24.4  
All deeds and documents belonging to the Company are in the possession of the
Company.

 
 

25.  
Changes since accounts date

 
Since the Accounts Date:
 

(i)  
the Company has conducted its business in the normal course and as a going
concern;

 

(ii)  
there has been no change in the turnover or financial position of the Company
which has had a material adverse effect;

 

(iii)  
the Company has not issued or agreed to issue any share or loan capital;

 

(iv)  
no dividend or other distribution of profits or assets has been, or agreed to
be, declared, made or paid by the Company;

 

(v)  
the Company has not borrowed or raised any money or taken any form of financial
security and no capital expenditure has been incurred on any individual item by
the Company in excess of £50,000 and the Company has not acquired, invested or
disposed of (or agreed to acquire, invest or dispose of) any individual item in
excess of £50,000 (other than the sale of the freehold property to a member of
the Seller’s Group); and

 

(vi)  
no shareholder resolutions of the Company have been passed other than as routine
business at the annual general meeting.

 
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26.  
Effect of sale on sale shares

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

(i)  
result in any third party being entitled contractually to exercise a right which
would cause the Company to lose the benefit of any right or privilege it
presently enjoys; or

 

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

 

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

 

(iv)  
entitle any person to receive from the Company any finder´s fee, brokerage or
other commission in connection with the purchase of the Sale Shares by the
Buyer; or

 

(v)  
result in any customer or supplier being contractually entitled to cease dealing
with the Company or to reduce substantially its existing level of business or to
change the terms on which it deals with the Company; or

 

(vi)  
result in any officer or senior Employee being entitled contractually to leave
the Company; or

 

(vii)  
result in a breach by the Company of contract, law, regulation, order, judgment,
injunction, undertaking, decree or other like imposition; or

 

(viii)  
result in the loss or impairment of or any default under any licence,
authorisation or consent required by the Company for the purposes of its
business; or

 

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

 

(x)  
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 in any financial facility of the Company being withdrawn; or

 

(xi)  
entitle any person to acquire or affect the entitlement of any person to acquire
shares in the Company.

 
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27.  
Retirement benefits 

 

27.1  
The Pension Scheme is the only arrangement under which the Company has any
obligation to provide or contribute towards pension, lump sum, death,
ill-health, disability or accident benefits in respect of its past or present
officers and employees and no proposal or announcement has been made to any
Employee about the introduction, continuance, increase or improvement of, or the
payment of a contribution towards, any other pension, lump sum, death,
ill-health, disability or accident benefit.

 
 

27.2  
The details of the Pension Scheme and its members set out in the Disclosure
Letter are true and accurate in all material respects.

 
 

27.3  
All contributions, insurance premiums, Tax and expenses due by the Company to
and in respect of the Pension Scheme have been duly paid.

 
 

Part 2.  
 

 
 
Tax warranties
 
 

1.  
General

 

1.1  
Provision or reserve (as appropriate) has been made in the Accounts:

 

(i)  
for all Taxation liable to be assessed on the Company or for which the Company
is accountable in respect of all income, profits or gains earned, accrued or
received on or before the Accounts Date or deemed to have been or treated as
earned accrued or received for taxation purposes on or before the Accounts Date,
and in respect of any event occurring or deemed to have occurred on or before
the Accounts Date, including distributions made on or before the Accounts Date
or provided for in the Accounts; and

 
              (ii) for all deferred Taxation of the Company in accordance with
generally accepted accounting practice in the United Kingdom (or, where the
Accounts are prepared in accordance with international accounting standards as
defined in section 50(2) of the Finance Act 2004, in accordance with those
standards).
 
 

1.2  
All notices, returns (including any land transaction returns), reports,
accounts, computations, statements, assessments and registrations and any other
necessary information submitted by the Company to any Taxation Authority for the
purposes of Taxation have been made on a proper basis were punctually submitted,
were accurate and complete when supplied and so far as the Seller is aware,
remain accurate and complete in all material respects and none of the above is
the subject of any dispute with any Taxation Authority.

 
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1.3  
All Taxation (whether of the United Kingdom or elsewhere) for which the Company
is or has been liable or is liable to account for has been duly paid (insofar as
such Taxation ought to have been paid) within the necessary time limits and
deadlines.

 
 

1.4  
The Company has not made any payments representing instalments of corporation
tax pursuant to the Corporation Tax (Instalment Payments) Regulations 1998 in
respect of any current or preceding accounting periods and is not under any
obligation to do so.

 
 

1.5  
The Company has not paid within the past three years ending on the date of this
agreement or will become liable to pay any penalty, fine, surcharge or interest
charged by virtue of the provisions of the TMA 1970 or any other Taxation
Statute.

 
 

1.6  
The Company has not within the past three years been subject to any non-routine
visit, audit, investigation, discovery or access order by any Taxation Authority
and the Seller is not aware of any circumstances existing which make it likely
that a visit, audit, investigation, discovery or access order will be made in
the next 12 months.

 
 

1.7  
The amount of Taxation chargeable on the Company during any accounting period
ending on or within the six years before Completion has not, to any material
extent, depended on any concession, agreements or other formal or informal
arrangement with any Taxation Authority.

 
 

1.8  
All transactions in respect of which any clearance or consent was required from
any Tax Authority have been entered into by the Company after such consent or
clearance has been properly obtained, any application for such clearance or
consent has been made on the basis of full and accurate disclosure of all
relevant material facts and considerations, and all such transactions have been
carried into effect only in accordance with the terms of the relevant clearance
or consent.

 
 

1.9  
The Company is not nor will it become liable to make to any person (including
any Taxation Authority) any payment in respect of any liability to Taxation of
any other person where that other person fails to discharge liability to
Taxation to which he is or may be primarily liable and there is no liability to
Taxation for which the Company is or may become liable to be assessed or asked
to account for or have collected from it where such Taxation is the joint and
several liability of the Company and some other person or where the Taxation in
question relates to any income, profits or gains earned, accrued or received by
any other person .

 
 

1.10  
All income tax deductible and payable under the PAYE system and/or any other
Taxation Statute has so far as is required to be deducted been deducted from all
payments made or treated as made by a Company or any Subsidiary and all amounts
due to be paid to the relevant Taxation Authority prior to the date of this
Agreement have been so paid including all Tax chargeable on benefits provided
for directors, employees or former employees of the Company or any Subsidiary or
any persons required to be treated as such.

 
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1.11  
The Company has, where legally obliged to do so, deducted or withheld amounts in
respect of Taxation from all payments it has made. The Company has, if required
by law, provided a certificate of deduction or withholding to the recipient of
the payment and has properly and punctually accounted to the relevant taxation
authority for the Taxation so deducted or withheld.

 
 

1.12  
Any liability of the Company (actual or contingent) to gross up any payment
which it is or may become to required to make, as well as copies of all
notifications from HM Revenue & Customs that any payment may be made gross or at
a reduced rate of withholding which otherwise should have been made subject to
deduction of an amount in respect of Taxation, are set out in the Disclosure
Letter.

 
 

1.13  
The Company has correctly applied the provisions of Section 349E ICTA 1988 to
any appropriate payments made under Section 349(1) ICTA 1988.

 
 

2.  
Capital allowances 

 

2.1  
  If the entire pool of assets was disposed of by the Company for a
consideration equal to the tax written down value shown in or adopted for the
purposes of the Accounts there would be no balancing charge under CAA 2001 (or
any legislation relating to capital allowances).

 
 

2.2  
No event has occurred since the Accounts Date whereby any balancing charge may
fall to be made against, or any disposal value may fall to be brought into
account by the Company under the CAA 2001 (or any other legislation relating to
capital allowances).

 
 

2.3  
The Seller has maintained all the records necessary to quantify and claim
Capital Allowances in respect of the Plant (being plant and machinery within the
meaning of the CAA 2001).

 
 

2.4  
The Seller warrants that an election made pursuant to section 569 of CAA 2001 or
section 198 CAA 2001 in either case in the amount equal to the tax written down
value of the Property or the assets covered by the election as per the Accounts
can be validly made within the requirements of such section and that it knows of
no circumstance which would invalidate the effectiveness for tax purposes of any
such election.

 
 

2.5  
In relation to the sale of the Property from the Company to Seller, the Seller
warrants that it shall, and it shall procure that the Company shall, enter into
such section 198 and 569 elections as are necessary to ensure that there is no
balancing charge or accelerated allowance arising as a result of the sale.  The
Seller and the Buyer warrant that neither of them will seek to, or will procure
or permit the Company to, seek to withdraw from or otherwise cause such election
to be invalidated, provided always that the elections have been made in amounts
equal to the tax written down values of the relevant assets.

 
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3.  
Distributions

 

3.1  
No distribution or deemed distribution within the meaning of sections 209, 210
or 211 of ICTA 1988 has been made (or will be deemed to have been made) by the
Company after 5 April 1965 except dividends shown in their audited accounts and
the Company is not bound to make any such distribution.

 
 

3.2  
No rents, interest, annual payments or other sums of an income nature in excess
of £2,500 paid or payable by the Company or which the Company is under an
existing legal obligation to pay in the future are or may be wholly or partially
disallowable as deductions, management expenses or charges in computing profits
for the purposes of corporation tax.

 
 

3.3  
The Company has not within the period of seven years preceding Completion been
engaged in, nor been a party to, any of the transactions set out in sections 213
to 218 (inclusive) of ICTA 1988, nor has it made or received a chargeable
payment as defined in section 218(1) of ICTA 1988.

 
 

4.  
Loan relationships 

 

4.1  
The Company is not party to any loan relationship (as defined in section 81
Finance Act 1996):

 

(i)  
which, were it to be repaid in full in accordance with its terms, may give rise
to any Taxation liability (other than in relation to interest);or

 

(ii)  
to which any of paragraphs 10 (imported losses), 11 (transactions not at arm’s
length), 11A (exchange gains and losses where loan not on arm’s length terms),
13 (loan relationships for unallowable purposes) or 15 (repo transactions and
stock-lending) of schedule 9 Finance Act 1996 (special computational provisions)
apply or may apply.

 
 

4.2  
The Company has no loan relationship in relation to which:

 

(i)  
there is or was a connection between the parties as defined by section 87
Finance Act 1996 (accounting method where parties have a connection), or one of
the parties has or had a major interest (as defined in paragraph 20 of schedule
9 Finance Act 1996) in the other; or

 

(ii)  
there has been, or has been deemed to be, a release or waiver of the amounts
payable under the relationship; or

 

(iii)  
paragraph 5 of schedule 9 Finance Act 1996 (bad debts etc) applies or applied.

 
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4.3  
All interests, discounts and premiums payable by the Company in respect of its
loan relationships (within the meaning of section 81 of the Finance Act 1996)
are eligible to be brought into account by the Company as a debit for the
purposes of Chapter II of Part IV of the Finance Act 1996 at the time and to the
extent that such debits are recognised in the statutory accounts of the Company.

 
 

4.4  
The Company has not been released from any loan relationship or other debt in
whole or in part in circumstances that give rise or could give rise to a
liability to Taxation.

 
 

5.  
Close companies

 

5.1  
The Company is not, nor has ever been, a close investment-holding company as
defined in section 13A of ICTA 1988.

 
 

5.2  
No distribution within section 418 of ICTA 1988 has been made by the Company
during the last six years ending at the Accounts Date, nor have such
distributions been made between the Accounts Date and Completion.

 
 

5.3  
Any loans or advances made, or agreed to be made, by the Company within sections
419 and 420 or 422 of ICTA 1988 and which remain outstanding have been disclosed
in the Disclosure Letter and any tax liability of the Company or any
participator within the meaning of section 416 of ICTA 1988 in relation to such
loans or advances have been paid. The Company has not released or written off,
or agreed to release or write off, the whole or any part of any such loans or
advances.

 
 

6.  
Group relief 

 
Except as provided in the Accounts, the Company is not or will not be obliged to
make or be entitled to receive any payment for group relief as defined in
section 402(6) of ICTA 1988 in respect of any period ending on or before the
Accounts Date, or any payment for the surrender of the benefit of an amount of
advance corporation tax or any repayment of such a payment.
 
 

7.  
Groups of companies

 

7.1  
The Company has not entered or agreed to enter into an election pursuant to
section 171A or section 179A of TCGA 1992 or paragraph 66 of Schedule 29 to the
Finance Act 2002.

 
 

7.2  
The execution or completion of this agreement or any other Event (as defined in
the Tax Covenant) since the Accounts Date will not result in any chargeable
asset being deemed to have been disposed of and re-acquired by the Company for
Taxation purposes pursuant to section 179 of TCGA 1992, paragraphs 58 or 60 of
Schedule 29 to the Finance Act 2002.

 
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7.3  
The Company has never been party to any arrangements pursuant to section 36 of
the Finance Act 1998 (group payment arrangements).

 
 

8.  
Company residence and overseas interests

 

8.1  
The Company has within the past seven years been resident in the United Kingdom
for corporation tax purposes and has not at any time in the past seven years
been treated for the purposes of any double taxation arrangements having effect
by virtue of section 249 of the Finance Act 1994, section 788 of ICTA 1988 or
for any other tax purpose as resident in any other jurisdiction.

 
 

8.2  
The Company has not without the prior written consent of HM Treasury caused,
permitted or entered into any of the transactions specified in section 765 of
ICTA 1988 (migration of companies).

 
 

8.3  
The Company does not hold shares in a company which is not resident in the
United Kingdom and which would be a close company if it were resident in the
United Kingdom in circumstances such that a chargeable gain accruing to the
company not resident in the United Kingdom could be apportioned to the Company
pursuant to section 13 of TCGA 1992.

 
 

8.4  
The Company is not holding or has not held in the past seven years any interest
in a controlled foreign company within section 747 of ICTA 1988, and has no
material interest in an offshore fund as defined in section 759 of ICTA 1988.

 
 

8.5  
The Company does not have a permanent establishment outside the UK.

 
 

9.  
Anti-avoidance

 

9.1  
The Company has not at any time been a party to or otherwise involved in a
transaction or series of transactions the main purpose or one of the main
purposes was the avoidance of Tax and there was a risk that the Company could be
liable to taxation as a result of the principles in W.T Ramsey Limited v IRC (54
TC 101) or Furniss v Dawson (55 TC 324), as developed in subsequent cases.

 
 

9.2  
Transactions or arrangements made by the Company have been made on fully arms
length terms and there are no circumstances in which section 770A of or Schedule
28AA to ICTA 1988 or any other rule or provision could apply causing any
Taxation Authority to make an adjustment to the terms on which such transaction
or arrangement is treated as being made for Taxation purposes.

 
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10.  
VAT

 

10.1  
The Company is a member of a group for VAT purposes of which Contico
International LLC is the representative member (the Representative Member) with
quarterly prescribed accounting periods, such registration not being pursuant to
paragraph 2 of Schedule 1 to the VATA 1994 or subject to any conditions imposed
by or agreed with HM Revenue & Customs.

 
 

10.2  
Neither the Company nor the Representative Member nor any Group Member is (nor
are there any circumstances in which they may become) under a duty to make
monthly payments on account under the Value Added Tax (Payments on Account)
Order 1993.

 
 

10.3  
The Disclosure letter contains full details of the group registration including
details of each company which has or has been in the period of six years ending
with the date of Completion, a member of that group. (“Group Member”)

 
 

10.4  
The Company and the Representative Member and any Group Member have complied
with all statutory provisions, rules, regulations, orders and directions in
respect of VAT and promptly submitted accurate returns, and maintained full and
accurate VAT records, invoices and other requisite documents. Neither the
Company nor the Representative Member nor any Group Member have been:

 

(i)  
subject to any interest, forfeiture, surcharge or penalty; or

 

(ii)  
given any notice under sections 59, 59A or 64 of the VATA 1994; or

 

(iii)  
given a warning within section 76(2) of the VATA 1994; or

 

(iv)  
required to give security under paragraph 4 of Schedule 11 to the VATA 1994.

 
 
 

10.5  
VAT has been duly paid by the Company and each Group Member and Representative
Member or provision has been made in the Accounts for all amounts of VAT for
which the Company is liable.

 
 

10.6  
All supplies made by the Company are taxable supplies and the Company has not
been or will not be denied full credit for all input tax by reason of the
operation of sections 25 and 26 of the VATA 1994 and regulations made thereunder
or for any other reasons and no VAT paid or payable by the Company is not input
tax as defined in section 24 of the VATA 1994 and regulations made thereunder.

 
 

10.7  
For the purposes of paragraph 3(7) of Schedule 10 to the VATA 1994, the Company
or any relevant associates of such companies (within the meaning of paragraph
3(7) of Schedule 10 to the VATA 1994) has exercised the election to waive
exemption from VAT (pursuant to paragraph 2 of Schedule 10 to the VATA 1994)
only in respect of those Properties listed (as having been the subject of such
an election) in the Disclosure Letter and:

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

 

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

 

(c)  
the election will not cease to have effect as a result of the Company leaving
the VAT Group

 
 

10.8  
The Disclosure Letter contains details of all assets owned by the Company which
are capital items for the purpose of the Capital Goods Scheme under Part XV of
the VAT Regulations 1995.

 
 

10.9  
All transactions between any Group Member and the Company have been made in
accordance with a valid VAT Group Election and the Company will not be required
to make good any default by any other Group Member in relation to VAT nor will
it be liable for additional output tax or non recoverable input tax as a result
of a direction under VATA 1994 section 9A paragraph 3.

 
 

10.10  
The transfer of the assets and trade of Contico Europe Holdings Limited to the
Company constituted a “transfer of a going concern” for the purposes of section
49 of VATA 1994 and Article 5 of the Value Added Tax (Special Provisions) Order
1995.

 
 

11.  
Stamp duty and stamp duty land tax

 

11.1  
Any document which is in the possession or control of the Company and that may
be necessary in proving the title of the Company to any asset which is owned by
the Company at Completion is duly stamped for stamp duty purposes.

 
 

11.2  
Neither entering into this agreement nor Completion will result in the
withdrawal of any stamp duty or stamp duty land tax relief granted on or before
Completion which will affect the Company.

 
 

11.3  
The Company has complied in all respects with the provisions of Part 4 Finance
Act 2003 (stamp duty land tax), including its associated schedules, and with any
regulations made under the same and the Company is not and will not become
liable to pay stamp duty land tax by reference to any land transaction, as
defined in section 43 Finance Act 2003, to which the Company has before
Completion been, or has agreed by legally binding contract to be, a party. HM
Revenue & Customs has not enquired, or given notice of its intention to enquire,
into a land transaction return delivered by or on behalf of the Company and the
Company is not aware that HM Revenue & Customs has reasonable grounds for
commencing such an enquiry.

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

12.  
INHERITANCE TAX

 

12.1  
The Company has never made any transfer of value within the meaning of the
Inheritance Tax Act 1984.

 
 

12.2  
Neither the assets owned by, nor the shares of, the Company are subject to an
outstanding HM Revenue & Customs charge as defined in section 237 Inheritance
Tax Act 1984 (imposition of charge).

 
 
12.3 
No circumstances exist, or but for section 204(6) Inheritance Tax Act 1984
(contingent liability of transferee for unpaid capital transfer tax or
inheritance tax) would exist, such that a power of sale could be exercised in
relation to any assets or shares of the Company pursuant to section 212
Inheritance Tax Act (powers to raise tax).

 

13.  
EMPLOYEE TAXATION 

 

13.1  
The Seller warrants that it will, or will procure that the Company is fully
informed of any payments made to employees or former employees of the Company to
enable the Company to comply with its obligations to report and account for
employee taxation including payments made by any member of the Seller's Group of
companies.  The Seller shall notify the Company within 7 days of making such
payments or becoming aware of any third party making such a payment.

 
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Part 3.  
Buyer’s Warranties

 
 

1.  
Power to Buy the Company

 

1.1  
The Buyer has taken all necessary action and has all requisite power and
authority to enter into and perform this agreement in accordance with its terms
and the other documents referred to in it.

 
 

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

 
 

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

 

(a)  
any agreement or instrument to which the Buyer is a party or by which it is
bound; or

 

(b)  
any order, judgment, decree or other restriction applicable to the Buyer.

 
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 Schedule 4  
Tax Covenant 

 
   1. INTENTIONALLY BLANK
 

2.  
Interpretation

 

2.1  
The definitions and rules of interpretation in this paragraph apply in this Tax
Covenant:

 
Buyer´s Relief: means:
 

(a)  
any Accounts Relief (as defined in paragraph 2.1(a)) of the definition of
Liability for Taxation) or Repayment Relief (as defined in paragraph 2.1(b) of
the definition of Liability for Taxation);

 

(b)  
any Post-Completion Relief of the Company (as defined in paragraph 2.1(c) of the
definition of Liability for Taxation); and

 

(c)  
any Relief, whenever arising, of the Buyer or any member of the Buyer´s Tax
Group other than the Company.

 
Buyer´s Tax Group: the Buyer and any other company or companies which either are
or become after Completion treated as members of the same group as, or otherwise
connected or associated in any way with, the Buyer for any Tax purpose.
 
Degrouping Charge: any Liability for Taxation of the Company as a result of the
Company ceasing to be, or ceasing to be treated as, a member of a group of
companies for Tax purposes as a result of Completion or of entering into this
agreement, or of the satisfaction of any condition in this agreement.
 
Event: includes (without limitation), the expiry of a period of time, the
Company becoming or ceasing to be associated with any other person for any Tax
purpose or ceasing to be or becoming resident in any country for any Tax
purpose, the death or the winding up or dissolution of any person, and any
transaction (including the execution and completion of all provisions of this
agreement), event, act or omission whatsoever, and any reference to an Event
occurring on or before a particular date shall include Events which for Tax
purposes are deemed to have, or are treated or regarded as having, occurred on
or before that date.
 
Group Relief: any or all of the following:
 

(a)  
relief surrendered or claimed pursuant to Chapter IV Part X ICTA 1988;

 

(b)  
advance corporation tax surrendered or claimed pursuant to section 240 of ICTA
1988 (set off of company´s surplus advance corporation tax against subsidiary´s
liability to corporation tax);

 

(c)  
a Tax refund relating to an accounting period as defined in section 102(3) of
the Finance Act 1989 (surrender of company Tax refund etc within group) in
respect of which a notice has been given pursuant to section 102(2) of that
statute; and

 

(d)  
eligible unrelieved foreign Tax surrendered or claimed pursuant to The Double
Taxation Relief (Surrender of Relievable Tax Within a Group) Regulations 2001.

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

(a)  
the Loss of any Relief (Accounts Relief) where such Relief has been taken into
account in computing and so reducing or eliminating any provision for Tax which
appears in the Working Capital Statement (or which but for such Relief would
have appeared in the Working Capital Statement) or where such Relief was treated
as an asset of the Company in the Working Capital Statement (Loss of an Accounts
Relief), in which case the amount of the Liability for Taxation will be the
amount of Tax which would (on the basis of Tax rates current at the date of
Completion) have been saved but for such Loss, assuming for this purpose that
the Company had sufficient profits or was otherwise in a position to use the
Relief;

 

(b)  
the Loss of any right to repayment of Tax (including any repayment supplement)
(Repayment Relief) which was treated as an asset in the Working Capital
Statement (Loss of a Repayment Relief), in which case the amount of the
Liability for Taxation will be the amount of the loss of the right to repayment
and any related repayment supplement;

 

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

 

(d)  
any liability to repay in whole or in part any payment received by the Company
or a liability of the Company to make any payment (other than to the Company)
for the surrender of Group Relief pursuant to any arrangement or agreement
entered into on or before Completion (save to the extent that such repayment or
payment is reflected in the Working Capital Statement or to the extent that the
Group Relief which was the subject of the payment is returned to the Company),
in which case the amount of the Liability for Taxation shall be the amount of
such liability (disregarding any set off).

 

(e)  
the loss in whole or in part of the right of the Company to receive any payment
(other than from the Company) for Group Relief pursuant to any arrangement or
agreement entered into on or before Completion where such payment was taken into
account in the Working Capital Statement, in which case the amount of the
Liability for Taxation shall be the amount taken into account in the Working
Capital Statement.

 
Loss: any reduction, modification, loss, counteraction, nullification,
utilisation, disallowance or claw-back for whatever reason.
 
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Overprovision: the amount by which any provision in the Working Capital
Statement relating to Tax (other than a provision for deferred Tax) is
overstated (except to the extent that such overstatement results from the
utilisation of a Post-Completion Relief), applying the accounting policies,
principles and practices adopted in relation to the preparation of the Working
Capital Statement (and ignoring the effect of any change in law made after
Completion).
 
Relief: includes any loss, relief, allowance, credit, exemption or set off in
respect of Tax or any deduction in computing income, profits or gains for the
purposes of Tax and any right to a repayment of Tax.
 
Retained Group: the Seller and any other company or companies (other than the
Company) which either are or become after Completion, or have within the seven
years ending at Completion been, treated as members of the same group, or
otherwise connected or associated in any way with the Seller for Tax purposes.
 
Saving: the reduction or elimination of any liability of the Company to make an
actual payment of corporation tax in respect of which the Seller would not have
been liable under paragraph 3, by the use of any Relief arising wholly as a
result of a Liability for Taxation in respect of which the Seller has made a
payment under paragraph 3 of this Tax Covenant.
 
Tax: all forms of taxation and statutory, governmental, state, federal,
provincial, local, government or municipal charges, duties, imposts,
contributions, levies, withholdings or liabilities in the nature of taxation
wherever chargeable and whether of the UK or any other jurisdiction; and any
penalty, fine, surcharge, interest, charges or costs imposed by a Taxation
Authority, and Taxation shall have the same meaning.
 
Tax Claim: any assessment (including self-assessment), notice, demand, letter or
other document issued or action taken by or on behalf of any Taxation Authority
from which it appears that the Company or the Buyer is or may be subject to a
Liability for Taxation or other liability in respect of which the Seller is or
may be liable under this Tax Covenant or that the Company is denied or is sought
to be denied a Relief.
 
Taxation Authority: HM Revenue & Customs, the Inland Revenue, HM Customs &
Excise, the Department of Social Security and any other governmental or other
authority whatsoever competent to impose any Tax whether in the United Kingdom
or elsewhere.
 
Tax Refund: means a right of repayment of Tax or an actual repayment of Tax
which the Company becomes entitled to or receives in respect of a period (or
part period) prior to Completion or arising as a result of an Event occurring on
or before Completion other than where such Tax Refund is a Repayment Relief;
 
Taxation Statute: any directive, statute, enactment, law or regulation
wheresoever enacted or issued, coming into force or entered into providing for
or imposing any Tax and shall include orders, regulations, instruments, bye-laws
or other subordinate legislation made under the relevant statute or statutory
provision and any directive, statute, enactment, law, order, regulation or
provision which amends, extends, consolidates or replaces the same or which has
been amended, extended, consolidated or replaced by the same.
 
 

2.2  
References to gross receipts, income, profits or gains earned, accrued or
received shall include any gross receipts, income, profits or gains deemed
pursuant to the relevant Taxation Statute to have been or treated or regarded as
earned, accrued or received.

 
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2.3  
A reference to an Event occurring on or before Completion includes a series or
combination of Events all of which were Events occurring on or before Completion
or the first of which was an Event occurring on or before Completion which was
not in the ordinary course of business of the Company and any of which occurring
after Completion were in the ordinary course of business of the Company and, for
the avoidance of doubt, this clause shall not apply to any series of Events
which result in any Tax Liability which arises on income , profits or gains
earned, accrued or received after Completion due to in whole or part an Event
occurring on or before Completion save to the extent that such tax Liability is
on deemed (as opposed to actual) income, profits or gains earned accrued or
received on or before Completion.  

 
 

2.4  
Any reference to something occurring in the ordinary course of business shall,
without prejudice to the generality thereof, be deemed not to include:

 

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

 

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

 

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

 

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

 

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

 

(f)  
anything which involves, or leads directly or indirectly to, a change of
residence of the Company for Tax purposes; or

 

(g)  
any employment related taxes arising from bonuses paid to employees or former
employees of the Company as a result of commitments provided by the Company or
any member of the Seller's Group prior to Completion in respect of duties
performed prior to Completion.

 
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2.5  
Unless the contrary intention appears, words and expressions defined in this
agreement have the same meaning in this Tax Covenant and any provisions in this
agreement concerning matters of construction or interpretation also apply in
this Tax Covenant.

 
 

3.  
Covenant

 
The Seller covenants with the Buyer that, subject to the provisions of this Tax
Covenant, the Seller shall pay to the Buyer, an amount equal to any:
 

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

 

(b)  
Liability for Taxation which arises solely as a result of the relationship for
Tax purposes of the Company with any person other than a person which is or has
been a member of the Buyer’s Tax Group whensoever arising;

 

(c)  
Liability for Taxation arising in connection with or as a result of the grant of
share options to and/or the exercise thereof to by employees or directors of the
Company in either case on or before Completion and save to the extent that such
Liability for Taxation was withheld or deducted from payments made to that
individual (including, for the avoidance of doubt, payments of the Purchase
Price in respect of Sale Shares owned by the relevant individual).

 

(d)  
Liability for Taxation arising in connection with or as a result of the actions
or omissions of any Company which was within the same VAT Group as the Company
prior to Completion.

 

(e)  
Liability for Taxation arising in connection with, or as a result of,
transactions which the Company entered into on or before Completion with
Continental Commercial Products LLC.

 

(f)  
all reasonable costs and expenses reasonably and properly incurred by the Buyer
and/or the Company on an indemnity basis in connection with a successful claim
in respect of such Liability to Taxation.

 
 

4.  
Payment date and interest

 

4.1  
Where the Seller is liable to make any payment under paragraph 3 (including any
payment pursuant to paragraph 3(f)), the due date for the making of that payment
(Due Date) shall be the later of the date falling seven days after the Buyer has
served a written notice on the Seller demanding that payment and in a case:

 

(a)  
that involves an actual payment of Tax (including any payment pursuant to
paragraph 3(f)) by the Company, the date which is 5 days prior to that date on
which the Tax in question would have had to have been paid to the relevant
Taxation Authority in order to prevent a liability to interest or a fine,
surcharge or penalty from arising in respect of the Liability for Taxation in
question; or

 

(b)  
that falls within paragraph 2.1(a) of the definition of Liability to Taxation,
the last date upon which the Tax is or would have been required to be paid to
the relevant Taxation Authority in respect of the period in which the Company is
deprived of the benefit of using the Relief; or

 
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(c)  
that falls within paragraph 2.1(b) of the definition of Liability to Taxation,
the date upon which the repayment was due from the relevant Taxation Authority;
or

 

(d)  
that falls within paragraph 2.1(c) of the definition of Liability to Taxation,
the date upon which the Tax saved by the Company is or would have been required
to be paid to the relevant Taxation Authority; or

 

(e)  
that falls within paragraph 2.1(e) of the definition of Liability for Taxation
(loss of payment rights relating to the surrender of group relief), not later
than the day on which the right to a payment or other consideration is lost.

 
 

4.2  
If any sums required to be paid by the Seller under this Tax Covenant are not
paid on the Due Date, then, except to the extent that the Seller’s liability
under paragraph 3 compensates the Buyer for the late payment by virtue of it
extending to interest and penalties, such sums shall bear interest (which shall
accrue from day to day after as well as before any judgement for the same) at
the rate of 2% per annum over the base rate from time to time of Barclays Bank
plc or (in the absence thereof) at such similar rate as the Buyer shall select
from the day following the Due Date up to and including the day of actual
payment of such sums, such interest to be compounded quarterly.

 
 

5.  
Exclusions

 

5.1  
The covenant contained in paragraph 3 above shall not cover any Liability for
Taxation (and the Seller shall not be liable for any breach of the Tax
Warranties) to the extent that:

 

(a)  
a provision or reserve in respect thereof is made in the Working Capital
Statement; or

 

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

 

(c)  
it would not have arisen but for a change after Completion in the accounting
reference date or the accounting bases upon which the Company values its assets
(other than a change made in order to correct pre-Completion failures to comply
with UK GAAP applicable prior to Completion); or

 

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

 

(e)  
it would not have arisen but for a voluntary act, transaction or omission
carried out by the Buyer or the Company (including any act, transaction or
omission by any director, officer, employee, agent or adviser of the Company)
after Completion being an act which:

 

(i)  
is not in the ordinary course of business; or

 

(ii)  
the Company was not legally committed to do under a commitment that existed on
or before Completion; or

 
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(iii)  
the Buyer was aware, or ought reasonably to have been aware, would give rise to
the Liability for Taxation in question; or

 

(f)  
the Liability for Taxation is a Degrouping Charge which, whether by election or
otherwise, is treated as accruing not to the Company but to the Seller or any
member of the Retained Group; or

 

(g)  
the Liability to Taxation would not have arisen but for a major change in the
nature or conduct of the trade (within the meaning of section 768A of ICTA 1988)
of, the Company on or after Completion; or

 

(h)  
the Liability to Taxation is in respect of interest and/or penalties and arises
or is increased in consequence of any failure by the Buyer to comply with, or a
failure to procure the compliance of the Company with, any of their respective
obligations under this Agreement; or

 

(i)  
any Relief (other than a Buyer's Relief) is available, or is for no
consideration made available, to the Company (and in circumstances where the
Buyer or Company is aware that such a Relief is available) to set against or
otherwise mitigate the Liability to Taxation, and so that:

 
(a) for this purpose, any Relief arising in respect of an accounting period
falling partly before and partly after Completion shall be apportioned on a time
basis, unless some other basis is more reasonable; and
 
(b) any Relief that is so available in relation to more than one Liability to
Taxation to which this Schedule applies shall be deemed, so far as possible, to
be used in such a way as to reduce to the maximum extent possible the Seller's
total liability under this Schedule;
 
(j) the Liability to Taxation would not have arisen but for:
 
(a) the making of a claim, election, surrender or disclaimer, the giving of a
notice or consent, or the doing of any other thing under the provisions of any
enactment or regulation relating to Tax, in each case after Completion by the
Purchaser, or the Company or the relevant Subsidiary other than at the Seller’s
direction in accordance with paragraph 9 or 10 ; or
 
(b) the failure by the Buyer to comply with, or a failure by the Buyer to
procure the compliance of the Company with, their respective obligations under
paragraphs 9 and/or 10;
 
(k) such Liability to Taxation is interest arising under the Corporation Tax
(Instalment Payments) Regulations 1998 as a result of the instalment payments
made before Completion being insufficient as a result of Income, Profits or
Gains earned, accrued or received after Completion or an Event arising after
Completion; or
 
(l) such Liability for Taxation arises as a result of a withdrawal by the Buyer
or the Company post Completion of the election under s 569 CAA 2001 made by the
Company and the Seller in relation to the Property.
 

6.  
Savings, Overprovisions, Tax Refunds

 

6.1  
If the Buyer or the Company becomes aware that an Overprovision, Saving or Tax
Refund has arisen, the Buyer shall promptly give details of such Overprovision,
Saving or Tax Refund by written notice to the Seller.

 
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6.2  
The Seller may instruct the auditors for the time being of the Company to
certify (at the request and expense of the Seller) whether (i) any provision for
Tax in the Working Capital Statement has proved to be an Overprovision, and, if
so, the extent of such Overprovision, or (ii) a Saving has arisen and, if so,
the extent of such Saving, or (iii) a Tax Refund has arisen and, if so, the
extent of such Tax Refund.

6.3  
If the auditors certify that an Overprovision, Saving or Tax Refund has arisen,
then:

(a) the amount shall first be set off against any payment then due from the
Seller under this Tax Covenant; 

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

(c) to the extent that such excess as referred to in paragraph 6.3(b) is not
exhausted, the remainder of that excess shall be carried forward and set off
against any future payment or payments which become due from the Seller under
this Tax Covenant;

6.4  
After the Company´s auditors have produced any certificate under this paragraph
6, the Seller or the Buyer may, at any time before the seventh anniversary of
Completion, request the auditors for the time being of the Company (as the case
may be) to review (at the expense of the party requesting the review) that
certificate in the light of all relevant circumstances, including any facts of
which they were not or it was not aware, and which were not taken into account,
at the time when such certificate was produced and to certify whether, in their
opinion, the certificate remains correct or whether, in light of those
circumstances, it should be amended.

6.5  
If the auditors make an amendment to the earlier certificate and the amount of
the Overprovision, Saving or Tax Refund is revised, that revised amount shall be
substituted for the previous amount and any adjusting payment that is required
shall be made by or to the Seller (as the case may be) as soon as reasonably
practicable.

 

7.  
Recovery from third parties

 

7.1  
Where the Seller has paid an amount in full discharge of a liability under
paragraph 3 in respect of any Liability for Taxation and the Buyer or the
Company is or becomes entitled to recover from some other person not being the
Buyer or the Company or any other company within the Buyer’s Tax Group, any
amount in respect of such Liability for Taxation to which paragraph 3 applies,
the Buyer shall or shall procure that the Company shall:

 

(a)  
notify the Seller of its entitlement as soon as reasonably practicable; and

 

(b)  
if required by the Seller and, subject to the Buyer, the Company being
reasonably indemnified by the Seller to the satisfaction of the Buyer against
any Tax that may be suffered on receipt of that amount and any costs and
expenses incurred in recovering that amount, take or procure that the Company
takes all reasonable steps to enforce that recovery against the person in
question (keeping the Seller fully informed of the progress of any action
taken).

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

 

(a)  
any amount recovered (including any related interest or related repayment
supplement) less any Tax suffered in respect of that amount and any costs and
expenses incurred in recovering that amount (save to the extent that amount has
already been made good by the Seller under paragraph 7.1 above); and

 

(b)  
the amount paid by the Seller under paragraph 3 in respect of the Liability for
Taxation in question.

 
 

7.3  
If any amount recovered pursuant to paragraph 7.1 (the Recovered Amount) exceeds
any payment made to the Seller pursuant to paragraph 7.2 (the Payment Amount)
then an amount equal to the difference between the Payment Amount and the
Recovered Amount shall be set off against the liability of the Seller in respect
of future claims under the Tax Covenant.

 
 

8.  
Surrender of group relief

 

8.1  
Subject to and in accordance with the provisions of this paragraph 8, if any
liability of the Seller under this Tax Covenant or in respect of any claim under
the Tax Warranties can be reduced or eliminated by the surrender of Group Relief
to the Company by the Seller or any company other than a member of the Buyer’s
Tax Group, the Seller may make or procure the making of such surrender and the
Company shall co-operate with the Seller in relation to such surrender and make
all necessary returns, claims, consents and notifications required to be made in
respect of such surrender.

 
 

8.2  
The Company shall not be liable to give any consideration in respect of any
surrender of Group Relief pursuant to paragraph 8.1.

 
 

9.  
Corporation tax returns

 

9.1  
The Seller or its duly authorised agent shall at the cost of the Company prepare
the corporation tax returns and computations of the Company for all accounting
periods ended on or prior to the Accounts Date, to the extent that the same have
not been prepared before Completion, and submit them to the Buyer.

 
 

9.2  
The Buyer shall procure that the returns and computations referred to in
paragraph 9.1 shall be authorised, signed and submitted to the relevant Taxation
Authority without amendment or with such amendments as requested by the Buyer
but subject to the prior approval of the Seller (such approval not to be
unreasonably withheld) and shall give the Seller or its agent all such
assistance as may reasonably be required (at the Seller´s cost and expense) to
agree those returns and computations with the relevant Taxation Authority
provided that the Buyer shall not be obliged to take any such action as is
mentioned in this paragraph 9.2 in relation to any return that is not full, true
and accurate in all material respects.

 
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9.3  
The Seller or its duly authorised agent shall at the Seller´s cost and expense
prepare all documentation and shall have conduct of all matters (including
correspondence) relating to the corporation tax returns and computations of the
Company for all accounting periods ended on or prior to the Accounts Date
provided that the Seller shall not without the prior written consent of the
Buyer (not to be unreasonably withheld or delayed) transmit any communication
(written or otherwise) to the relevant Taxation Authority or agree any matter
with the relevant Taxation Authority.

 
 

9.4  
The Buyer shall procure that the Company, at the Seller´s cost and expense,
afford such access to their books, accounts and records as is necessary and
reasonable to enable the Seller or its duly authorised agent to prepare the
corporation tax returns and computations of the Company for all accounting
periods ended on or before the Accounts Date and conduct matters relating to
them in accordance with this paragraph 9.

 
 

9.5  
The Seller shall take all reasonable steps to ensure that the corporation tax
returns and computations of the Company for all accounting periods ended on or
before the Accounts Date are prepared and agreed with the relevant Taxation
Authority as soon as possible.

 
 

9.6  
The Buyer shall procure that the Company:

 
(a) makes such claims (including, but not limited to, claiming or disclaiming
capital allowances, depreciation allowances and claiming roll over reliefs);
 
(b) executes such documents (including but not limited to returns of profits and
losses and amended returns); and
 
(c) does such other things in relation to the relevant accounting periods as are
considered necessary by the Seller;
 
in each case, as is required to give effect to the returns, computations and
other documentation referred to in paragraphs 9.2 and 9.3.
 
 

9.7  
The Buyer shall further procure that the Company shall not (unless it has been
approved by the Seller such approval not to be unreasonably withheld or delayed
or otherwise pursuant to this paragraph 9):

 
(a) amend, withdraw or disclaim any election or claim previously made; nor
 
(b) disclaim any allowance or Relief arising on or before Completion; nor
 
(c) carry back any Post-Completion Relief in circumstances where such carry back
will reduce the Company’s ability to make any surrenders, claims or elections.
 
 

9.8  
In relation to the accounting period commencing prior to but ending after
Completion, the Buyer shall have conduct of all corporation tax matters of the
Company and its Subsidiaries provided that the Buyer shall not (and shall
procure that its agents shall not) transmit any written communication or agree
any matter with a Tax Authority without the prior written consent of the Sellers
(such consent not to be unreasonably withheld or delayed).

 
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9.9  
The Seller shall ensure that if the Company is a party to a group payment
arrangement with HM Revenue & Customs under section 36 of the Finance Act 1998,
it shall be immediately removed from the arrangement as provided for in the
arrangement.

 
 

9.10  
The Seller will ensure that the Nominated Company under the group payment
arrangement to which the Company is a party exercises its rights to apportion
and re-apportion payments under the arrangement so far as possible to ensure
that Liability for Taxation of the Company for which (disregarding any de
minimis provisions in this agreement) recovery would otherwise be available
under this Tax Covenant are fully and expeditiously discharged.

 
 

9.11  
The Seller will ensure (to the extent permitted by law and for no consideration)
that any Degrouping Charge for which recovery would otherwise be available under
this Tax Covenant or under the Tax Warranties is treated as accruing not to the
Company but to the Seller or a member of the Retained Group and the Buyer will
procure that the Company executes all claims, elections, consents or other
documents relevant for that purpose.

 
 
  9.12  For the avoidance of doubt:
 
(a) where any matter relating to Tax gives rise to a Tax Claim, the provisions
of paragraph 10 shall take precedence over the provisions of this paragraph 9;
and
 
(b) the provisions of this paragraph 9 shall not prejudice the rights of the
Buyer to make a Tax Claim under this Tax Covenant in respect of any Liability
for Taxation.
 
 
9.13  
The Seller shall, or shall procure, to the extent that it is able to do so, that
all the records not in the possession or control of the Company needed by the
Buyer to identify, quantify and submit a claim for capital allowances shall be
preserved and, to the extent that such records are not delivered to the Buyer on
Completion, the Seller shall make available or shall procure that the records
shall be made available to the Buyer. The Seller agrees to provide such
information and other assistance as the Buyer may reasonable request to enable
it to claim capital allowances in respect of the plant and the Seller will keep
the Buyer informed of any information and correspondence which it receives from
HM Revenue & Customs which might effect the capital allowances on the plant or
indicate that such capital allowances may be challenged.

 
 
9.14  
For the avoidance of doubt, the Seller shall (to the extent permitted by law) be
free to make claims and obtain consents for the surrender of Group Relief
between the Company and the Retained Group for the period between the Accounts
Date and 1 April 2006 on a just and reasonable apportionment basis (as well as
periods ending prior to the Accounts Date). If Group Relief is surrendered under
this paragraph 9 to a member of the Retained Group, no member of the Retained
Group shall be liable to pay any consideration to the Company or the Buyer in
respect of such surrender. 

 
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10.  
Conduct of tax claims

 

10.1  
If the Buyer or the Company becomes aware of a Tax Claim, the Buyer shall give
or procure that notice in writing is given to the Seller as soon as is
reasonably practicable (and, in any event, within 10 Business Days where there
is a time limit for appeal), provided that if the Seller receives any Tax Claim
for whatever reason, it shall notify the Buyer in writing as soon as is
reasonably practicable and the Buyer shall be deemed on receipt of such claim by
the Seller to have given the Seller notice of such Tax Claim in accordance with
the provisions of this paragraph 10 provided always that the giving of such
notice shall not be a condition precedent to the Seller´s liability under this
Tax Covenant.

 
 

10.2  
Provided that the Seller indemnifies the Buyer and the Company to the Buyer´s
reasonable satisfaction against all liabilities, costs, damages or expenses
which may be reasonably incurred thereby including any additional Liability for
Taxation, the Buyer shall take and shall procure that the Company shall take
such action as the Seller may reasonably request by notice in writing given to
the Buyer or the Company to avoid, dispute, defend, resist, appeal or compromise
any Tax Claim (such a Tax Claim where action is so requested being hereinafter
referred to as a Dispute), provided that neither the Buyer nor the Company shall
be obliged to appeal or procure an appeal against any assessment to Tax raised
on any of them if, the Seller having been given written notice of the receipt of
such assessment, the Buyer or the Company has not within 10 Business Days or,
where there is a time limit for appeal, 5 Business Days of the date of the
notice, received instructions in writing from the Seller to do so.

 
 

10.3  
If:

 
(a)  the Seller does not request the Buyer or the Company to take any action
under paragraph 10.2 or fails to indemnify the Buyer or the Company to the
Buyer´s reasonable satisfaction within a period of time (commencing with the
date of the notice given to the Seller) that is reasonable having regard to the
nature of the Tax Claim and the existence of any time limit in relation to
avoiding, disputing, defending, resisting, appealing or compromising such Tax
Claim; or
 
(b)  the Seller (or the Company before Completion) has been involved in a case
involving fraudulent conduct or wilful default in respect of the Liability for
Taxation which is the subject matter of the Dispute; or
 
(c) the Dispute involves an appeal against a determination by the General or
Special Commissioners of the VAT and Duties Tribunal, unless the Seller has
obtained the opinion of Tax counsel of at least 5 years´ standing that there is
a reasonable prospect that the appeal will succeed,
 
 
the Buyer or the Company shall have the conduct of the Dispute absolutely
(without prejudice to its rights under this Tax Covenant) and shall be free to
pay or settle the Tax Claim on such terms as the Buyer or the Company may in its
absolute discretion consider fit.
 
 

10.4  
Subject to paragraph 10.3, the Seller may resist any Dispute for and on behalf
of the Company or the relevant Subsidiary and in its name provided that:

 
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(a) the Buyer or the Company shall promptly be kept fully informed of all
matters pertaining to a Dispute and shall be entitled to see and keep copies of
all correspondence and notes or other written records of telephone conversations
or meetings and, in the event that there is no written record, shall be given an
immediate report of all telephone conversations with any Taxation Authority to
the extent that it relates to a Dispute;
 
(b) the appointment of solicitors or other professional advisers shall be
subject to the approval of the Buyer, such approval not to be unreasonably
withheld or delayed; and
 
(c) all material written communications pertaining to the Dispute which are to
be transmitted to the relevant Taxation Authority shall first be submitted to
the Buyer for approval and shall only be finally transmitted if such approval is
given, which approval is not to be unreasonably withheld or delayed; and
 
(d) the Seller shall make no settlement or compromise of the Dispute or agree
any matter in the conduct of the Dispute which is likely to affect the amount
thereof or the future liability to Tax of the Buyer or the Company without the
prior approval of the Buyer (not to be unreasonably withheld or delayed).
 
(e) the Buyer shall not be required and the Seller shall not be permitted to
make or procure the making of a formal appeal to any tribunal, court, appellate
body or judicial authority unless the Seller, at its own expense and after
disclosure of all relevant information and documents, obtains and delivers to
the Buyer an opinion from appropriate counsel who has been approved for the
purpose by the Buyer (such approval not to be unreasonably withheld or delayed)
and who has specialised in relevant Tax matters for a minimum of five years that
the appeal has a reasonable change of success.
 
 

10.5  
The Buyer shall provide and shall procure that the Company provides to the
Seller and the Seller´s professional advisors reasonable access to premises and
personnel and to any relevant assets, documents and records within their power,
possession or control for the purpose of investigating the matter and enabling
the Seller to take such action as is referred to in this paragraph 10.

 
 

10.6  
Other than where paragraph 10.3 applies, the Buyer shall not (and shall procure
that the Company shall not) settle, accept, pay or compromise the Dispute
without the Seller's written consent (such consent not to be unreasonably
withheld or delayed).

 
 

10.7  
Neither the Buyer nor the Company shall be subject to any claim by or liability
to the Seller for non-compliance with any of the provisions of this paragraph 10
if the Buyer, or the Company has bona fide acted in accordance with the
instructions of the Seller.

 
 

11.  
Grossing up

 

11.1  
All sums payable by the Seller to the Buyer under this Tax Covenant shall be
paid free and clear of all deductions or withholdings in respect of Taxation
unless the deduction or withholding is required by law. If any deductions or
withholdings are required by law to be made from any of the sums payable under
this Tax Covenant, the Seller shall pay to the Buyer such sum as will, after the
deduction or withholding has been made, leave the Buyer with the same amount as
it would have been entitled to receive in the absence of any such requirement to
make a deduction or withholding.

 
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11.2  
If the Buyer incurs a Taxation liability which results from, or is calculated by
reference to, any sum paid under this Tax Covenant, the amount so payable shall
be increased by such amount as will ensure that, after payment of the Taxation
liability, the Buyer is left with a net sum equal to the sum it would have
received had no such taxation liability arisen.

 
 

11.3  
If the Buyer would, but for the availability of a Buyer´s Relief, incur a
Taxation liability falling within paragraph 11.2, it shall be deemed for the
purposes of that paragraph to have incurred and paid that liability

 
 

11.4  
If the Seller pays an additional amount in accordance with paragraph 11.1 or
11.2, the Buyer shall reimburse the Seller such amount as the Buyer shall
(acting in good faith) determine as leaving the Buyer in the same position as
the Buyer would have been in had no such additional Tax been paid or deduction
or withholding been made, but only to the extent that the Buyer can do so
without prejudicing the retention of any credit or relief obtained as a result
of the relevant deduction or withholding or additional Tax

 
 

11.5  
If the Buyer assigns the benefit of this Tax Covenant or this agreement, the
Seller shall not be liable pursuant to paragraph 11.1 or paragraph 11.2, save to
the extent that the Seller would have been so liable had no such assignment
occurred.

 
 

12.  
BUYER’S COVENANT

 

12.1  
The Buyer covenants to pay to the Seller and any member of the Retained Group an
amount equal to any Tax assessed on the Sellers or a member of the Retained
Group to the extent that such Tax is primarily a liability of the Company and is
not of a type which would allow it to be claimed by the Buyer from the Seller
under paragraph 3.

12.2  
Paragraphs 4 (Payment Date and interest), 10 (Conduct of Tax Claims) and 11
(Grossing up) apply to the covenant at paragraph 12.1 as they apply to the
covenant in paragraph 3 as if all references in the relevant paragraphs to the
"Seller" were to the "Buyer" instead and vice versa.

 
13 Value added tax groups
 
  13.1 Immediately after the date of this Deed the Seller shall procure that an
application be made to HM Revenue & Customs, pursuant to section 43 VAT 1994 for
the exclusion of the Company from the Seller’s value added tax group and that
such exclusion is sought to have effect from Completion. Unless the Buyer
otherwise requires, the Seller shall co-operate to ensure that the exclusion
from the Seller’s value added tax group is simultaneous with the registration of
the Company for value added tax purposes or their inclusion in the Buyer’s value
added tax group (as the case may be).
 
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  13.2 Pending the taking effect of such application and for so long thereafter
as may be necessary, the Seller and the Buyer shall reciprocally furnish such
information as may be required to enable the continuing representative member of
the VAT Group to make all the returns required of it in respect of the VAT Group
and the party being or controlling (as defined in Section 43(8) VATA) that
representative member shall make or procure it to make such returns accordingly.
 
 
  13.3 The Buyer will procure that the Company will account to the
representative member of the VAT Group for any excess output VAT over input VAT
paid or payable by such representative member to the Commissioners of HM Revenue
& Customs in respect of any supply of goods or services made or received by the
Company in respect of a prescribed accounting period during which the Company
was and remained a member of the VAT Group for the purposes of section 43 VATA.
 
 
  13.4 The Seller will procure that the representative member of the VAT Group
will account to the Company for any excess of input VAT over output VAT received
or receivable by such representative member from the Commissioners of Customs
and Excise in respect of any supply of goods or services made by or received by
the Company in respect of a prescribed accounting period or part of a prescribed
accounting period during which the Company was an remained a member of the VAT
Group for the purposes of Section 43 VATA.
 
 
  13.5 The provisions of clause 4 (Amount Due from Seller and Date of Payment)
shall apply to any payments made under this clause 13 as if incorporated herein.
 
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 Schedule 5  
Intellectual property rights

 
Part 1 Registered Intellectual Property Rights
 

The following table contains particulars of all the registered Intellectual
Property Rights used by the Company:

No.
Country
Registration No.
Trademark
Owner
1
 
United Kingdom
 
 
2171543
 
 
CONTICO
 
 
Continental Commercial Products LLC
 
2
Ireland
212752
CONTICO
Continental Commercial
Products LLC
 
 
3
 
 
European Community
 
 
001764786
 
 
CONTICO
 
 
Continental Commercial
Products LLC
 
 
4
 
 
USA
 
 
1822425
 
 
CONTICO
 
 
Continental Commercial Products LLC
(by assignment 25-Jul-03)
 
 
5
 
 
USA
 
 
1428387
 
 
CONTICO
 
 
Continental Commercial Products LLC
(by assignment 25-Jul-03)
 

www.contico.co.uk

 
Part 2. Material unregistered Intellectual Property Rights
 
The following table contains particulars of all material unregistered
Intellectual Property Rights used by the Company on an unregistered basis in
connection with the Business in Europe:

 
No.
 
 
Trademark
 
 
1)  
 
 
TUFF BOX
 
 
2)  
 
 
TUFFBIN
 
 
3)  
 
 
TUFF-E
 
 
4)  
 
 
VALUE TUFF
 

 
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5)  
 
 
WORK BIN
 
 
6)  
 
 
NEUVO
 
 
7)  
 
 
TRASH 'N' STASH
 
 
8)  
 
 
TUFF CRATE
 
 
9)  
 
 
TUFF
 
 
10)  
 
 
STRUCTURAL FOAM
 
 
11)  
 
 
STRUCTOLENE
 
 
12)  
 
 
FUN STORAGE
 

 
Part 3. Intellectual property rights licensed from third parties
 
N/A
 

Part 4.  
Intellectual property rights licensed to third parties

 
The following is a list of all licences, agreements, authorisations and
permissions under which the Company has licensed or agreed to license
Intellectual Property Rights to, or otherwise permitted the use of any
Intellectual Property Rights, by any third party:

1)  
License Agreement dated December 31, 2003 between Continental Commercial
Products LLC (“CCP”) and the Company, according to which CCP grants the Company
a license under the terms of the license agreement to use the intangible assets
as detailed therein. Such license shall be terminated on the Completion Date.

 

 

2)  
As part of the sale by CCP of its truck box business, a non-exclusive,
royalty-free license to use the Contico trademark for one year post closing
(until June 2, 2007) was granted to Tradesman Truck Accessories LLC under the
license agreement dated June 2, 2006.

 

3)  
As part of the sale of Contico Manufacturing (Ireland) Limited, the share sale
and purchase agreement between CEH Limited and Brendan Murphy and Carolyn Murphy
dated February 21, 2005, gives Contico Manufacturing (Ireland) Limited the right
to use the Contico name. This arrangement shall cease on termination of the
distribution agreement between CML and Contico Manufacturing (Ireland) Ltd.

 
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 Schedule 6  
Working Capital Statement

 
 
1.
The Buyer shall at its cost prepare as soon as practicable after Completion, and
in any event within 40 Business Days after Completion, a draft Working Capital
Statement.

 
 
2.
The Working Capital Statement shall be prepared in accordance with the
accounting principles, policies and practices adopted by the Company for the
purposes of the Accounts (the Policies) including a stock count at which
representatives of the Seller and the Buyer shall be present. The Working
Capital Statement shall show the Working Capital of the Company as at 2359hrs
GMT on Friday 17 November 2006 which shall comprise the aggregate of Account
Receivables (net of any provisions necessary in accordance with the Policies but
excluding the Receivable) and Stock (net of any provisions necessary in
accordance with the Policies and subject as stated below) less Account Payables
(including , VAT, PAYE and National Insurance contributions), in each case as at
2359hrs GMT on Friday 17 November 2006.  The amount for Stock shall not in any
event exceed £1,600,000 (one million six hundred thousand pounds) and if such
sum shall exceed such amount then the difference shall not be included in
calculating the Working Capital. The Working Capital Statement will not take
into account amounts relating to pre-payments and accruals as at 2359hrs on
Friday 17 November 2006 unless the net amount of accruals and pre-payments as at
2359hrs on Friday 17 November 2006 exceeds the aggregate net amount of accruals
and pre-payments as at 31 December 2005 (as shown in the agreed form pro-forma)
by a sum greater than £150,000 whereupon the excess over such value shall be
included as a liability within the Working Capital Statement. The Working
Capital Statement shall be prepared in accordance with the pro-forma Working
Capital Statement in the agreed form and shall only contain those line items
shown on the pro-forma. For the purposes of illustration, the Working Capital of
the Company as at 31 December 2005 by reference to the Accounts would have been
£2,467,000 (two million four hundred and sixty seven thousand pounds).

 
 
3.
When prepared, the Buyer shall procure that the draft Working Capital Statement
shall be promptly submitted to the Seller (together with such working papers
used in connection with the preparation of the Working Capital Statement as are
necessary to understand its preparation) for review by the Seller and its
advisers.

 
 
4.
For the purposes of such review the Buyer shall procure that the Seller and its
advisers shall be given the same access to information and co-operation from the
management of the Company as if they were the auditors of the Company.

 
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5.
The Seller shall within 10 Business Days following its receipt of the draft
Working Capital Statement, notify the Buyer in writing (Response Notice) whether
it accepts the draft Working Capital Statement as submitted or whether it
rejects the draft as not being in accordance with this Schedule. Any Response
Notice rejecting the draft shall set out in reasonable particularity the grounds
for such rejection.

 
 
6.
If no Response Notice is given within the period stated in paragraph 5, the
Seller shall be deemed to have accepted the draft Working Capital Statement as
being in accordance with this Schedule and the amount of the Working Capital as
stated in the draft Working Capital Statement, and accordingly the amount of the
Working Capital so stated shall be accepted by and shall be final and binding on
the parties.

 
 
7.
If within 20 Business Days of the submission of the draft Working Capital
Statement to the Seller the draft Working Capital Statement has not been
accepted by the Seller, then the matters outstanding or in dispute shall be
referred for final determination to a firm of chartered accountants nominated
jointly by the Seller and the Buyer or failing such nomination within 10
Business Days after request by either the Seller or the Buyer, nominated at the
request of either of them by the President of the Institute of Chartered
Accountants in England and Wales (the Experts). The Buyer shall procure that the
Experts shall be given the same access to information and co-operation from the
management of the Company as if they were the auditors of the Company and the
Buyer shall procure that the Experts shall be given access to such working
papers used in connection with the preparation of the draft Working Capital
Statement as are necessary to understand its preparation. In making their
determination the Experts shall be treated as acting as experts and not as
arbitrators. The determination of the Experts shall be final and binding on the
parties. The Experts’ fees shall be borne and paid by the Seller and the Buyer
in such proportions as the Experts determine.

 
 
8.
Within 5 Business Days of the date of agreement or determination of the Working
Capital Statement and the amount of the Working Capital in accordance with this
Schedule:

 
 
(a) if the Purchase Price as adjusted in accordance with clause 4.2 exceeds the
Completion Payment, the Buyer shall pay to the Seller an amount equal to the
aggregate of such excess and the sum of £370,000 paid to the Buyer pursuant to
clause 5.8 of the Agreement (plus interest at an annual rate equal to the base
rate of Barclays Bank Plc from time to time plus 2% in respect of the period
from the Completion Date to the date of payment of such excess) by way of
telegraphic transfer; or
 
 
(b) if the Purchase Price as adjusted in accordance with clause 4.2 is less than
the amount equal to the Completion Payment less the sum of £370,000 paid to the
Buyer pursuant to clause 5.8 of the Agreement, the Seller shall pay to the Buyer
an amount equal to such shortfall (plus interest at an annual rate equal to the
base rate of Barclays Bank Plc from time to time plus 2% in respect of the
period from the Completion Date to the date of payment of such shortfall) by way
of telegraphic transfer.
 
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9.
Notwithstanding the above provisions no recognition shall be made in the Working
Capital Statement of any deferred Tax asset arising from the recognition of tax
losses.

 

 

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Executed as a deed by CEH Limited
 
acting by its attorney
 
 
Executed as a deed by Jardin International Holding BV
 
acting by its attorney
 
 
 
Executed as a deed by Katy Industries, Inc.
 
acting by its attorney
 
/s/ Peter Kavanagh
as attorney for
CEH Limited
 
 
/s/ Oren Vaner
for and behalf of
Jardin International Holding BV
 
 
 
/s/ Peter Kavanagh
as attorney for
Katy Industries, Inc.
 

 
 
 

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