Exhibit 10.20

Dated 05 February 2007

Interior Projects Solutions Limited

(as the Purchaser)

Collins & Aikman Floorcoverings Inc

(as the Vendor)

 

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Share Purchase Deed

relating to the shares in

Tandus Europe Limited

 

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LOGO [g18737img001.jpg]

99 Bishopsgate

London EC2M 3XF

+44 (0)20 7710 1000 (Tel)

+44 (0)20 7374 4460 (Fax)

www.lw.com

Contact: Rory Negus / John Houghton

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CONTENTS

 

Clause        Page   1.   Interpretation    1   2.   Sale of shares    3   3.  
Consideration    3   4.   Completion    3   5.   Stamping and share rights    4
  6.   Warranties    5   7.   Post Completion Obligations    6   8.   Employees
   7   9.   Confidentiality    7 10.   Announcements    8 11.   Provisions
relating to this Agreement    9 12.   Law and Jurisdiction    11 schedule 1 :
Adjustment of Consideration    12 schedule 2 : Former employees    16

 

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THIS AGREEMENT is made as a deed on 05 February 2007

BETWEEN

 

(1) INTERIOR PROJECTS SOLUTIONS LIMITED (the “PURCHASER”) a company registered
in England and Wales under company number 04110449 with its registered office at
Unit B6, The Seedbed Centre Wyncolls Road, Severalls Business Park, Colchester
Essex, CO4 9HT; and

 

(2) COLLINS & AIKMAN FLOORCOVERINGS INC (the “VENDOR”) a company registered in
the United States with its registered office at 311 Smith Industrial Blvd,
Dalton, GA 30722-1447, USA.

 

BACKGROUND:

 

(A) The Vendor wishes to sell and the Purchaser wishes to acquire the entire
issued share capital of Tandus Europe Limited on and subject to the terms of
this Agreement.

NOW IT IS AGREED as follows:

 

1. Interpretation

 

1.1 Definitions

In this Agreement where the context admits:

“Affiliate” means, in relation to a body corporate, any subsidiary or holding
company of such body corporate, and any subsidiary of any such holding company
for the time being;

“Agreed Form” means, in relation to any document, a document in the terms signed
or initialled by or on behalf of the parties for identification;

“Audited Accounts” means the audited consolidated balance sheet of the Company
and the Subsidiaries made up as at the Balance Sheet Date and the audited
consolidated profit and loss account of the Company and the Subsidiaries in
respect of the period ended on the Balance Sheet Date including, in each case,
the notes thereto and the directors’ report and auditors’ report;

“Balance Sheet Date” means 29 January 2006;

“Business Day” means a day (other than a Saturday or Sunday) on which banks are
open for ordinary banking business in London;

“Company” means Tandus Europe Limited a company registered in England and Wales
under company number 02186099 with its registered office at Unit 8/9 Rising Sun
Estate, Blaina, Abertillery, Gwent NP13 3JW;

“Companies Acts” means statutes from time to time in force concerning companies
including (without limitation) the Companies Act 1985, the Companies Act 1989,
Part V of the Criminal Justice Act 1993 and the Companies Consolidation
(Consequential Provisions) Act 1985;

“Completion” means completion of the sale and purchase of the Sale Shares in
accordance with clause 4;

“Completion Date” means the day on which Completion takes place;

“Compromise Agreements” means the compromise agreements between the Company and
each of David Nuttall and Ian Wolstenholme in the Agreed Form;

 

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“Consideration” means the consideration to be paid for the Sale Shares in
accordance with clause 3.1;

“Debenture” means the debenture in the Agreed Form given by the Company as
security for, inter alia, the Loan Notes;

“Directors” means in relation to the Company or any of the Subsidiaries, its
directors;

“Encumbrance” means any mortgage, charge, pledge, lien, assignment,
hypothecation, security interest (including any created by law), or other
security agreement or arrangement but does not include any retention of title
provision;

“Guarantee” means any guarantee, suretyship, indemnity, bonding liability or
similar contingent liability given or undertaken by a person to secure or
support the obligations of any third party but does not include any Guarantee
given to National Westminster Bank plc by the Vendor in respect of the overdraft
facility of the Company;

“Loan Notes” means the US$4,090,200 Floating Rate Secured Loan Notes due 2009 to
2014 in the Agreed Form to be issued by the Purchaser to the Vendor on
Completion;

“London Stock Exchange” means London Stock Exchange plc;

“Provisional Consideration” has the meaning given in schedule 1;

“Purchaser Documents” has the meaning set out in clause 6.1(A);

“Purchaser’s Group” means the Purchaser and each of its Affiliates including,
after Completion, the Company and each of the Subsidiaries;

“Recognised Investment Exchange” has the meaning given to it by s.285 Financial
Services and Markets Act 2000;

“Sale Shares” means the shares to be bought and sold pursuant to clause 2.1
being all the issued shares in the capital of the Company;

“Subsidiaries” means each of Tandus Manufacturing Limited and Tandus BV;

“Supply Agreement” means the distribution agreement in the Agreed Form to be
entered into between a member of the Vendor’s Group and the Company on
Completion;

“Vendor’s Group” means the Vendor and each of its Affiliates other than the
Company and the Subsidiaries; and

“Vendor’s Solicitors” means Latham & Watkins of 99 Bishopsgate, London, EC2M
3XF.

 

1.2 Construction of certain references

In this Agreement, where the context admits:

 

  (A) words and phrases the definitions of which are contained or referred to in
Part XXVI Companies Act 1985 shall be construed as having the meanings thereby
attributed to them;

 

  (B) references to clauses and schedules are references to clauses of and
schedules to this Agreement, references to paragraphs are, unless otherwise
stated, references to paragraphs of the schedule in which the reference appears,
and references to this Agreement include the schedules;

 

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  (C) references to the singular shall include the plural and vice versa and
references to the masculine, the feminine and the neuter shall include all such
genders;

 

  (D) “person” includes any individual, partnership, body corporate, corporation
sole or aggregate, state or agency of a state, and any unincorporated
association or organisation, in each case whether or not having separate legal
personality; and

 

  (E) “company” includes any body corporate; and

 

  (F) references to “indemnify” and “indemnifying” any person against any
liability or circumstance include indemnifying him and keeping him harmless from
all actions, claims, demands and proceedings from time to time made against that
person and all losses, damages, payments, costs and expenses (including legal
costs and expenses on a full indemnity basis) made, suffered or incurred by that
person as a consequence of or which would not have arisen but for that liability
or circumstance.

 

1.3 Headings

The headings and sub-headings are inserted for convenience only and shall not
affect the construction of this Agreement.

 

1.4 Schedules

Each of the schedules shall have effect as if set out herein.

 

2. Sale of shares

 

2.1 Sale and purchase

Subject to the terms of this Agreement, the Vendor shall sell with full title
guarantee and the Purchaser shall purchase, free from all Encumbrances (whether
known about or not) and together with all rights now or hereafter attaching
thereto the entire issued share capital of the Company comprising 3,436,555
ordinary shares of £1.00 each.

 

2.2 No sale of part only and waiver of pre-emption rights

Neither the Vendor nor the Purchaser shall be obliged to complete the sale and
purchase of any of the Sale Shares unless the sale and purchase of all the Sale
Shares is completed simultaneously. The Vendor waives all pre-emption rights in
respect of the transfer of the Sale Shares and any other rights which it may
have which restrict the transfer of the Sale Shares, howsoever conferred on
them.

 

3. Consideration

 

3.1 Amount

The total consideration for the Sale Shares shall be the sum of US$4,090,200 but
subject to adjustment as provided in this Agreement. Such consideration shall be
satisfied by the issue of the Loan Notes on Completion.

 

4. Completion

 

4.1 Date and place of Completion

Completion shall take place at the offices of the Vendor’s Solicitors
immediately following the signing of this Agreement.

 

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4.2 Vendor’s obligations

On Completion the Vendor shall subject to the due performance by the Purchaser
of its obligations under clause 4.3:

 

  (A) deliver to the Purchaser transfers of the Sale Shares duly executed by the
registered holders thereof in favour of the Purchaser or its nominees together
with the related share certificates or an indemnity in respect of any missing
certificates;

 

  (B) procure that the Directors of the Company and the Subsidiaries retire from
all their offices and employments with the Company and the Subsidiaries;

 

  (C) save in respect of any Encumbrance in respect of National Westinster Bank
plc, the Vendor will forthwith procure the release of the Company and the
Subsidiaries from any contract, arrangement, commitment, Guarantee or security
given by the Company and the Subsidiaries in respect of any indebtedness,
liabilities or obligations of any member of the Vendor’s Group and shall
indemnify the Purchaser against all liabilities arising after Completion in
pending such release;

 

  (D) to the extent not already held by or to the order of the Company or any
Subsidiary, deliver to the Purchaser as agent for the Company and the
Subsidiaries:

 

  (1) all the statutory and other books of the Company and each of the
Subsidiaries and its/their certificate(s) of incorporation, any certificates of
incorporation on change of name and common seal(s);

 

  (2) certificates in respect of all issued shares in the capital of each of the
Subsidiaries;

 

  (E) procure board meetings of the Company and of each of the Subsidiaries to
be held at which there shall be:

 

  (1) passed a resolution to approve, in the case of the Company, the transfers
of the Sale Shares and (subject only to due stamping) to register, in the
register of members, each transferee as the holder of the shares concerned;

 

  (2) appointed as directors and/or secretary such persons as the Purchaser may
nominate;

 

  (3) tendered and accepted the resignations and acknowledgements of the
directors and secretary referred to in clause 4.2(B); and

 

  (F) deliver to the Purchaser, duly signed by the Vendor, the Supply Agreement.

 

4.3 Purchaser’s obligations

On Completion the Purchaser shall:

 

  (A) deliver the Loan Notes duly signed by the Purchaser together with the
related loan note certificates issuable thereunder in the name of the Vendor (or
its nominee);

 

  (B) deliver duly signed by the Purchaser the Debenture; and

 

  (C) deliver duly signed by the Purchaser, the Supply Agreement.

 

5. Stamping and share rights

 

5.1 As soon as reasonably practicable, and in any event within 28 days following
Completion, the Purchaser shall procure delivery of the stock transfer form in
respect of the Shares to the stamp office for stamping and following their
return, procure the registration of the Purchaser as the legal holder of all of
the Shares transferred to it under this Agreement.

 

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5.2 The Vendor declares that for as long as it remains the registered holder of
any of the Shares after Completion (and without prejudice to the Vendor’s right
in respect of the Consideration) it will:

 

  (A) hold such Shares and the dividends and any other moneys paid or
distributed in respect of them after Completion and all rights arising out of or
in connection with them in trust for the Purchaser; and

 

  (B) deal with such Shares and all such dividends, distributions and rights as
the Purchaser may direct for the period between Completion and the day on which
the Purchaser or its nominee is entered in the register of members of the
Company as the holder of such Shares.

 

5.3 With effect from Completion the Vendor irrevocably appoints the Purchaser as
its attorney for the purpose of exercising any rights, privileges or duties
attaching to the Shares including receiving notices of and attending and voting
at all meetings of the members of the Company from Completion to the day on
which the Purchaser or its nominee is entered in the register of members of the
Company as the holder of such Shares.

 

5.4 For the purpose of clause 5.3, the Vendor authorises:

 

  (A) the Company to send any notices in respect of its Shares to the Purchaser;
and

 

  (B) the Purchaser to complete and return proxy cards, consents to short notice
and any other document required to be signed by the Vendor as a member of the
Company.

 

6. Warranties

 

6.1 Warranties

The Purchaser warrants to the Vendor as follows:

 

  (A) the Purchaser has the requisite power and authority to enter into and
perform this Agreement and any other agreement referred to herein to which it is
or has agreed to become a party (the “Purchaser Documents”);

 

  (B) this Agreement constitutes and the Purchaser Documents will, when
executed, constitute binding obligations of the Purchaser in accordance with
their respective terms;

 

  (C) no order has been made and no resolution has been passed for the winding
up of the Purchaser or for a provisional liquidator to be appointed in respect
of it and no petition has been presented and no meeting has been convened for
the purposes of winding up the Purchaser;

 

  (D) no administration order has been made and no petition for such an order
has been presented in respect of the Purchaser;

 

  (E) no receiver (which expression shall include an administrative receiver)
has been appointed in respect of the Purchaser;

 

  (F) the Purchaser is not insolvent or unable to pay its debts within the
meaning of s.123 Insolvency Act 1986 and has not stopped paying its debts as
they fall due;

 

  (G) no voluntary arrangement has been proposed under s.1 of the Insolvency Act
1986 in respect of the Purchaser;

 

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  (H) no event analogous to any of the foregoing has occurred in or outside
England with respect to the Purchaser;

 

  (I) the Purchaser has obtained all necessary shareholder and board approvals
in respect of the entry into of this Agreement and the Purchaser Documents; and

 

  (J) the execution and delivery of, and the performance by the Purchaser of its
obligations under, this Agreement and the Purchaser Documents will not:

 

  (1) be or result in a breach of any provision of the memorandum or articles of
association of the Purchaser;

 

  (2) be or result in a breach of, or constitute a default under, any instrument
to which the Purchaser is a party or by which the Purchaser is bound and which
is material in the context of the transactions contemplated by this Agreement;

 

  (3) be or result in a breach of any order, judgment or decree of any court or
governmental agency to which the Purchaser is a party or by which the Purchaser
is bound and which is material in the context of the transactions contemplated
by this Agreement; or

 

  (4) require the Purchaser to obtain any consent or approval of, or give any
notice to or make any registration with, any governmental or other authority
which has not been obtained or made at the date hereof both on an unconditional
basis and on a basis which cannot be revoked (save pursuant to any legal or
regulatory entitlement to revoke the same other than by reason of any
misrepresentation or misstatement).

 

6.2 Undertaking by Purchaser

The Purchaser agrees and undertakes that (in the absence of fraud or dishonesty)
it has no rights against and shall not make any claim against any member of the
Vendor’s Group (other than the Vendor) or any present or former employee,
director, agent or officer of any member of the Vendor’s Group in connection
with this Agreement or its subject matter. The rights of the said persons are
intended to be enforceable under the Contracts (Rights of Third Parties) Act
1999 but subject to clauses 11.8 and 12 and the parties to this Agreement may
rescind or vary this Agreement without the consent of any of such persons.

 

7. Post Completion Obligations

 

7.1 Changes of Name

The Purchaser shall procure that forthwith after Completion the Company and each
of the Subsidiaries shall change their respective corporate names to names that
do not include the name “Tandus” or any name intended or likely to be confused
or associated with it, and the Purchaser shall supply a copy of the Certificate
of Incorporation on Change of Name (or equivalent official confirmation in the
case of any subsidiary incorporated outside the United Kingdom) to the Vendor
when each such change is effected.

 

7.2 Books and Records

The Purchaser shall procure that:

 

  (A) the Company and the Subsidiaries shall preserve until the sixth
anniversary of Completion all books, records and documents of the Company and
the Subsidiaries which are at Completion in the possession under the control of
each of them or insofar as the same record matters occurring on or before
Completion; and

 

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  (B) until the sixth anniversary of Completion, the Vendor and its agents,
accountants, solicitors and other professional advisers shall be allowed the
right to inspect and take copies of the books, records and documents referred to
in clause 7.2(A) (but only in relation to matters recorded therein which
occurred on or before Completion) at all reasonable times upon the Vendor giving
reasonable written notice of such requirement to the Company or the relevant
Subsidiary.

 

7.3 Guarantees etc.

The Purchaser shall use its best endeavours to secure on or as soon as
reasonably practicable following Completion the release of the Vendor and any
other member of the Vendor’s Group from all the guarantees, indemnities and
other contingent liabilities given in respect of or otherwise relating to any
obligations or liabilities of any of the Company and the Subsidiaries (other
than in respect of goods manufactured or sold which were, at the time they were
manufactured or sold, were faulty or defective or did not comply with warranties
or representations expressly made or implied by or on behalf of the Company or
the Subsidiaries) (a “Vendor’s Guarantee”) (offering its own covenant and
appropriate security in substitution if requested by the Vendor). The Purchaser
shall in the meantime with effect from Completion indemnify the Vendor and every
other member of the Vendor’s Group against any liability incurred in relation
thereto and pay to the Vendor (on behalf of itself and every other member of the
Vendor’s Group) an amount equal to every such liability so incurred within 40
days of written notification from the Vendor or any other member of the Vendor’s
Group that such a liability has arisen, such payment to be made into a bank
account specified by the Vendor. Until such time as all the Vendor’s Guarantees
have ceased to have any effect, the Purchaser shall not sell, transfer or
otherwise dispose of a controlling shareholding in the Company or the Subsidiary
in respect of the obligations of which any such Vendor’s Guarantee was given
(the “relevant company”) without (i) each such Vendor’s Guarantee being released
or (ii) the consent in writing of the Vendor, not to be unreasonably withheld,
and if every such Vendor’s Guarantee is not so released on or before such sale,
transfer or other disposal being effected the Purchaser shall procure (without
prejudice to the rights of the Vendor as to the giving or withholding of its
consent) that the person acquiring such controlling shareholding shall enter
into a direct undertaking with the Vendor in the terms set out in this clause
7.3 in relation to each such Vendors’ Guarantee and any sale, transfer or other
disposal of a controlling interest in the relevant company by such person. Save
as to any payment in respect of monies owed to National Westminster Bank plc,
any payment by the Purchaser pursuant to this clause 7.3 shall be deemed a
reduction in the Consideration and shall be effected by a reduction in the
principal outstanding under the Loan Notes in accordance with paragraph 5.2 of
schedule 1.

 

8. Employees

 

8.1 Termination costs under Compromise Agreements

The Vendor shall indemnify the Purchaser against any sum due or action, award,
claim or other legal recourse, debt, expense, fine, liability or other costs
incurred by the Company or the Purchaser as a result of the termination of
employment of those former employees of the Company listed in schedule 2. Any
payment made by the Purchaser under this clause, shall be deemed a reduction in
the Consideration and shall be effected by a reduction in the principal
outstanding under the Loan Notes in accordance with paragraph 5.2 of schedule 1.

 

9. Confidentiality

 

9.1 Confidentiality

Subject to clause 9.2 and to clause 10, each party:

 

  (A) shall treat as strictly confidential the provisions of this Agreement and
the process of their negotiation and all information about the other party
obtained or received by it as a result of negotiating, entering into or
performing its obligations under this Agreement (“Confidential Information”);
and

 

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  (B) shall not, except with the prior written consent of the other party (which
shall not be unreasonably withheld or delayed), make use of (save for the
purposes of performing its obligations under this Agreement) or disclose to any
person any Confidential Information.

 

9.2 Permitted disclosure or use

Clause 9.1 shall not apply if and to the extent that the party using or
disclosing Confidential Information can demonstrate that:

 

  (A) such disclosure is required by law or by any supervisory, regulatory or
governmental body having jurisdiction over it (including but not limited to the
Financial Services Authority, the London Stock Exchange, the Panel on Take-overs
and Mergers, the Serious Fraud Office, the US Securities and Exchange Commission
or the New York Stock Exchange) and whether or not the requirement has the force
of law; or

 

  (B) such disclosure is to its professional advisers in relation to the
negotiation entry into or performance of this Agreement or any matter arising
out of the same;

 

  (C) in the case of disclosure or use, the Confidential Information concerned
was lawfully in its possession (as evidenced by written records) prior to its
being obtained or received as described in clause 9.1(A); or

 

  (D) in the case of disclosure or use, the Confidential Information concerned
has come into the public domain other than through its fault or the fault of any
person to whom such Confidential Information has been disclosed in accordance
with clause 9.1(B).

 

9.3 Continuance of restrictions

The restrictions contained in this clause 9 shall survive Completion and shall
continue without limit of time.

 

10. Announcements

 

10.1 Restrictions

Subject to clauses 10.2 and 10.4, and whether or not any restriction contained
in clause 9 applies, no party to this Agreement shall make any announcement,
(including, without limitation any communication to the public, to any customers
or suppliers of the Company, or to all or any of the employees of the Company)
concerning the provisions or subject matter of this Agreement or containing any
information about the other party without the prior written approval of the
other (which shall not be unreasonably withheld or delayed).

 

10.2 Permitted announcements

Clause 10.1 shall not apply if and to the extent that such announcement is
required by law or by any supervisory, regulatory or governmental body having
jurisdiction over it (including but not limited to the Financial Services
Authority, the London Stock Exchange, The Panel on Take-overs and Mergers, the
Serious Fraud Office, the US Securities and Exchange Commission or the New York
Stock Exchange ) and whether or not the requirement has the force of law and
provided that any such announcement shall be made only after consultation with
the other party.

 

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10.3 Continuance of restrictions

The restrictions contained in this clause 10 shall survive Completion and shall
continue without limit of time.

 

10.4 Announcements to customers and suppliers

The Vendor and the Purchaser shall as soon as practicable after Completion, and
in any event within 10 Business Days of Completion, procure that a joint
announcement of the sale and purchase of the Sale Shares is made to the
customers and suppliers of the Company and each Subsidiary in the Agreed Form.

 

11. Provisions relating to this Agreement

 

11.1 Successors and assigns

This Agreement shall be binding upon and enure for the benefit of the successors
of the parties but shall not be assignable. Any purported assignment shall be
void.

 

11.2 Whole agreement and variations

 

  (A) This Agreement, together with any documents referred to in it, constitutes
the whole agreement between the parties relating to its subject matter and
supersedes and extinguishes any prior drafts, agreements, and undertakings,
whether in writing or oral, relating to such subject matter.

 

  (B) No variation of this Agreement shall be effective unless made in writing
and signed by each of the parties.

 

11.3 Rights etc cumulative and other matters

 

  (A) The rights, powers, privileges and remedies provided in this Agreement are
cumulative and are not exclusive of any rights, powers, privileges or remedies
provided by law or otherwise.

 

  (B) No failure to exercise nor any delay in exercising any right, power,
privilege or remedy under this Agreement shall in any way impair or affect the
exercise thereof or operate as a waiver thereof in whole or in part.

 

  (C) No single or partial exercise of any right, power, privilege or remedy
under this Agreement shall prevent any further or other exercise thereof or the
exercise of any other right, power, privilege or remedy.

 

11.4 Invalidity

If any provision of this Agreement shall be held to be illegal, void, invalid or
unenforceable under the laws of any jurisdiction, the legality, validity and
enforceability of the remainder of this Agreement in that jurisdiction shall not
be affected, and the legality, validity and enforceability of the whole of this
Agreement in any other jurisdiction shall not be affected.

 

11.5 Counterparts

This Agreement may be executed in any number of counterparts, which shall
together constitute one Agreement. Any party may enter into this Agreement by
signing any such counterpart.

 

11.6 Costs

Save as otherwise expressly provided herein, each party shall bear its own costs
arising out of or in connection with the preparation, negotiation and
implementation of this Agreement.

 

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11.7 Further assurance

After Completion the parties shall execute such documents and take such steps as
either party may reasonably require:

 

  (A) to vest the full title to the Shares in the Purchaser; and

 

  (B) to give the parties the full benefit of this Agreement.

 

11.8 Notices

 

  (A) Any notice or other communication required to be given under this
Agreement or in connection with the matters contemplated by it shall, except
where otherwise specifically provided, be in writing in the English language and
shall be addressed as provided in clause 11.8(B) and may be:

 

  (1) personally delivered, in which case it shall be deemed to have been given
upon delivery at the relevant address; or

 

  (2) if within the United Kingdom, sent by first class pre-paid post, in which
case it shall be deemed to have been given two Business Days after the date of
posting; or

 

  (3) if from or to any place outside the United Kingdom, sent by pre-paid
priority airmail, in which case it shall be deemed to have been given seven
Business Days after the date of posting; or

 

  (4) sent by fax, in which case it shall be deemed to have been given when
despatched, subject to confirmation of uninterrupted transmission by a
transmission report provided that any notice despatched by fax after 17:00 hours
(at the place where such fax is to be received) on any day shall be deemed to
have been received at 09:00 on the next Business Day.

 

  (B) The addresses and other details of the parties referred to in clause
11.8(A) are, subject to clause 11.8(C):

 

Name:

   Collins & Aikman Floorcoverings Inc

For the attention of:

   Len Ferro

Address:

   311 Smith Industrial Blvd, Dalton, GA 30722-1447, USA

Fax number:

   +1 706 259 2125

Name:

   Interior Projects Solutions Limited

For the attention of:

   Eric Roelandt

Address:

   42 Rayne Road, Braintree, Essex, CM7 2QP

Fax number:

   +44 (0)1376 552491

 

  (C) Any party to this Agreement may notify the other parties of any change to
its address or other details specified in clause 11.8(B), provided that such
notification shall only be effective on the date specified in such notice or
five Business Days after the notice is given, whichever is later.

 

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12. Law and Jurisdiction

 

12.1 English Law

This Agreement shall be governed by, and construed in accordance with, English
law.

 

12.2 Jurisdiction

In relation to any legal action or proceedings to enforce this Agreement or
arising out of or in connection with this Agreement (“Proceedings”) each of the
parties submits to the non-exclusive jurisdiction of the English courts and
waives any objection to Proceedings in such courts on the grounds of venue or on
the grounds that the Proceedings have been brought in an inappropriate forum.

 

12.3 Contracts (Rights of Third Parties) Act 1999

Except pursuant to clause 6.2, no person who is not a party to this Agreement
other than any other member of the Vendor’s Group shall have any right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement.

AS WITNESS the hands of the duly authorised representatives of the parties on
the date first before written have executed this Agreement as a Deed.

 

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SCHEDULE 1: ADJUSTMENT OF CONSIDERATION

 

1. Interpretation

In this schedule, where the context admits:

“2006 EBIT” means the earnings before interest and taxation of the Company and
the Subsidiaries for the period from the Balance Sheet Date to the Completion
Date, as shown by the Completion Accounts;

“Completion Accounts” means the accounts prepared in accordance with paragraph 2
and agreed or determined in accordance with paragraph 4 ;

“FRS” means a Financial Reporting Standard published by the Accounting Standards
Board in force at the date of this Agreement;

“Net Tangible Assets” means the aggregate value of all fixed and current assets
minus the aggregate value of all liabilities and provisions (in accordance with
paragraph 89 of Schedule 4 of the Companies Act 1985) of the Company and the
Subsidiaries as shown by the Completion Accounts;

“Provisional Consideration” means the consideration for the Sale Shares of
US$4,090,200 stated in clause 3.1;

“Purchaser’s Accountants” means such firm of accountants as the Purchaser may
nominate from time to time; and

“Vendor’s Accountants” means such firm of accountants as the Vendor may nominate
from time to time.

 

2. Completion Accounts

 

2.1 Preparation

The Purchaser shall as soon as practicable, and in any event within 60 Business
Days after Completion, procure that accounts for the Company and the
Subsidiaries shall be prepared in accordance with this schedule and the parties
shall use all reasonable endeavours to secure compliance with this schedule by
their respective accountants. The Purchaser shall promptly supply all such
information and provide access to all such records and personnel as the Vendor
and the Vendor’s Accountants and any independent firm of accountants appointed
under paragraph 4.3 shall reasonably require for the purposes of preparing,
reviewing and/or agreeing the Completion Accounts.

 

2.2 Description

The Completion Accounts shall consist of a consolidated balance sheet of the
Company and the Subsidiaries as at the close of business on the Completion Date
and a consolidated profit and loss account of the Company and the Subsidiaries
in respect of the period from the day following the Balance Sheet Date to the
Completion Date (both dates inclusive).

 

2.3 General requirements

Subject to the specific requirements of paragraph 2.4 which shall take priority
over the general requirements set out below, the Completion Accounts shall:

 

  (A) apply and adopt the same policies, bases, methods, practices and
procedures of accounting as were applied or adopted for the purposes of the
December 2006 management accounts;

 

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  (B) be prepared as if the Completion Date was the end of an accounting
reference period.

 

2.4 Specific requirements

In preparing the Completion Accounts:

 

  (A) stock shall be determined in accordance with paragraph 3 and valued at the
lower of cost and net realisable value;

 

  (B) no provision shall be made for any liability arising as a result of the
entry into this Agreement or any change of control of the Company occurring on
or after the date of this Agreement;

 

  (C) no provision shall be made in respect of the cost of making good
dilapidations and/or wants of repair on or to any premises occupied by the
Company or the Subsidiaries;

 

  (D) no provision shall be made for any deferred tax liability of the Company
or any Subsidiary;

 

  (E) no provision shall be made in respect of audit fees;

 

  (F) no account shall be taken of any change in the value of any asset or
liability arising (directly or indirectly) as a result of the transaction
contemplated by this Agreement or any other agreement entered into in connection
with the sale of the Sale Shares;

 

  (G) no general provisions in respect of potential or unquantified tax
liabilities shall be made;

 

  (H) no provision shall be made in respect of loyalty bonuses or long-service
awards which any Company or Subsidiary is contractually obliged to pay to any
Employee;

 

  (I) the release of any amounts owing to creditors shall be treated as income
to the amount of the release in the profit and loss statement; and

 

  (J) no information relating to the state of affairs of the Company and the
Subsidiaries as at the Completion Date which comes to the knowledge of any of
them at any time and is obtained as the result of an event occurring after the
Completion Date shall be reflected in the Completion Accounts to the extent that
such event is attributable to any change in the commercial policy or the nature
or manner of operation of any business of the Company or any of the Subsidiaries
occurring after the Completion Date.

 

3. Stock valuation

For the purposes of the preparation of the Completion Accounts, the value of
stock shall be ascertained in accordance with the provisions of this paragraph
3:

 

  (A) the Vendor and the Purchaser shall cause a stocktaking to be made on the
Completion Date of all the stock then belonging to the Company and the
Subsidiaries;

 

  (B) unless otherwise agreed by the parties such stocktaking shall consist of a
physical check of the amount, quality and condition of all such stock situated
on the Premises at the Completion Date and an inspection of the books and
records and contractual documentation (of the Company and the Subsidiaries) for
all such stock not so situated together with confirmation from the person or
persons having physical possession of such stock of the extent of any interest
in or Encumbrance claimed over such stock (if any); and

 

  (C) when such stocktaking has been completed the stock shall be valued by the
Purchaser in accordance with paragraph 2.4(A) and included in the Completion
Accounts.

 

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4. Procedure

 

4.1 Submission of draft

 

  (A) As soon as the draft Completion Accounts shall have been prepared, the
Purchaser shall send a draft copy to the Vendor and shall procure that the
Vendor is permitted access to such working papers used in connection with the
preparation of the same as the Vendor considers necessary or appropriate to
understand and agree the Completion Accounts and shall in addition, at the same
time, send to the Vendor its calculation of the Net Tangible Assets and 2006
EBIT.

 

  (B) Unless the Vendor shall within 30 Business Days after receipt of the draft
Completion Accounts and calculation as provided in paragraph 4.1(A) serve a
notice in writing on the Purchaser that it objects to the draft Completion
Accounts (identifying the reason for any objection and the amount(s) or item(s)
in the draft Completion Accounts and/or calculation which is/are in dispute)
(such notification being, for the purposes of this paragraph 4, an “Objection
Notice”) the Vendor shall be deemed to have irrevocably agreed to the Completion
Accounts in the form of the draft and the Purchaser’s calculation of the Net
Tangible Assets for all purposes of this Agreement.

 

  (C) If the Purchaser shall not send the Completion Accounts to the Vendor
within the period specified in paragraph 2.1, the Completion Accounts shall no
longer be required, and notwithstanding any other provision of this schedule, no
adjustment to the Consideration shall be made, other than pursuant to clause
8.1.

 

4.2 Agreement of draft

If, within the period referred to in paragraph 4.1(B), the Vendor shall serve
upon the Purchaser an Objection Notice then the Purchaser and the Vendor shall
use their reasonable endeavours to reach agreement upon adjustments to the draft
Completion Accounts and the value of the Net Tangible Assets. Neither the Vendor
nor the Purchaser shall be entitled to propose any adjustments to the draft
Completion Accounts except (i) in the case of the Vendor an adjustment referred
to in its Objection Notice and (ii) in the case of either of them, an adjustment
by way of a counter-proposal to an adjustment proposed by the other of them,
being in each case a revision of an adjustment referred to in the Objection
Notice.

 

4.3 Independent accountant

In the event that the Vendor and the Purchaser fail to reach agreement within 20
Business Days following service of the Objection Notice, either the Vendor or
the Purchaser shall be entitled to refer the matter or matters in dispute to an
independent firm of chartered accountants (the “Firm”) agreed upon between them
or (failing agreement) to be selected (at the instance of either party) by the
President for the time being of the Institute of Chartered Accountants in
England and Wales. The Firm shall act as experts not as arbitrators and shall
determine the matter or matters in dispute (which may include any dispute
concerning the interpretation of any provision of this Agreement affecting the
Completion Accounts or their jurisdiction to determine the dispute or the
content or interpretation of their terms of reference) and their decision shall
be final and binding. The Firm may (so far as is reasonable) instruct valuers,
solicitors and other professional advisers to the extent they consider necessary
to reach their determination. The fees and expenses of the Firm (including the
fees of any professional advisers appointed by them as aforesaid) shall be borne
by the Vendor and the Purchaser in such proportions as the said accountants
shall direct and any professional fees incurred by the Vendor or the Purchaser
in relation to the dispute shall be borne by the party incurring them.

 

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4.4 Accounts final and binding

If within the period referred to in paragraph 4.1(B) the Vendor shall not have
served an Objection Notice on the Purchaser, or if such notice is served and the
Vendor and the Purchaser shall subsequently agree the draft Completion Accounts
or the matters in dispute are referred to the Firm under paragraph 4.3, the
draft Completion Accounts, as adjusted (where applicable) so as to be in
accordance with the agreement of the Vendor and the Purchaser or the
determination of the Firm, shall be the Completion Accounts for the purposes of
this Agreement and shall be final and binding on the parties.

 

4.5 Information and explanations

The Purchaser and the Purchaser’s Accountants shall provide such information and
explanations relating to the draft Completion Accounts and their preparation as
the Vendor’s Accountants, or the Firm shall reasonably require.

 

5. Adjustment of Consideration

 

5.1 Increase or reduction

When the Completion Accounts have become final and binding, the Provisional
Consideration shall forthwith:

 

  (A) be reduced by the amount (if any) by which the Net Tangible Assets of the
Company and the Subsidiaries as at the date of Completion as shown by the
Completion Accounts are less than £2,076,000; and

 

  (B) be reduced by the amount (if any) by which the 2006 EBIT of the Company
and the Subsidiaries, for the period from the Balance Sheet Date to the date of
Completion, as shown by the Completion Accounts, is less than £6,397.

 

5.2 Payment

Any reduction in the Provisional Consideration shall be effected by a reduction
in the principal outstanding under the Loan Notes, and the Vendor shall deliver
such of the certificates issued un the Loan Notes, and which are the latest in
time due for payment back to the Purchaser for cancellation to satisfy on a £
for £ basis any reduction in the Consideration made pursuant to paragraph 5.2
above. The Purchaser shall issue any balancing certificate to the Vendor if the
amount of Loan Notes tendered by the Purchaser exceeds the amount of any
Consideration reduction made pursuant to paragraph 5.2 above, which shall be the
repayable as the final instalment under the Loan Notes. In order to calculate
the reduction in the amount outstanding under the Loan Notes in US$, the
exchange rate as shown in the Financial Times on the first Business Day
following the day on which Completion Accounts become final and binding will be
used. For the avoidance of doubt, no interest will be payable in respect any
certificates delivered by the Vendor to the Purchaser pursuant to this paragraph
5.2.

 

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SCHEDULE 2: FORMER EMPLOYEES

Thomas Price

David Daniels

Alison Thomas

John Wilson

Wyndham Lewis

Sean Goode

Ian Wolstenholme

David Nuttall

Kath Samuel

Han Nooijen

 

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Executed as a deed by

  )                                  

/s/ Eric Roelandt

Interior Projects

  )                                   Director

Solutions Limited acting by

  )                                  

2 directors or a director and

  )                                  

secretary

  )                                  

/s/ Julie Chapman

  )                                   Director/Secretary

Executed as a deed by

  )                                  

Collins & Aikman

  )                                  

/s/ Leonard F. Ferro

Floorcoverings Inc

  )                                   Duly authorised signatory

 

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