Document:

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                                                                     EXHIBIT 4.2

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                   KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.

                                     ISSUER

                                       AND

                               JPMORGAN CHASE BANK

                                     TRUSTEE

                          FIRST SUPPLEMENTAL INDENTURE

                          DATED AS OF FEBRUARY 21, 2002

                     7.750% SENIOR UNSECURED NOTES DUE 2012

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                                                    First Supplemental Indenture
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                                TABLE OF CONTENTS

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                                                                                                       PAGE
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<S>                                                                                                   <C>
ARTICLE 1             Relation to Indenture; Definitions................................................1

         Section 1.01.         Relation to Indenture....................................................1
         Section 1.02.         Definitions and References...............................................2
         Section 1.03.         General References.......................................................6

ARTICLE 2             The Series of Securities..........................................................7

         Section 2.01.         The Form and Title of the Debt Securities................................7
         Section 2.02.         Limitation on Aggregate Principal Amount.................................7
         Section 2.03.         Stated Maturity..........................................................7
         Section 2.04.         Interest and Interest Rates..............................................7
         Section 2.05.         Place of Payment.........................................................8
         Section 2.06.         Optional Redemption......................................................8
         Section 2.07.         Sinking Fund Obligations.................................................8
         Section 2.08.         Defeasance and Discharge; Covenant Defeasance............................8
         Section 2.09.         Global Securities........................................................8
         Section 2.10.         Registrar................................................................9
         Section 2.11.         Applicability of Additional Covenants and Definitions to the Notes.......9
         Section 2.12.         Other Terms:  Percentage of Principal Amount.............................9
         Section 2.13.         Cusip Number.............................................................9

ARTICLE 3             covenants.........................................................................9

         Section 3.01.         Limitations on Liens.....................................................9
         Section 3.02.         Restriction of Sale-Leaseback Transaction...............................11
         Section 3.03.         Transactions with Affiliates............................................12
         Section 3.04.         Restricted Payments.....................................................12
         Section 3.05.         Sale of Assets..........................................................14
         Section 3.06.         Fundamental Changes.....................................................14
         Section 3.07.         Waiver of Certain Covenants.............................................14

ARTICLE 4             Events of Default................................................................15

         Section 4.01.         Modified Event of Default...............................................15
         Section 4.02.         Additional Event of Default.............................................15

ARTICLE 5             Miscellaneous....................................................................15

         Section 5.01.         Certain Trustee Matters.................................................15
         Section 5.02.         Continued Effect........................................................16
         Section 5.03.         Governing Law...........................................................16
         Section 5.04.         Counterparts............................................................16

EXHIBITS

         Exhibit A:        Form of Note
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                                                    First Supplemental Indenture
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         FIRST SUPPLEMENTAL INDENTURE, dated as of February 21, 2002 (the
"SUPPLEMENTAL INDENTURE"), between KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership (the "COMPANY"), having its principal office at
2435 North Central Expressway, Richardson, Texas, and JPMORGAN CHASE BANK, a New
York banking corporation ("JPMORGAN"), as trustee under the Indenture referred
to below (in such capacity, the "TRUSTEE").

                             RECITALS OF THE COMPANY

                  WHEREAS, the Company has heretofore entered into an Indenture,
dated as of February 21, 2002 (the "ORIGINAL INDENTURE"), with JPMorgan, as
trustee;

                  WHEREAS, the Original Indenture is incorporated herein by this
reference and the Original Indenture, as supplemented by this Supplemental
Indenture, is herein called the "INDENTURE";

                  WHEREAS, under the Original Indenture, a new series of Debt
Securities may at any time be established by the Board of Directors in
accordance with the provisions of the Original Indenture, and the terms of such
series may be established by a supplemental Indenture executed by the Company
and the Trustee;

                  WHEREAS, the Company proposes to create under the Indenture a
new series of Debt Securities;

                  WHEREAS, additional Debt Securities of other series hereafter
established, except as may be limited in the Original Indenture as at the time
supplemented and modified, may be issued from time to time pursuant to the
Indenture as at the time supplemented and modified; and

                  WHEREAS, all acts and things necessary to make the Notes (as
herein defined), when executed by the Company and authenticated and delivered by
the Trustee as provided in the Original Indenture and this Supplemental
Indenture, the valid and binding obligations of the Company and to make this
Supplemental Indenture a valid and binding agreement in accordance with the
Original Indenture have been done or performed;

                  NOW, THEREFORE, in consideration of the premises, agreements
and obligations set forth herein and for other good and valuable consideration,
the sufficiency of which is hereby acknowledged, the parties hereto hereby
agree, for the equal and proportionate benefit of all Holders of the Notes, as
follows:

                                   ARTICLE 1
                       RELATION TO INDENTURE; DEFINITIONS

         SECTION 1.01. RELATION TO INDENTURE.

         With respect to the Notes, this Supplemental Indenture constitutes an
integral part of the Indenture.

                                                    First Supplemental Indenture
<PAGE>

         SECTION 1.02. DEFINITIONS AND REFERENCES.

         For all purposes of this Supplemental Indenture, capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned in the
Original Indenture. The following are definitions used in this Supplemental
Indenture:

              "AFFILIATE" of any specified Person means any other Person,
     directly or indirectly, controlling or controlled by, or under direct or
     indirect common control with, such specified Person. For purposes of this
     definition, "control," as used with respect to any Person, shall mean the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management or policies of such Person, whether through the
     ownership of voting securities, by agreement or otherwise. For purposes of
     this definition, the terms "controlling," "controlled by" and "under common
     control with" shall have correlative meanings. Notwithstanding the
     foregoing, the term "Affiliate" shall not include a Subsidiary of any
     specified Person.

              "COMPARABLE TREASURY ISSUE" means the United States Treasury
     security or securities selected by the Independent Investment Banker as
     having an actual or interpolated maturity comparable to the remaining term
     of the Notes to be redeemed that would be utilized, at the time of
     selection and in accordance with customary financial practice, in pricing
     new issues of corporate debt securities of a comparable maturity to the
     remaining term of the Notes.

              "COMPARABLE TREASURY PRICE" means, for any redemption date
     relating to the Notes, (i) the average of four Reference Treasury Dealer
     Quotations for such redemption date, after excluding the highest and lowest
     such Reference Treasury Dealer Quotations, or (ii) if the Independent
     Investment Banker obtains fewer than four such Reference Treasury Dealer
     Quotations, the average of all such quotations.

              "CONSOLIDATED NET TANGIBLE ASSETS" means, at any date of
     determination, the aggregate amount of total assets after deducting
     therefrom (i) all current liabilities (excluding (A) any current
     liabilities that by their terms are extendable or renewable at the option
     of the obligor thereon to a time more than 12 months after the time as of
     which the amount thereof is being computed, and (B) current maturities of
     long-term debt), and (ii) the value (net of any applicable reserves) of all
     goodwill, trade names, trademarks, patents and other like intangible
     assets, all as set forth on the consolidated balance sheet of the Company
     and its consolidated Subsidiaries for the Company's most recently completed
     fiscal quarter, prepared in accordance with GAAP.

              "DEBT" means any obligation created or assumed for the repayment
     of money borrowed or indebtedness for the repayment of money borrowed and,
     without duplication, any guarantee therefor.

              "DISQUALIFIED EQUITY" means, with respect to any Person, any
     Equity Interests to the extent that by their terms (or by the terms of any
     security into which they are convertible or for which they are
     exchangeable) or upon the happening of any event, they mature or are
     mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
     or are redeemable at the option of the holder thereof, in whole or in part,
     on or prior to the date that the Notes mature, except such Equity Interests
     that are solely redeemable with, or solely exchangeable for, any Equity
     Interests of such Person that are not a Disqualified Equity.

                                      -2-           First Supplemental Indenture
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              "DISTRIBUTION" shall mean, with respect to any Equity Interests
     issued by a Person (i) the retirement, redemption, purchase or other
     acquisition for value of those Equity Interests by such Person, (ii) the
     declaration or payment of any dividend or distribution on or with respect
     to those Equity Interests by such Person, (iii) any Investment by that
     Person in the holder of any of those Equity Interests, and (iv) any other
     payment by that Person with respect to those Equity Interests.

              "EQUITY INTERESTS" shall mean, (i) with respect to a corporation,
     shares of capital stock of such corporation or any other interest
     convertible or exchangeable into any such interest, (ii) with respect to a
     limited liability company, membership interests in such limited liability
     company, (iii) with respect to a partnership, partnership interests in such
     partnership, and (iv) with respect to any other Person, interests in such
     Person analogous to interests described in clauses (i) through (iii).

              "EXCLUDED SUBSIDIARY" shall mean any Subsidiary (i) that has no
     Debt other than Permitted Non-Recourse Debt and (ii) the sole purpose of
     which is to engage in the acquisition, construction, development and/or
     operation activities financed or refinanced with such Permitted
     Non-Recourse Debt.

              "FUNDED DEBT" means, as applied to the Company or any of its
     Subsidiaries, Debt maturing one year or more from the date of the
     incurrence, creation or assumption thereof by the Company or any of its
     Subsidiaries, Debt directly or indirectly renewable or extendible, at the
     option of the obligor, by its terms or by the terms of any instrument or
     agreement relating thereto, to a date one year or more from the date of the
     incurrence, creation or assumption thereof by the Company or any of its
     Subsidiaries, and Debt under a revolving credit or similar agreement
     obligating the lender or lenders to extend credit over a period of one year
     or more.

              "INDEPENDENT INVESTMENT BANKER" means either Banc of America
     Securities LLC or Salomon Smith Barney Inc., as specified by the Company,
     or any successor firm, or if such firm is unwilling or unable to select the
     Comparable Treasury Issue, an independent investment banking institution of
     national standing appointed by the Trustee after consultation with the
     Company.

              "INTEREST PAYMENT DATE" has the meaning assigned in Section 2.04
     hereof.

              "INVESTMENT" shall mean, in respect of any Person, any loan,
     advance, extension of credit or capital contribution to that Person, any
     other investment in that Person, or any purchase or commitment to purchase
     any Equity Interests or Debt issued by that Person or substantially all of
     the assets or a division or other business unit of that Person.

              "LIEN" means, at to any Person, any mortgage, lien, pledge,
     security interest or other similar charge or encumbrance.

              "NOTES" has the meaning assigned in Section 2.01 hereof.

              "PARI PASSU DEBT" means any Funded Debt or Debt of the Company or
     any of its Subsidiaries, whether outstanding on the date of original
     issuance of the Notes or thereafter created, incurred or assumed, unless,
     in the case of any particular Funded Debt or Debt, as the case may be, the
     instrument creating or evidencing the same or pursuant to which the same is
     outstanding expressly provides that such Funded Debt or Debt, as the case
     may be, shall be subordinated in right of payment to the Notes.

                                      -3-           First Supplemental Indenture
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              "PERMITTED LIENS" means:

                  (1) Liens upon rights-of-way for pipeline purposes;

                  (2) any statutory or governmental Liens or Liens arising by
operation of law, or mechanics', repairmen's, materialmen's, suppliers',
carriers', landlords', warehousemen's or similar Liens incurred in the ordinary
course of business which are not yet due or which are being contested in good
faith by appropriate proceedings;

                  (3) rights reserved to, or vested in, any municipality or
governmental, statutory or public authority by the terms of any right, power,
franchise, grant, license, lease, permit, or by any provision of law, to control
or regulate, to use, to purchase or recapture, to designate a purchaser of, to
terminate any franchise, grant, license, lease or permit, or to condemn or
expropriate, any property, or zoning laws, ordinances or municipal regulations;

                  (4) Liens of taxes and assessments which are (i) for the then
current year, (ii) not at the time delinquent, or (iii) delinquent but the
validity of which are being contested at the time by the Company or any of its
Subsidiaries in good faith by appropriate proceedings;

                  (5) Liens of, or to secure the payment or performance of,
leases, other than capital leases;

                  (6) Liens upon, or deposits of, any assets in favor of any
surety company or clerk of court for the purpose of obtaining indemnity or stay
of, or appeal from, judicial proceedings;

                  (7) any Lien for any judgment, attachment, decree or order of
any governmental or court authority which when combined with other similar Liens
are not in excess of $10,000,000 in the aggregate or any Lien arising by reason
of any attachment, judgment, decree or order of any governmental or court
authority, so long as any proceeding initiated to review such attachment,
judgment, decree or order shall not have been terminated or the period within
which such proceeding may be initiated shall not expire, or such attachment,
judgment, decree or order shall otherwise be effectively stayed;

                  (8) Liens upon property or assets acquired or sold by the
Company or any of its Subsidiaries resulting from the exercise of any rights
arising out of defaults on receivables or other sums owed to the Company or any
of its Subsidiaries;

                  (9) Liens incurred or deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance,
temporary disability, social security, retiree health or similar laws or
regulations or to secure obligations imposed by statute or governmental
regulations;

                  (10) Liens in favor of the Company or any of its Subsidiaries;

                  (11) Liens in favor of the United States of America or any
other country or of any State, province, territory or any political subdivision
thereof, or any department, agency or instrumentality or political subdivision
of any of the foregoing, (i) in order to permit the Company or any of its
Subsidiaries to perform any contract or subcontract made with or at the request
of such governmental entity, securing any partial, progress, advance or other
payments pursuant to any contract or statute, or (ii) to secure any Debt
incurred by the Company or any of its Subsidiaries for the purpose of financing
all or any part of the purchase price of, or the cost of constructing,
developing, repairing or improving, the property or assets subject to such Lien;

                                      -4-           First Supplemental Indenture
<PAGE>

                  (12) Liens securing industrial development, pollution control
or similar revenue bonds, or Liens created or assumed by the Company or any
Restricted Subsidiary in connection with the issuance of Debt the interest on
which is excludable from gross income of the holder of such Debt pursuant to the
Code for the purpose of financing, in whole or in part, the acquisition,
development or construction of, or repair or improvement on, property or assets
to be used by the Company or any of its Subsidiaries;

                  (13) Liens in favor of any Person to secure obligations under
the provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested, in the ordinary course of business by any
governmental authority in connection with any contract or statute;

                  (14) Liens upon property or assets to secure performance of
tenders, bids, trade or government contracts, leases, statutory obligations,
performance bonds or other similar obligations or to secure obligations arising
under statutory, regulatory, contractual or warranty requirements;

                  (15) easements, rights-of-way, restrictions, exceptions,
reservations, defects and irregularities in title and other similar charges,
claims and encumbrances in any property or assets which do not, individually or
in the aggregate, materially interfere with the ordinary conduct of the business
or businesses of the Company and its Subsidiaries, taken as a whole; or

                  (16) Liens arising under joint venture agreements,
transportation or exchange agreements, preferential rights to purchase, and
other agreements arising in the ordinary course of the Company's or any of its
Subsidiaries' business.

              "PERMITTED NON-RECOURSE DEBT" shall mean Debt of any Person that
     is non-recourse to the Company or any of its Subsidiaries (other than an
     Excluded Subsidiary) and is used by such Person to acquire, construct,
     develop and/or operate assets not owned by the Company or any of its
     Subsidiaries (other than an Excluded Subsidiary) as of the date hereof or
     to refinance Permitted Non-Recourse Debt.

              "PREDECESSOR SECURITY" of any particular Debt Security means every
     previous Debt Security evidencing all or part of the same Debt as that
     evidenced by such particular Debt Security; and for the purpose of this
     definition, any Debt Security authenticated and delivered under the
     Indenture in exchange for or in lieu of a mutilated, destroyed, lost or
     stolen Debt Security shall be deemed to evidence the same Debt as the
     mutilated, destroyed, lost or stolen Debt Security.

              "PRINCIPAL PROPERTY" means, whether owned or leased on the date of
     original issuance of the Notes or thereafter acquired, (i) pipeline assets
     of the Company or any of its Subsidiaries, including any related facilities
     employed in the transportation, distribution, terminalling, storage or
     marketing of refined petroleum products, petroleum products and specialty
     liquids which are located in the United States of America or any territory
     or political subdivision thereof, and (ii) any processing or manufacturing
     plant or terminal owned or leased by the Company or any of its Subsidiaries
     which is located within the United States of America or any territory or
     political subdivision thereof, except, in the case of either clause (i) or
     (ii), (y) any assets consisting of inventories, office fixtures and
     equipment (including data processing equipment), vehicles and equipment
     used on, or useful with, vehicles, and (z) any such assets, plant or
     terminal which, in the opinion of the Board of Directors, is not material
     in relation to the activities of the Company and its Subsidiaries, taken as
     a whole.

                                      -5-           First Supplemental Indenture
<PAGE>

              "REFERENCE TREASURY DEALER" means each of Banc of America
     Securities LLC and Salomon Smith Barney Inc., plus two additional dealers
     selected by the Trustee that are at the time primary U.S. Government
     securities dealers in New York City, and their respective successors;
     provided, if Banc of America Securities LLC or Salomon Smith Barney Inc. or
     any primary U.S. Government securities dealer selected by the Trustee shall
     cease to be a primary U.S. Government securities dealer, then such other
     primary U.S. Government securities dealers as may be substituted by the
     Trustee.

              "REFERENCE TREASURY DEALER QUOTATIONS" means, for each Reference
     Treasury Dealer and any redemption date relating to the Notes, as
     determined by the Trustee, of the bid and asked prices for the Comparable
     Treasury Issue (expressed in each case as a percentage of its principal
     amount) quoted in writing to the Trustee by such Reference Treasury Dealer
     at 5:00 p.m., New York City time, on the third Business Day preceding such
     redemption date.

              "REGULAR RECORD DATE" has the meaning assigned in Section 2.04
     hereof.

              "RESTRICTED PAYMENT" has the meaning assigned in Section 3.04
     hereof.

              "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which
     owns or, as a lessee, leases any Principal Property.

              "RIGHT" has the meaning assigned in Section 3.04 hereof.

              "SALE-LEASEBACK TRANSACTION" means the sale or transfer by the
     Company or any Restricted Subsidiary of any Principal Property to a Person
     (other than the Company or any of its Subsidiaries) and the taking back by
     the Company or any such Restricted Subsidiary, as the case may be, of a
     lease of such Principal Property.

              "TREASURY RATE" means, with respect to any redemption date
     relating to the Notes, (i) the yield, under the heading which represents
     the average for the immediately preceding week, appearing in the most
     recently published statistical release designated "H.15(519)" or any
     successor publication which is published weekly by the Board of Governors
     of the Federal Reserve System and which establishes yields on actively
     traded United States Treasury securities adjusted to constant maturity
     under the caption "Treasury Constant Maturities," for the maturity
     corresponding to the Comparable Treasury Issue (if no maturity is within
     three months before or after the remaining term of the Notes to be
     redeemed, yields for the two published maturities most closely
     corresponding to the Comparable Treasury Issue shall be determined and the
     Treasury Rate shall be interpolated or extrapolated from such yields on a
     straight line basis, rounding to the nearest month) or (ii) if such release
     (or any successor release) is not published during the week preceding the
     calculation date or does not contain such yields, the rate per annum equal
     to the semiannual equivalent yield to maturity of the Comparable Treasury
     Issue, calculated using a price for the Comparable Treasury Issue
     (expressed as a percentage of its principal amount) equal to the Comparable
     Treasury Price for such redemption date. The Treasury Rate shall be
     calculated on the third Business Day preceding the redemption date. Any
     weekly average yields calculated by interpolation or extrapolation will be
     ranked to the nearest 1/100th of 1% with any figure of 1/200th of 1% or
     above being rounded upward.

         SECTION 1.03. GENERAL REFERENCES.

         All references in this Supplemental Indenture to Articles and Sections,
unless otherwise specified, refer to the corresponding Articles and Sections of
this Supplemental Indenture; and the

                                      -6-           First Supplemental Indenture
<PAGE>

term "HEREIN", "HEREOF", "HEREUNDER" and any other word of similar import refers
to this Supplemental Indenture.

                                   ARTICLE 2
                            THE SERIES OF SECURITIES

         SECTION 2.01. THE FORM AND TITLE OF THE DEBT SECURITIES.

         There is hereby established a new series of Debt Securities to be
issued under the Indenture and to be designated as the Company's 7.750% Senior
Unsecured Notes due 2012 (the "NOTES"). The Notes shall be executed,
authenticated and delivered in accordance with the provisions of, and shall in
all respects be subject to, the terms, conditions and covenants of the Original
Indenture and this Supplemental Indenture (including the form of Note set forth
as Exhibit A hereto (the terms of which are incorporated in and made a part of
the Supplemental Indenture for all intents and purposes) and the additional
covenants set forth in Article 3 hereof).

         The Notes shall be substantially in the form attached as Exhibit A
hereto. The Notes shall be registered in such names, shall be in such amounts
and shall have such other specific terms contemplated in the form of Note
attached hereto as Exhibit A, as shall be communicated by the Company to the
Trustee in accordance with the administrative procedures, as in effect from time
to time, established to provide for the issuance of the Notes.

         SECTION 2.02. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT.

         The aggregate principal amount of the Notes shall be limited to
$250,000,000.

         SECTION 2.03. STATED MATURITY.

         The Notes may be issued on any Business Day on or after February 21,
2002, and the Stated Maturity of the Notes shall be February 15, 2012.

         SECTION 2.04. INTEREST AND INTEREST RATES.

         The rate of interest on each Note shall be 7.750% per annum, accruing
from February 21, 2002 and interest shall be payable, semi-annually in arrears,
on February 15 and August 15, of each year (each such date, an "INTEREST PAYMENT
DATE"), commencing August 15, 2002, to the Persons in whose names the Notes are
registered at the close of business on the immediately preceding February 1 and
August 1, respectively, whether or not such day is a Business Day (each such
date, a "REGULAR RECORD DATE"). The amount of interest payable for any period
shall be computed on the basis of twelve 30-day months and a 360-day year. The
amount of interest payable for any partial period shall be computed on the basis
of a 360-day year of twelve 30-day months and the days elapsed in any partial
month. In the event that any date on which interest is payable on a Note is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will be
paid to the Person in whose name such Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and shall either (i) be paid to the Person in whose name such Note (or one or
more Predecessor Securities) is registered at the close of business on the
special record date for the payment of such Defaulted Interest to be fixed by
the

                                      -7-           First Supplemental Indenture
<PAGE>

Trustee, notice of which shall be given to Holders of the Notes not less than 10
days prior to such special record date, or (ii) be paid at such time in any
other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Notes may be listed or
traded, and upon such notice as may be required by such exchange or automated
quotation system, all as more fully provided in the Indenture.

         SECTION 2.05. PLACE OF PAYMENT.

         The Place of Payment where the Notes may be presented or surrendered
for payment shall initially be the Corporate Trust Office of the Trustee in the
City and State of New York.

         SECTION 2.06. OPTIONAL REDEMPTION.

         At its option, the Company may choose to redeem the Notes, as a whole
or in part, in principal amounts of $1,000 or any integral multiple thereof, at
any time or from time to time upon notification to the Holders of the Notes
given at least 30 and not more than 60 days prior to the date fixed for such
redemption, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Notes to be redeemed and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest on such
Notes, exclusive of interest accrued to the redemption date therefor, discounted
to such redemption date on a semiannual basis, assuming a 360-day year
consisting of twelve 30-day months, at the Treasury Rate plus 30 basis points,
plus, in either case, accrued and unpaid interest on the principal amount of the
Notes being redeemed to such redemption date; provided that installments of
interest on Notes that are due and payable on any date on or prior to a
redemption date shall be payable to the registered Holders of such Notes (or one
or more Predecessor Securities), registered as such as of the close of business
on the relevant Regular Record Dates. The redemption price shall be calculated
and certified to the Trustee by the Independent Investment Banker; provided that
if the institution so appointed has notified the Trustee in writing at least 15
days prior to the redemption date that it is unwilling or unable to make such
calculation, such calculation shall be made by another Independent Investment
Banker appointed by the Trustee at the cost and expense of the Company. The
notice to the Holders shall state that the redemption price shall be calculated
in accordance with this Section 2.06.

         SECTION 2.07. SINKING FUND OBLIGATIONS.

         The Company has no obligation to redeem or purchase any Notes pursuant
to any sinking fund or analogous requirement or upon the happening of a
specified event or at the option of a Holder thereof.

         SECTION 2.08. DEFEASANCE AND DISCHARGE; COVENANT DEFEASANCE.

         Article 11 of the Original Indenture, including without limitation,
Section 11.02(b) thereof, shall apply to the additional covenants set forth in
Article 3 hereof and the Notes, and such additional covenants set forth in
Article 3 hereof shall be subject to the covenant defeasance option pursuant to
Section 11.02(b) of the Original Indenture.

         SECTION 2.09. GLOBAL SECURITIES.

         The Notes shall initially be issuable in the form of one or more Global
Securities. Such Global Securities (i) shall be deposited with, or on behalf of,
The Depository Trust Company, New York, New York, which shall act as Depositary
with respect to the Notes, (ii) shall bear the legends set forth in the form of
Note attached as Exhibit A hereto, (iii) may be exchanged in

                                      -8-           First Supplemental Indenture
<PAGE>

whole or in part for Debt Securities in definitive form upon the terms and
subject to the conditions provided in Section 2.15 of the Original Indenture and
(iv) shall otherwise be subject to the applicable provisions of the Indenture.

         SECTION 2.10. REGISTRAR.

         The Trustee shall serve as the initial Registrar.

         SECTION 2.11. APPLICABILITY OF ADDITIONAL COVENANTS AND DEFINITIONS TO
THE NOTES.

         In addition to the covenants and definitions set forth in the Original
Indenture, the definitions set forth in Section 1.02 hereof and the covenants
set forth in Article 3 hereof are applicable to the Notes. The additional
covenants set forth in Article 3 hereof are solely for the benefit of the Notes
and its Holders, and shall not be applicable, in whole or part, to any other
series of Debt Securities unless the instruments establishing any of them shall
so expressly provide, and each such case, as therein expressly provided.

         SECTION 2.12. OTHER TERMS: PERCENTAGE OF PRINCIPAL AMOUNT.

         The Notes shall be issued at 100% of their principal amount.

         SECTION 2.13. CUSIP NUMBER.

         The Cusip Number for the Notes is 484168 AA 7.

                                    ARTICLE 3
                                    COVENANTS

         SECTION 3.01. LIMITATIONS ON LIENS.

         So long as the Notes are Outstanding, the Company will not, nor will it
permit any Restricted Subsidiary to, create, assume or incur, except in favor of
the Company or any of its Subsidiaries, any Lien upon any Principal Property or
upon any shares of capital stock or other equity interests of any Restricted
Subsidiary at any time owned by them, to secure any Debt of the Company or any
other Person (other than the Notes issued hereunder), without effectively
providing that all of the Notes Outstanding (together with, if the Company shall
so determine, any other indebtedness or obligation of the Company which is
similarly entitled to be equally and ratably secured) shall be secured equally
and ratably with, or prior to, such Debt so long as such Debt shall be so
secured. The foregoing restriction shall not apply to, or prevent the creation
or existence of, any of the following:

                  (1) Permitted Liens;

                  (2) Liens upon any property or assets created at the time of
acquisition of such property or assets by the Company or any of its Restricted
Subsidiaries or within one year after such time, to secure all or part of the
purchase price for such property or assets or Debt incurred to finance such
purchase price, whether such Debt was incurred prior to, at the time of, or
within one year of, such acquisition;

                  (3) Liens upon any property or assets to secure all or part of
the cost of construction, development, repair or improvements thereon or to
secure Debt incurred prior to, at the time of, or within one year after,
completion of such construction, development, repair or

                                      -9-           First Supplemental Indenture
<PAGE>

improvements or the commencement of full operations thereof (whichever is
later), to provide funds for any such purpose;

                  (4) Liens upon any property or assets existing thereon at the
time of the acquisition thereof by the Company or any of its Restricted
Subsidiaries (whether or not the obligations secured thereby are assumed by the
Company or any of its Restricted Subsidiaries), or the assumption by the Company
or any Restricted Subsidiary of obligations secured by any Lien that exists at
the time of acquisition by the Company or any of its Restricted Subsidiaries of
the property or assets subject to such Lien or at the time of the acquisition of
the Person that owns such property or assets; provided, however, that any such
Lien only encumbers the property or assets so acquired;

                  (5) Liens upon any property or assets of a Person existing
thereon at the time (i) such Person becomes a Restricted Subsidiary of the
Company, (ii) such Person is merged with or into, or consolidated with, the
Company or any of its Restricted Subsidiaries or (iii) of a sale, lease or other
disposition of the properties of a Person (or division thereof) as an entirety
or substantially as an entirety to the Company or any of its Restricted
Subsidiaries; provided, however, than any such Lien only encumbers the property
or assets of such Person at the time such Person becomes a Restricted
Subsidiary;

                  (6) Liens upon any property or assets of the Company or any of
its Restricted Subsidiaries in existence on the date of original issuance of the
Notes or provided for or created pursuant to an "after-acquired property" clause
or similar term in existence on the date of original issuance of the Notes or
any mortgage, pledge agreement, security agreement or other similar instrument
in existence on the date of original issuance of the Notes;

                  (7) Liens imposed by law or order as a result of any
proceeding before any court or regulatory body that is being contested in good
faith by appropriate proceedings, and Liens which secure a judgment or other
court-ordered award or settlement as to which the Company or any of its
applicable Restricted Subsidiaries has not exhausted its applicable rights;

                  (8) Liens upon any additions, improvements, replacements,
repairs, fixtures, appurtenances or component parts thereof attaching to or
required to be attached to property or assets pursuant to the terms of any
mortgage, pledge agreement, security agreement or other similar instrument,
creating a Lien upon such property or assets permitted by clauses (1) through
(7) inclusive, of this Section;

                  (9) Liens securing Debt of the Company or any of its
Restricted Subsidiaries, all or a portion of the net proceeds of which are used
substantially concurrent with the funding thereof (and for purposes of
determining such "substantial concurrence," taking into consideration, among
other things, required notices to be given to holders of Outstanding Notes in
connection with such refunding, refinancing or repurchase, and the required
corresponding durations thereof), to refinance, refund or repurchase all
Outstanding Notes, including the amount of all accrued interest thereon and
reasonable fees and expenses and premium, if any, incurred by the Company or any
of its Subsidiaries in connection therewith;

                  (10) Liens resulting from the deposit of moneys, U.S.
Government Obligations or evidence of indebtedness in trust for the purpose of
defeasing Debt of the Company or any of its Restricted Subsidiaries;

                  (11) any Lien upon any property or assets to secure Debt
incurred by the Company or any of its Restricted Subsidiaries, the proceeds of
which, in whole or part, were used

                                     -10-           First Supplemental Indenture
<PAGE>

to defease, in a defeasance or a covenant defeasance, or obligations on any
series of the Debt Securities; or

                  (12) any extension, renewal, refinancing, refunding or
replacement (or successive extensions, renewals, refinancing, refunding or
replacements) of any Lien, in whole or in part, that is referred to in clause
(1) through (11), inclusive, of this Section, or of any Debt secured thereby;
provided, however, than any such extension, renewal, refinancing, refunding or
replacement Lien shall be limited to the property or assets covered by the Lien
extended, renewed, refinanced, refunded or replaced and that the principal
amount secured by any such extension, renewal, refinancing, refunding or
replacement Lien shall be in an amount not greater than the principal amount of
(plus accrued interest on) the obligations secured by the Lien extended,
renewed, refinanced, refunded or replaced plus any expenses of the Company and
its Restricted Subsidiaries (including any premium) incurred in connection with
such extension, renewal, refinancing, refunding or replacement.

         Notwithstanding the foregoing provisions of this Section 3.01, the
Company may, and may permit any Restricted Subsidiary to, create, assume or
incur any Lien upon any Principal Property to secure any Debt of the Company or
any other Person (other than the Notes) that is not excepted by clauses (1)
through (12), inclusive, of this Section 3.01 without securing the Outstanding
Notes, provided that after giving effect to the creation, assumption or
incurrence of such Lien and Debt, and the application of the proceeds of such
Debt, if any, received as a result thereof, the aggregate principal amount of
all Debt then outstanding secured by such Lien and all similar Liens (not
including Debt permitted to be secured under clauses (1) through (12) inclusive,
of this Section 3.01), together with all net sale proceeds received by the
Company or any of its Subsidiaries from Sale-Leaseback Transactions (excluding
Sale-Leaseback Transactions permitted by clauses (1) through (4), inclusive, of
the first paragraph of Section 3.02), would not exceed 10% of Consolidated Net
Tangible Assets.

         SECTION 3.02. RESTRICTION OF SALE-LEASEBACK TRANSACTION.

         The Company will not, nor will it permit any Restricted Subsidiary to,
engage in a Sale-Leaseback Transaction, unless:

                  (1) such Sale-Leaseback Transaction occurs within one year
from the date of completion of the acquisition of the Principal Property subject
thereto or the date of the completion of construction, development of, or
substantial repair or improvement on, or commencement of full operations of,
such Principal Property, whichever is later;

                  (2) the Sale-Leaseback Transaction involves a lease for a
period, including renewals, of not more than three years;

                  (3) the Company or such Restricted Subsidiary would be
entitled to incur Debt secured by a Lien on Principal Property subject thereto
in a principal amount equal to or exceeding the net proceeds received by the
Company or such Restricted Subsidiary from such Sale-Leaseback Transaction
without equally and ratably securing the Notes pursuant to Section 3.01; or

                  (4) the Company or such Restricted Subsidiary, within a
one-year period after such Sale-Leaseback Transaction, applies or causes to be
applied an amount not less than the net sale proceeds from such Sale-Leaseback
Transaction to (i) the prepayment, repayment, reduction, redemption or
retirement of Pari Passu Debt of the Company or any of its Subsidiaries, or (ii)
the expenditure or expenditures for (y) the acquisition, development or
construction of, or repair or

                                     -11-           First Supplemental Indenture
<PAGE>

improvement on, Principal Property or (z) capital stock or other equity
interests in a Person that is or with such expenditure becomes a Restricted
Subsidiary of the Company or in a joint venture, and in each case, whose
principal assets consists of Principal Property.

         Notwithstanding the foregoing provisions of this Section 3.02, the
Company may, and may permit any Restricted Subsidiary to, effect any
Sale-Leaseback Transaction that is not excepted by clauses (1) through (4),
inclusive, of this Section 3.02, provided that after giving effect thereto and
the application of the proceeds, if any, received as a result thereof, the net
sales proceeds received by the Company or any of its Restricted Subsidiaries
from such Sale-Leaseback Transaction, together with the aggregate principal
amount of then outstanding Debt (other than the Notes) secured by Liens upon
Principal Property not excepted by clauses (1) through (12), inclusive, of
Section 3.01, would not exceed 10% of the Consolidated Net Tangible Assets.

         SECTION 3.03. TRANSACTIONS WITH AFFILIATES.

         The Company will not, and will not permit any of its Subsidiaries to,
sell, lease or otherwise transfer any Principal Property to, or purchase, lease
or otherwise acquire any Principal Property from, any of its Affiliates, except
(i) on terms and conditions not less favorable to the Company or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(ii) transactions between or among the Company and its wholly-owned Subsidiaries
not involving any other Affiliates and (iii) any Restricted Payment permitted by
Section 3.04.

         SECTION 3.04. RESTRICTED PAYMENTS.

         The Company will not, and will not permit its Subsidiaries to, make or
agree to make, directly or indirectly, any Distribution, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement, defeasance or other acquisition of, any Equity
Interests or Debt subordinated to the Notes, or any options, warrants, or other
rights (each, a "RIGHT") to purchase Equity Interests or such Debt, whether now
or hereafter outstanding (each, a "RESTRICTED PAYMENT"), unless, at the time and
after giving effect to such Restricted Payment, the aggregate amount of the
Restricted Payment together with the aggregate amount of all other Restricted
Payments made by the Company or any of its Subsidiaries after the date of
original issuance of the Notes (excluding Restricted Payments permitted by
clauses (i), (ii), (v), (vi), (vii), (viii) or (ix) of the next succeeding
paragraph), is less than the sum of the aggregate net cash proceeds and the fair
market value of any assets or rights used or useful in a business activity not
prohibited by Section 3.06 which are received by the Company or any of its
Subsidiaries in connection with (i) a capital contribution to the Company from
any Person (other than any of its Subsidiaries) made after the date of the
original issuance of the Notes or a capital contribution to a Subsidiary of the
Company from any Person (other than the Company or another Subsidiary of the
Company) made after the date of the original issuance of the Notes, or (ii) an
issuance and sale made after the issuance date of Equity Interests (other than
Disqualified Equity) of the Company or from the issuance or sale made after the
issuance date of convertible or exchangeable Disqualified Equity or convertible
or exchangeable debt securities of the Company which have been converted into or
exchanged for such Equity Interests (other than Disqualified Equity).

         The foregoing provisions shall not prohibit:

                  (i) Distributions payable by the Company solely in its Equity
         Interests;

                                     -12-           First Supplemental Indenture
<PAGE>

                  (ii) Restricted Payments made by any Subsidiary of the Company
         to the Company or to another Subsidiary of the Company;

                  (iii) cash Distributions paid on, and cash redemptions of, the
         Equity Interests of the Company made within 60 days after the
         declaration thereof; provided that no Default has occurred and is
         continuing at the time of such declaration;

                  (iv) Restricted Payments on, or of, Debt subordinated to the
         Notes, or Rights related thereto, provided that no Default has occurred
         and is continuing at the time such Restricted Payment is made;

                  (v) the redemption, repurchase, retirement, defeasance or
         other acquisition of any Equity Interests of the Company or any of its
         Subsidiaries, or Rights related thereto, in exchange for, or out of the
         net cash proceeds of the substantially concurrent sale or issuance (a
         sale or issuance will be deemed substantially concurrent if such
         redemption, repurchase, retirement or acquisition occurs not more than
         90 days after such sale or issuance) (other than to a Subsidiary of the
         Company) of, Equity Interests of the Company (other than any
         Disqualified Equity), provided that the amount of any such net cash
         proceeds that are utilized for any such redemption, repurchase,
         retirement, defeasance or other acquisition, or payments, shall be
         excluded from clause (ii) of the preceding paragraph;

                  (vi) (A) the purchase or other acquisition of one or more
         Equity Interests in the Company from former employees or directors of
         the Company or any of its Subsidiaries (or any of its or their general
         partners), provided that the aggregate price paid for all such
         purchased or acquired Equity Interests shall not exceed $2,000,000 in
         any 12-month period; and (B) the repurchase, redemption or other
         acquisition or retirement for value of any Equity Interests of the
         Company or any of its Subsidiaries held by any current or former
         officer, employee or director of the Company or any of its Subsidiaries
         (or any of its or their general partners) pursuant to the terms of any
         agreements (including employment agreements) and plans approved by the
         Board of Directors, including any management equity plan or stock
         option plan or any other management or employee benefit plan, agreement
         or trust, provided, however, that the aggregate price paid for all such
         repurchased, redeemed, acquired or retired Equity Interests pursuant to
         this clause (vi) shall not exceed the sum of (y) $5,000,000 in any
         twelve-month period and (z) the aggregate net proceeds received by the
         Company during such 12-month period from issuance of such Equity
         Interests pursuant to such agreements or plans, provided, however, if
         the amount so paid in any calendar year is less than $5,000,000, such
         shortfall may be used to repurchase, redeem, acquire or retire such
         Equity Interests in either of the next two 12-month periods in addition
         to the $5,000,000 that may otherwise be paid in each such 12-month
         periods;

                  (vii) repurchases of Equity Interests deemed to occur upon the
         cashless exercise of stock options;

                  (viii) reasonable and customary directors' fees to the members
         of the Board of Directors, provided that such fees are consistent with
         past practice or current requirements;

                  (ix) other Restricted Payments in an aggregate principal
         amount since the date of original issuance of the Notes not to exceed
         $50,000,000;

                                     -13-           First Supplemental Indenture
<PAGE>

provided, further, that, with respect to clauses (v), (vi), (vii), (viii) and
(ix) above, no Default or Event of Default shall have occurred and be
continuing.

         In determining whether any Restricted Payment is permitted by the
foregoing covenant, the Company may allocate or reallocate all or any portion of
such Restricted Payment among the clauses (i) through (ix) of the preceding
paragraph or among such clauses and the first paragraph of this Section 3.04,
provided that at the time of such allocation or reallocation, all such
Restricted Payments, or allocated portions thereof, would be permitted under the
various provisions of the foregoing covenant.

         The amount of all Restricted Payments (other than cash) shall be the
fair market value (as determined by the Board of Directors and as evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the transfer, incurrence or issuance of
such non-cash Restricted Payment.

         SECTION 3.05. SALE OF ASSETS.

         The Company will not, and will not permit any of its Subsidiaries
(other than any Excluded Subsidiary) to, convey, sell, lease, assign, transfer
or otherwise dispose of, any of its Principal Properties (each, a
"DISPOSITION"), other than as follows: (i) dispositions of assets in the
ordinary course of business having a fair market value of not more than the
greater of (A) $25,000,000 and (B) 5% of Consolidated Net Tangible Assets in the
aggregate during any fiscal year of the Company; (ii) dispositions of assets,
the proceeds of which are (A) reinvested in other assets (or Persons owning
other assets) used by or useful to the Company or such Subsidiary in conducting
its business that is not prohibited by Section 3.06, (B) used to repay,
repurchase, redeem or defease, in whole or part, Debt, or (C) used to make
capital expenditures; (iii) leases permitted by Section 3.02; (iv) leases of
such assets entered into in the ordinary course of business and with respect to
which the Company or any of its Subsidiaries is the lessor and the lessee has no
option to purchase such assets for less than fair market value at any time the
right to acquire such asset occurs; (v) dispositions between and among the
Company and its Subsidiaries, (vi) any Restricted Payment permitted by Section
3.04; (vii) abandonment or relinquishment of such assets in the ordinary course
of business; and (viii) dispositions of such assets received in settlement of
debts accrued in the ordinary course of business.

         SECTION 3.06. FUNDAMENTAL CHANGES.

         The Company will not, and will not permit any of its Subsidiaries to,
engage in any business other than businesses of the type (i) conducted by the
Company and its Subsidiaries on the date hereof; (ii) conducted by Statia
Terminals Group N.V. and its Subsidiaries on the date hereof; and (iii)
businesses reasonably related thereto.

         SECTION 3.07. WAIVER OF CERTAIN COVENANTS.

         The Company may, with respect to the Notes, omit in any particular
instance to comply with any term, provision or condition set forth in any
covenant provided pursuant to Section 3.01, 3.02, 3.03, 3.04, 3.05 or 3.06, if
before the time for such compliance the Holders of at least a majority in
aggregate principal amount of the of all Outstanding Notes (voting as one class)
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.

                                     -14-           First Supplemental Indenture
<PAGE>

         A waiver which changes or eliminates any term, provision or condition
of this Indenture which has expressly been included solely for the benefit of
one or more particular series of Debt Securities, or which modifies the rights
of the Holders of Debt Securities of such series with respect to such term,
provision or condition, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

                                    ARTICLE 4
                                EVENTS OF DEFAULT

         SECTION 4.01. MODIFIED EVENT OF DEFAULT

         With respect to the Notes, the following provision in this Section 4.01
shall preempt, in its entirety, the provision and application of clause (a) of
Section 6.01 of the Original Indenture in relation to the Notes and shall, in
relation to the Notes, replace such clause (a); and for reference to the
Indenture in relation to the Notes, the following clause shall be referred to as
being set forth in Section 6.01(a-1) thereof:

                  (a-1) the Company defaults for a period of 30 days in the
         payment when due of interest on any of the Notes.

         SECTION 4.02. ADDITIONAL EVENT OF DEFAULT

         With respect to the Notes, the occurrence of any of the following
events shall, in addition to the other events or circumstances described as
Events of Default at clauses (a) through (g) of Section 6.01 of the Original
Indenture, constitute an Event of Default, and for reference to the Indenture in
relation to the Notes, such events shall be referred to as being set forth in
Section 6.01(h-1) thereof:

                  (h-1) default under any mortgage, indenture or instrument
         under which there may be issued or by which there may be secured or
         evidenced any Debt for money borrowed by the Company or any of its
         Restricted Subsidiaries, or the payment of which is guaranteed by the
         Company or any of its Restricted Subsidiaries, whether such Debt or
         guarantee now exists, or is created after the date of the Supplemental
         Indenture, which default results in the acceleration of such Debt prior
         to its express maturity, and the principal amount of any such Debt,
         together with the principal amount of any other such Debt the maturity
         of which has been so accelerated, aggregates, without duplication,
         $5,000,000 or more, and such acceleration shall not have been
         rescinded, or such Debt is repaid or otherwise discharged, within a
         period of 30 days from the occurrence of such acceleration; provided,
         that if any such acceleration is rescinded, or such Debt is repaid or
         otherwise discharged, within such period of 30 days, then such Event of
         Default and any consequential acceleration of the Notes shall be
         automatically rescinded, so long as such rescission does not conflict
         with any related judgment or decree;

                                    ARTICLE 5
                                  MISCELLANEOUS

         SECTION 5.01. CERTAIN TRUSTEE MATTERS.

         The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness.

                                     -15-           First Supplemental Indenture
<PAGE>

         The Trustee makes no representations as to the validity or sufficiency
of this Supplemental Indenture or the Notes or the proper authorization or the
due execution hereof or thereof by the Company.

         SECTION 5.02. CONTINUED EFFECT.

         Except as expressly supplemented and amended hereby, the Original
Indenture shall continue in full force and effect in accordance with the
provisions thereof, and the Original Indenture, as supplemented and amended
hereby, is in all respects hereby ratified and confirmed. This Supplemental
Indenture and all its provisions shall be deemed a part of the Original
Indenture in the manner and to the extent herein and therein provided.

         SECTION 5.03. GOVERNING LAW.

         This Supplemental Indenture and the Notes shall be governed by and
construed in accordance with the laws of the State of New York.

         SECTION 5.04. COUNTERPARTS.

         This instrument may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     -16-           First Supplemental Indenture
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and delivered, all as of the day and year first
above written.

                                        KANEB PIPE LINE OPERATING
                                        PARTNERSHIP, L.P.

                                        By:  Kaneb Pipe Line Company LLC,
                                             Its General Partner

                                        By /s/ HOWARD C. WADSWORTH
                                           ------------------------------------
                                           Name: Howard C. Wadsworth
                                           Title: Vice President, Treasurer
                                                  and Secretary

                                        JPMORGAN CHASE BANK

                                        By /s/ MAURI J. COWEN
                                        ----------------------------------------
                                        Name: Mauri J. Cowen
                                        Title: Authorized Officer

                                     -17-           First Supplemental Indenture
<PAGE>

                                                                       EXHIBIT A

                             [FORM OF FACE OF NOTE]

         [If the Note is a Global Security, insert - THIS NOTE IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF, AND HELD BY, THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF. THIS NOTE IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (i) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.08 OF THE ORIGINAL INDENTURE, (ii) THIS GLOBAL
SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.15 OF
THE ORIGINAL INDENTURE, (iii) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE ORIGINAL INDENTURE AND
(iv) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                   KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.

                     ______% SENIOR UNSECURED NOTES DUE 2012

NO.                                                             U.S.$___________
CUSIP No.

         KANEB PIPE LINE OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (herein called the "COMPANY", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ____________, or registered assigns, the principal sum of
$_____________ United States Dollars on _________________, 2012, and to pay
interest thereon from _________________, 2002, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on ________________ and _____________ ____ in each year, commencing
_________________, 2002, at the rate of ______% per annum, until the principal
hereof is paid or made available for payment, and at a rate of _____% per annum
on any overdue principal or redemption price, as applicable, and on any overdue
installment of interest. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on this Note is not a
Business Day, then a

                                     A-1            First Supplemental Indenture
<PAGE>

payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay) with the same force and effect as if made on the date
the payment was originally payable. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be _________________ or
__________________ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and shall either (i) be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a special record date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice of which shall be given to Holders of Notes not
less than 10 days prior to such special record date, or (ii) be paid at such
time in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Notes may be
listed or traded, and upon such notice as may be required by such exchange or
automated quotation system, all as more fully provided in such Indenture.

         [If the Note is a Global Security, insert - Payment of the principal or
redemption price (as applicable) of and interest on this Note will be made by
transfer of immediately available funds to a bank account in the City and State
of New York designated by the Holder in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.]

         [If the Note is a Definitive Security, insert - Payment of the
principal or redemption price (as applicable) and interest on this Note will be
made at the office or agency of the Company maintained for that purpose in the
City and State of New York or at such other offices or agencies as the Company
may designate, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts, or
subject to any laws or regulations applicable thereto, at the option of the
Company, by United States Dollar check drawn on, or transfer to a United States
Dollar account maintained by the payee with, a bank in the City and State of New
York (so long as the applicable paying agent has received proper transfer
instructions in writing by the Regular Record Date or special record date, as
applicable, prior to the applicable payment date); provided, however, that
payment at maturity will only be made against presentation and surrender of this
Note; and provided, further, that any Holder of this Note who is the Holder of
at least $1.0 million aggregate principal amount of Notes may request to have
any payment of interest on this Note be made by transfer to a United States
Dollar account maintained by the payee with a bank in the United States (so long
as the applicable paying agent has received proper transfer instructions in
writing by the Regular Record Date or special record date, as applicable, prior
to the applicable Interest Payment Date).]

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

                                     A-2            First Supplemental Indenture
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and delivered.

Dated:
       ----------------------

                                        KANEB PIPE LINE OPERATING
                                          PARTNERSHIP, L.P.

                                        By:  Kaneb Pipe Line Company LLC,
                                               Its General Partner

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

                     TRUSTEE'S CERTIFICATE AND AUTHORIZATION

     This is one of the Notes referred to in the within-mentioned Indenture.

                                        ----------------------------------------
                                          As Trustee

                                        By:
                                           -------------------------------------
                                                     Authorized Officer
                                        Date:                             , 20
                                             -----------------------------    --

                                     A-3            First Supplemental Indenture
<PAGE>

                            [FORM OF REVERSE OF NOTE]

         This Note is one of a duly authorized series of Debt Securities of the
Company (the "NOTES") issued under an Indenture dated as of __________________,
200__ (the "ORIGINAL INDENTURE"), as supplemented by the First Supplemental
Indenture dated as of _______________, 20____ (the "SUPPLEMENTAL INDENTURE", and
together with the Original Indenture, the "INDENTURE"), between the Company and
___________________, as Trustee (the "TRUSTEE", which term includes any
successor trustee under the Indenture), to which Indenture and all applicable
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered. As
provided in the Indenture, the Debt Securities may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption provisions, if any, may be subject
to different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided or permitted. This Note is one of a series of Debt Securities
designated on the face hereof limited in aggregate principal amount to U.S.
$_____________.

         At its option, the Company may choose to redeem the Notes, as a whole
or in part, in principal amounts of $1,000 or any integral multiple thereof, at
any time or from time to time upon notification to the Holders of the Notes
given at least 30 and not more than 60 days prior to the date fixed for such
redemption, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Notes to be redeemed and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest on such
Notes, exclusive of interest accrued to the redemption date therefor, discounted
to such redemption date on a semiannual basis, assuming a 360-day year
consisting of twelve 30-day months, at the Treasury Rate plus ________ basis
points, plus, in either case, accrued and unpaid interest on the principal
amount of the Notes being redeemed to such redemption date; provided, that
installments of interest on Notes that are due and payable on any date on or
prior to a redemption date shall be payable to the registered Holders of such
Notes (or one or more Predecessor Securities), registered as such as of the
close of business on the relevant Regular Record Dates referred to on the face
hereof, all as provided in the Indenture.

         Capitalized terms used herein shall have the meanings specified herein
or in the Indenture, as the case may be.

                  "COMPARABLE TREASURY ISSUE" means the United States Treasury
     security or securities selected by the Independent Investment Banker as
     having an actual or interpolated maturity comparable to the remaining term
     of the Notes to be redeemed that would be utilized, at the time of
     selection and in accordance with customary financial practice, in pricing
     new issues of corporate debt securities of a comparable maturity to the
     remaining term of the Notes.

                  "COMPARABLE TREASURY PRICE" means, for any redemption date
     relating to the Notes, (i) the average of four Reference Treasury Dealer
     Quotations for such redemption date, after excluding the highest and lowest
     such Reference Treasury Dealer Quotations, or (ii) if the Independent
     Investment Banker obtains fewer than four such Reference Treasury Dealer
     Quotations, the average of all such quotations.

                                     A-4            First Supplemental Indenture
<PAGE>

                  "INDEPENDENT INVESTMENT BANKER" means either Banc of America
     Securities LLC or Salomon Smith Barney Inc., as specified by the Company,
     or any successor firm, or if such firm is unwilling or unable to select the
     Comparable Treasury Issue, an independent investment banking institution of
     national standing appointed by the Trustee after consultation with the
     Company.

                  "REFERENCE TREASURY DEALER" means each of Banc of America
     Securities LLC and Salomon Smith Barney Inc., plus two additional dealers
     selected by the Trustee that are at the time primary U.S. Government
     securities dealers in New York City, and their respective successors;
     provided, if Banc of America Securities LLC or Salomon Smith Barney Inc. or
     any primary U.S. Government securities dealer selected by the Trustee shall
     cease to be a primary U.S. Government securities dealer, then such other
     primary U.S. Government securities dealers as may be substituted by the
     Trustee.

                  "REFERENCE TREASURY DEALER QUOTATIONS" means, for each
     Reference Treasury Dealer and any redemption date relating to the Notes, as
     determined by the Trustee, of the bid and asked prices for the Comparable
     Treasury Issue (expressed in each case as a percentage of its principal
     amount) quoted in writing to the Trustee by such Reference Treasury Dealers
     at 5:00 p.m., New York City time, on the third Business Day preceding such
     redemption date.

                  "TREASURY RATE" means with respect to any redemption date
     relating to the Notes, (i) the yield, under the heading which represents
     the average for the immediately preceding week, appearing in the most
     recently published statistical release designated "H.15(519)" or any
     successor publication which is published weekly by the Board of Governors
     of the Federal Reserve System and which establishes yields on actively
     traded United States Treasury securities adjusted to constant maturity
     under the caption "Treasury Constant Maturities," for the maturity
     corresponding to the Comparable Treasury Issue (if no maturity is within
     three months before or after the remaining term of the Notes to be
     redeemed, yields for the two published maturities most closely
     corresponding to the Comparable Treasury Issue shall be determined and the
     Treasury Rate shall be interpolated or extrapolated from such yields on a
     straight line basis, rounding to the nearest month) or (ii) if such release
     (or any successor release) is not published during the week preceding the
     calculation date or does not contain such yields, the rate per annum equal
     to the semiannual equivalent yield to maturity of the Comparable Treasury
     Issue, calculated using a price for the Comparable Treasury Issue
     (expressed as a percentage of its principal amount) equal to the Comparable
     Treasury Price for such redemption date. The Treasury Rate shall be
     calculated on the third Business Day preceding the redemption date. Any
     weekly average yields calculated by interpolation or extrapolation will be
     ranked to the nearest 1/100th of 1% with any figure of 1/200th of 1% or
     above being rounded upward.

         In the event of redemption of this Note in part only, a new Note or
Notes of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.

         If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes to be affected under the
Indenture at any time by the Company and the Trustee with the consent of not
less than the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of all series to be affected (voting as one class).
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount

                                     A-5            First Supplemental Indenture
<PAGE>

of the Outstanding Debt Securities of all affected series (voting as one class),
on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture. The Indenture permits,
with certain exceptions as therein provided, the Holders of a majority in
principal amount of Notes then Outstanding to waive past defaults under the
Indenture with respect to the Notes and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal, premium, if any, or
interest hereon on or after the respective due dates expressed herein.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place(s) and rate, and in the coin or
currency, herein prescribed.

         [If the Note is a Global Security, insert - This Global Security or
portion hereof may not be exchanged for Definitive Securities except in the
limited circumstances provided in the Indenture.

         The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.]

         [If the Note is a Definitive Security, insert - As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Note is registrable in the Debt Security Register, upon surrender of this
Note for registration of transfer at the office or agency of the Company in the
City and State of New York or at such other offices or agencies as the Company
may designate, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Debt Security Registrar
duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.]

         The Notes are issuable only in registered form, without coupons, in
denominations of U.S. $1,000 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth, the Notes
are transferable and exchangeable at the office of the

                                     A-6            First Supplemental Indenture
<PAGE>

Registrar and any co-registrar for a like aggregate principal amount of Notes
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any transfer tax or other similar government charge payable in connection with
certain transfers and exchanges.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         Obligations of the Company under the Indenture and the Securities
thereunder, including this Note, are non-recourse to Kaneb Pipe Line Company
LLC, a Delaware limited liability company (the "GENERAL PARTNER"), and Kaneb
Pipe Line Partners, L.P., a Delaware limited partnership ("MLP"), and their
respective Affiliates (other than the Company), and payable only out of cash
flow and assets of the Company. The Trustee, and each Holder of a Note by its
acceptance hereof, will be deemed to have agreed in the Indenture that (i)
neither the General Partner nor its assets nor the MLP nor its assets (nor any
of their respective Affiliates other than the Company, nor their respective
assets) shall be liable for any of the obligations of the Company under the
Indenture or such Securities, including this Note, and (ii) no past, present or
future director, officer, partner, employee, incorporator, stockholder, member
or manager or unitholder, as such, of the Company, the Trustee, the General
Partner, the MLP or any Affiliate of any of the foregoing entities or any other
Person an obligor on the Notes, as such, shall have any liability in respect of
any obligations of the Company under the Indenture or such Debt Securities or
for any claim based on, in respect of, or by reason of, such obligation or their
creation. The foregoing agreements by the Trustee and each Holder are part of
the consideration for the issuance of the Notes.

         The Indenture contains provisions that relieve the Company from the
obligation to comply with certain restrictive covenants in the Indenture and for
satisfaction and discharge at any time of the entire indebtedness upon
compliance by the Company with certain conditions set forth in the Indenture.

         This Note shall be governed by and construed in accordance with the
laws of the State of New York.

         All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

         [If the Note is a Definitive Security, insert as a separate page -

                                     A-7            First Supplemental Indenture
<PAGE>

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________ (Please Print or Typewrite Name
and Address of Assignee) the within instrument of KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P., and does hereby irrevocably constitute and appoint
_________________________ Attorney to transfer said instrument on the books of
the within-named Company, with full power of substitution in the premises.

Please Insert Social Security or
Other Identifying Number of Assignee:

Dated:                             (Signature)
      -----------------------                  ---------------------------------

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]

                                     A-8            First Supplemental Indenture<PAGE>
                                                                     Exhibit 4.7

This Agreement is made the 14th day of June 2000

Between:

(1)  The persons (excluding 3i) whose names and addresses are set out in
     Schedule 1 ("the Vendors"); and

(2)  3i Nominees Limited (company number: 02916955) and 3i 96 Partners Nominees
     Limited (company number: 03172468) (together "3i") both of whom have their
     registered office at 91 Waterloo Road, London SE1 8XP.

(3)  Berisford Industrial Holdings Limited (company number: 02887689) whose
     registered office is at Washington House, 40-41 Conduit Street, London W1R
     9FB ("the Purchaser").

Background:

The Vendors and 3i have agreed to sell and the Purchaser has agreed to purchase
the Shares (as defined below) on the terms of this Agreement.

It is agreed as follows:

1.   Definitions and interpretation

1.1  In this Agreement, unless the context otherwise requires, the following
     words have the following meanings:

          "AB Jelly and others"     the persons defined as vendors under the
                                    sale and purchase agreement for the entire
                                    issued share capital of Elvadene Limited
                                    dated 20 December 1996;

          "the Accounts"            the audited balance sheet as at the Accounts
                                    Date and the audited profit and loss account
                                    for the year ended on the Accounts Date of
                                    each Group Company, including all documents
                                    required by law to be annexed to them and,
                                    in the case of the Company, the audited
                                    consolidated balance sheet as at that date
                                    and the audited consolidated profit and loss
                                    account for that year;

          "the Accounts Date"       30 September 1999

          "this Agreement"          this Agreement (including any Schedule or
                                    annexure to it);

          "Amana Statement"         the witnessed statement, in the agreed
                                    form, in relation to Amana Company L.P.

                                       1

<PAGE>

                                    given by the Warrantors;

                "the Bank"          the Governor and the Company of the Bank of
                                    Scotland;

                "the Board"         in relation to each Group Company, its board
                                    of directors;

                "Borrowings"        (a)     all monies borrowed (or if in the
                                            nature of borrowings raised) from
                                            banks or other providers of finance
                                            and capitalised interest thereon;

                                    (b)     liabilities under any bond, note,
                                            debenture, loan stock or other
                                            instrument or security;

                                    (c)     liabilities in respect of any
                                            debentures, bonds, loan stock,
                                            commercial paper, acceptance or
                                            documentary credits or discounted
                                            instruments or note purchaser
                                            facilities or other similar
                                            instruments;

                                    (d)     liabilities in respect of the
                                            acquisition cost of asset or
                                            services to the extent payable on
                                            deferred payment terms;

                                    (e)     liabilities under guarantees or
                                            indemnities or other assurances
                                            against financial loss of any person
                                            (other than in respect of product
                                            warranties);

                                    (f)     liabilities under debt purchase,
                                            factoring or similar agreements and
                                            amounts payable under finance
                                            leases, hire purchase agreements or
                                            conditional sale agreements;

                                    (g)     any interest rate or currency swap,
                                            cap, floor or collar transaction or
                                            any similar or other derivative
                                            transaction; and

                                    (h)     any other transaction or item

                                       2

<PAGE>

                                   having substantially the same commercial
                                   effect as any of the foregoing,
                                   including liabilities which are not
                                   shown as borrowings on the balance
                                   sheets of the Companies by reason of
                                   being contingent, conditional or
                                   otherwise;

                             but for the avoidance of doubt shall not
                             include:

                             (i)   trade credit incurred in the ordinary
                                   course of business nor any liabilities
                                   incurred under those finance and/or
                                   operating (e.g. the Lex leasing
                                   agreement for company vehicles amounting
                                   to (Pounds)120k approximately) leases
                                   copies of which are included in the
                                   Disclosure Bundle;

                             (ii)  a prospective liability for corporation
                                   tax payable on 18 July 2000 of
                                   (Pounds)265,000;

                             (iii) a liability in respect of the proposed
                                   purchase of a motor vehicle for Mr
                                   Graham Veal amounting to (Pounds)26,000;

                             (iv)  deferment of VAT payable of
                                   (Pounds)15,000 on a rolling basis
                                   guaranteed by the Bank.

                             (V)   any amounts outstanding from one Group
                                   Company to another Group Company

"the CA"                     means the Companies Act 1985, as amended;

"Claim"                      a claim by the Purchaser against the
                             Warrantors under the Covenant for Taxation
                             or under the Warranties and "Non-Tax Claim"
                             means any Claim which is not a Tax Claim (as
                             defined in Schedule 8 of the Agreement);

"Confidential Business       means all or any information of a

                                       3

<PAGE>

Information"                      confidential nature and not publicly known
                                  which is owned by a Group Company or which is
                                  used in or otherwise relates to the business,
                                  customers or financial or other affairs of any
                                  Group Company including, without limitation,
                                  information relating to:

                                  (a)     the business methods, corporate plans,
                                          management systems, finances, new
                                          business opportunities or development
                                          projects of any Group Company; or

                                  (b)     the marketing or sales of any past or
                                          present or future products, goods or
                                          services of any Group Company
                                          including, without limitation,
                                          customer names and lists and other
                                          details of customers, sales targets,
                                          sales statistics, market share
                                          statistics, prices, market research
                                          reports and surveys and advertising
                                          and other promotional materials; or

                                  (c)     future projects, business development
                                          or planning, commercial relationships
                                          and negotiations; or

                                  (d)     any trade secrets or other
                                          information relating to the provision
                                          of any product or service of any
                                          Company.

"the Company"                     Merrychef Holdings Limited (formerly known
                                  as Blakedew Twenty Four Limited), details of
                                  which are set out in Schedule 2;

"Completion"                      the completion of the sale and purchase of the
                                  Shares under this Agreement;

"the Consideration"               the consideration payable by the Purchaser to
                                  the Vendors and 3i for the Shares under
                                  Clause 3;

"the Covenant for                 the covenant given by the Vendors under

                                       4

<PAGE>

Taxation"                     paragraph 2 of Schedule 8;

"Disclosed"                   fully and fairly disclosed to the Purchaser
                              expressly for the purposes of this Agreement in
                              the Disclosure Letter and "fully and fairly" means
                              disclosed with sufficient particularity to enable
                              the Purchaser to assess the full impact on the
                              Company of the matter disclosed;

"the Disclosure Letter"       the letter of the same date as this Agreement in
                              the agreed form from the Warrantors to the
                              Purchaser, together with any attachments,
                              disclosing matters that are exceptions to the
                              Warranties;

"the Group Companies"         the Company, its Subsidiaries, any Holding Company
                              of the Company and any Subsidiary of any such
                              Holding Company and "Group Company" means any of
                              them;

"Company Intellectual         all Intellectual Property which are used or
Property"                     required in the carrying on of the business of the
                              Company or any of the Subsidiaries in the manner
                              in which such business was carried on immediately
                              before the date of this Agreement;

"Guarantee"                   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;

"Intellectual Property"       patents, trade marks or names whether or not
                              registered or capable of registration, registered
                              designs, design rights, copyrights (including
                              copyright in computer software), database rights,
                              the right to apply for and applications for any of
                              the preceding items, together with the rights in
                              inventions, processes, software, know-how, trade
                              or business secrets and confidential information;

"the  Lease"                  the lease under which the Property is held,
                              particulars of which are set out in Schedule 5;

                                       5

<PAGE>

"the Loan Note"             the secured variable rate Loan Note instrument
                            between the Company (1) and AB Jelly and others (2)
                            dated 20 December 1996;

"Management Accounts"       the unaudited management accounts for the Company
                            for the period from Accounts Date to 30 April 2000;

"Materially Adverse         means an act, event, omission which alone or in
 Event"                     combination with other such acts, events or
                            omissions has had or is reasonably likely to result
                            in a material adverse change in or effect on the
                            assets, business, condition (financial or otherwise)
                            results or operations of any Group Company except as
                            a direct result of:

                            (a) any gneral change in the general economic or
                                financial position common to all companies or
                                businesses engaged in the activities carried on
                                by any Group Company as at the date of this
                                Agreement ("Industry"); or

                            (b) the occurrence or continuance of any material
                                disruption of or material adverse change in any
                                of the worldwide, US, European or UK financial,
                                banking or capital markets since the date of
                                this Agreement; or

                            (c) any change resulting from an action of the
                                Buyer affecting any Group Company or any member
                                of the Industry; or

                            (d) any loss of custom or supply as a result of the
                            announcement of the proposed sale of any Group
                            Company or following Completion;

"the Net Consideration"     the Consideration less the costs incurred by the
                            Vendors, details of which are set out in column 7 of
                            Schedule 1;

                                       6

<PAGE>

     "Non-Tax Warranties"     the representations referred to in Clause 6 and
                              set out in Schedule 4;

     "Planning Acts"          the Town and Country Planning Act 1990, the
                              Planning (Listed Buildings and Conservation Areas)
                              Act 1990, the Planning (Hazardous Substances) Act
                              1990, the Planning (Consequential Provisions) Act
                              1990, the Planning and Compensation Act 1991 and
                              all other statutes containing provisions relating
                              to town and country planning;

     "the Policies"           all insurance policies maintained by the Company
                              on the date of this Agreement and "Policy" means
                              any of them;

     "the Property"           the lease hold property particulars of which are
                              set out in Schedule 5;

     "the Purchaser's         means Hammond Suddards, 7 Devonshire Square,
     Solicitors"              Cutlers Gardens, London EC2M 4YH;

     "Security Interest"      means any mortgage, charge, assignment or
                              assignation by way of security, guarantee,
                              indemnity, debenture, hypothecation, pledge,
                              declaration of trust, lien, right of set off or
                              combination of accounts, or any encumbrance or
                              security interest whatsoever, howsoever created or
                              arising;

     "the Senior Loan         the facilities agreement between the Company (I),
     Facility"                Merrychef Limited and Elvadene Limited (2) and the
                              Bank dated 20 December 1996;

     "the Shares"             all the issued shares of the Company at
                              Completion, as set out in Schedule 2;

     "the Subordinated Loan   the agreement between the Company (1) Reece
     Agreement"               Houghton and others (2), 3i plc (3), 3i Group plc
                              (4) and 3i UK Investment Partners (5) dated 20
                              December 1996;

     "Subsidiaries"           any subsidiaries of the Company within the meaning
                              of Section 736, Companies Act 1985 and any
                              subsidiary undertakings

                                       7

<PAGE>

                              within the meaning of Section 258, Companies Act
                              1985 from time to time, details of which are set
                              out in Schedule 3, and "Subsidiary" means any of
                              them;

     "Tax Authority"          having the meaning given in Schedule 8 (Tax
                              Schedule);

     "Tax Warranties"         the representations set out in paragraph 4 of
                              Schedule 8 (Tax Schedule) and each of them;

     "the Tenancies"          any tenancies or other occupational arrangements
                              under which the Properties are held by third
                              parties, particulars of which are set out in
                              Schedule 5;

     "Warrantors"             R Houghton, RG Gale, JR Keywood, GPB Veal, SC
                              Barker and N Thorneywork, details of whom are set
                              out in Schedule 1;

     "Warrantor Associate"    each of the Warrantors and any persons connected
                              with any of them within the meaning of Section
                              839, ICTA;

     "Warranties"             the Non-Tax Warranties and the Tax Warranties, and
                              "Warranty" means any one of them;

1.2  Words defined in paragraph 1 of Schedule 8 (Tax Schedule) shall bear the
     same meaning in the entire Agreement.

1.3  In this Agreement, unless the context otherwise requires:

     (a)  words in the singular include the plural and vice versa and words in
          one gender include any other gender;

     (b)  a reference to a statute or statutory provision includes:

          (i)   any subordinate legislation (as defined in Section 21(l),
                Interpretation Act 1978) made under it;

          (ii)  any repealed statute or statutory provision which it re-enacts
                (with or without modification); and

          (iii) any statute or statutory provision which modifies, consolidates,
                re-enacts or supersedes except to the extent that it would
                create or increase the liability of 3i, the Vendors or the
                Warrantors under Clause 6;

                                       8

<PAGE>

     (c)  a reference to:

          (i)   any party includes its successors in title and permitted
                assigns;

          (ii)  a "person" includes any individual, firm, body corporate,
                association or partnership, government or state (whether or not
                having a separate legal personality);

          (iii) Clauses and schedules are to Clauses and schedules of this
                Agreement and references to sub-clauses and paragraphs are
                references to sub-clauses and paragraphs of the Clause or
                schedule in which they appear;

          (iv)  any provision of this Agreement is to that provision as amended
                in accordance with the terms of this Agreement;

          (v)   any document being "in the agreed form" means in a form which
                has been agreed by the parties on or before the date of this
                Agreement and for identification purposes signed by them or on
                their behalf by their solicitors;

          (vi)  "indemnify" and "indemnifying" any person against any
                circumstance include indemnifying and keeping him harmless from
                all actions, claims and proceedings from time to time made
                against him and all loss or damage and all reasonable payments,
                reasonable costs or reasonable expenses made or incurred by that
                person as a consequence of or which would not have arisen but
                for that circumstance; and

     (d)  except as set out in sub-clause 1.1, terms defined in the Companies
          Act 1985 have the meanings attributed to them by that Act;

     (e)  "sterling" and the sign "(Pounds)" mean pounds sterling in the
          official currency of the United Kingdom save that if, following the
          introduction of the Euro, pounds sterling ceases to exist as the
          currency of the United Kingdom, then all references in this Agreement
          to pounds sterling shall be construed as references to the Euro at the
          conversion rate applicable at the close of business on the day before
          that on which sterling ceased to exist;

     (f)  the table of contents and headings are for convenience only and shall
          not affect the interpretation of this Agreement;

     (g)  general words shall not be given a restrictive meaning:

          (i)   if they are introduced by the word "other" by reason of the fact
                that they are preceded by words indicating a particular class of
                act, matter or thing; or

          (ii)  by reason of the fact that they are followed by particular
                examples intended to be embraced by those general words;

                                       9

<PAGE>

     (h)  where any liability or obligation is undertaken by two or more
          persons, the liability of each of them shall be several; and

     (i)  where any statement is qualified by the expression "so far as the
          Warrantor is aware" or "to the best of the Warrantor's knowledge and
          belief" or any similar expression it shall be deemed to include an
          additional statement that the statement is given individually and
          severally by each Warrantor after due and careful consideration of the
          factors relevant to each statement or warranty and after enquiry by
          each of them of the others, save that Reece Houghton need not enquire
          of any of the other Warrantors, and the other Warrantors need not
          enquire of Reece Houghton.

2.   Sale and purchase

2.1  Subject to the terms of this Agreement, the Vendors and 3i shall sell the
     Shares set opposite their respective names in Schedule 1 and the Purchaser
     shall purchase such Shares, with effect from Completion, with:

     (a)  full title guarantee (free from any and all Security Interests
          (whether monetary or not) and all other rights exercisable by third
          parties which 3i or the Vendors do not, and could not reasonably be
          expected to, know about); and

     (b)  all rights attaching to or accruing to them at Completion (including
          all dividends and distributions declared, paid or made on or after
          that date).

2.2  Each of the Vendors and 3i waive all rights of pre-emption over any of the
     Shares conferred on them by the Articles of Association of the Company or
     in any other way.

2.3  The Purchaser shall not be obliged to complete the purchase unless the sale
     and purchase of all the Shares is completed simultaneously.

3.   Consideration

3.1  The Consideration is the payment by the Purchaser to the Vendors and 3i of
     the sum of (Pounds)3,750,000 which shall be payable in cash at Completion
     in accordance with Clause 4.

3.2  Subject to Clause 4, the Consideration shall be apportioned between the
     Vendors and 3i in accordance with Schedule 1.

3.3  The bonuses amounting in aggregate to the gross sum of (Pounds)183,000
     payable to Messrs Barker, Veal, Thorneywork, Keywood and Gale ("the
     Managers") shall be paid by the Company on or around Completion subject and
     to the extent that the Company has cash in sufficient amount to pay the
     same, failing which the Company shall not be liable to pay such bonuses and
     the managers waive their right to receive the same from the Company.

4.   Completion

                                       10

<PAGE>

4.1  Completion shall take place at the offices of the Vendor's Solicitors in
     Reading immediately after the execution of this Agreement.

4.2  On Completion:

     (a)  the Vendors shall deliver or procure the delivery to the Purchaser:

          (i)    stock transfer forms, duly completed and executed by the
                 registered holders, in favour of the Purchaser (or as it may
                 direct) in respect of the Shares together with the relevant
                 share certificates;

          (ii)   irrevocable powers of attorney in favour of the Purchaser in
                 the agreed form executed by each of the Vendors in respect of
                 the Shares registered in their names to enable the Purchaser
                 (pending registration of transfers of the Shares) to exercise
                 all voting and other rights attaching to the shares and to
                 appoint proxies for this purpose;

          (iii)  the certificate of incorporation, any certificates of
                 incorporation on change of name or re-registration, the
                 statutory books written up to date, share certificate books,
                 minute books, and the common seal of each Group Company;

          (iv)   subject to clause 4.2(d)(ii) and (iii) duly executed releases
                 of all charges granted by any Group Company details of which
                 are set out in Schedule 7;

          (v)    all title deeds relating to the Properties including all
                 documents relating to the Tenancies and, where the Properties
                 are charged, Forms DS1 or receipted Legal Charges as
                 appropriate;

          (vi)   a statement of all overdraft and credit balances from each
                 Group Company's bankers and other lenders as at the close of
                 business on the day two days before Completion;

          (vii)  the Disclosure Letter;

          (viii) the Letter of Instruction and the Redcliffe Letter of
                 Instruction signed for and on behalf of the relevant
                 signatories (excluding the Purchaser).

     (b)  The Vendors shall repay all monies then owing by them to any Group
          Company whether due and payable or not.

     (c)  The Vendors shall procure that a board meeting of each Group Company
          is held at which:

          (i)    the stock transfer forms referred to in sub-clause (a)(i) are
                 approved and (subject to them being appropriately stamped)
                 registered in the relevant Group Company's books;

                                       11

<PAGE>

          (ii)   the persons nominated by the Purchaser are appointed as
                 directors and secretary of each Group Company and any requested
                 resignations are implemented;

     (d)  When the Vendors have complied with the provisions of sub-clauses
          (a)-(c) inclusive, the Purchaser shall:

          (i)    advance to the Company the sum of (Pounds)12,950,000 by way of
                 loan, such loan to be interest free and repayable on demand by
                 telegraphic transfer to the client account of the Vendors'
                 solicitors, Osborne Clarke OWA at the National Westminster Bank
                 plc, account number 00708542, sort code 56-00-05;

          (ii)   pay the amount of the Retention (as defined in Schedule 9) into
                 the Retention Account (as therein defined);

          (iii)  pay the amount of the Redcliffe Retention (as defined in
                 Schedule 10) into the Redcliffe Retention Account (as therein
                 defined);

          (iv)   pay to the Vendors and 3i the Consideration for the Shares
                 namely the sum of (Pounds)3,750,000 (less in the case of 31,
                 the amount of the Retention and in the case of the Vendors and
                 31, less their proportionate share of the Redcliffe Retention)
                 in the proportions set out in Schedule 1 by telegraphic
                 transfer to the client account of the Vendors' solicitors,
                 Osborne Clarke OWA at the National Westminster Bank plc,
                 account number 00708542, sort code 56-00-05;

          (v)    sign the Letter of Instruction and the Redcliffe Letter of
                 Instruction.

4.3  If any of the requirements of sub-clause 4.2 are not complied with on the
     date set for Completion under sub-clause 4.1, the Purchaser (in the case of
     the requirements of sub-clauses 4.2(a)-(c) inclusive) or the Vendors or 3i
     (in the case of the requirements of sub-clause 4.2(d)) may:

     (a)  defer Completion with respect to some or all of the Shares to a date
          not less than 7 nor more than 28 days after that date (in which case
          the provisions of this sub-clause shall also apply to Completion as so
          deferred); or

     (b)  proceed to Completion so far as practicable (including, at the
          Purchaser's option, completion of the purchase of some only of the
          Shares) but without prejudice to any other rights which it or they may
          have under this Agreement; or

     (c)  rescind this Agreement by notice in writing.

                                       12

<PAGE>

4.4 The Retention shall be held by the Purchaser's Solicitors and 3i's
    Solicitors as set out in Clause 6.9 of this Agreement and shall be dealt
    with in accordance with the provisions of Clause 6.9, Schedule 9 and the
    Instruction Letter.

4.5 The Redcliffe Retention shall be held by the Purchaser's Solicitors,
    Vendor's solicitors and 3i's Solicitors as set out in Clause 6.10, Schedule
    10 and the Redcliffe Letter of Instruction.

5.  Post completion matters

5.1 The Vendors and 3i declare that for as long as they remain the registered
    holders of the shares after Completion they will:

     (a)  hold the 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;

     (b)  deal with the 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 the shares such
          registration to be carried out by the Purchaser with in 21 days of
          Completion.

5.2 The Vendors and 3i irrevocably appoint the Purchaser as their 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 the Shares.

5.3 For the purpose of Clause 5.2, the Vendors and 3i authorise:

     (a)  the Company to send any notices in respect of their share holdings to
          the Purchaser;

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

6.  Warranties

6.1 The Warrantors, Mr Graham Woodhead and 3i severally in relation to their
    respective holdings of Shares and capacity respectively warrant to the
    Purchaser that Warranties 1 and 2 (Capacity) and 3.3 in Schedule 4 is true
    and accurate in all respects and not misleading at the date of this
    Agreement and will continue to be true and accurate in all respects and not
    misleading up to and including Completion.

6.2 The Warrantors severally warrant to the Purchaser that all of the Warranties
    other than those referred to in Clause 6.1 above are true and accurate in
    all respects and not misleading and will continue to be true and accurate in
    all

                                       13

<PAGE>

     respects and not misleading up to and including Completion. Provided that
     in the case of Mr Reece Houghton he shall not be liable for any breach of
     any Warranty in respect of any matter occurring after 19 January 2000 which
     would otherwise be treated as a breach of Warranty, save where the matter
     in question relates to a breach of the Warranty at paragraph 43 of Schedule
     4 in which case no such time restriction shall apply.

6.3  The Warrantors acknowledge that the Purchaser has entered into this
     Agreement in reliance upon the Warranties (including the Warranties in this
     Clause 6), but such acknowledgement shall not give rise to any right of
     rescission of this Agreement.

6.4  Each Warranty (including the Warranties in this Clause 6) made or given in
     respect of the "Company" shall be deemed to be a Warranty of the Warrantors
     made or given in respect of the Company and each Group Company and (unless
     the context or subject matter otherwise requires) the expression the
     "Company" in Schedule 4 shall be construed accordingly.

6.5  Each of the Warranties (including the Warranties in this Clause 6) shall be
     construed as a separate and independent Warranty and, except where
     expressly stated, shall not be limited or restricted by reference to or
     inference from the terms of any other Warranty or any other provision of
     this Agreement. The Warranties (including any Warranty in this Clause 6)
     shall not in any respect be extinguished or affected by Completion.

6.6  The rights and remedies of the Purchaser in respect of any breach of the
     Warranties shall not be affected by completion of the purchase of the
     Shares, by any investigation made by or on behalf of the Purchaser into the
     affairs of any Group Company, by its failure to rescind this Agreement, by
     any failure to exercise or delay in exercising any right or remedy or by
     any other event or matter whatsoever, except a specific and duly authorised
     written waiver or release expressly referring to such breach.

6.7  The Warrantors, Mr Graham Woodhead and 3i agree with the Purchaser (for
     themselves and as trustee for each Group Company and their respective
     directors, officers, and employees) and 3i agree on behalf of themselves
     only to waive any claim or remedy or right which they may have in respect
     of any misrepresentation, inaccuracy or omission in or from any information
     or advice supplied or given by any Group Company or a director, officer or
     employee of any Group Company for the purpose of assisting the Warrantors
     in giving any warranty, representation, undertaking or covenant, in
     preparing the Disclosure Letter and in entering into this Agreement, the
     Covenant for Taxation or any agreement or document entered into pursuant to
     this Agreement.

6.8  Subject to the proviso of this Clause but not to any other limitations
     (including in particular the limitations set out in Clause 9):

     (a)  the Warrantors jointly and severally warrant and represent to the
          Purchaser that save for the items listed at Clause 6.11 of this
          Agreement

                                       14

<PAGE>

               the Group Companies have no Borrowings save that Mr Houghton
               warrants only in respect of the period up to 19 January 2000;

          (b)  the Warrantors covenant to indemnify and keep indemnified the
               Purchaser and the Group Companies in the event that the
               Borrowings listed at Clause 6.11 do not represent all the
               Borrowings of the Group Companies as at Completion provided that
               in the absence of fraud or dishonesty or wilful non-disclosure:

               (i)   no claims under Clauses 6,8 and 6.9 shall be made unless
                     and until the amount of the claim equals or exceeds
                     (Pounds)l00,000;

               (ii)  no Warrantor shall be liable under this Clause to pay more
                     than the Net Consideration received by that Warrantor;

               (iii) no claim shall be made under this Clause 6 unless it is
                     made in writing; before the date which is 12 months from
                     the date of this Agreement;

6.9

     In relation to the Retention, 3i and the Purchaser shall comply with their
     respective obligation as set out in Schedule 9.

6.10 The Redcliffe Claim shall be dealt with in accordance with Schedule 10.

6.11 The items referred to in Clause 6.8 and 6.9 above are:

          (a)  (Pounds)3,950,000 which together with interest thereon amounting
               to (Pounds)14,076.50 equals the indebtedness of the Company to
               the Bank under the Senior Loan Facility;

          (b)  (Pounds)7,000,000 which together with interest thereon amounting
               to (Pounds)294,625.66 equals the indebtedness of the Company to
               3i under the Subordinated Loan Agreement;

          (c)  (Pounds)2,000,000 which together with interest thereon amounting
               to (Pounds)50,936.99 equals the indebtedness of the Company to
               AB Jelly and others under the Loan Note others; and

7.   Covenant for Taxation

     The Warrantors severally covenant to the Purchaser in the terms of the
     Covenant for Taxation as set out in Schedule 8.

8.   Purchaser's remedies

8.1  Each of the Warrantors undertakes to disclose in writing to the Purchaser
     anything which is or may lead to a breach of the Warranties or which may be
     inconsistent with the Warranties or the contents of the Disclosure Letter
     directly it comes to the notice of any of them at the time of after
     Completion.

                                       15

<PAGE>

8.2  The rights and remedies of the Purchaser in respect of any breach of the
     Warranties or the Covenant for Taxation shall not be affected by
     Completion.

8.3  If any Claim is made, no Warrantor nor Mr Graham Woodhead nor 3i shall make
     any claim against any Group Company or any director or employee of any
     Group Company on whom he may have relied before agreeing to any terms of
     this Agreement or authorising any statement in the Disclosure Letter. This
     sub-clause shall not preclude any Warrantor from claiming against any other
     Warrantor under any right of contribution or indemnity to which he may be
     entitled.

8.4  In the event of a Claim the Warrantors, Mr Graham Woodhead as the case may
     be, as the case may be, agree to pay in cash to the Purchaser by way of
     damages a sum equal to the diminution in value of the Shares as agreed
     between the Vendors and the Purchaser or, in default of such agreement, as
     determined by order of a court of competent jurisdiction.

8.5  Any amount paid by the Warrantors to the Purchaser in respect of any of the
     provisions of this Agreement shall be treated as paid to the Purchaser by
     the Warrantors by way of pro rata reduction in the Consideration.

9.   Limitations on liability

9.1  The liability of the Warrantors under the Covenant for Taxation shall be
     reduced if and to the extent that the loss shall have been recovered under
     the Warranties (and vice versa).

9.2  In the absence of fraud or dishonesty or wilful non-disclosure on the part
     of any of the Warrantors, their agents or advisors:

     (a)  the Purchaser shall not have any claim under the Warranties in respect
          of any matter if, and to the extent that, it is Disclosed in the
          Disclosure Letter;

     (b)  the Warrantors shall not be liable for any Claim unless:

          (i)  they have received written notice from the Purchaser giving
               reasonable details of the Claim and, if practicable, the
               Purchaser's estimate of the amount involved on or before:

               (A)  in the case of all Warrantors the expiration of one (1) year
                    from the date of this Agreement;

               (B)  in the case of any claim relating to Taxation, the date
                    which is the earlier of two (2) years from the date of the
                    filing of the tax return for the Company for the year ending
                    30 September 2001, such return to be made within 6 months of
                    30 September 2001, and agreement of the returns for the
                    years ending 30 September 2000 and 30 September 2001 by the
                    Inland Revenue;

          (ii) subject to sub-clause (iii), an individual Claim is equal to or

                                       16

<PAGE>

                           exceeds (Pounds)20,000 ("a (Pounds)20,000 Threshold
                           Claim). In circumstances where Claims relate to the
                           same set of circumstances or matters then such Claims
                           shall be aggregated and treated as one individual
                           Claim for the purposes of this Clause;

                    (iii)  the amount of the Claim, when aggregate with all
                           other (Pounds)20,000 Threshold Claims made on the
                           same occasion or previously, is equal to or exceeds
                           (Pounds)200,000 (in which case the Warrantors shall
                           be liable for the whole amount of all Claims
                           irrespective of whether an individual Claims exceeds
                           (Pounds)20,000 and not simply the excess).

          (c)       The liability of a Warrantor in respect of a Claim shall be
                    limited to and shall not exceed the lower of the following
                    amounts and proportions:

                    Warrantor             Amount          Proportion of Claim
                                                          Warrantor is liable
                                                          for

                    Reece Houghton         531744                37.5%

                    Joyce Keywood          176269                12.5%

                    Robert Gale            176269                12.5%

                    Graham Veal            176269                12.5%

                    Simon Barker           176269                12.5%

                    Nigel Thorneywork      176269                12.5%

                    and the aggregate liability of the Warrantors in respect of
                    all the Warranties shall not exceed the aggregate of the Net
                    Consideration received by the Warrantors as set out in
                    column 7 in Schedule 1;

                    Always provided that in respect of those Warranties which
                    are given "so far as the Warrantor(s) is/are aware "or" to
                    the best of the Warrantor's belief " or any similar
                    expression where the number of Warrantors liable in respect
                    of a claim is less than the total number of Warrantors, the
                    above proportions shall be adjusted so that such liable
                    Warrantors shall (subject to the limitations set out in this
                    Clause 9) together be liable for one hundred per cent of the
                    Claim but each of the individual liable Warrantors shall be
                    liable for the proportion of the Claim as represents the
                    proportion which his shareholding in the Company immediately
                    prior to Completion bears to the total number of such shares
                    held by all of the liable Warrantors immediately prior to
                    Completion. For the purpose of this calculation a
                    Warrantor's holding of Shares shall include any held by his
                    spouse.

9.3       The Warrantors shall not be liable for any Claim (save in respect of
          any Tax Claim in respect of which Clause 5 (Limitations) of Schedule 8
          of the

                                       17

<PAGE>

     Agreement shall apply) if and to the extent that:

     (a)  proper allowance, provision or reserve in respect of any liability the
          subject of such a Claim was made or taken into account, or payment or
          discharge of which the Warrantors can demonstrate was taken into
          account, in or in preparing the Accounts;

     (b)  it is attributable to or arises as a result of:

          (i)   any voluntary act or omission of the Purchaser (or any persons
                deriving title from it) or any Group Company after Completion
                done or suffered outside the ordinary course of business;

          (ii)  a change in the law (whether retrospectively or not after
                Completion);

          (iii) any change after Completion in the bases upon which the Accounts
                are prepared or any change in accounting or taxation practice,
                policies or principles save where such change is made to bring
                the Accounts into line with generally accepted accounting
                principles in the United Kingdom applying as at the Accounts
                Date in so far as the Accounts did not conform to such
                principled; or

          (iv)  any change after Completion in the date to which any Group
                Company makes up its Accounts.

     (c)  the Purchaser or any Group Company is indemnified against any loss or
          damage suffered by it under the terms of any insurance policy for the
          time being in force or would have been so indemnified had the
          insurance policies held by the Group Companies immediately prior to
          Completion remained in full force and effect, but for a decision by
          the Purchaser not to continue such policies in full force and effect.;

     (d)  the liabilities under it are contingent, future or unascertainable in
          which case the Purchaser shall not be precluded from making a claim
          but the Warrantors shall not be liable to recompense the Purchaser
          until such time as the Purchaser shall actually have suffered the loss
          or incurred the liability in question or the amount of the loss shall
          be ascertainable;

     (e)  has been or is made good or it is otherwise compensated for without
          cost to the Purchaser or any Group Company; and

     (f)  it would not have arisen or would have been reduced but for a
          cessation of a trade or a change in the nature or conduct of a trade
          carried on by any Group Company in either case occurring after
          Completion.

9.4  Where the subject matter of the Claim is capable of remedy, the Warrantors
     shall not be liable for the Claim if the breach or default is remedied by
     them to the reasonable satisfaction of the Purchaser within 30 days of
     receipt by them of the

                                       18

<PAGE>

     notification of the Claim.

9.5  Repayment

     If the Warrantors shall make any payment to the Purchaser in relation to
     any Claim (other than a Tax Claim) and the Purchaser or any Group Company
     subsequently receives or is entitled to receive from any Tax Authority or
     any person (other than another Group Company) any amount referable to the
     subject matter of that Claim, the Purchaser shall take all necessary steps
     to recover the same and once it or any Group Company has received such
     amount, repay (after deducting the costs and expenses of the Purchaser or
     any Group Company incurred in recovering such amount and any Taxation
     payable on it or on any interest) to the Warrantors either:

     (a)  a sum equal to such amount; or

     (b)  if lesser a sum equal to the Claim paid by the Warrantors to the
          Purchaser,

          together with any interest paid to the Purchaser or that Group
          Company in respect of such sum.

10.  Conduct of Non Tax Claims

10.1 The Purchaser shall notify the Warrantors in a timely fashion in writing
     of:

     (a)  any claim made against it by a third party which may give rise to a
          Non Tax Claim; and

     (b)  any claim any Group Company is entitled to bring against a third party
          which claim is based on circumstances which may give rise to a Non Tax
          Claim.

10.2 The Purchaser shall procure that the conduct, negotiation, settlement or
     litigation of the claim by or against such third party is, so far as is
     reasonably practicable, carried out in accordance with the wishes of the
     Warrantors in a timely fashion and at their cost subject to their giving
     timely instructions to the Purchaser and providing reasonable security for
     any costs and expenses which might be incurred by the Purchaser or a Group
     Company provided that the Warrantors shall not be entitled to request that
     anything be done which in the reasonable opinion of the Purchaser (but, for
     the avoidance of doubt only, without any obligation to take into account
     the interests of any other party to this Agreement) might be against the
     interests of any Group Company or in any way effect the goodwill of any
     such company.

10.3 The Purchaser shall provide and shall procure that each Group Company
     provides to the Warrantors and the Warrantors' professional advisers
     reasonable access to premises and personnel and subject to appropriate
     Confidentiality Undertakings to any relevant assets, documents and records
     within their power, possession or control for the purpose of investigating
     any Non Tax Claim and

                                       19

<PAGE>

     enabling the Warrantors to take the action referred to in sub-clause 11.2
     and shall allow the Warrantors and their advisers to take copies of any
     relevant documents or records at their expense.

10.4 In so far as the subject matter ("the Relevant Subject Matter") of any
     Claim is a liability for Taxation which is, on the face of it, recoverable
     from the persons defined as the "Covenantors" in the Deed of Covenant dated
     20 December 1996 between the persons defined as "Covenantors" (1) and the
     Company (2),("the Jelly Deed of Covenant") the Purchaser will procure that
     the Company pursues all remedies available to it pursuant to the Jelly Deed
     of Covenant against the Covenantors provided that, having pursued any
     remedies that might be available under the Jelly Deed of Covenant to the
     Purchaser or a Group Company, a Claim remains unsatisfied, either in whole
     or in part then the Purchaser shall be entitled to pursue such Claim in
     respect of the Relevant Subject Matter under the Covenant for Taxation.

11.  Non-competition covenants

11.1 In order to assure to the Purchaser the full benefit of the business and
     goodwill of the Group Companies, each Warrantor together with (only in the
     case of the provisions of 11.1 (a) 3i) and Mr Graham Woodhead undertakes
     that he shall not, either alone or in conjunction with or on behalf of any
     other person, do any of the following things:

     (a)  except in the circumstances referred to in sub-clause 13.12(b)
          (Confidentiality), disclose to any other person any Confidential
          Business Information of any Group Company or use any such information
          to the detriment of the business of any Group Company for so long as
          that information remains secret or confidential;

     (b)  neither before nor within one year after Completion solicit or
          endeavour to solicit orders or the custom from any person, firm or
          company to whom any Group Company has sold its goods or services in
          the 12 months before Completion or to whom any Group Company has
          actioned plans to sell goods in respect of similar goods or services;
          or

     (c)  neither before nor within one year after Completion solicit or seek to
          entice away or employ any employee who holds a senior management
          position in a Group Company from the employment of any Group Company;
          or

     (d)  for a period of 12 months after the date of Completion either as
          principal or partner, alone or jointly with, through or as a manager,
          adviser, consultant, or agent for any person or in any other capacity
          whatsoever, directly or indirectly, carry on or be engaged, concerned
          or interested in the business of manufacture and supply of commercial
          (as distinct from domestic) (as defined)) microwave and commercial (as
          distinct from domestic) (as defined)) combination ovens in the United
          Kingdom in competition with the business of any Group Company as
          carried on at the date of Completion PROVIDED THAT nothing contained
          in this Clause

                                       20

<PAGE>

          11 (d) shall preclude any of the Vendors from being the registered
          holder or beneficial owner for investment purposes only of not more
          than 3% of the equity share capital of any company listed on the
          Official List of the London Stock Exchange or the Alternative
          Investment Market.

11.2 Each undertaking contained in sub-clause 11.1 shall be construed as a
     separate and independent undertaking.

11.3 In this Clause 11 "domestic" shall mean microwaves sold to and purchased by
     domestic end-users but shall not include domestic microwaves sold to and
     purchased by commercial end-users.

11.4 For the avoidance of doubt 3i's undertaking is only in relation Clause 11.1
     (a).

12.  Pensions

     The pension arrangements of the Company are as set out in paragraph 33.2 of
     Schedule 4.

13.  General

13.1 Entire Agreement

     (a)  This Agreement sets out the entire agreement and understanding between
          the parties in respect of the subject matter of this Agreement.

     (b)  This Agreement supersedes the Heads of Agreement dated 31 March 2000
          except for any of its provisions which this Agreement specifically
          preserves.

     (b)  The Purchaser acknowledges that it has entered into this Agreement in
          reliance only upon the warranties specifically contained or
          incorporated in this Agreement and, save as expressly set out in this
          Agreement, the Vendors, the Warrantors and 3i shall have no liability
          in respect of any other representation, warranty or promise made prior
          to the date of this Agreement unless it was made fraudulently.

13.2 Contracts (Rights of Third Parties) Act 1999

     The Contracts (Rights of Third Parties) Act 1999 does not apply this
     Agreement.

13.3 Assignment

     This Agreement shall be binding upon and enure for the benefit of the
     successors of the parties but, shall not be assignable any party without
     the prior written consent of the other provided that the liability of the
     Warrantors shall not thereby be increased as a result of this Clause 13.3.

13.4 Variation

                                       21

<PAGE>

     No purported variation of this Agreement shall be effective unless it is in
     writing and signed by or on behalf of each of the parties.

13.5 Effect of Completion

     Except to the extent already performed, all the provisions of this
     Agreement shall, so far as they are capable of being performed or observed,
     continue in full force and effect notwithstanding Completion.

13.6 Invalidity

     If any part of this Agreement is found by any court or competent authority
     to be invalid, unlawful or unenforceable in any jurisdiction, then that
     part shall be deemed not to be a part of this Agreement, it shall not
     effect the enforceability of the remainder of this Agreement, nor shall it
     affect the validity, lawfulness or enforceability of that provision in any
     other jurisdiction.

13.7 Releases and waivers

     (a)  The rights, powers and remedies conferred on the parties by this
          Agreement and remedies available to the parties are cumulative and are
          additional to any right, power or remedy which it may have under
          general law or otherwise.

     (b)  A party may, in whole or in part, release, compound, compromise, waive
          or postpone, in its absolute discretion, any liability owed to it or
          right granted to it in this Agreement by any other party or parties
          without in any way prejudicing or affecting its rights in respect of
          that or any other liability or right not so released, compounded,
          compromised, waived or postponed.

     (c)  No single or partial exercise, or failure or delay in exercising any
          right, power or remedy by a party shall constitute a waiver by it, or
          impair or preclude any further exercise of, that or any right, power
          or remedy arising under this Agreement or otherwise.

13.8 Further assurance

     After Completion, the Vendors and 3i shall execute such documents and take
     such steps as the Purchaser may reasonably require at the Purchaser's cost
     to vest the full title to their respective Shares in the Purchaser and to
     give the Purchaser the full benefit of this Agreement.

13.9 Counterparts

     (d)  This Agreement may be executed in any number of counterparts and by
          the parties on separate counterparts, but shall not be effective until
          each party has executed at least one counterpart.

     (e)  Each counterpart, when executed, shall be an original of this
          Agreement and all counterparts shall together constitute one and the
          same

                                       22

<PAGE>

               instrument.

13.10     Time of the essence

          Except as otherwise expressly provided, time is of the essence as
          regards every obligation of any party under this Agreement.

13.11     Termination

          Without prejudice to any remedy available to any party arising out
          of any outstanding breach of this Agreement on the part of any other
          party, if this Agreement is terminated in accordance with its terms,
          the following shall occur:

          (a)  the restrictions contained in sub-clause 13.12 (Confidentiality)
               and Clause 14 (Announcements) shall continue to apply; and

          (b)  except as referred to in sub-clause (a), all obligations of the
               parties under this Agreement shall cease.

13.12     Confidentiality

          (a)  Except as referred to in sub-clause (b), each party shall treat
               as strictly confidential all information received or obtained as
               a result of entering into or performing this Agreement which
               relates to the provisions or subject matter of this Agreement, to
               any other party to this Agreement or the negotiations relating to
               this Agreement.

          (b)  Any party may disclose information which would otherwise be
               confidential if and to the extent:

               (i)    it is required to do so by law or any securities exchange
                      or regulatory or governmental body to which it is subject
                      wherever situated;

               (ii)   it considers it necessary to disclose the information to
                      its professional advisers, auditors and bankers provided
                      that it does so on a confidential basis;

               (iii)  the information has come into the public domain through no
                      fault of that party; or

               (iv)   each party to whom it has given its consent in writing.

13.13     Default interest

          If any party defaults in the payment when due of any sum payable under
          this Agreement (whether payable by agreement or by an order of a court
          or otherwise), the liability of that party shall be increased to
          include interest on that sum from the date when such payment was due
          until the date of actual payment at a rate per annum of 4 per cent
          above the base rate from time to time of National Westminster Bank
          PLC. Such interest shall accrue from day to day and

                                       23

<PAGE>

     shall be compounded annually.

14.  Announcements

14.1 Subject to sub-clause 14.2, no announcement concerning the terms of this
     Agreement shall be made by or on behalf of any of the parties without the
     prior written consent of the others, such consent not to be unreasonably
     withheld or delayed.

14.2 Any announcement or circular required to be made or issued by any party by
     law or under the regulations of the London Stock Exchange or the City Code
     on Takeovers and Mergers issued by the Panel on Takeovers and Mergers may
     be made or issued by that party without consent if it has first given the
     other parties a reasonable opportunity to comment on the subject matter and
     form of the announcement or circular (given the time scale within which it
     is required to be released or despatched).

15.  Costs and expenses

15.1 Except as referred to in sub-clause 15.2 each party shall bear its own
     costs and expenses incurred in the preparation, execution and
     implementation of this Agreement.

15.2 The Purchaser shall pay all stamp and other transfer duties and
     registration fees applicable to any document to which it is a party and
     which arise as a result of or in consequence of this Agreement.

16.  Notices

16.1 Any notice to a party under this Agreement shall be in writing signed by or
     on behalf of the party giving it and shall, unless delivered to a party
     personally, be left at, or sent by prepaid first class post, prepaid
     recorded delivery, or facsimile to the address of the party as set out on
     page 1 or in Schedule 1 of this Agreement or as otherwise notified in
     writing from time to time.

16.2 Except as referred to in sub-clauses 16.3 and 16.4, a notice shall be
     deemed to have been served:

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

     (b)  48 hours after posting in the case of an address in the United Kingdom
          and 96 hours after posting for any other address;

     (c)  24 hours after transmission if served by facsimile on a business day
          prior to 3pm or in any other case at 10 am on the business day after
          the date of despatch.

16.3 If the deemed time of service is not during normal business hours in the
     country of receipt, the notice shall be deemed served at or, in the case of
     faxes, 2 hours after the opening of business on the next business day of
     that country.

                                       24

<PAGE>

16.4 The deemed service provisions set out in sub-clause 16.2 do not apply to:

     (a)  a notice served by post, if there is a national or local suspension,
          curtailment or disruption of postal services which affects the
          collection of the notice or is such that the notice cannot reasonably
          be expected to be delivered within 48 hours or 96 hours (as
          appropriate) after posting; and

     (b)  a notice served by facsimile, if, before the time at which the notice
          would otherwise be deemed to have been served, the receiving party
          informs the sending party that the notice has been received in a form
          which is unclear in any material respect, and, if it informs the
          sending party by telephone, it also despatches a confirmatory
          facsimile within 2 hours.

16.5 In proving service it will be sufficient to prove:

     (a)  in the case of personal service, that it was handed to the party or
          delivered to or left in an appropriate place for receipt of letters at
          its address;

     (b)  in the case of a letter sent by post, that the letter was properly
          addressed, stamped and posted;

     (c)  in the case of facsimile, that it was properly addressed and
          despatched to the number of the party.

16.6 A party shall not attempt to prevent or delay the service on it of a notice
     connected with this Agreement.

17.  Severance

     If any term or provision in this Agreement shall be held to be illegal or
     unenforceable, in whole or in part, under any enactment or rule of law,
     such term or provision or part shall to that extent be deemed not to form
     part of this Agreement but the enforceability of the remainder of this
     Agreement shall not be affected.

18.  Governing law and jurisdiction

18.1 This Agreement shall be governed by and construed in accordance with
     English Law.

18.2 Each of the parties irrevocably submits for all purposes in connection with
     this Agreement to the exclusive jurisdiction of the courts of England.

This Agreement has been signed on the date appearing at the head of page 1.

                                       25

<PAGE>

                                   Schedule 1

                              (The Vendors and 3i)
<TABLE>
<CAPTION>
Name                      Address              No. of Ord    No of A Ord     Consideration     Costs            Net
                                                 Shares        Shares                                      Consideration
                                                                               (Pounds)       (Pounds)        (Pounds)
<S>                       <C>                 <C>            <C>             <C>              <C>          <C>
Reece Houghton            5 St Barbe Close       70,000                        525,000         28,706          496,294
                          Romsey
                          Hampshire
                          SO5 5RH

Susan Houghton            5 St Barbe Close        5,000                         37,500          2,050           35,450
                          Romsey
                          Hampshire
                          SO5 5RH

Joyce Rosalyn Keywood     22 York Gardens        25,000                        187,500         11,231          176,269
                          Walton-on-Thames
                          Surrey
                          KT12 3EP

Robert Geoffrey Gale      Fir Tree Cottage       25,000                        187,500         11,231          176,269
                          Wrotham Hill
                          Dunsfold
                          Surrey
                          GU8 4PA
</TABLE>

                                       1

<PAGE>

<TABLE>
<S>                                                <C>            <C>             <C>         <C>
Graham Philip Brisley       The Stile              19,460         145,950         8,742       137,208
Veal                        Stapley Lane
                            Ropley
                            Hampshire
                            SO24 OEL

Francesca Veal              The Stile               5,540          41,550         2,489        39,061
                            Stapley Lane
                            Ropley
                            Hampshire
                            SO24 OEL

Simon Charles Barker        Timberdene             19,325         144,938         8,682       136,256
                            Cottage
                            Chalk Road
                            Loxwood, Ifold
                            West Sussex
                            RH14 OUD

Fiona-Anne Elizabeth        Timberdene              5,675          42,562         2,549        40,013
Barker                      Cottage
                            Chalk Road
                            Loxwood, Ifold
                            West Sussex
                            RH14 OUD

Nigel Thorneywork           Malden Dale            19,460          145,950        8,742       137,208
                            Bailes Lane
                            Guildford
                            Surrey
</TABLE>

                                       2

<PAGE>

<TABLE>
<S>                       <C>                     <C>        <C>       <C>         <C>       <C>
                          GU3 2AX

Iris Thorneywork          Malden Dale               5,540                 41,550     2,489      39,061
                          Bailes Lane
                          Guildford
                          Surrey
                          GU3 2AX

Graham Geoffrey           Hammer Cottage            5,000                 37,500     2,247      35,253
Woodhead                  Abinger Hammer
                          Surrey
                          RH5 6QX

3i Nominees Limited       91 Waterloo Road                   177,000   1,327,500    79,517   1,247,983
                          London
                          SE1 8XP

3i 96 Partners Nominees   91 Waterloo Road                   118,000     885,000    53,012     831,988
Limited                   London
                          SE1 8XP

                                              --------------------------------------------------------
Total                                             210,540    295,000   3,750,000   221,687   3,528,313
                                              --------------------------------------------------------
</TABLE>

                                        3

<PAGE>

                                   Schedule 2

                      (Information concerning the Company)

                           Merrychef Holdings Limited

Registered number                       3274972

Date of incorporation                   7 November 1996

Place of incorporation                  United Kingdom

Address of registered office            Station Road West, Ash Vale,
                                        Aldershot, Hampshire RG12 5XA

Class of company                        Private company limited by shares

Authorised share capital                (Pounds)525,000 divided into 205,000
                                        ordinary shares of (Pound)l each,
                                        295,000 A ordinary shares of (Pound)l
                                        each and 25,000 B ordinary shares of
                                        (Pound)l each

Issued share capital                    (Pounds)500,000 divided into 205,000
                                        ordinary shares of (Pound)l each and
                                        295,000 A ordinary shares of (Pound)l
                                        each

Loan Capital

Directors

Full name           Usual residential address        Nationality

Graham              Hammer Cottage, Abinger          British
Woodhead            Hammer, Surrey RH5 6QX

Simon Charles       Timberdene Cottage, Chalk        British
Barker              Road, Ifold, Loxwood,
                    Billingshurst, West Sussex
                    RH14 0UD

Nigel               Malden Dale, Bailes Lane,        British
Thorneywork         Guildford, Surrey GU3
                    2AX

Robert Geoffrey     Fir Tree Cottage, Wrotham        British
Gale                Hill, Dunsfold, Surrey GU8
                    4PA

Graham Philip       The Stile, Stapley Lane,         British
Brisley Veal        Ropley, Hampshire SO24

                                       30

<PAGE>

                                  0EL

       Joyce Rosalyn              22 York Gardens, Walton-     British
       Keywood                    on-Thames, Surrey KT 12
                                  3EP

       Secretary

       Full name                         Usual residential address

       Joyce Rosalyn Keywood             22 York Gardens, Walton-on-
                                         Thames, Surrey KT12 3EP

       Accounting reference date         30 September

       Auditors                          Deloitte & Touche

       Tax residence                     United Kingdom

                                       31

<PAGE>

                                   Schedule 3

                   Information concerning the Group Companies

Elvadene Limited

Registered number                        01680157

Date of incorporation                    22 November 1982

Place of incorporation                   United Kingdom

Address of registered office             Station Road West, Ash Vale,
                                         Aldershot, Hampshire GU12
                                         5XA

Business classification                  Management Activities of
                                         Holding Companies
                                         Code: 7415

Authorised share capital                 (Pounds)60,000 divided into 60,000
                                         ordinary shares of (Pound)l each

Issued share capital                     (Pounds)60,000 divided into 60,000
                                         ordinary shares of (Pound)l each

Members

Full name                  Registered address              Number of
                                                           shares held

Merrychef Holdings         Station Road West, Ash Vale,    60,000
Limited                    Aldershot, Hampshire GU12
                           5XA

Directors

Full name                  Usual residential address       Nationality

Joyce Rosalyn              22 York Gardens, Walton-on-     British
Keywood                    Thames, Surrey KT12 3EP

Simon Barker               Timberdene Cottage, Chalk       British
                           Road, Ifold Loxwood,
                           Billingshurst, West Sussex

                                       32

<PAGE>

                                    RH14 OUD

Secretary

Full name                   Usual residential address

Joyce Rosalyn               22 York Gardens, Walton-on-Thames, Surrey KT12
Keywood                     3EP

Accounting reference date         30 September

Auditors                          Deloitte & Touche

Tax residence                     United Kingdom

                                       33

<PAGE>

       Merrychef Limited

       Registered number                  00487712

       Date of incorporation              27 October 1950

       Place of incorporation             United Kingdom

       Address of registered office       Station Road West, Ash Vale,
                                          Aldershot, Hampshire GU12 5XA

       Business classification            Manufacture other electrical
                                          equipment Code: 7499

       Authorised share capital           (Pounds)56,000 divided into 56,000
                                          ordinary shares of (Pound)l each

       Issued share capital               (Pounds)44,800 divided into 44,800
                                          ordinary shares of (Pound)l each

       Members

       Full name              Registered address        Number of shares held

       Elvadene Limited     Station Road West, Ash   44,800
                            Vale, Aldershot,
                            Hampshire GU12 5XA

       Directors

       Full name               Usual residential address         Nationality

       Joyce Rosalyn Keywood   22 York Gardens, Walton-on-       British
                               Thames, Surrey KT 12 3EP

       Simon Charles Barker    Timberdene Cottage, Chalk         British
       FCCA                    Road, Ifold Loxwood,
                               Billingshurst, West Sussex
                               RH14 OUD

       Graham Veal             The Stile, Stapley Lane,          British
                               Ropley, Hampshire SO24 OEL

       Nigel Thomeywork        Malden Dale, Bailes Lane,         British
                               Normandy, Guildford, Surrey

                                       34

<PAGE>

                                     GU3 2AX

       Robert G Gale        Fir Tree Cottage, Wrotham           British
                            Hill, Dunsfold, Surrey GU8
                            4PA

       Secretary

       Full name                     Usual residential address

       Joyce Rosalyn Keywood         22 York Gardens, Walton-on-Thames,
                                     Surrey KT12 3EP

       Accounting reference date     30 September

       Auditors                      Deloitte & Touche

       Tax residence                 United Kingdom

                                       35

<PAGE>

Mealstream (UK) Limited

Registered number                          02954945

Date of incorporation                      2 August 1994

Place of incorporation                     United Kingdom

Address of registered office               Station Road West, Ash Vale,
                                           Aldershot, Hampshire GU12
                                           5XA

Business classification                    Non-trading/ceased to trade
                                           Code: 7499

Authorised share capital                   (Pounds)100 divided into 100 ordinary
                                           shares of (Pound)l each

Issued share capital                       (Pounds)2 divided into 2 ordinary
                                           shares of (Pound)l each

Loan capital

Members

Full name              Registered address                       Number of
                                                                shares held

Merrychef Limited      Station Road West, Ash Vale,             2
                       Aldershot, Hampshire GU12
                       5XA

Directors

Full name              Usual residential address                Nationality

Joyce Rosalyn          22 York Gardens, Walton-on-              British
Keywood                Thames, Surrey KT12 3EP

Simon Barker           Timberdene Cottage, Chalk                British
                       Road, Ifold Loxwood,
                       Billingshurst, West Sussex
                       RH14 OUD

Secretary

                                       36

<PAGE>

Full name                      Usual residential address

Joyce Rosalyn                  22 York Gardens, Walton-on-Thames, Surrey KT12
Keywood                        3EP

Accounting reference date                30 September

Auditors

Tax residence                            United Kingdom

                                       37

<PAGE>

        Merrychef Projects Limited

        Registered number                 0142641

        Date of incorporation             7 June 1979

        Place of incorporation            United Kingdom

        Address of registered office      Station Road West, Ash Vale,
                                          Aldershot, Hampshire GU12 5xA

        Business classification           Non-trading/ceased to trade

        Authorised share capital          (Pounds)5,000 divided into 5,000
                                          ordinary shares of (Pound)l each

        Issued share capital              (Pounds)100 divided into 100
                                          ordinary shares of (Pound)l each

        Loan capital

        Members

        Full name            Registered address              Number of
                                                             shares held

        Pumpcroft Limited    Station Road West, Ash Vale,    100
                             Aldershot, Hampshire GU12
                             5XA

        Directors

        Full name            Usual residential address       Nationality

        Joyce Rosalyn        22 York Gardens, Walton-on-     British
        Keywood              Thames, Surrey KY12 3KP

        Simon Barker         Timberdene Cottage, Chalk       British
                             Road, Ifold Loxwood,
                             Billingshurst, West Sussex
                             RH14 OUD

        Secretary

                                       38

<PAGE>

   Full name                       Usual residential address

   Joyce Rosalyn                   22 York Gardens, Walton-on-Thames,
                                   Surrey KT12 3EP

   Keywood

   Accounting reference date       30 September
   Auditors

   Tax residence                   United Kingdom

                                       39

<PAGE>

       Pumpcroft Limited

       Registered number                   00630988

       Date of incorporation               24 June 1959

       Place of incorporation              United Kingdom

       Address of registered office        Station Road West, Ash Vale,
                                           Aldershot, Hampshire GU12
                                           5XA

       Business classification             Non-trading/ceased to trade
                                           Code: 7499

       Authorised share capital            (Pounds)355,755 divided into 355,755
                                           ordinary shares of (Pound)1 each

       Issued share capital                (Pounds)355,755 divided into 355,755
                                           ordinary shares off (Pound)1 each

       Loan capital

       Members

       Full name             Registered address               Number of
                                                              shares held

       Merrychef Limited     Station Road West, Ash Vale,     355,755
                             Aldershot, Hampshire GU12
                             5XA

       Directors

       Full name             Usual residential address        Nationality

       Joyce Rosalyn         22 York Gardens, Walton-on-      British
       Keywood               Thames, Surrey KT12 3EP

       Simon Barker          Timberdene Cottage, Chalk        British
                             Road, Ifold Loxwood,
                             Billingshurst, West Sussex
                             RH14 0UD

       Secretary

                                       40

<PAGE>

       Full name            Usual residential address

       Joyce Rosalyn        22 York Gardens, Walton-on-Thames, Surrey
       Keywood              KT12 3EP

       Accounting reference date        30 September

       Auditors

       Tax residence                    United Kingdom

                                       41

<PAGE>

Twilight Band Limited

Registered number                            00973272

Date of incorporation                        25 February 1970

Place of incorporation                       United Kingdom

Address of registered office                 Station Road West, Ash Vale,
                                             Aldershot, Hampshire GU12
                                             5XA

Business classification                      Non-trading/ceased to trade
                                             Code: 7499

Authorised share capital                     (Pounds)80,000 divided into 80,000
                                              ordinary shares of (Pound)1 each

Issued share capital                         (Pounds)80,000 divided into 80,000
                                              ordinary shares of (Pound)1 each

Loan capital

Members

Full name              Registered address                           Number of
                                                                    shares held

Merrychef Limited      Station Road West, Ash Vale,                 80,000
                       Aldershot, Hampshire GU12
                       5XA

Directors

Full name              Usual residential address                    Nationality

Joyce Rosalyn          22 York Gardens, Walton-on-                  British
Keywood                Thames, Surrey KT12 3EP

Simon Barker           Timberdene Cottage, Chalk                    British
                       Road, Ifold Loxwood,
                       Billingshurst, West Sussex
                       RH14 OUD

Secretary

                                       42

<PAGE>

Full name                     Usual residential address

Joyce Rosalyn                 22 York Gardens, Walton-on-Thames, Surrey KT12
Keywood                       3EP

Accounting reference date                 30 September

Auditors

Tax residence                             United Kingdom

                                       43

<PAGE>

                                   Schedule 4

                              (Non-Tax Warranties)

The Vendors

1.    Capacity

1.1   3i and each Vendor has full power and authority to enter into and perform
      this Agreement and any agreement or document to be entered into by 3i
      and/or each Vendor pursuant to this Agreement.

1.2   3i has taken all corporate and other action necessary to enable it to
      enter into and perform this Agreement.

1.3   Neither 3i nor any Vendor is bankrupt, has proposed a voluntary
      arrangement or has made or proposed any arrangement or composition with
      his creditors or any class of his creditors.

2.    Enforceability

      This Agreement and any agreement or document to be entered into by 3i
      and/or each Vendor pursuant to this Agreement constitutes and imposes
      valid legal and binding obligations on 3i and each Vendor fully
      enforceable in accordance with its terms.

Share capital

3.    Company

3.1   The Shares constitute the entire issued and allotted share capital of the
      Company and have been validly allotted and issued, are fully paid or
      credited as fully paid.

3.2   Apart from this Agreement, there is no agreement, arrangement or
      commitment outstanding which calls for the present or future allotment,
      issue, redemption, repayment of or transfer of, or accords to any person
      the right to call for the allotment, issue or transfer of, any share or
      loan capital of the Company.

3.3   There is no Security Interest on, over or affecting any of the Shares
      registered in the name of 3i and each Vendor and 3i and each Vendor have
      not entered into any agreement or arrangement to give or create any such
      Security Interest. No claim has been or will be made by any person to be
      entitled to such Security Interest.

3.4   None of the Shares was, or represents assets which were, the subject of a
      transfer at an undervalue, within the meaning of Sections 238 or 339,
      Insolvency Act 1986, since 20 December 1996.

3.5   The Company has not since 20 December 1996 at any time:

                                       44

<PAGE>

      (a)  reduced or agreed to reduce its share capital;

      (b)  redeemed or agreed to redeem any share capital;

      (c)  purchased or agreed to purchase any of its shares;

      (d)  forfeited or agreed to forfeit any of its shares; or

      (e)  created or granted or agreed to create or grant any Security
           Interest in respect of any of its uncalled share capital.

3.6   3i and each Vendor are the only legal and beneficial owners of the Shares.

4.    Subsidiaries

4.1   Schedule 3 lists all the Subsidiaries of the Company and the holders of
      the entire issued and allotted share capital of the Subsidiaries.

4.2   The whole of the issued share capital of each of the Subsidiaries has been
      validly allotted and issued and is fully paid or properly credited as
      fully paid.

4.3   The Company does not have, and has never had since 20 December 1996, a
      participating interest (as defined in Section 260, Companies Act 1985) in
      any undertaking which is not a Subsidiary nor has it agreed to acquire
      such an interest.

4.4   No Group Company holds or is liable on any share or relevant security
      which is not fully paid up or which carries any liability.

4.5   Apart from this Agreement, there is no agreement, arrangement or
      commitment outstanding which calls for the present or future allotment,
      issue or transfer of, or accords to any person the right to call for the
      allotment, issue or transfer of, any share or loan capital of any
      Subsidiary.

4.6   There is no Security Interest on, over or affecting any of the shares in
      the capital of any Subsidiary and no holder of such shares has entered
      into any agreement or arrangement to give or create any such Security
      Interest. No claim has been or will be made by any person to be entitled
      to any such Security Interest.

4.7   None of the shares in the capital of any Subsidiary was, or represents
      assets which were, the subject of a transfer at an undervalue, within the
      meaning of Sections 238 or 339, Insolvency Act 1986, since 20 December
      1996.

4.8   The Company does not have any branch, agency or place of business, or any
      permanent establishment (as the expression is defined in the relevant
      double taxation relief order current at the date of this

                                       45

<PAGE>

     Agreement) outside the United Kingdom.

Corporate matters

5.   Insolvency of the Group

5.1  No order has been made, no resolution has been passed, no meeting convened
     and so far as the Warrantors are aware, no petition presented, for the
     winding up of any Group Company or for a provisional liquidator to be
     appointed in respect of any Group Company.

5.2  No administration order has been made and so far as the Warrantors are
     aware, no petition for one has been presented in respect of any Group
     Company.

5.3  No receiver or administrative receiver has been appointed in respect of any
     Group Company or the whole or any part of any of the property, undertaking
     or assets of any Group Company.

5.4  No Group Company is insolvent, has failed or is unable to pay any of its
     debts as they fall due, as those expressions are defined in Section 123,
     Insolvency Act 1986.

5.5  No voluntary arrangement has been proposed under Section 1, Insolvency Act
     1986 in respect of any Group Company and no Group Company has made or
     proposed any arrangement or composition with its creditors or any class of
     them.

5.6  No distress, execution or other process has been levied or applied for in
     respect of the whole or any part of any of the Group Company's assets,
     property or undertaking or action taken to repossess goods in the
     possession of any Group Company.

5.7  No unsatisfied judgement is outstanding against any Group Company and no
     demand has been served on any Group Company under Section 123(l)(a),
     Insolvency Act 1986.

5.8  No event analogous to any referred to in sub-paragraphs 5.1 to 5.7 has
     occurred anywhere in the world.

5.9  No Group Company has been a party to any transaction with any third party
     which, in the event of such third party going into liquidation or being the
     subject of an administration order or a bankruptcy order, would/is likely
     to constitute (whether in whole or in part) a transaction at an undervalue,
     a preference, an invalid floating charge or an extortionate credit
     transaction or part of a general assignment of debts pursuant to the
     Insolvency Act 1986.

6.   Corporate compliance

6.1  Each Group Company has at all times carried on business and

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<PAGE>

    conducted its affairs in all material respects in accordance with its
    Memorandum and Articles of Association for the time being in force and any
    other documents to which it is or has been a party.

6.2 Each Group Company is empowered and duly qualified to carry on business in
    all jurisdictions in which it now carries on business.

6.3 Due compliance has been made with all the provisions of the CA 1985 and
    other legal requirements in connection with the formation of each Group
    Company, the allotment or issue of any of the Group Company's shares,
    debentures and other securities and the payment of dividends.

7.  Statutory books and documents filed

7.1 The statutory books, including all registers and minute books, of each Group
    Company have been properly kept and contain a materially accurate and
    complete record of the matters with which those books should deal.

7.2 All returns, particulars, resolutions and documents which should have been
    delivered by any Group Company to the Registrar of Companies or any other
    authority are complete and accurate and have been properly so delivered.

7.3 Since the Accounts Date the members of any Group Company in general meeting,
    or of any class of them, have not passed any resolution other than
    resolutions relating to the ordinary business of annual general meetings.

7.4 All mortgages and charges in favour of any Group Company have (where
    necessary in order to secure their enforceability) been duly registered in
    accordance with the CA 1985.

8.  Memorandum and Articles of Association

    The copy of the Memorandum and Articles of Association of the Company and
    each Subsidiary, which is attached to the Disclosure Letter is true,
    accurate and complete in all respects and has embodied in it or annexed to
    it a copy of every such resolution as is referred to in Section 380 CA 1985.

9.  Common seal

    Each Group Company has a common seal.

10. Documents stamped

    All documents which in any way affect the right, title or interest of any
    Group Company in or to any of its properties, undertakings or assets, or to
    which any Group Company is a party, and which attract stamp duty or stamp
    duty reserve tax have been duly stamped within the

                                       47

<PAGE>

     requisite period for stamping.

11.  Possession of documents

     All documents of title relating to the assets of the Group Companies
     (including, without limitation, all title deeds relating to the
     Properties), an executed copy of all agreements to which any Group Company
     is a party and an original executed copy of every document or instrument
     creating or evidencing a charge over any of its assets, property or
     undertaking or is in the relevant Group Company's possession.

Information

12.  Accuracy and adequacy of information

     The information contained in Schedules 2, 3, 5, 6 and 7 to this Agreement
     is accurate and complete.

Accounts

13.  Preparation and contents of the Accounts

13.1 The Accounts were prepared in accordance with the requirements of all
     relevant statutes and generally accepted United Kingdom accounting
     practices in force at the date of the preparation of the Accounts
     including, without limitation, all applicable Financial Reporting Standards
     issued by the Accounting Standards Board, Statements of Standard Accounting
     Practice issued by the Institute of Chartered Accountants of England and
     Wales and Statements from the Urgent Issues Task Force current at the
     Accounts Date and, where the accounting practice used to prepare the
     Accounts differs from those applicable in previous financial periods, the
     effect of any such difference is Disclosed in the Disclosure Letter.

13.2 Without prejudice to the generality of sub-paragraph 14.1 the
     Accounts:

          (i)   give a true and fair view of the state of affairs of each Group
                Company at the Accounts Date and the profits or losses of each
                Group Company for the financial period ending on that date;

          (ii)  make appropriate provisions or reserves for all liabilities and
                for all capital and revenue commitments of each Group Company as
                at the Accounts Date;

          (iii) disclose all the assets of each Group Company as at the Accounts
                Date;

          (iv)  make provisions reasonably regarded as adequate for all bad and
                doubtful debts as at the Accounts Date;

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<PAGE>

          (v)  do not include any figure which is referable to the value of an
               intangible asset; and

          (vi) make provisions reasonably regarded as adequate for depreciation
               of the fixed assets of each Group Company having regard to their
               original cost and life;

13.3  The profits and losses of each Group Company shown in the accounts were
      not, save as disclosed in the Accounts or in any note accompanying them,
      to any material extent affected by any extraordinary, exceptional or
      unusual income (as defined in FRS 10 and SAPP 13) capital gain or
      expenditure or by any other factor known to the Warrantors rendering any
      such profit or loss for such period exceptionally high or low.

13.4  The audited profit and loss accounts and audited balance sheets of each
      Group Company contained in the Accounts were prepared on a consistent
      basis with each other.

14.   Accounting records

14.1  The accounting records of each Group Company comply with the requirements
      of Sections 221 and 222, Companies Act 1985, do not contain or reflect any
      material inaccuracy or discrepancy and present and reflect in accordance
      with generally accepted accounting principles and standards the financial
      position of and all transactions entered into by the relevant Group
      Company or to which it has been a party.

14.2  All the accounts, financial books, ledgers, financial and records of each
      Group Company are in its possession or otherwise under its direct control.

14.3  Where any of the records of any Group Company are kept on computer, that
      Group Company:

      (a) is the owner or licensee of all hardware and all software necessary to
          enable it to use the records as they have been used in its business to
          the date of this Agreement and to Completion;

      (b) does not share any hardware or software relating to the records with
          any person; and

      (c) maintains adequate back up records and support in the event of any
          fault or failure of such computer hardware and software.

15.   Management Accounts

      The Management Accounts have been carefully prepared on a basis consistent
      with the Accounts, fairly reflect the trading position of each Group
      Company as at their date and for the period to which they relate and are
      not affected by any extraordinary, exceptional or unusual

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<PAGE>

     income, capital gain or expenditure or by any other factor known by the
     Warrantors rendering profits or losses for the period covered exceptionally
     high or low.

16.  Events since the Accounts Date

16.1 Since the Accounts Date there has been no material adverse change in:

     (a) the financial or trading position or prospects of any Group
         Company;

     (b) the value or state of assets or amount or nature of liabilities as
         compared with the position disclosed in the Accounts; or

     (c)  in the turnover, direct or indirect expenses or the margin of
          profitability of any Group Company as compared with the position
          disclosed for the equivalent period of the last financial year.

16.2 Each Group Company which is trading has since the Accounts Date carried on
     its business in the ordinary course and without interruption, so as to
     maintain it as a going concern and paid its creditors in the ordinary
     course and within the credit periods agreed with such creditors either
     formally or by trading practice.

16.3 Since the Accounts Date no supplier which accounts for more than ten per
     cent of the Group Companies supply requirements of any Group Company has
     ceased or restricted supplies or threatened so to do, there has been no
     loss or material curtailment of the business transacted by any Group
     Company with any customer which at any time in the preceding financial year
     represented ten per cent or more of the turnover of that Group Company and
     the Warrantors are not aware of any circumstances likely to give rise to
     any of the above.

16.4 Since the Accounts Date no Group Company has:

     (a)  incurred or committed to incur:

          (i)  material expenditure in excess of (Pounds)20,000; or

          (ii) any liability in excess of (Pounds)20,000 whether actual or
               contingent except for full value or in the ordinary course of
               business;

     (b)  acquired or agreed to acquire:

          (i)  any asset for a consideration higher than its market value at the
               time of acquisition and otherwise than in the ordinary course of
               business; or

          (ii) any business or substantial part of it or any share or

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<PAGE>

               shares in a body corporate;

      (c)  disposed of or agreed to dispose of, any of the assets of any Group
           Company, except in the ordinary course of business and for full
           value;

      (d)  repaid wholly or in part any loan except upon the due date or dates
           for repayment;

      (e)  issued or allotted share or loan capital, increased its authorised
           share capital, purchased or redeemed any shares, reduced or re-
           organised its share capital or agreed to do so; or

      (f)  declared or paid any distribution of profit.

16.5  None of the debts included in the Accounts or any of thedebts subsequently
      arising have been the subject of factoring by any Group Company and the
      Warrantors are not aware of any circumstances which could result in any
      presently outstanding debt in excess of (Pounds)10,000 not being paid in
      full.

Financial

17.   Financial commitments and borrowings

17.1  Complete and accurate details of all overdraft, loan and other financial
      facilities available to the Group Companies and the amounts outstanding
      under them at the close of business no earlier than three days prior to
      the date of this Agreement are set out in the Disclosure Letter and none
      of the Warrantors or any Group Company has done anything, or omitted to do
      anything, as a result of which the continuance of any of those facilities
      might be affected or prejudiced.

17.2  No Group Company is a party to, or has agreed to enter into, any lending,
      or purported lending, agreement or arrangement (other than agreements to
      give credit in the ordinary course of its business).

17.3  No Group Company is exceeding any borrowing limit imposed upon it by its
      bankers, other lenders, its articles of association or otherwise nor has
      any Group Company entered into any commitment or arrangement which might
      lead it so to do.

17.4  No overdraft or other financial facilities available to any Group Company
      are dependent upon the guarantee of or security provided by any other
      person.

17.5  No Group Company is, or has agreed to become, bound by any guarantee,
      indemnity, surety or similar commitment.

17.6  No Group Company has received any grants, allowances, loans or financial
      aid of any kind from any government departmental or other

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<PAGE>

     board, body, agency or authority which may become liable to be refunded or
     repaid in whole or in part.

17.7 No Group Company has engaged in financing of a type which is not required,
     or has not been, shown or reflected in the Accounts.

18.  Defective products or services

     So far as the Warrantors are aware, no Group Company has manufactured, sold
     or supplied products or services which are or were or will become in any
     material respect faulty or defective or which do not comply in any material
     respect with any warranties or representations expressly or impliedly
     (whether by statute common law or otherwise) made by it or with all
     applicable regulations standards and requirements.

19.  Insurances

19.1 Each Group Company maintains, and at all material times since 20 December
     1996 has maintained, insurance cover against all risks normally insured
     against by companies carrying on a similar business, for the full
     replacement or reinstatement value of its business and assets, and in
     particular maintains and has maintained at all relevant times product
     liability, professional indemnity insurance and all insurance required by
     statute.

19.2 The Policies are so far as the Warrantors are aware valid and enforceable
     and all premiums due have been paid. There are no outstanding claims or so
     far as the Warrantors are aware circumstances likely to give rise to a
     claim under the Policies or which would be required to be notified to the
     insurers and so far as the Warrantors are aware nothing has been done or
     omitted to be done which has made or could make any Policy void or voidable
     or as a result of which the renewal of any Policy might be refused or the
     premiums due in respect of them may be liable to be increased.

19.3 There are no claims outstanding or threatened, or so far as the Warrantors
     are aware, pending, against any Group Company which are not fully covered
     by insurance.

Trading and contracts

20.  Contracts and commitments

20.1 No Group Company is a party to any agreement, arrangement or commitment
     which:

     (a)  has or is expected to have material adverse effects or consequences in
          terms of expenditure or revenue;

     (b)  relates to matters outside the ordinary business of that Group

                                       52

<PAGE>

          Company or was not entered into on arms' length terms;

     (c)  can be terminated in the event of any change in the underlying
          ownership or control of that Group Company or would be materially
          affected by such change;

     (d)  cannot readily be fulfilled or performed by it materially in
          accordance with the timetable set out in the relevant contract for
          completion;

     (e)  cannot be terminated, without giving rise to any liabilities on any
          Group Company, by that Group Company giving 3 months' notice or less;
          or

     (f)  the termination of which would cause a Materially Adverse Event to
          the Company.

20.2 All material contracts or arrangements to which a Group Company (whether
     written or unwritten or intended to have a binding legal effect or pursuant
     to which any Group Company is trading or acting) under which a
     consideration of more than (Pounds)25,OOO is payable by suppliers and
     (Pounds)50,OOO in relation to customers is payable by either party are
     listed in the Disclosure Letter and copies of such contracts or
     arrangements are attached to the Disclosure Letter.

20.3 So far as the Warrantors are aware, no Group Company is in breach of any
     material contract or arrangement to which it is a party and the Warrantors
     are not aware of any breach of such contracts or arrangements by any other
     party thereto.

20.4 The Company is not a party to any agreement other than those listed in the
     Disclosure Letter under which rights accrue third parties pursuant to the
     Contracts (Rights of Third Parties) Act 1999.

21.  Terms of trade

     No Group Company has accepted any liability to service, maintain, repair or
     otherwise do or refrain from doing anything in relation to any product sold
     or supplied except for those contained in its standard conditions of
     trading, complete and accurate copies of which are contained in the
     Disclosure Letter.

22.  Licences and consents

22.1 Save for fire certificates, (copies of which are attached to the Disclosure
     Letter) no Group Company requires any licence, consent, permission,
     authorisation or approval to continue to carry on its business.

22.2 All such consents are in full force and effect are not limited in duration
     or subject to any unusual or onerous condition or any condition which

                                       53

<PAGE>

       is personal to the Vendors. No expenditure or work is or will be
       necessary to comply with maintain or obtain any such consents and the
       Company is not in breach of any of the terms or conditions of any such
       consents.

23.    Trading partners

23.1   No Group Company acts or carries on business in partnership with any
       other person or is a member of any corporate or unincorporated body,
       undertaking or association.

23.2   No Group Company is a party to any joint venture agreement or arrangement
       or any agreement or arrangement under which it is to participate with any
       other person in any business.

23.3   No Group Company is a party to any agency, distributorship, licence or
       management agreement or is a party to any contract or arrangement which
       restricts its freedom to carry on its business in such manner as it may
       think fit in any part of the world.

23.4   No Group Company has any branch, agency, place of business or
       establishment outside the United Kingdom.

24.    Competition and trade regulation law

24.1   No Group Company is or has been a party to, or is or has been concerned
       in any agreement or arrangement, or is conducting or has conducted
       itself, whether by omission or otherwise, in a manner which:

       (a)    contravenes or contravened the provisions of the Resale Prices
              Acts 1976 and 1977, the Fair Trading Act 1973, the Competition Act
              1980 or any amendments to those acts;

       (b)    infringes Articles 81 or 82 of the EC Treaty or any Regulation or
              Directive made under it or any other anti-trust or similar
              legislation in any jurisdiction in which any Group Company has
              assets or sales or carries on or intends to carry on business or
              where its activities may have any effect; or

       (c)    infringes Chapter 1 or Chapter 2 of the Competition Act 1998 or
              any secondary legislation made under it.

24.2   No Group Company has:

       (a)    given an undertaking to, or is subject to, any order of or
              investigation by, or has received any request for information
              from;

       (b)    received, nor so far as the Warrantors are aware, is it likely to
              receive any process, notice or communication, formal or informal
              by or on behalf of;

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<PAGE>

       (c)    been or is a party to, or is or has been concerned in, any
              agreement or arrangement in respect of which an application for
              negative clearance and/or exemption has been made to

       the Office of Fair Trading, the Competition Commission, the Secretary of
       State, the European Commission or any other governmental or other
       authority, department, board, body or agency of any country having
       jurisdiction in anti-trust or similar matters in relation to its
       business.

24.3   The Company has not received notice that it is a party to an agreement or
       arrangement which is void and unenforceable (in whole or in part) or may
       render the Company liable to proceedings under any legislation referred
       to above.

25.    Compliance with laws

25.1   So far as the Warrantors are aware, each Group Company has conducted and
       is conducting its business in accordance with all applicable laws and
       regulations whether of the United Kingdom or elsewhere.

25.2   The Company is not subject to any investigation, enquiry or enforcement
       proceedings or other process by any governmental, administrative or
       regulatory body or agency and the Company is not in breach of any order,
       decree, or judgement of any court of any governmental or regulatory
       authority (whether of the United Kingdom or elsewhere).

25.3   The Company does not carry on (and has not, at any time when not an
       authorised person under Chapter III Financial Services Act 1986 or
       Section 98(a) Friendly Societies Act 1992 carried on) investment business
       in the United Kingdom within the meaning of Section 1 Financial Services
       Act 1986.

25.4   The Company has not received notice that it has not done nor omitted to
       do anything which is contrary to the Trade Description Act 1968 or the
       Consumer Protection Act 1987 or any secondary legislation enacted
       thereafter.

26.    Litigation and disputes

26.1   Except for actions to recover any debt incurred in the ordinary course of
       the business owed to any Group Company where each individual debt and its
       costs outstanding amounts to less than (Pounds)20,000:

       (a)    no Group Company is engaged, and during the 2 years preceding the
              date of this Agreement has been engaged, in any litigation,
              arbitration, administrative or criminal proceedings, whether as
              plaintiff, defendant or otherwise;

       (b)    no litigation, arbitration, administrative or criminal proceedings

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<PAGE>

              by or against any Group Company are threatened or expected and, as
              far as the Warrantors are aware, none are pending;

       (c)    there are no proceedings, processes, or disputes pending or
              threatened by or against the Company and the Company is not aware
              of any circumstances which are likely to give rise to any such
              proceedings, processes or disputes.

26.2   No Group Company is subject to any order or judgement given by any court
       or governmental or other authority, department, board, body or agency or
       has not been a party to any undertaking or assurance given to any court
       or governmental or other authority, department, board, body or agency
       which is still in force.

Assets

27.    Ownership and condition of assets

27.1   Each of the assets included in the Accounts or acquired by any Group
       Company since the Accounts Date (other than the Properties and current
       assets subsequently disposed of or realised in the ordinary course of
       business) is owned both legally and beneficially by a Group Company free
       from any third party rights and, if capable of possession, is in the
       possession of that Group Company.

27.2   Each item of plant and machinery, vehicle and office equipment used by
       each Group Company at the date of this Agreement is in satisfactory
       working order, has been regularly maintained and is capable of doing the
       work for which it was designed or purchased.

27.3   No Group Company has acquired, or agreed to acquire, any asset on terms
       that title to that asset does not pass until full payment is made or all
       indebtedness incurred in connection with the acquisition is discharged.

27.4   The assets owned by each Group Company, together with all assets held
       under hire purchase, lease or rental agreements which are contained in
       the Disclosure Letter, comprise all assets necessary for the continuation
       of the business of each Group Company as it is currently carried on.

27.5   All vehicles owned, leased or used by the Company have been regularly
       maintained and, where relevant, have up to date MOT certificates and are
       appropriately licensed.

27.6   The stocks held by the Company are not excessive and are adequate in
       relation to the current trading requirements of the Company, and so far
       as the Warrantors are aware, none of the stock is obsolete, unusable or
       of limited value in relation to the current business of the Company.

28.    Charges and encumbrances over assets

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<PAGE>

28.1   No option, right to acquire, mortgage, charge, pledge, lien (other than a
       lien arising by operation of law in the ordinary course of trading) or
       other form of security or encumbrance or equity on, over or affecting the
       shares or the whole or any part of the undertaking or assets of any Group
       Company, including any investment in any other Group Company, is
       outstanding other than as set out in Schedule 7 and, apart from this
       Agreement, there is no agreement or commitment to give or create any of
       them and no claim has been made by any person to be entitled to any of
       them.

28.2   No floating charge created by a Group Company has crystallised and there
       are no circumstances likely to cause such a floating charge to
       crystallise.

28.3   No Group Company has received notice from any person intimating that it
       will enforce any security which it may hold over the assets of any Group
       Company, and there are no circumstances likely to give rise to such a
       notice.

29.    Intellectual Property

29.1   All Group Company Intellectual Property is either:

       (a)    in the sole legal and beneficial ownership of the Company or the
              Subsidiaries which uses it, free from all third party rights of
              ownership, licences, charges or other encumbrances; or

       (b)    the subject of binding, subsisting and enforceable licences from
              third parties in favour of the Company or the Subsidiaries (as the
              case may be) which uses it:

              (i)   of which no notice to terminate has been received or so far
                    as the warrantors are aware sent;

              (ii)  all parties to which, so far as the Warrantors are aware,
                    have fully complied with all obligations in those licences;
                    and

              (iii) in relation to which no disputes have arisen; and

              (iv)  a copy of which has been disclosed to the Purchaser.

       and in either case nothing has been done or omitted to be done whether by
       the Company or as far as the Warrantors are aware which would jeopardise
       the validity, enforceability or subsistence of any Company Intellectual
       Property or any such licences.

29.2   The Warrantors are not aware nor have they or any Group Company received
       any notice or allegation, whether written or otherwise, that the carrying
       on of the business of the Company or of any of the Subsidiaries in the
       manner in which it was carried on immediately

                                       57

<PAGE>

        before the date of this Agreement infringes or conflicts with any
        Intellectual Property of any third party or breaches any obligations of
        confidence owed by the Company or any of the Subsidiaries to any third
        party or gives rise to any liability on the part of the Company or any
        of the Subsidiaries to pay any royalty or any sum in the nature of a
        royalty or to a liability to pay compensation pursuant to any applicable
        legislation. Without prejudice to the generality of the foregoing, the
        Warrantors warrant that the Evolution ovens developed and currently
        marketed by the Company:

        (a)     do not cook food by directed hot air impingement;

        (b)     maintain air circulation at a constant non-variable rate after
                switch-on;

        (c)     do not contain plenums containing metal (other than the plenum
                housing and heating elements) which functions substantially as
                heat-sink during operation;

        (d)     do not contain temperature sensing means located in the plenum;

        (e)     do not contain auxiliary catalytic converters on the exhaust
                air; and

        (f)     contain one waveguide per magnetron, there being more than one
                magnetron.

29.3    Any Company Intellectual Property which is capable of registration has
        been registered in the name of either the Company or one of the
        Subsidiaries or is the subject of an application for registration in the
        name of the Company or one of the Subsidiaries. Schedule 11 contains a
        complete and accurate list of all the registered Intellectual Property,
        which are owned by the Company or any of the Subsidiaries either legally
        or beneficially, and details of the type of Intellectual Property each
        registration/application relates to, a description of each
        registration/application, the registration/application number of each
        registration/application, and the proprietorship and current status of
        each registration/application the current status of those
        registrations/applications. All the Intellectual Property set out in
        Schedule 11 is subsisting.

29.4    In the case of those registrations of Intellectual Property set out in
        Schedule 11, all renewal fees have been paid and renewals made by their
        due date and all such other actions necessary to preserve and maintain
        such registrations have been taken;

29.5    In the case of those registrations, set out in Schedule 11, being trade
        marks each is presently used by either the Company or at least one of
        the Subsidiaries and has not been abandoned:

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29.6    In the case of those pending applications for Intellectual Property set
        out in Schedule 11, the Warrantors are aware of no fact or matter why
        any such applications should not proceed to valid grant and all
        prosecution and other fees relating to the same have been paid in full
        and in time;

29.7    So far as the Warrantors are aware there exists no fact or matter which
        might make any of the Group Company Intellectual Property (whether
        registered or not) invalid and/or unenforceable.

29.8    So far as the Warrantors are aware, none of the Company Intellectual
        Property is subject to any attack or challenge or claim of invalidity by
        or of any other person.

29.9    No licence, security interest, option, lien, assignment or other rights
        or encumbrances have been granted or agreed to be granted or other
        agreements entered into or agreed to be entered into imposing
        restrictions on the Company's or any Subsidiary's rights to use the
        Company Intellectual Property.

29.10   The Warrantors are not aware nor have they or any Group Company received
        any notice or allegation, whether written or otherwise, that any Company
        Intellectual Property is being infringed.

29.11   So far as the Warrantors are aware, none of the subject matter of any of
        the Company Intellectual Property is subject to any claims by any third
        parties arising under sections 77-80 of the Copyright, Designs and
        Patents Act 1988 or under similar legislation in any part of the world.

29.12   Except in the ordinary course of business and on a confidential basis,
        no disclosure has been made (and nor is any Group Company currently
        obliged to make any such disclosure in the future) of any of the
        confidential information, know-how, technical processes, financial or
        trade secrets or customer or supplier lists of the Company or any
        Subsidiary.

29.13   Neither the Company nor any of the Subsidiaries is a party to any
        agreement which imposes on it a material restriction on the use or
        disclosure of any information.

29.14   Any names used by the Company or any of the Subsidiaries other than
        their corporate names are contained in the Letter.

29.15   Neither the Company, nor any of the Subsidiaries nor any of their
        servants, agents or officers have made any threat to bring proceedings
        for infringement of any Intellectual Property which is actionable by
        virtue of any applicable legislation.

29.16   So far as the Warrantors are aware no licence or assignment of
        Intellectual Property granted to the Company or any of the Subsidiaries

                                       59

<PAGE>

        is determinable by such third party by virtue of the change in control
        of the Company or the Subsidiaries occasioned by this Agreement.

30.     Data Protection Act

30.1    All Group Companies have at all relevant times complied in all respects
        with the provisions of the Data Protection Act 1984 ("the 1984 Act") and
        the Data Protection Act 1998 ("DPA") and the data protection principles
        contained in the 1984 Act and the DPA and any requests from data
        subjects for access to data held by it.

30.2    The Company has not received any notice, letter or communication from
        the enforcement bodies under the 1984 Act or the DPA nor is the Company
        obliged to pay any individual compensation under the 1984 Act or the
        DPA.

30.3    Details of the procedures the Company has in place to ensure compliance
        with the DPA are set out in the Disclosure Letter.

Employment

31.     Directors and employees

31.1    Complete and accurate particulars of the terms and conditions of
        employment of all employees of each Group Company, including the date of
        commencement of their continuous period of employment, notice period,
        date of birth and full particulars of remuneration and material benefits
        are contained in the Disclosure Letter.

31.2    Each Group Company has maintained up-to-date, adequate and suitable
        records regarding the service and terms and conditions of employment of
        each of its employees.

31.3    No Group Company is a party to any consultancy agreement, any agreement
        for management services or any contract of services with any director.

31.4    Since the Accounts Date there has been:

        (a)     no material alteration in the terms of employment or any
                material change in the number of employees employed by any Group
                Company; or

        (b)     no material increase in any fees, remuneration or benefits paid
                or payable to any officer or employee of any Group Company, nor
                are any negotiations for any such increase current or likely to
                take place in the next 6 months.

31.5    No officer or employee of any Group Company is remunerated on a
        profit-sharing, bonus or commission basis.

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<PAGE>

31.6    Other than salary for the current month and accrued holiday pay, no
        amount is owing to any present or former officer or employee of any
        Group Company.

31.7    There is no share option or share incentive scheme in operation by or in
        relation to any Group Company for any of its officers or employees nor
        has the introduction of such a scheme been proposed.

31.8    So far as the Warrantors are aware there are no claims capable of
        arising or pending or threatened by any employee or third party in
        respect of any accident or injury which are not fully covered by
        insurance.

31.9    Save as provided for or taken into account in the Accounts:

        (a)     no claim or liability to make any payment of any kind to any
                person who is or has been an officer or employee has been
                received or so far as the Warrantors are aware, incurred by any
                Group Company whether under the Employment Rights Act 1996, Sex
                Discrimination Act 1975, the Race Relations Act 1976 and the
                Disability Discrimination Act 1995; and

        (b)     no gratuitous payment of a material amount has been made or
                promised by any Group Company in connection with the actual or
                proposed termination or suspension of employment or variation of
                any contract of employment of any present or former officer or
                employee.

31.10   No officer or employee of any Group Company has given notice or is under
        notice of dismissal nor are there any service contracts between any
        Group Company and its officers or employees which cannot be terminated
        by the relevant Group Company by 12 weeks notice or less without
        giving rise to a claim for damages or compensation (other than a
        statutory redundancy payment).

31.11   No Group Company has, in contravention of the Companies Act 1985:

        (a)     entered into any arrangement involving the acquisition of
                non-cash assets from or disposal to;

        (b)     granted any loan or quasi-loan to or entered into any guarantee
                or credit transaction with; or

        (c)     provided any security in connection with any loan, quasi-loan or
                credit transaction to or with

        any director or person connected with a director within the meaning of
        the Companies Act 1985.

31.12   No person employed by the Company has been dismissed at any time in the
        3 months preceding Completion.

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31.13   No persons have been offered employment commencing after the date of
        Completion who would earn a basic salary of more than (Pounds)30,000
        p.a. in aggregate.

31.14   No Employee, officer, worker or consultant will be entitled by reason of
        this transaction to any one-off payment or similar, or to terminate his
        service with the Company on other than his normal contractual terms.

31.15   No persons working or who have worked for the Company under contracts of
        employment or contracts for services in the last 6 years have issued or
        threatened to issue any court, employment tribunal or other proceedings
        against the Company or any officer or employee thereof which actual or
        threatened proceedings (including any appeal) remain unresolved at the
        date of this Agreement.

31.16   No contracts of employment or contracts for services in with the Company
        contain any pay in lieu of notice clauses or liquidated damages clauses
        or any other provision whereby this transaction triggers or otherwise
        brings about any change to such contracts.

31.17   There are no enhanced redundancy payment or other severance schemes or
        practices conferring any entitlements on any Employees, workers or
        officers of the Company.

31.18   In the 12 months preceding this Agreement there has in relation to the
        Company been no recommendation made by an employment tribunal nor any
        investigation by any body responsible for investigating or enforcing
        matters relating to sex, race or disability discrimination.

31.19   In the 12 months preceding the date of this Agreement no improvement or
        prohibition notice has been served on the Company by any body
        responsible for Health and Safety.

31.20   The Company has complied with all its obligations (if any) owed under
        the Trade Union and Labour Relations (Consolidation) Act 1992 and the
        TUPE Regulations 1981 (as amended).

31.21   All Employees have received a written statement of particulars of
        employment as required by Section 1 Employment Rights Act 1996 to the
        extent they are so entitled.

31.22   The Company has complied with the requirements of the Working Time
        Regulations 1998 in relation to its Employees and workers. No Employee
        or worker of the Company has working time exceeding 48 hours per week on
        average over any 17 weeks.

31.23   So far as the Company is aware there are no terms or conditions under
        which any officer, worker or Employee is employed, nor so far as the
        Company is aware has anything occurred or not occurred prior to
        Completion that may give rise to any claim for sex discrimination, race

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        discrimination, disability discrimination or equal pay either under
        domestic United Kingdom, European Law or the laws of any other
        jurisdiction to the extent applicable whether by such officer, worker or
        Employee or a prospective officer, worker or Employee or otherwise.

31.24   The Company has not entered into any agreement which may involve it
        acquiring any undertaking or part undertaking such that the TUPE
        Regulations 1981 (as amended) may apply thereto.

31.25   The Company has taken every reasonable step to ensure that records held
        in respect of the Employees comply with the requirements of the Data
        Protection Acts 1984 and 1998 in respect of the United Kingdom and in
        respect of any other jurisdiction any laws relating to the use, control
        and dissemination of information and records relating to employees.

31.26   Within the 6 months prior to Completion no Employee, officer or worker
        has made any protected disclosure under the Public Interest (Disclosure)
        Act 1998 in relation to the Company.

32.     Industrial relations

32.1    No Group Company is a party to any contract, agreement or arrangement
        with any trade union or other body or organisation representing any of
        its employees.

32.2    No dispute has arisen between any Group Company and a material number or
        category of its employees nor are there any present circumstances known
        to the Warrantors which are likely to give rise to any such dispute.

32.3    No training schemes, arrangements or proposals exist nor have there been
        any such schemes, arrangements or proposals in the past in respect of
        which a levy may become payable by any Group Company under the
        Industrial Training Act 1982.

33.     Pensions

33.1    Save for the Disclosed Schemes 6, no Group Company has any plans,
        schemes or arrangements in relation to death, disability or retirement
        of any of its current or past directors or employees.

33.2    In this Section 33, "Disclosed Schemes" means each of the following:

        (a)     "Scheme 1" means the Sun Life Group Money Purchase (Contracted
                Out) Scheme (Ref: 81491);

        (b)     "Scheme 2" means the Sun Life Group Personal Pension Scheme
                (Ref: 892167);

        (c)     "Scheme 3" means the Standard Life Group Money Purchase

                                       63

<PAGE>

              Scheme (Ref: H190890) and

       (d)    "Scheme 4" means the Group Long Term Disability Insurance Scheme;

       (e)    "Scheme 5" means the scheme insured with Legal and General and
              providing death in service benefits at between 2 and 4 times
              salary.

33.3   Save pursuant to the Disclosed Schemes, the Vendors and the Group
       Companies are under no obligation or commitment nor are party to any
       custom or practice to pay, provide or contribute towards the provision of
       any "relevant benefits" within the meaning of section 612 of ICTA or any
       other death, retirement, sickness or disability benefits to or in respect
       of any person and has not at any time participated in or contributed
       towards any scheme or arrangement which has or had as its purpose or one
       of its purposes the provision of any such benefits (other than schemes
       which have been fully wound up).

33.4   Neither the Vendors nor the Group Companies have made or proposed nor
       will before Completion make or propose any voluntary or ex gratia
       payments to any person in respect of any relevant or other benefit
       referred to in paragraph 33.1.

33.5   Copies of an up to date list of beneficiaries with all relevant data in
       respect of them, all policies and contracts including premium details
       effected with any insurance company and details of contributions payable
       by any Group Company and all documents containing the provisions
       currently governing the Disclosed Schemes are attached to the Disclosure
       Letter and these are true and accurate.

33.6   All due contributions and expenses including professional fees in respect
       of the Disclosed Schemes payable by the Vendors and any Group Company
       have been properly paid as they have fallen due.

33.7   All contracts of insurance relating to the Disclosed Schemes are
       enforceable and there is no ground on which the insurers might avoid
       liability under them. All premiums payable under such contracts of
       insurance have been properly and timeously paid. Without limitation to
       the foregoing, all lump sum and pension benefits (other than refunds of
       contributions with interest where appropriate) payable in the event of a
       member's death in service are fully insured and secured on normal terms
       with a reputable insurance company which is carrying on ordinary
       long-term insurance business in the United Kingdom or any other member
       state of the European Union (and which is, in each case, authorised to do
       so by the competent authority of the relevant member state) and no
       special terms including as to premiums in relation to any such contract
       of insurance have been imposed.

33.8   The Disclosed Schemes have, where appropriate, at all times been

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<PAGE>

       operated in all material respects in accordance with the requirements of
       the Inland Revenue for exempt approval under Chapter IV of Part XIV of
       ICTA, the requirements of the governing documentation of the Disclosed
       Schemes and all applicable domestic laws and laws of the European Union.
       All employers participating in the Disclosed Schemes have observed and
       performed in all material respects all obligations applicable to them
       under the Disclosed Schemes' documentation.

33.9   No outstanding claim action complaint or investigation has been made or
       threatened against the Vendors, any Group Company or the trustees or
       administrators of the Disclosed Schemes or against any person whom any
       Group Company or those trustees or administrators is/are or may be liable
       to indemnify or compensate, in respect of or involving any act, event,
       omission or other matter arising out of or in connection with the
       Disclosed Schemes (other than routine claims for benefit). After making
       due and careful enquiries the Vendors are not aware of any circumstances
       which may give rise to any such claim. No indemnities have been given to
       any person in connection with the Disclosed Schemes under which any Group
       Company or the trustees of any of the Disclosed Schemes may be liable.

33.10  Scheme 1, Scheme 2 and Scheme 3 provide only money purchase benefits for
       beneficiaries and neither the Group Company nor the Vendors have given
       any promise or assurance (oral or written) to any beneficiary that his or
       her benefits under the Scheme 1, Scheme 2 or Scheme 3 will be calculated
       wholly or partly by reference to any person's remuneration or will
       constitute (approximately or exactly) any particular amount.

33.11  All membership and administration records of the Disclosed Schemes have
       been fully and properly compiled in all material respects so as to enable
       the benefits and prospective benefits payable in respect of all
       beneficiaries of the Disclosed Schemes to be accurately calculated.

33.12  There are no outstanding expenses or liabilities arising out of the
       termination or winding up of Scheme 1 for which any Group Company is or
       could be liable.

Property

34.    Title

34.1

       (a)    The Property comprises all of the property presently owned,
              occupied, held, controlled or otherwise used by any Group Company
              and all of the estate, interest, right and title whatsoever of any
              Group Company in respect of any land or premises (including
              interests in the nature of options and rights

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<PAGE>

              in the nature of contractual licences) and a Group Company is in
              actual and exclusive occupation of the Property.

       (b)    The particulars of the Property set out in Schedule 5 are true and
              correct.

34.2   The title of each Group Company to the Property is good and marketable.

34.3   The Property is occupied or otherwise used by a Group Company under the
       Lease, the terms of which permit its occupation or use as tenant and not
       under any provision allowing the parting of or sharing of possession with
       group or associated companies and there are no outstanding circumstances
       which would restrict the continued possession and enjoyment of the
       Property or any part of it.

34.4   All deeds and documents necessary to prove title to each Property are in
       the possession and control of the Group Companies and consist of original
       deeds and documents or properly examined abstracts.

34.5   No person is in adverse possession of any Property or has acquired or is
       acquiring any rights or overriding interests (as defined by Section 70,
       Land Registration Act 1925) adversely affecting any Property.

34.6   No Group Company has had occasion to make any claim or complaint in
       relation to any neighbouring property or its use or occupation and there
       are no disputes, claims, actions, demands or complaints in respect of the
       Property which are ongoing nor are any disputes, claims, actions, demands
       or complaints anticipated and no notices materially affecting the
       Property have been given or received and not complied with.

35.    Encumbrances

35.1   The Property is not subject to any outgoings other than business rates,
       water rates, insurance premiums, rent, insurance rent and service charges
       and all outgoings have been duly paid to date and none is in dispute.

35.2   The Property is free from any mortgage, debenture, charge, rent charge,
       lien or other encumbrance securing the repayment of monies or other
       obligation or liability of the Group Companies and the Vendors or any
       other person.

35.3   So far as the Warrantors are aware the Property is not subject to any
       matter (other than those contained in the title deed supplied to the
       Purchaser or its solicitors prior to the date of this Agreement) which
       adversely affect its proper use and occupation for the purposes of the
       business, as structured and carried on prior to the date of this
       Agreement, of the Group Companies.

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<PAGE>

35.4   Where any such matters as are referred to in paragraph 35.2 and 35.3
       above have been disclosed, the obligations and liabilities imposed and
       arising under them have been fully observed and performed and any
       payments in respect of them due and payable have been duly paid.

35.5   The Company's interest in the Property is not subject to any option,
       right of pre-emption or right of first refusal.

35.6   So far as the Warrantors are aware, he Property is not subject to any
       Local Land Charges or other matters which are capable of registration as
       such against the Property and has not been so registered.

35.7   There are no claims, disputes or outstanding orders or notices affecting
       the Property (whether served by a landlord, local authority, local
       planning authority or other body or person) and none are anticipated.

36.    Planning matters

36.1   The use of the Property is a lawful and permitted use for the purposes of
       the Planning Acts.

36.2   All consents applicable to the use of the Property are either
       unconditional or are subject only to conditions which have been satisfied
       or are subject to continuing conditions all of which have been and are
       being duly complied with and which are not onerous. No consents are
       personal or for a limited period only.

36.3   Planning permission has been obtained in respect of all development of
       the Property carried out by the Company and any subsequent alteration,
       extensions or other improvement of the same, and no such planning
       permission has been revoked, modified or suspended or remains
       unimplemented in whole or in part, and no application submitted by the
       Company for planning permission in relation to the Property) is either
       awaiting decision or the subject of any appeal.

36.4   All necessary bye law consents, building regulation consents and other
       statutory permissions and approvals have been obtained and complied with
       in respect to all development, alterations and improvements to the
       Property carried out by the Company.

36.5   The Company has not been notified of) any breaches of planning control,
       listing building control, conservation area control or other regulatory
       schemes imposed by the Planning Acts, or regulations made thereunder, or
       the Building Act 1984 or regulations (or other secondary legislation made
       thereunder) with respect to the Property by any of the Group Companies.

36.6   Compliance is being made and has at all times been made with all
       agreements, relating to the Property made under Section 106 Town and
       Country Planning Act 1990, Section 38 Highways Act 1980, Section

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<PAGE>

       33 Local Government (Miscellaneous Provisions) Act 1982 or Section 111
       Local Government Act 1972.

37.    Statutory obligations

37.1   So far as the Warrantors are aware, each Group Company has complied with
       and is continuing to comply with all applicable statutory and by- law
       requirements with respect to the Property, and in particular with the
       requirements as to fire precautions under the Fire Precautions Act 1971
       and under the Public Health Acts, the Offices, Shops and Railway Premises
       Act 1963, the Health and Safety at Work Act 1974, the Factories Act 1961
       and the Shops Acts 1950 to 1956, the Food Premises (Registration)
       Regulations 1981 and Food Safety Act 1990.

37.2   There is no outstanding and unobserved or unperformed obligation with
       respect to the Property necessary to comply with the requirements of any
       competent authority exercising statutory or delegated powers.

37.3   There are not in force or required to be in force any licences whether
       under the Licensing Act 1964 or otherwise which apply to the Property or
       the present use of the Property for the purpose of the business of the
       Group Companies.

37.4   No notices, orders, proposals, applications affecting or relating to the
       Property have been served or made by any authority or by the Group
       Companies or the Vendors and, so far as the Vendors are aware, there are
       no circumstances which are likely to result in any being served or made.

37.5   A fire certificate has been issued in respect of the Property where
       requisite and the Property comply with the fire regulations and has
       sufficient right of escape in the event of fire or other emergency.

38.    Adverse orders

38.1   So far as the Warrantors are aware, there are no closing, demolition or
       clearance orders, enforcement notices or stop notices affecting the
       Property nor are there any circumstances likely to lead to any being
       made.

38.2   So far as the Warrantors are aware, there are no compulsory purchase
       notices orders or resolutions or blight notices affecting the Property
       nor are there any circumstances likely to lead to any being made.

39.    Leasehold properties

39.1   The Lease is valid and in full force and there are no circumstances which
       would entitle the landlord or other person to exercise any power of entry
       or take possession of the Property other than as set out in the Lease.

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<PAGE>

39.2   Each Group Company has paid the rent and observed and performed the
       covenants on the part of the tenant and the conditions contained in any
       Lease to which it is a party, and the last demands (or receipts for rent
       if issued) were unqualified.

39.3   All licences, consents and approvals required from the landlords and any
       superior landlords for the grant of the Lease and during the continuance
       of the Lease have been obtained and any covenants on the part of the
       tenant contained in those licences, consents and approvals have been duly
       performed and observed.

39.4   There are no rent reviews outstanding or in progress under the Lease.

39.5   Any alteration or improvement carried out on the Property is to be
       disregarded for rent review purposes.

39.6   The sale of the Shares will not constitute an assignment or other dealing
       in respect of the Property under the terms of the Lease.

39.7   No notices have been served on the Company by any Landlord in respect of
       the Lease or the Property under the terms of the Lease.

39.8   There is not outstanding or unobserved or unperformed any obligation
       necessary to comply with any notice or other requirement given by any
       Landlord in respect of any the Property.

39.9   There are no side letters, collateral assurances, undertakings or
       concessions which have been made by any party to the leases under which
       the Group Companies occupy the Property.

39.10  There is no obligation to reinstate the Property by removing or
       dismantling any alteration or improvements made to it by the Group
       Companies.

40.    Condition of the Properties

40.1   There are no disputes with any adjoining or neighbouring owner with
       respect to boundary walls and fences or with respect to any easement,
       right of or means of access to the Property.

40.2   Neither the Group Companies nor the Vendors have had occasion to make any
       claim or complaint in relation to any neighbouring property or its use or
       occupation.

40.3   The Property enjoys mains services of water foul and surface water
       drainage, electricity and gas.

40.4   So far as the Warrantors are aware, there has been no flooding,
       subsidence, heave or significant structural or drainage defect affecting
       the Property during the Company's ownership.

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<PAGE>

40.5   No deleterious building material or method of construction not in
       accordance with currently accepted good building practice has been used
       in the alteration or repair of the Property by the Company.

40.6   The Group Companies and the Vendors are not expecting to have to expend
       any sum of money in respect of the Property in the near future.

41.    Tenancies

       There is no lease, underlease, tenancy or licence affecting the Property.

42.    Other involvement in relation to Property

42.1   The Group Companies have not at any time:

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

       (b)    given any covenant or entered into any agreement, deed or other
              document (whether as a tenant or undertenant or as an assignee,
              transferee, guarantor or otherwise) in respect of any freehold or
              leasehold property in respect of which any contingent or potential
              liability remains with the Group Companies.

43.    Amana matter

43.1   So far as each of the Warrantors is aware all of the material written
       information in relation to the Amana matter (being the matter referred to
       in the Amana Statement) in the possession of each Warrantor or of which
       he is aware has been provided to the Purchaser by each Warrantor and is
       included in the Disclosure Bundle.

43.2   The facts and statements contained in the Amana Statement are honestly
       believed by each of the Warrantors to be true and accurate.

44.    Preliminary enquiries

       So far as Warrantors are aware all replies to the preliminary enquiries
       in relation to the Property raised by the Purchasers solicitors are true,
       complete and accurate in all material respects.

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<PAGE>

                                   Schedule 5

                          (Particulars of the Property)

<TABLE>
<CAPTION>
Address              Date and parties          Term of Lease                Current rental                    Rent reviews
<S>                 <C>                       <C>                          <C>                               <C>
Station Road West    Beverley John Boag        Twenty years from and        (Pounds)150,000 per annum until   15 December 2001 and
Ash Vale             and Merrychef Limited     including 15 December        13 December 2001 and              15 December 2006
Aldershot                                      1991                         then (Pounds)140,150 and then
Hampshire                                                                   subject to review
GU12 5XA
</TABLE>

                                       71

<PAGE>

                                   Schedule 6

                              (Current Pension and
                               Disability Schemes)

1.     Group Personal Pension Plan with AXA Sun Life (Ref: 892167).

2.     Sun Life Group Money Particular (Contracted Out) Schemes (Ref 81491).

3.     Standard Life Group Money Purchase Scheme - for the benefit of J.
       Keywood, R. Gale, P. Hall and R. Edwards.

4.     Long Term Disability Scheme - insured with Unum Limited.

5.     Death in service benefits scheme with Legal and General.

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<PAGE>

                                   Schedule 7

                                    (Charges)

Company     Description  Date of       Date of       Amount Secured     Chargee
                         Charge        Registration

Merrychef   Composite    20 December   27 December   All monies due     Bank of
Holdings    Guarantee    1996          1996                             Scotland
Limited     and
            Debenture

            Composite    20 December   3 January     All monies due     3i plc
            Guarantee    1996          1997
            and
            Debenture

            Deed         28 July 1997  5 August      All indebtedness,  The Bank
            Assignment                 1997          liabilities and    of
            of Keyman                                obligations due    Scotland
            Life
            Policies

Company     Description  Date of       Date of       Amount Secured     Chargee
                         Charge        Registration

Elvadene    Composite    20 December   27 December   All monies due     Bank of
Limited     Guarantee    1996          1996                             Scotland
            and
            Debenture

            Composite    20 December   3 January     All monies due     3i plc
            Guarantee    1996          1997
            and
            Debenture

Company     Description  Date of       Date of       Amount Secured     Chargee
                         Charge        Registration

Merrychef   Composite    20 December   27 December   All monies due     Bank of
Limited     Guarantee    1996          1996                             Scotland
            and
            Debenture

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<PAGE>

           Composite    20 December   3 January     All monies due      3i plc
           Guarantee    1996          1997
           and
           Debenture

Company    Description  Date of       Date of       Amount Secured      Chargee
                        Charge        Registration

Twilight
Band       Deed         26 January    11 February   (Pounds)50,000 due  Elvadene
Limited                 1983          1983          from the company    Limited
                                                    to the chargee
                                                    supplemental to a
                                                    debenture dated
                                                    19 August 1977

                                       64

<PAGE>

                                   Schedule 8

                                  Tax Schedule

1.     Definitions and interpretation

1.1    In this Agreement, unless the context otherwise requires, the following
       words have the following meanings:

        "Claim for Taxation"     any notice, demand, assessment, letter or other
                                 document issued or action taken by any Tax
                                 Authority or any person (including any Group
                                 Company) indicating that any person is or may
                                 be placed or sought to be placed under either a
                                 Liability to Taxation or a claim for Taxation
                                 to which paragraph 3 may apply;

        "ICTA"                   the Income and Corporation Taxes Act 1988;

        "Liability to Taxation"  (a)   any liability to make a payment of or in
                                       respect of Taxation regardless of whether
                                       such Taxation is chargeable or
                                       attributable directly or primarily to a
                                       Group Company or to any other person;

                                 (b)   the loss of any Relief which would (were
                                       it not for the loss) have been available
                                       to any Group Company and which has been
                                       treated as an asset in preparing the
                                       Accounts or taken into account in
                                       computing (and so reducing) or obviating
                                       any provision for deferred taxation which
                                       appears in the Accounts (or which, but
                                       for the availability or presumed
                                       availability of such Relief prior to its
                                       loss, would have appeared in the
                                       Accounts); and

                                 (c)   the setting off against any liability to
                                       Taxation or against Profits earned,
                                       accrued or received on or before
                                       Completion of any Relief which arises in
                                       respect of any

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<PAGE>

                                 period after Completion or in respect of any
                                 Transaction effected on or after Completion in
                                 circumstances where, but for the setting off,
                                 any Group Company would have had a liability to
                                 Taxation in respect of which the Warrantors
                                 would have been liable under the Covenant for
                                 Taxation;

"Profits"             income, profits and gains, the value of any supply and any
                      other consideration, value or receipt used or charged for
                      Taxation purposes and references to "Profits earned,
                      accrued or received" means income and profits (excluding
                      chargeable gains) earned, accrued or received or deemed to
                      have been earned, accrued or received and chargeable gains
                      realised or deemed to have been realised for Taxation
                      purposes;

"Purchaser's Relief"  a Relief falling within the definition of Liability
                      to Taxation;

"Relief"              any relief, loss, allowance, exemption, set-off, deduction
                      or credit in computing or against Profits or Taxation or
                      any right to repayment of Taxation and references to the
                      "loss of any Relief" include the loss, reduction,
                      counteraction, disallowance, setting-off against Profits,
                      crediting against a liability to make an actual payment of
                      Taxation or failure to obtain a Relief and "lose" and
                      "lost" shall be construed accordingly;

"Taxation"            all forms of taxation and statutory, governmental, supra
                      governmental, state, provincial, local governmental or
                      municipal impositions, duties, contributions and levies in
                      the nature of taxation (including withholdings and
                      deductions), whether of the United Kingdom or elsewhere in
                      the world, whenever imposed and however arising other than
                      any taxation arising from the occupation of property and
                      all penalties,

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                    fines, and interest, together with the cost of removing any
                    charge or other encumbrance, relating thereto and "Tax"
                    shall be construed accordingly

"Tax Authority"     any taxing or other authority, body or official competent to
                    administer, impose or collect any Taxation;

"Tax Claim"         a claim by the Purchaser against the Warrantors under the
                    Covenant for Taxation or that any of the Taxation Warranties
                    is untrue or inaccurate in any respect or is misleading or,
                    as the case may be, a claim by the Warrantors against the
                    Purchaser under the covenant in paragraph 3;

"TCGA"              the Taxation of Chargeable Gains Act 1992;

"TMA"               the Taxes Management Act 1970;

"Transaction"       any transaction, arrangement deed, act, event, omission,
                    failure, payment or receipt of whatever nature and whether
                    actual or deemed for Tax purposes and includes (without
                    limitation) the execution and performance of the Agreement
                    and reference to a Transaction occurring on or before any
                    date shall be deemed to include the combination of two or
                    more Transactions only the first of which shall have
                    occurred on or before that date provided that there shall be
                    disregarded:

                    (a)    any Transaction which shall have occurred before
                           Completion in the ordinary course of the Company's
                           business; and

                    (b)    any Transaction which shall have occurred after
                           Completion outside the ordinary course of the
                           Company's business;

"VATA"              the Value Added Tax Act 1994; and

"Warrantors"        R Houghton, JR Keywood, GPB Veal,

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                                    SC Barker and N Thoneywork, details of whom
                                    are set out in Schedule 1;

        "Warrantor Associate"       any Warrantor and any other person with whom
                                    such Warrantor is either associated (within
                                    the meaning of section 417 ICTA) or
                                    connected (within the meaning of Section 839
                                    ICTA).

1.2     Without limiting the generality of the expression, references in this
        Tax Schedule to anything "in the ordinary and normal course of business"
        does not include:

        (a)   a Transaction which results in a Group Company becoming liable for
              taxation for which it is not primary liable under the provisions
              of Section 767A.

        (b)   the acquisition, disposal or supply or deemed acquisition,
              disposal or supply of any asset, service or facility (including a
              loan of money or the letting, hiring or licensing of tangible or
              intangible property) in a Transaction which is not entered into at
              arm's length for Taxation purposes;

        (c)   the making of a distribution or deemed distribution or any other
              event which gives rise to an obligation to account for advance
              corporation tax (prior to 5 April 1999), the creation,
              cancellation or reorganisation of any share or a loan capital of
              any Group Company becoming or ceasing to be a member of a group of
              companies for any Taxation purpose;

        (d)   the failure by any Group Company to deduct or account for Taxation
              from any payment;

        (e)   the disposal of a capital asset in excess of (Pounds)l0,000; and

        (f)   any Transaction or a series of Transaction which includes, any
              step or steps having no commercial or business purposes apart from
              the reduction, avoidance or deferral of the liability for Taxation
              under Part XVII, ICTA (tax avoidance);

2.      Covenant for Taxation

2.1     Subject to paragraph 5 of this Schedule and of Clause 9 (but not Clause
        9.2(a)) of the Agreement the Warrantors severally covenant and undertake
        to the Purchaser to pay to the Purchaser an amount equal to any
        Liability to Taxation of any Group Company:

        (a)   arising from any Transaction effected or deemed to be effected on
              or before Completion;

        (b)   in respect of, or by reference to, any Profits earned, accrued or

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        received on or before Completion;

(c)     any stamp duty by way of liquidated damages in respect of which there is
        a breach of warranty pursuant to paragraph 4 of this Tax Schedule;

(d)     which would not have arisen but for the failure by any person who is or
        has been a Warrantor Associate to discharge a Liability to Taxation
        which falls upon such Warrantor Associate:

        (i)    arising directly or indirectly from any Transaction effected or
               deemed to have been effected at any time by such Warrantor
               Associate; or

        (ii)   in respect of any Profits earned, accrued or received at any time
               by such Warrantor Associate;

(e)     any Inheritance Tax which is unpaid at the Completion and in respect of
        which the Inland Revenue has a charge on any of the shares or assets of
        a Group Company, or gives rise to a power to sell, mortgage or charge
        any of the shares or assets of that Group Company or which after the
        Completion Date becomes a charge on or gives rise to a power to sell,
        mortgage or charge any of the shares or assets of the Company, being a
        liability in respect of Inheritance Tax payable as a result of the death
        of any person within seven years after a transfer of value (or a deemed
        transfer of value) if a charge on or power to sell, mortgage or charge
        any such shares or assets existed at the Completion or would have
        existed at Completion, if the death had occurred immediately before the
        Completion and the Inheritance Tax payable as a result thereof had not
        been paid;

(f)     any liability of a Group Company to repay in whole or part any payment
        for group relief under Chapter IV, Part X, ICTA, advance corporation tax
        and Section 240, ICTA or a tax refund under Section 102, Finance Act
        1989;

(g)     arising as a direct result of the termination payment paid to Reece
        Houghton on 4 May 2000 under the terms of the Compromise Agreement dated
        2 May 2000 and made between the Company and Reece Houghton but only to
        the extent that such liability to Taxation has not been accounted for by
        the Company and for the purposes of this Clause 2.1(g) only reference to
        Tax Disclosures 4.3 and 4.9 in calculating such additional liability to
        Taxation:

together with all costs and expenses reasonably and properly incurred by the
Purchaser or any Group Company in connection with any such Liability to Taxation
or Claim for Taxation or in bringing any claim or

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        defending any action under the provisions of this Schedule.

2.2     Where the Warrantors become liable to make any payment under the
        Covenant for Taxation, the due date for the making of that payment shall
        be:

        (a)     in a case that involves an actual payment of Taxation by any
                Group Company, the date that is two days before the last date on
                which the relevant Group Company is liable to pay to the
                appropriate Tax Authority the Taxation in question in order to
                avoid incurring a liability to interest or penalties or, if
                later, five days following a written demand from the Purchaser
                giving details of the payment of taxation in question;

        (b)     in the case of the loss of any Relief, on or before the later of
                (a) five days following the date when the Warrantors have been
                notified by the Purchaser of the amount of the loss of the
                Relief as certified by its auditors for the time being of the
                relevant Group Company (pursuant to paragraph 2.3 herein) and
                (b) five days before, the date on which Taxation which would
                otherwise have been saved but for the loss of Relief becomes due
                and payable or in the case of repayment of Taxation, the date on
                which such repayment would have been made but for the loss of
                Relief; or

        (c)     in the case of costs and expenses, the date falling five
                Business Days following the date on which the Warrantors receive
                a written demand for such amount from the Purchaser.

2.3     In a case of a loss of any Relief, the amount (as certified by the
        auditors for the time being of the relevant Group Company) that is to be
        treated under the Covenant for Taxation as a Liability to Taxation
        shall:

        (a)     be the amount of that Relief, if the Relief that was the subject
                of the loss was either a deduction from or offset against
                Taxation or a right to a repayment of Taxation;

        (b)     be the amount of Taxation which has been saved in consequence of
                the setting off where the Relief that was the subject of the
                loss was a deduction from or offset against gross Profits, and
                the Relief was the subject of a setting off; and

        (c)     in any other case where the Relief that was the subject of the
                loss was a deduction from or offset against gross Profits, be
                the amount of Taxation which would, on the basis of the rates of
                Taxation current at the date of the loss, have been saved but
                for the loss.

2.4     Gross payments

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        Subject to Clause 2.5, all payments made by the Warrantors hereunder
        shall be made gross free from any rights of counterclaim or set off and
        without any deductions or withholdings of any nature save for such
        deductions or withholdings as are required by law.

2.5     Gross up

        If, in respect of or in connection with any Claim, or otherwise in
        connection with any payment made hereunder, any amount payable to the
        Purchaser by the Warrantors is subject to Taxation, the amount to be
        paid to the Purchaser by the Warrantors shall be such amount as will
        ensure that the net amount received by the Purchaser after such Taxation
        has been taken into account is equal to the full amount which would be
        payable to the Purchaser had the amount not been subject to Taxation,
        provided that this sub paragraph 2.4 shall not inure for the benefit of
        any assignee of the purchaser.

2.6     Additional tax

        If a payment under a Tax Claim is subject to Taxation in the hands of
        the Purchaser, the Warrantors shall within 7 days of notice in writing
        being served on it by the Purchaser pay to the Purchaser such amount as
        will ensure that the net amount received in respect of such payment
        after such Taxation is the same as it would have been were the payment
        not so subject to Taxation.

3.      Covenant to Warrantors

3.1     The Purchaser hereby covenants with the Warrantors to pay to the
        Warrantors an amount equal to any Taxation which is assessed on the
        Warrantors or on any Warrantor Associate (together with any costs and
        expenses incurred by the Warrantors or any Warrantor Associate in
        relation to such Taxation) where such Taxation arises as a result of or
        pursuant to either section 767A or section 767AA, ICTA by reason of
        Taxation assessed on or primarily or directly attributable to the
        Purchaser or any Group Company for any accounting period remaining
        unpaid provided that this covenant shall not apply to any Taxation in
        respect of which the Purchaser is entitled to bring a claim against the
        Warrantors under the Covenant for Taxation or would have been so
        entitled but for paragraph 5 below or Clauses 9.1, 9.2, 9.3(c)-(f) and
        9.4 of the Agreement (Limitations) except and to the extent that the
        Warrantors have paid such a claim to the Purchasers.

3.2     The Warrantors hereby covenant that they shall make no claim under
        paragraph 3.1 above to the extent that it has recovered the Taxation in
        question under section 767B(2), ICTA and that to the extent that it
        recovers any amount under paragraph 3.1 it shall not seek to recover
        payment under section 767B(2).

3.3     The provisions of paragraphs 2.2 (date of payment), 2.4 (grossing up),

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        6 (repayment) and 9 (Claims Procedure) shall apply to this covenant as
        if references to the "Purchaser" were to the "Warrantors" (and vice
        versa), references to the "the Group Company" were also to the
        "Warrantors" and references to "Covenant for Taxation" were to the
        "covenant under paragraph 3".

4.      Tax Warranties

Stamp Duty

4.1     All documents which are required to be stamped and which are in the
        possession of or in the enforcement of any Group Company have been duly
        and sufficiently stamped.

4.2     Since the Accounts Date, no Group Company has incurred any liability to
        stamp duty reserve tax.

Records and compliance

4.3     Each Group Company has paid all Taxation which is due to be paid prior
        to the date hereof and made all withholdings and deductions in respect,
        or on account, of any Taxation from any payments made by it which it is
        obliged or entitled to make and has paid to the appropriate Tax
        Authority all amounts so withheld or deducted due to be paid prior to
        the date hereof.

4.4     Each Group Company has submitted all notices, returns and applications
        for clearances or consents required for Tax purposes and so far as the
        Warrantors are aware has provided complete and accurate information to
        any Tax Authority.

4.5     Each Group Company has kept and maintained complete and accurate
        records, invoices and other documents and information of whatever nature
        appropriate or requisite for Tax purposes.

4.6     There are no disputes, unsettled or outstanding assessments or appeals
        in respect of Taxation and no Group Company has within the last three
        years been subject to any enquiry, investigation or other dispute with
        any Tax Authority and so far as the Warrantors are aware there are no
        circumstances which have arisen before the date hereof which may give
        rise to such an enquiry or dispute.

4.7     No Group Company has within the last three years been liable to pay any
        interest, penalty, fine or sum of a similar nature in respect of
        Taxation nor, in relation to value added tax, has received any penalty
        liability notice, surcharge liability notice or other written notice or
        warning under the VATA.

4.8     In the past 6 years each Group Company has at all times been resident
        for Tax purposes in the jurisdiction identified as the Tax Residence in

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        Schedule 2 and no Group Company has during the past six years paid and
        is not liable to pay Tax in any other jurisdiction.

4.9     Each Group Company has operated the Pay As You Earn ("PAYE") system
        accurately and correctly and has materially complied with all reporting
        obligations to the Inland Revenue and the Contributions Agency in
        connection with benefits provided for employees and former employees of
        each Group Company.

4.10    So far as the Warrantors are aware, no payment of, or on account of,
        income of a director, other officer, or employee of each Group Company
        has been made by an Intermediary. No agreement or arrangement has been
        entered into under which a payment of this kind will or might be an
        Intermediary in respect of which each Group Company may be liable under
        the PAYE system or any other system of payroll deduction of tax. In this
        paragraph, "Intermediary" means:

        (a)     a person acting on a Group Company's behalf either at the
                expense of that Group Company or a person connected with that
                Group Company; or

        (b)     a trustee holding property for persons who include, or a class
                of persons which includes, a director, other officer or employee
                of a Group Company;

        and for the purpose of paragraph (a) of this definition, "connected" has
        meaning given by section 839 of ICTA.

4.11    The Disclosure Letter contains details of all share options schemes and
        profit sharing schemes established by the Group Companies and in respect
        of which rights all subsist after Completion.

4.12    Each Group Company has materially complied with its obligations relating
        to Class 1 and Class 1A National Insurance Contributions, both primarily
        and secondary obligations.

VAT

4.13    Each Group Company:

        (a)     is registered for the purpose of, and has complied in all
                material respects with, the VATA and is not subject to any
                conditions imposed or agreed with any Tax Authority; and

        (b)     is not, and has not within the last three years been a member of
                a group for value added tax purposes under Section 43, VATA
                (groups of companies).

Customs duties

4.14    Each Group Company has made all necessary returns in relation to the

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<PAGE>

        collection and payment of customs duties, excise duties and other Taxes
        having an equivalent effect and has provided to any relevant Tax
        Authority all necessary information, returns and documentation and paid
        all amounts clue in relation to the same and within the prescribed time
        limits.

Balance sheet values

4.15    No Liability to Taxation will arise or be incurred on a disposal by any
        Group Company of any of its capital assets if disposed of in a single
        transaction for:

        (a)    in the case of its assets owned at the Accounts Date,an aggregate
               consideration equal to the value attributed to those assets in
               preparing the Accounts; and

        (b)    in the case of its assets acquired since the Accounts Date,an
               aggregate consideration equal to the consideration given for the
               acquisition.

Close company

4.16    No Group Company has at any time made any loan or advance or payment or
        given any consideration or effected any transaction falling within
        Sections 419 to 422 (inclusive), ICTA (loans to participators etc).

        Group transactions

4.17    Within the last six years no Group Company has been a member of a group
        of companies within the meaning of Section 170 TCGA (groups of
        companies), other than one of which the Group Companies were the only
        members.

Deductible expenses.

4.18    No Group Company has since the Accounts Date made or provided and is not
        under any legally binding obligation to make any payment of an income or
        revenue nature in excess of (Pounds)20,000 which will be prevented from
        being deductible for Tax purposes, whether as a deduction in computing
        the profits of a trade or as an expense of management or as a charge on
        income.

4.19    The accounting treatment adopted by each Group Company in its Accounts
        in relation to any loan relationship as defined in Section 81, Finance
        Act 1996 (meaning of "loans relationships" etc.) will be treated as an
        authorised accounting method for the purposes of Section 85, Finance Act
        1996 (authorised accounting methods).

4.20    No Group Company has been a party to a loan relationship treated as
        being for an unallowable purpose within the meaning of Paragraph 13

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        Schedule 9, Finance Act 1996 (loan relationships for unallowable
        purposes).

Dividends and distributions

4.21    No Group Company has at any time purchased, repaid or redeemed or agreed
        to purchase, repay or redeem its share capital, or capitalised or agreed
        to capitalise in the form of redeemable shares or debentures any profits
        or reserves, or otherwise issued any share capital or other security as
        paid up otherwise than by the receipt of new consideration within the
        meaning of Section 254, ICTA (interpretation of Part VI).

4.22    In the past 6 years no Group Company has entered into any Transaction or
        series of Transactions which includes, any step or steps having no
        commercial purposes apart from the reduction, avoidance or deferral of
        the liability for Taxation.

5.      Limitations on liability

5.1     The liability of the Warrantors under the Covenant for Taxation shall be
        reduced if and to the extent that the Liability to Taxation shall have
        been recovered under the Warranties or under any other part of the
        Covenant for Taxation (and vice versa).

5.2     The Warrantors shall not be liable to the Purchaser for a Tax Claim in
        respect of any Liability to Taxation or under the Warranties in respect
        of Taxation (which for the purposes of this paragraph 5 is additionally
        referred to as a Liability to Taxation):

        (a)    to the extent that proper provision or reserve in respect of that
               Liability to Taxation was included in the Accounts or payment or
               discharge of it was taken in to account therein and is identified
               in the notes thereto;

        (b)    to the extent that the Liability to Taxation arises or is
               increased as a result only of:

               (i)   any increase in rates of Taxation;

               (ii)  any change in law or in the published practice thereof;

               (iii) any change in the bases upon which the Accounts of the
                     relevant Group Company are prepared or any change in
                     accounting practice or principles except in either case in
                     order to comply with generally accepted accounting
                     principles; or

               (iv)  any change in the date to which the relevant Group Company
                     makes up its Accounts,

               made in any such case after Completion with retrospective

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<PAGE>

                effect.

        (c)     to the extent that such Liability to Taxation is:

                (i)     upon income, profits or gains which were actually
                        earned, accrued or received by a Group Company; or

                (ii)    in consequence any Transaction carried out by a Group
                        Company,

                in each case since the Accounts Date in the ordinary and normal
                course of the business of that Group Company;

        (d)     to the extent that there is available to the relevant Group
                Company to relieve or mitigate such Liability to Taxation any
                Relief which is not a Purchaser's Relief;

        (e)     to the extent that such Liability to Taxation would not have
                arisen but for a voluntary act or omission carried out or
                effected by the relevant Group Company at any time after
                Completion and which the Purchaser know or ought to have
                reasonably known would give rise to such liability to Taxation,
                other than any act or omission carried out or effected:

                (i)     under a legally binding commitment created on or before
                        Completion; or

                (ii)    in the ordinary and normal course of the business
                        carried on by that Group Company;

        (f)     to the extent that such Liability to Taxation would not have
                arisen or would have been reduced but for a failure or omission
                on the part of the Group Company concerned after Completion to
                make any claim or election, the making or claiming of which was
                taken into account in computing the provision or reserve for
                Taxation in the Accounts and identified in the notes therein;

        (g)     to the extent that the rate or average rate of any Taxation for
                any period which is applicable to the Company is increased as a
                result of the Group Companies becoming associated with the
                Purchaser or Companies in the same group as the Purchaser;

        (h)     to the extent that the Liability to Taxation has been relieved
                or mitigated because the Warrantors have procured for no
                consideration a surrender of group relief, ACT or a right to
                repayment of Tax to the relevant Group Company.

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5.3     For the avoidance of doubt the provisions of Clauses 9.1, 9.2,
        9.3(c)-(f) and 9.4 of the Agreement shall apply to the Tax Schedule as
        if their terms were specifically set out herein.

6.      Repayment

        If the Warrantors shall make any payment to the Purchaser in relation to
        any Tax Claim and the Purchaser or any Group Company subsequently
        receives or is entitled to receive from any Tax Authority or any person
        (other than another Group Company or an employee of the Group Company)
        any amount referable to the subject matter of that Tax Claim, the
        Purchaser (if so required by the Warrantors and provided that the
        Purchaser notifies the Warrantors of their entitlement) shall take all
        necessary steps to recover the same and once it or any Group Company has
        received such amount, repay (after deducting the costs and expenses of
        the Purchaser or any Group Company incurred in recovering such amount
        and any Taxation payable on it or on any interest) to the Warrantors the
        lesser amount of:

        (a)     a sum equal to such amount; or

        (b)     if lesser a sum equal to the Tax Claim paid by the Warrantors to
                the Purchaser,

        together with any interest paid to the Purchaser or that Group Company
        in respect of such sum.

7.      Over-provision and Reliefs

7.1     If the auditors for the time being of the relevant Group Company shall
        certify (at the request and expense of the Warrantors) that any
        provision for Taxation in the Accounts (excluding any provision for
        deferred taxation) has proved to be an over-provision, then the amount
        of such over-provision shall be dealt with in accordance with paragraph
        7.3 below.

7.2     If the auditors for the time being of the relevant Group Company shall
        certify (at the request and expense of the Warrantors) that any
        Liability to Taxation which has resulted in a payment having been made
        or becoming due from the Warrantors under the Covenant for Taxation will
        give rise to a Relief for any Group Company (other than a Purchaser's
        Relief) which would not otherwise have arisen, then as and when such
        Relief reduces a liability to make an actual payment of Tax (other than
        a liability for which the Purchaser would be entitled to bring a Tax
        Claim), the amount of that reduction shall be dealt with in accordance
        with paragraph 7.3 below.

7.3     Where it is provided under paragraphs 7.1 or 7.2 that any amount ("the
        relevant amount") is to be dealt with in accordance with this sub-
        clause:

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        (a)     the relevant amount shall first be set-off against any payment
                then due from the Warrantors under the Covenant for Taxation;

        (b)     to the extent that there is an excess, a refund shall be made to
                the Warrantors of any previous payment made by the Warrantors
                under the Covenant for Taxation (to the extent not previously
                refunded under this paragraph 7) up to the amount of such
                excess; and

        (c)     to the extent that the excess referred to in paragraph 7.3(b)
                above is not exhausted under that paragraph, the remainder of
                the excess shall be carried forward and set off against any
                future payment or payments which become due from the Warrantors
                under the Covenant for Taxation.

7.4     Where any certification referred to in paragraphs 7.1 or 7.2 has been
        made, the Warrantors or the Purchaser or the relevant Group Company may
        request the auditors (at the cost of the requesting party) to review
        such certification in the light of all relevant circumstances, including
        any facts which have become known only since such certification, and to
        certify whether such certification remains correct or whether the
        certified amount should be amended.

7.5     If the auditors certify under paragraph 7.4 that an amount previously
        certified should be amended, that amended amount shall be substituted
        for the purposes of paragraph 7.3 as the relevant amount in respect of
        the certification in question in place of the amount originally
        certified, and such adjusting payment (if any) as may be required shall
        be made as soon as practicable by the Warrantors or (as the case may be)
        to the Warrantors to give effect to the revised certification.

8.      Tax Returns

8.1     The Warrantors or their duly authorised agent shall at the reasonable
        expense of the relevant Group Company prepare the corporation tax
        returns of each Group Company for all accounting periods ended on or
        before the Accounts Date to the extent that they have not been prepared
        prior to Completion.

8.2     The Purchaser shall procure that each Group Company shall cause the tax
        returns mentioned in paragraph 8.1 above to be authorised, signed and
        submitted to the relevant Tax Authority without amendment or with such
        amendments as the Warrantors shall reasonably agree provided that the
        Purchaser shall not be obliged to procure that any Group Company takes
        any such action as is mentioned in this paragraph 8 in relation to any
        tax return that is not true and accurate in all material respects.

8.3     The Warrantors or their duly authorised agent shall at the reasonable
        expense of the relevant Group Company prepare all documentation and

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<PAGE>

        deal with all matters (including correspondence) relating to the tax
        returns of each Group Company for all accounting periods ended on or
        prior to the Accounts Date and the Warrantors shall provide the
        Purchaser with copies of any correspondence relating to such tax returns
        prior to their submission and copies of any correspondence from the
        Inland Revenue. The Warrantors shall give the Purchaser a reasonable
        opportunity to comment on such correspondence prior to submission and
        shall take account of the Purchaser's reasonable comments. The Purchaser
        shall upon reasonable notice (having regard to the circumstances) being
        given by the Warrantors procure that the relevant Group Company shall
        afford such access to its books, accounts, records and personnel as is
        necessary and reasonable to enable the Warrantors or their duly
        authorised agent to prepare those tax returns and conduct matters
        relating thereto in accordance with the rights of the Warrantors under
        this paragraph.

8.4     The provisions of paragraph 8.3 shall be without prejudice to the rights
        of the relevant Group Company in relation to any audit or any enquiry
        resulting therefrom and if the Purchaser shall at any time become aware
        of a Claim for Taxation which may result in a Tax Claim, the Purchaser
        may at any time thereafter by notice in writing to the Warrantors notify
        that the provisions of paragraph 8.3 shall lapse, in which case the
        provisions of paragraph 9 (Claim Procedure) shall come into operation in
        accordance with its terms.

9.      Claims Procedure

9.1     Upon the Purchaser or any Group Company becoming aware of a Claim for
        Taxation which may result in a Tax Claim the Purchaser shall as soon as
        is reasonably practicable give written notice of that Claim for Taxation
        to the Warrantors or, as the case may be, shall procure that the Group
        Company forthwith give written notice of that Claim for Taxation to the
        Warrantors provided that the delivery of such notice is not a condition
        precedent to the liability of the Warrantors under the Covenant of
        Taxation.

9.2     The Purchaser shall subject to the Warrantors agreeing to indemnify and
        securing the Purchaser and/or the relevant Group Company to its
        reasonable satisfaction against all losses, costs, damages and expenses,
        including additional Taxation and interest on overdue Taxation, which
        may be incurred, further procure that the Group Company take such
        action, including assigning the conduct of the Claim to the Warrantors,
        and give such information and assistance in connection with the affairs
        of the relevant Group Company, as the Warrantors may reasonably and
        promptly by written notice request to avoid, resist, appeal or
        compromise the Claim for Taxation provided that neither the Purchaser or
        a Group Company shall be obliged to take any action required by
        Warrantors which could be reasonably be said to be frivolous or
        vexatious or which could materially adversely increase the Taxation

                                       79

<PAGE>

      Liability of the Tax Claim in question.

9.3   The Purchaser shall not be obliged to procure that the Group Company
      appeals against any tax assessment if, the Warrantors having been given
      written notice of the receipt of that Claim for Taxation in accordance
      with paragraph 9.1 above, the Group Company has not within 21 days (or, if
      there is a statutory time limit of not more than 30 days, within 10
      business days before the expiry of such limit) thereafter received
      instructions in writing from the Warrantors, in accordance with the
      preceding provisions of this paragraph 9, to make that appeal or fail
      within that period to give the indemnity and security referred to in
      Clause 9.2.

9.4   The Warrantors shall procure that the Purchaser is promptly provided with
      copies of any correspondence from the Tax Authority and of any
      correspondence from the Warrantors to the Tax Authority prior to its
      submission to the Tax Authority, and shall give the Purchaser a reasonable
      opportunity to comment thereon prior to submission and account shall be
      taken of its reasonable comments to the extent that there might otherwise
      be a material adverse effect on the amount of tax payable by the Purchaser
      or any Group Company in respect of a period after Completion as compared
      with the provision for Taxation in the Accounts.

9.5   The Purchaser shall not be obliged to procure that any Group Company take
      any action under paragraph 9.1 above which involves contesting any matter
      before the any court or other applicable body unless the Warrantors
      furnish the Group Company with the written opinion of tax counsel of at
      least 7 years call to the effect that such contest will on the balance of
      probabilities be successful. Such tax counsel shall be instructed by the
      Warrantors at the Warrantors' expense but the Warrantors shall promptly
      provide the Purchaser with a copy of such instructions and give the
      Purchaser or its representative a reasonable opportunity to attend any
      conference with Counsel.

9.6   Clause 9.6 shall not apply if the Warrantor or the relevant Group Company
      has committed acts or omissions which constitute fraud.

10.   Miscellaneous

10.1  Any amount paid under this Schedule 8 shall be treated as an adjustment to
      the consideration paid by the Purchaser for the Shares under the terms of
      the Agreement.

10.2  The Purchaser will procure that each of the Group Companies co-operates
      with the Warrantors in making such surrenders of or claims for group
      relief and such claims for capital allowances as are reasonable required
      by the Warrantor, subject to the Purchaser being reasonably satisfied that
      there is no net cost to it or the Group Companies in doing so. If there is
      a dispute between the parties as to

                                       80

<PAGE>

this Clause, the procedure for resolving disputes set out in Clause 9 of this
Schedule shall adopt.

                                       81

<PAGE>

                                   Schedule 9

1.  In this Schedule:

    "Expert"                        shall mean a Chartered Accountant (acting as
                                    an expert and not as an arbitrator)
                                    nominated by 3i and the Purchaser or in the
                                    event of disagreement as to nomination
                                    appointed upon the application of either 3i
                                    or the Purchaser by the President for the
                                    time being of the Institute of Chartered
                                    Accountants for England and Wales;

    "Retention"                     shall mean the principal amount of
                                    (Pounds)500,000 to be placed on deposit in
                                    the Retention Account under Clause
                                    4.2(d)(ii)

    "Retention Account"             shall mean an interest bearing account in
                                    the joint names of the Purchaser's
                                    Solicitors and 3i's Solicitors, Addleshaw
                                    Booth & Co. of 60 Cannon Street, London EC4N
                                    6NP with NatWest Bank Plc, City of London
                                    Office, PO Box 12258, 1 Princes Street,
                                    London EC2R 8PA, sort code: 60-00-01,
                                    account number: .;

2.  The operation of the Retention Account shall require the signature of both
    a partner in the Purchaser' Solicitors and a partner in 3i's Solicitors
    and the Retention (together with any accrued interest thereon) shall be
    released in accordance with terms of this Schedule and the letter of
    instruction signed for and on behalf of 3i and the Purchaser ("Instruction
    Letter").

3.  The Purchaser shall within 60 days from the date hereof prepare or procure
    the preparation of a certified statement of all the Borrowings of the
    Group Companies (excluding those Borrowings listed at Clause 6.11) (the
    "Group Borrowings") as at Completion (the "Group Borrowings Statement")
    and deliver such statement to 3i (marked with the reference - "Case
    number: 16-8508130 at Apex Plaza, Forbury Road, Reading RG1 1AX.

4.  If the Group Eorrowings Statement shall show there to be either no Group
    Borrowings or Group Borrowings of (Pounds)l00,000 or less or if the
    Purchaser fails to produce a Group Borrowings Statement within the 60

                                       82

<PAGE>

      day period set out in paragraph 3 above the whole of the Retention
      together with accrued interest thereon shall as soon as reasonably
      practicable be released to 3i's Solicitors.

5.1   If the Group Borrowings Statement shall show there to be Group Borrowings
      in excess of (Pounds)l00,000 3i shall be entitled to appoint accountants
      to act on its behalf ("3i's Accountants") which accountants shall be
      entitled to have access to all working papers and other documentation
      necessary for the purpose of attempting to verify the Group Borrowings
      Statement. 3i's Accountants and the Purchaser shall endeavour to agree the
      Group Borrowings Statement. In the event that the Purchaser and 3i's
      Accountants are unable within 60 days of the date of receipt by 3i of such
      Group Borrowings Statement to agree the Group Borrowings figure as set out
      therein the matter shall be referred to the Expert whose determination
      shall be final and binding on 3i and the Purchaser.

5.2   In the event that the Group Borrowings Statement shall show there to be
      Group Borrowings of (Pounds)lOO,OOO or less (as agreed or determined (as
      the case may be)) the whole of the Retention together with accrued
      interest shall be released as soon as reasonably practicable to 3i, but if
      such Group Borrowings (as agreed or determined (as the case may be)) shall
      exceed (Pounds)l00,000 then there shall be released as soon as reasonably
      practicable to the Purchaser from the Retention Account a sum equal to 59%
      of such Group Borrowings together with interest accrued on such sum and
      the balance (if any) of the Retention together with accrued interest on
      such balance shall as soon as reasonably practicable be released to 3i.

5.3   If after the expiry of 60 days from the date hereof monies are retained in
      the Retention Account in accordance with this Schedule 9 then in addition
      to interest accruing on the Retention Account a deemed rate of interest
      shall begin accruing on the amount so retained at a rate of 2% above the
      rate payable by the Bank on the Retention Account from time to time (the
      "Default Interest").

      In the event that it is determined by the Expert in accordance with this
      Schedule 9 that any amount of the monies retained beyond the 60 day period
      be released to 3i and in the event that the Expert determines that the
      retention beyond 60 days occurred as a result of vexatiousness or bad
      faith on the part of the Purchaser, then in addition to any accrued
      interest under paragraph 5.2 the Purchaser shall pay to 3i an amount equal
      to the Default Interest which is deemed to have accrued on the principal
      amount released to 3i (excluding accrued bank interest on that principal
      amount and excluding Default Interest on any principal amount not released
      to 3i). For the avoidance of doubt Default Interest shall be payable by
      the Purchaser only in the circumstances and to the extent set out in this
      paragraph 5.3.

                                       83

<PAGE>

6.   The costs of the Expert appointed under paragraph 5.1 shall be borne
     equally by (i) and the Purchaser and (ii) 3i.

7.   3i and the Purchaser agree the bank's costs and charges incurred in
     connection with the opening and operation of the Retention Account shall be
     borne by them in the same proportion as their entitlement to receive an
     amount out of the Retention bears to (Pounds)500,000 so that such costs and
     charges shall be deducted from the amount standing to the credit of the
     Retention Account before any payment is made out of such account under this
     Schedule 9 and any payments out of the Retention Account shall be reduced
     accordingly.

8.   Each of the Purchaser and 3i undertakes to instruct the respective
     signatory to the Retention Account to release the sums standing to the
     credit of the Retention Account in accordance with the provisions of this
     Schedule.

9.   To the extent that the Purchaser is entitled to have released to it a sum
     out of the Retention pursuant to this Schedule the Consideration, to the
     extent payable to 3i, shall be reduced by an amount equal to such sum.

10.  The Purchaser shall have no claim under this Schedule against 3i for any
     amount in excess of the Retention.

11.  The Retention shall be applied only in accordance with this Schedule 9 and
     the Instruction Letter. The Purchaser shall not be entitled to exercise any
     right of set-off, counterclaim or any other like right against the
     Retention.

                                       84

<PAGE>

                                   Schedule 10

                             (The Redcliffe Claim)

For the purposes of Clause 6.10 and this Schedule 10 the following provisions
have the following meanings:

"Redcliffe Claim"           means the claim particulars of which are set out in
                            a letter dated 1 June 2000 to the Company from Mr S
                            Parsons of Redcliffe Magtronics Limited
                            ("Redcliffe"), a copy of which is attached as
                            Exhibit "A";

"Claim Amount"              means the amount (if any) paid by the Company to
                            Redcliffe pursuant to the Redcliffe Claim in full
                            and final settlement of the Redcliffe Claim;

"Redcliffe Retention"       means the amount of (Pounds)l30,000 paid into the to
                            Redcliffe Retention Account and detailed in this
                            Schedule 10;

"Redcliffe Retention        means an interest bearing account in the joint names
Account"                    of Addleshaw Booth & Co ("3i's Solicitors"),
                            Osborne Clarke ("the Warrantor's Solicitors") and
                            Hammond Suddards ("the Purchaser's Solicitors) with
                            National Westminster Bank plc, City of London
                            Office, PO Box 12258, 1 Princes Street, London EC2R
                            8PA, sort code: 60-00-01, account number: .;

"Redcliffe Retention        means the date which is 6 months from the date of
Date"                       this Agreement.

1.   3i and the Warrantors severally agreed that in the event that the Redcliffe
     Claim results in the Company paying a Claim Amount to Redcliffe before the
     Redcliffe Retention Date then the Purchaser will be entitled to have
     released to it an amount equal to whichever is the lesser of:

     (a)  the amount of the Redcliffe Retention (i.e. (Pounds) 130,000); and

     (b)  the Claim Amount.

     and the sums (if any) remaining to the credit of the Redcliffe Retention
     Account after such release to the Purchaser shall be released to 3i and the
     Warrantors.

2.   If legal proceedings in relation to the Redcliffe Claim are not commenced
     against the Company before the Redcliffe Retention Date or no Claim Amount
     is paid to Redcliffe then the Redcliffe Retention

                                       85

<PAGE>

       shall be released to 3i and the Warrantors forthwith on the expiration of
       the said 6 month period.

3.     If legal proceedings in relation to the Redcliffe Claim are commenced
       within 6 months of the date of this Agreement then the parties will
       instruct counsel of not less than 10 years standing (and in default of
       agreement on the identity of counsel then counsel nominated by the
       chairman of the Bar Council) on the issues concerned together with all
       appropriate supporting papers to give his opinion as to:

       (a)    the merits of the Redcliffe Claim; and

       (b)    the amount (if any) which should continue to be retained as the
              Redcliffe Retention.

       and any amount which such counsel determines need not be so retained
       shall forthwith be released to the Warrantors and 3i.

4.     The Redcliffe Retention shall be deemed to be apportioned as between 3i
       and the Warrantors (including their respective spouses) in the
       proportions which their respective holdings of shares in the Company bear
       to each other immediately prior to the execution of this document and any
       payment under this Agreement from the Redcliffe Retention shall be borne
       in such proportions. For the avoidance of doubt, 3i's maximum liability
       under this Schedule 10 shall be 59% of the Redcliffe Retention.

5.     The Warrantors shall be entitled to conduct the Redcliffe Claim as they
       think fit provided that in the event that proceedings are commenced
       either by or against the Company in relation to the Redcliffe Claim such
       proceedings shall be advised on by counsel of not less than 10 years
       standing and the Purchaser shall be entitled to review and comment on
       instructions to counsel and to attend any conferences with counsel.

       And further

       Always provided they shall at all times do so in good faith.

6.     Upon the release of the whole or any part of the Redcliffe Retention to
       3i and the Warrantors, 3i and the Warrantors shall be entitled to any
       interest which has accrued pro rata to the amounts of the Redcliffe
       Retention as released but otherwise the Purchaser shall be entitled to
       all such interest.

7.     For the purpose of this Schedule 10, 3i and the Purchaser and the
       Warrantors irrevocably instruct 32s Solicitors, the Warrantors'
       Solicitors and the Purchaser's Solicitors respectively to sign up any
       withdrawal form or other document to give effect to the provisions of
       this Schedule.

                                       86

<PAGE>

8.     Save in the case of fraud or gross negligence the parties hereto agree to
       indemnify 3i's Solicitors, the Warrantors' solicitors and the Purchaser's
       Solicitors in respect of all claims made against them and any costs,
       liabilities or expenses incurred by them in that capacity.

9.     Save as set out in this Schedule 10, there shall be no set-off of any
       kind against the Redcliffe Retention.

                                       87

<PAGE>

                                                              Osborne
                                                           Clarke OWA    [LOGO]

                                   SCHEDULE II

                    MERRYCHEF LIMITED - INTELLECTUAL PROPERTY

                           PART I - REGISTERED DESIGNS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
REGISTERED DESIGN        TITLE           COUNTRY     APPLICATION/       STATUS
       NO.                                         REGISTRATION DATE
------------------------------------------------------------------------------------
<S>               <C>                    <C>       <C>                  <C>
2032000           "Microwave Oven Roof"  GB        25 June 1993         ABD
------------------------------------------------------------------------------------

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

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

------------------------------------------------------------------------------------
</TABLE>

                                       1

<PAGE>

                    MERRYCHEF LIMITED - INTELLECTUAL PROPERTY

                                PART II - PATENTS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
PATENT NO.            TITLE                 COUNTRY     APPLICATION/         STATUS
                                                      REGISTRATION DATE
--------------------------------------------------------------------------------------
<S>           <C>                           <C>       <C>                    <C>
9915368.5     Microwave Heating               GB       2 July 1999            ABD
--------------------------------------------------------------------------------------
9927368.2     Ovens with Catalytic Converter  GB      20 November 1999        PEN
--------------------------------------------------------------------------------------
0007033.4     Microwave Heating               GB      23 March 2000           PEN
--------------------------------------------------------------------------------------
9412338.7     Microwave Heating               GB      20 June 1994            GRA
2279856                                                5 March 1997
--------------------------------------------------------------------------------------
9444304454.5  Microwave Oven                  EP      20 June 1994            GRA
0631459                                               23 September 1998
--------------------------------------------------------------------------------------
08/261547     Microwave Heating with hot air  US      17 June 1994            GRA
5483044       and cold air streams                     9 January 1996
--------------------------------------------------------------------------------------
94304454.5    Hot Air Microwave Oven          DE      20 June 1994            GRA
0631459                                               23 September 1998
--------------------------------------------------------------------------------------
94304454.5    "Microwave Oven"                FR      20 June 1994            GRA
0631459                                               23 September 1998
--------------------------------------------------------------------------------------
94304454.5    "Microwave Oven"                IT      20 June 1994            GRA
0631459                                               23 September 1998
--------------------------------------------------------------------------------------
</TABLE>

                                       2

<PAGE>

                   MERRYCHEF LIMITED - INTELLECTUAL PROPERTY

                             PART III - TRADE MARKS

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
    TRADE MARK         TITLE        CLASS  COUNTRY      APPLICATION/            STATUS
  APPLICATION NO.                                     REGISTRATION DATE
-------------------------------------------------------------------------------------------------
  <S>                 <C>           <C>    <C>        <C>                <C>
     2219333          MERRYCHEF      9, 11   GB        14 January 2000           PEN
-------------------------------------------------------------------------------------------------
      953921          MERRYCHEF        9     GB        21 January 1970           REG
                                                                         renewed 14 years from
                                                                               21/01/91
-------------------------------------------------------------------------------------------------
     2221928          MEALSTREAM       9     GB        10 February 2000          PEN
-------------------------------------------------------------------------------------------------
     2221930          MICRO-AIRE       9     GB        10 February 2000          PEN
-------------------------------------------------------------------------------------------------
     1501287          MERRYCHEF      9, 11   CTM        9 February 2000          PEN
-------------------------------------------------------------------------------------------------
     1501386          MEALSTREAM     9, 11   CTM        9 February 2000          PEN
-------------------------------------------------------------------------------------------------
     1501345          TURBOAIRE      9, 11   CTM        9 February 2000          PEN
-------------------------------------------------------------------------------------------------
      953922          MERRYCHEF       11     GB        21 January 1970           REG
                                                                         Renewed 14 years from
                                                                              21/01/91
-------------------------------------------------------------------------------------------------
     1291030          "MERRYCHEF"      -     GB        17 October 1986           ABD
-------------------------------------------------------------------------------------------------
</TABLE>

                                       3

<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
     TRADEMARK             TITLE          CLASS           COUNTRY         APPLICATION/           STATUS
   APPLICATION NO.                                                      REGISTRATION DATE
-------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>             <C>           <C>                      <C>
       1539798           TURBOAIRE          9               GB             25 June 1993           REG
                                                                         29 September 1995
-------------------------------------------------------------------------------------------------------------
       1539802           TURBOAIRE         11               GB             25 June 1993           REG
                                                                           23 June 1995
-------------------------------------------------------------------------------------------------------------
</TABLE>

                                       4

<PAGE>

                            PART IV - MISCELLANEOUS

The following trade marks are registered in the name of Mealstream UK Limited
and are to be assigned to Merrychef Limited:-

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
     TRADE MARK          MARK        CLASS         COUNTRY            STATUS
  REGISTRATION NO.
--------------------------------------------------------------------------------------------
<S>                   <C>            <C>           <C>     <C>
        1104876       MEALSTREAM       II            GB                REG

                                                           Renewed 10 years from 17/ll/99
--------------------------------------------------------------------------------------------

         945009       MICRO-AIRE       II            GB                REG

                                                           Renewed 14 years from l/7/90
--------------------------------------------------------------------------------------------
</TABLE>

There is also a UK patent registered number 2234655 (application number
8915531-9) dated 7 July 1989 registered applicant Arthur Charles Carter which
has been abandoned.

KEY:-

ABD - Abandoned              GB - Great Britain   REG - Registered

CTM - Community Trade Mark   DE - Germany         US  - United States of America

GRA - Granted                FR - France

PEN - Pending                IT - Italy

                             EP - European Patent

                                       5

<PAGE>

Executed as a Deed by            )
Reece Houghton but not delivered )
until the date appearing at the  )        /s/ Reece Houghton
beginning of this document       )
in the presence of:              )

Witness  [ILLEGIBLE]

Signature /s/ [ILLEGIBLE]

Address       [ILLEGIBLE]

Occupation   [ILLEGIBLE]

Executed as a Deed by            )
Susan Houghton but not delivered )
until the date appearing at the  )         /s/ Susan Houghton
beginning of this document       )
in the presence of:              )

Witness     [ILLEGIBLE]

Signature /s/ [ILLEGIBLE]

Address     [ILLEGIBLE]

Occupation

Executed as a Deed by            )
Joyce Rosalyn Keywood but not    )
delivered until the date         )         /s/ Joyce Rosalyn Keywood
appearing at the                 )
beginning of this document       )
in the presence of:              )

Witness     JEFFREY CHANG

Signature   /s/ Jeffrey Chang

Address     21 LEIGHTON CLOSE
            EDGWARE
            MIDDLESEX HAE 5SE

Occupation  TRAINEE SOLICITOR

                                       88

<PAGE>

Executed as a Deed by                   )
Robert Geoffrey Gale but not            )
delivered until the date appearing at   ) /s/ Robert Geoffrey Gale
the beginning of this document in       )
the presence of:                        )

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

Executed as a Deed by                   )
Graham Philip Brisley but not           )
delivered until the date appearing at   ) /s/ Graham Philip Brisley
the beginning of this document in       )
the presence of:                        )

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

Executed as a Deed by                   )       Francesca Veal
Francesca Veal but not delivered        )         by her attorney
until the date appearing at the         )
beginning of this document in           )
the presence of:                        )

Witness    Jeffrey Chang                  /s/ [ILLEGIBLE]

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR.

                                       89

<PAGE>

Executed as a Deed by                         )
Simon Charles Barker but not                  )
delivered until the date appearing at         )     /s/ Simon Charles Barker
the beginning of this document                )
in the presence of:                           )

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

Executed as a Deed by                         )
Fiona-Anne Elizabeth Barker but               )  Fiona-Anne Elizabeth Barker
not delivered until the date appearing at     )  by her Attorney
the beginning of this document                )
in the presence of:                           )     /s/ [ILLEGIBLE]

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

Executed as a Deed by                         )
Nigel Thorneywork but not                     )
delivered until the date appearing at         )     /s/ Nigel Thorneywork
the beginning of this document                )
in the presence of:                           )

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

                                       90

<PAGE>

Executed as a Deed by                         )
Iris Thorneywork  but not                     ) Iris Thorneywork
delivered until the date appearing at         ) by attorney
the beginning of this document                )
in the presence of:                           )     /s/ [ILLEGIBLE]

Witness    Jeffrey Chang

Signature  /s/ Jeffrey Chang

Address    21 LEIGHTON CLOSE
           EDGWARE, MIDDLESEX
           HA8 5SE

Occupation TRAINEE SOLICITOR

Executed as a Deed by                         )
Graham Geoffrey Woodhead but                  ) Graham Woodhead
not delivered until the date appearing at     ) by his attorney
the beginning of this document                )
in the presence of:                           )     /s/ [ILLEGIBLE]

Witness    H. J. Lunt

Signature  /s/ H. J. Lunt

Address    7 Devonshire Square,
           Cutlers Gardens,
           London, EC2M 4YH

Occupation SOLICITOR

                                   duly authorized attorney for and on behalf of

Executed as a Deed by CRESSIDA HOGG           )
3i Nominees Limited but not                   ) /s/ Cressida Hogg
delivered until the date appearing at         )
the beginning of this document                )
in the presence of:                           )

Witness    Sanjeev Sharma

Signature  /s/ Sanjeev Sharma

Address    60 Cannon Street
           London

Occupation SOLICITOR

                                       91

<PAGE>

                                  duly authorized attorney for and on behalf of

Executed as a Deed by CRESSIDA HOGG           )
3i 96 partners Nominees Limited but not       ) /s/ Cressida Hogg
delivered until the date appearing at         )
the beginning of this document in the         )
presence of:                                  )

Witness    Sanjeev Sharma

Signature  /s/ Sanjeev Sharma

Address    60 Cannon Street
           London

Occupation Solicitor

Executed as a Deed by                         )
Berisford Industrial Holdings Limited         ) /s/ [ILLEGIBLE]
but not delivered until the date appearing at )
the beginning of this document in the         )
presence of:                                  )

Witness    H. J. Lunt

Signature  /s/ H. J. Lunt

Address    7 Devonshire Square,
           London, EC2M 4YH

Occupation Solicitor

                                       92

<PAGE>

                                                                       EXHIBIT A

Private and Confidential
Mr. Simon Barker
Merry Chef Limited
Station Road West
Ash Vale
Aldershot
Hampshire
GU12 5XA

                      [LETTERHEAD OF REDCLIFFE MACTRONICS]

Ref:  SRP/PB

Date: 1 June 2000

Dear Simon

Magnetech

As you know, Redcliffe have cause to be very unhappy with the financial
performance of Magnetech since it was acquired from you on June 11/th/ 1998.

In accordance with the Agreement covering the sale of Magnetech please take this
letter as formal notice under schedule 10 of the terms of the Sale and Purchase
agreement dated June 11/th/ 1998 that Redcliffe is making a claim based upon
various warranties given by Merrychef in the Agreement. In particular, the
warranty given in the Agreement in 22.1 that the Magnetech business was
continuing in the ordinary and normal course and that neither turnover nor the
financial trading position of Magnetech had deteriorated. This was clearly not
so as the Magnetech trading performance in the year July 1998 to June 1999
demonstrates. During that period, Magnetech sales were (Pounds)104,532 and not
the projected (Pounds)200,000 that the financial structure of the deal was
entirely based upon.

This shortfall in turnover caused Redcliffe to make a loss in Magnetech in that
first year period of (Pounds)65,000. The loss in the second year will be of a
similar nature and the total extent of our claim will therefore be
(Pounds)130,000. Redcliffe have also relied on other warranties given by
Merrychef and in particular, clause 24 and the general warranty in clause 27
covering the accuracy of all material information given by the Vendor to the
Purchaser relating to the Business or Assets of Merrychef and that it was
materially complete and accurate.

Please let me know how you would like to proceed.

Yours sincerely

/s/ Stephen Parsons

Stephen Parsons
Chief Executive

<PAGE>

To Berisford Industrial Holdings Limited, Washington House, 40/41 Conduit
Street, London W1R 9FB

14 June 2000

Dear Sirs

Merrychef Holdings Limited (and where appropriate Merrychef Limited (together
"the Company"))

1.   Introduction

1.1  This is the Disclosure Letter defined in the agreement entered into
     immediately prior to the delivery of this Disclosure Letter between Joyce
     Rosalyn Keywood, Robert Geoffrey Gale, Graham Philip Brisley Veal,
     Francesca Veal, Reece Houghton, Susan Houghton, Simon Charles Barker,
     Fionna-Anne Elizabeth Barker, Nigel Thorneywork, Iris Thorneywork and
     Graham Geoffrey Woodhead (1) ("the Vendors"); 3i Nominees Limited and 3i 96
     Partners Limited (2) (together "3i") and Berisford Industrial Holdings
     Limited (3) ("the Purchaser") for the sale and purchase of the entire
     issued share capital of the Company ("the Agreement").

1.2  Words and expressions defined in the Agreement, unless the context
     otherwise requires, have the same meaning in this Disclosure Letter.

1.3  The purpose of this Disclosure Letter is as set out in the Agreement.

1.4  The headings and numbering used in this Disclosure Letter are for
     convenience only and shall not affect its interpretation.

1.5  Annexure A to this Disclosure Letter is an index of copy and original
     documents which have been supplied to the Purchaser or its solicitors ("the
     Disclosure Bundle"). In this Disclosure Letter, references to numbered
     documents are to those so referenced in the Disclosure Bundle. For the
     avoidance of doubt the contents of the Disclosure Bundle have been provided
     to the Purchaser and/or its advisors but are not deemed to be disclosed and
     are not disclosed unless reference in the Disclosure Letter is made to a
     document or part of a document in the Disclosure Bundle.

1.6  If there is any conflict between the contents of any document appearing in
     the Disclosure Bundle and the contents of this Disclosure Letter, this
     Disclosure Letter shall prevail.

2.   General disclosures

     This Disclosure Letter shall be deemed to disclose:

                                       1

<PAGE>

     (a)  any matter contained within the Agreement and all documents in agreed
          form;

     (b)  any matter:

          (i)  appearing on the company search of each of the Group Companies
               which are attached at documents 1 to 7 of File 1A of the
               Disclosure Bundle (excluding all company accounts);

          (ii) which would be revealed by a search made at the Central Registry

               of Winding-up Petitions in England and Wales;

     (c)  any matter contained within the statutory books in the last two years
          of each Group Company excluding all minutes;

     (d)  any matter:

          (i)  contained in the deeds of the Property revealed or supplied to
               the Purchaser or which would be disclosed by or as a result of
               searches in registers held by the relevant local authorities, HM
               Land Charges Registry searches, HM Land Registry searches,
               Commons Register and/or Register of Village Green searches, index
               map searches conducted in respect of the premises at Station Road
               West, Ash Vale, Aldershot

          (ii) revealed in replies to formal enquiries given by the Vendors and
               3i to the Purchaser in each case in relation to the Property at
               the date of this Disclosure Letter; and

     (e)  any matter specifically provided for in the Accounts for the 2
          financial years ended on 30 September 1999.

3.   Specific disclosures

     For convenience only, each of the following specific disclosures is
     numbered to correspond to the paragraph number of the Warranty to which it
     is considered most likely to relate. However, each matter disclosed is a
     disclosure in respect of all Warranties to which it is or may be
     appropriate and shall not be limited to the specific paragraphs referred to
     below:

Share Capital

3.1       The authorised share capital of the Company consists of:

                                       2

<PAGE>

                    295,000 A Ordinary Shares of (Pound)l.00 each;
                    205,000 Ordinary Shares of (Pound)l.00 each; and
                    25,000 B Ordinary Shares of (Pound)l.00 each.

                    Before 13 November 1997 there were also 25,000 Deferred
                    Ordinary Shares of (Pound)l.00 each. On 13 November 1997 in
                    accordance with the terms of the agreement between AB Jelly
                    and others and the Vendors and 3i dated 20 December 1996
                    these were converted into 25,000 Ordinary Shares of
                    (Pound)l.00 each.

                    On 20 August 1999 5000 A Ordinary Shares of (Pound)l.00 each
                    were transferred from 3i to Graham Woodhead. These 5000 A
                    Ordinary Shares which were transferred were converted into
                    5000 Ordinary Shares of (Pound)l.00 each.

3.2                 In accordance with the terms of a compromise agreement
                    between Reece Houghton and the Company ("the Compromise
                    Agreement") the nominee shares held in the name of Reece
                    Houghton have been transferred to the immediate parent
                    Company. A copy of the Compromise Agreement and a letter
                    from Blake Lapthorn Solicitors dated 10 April 2000 are
                    attached at document 12 of File 4 of the Disclosure Bundle.

Subsidiaries

4.2                 The business of Magnetising Techniques Limited was sold by
                    the Company to Redcliffe Magtronics Limited ("Redcliffes")
                    on 11 June 1998 for the sum of (Pounds)207,500. The
                    Magnetech business was part of the business of Mealstream
                    (UK) Limited acquired by the Company on 25 June 1990.
                    Magnetising Techniques Limited has now been re-named
                    Merrychef Projects Limited and continues to be dormant. A
                    copy of the Acquisition Agreement for the Magnetech business
                    is attached at document 33 of File 3 of the Disclosure
                    Bundle. Copies of the ancillary documents, namely, the
                    Assignment of Industrial Property Rights, the Assignment of
                    Goodwill, the Assignment of Contracts and the Technical
                    Support Agreement are attached at documents 1,2,3 and 4 of
                    File 3A of the Disclosure Bundle respectively.

Statutory
books and
documents
filed

7.2                 On 13 November 1997 25,000 Deferred Ordinary Shares of
                    (Pound)1.00 each were converted into 25,000 Ordinary Shares
                    of (Pound)1.00 each. Form 122 in relation to this conversion
                    was

                                       3

<PAGE>

                             not filed at Companies House until 23 May 2000. The
                             Company has not as yet received any penalty from
                             the Registrar of Companies or notice of penalty.

          7.2                The 1998 the Annual Return for the Company was
                             filed late and the Registrar of Companies notified
                             the Directors accordingly. No action was taken by
                             the Registrar of Companies.

                             From time to time other documents have not been
                             filed on time but no penalties have been imposed by
                             the Registrar of Companies.

          7.3                Due to the resignation of Mr Reece Houghton, a
                             written agreement has been entered into by all the
                             shareholders of the Company waiving the pre-emption
                             provisions of Article 8.8 of the Articles of
                             Association for a period from the date of the
                             shareholders' agreement (referred to above) to 31
                             July 2000. A copy of this shareholders' agreement
                             is attached at document 3 of File 1 of the
                             Disclosure Bundle.

          9.                 Only Merrychef Holdings Limited, Merrychef Limited
                             and Elvadene Limited have company seals.

          Possession of
          Documents

          11                 There are a number of commercial agreements entered
                             into by the Company of which the originals are not
                             in the possession of the Company

          Accounts

          13.1               The auditors of the Company Deloitte & Touche have
                             given unqualified approval for the annual accounts.

          13.1               The September 1996 accounts contained no warranty
                             or deferred revenue provisions. Provision for these
                             are now included in the Accounts. In the Accounts
                             research and development expenditure was provided
                             for the first time. This provision amounted to
                             (Pounds)55,000. It is estimated that the research
                             and development expenditure for the year 1999/2000
                             will be approximately (Pounds)250,000. See a copy
                             of the Accounts attached at document 33 of File 1
                             of the Disclosure Bundle

          13.2(ii)           The Company has under-provided for performance
                             related pay ("PRP") in all audited accounts since
                             PRP was introduced on 1 October 1995. The Company
                             has

                                       4

<PAGE>

                             consequently had to provide for additional
                             contributions in the following year's accounts
                             including the Accounts.

          13.2(iii)          A large number of the Company's assets have a nil
                             value in the Accounts as a consequence of the
                             annual depreciation policy. These assets continue
                             to be used by the Company.

          13.2(iv)           A debt of (Pounds)62,000 is outstanding from
                             Redcliffes in relation to its purchase of the
                             Magnetech business in June 1998, details of which
                             are set out in the  disclosure against warranty
                             4.2. This debt was not provided for in the
                             Accounts. The basis for this outstanding debt is
                             that Redcliffes claim that the Company made a
                             representation to Redclilfes that the sales figures
                             of the Magnetech business purchased would be
                             (Pounds)200,000 per year and that to date sales
                             figures are only just in excess of (Pounds)l00,000
                             per year. The Company is contesting this claim. An
                             offer of settlement has been received from
                             Redcliffes by the Company and is attached at
                             document 5 of File 3A of the Disclosure Bundle but
                             this has been rejected by the Company. Since that
                             rejection, the Company has received a letter dated
                             1 June 2000 from Stephen Parsons, the Chief
                             Executive of Redcliffes a copy of which is attached
                             at document 11 of File 3A of the Disclosure Bundle.

          13.2(iv)           There is a debt of (Pounds)44,000 outstanding from
                             GVL mbH. GVL mbH contracted with the Company to
                             acquire 53 microwave ovens. The Company understands
                             that GVL mbH are currently raising further capital
                             to finance this debt. Forty of the microwave ovens
                             remain in the possession of the Company. A copy of
                             the contract is attached at document 2 of File 2 of
                             the Disclosure Bundle.

          13.2(iv)           Hi-Spec Limited have recently gone into liquidation
                             owing the Company approximately (Pounds)ll,500.
                             This amount has yet to be provided for in the
                             Management Accounts.

          13.2(iv)           Nordson Inc. ("Nordson") entered into a verbal
                             agreement with the Company which is evidenced by a
                             purchase order dated 17 May 1999. Under the terms
                             of this agreement with Nordson the Company carried
                             out research and development work for Nordson for
                             an agreed fee of (Pounds)107,000. It was agreed
                             that one third of the consideration would be
                             payable immediately, a third would be payable on
                             completion of the research and development work and
                             the balance would be payable when Nordsen ordered
                             100 units of power supplies. The research and
                             development work has been completed by the Company
                             and Nordsen have paid two thirds of the
                             consideration due. However,

                                       5

<PAGE>

               due to difficulties in other areas of Nordson's projects they
               have not yet ordered the 100 units of power supplies and the
               balance of the consideration is therefore outstanding. A copy of
               the purchase order is attached at document 12 of File 3 of the
               Disclosure Bundle.

13.2(v)        There is attached at document 5 of File 1 of the Disclosure
               Bundle a copy of Note 10 (investments) to the 1990 consolidated
               accounts of Merrychef Limited dealing with an investment of
               (Pounds)14,003 in Mealstream (UK) Limited

13.2(vi)       The Company's depreciation policy is listed in Note 1 of the
               Accounts. See document 33 of File 1 of the Disclosure Bundle.

13.3           Redundancy costs of (Pounds)20,000 were incurred in the financial
               year ended 30 September 1999.

13.3           Consolidated profits in the Accounts were under-reported by
               (Pounds)80,564 being the tax deducted on the interest payable on
               the Jelly and 3i loans in the financial year ended 30 September
               1999. This figure has not yet been corrected but will be
               corrected in the May management accounts. Accordingly, the tax
               provision for the period was understated by (Pounds)24,572.

13.3           In 1997 there were capital losses with regard to the sale of 2
               vehicles to AB and JJ Jelly of (Pounds)3,217. It should also be
               noted that it is expected that there will be a capital loss of
               approximately (Pounds)3,400 on the sale of a car previously owned
               by Reece Houghton.

13.3           In 1998 the Magnetech business was sold creating an exceptional
               gain of approximately (Pounds)154,000 in the accounts of the
               Company to 30 September 1998. (See disclosure against warranty
               4.2)

13.3           In the period to September 1999 the Company received
               approximately (Pounds)24,650 in full and final settlement of a
               debt owed by Diodes Limited which had been written off some years
               previously.

Accounting
records

14.1           In the management accounts of the Company up to April 2000 the
               profits were under-reported by (Pounds)80,564. See the disclosure
               against warranty 13.3.

14.2           The Accounting records relating to taxation are held by the

                                       6

<PAGE>

               Company's tax advisors, Nicoloau Dearle.

14.3(c)        The Company keeps daily back-ups of its computer data in case of
               any failure of computer hardware or software. These back-ups are
               removed from the Company premises each night and then brought to
               the Company's offices the next day and placed in a safe where
               they are kept for two weeks. After two weeks the tapes are
               re-used.

               The accounting computer software requires updating or replacing
               in order to fulfil user requirements. However, it remains fully
               operational.

Management
Accounts

15             There was a difference between the stock figure in the management
               accounts and the Accounts. This is due to the fact that the stock
               figure is not updated accurately each month and the warranty, bad
               debt and deferred revenue provisions are not altered on a monthly
               basis. These and other procedures are updated or altered on an
               annual basis.

Events since
the accounts
date

16.1(a)        Current sales figures for March and April of this year are higher
               than this time last year by (Pounds)412,000.

16.1(b)        The management accounts show that there has been an increase in
               debtors by (Pounds)650,000 during the months of March and April
               2000 as compared with the months March and April 1999. This is as
               a result of the increase in the sales figures for March and April
               2000. (See disclosure against warranty 16.1(a))

16.1(c)        Overall material costs in the current year are generally
               consistent with those of the previous year.

16.1(c)        Material costs in relation to the Microaire ranges have risen by
               approximately 12 per cent since last year largely due to the
               strength of sterling. Changes in the specification of the
               Evolution Oven have increased the material cost. (Please see
               document 7 of File 1 of the Disclosure Bundle) This will be off
               set to a certain extent by higher planned average selling prices.
               Pre-production prototypes of the Evolution oven incurred a
               considerably higher unit material cost. Technical specification
               of the Merrychef Evolution oven is provided at document 1 of File
               8 of the Disclosure Bundle.

                                       7

<PAGE>

16.2             Merrychef Limited is the only trading company of the Group
                 Companies.

16.3             The nature of the Company's business is that it receives large
                 bulk orders for capital products on an intermittent basis.
                 Therefore the Company's sales from year to year will inevitably
                 fluctuate depending on its customers' projects. The Company has
                 not lost any material customers and Scottish and Newcastle plc
                 remains its largest customer constituting approximately 12% of
                 the Company's entire sales revenue.

                 It should be noted that the expected invoice sales to Whitbread
                 plc will be materially less than forecast in August 1999 but
                 will not be materially less than was represented to the
                 Purchaser at presentations and meetings given by the Company's
                 management in April and May 2000. Equally it should be noted
                 that several other customers are expected to purchase
                 significantly more than had been budgeted.

16.3             The supplier of transformers to Merrychef Limited has cut back
                 its production of lower value transformers but has confirmed to
                 Merrychef Limited that it will continue to supply Merrychef
                 Limited with the higher value transformers it orders. In any
                 event the transformers would be readily available from other
                 plants owned by the supplier.

16.4(a)(ii)      Under the terms of the Compromise Agreement with Reece Houghton
                 (attached at document 12 File 4 of the Disclosure Bundle) a net
                 payment of (Pounds)71,713.20 was paid to him by the Company.
                 Approximately (Pounds)34,000 of tax and national insurance
                 contributions in respect of the payment to Reece Houghton will
                 be paid by the Company in June 2000.

16.4(a)(ii)      In the ordinary course of the Company's existing Company car
                 policy, Graham Veal's vehicle will be replaced with effect from
                 the end of May 2000 and Nigel Thorneywork's vehicle is due to
                 be replaced at the end of August 2000

16.4(b)(ii)      Merrychef Limited has a right of first refusal in relation to
                 the entire issued share capital of Marren Microwaves Limited.
                 Attached at document 28 of File 3 of the Disclosure Bundle is a
                 copy of the agreement with the shareholders of Marren
                 Microwaves.

                                       8

<PAGE>

16.4(c)       Under Schedule B of the Compromise Agreement (document 12 File 4
              of the Disclosure Bundle) Reece Houghton has agreed to purchase
              various items from the Company including a computer for
              (Pounds)1,500.

16.4(f)       A dividend of (Pounds)l12,171 was declared in the 1998/1999
              Accounts and paid to 3i on 24 March 2000.

16.5          See disclosure against warranty 13.2(iv)

Financial
commitments
and
borrowings

17.1          The Company has a duty deferment guarantee from the Bank of
              Scotland for the amount of (Pounds)30,000. A copy of the relevant
              documentation is attached at 36 of File 1 of the Disclosure
              Bundle.

17.1          In March 2000, the Company was in breach of two of its bank
              covenants in relation to cash available for debt service. Oral
              assurance has been given to the Company by the Bank and the
              Company believes that this matter has been resolved.

              See also the disclosure against warranty 28.2.

17.5          The Company has a car leasing agreement with Lex Vehicle Leasing
              Limited. A copy of the agreement and addendum to this agreement is
              attached at documents 21 and 23 of File 3 of the Disclosure Bundle
              respectively.

              The Company further has a leasing agreement in respect of a fork
              lift truck, two pension scheme arrangements, a life assurance and
              private health scheme and a long term disability scheme (see
              schedule 6 of the Agreement).

17.6          In the previous 10 years, the Company has received grants
              /subsidies in respect of:

              a) Y2K training;
              b) ISO 9000; and
              c) general training.

17.7          See disclosure against warranty 17.5

Defective
Products
Services

                                       9

<PAGE>

18             There are at any one time a number of warranty claims in respect
               of alleged defective products but the number of such claims has
               not materially increased over the previous 2 years. A general
               statement by the Company regarding defective products is attached
               at document 19 of File 7 of the Disclosure Bundle.

18             On 1 January 1998 the standard warranty for microwave ovens
               increased from 2 years to 3 years.

19.1           The Company does not carry professional indemnity insurance.

19.2           Mark Eaglestone an employee of the Company suffered an injury at
               work on 7 February 2000 when acid splashed in his eye. This may
               give rise to a claim for compensation but no claim has been made
               to date or is expected to be made by Mr Eaglestone.

               A Mr D Taylor suffered a scald at work on 26 January 1999 which
               may give rise to a claim for compensation, but no claim has been
               made to date or is expected to be made by Mr Taylor. Please see
               document 25 of File 4 of the Disclosure Bundle.

19.2           In May of this year an employee named Nhut Nguyen suffered a
               shock as a result of the explosion of a capacitor. No claim to
               date has been made nor is any claim expected to be made by Nhut
               Nguyen.

19.2           See health and safety policy document attached at document 24 of
               File 4 of the Disclosure Bundle and the accident report book
               attached at document 23 of File 4 of the Disclosure Bundle.

19.2           In November/December of 1998 a chair collapsed under an employee
               called Brian Cotterill. He had at that time already been
               suffering from back problems. Sun Alliance Insurance has paid him
               (Pounds)8,088 in full and final settlement of this claim. Please
               see document 25 of File 4 of the Disclosure Bundle.

19.2           Details of car insurance claims is attached at document 24 of
               File 5 the Disclosure Bundle.

Contracts and
commitments

                                       10

<PAGE>

20.1(c)        Under the terms of the Bass Agreement, Bass may terminate the
               Agreement on a change of ownership of Merrychef Limited. Please
               see documents 6 and 7 of File 2.

20.1(d)        The MC1000 is an entry level microwave oven which the Company is
               obliged to offer in its range of products in order to receive
               major contracts. This, however, is a very low selling product by
               the unit. The material gross margin in relation to the MC1 000 is
               approximately 14.7% per cent.

20.1(e)        The lease agreement in respect of the company cars cannot be
               terminated on giving 3 months notice or less. See Lex Master
               Lease Agreement at documents 21 and 23 of File3 of the Disclosure
               Bundle.

20.1(e)        There are certain 3 month or more rolling purchase orders to
               which the production is tied. The most notable are with Rinnai,
               Sampo, Ripley Engineering and Mori Associates. A copy of the
               agreement with Sampo is attached at document 26 File 3 of the
               Disclosure Bundle.

20.2           A list of the Company's material customers is listed at document
               1 of File 2 of the Disclosure Bundle. Please also refer to
               documents 5 to 20 and 26 to 37 of File 2 and document 1 of File 3
               of the Disclosure Bundle.

Terms of
Trade

21             Under the Company's terms of trade, microwave ovens have a 3 year
               warranty and combination microwave ovens have a 1 year warranty.
               However, some of the Company's larger customers received a
               preferential warranty of 3 years in relation to microwave ovens
               prior to its introduction in 1998. Some larger customers receive
               a 2 or 3 year warranty on microwave combination ovens.

               The Company also has maintenance contracts which are renewable on
               an annual basis. Copies of the maintenance contract documentation
               is attached at document 24 File 7.

Licences and
consents

22.1           The Company believes it may not have all necessary software
               licences. An audit for requirements of these licences is
               currently being carried out. These licences comprise shrink wrap
               licences in relation to PC's used in

                                       11

<PAGE>

               the business of the Company and the cost of obtaining such
               licences will not exceed (Pounds)l0,000.

22.1           The Company's products are required to conform with the Low
               Voltage Directive ("LVD") and the Electra Magnetic Compatibility
               Directive ("EMC"). A copy of the LVD and EMC licences together
               with other British Standards certificate's/licences are attached
               at document 26 File 7 of the Disclosure Bundle. The Company's
               products also required to be CE marked.

22.2           LVD and EMC licences are limited in duration but all products
               conform to current EC legislation at the time of testing. There
               are no other approvals required particularly UL (i.e. US)
               approval as the Company does not sell to the United States.

Trading
Partners

23.1           The Company is a member of CEDA, BSI and the Guildford Chamber
               of Commerce. The cost of membership of these associations does
               not in total exceed (Pounds)2,000 per annum.

23.2           The Company has agreements in place with certain authorised
               service companies under which service engineers receive
               preferential discounted rates of between 25 and 40 per cent for
               the parts they purchase.

23.2           Negotiations between the Company and GVL mbH are currently taking
               place whereby GVL mbH will grant exclusive manufacturing rights
               to the Company to produce an oven based on the Turboaire 2.

23.2           The Company has entered into commercial discussions with VCK srl
               regarding the development of an oven to go into a hot food
               vending machine. The Company is also negotiating a manufacturing
               agreement and joint distribution agreement with Jenton
               International Limited ("Jenact") for non-catering products.

23.3           The Company has entered into a written distribution agreement
               with Ubert Gastrotechnik GmbH a copy of which is attached at
               document 21 of File 2 of the Disclosure Bundle. The Company has
               not entered into any other written distribution agreements.

23.3           Attached at document 31 of File 3 is a copy of an

                                       12

<PAGE>

               agreement between Henny Penny Corporation and the Company. This
               agreement is terminable on 3 months notice. The Company does not
               know if this agreement has in fact been formally terminated.
               There has been no trading activity between Henny Penny
               Corporation and the Company for some years.

23.3           In 1999 following a decision of the board authorising the opening
               of discussions with Amana Company LP ("Amana") the then managing
               director of the Company contacted Amana. One of the options was
               that Amana might have been appointed as distributor for the Group
               in the United States. A number of sample ovens were supplied to
               Amana following the entering into of a confidentiality agreement
               by Amana and the Company. It is understood that the discussions
               were terminated and an e-mail dated 22 May 2000 has been sent to
               Amana requesting the return of the ovens. All the relevant
               documentation and correspondence is attached at document 25 of
               File 3 of the Disclosure Bundle. The Company is not aware of any
               other distribution agreements. The Company's directors and Reece
               Houghton have signed a statement confirming that there is no
               contractual relationship between Amana and the Company.

23.3           The Company has a number of regular buyers which the Company
               terms as "distributors." With the exception of Ubert,
               Gastrotechnik GmbH the Company has not entered into any formal
               agreements with these "distributors"

Competition
and trade
regulation law

24.1(a)        The Company has a policy of only supplying replacement parts to
               recognised microwave service engineers and companies

24.1(b)        The Company believes that it has approximately 30% of the
               commercial combination microwave oven market in the United
               Kingdom; and 10% of the microwave oven market in the United
               Kingdom.

               With regard to "total cooking equipment" the Company believes
               that it has approximately 1% of the European market.

Compliance
with laws

                                       13

<PAGE>

25.2                In August, 1999, the Company had a VAT review and in July
                    1997, the Company had a PAYE inspection. Neither the review
                    nor the inspection has resulted in any material adverse
                    consequences to date.

Litigation and
disputes

26.1(b)             See disclosure against warranty 13.2(iv)

26.1(b)             The Company supplied 7 microwaves to Sainsburys Supermarkets
                    plc ("Sainsburys") which were subsequently stolen from
                    Sainsburys. The ovens were actually delivered to Sainsburys
                    pursuant to an official order number from Sainsburys. There
                    is a dispute over how the order number was actually obtained
                    as there is evidence to suggest that the order number may
                    have been fraudulently obtained by an employee of
                    Sainsburys' head office. The ovens have been recovered and
                    are held by the police but no payment has yet been made to
                    the Company by Sainsburys in respect of these microwaves
                    ovens. The Company does not expect to suffer any loss as a
                    result of this incident as it will either receive payment
                    from Sainsburys or will take the ovens back from the custody
                    of the police. Until the boxes are opened and the microwaves
                    ovens are tested, it is not known whether the microwaves are
                    in a merchantable condition.

26.1(b)             Turbochef has informally indicated to certain customers that
                    the Company may have infringed some of its patents. The
                    managing director of Turbochef has denied that he knows of
                    any potential or pending claim. Turbochef has a patent
                    relating to ovens with catalytic converters on application
                    for registration in the UK which has not been granted. The
                    management believes that Turbochef's US patent applies only
                    in respect of its own oven with a heat reservoir. The
                    Group's lawyers have indicated to the Company that the ovens
                    do not infringe this patent. See attached at documents 6, 8
                    and 9 of File 8 of the Disclosure Bundle the correspondence
                    and documentation relating to the alleged infringement of
                    the Turbochef patent.

26.1(b)             There is a potential intellectual property claim made
                    against the Company by Unice International Limited ("One
                    Shot"). One Shot claim that the Company was in breach of a
                    confidentiality agreement dated 24 March 1999 by using One
                    Shot's idea for a packaging relating to a microwave
                    defroster. Negotiations under the agreement had broken

                                       14

<PAGE>

                    down between the parties over a failure to agree terms on
                    distribution rights. On discovering that the Company had
                    filed a patent in respect of microwave defroster, One Shot
                    threatened legal action against the Company if the patent
                    was not assigned to them on the basis that the Company had
                    used information which was proprietary to One Shot. The
                    Company rejected this claim on the basis that it had
                    discovered the idea prior to the agreement with One Shot. No
                    further correspondence has been received by the Company from
                    One Shot since the Company's letter dated 10 September 1999
                    at document 5 at File 8 of the Disclosure Bundle. Attached
                    at document 5 of File 8 of the Disclosure Bundle is the
                    documentation and correspondence relating to this issue.
                    Please also refer to document 27 of File 3 of the Disclosure
                    Bundle.

Ownership and
condition of
assets

27.1                Tools used in production but which do not belong to the
                    Company are listed in document 18 of File 1.

27.1                The Company is currently testing 3D software supplied by NT
                    CAP CAM. The Company intends to buy the software for
                    (Pounds)l0,000 in June 2000.

27.3                Robert Gale paid the Company an additional (Pounds)2,500 in
                    relation to his company car. This was done to allow him to
                    upgrade his Company car.

27.4                In common with most manufacturing businesses, the Company
                    relies on the use of assets (e.g. tools) owned by
                    sub-contractors for the manufacture of component parts.

27.6                The Company's stock provision policy that is the first
                    year's stock supply is valued at full cost, between 1 and 2
                    years stock is valued at 50% and for 2 or more years stock
                    is valued at nil.

Charges and
incumbrances
over assets

28.1                See disclosure against warranty 17.5.

Intellectual
Property

29.1(a)             See disclosure against warranty 22.1.

                                       15

<PAGE>

29.1(a)  The Turboaire patent is registered in the UK, Germany, Italy France
         and the USA. The trade mark is registered in the UK and there is a CTM
         (European) registration pending.

         The Company is aware that Turbochef has registered "Turboair" in the
         United States. See Marks and Clerks Intellectual Property
         correspondence attached at document 8 of File 8.

29.1(a)  The Warrantors are aware that there is a company in Malaysia which
         has registered in the UK Trade Marks Register the name of "Merrychef"
         for a range of food products. However, the Company is unable to take
         any action to prevent this as the company in Malaysia has registered
         the name for a different class of products to the classes under which
         Merrychef has registered the name "Merrychef".

29.2     See disclosure against warranty 26.1(b) with regard to third party
         infringement and potential litigation by One Shot and Turbochef
         respectively.

29.3     If the Company enters into a contract with GVL mbH, as detailed in the
         disclosure against warranty 13.2 (iv). GVL mbH will obtain the right to
         make use of the Turboaire technology should the Company stop producing
         the Turboaire ovens in exchange for a royalty. At the date hereof a
         contract with GVL mbH has not been signed.

29.3     The Company has adopted a policy not to register every item of
         intellectual property which is potentially capable of registration.

29.5     The schedule of intellectual property registrations identifies those
         registrations which have been abandoned by the reference "ABD" and this
         schedule and a letter is attached as document 9 of File 8 of the
         Disclosure Bundle.

29.6     See disclosure against warranty 29.5

29.7     See disclosure against warranty 26.1(b).

29.8     The Company has pending US trade mark applications for "Merrychef" and
         for "Mealstream". The Company's Trade Mark Agents have carried out
         searches which have revealed that these two marks are available for
         use. The Company will have to file a letter of intent in the US
         notifying its intention to use the marks. The Company has

                                       16

<PAGE>

                    not yet done so on the basis that the letter of intent gives
                    the Company a "window of opportunity" to exploit the mark
                    for a period of 6 months. The Company would therefore need
                    to put in place a US distribution arm before filing the
                    letter of intent so that it can take maximum advantage of
                    the 6 month period to avoid any argument that the marks are
                    not being exploited.

29.8                The Company has a UK application pending for the mark
                    "XCELAIRE". A trade mark search has been carried out and has
                    revealed a conflicting "EXCEL" which is currently being used
                    by Glynwed Limited, a catering Company. About 2 months ago
                    the Company's Business Development Director Graham Veal
                    contacted this organisation and has obtained a verbal
                    agreement from Glynwed Limited that it would not object to
                    the Company's proposed use of the mark. The Company is
                    awaiting written confirmation from Glynwed Limited in this
                    respect.

29.9                The Company has two UK registrations in the name of
                    Mealstream (UK) Limited: "MICRO-AIRE" (No. 945009) in class
                    11 and "MEALSTREAM" (No. 1104876) in class 11. These marks
                    are to be assigned to Merrychef Limited.

29.12               See disclosure against warranty 29.13

29.14               A list of the names used by any Group Company is contained
                    in document 1 of File 1 of the Disclosure Bundle.

Data
Protection Act

30.3                The Company has no procedures.

Employment

31.1                Please refer to documents 1 and 2 of File 4 of the
                    Disclosure Bundle. Copies of the directors' service
                    contracts together with subsequent correspondence are
                    attached at documents 5,6,7,8 and 9 of File 4 of the
                    Disclosure Bundle. Variations to the above service contracts
                    are attached at document 10 of File 4 of the Disclosure
                    Bundle.

31.2                The Company keeps personnel files which includes contracts
                    of employment together with starter and leaver
                    documentation. However, it is likely that not all
                    correspondence during the interim period of employment are
                    filed in the personnel records.

                                       17

<PAGE>

                    See Company Handbook attached at document 3 of File 4 of the
                    Disclosure Bundle. This was last updated in 1997.

          31.3      Graham Woodhead provides his services to the Company under a
                    consultancy agreement A copy of the consultancy agreement is
                    attached at document 18 of File 4.

                    Furthermore, John Whirton, Mona Taylor and Pauline Stephens
                    invoice the Company for their services. Details of their
                    consultancy agreements are contained at documents 19, 20 and
                    21 of File 4 of the Disclosure Bundle. Other trainers are
                    used on an occasional basis. Ray Deare works as a contract
                    draughtsman and Stewart Rivers is the Quality and Health and
                    Safety consultant whose company is paid on a daily basis.

          31.4(b)   A salary review was implemented on 1 April 2000 resulting in
                    an average across the board increase in salaries of
                    approximately 5%. Details of the directors' current salaries
                    are set out in document 10 of File 4 of the Disclosure
                    Bundle.

          31.4(b)   Peter Woodcraft's benefits have been increased to include a
                    company car.

          31.5      The Company operates a management bonus scheme. In 1998 the
                    total amount paid out (excluding that paid to the directors)
                    was (Pounds)60,000. In 1999 this sum was (Pounds)30,000
                    divided between approximately 20 people. A discretionary
                    management bonus scheme is also in operation within the
                    Company. In 1999 a discretionary payment was made as the
                    management bonus scheme was not triggered. This amounted to
                    approximately (Pounds)30,000. Additionally, bonuses and
                    commissions are sometimes paid to certain service workmen
                    with regard to overtime and commission for the sale of
                    ovens.

          31.5      An example of a letter relating to a bonus is attached at
                    document 22 of File 4 of the Disclosure Bundle.

          31.6      A service engineer Mr David Racine left the Company in 1999
                    owing the Company (Pounds)896.64. The Company deducted the
                    outstanding sum from his wages and did not pay his expenses
                    claim amounting to (Pounds)700. The Company has since paid
                    (Pounds)270 of the expenses claim in full and final
                    settlement. The Company believes the matter has now been
                    resolved.

                                       18

<PAGE>

          31.6      Claims for expenses incurred by employees during the course
                    of business are received on a regular basis.

          31.7      A share option scheme had informally been proposed in 1997
                    by the former managing director of the Company (Reece
                    Houghton) to certain employees but no specific details have
                    been provided. This proposal was not sanctioned by the board
                    of directors of the Company.

          31.8      See disclosure against warranty 19.2

          31.9      There are three compromise agreements in place which
                    document the termination of the following employees: Reece
                    Houghton (document 12 of File 4) who received (Pounds)95,000
                    (less tax); Helen Parris (document 14 of File 4), who
                    received (Pounds)19,118 (no tax deducted); and Diana
                    Kempster (document 15 of File 4), who received
                    (Pounds)8,671.52 (no tax deducted).

          31.10     Statutory notice periods apply, save in respect of the
                    directors of the Company, whose contracts cannot be
                    terminated by 12 weeks' notice.

          31.10     Sandra Lemoigne a regional export sales manager has tendered
                    her resignation from the Company with her employment due to
                    end on 2 June 2000.

                    Leah Harris a business development assistant has tendered
                    her resignation from the Company with her employment due to
                    end on 9 June 2000.

                    Mark Sinden senior development engineer has tendered his
                    resignation from the Company with his employment due to
                    end on 30 June 2000.

                    These employees are leaving the Company to further their
                    careers and will be paid their normal salary and any holiday
                    entitlement due to them upon their termination of employment
                    with the Company.

          31.12     Binh Nguyen's employment was terminated on 20 April 2000.
                    The reason for terminating his employment after four months
                    service was that he was not suitable to carry out the
                    activities required of him in the Company's ordinary course
                    of business. His employment was terminated during his
                    probationary period. Binh Nguyen has made no appeal against
                    the decision to terminate his employment nor is any appeal
                    anticipated.

                                       19

<PAGE>

Industrial
relations

32.3            See disclosure against warranty 17.6

Pensions

33.5            No policies or governing documentation have been supplied in
                relation to scheme 1, scheme 3, or scheme 5.

33.9            As referred to in relation to warranty 33.5, we have not seen
                the governing documentation for either scheme 1 or scheme 3 but
                these may well contain indemnities from the Company in favour of
                the trustees. We can however confirm that even if this is the
                case no such indemnities have been invoked.

Property

34.1(i)         A copy of the lease of the Brinell Factory is attached at
                document 9 of File 6 of the Disclosure Bundle.Please also refer
                to the Deed of Agreement for the Property attached at document 8
                of File 6 of the Disclosure Bundle.

34.1(i)         So far as the Vendors are aware, the Group has occupied
                properties at, the Vendors believe, the following addresses:-

                a)  Premises at Terrace Road Walton-on-Thames. The occupation
                    was largely freehold and part leasehold and was transferred
                    to Ford and Weston Holdings Limited.

                b)  Premises at Perram Works, Merrow, Guildford which was
                    transferred to Romarc Limited in or around 1982;

                c)  Unit 10, Merrow, Guildford which was transferred in or
                    around 1977;

                d)  Unit 6 and the 1st floor office, Merrow, Guildford. The
                    lease of the first floor office was surrendered in or around
                    1983. The lease of unit 6 expired in 1984.

                e)  Premises at Moorfield Road, Slyfield Industrial Estate,
                    Guildford. On 18 November 1996 the Company and F.G Barnes &
                    Sons Limited entered into a Surrender and Deed of Release, a
                    copy of which is attached at document 2 of File 6 of the
                    Disclosure Bundle, relating to the termination of a lease of
                    the premises at Moorfield Road. The aggregate costs incurred
                    in

                                       20

<PAGE>

                    terminating the lease amounting to (Pounds)146,864.91 has
                    been paid by the Company;

                f)  Depot at Rawdon, Leeds which was terminated in or around
                    1980;

                g)  10 Craddock Road, Reading which the lease was assigned in or
                    around 1980;

                h)  Premises at Crawley, Sussex, which occupation was terminated
                    in 1990.

34.6            The Company has on several occasions made complaints in relation
                to the parking of vehicles obstructing access to the front of
                the Property, by a neighbouring Company, DC Cobb.

Encumbrances

35.1            The lease of the Company premises contains a full repairing
                covenant except with regard to the roof. A copy of the lease is
                attached at document 9 of File 6 of the Disclosure Bundle.

35.1            The rateable value of the Company's premises has fallen by
                approximately 10% to (Pounds)93,050 which may be increased on a
                subsequent review.

35.1            Station Road West is has not been formally adopted by the local
                authority. However, the road has been maintained throughout the
                duration of the lease to the Company.

39.4            The next rent review for the Property is due in December 2001
                and the terms of the lease provide for an upwards only review.

Planning
matters

39.3            The Company only received oral consent from the landlord with
                regard to certain alterations. These alterations comprised
                improvements to the board room on the ground floor and the room
                above it. The Landlord is aware of all the alterations and is a
                frequent visitor.

Condition of
the Properties

                                       21

<PAGE>

40.5            The Vendors are unaware as to the nature of materials used in
                the alteration and/or construction and/or repair to the
                Property.

40.6            The roof includes asbestos made cement.

Tax
disclosures

2.2             Arising as a direct result of the termination paid to Reece
                Houghton on 4 May 2000 under the terms of the Compromise
                Agreement dated 2 May 2000 and made between the Company and
                Reece Houghton but only to the extent that such Liability to
                Taxation has not been accounted for by the Company and for the
                purposes of this Clause 2.2 only reference is made to Tax
                Disclosures 4.3 and 4.9 in calculating such additional Liability
                to Taxation.

4.17            In 1990 the assets and trade of Mealstream (UK) Limited were
                transferred to Merrychef Limited. The assets were transferred at
                book value. The transfer will have been deemed, for the purposes
                of corporation tax on chargeable gains, to have taken place on a
                no loss no gains basis.

                In 1993 a reorganisation of the Group was carried out. The
                assets of each of the subsidiaries of Merrychef Limited were
                transferred up to Merrychef. Again, these transfers will have
                taken place on a no loss no gains basis for the purposes of
                corporation tax on chargeable gains.

4.15(a) &       Twilight Band Limited owes (Pounds)50,000 to Elvadene Limited
                under a debenture. The original cost of this debenture in the
                books of Elvadene Limited is (Pounds)22,164. The debenture was
4.20            assigned to Elvadene on 26th January 1983, being the date of the
                acquisition by Elvadene of the entire issued share capital of
                Twilight Band from Ford and Western Holdings Limited. The
                debenture was purchased by Elvadene for approximately
                (Pounds)24,000. It is considered that the debenture is a debt on
                a security and that a payment by Twilight Band of the full
                amount due under the debenture could create a chargeable gain in
                Elvadene. Accordingly, the debenture remains outstanding with a
                face value of (Pounds)50,000 although no interest is being
                charged by Elvadene.

4.3 and 4.9     Please refer to disclosure against warranty 16.4(a)(ii) of the
                Disclosure Letter.

                Payments are made gross to GM Associates, Stewart Rivers and a
                number of oven trainers under various consultancy

                                       22

<PAGE>

                agreements. The Company has no reason to believe that the
                consultants are anything other than self employed.

4.3 and 4.9     Please refer to the disclosure against warranty 16.4(a)(ii).
                The Compromise Agreement provided that the termination payment
                to be paid after the issue of the P45. However, the P45 was sent
                to Reece Houghton on 25 May 2000. Accordingly, higher rate tax
                at 40% should have been deducted, however, only basic rate tax
                of 22% was deducted together with employees NIC. The payment was
                made to Reece Houghton on May 4 2000.

4.4 and 4.6     In 1997 the Company paid corporation tax of (Pounds)141.76 late.
                Interest was charged. Please refer to document 32 of File 1 of
                the Disclosure Bundle.

                In 1997 the Company had a PAYE audit. During December of each
                year the Company gives Marks and Spencer vouchers. No tax is
                deducted on such vouchers and they are not declared on the pl
                Ids. The Company pays the tax on behalf of the employees each
                year in respect of the vouchers. Please refer to document 32 of
                File 1 of the Disclosure Bundle.

                In 1998 a CT61 was filed late. Interest of (Pounds)179.17 was
                paid.

                All computations for the years up to and including 30 September
                1998 have been agreed. There are no outstanding queries. You are
                referred to the corporation tax computations disclosed at
                document 32 of File 1 of the Disclosure Bundle.

                The corporation tax computations for the period ended 30
                September 1999 are in draft. The group intends to make a group
                relief claim. You are referred to disclosure document 32 of File
                1 of the Disclosure Bundle.

4.6 and 4.7     The Company was subject to a VAT audit last year.  No issues
                were raised.

4.13(b)         The companies are grouped for VAT purposes.  The VAT
                representative member is 211 8156 94. Please refer to documents
                28 of File 1 of the Disclosure Bundle.

4.15(a)         There are four dormant subsidiaries. If these dormant
                subsidiaries are wound up there may be a charge to corporation
                tax on chargeable gains.

                Please also refer to disclosure against 40.6.

                                       23

<PAGE>

4.15(b) and     Disposal of assets to Reece Houghton.  Please refer to
4.16            disclosure against warranty number 13.3 and 16.4(c).  The
                Company is not aware that any PAYE/NIC is due on the sale.

                A number of employees have been lent ovens for use at home. The
                value of each oven is approximately (Pounds)1,500, although
                there second hand value is approximately (Pounds)700 (this value
                varies). The ovens are not declared as a benefit in kind.

4.21 -          Please refer to the disclosure against warranty 3.1.

Yours faithfully

/s/ Reece Houghton
----------------------------
Reece Houghton

/s/ Joyce Keywood
----------------------------
Joyce Keywood

/s/ Robert Gale
----------------------------
Robert Gale

/s/ Graham Veal
----------------------------
Graham Veal

/s/ Simon Barker
----------------------------
Simon Barker

/s/ Nigel Thorneywork
----------------------------
Nigel Thorneywork

                                       24

<PAGE>

We confirm receipt of your letter dated 14 June 2000 of which the above is a
true copy.

/s/ [ILLEGIBLE]
----------------------------
Berisford Industrial Holdings Limited

                                       25

<PAGE>

                                   Annexure A

                         Index to the Disclosure Bundle

                                     File 1

No.  Description

1.   Merrychef Holdings Group Structure including a brief history and previous
     names used

2.   Certificates of Incorporation and Change of Name together with Articles of
     Association

3.   Company statement regarding share options/Waiver of Pre-emption
     Rights/Written Resolution/Temporary Waiver of the Articles of Association

4.   Directors names and addresses

5.   Notes to Financial Statements and Accounts for the year end 30 September
     1990 and 1999

6.   Series of accounts for the year end 30 May 2000

7.   Manufacturing Board Report for April 1999 and April 2000

8.   Merrychef Limited Consolidated Cashflow

9.   Blank

10.  Merrychef Limited Fixed Assets 1999/2000

11.  Details of share ownership (Note: Reece Houghton has transferred 4,000
     shares to his wife)

12.  Annual Return up to 7 November 1999

13.  Minutes of Merrychef Holdings Limited

14.  Bank details

15.  Various notes relating to the Company

16.  Terms and conditions of sale

17.  Correspondence to directors relating to their disposal of their share
     capital

18.  Merrychef Limited Current Tooling Register

                                       1

<PAGE>

19.  Memorandum relating to Member Companies of the Group

20.  Extract from a profit and loss account

21.  Merrychef Limited consolidated Profit and Loss Account for 1 October 1999
     to 30 April 2000

22.  Merrychef Holdings Accounts - April 2000

23.  Blank

24.  Consolidated Balance Sheet as at 30 April 2000 for Merrychef Limited

25.  Blank

26.  Merrychef Limited - Bank of Scotland covenant calculations

27.  Cashflow cover for Bank borrowings as at 30 April 2000

28.  Correspondence relating to the Group treatment VAT

29.  Inland Revenue correspondence on PAYE and NIC together with dispensation

30.  Details of private fuel benefits and the payable

31.  Blank

32.  Inland Revenue Documentation

33.  Accounts for 1998 & 1999

34.  April 2000 management accounts

35.  Blank

36.  Bank of Scotland duty deferment guarantee documents

                                       2

<PAGE>

                                     File 1A

No.  Description

1.   Merrychef Holdings Limited Company Search Report

2.   Elvadene Limited Company Search Report

3.   Merrychef Limited Company Search Report

4.   Mealstream (UK) Limited Company Search Report

5.   Pumpcroft Limited Company Search Report

6.   Twilight Band Company Search Report

7.   Merrychef Projects Limited Company Search Report

                                     File 2

No.  Description

1.   Statement relating to significant contracts

2    GVL Turboaire Development Project Contract

3.   GVL mbh Manufacturing Agreement

4.   VCK SL Manufacturing Agreement

5.   Supply Proposal for Microwave and Microwave Combination Ovens to Asda
     Stores plc

6.   Bass Taverns Supply Agreement and related correspondence

7.   Conditions of contract for the supply of goods and services to Bass Taverns
     Limited

8.   Correspondence relating to supply proposal for City Centre Restaurants (UK)
     Limited

9.   Correspondence relating to the Renewal of Sole Supply Pricing Proposal
     regarding Fuller Smith and Turner plc

10.  Proposal for the Supply of Microwave and Microwave Combination Ovens
     regarding Granada Purchasing Limited

                                       3

<PAGE>

11.  Group Purchasing Agreement for Rank Leisure Holdings plc

12.  Tender to supply microwave ovens and microwave combination ovens to
     Scottish and Newcastle Retail Limited

13.  Scottish and Newcastle proposal for the renewal of Merrychefs sole supplier
     nomination with Scottish and Newcastle Limited

14.  Correspondence with Bass Leisure Retail regarding Vantage Inns

15.  Asda Stores plc Supply Proposal 1998-2000

16.  Scottish and Newcastle proposal for Sole Supply Nomination with Scottish
     and Newcastle Retail Limited

17.  Tesco plc proposal

18.  Whitbread - Proposal for the Supply of Microwave and Microwave and
     Combination Ovens

19.  Scottish and Newcastle Retail Limited QARAC Margin Analysis (example)

20.  Whitbread - Contract GC1216P

21.  Ubert Gastrotechnik GmbH Agreement

22.  Nordson Corporation Manufacturing Agreement

23.  Redcliffe Magtronics Limited Technical Support Agreement

24.  Redcliffe Magtronics Limited Agreement for the Aquisition for the Magnetech
     Business

25.  Blank

26.  Bass Taverns Limited Supply Agreement

27.  Bass Taverns Limited - Conditions of Contract for the Supply of Goods and
     Services

28.  City Centre Restaurants Supply Proposal

29.  Fuller Smith & Turner - Renewal of Sole Supply Pricing Proposal

30.  Granada Purchasing Limited - Supply Proposal

31.  Blank

                                       4

<PAGE>

32.  Rank Group Pricing Proposal

33.  Rank Divisions - Users Guide to Merrychef

34.  Tesco Pricing Agreement

35.  Whitbread plc - Users Guide to Merrychef

36.  Scottish and Newcastle Retail Managed Estate - Supply Tender

37.  Asda Stores plc - Supply Proposal

                                     File 3

No.  Description

1.   Whitbread plc - Contract GC/1216P Correspondence/Agreement/Annex

2.   Microcare Agreement

3.   Southampton Football Club Agreement

4.   Blank

5.   VCK Spain - quote for development of vending oven

6.   Norsden Corporation Manufacturing agreement

7.   GVL mbH - correspondence and agreement

8.   Concept Product Design - Non-Disclosure and Protective Agreement

9.   Charcuterie Limited agreement

10.  Hot Sandwich Project - Agreement and Termination Letter

11.  Compromise Agreement (Reece Houghton)

12.  ACT Spectral Purchase Orders and 10" System Development Proposal

13.  JenAct Limited Manufacturing Agreement

14.  Lex Accident Management Agreement

15.  RICHO Purchase, Services and Supplies Agreement

                                       5

<PAGE>

16.  Microcare Systems Limited Agreement

17.  Redcliffe Magtronics Technical Support Agreement

18.  Hot Sandwich Project Correspondence and Agreement

19.  Charcuterie - Agreement and Notice of Termination

20.  Rinnai - Correspondence and Distribution Agreement

21.  Lex Vehicle Leasing Master Hiring Agreement

22.  Craig Copiers Limited Service Agreement

23.  Lex Vehicle Leasing Addendum to the Master Hiring Agreement

24.  Hitachi Europe Limited - Note to Confirmation

25.  Amana - Correspondence and Agreement

26.  Sampo Corporation Joint Agreement

27.  Unike International Confidentiality Agreement

28.  Marren Microwave Limited Agreement

29.  Nt Cad Cam Purchaser Order Requisition Form

30.  TSSC (Statement with regard to distribution in Dubai)

31.  Henny Penny Corporation - Commercial Heads of Agreement

32.  List of Key Distributors for Merrychef

33.  Redcliffe Magtronics Limited - Agreement for the Acquisition of the
     Megnetech Bushess.

                                       6

<PAGE>

                                     File 3A

No.    Description

1.     Redcliffe Magtronics Limited - Assignment of Industrial Property Rights

2.     Redcliffe Magtronics Limited - Assignment of Goodwill

3.     Redcliffe Magtronics Limited - Assignment of Contracts

4.     Redcliffe Magtronics Limited - Technical Support Agreement

5.     Redcliffe Magtronics Limited - Without Prejudice Letter

6.     City Centre Restaurants (UK) Limited - 2000-2001 Supply Proposal

7.     E-mail and GLV mbH Manufacturing Agreement

8.     Draft Contract relating to the GVL Turboaire Development Project Contract

9.     Two letters from GVL MbH

10.    List of agreements which the company has entered in to

11.    Letter dated 1 June from Redcliffe Magtronics Limited

                                     File 4

No.    Description

1.     List of employees and escalation procedure

2.     Details of employees

3.     Company Handbook

4.     Contracts of employment and other documents relating to Wendy Brookes

5.     Service Agreement of Robert Gale

6.     Service Agreement of Joyce Keywood

7.     Service Agreement of Nigel Thorneywork

8.     Service Agreement of Graham Veal

                                       7

<PAGE>

9.     Service Agreement of Simon Barker

10.    Variation of directors' service agreements

11.    Details relating to non standard employees/potential leavers/leaver and
       joiners

12.    Compromise Agreement of Reece Houghton and related correspondence

13.    Commentary on staff turnover and leavers

14.    Compromise Agreement of Helene Parris

15.    Compromise Agreement of Diane Elizabeth Kempster

16.    Details relating to salary reviews

17.    Details relating to various employee issues/non standard
       employees/leavers and joiners

18.    Documents and correspondence relating to the appointment of Graham
       Woodhead as Non Executive Director

19.    Pauline Stephens - Consultancy Agreement

20.    M Taylor - Consultancy Agreement

21.    J Whirton - Consultancy Agreement

22.    Salary review of Simon Barker

23.    Accident Book

24.    Health and Safety Policy Document

25.    Accident reports

26.    Certificate of Employers Liability Insurance

27.    List of employee pension and salary details

28.    Blank

29.    Letter regarding Allen Illingworth's salary

                                       8

<PAGE>

                                     File 5

No.  Description

1.   General company statement on insurance policies

2.   Royal & Sun Alliance Insurance policy details Policy No. PZ-RKJ246240

3.   The Fairmount Group long term disability insurance

4.   Correspondence relating to UNUM Policy No. 911601 long term disability
     insurance provisions

5.   AON Risk Services Policy No. RNN768606

6.   Description of company Claims Procedures

7.   Royal & Sun Alliance Policy and Schedule

8.   Blank

9.   Spectrum policy no. 74UK855213

10.  Sun Life Assurance. Contracted-Out Money Purchase Pension Scheme No.: 81491

11.  Letter From Sun Life regards Retirement Benefits Scheme (1)

12.  Retirement and Death Benefits Plan

13.  Sun Life Group Personal Pension Plan information Pack

14.  Sun Life Group Personal Pension Plan joiner details

15.  Company description of long term disability insurance scheme available to
     employees

16.  List of employees enrolled with the Sun Life Pension Plan

17.  Letter from Paul Jones Financial Services Ltd relation to pension
     Arrangements

18.  Inland Revenue Certificate of approval for retirement benefits scheme

19.  Standard Life Memorandum to company relation to Stanplan

20.  Letter from AON Insurance Brokers confirming Public/Products Liability

                                       9

<PAGE>

21.  Letter from the Contributions Agency to the Pensions Scheme Trustees

22.  Sun Life Contracted-Out Money Purchase Scheme on employer's guide

23.  Material relation to the Sun Life Personal Pension Plan

24.  AON Insurance Claims Record

25.  List of Insurance Policies

                                     File 6

No.  Description

1.   Letter regarding rating at Ash Vale

2.   Letter/Lease/Surrender and Deed of Release/Letter of Assignment relating to
     Moorfield Road and Memorandum relating to Slyfield Industrial Estate

3.   Surrender between Max Art Limited and Crusader Insurance

4.   Tenancy Agreements relating to 2 & 3 of Fleming Way Crawley

5.   Tenancy Agreements relating to 2 & 3 of Fleming Way Crawley

6.   Orders of Clerkenwell County Court regarding Units 2 & 3 Fleming Way
     Crawley

7.   Report on Inspection of CPV Industrial Unit Enterprise Estate Station Road
     West Lysons Avenue Ash Vale Aldershot

8.   Deed of Agreement for the lease of the Brinell Factory Station Road West
     Ash Vale Aldershot/Specification for Office Extension and Internal
     Alterations/Warranty Agreement/Memorandum of Agreement/Schedule of Services
     and fees/Supplemental Deed of Agreement

9.   Lease of the Brinell Factory Road West Ash Vale Aldershot

10.  land Certificate relating to on the South Side of Lysons Avenue the land
     Ash Vale

11.  Conveyance between the State for Defence and the Council Secretary of the
     Borough of Guildford

                                       10

<PAGE>

12.     Blank

13.     Warranty Agreement and invoice relating to he works carried out at the
        Brinell Factory

14.     Lease of land at Lysons Avenue Ash Vale Surrey

15.     Property Report relating to the Brinell Factory Road West Ash
        Vale/Schedule of Planning Permissions

16.     Letter from Beverley Boag and Plan relating to the Brinell Machine Tools
        Factory Lysons Avenue Ash Vale

17.     Letter from Beverley Boag regarding the surrender of the Brinell Machine
        Tools Factory Lysons Avenue Ash Vale

18.     Various Decisions/Consents/Permissions of Guildford Borough Council and
        Plans relating to the Brinell Works Station Road West together with
        Office Copy Entries and Plans

                                     File 7

No.     Description

1.      Various reports from Surrey County Council and letter to Surrey Fire and
        Rescue Service regarding fire precautions

2.      Series of Health & Safety Minutes

3.      Safety Procedures Memorandum

4.      Health & Safety Requirements for Service Engineers

5.      Blank

6.      Details of any specific legislation or regulations under which the
        business operates

7.      Series of British Standard Specification Requirements and Standards

8.      Royal Sun Alliance Report of working examination of a single item within
        a pressure system

9.      Gas Safety Report

10.     Nimrod Fire Protection Limited Inspection invoice

                                       11

<PAGE>

11.     Maintenance Report

12.     Modern Alarms Limited Agreement/Specifications/NACOSS Certificate of
        Compliance in respect of Security System Installation

13.     AMP letter regarding the payment of invoices/AMP Summary Sheet

14.     North Hants for Lift Hire Contract Services

15.     ADT Call Form/Receipt

16.     IS0 9002: 1994 Certificate of Approval

17.     Various Corgi Certificates

18.     Office of Fair Trading Standing Licence (Renewal)

19.     Details regarding defective products

20.     Blank

21.     Blank

22.     General Declaration of Conformity with EMC 89/336/EEC and LVD 73/23/EEC
        Directives

23.     Blank

24.     Merrychef Cover Maintenance Service Contracts details

25.     Various documents relating to waste and packaging

26.     British Standards including LVD and EMC compliance certificates
        certificates/licences

                                     File 8

No.     Description

1.      Merrychef Evolution Technical Specifications

2.      Details regarding intellectual property

3.      Claims and Patent Specifications

4.      Intellectual property infringement claims

                                       12

<PAGE>

5.      Correspondance between Merrychef Limited and Unice International Limited
        relating to the Revolver Project

6.      Marks and Clerk correspondence/documents regarding work undertaken for
        Merrychef Holdings Limited

7.      Data Protection Register correspondence and a copy of the register

8.      Patents, specifications, correspondence and other documents relating to
        the Turbochef issue.

9.      Letter and Schedules of patents owned by the Company

                                       13

<PAGE>

                                    Contents

<TABLE>
<S>                                                                           <C>
1.  Definitions and interpretation ..........................................  1
2.  Sale and purchase ....................................................... 10
3.  Consideration ........................................................... 10
4.  Completion .............................................................. 11
5.  Post completion matters ................................................. 13
6.  Warranties .............................................................. 13
7.  Covenant for Taxation ................................................... 15
8.  Purchaser's remedies .................................................... 15
9.  Limitations on liability ................................................ 16
10.  Conduct of Non Tax Claims .............................................. 19
11.  Non-competition covenants .............................................. 20
12.  Pensions ............................................................... 21
13.  General ................................................................ 21
14.  Announcements .......................................................... 24
15.  Costs and expenses ..................................................... 24
16.  Notices ................................................................ 24
17.  Severance .............................................................. 25
18.  Governing law and jurisdiction ......................................... 25
Schedule I ..................................................................  1
(The Vendors and 3i) ........................................................  1
Schedule 2 .................................................................. 30
(Information concerning the Company) ........................................ 30
Schedule 3 .................................................................. 32
Information concerning the Group Companies .................................. 32
Schedule 4 .................................................................. 44
(Non-Tax Warranties) ........................................................ 44
1.  Capacity ................................................................ 44
2.  Enforceability .......................................................... 44
3.  Company ................................................................. 44
4.  Subsidiaries ............................................................ 45
5.  Insolvency of the Group ................................................. 46
6.  Corporate compliance .................................................... 46
7.  Statutory books and documents filed ..................................... 47
8.  Memorandum and Articles of Association .................................. 47
9.  Common seal ............................................................. 47
10.  Documents stamped ...................................................... 47
11.  Possession of documents ................................................ 48
12.  Accuracy and adequacy of information ................................... 48
13.  Preparation and contents of the Accounts ............................... 48
14.  Accounting records ..................................................... 49
15.  Management Accounts .................................................... 49
16.  Events since the Accounts Date ......................................... 50
17.  Financial commitments and borrowings ................................... 51
18.  Defective products or services ......................................... 52
19.  Insurances ............................................................. 52
20.  Contracts and commitments .............................................. 52
21.  Terms of trade ......................................................... 53
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                          <C>
22.  Licences and consents ................................................   53
23.  Trading partners .....................................................   54
24.  Competition and trade regulation law .................................   54
25.  Compliance with laws .................................................   55
26.  Litigation and disputes ..............................................   55
27.  Ownership and condition of assets ....................................   56
28.  Charges and encumbrances over assets .................................   56
29.  Intellectual Property ................................................   57
30.  Data Protection Act ..................................................   60
31.  Directors and employees ..............................................   60
32.  Industrial relations .................................................   63
33.  Pensions .............................................................   63
34.  Title ................................................................   65
35.  Encumbrances .........................................................   66
36.  Planning matters .....................................................   67
37.  Statutory obligations ................................................   68
38.  Adverse orders .......................................................   68
39.  Leasehold properties .................................................   68
40.  Condition of the Properties ..........................................   69
41.  Tenancies ............................................................   70
42.  Other involvement in relation to Property ............................   70
43.  Amana matter .........................................................   70
44.  Preliminary enquiries ................................................   70
Schedule 5 ................................................................   71
(Particulars of the Property)  ............................................   71
Schedule 6 ................................................................   62
(Current Pension and Disability Schemes) ..................................   62
Schedule 7 ................................................................   63
1.  Definitions and interpretation ........................................   65
2.  Covenant for Taxation .................................................   68
3.  Covenant to Warrantors ................................................   71
4.  Tax Warranties ........................................................   72
5.  Limitations on liability ..............................................   75
6.  Repayment .............................................................   77
7.  Over-provision and Reliefs ............................................   77
8.  Tax Returns ...........................................................   78
9.  Claims Procedure ......................................................   79
10.  Miscellaneous ........................................................   80
Schedule 9  ...............................................................   82
Schedule 10 ...............................................................   85
(The Redcliffe Claim) .....................................................   85
</TABLE>

                                       ii

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