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DATED 6 June 2007

 
(1) CEH LIMITED

(2) KATY INDUSTRIES, INC.

and

(3) INVESCOTEC LIMITED

AGREEMENT
for sale and purchase of
Contico Manufacturing Limited

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CONTENTS
 
 

 Clause  
 Page     
       1  INTERPRETATION  4  2  SALE AND PURCHASE OF THE SHARES  9  3
 CONSIDERATION  9  4  COMPLETION  10  5  WARRANTIES  13  6  LIMITATION ON
LIABILITY  13  7  INDEMNITY  15  8  CONDUCT OF CLAIMS  16  9  PROTECTION OF
GOODWILL  17  10  CONFIDENTIAL INFORMATION  18  11  ANNOUNCEMENTS  19  12
 NOTICES  19  13  ENTIRE AGREEMENT  20  14  FURTHER ASSURANCE  20  15  EFFECT OF
COMPLETION  21  16  WAIVER  21  17  COSTS  21  18  ASSIGNMENT  21  19  CONTRACTS
(RIGHTS OF THIRD PARTIES) ACT 1999  21  20  COUNTERPARTS  21  21  LAW AND
JURISDICTION  21  SCHEDULE 1 - THE COMPANY                23    Part 1  23  
 Part 2  24  SCHEDULE 2    25    Part 1 - WARRANTIES  25

 
2

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   Part 2 - BUYER'S WARRANTIES  31  SCHEDULE 3        32    Part 1 - WORKING
CAPITAL STATEMENT  32    Part 2 - WORKING CAPITAL STATEMENT  35

 
 
 
 
 
 
 
 
 
 
 

 

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THIS AGREEMENT is made on 6 June 2007
 
BETWEEN:-
 
(1) CEH LIMITED (No 4992300) whose registered office is Cardrew Way, Redruth,
Cornwall TR15 1ST (“CEH”);
 
(2) KATY INDUSTRIES INC, of 2461 South Clark Street, Suite 630, Arlington,
Virginia 22202, USA (“KII”)
 
(together “CEH” and “KII” being the “Sellers”)
 
(3) INVESCOTEC LIMITED (No 6207123) whose registered office is at 49 Rodney
Street, Liverpool, L1 9EW (the “Buyer”).
 
IT IS AGREED as follows:-
 

1.  
INTERPRETATION

 

1.1  
In this Agreement, unless the context otherwise requires:-

 
“Accounts”
 
means the audited balance sheet of the Company as at the Accounts Date and the
audited profit and loss account of the Company for the financial period ended on
the Accounts Date, the notes and directors’ report and auditors’ report and all
other documents or statements annexed thereto or incorporated therein
 
“Accounts Date”
 
means 31 December 2006
 
“Act”
 
means the Companies Act 1985 (or, where the context so requires, the Companies
Act 2006)
 
“Business”
 
means the business of the Company (as carried on in the period up to and
including Completion)
 
“Business Day”
 
means any day other than a Saturday, Sunday or public holiday in England
 
“Buyer’s Solicitors”
 
means Pinsent Masons of 1 Park Row, Leeds, LS1 5AB
 
“Claim”
 
a claim for breach of any of the Warranties or a claim under Clause 7
 
"Claim for Tax"
 
means any assessment, notice, demand, determination, letter or other document
issued by or action taken by or on behalf of any Tax Authority or any
circumstances indicating that a Group company is or may be placed or is sought
to be placed under a Liability for Tax
 
“Company”
 
means Contico Manufacturing Limited details of which are set out in Part 1 of
Schedule 1 (and for the purposes of Warranties 4.1, 5 to 9 (inclusive) and 13
shall include the Subsidiary save that those Warranties so given in respect of
the Subsidiary shall be deemed to be given only in respect of the period for
which the Subsidiary has been a subsidiary undertaking of KII)
 

 
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“Completion”
 
means completion of the sale and purchase of the Shares in accordance with this
Agreement
 
“Confidential Information”
 
means all information concerned with the operation of any process, trade
secrets, the marketing of any products or services, drawings and designs, but
specifically excluding (1) information that is or becomes public knowledge other
than as a direct or indirect result of a breach of this Agreement, (2)
information received from a source not connected with the party to whom the duty
of confidence is owed acquired free from any obligation of confidence to any
other person and (3) information that is independently developed without
otherwise violating the terms of this Agreement
 
“Consideration”
 
means the total consideration for the Shares payable pursuant to Clause 3
 
"CCP"
 
means Continental Commercial Products, LLC. a Delaware limited liability company
 
“Disclosure Letter”
 
means the letter (together with all the documents attached to it) in the agreed
form from the Sellers to the Buyer executed and delivered to the Buyer
immediately prior to the execution of this Agreement
 
“Employee”
 
means a director or officer (whether or not employed by the Company) or
executive or managerial employee of the Company
 
“Encumbrance”
 
means any encumbrance or security interest of any kind whatsoever including
without limitation a mortgage, charge, pledge, lien, hypothecation, restriction,
right to acquire, right of pre-emption, option, conversion right, third party
right or interest, right of set-off or counterclaim, equities, trust arrangement
or any other type of preferential agreement (such as a retention of title
arrangement) having similar effect or any other rights exercisable by or claims
by third parties
 
"Environment"
 
means all and any of the following media, being land, water and air (wherever
situate) and includes all human or plant or animal life and living organisms
 
"Environmental Law"
 
means all or any applicable law, including common law, statute, statutory
instrument, regulation, codes of practice or guidance, European law, directives,
regulations, decisions of the European Court and any by-law, order, notice,
demand, decree, injunction, resolution or judgment of any competent authority
which has as a purpose or effect the prevention of harm to the Environment
including for the avoidance of doubt the health and safety of any person

 
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"Environmental Liabilities"
 
means any demands, claims, actions, proceedings, orders (including any claim or
order made by a regulatory authority or third party) damages, payments, losses,
costs (including reasonable legal or other professional costs) expenses or other
liabilities (including any works which are required to investigate, monitor,
remove, remedy or clean up any hazardous or otherwise polluting substance) which
are incurred, suffered or sustained by the Buyer and arise from relate to or are
connected with:
 
(a)  any breach of Environmental Law during the period prior to Completion;
 
(b)  any failure to obtain or comply with any Environmental Permits prior to
Completion; and/or
 
(c)  the presence of any hazardous or otherwise polluting substance in on at or
under any premises in relation to the activities of the Company at any time at
or prior to Completion and/or any discharge, release, escape, emission, leakage
or spillage emanating from any such hazardous or otherwise polluting substance
at any time whether before or after Completion.
 
"Environmental Permits"
 
means all or any permits, licences, authorisations, consents, approvals,
certificates, qualifications, including any conditions thereof required prior to
Completion under any Environmental Law for the activities of the Company at any
time or the occupation or use by the Company of any premises in relation to the
activities of the Company at any time prior to Completion
 
“Group”
 
means, in relation to a company (whenever 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
 
“ICTA”
 
means the Income and Corporation Taxes Act 1988
 
“Intellectual Property”
 
means patents, trade marks, service marks, trade names, design rights, copyright
(including rights in computer software), rights in know-how and other
intellectual property rights, in each case whether registered or unregistered
and including applications for the grant of any such rights, used, or required
to be used, by the Company in, or in connection with, the business of the
Company
 
“ITEPA”
 
means the Income Tax (Earnings and Pensions) Act 2003
 
“Lease”
 
means the lease of the Property dated 27 November 2006 between (1) Contico
Europe Limited and (2) the Company
 
“Licence”
 
means a licence, permit, certificate, consent, approval, filing of
notifications, reports and assessments, registrations or authorisation required
by law for the operation of the Company’s business, its ownership, use,
possession or occupation of any asset or the performance of this Agreement
 
"Liability for Tax"
 
has the meaning given in the Tax Deed
 
“Management Accounts Date”
 
27 April 2007
 

 
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“Management Accounts”
 
the unaudited balance sheet of the Company as at, and the unaudited profit and
loss account of the Company for the financial period of two (2) months ended on,
the Management Accounts Date, the notes and all other documents annexed thereto
 
“Pre-Completion Dividend Documentation”
 
means the documentation in the agreed form in relation to a pre-Completion
dividend of £1,537,082.87
 
“Property”
 
means that part of the property at Cardrew Way, Redruth, Cornwall TR5 1ST which
is leased to the Company pursuant to the Lease
 
“Reporting Accountants”
 
means such firm of accountants as is selected by agreement between the Sellers
and the Buyer
 
"Restricted Business"
 
means the business of the Company that consists of the marketing and sale of
janitorial and sanitary products into the commercial distribution market
(including wholesale customers). For the purposes of clarification, the
"commercial distribution market" shall not include a business which markets and
sells janitorial and sanitary products direct to members of the public
 
“Sellers’ Group”
 
means KII, CEH, any subsidiary undertaking or parent undertaking of KII or CEH
for the time being and any subsidiary for the time being of a parent undertaking
of KII or CEH, excluding the Company and the Subsidiary
 
“Sellers’ Solicitors
 
means Hunton & Williams LLP of Bank of America Plaza, Suite 4100, 600 Peachtree
Street NE, Atlanta, Georgia, 30308-2216
 
“Senior Management”
 
means Vernon Leslie Holmes and Philip Macey
 
“Shares”
 
means the 222,758 fully paid ordinary shares of £1.00 each of the Company
comprising the whole of the issued share capital of the Company
 
“Subsidiary”
 
means Spraychem Limited (No. 01670517) details of which are set out in Part 2 of
Schedule 1
 
“Supply Agreement”
 
means the supply agreement in agreed form between (1) the Company and (2) CCP on
the terms set forth therein
 
“Target Working Capital”
 
means £1,737,813 (one million seven hundred and thirty seven thousand eight
hundred and thirteen pounds) converted into US Dollars at the spot rate obtained
by the Buyer at Completion from Royal Bank of Scotland plc (being the rate at
which pounds sterling may be sold and US Dollars bought) (the “Exchange Rate”)
 
“Tax Authority”
 
has the meaning given in the Tax Deed
 
“Tax Deed”
 
means the deed in the agreed form executed by the parties and delivered
immediately prior to Completion
 
“Tax Warranties”
 
means the Warranties relating to Tax in Schedule 2, Part 1, Item 12
 

 
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"Tax"
 
has the meaning given in the Tax Deed
 
"TCGA"
 
means the Taxation of Chargeable Gains Act 1992
 
"Trademark Licence"
 
means the licence of agreed trademarks in agreed form between (1) CCP and (2)
the Company
 
"Transaction Documents"
 
means the Tax Deed, the Supply Agreement, the Transition Services Agreement, the
Trademark Licence and the Disclosure Letter
 
"Transition Services Agreement"
 
means the transition services agreement in agreed form between (1) CCP and (2)
the Company, pursuant to which CCP shall provide to the Company for a period of
12 months following Completion use of a computer system and software on the
terms set forth therein
 
"VAT"
 
means value added tax
 
"VATA"
 
means the Value Added Tax Act 1994
 
"Warranties"
 
means the warranties contained in Schedule 2 and references to a "Warranty"
include a reference to each of the individual Warranties
 
"Working Capital Adjustment"
 
means the amount by which the Working Capital exceeds the Target Working
Capital, payable pursuant to Clause 3.3.1 or the amount by which the Working
Capital is less than the Target Working Capital, payable pursuant to Clause
3.3.2 (such amount being expressed as a negative figure)
 
"Working Capital Statement"
 
means the statement to be prepared by the Buyer in accordance with Clause 3.2
and Schedule 3
 
"Working Capital"
 
means the amount of working capital of the Company as at the close of business
on 1 June 2007, as set out in the Working Capital Statement
 

1.2  
In this Agreement, unless the context otherwise requires, reference to:-

 

1.2.1  
a document "in the agreed form" is a reference to a document in the form
approved and, for the purposes of identification only, signed by or on behalf of
the Buyer and the Sellers;

 

1.2.2  
a statutory provision includes a reference to that provision as modified,
replaced, amended and/or re-enacted from time to time (before or after the date
of this Agreement) and any prior or subsequent subordinate legislation made
under it;

 

1.2.3  
a "person" includes a reference to an individual, partnership, association or
body corporate and includes a reference to that person's legal personal
representatives and successors;

 

1.2.4  
"costs" includes a reference to costs, charges and expenses of every
description;

 

1.2.5  
a "company", "subsidiary" and "body corporate" have the respective meanings set
out in sections 735, 736 and 740 of the Act;

 

1.2.6  
a "subsidiary undertaking" or a "parent undertaking" has the meaning set out in
sections 258 and 259 of the Act; and

 
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1.2.7  
a "connected person" is a person connected with another within the meaning of
section 839 of ICTA.

 

1.3  
Schedules form part of this Agreement and shall be interpreted and construed as
though they were set out in this Agreement.

 

1.4  
Any statement which refers to the knowledge or knowledge and belief of the
Sellers or is expressed to be "so far as the Sellers are aware" or any similar
expression shall be deemed to include an additional statement that it has been
made after making due and careful enquiries, but shall not include any matter or
information of which the Senior Management is aware after making due and careful
enquiry.

 

1.5  
Any agreement, warranty, representation, indemnity, covenant or undertaking on
the part of two or more persons shall, except where the contrary is stated, be
deemed to be given or made by such persons jointly or severally.

 

1.6  
Any references in this Agreement to any monetary sum expressed in sterling
shall, if required to aid the interpretation of any clause, be deemed to be
translated into dollars at the spot rate of exchange (the closing mid-point) for
sterling into dollars on the date of this Agreement. For the avoidance of doubt
any amount payable pursuant to Clause 3.1.2 shall be paid in sterling.

 

1.7  
Where it is necessary to determine whether a monetary limit or threshold set out
in this Agreement which is expressed in dollars has been reached or exceeded (as
the case may be) and the value of the relevant claim or any of the relevant
claims is expressed in a currency other than dollars, the value of each such
claim shall be translated into dollars at the spot rate of exchange (the closing
mid-point) for the currency in question into dollars on the date of this
Agreement.

 

1.8  
Where it is necessary to determine whether a monetary limit or threshold set out
in this Agreement which is expressed in sterling has been reached or exceeded
(as the case may be) and the value of the relevant claim or any of the relevant
claims is expressed in a currency other than sterling, the value of each such
claim shall be translated into sterling at the spot rate of exchange (the
closing mid-point) for the currency in question into sterling on the date of
this Agreement.

 

2.  
SALE AND PURCHASE OF THE SHARES

 

2.1  
On the terms of this Agreement:-

 

2.1.1  
CEH agrees to sell, and the Buyer agrees to buy, with effect from Completion,
the whole of the legal interest in the Shares with all rights attached or
accruing to them at the date of this Agreement; and

 

2.1.2  
KII agrees to sell and the Buyer agrees to buy, with effect from Completion, the
whole of the beneficial interest in the Shares.

 

2.2  
The Sellers covenant to the Buyer that there are no unissued shares, debentures
or other securities of the Company and no person has, or has claimed, the right
(whether exercisable now or in the future and whether contingent or not) to call
for the issue or transfer of any shares, debentures or other securities of the
Company.

 

2.3  
The Sellers covenant to the Buyer that the Shares will on Completion be free
from all Encumbrances.

 

2.4  
Part I of the Law of Property (Miscellaneous Provisions) Act 1994 shall not
apply for the purpose of this Agreement.

 

3.  
CONSIDERATION

 

3.1  
The consideration for the purchase of the Shares is:-

 
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3.1.1  
$10,000,000 payable by the Buyer to CEH forthwith following Completion in
accordance with Clause 4.6; and

 

3.1.2  
the Working Capital Adjustment payable (in pounds sterling) in accordance with
Clauses 3.3 and 3.4.

 

3.2  
The Working Capital Statement shall be prepared, and the Working Capital
ascertained, in accordance with the provisions of Schedule 3.

 

3.3  
If the Working Capital:-

 

3.3.1  
exceeds the Target Working Capital the Buyer shall pay to CEH the amount of the
excess, subject always to a maximum amount of £1,000,000; or

 

3.3.2  
is less than the Target Working Capital CEH shall repay to the Buyer so much of
the Consideration as is equal to the deficiency.

 

3.4  
Any payment required to be made under Clause 3.3 shall be made within 7 days of
the Working Capital Statement being agreed, deemed agreed or certified in
accordance with Schedule 3.

 

4.  
COMPLETION

 

4.1  
Completion shall take place at the offices of the Buyer immediately after
signature and exchange of this Agreement.

 

4.2  
At Completion the Sellers shall deliver to the Buyer:-

 

4.2.1  
a copy of the Pre-Completion Dividend Documentation;

 

4.2.2  
duly executed transfers of the Shares to the Buyer together with the share
certificates for all of the Shares (or an express indemnity in a form
satisfactory to the Buyer in the case of any missing certificate);

 

4.2.3  
an executed power of attorney in favour of the Buyer or as it directs in the
agreed form, and such duly executed waivers or consents as may be required to
give a good title to the Shares to the Buyer or as it directs and to enable the
Buyer or as it directs to be registered as the holder of the Shares and (pending
registration) to exercise all voting and other rights attaching to the Shares;

 

4.2.4  
letters of resignation from each director of the Company (other than Vernon
Holmes) in the agreed form;

 

4.2.5  
a letter of resignation from Alan Elkins as secretary of the Subsidiary in the
agreed form;

 

4.2.6  
a letter of resignation from the auditors of the Company and the Subsidiary
accompanied by a statement under section 394 of the Act in the agreed form
together with evidence that any letter required by the Act to be deposited by
the auditors at the registered office of the Company and the Subsidiary has been
so deposited;

 

4.2.7  
all the financial and accounting books and records of the Company and the
Subsidiary;

 

4.2.8  
the statutory books of the Company and the Subsidiary (duly written up to date
as at immediately prior to Completion), the common seals, Certificates of
Incorporation and Certificates of Incorporation on Change of Name;

 

4.2.9  
the Lease and all other title deeds relating to the Property;

 
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4.2.10  
a legal opinion from Hunton & Williams LLP in the agreed form relating to KII
and CCP confirming that:

 

(a)  
KII has the capacity to enter into this Agreement;

 

(b)  
CCP has the capacity to enter into the Transition Services Agreement, the Supply
Agreement and the Trademark Licence;

 

4.2.11  
all documents of title relating to that portion of the Intellectual Property and
Confidential Information the rights to which, at Completion, are owned by the
Company or the Subsidiary;

 

4.2.12  
a deed of acknowledgement from each of the Sellers in a form satisfactory to the
Buyer that all inter-group indebtedness to which the Company or the Subsidiary
is a party has been discharged;

 

4.2.13  
the Tax Deed in the agreed form duly executed by each of the Sellers;

 

4.2.14  
a deed of release from Lloyds Bank plc in a form satisfactory to the Buyer
evidencing the release and discharge of the debenture to Lloyds Bank plc dated
23 December 1998;

 

4.2.15  
a deed releasing the Company from all of its obligations pursuant to the KII
amended and restated loan agreement with Bank of America, N.A.;

 

4.2.16  
a copy, certified to be a true copy by a director or secretary of CEH of a
resolution of CEH's board of directors (or an authorised committee of that
board) authorising the execution and completion of this Agreement and the
documents referred to in Clause 4 by CEH;

 

4.2.17  
a copy, certified to be a true copy by a director or secretary of KII of a
resolution of KII's board of directors (or an authorised committee of that
board) authorising the execution and completion of this Agreement and any
documents referred to in Clause 4 that are to be entered into by KII;

 

4.2.18  
a copy, certified to be a true copy by a director or secretary of CCP of a
resolution of CCP's board of directors (or an authorised committee of that
board) authorising the execution and completion of the Transition Services
Agreement, the Trademark Licence and the Supply Agreement;

 

4.2.19  
the Transition Services Agreement duly executed by CCP (and the third party
system access agreement duly executed by Infor Global Solutions (Chicago),
Inc.);

 

4.2.20  
the Trademark Licence duly executed by (1) CCP and (2) the Company; and

 

4.2.21  
the Supply Agreement duly executed by CCP.

 

4.3  
At Completion CEH shall procure that a board meeting of the Company is held at
which the directors, in respect of the Company as appropriate, approve the
following matters, or that the following matters are otherwise approved by the
board of the Company:-

 

4.3.1  
approve the registration of the transfers in respect of the Shares referred to
in Clause 4.2.2 (subject only to stamping at the cost of the Buyer);

 

4.3.2  
accept the resignations referred to in Clause 4.2.4 and appoint the persons
nominated by the Buyer as directors and secretary with effect from the end of
the meeting;

 

4.3.3  
accept the resignation referred to in Clause 4.2.6 and appoint PKF (UK) LLP as
auditors;

 
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4.3.4  
revoke all existing authorities to bankers and give authority in favour of
persons nominated by the Buyer to operate such accounts;

 

4.3.5  
change the registered office address as the Buyer directs; and

 

4.3.6  
change the accounting reference date as the Buyer directs.

 

4.4  
At Completion CEH shall procure that a board meeting of the Subsidiary is held
at which the directors, in respect of the Subsidiary as appropriate, approve the
following matters, or that the following matters are otherwise approved by the
board of the Subsidiary:-

 

4.4.1  
accept the resignation referred to in Clause 4.2.4 and appoint the persons
nominated by the Buyer as director and secretary with effect from the end of the
meeting;

 

4.4.2  
accept the resignation referred to in Clause 4.2.6 and appoint PKF (UK) LLP as
auditors;

 

4.4.3  
revoke all existing authorities to bankers and give authority in favour of
persons nominated by the Buyer to operate such accounts;

 

4.4.4  
change the registered office address as the Buyer directs; and

 

4.4.5  
change the accounting reference date as the Buyer directs.

 

4.5  
At Completion the Buyer shall deliver to the Sellers:

 

4.5.1  
a copy, certified to be a true copy by a director or secretary of the Buyer, of
a resolution of the Buyer's board of directors (or an authorised committee of
that board) authorising the execution and completion of this Agreement and the
documents referred to in Clause 4 by the Buyer;

 

4.5.2  
an original of the Supply Agreement duly executed by the Company;

 

4.5.3  
an original of the Transition Services Agreement duly executed by the Company;
and

 

4.5.4  
an original of the Trademark Licence duly executed by the Company.

 

4.6  
Forthwith following Completion, the Buyer shall pay (via the Buyer's Solicitors)
that part of the Consideration referred to in Clause 3.1.1 by telegraphic
transfer to the account specified in the undertaking from the Buyer's Solicitors
in the agreed form.

 

4.7  
The Buyer is not obliged to complete this Agreement unless each of the Sellers
has fulfilled all its obligations under this Clause.

 

4.8  
The Sellers are not obliged to complete this Agreement unless the Buyer has
fulfilled all its obligations under this Clause (other than the obligation under
Clause 4.6, which will be fulfilled by the Buyer forthwith following
Completion).

 

4.9  
The Sellers covenant that, with effect from the giving of the undertaking by the
Buyer's Solicitors referred to in Clause 4.6, the Company shall have no
liability (whether actual or contingent) under (and shall have been released
from any obligations under) any loan, facility, overdraft or other financing
agreements or arrangements in the nature of bank (or other professional lending)
financing (or under any security agreements or security arrangements in
connection with bank (or other professional lending) financing) which have been
entered into by (or which are or were for the benefit of):

 

4.9.1  
one or more members of the Sellers' Group; or

 
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4.9.2  
one or more former members (other than the Company and the Subsidiary) of the
Sellers' Group).

 
For the avoidance of doubt "bank (or other professional lending) financing" does
not include commercial terms of trade (including periods for settlement of
invoices or retention of title provisions) agreed on a bi-lateral basis between
the Company and a member of the Sellers' Group in relation to the supply of
products between those companies in the ordinary course of business.

5.  
WARRANTIES

 

5.1  
The Sellers warrant to the Buyer that (subject to Clause 5.2) each Warranty is
accurate on the date of this Agreement.

 

5.2  
The Warranties are subject only to:-

 

5.2.1  
any matter which is fairly disclosed in the Disclosure Letter; and

 

5.2.2  
the provisions of Clause 6.

 

5.3  
The Buyer acknowledges that (1) it accepts responsibility for determining the
scope of its investigations of the Company and for the manner in which such
investigations have been conducted, (2) the Sellers are not making any
warranties, express or implied, of any nature whatsoever with respect to the
Company other than the Warranties.

 

5.4  
Each of the Warranties shall be interpreted as a separate and independent
Warranty so that the Buyer shall have a separate claim and right of action in
respect of every breach of each Warranty.

 

5.5  
No information supplied by, or on behalf of, the Company (or any of the
Employees) to the Sellers or their advisers in connection with the business and
affairs of the Company constitutes a representation, warranty or undertaking as
to its accuracy to the Sellers by the Company (or by any of the Employees) and
each of the Sellers waives each and every claim which it may have against the
Company or any of the employees in respect of such information, save that such a
waiver will not apply in respect of a claim against an Employee in the event of
(and to the extent of) any fraud or wilful misconduct (including wilful
non-disclosure) by that Employee.

 

6.  
LIMITATION ON LIABILITY

 

6.1  
The Sellers' liability under the Warranties shall be limited as follows:-

 

6.1.1  
no Claim shall be made by the Buyer, and the Sellers shall not be liable in
respect of any breach of the Warranties, unless the liability for that
individual Claim shall equal or exceed US$10,000, and until the aggregate
liability for all claims under this Agreement shall equal or exceed US$100,000
in which case the whole amount shall be capable of being claimed and not merely
the excess;

 

6.1.2  
the Sellers' maximum aggregate liability in respect of Warranties 1.1 to 1.5
(inclusive), 1.7, 2.1, 2.2, 4.2.1, 4.2.2, 6.1 and 6.2 is limited to the
Consideration;

 

6.1.3  
the Sellers' maximum aggregate liability in respect of the remainder of the
Warranties not listed in Clause 6.1.2 (other than the Tax Warranties) and in
respect of any other Claim (as defined) is limited to 10% of the Consideration;

 

6.1.4  
the Sellers' maximum aggregate liability under the Tax Warranties and the Tax
Deed (other than in relation to any claim that arises in connection with, as a
result of or in consequence of any amounts surrendered or claimed by way of
group relief) is limited to 10% of the Consideration;

 
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6.1.5  
the Sellers' maximum aggregate liability under the Tax Warranties and the Tax
Deed in relation to any claim that arises in connection with, as a result of or
in consequence of any amounts surrendered or claimed by way of group relief is
limited to £300,000;

 

6.1.6  
no claim:-

 

(a)  
for breach of the Warranties otherwise than in relation to Tax shall be made
unless the Claim has been notified in writing to the Sellers summarising the
nature of the Claim as far as it is known to the Buyer and a reasonable estimate
of the amount claimed before 31 August 2008; and

 

(b)  
in relation to Tax or under the Tax Deed shall be made unless the claim has been
notified in writing to the Sellers summarising the nature of the claim as far as
it is known to the Buyer and a reasonable estimate of the amount claimed before
the seventh anniversary of Completion (save that any claim that arises in
connection with, as a result of or in consequence of any amounts surrendered or
claimed by way of group relief must be notified prior to 1 January 2009 (unless
a notice from HMRC in relation to any such matter is received on or after 1
December 2008, in which event such claim must be notified as soon as reasonably
practicable thereafter and in any event prior to 31 January 2009));

 

6.1.7  
the Sellers shall not be liable in respect of any breach of the Warranties if
and to the extent that the resulting loss has been recovered under the Tax Deed.

 

6.1.8  
no Claim shall be made and the Sellers shall not be liable under any Claim:

 

(a)  
to the extent that a provision, reserve or allowance relating to the subject
matter of the Claim 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 direct result of
any change or changes in legislation or published practice of a Tax Authority or
generally accepted accounting practice 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 direct result of or is
otherwise attributable wholly or partly to any act, transaction or omission of
the Company or the Buyer or their respective directors or employees 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:

 

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

 

(ii)  
pursuant to the Buyer investigating the circumstances of a Claim or evaluating
of the merits of a Claim; or

 

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

 

(iv)  
required by law or any regulatory authority.

 

(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

 
14

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(e)  
to the extent that the Buyer has recovered a sum in respect of a Claim under any
policy of insurance (which the Buyer will use reasonable endeavours to procure)
provided that if the Buyer makes a claim against an insurance policy in
connection with a Claim, then the Sellers undertake to indemnify the Buyer in
full for any increase in the Buyer's insurance premium resulting from the Buyer
making a claim on its insurance policy; or

 

(f)  
to the extent that 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 voluntary change in the accounting
policies of the Company after Completion unless such change is necessary to
comply with generally accepted accounting practice subsisting at Completion; or

 

(g)  
to the extent that the Buyer or the Senior Management have actual knowledge at
the date of this Agreement of any actual breach of the Warranties by the Sellers
which would enable a Claim to be brought.

 

6.2  
None of the limitations contained in Clause 6.1 apply to any Claim that arises
or is delayed as a result of fraud, dishonesty, wilful misconduct or wilful
concealment by a Seller, its agents, officers or advisors except the Senior
Management.

 

6.3  
In assessing the liability of the Sellers 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.

 

6.4  
The Buyer shall not be entitled to recover any sum more than once in respect of
any Claim under the Warranties 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 in respect of that act, matter or thing.

 

6.5  
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 (and shall notify the Sellers 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 Sellers shall be reduced by the net
amount (having deducted the reasonable and proper costs of recovery) recovered
from such other person.

 

6.6  
If the Sellers pay at any time to the Buyer or to the Company an amount pursuant
to a Claim and 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 procure that the Company shall take all reasonable steps to enforce
such recovery and shall (as soon as reasonably practicable) repay to the Sellers
so much of the amount paid by it to the Buyer or the Company as does not exceed
the net sum (having deducted the reasonable and proper costs of recovery)
recovered from such other person.

 

7.  
INDEMNITY

 

7.1  
The Sellers agree to indemnify and keep indemnified the Buyer against all
actions, proceedings, demands, claims, costs and liabilities whatsoever in
connection with:

 

7.1.1  
any and all Environmental Liabilities of the Company or the Subsidiary;

 

7.1.2  
the Subsidiary insofar as such actions, proceedings, demands, claims, costs and
liabilities relate to any real property leased, occupied or owned by it at any
time during which the Subsidiary has been a subsidiary undertaking of KII; and

 

7.1.3  
any Claim relating to Tax made pursuant to a deed of indemnity between inter
alia the Company, Brendan Murphy and Carolyn Murphy.

 
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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 or a Claim for Tax or one of the
Sellers becomes aware of a matter which it reasonably considers might give rise
to a Claim pursuant to the Buyer’s Warranties then such party:

 

8.1.1  
shall (or, in the case of the Buyer, shall procure that the Company shall) as
soon as reasonably practicable give notice to the Sellers or the Buyer as the
case may be of the matter and shall consult with the Sellers 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 Sellers or the Buyer as the case may be;

 

8.1.2  
shall provide to the Sellers 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 Sellers’ Group (as the case may be) for the
purposes of investigating the matter;

 

8.1.3  
(at the requesting Party's cost) may take copies of the documents or records
relevant to the matter, and photograph the premises or assets, referred to in
Clause 8.1.2;

 

8.1.4  
subject to the following provisions of this Clause 8, 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 Sellers as the requesting party may reasonably request in writing
to negotiate, avoid, dispute, resist or defend against the matter;

 

8.1.5  
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 Sellers shall not be obliged to take or
procure the taking of any of the following actions pursuant to its obligations
contained in Clause 8.1.4:

 

8.2.1  
the submission of any proposal to settle or compromise the relevant matter made
by the Sellers or the Buyer (as the case may be) of which the Buyer (or the
Sellers as the case may be) (acting reasonably) does not approve;

 

8.2.2  
agreeing to the settlement or compromise of any claim or any proposal for the
same which is likely to have an adverse effect on the future liability of the
Company, the Buyer or any member of the Buyer’s Group or the Sellers or any
member of the Sellers’ Group unless the Sellers (or the Buyer as the case may
be) indemnify the Buyer (or the Sellers as the case may be), or the Company or
the relevant member of the Buyer’s Group or the Sellers’ Group (as the case may
be) against any such future liability;

 

8.2.3  
complying with any unreasonable instruction of the Sellers or the Buyer as the
case may be or taking any action or procuring the taking of any action which the
Buyer or the Sellers (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
Sellers or any member of the Sellers’ Group (as the case may be).

 

8.3  
If a Party does not request the other to take action pursuant to Clause 8.1.4 or
shall fail to indemnify the other Party or the Company concerned in accordance
with Clause 8.1.5 within 14 days of the written notice to the Sellers (or the
Buyer as the case may be) served in accordance with Clause 8.1.1 the Buyer (or
the Sellers 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
notwithstanding the provisions of Clause 8.2.

 
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8.4  
Any claim under the Warranties or the Buyer's Warranties 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 Sellers (or the Buyer as the case may be)
and the loss giving rise to any such claim (or claim under the Buyer’s
Warranties) 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  
Subject to Clause 8.3 notwithstanding any failure by the Buyer to notify the
Sellers or of the Sellers to notify the Buyer (as the case may be) pursuant to
Clause 8.1.1 the Buyer (or the Sellers 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 Sellers or the Buyer (as the case may be) (which shall
not be unreasonably withheld or delayed).

 

8.6  
If any Claim (or claim under the Buyer’s Warranties) shall arise by reason of
some liability which, at the time the Claim (or claim under the Buyer’s
Warranties) is notified to the Sellers (or the Buyer as the case may be), is
contingent only, the Sellers (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 Sellers or the Buyer (as the case may be) in accordance with
Clause 6.1.6 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.

 

8.7  
Nothing in this agreement shall be deemed to relieve the Buyer or of the Sellers
(as the case may be) from any duty to mitigate any loss or damage incurred by
it.

 

9.  
PROTECTION OF GOODWILL

 

9.1  
For the purposes of this Clause 9, the words "Restricted Person" means any
member of the Sellers' Group.

 

9.2  
Subject to Clauses 9.3 and 9.4, the Sellers undertake to the Buyer (for itself
and as trustee for the holders for the time being of the Shares but so that the
Buyer shall not as trustee be under any obligation to such holders to enforce
the undertakings and may release or waive them in whole or in part as it, in its
absolute discretion, thinks fit) that without the written consent of the
Buyer:- 

 

9.2.1  
for a period of 2 years from Completion they will not in the United Kingdom, the
European Union or Dubai in any capacity whatsoever directly or indirectly carry
on or assist in carrying on or be engaged, concerned or interested in any
business which competes with the Restricted Business (or with any part of the
Restricted Business);

 

9.2.2  
for a period of 2 years from Completion they will not and will procure that no
other Restricted Person will do any act or thing with the primary intention of
causing any supplier of or other person in the habit of dealing with the Company
(at Completion) to be unable or unwilling to deal with the Company either at all
or in part or on the terms on which it had previously dealt with the Company or
with the primary intention of causing any person having a contract or
arrangement with the Company (at Completion) to breach, terminate or modify that
contract or arrangement to exercise any right under it; and

 

9.2.3  
for a period of 2 years from Completion they will not and will procure that no
other Restricted Person will solicit or endeavour to entice away from the
Company any employee of the Company who is at the date of this Agreement and at
the time of such attempt an Employee; and

 

9.2.4  
they will not at any time in connection with any business carried on by it or
otherwise howsoever use directly or indirectly or authorise any person to use
directly or indirectly any distinctive mark, style or logo the rights to which,
at Completion, were owned by the Company or the Subsidiary (“Company
Trademarks”) or any mark, style or logo confusingly similar to or likely to be
confused with any Company Trademarks, nor use the name "Contico" (or any name
confusingly similar thereto) in the UK, Europe or Dubai.

 
17

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9.3  
The restrictions in Clause 9.2 shall terminate with regard to the obligations of
KII, CEH or any Restricted Person (respectively) immediately upon a change of
control of that particular company. For the purpose of this clause, "change of
control" shall mean the acquisition by a third party and any connected person
(in one transaction or a series of transactions) of (i) an interest in shares in
the relevant company conferring in aggregate more that 50% of the total voting
rights conferred by all of the issued shares in that company or any of its
parents, taking account at the relevant time of provisions regarding voting
rights contained in the articles of association of that company or its parents,
as applicable, or (ii) substantially all (over 85 per cent) of its assets.

 

9.4  
Nothing in Clause 9.2 shall prevent KII or CEH or any other Restricted Person
from:-

 

9.4.1  
owning not more than five per cent of any class of the issued share capital of a
company which is dealt in on a recognised investment exchange (as defined in the
Financial Services and Markets Act 2000); or

 

9.4.2  
employing any person who has approached the relevant party as a result of a
general advertising campaign by or on behalf of KII, CEH or such other
Restricted Person.

 

9.5  
KII and CEH have taken independent legal advice and acknowledge that they
consider the undertakings contained in Clause 9.2 reasonable for the proper
protection of the business of the Company and the legitimate interests of the
Buyer.

 

9.6  
Each of the undertakings contained in Clause 9.2 is separate and severable and
shall be construed on that basis. In the event that any of such undertakings is
found to be void but would be valid if some part of it were deleted or if the
period or extent of it were reduced such undertaking shall apply with such
modification as may be necessary to make it valid and effective.

 

10.  
CONFIDENTIAL INFORMATION

 

10.1  
The Sellers shall not at any time make use of or disclose to any person
Confidential Information belonging to the Company except for the purposes
contemplated by this Agreement.

 

10.2  
The Buyer shall not at any time make use of or disclose to any person
Confidential Information belonging to the Sellers or the Sellers’ Group (other
than the Company) except for the purposes contemplated by this Agreement.

 

10.3  
Clause 10.1 does not apply to:-

 

10.3.1  
use or disclosure of Confidential Information required to be used or disclosed
by law;

 

10.3.2  
disclosure of Confidential Information to a director, officer or employee of the
Buyer or to an Employee of the Company whose function requires that he has
possession of the Confidential Information;

 

10.3.3  
disclosure of Confidential Information to an adviser for the purpose of advising
the Sellers in connection with this Agreement provided that such disclosure is
subject to the terms set out in Clause 10.1; or

 

10.3.4  
Confidential Information which becomes publicly known except as a result of a
breach of Clauses 10.1 or 10.2.

 
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10.4  
The Sellers and the Buyer may disclose the Transaction Documents to bona fide
third party purchasers of the entire issued share capital of, or substantially
all (over 85 per cent) of the assets of, a Seller or the Buyer or members of
their Group if the disclosing party procures that the people to whom the
Transaction Documents are 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

 

11.  
ANNOUNCEMENTS

 

11.1  
Subject to Clause 11.2, neither the Buyer nor the Sellers shall at any time make
or send any announcement, communication or circular relating to the subject
matter of this Agreement unless such party has first obtained the other party's
written consent to the form and text of such announcement, such consent not to
be unreasonably withheld.

 

11.2  
Clause 11.1 does not apply to an announcement, communication or circular:-

 

11.2.1  
required by law or by the London Stock Exchange or any other securities exchange
or by any governmental authority, in which event the party required to make or
send such announcement, communication or circular shall, where practicable,
first consult with the other party as to the content of such announcement; or

 

11.2.2  
to confirm that the sale of the Company to the Buyer has taken place and the
date of the sale.

 

12.  
NOTICES

 

12.1  
Subject to Clause 12.2, any notice or other communication pursuant to or in
connection with this Agreement shall be in writing and delivered personally or
sent by first class pre-paid recorded delivery post (air mail if overseas) to
the party due to receive such notice or by sending it by fax to the fax number
of the party concerned set out in this Clause, or such other fax number as may
from time to time have been notified in writing to the other party in accordance
with this Clause 12) (subject to the original notice or communication being sent
in the post on the same day in the manner specified above):

 
In the case of the Sellers, 2461 South Clark Avenue, Suite 630, Arlington,
Virginia 22022, for the attention of Amir Rosenthal, CFO, with fax no: +1 (703)
236 3170, with a copy to Hunton & Williams LLP, Bank of America Plaza, Suite
4100, Atlanta, Georgia 30308-2216, for the attention of Joseph B. Alexander,
Jr., Esq., with fax no: +1 (404) 602-9004.
 
In the case of the Buyer, 49 Rodney Street, Liverpool, L1 9EW, for the attention
of David Chestnutt, Chief Executive, with fax no: +44 (0) 151 706 0627, with a
copy to Pinsent Masons, 1 Park Row, Leeds LS1 5AB, for the attention of Rob
Hutchings, with fax no. (+44) 113 244 8000.
 

12.2  
KII irrevocably appoints CEH as its agent for service of process in England,
service upon whom shall be deemed completed whether or not forwarded to, or
received by KII. If such process agent ceases to have an address in England, KII
hereby irrevocably agrees to appoint a new process agent acceptable to the Buyer
and to deliver to the Buyer within 14 days a copy of a written acceptance of
appointment by such process agent.

 

12.3  
Any notice required to be served on the Sellers shall be effective if served on
either KII or CEH in accordance with this Clause.

 

12.4  
Subject to Clause 12.5, any notice or other communication shall be deemed to
have been served:-

 

12.4.1  
if delivered personally, when left at the address referred to in Clause 12.1;

 

12.4.2  
if sent by pre-paid recorded delivery post (except air mail), two days after
posting it;

 
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12.4.3  
if sent by air mail, four days after posting it;

 

12.4.4  
if sent by fax (subject to the original notice or communication being sent by
post on the same day in the manner specified in Clause 12.1) one hour after
despatch subject to receipt during office hours.

 

12.5  
If a notice is given or deemed given at a time or on a date which is not a
Business Day, it shall be deemed to have been given on the first Business Day
thereafter.

 

13.  
ENTIRE AGREEMENT

 

13.1  
This Agreement and the Disclosure Letter sets out the entire agreement and
understanding between the parties in respect of the subject matter of this
Agreement. This Agreement supersedes and extinguishes all previous agreements
between the parties relating to the subject matter thereof and any
representations and warranties previously given or made, including, without
limitation, the heads of agreement dated 29/30 April 2007 which shall cease to
have any further force or effect. It is agreed that:-

 

13.1.1  
the Buyer has not entered into this Agreement in reliance upon, nor relied upon,
any representation, warranty or undertaking of any other party which is not
expressly set out in this Agreement;

 

13.1.2  
no party shall have any remedy in respect of, and each party hereby irrevocably
and unconditionally waives any right it may have to claim damages or to rescind
this Agreement by reason of, any misrepresentation or any untrue statement made
by any other party which is not contained in this Agreement nor for any breach
of warranty which is not contained in this Agreement;

 

13.1.3  
no breach of this Agreement shall in any event give rise to a right on the party
of the Buyer to rescind or terminate this Agreement;

 

13.1.4  
this Clause shall not exclude any liability for, or remedy in respect of fraud,
or fraudulent misrepresentation; and

 

13.1.5  
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 (other than the Company or the Subsidiary) of the Sellers’ Group.

 

13.2  
No variation of this Agreement shall be effective unless made in writing and
signed by or on behalf of each party.

 

14.  
FURTHER ASSURANCE

 

14.1  
During the period which is two years from and after Completion, each of the
Buyer and the Sellers shall:-

 

14.1.1  
at their own cost at any time after Completion do or procure the doing of all
such acts and things and/or execute or procure the execution of all such
documents as the other party may reasonably request for the purpose of vesting
the Shares in the Buyer or giving full effect to all the provisions of this
Agreement; and

 

14.1.2  
at the other party’s cost give to the other party such assistance as it may
reasonably require in connection with any dispute or threatened dispute directly
or indirectly relating to the Company, the Property, the Intellectual Property,
(including the Company Trademarks) and/or the Confidential Information.

 
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14.2  
In the event that (following Completion) any sum is received by any member of
the Seller's Group from a customer of the Company and which that customer
despatched in intended payment of (all or part of) an invoice from the Company
and for the Company's account, the Sellers shall procure that such sum is
forwarded to the Company as soon as reasonably practicable after such receipt.

 

15.  
EFFECT OF COMPLETION

 
This Agreement and in particular the Warranties and the Tax Deed insofar as any
of its provisions remain to be, or are capable of being, performed or observed,
shall remain in full force and effect after Completion.
 

16.  
WAIVER

 

16.1  
The failure to exercise or delay in exercising a right or remedy under this
Agreement shall not constitute a waiver of the right or remedy or a waiver of
any other rights or remedies and no single or partial exercise of any right or
remedy under this Agreement shall prevent any further exercise of the right or
remedy or the exercise of any other right or remedy.

 

16.2  
Unless specifically provided otherwise, the rights and remedies contained in
this Agreement are in addition to, and not exclusive of, any other rights or
remedies available at law.

 

17.  
COSTS

 
The Buyer and the Sellers shall each pay their own costs in relation to the
negotiation, preparation, execution and implementation of this Agreement and of
each document referred to in this Agreement.
 

18.  
ASSIGNMENT

 
Except as provided herein, no party may assign, or grant an Encumbrance or
security interest over, any of its rights under this Agreement. Each party that
has rights under this Agreement is acting for its own behalf. The Buyer may
assign its rights under this Agreement but not its obligations to a member of
its Group (“Permitted Assignee”). In the event of any Permitted Assignee itself
subsequently becoming the subject of a sale or transfer other than to a
Permitted Assignee then the Buyer shall procure that the rights assigned under
this agreement are assigned to a Permitted Assignee 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 Buyer or the Company to deal with
the Shares or any assets of the Company.
 

19.  
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

 
Subject to Clause 18 (and save for the persons referred to in Clause 5.5), a
person who is not a party to this Agreement shall have no rights under the
Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term of
this Agreement provided that this does not affect any right or remedy of the
third party which exists or is available apart from that Act. No party may
declare itself as a trustee of the rights under this Agreement for the benefit
of any third party save as expressly provided in this Agreement.
 

20.  
COUNTERPARTS

 
This Agreement may be executed in any number of counterparts and by each of the
parties on separate counterparts each of which when executed and delivered shall
be deemed to be an original, but all the counterparts together shall constitute
one and the same document.
 

21.  
LAW AND JURISDICTION

 

21.1  
This Agreement shall be governed by and construed in accordance with the laws of
England.

 
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21.2  
The parties hereby submit to the exclusive jurisdiction of the High Court of
England in relation to any dispute or claim arising out of or in connection with
this Agreement.

 
EXECUTED AS A DEED by the parties on the date which first appears in this deed.
 
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SCHEDULE 1
THE COMPANY
PART 1  
 
1.
Registered number: 01338772

 
2.
Registered office: Cardrew Way, Redruth, Cornwall, TR15 1ST

 
3.
Date and place of incorporation: 15/11/1977, United Kingdom

 
4.
Authorised share capital: 250,000 Ordinary Shares of £1

 
5.
Issued share capital: 222,758 Ordinary Shares of £1

 
6.
Shareholders:

 
Shareholder                                    No of class shares
 
CEH Limited, Cardrew Way, Redruth, Cornwall                222,758 Ordinary
Shares
 
7.
Loan capital: None

 
8.
Directors:

 
Name                                                Address
 
Keith Mills
 
800 Green Street, PO Box 166, Niagara on the Lake, Ontario, Losijo, Canada
 
Christopher Anderson
 
111 Radio Circle, Mount Kisco, NY 10549
 
Anthony T Castor III
 
3625 10th Street North, Apt. 904, Arlington, Virginia 22201, USA
 
Vernon Leslie Holmes
 
12 Warren Wood Drive, High Wycombe, Buckinghamshire HP11 1DZ
 
Christopher Lacovara
 
65 Central Park West, Penthouse G, New York, 10023, USA
 

9.
Secretary:

 
Alan Richard Elkins
 
1 Garden Way, Little Trethiggey, Quintrell Downs, Newquay, Cornwall
 

10.
Accounting reference date: 31/12

 
11.
Auditors: PricewaterhouseCoopers LLP

 
12.
Charges: None

 
13.
Main activity: Manufacturing

 
14.  Subsidiary: Spraychem Limited
 
23

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THE SUBSIDIARY
 
PART 2  
 
1.
Registered number: 01670517

 
2.
Registered office: Cardrew Way, Redruth, Cornwall, TR15 1ST

 
3.
Date and place of incorporation: 07/10/1982, United Kingdom

 
4.
Authorised share capital: 20,000 Ordinary Shares of £1

 
5.
Issued share capital: 1,000 Ordinary Shares of £1

 
6.
Shareholders:

 
Shareholder                                        No of class shares
 
Contico Manufacturing Limited
Cardrew Way Redruth, Cornwall                            1,000 Ordinary Shares

7.
Loan capital: None

 
8.
Directors:

 
Name                                                Address
 
Vernon Leslie Holmes
 
12 Warren Wood Drive, High Wycombe, Buckinghamshire, HP11 1DZ
 

9.
Secretary:

 
Alan Elkins
 
1 Garden Way, Little Trethiggey, Quintrell Downs, Newquay, Cornwall, TR8 4LG
 

10.
Accounting reference date: 31/01

 
11.
Auditors: PricewaterhouseCoopers LLP

 
12.
Charges: None

 
13.
Main activity: Other manufacturing, other wholesale, non-trading company

 
14.  Subsidiaries: None
 

 
24

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SCHEDULE 2  
 
PART 1  
 
WARRANTIES
 
(CLAUSE 5)
 

1.  
SHARE CAPITAL AND SUBSIDIARIES

 
Shares
 

1.1  
CEH is the legal owner of the Shares and KII is the beneficial owner of the
Shares and are entitled to sell the Shares with full title guarantee on the
terms of this Agreement without the consent of any third party.

 

1.2  
The Shares constitute the whole of the Company's allotted and issued share
capital and are fully paid or credited as fully paid.

 

1.3  
There is no Encumbrance on, over or affecting any of the Shares or any shares,
debentures or other securities of the Company and no person has the right to an
Encumbrance in relation to any of the Shares or any shares, debentures or other
securities of the Company.

 

1.4  
All dividends declared or due in respect of the Shares or the Shares of the
Subsidiary have been paid in full.

 
Subsidiaries
 

1.5  
The Company does not have and never has had any subsidiary (or any subsidiary
undertaking) save for the Subsidiary and the Company has not agreed to acquire
any interest in any body corporate.

 
Shadow Director
 

1.6  
The Company has no liability as a former member, officer or shadow director of
any person nor are there any circumstances in which such liability could arise.

 
Company and Subsidiary Information
 

1.7  
The information contained in Parts 1 and 2 of Schedule 1 is accurate in all
respects

 

2.  
CAPACITY

 

2.1  
The Sellers have the necessary power and authority and has taken all necessary
action to enter into and perform this Agreement, the Tax Deed and each of the
documents to be executed at or before Completion in accordance with this
Agreement which will, when executed, become binding and enforceable obligations
on the Sellers.

 

2.2  
The execution or the performance of this Agreement or any document to be
executed at Completion in accordance with this Agreement will not result in a
breach of any agreement or arrangement to which the Company is a party or by
which the Company is bound or any Licence or statutory or regulatory provision.

 

3.  
RECORDS AND DOCUMENTS

 
Storage of records
 
25

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3.1  
All records or data relating to the Company are under the ownership and direct
control of the Company, and all title deeds relating to the Company are under
the exclusive ownership of the Company.

 

4.  
ACCOUNTS AND RECORDS

 
Accuracy of the Accounts
 

4.1  
The Accounts:-

 

4.1.1  
give a true and fair view of the state of the Company's affairs and of its
results for the financial year ended on the Accounts Date;

 

4.1.2  
have been prepared and audited in compliance with applicable law and generally
accepted accounting conventions, standards, principles and practices
("Accounting Practice") on a consistent basis for each of the last three
financial years ended on the Accounts Date.

 
Events since the Accounts Date
 

4.2  
Since the Accounts Date:-

 

4.2.1  
no dividend or other distribution within the meaning of Part VIII of the Act or
of ICTA has been declared, paid or made by the Company except as provided for in
the Accounts;

 

4.2.2  
no share or loan capital of the Company has been or agreed to be issued,
allotted, redeemed, purchased or repaid by the Company; and

 

4.2.3  
no resolution of the shareholders of the Company has been passed.

 
Management Accounts
 

4.3  
The Management Accounts have:

 

4.3.1  
been prepared in accordance with accounting practice consistent with those used
in preparing the Accounts;

 

4.3.2  
fairly represent the income and expenditure of the Company to the Management
Accounts Date; and

 

4.3.3  
are not affected by any material unusual or non recurring items.

 

5.  
INSIDER CONTRACTS

 

5.1  
The Company is not, and during the three years preceding the date of this
Agreement has not been, a party to any agreement or arrangement (whether legally
enforceable or not) in which either of the Sellers or any member of the Sellers'
Group or any director or former director of the Sellers' Group or any connected
person of any of them is or was directly or indirectly interested.

 

5.2  
There is no claim or circumstance which may give rise to a claim against the
Company by any member of the Sellers' Group or any director or former director
of the Company or any connected person of any of them on any account whatsoever.

 

6.  
INSOLVENCY

 

6.1  
In relation to the Company:-

 
26

--------------------------------------------------------------------------------

 

6.1.1  
no resolution has been passed (and no meeting has been convened, and no written
resolution has been circulated with a view to any resolution), no petition has
been presented and no order has been made, for winding up; and

 

6.1.2  
no administrative receiver, receiver, administrator, liquidator or provisional
liquidator has been appointed and, no Encumbrance has been enforced.

 

6.2  
In relation to each of the Sellers (being bodies corporate):-

 

6.2.1  
no resolution has been passed, no petition has been presented and no order has
been made, for winding up;

 

6.2.2  
no notice of intention to appoint an administrator has been filed and no
application for the appointment of an administrator has been made;

 

6.2.3  
no administrative receiver, receiver, administrator, liquidator or provisional
liquidator has been appointed and no Encumbrance has been enforced;

 

6.2.4  
no floating charge has crystallised and no holder of any floating charge
(whether qualifying or not) has taken any steps to enforce such security;

 

6.2.5  
no distress, distraint, charging order, execution or other process has been
levied, on or over any of the Shares; and

 

6.2.6  
no event analogous to any of the above has occurred in the US or any
jurisdiction.

 

7.  
INSURANCE

 

7.1  
The Company has at all material times been and is now adequately covered against
accident, damage, injury, third party loss and other risks normally insured
against by persons operating the type of business operated by the Company.

 

8.  
PROPERTY MATTERS

 
Title
 

8.1  
The Property comprises all the freehold and leasehold land and premises owned,
used or occupied by the Company and the Company has never been a party to any
lease other than the current leases of the Property in respect of which actual
or contingent obligations may subsist.

 

8.2  
So far as the Sellers are aware, there has been no breach by the Company of the
terms of the Lease.

 
Liabilities
 

8.3  
The Company has not been the tenant, licensee, assignee or guarantor of any
lease, licence or tenancy agreement other than in relation to the Property.

 

8.4  
The Company has not at any time acquired, assigned or otherwise disposed of any
leasehold property in such a way that it retains any residual liability in
respect of it.

 

8.5  
Since the Accounts Date the Company has not acquired or disposed of, or agreed
to acquire or dispose of, or granted any option in respect of, any interest in
any land or premises nor will it do so before Completion without the prior
written consent of the Buyer.

 

8.6  
There is not outstanding any monetary claim or liability (contingent or
otherwise) affecting the Property.

 
27

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9.  
ENVIRONMENTAL MATTERS

 
"harm"
 
means harm to the health of living organisms or other interference with the
ecological systems of which they form part and in the case of man includes any
offence caused to any of his senses or harm to his property
 
"Hazardous Substance"
 
means any natural or artificial substance or combination of substances (whether
in solid or liquid form or in the form of a gas or vapour) capable of causing
harm to the Environment including but not limited to waste of any nature and any
hazardous, toxic or dangerous substance or article
 

Hazardous Substances
 

9.1  
None of the activities of the Company at any time have, nor has any use of any
asset or property owned, occupied or used by the Company or any other person in
connection with the activities of the Company at any time, involved the use of,
or the release or discharge into the Environment of, or contained, any Hazardous
Substance prescribed or specified under any Environmental Laws as being
prohibited or restricted.

 
Contamination of land and other assets
 

9.2  
No land or other asset now or previously owned, occupied or used by the Company
contains or has contained any storage tanks or any Hazardous Substance whether
above or below ground.

 

10.  
GRANTS AND ALLOWANCES

 
Full particulars of all grants, allowances, subsidies, loans or financial
assistance paid or pledged to the Company during the last six years by any
supranational, national or local authority or government agency are set out in
the Disclosure Letter and no member of the Sellers' Group has done or failed to
do any act or thing (including the entering into of this Agreement) which could
result in such grant or allowance becoming repayable or forfeited in whole or in
part or in a claim for such grant not being granted.
 

11.  
INTELLECTUAL PROPERTY

 

11.1  
CCP is the sole legal and beneficial owner of the trademarks that are being
licensed to the Company pursuant to the Trademark Licence.

 

12.  
TAX MATTERS

 

12.1  
The Company has, within the relevant time limits, correctly made all returns
(including returns under Schedule 18 Finance Act 1998) required to be made and
given all notices required to be given by the Company and maintained all records
for any Tax purpose and the information contained in any such returns and
notices and records was full and accurate.

 

12.2  
The Company has properly deducted and/or withheld from payments made by it all
Tax required to be deducted and/or withheld and within the relevant time limits
paid or accounted for all Tax which it is or was liable to pay or account for
(including Tax required to be deducted or withheld from payments).

 

12.3  
The Company is not a close company for the purposes of United Kingdom Tax.

 

12.4  
No employee or director or former employee or director of the Company or any
person associated with any of them holds or has within the last six years held
any shares or securities or options over or interests in any shares or
securities of the Company and the Company will not, so far as the Sellers are
aware, be liable after Completion to pay national insurance contributions or
account for income tax or national insurance under the PAYE system in respect
of, or in consequence of any event occurring in relation to, any such shares,
securities, options or interests.

 
28

--------------------------------------------------------------------------------

 

12.5  
The amount at which any asset is included in the Accounts and/or the amount of
consideration given on the acquisition of any asset by the Company since the
Accounts Date, is such that on the disposal of such asset for a consideration
equal to such amount (disregarding any statutory right to make any election or
to claim any allowance or relief other than one allowable under Section 38
TCGA), no liability to corporation tax in respect of any chargeable gain will
arise.

 

12.6  
The value attributed in the Accounts to each asset, or the aggregates of the
values attributed to the assets in each pool of assets in respect of which
separate computations for capital allowances are required to be made or, as a
result of any election, are made, is such that on a disposal of each such asset
or pool of assets on the Accounts Date for a consideration equal to such a value
or aggregate value no balancing charge would arise.

 

12.7  
The Company is not and has never been a member of a group for Tax purposes
(other than being grouped with the Subsidiary).

 

12.8  
All instruments executed by the Company which are not subject to stamp duty land
tax and by virtue of which the Company has any rights have been duly stamped
and, where appropriate, stamped with the particulars delivered stamp by HM
Revenue & Customs and the Company has not executed outside the United Kingdom
any instrument relating to any property situated or to any matter or thing done,
or to be done, in any part of the United Kingdom.

 

12.9  
No relief from stamp duty or stamp duty land tax previously granted will be
withdrawn on or in connection with the sale of the Company pursuant to this
Agreement.

 

12.10  
The Company has not:-

 

12.10.1  
entered into a contract to purchase any land or an agreement to take a lease of
any land which in either case has not been completed by a conveyance or the
grant of a lease; or

 

12.10.2  
entered into a land transaction where there will or may be an obligation in the
future to make a further land transaction return; or

 

12.10.3  
applied to defer payment of stamp duty land tax under section 90 Finance Act
2003.

 

12.11  
The Company is, and always has been, resident only in the United Kingdom for Tax
purposes (and has never been treated as resident outside the United Kingdom for
the purposes of any double tax convention).

 

12.12  
The Company is not carrying on and has never carried on any trade or otherwise
been liable to Tax other than in the United Kingdom, or is acting or has ever
acted as the branch, agent, factor, or tax representative of any person resident
outside the United Kingdom for Tax purposes and no such person carries on any
trade or business through the Company.

 

12.13  
The Company has not been party to any transaction in respect of which the
relevant Tax Authority may substitute for Tax purposes a different amount or
value than the amount or value of the actual consideration given or received by
the Company, including, for the avoidance of doubt, any transaction to which
Schedule 28AA ICTA might apply.

 

13.  
GENERAL

 

13.1  
The Company has not incurred any liability of any nature in circumstances where
such liability is known by the senior management of KII or CEH but is not known
by the Senior Management.

 
29

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13.2  
The details of the intra-Group services provided to the Company by other members
of the Sellers' Group and set out in the Disclosure Letter is true and accurate
and there are no other intra-Group services provided to the Company.

 

13.3  
Except in respect of trading in the ordinary course of business with the Sellers
or any members of the Sellers' Group:

 

13.3.1  
there is no outstanding indebtedness or other liability between the Company and
any member of the Sellers' Group (actual or contingent);

 

13.3.2  
there is no outstanding contract or commitment between the Company and any
members of the Sellers' Group; and

 

13.3.3  
no members of the Sellers Group are entitled to a claim of any nature against
the Company or have assigned to any person the benefit of a claim against the
Company to which the Sellers or a member of the Sellers' Group would otherwise
be entitled.

 

13.4  
All mortgages, guarantees, pledges or other security agreements or arrangements
which have been given or entered into by the Company or any third party in
respect of any borrowings or other obligations of the Company will be discharged
on Completion.

 

13.5  
There are no outstanding bonuses or other benefits owed to Senior Management by
the Sellers or any member of the Sellers' Group.

 

13.6  
The Subsidiary is dormant (or is capable of being declared dormant) within the
meaning of Part VII of the Act and the Company has not given any form of
guarantee or security (or letter of comfort) to any person or party in respect
of any liability of (or any matter affecting) the Subsidiary.

 

13.7  
So far as the Sellers are aware, all of the assets included in the Accounts or
acquired by the Company since the Accounts Date are legally and beneficially
owned by the Company free from any Encumbrance, except for:

 

13.7.1  
title retention provisions in respect of goods and materials supplied to the
Company in the ordinary course of business; and

 

13.7.2  
the security interests, if any, reflected in the Accounts and liens arising in
the ordinary course of business by operation of law.

 

13.8  
The Company has no liability to make any contributions or payments to any
pension or other benefit arrangements provided by any members of the Sellers'
Group.

 

13.9  
So far as the Sellers are aware (and save as disclosed in the Disclosure
Letter), the Company is not liable for (and has no contractual obligation to
provide) any benefit to any employees (or former employees) of the Company by
reference to old age, retirement or death.

 

 

30

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PART 2  
 
BUYER’S WARRANTIES
 
(CLAUSE 5)
 

 
POWER TO BUY THE COMPANY
 

13.10  
The Buyer has taken all necessary action and has all requisite power and
authority to enter into and perform this Agreement and the Transaction
Documents.

 

13.11  
This Agreement and the Transaction Documents constitute (or shall constitute
when executed) valid, legal and binding obligations on the Buyer in the terms of
this Agreement and the Transaction Documents.

 

13.12  
Compliance with the terms of this Agreement and the Transaction Documents shall
not breach or constitute a default under any of the following:

 

13.12.1  
any agreement or instrument to which the Buyer is a party or by which it is
bound; or

 

13.12.2  
any order, judgment, decree or other restriction applicable to the Buyer.

 

 

31

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SCHEDULE 3  
 
PART 1  
 
WORKING CAPITAL STATEMENT
 

1.  
FORM AND CONTENT OF WORKING CAPITAL STATEMENT

 
The Working Capital Statement shall be drawn up by the Buyer at its cost as soon
as practicable after Completion in accordance with this Schedule and the form
set out in Part 2 of this Schedule 3.
 

2.  
Accounting Policies

 

2.1  
The Working Capital Statement shall be drawn up in accordance with:-

 

2.1.1  
the policies, procedures and practices set out in paragraphs 2.2 to 2.3 below;

 

2.1.2  
to the extent not inconsistent with paragraph 2.1.1, the accounting policies,
procedures and practices adopted in calculating the Target Working Capital,
applied on a consistent basis;

 

2.1.3  
to the extent not inconsistent with paragraphs 2.1.1 and 2.1.2, the accounting
policies, procedures and practices adopted in the Accounts, applied on a
consistent basis; and

 

2.1.4  
to the extent not inconsistent with paragraphs 2.1.1, 2.1.2 and 2.1.3, the
accounting principles generally accepted in the United States.

 

2.2  
The Working Capital Statement shall be drawn up as at the close of business on 1
June 2007. No account shall be taken of events taking place after the close of
business on 1 June 2007.

 

2.3  
The Working Capital Statement shall be expressed in pounds sterling. Amounts in
other currencies shall be translated into pounds sterling at the Exchange Rate.

 

3.  
Preparation

 

3.1  
No later than 20 days following Completion, the Buyer shall deliver to the
Sellers a draft of the Working Capital Statement (the "Draft Working Capital
Statement"). Prior to such delivery the Buyer shall so far as is practicable
consult with the Sellers with a view to reducing the potential areas of
disagreement.

 

3.2  
In order to enable the Sellers to review and agree the Draft Working Capital
Statement, the Buyer shall keep up to date and subject to reasonable notice,
make available to the Sellers' representatives and to the Sellers' accountants
all books and records relating to the Company during normal office house and
co-operate with them with regard to the agreement of the Draft Working Capital
Statement.

 

3.3  
If the Sellers do not within 20 days of presentation to it of the Draft Working
Capital Statement give notice to the Buyer that it disagrees with the Draft
Working Capital Statement or any item thereof, such notice stating the reasons
for the disagreement in reasonable detail and specifying the adjustments which,
in the Sellers’ opinion should be made to the Draft Working Capital Statement
(the "Disagreement Notice"), the Draft Working Capital Statement shall be final
and binding on the parties for all purposes.

 

3.4  
If within the 20 day period referred to in paragraph 3.3, the Sellers’ give a
Disagreement Notice, the Sellers and the Buyer shall attempt in good faith to
reach agreement in respect of the Draft Working Capital Statement and, if they
are unable to do so within 2 days of such notification the Sellers or the Buyer
may by notice to the other require that the Draft Working Capital Statement be
referred to the Reporting Accountants (an "Appointment Notice").

 
32

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3.5  
The Reporting Accountants shall be engaged jointly by the Sellers and the Buyer
on the terms set out in this paragraph 3 and otherwise on such terms as shall be
agreed; provided that neither the Sellers nor the Buyer shall unreasonably
(having regard, inter alia, to the provisions of this paragraph 3) refuse its
agreement to terms proposed by the Reporting Accountants or by the other party.
If the terms of engagement of the Reporting Accountants have not been settled
within 5 Business Days of their identity having been determined (or such longer
period as the Sellers and the Buyer may agree) then, unless the Sellers or the
Buyer are unreasonably refusing its agreement to those terms, those accountants
shall be deemed never to have become the Reporting Accountants and new Reporting
Accountants shall be selected in accordance with the provisions of this
Agreement.

 

3.6  
Except to the extent that the Sellers and the Buyer agree otherwise, the
Reporting Accountants shall determine their own procedure but:-

 

3.6.1  
apart from procedural matters and as otherwise set out in this Agreement shall
determine only:

 

(a)  
whether any of the arguments for an alternation to the Draft Working Capital
Statement put forward in the Buyer's Disagreement Notice is correct in whole or
in part; and

 

(b)  
if so, what alterations should be made to the Draft Working Capital Statement in
order to correct the relevant inaccuracy in it;

 

3.6.2  
shall apply the principles set out in paragraph 2 of Part 1 of Schedule 3;

 

3.6.3  
shall make their determination pursuant to paragraph 3.6.1 above, within 5 days
of their appointment in accordance with paragraph 3.5 of this Schedule (or
failing this no later than 30 July 2007);

 

3.6.4  
the procedure of the Reporting Accountants shall:

 

(a)  
give the Sellers and the Buyer a reasonable opportunity to make written
representations to them;

 

(b)  
require that each party supply the other with a copy of any written
representations at the same time as they are made to the Reporting Accountants;
and

 

(c)  
for the avoidance of doubt, the Reporting Accountants shall not be entitled to
determine the scope of their own jurisdiction.

 

3.7  
The determination of the Reporting Accountants pursuant to paragraph 3.6.1
shall:-

 

3.7.1  
be made in writing and made available for collection by the Sellers and the
Buyer at the offices of the Reporting Accountants at such time as they shall
determine; and

 

3.7.2  
unless otherwise agreed by the Sellers and the Buyer include reasons for each
relevant determination.

 

3.8  
The Reporting Accountants shall act as experts and not as arbitrators and their
determination of any matter falling within their jurisdiction shall be final and
binding on the Sellers and the Buyer save in the event of manifest error (when
the relevant part of their determination shall be void and the matter shall be
remitted to the Reporting Accountants for correction). In particular, without
limitation their determination shall be deemed to be incorporated into the Draft
Working Capital Statement.

 

3.9  
The expenses (including VAT) of the Reporting Accountants shall be borne as they
shall direct at the time they make any determination under paragraph 3.6.1(a)
or, failing such direction, equally between the Buyer, on the one hand, and the
Sellers, on the other.

 
33

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3.10  
The Sellers and Buyer shall co-operate with the Reporting Accountants and comply
with their reasonable requests made in connection with the carrying out of their
duties under this Agreement. In particular, without limitation, the Buyer shall
keep up to date and, subject to reasonable notice, make available to the
Reporting Accountants all books and records relating to the Company during
normal office hours during the period from the appointment of the Reporting
Accountants down to the making of the relevant determination.

 

3.11  
Subject to paragraph 3.12, nothing in this Schedule shall entitle any party or
the Reporting Accountants access to any information or document which is
protected by legal professional privilege, or which has been prepared by the
other party or its accountants and other professional advisors with a view to
assessing the merits of any claim or argument.

 

3.12  
A party shall not be entitled by reason of paragraph 3.11 to refuse to supply
such part or parts of documents as contain only the facts on which the relevant
claim or argument is based.

 

3.13  
Each party and the Reporting Accountants shall, and shall procure that its
accountants and other advisers shall, keep all information and documents
provided to the pursuant to this paragraph 3 confidential and shall not use the
same for any purpose, except for disclosure or use in connection with the
preparation of the Draft Working Capital Statement, the proceedings of the
Reporting Accountants or other matter arising out of this Agreement or in
defending any claim or argument or alleged claim or argument relating to this
Agreement or its subject matter.

 

4.  
Determination of Working Capital

 

4.1  
The Draft Working Capital Statement as agreed or determined in accordance with
paragraph 3, shall:-

 

4.1.1  
constitute the Working Capital Statement for the purposes of this Agreement; and

 

4.1.2  
shall be final and binding on the Sellers and the Buyer.

 

4.2  
The Working Capital shall be derived from the Working Capital Statement.

 
 

 

34

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PART 2   - WORKING CAPITAL STATEMENT
 
"Working Capital" shall mean the net total of the following line items for the
Company as at Completion. For purposes of clarification, the table below
includes the calculation as at 28th February 2007.
 
All amounts in pounds sterling
FEB-actual
     
£ whole
A/R (gross)
1959858
reserves
-49576
NET A/R
1910282
   
INV (gross)
1618423
reserves
-6858
NET INVENTORY
1611565
   
OTHER CURRENT ASSETS
 
PREPAID
45597
OTHER C/A ****
7532
 
53129
   
TOTAL CURRENT ASSETS
3574976
       
ACCOUNTS PAYABLE
 
TRADE
659989
VAT
103386
ACCRUED A/P (unvouched invoices)
70035
PAYROLL TAXES (Nat'l Ins)
351170
 
1184580
   
ACCRUALS( payroll, commissions, bonus, sales programs)
293349
   
INCOME/ CORPORATION TAX PAYABLE
149147
   
CURRENT LIAB(excl. interco)
1627076
   
INTERCO PAYABLE
 
TRADE (royalty (acct no. 2175), trade (acct no. 2174) and mgm't chg from KII
(account no. 2177))
210087
   
NET W/C
1737813

 
35

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EXECUTED (but not delivered
until the date hereof) AS A DEED by
CEH LIMITED
 
/s/ Christopher W. Anderson
 
/s/ Anthony T. Castor III
)
)
)
 
Director
 
Director/Secretary
 
 
 
 
EXECUTED (but not delivered
until the date hereof) AS A DEED by
KATY INDUSTRIES INC.
 
/s/ Anthony T. Castor III
)
)
)
 
Authorised Signatory
 
 
 
 
 
EXECUTED (but not delivered
until the date hereof) AS A DEED by
INVESCOTEC LIMITED
 
/s/ David Chestnutt
 
/s/ Rebecca Smith
)
)
)
 
Director
 
Director/Secretary
 
 
 

 
 
 
 
 36

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