Document:

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                                                                    EXHIBIT 10.1

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                     Bradley International Holdings Limited

                                      and

                                 Newell Limited

                      AGREEMENT FOR THE SALE AND PURCHASE

                                   OF SHARES

                               IN KLIPPAN LIMITED

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                          SALE AND PURCHASE AGREEMENT

THIS AGREEMENT is made on 29 January, 2001.

BETWEEN:

(1)      Bradley International Holdings Limited (Company number 3407901), a
         limited liability company incorporated in England and Wales (the
         "Vendor"); and

(2)      Newell Limited (Company number 02933327), a limited liability company
         incorporated in England and Wales (the "Purchaser").

RECITALS

(A)      The Vendor owns all of the issued share capital (the "Klippan Shares")
         of Klippan Limited (Company number 2264274) ("Klippan"), a private
         limited liability company incorporated in England and Wales.

(B)      Klippan owns all of the issued share capital of Akta Barnsakerhet AB, a
         private limited liability company incorporated in Sweden, and Oy
         Klippan Ab, a limited liability company incorporated in Finland (the
         "Subsidiary Shares") and will on Completion own the German Assets and
         the German Business.

(C)      The Vendor owns all of the issued share capital of Klippan GmbH, a
         private limited liability company incorporated in Germany and Klippan
         SARL, a private limited liability company incorporated in France.

(D)      The Vendor wishes to sell, and the Purchaser wishes to purchase the
         Klippan Shares on and subject to the terms of this Agreement.

NOW THEREFORE, THE PARTIES AGREE as follows:

1.       Sale and Purchase of Klippan Shares

1.1      Subject to the terms and conditions hereof, the Vendor agrees to sell,
         with full title guarantee, and the Purchaser agrees to buy, the Klippan
         Shares and each right attaching to the Klippan Shares at or after the
         date of this Agreement, free from any Encumbrances.

1.2      The Purchaser will pay to the Vendor for the Klippan Shares an
         aggregate purchase price of L2,800,000 less the amount set out in the
         Estimated Indebtedness Statement as set forth in Clause 2.2 (the
         "Purchase Price") and subject to an adjustment as provided in Clause 3.

1.3      The Purchaser agrees to procure the discharge of the Inter-Company
         Indebtedness at Completion in accordance with Clause 2.2.

2.       Completion

2.1      Completion shall take place at the offices of the Purchaser's
         Solicitors on 29 January 2001 or on such other Business Day and time as
         the parties shall have agreed to in

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         writing. The date on which Completion shall occur is hereinafter
         referred to as the "Completion Date".

2.2      At Completion the Vendor and the Purchaser shall do all those things
         respectively required of them in Schedule 3 and the Purchaser shall pay
         to the Vendor L2,800,000 less (i) the Escrow Amount and (ii) the
         estimated aggregate amount of the InterCompany Indebtedness, the Net
         External Debt and the Estimated Tax Adjustment as set out in the
         Estimated Indebtedness Statement and pay to the Vendor the amount of
         the Inter-Company Indebtedness, as set out in the Estimated
         Indebtedness Statement, in each case by transfer of funds for same day
         value, to be paid to the following account:

         Martineau Johnson
         Client Account No:         0520983
         Sort Code:                 30-00-03

         Lloyds TSB Bank plc
         Colmore Row Branch
         125 Colmore Row
         Birmingham B3 3AD

2.3      Payment of the Purchase Price and the Inter-Company Indebtedness (the
         latter in accordance with Clause 2.2) shall be a good discharge to the
         Purchaser for the Purchase Price and in respect of Inter-Company
         Indebtedness. The Vendor confirms that it has authority from each
         company in the Vendor Group to which Inter-Company Indebtedness is owed
         to give such a discharge and provided that the Purchaser complies with
         its obligations pursuant to Clause 2.2 with regard to the Inter-Company
         Indebtedness the Vendor shall hold the Purchaser and the Group harmless
         from any Inter-Company Indebtedness owed to the Vendor Group.

2.4      If Completion does not take place on the Completion Date because the
         Vendor fails to comply with any of its obligations under this Clause 2,
         the Purchaser may by notice to the Vendor:

         (a)      proceed to Completion to the extent reasonably practicable
                  including without limitation by purchasing some, but not all
                  of the Klippan Shares (but if the Purchaser exercises its
                  right pursuant to this Clause 2.4 completion of the purchase
                  of some of the Klippan Shares does not affect the Purchaser's
                  rights in connection with the others);

         (b)      postpone Completion to a date to be no later than 30 Business
                  Days after the date of this Agreement;

         (c)      terminate this Agreement.

2.5      If the Purchaser postpones Completion to another date in accordance
         with Clause 2.4(b), the provisions of this Agreement shall apply as if
         that other date is the date for Completion.

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2.6      The Warranties and all other provisions of this Agreement and the Tax
         Deed insofar as the same shall not have been performed at Completion
         shall not be extinguished or affected by Completion, or by any other
         event or matter whatsoever.

2.7      If the Purchaser terminates this Agreement pursuant to Clause 2.4(c),
         each party's further rights and obligations cease immediately on
         termination, but termination does not affect a party's accrued rights
         and obligations at the date of termination and, for the avoidance of
         doubt, in such event the respective obligations of both the Vendor and
         the Purchaser pursuant to the Heads of Terms shall remain in full force
         and effect.

2.8      If following the date hereof and prior to Completion the Purchaser
         receives a notification from the Vendor pursuant to Clause 4.6 that any
         of the Warranties has, when given, or will be or would be, at
         Completion (as if they had been given again at Completion) not complied
         with or otherwise untrue or misleading the Purchaser shall be entitled
         (in addition to and without prejudice to all other rights or remedies
         available to it and its successors in title including the right to
         claim damages) by notice in writing to the Vendor to terminate the
         Agreement. If, notwithstanding such notification pursuant to Clause
         4.6, the Purchaser elects to complete this Agreement, the occurrence of
         such an event, the subject of the notification, shall not preclude the
         Purchaser from any right to damages or compensation for breach of
         Warranty save to the extent details of such breach have been fairly
         notified in such notification. If any event shall occur (other than an
         event constituting or giving rise to a breach of any of the Warranties)
         following the date hereof but prior to Completion which affects or is
         likely to affect adversely to a material degree the financial position
         or turnover or profitability of any of the Group Companies as a whole
         or any of the Group Companies, not being an event affecting or likely
         to affect generally all companies carrying on similar businesses in the
         United Kingdom, Sweden, or Finland, the Purchaser shall be entitled by
         notice in writing to the Vendor to terminate this Agreement but the
         occurrence of such an event shall not give rise to any right to damages
         or compensation.

2.9      The Vendor agrees with the Purchaser (for itself and as trustee for
         each Group Company and their respective officers, employees and agents)
         to assign to the Purchaser any rights, remedies or claims which it may
         have (other than in relation to fraud, or fraudulent misrepresentation,
         willful misconduct or willful concealment) in respect of any
         misrepresentation, inaccuracy or omission in or from any information or
         advice supplied or given by any Group Company or its respective
         officers, employees or agents in connection with assisting the Vendor
         in the making of any representation and the giving of the Warranties or
         the preparation of the Disclosure Letter and the Tax Deed.

3.       Completion Accounts

3.1      The Completion Accounts. The Purchaser shall procure that as soon as
         practicable following Completion there shall be drawn up a consolidated
         balance sheet (to be drawn up as at immediately prior to Completion)
         and a consolidated profit and loss account of the Group Companies
         including the assets acquired and liabilities assumed by Klippan from
         Klippan GmbH pursuant to the German Agreement (the "German Net
         Assets") in respect of the period from the Reference Accounts Date to
         immediately prior to Completion (the "Completion Accounts") and that
         the same are

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         reviewed by the Purchaser's Accountants. The Completion Accounts shall
         be drawn up in accordance with the accounting principles set out in
         Schedule 6.

3.2      Preparation. (a) The Completion Accounts shall be delivered to the
         Vendor and the Vendor's Accountants by the Purchaser as soon as is
         practicable following Completion and, in any event, not later than 28
         February 2001. Prior to such delivery, the Purchaser shall so far as is
         practicable consult with the Vendor and the Vendor's Accountants with a
         view to reducing the potential areas of future disagreement.

         (b)      In order to enable the Purchaser to prepare and the Vendor and
         Vendor's Accountants to review the Completion Accounts, the Purchaser
         shall procure that the Group Companies shall keep up-to-date and make
         available to the Vendor and to the Vendor's Accountants their books,
         records and working papers relating to the businesses of the Group
         Companies and the German Net Assets as at Completion during normal
         office hours and cooperate with them with regard to the preparation and
         review of the Completion Accounts. The Vendor agrees to make available
         to the Purchaser and the Purchaser's Accountants its books, records and
         working papers relating to the businesses of the Group Companies and
         the German Net Assets as at Completion during normal office hours and,
         in so far as it is reasonable to do so, to make available the services
         of its employees to assist the Purchaser in the performance of its
         duties under this Clause 3.

         (c)      If the Vendor does not within 45 days of presentation to it of
         the Completion Accounts give notice to the Purchaser that it disagrees
         with the Completion Accounts or any item thereof, such written notice
         stating the reasons for the disagreement in reasonable detail (the
         "Vendor's Disagreement Notice"), the Completion Accounts shall be final
         and binding on the parties for the purpose of this Clause 3. If the
         Vendor gives a Vendor's Disagreement Notice within such 30 days, the
         parties shall attempt in good faith to reach agreement in respect
         thereof and, if they are unable to do so within 21 days of such
         notification or any other period as agreed between the parties, either
         party may by notice to the other require that the Completion Accounts
         to the extent not agreed be referred to the Reporting Accountants (as
         defined in Clause 3.2(e) below) (an "Appointment Notice").

         (d)      Within 21 days of the giving of an Appointment Notice, the
         Purchaser may by notice to the Vendor indicate that, in the light of
         the fact that the Vendor has not accepted the Completion Accounts in
         their entirety, the Purchaser wishes the Reporting Accountants to
         consider matters relating to the Completion Accounts in addition to
         those specified in the Vendor's Disagreement Notice, such notice
         stating in reasonable detail the reasons why and in what respects the
         Purchaser believes that the Completion Accounts should be altered (the
         "Purchaser's Disagreement Notice"). Within 7 days of the giving of a
         Purchaser's Disagreement Notice, the Vendor may by notice to the
         Purchaser indicate that, in light of the Purchaser's Disagreement
         Notice, the Vendor wishes the Reporting Accountants to consider
         matters relating to the Completion Accounts in addition to those
         specified in the Vendor's Disagreement Notice, such notice stating in
         reasonable detail the reasons why and in what respects the Vendor
         believes that the Completion Accounts should be altered and the
         Vendor's Disagreement Notice shall be amended in accordance with such
         notice.

         (e)      Such firm of accountants as the Vendor and the Purchaser may
         agree (or in default of nomination by agreement between the Vendor and
         the Purchaser, such firm

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         of accountants nominated by the President for the time being of the
         Institute of Chartered Accountants in England and Wales) (the
         "Reporting Accountants") shall be engaged jointly by the parties on the
         terms set out in this Clause 3.2(e) and otherwise on such terms as
         shall be agreed provided that neither party shall unreasonably (having
         regard, inter alia, to the provisions of this Clause 3.2) refuse its
         agreement to terms proposed by the Reporting Accountants or by the
         other party. If the terms of engagement of the Reporting Accountants
         have not been settled within 45 days of their identity having been
         determined (or such longer period as the parties may agree) then,
         unless one party is unreasonably refusing its agreement to those terms,
         those accountants shall be deemed never to have become the Reporting
         Accountants and new Reporting Accountants shall be selected in
         accordance with the provisions of this Clause.

         (f)      Except to the extent that the parties agree otherwise, the
         Reporting Accountants shall determine their own procedure but:

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

                           (A)      whether any of the arguments for an
                                    alteration to the Completion Accounts put
                                    forward in the Vendor's Disagreement Notice
                                    or the Purchaser's Disagreement Notice is
                                    correct in whole or in part; and

                           (B)      if so, what alterations should be made to
                                    the Completion Accounts in order to correct
                                    the relevant inaccuracy in it;

                           and in doing so shall apply the principles set out in
                           Schedule 6;

                  (ii)     shall make their determination pursuant to paragraph
                           (i) above as soon as is reasonably practicable;

                  (iii)    the procedure of the Reporting Accountants shall:

                           (A)      give the parties a reasonable opportunity to
                                    make written and oral representations to
                                    them;

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

                           (C)      permit each party to be present while oral
                                    submissions are being made by the other
                                    party; and

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

         (g)      The determination of the Reporting Accountants pursuant to
         Clause 3.2(f) shall (i) be made in writing delivered to the registered
         offices of the Vendor and the Purchaser and (ii) unless otherwise
         agreed by the parties include reasons for each relevant determination.

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         (h)      The Reporting Accountants shall act as experts and not as
         arbitrators and their determination of any matter falling within their
         jurisdiction shall be final and binding on the parties save in the
         event of manifest error (when the relevant part of their determination
         shall be void and the matter shall be remitted to the Reporting
         Accountants for correction). In particular, without limitation:

                  (i)      their determination shall be deemed to be
                           incorporated into the Completion Accounts, which
                           shall then be final and binding on the parties save
                           as aforesaid;

                  (ii)     their determination of any fact which they have found
                           it necessary to determine for their determination
                           pursuant to Clause 3.2(f)(i) shall be final and
                           binding on the parties.

         (i)      The expenses of the Reporting Accountant shall be borne as
         they shall direct at the time they make any determination under Clause
         3.2(f)(i) or, failing such direction, equally between the Vendor, on
         the one hand, and the Purchaser, on the other.

         (j)      The parties shall co-operate with the Reporting Accountants
         and comply with their reasonable requests made in connection with the
         carrying out of their duties under this Agreement. In particular,
         without limitation, the Purchaser shall in relation to the German Net
         Assets keep up-to-date and procure that the Group Companies keep
         up-to-date and, subject to reasonable notice, make available to the
         Vendor's representatives, the Purchaser's Accountants and the Reporting
         Accountants the books, records and working papers relating to the
         businesses of the Group Companies and the German Net Assets as at
         Completion during normal office hours during the period from Completion
         down to the agreement or relevant determination of the Completion
         Accounts.

         (k)      Subject to Clause 3.2(l), nothing in this Clause 3.2 shall
         entitle a party or the Reporting Accountants access to any information
         or document which is protected by legal professional privilege, or
         which has been prepared by the other party or its accountants or other
         professional advisers with a view to assessing the merits of any claim
         or argument.

         (l)      A party shall not be entitled by reason of Clause 3.2(k) to
         refuse to supply such part or parts of documents or summaries thereof
         as contain only the facts on which the relevant claim or argument is
         based.

         (m)      Each party and the Reporting Accountants shall, and shall
         procure that its accountants and other advisers shall, keep all
         information and documents provided to them pursuant to this Clause 3.2
         confidential and shall not use the same for any purpose, except for
         disclosure or use in connection with the preparation of the Completion
         Accounts, the proceedings of the Reporting Accountants or another
         matter arising out of this Agreement or in defending any claim or
         argument or alleged claim or argument relating to this Agreement or its
         subject matter.

         (n)      References to a "party" or "parties" in this Clause 3.2 shall
         be deemed to include the Vendor, the Vendor's Accountants, the
         Purchaser and the Purchaser's Accountants.

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3.3      Adjustment of Consideration

         (a)      (i) If the Net External Debt set out in the Actual
         Indebtedness Statement is greater than the estimated Net External Debt
         set out in the Estimated Indebtedness Statement, then within 14 days of
         either the Completion Accounts becoming final and binding under Clause
         3.2(c) or the determination of the Reporting Accountants, the Vendor
         shall repay to the Purchaser an amount equal to such difference in
         immediately available funds. Such payment by the Vendor to the
         Purchaser shall be made to the following account: Newell Limited,
         Account No. 20438200, Barclays Bank, Sort Code 20-83-69, and shall
         constitute a reduction in the Purchase Price.

         (ii)     If the Net External Debt set out in the Actual Indebtedness
         Statement is less than the estimated Net External Debt set out in the
         Estimated Indebtedness Statement, then within 14 days of either the
         Completion Accounts becoming final and binding under Clause 3.2(c) or
         the determination of the Reporting Accountants, the Purchaser shall pay
         to the Vendor an amount equal to such difference in immediately
         available funds. Such payment by the Purchaser to the Vendor shall be
         made to the account referred to in Clause 2.2 and shall constitute an
         increase in the Purchase Price.

         (iii)    The parties hereby agree that any liability of the Purchaser
         pursuant to Clause 3.3(a)(ii) may be offset against any liability of
         the Vendor pursuant to Clause 3.3(a)(iv).

         (iv)     If the Completion Working Capital Statement is less than
         L104,000, then, within 14 days of either the Completion Accounts
         becoming final and binding under Clause 3.2(c) or the determination of
         the Reporting Accountants, the Vendor shall pay to the Purchaser as a
         reduction to the Purchase Price an amount equal to such difference.

         (v)      The Purchaser agrees that the Purchaser shall pay to the
         Vendor on demand as an increase to the Purchase Price an amount equal
         to the capital expenditure incurred by Klippan from the effective date
         of the Heads of Terms up to and including Completion, relating to the
         Folda and Reclina Products, provided that the Purchaser shall have no
         obligation to pay any amount to the Vendor to the extent that the
         aggregate amount of capital expenditure incurred is in excess of
         L36,000 (or as otherwise agreed in writing by the Purchaser and the
         Vendor).

         (vi)     If The Scheme is not 100% funded as at the date of Completion
         on the Minimum Funding Requirement basis as prescribed by the
         Occupational Pension Schemes (Minimum Funding Requirement and Actuarial
         Valuations) Regulations 1996 No 1536 and Actuarial Guidance Note EN27,
         then within 14 days of either the Completion Accounts becoming final
         and binding under Clause 3.2(c) or the determination of the Reporting
         Accountants, the Vendor shall pay to the Purchaser an amount equal to
         the amount by which The Scheme is less than 100% funded.

         (vii)    The Vendor and the Purchaser acknowledge and agree that, to
         the extent possible, the Purchaser shall at its discretion be entitled
         to obtain payment of any sums owing to it including, for the avoidance
         of doubt, interest, as a result of the adjustment of the Purchase Price
         and/or Net External Debt pursuant to Clause 3.3(a) and/or Clause
         3.3(b), from the Escrow Account for same day value. For the avoidance
         of doubt, in the event that the said payment cannot be satisfied in
         full from the monies

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         in the Escrow Account, the Purchaser shall be entitled to any shortfall
         from the Vendor in immediately available funds. In the event that the
         Purchaser obtains payment of any amount owing to it as a result of an
         adjustment to the Purchase Price pursuant to Clause 3.3(a) and/or
         Clause 3.3(b) from the Escrow Account, the Vendor shall forthwith
         deposit with the Escrow Agent an amount equal to the amount of such
         payment made out of the Escrow Account.

         (b)      If the Completion Tax Adjustment as shown in the Completion
         Accounts is more than the Estimated Tax Adjustment, then within 14 days
         of either the Completion Accounts becoming final and binding under
         Clause 3.2(c) or the determination of the Reporting Accountants, the
         Vendor shall pay to the Purchaser as a reduction to the Purchase Price
         an amount equal to such difference. If the Completion Tax Adjustment as
         shown in the Completion Accounts is less than the Estimated Tax
         Adjustment, then within 14 days of either the Completion Accounts
         becoming final and binding under Clause 3.2(c) or the determination of
         the Reporting Accountants, the Purchaser shall pay to the Vendor as an
         increase to the Purchase Price an amount equal to such difference.

3.4      Currency. All amounts used or calculated in this Clause 3 shall be
         determined in UK pounds sterling. All payments to be made under this
         Clause 3 shall be made in UK pounds sterling and in immediately
         available funds.

3.5      Escrow Arrangements. On Completion, L400,000 of the Purchase Price
         shall be deposited by the Purchaser with the Escrow Agent, to be held,
         invested and distributed subject to the terms of the Escrow Agreement.
         The Purchaser may use money in the Escrow Account to settle claims by
         the Purchaser under or pursuant to Clause 5 of this Agreement or under
         the Tax Deed subject to the terms of the Escrow Agreement.

3.6      Flymo Claim. The Vendor and Purchaser agree that all benefits, rights
         and liabilities of Klippan arising out of or in any way connected to
         the Flymo Claim either prior to or after the date of Completion, shall
         be transferred to and assumed by the Vendor at Completion. The Vendor
         and the Purchaser shall use their reasonable endeavours to assign the
         benefit (subject to the burden) of the Flymo Claim to the Vendor. The
         Vendor shall indemnify the Purchaser and/or Klippan fully in respect of
         any liability whatsoever connected directly or indirectly to the Flymo
         Claim, on the terms set out in Clause 8.5.

4.       Warranties

4.1      The Vendor warrants to the Purchaser that each Warranty is true,
         accurate and not misleading at the date of this Agreement and at
         Completion in accordance with Clause 4.6.

4.2      The Vendor acknowledges that the Purchaser is entering into this
         Agreement in reliance on each Warranty and the undertakings of the
         Vendor contained in Clause 8 which have also been given as a
         representation and with the intention of inducing the Purchaser to
         enter into this Agreement.

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4.3      The Purchaser may rely on the Warranties in warranting to any
         subsequent purchaser of all or any of the Klippan Shares or of all or
         any part of the undertaking of any Group Company.

4.4      The Warranties are qualified by the facts and circumstances fairly
         disclosed in the Disclosure Letter and/or any notification given
         pursuant to Clause 4.6. No other knowledge regarding any Group Company
         (actual, constructive or imputed) prevents or limits a claim made by
         the Purchaser for breach of Clause 4.1. The Vendor shall not seek to
         rely on the Purchaser's knowledge (actual, constructive or imputed) of
         a fact or circumstance which might make a Warranty untrue, inaccurate
         or misleading as a defence to a claim for breach of Clause 4.1 or
         pursuant to any of the indemnities.

4.5      Each Warranty is to be construed independently and (except where this
         Agreement provides otherwise) is not limited by a provision of this
         Agreement or another Warranty.

4.6      The Vendor further warrants to the Purchaser and its successors in
         title that subject to Clause 4.4, each Warranty will be true and
         accurate in all respects and not misleading in any respect at
         Completion as if each Warranty had been given again at Completion. If
         after the signing of this Agreement and before Completion any event
         shall occur or matter arises which results or may result in any
         Warranty being unfulfilled, untrue, misleading or incorrect in any
         respect at Completion, the Vendor shall immediately notify the
         Purchaser in writing thereof prior to Completion and the Vendor (at its
         own cost) shall make investigation concerning the event or matter which
         the Purchaser may require.

5.       Purchaser's Rights

5.1      If Completion takes place and there is a Warranty Claim, the Vendor
         shall pay the Purchaser on demand (at the Purchaser's option) an amount
         equal to either:

         (a)      the reduction in the value of the Klippan Shares; or

         (b)      if:

                  (i)      the value of an asset of each Group Company is or
                           becomes less than the value would have been had the
                           breach not occurred; or

                  (ii)     any Group Company is subject to or incurs a liability
                           or an increase in a liability which it would not have
                           been subject to or would not have incurred had the
                           breach not occurred,

         the reduction in the value of the asset or, as the case may be, the
         amount of the liability or increased liability.

         Provided always that the Purchaser shall be required to mitigate its
         loss in accordance with general common law principles and that only
         damages which are reasonably foreseeable by the parties hereto as at
         Completion shall be recoverable. The Purchaser shall be entitled to
         recover all costs and expenses reasonably incurred in or about the
         enforcement of its rights under this Clause 5.1.

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5.2      The Vendor shall indemnify the Purchaser on demand against each loss,
         liability and cost which the Purchaser incurs arising (directly or
         indirectly) out of:

         (a)      the settlement of a claim against the Vendor in respect of a
                  breach of Clause 7, Clause 8.1 and/or Clause 9 of this
                  Agreement or the enforcement of a settlement; or

         (b)      legal proceedings against the Vendor in respect of a breach or
                  alleged breach of Clause 7, Clause 8.1 and/or Clause 9 of this
                  Agreement in which judgment is given for the Purchaser or the
                  enforcement of the judgment,

         and whether such loss, liability or cost is incurred before or after
         the commencement of an action.

6.       Limitations on the Vendor's Liability

6.1      The Vendor is not liable in respect of a Warranty Claim unless:

         (a)      the amount which would otherwise be recoverable from the
                  Vendor (but for this Clause 6.1) in respect of that Warranty
                  Claim exceeds L2,000; and

         (b)      the aggregate amount of all Warranty Claims of L2,000 or more
                  exceeds L30,000 but if the aggregate liability in respect of
                  all such claims exceeds that figure then all such Warranty
                  Claims shall accrue against and be recoverable from the
                  Vendor.

6.2      The Vendor's total liability in respect of all claims made under this
         Agreement and the Tax Deed is limited to L2.0 million, provided always
         that the amount of any reduction of the Purchase Price pursuant to
         Clause 3.3(a) shall not be counted for this purpose.

6.3      The Vendor is not liable for a Warranty Claim:

         (a)      for a claim in respect of the Warranty contained in paragraph
                  6 of Schedule 4 unless the Purchaser has notified the Vendor
                  of the Warranty Claim stating in reasonable detail the nature
                  of the Warranty Claim and, if practicable, the amount claimed
                  not later than on or before seven years from the date of
                  Completion;

         (b)      in respect of any other Warranty Claim unless the Purchaser
                  has notified the Vendor of the Warranty Claim stating in
                  reasonable detail the nature of the Warranty Claim and, if
                  practicable, the amount claimed on or before 31 July, 2002;

         (c)      if and to the extent that a Warranty Claim would occur as a
                  result of any legislation not in force at the date hereof
                  which takes effect retrospectively or occurs as a result of
                  any increase in the rates of Tax in force at the date hereof;

         (d)      if and to the extent that a Warranty Claim would not have
                  arisen but for:-

                  (i)      any act, omission, transaction or arrangement after
                           Completion by the Purchaser or any Group Company
                           otherwise than in the ordinary course of business of
                           any Group Company as presently carried on;

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                  (ii)     the effect of the provisions of Sections 393, 393A,
                           343 and/or 768 ICTA in any Group Company and/or the
                           Purchaser.

         (e)      for a Warranty Claim if and to the extent that:

                  (i)      any Group Company actually recovers a sum in respect
                           of the subject matter of such Warranty Claim under
                           the terms of any insurance policy held by any Group
                           Company or from any other third party in force at the
                           date hereof;

                  (ii)     the Warranty Claim relates to a claim for Tax and the
                           Vendor has surrendered or procured the surrender of
                           amounts which have offset such Warranty Claim;

                  (iii)    the Warranty Claim would not have arisen or would
                           have been reduced or eliminated but for the failure
                           or omission on the part of the Purchaser to make any
                           claim, election, surrender or disclaimer or give any
                           notice or consent to do any other thing under the
                           provisions of any enactment or regulation relating to
                           Tax after Completion;

                  (iv)     the Warranty Claim would not have arisen but for any
                           winding up or cessation after Completion of, or any
                           change or diminution after Completion in, any trade
                           or business (or part thereof) carried on by any Group
                           Company;

                  (v)      the Warranty Claim would not have arisen but for any
                           change in the accounting policy practice of any Group
                           Company introduced after Completion whether with
                           retrospective effect or not unless such change in the
                           accounting policy practice of any Group Company was
                           required to comply with applicable law, regulations,
                           or regulatory requirements or practice in force on or
                           before Completion;

                  (vi)     if and to the extent that any sum is received by any
                           Group Company which has previously been written off
                           as unrecoverable in the accounts of that Group
                           Company;

                  (vii)    to the extent that the matter giving rise to the
                           Warranty Claim was done or omitted to be done prior
                           to Completion by the Vendor or any Group Company at
                           the request of the Purchaser or its authorised
                           representatives or any of them;

                  (viii)   to the extent that the claim has been made good or
                           otherwise compensated for at no expense to the Group
                           Company or the Purchaser;

                  (ix)     to the extent that it has been properly provided for
                           in the Completion Accounts.

6.4      If the Purchaser becomes aware of any matter that may give rise to a
         claim against the Vendor under this Agreement notice of the fact shall
         be given as soon as possible to the Vendor.

<PAGE>   13

6.5      Without prejudice to the validity of the claim or alleged claim in
         question, the Purchaser shall allow, and shall procure that the
         relevant Group Companies allow the Vendor and its accountants and
         professional advisers to investigate the matter or circumstance alleged
         to give rise to such claim and whether and to what extent any amount is
         payable in respect of such claim and for such purpose the Purchaser
         shall give, and shall procure that the relevant Group Company give,
         subject to their being paid all reasonable costs and expenses as shall
         be agreed with the Vendor in advance, all such information and
         assistance, including access to premises and personnel, documents and
         records as the Vendor or its accountants or professional advisers may
         reasonably request.

6.6      If the claim in question is a result of or in connection with a claim
         or liability to a third party then no admission of liability shall be
         made by the Vendor and the claim shall not be compromised, disposed or
         settled without the prior written consent of the Purchaser, which
         consent shall not be unreasonably withheld or delayed.

6.7      The Purchaser shall be entitled at its own expense in its absolute
         discretion to take such action as it deems necessary to avoid,
         dispute, deny, defend, resist, appeal, compromise or contest such claim
         or liability (including, without limitation, making counter-claims or
         other claims against third parties), in the name of and on behalf of
         the Vendor or the Group Company concerned and to have the conduct of
         any related proceedings, negotiations or appeals provided that in
         taking such action the Purchaser will act in such a way to minimise as
         far as reasonably practicable any damage or harm to the name of the
         Vendor and damage or harm to the business, trading or financial
         prospects of the Vendor.

6.8      The provision of Clauses 6.3 (other than 6.3(a)), 6.4, 6.5 and 6.6
         shall not apply to any claim for breach of a warranty contained in
         paragraph 6 of Schedule 4 and the provisions of Clause 7 of the Tax
         Deed shall apply to such claims.

6.9      Clauses 6.1, 6.2 and 6.3 do not apply in respect of a Warranty Claim
         relating to breach of Clause 4.1 in respect of a Warranty contained in
         paragraph 3 of Schedule 4.

6.10     Nothing in this Clause 6 shall have the effect of limiting or
         restricting any liability of the Vendor in respect of a Warranty Claim
         arising as a result of any fraud, fraudulent misrepresentation, willful
         misconduct or willful concealment by the Vendor or any officer or
         employee or any of the directors of the Group Companies.

6.11     Any amount paid in respect of any Warranty Claim or under the Tax Deed
         shall so far as lawfully possible be treated as a reduction in the
         consideration paid for the Klippan Shares.

6.12     If the Purchaser is entitled in its sole discretion (but subject to
         Clause 7 of the Tax Deed) to make both a Warranty Claim and a claim
         under the Tax Deed, the Warranty Claim shall be made first.

6.13     The limitations on liability of the Vendor set out in Clause 3 of the
         Tax Deed shall apply to limit the liability of the Vendor in respect of
         Warranty Claims under the Warranties contained in paragraph 6 of
         Schedule 4 of this Agreement as if set out herein mutatis mutandis.

<PAGE>   14

6.14     The Purchaser shall only be entitled to recover once under this
         Agreement and/or the Tax Deed in respect of the same loss.

7.       Use of Intellectual Property Rights

         The Vendor shall not with, through or as manager, adviser, consultant
         or agent for a person directly or indirectly use or authorise,
         encourage or assist any person to use in connection with a business
         which competes, directly or indirectly, with a business of any Group
         Company as operated at the date of this Agreement, any of the
         Intellectual Property Rights or use in that connection anything which
         is intended, or is likely to be confused, with any of the Intellectual
         Property Rights.

8.       Vendor's Undertakings

8.1      The Vendor undertakes to the Purchaser and its lawful successors in
         title, for itself and as agent and trustee for the Group Companies,
         that it will not and will procure that any subsidiary undertaking,
         fellow subsidiary undertaking or holding company or director of the
         Vendor will not do any of the following things:

         (a)      for a period of 3 years starting on the date of this Agreement
                  through or as adviser to, or agent of, or manager for, or any
                  person directly or indirectly carry on or be engaged,
                  concerned or interested in or assist a business which
                  competes, directly or indirectly, with a business of any Group
                  Company as carried on at the date of this Agreement including
                  but not limited to child car safety seats and accessories,
                  child transportation seats and accessories, (including prams
                  or pushchairs which can be used as a child car safety seat or
                  part of a child transportation system), seat belts, car seat
                  belts and accessories (whether carried on under the name
                  "Klippan" or any name likely to be confused therewith or
                  otherwise) or at any time in the twelve months prior to that
                  date in a territory in which that business is or was carried
                  on at any such date or time (and which for the avoidance of
                  doubt includes North America);

         (b)      for a period of 3 years starting on the date of this
                  Agreement, knowingly do or say anything which is harmful to
                  any Group Company's goodwill (as subsisting at the date of
                  this Agreement) or which is likely to lead a person who has
                  dealt with any Group Company at any time during the twelve
                  months prior to the date of this Agreement to cease to deal
                  with any Group Company on substantially equivalent terms to
                  those previously offered or at all;

         (c)      for a period of 3 years starting on the date of this Agreement
                  on its own account or in conjunction with or on behalf of any
                  other person in respect of the products or services supplied
                  by a business of any Group Company, either seek to obtain
                  orders from, or do business with, or encourage directly or
                  indirectly another person to obtain orders from, or do
                  business with, a person who has been a customer of that
                  business at any time during the twelve months prior to the
                  date of this Agreement for the products or services supplied
                  by that business in the territory of operation of that
                  business;

         (d)      for a period of 3 years starting on the date of this
                  Agreement, engage, employ, solicit or contact with a view to
                  engagement or employment by another person, a director,
                  officer, employee or manager of any Group Company or a

<PAGE>   15

                  person who was a director, employee or manager of any Group
                  Company at any time during the twelve months prior to the date
                  of this Agreement, in either case where the person in question
                  either has Confidential Information or know-how and would be
                  in a position to exploit either the Company's trade
                  connections or those of any Group Company;

         (e)      for a period of 3 years starting on the date of this
                  Agreement, seek to contract with or engage (in such a way as
                  to affect adversely a business of any Group Company as carried
                  on at the date of this Agreement) a person who has been
                  contracted with or engaged to manufacture, assemble, supply or
                  deliver goods or services to that business at any time during
                  the twelve months prior to the date of this Agreement unless
                  approved in advance by the Purchaser in writing; or

         (f)      for a period of 3 years starting on the date of this
                  Agreement, seek to contract with or engage or assist in a
                  business (as supplier or otherwise) which seeks, directly or
                  indirectly, to contract with Mama's & Papa's for the provision
                  or supply to Mama's and Papa's of any goods or services
                  referred to in Clause 8.1(a) unless approved in advance by
                  the Purchaser in writing.

8.2      Each undertaking in Clause 8.1 constitutes an entirely independent
         undertaking and if one or more of the undertakings is held to be
         against the public interest or unlawful or in any way an unreasonable
         restraint of trade:

         (a)      the remaining undertaking(s) shall continue to bind the Vendor
                  with such deletion or modification as may be necessary to make
                  it valid and enforceable; and

         (b)      if such undertaking(s) would not be held to be so if any
                  period of time expressed therein were expressed as a shorter
                  period of time then such undertaking(s) shall be deemed given
                  for such shorter period of time.

8.3      On receiving the Purchaser's reasonable request the Vendor shall (at
         its own cost, save as specifically stated otherwise in this Agreement):

         (a)      do and execute, or arrange to be done and executed, each act,
                  document and thing necessary to implement this Agreement; and

         (b)      give to the Purchaser all information it possesses or to which
                  it has access relating to the business of any Group Company
                  and allow the Purchaser to copy any document containing that
                  information.

8.4      The Vendor agrees that the restrictions contained in Clauses 8.1, 8.2
         and 8.3 are no greater than reasonable and necessary for the protection
         of the interests of the Purchaser.

8.5      In accordance with Clause 3.6 hereto, the Vendor shall assume all
         benefits, rights and liabilities of Klippan (or indemnify the Purchaser
         and/or Klippan in respect of liabilities not novated) as set out
         below:-

<PAGE>   16

         (a)      The Vendor shall assume absolutely full responsibility of the
                  Flymo Claim. All legal fees and expenses in relation to the
                  Flymo Claim shall be for the account of the Vendor. The
                  Purchaser shall bear no liability (whether direct or indirect)
                  in relation to the Flymo Claim.

         (b)      The Vendor shall fully indemnify the Purchaser and/or Klippan
                  against each and every loss, liability, damage, cost, claim or
                  expense of any kind whatsoever which the Purchaser and/or
                  Klippan incurs or suffers arising directly or indirectly out
                  of, or in any way connected to, the Flymo Claim including for
                  the avoidance of doubt all costs, damages, expenses, legal
                  fees and interest thereon relating to:-

                  (i)      the Flymo Claim;

                  (ii)     any alternative dispute resolution procedures which
                           may be used in relation to the Flymo Claim;

                  (iii)    any judgment or decision made against Klippan and/or
                           the Purchaser or the enforcement of such judgment
                           against Klippan and/or the Purchaser in relation to
                           the Flymo Claim;

                  (iv)     any settlement of the Flymo Claim or the enforcement
                           of any settlement terms against Klippan and/or the
                           Purchaser in respect thereof;

                  (v)      any enforcement of a judgment, decision or settlement
                           against Flymo or others,

                  regardless of when such loss, liability, expense or cost is
                  incurred.

         (c)      The Purchaser agrees, in order that the Vendor may seek to
                  take reasonable steps to take such action or take any other
                  reasonable steps in relation to the Flymo Claim, in the name
                  of and on behalf of Klippan, that the Purchaser shall and
                  shall use its reasonable endeavours to procure that Klippan
                  shall,

                  (i)      take such action as the Vendor or its professional
                           advisers may reasonably request by notice in writing
                           given to the Purchaser with respect to the Flymo
                           Claim;

                  (ii)     afford access to its books and records as is
                           necessary and reasonable to enable the Vendor and its
                           professional advisers to conduct matters relating to
                           the Flymo, Claim;

                  (iii)    permit the Senior Employees to assist the Vendor, as
                           the Vendor or its professional advisers may
                           reasonably request by notice in writing given to the
                           Purchaser in the conduct of the Flymo Claim (which
                           shall include for the avoidance of doubt attendance
                           at any hearing in connection therewith),

provided always that the Vendor fully indemnifies the Purchaser and/or Klippan
to the reasonable satisfaction of the Purchaser and/or Klippan in respect of:-

<PAGE>   17

                  (i)      any liability, damage, cost or expense or legal fees
                           which may be incurred by Klippan and/or the Purchaser
                           in connection with this Clause 8.5(c);

                  (ii)     the expense of each Senior Employee requested to
                           assist the Vendor pursuant to Clause 8.5(c), such
                           expense to be calculated at the rate of L500.00 per
                           day for David Wright, L350 per day for each of David
                           Reay, Chris Tweddle and David Patterson, and L200 per
                           day for Alan Beattie for the period that such persons
                           are employed by Klippan; and

                  (iii)    any other costs and related expenses which may be
                           reasonably incurred by any Senior Employee in
                           connection with any action taken in accordance with
                           Clause 8.5(c).

         (d)      All payments to be made by the Vendor to the Purchaser and/or
                  Klippan under this Clause 8.5 shall be made to the Purchaser
                  and/or Klippan as the case may be in full within 7 Business
                  Days of the Purchaser's first written demand together with the
                  interest thereon calculated in accordance with Clause 13.

         (e)      The Vendor agrees that it and its professional advisers shall
                  keep the Purchaser and Klippan informed of all matters
                  relating to the Flymo Claim and the Purchaser shall be
                  entitled to see and keep copies of all correspondence and
                  notes and other written records in connection therewith
                  provided always that any change to the appointment of
                  solicitors or other professional advisers in relation to the
                  Flymo Claim shall be subject to the prior written approval of
                  the Purchaser (such approval not to be unreasonably withheld
                  or delayed).

         (f)      The Vendor shall ensure that the Flymo Claim is pursued in a
                  reasonable manner and take all appropriate steps in relation
                  to the Flymo Claim as to fully protect the good name and
                  reputation of Klippan.

         (g)      The Vendor shall not be entitled to make any final settlement
                  or compromise of the Flymo Claim or agree any matter in the
                  conduct of the Flymo Claim which is reasonably likely to
                  materially affect the amount of or any future liability of
                  Klippan without giving the Purchaser prior written notice of
                  such settlement or compromise or agreement and ensuring that
                  prior to the making of any final settlement or compromise or
                  agreement likely to affect the amount of or any future
                  liability of Klippan, the Purchaser and/or Klippan is put in
                  funds by the Vendor to enable Klippan to meet its liabilities
                  pursuant to any such settlement or compromise or agreement.

         (h)      Neither the Purchaser, Klippan nor any Senior Employee shall
                  be subject to any claim or liability to the Vendor for
                  non-compliance with any of the foregoing provisions of this
                  Clause 8.5 where each has acted bona fide in accordance with
                  the requests or the instructions of the Vendor.

8.6      The Vendor undertakes to indemnify and keep indemnified the Purchaser
         from and against any liability, loss, damage, cost, claim or expense of
         whatever kind which it may incur or may be suffered by the Purchaser
         arising from any of the Excluded Liabilities.

<PAGE>   18

8.7      The Vendor undertakes to indemnify and keep indemnified the Purchaser
         from and against any liability, loss, damage, cost, claims or expenses
         of whatever kind which it may incur or may be suffered by the Purchaser
         arising from any interference (legal or otherwise) with Klippan's use
         of the Access Road for all purposes as described in Part I of the
         Second Schedule of the Main Carlisle Lease.

8.8      The Vendor undertakes to indemnify and keep indemnified the Purchaser
         from and against any liability, loss, damage, cost, claims or
         reasonable expense of whatever kind it may incur, or may be suffered by
         the Purchaser arising in connection with any breach by Klippan GmbH of
         the German Agreement or the Deed of Assignment.

8.9      The Vendor undertakes to indemnify and keep indemnified the Purchaser
         in accordance with the provisions of the Environmental Indemnity set
         out in Schedule 7 hereto.

8.10     The Vendor undertakes to indemnify and keep indemnified the Purchaser
         and/or Oy Klippan Ab from and against any liability, loss, damage,
         cost, claims or expenses of whatever kind which it may incur or may be
         suffered by the Purchaser and/or Oy Klippan Ab in respect of (i) goods
         or stock held as at Completion by Oy Klippan Ab for Autoliv, (ii) goods
         or stock ordered by Oy Klippan Ab from suppliers or other third parties
         prior to Completion in relation to the contract or arrangement between
         Oy Klippan Ab and Autoliv, and (iii) any claims by or liabilities to
         suppliers or other third parties in respect of goods supplied or to be
         supplied in connection with the contract or arrangement between Oy
         Klippan Ab and Autoliv to the extent that the subject matter or
         circumstance giving rise to the claim or liability existed at or prior
         to Completion.

8.11     To the extent that any provision is properly made in the Completion
         Accounts in respect of a claim which is being made by the Purchaser
         pursuant to Clauses 8.5 to 8.10 inclusive, then the Vendor's liability
         shall be reduced by the amount of the provision which has been included
         in the Completion Accounts.

8.12     Notwithstanding anything to the contrary otherwise stated in this
         Agreement, the Vendor is not liable to indemnify the Purchaser pursuant
         to Clauses 8.5, 8.6, 8.7 and 8.8 unless the Purchaser has notified the
         Vendor of a claim thereunder on or before the expiry of 6 years from
         the date of this Agreement. The Vendor is not liable to indemnify the
         Purchaser pursuant to Clause 8.10 unless the Purchaser has notified
         the Vendor of a claim thereunder on or before 31 July 2002.

9.       Confidential Information

9.1      The Vendor undertakes to the Purchaser, for itself and as agent and
         trustee for each Group Company, that following the date hereof the
         Vendor shall not, except as required by Clause 3.1(m), use or
         disclose, or permit the use or disclosure of, any Confidential
         Information.

9.2      Clause 9.1 does not apply to disclosure of Confidential Information:

         (a)      to a director, officer or employee of the Purchaser or any
                  Group Company whose function requires him to have the
                  Confidential Information;

<PAGE>   19

         (b)      required to be disclosed by law or any regulatory body,
                  provided that the disclosure shall be made so far as possible
                  after consultation with the Purchaser and so far or reasonably
                  practicable after taking into account the Purchaser's
                  reasonable requirements as to its timing, content and manner
                  of making or despatch; or

         (c)      to an adviser for the purpose of advising the Vendor in
                  connection with the transactions contemplated by this
                  Agreement provided that such disclosure is essential for these
                  purposes and is on the basis that Clause 9.1 applies to the
                  disclosure by the adviser.

10.      Announcements

         Neither party may, following the date hereof, make or send or issue a
         public announcement, communication or circular concerning the
         transactions referred to in this Agreement unless they have first
         obtained the other party's prior written consent. This shall not affect
         any announcement or circular required by law or any regulatory body or
         the rules of any recognised stock exchange but the party with an
         obligation to make an announcement, communication or circular shall
         first consult with the other party on the form, substance and timing of
         such disclosure insofar as is reasonably practicable before complying
         with such obligations.

11.      Competition

         Notwithstanding any other provision of this Agreement, if there are
         provisions of this Agreement (or of an agreement or arrangement of
         which it forms part) by virtue of which particulars of this Agreement
         (or of an agreement or arrangement of which it forms part) that are, at
         the date of this Agreement, required to be furnished to the Director
         General of Fair Trading under the Restrictive Practices Acts 1976 and
         1977:

         (a)      the Purchaser shall ensure that particulars are duly furnished
                  as soon as possible and in any event within the time specified
                  by these Acts; and

         (b)      those provisions do not take effect until the day after the
                  particulars have been duly furnished.

         This Clause shall not apply if this Agreement is, or by virtue of the
         Competition Act 1998, is to be treated as, a non-notifiable agreement
         for the purposes of the Restrictive Trade Practices Acts 1976 and 1977.
         For the purposes of this Clause 11, the term "Agreement" shall include
         every other agreement which forms part of the same arrangement.

12.      Costs

         Subject to Clauses 3 and 8.3, the Vendor shall bear all costs incurred
         by it and the Group in connection with the preparation, negotiation,
         execution and performance by it of this Agreement, the Tax Deed, the
         German Agreement, and the sale of Klippan Shares (which shall include
         for the avoidance of doubt any management bonus incentive scheme in
         connection with the sale of the Klippan Shares). Subject to Clause 3,
         the Purchaser shall bear all such costs incurred by it.

<PAGE>   20

13.      Interest

         If the Vendor or the Purchaser default in the payment when due of any
         sum payable under this Agreement or the Tax Deed (howsoever determined)
         the liability of the Vendor or the Purchaser as the case may be shall
         be increased to include interest on such sum from the date when such
         payment is due until the date of actual payment (as well as after or
         before judgment) at a rate of 3 per cent above the base rate from time
         to time of Barclays Bank PLC. Such interest shall accrue from day to
         day.

14.      General

14.1     A variation of this Agreement is valid only if it is in writing and
         signed by or on behalf of each party.

14.2     The failure to exercise or delay in exercising a right or remedy
         provided with this Agreement or by law does not constitute a waiver of
         the right or remedy or a waiver of other rights or remedies. No single
         or partial exercise of a right or remedy provided by this Agreement or
         by law prevents further exercise of the right or remedy or the
         exercise of another right or remedy.

14.3     The Purchaser's rights and remedies contained in this Agreement are
         cumulative and not exclusive of rights and remedies provided by law.

14.4     Except to the extent that they have been performed and except where
         this Agreement provides otherwise, the obligations contained in this
         Agreement remain in force after Completion.

15.      Assignment

         This Agreement and the Tax Deed is personal to the parties hereto and
         may not be assigned or transferred to any third party without the prior
         written consent of the other.

16.      Further Assurance

         At any time after the date of this Agreement, the Vendor shall use its
         reasonable endeavors to procure that any necessary third party shall
         execute such documents and do such acts and things as the Purchaser may
         reasonably require for the purpose of giving to the Purchaser the full
         benefit of all the provisions of this Agreement or Tax Deed and Klippan
         the full benefit of all the provisions of the German Agreement.

17.      Interpretation

17.1     In this Agreement:

         "Access Road" means the part of the roadway known as Byron Street
         between points B and C shown on the plan to the Main Carlisle Lease;

         "Accounts" means each Group Company's individual accounts (as that term
         is used in section 226 of the CA 1985) for the financial year ended on
         the Reference Accounts Date, the auditors' report on those accounts,
         the directors' report for that year and the notes to those accounts;

<PAGE>   21

         "Actual Indebtedness Statement" means a statement to determine the
         amount of Inter-Company Indebtedness, the Net External Debt and the
         Completion Tax Adjustment of the Group Companies at the close of
         business on the Completion Date and as set out in the Completion
         Accounts;

         "Adjuster Claim" means any liability of Klippan relating to the
         IMMI 25 millimetre adjuster;

         "Akta" means Akta Barnsakerhet AB, a private limited company
         incorporated in Sweden;

         "Benjamin and Maas Claims" means the product liability claims against
         Klippan by Benjamin and Maas disclosed in the Disclosure Letter;

         "Business Day" means any day (other than a Saturday) when banks are
         open in London for ordinary banking business;

         "CA 1985" means the Companies Act 1985;

         "Carrytot Claim" means all and any claims, actions and proceedings
         actual or pending arising out of all and any product failure of the
         "Carrytot Baby Seats" sold or supplied by any of the Group Companies
         prior to the date hereof but excluding the Flymo Claim and the Benjamin
         and Maas Claims;

         "Carlisle Leases" means the Main Carlisle Lease and the Warehouse Lease
         as described in Schedule 5;

         "Completion" means completion of the sale and purchase of the Klippan
         Shares in accordance with this Agreement;

         "Completion Accounts" shall have the meaning set out in Clause 3.1;

         "Completion Working Capital Statement" means the amount of consolidated
         net Working Capital of the Group Companies as at the Completion Date as
         set out in the Completion Accounts;

         "Completion Tax Adjustment" means a calculation of the amount of the
         corporation tax payable by the Group Companies as at Completion as set
         out in the Actual Indebtedness Statement;

         "Confidential Information" means all information which is used in or
         otherwise relates to any Group Company's business, distributors,
         agents, suppliers, customers or financial or other affairs, including,
         without limitation, information relating to:

         (a)      the marketing of goods or services including, without
                  limitation, distributors, agents, supplier and customer names
                  and lists and other details of distributors, agents, suppliers
                  and customers, sales data, prices and promotional material; or

         (b)      future projects, business development or planning, commercial
                  relationships (in writing or otherwise) and negotiations,

<PAGE>   22

         but does not include information which is made public by, or with the
         consent of, the Purchaser after the Completion Date or which is in the
         public domain or becomes a part of the public domain through no fault
         of the Vendor;

         "Deed of Assignment" means the assignment by Klippan GmbH of the Trade
         Mark to Klippan at the date hereof in the agreed form;

         "Disclosure Letter" means the letter from the Vendor to the Purchaser
         in relation to the Warranties having the same date as this Agreement,
         the receipt of which has been acknowledged by the Purchaser;

         "Encumbrance" means a mortgage, charge, pledge, lien, option,
         restriction, right of first refusal, right of pre-emption, third-party
         right or interest, other encumbrance or security interest of any kind,
         or another arrangement (including, without limitation, a title transfer
         or retention arrangement) having similar effect;

         "Environmental Indemnity" means the indemnity provided by the Vendor to
         the Purchaser set out in Schedule 7;

         "Environmental Prosecution" means the prosecution against the Klippan
         Group by the Environment Agency or similar agencies in jurisdictions
         where a prosecution has been initiated;

         "Environmental Waste Prosecution" means the prosecution under the
         Producer Responsibility Obligations (Packaging Waste) Regulations 1997
         disclosed in the Disclosure Letter;

         "Equipment Lease" means the telephone equipment lease entered into by
         Klippan GmbH and Alcatel due to expire in 2005;

         "Escrow Account" means the designated account set forth in the Escrow
         Agreement;

         "Escrow Agent" means Martineau Johnson appointed as agent under the
         Escrow Agreement and references in this Agreement to "Escrow Agent"
         shall be deemed to refer to Martineau Johnson;

         "Escrow Agreement" means the agreement in the form set out in Schedule
         9 relating to the deposit of the Escrow Amount with the Escrow Agent
         pursuant to Clause 3.5;

         "Escrow Amount" means the amount of L400,000 of the Purchase Price to
         be held in accordance with the terms of the Escrow Agreement;

         "Estimated Completion Balance Sheet" means the consolidated balance
         sheet to be provided by the Vendor to the Purchaser in accordance with
         Schedule 3;

         "Estimated Indebtedness Statement" means the estimate of the aggregate
         of the Inter-Company Indebtedness, the Net External Debt and the
         Estimated Tax Adjustment set out in the Estimated Completion Balance
         Sheet;

         "Estimated Funding Position" means the estimated funding position of
         The Scheme as set out in the Estimated Completion Balance Sheet;

<PAGE>   23

         "Estimated Tax Adjustment" means the estimate of the amount of
         corporation tax payable by the Group Companies as at Completion as set
         out in the Estimated Indebtedness Statement;

         "Excluded Liabilities" means any liability actual or known to be
         pending at the date hereof with respect to operations discontinued in
         the period from the Reference Accounts Date to the date hereof by
         Klippan GmbH and/or Klippan SARL and/or any Group Company, termination
         of employment or redundancies in each case made by any Group Company in
         the period from the Reference Accounts Date to the date hereof,
         litigation involving any Group Company, the Patents' Claims, the
         Environmental Waste Prosecution, the Benjamin and Maas Claim, the
         Equipment Lease, the Adjuster Claim, any breach of the restrictive
         covenant set out in the Krug Acquisition Agreement, the Carrytot Claim,
         and Overdue Creditors, in each case save to the extent that such
         liability has properly been included in the Completion Accounts in
         accordance with Schedule 6;

         "Flymo Claim" means the proceedings brought by Klippan against Flymo
         ("Flymo"), and any other connected claim, action or procedure brought
         by Klippan, the Vendor, the Purchaser or Flymo with respect to the
         recall of "Carrycot Babyseats";

         "Flymo Indemnity" means the terms of the indemnity to be provided by
         the Vendor to the Purchaser as more fully set out in Clause 8.5;

         "Folda and Reclina Products" means the Groups 1 and 2 child car seats
         introduced to the market in autumn 2000 ("Folda") and the Group 1 child
         car seats introduced to the market in autumn 2000 ("Reclina");

         "FRS" means a financial reporting standard adopted or issued by the
         Accounting Standards Board;

         "German Agreement" means the assets transfer agreement to be entered
         into on the date hereof for the transfer of the German Assets from
         Klippan GmbH to Klippan;

         "German Assets" means the assets specified in the German Agreement;

         "German Business" means the undertaking and business carried on by
         Klippan GmbH as at the Transfer Date as defined in the German
         Agreement;

         "Group" or "Group Companies" means Klippan and its Subsidiaries and
         "Group Company" means any one of them;

         "Heads of Terms" means the heads of terms entered into by the Vendor
         and the Purchaser dated September 3, 2000;

         "Historical Policies" means practices generally accepted in the United
         Kingdom and the historical accounting policies of each Group Company
         set forth in Schedule 6;

         "ICTA" means the Income and Corporation Taxes Act 1988;

         "Intellectual Property" means:

<PAGE>   24

         (a)      patents, trade marks, service marks, registered designs,
                  applications and rights to apply for any of those rights,
                  trade, business and company names, logos, internet domain
                  names and e-mail addresses, unregistered trade marks and
                  service marks, copyrights, database rights, know-how, rights
                  in designs and inventions, database rights and all similar
                  rights which may subsist in any part of the world including,
                  where such rights are obtained or enhanced by registration,
                  any registration of such rights and applications and rights to
                  apply for such registrations;

         (b)      rights under licences, consents, orders, statutes or otherwise
                  in relation to a right in paragraph (a);

         (c)      rights of the same or similar effect or nature as or to those
                  in paragraphs (a) and (b) which now or in the future may
                  subsist; and

         (d)      the right to sue for past infringements of any of the
                  foregoing rights;

         "Intellectual Property Rights" means all Intellectual Property owned,
         used or required to be used, by any Group Company;

         "Inter-Company Indebtedness" shall mean the amount of all sums owed by
         the Group to the Vendor Group less all sums owed to the Group by the
         Vendor Group;

         "Klippan" means Klippan Limited, a private limited liability company
         incorporated in England and Wales;

         "Klippan GmbH" means Klippan GmbH, a private limited company
         incorporated in Germany with registered office at Goerlitzerstrasse 21,
         83395 Freilassing;

         "Klippan Group" means each of the Vendor and any of their respective
         subsidiaries;

         "Klippan SARL" means Klippan SARL, a private limited company
         incorporated in France with registered office at 38, rue de Bassano,
         75008 Paris, France;

         "Klippan Shares" means 1,570,000 ordinary shares of Ll each in Klippan;

         "Krug Acquisition Agreement" means the acquisition agreement between
         Klippan Safety AB and the Vendor dated October 2, 1997;

         "Landskrona Lease" means the premises at Hjalmar Brantings Vag 11 D,
         Landskrona, Sweden;

         "Landlord" means the landlord under the Main Carlisle Lease;

         "Main Carlisle Lease" means the Lease dated April 3, 1986 between Fred
         Proudfoot Limited (1) and ASE (UK) Limited (2) being the main part of
         the Carlisle Leases as defined in paragraph 1 of Schedule 5 hereto;

         "Management Accounts" means the unaudited profit and loss account of
         each Company in respect of the period starting on the date after the
         Reference Accounts Date and ending on 30 December, 2000 and the
         unaudited balance sheet of each Group Company as at 30 December, 2000;

<PAGE>   25

         "Net External Debt" means (i) any interest-bearing bank, hire-purchase,
         finance lease (including the Equipment Lease), overdraft, invoice
         discounting facility or other debt (including the Overdue Creditors,
         but excluding all other trade creditors and excluding any monies owed
         by the Group Companies to the Vendor Group) of any Group Company in
         existence at the date of Completion whether or not due and payable less
         any cash or bank deposits (which for the avoidance of doubt shall
         include cheques in transit (presented or not)) and (ii) the Excluded
         Liabilities to the extent crystallised as an actual liability on or
         before the date on which the Completion Accounts are agreed or
         determined in accordance with the terms of this Agreement;

         "Overdue Creditors" means the amount due to trade creditors of any
         Group Company at the date hereof which is overdue in accordance with
         its payment terms as set out in the Disclosure Letter unless and to the
         extent there is a valid dispute in existence;

         "Oy Klippan Ab" means Oy Klippan Ab, a private limited company
         incorporated in Finland with registered office at Sandeanan 8, 01370,
         Vanda, Finland;

         "Patent Claims" means (i) the patent infringement claim against Akta
         and Oy Klippan Ab relating to the product "Mammas Magbalte" and (ii)
         the patent infringement claim by Torsten Jacobi;

         "Permit" means:

         (a)      a permit, licence, consent, approval, certificate,
                  qualification, specification, registration or other
                  authorisation; or

         (b)      a filing of a notification, report or assessment,

         in each case necessary for the effective operation of each Group
         Company's business, its ownership, possession, occupation or use of an
         asset or the execution or performance of this Agreement;

         "Property" means the property and interests set out in Schedule 5;

         "Purchaser's Accountants" means Arthur Andersen of One Victoria Square,
         Birmingham B1 1BD;

         "Purchaser's Solicitors" means Debevoise & Plimpton of Tower 42,
         International Financial Centre, Old Broad Street, London EC2N 1HQ;

         "Reference Accounts Date" means 31 March, 2000;

         "Senior Employees" means each of David Wright, David Reay, Chris
         Tweddle, David Patterson and Alan Beattie, or any other person as may
         be agreed in writing by the parties;

         "SSAP's" means a statement of standard accounting practice in force at
         any material time as issued by the Accounting Standards Committee;

         "Subsidiary Shares" means (i) 1,000 ordinary shares of 100 SEK in Akta;
         and (ii) 6,000 shares of 83.34 FIM each in Oy Klippan Ab;

<PAGE>   26
         "Subsidiaries" means collectively Akta and Oy Klippan Ab;

         "Tax" and "Taxation" has the meaning given in the Tax Deed;

         "Tax Authority" has the meaning given in the Tax Deed;

         "Tax Deed" means a Tax Deed in the agreed form between the Vendor and
         the Purchaser set out in Schedule 10 hereto;

         "TCGA" means the Taxation of Chargeable Gains Act 1992;

         "The Scheme" means the Klippan Limited Retirement and Death Benefits
         Scheme and where the context so requires, the trustees of The Scheme;

         "Trade Mark" means the registered trade mark owned by Klippan GmbH and
         registered in the UK to be assigned on Completion to the Purchaser in
         accordance with the terms of the Deed of Assignment;

         "Vantaa Lease" means the lease of the premises at Sandeanan 8,
         01370, Vantaa, Finland;

         "VAT" means within the European Community such Tax as may be levied in
         accordance with (but subject to derogations from) the Directive
         77/388/EEC and outside the European Community any Taxation levied by
         reference to added value or sales;

         "VATA" means, in the United Kingdom, the Value Added Tax Act 1994 and,
         in a jurisdiction outside the United Kingdom, any equivalent
         legalisation;

         "Vendor's Accountants" means Deloitte & Touche of 2 Colmore Row,
         Birmingham B3 2BN;

         "Vendor Group" means each of Krug International Corp, Krug
         International (UK) Limited, the Vendor, Klippan GmbH, Klippan SARL and
         all respective subsidiaries and subsidiary undertakings thereof other
         than the Group;

         "Vendor's Solicitors" means Martineau Johnson, of St. Philips House,
         St. Philips Place, Birmingham, B33 2PP;

         "Warehouse Lease" means the Lease of February 28, 1995 between the
         House of Fraser (Stores) Limited (1) and Klippan (2) of the warehouse
         premises referred to the Carlisle Leases at paragraph 1 of Schedule 5
         hereto;

         "Warranty" means a statement contained in Schedule 4 of this Agreement
         and "Warranties" means all those statements;

         "Warranty Claim" means a claim by the Purchaser under or pursuant to
         the provisions of Clause 4 (subject to Clause 6);

         "Working Capital" means stock, trade and other debtors, trade and other
         creditors (excluding any interest-bearing liabilities, Overdue
         Creditors and any sums taken into account in calculating Inter-Company
         Indebtedness), accruals, prepayments (to the

<PAGE>   27

         extent that the Group Companies receive the benefit thereto
         post-Completion) and VAT as at the Completion Date as set out in the
         Completion Accounts.

17.2     In this Agreement, a reference to:

         (a)      a "subsidiary undertaking" or "parent undertaking" is to be
                  construed in accordance with section 258 of the CA 1985 and to
                  a "subsidiary" or "holding company" is to be construed in
                  accordance with Section 736 of the CA 1985;

         (b)      liability under, pursuant to or arising out of (or any
                  analogous expression) any agreement, contract, deed or other
                  instrument includes a reference to contingent liability under,
                  pursuant to or arising out of (or any analogous expression)
                  that agreement, contract, deed or other instrument;

         (c)      a document in the "agreed form" is a reference to a document
                  in a form approved and for the purposes of identification
                  signed by or on behalf of each party;

         (d)      a statutory provision includes a reference to the statutory
                  provision of modified or re-enacted or both from time to time
                  before the date of this Agreement and any subordinate
                  legislation made under the statutory provisions (as so
                  modified or re-enacted) before the date of this Agreement;

         (e)      a person includes a reference to any individual, firm,
                  company, corporation or other body corporate, government,
                  state or agency or a state or any joint venture, association
                  or partnership (whether or not having separate legal
                  personality);

         (f)      a person includes a reference to that person's legal personal
                  representatives and lawful successors;

         (g)      a Clause, paragraph or Schedule, unless the context otherwise
                  requires, is a reference to a Clause or paragraph of, or
                  Schedule to, this Agreement; and

         (h)      any English legal term for any action, remedy, method of
                  judicial proceeding, legal document, legal status, court,
                  official or any legal concept or thing shall in respect of any
                  jurisdiction other than England be deemed to include what most
                  nearly approximates in that jurisdiction to the English legal
                  term and to any English statute shall be construed so as to
                  include equivalent or analogous laws of any other
                  jurisdiction.

17.3     The headings in this Agreement do not affect its interpretation.

17.4     References to any authority, agencies or regulatory body in the UK
         shall be deemed to include all equivalent authorities, agencies or
         regulatory bodies in other jurisdictions.

18.      Notices

18.1     A notice, claim, demand or other communication under and in connection
         with this Agreement or with any arbitration under this Agreement (a
         "Notice") shall be:

         (a)      in writing; and

<PAGE>   28

         (b)      delivered personally or sent by first class post, prepaid
                  recorded delivery (and airmail if overseas) or by fax to the
                  party due to receive the Notice to the address set out in
                  Clause 18.3 or to another address, person, or fax number
                  specified by that party by not less than seven days' written
                  notice to the other party received before the Notice was
                  despatched.

18.2     Unless there is evidence that it was received earlier, a Notice is
         deemed given if:

         (a)      delivered personally, when left at the address referred to in
                  Clause 18.1 (b);

         (b)      sent by mail, two Business Days after posting;

         (c)      sent by airmail, six Business Days after posting;

         (d)      sent by fax, when confirmation of its transmission has been
                  recorded by the sender's fax machine.

18.3     The address referred to in Clause 18.1 (b) is:

<TABLE>
<CAPTION>

Name of Party     Address                             Fax Number        Marked for the
-------------     -------                             ----------        --------------
                                                                        attention of
                                                                        ------------

<S>               <C>                                 <C>               <C>
The Vendor        Bradley International Holdings      01902 406281      A. Firth
                  Limited
                  PO Box 20
                  Beldray Road
                  Bilston
                  West Midlands
                  W14 7NF

The Purchaser     Newell Rubbermaid Inc.,             001 212 332 7803  General Counsel
                  6833 Stalter Drive
                  Suite 101
                  Rockford
                  Illinois 61108

                  Debevoise & Plimpton                020 7588 4180     Colin Bogie
                  Tower 42
                  International Financial
                  Centre
                  Old Broad Street
                  London EC2N 1HQ
</TABLE>

19.      Governing Law and Jurisdiction

19.1     This Agreement and the documents to be entered into pursuant to it
         shall be governed by English law.

<PAGE>   29

19.2     The courts of England have exclusive jurisdiction to settle any dispute
         arising from or connected with this Agreement and the documents to be
         entered into pursuant to it (a "Dispute").

19.3     The parties agree that the courts of England are the most appropriate
         and convenient courts to settle any Dispute and, accordingly, they will
         not argue to the contrary. This Clause 19.3 is for the benefit of the
         parties hereto and shall not limit their respective rights to take
         proceedings in any other court of competent jurisdiction.

19.4     The parties agree that the documents which start any such action or
         proceedings (the "Proceedings") and any other documents required to be
         served in relation to those Proceedings may be served on the Vendor or
         Purchaser (as relevant) in accordance with Clause 18. These documents
         may however be served in any other manner allowed by law. This Clause
         applies to all Proceedings wherever started.

20.      Counterparts

         This Agreement may be executed in any number of counterparts, each of
         which is an original and all of which together evidence the same
         Agreement. Any party may enter into this Agreement by executing any
         such counterpart.

21.      Contracts (Rights of Third Parties) Act 1999

         Except as expressly stated herein, nothing in this Agreement confers
         any right on any person (other than the parties hereto) pursuant to the
         UK Contracts (Rights of Third Parties) Act 1999.

<PAGE>   30

SIGNED BY                  )

on behalf of               )
NEWELL LIMITED             )

SIGNED BY                  )

for and on behalf of       )
BRADLEY INTERNATIONAL      )
HOLDINGS LIMITED           )

<PAGE>   31

                                   SCHEDULE 1

                              Shareholder Details

<TABLE>
<CAPTION>
Shareholder                No. of Shares
-----------                -------------

<S>                        <C>
Bradley International      1,570,000 ordinary
Holdings Limited           shares of Ll each in
                           Klippan Limited

Klippan Limited            1,000 ordinary shares of
                           100 SEK each in Akta,
                           Barnsakerhet AB

Klippan Limited            6,000 ordinary shares of
                           83.34 FIM each in Oy
                           Klippan Ab
</TABLE>

<PAGE>   32

                                   SCHEDULE 2

                                     PART 1

Vendor Details

1        Registered number: 03407901

2        Place of incorporation: England and Wales

3        Registered office: PO Box 20, Beldray Road, Bilston, West Midlands WV14
         7NF

4        Type of company: Private Limited

5        Authorised share capital: L498,200 divided into 2,491,000 ordinary
         shares of; L0.20 each

6        Issued share capital: L498,200 divided into 2,491,000 ordinary shares

7        Directors:        Alistair Scott Firth
                           Mark James Stockslager
                           Robert Mitchell Thornton Jnr.

8        Secretary: Alistair Scott Firth

9        Accounting reference date: March 31

10       Auditors: Deloitte & Touche

                                     PART 2

Particulars of Klippan

1        Registered number: 02264274

2        Place of incorporation: England and Wales

3        Registered office: Byron Street, Carlisle, Cumbria CA2 5TD

4        Type of company: Private Limited

5        Authorised share capital: L2,000,000 divided into 2,000,000 ordinary
         shares of L1 each

6        Issued share capital: L1,570,000 divided into 1,570,000 ordinary shares

7        Directors:        David Reay
                           Robert Mitchell Thornton Jnr.
                           David Wright
                           Alistair Firth
                           Mark James Stockslager

8        Secretary:        David Reay

<PAGE>   33

9        Accounting reference date: March 31

10       Auditors: Deloitte & Touche

                                     PART 3

Particulars of the Subsidiaries

Akta Barnsakerhet AB

1        Registered number: 556540-7961

2        Place of incorporation: Klippan Kommun, Sweden

3        Registered office: Hjalmar Bratings vag 11D, 261 43 Landskrona, Sweden

4        Type of company: Private Limited

5        Authorised.share capital: 100,000 SEK

6        Issued share capital: 100,000 SEK divided into 1,000 shares

7        Directors:        Sten-Ake Kjellstedt
                           Robert Mitchell Thornton Jnr.(chairman)
                           David Wright (member of the board and managing
                           director)

8        Secretary: No permanent secretary

9        Accounting reference date: March 31

10       Auditor: Deloitte & Touche, Slottsgatan 20, 21133 Malmo

Oy Klippan Ab

1        Registered number: 150.956

2        Place of incorporation: Finland

3        Registered office: Sandbanan 8, 01370 Vanda, Finland

4        Type of company: Private Limited

5        Authorised shares capital: 2,000,000 FIM

6        Issued share capital: 500,040 FIM divided into 6,000 shares

7        Directors:        David Wright
                           Leo Martin
                           Robert Mitchell Thornton Jnr.

8        Secretary: No Secretary

9        Accounting reference date: March 31

<PAGE>   34

10       Auditors: Deloitte & Touche

<PAGE>   35

                                   SCHEDULE 3

                            Completion Requirements

1.       Vendor's Obligations

1.1      At Completion the Vendor shall deliver to the Purchaser:

         (a)      duly executed transfer(s) in respect of the Klippan Shares to
                  the Purchaser or its nominee(s) and the share certificate(s)
                  for the Klippan Shares;

         (b)      any waiver, consent, release or other document necessary to
                  give the Purchaser or its nominee(s) full legal and beneficial
                  ownership of the Klippan Shares;

         (c)      the common seal (if any) of each Group Company and each
                  register, minute book and other book required to be kept by
                  each Group Company under the CA 1985 (or applicable
                  legislation) duly written up to the date of Completion and
                  each certificate of incorporation and certificate of
                  incorporation on change of name for each Group Company (to
                  the extent applicable) and the share certificates in respect
                  of each of the Subsidiaries;

         (d)      a copy of a letter to each Group Company from its auditors
                  resigning their office with effect from Completion and, in
                  relation to Klippan, containing the statement referred to in
                  Section 394 of the CA 1985, the original of the letter having
                  been deposited at the registered office of the relevant
                  company;

         (e)      a resignation in the agreed form from each of the directors of
                  each Group Company (other than David Reay, David Wright,
                  Sten-Ake Kjellstedt and Leo Martin) expressed to take effect
                  from the end of the meeting held pursuant to paragraph 1.2;

         (f)      the Management Accounts and all title deeds and other
                  documentation relating to the Properties;

         (g)      a copy of each bank mandate of each Group Company and copies
                  of statements of each bank account of each Group Company made
                  up to a date not earlier than two Business Days before
                  Completion;

         (h)      so far as possible, all documentation relating to the
                  Intellectual Property Rights, including (without limitation)
                  the original registration and renewal certificates for each of
                  the Intellectual Property Rights which are registered or
                  pending as at Completion (or copies thereof where such
                  original documentation is not available);

         (i)      a certified copy of the notarial deed and notification of the
                  share transfer evidencing the transfer of the entire issued
                  share capital of Klippan GmbH from Klippan to the Vendor;

         (j)      a copy of the agreement for the transfer of shares and
                  certified copy of the filings at the Commercial Registry
                  evidencing the transfer of the entire issued share capital of
                  Klippan SARL from Klippan to the Vendor;

<PAGE>   36

         (k)      the Tax Deed duly executed by the Vendor;

         (l)      the Escrow Agreement duly executed by the Vendor and the
                  Escrow Agent;

         (m)      the duly executed resolutions of the Vendor approving the sale
                  and purchase of the Klippan Shares, in a form and substance
                  satisfactory to the Purchaser;

         (n)      the Estimated Completion Balance Sheet in accordance with
                  Schedule 8 in form and substance satisfactory to the
                  Purchaser;

         (o)      the Escrow Agreement duly executed by the Escrow Agent;

         (p)      the German Agreement duly executed by the Klippan Limited and
                  Klippan GmbH; and

         (q)      the Deed of Assignment duly executed by Klippan Limited and
                  Klippan GmbH.

1.2      The Vendor shall ensure that at Completion a meeting of the board of
         directors of each Group Company is held at which the directors:

         (a)      vote in favour of the registration of the Purchaser or its
                  nominee(s) as member(s) of each Group Company in respect of
                  the Klippan Shares (subject to the production of properly
                  stamped transfers);

         (b)      appoint persons nominated by the Purchaser as directors,
                  secretary and auditors of each Group Company with effect from
                  the end of the meeting;

         (c)      revoke each existing mandate given by each Group Company for
                  the operation of its bank accounts and pass the resolutions
                  contained in new mandate(s) giving authority to persons
                  nominated by the Purchaser OR with effect from the end of the
                  meeting, authorise the secretary to notify the specimen
                  signatures of the new officers of each Group Company in
                  connection with each existing mandate given by the Group
                  Company for the operation of its bank accounts;

         (d)      accept the resignation of each director of each Group Company
                  so as to take effect from the end of the meeting and shall
                  hand to the Purchaser duly certified copies of such
                  Resolutions.

1.3      Each of the requirements set out in Clauses 1.1 and 1.2 above shall
         apply equally to each of the Subsidiaries to the extent applicable
         under relevant law.

2.       Purchaser's Obligations

2.1      On Completion, the Purchaser shall deliver to the Vendor:

         (a)      the Tax Deed duly executed duly executed by the Purchaser;

         (b)      the Escrow Agreement duly executed by the Purchaser; and

         (c)      the German Agreement duly executed by the Purchaser.

<PAGE>   37

                                   SCHEDULE 4

                                   Warranties

1.       Capacity and Authority

1.1      The Vendor and each Group Company are companies duly incorporated and
         validly existing under English law or the relevant law of incorporation
         and have been in continuous existence since incorporation.

1.2      Each Group Company has the right, power and authority to conduct its
         business as conducted at the date of this Agreement and to own or lease
         its properties, as now conducted, owned or leased.

1.3      The Vendor's obligations under this Agreement, the Tax Deed, the Escrow
         Agreement and each document to be executed at or before Completion are,
         or when the relevant document is executed will be, enforceable in
         accordance with their terms and will not conflict with any other
         obligation of the Vendor.

2.       Information

2.1      To the best of the Vendor's knowledge, information and belief (after
         having made all reasonable enquiry of each of the Directors of the
         Group Companies, the Vendor's Accountants, the Vendor's Solicitors,
         William M. Mercer, and Marsh) all written factual information provided
         to the Purchaser or its agents or employees or to Debevoise & Plimpton
         or Arthur Andersen during the period from July 20, 2000 to the date of
         this Agreement was when given true, accurate and not misleading in any
         respect which is material to the business of the Group Companies as a
         whole at the time given. For the avoidance of doubt, this Warranty does
         not relate to any statement of opinion, forecast, budget or other
         comment, statement, representation or undertaking in respect of a
         future position, happening or event. In the event of there being a
         conflict in any information warranted pursuant to this Warranty 2.1,
         this Warranty shall be deemed to relate only to the information most
         recently received.

2.2      The information set out in the Recitals and Schedules 1 and 2 of this
         Agreement is true, accurate and not misleading.

3.       Shares and Subsidiary Undertakings

3.1      The Vendor is the sole legal and beneficial owner of the number of
         Klippan Shares set out against his name in Schedule 1, free from any
         Encumbrances.

3.2      Klippan is the sole legal and beneficial owner of the number of
         Subsidiary Shares set out against his name in Schedule 1, free from any
         Encumbrances.

3.3      The Klippan Shares comprise the entire issued share capital of Klippan,
         have been properly allotted and issued and are fully paid or credited
         as fully paid. The particulars of the Vendor and Klippan set out in
         Schedule 2 are true and complete and the Vendor has no other
         subsidiaries other than Klippan.

3.4      The Subsidiary Shares comprise the entire issued share capital of the
         Subsidiaries, have been properly allotted and issued and are fully paid
         or credited as fully paid.

<PAGE>   38

         The particulars of the Subsidiaries set out in Schedule 2 are true and
         complete and Klippan has no other subsidiaries other than Akta and Oy
         Klippan AB.

3.5      There is no Encumbrance, and there is no agreement, arrangement or
         obligation to create or give an Encumbrance, in relation to any of the
         Shares or unissued shares in the capital of any Group Company. No
         person has claimed to be entitled to an Encumbrance in relation to any
         of the Shares.

3.6      Other than this Agreement, there is no agreement, arrangement or
         obligation requiring the creation, allotment, issue, transfer,
         redemption or repayment of or the grant to a person of the right
         (conditional or not) to require the allotment, issue, transfer,
         redemption or payment of a share in the capital of any Group Company
         (including, without limitation, an option or right of pre-emption or
         conversion).

3.7      A copy of the memorandum and articles of association of each Group
         Company (or the equivalent under the relevant law of incorporation) is
         annexed to the Disclosure Letter and is true, accurate and complete and
         has annexed thereto a copy of every resolution or agreement as is
         required by law to be annexed to it and sets out the rights and
         restrictions attaching to each class of share capital in each Group
         Company.

3.8      None of the Subsidiaries have and ever had any subsidiary undertaking.

3.9      Each Group Company has no interest in, and has not agreed to acquire an
         interest in, any corporate body.

4.       Accounts

4.1      The Accounts have been prepared on a proper and consistent basis and
         audited in accordance with the Companies Act 1985 and applicable
         standards, principles and Historical Policies.

4.2      No change in accounting policies has been made in preparing the
         accounts of each Group Company for each of the three financial years of
         each Group Company ended on the Reference Accounts Date, except as
         stated in the audited financial statements for those years.

4.3      The Accounts and the Historical Policies show a true and fair view of
         the assets, liabilities and state of affairs of each Group Company as
         at the Reference Accounts Date and of the profits and losses of each
         Group Company for the financial year ended on the Reference Accounts
         Date.

4.4      To the extent required by the Companies Act 1985 and all appropriate
         SSAPs and FRS, the Accounts disclose and provide for all bad and
         doubtful debts, all liabilities (actual contingent or otherwise) and
         all financial commitments existing at the Reference Accounts Date.

4.5      The results shown by the audited profit and loss accounts of each Group
         Company for each of the three financial years of each Group Company
         ended on the Reference Accounts Date have not (except as disclosed in
         those accounts) been effected by any extraordinary, exceptional or
         non-recurring item or by another fact or circumstance

<PAGE>   39

         making the profit or loss for a period covered by any of those accounts
         unusually high or low.

4.6      The Accounts and the Historical Policies reserve or provide in
         accordance with applicable standards, principles and practices
         generally accepted in the United Kingdom for all Tax liable to be
         assessed on each Group Company, or for which it is or may become
         accountable, for all periods starting on or before the Reference
         Accounts Date (whether or not each Group Company has or may have a
         right of reimbursement against another person). The Accounts reserve in
         accordance with applicable standards, principles and practices
         generally accepted in the United Kingdom for all contingent or deferred
         liabilities to Tax for all periods starting on or before the Reference
         Accounts Date.

4.7      In the Accounts:

         (a)      stock (except long term contract balances) was valued in the
                  same way as in the audited accounts of each Group Company for
                  the two preceding financial years and on the basis of the
                  lower of cost and net realisable value;

         (b)      all redundant and obsolete stock was written off and all sold,
                  moving and damaged stock was written down appropriately.

4.8      The basis and rates of depreciation and amortisation used in the
         Accounts were the same as those used in the audited accounts of each
         Group Company for the two preceding financial years.

4.9      The rates of depreciation and amortisation used in the audited accounts
         of each Company for the three financial years of each Group Company
         ended on the Reference Accounts Date were sufficient to ensure that
         each fixed asset of the Group Company will be written down to nil by
         the end of its useful life.

4.10     The Management Accounts have been carefully and properly prepared with
         all due care on a basis consistent with each other and are not
         misleading with respect to the state of assets, liabilities and affairs
         of the Group Companies as at the relevant Accounts Date and of the
         profits or losses for the period concerned.

4.11     Each Group Company's accounting records are up to date, in its
         possession or under its control and are properly completed in
         accordance with the law and applicable standards, principles and
         practices generally accepted in the United Kingdom.

4.12     None of the debts receivable or due to any Group Company which are
         included in the Accounts or which have subsequently arisen has been
         outstanding for more than three months from its due date for payment or
         has been released on terms that the debtor has paid less than the full
         value of his debt and all such debts have realised or, so far as the
         Vendor is aware (having made all due enquiry of the directors of the
         Group Company), will realise in the normal course of collection their
         full value as included in the Accounts, the Historical Policies or in
         the books of the relevant Group Company after taking into account the
         provision for bad and doubtful debts made in the Accounts. For the
         avoidance of doubt, a debt which has been paid or repaid to any Group
         Company shall not be regarded as realising its full value to the extent
         that it is paid, received or otherwise recovered in circumstances in
         which to the knowledge

<PAGE>   40

         of the Vendor (having made all due enquiry of the directors of the
         Group Company) such payment, receipt or recovery is or may be void,
         voidable or otherwise liable to be reclaimed or set aside.

4.13     All inventory of each Group Company (whether or not allocated to
         contracts in process), including without limitation raw materials, work
         in process and finished products, packaging, items purchased for
         distribution or resale and items which have been ordered or purchased
         by each Group Company, including inventory shown in the Accounts or
         acquired thereafter, was acquired or manufactured in the ordinary
         course of business and is valued on the books of each Group Company at
         the lower of cost or market value determined in accordance with UK GAAP
         and the Historical Policies consistently applied, and the Accounts
         contain all inventory reserves that are appropriate in accordance with
         UK GAAP and the Historical Policies consistently applied. Except as
         reserved against in the Accounts in accordance with UK GAAP and the
         Historical Policies consistently applied, all inventory of each Group
         Company is of good and merchantable quality, meets current industry or
         customer specifications, is shown in the current product catalogue, is
         not damaged or defective, meets all relevant quality control standards,
         is not mislabeled or mispackaged and is saleable or usable for its
         intended purposes in the ordinary course of business, has not been
         returned from customers and is not excessive in amount in light of each
         Group Company's business and current economic conditions. All inventory
         reflected in the Accounts can be sold no later than 12 months after the
         Completion Date.

5.       Changes since the Reference Accounts Date

5.1      Since the Reference Accounts Date:

         (a)      each Group Company's business has been operated in the
                  ordinary and usual course so as to maintain it as a going
                  concern and without any material interruption or alteration in
                  the nature, scope or manner of its business;

         (b)      there has been no adverse change in the financial or trading
                  position or turnover of each Group Company;

         (c)      no material change has occurred in the assets and liabilities
                  shown in the Accounts and there has been no reduction in the
                  value of the net tangible assets of each Group Company on the
                  basis of valuation used in the Accounts; and

         (d)      no Group Company has borrowed or raised any money or taken any
                  form of financial facility (whether pursuant to a factoring
                  arrangement or otherwise).

5.2      Since the Reference Accounts Date:

         (a)      each Group Company has not other than in the usual course of
                  its business:

                  (i)      acquired or disposed of or agreed to acquire or
                           dispose of, a material asset; or

                  (ii)     assumed or incurred, or agreed to assume or incur, a
                           liability, obligation or expense (actual or
                           contingent); or

<PAGE>   41

                  (iii)    entered into or amended any material contract or
                           arrangement (in writing or otherwise) in each case
                           involving consideration, expenditure or liabilities,
                           in excess of 5,000;

         (b)      each Group Company has not factored, sold or agreed to sell a
                  debt;

         (c)      each Group Company's business has not been materially or
                  adversely affected by the loss of any important distributor,
                  agent, customer or source of supply. For these purposes, an
                  important distributor, agent, customer or source of supply
                  means the relevant party having a revenue exceeding L10,000
                  per annum;

         (d)      each Group Company has not:

                  (i)      made, or agreed to make, capital expenditure
                           exceeding in total L10,000; or

                  (ii),    incurred, or agreed to incur, a commitment or
                           commitments involving capital expenditure exceeding
                           in total L10,000;

         (e)      each Group Company's business has not been materially or
                  adversely affected by the termination of, or a change in the
                  terms of, an agreement or by the loss of a distributor, agent,
                  supplier or customer;

         (f)      each Group Company has not taken any steps to procure the
                  payment by any debtor generally in advance of the date on
                  which book and other debts are usually payable in accordance
                  with the standard terms of business of any Group Company or
                  (if different) the period extended to any particular debtor in
                  which to make payment;

         (g)      each Group Company has not delayed in making payment to any
                  trade creditors generally beyond the date on which payment of
                  the relevant trade debt should be paid in accordance with
                  credit periods authorised by the relevant creditors (or (if
                  different) the period extended by creditors in which to make
                  payment) or extend or amend any of the terms in respect of any
                  trade creditors outside the ordinary course;

         (h)      each Group Company has not declared, paid or made a dividend
                  or distribution (including, without limitation, a distribution
                  within the meaning of ICTA) except as provided in the
                  Accounts;

         (i)      each Group Company has not changed its accounting reference
                  period;

         (j)      no resolutions of the shareholders of any Group Company have
                  been passed;

         (k)      each Group Company, save as required by law, has not made any
                  amendment to the terms and conditions of employment
                  (including, without limitation, remuneration, pension
                  entitlement and other benefits) of any employee (other than
                  minor increases which the Vendor shall notify to the Purchaser
                  as soon as reasonably possible), provide or agree to provide
                  any gratuitous payment or benefit to any such person or any of
                  their dependants, or dismiss any employee or engage or appoint
                  any additional employee;

<PAGE>   42

         (l)      each Group Company has not created, allotted, issued,
                  acquired, repaid or redeemed share or loan capital or made an
                  agreement or arrangement or undertaken an obligation to do any
                  of those things; and

         (m)      each Group Company has not been refused any insurance claims
                  or settled below the amount claimed.

6.       Tax

6.1      Klippan is and has at all times been resident only in the United
         Kingdom for all Tax purposes. Klippan is not liable to pay and has at
         no time incurred any liability to Tax chargeable under the laws of any
         jurisdiction other than the United Kingdom.

6.2      Each Group Company has paid all Tax which it has become liable to pay
         and is not and has not in the six years ending on the date of this
         Agreement been, liable to pay a penalty, surcharge, fine or interest in
         connection with Tax.

6.3      Without prejudice to paragraph 6.2 each Group Company has deducted or
         withheld all Tax which it has been obliged by law to deduct or withhold
         from amounts paid by it, has properly accounted to the relevant Tax
         Authority for all amounts of Tax so deducted or withheld and has
         otherwise complied with its legal obligations in respect of such
         deductions or withholdings.

6.4      Each Group Company has within applicable time limits made all returns,
         provided all information and maintained all records in relation to Tax
         as it is required to make, provide or maintain and has fully complied
         on a timely basis with all notices served on it and any other
         requirements lawfully made of it by any Tax Authority. No return (and
         nothing in a return) is disputed or is yet to be determined by, or is
         subject to agreement with, a Tax Authority.

6.5      Klippan has properly operated in all material respects the
         Pay-As-You-Earn system and has complied in all material respects with
         each reporting obligation in connection with benefits provided (whether
         by each Group Company or by any other person) for each Group Company's
         directors, other officers and employees.

6.6      So far as the Vendor is aware, having made all reasonable enquiries,
         each Group Company is not and does not expect to be involved in a
         dispute in relation to Tax. No Tax Authority has investigated or
         indicated to the Vendor or to any Group Company that it intends to
         investigate each Group Company's Tax affairs.

6.7      Each Group Company has sufficient records to determine the Tax
         consequences which would arise on a disposal or on the realisation of
         each material asset owned by it at the Reference Accounts Date, or
         acquired since the Reference Accounts Date but before the date of this
         Agreement.

6.8      No Tax Authority has agreed to operate any special arrangement (that
         is, an arrangement which is not based on a strict application of all
         relevant Tax legislation, published extra-statutory concessions and
         published statements of practice) in relation to the affairs of each
         Group Company. All notices and other communications from a Tax
         Authority requiring or permitting each Group Company to deal with its
         Tax

<PAGE>   43

         affairs in a particular manner or on a particular basis are in the
         possession of each Group Company.

6.9      The Disclosure Letter contains full details of all applications which
         have been made at any time in the last 3 years by each Group Company
         for any statutory consent or clearance. All particulars and other
         information given to any Tax Authority in connection with any such
         application for such consent or clearance were full and accurate in all
         material respects and, as far as the Vendor is aware, any consent or
         clearance given in response to such application was valid and
         effective. All transactions in respect of which such consent or
         clearance was obtained have been carried into effect, and have been
         undertaken strictly in accordance with the terms of the application for
         the relevant consent or clearance.

6.10     Except as disclosed in the Disclosure Letter, each Group Company is not
         and has not been a party to or otherwise involved in any transaction,
         agreement or arrangement otherwise than by way of a bargain at arms'
         length, or any transaction, agreement or arrangement (whether or not by
         way of a bargain at arms' length) under which it has been or is or may
         be required to make any payment for any goods, services or facilities
         provided to it which is in excess of the market value of such goods,
         services or facilities or under which it has been, or is or may be
         required to provide goods, services or facilities for a consideration
         which is less than the market value of such goods, services or
         facilities and/or in consequence of which it is or will be liable to
         Tax in respect of an amount deemed for Tax purposes to be income or
         gains of each Group Company but not actually income or gains of each
         Group Company.

6.11     Klippan:

         (a)      is registered for the purposes of the VATA;

         (b)      has made, given, obtained and kept up-to-date, full and
                  accurate records in all material respects, invoices and
                  documents required for the purposes of the VATA;

         (c)      has complied in all material respects with all other
                  applicable VAT legislation and in particular has filed all
                  returns and made all payments of VAT on a timely basis; and

         (d)      has not been required by a Tax Authority to give security
                  under the VATA.

6.12     Klippan is not under a duty to make payments on account of VAT pursuant
         to any order made under section 28 of the VATA.

6.13     In the three years ending on the date of this Agreement Kippan has not
         been in default in respect of an accounting period, as the terms
         "default" and "accounting period" are used in section 59(1) of the VATA
         (the default surcharge).

6.14     Klippan is not and has not been liable to a penalty under section 63 of
         the VATA.

6.15     No VAT Return made by Klippan has contained a material inaccuracy for
         the purposes of section 64 of the VATA.

6.16     Klippan is entitled under the VATA to credit for all of its input tax.

<PAGE>   44
 6.17    The Disclosure Letter contains adequate details of any method agreed
         with or directed by H M Customs and Excise or otherwise applicable to
         each Group Company for determining the allowability to that company of
         input tax in accordance with Part XIV of the Value Added Tax
         Regulations 1995.

6.18     The Disclosure Letter contains details of each claim made in the three
         years ending on the date of this Agreement for bad debt relief under
         section 36 of the VATA (bad debts) made by Klippan.

6.19     No Group Company owns any asset which is a capital item, the input tax
         on which may be subject to adjustment in accordance with Part XV of the
         Value Added Tax Regulations 1995 (capital goods scheme).

6.20     Neither Klippan, nor a company of which any Group Company is a relevant
         associate within the meaning of paragraph 3(7) of Schedule 10 to the
         VATA (election to waive exemption), have elected to waive exemption
         under paragraph 2 of Schedule 10 in relation to any land owned by it at
         Completion except as disclosed in the Disclosure Letter. Each such
         election disclosed in the Disclosure Letter has effect. Where any such
         election has been made, no supplies in relation to the relevant land
         will be taken by virtue of paragraph 2(3AA) of Schedule 10 to the VATA
         to be supplies other than taxable supplies. Each Group Company does not
         have an interest in any land supplies in relation to which, if an
         election to waive exemption under paragraph 2 of Schedule 10 to the
         VATA were to be made by each Group Company (or by a company of which
         any Group Company is a relevant associate within the meaning of
         paragraph 3(7) of Schedule 10 to the VATA), would be taken by virtue
         of the said paragraph 2(3AA) to be supplies other than taxable
         supplies.

6.21     No Group Company (to the extent applicable) has received a notice of
         and to the best of the Vendor's knowledge, information and belief there
         is nothing which indicates that the grant to any Group Company of an
         interest in or right over land owned by a Group Company at Completion
         or of a licence to occupy land owned by a Group Company at Completion
         will not be an exempt supply because of an election under Schedule 10
         to the VATA (election to waive exemption).

6.22     No event, transaction, act or omission has occurred by reason or in
         consequence of which any Group Company (to the extent applicable) may
         be deemed to make a taxable supply under paragraph 1 of Schedule 10 to
         the VATA or under the Value Added Tax (Self-Supply of Construction
         Services) Order 1989.

6.23     No tenancy, lease or licence to which any Group Company (to the extent
         applicable) is a party is or may become a developmental tenancy,
         developmental lease or developmental licence for the purposes of Group
         1 of Schedule 9 to the VATA.

6.24     No Group Company (to the extent applicable) is and has not been a party
         to any transaction or arrangements in respect of which a direction has
         been or could be made under paragraphs 1 or 2 of Schedule 6 or
         paragraph 1 of Schedule 7 to the VATA.

6.25     Klippan is not, nor has it is, agreed to become an agent, manager or
         factor for the purposes of section 47 of the VATA (agents, etc.) of a
         person not resident in the United Kingdom.

<PAGE>   45

6.26     Klippan has not been a party to any transactions in respect of which a
         direction under the provisions of Schedule 9A to the VATA has been or
         may be made.

6.27     All value added tax payable on the import of goods and all customs
         duties and duties of excise payable to a Tax Authority in respect of
         any asset (including, without limitation, trading stock) imported or
         owned by each Group Company have been paid in so far as payment has
         fallen due and otherwise such liability has been properly recorded.

6.28     Klippan has not been and is not a close company for the purposes of
         ICTA.

6.29     The entry into or Completion of this Agreement will not result in any
         profit or gain being deemed to accrue to any Group Company for taxation
         purposes, whether pursuant to Section 179 or otherwise.

6.30     All documents by virtue of which any Group Company has any right or in
         the enforcement of which any Group Company is interested have been duly
         stamped.

6.31     No Group Company has or has ever had an interest in a controlled
         foreign company as defined in Chapter IV of Part XVIII of ICTA or any
         material interest in an offshore fund as described in Section 759 of
         ICTA.

6.32     No claim has been made under Section 152, 153, 154 or 175 TCGA or any
         other section which would afflict the amount of any gain accruing or
         being treated as accruing as a disposal of an asset of any Group
         Company.

7.       Assets

7.1      Each asset included in the Accounts or acquired by any Group Company
         since the Reference Accounts Date (other than stock disposed of in the
         usual course of business) and each asset used by any Group Company or
         which is in the reputed ownership of any Group Company is:

         (a)      legally and beneficially owned solely by each Group Company
                  free from any Encumbrance; and

         (b)      where capable of possession, in the possession or under the
                  control of each Group Company.

7.2      Each Group Company owns or has a right to use each asset necessary for
         the effective operation of its business as currently conducted.

7.3      All plant, machinery, vehicles and equipment owned, possessed or used
         by each Group Company are in good condition and working order (fair
         wear and tear accepted) and have been regularly and properly
         maintained. None is in the Vendor's reasonable opinion in need of
         renewal or replacement or surplus to each Group Company's requirements.

7.4      Each Group Company's asset registers comprise a complete and accurate
         record of all the plant, machinery, equipment, vehicles and other
         assets owned, possessed or used by it.

<PAGE>   46

7.5      Maintenance contracts are in force for each asset of each Group Company
         which it is normal to have maintained by independent or specialist
         contractors and for each asset which each Group Company is obliged to
         maintain or repair under a leasing or similar agreement.

7.6      No Group Company is a party to, nor is liable under, a lease or hire,
         hire purchase, credit sale or conditional sale agreement.

7.7      No charge in favour of any Group Company is void or voidable for want
         of registration.

7.8      Each Group Company's level of stock is reasonable having regard to
         current and anticipated demand.

7.9      No debt shown in the Accounts, the Management Accounts or any Group
         Company's accounting records is overdue by more than 12 weeks.

7.10     No Group Company has released a debt shown in the Accounts, the
         Management Accounts or its accounting records so that the debtor has
         paid or will pay less than the debt's book value. None of the debts
         shown in the Accounts, the Management Accounts or any Group Company's
         accounting records has been deferred, subordinated or written off or to
         the best of the Vendor's knowledge, information and belief (having made
         all due enquiry) become irrecoverable to any extent. To the best of the
         Vendor's knowledge, information and belief, each of those debts will
         realise its book value in the usual course of collection.

7.11     No Group Company has acquired or agreed to acquire any material asset
         (other than stock) on terms that property thereon does not pass until
         full payment is made.

8.       German Warranties

8.1      Each of the representations and warranties set out in Article 7 of the
         German Agreement is true accurate and not misleading.

8.2      Klippan GmbH's obligations under the German Agreement are, and will
         be, enforceable in accordance with their terms and will not conflict
         with any other obligation of Klippan GmbH.

8.3      Save as set out in the German Agreement, all Assets relating to the
         Business are being transferred to Klippan as of the Transfer Date.

8.4      So far as the Vendor is aware, other than the Assets, there is no other
         agreement or arrangement for the benefit of the Business in existence.

8.5      So far as the Vendor is aware, all the Business Contracts are in full
         force and effect and have been duly complied with and nothing has
         occurred whereby any of them is or could be subject to early
         termination or which has given or may give right to any claim under any
         of them by any party to any of them.

8.6      So far as the Vendor is aware, no fact or circumstance exists which
         might invalidate or give rise to a ground for termination, avoidance or
         repudiation of any of the Business Contracts. No party with whom
         Klippan GmbH has entered into any of the

<PAGE>   47

         Business Contracts has given notice of its intention to terminate, or
         has sought to repudiate or disclaim, any of the Business Contracts and
         no party with whom it has entered into any of the Business Contracts is
         not in material breach of the Assets.

8.7      Klippan GmbH has no outstanding liabilities or obligations of any
         nature, whether known or unknown or absolute, accrued or contingent or
         otherwise and whether due or to become due relating to the Assets.

8.8      Klippan GmbH has no other employee save for Rudolf Schett.

8.9      This employment contract for the Employee can be terminated by Klippan
         GmbH by three month's notice without giving rise to a claim for damages
         or compensation. Klippan GmbH is not obliged to increase, nor has it
         made provision to increase, the total annual remuneration payable to
         its employee by more than five per cent.

8.10     There are no other employment or consultancy contracts or other
         contracts of engagement between Klippan GmbH and any person in respect
         of which Klippan GmbH has a continuing obligation.

8.11     Klippan GmbH does not owe any amount to its Employee other than for
         accrued remuneration or reimbursement of business expenses, and has not
         provided, or agreed to provide, a gratuitous payment or benefit to its
         Employee.

8.12     Klippan GmbH has complied with each obligation imposed on it by, and
         each order and award made under, statute, regulation, code for conduct
         and practice derived from statute or regulation, collective agreement,
         custom and practice relevant to relations between it and its Employee
         or a trade union or the terms of employment of its Employee.

8.13     Klippan GmbH does not recognise a trade union or other body
         representing its Employee.

8.14     No order has been made, petition presented or resolution passed for the
         winding up of Klippan GmbH or for the appointment of a provisional
         liquidator to Klippan GmbH and no administration order has been made in
         respect of Klippan GmbH.

8.15     No receiver or manager has been appointed of the whole or part of
         Klippan GmbH's Business or in respect of any of the Assets.

8.16     Klippan GmbH is not unable to pay its debts within the meaning of
         Section 17 of the German Insolvency Act ("Insolvenzordnung").

         For the purposes of this Clause 8, each of "Assets", "Business",
         "Business Contracts" and "Employee" shall have the same meaning
         ascribed thereto in the German Agreement.

9.       Intellectual Property

9.1      Each of the Intellectual Property Rights is:

         (a)      so far as the Vendor is aware, valid and enforceable and
                  nothing has been done or omitted to be done by which it may
                  cease to be valid and enforceable;

<PAGE>   48

         (b)      legally and beneficially owned by and validly granted to each
                  Group Company alone, free from any licence, Encumbrance,
                  restriction on use or disclosure obligation (or is lawfully
                  used with the consent of the owner under a licence); and

         (c)      not, and will not be, so far as the Vendor is aware, the
                  subject of a claim or opposition from a person (including,
                  without limitation, an employee of each Company) as to title,
                  validity, enforceability, entitlement or otherwise.

9.2      The Disclosure Letter contains details of all the Intellectual Property
         Rights in respect of which each Group Company is a registered or
         beneficial owner or applicant for registration including full correct
         and up-to-date information in relation to each registration and
         application.

9.3      All renewal and maintenance fees and taxes due and payable prior to
         Completion in respect of each of the pending and registered
         Intellectual Property Rights have been paid in full. Each other action
         required to maintain and protect the pending and registered
         Intellectual Property Rights has been taken.

9.4      To the best of the Vendor's knowledge, information and belief (having
         made all reasonable enquiry) nothing has been done or omitted to be
         done and no circumstances exist by which a person is or will be able to
         seek cancellation, rectification or other modification of a
         registration of any of the Intellectual Property Rights.

9.5      There is and during the two years ending on the date of this Agreement
         has been, no civil, criminal, arbitration, administrative or other
         proceeding or dispute in any jurisdiction concerning any of the
         Intellectual Property Rights. No civil, criminal, arbitration,
         administrative or other proceeding or dispute concerning any of the
         Intellectual Property Rights is pending or threatened. To the best of
         the Vendor's knowledge, information and belief, no fact or circumstance
         exists which might give rise to a proceeding of that type.

9.6      No Group Company has granted and nor is obliged to grant a licence,
         assignment, consent, undertaking, security interest, or other right in
         respect of any of the Intellectual Property Rights.

9.7      There are no, and never have been, any outstanding claims against any
         Group Company for an infringement or unauthorised use of any of the
         Intellectual Property Rights. No Group Company has received any written
         claim that any of the Intellectual Property is invalid.

9.8      The activities, processes, methods, products, services or Intellectual
         Property used, manufactured, dealt in or supplied on or before the date
         of this Agreement by each Company:

         (a)      are not, so far as the Vendor is aware, at the date of this
                  Agreement, nor were they at the time used, manufactured, dealt
                  in or supplied, subject to licence, consent or permission of,
                  or payment to, another person;

<PAGE>   49

         (b)      to the best of the Vendor's knowledge, information and belief,
                  do not at the date of this Agreement, nor did they at the time
                  used, manufactured, dealt in or supplied, infringe, misuse or
                  embody the subject matter of any rights in the Intellectual
                  Property (including, without limitation, moral rights) of
                  another person;

         (c)      to the best of the Vendor's knowledge, information and belief,
                  have not given, and will not give, rise to a claim against any
                  Group Company.

9.9      No party to an agreement relating to the use:

         (a)      by each Group Company of Intellectual Property owned by
                  another person; or

         (b)      of any Intellectual Property Rights owned by each Group
                  Company by another person,

         is, or has at any time been, in breach of the agreement and, so far as
         the Vendor is aware, no circumstances exist which would give rise to
         any breach of any such agreement or to any such agreement being
         terminated, suspended, varied or revoked without each Group Company's
         consent (other than termination without cause upon notice in accordance
         with the terms of the agreement).

9.10     Each Group Company has not disclosed and is not obliged to disclose any
         Confidential Information to any person other than its employees who are
         bound by obligations of confidence or except in the ordinary and usual
         course of business and then only on condition that the disclosure is to
         be treated as being of a confidential nature. The Vendor is not aware
         of any such confidentiality having been breached.

9.11     The Intellectual Property Rights and each Group Company's ownership,
         licence or rights in them will not be adversely affected by the
         transaction contemplated by this Agreement.

9.12     The Intellectual Property Rights comprise all the Intellectual Property
         necessary for each Group Company to operate its business, and for the
         business to continue to operate, as it has been operated during the two
         year period ending on the date of this Agreement.

9.13     Each Group Company is not a party to a confidentiality or other
         agreement and is not otherwise subject to any duty which restricts the
         free use or disclosure of information or of any of the Intellectual
         Property Rights.

9.14     Each Group Company does not use or operate its business under a name
         other than its corporate name.

10.      Trade Mark

10.1     Klippan GmbH is the registered owner of the Trade Mark, free from any
         licence, Encumbrance, restriction on use or disclosure obligation (or
         is lawfully used with the consent of the owner under a licence).

10.2     Klippan GmbH owns no other trade marks other than the Trade Mark.

<PAGE>   50

10.3     There is no claim or opposition from any person (including, without
         limitation, an employee of Klippan GmbH or any Group Company) as to
         title, validity, enforceability entitlement or otherwise of the Trade
         Mark.

10.4     Klippan GmbH has the requisite right, power and authority to enter into
         and perform its obligations under the German Agreement and the Deed of
         Assignment.

10.5     The obligations of Klippan GmbH under the German Agreement and the Deed
         of Assignment, when executed, will be legal, valid, binding and
         enforceable in accordance with their terms and will not conflict with
         any other obligation of Klippan GmbH or of the Vendor.

11.      Insurance

11.1     Each insurable asset of each Group Company has at all material times
         been and is at the date of this Agreement insured to its full
         replacement value (with no provision for deduction or excess) against
         each risk normally insured against by a person operating the types of
         business operated by each Group Company.

11.2     Each Group Company has at all material times been and is at the date of
         this Agreement adequately insured against accident, damage, injury,
         third party loss (including, without limitation, product liability),
         credit risk, loss of profits and all other risks to which a person
         operating the types of business operated by each Group Company is
         exposed.

11.3     The Disclosure Letter contains a Schedule of each current insurance and
         indemnity policy in respect of which each Group Company has an interest
         (including any active historic policies which provide cover on a losses
         occurring basis) (together the "Policies").

11.4     Each of the Policies is valid and enforceable and is not void or
         voidable and will be maintained in full force and effect without
         alteration pending Completion and all premiums will be paid on time.

11.5     No Group Company has done anything or omitted to do anything which may
         make any of the Policies void or voidable.

11.6     No insurer under any of the Policies has disputed, or given any
         indication that they intend to dispute, the validity of any of the
         Policies on any grounds.

11.7     To the best of the Vendor's knowledge, information and belief, (i)
         there is nothing which could vitiate any of the Policies or, (ii)
         prejudice the ability to effect insurance on the same or better terms
         in the future.

11.8     No insurer has ever cancelled or refused to accept or continue any
         insurance in relation to each Group Company.

11.9     No claims have been made, no claim is outstanding and no fact or
         circumstance known to the Vendor exists, which might give rise to a
         claim under any of the Policies.

<PAGE>   51

11.10    No event, act or omission has occurred which requires notification
         under any of the Policies.

11.11    None of the insurers under any of the Policies has refused, or given
         any indication that it intends to refuse, indemnity in whole or in part
         in respect of any claims under the Policies.

11.12    Nothing has been done or omitted to be done, and there is nothing,
         which might entitle the insurers under any of the Policies to refuse
         indemnity in whole or in part in respect of any claims under the
         Policies.

11.13    All premiums which are due under the Policies have been paid.

11.14    No Group Company has not done anything or omitted to do anything, and
         there is nothing, which might result in an increase in the premium
         payable under any of the Policies.

12.      Real Property

12.1     The Property comprises all land and premises owned, occupied or used
         by, or in the possession of, each Group Company.

12.2     There is appurtenant to the Property each right and easement necessary
         for its proper and existing use including, without limitation,
         emergency escape routes. No right or easement is restricted in any way
         (including, without limitation, a restriction on hours of use) or is
         capable of being lawfully interrupted or terminated by any person.

12.3     Each Group Company has no right or easement appurtenant for a term less
         than the unexpired term of the lease, tenancy or licence other than
         disclosed in the documents.

12.4     Each service necessary for the Property's existing use (including,
         without limitation, electricity, gas and water supplies, sewerage and
         telecommunications lines) is available to each Group Company.

12.5     Each Group Company's access to the Property is sufficient for the
         existing use of the Property and (other than in relation to the
         Carlisle Property) is by means of a road adopted by the local highway
         authority and maintainable at public expense.

12.6     The Property is not subject to outgoings other than the uniform
         business rate, water and sewerage rates, rent, service charge and
         insurance premiums.

12.7     Neither the Property nor any of its title deeds is subject to an
         Encumbrance, agreement, obligation, condition, right, easement,
         exception, reservation, or other interest.

12.8     There is, so far as the Vendor is aware, no person in possession or
         occupation of, or who has or claims a right or interest of any kind, in
         the Property adversely to each Company's interest and each Group
         Company is entitled to and has exclusive vacant possession of the
         Property.

<PAGE>   52

12.9     No fact or circumstance exists which materially and adversely affects
         the use or enjoyment of the Property or casts doubt on each Group
         Company's right or title to the Property.

12.10    Each Group Company has performed or complied with each Property Permit,
         obligation, condition, restriction, agreement (including, without
         limitation, the term of any lease) and legal and administrative
         requirement affecting the Property, or its respective ownership,
         occupation, possession or existing use.

12.11    There is, and during the two years ending on the date of this Agreement
         has been, no civil, criminal, arbitration, administrative, or other
         proceeding or dispute concerning the Property. No civil, criminal,
         arbitration, administrative or other proceeding concerning the Property
         is pending or threatened. To the best of the Vendor' knowledge,
         information and belief, no fact or circumstance exists which might give
         rise to a proceeding of that type. There is no outstanding notice
         affecting the Property.

12.12    There is, so far as the Vendor is aware, no resolution or proposal for
         compulsory acquisition of the Property by a local or other authority.

12.13    Each Property's existing use is the lawful use permitted under the
         lease and any applicable town and country planning legislation and such
         permission is not temporary or personal.

12.14    Any permission necessary for the Property's existing use, construction
         and any subsequent alteration has been obtained and is in force,
         unimpeachable and unconditional or subject only to a condition that has
         been satisfied (and nothing more remains to be done under the
         condition).

12.15    To the best of the Vendor's knowledge, information and belief there is
         no material deficiency which requires correction in the state or
         condition of any building or other structure on or forming part of the
         Property.

12.16    No flooding, subsidence or other material defect of any kind
         (including, without limitation, a design or construction defect) which
         affects or has affected the Property.

12.17    To the best of the Vendor's knowledge, information and belief, no
         building or other structure on or forming part of the Property contains
         a deleterious substance or a substance which is not at the date of this
         Agreement used in generally accepted good building practice.

12.18    There is no fact or circumstance (and, to the best of the Vendor's
         knowledge, information and belief, no fact or circumstance will within
         six months starting on the date of this Agreement occur or arise)
         which:

         (a)      could entitle or require a person (including, without
                  limitation, a landlord or licensor) to forfeit or enter on, or
                  take possession of, or occupy, the Property; or

         (b)      could restrict or terminate each Group Company's continued and
                  uninterrupted possession or occupation of the Property.

<PAGE>   53
12.19    A rent or fee payable in respect of the Property is not at the date of
         this Agreement being reviewed and cannot be reviewed before Completion.

12.20    No person (including, without limitation, a landlord or licensor) has
         elected to waive, or indicated an intention to waive, an exemption from
         payment by each Group Company of value added tax in respect of a
         payment made under the Lease.

12.21    The documents disclosed relating to the Property are all those that are
         relevant and are complete copies.

12.22    No Group Company has any contingent liability or other liability as
         original tenant, landlord, assignee or otherwise in respect of any real
         property or interest in real property except the Property.

12.23    As far as the Vendor is aware, no landlord or party to any lease of the
         Property (except the Group Company) is in breach of its obligations to
         the Group Company under such lease.

12.24    There is no interference with the rights of any of the Group Companies
         in respect of or appurtenant to the Property.

13.      Environmental Matters, Health and Safety and Product Liability

13.1     The operation of each Group Company's business does not involve and so
         far as the Vendor is aware has never involved the use, or the release
         or discharge of a hazardous substance or article, waste, sewage or
         other pollutant or contaminant.

13.2     So far as the Vendor is aware, no land or other asset owned, occupied,
         possessed or used by each Group Company on or at any time before the
         date of this Agreement:

         (a)      contains or so far as the Vendor is aware has contained (in
                  the case of land, above or below ground) a hazardous substance
                  or article, waste or other pollutant or contaminant;

         (b)      is or so far as the Vendor is aware has been used for the
                  deposit, storage, treatment or disposal of waste or sewage; or

         (c)      is referred to or listed in a register of polluted or
                  contaminated land and so far as the Vendor is aware no fact or
                  circumstance exists which might give rise to an entry in such
                  a register.

13.3     No Group Company has sold, supplied or provided a defective product or
         services in the course of its business on or prior to the date hereof.

13.4     No Group Company has manufactured, sold or supplied any product or
         service which:

         (a)      is, was or will become, in any material respect, faulty or
                  defective when sold to an end-user; or

         (b)      does not comply in any material respect with any warranty or
                  representation, express or implied, made by or on behalf of
                  any Group Company in respect of it or with all laws,
                  regulations, standards and requirements applicable to it; or

<PAGE>   54

         (c)      was sold or supplied on terms that any Group Company accepts
                  an obligation to service or repair or replace such products
                  after delivery.

13.5     No Group Company has received a prohibition notice, a notice to warn or
         a suspension notice under the Consumer Protection Act 1987 in relation
         to any of its products at any time within the last 3 years.

13.6     Each Group Company has in relation to its plant and machinery and other
         fixed assets, and the Properties and its employees, complied with all
         legal requirements relating to health and safety including, but not
         limited to, those imposed by the Health and Safety at Work etc. Act
         1974 and all regulations made thereunder, and no action has been taken
         by any entering authority in relation to any actual or alleged breach
         of such requirements and neither is any Group Company in receipt of any
         claim by any officer or employee or any past officer or employee in
         relation to any such breach and the Vendor is not aware of any
         circumstances which may lead to such action or claim.

13.7     (a)      Each Group Company is and to the Vendor's knowledge always has
         been in full compliance with all Environmental Laws and the existence
         and the use of the Properties, machinery and other property of any
         Group Company has been and is in accordance with all Environmental
         Laws.

         (b)      No written notice, written demand or written request for
         information has been issued or made and no investigation or review is
         or has been threatened or is pending by any governmental authority or
         other person with respect to any alleged violation by any Group Company
         of any Environmental Law or liability thereunder.

         (c)      No Group Company owns or so far as the Vendor is aware has in
         the past owned or had any interest in land which has been used for a
         contaminative use or upon which toxic, radioactive, caustic or other
         hazardous substances (of whatever kind) have been stored or processed
         in a manner inconsistent with any Environmental Laws.

14.      Agreements

14.1     To the best of the Vendor's knowledge, information and belief no fact
         or circumstance exists which might invalidate or give rise to a ground
         for termination, avoidance or repudiation of any agreement, arrangement
         or obligation of which each Group Company is a party. No party with
         whom each Group Company has entered into an agreement, arrangement or
         obligation has given notice of its intention to terminate, or has
         sought to repudiate or disclaim, the agreement, arrangement or
         obligation.

14.2     No Group Company nor any party with whom each Group Company has entered
         into an agreement, arrangement or obligation is in material breach of
         the agreement, arrangement or obligation. To the best of the Vendor's
         knowledge, information and belief, no fact or circumstance exists which
         might give rise to a breach of this type.

14.3     No Group Company is a party to and is not liable under a long-term,
         onerous or unusual legally binding agreement, arrangement or obligation
         including, without limitation:

<PAGE>   55

         (a)      an agreement, arrangement or obligation entered into other
                  than in the usual course of its business;

         (b)      an agreement, arrangement or obligation entered into other
                  than by way of a bargain at arms length;

         (c)      an agreement, arrangement or obligation restricting each Group
                  Company's freedom to operate the whole or part of its business
                  or to use or exploit any of its assets;

         (d)      a sale or purchase, option or similar agreement, arrangement
                  or obligation affecting an asset owned, occupied, possessed or
                  used by each Group Company or by which each Group Company is
                  bound;

         (e)      a material agreement, arrangement or obligation with which
                  each Group Company cannot comply on time or without undue or
                  unusual expenditure of money or effort;

         (f)      a contract for the sale of shares or assets comprising a
                  business undertaking which contains warranties or indemnities
                  under which any Group Company still has a remaining liability
                  or obligation or can be terminated as a result of any change
                  in the underlying ownership or control of any Group Company,
                  or would be materially affected by such change; or

         (g)      an agreement, arrangement or obligation which is in any way
                  otherwise than in the ordinary course of any Company's
                  business.

14.4     Each Group Company is not:

         (a)      a member of a joint venture, consortium, partnership or
                  association (other than the bona fide trade association); or

         (b)      a party to a distributorship, agency, franchise or management
                  agreement or arrangement.

15.      Terms of Trade and Business

15.1     Each Group Company has paid its creditors within the times agreed with
         them. No debt owing by it has been due for more than 30 days.

15.2     During the year ending on the date of this Agreement, no substantial
         supplier, distributor, agent or customer of each Group Company has:

         (a)      stopped, or indicated an intention to stop, trading with each
                  Company;

         (b)      reduced, or indicated an intention to reduce, trading with
                  each Company; or

         (c)      changed or indicated an intention to change, substantially the
                  terms on which it is prepared to trade with each Group
                  Company.

15.3     To the best of the Vendor's knowledge, information and belief no
         substantial supplier, distributor, agent or customer of each Group
         Company is likely to:

<PAGE>   56

         (a)      stop trading with each Group Company;

         (b)      reduce substantially its trading with each Group Company; or

         (c)      change substantially the terms on which it is prepared to
                  trade with each Group Company.

15.4     To the best of the Vendor's knowledge, information and belief, the
         attitude of suppliers, distributors, agents, customers and employees
         with regard to each Group Company will not be prejudicially affected by
         the execution or performance of this Agreement or any document to be
         executed at or before Completion.

15.5     No Group Company has entered into an agreement or arrangement with a
         supplier, distributor, agent or customer in terms materially different
         to its standard terms of business.

15.6     No person (either individually or jointly with another person) has
         bought from or sold to each Group Company, either in the financial year
         of each Group Company ended on the Reference Accounts Date or since the
         Reference Accounts Date, more than five per cent of the total amount of
         all purchases or sales made by each Group Company in that period.

15.7     No Group Company has outstanding any bid, tender, sale or service
         proposal.

15.8     So far as the Vendor is aware, no supplier, distributor, agent or
         customer of any Group Company is in breach of any of its obligations to
         any Group Company.

15.9     None of the records, systems, data or information of each Group Company
         is recorded, stored, maintained, operated or otherwise wholly or partly
         dependent on or held or accessible by any means (including, without
         limitation, any electronic, mechanical or photographic process,
         computerised or not) which are not under the exclusive ownership and
         direct control of each Group Company.

15.10    Each Group Company has (to the extent applicable to such Group Company)
         at all times complied with the Data Protection Acts 1984 and 1998
         (including, for the avoidance of doubt, the data protection principles
         set out in Schedule 1 to the Data Protection Act 1984 and the
         Telecommunications (Data Protection and Privacy) (Direct Marketing)
         Regulations 1998.

16.      Effect of Sale

         Neither the execution nor the performance of this Agreement or any
         document to be executed at or before Completion will, so far as the
         Vendor is aware, result in any Group Company losing the benefit of any
         Permit necessary for carrying on each Group Company's business in the
         places and in the manner currently carried on or any asset, grant,
         subsidy, right or privilege which it enjoys at the date of this
         Agreement or will:

         (a)      conflict with;

         (b)      result in the breach of;

<PAGE>   57

         (c)      give rise to an event of default under;

         (d)      require the consent of a person under;

         (e)      enable a person to terminate; or

         (f)      relieve a person from an obligation under

         any agreement or arrangement to which any Group Company is a party or
         any legal or administrative requirement by which any Group Company is
         bound or result in any present or future indebtedness of any Group
         Company becoming due or capable of being declared due and payable prior
         to its stated maturity.

17.      Employees

17.1     Save as referred to in the Disclosure Letter, there is no employment or
         other contract of engagement between any Group Company and any of its
         directors or their officers. No Group Company is a party to a
         consultancy contract.

17.2     There is no employment contract between any Group Company and any its
         employees which cannot be terminated by any Group Company by three
         month's notice or less without giving rise to a claim for damages or
         compensation (other than a statutory redundancy payment or statutory
         compensation for unfair dismissal).

17.3     There is no employment or consultancy contract or other contract of
         engagement between any Group Company and any person which is in
         suspension or has been terminated but is capable of being revised or
         enforced and in respect of which each Company has a continuing
         obligation.

17.4     The Disclosure Letter contains details of:

         (a)      the total number of Group Company's employees including those
                  who are on maternity leave or absent because of disability or
                  other long-term leave of absence and who have or may have a
                  right to return to work with each Group Company;

         (b)      the name, date of start of employment, period of continuous
                  employment, salary and other benefits, grade and age of each
                  employee of each Group Company and, where an employee has been
                  continually absent for more than one month, the reason for the
                  absence; and

         (c)      the terms of the contract of each director, other officer and
                  employee of each Group Company entitled to remuneration at an
                  annual rate or an average annual rate, or an average annual
                  rate over the last three financial years, of more than
                  L30,000.

17.5     The basis of the remuneration payable to each Group Company's
         directors, other officers and employees is the same as that in force at
         the Reference Accounts Date. Each Group Company is not obliged to
         increase, nor has it made provision to increase, the total annual
         remuneration payable to its directors, other officers and employees by
         more than five per cent.

<PAGE>   58

17.6     No Group Company owes any amount to a present or former director, other
         officer or employee of each Group Company (or his dependant) other than
         for accrued remuneration or reimbursement of business expenses.

17.7     There is no agreement or arrangement between each Group Company and an
         employee or former employee with respect to his employment, his ceasing
         to be employed or his retirement which is not included in the written
         terms of his employment or previous employment. No Group Company has
         provided, or agreed to provide, a gratuitous payment or benefit to a
         director, officer or employee or to any of their dependants.

17.8     Each Group Company has maintained up-to-date and accurate records
         regarding the employment of each of its employees (including, without
         limitation, details of terms of employment, payments of statutory sick
         pay and statutory maternity pay, income tax and social security
         contributions, disciplinary and health and safety matters), and
         termination of employment.

17.9     No Group Company has since the Reference Accounts Date:

         (a)      incurred a liability for breach or termination of an
                  employment contract including, without limitation, a
                  redundancy payment, protective award and compensation for
                  wrongful dismissal, unfair dismissal and failure to comply
                  with an order for the reinstatement or re-engagement of an
                  employee;

         (b)      incurred a liability for breach or termination of a
                  consultancy agreement; or

         (c)      made or agreed to make a payment or provided or agreed to
                  provide a benefit to a present or former director, other
                  officer or employee of each Company or to any of their
                  dependants in connection with the actual or proposed
                  termination or suspension of employment or variation of an
                  employment contract.

17.10    Each Group Company has complied with:

         (a)      each obligation imposed on it by, and each order and award
                  made under, statute, regulation, code for conduct and practice
                  derived from statute or regulation, collective agreement,
                  custom and practice relevant to relations between it and its
                  employees or a trade union or the terms of employment of its
                  employees; and

         (b)      each recommendation made by the Advisory, Conciliation and
                  Arbitration Service and each award and declaration made by the
                  Central Arbitration Committee.

17.11    Within the year ending on the date of this Agreement, no Group Company
         (to the extent applicable) has:

         (a)      given notice of redundancies to the relevant Secretary of
                  State or started consultations with a trade union under
                  Chapter II of Part IV of the Trade Union and Labour Relations
                  (Consolidation) Act 1992 or failed to comply with its
                  obligations under Chapter II of Part IV of that Act; or

<PAGE>   59

         (b)      been a party to a relevant transfer (as defined in the
                  Transfer of Undertakings (Protection of Employment Regulations
                  1981) or failed to comply with a duty to inform and consult a
                  trade union under those Regulations.

17.12    No Group Company has any arrangement with and does not recognise a
         trade union, works council, staff association or other body
         representing any of its employees.

17.13    No Group Company is involved in, and, so far as the Vendor is aware, no
         fact or circumstance exist which might give rise to, a dispute with a
         trade union, works council, staff association or other body
         representing any of its employees.

17.14    No Group Company has and is not proposing to introduce a share
         incentive, share option, profit sharing, bonus or other incentive
         scheme for any of its directors, other officers or employees.

17.15    There is not and has not been a training scheme, arrangement or
         proposal in relation to each Company in respect of which a levy may
         become payable by each Company under the Industrial Training Act 1982.

18.      Pensions and Other Benefits

18.1     The Scheme is the only scheme to which Klippan makes payment for
         providing retirement, death, disability or life assurance benefits. The
         Group Companies have no obligation (whether legally binding or not) to
         provide "relevant benefits" (within the meaning of Section 612 ICTA
         1988) to, or in respect of any person who is now or has been an officer
         or employee of any Group Company or spouse or dependant of such officer
         or employee.

18.2     Full and accurate details and particulars of The Scheme in all material
         respects have been disclosed in the Disclosure Letter together with
         accurate, up-to-date and complete copies of all documents relating to
         The Scheme including (i) the actuary's report on the latest actuarial
         valuations of The Scheme, (ii) the latest annual report and accounts
         and (iii) a list of investments held for The Scheme during the last
         year showing each asset of The Scheme and its market value at a date no
         earlier than a month before the date of this Agreement. There is no
         obligation to provide benefits under The Scheme other than as revealed
         in such documents and particulars.

18.3     The members data relating to The Scheme disclosed in the Disclosure
         Letter is accurate, up-to-date and complete. The Disclosure Letter sets
         out the rate at which contributions to The Scheme are being paid and
         the basis on which they are calculated, and whether they are paid in
         advance or in arrear.

18.4     No power to increase the benefits under The Scheme has been exercised
         in the last year of the Scheme.

18.5     The Scheme is contracted out of the State Earnings Related Pension
         Scheme within the meaning of the Pensions Schemes Act 1993.

18.6     The Scheme is "exempt approved" (within the meaning of Chapter I of
         Part XIV ICTA 1988) and, to the best of the Vendor's knowledge and
         awareness, there is no reason why approval of the Board of Inland
         Revenue should be withdrawn.

<PAGE>   60

18.7     During the Vendor's period of ownership of the Companies, the
         provisions of The Scheme has never discriminated illegally between male
         and female members.

18.8     All premiums payable under contracts of insurance relating to payment
         of benefits on death before normal pension age in respect of any
         officer or employee of any Group Company have been paid and all
         contributions to, and expenses of, The Scheme which have fallen due for
         payment have been paid.

18.9     Except as fairly disclosed in the Disclosure Letter, there is no
         dispute with regard to the benefits payable under The Scheme, no claim
         by or against the Trustees of The Scheme or any of the participating
         employers or any other payments or benefits (other than routine claims
         for benefits). Except as fairly disclosed in the Disclosure Letter, no
         legal proceedings in connection with The Scheme or any of the trustees
         are pending, threatened or expected nor is there any fact or
         circumstance likely to give rise to any such proceedings.

18.10    The Scheme has at all times complied with and been administered in all
         material respects in accordance with the provisions governing it and
         all applicable laws, regulations and requirements, including the
         requirements of the Inland Revenue for continued approval as an exempt
         approved scheme, and of trust law.

18.11    Klippan has at all times complied with all the provisions of The Scheme
         which apply to it.

18.12    The actuary's report on the latest actuarial valuation accurately
         describes the financial position of The Scheme at its effective date.
         No change has occurred since such date that would materially affect the
         level of funding of The Scheme and, since such date, contributions have
         been paid to The Scheme at the rate recommended by the actuary. No
         assets have been withdrawn from The Scheme (except to pay benefits)
         since the effective date of the list of assets disclosed in the
         Disclosure Letter.

18.13    All taxes and expenses relating to the Scheme have been paid and no
         services have been rendered or requested which have not been paid for.

19.      Liabilities

19.1     Except as disclosed in the Accounts or in the Disclosure Letter, no
         Group Company has any outstanding and has not agreed to create or incur
         loan capital, borrowing or indebtedness in the nature of borrowing.

19.2     No Group Company is a party to and is not liable under a guarantee,
         indemnity or other agreement to secure or incur a financial or other
         obligation with respect to another person's obligation.

19.3     No part of the loan capital, borrowing or indebtedness in the nature of
         borrowing of each Group Company is dependent on the guarantee or
         indemnity of, or security provided by, another person.

19.4     No event has occurred or been alleged to have occurred which:

         (a)      constitutes an event of default, or otherwise gives rise to an
                  obligation to repay, under an agreement relating to borrowing
                  or indebtedness in the nature

<PAGE>   61
                  of borrowing (or will do so with the giving of notice or lapse
                  of time or both) or

         (b)      will lead to an Encumbrance constituted or created in
                  connection with borrowing or indebtedness in the nature of
                  borrowing, a guarantee, an indemnity or other obligation of
                  each Group Company becoming enforceable (or will do so with
                  the giving of notice or lapse of time or both);

19.5     No Group Company is liable to repay an investment or other grant or
         subsidy made to it by a body (including, without limitation, the
         Department of Trade and Industry or its predecessor).

19.6     No fact or circumstance (including, without limitation, execution and
         performance of this Agreement) exists which might entitle a body to
         require repayment of, or refuse an application by each Group Company
         for, the whole or part of a grant or subsidy.

19.7     Each Group Company has no liabilities or obligations of any nature,
         whether known or unknown, absolute, accrued contingent or otherwise and
         whether due or to become due, arising out of relating to the business
         and operations of the Group Company as previously or currently
         conducted except (a) as and to the extent disclosed or provided for in
         the Accounts and/or the Management Accounts and (b) for liabilities and
         obligations that (i) were incurred after the Reference Accounts Date in
         the ordinary course of business consistent with past practice; (ii)
         individually and in the aggregate would not have a material adverse
         effect; and (iii) do not materially impair the ability of the Vendor to
         perform its obligations hereunder.

19.8     The Vendor is not aware of anything that may prevent the Group
         Companies from conducting their respective businesses and operations in
         the manner currently conducted following the Completion Date.

20.      Permits

20.1     Each Group Company has obtained and has complied with the terms and
         conditions of each Permit.

20.2     Details of each Permit are set out in the Disclosure Letter.

20.3     Each Permit is in force and unconditional or subject only to a
         condition that has been satisfied. To the best of the Vendor's
         knowledge, information and belief, no Permit will be revoked,
         suspended, canceled or varied or not renewed.

20.4     Each action required for the renewal or extension of each Permit has
         been taken.

21.      Insolvency

21.1     No order has been made, petition presented or resolution passed for the
         winding up of any Group Company or for the appointment of a provisional
         liquidator to any Group Company and no administration order has been
         made in respect of each Group Company.

21.2     No receiver or manager has been appointed of the whole or part of any
         Group Company's business or assets.

<PAGE>   62

21.3     (To the extent applicable to any Group Company), no voluntary
         arrangement has been proposed under Section 1 of the Insolvency Act
         1986 in respect of any Group Company and no compromise or arrangement
         has been proposed, agreed to or sanctioned under section 425 of the CA
         1985 in respect of each Group Company.

21.4     No Group Company (to the extent applicable) is insolvent or unable to
         pay its debts within the meaning of Section 123 of the Insolvency Act
         1986.

21.5     No Group Company has stopped paying its debts as they fall due.

21.6     No distress, execution or other process has been levied on an asset of
         each Group Company or action taken to repossess goods in each Group
         Company's possession which has not been satisfied in full.

21.7     There is no unsatisfied judgment or court order outstanding against any
         Group Company.

21.8     No floating charge created by any Group Company has crystallized and,
         so far as the Vendor is aware, there are no circumstances likely to
         cause such floating charge to crystallize.

21.9     No action has been taken by the Registrar of Companies to strike any
         Group Company off the register under section 652 of the CA 1985.

21.10    No Group Company has at any time during the two years immediately prior
         to the date of this Agreement:

         (a)      entered into a transaction with any person at an undervalue
                  (as referred to in Section 238(4) of the Insolvency Act 1986);
                  or

         (b)      been given a preference by any person (as referred to in
                  section 239(4) of the Insolvency Act 1986).

21.11    No event analogous to any of the foregoing has occurred in or outside
         England.

22.      Competition

22.1     No Group Company has any liability under, and is not a party to, any
         agreement or arrangement

         (a)      particulars of which have been furnished to the Director
                  General of Fair Trading under the Restrictive Trade Practices
                  Acts 1976 and 1977;

         (b)      which is prohibited by any competition law.

22.2     No Group Company has given an undertaking or written assurance (legally
         binding or not) to a governmental authority or an authority of the
         European Communities or European Economic Area under the Fair Trading
         Act 1973, Competition Act 1980, Restrictive Trade Practices Acts 1976
         and 1977, Resale Prices Act 1976, Treaty of Rome, Agreement on the
         European Economic Area or any other statute or legal instrument. No
         Group Company is affected by an order or regulation made under the Fair
         Trading Act 1973 or the Competition Act 1980 or by a decision of the

<PAGE>   63

         Commission of the European Communities, EFTA Surveillance Authority or
         a competition or governmental authority of another jurisdiction.

22.3     No Group Company has received a communication or request for
         information relating to any aspect of each Group Company's business
         from or by the Director General of Fair Trading, Competition
         Commission, Secretary of State for Trade and Industry, Commission of
         the European Communities or EFTA Surveillance Authority or a
         competition or governmental authority of another jurisdiction. No
         agreement, arrangement or conduct (by omission or otherwise) of each
         Group Company is or has been the subject of an investigation, report or
         decision by any of those persons or bodies and none is pending or
         threatened. To the best of the Vendor's knowledge, information and
         belief, no fact or circumstance exists which might give rise to an
         investigation, report or decision by any of those persons or bodies.

23.      Litigation and Compliance with Law

23.1     No Group Company nor a person for whose acts or defaults each Group
         Company may be vicariously liable is involved, or has during the two
         years ending on the date of this Agreement been involved, in a civil,
         criminal, arbitration, administrative or other proceedings. No civil,
         criminal, arbitration, administrative or other proceeding is pending or
         threatened by or against each Group Company or a person for whose acts
         or default each Group Company may be vicariously liable.

23.2     To the best of the Vendor's knowledge, information and belief, no fact
         or circumstance exists which might give rise to a civil, criminal,
         arbitration, administrative or other proceeding involving each Group
         Company or a person for whose acts or defaults each Group Company may
         be vicariously liable.

23.3     There is no outstanding judgement, order, decree, arbitral award or
         decision of the court, tribunal, arbitrator or governmental agency
         against each Group Company or a person for whose acts or defaults each
         Group Company may be vicariously liable.

23.4     Each Group Company has, in the Vendor's reasonable knowledge, conducted
         its business and dealt with its assets in all material respects in
         accordance with all applicable legal and administrative requirements.

23.5     There is not and has not been any governmental or other investigation,
         inquiry or disciplinary proceeding concerning each Group Company and
         none is pending or threatened. To the best of the Vendor's knowledge,
         information and belief no fact or circumstance exits which might give
         rise to an investigation, inquiry or proceeding of that type.

23.6     So far as the Vendor is aware, no Group Company or any person for whose
         acts or defaults each Group Company may be vicariously liable has:

         (a)      induced a person to enter into an agreement or arrangement
                  with any Group Company by means of a unlawful or immoral
                  payment, contribution, gift or other inducement;

         (b)      offered or made an unlawful or immoral payment, contribution,
                  gift or other inducement to a government official or employee;
                  or

<PAGE>   64

         (c)      directly or indirectly made an unlawful contribution to a
                  political activity.

24.      Insider Agreements

         There is not, and during the three years ending on the date of this
         Agreement, there has not been, any agreement or arrangement (legally
         enforceable or not) to which any Group Company is or was a party and in
         which any of the Vendor, a director or former director of any Group
         Company or a person connected with any of them is or was interested in
         any way. For this purpose, "connected" has the meaning given by section
         839 of ICTA, except that in construing section 839 "control" has the
         meaning given by section 840 or section 416 of ICTA so that there is
         control wherever either section 840 or 416 requires.

25.      Miscellaneous

25.1     Each Group Company is operating and has always operated its business in
         all respects in accordance with its memorandum and articles of
         association at the relevant time.

25.2     Each register, minute book and other book which the CA 1985 requires
         each Group Company to keep has been properly kept and contains a
         complete and accurate record of the matters which it is required by the
         CA 1985 to record. No notice has been received or allegation made that
         a register or book is incorrect or should be rectified.

25.3     All returns, particulars, resolutions and other documents required to
         be delivered by each Group Company to the Registrar of Companies and
         other governmental or other authority or agency have been properly
         prepared and delivered.

25.4     No Group Company has not given a power of attorney or other authority
         by which a person my enter into an agreement, arrangement or obligation
         on any Group Company's behalf (other than an authority for a director,
         other officer or employee to enter into an agreement in the usual
         course of that person's duties).

26.      Brokerage or Commission

         No person is entitled to receive a finder's fee, brokerage or
         commission from any Group Company in connection with this Agreement.

<PAGE>   65

                                    SCHEDULE 5

                                   Properties

1.       The Carlisle Lease - Premises at Byron Street, Caldergate, Carlisle,
         Cumbria, being registered under title number CU 34611 with good title
         leasehold and more particularly described in a lease dated April 3,
         1986 between Fred Proudfoot Limited (1) and Ase (UK) Limited (2).
         Leasehold - for a term of 25 years from January 10, 1986 and Warehouse
         Premises at Byron Street, Caldergate, Carlisle, Cumbria between The
         House of Fraser (Stores) Limited and Klippan dated February 28, 1995.
         Leasehold for a term of 16 years from January 10, 1995.

2.       The Landskrona Lease - Premises at Hjalmar Brantings, Vag 11 D,
         Landskrona, Sweden.

3.       The Vantaa Lease - Premises at Sandbanan 8,01370 Vanda, Finland.

<PAGE>   66

                                   SCHEDULE 6

                              Accounting Principles

The Completion Accounts as defined in Clause 3.1 of the Agreement shall be
prepared in accordance with all applicable UK GAAP, in a manner consistent with
the Group's established practice and in a manner consistent with the policies
and practices adopted in preparation of the Accounts.

The following bases and principles represent agreed interpretations of the
application of these principles and practices to specific areas of the Accounts.
To the extent that there is any conflict between the following bases and
principles and those adopted in preparation of the Accounts then the policies
set out herein shall prevail.

Sales and Debtors

1.       Trade Debtors represent the amounts owed by third parties for goods and
         services provided on or before the period end, inclusive of VAT. For
         the avoidance of doubt, the point of sale is normally dispatch by the
         Group of the goods or performance of the service.

2.       A credit note provision will be made based on valid debit notes
         received from customers, and other known credits which are foreseen
         (normally valued at one to two months credit note costs). Any disputes
         will be resolved by the Company.

3.       A provision will be made for bad or doubtful trade debts where it is
         considered that a specific customer is unlikely to be able to meet
         their debts as they fall due. Accounts which have been sent to a
         collection agency or referred to counsel for collection shall be valued
         at the higher of nil and the amount actually collected after the
         Completion Date up to the date on which the Completion Accounts are
         agreed or determined. An additional provision will be established in
         accordance with historical practice.

4.       A provision will be made based on the best estimate of the amount that
         will be taken by customers by way of settlement discount on a time
         apportioned basis according to historical practice, based on the actual
         amount outstanding.

5.       A provision will be made based on the royalty payment due under the
         terms of the Mamas & Papas licence agreement.

6.       A rebate provision will be made based on the amount due to customers
         under their rebate agreements. The relevant rebate percentage for each
         customer shall be calculated by reference to the aggregate of (i) the
         actual turnover during the rebate period in which Completion falls,
         from the commencement of such period up to and including Completion,
         and (ii) the best forecast of turnover for the balance of the rebate
         period. To calculate the amount of the rebate provision the rebate
         percentage calculated for the relevant customer in accordance with the
         foregoing should then be applied to the actual turnover from the
         commencement of the rebate period in which Completion falls up to and
         including Completion.

7.       Prepayments will be accounted for on a time apportioned basis, normally
         calendar weeks.

<PAGE>   67

8.       No provision will be made in respect of any inter Group trading
         balances.

Pensions

1.       The cash cost of providing pensions and other post-retirement benefits
         for employees is charged to the profit and loss account as incurred. No
         provision or accrual will be made for any pension fund surplus or
         deficit.

2.       An accrual or prepayment will be made for any unpaid insurance premiums
         relating to the group life assurance scheme.

Insurance

1.       Insurance prepayments or accruals will be calculated on a time
         apportioned basis.

Agent's commission

1.       Commission is accrued for as incurred under the terms of the individual
         agency agreements.

Pre-paid and Deferred Expenses

1.       Prepaid expenses and deferred expenses shall be included as to the
         extent that a direct and measurable benefit will be received, or cash
         will be recoverable.

2.       Product displays or samples sent to a customer, operating supplies (for
         example, oils and fluids) and repair parts (for example, minor or small
         parts for production equipment) will not be recorded as assets.

Stocks and Inventories

1.       A physical stock count will be performed to identify all stocks and
         inventories.

2.       Stocks and inventories will be stated by product, at the lower of cost
         and net realisable value on a basis consistent with the historical
         practice and the practice applied in the calculation of stocks and
         inventories as at the December 2000 period end.

3.       Cost includes all expenditure incurred in the normal course of business
         in bringing the stocks to their present location and condition,
         including the appropriate proportion of production related overheads
         calculated on a consistent basis.

4.       Costs are to be the standard costs in use as at the December 2000
         period end unless there is a significant change in the cost of raw
         materials from that date, in which case the new cost of raw materials
         will be used rather than the standard cost.

5.       Net realisable value is the actual or estimated selling price, net of
         trade discounts but before settlement discounts, less:

         (a)      all further costs to completion; and

         (b)      all costs to be incurred in marketing, selling and
                  distribution.

6.       The gross value of the material content of stock is based on the actual
         cost.

<PAGE>   68

7.       The value of work-in-progress includes the standard labour element
         required in order to process the part to its current location
         calculated on actual material cost on a consistent basis. Factory
         overheads are apportioned through a single labour recovery rate.

8.       Obsolete stocks are identified through a review of the reasonable
         future sales of stock items. A provision is made against all identified
         obsolete stock items to reduce them to their estimated net realisable
         value in accordance with historical practice as at the December 2000
         period end.

9.       Returned, damaged, defective and unsaleable stocks and inventories are
         separately identifiable and will be written down to the lower of cost
         and net realisable value.

Tooling

1.       Tooling costs are held in the balance sheet under fixed assets and
         written off over a 5 year period commencing when the test products meet
         the product specification.

Fixed Assets

1.       Fixed Assets are defined as assets which would be classified as
         tangible fixed assets under UK GAAP or an asset financed by a finance
         lease.

2.       Unless part of a larger project, items costing less than L1,000 will be
         treated as an expense and charged against profits.

3.       The cost of fixed assets will be written off over their estimated
         useful lives by providing depreciation on a straight line basis as
         follows:

<TABLE>
         <S>                                                            <C>
         Plant & Machinery                                              5 to 10 years

         Computer Equipment (excluding desk top computers)              5 years

         Desk top computers (and peripheral equipment including
         printers, monitors and software).                              1 to 2 years

         Office Equipment                                               5 years

         Leasehold Improvements                                         Remaining life of Lease
</TABLE>
         Depreciation should continue to be charged up to the month of
         disposal/scrapping when the profit or loss on disposal is calculated.

4.       For the purposes of the Completion Accounts, assets acquired under
         finance leasing contracts will be recorded in the balance sheet as
         fixed tangible assets at their equivalent capital value and depreciated
         over the useful life of the asset. The corresponding liability is
         recorded as a finance lease creditor and the interest element of the
         finance charge charged against profits over the primary lease period.

5.       Payments under operating leases are charged against profits in the year
         in which the payments are made.

<PAGE>   69

6.       No provision is made for dilapidations on leasehold buildings other
         than the L25,000 provision for Carlisle property.

7.       Capital grants (as distinct from revenue grants) are recorded as
         deferred income and amortised to match the depreciation rate of the
         relevant asset.

8.       Revenue grants are recognised in the period in which they are received.

9.       A provision to write down to net realisable value will be made for any
         assets not in service and for which no future use is reasonably
         envisaged or which are otherwise not useable.

10.      No amount shall be included for goodwill or other intangible assets.

Research and development costs

1.       Research and development costs are charged to profit as incurred.

VAT

1.       VAT is accounted for to the relevant authorities on a quarterly basis.

2.       The creditor for the purposes of the Completion Accounts will be output
         tax less input tax for the period outstanding up to the period end as
         per the nominal ledger with any appropriate manual adjustment for
         accruals.

Purchasers and Creditors

1.       Trade Creditors will be calculated as invoiced (including VAT) and
         recorded on the purchase ledger, plus invoices received and not yet
         posted to the purchase ledger, plus a provision for goods and services
         received but not yet invoiced less a provision for goods returned but
         not yet credited. Overdue Creditors shall not be included in the
         calculation of trade creditors.

2.       Accruals will be accounted for on a time apportioned basis, normally
         calendar weeks on a consistent basis in accordance with historical
         practice and shall include operating expenses, customer credits, free
         or sample goods, repurchase provisions, rebates and advertising
         arrangements.

3.       Any salaries and related payroll costs due, unpaid will be accrued for
         at the period end. The accounts will include any sums due but not paid
         less any sums paid but not due.

4.       A provision for holiday pay will be made in the accounts calculated on
         a time apportioned basis in accordance with historical practice.

5.       Provision will only be made for actual goods and services received
         prior to the relevant period end and no general accruals will be made.
         In particular, the following will not be accrued in the accounts: costs
         associated with the proposed transaction, general warranty accruals,
         goods at suppliers, potential computer reorganisation, rationalisation
         or redundancy costs as a result of the proposed transaction.

<PAGE>   70

6.       No provision will be made in the accounts in respect of claims against
         the Group with regard to potential, prospective or actual litigation or
         contingent liabilities, if UK GAAP would not require such provision to
         be made.

7.       For the avoidance of doubt creditors in relation to Folda & Reclina
         Products will be dealt with in accordance with paragraphs 1, 5 and 6
         above.

Cash/overdraft/invoice discounting facility and loans

1.       The cash/overdraft/invoice discounting facility balance will be
         included in the Completion Accounts on the basis of the balance of the
         cash book, having been appropriately reconciled to the bank statements.

2.       Loans will be included in the Completion Accounts on the basis of the
         outstanding balance of the loan.

3.       A sum equal to Overdue Creditors shall be treated as paid with a
         corresponding adjustment to the cash/overdraft/invoice discounting
         facility balance.

Corporation and Deferred Tax

1.       Corporation tax will be provided for based on draft tax computations
         for the Group Companies.

2.       Deferred taxation will be provided using the liability method on all
         timing differences which are expected to reverse in the future without
         being replaced, calculated at the rate at which it is anticipated the
         timing of differences will reverse.

Foreign currencies

1.       Transactions in foreign currencies will be recorded at the rate of
         exchange ruling at the date of the transaction. Any foreign exchange
         gains and losses are to be dealt with in accordance with SSAP 20.

Interest receivable and payable

1.       Interest receivable on bank deposits and interest payable on cash
         overdrafts will be accrued up to the period end.

German Agreement

1.       All assets acquired by Klippan and liabilities assumed by Klippan
         pursuant to the German Agreement shall be treated in the manner set out
         above for the relevant asset or liability category.

<PAGE>   71

                          Completion Statement Proforma

<TABLE>
<CAPTION>                                             L                                             L
<S>                                                   <C>                                           <C>
Actual Working Capital at Completion per
Completion Accounts

Stocks                                                [Extracted from Completion Balance Sheet]
Trade debtors                                         [Extracted from Completion Balance Sheet]
Other debtors and prepayments                         [Extracted from Completion Balance Sheet]
Trade creditors                                       [Extracted from Completion Balance Sheet]
Other creditors and accruals                          [Extracted from Completion Balance Sheet]
VAT                                                   [Extracted from Completion Balance Sheet]
                                                      -------------------------------------------

Less: target Working Capital                                   (104,000)

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

Working Capital Adjustment (if actual Working                                                           [Sub-total]
Capital at Completion is greater than L104,000 the
Working Capital adjustment is (nil)

Actual Net External Debt at Completion per
         Completion Accounts:

Overdraft/invoice discounting                         [Extracted from Completion Balance Sheet]
Overdue creditors                                     [Separately calculated by Klippan]
Loans                                                 [Extracted from Completion Balance Sheet]
HP and finance leases                                 [Extracted from Completion Balance Sheet]
Cash                                                  [Extracted from Completion Balance Sheet]

                                                      -------------------------------------------
Less: Estimated Net External Debt at Completion                (364,683)                                [Sub-total]

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

Net External Debt adjustment                                                                            [Sub-total]

Completion Tax Adjustment                             [Extracted from Completion Balance Sheet

                                                      -------------------------------------------
Less: Estimated Tax Adjustment at Completion                   (140,798)                                [Sub-total]

Tax Adjustment                                                                                          [         ]
Actual Folda and Reclina                             [Separately calculated by Klippan]
Capital Expenditure

Less: Estimate Folda and Reclina capital                       (34,500)
         expenditure

                                                      -------------------------------------------
Capex Adjustment                                                                                        [Sub-total]
                                                                                                        -----------
Completion Accounts Adjustment                                                                            [Total]
                                                                                                        ===========
</TABLE>

<PAGE>   72

                                   SCHEDULE 7

                            Environmental Indemnity

1.       Interpretation

         "Commercially Reasonable Expenses" are those costs and expenses which a
         reasonable person, acting in a commercially prudent manner, would
         expend in order to satisfy any obligations pursuant to Environmental
         Laws. For the avoidance of doubt, Commercially Reasonable Expenses
         shall not include any costs or expenses to the extent that they are
         incurred as a result of the adoption or imposition of standards of
         remediation materially more stringent than those which are provided for
         under Environmental Laws;

         "Environment" means any ecological system, including without limitation
         living organisms (including man) and the following media (alone or in
         combination): air, water (including ground or surface water, water
         under or within land or in drains, culverts or sewers, and coastal and
         inland waters) and land (including land under water);

         "Environmental Laws" means any and all laws and legislation (whether
         civil, criminal, administrative, supranational, national, federal,
         state or regional), statutes, treaty, statutory instrument, directive
         bylaw or judgment (including any judgment by the European Court of
         Justice), regulations, orders, (including any notices, government
         circulars, codes of practice and guidance notes or decision of any
         competent regulatory body, provided in each case they have the force of
         law) or common law relating to pollution or protection of the
         Environment which as at Completion are in effect and capable of
         enforcement by legal process;

         "Environmental Liabilities" means all claims, costs, damages, expenses
         (including reasonable professional fees incurred), losses, liabilities
         (including without limitation liability to third parties), fines or
         penalties relating to the Environment and suffered or incurred by any
         Group Company as a direct consequence of or in connection with:

         (i)      any Environmental Proceedings; or

         (ii)     relating directly to any agreement in writing between the
                  Vendor and the Purchaser, or in the event of disagreement any
                  determination by the Expert that it is reasonably necessary to
                  undertake remediation or other actions in order to prevent any
                  Environmental Proceedings which, but for the remediation or
                  other actions, would reasonably result in Environmental
                  Proceedings within a period of six months of the date of this
                  determination.

         BUT EXCLUDING any claims, costs, damages, expenses, losses,
         liabilities:

         (i)      in respect of capital expenditure on plant and equipment which
                  would be incurred in the ordinary course of business;

         (ii)     where applicable to the extent that they are not Commercially
                  Reasonable Expenses;

<PAGE>   73

         "Environmental Proceedings" means any writ and/or interim or final
         judicial or administrative decree, judgment, injunction, order, notice
         or requirement relating to the enforcement of or breach or alleged
         breach of or liability under any Environmental Laws which enforcement
         of or breach or alleged breach of or liability relates to acts or
         omissions prior to Completion;

2.       Environmental Indemnity

2.1      The Vendor undertakes to indemnify and keep indemnified the Purchaser
         for a period of 48 months from the date of Completion from and against
         all Environmental Liability relating to any sites or properties owned
         or leased (including for the avoidance of doubt sites or properties
         previously owned or leased) by any of the Group Companies or relating
         to third party sites to which waste materials from such sites or
         properties are or were transported.

2.2      If any Environmental Liability arises from the period prior to the
         acquisition of Klippan by the Vendor, the Purchaser agrees as follows:

         2.2.1    to the extent that any Environmental Liability is assessed by
         the Purchaser to be less than L100,000, the Purchaser agrees to pay
         10% of such Environmental Liability;

         2.2.2    to the extent that any Environmental Liability is assessed by
         the Purchaser to be between L100,000 and L250,000, the Purchaser
         agrees to pay 20% of such Environmental Liability; and

         2.2.3    to the extent that that any Environmental Liability is
         assessed by the Purchaser to be in excess of L250,000, the Purchaser
         agrees to pay 30% of such Environmental Liability,

         provided always that the Purchaser's aggregate liability in respect of
         payments made under this Clause 2 shall be limited to L200,000.

3.       Notification

3.1      As soon as reasonably practicable after the Purchaser becomes aware of
         any actual or potential Environmental Liabilities which may give rise
         to a claim under the Environmental Indemnity, the Purchaser shall
         notify the Vendor forthwith and thereafter keep the Vendor fully
         informed of all material developments. Written notice shall include all
         material details of any actual or potential Environmental Liabilities
         (including to the extent practicable the Purchaser's reasonable
         estimate of the extent of the Environmental Liabilities as a result
         thereof).

3.2      The Purchaser shall not admit, settle or discharge any claim or
         liability unless the Purchaser has first served notice to the Vendor
         under Clause 3.1 and given the Vendor reasonable opportunity to
         consider and comment in writing upon the circumstances contained
         therein.

4.       Conduct of Third Party Claims

         If any notice made by the Purchaser under Clause 3.1 above relates to
         any existing or potential Environmental Proceedings, the Purchaser
         shall be entitled to take all steps

<PAGE>   74

         which are necessary and reasonable to avoid, resist, appeal, compromise
         or defend any claim and any adjudication in respect thereof and shall
         be indemnified against all costs and expenses which may reasonably and
         necessarily be incurred in connection therewith. The Vendor shall, at
         its request, be permitted to conduct any negotiations, proceedings or
         appeals incidental thereto provided that it consults fully with the
         Purchaser.

5.       Dispute Resolution

         Upon the Purchaser giving a notice in accordance with Clause 3.1, in
         the event that the Vendor and the Purchaser are unable to agree
         promptly any technical matter relevant to a claim under the
         Environmental Indemnity or in the event of any other matter being
         referred to the Expert in accordance with this Schedule or with the
         agreement of the Vendor and the Purchaser then the following provisions
         of this paragraph shall apply:

5.1      a reputable independent environmental consultant (the "Expert") (who
         shall act as expert and not arbitrator) in relation to the Environment
         relevant to the claim or potential claim (having at least ten years
         relevant experience) shall be appointed by mutual agreement of the
         parties hereto (and the parties shall each be obliged to use their
         respective best endeavours to reach agreement as soon as practicable)
         to resolve any technical matter in dispute between the parties;

5.2      the Expert shall be offered the appointment within 15 Business Days of
         the parties reaching such mutual agreement and shall be notified in
         writing of the provisions of Clause 5.9 below;

5.3      failing such mutual agreement on the appointment of an Expert, the
         parties shall promptly refer the issue, at their joint cost, if the
         issue relates to the United Kingdom to the President for the time being
         of the Royal Institution of Chartered Surveyors in the United Kingdom
         (or if the dispute concerns another jurisdiction the nearest equivalent
         of the Royal Institution of Chartered Surveyors in the relevant
         jurisdiction) with instructions to appoint a suitable Expert within
         fourteen (14) days of receipt of such instructions;

5.4      the said Expert shall only be dismissed by the mutual agreement of the
         parties hereto;

5.5      both parties shall promptly and simultaneously exchange with each other
         and submit to the Expert, and in any event in accordance with the
         Expert's written directions, their arguments and submissions in
         connection with any matter referred to him in accordance with this
         Clause;

5.6      following receipt by the Expert of the written arguments and other
         submissions of the parties pursuant to Clause 5.5, the parties shall
         instruct the Expert to issue, as soon as reasonably practicable, a
         formal written opinion pertaining to the matter of fact referred to
         him. In any event the Expert shall be instructed to present the said
         opinion within two months of receiving the written arguments and other
         submissions of the parties pursuant to Clause 5.5;

<PAGE>   75

5.7      the formal written opinion of the Expert issued pursuant to Clause 5.6
         shall be conclusive in any proceedings between the parties hereto as to
         any matter so determined;

5.8      the fees and expenses of the Expert shall be borne equally by the
         Vendor and the Purchaser (unless otherwise directed by the Expert); and

5.9      the Expert, and any company, firm, partnership or other organisation
         with which the Expert is connected shall not be eligible to be
         considered to undertake any work in respect of the claim save where the
         parties hereto mutually agree to waive this provision. For the
         avoidance of doubt, either party may withhold such consent in any
         event.

6.       Statements

         In the event of any circumstances arising which do or may give rise to
         Environmental Liabilities which may fall within the terms of the
         Environmental Indemnity the Vendor shall not, and shall procure that no
         member of the Vendor Group shall, make any public statements
         (including, for the avoidance of doubt, any statement to any regulatory
         authority, unless required by law or in an emergency) regarding such
         circumstances without first discussion with the other party and paying
         reasonable regard to the view of the other parties on the text of any
         such public statement before it is made.

7.       General

7.1      Any information, records, or other material of one party shall be
         treated as strictly confidential by the other party except when it is
         required to be used in order to comply with an order of the court or
         regulatory authority or it is used by the other party to enforce its
         rights under this Schedule or so as to make an insurance claim or to
         pursue a third party claim as required herein.

7.2      The Purchaser's exclusive remedies in respect of any claims which fall
         within the scope of the Environmental Indemnity shall be in accordance
         with the provisions of this Schedule, and the Purchaser hereby waives
         all other remedies whether in contract, tort (including, for the
         avoidance of doubt, negligence), or howsoever otherwise arising which
         it may have against the Vendor at law or in equity in respect of the
         matters which fall within the scope of the Environmental Indemnity and,
         for the avoidance of doubt, if such a claim under this Schedule could
         also give rise to a claim under any other provision of this Agreement
         in respect of the same subject matter, the Purchaser may only bring a
         claim under this Schedule.

7.3      Subject to Clause 7.2, the Purchaser does not release, amend or waive
         any of its rights it has arising hereunder the Warranties.

<PAGE>   76

8.       Co-operation

         The Purchaser undertakes that wherever co-operation is required by any
         of the Group Companies to ensure compliance with the Purchaser's
         obligations hereunder, the Purchaser will use its reasonable endeavours
         to ensure that the Group Companies provide the requisite co-operation.

9.       Notices

         A notice or other communication under or in connection with this
         Schedule shall be given in accordance with Clause 18 of this Agreement.

<PAGE>   77

                                   SCHEDULE 8

                       Estimated Completion Balance Sheet

<TABLE>
<CAPTION>
                                      Companies to be acquired       Assets to be   Consolidation  Total
                                    -----------------------------    ------------   -------------  -----
                                                                       acquired      adjustments
                                                                       --------      -----------

                                    Klippan   Oy Klippan    Akta
                                      UK       Finland     Sweden      Germany
                                    L'000       L'000      L'000        L'000          L'000       L'000
                                    -------   ----------   ------      -------         ------      ------

<S>                                 <C>       <C>          <C>         <C>             <C>         <C>
Tangible fixed assets                  410          67         7            0               0         484
Investments                            180           0         0            0            (180)          0
Goodwill                                 0           0         0            0               0           0
                                    ------      ------      ----         ----          ------      ------
                                       590          67         7            0            (180)        484

Stock                                  301         480       114           28             (29)        894
Trade Debtors                          525         203       278           36               0       1,043
Inter-Company - trading                 84         116        11            0            (210)          0
Inter-Company - non-trading            136           4         0            0            (140)          0
Other debtors                           38         175        26            0               0         239
VAT                                      0          24         0            0               0          24
Cash                                     0          98        82           23               0         204
                                    ------      ------      ----         ----          ------      ------
                                     1,084       1,099       512           88            (379)      2,404

Trade creditors                      1,025         250        49            8               0       1,332
Inter-Company - trading                292          13       119            0            (424)          0
Inter-Company - non-trading             66         169         0            0             209         444
Other creditors                        153         423       174           14              (5)        759
VAT                                     35           0         0            3               0          38
Taxation                                 0         105        36            0               0         141
Cash                                   429           0         0            0               0         429
                                    ------      ------      ----         ----          ------      ------
                                     2,000         960       379           25            (220)      3,143

Net Current Assets                    (916)        139       133           63            (159)       (739)
Long term loan                         132          90         0            0            (132)         90
Deferred tax                           (29)          0        15            0               0         (14)
                                    ------      ------      ----         ----          ------      ------
Net assets                            (429)        116       126           63            (207)       (330)
                                    ======      ======      ====         ====          ======      ======
</TABLE>

                                       76
<PAGE>   78

                         Estimated Completion Statement

<TABLE>
<CAPTION>
                                                         L                L
<S>                                                  <C>              <C>
BASE CONSIDERATION                                                    2,800,000

Less:

Less:    Estimated Net External Debt:
         - Overdraft/invoice discounting facility    (429,000)
         - Cheques in transit                              (0)
         - Overdue Creditors                          (49,730)
         - Loans                                      (89,850)
         - HP and finance leases                            0
         - Cash in hand and at bank                   203,897
                                                     --------
                                                                       (364,683)
Less:    Estimated Tax Adjustment                                      (140,798)
Plus:    Estimated Reclina and Folda Capital                             34,500
Expenditure
                                                                      ---------
                                                                      2,329,019
                                                                      =========
</TABLE>

Notes:

1.       Overdue Creditors at the December 2000 period end were separately
         calculated by Klippan Ltd. and is not identifiable from the face of the
         Estimated Completion Balance Sheet.

2.       For the avoidance of doubt, Working Capital as extracted from the
         Estimated Completion Balance sheet is:

<TABLE>
<CAPTION>
                                                 L
         <S>                                <C>
         Stock                                 894,000
         Trade Debtors                       1,043,000
         Other Debtors and Prepayments         239,000
         Trade Creditors                    (1,332,000)
         Overdue Creditors                      49,730
         Other Creditors and accruals         (759,000)
         VAT (L38,000 less L24,000)            (14,000)

                                            ----------
                                               120,730
                                            ----------
</TABLE>

<PAGE>   79

3.       Reclina and Folda capital expenditure was separately calculated by
         Klippan and is not identifiable from the face of the Estimated
         Completion Balance Sheet.

<PAGE>   80

                                   SCHEDULE 9

                                ESCROW AGREEMENT

THIS ESCROW AGREEMENT is made on 29 January, 2001.

BETWEEN

(1)      Bradley International Holdings Limited (company number 02877163), a
         limited liability company incorporated in England and Wales (the
         "Vendor");

(2)      Newell Limited (company number 0293327), a limited liability company
         incorporated in England and Wales (the "Purchaser"); and

(3)      Martineau Johnson of St Philips House, St Philips Place, Birmingham B3
         2PP acting as Escrow Agent (the "Escrow Agent").

                                  WITNESSETH:

WHEREAS, pursuant to the Share Purchase Agreement, dated as of January 29, 2001
(the "Share Purchase Agreement") among the Purchaser and the Vendor, pursuant
to which the Purchaser has agreed to purchase from the Vendor, and the Vendor
has agreed to sell to the Purchaser, the Klippan Shares in consideration of the
payments by the Purchaser provided for therein, including the payment by wire
transfer to the Escrow Agent of L400,000 (the "Escrow Amount") to be held and
disposed of on the terms set forth in this Escrow Agreement; and

WHEREAS, the Purchaser and the Vendor desire the Escrow Agent to hold and
dispose of the Escrow Fund (as defined herein), and the Escrow Agent is willing
to do so on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the transactions contemplated by the Share
Purchase Agreement, and of the premises and the mutual agreements hereinafter
set forth, the parties hereto do hereby agree as follows:

1.       Interpretation. In this Escrow Agreement, words and expressions defined
         in the Share Purchase Agreement have the same meaning herein. Unless
         the context requires otherwise, the words and expressions defined in
         this Escrow Agreement shall have the meaning as so defined. In the
         event of conflict, the definitions in this Escrow Agreement shall
         prevail.

2.       Appointment of the Escrow Agent. The Purchaser and the Vendor hereby
         appoint the Escrow Agent to serve as, and the Escrow Agent hereby
         agrees to act as, escrow agent upon the terms and conditions of this
         Escrow Agreement.

3.       Deposit of the Escrow Funds. At Completion, in accordance with the
         terms of the Share Purchase Agreement, the Purchaser shall, deposit the
         sum of L400,000 with the Escrow Agent to be held and disposed of as
         provided in this Escrow Agreement. The funds and property held by the
         Escrow Agent hereunder, including without limitation any interest,
         dividends or gains earned thereon and any other earnings in respect
         thereof, are hereinafter called the "Escrow Fund." The Escrow Fund
         shall be held in

<PAGE>   81
         trust and shall not be subject to any lien or attachment of any
         creditor of any party hereto and shall be used solely for the purposes
         and subject to the conditions set forth herein. The Escrow Agent shall
         hold the Escrow Fund in a separate designated interest-bearing account
         with the Allied Irish Bank in the Escrow Agent's name (the "Escrow
         Account").

4.       Liability Secured by the Escrow Fund. The Escrow Fund shall be used,
         (a) at the option of the Purchaser, to pay for any sums owing to it
         (including for the avoidance of doubt, interest) as a result of an
         adjustment to the Purchase Price and/or Net External Debt and/or
         Inter-Company Indebtedness and/or Completion Tax Adjustment and/or as a
         result of the covenant regarding The Scheme under or pursuant to Clause
         3.3(a)(iv) under or pursuant to Clause 3.3 of the Share Purchase
         Agreement (the "Adjustment Amount"), and (b) subject to Clause 5 of
         this Escrow Agreement, to settle any and all Warranty Claims by the
         Purchaser under or pursuant to Clause 5 of the Share Purchase Agreement
         or under or pursuant to Clause 2 of the Tax Deed.

5.       Payments to the Purchaser from the Escrow Account.

         (a)      In the event that the Purchaser wishes to use money in the
                  Escrow Account to settle any Adjustment Amount required to be
                  paid to the Purchaser as referred to in Clause 4(a) above, the
                  Purchaser shall have the right (but not the obligation) to
                  give written notice (an "Adjustment Notice") to the Escrow
                  Agent setting forth (i) the amount of the Adjustment Amount
                  (ii) the amount (if not in full) to be paid from the Escrow
                  Fund in immediately available funds for same day value and
                  (iii) instructions for payment. Upon receipt of an Adjustment
                  Notice, the Escrow Agent shall pay promptly the requested
                  amount of the Adjustment Amount to the Purchaser in
                  immediately available funds according to the Purchaser's
                  instructions. If the Adjustment Amount cannot be satisfied in
                  full from the Escrow Fund, the Purchaser shall be entitled to
                  any shortfall from the Vendor in immediately available funds.

         (b)      In the event that the Purchaser wishes to use money in the
                  Escrow Account to settle a Warranty Claim pursuant to Clause 5
                  of the Share Purchase Agreement and/or settle a Claim pursuant
                  to Clause 2 of the Tax Deed (a "Tax Claim"), the Purchaser
                  shall have the right (but not the obligation) to give written
                  notice to the Vendor of the Warranty Claim and/or Tax Claim
                  (the "Claim Notice") stating (i) in reasonable detail the
                  nature of the Warranty Claim and/or Tax Claim (ii) specifying
                  the portion thereof to be paid from the Escrow Fund in respect
                  of the Warranty Claim and/or Tax Claim (the "Claimed Amount")
                  and (iii) instructions for payment and, at the same time
                  provide a copy to the Escrow Agent. The Vendor shall notify
                  the Purchaser within 21 days from the date of the Claim Notice
                  whether it accepts liability for the Warranty Claim and/or Tax
                  Claim, and if not, the portion of the Claimed Amount it does
                  not accept and, at the same time provide a copy to the Escrow
                  Agent. If the Vendor fails to notify the Purchaser in
                  accordance with this Clause 5(b), the money standing to the
                  credit of the Escrow Fund shall be used to satisfy the Claimed
                  Amount in full.

         (c)      If the Vendor gives a notice of objection pursuant to Clause
                  5(b) (the "Objection Notice") to any Claim Notice, the
                  Purchaser and Vendor shall

<PAGE>   82

                  attempt in good faith to resolve the dispute and shall give to
                  the Escrow Agent as soon as practicable written notice
                  executed by each of the Purchaser and the Vendor of the
                  resolution of the dispute and the amount of the Claimed
                  Amount. On receipt of such notice, the Escrow Agent shall
                  promptly pay to the extent possible the agreed amount to the
                  Purchaser in immediately available funds out of the Escrow
                  Fund.

         (d)      If the Vendor and Purchaser are unable to resolve a disputed
                  claim in accordance with Clause 5(c) within seven Business
                  Days after the date of receipt of the Objection Notice, the
                  Escrow Agent shall not be obliged to make any payment to the
                  Purchaser until there is a determination of the amount payable
                  by a court of a competent jurisdiction or, in relation to a
                  Claimed Amount in respect of Taxation, by the Inland Revenue
                  in favour of the Purchaser, against which no appeal has been
                  lodged with the statutory time limit by the Vendor. On receipt
                  of such determination, the Escrow Agent shall release and
                  deliver to the Purchaser the determined amount in immediately
                  available funds out of the Escrow Fund.

         (e)      If the Vendor accepts liability in respect of the Claim Notice
                  but accepts only a portion of the Claimed Amount, the Escrow
                  Agent shall release and deliver the portion of the Claimed
                  Amount which is accepted to the Purchaser in immediately
                  available funds out of the Escrow Fund.

         (f)      If there is a determination of the amount payable in respect
                  of the Warranty Claim and/or Tax Claim by the Inland Revenue
                  or by a court of competent jurisdiction in favour of the
                  Purchaser against which no appeal has been lodged within the
                  statutory time limit by the Vendor, the Escrow Agent shall
                  forthwith on receipt of a copy of the said determination and
                  written confirmation from the Purchaser that no appeal has
                  been lodged within the statutory time limit in respect of such
                  determination, release and deliver the amount so determined
                  (in the latter case less any money previously paid under
                  Clause 5(c) in respect of the Claimed Amount) to the Purchaser
                  in immediately available funds.

         (g)      To the extent that a payment to the Purchaser out of the
                  Escrow Account is made in partial satisfaction of a Claimed
                  Amount, such payment shall be deemed to be a payment on
                  account of the amount finally agreed or determined to be
                  payable in respect of the Claimed Amount. The liability of the
                  Vendor in respect of any claim under or pursuant to Clause 5
                  of the Share Purchase Agreement and/or Clause 2 of the Tax
                  Deed shall not be limited by the amount standing to the credit
                  of the Escrow Account from time to time.

         (h)      Delivery of a Claim Notice by the Purchaser shall not be a
                  limitation in any respect of any claim which the Purchaser is
                  entitled to make against the Vendor with respect to the Share
                  Purchase Agreement and/or the Tax Deed.

         (i)      If any Adjustment Amount is paid to the Purchaser from the
                  Escrow Fund pursuant to this Clause 5 the Vendor shall
                  forthwith deposit with the Escrow Agent an amount equal to
                  such Adjustment Amount within 5 Business Days of such payment
                  having been made to the Purchaser, such additional amount to

<PAGE>   83

                  be held as part of the Escrow Fund in accordance with the
                  terms of this Escrow Agreement.

6.       Payments to the Vendor from the Escrow Account; Termination.

         (a)      The Vendor and Purchaser agree that within 5 Business Days of
                  the date on which the Completion Accounts are agreed or
                  determined in accordance with the Share Purchase Agreement,
                  the Escrow Agent shall pay to the Vendor in immediately
                  available funds from the Escrow Fund the amount of L100,000
                  less any Adjustment Amount payable to the Purchaser.

         (b)      The Vendor and Purchaser agree that within 5 Business Days of
                  October 30, 2001, the Escrow Agent shall pay the amount of
                  L140,000 to the Vendor in immediately available funds from the
                  Escrow Fund less the aggregate of:-

                  (i)      any unpaid Claimed Amount(s) claimed by the Purchaser
                           within 30 days prior October 30, 2001: and

                  (ii)     any outstanding disputed claim(s) pursuant to Clause
                           5(c) and/or Clause 5(d) hereof,

                  to the extent that such amounts are in excess of L160,000 less
                  any amount outstanding to be paid by the Vendor pursuant to
                  Clause 5(i) above.

         (c)      Within 5 Business Days of October 30, 2002, the Escrow Agent
                  shall pay to the Vendor the balance of the Escrow Fund
                  remaining in the Escrow Account less the aggregate of (i) any
                  unpaid Claimed Amounts claimed by the Purchaser within 30 days
                  prior to October 30, 2002 and (ii) any outstanding dispute
                  claim(s) pursuant to Clause 5(c) and/or Clause 5(d) hereof.
                  The provisions of Clause 6(d) hereof shall apply mutatis
                  mutandis with respect to any amounts balance outstanding in
                  the Escrow Fund.

         (d)      If there are any monies held in escrow after October 30, 2002,
                  by the Escrow Agent, such monies shall be disposed of in
                  accordance with Clause 5. If the Vendor and Purchaser agree
                  that (i) any such amount outstanding (or part thereof) is not
                  payable to the Purchaser, or (ii) that a court of competent
                  jurisdiction or, in respect of a Claimed Amount relating to
                  Taxation, by the Inland Revenue has determined in favour of
                  the Vendor against which no appeal has been lodged within the
                  statutory time limit by the Purchaser, then in relation to
                  (i), the Vendor and Purchaser shall provide to the Escrow
                  Agent written notice executed by both parties stating the
                  amount to be transferred to the Vendor by the Escrow Agent in
                  immediately available funds and in relation to (ii), the
                  Escrow Agent shall forthwith on receipt of a copy of the said
                  determination and written confirmation from the Vendor that no
                  appeal has been lodged within the statutory time limit in
                  respect of such determination release and deliver to the
                  Vendor in immediately available funds a sum equal to the
                  amount retained pursuant to Clause 6(b)(ii) in respect of a
                  relevant Warranty Claim or Tax Claim less the amount of such
                  Warranty Claim or Tax Claim determined in favour of the
                  Purchaser (if any).

<PAGE>   84

7.       Taxes. All interest or other income earned under this Escrow Agreement
         shall be treated for all tax purposes as earned by the Vendor and shall
         be reported as such by the Vendor. The Vendor shall hold the Purchaser
         harmless from any and all tax liability arising in the event that the
         Purchaser is treated as the tax owner of all or any portion of earnings
         on the Escrow Fund. The Vendor and the Purchaser acknowledge that the
         Escrow Agent may withdraw and pay to the Vendor from time to time on
         reasonable evidence that such tax is due or has been paid from the
         Escrow Account an amount of tax on the interest in respect of the money
         held in the Escrow Fund for which the Vendor may become liable.

8.       Concerning the Escrow Agent

         (a)      The Vendor agrees to pay or reimburse the Escrow Agent upon
                  request for all expenses, disbursement and advances incurred
                  or made by it in connection with carrying out their duties
                  hereunder, including, without limitation, trading commissions
                  and fees and reasonable legal fees.

         (b)      The Escrow Agent shall prepare and deliver to the Purchaser
                  and the Vendor within ten Business Days after the end of each
                  calendar month prior to termination of this Escrow Agreement a
                  written account describing all transactions with respect to
                  the Escrow Fund during such calendar month.

         (c)      The Vendor and the Purchaser agree jointly and severally to
                  indemnify the Escrow Agent for, and to hold it harmless
                  against any loss, liability or expense incurred without gross
                  negligence or bad faith on the part of the Escrow Agent
                  arising out of or in connection with them entering into this
                  Escrow Agreement and carrying out their duties hereunder,
                  including the costs and expenses of defending itself against
                  any claim of liability. Notwithstanding the foregoing, as
                  between the Vendor and the Purchaser, any indemnity to be paid
                  to the Escrow Agent pursuant to the preceding sentence shall
                  be borne by the Vendor and Purchaser jointly and severally,
                  provided that any such indemnity to be paid in respect of
                  expenses, disbursements or advances referred to in Clause 8(a)
                  hereof shall be borne by the Vendor.

         (d)      The duties and responsibilities of the Escrow Agent hereunder
                  shall be determined solely by the express provisions of this
                  Escrow Agreement, and no further duties or responsibilities
                  shall be implied.

         (e)      The Escrow Agent may act upon any instrument or other writing
                  provided by a duly authorised officer of any of the Vendor and
                  the Purchaser as named in the Schedule hereto believed by it
                  in good faith to be genuine, and to be signed or presented by
                  the proper person as named in the Schedule hereto, and shall
                  not be liable in connection with the performance by it of its
                  duties pursuant to the provisions of this Escrow Agreement,
                  except for its own wilful misconduct or gross negligence.

9.       Resignation of Escrow Agent; Appointment of Successor. The Escrow Agent
         may at any time resign by giving ninety days' prior written notice of
         resignation to the Purchaser and the Vendor. The Purchaser and the
         Vendor may at any time jointly remove the Escrow Agent by giving ninety
         days' prior written notice signed by the Purchaser and the Vendor to
         the Escrow Agent. If the Escrow Agent shall resign or

<PAGE>   85

         be removed, a successor escrow agent, which shall be a bank or trust
         company having offices in London and assets in excess of L1 billion,
         shall be appointed jointly by the Purchaser and the Vendor and notified
         to the Escrow Agent by written instrument executed by the Purchaser and
         the Vendor and delivered to the Escrow Agent and to such successor
         escrow agent and, thereupon, the resignation or removal of the
         predecessor Escrow Agent shall become effective and such successor
         escrow agent, without any further act, deed or conveyance, shall become
         vested with all right, title and interest to all cash and property held
         hereunder of such predecessor Escrow Agent, and such predecessor Escrow
         Agent shall, on the written request of the Purchaser and the Vendor's
         Representative, on the one hand, or the successor escrow agent, on the
         other hand, execute and deliver to such successor escrow agent all the
         right, title and interest hereunder in and to the Escrow Fund of such
         predecessor Escrow Agent and all other rights hereunder of such
         predecessor Escrow Agent. If no successor escrow agent shall have been
         appointed within ninety days of a notice of resignation by the Escrow
         Agent, the Escrow Agent's sole responsibility shall thereafter be to
         hold the Escrow Fund until the earlier of its receipt of designation of
         a successor escrow agent, a joint written instruction by the Purchaser
         and the Vendor and the termination of this Escrow Agreement in
         accordance with its terms.

10.      Assignment. Neither the Purchaser nor the Vendor shall sell, assign,
         transfer, or encumber, or in any other manner anticipate or dispose of
         any portion of the Escrow Fund on deposit with the Escrow Agent until
         the same shall be actually paid over to and received by the Purchaser
         or the Vendor, as the case may be, pursuant to the terms hereof without
         the prior written consent of the other.

11.      Notices. Any and all notices or other instruments or papers to be sent
         to any party hereto by any other party hereto pursuant to this Escrow
         Agreement shall be (a) mailed by first-class, registered or certified
         mail, return receipt requested, postage prepaid, (b) transmitted by
         hand delivery, (c) sent charges prepaid by next-day or overnight mail
         or delivery or (d) sent by facsimile transmission, addressed as
         follows:

         (i)      if to the Purchaser, to

                  Newell Rubbermaid Inc.
                  6833 Stalter Drive
                  Suite 101
                  Rockford
                  Illinois 61108
                  USA

                  Attention:        General Counsel

                  with a copy to:

                  Debevoise & Plimpton
                  Tower 42
                  Old Broad Street
                  London EC2N 1HQ
                  Fax:              020 7588 4180

<PAGE>   86

                  Telephone:        020 7786 9000
                  Attention:        Colin Bogie

         (ii)     if to the Escrow Agent, to

                  Martineau Johnson
                  St Philips House
                  St Philips Place
                  Birmingham
                  B3 2PP
                  Fax:              0121 233 3910
                  Telephone:        0121 200 3300
                  Attention:        Linda Crow

         (iii)    if to the Vendor, to

                  Bradley International Holdings Limited
                  PO Box 20
                  Beldray Road
                  Bilston
                  West Midlands
                  WV14 7NT
                  Fax:              01902 406281
                  Telephone:        01902 906280
                  Attention:        Alistair Firth

                  with a copy to:

                  Martineau Johnson
                  St Philips House
                  St Philips Place
                  Birmingham
                  B3 2PP
                  Fax:              0121 233 3910
                  Telephone:        0121 200 3300
                  Attention:        Linda Crow

         or, in each case, to such other address as may be specified in writing
         to the other parties hereto.

12.      Binding Effect. This Escrow Agreement shall be binding upon and inure
         to the benefit of the respective successors, assigns and legal
         representatives of the Purchaser, the Vendor and the Escrow Agent.

13.      Governing Law, etc. This Escrow Agreement shall be governed in all
         respects, including as to validity, interpretation and effect, by the
         laws of England and Wales. In relation to any legal action or
         proceedings to enforce this Escrow Agreement or arising out of or in
         connection with this Escrow Agreement each of the parties irrevocably
         submits to the exclusive jurisdiction of the English courts and waives
         any objections to such proceedings in such courts on the grounds of
         venue or on the grounds that such proceedings have been brought in an
         inconvenient forum.

<PAGE>   87
14.      Headings, Counterparts. The headings of the several clauses contained
         herein are for convenience only and do not define, limit or construe
         the contents of such clauses. This Escrow Agreement may be executed in
         one or more Counterparts, each of which shall be deemed to be an
         original, but all of which together shall constitute one and the same
         instrument.

15.      Amendment; Waivers, etc. No amendment, modification or discharge of
         this Escrow Agreement, and no waiver hereunder, shall be valid or
         binding unless set forth in writing and duly executed by the party
         against whom enforcement of the amendment, modification, discharge or
         waiver is sought by the Escrow Agent. Any such waiver shall constitute
         a waiver only with respect to the specific matter described in such
         writing and shall in no way impair the rights of the party granting
         such waiver in any other respect or at any other time. Neither the
         waiver by any of the parties hereto of a breach of or a default under
         any of the provisions of this Escrow Agreement, nor the failure by any
         of the parties, on one or more occasions, to enforce any of the
         provisions of this Escrow Agreement or to exercise any right or
         privilege hereunder, shall be construed as a waiver of any other breach
         or default of a similar nature, or as a waiver of any of such
         provisions, rights or privileges hereunder. The rights and remedies
         herein provided are cumulative and are not exclusive of any rights or
         remedies that any party may otherwise have at law or in equity.

16.      Severability. If any provision of this Escrow Agreement, including any
         phrase, sentence, clause or subsection is inoperative or unenforceable
         for any reason, such circumstances shall not have the effect of
         rendering the provision in question inoperative or unenforceable in any
         other case or circumstance, or of rendering any other provision or
         provisions herein contained invalid, inoperative, or unenforceable to
         any extent whatsoever.

17.      Contracts (Rights of Third Parties) Act 1999. Except as expressly
         stated herein, nothing in this Agreement confers any right on any
         person (other than the parties hereto) pursuant to the UK Contract
         (Rights of Third Parties) Act 1999.

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
signed as of the day and year first above written.

         By:
         Name:
         Title:
         For and on behalf of Martineau Johnson acting as Escrow Agent

         By:
         Name:
         Title:
         For and on behalf of the Vendor

         By:
         Name:

<PAGE>   88

         Title:
         For and on behalf of the Purchaser

<PAGE>   89

                                    Schedule

Authorised Signatories

The Vendor
Name:
Title:
Sample Signature

The Purchaser
Name:
Title:
Sample Signature

<PAGE>   90
                                   SCHEDULE 10

                                    TAX DEED

THIS TAX DEED is made on 29 January, 2001:

BETWEEN:

(1)      Bradley International Holdings Limited (Company number 02877163), a
         limited liability company incorporated in England and Wales (the
         "Vendor"); and

(2)      Newell Limited (Company number 02933327), a limited liability company
         incorporated in England and Wales (the "Purchaser").

RECITAL:

This Deed is entered into pursuant to the provisions of an agreement dated 29
January, 2001 pursuant to which the Purchaser agreed to purchase from the
Vendor the entire issued share capital of Klippan Limited (the "Agreement").

It is agreed as follows:

1.       Interpretation

1.1      In this Deed, words and expression defined in the Agreement have the
         same meaning, and, unless the context requires otherwise, the following
         words and expressions shall have the following meanings and, in the
         event of conflict, the definitions in this Deed shall prevail.

1.2      "Claim" includes any notice, demand, assessment, self-assessment,
         letter or other document (including but not limited to those issued or
         taken by or on behalf of any Taxation Authority (whether of the United
         Kingdom or elsewhere)) indicating that any Group Company is or may be
         placed or sought to be placed under a liability to make a payment of
         Taxation in respect of which the Vendor is or may be liable under this
         Deed or under any of the Warranties.

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

         (i)      the Loss of any Relief where such Relief has been taken into
                  account in computing and so reducing or eliminating any
                  provision for deferred Tax which appears in the Completion
                  Accounts (or which but for such Relief would have appeared in
                  the Completion Accounts) or was taken into account in
                  computing any deferred Tax asset which appears in the
                  Completion Accounts in which case the amount of the Liability
                  for Taxation shall be the amount of Taxation which would (on
                  the basis of tax rates current at the date of such Loss) have
                  been saved but for such Loss at the salient date the Group
                  Company had sufficient profits or was otherwise in a position
                  to use the Relief provided (in either case) that the amount of
                  such Liability for Taxation shall

<PAGE>   91

                  be limited to the amount by which such Relief led to the
                  reduction to the Purchase Price under the Agreement;

         (ii)     the Loss of any right to repayment of Taxation (including any
                  repayment supplement) which was treated as an asset in the
                  Completion Accounts of the Group Company in which case the
                  amount of the Liability for Taxation shall be the amount of
                  the right to repayment and any related repayment supplement;
                  and

         (iii)    where tax becomes payable in respect of a Transaction
                  occurring on or before Completion the use of any Relief or
                  right to repayment of Taxation (including any repayment
                  supplement) which is not a Vendor's Relief but arises after
                  Completion in circumstances where, but for such set-off or
                  use, the Group Company would have been subject to a Liability
                  for Taxation in respect of which (and to the extent that) the
                  Vendor would have been liable under this Deed, in which case
                  the amount of the Liability for Taxation shall be the amount
                  of that payment.

1.4      "Loss" means any reduction, modification, loss, counteraction,
         nullification, utilisation, disallowance or clawback for whatever
         reason.

1.5      "Relevant Company" means any company other than the Group Company and
         the Purchaser.

1.6      "Relief" means any loss, relief, allowance, credit, exemption or
         set-off in respect of Taxation or any deduction in computing income,
         profit or gains for the purposes of Taxation.

1.7      "Saving" means the reduction or elimination of any liability of any
         Group Company to make an actual payment of Taxation in respect of which
         the Vendor would not have been liable under Clause 2, by the use of any
         Relief arising wholly as a result of a Liability for Taxation in
         respect of which the Vendor has made a payment under Clause 2.

1.8      "Tax" or "Taxation" means:

         1.8.1    all forms of taxation including and without any limitation any
                  charge, tax, duty, levy, impost, withholding or liability
                  wherever chargeable imposed for support of national state,
                  federal, municipal or local government but excluding business,
                  general or water rates, council tax and vehicle duty or any
                  other person and whether of the UK or any other jurisdiction;
                  and

         1.8.2    any penalty, fine surcharge, interest, charges or similar
                  imposition payable in connection with any Taxation within
                  Clause 1.8.1 above.

1.9      "Taxation Authority" means any government, state, or municipality or
         any local, state, federal or other fiscal, revenue, customs or excise
         authority, body or official whatsoever competent to impose Taxation
         whether in the United Kingdom or elsewhere.

<PAGE>   92

1.10     "Taxation Statute" means any directive, statute, enactment, law or
         regulation wheresoever enacted or issued, coming into force or entered
         into providing for or imposing any Taxation and shall include orders,
         regulations, instruments, by-laws, published practice or concession or
         other subordinate legislation made under the relevant statute or
         statutory provision and any directive, statute, enactment, law, order,
         regulation or provision which amends, extends, consolidates or replaces
         the same or which has been amended, extended, consolidated or replaced
         by the same.

1.11     "Transaction" means the existence of any state of affairs and any
         payment, transaction, act, omission, or occurrence of whatever nature
         whether or not the Group Company or Purchaser is a party thereto and
         for the avoidance of doubt, includes the execution and completion of
         the sale of Klippan Shares to the Purchaser. References to a
         Transaction occurring on or before Completion shall include a
         Transaction deemed pursuant to any Taxation Statute, to occur or which
         is otherwise treated or regarded as occurring on or before Completion.

1.12     "Vendor's Relief" means any relief not taken account of in the
         Completion Accounts but which arises solely with respect to the period
         before Completion.

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

1.14     References to a Transaction which occurred on or before Completion
         include the combined result of two or more Transactions one or more of
         which occurred on or before Completion and at least one of those events
         occurs after Completion but only where the event or events occurring
         after Completion is or are:

         1.14.1   the completion of the disposal by the Group Company of any
                  capital asset which was contracted to be sold by the Group
                  Company before Completion, provide that such disposal shall
                  only be treated as occurring on or before Completion to the
                  extent that it gives rise to a Liability to Taxation in
                  respect to actual income, profits or gains and only tax
                  arising in respect of the amount by which the deemed income,
                  profits and gains shall be treated as arising in consequence
                  of an event occurring on or before Completion

         1.14.2   the satisfaction of a condition to which the disposal by the
                  Group Company of any asset pursuant to a contract entered into
                  before Completion was subject, provided that such disposal
                  shall only be treated as occurring on or before Completion to
                  the extent that it gives rise to a Liability to Taxation in
                  respect of actual income, profits or gains and only tax
                  arising in respect of the amount by which deemed profits of
                  gains of the Group Company exceeds the actual income, profits
                  or gains shall be treated as arising in consequence of an
                  event occurring on or before Completion; or

         1.14.3   the bringing into the United Kingdom of any document executed
                  prior to Completion outside the United Kingdom.

1.15     Headings are for convenience only and shall not affect the construction
         of this Deed.

<PAGE>   93

2.       Covenant

2.1      Subject as hereinafter provided in this Deed, the Vendor hereby agrees
         and undertakes to the Purchaser to pay so far as possible by way of an
         adjustment to the Purchase Price an amount equal to:

         2.1.1    any Liability for Taxation payable by any Group Company after
                  the Completion Date:

                  2.1.1.1  in respect of or arising from any Transaction
                           occurring on or before the Completion Date; or

                  2.1.1.2  in respect of any gross receipts, income, profits or
                           gains earned, accrued or received by the Group
                           Company on or before Completion;

                  2.1.1.3  by reference to the net wealth, asset values,
                           turnover or added value of any Group Company on or
                           before the Completion Date;

                  2.1.1.4  in respect of any liability of any Group Company to
                           repay or the loss of the right to receive in whole or
                           in part any payment for the surrender of group
                           relief;

                  2.1.1.5  in respect of the benefit of any surplus advance
                           corporation tax received or receivable by any Group
                           Company pursuant to any agreement or claim made on or
                           before the date hereof;

                  2.1.1.6  in respect of any Liability for Taxation for which
                           the Group Company would not have been liable but for
                           being treated as being or having been a member of the
                           same group of companies as, or associated with the
                           Vendor for the purposes of any Tax; and

         2.1.2    any reasonable costs and expenses properly incurred and
                  payable by the Purchaser and the reasonable costs and expenses
                  properly incurred and payable by any Group Company in
                  connection with any item for which the Vendor is liable under
                  this Deed.

2.2      The due date for payment (the "Due Date") under Clause 2.1 shall be the
         later of (i) the date five days (or, if such a day is not a Business
         Day, the next Business Day) after the date on which a notice setting
         out the details of the matter and amount for which the Vendor is liable
         is received from the Purchaser pursuant to Clause 7 below, and (ii) the
         latest date on which the payment or repayment, as the case may be,
         would have been required to be paid or shall have been due.

2.3      Any payments made under Clause 2.2 hereof shall be treated as an
         adjustment to the consideration paid by the Purchaser under the terms
         of the Agreement.

2.4      For the avoidance of doubt, Clause 2.1 above shall not cover any
         Taxation to the extent relating to any profits earned, accrued or
         received after the Completion Date or

<PAGE>   94
         in respect of or arising from any Transaction whatsoever and by
         whosoever effected after the Completion Date.

2.5      Any dispute as to the amount specified in any notice served on the
         Vendor under Clauses 2.2 shall be determined by the auditors of the
         Group Company for the time being acting as experts and not as
         arbitrators (the costs of such determination to be borne equally by the
         Vendor and the Purchaser).

2.6      If any sums are not paid by the Due Date then, except to the extent
         that the Vendor's liability compensates the Purchaser for late payment
         by virtue of it extending to interest and penalties, such amounts shall
         bear interest in accordance with Clause 14 of the Agreement.

3.       Limitation of Liability

3.1      The covenants given by the Vendor in Clause 2 shall not apply, in
         either case to the extent that:

         3.1.1    a provision or reserve in respect of such liability was made
                  in the Completion Accounts; or

         3.1.2    the same has been satisfied by the surrender or other transfer
                  to the relevant Group Company of any Relief by the Vendor or
                  by a member of the Vendor's Group (other than a Group Company)
                  or by a member of the same group of companies of which the
                  Vendor was a member on or prior to Completion at no cost to
                  the relevant Group Company; or

         3.1.3    such Taxation arises or is increased as a result of any
                  increase in rates of Taxation or imposition of new Taxation
                  legislation or withdrawal of relief from Taxation or any
                  change to Taxation Statute announced or made after the
                  Completion Date whether with or without retrospective affect;
                  or

         3.1.4    recovery (less costs and expenses) has been made in respect of
                  the liability in question or the matter giving rise to the
                  Taxation under the Warranties or recovery has already been
                  made under this Deed in respect of it; or

         3.1.5    such Liability for Taxation would not have arisen but for or
                  is increased by any voluntary act or Transaction carried out
                  by the Purchaser or Group Company after the date hereof or
                  otherwise than pursuant to a legally binding obligation
                  created on or before the date hereof, where in each case the
                  Purchaser or the Group Company knew or reasonably should have
                  known that such act or transaction would give rise to such
                  Liability for Taxation provided that, without limitation to
                  the foregoing, the parties agree that the following are all
                  examples of voluntary acts which can reasonably be expected to
                  give rise to a Liability to Taxation:

                  3.1.5.1  any change in the accounting policy of a company
                           (including a change to the date to which a company
                           makes up its accounts for tax purposes) or the basis
                           upon which a company values its assets;

<PAGE>   95

                  3.1.5.2  any failure or delay in making any payment to the
                           relevant Taxation Authority, or any failure in
                           keeping preserving, maintaining or submitting any
                           account records form return or computation;

                  3.1.5.3  any failure or omission to make any election or claim
                           a Relief the making or claiming of which was taken
                           into account in computing the provision or reserve
                           for tax in the Completion Accounts;

                  3.1.5.4  a voluntary disclaimer of the whole or any part of
                           any allowance to which a company is entitled under
                           Part II of the Capital Allowances Act 1990 or a
                           revocation of any claim for Relief;

                  3.1.5.5  a cessation of, or any change in, the nature or
                           conduct of any trade carried on by a company;

                  3.1.5.6  any failure by the Purchaser to comply with any of
                           its obligations under the terms of this Deed
                           (including its obligations to procure certain actions
                           by Group Companies).

         3.1.6    except in the case of fraudulent or negligent conduct by the
                  Vendor or (prior to Completion) the relevant Group Company
                  unless written notice of the Liability for Taxation or any Tax
                  Claim which may give rise to such Liability for Taxation
                  specifying in reasonable detail the circumstances giving or
                  which may give rise to such Liability for Taxation and the
                  amount thereof has been served on the Vendor on or prior to
                  the seventh anniversary after Completion; or

         3.1.7    to the extent that such liability for Taxation is in respect
                  of stamp duty or stamp duty reserve tax payable on the
                  transfer or agreement to transfer the Klippan Shares to the
                  Purchaser under the Agreement

                  and for the purposes of this Clause 3 only, "Liability for
                  Taxation" shall be deemed to include a liability or loss
                  falling within Clauses 2.1.1(v) and 2.1.1(vii).

3.2      The Vendor shall not be liable in respect of any claim under Clause 2.1
         of this Deed unless written notice of such claim is given in writing by
         the Purchaser to the Vendor setting out full details of the specific
         matter in respect of which the claim is made, including an estimate of
         the amount of such claim, if practicable, as soon as reasonably
         practicable (any in the case of a Claim for which there is a time limit
         for the making of an appeal, within 10 days of the Purchaser or Group
         Company first becoming aware of the Claim) but such notice shall not be
         a condition precedent to the liability of the Vendor under this Deed
         provided always that the Purchaser shall not be required to notify the
         Vendor where the Claim relates to the period prior to Completion where
         the Vendor or any of its professional advisers have been notified of a
         Claim by a Taxation Authority (or other competent authority) or to a
         Claim conducted by the Vendor.

3.3      The Vendor's obligation to make payments under Clause 2.1 shall not be
         affected by the Purchaser's knowledge or the disclosure, in the
         Disclosure Letter or otherwise, of any Liability to Tax giving rise to
         the payment, or of the circumstances giving rise to such Liability to
         Tax.

<PAGE>   96

4.       Savings

4.1      If, at the Vendor's request and expense, the auditors of the Group
         Company for the time being determine that the Group Company has
         obtained a Saving, the Purchaser shall as soon as reasonably
         practicable thereafter repay to the Vendor the lesser of:

         4.1.1    the amount of the Saving (as determined by the Purchaser's
                  Auditors) less any costs incurred by the Group Company or the
                  Purchaser; and

         4.1.2    the amount paid by the Vendor under Clause 2 in respect of the
                  Liability for Taxation which gave rise to the Saving less any
                  part of that amount previously repaid to the Vendor under any
                  provision of this Deed or otherwise.

4.2      The Purchaser shall procure that the Group Company shall use any Relief
         (which would if used give rise to a Saving) in priority to using any
         other Relief available to it unless doing so would result in a lesser
         benefit to the group of companies to which the Group Company is then a
         member.

4.3      If any Group Company avoids or reduces a payment of Taxation by use of
         a Vendor's Relief, an amount equal to the amount of Taxation so saved
         shall be set-off against any liability of the Vendor under Clause 2
         with any excess being carried forward and set-off until such Liability
         for Taxation is exhausted.

4.4      If, at the Vendor's request and expense, the auditors of the Group
         Company for the time being certify that any provision for Taxation in
         the Completion Accounts for any liability to Taxation or liability to
         make a payment in respect of Taxation (excluding any provision for
         deferred tax) has proved to be an over-provision, the Purchaser shall
         as soon as practicable pay to the Vendor the lesser of the value of:-

         4.4.1    the over-provision (as determined by the auditors); and

         4.4.2    the aggregate amount (if any) paid, in respect of the same
                  type of Taxation for which there has been an over-provision,
                  by the Vendor under Clause 2 less any part of that amount
                  previously repaid to the Vendor under any provision of this
                  Deed or otherwise prior to the determination of such
                  over-provision.

4.5      In the event that the amount in 4.4.1 exceeds the amount set out in
         4.4.2, the excess shall be set off (in order to reduce or eliminate)
         any liability of the Vendor under Clause 2 in respect of any liability
         for the same type of Taxation as the over-provision then outstanding or
         which arises after the date of such determination, when such liability
         arises provided that no deduction shall be made from any payment which
         the Vendor shall be obliged to make unless such certificate is in
         existence on the Due Date.

4.4      In determining whether any Group Company has obtained a Saving (or
         whether any provision in the Completion Accounts is an over-provision)
         pursuant to this Clause 4, the auditors shall act as experts and not as
         arbitrators and, in the absence of manifest error, their determination
         shall be conclusive and binding on the Vendor and the Purchaser.

<PAGE>   97

5.       Recovery from Other Persons

5.1      Where the Purchaser or the Group Company is or becomes entitled either
         immediately or at some subsequent date to recover from some other
         person not being the Purchaser, the Group Company or any member of the
         Purchaser's Group (including any Taxation Authority or other competent
         authority) any amount which is referable to a Liability for Taxation
         under this Deed, the Purchaser shall and shall procure that each Group
         Company shall;

         5.1.1    notify the Vendor as soon as reasonably practicable of its
                  entitlement; and

         5.1.2    if required by the Vendor, and subject to the Purchaser and
                  the Group Company being indemnified by the Vendor against any
                  Taxation that may be suffered on receipt of such amount and
                  any costs and expenses properly incurred in recovering that
                  amount, take all reasonable steps to enforce such recovery
                  (keeping the Vendor informed of the progress of any action
                  taken).

5.2      If the Purchaser or the Group Company recovers any amount referred to
         in Clause 5.1 above, the Purchaser shall account to the Vendor for the
         lesser of:

         5.2.1    any amount recovered (including any related interest or
                  related repayment supplement) less any Taxation suffered by
                  the Purchaser or Group Company in respect of that amount and
                  any costs and expenses incurred in recovering that amount
                  (save to the extent that the amount has already been made good
                  by the Vendor under Clause 5.1.2); and

         5.2.2    the amount paid by the Vendor under Clause 2 (less any costs
                  and expenses properly incurred by the Purchaser and/or any
                  Group Company in recovering such amount under Clause 5.1.2
                  save to the extent that payment under Clause 5.1.2 includes
                  such costs and expenses) in respect of the Liability for
                  Taxation in question.

5.3      Notwithstanding anything in the Agreement or in this Deed, neither the
         Purchaser nor any Group Company shall be obliged to take any action
         unless the Vendor shall first indemnify and secure the Group Company
         and the Purchaser to their reasonable satisfaction against all losses
         (including any additional Tax Liability), costs, interest damages and
         expenses which that may incur.

6.       Corporation Tax Returns

6.1      The Vendor or its duly authorised agents shall at the Vendor's cost and
         expense prepare the corporation tax returns and computations of the
         Group Company for all accounting periods ended on or prior to
         Completion. To the extent that the same shall not have been prepared
         before Completion, the Vendor or its duly authorised agents shall
         submit them to the Purchaser for onward submission to the relevant
         Taxation Authority.

6.2      The Purchaser shall procure that the returns and computations mentioned
         in Clause 6.1 shall be authorised, signed and submitted to the relevant
         Taxation Authority without amendment or only with such amendments as
         the Purchaser reasonably considers to be necessary and shall give the
         Vendor or its agents all such assistance as

<PAGE>   98
         may reasonably be required (at the Vendor's cost and expense) to agree
         those returns and computations with the relevant Taxation Authority,
         provided that the Purchaser shall not be obliged to take any such
         action as is mentioned in this Clause in relation to any return that is
         not in the reasonable opinion of the Purchaser full, true and accurate
         in all material respects.

6.3      The Vendor's duly authorised agents shall at the Vendor's cost and
         expense prepare all documentation and shall have conduct of all matters
         (including correspondence) relating to the corporation tax returns and
         computations of the Group Company for all accounting periods ended on
         or prior to the Completion, provided that the Vendor shall not without
         the prior written consent of the Purchaser (not to be unreasonably
         withheld or delayed) transmit any communication (written or otherwise)
         to the relevant Taxation Authority or agree any matter with the
         relevant Taxation Authority unless necessary to make an appeal within
         the permitted time limit.

6.4      The Purchaser shall procure that the Group Company, at the Vendor's
         cost and expense, affords such access to its books, accounts and
         records as is necessary and reasonable to enable the Vendor's duly
         authorised agents to prepared the corporation tax returns and
         computations of the Group Company for all accounting periods ended on
         or before Completion, and conduct matters relating to them in
         accordance with this Clause.

6.5      The Vendor and the Purchaser agree to take (and the Purchaser agrees to
         procure that the Group Company shall take) all reasonable steps to
         ensure that the corporation tax returns and computations of the Group
         Company for all accounting periods ended on or before the Completion
         Date are prepared and agreed with the relevant Taxation Authority as
         soon as possible.

6.6      The Purchaser shall procure that each Group Company shall sign and
         deliver to the Vendor all such letters, claims, surrenders,
         applications and elections and do all such other acts as the Vendor may
         reasonably request for the purpose of enabling the Vendor to minimise
         the liability to taxation for each Group Company in relation to the
         profits and losses of each Group Company in the financial periods of
         the Company up to and including that ended on the Reference Accounts
         date and for the period from the Reference Accounts Date to Completion
         (without however the Vendor being under any liability to reduce the
         Group Companies net taxation liability below that set out in the
         Completion Accounts).

6.7      The Purchaser shall procure that each Group Company will surrender as
         group relief losses to such company or companies in the Vendor's Group
         as the Vendor shall direct to the extent that such losses have not been
         utilised in accordance with Clause 6.6 and will also procure that
         copies of all documentation relating to such surrenders shall be
         submitted to the Vendor prior to submission to the relevant Taxation
         Authority, together with any relevant correspondence from time to time.

6.8      The Purchaser shall procure that the corporation tax computations
         already submitted to the relevant Taxation Authority for periods up to
         and including the period ended on the Reference Accounts Date will not
         be altered or amended in any way without the prior written approval of
         the Vendor.

<PAGE>   99

6.9      The Purchaser shall procure that no changes are made to the tax
         returns, computations and other documents mentioned in this Clause 6 as
         would lead to any of them effecting the minimisation of tax liability
         or the surrenders directed by the Vendor mentioned by Clause 6.6 and
         6.7 respectively.

7.       Conduct of Claims

7.1      If the Purchaser or a Group Company becomes aware of any Claim, the
         Purchaser shall or shall procure that the Group Company give written
         notice in accordance with Clause 3.2 and shall keep the Vendor informed
         as far as reasonably practicable of all relevant information relating
         to such matter.

7.2      The Purchaser shall and shall procure that the relevant Group Company,
         provided the Vendor previously indemnifies the Group Company and the
         Purchaser to the Purchaser's reasonable satisfaction against all
         liability, costs, damages or expenses which may be properly incurred
         thereby including any additional Liability for Taxation, take such
         action as the Vendor may reasonably request by notice in writing given
         to the Purchaser to avoid, dispute, delay, defend, resist, appeal or
         compromise any Claim (hereinafter defined as the "Dispute"), provided
         that no Group Company nor the Purchaser shall be obliged to appeal or
         procure an appeal against any assessment to Taxation raised on any of
         them if, the Vendor having been given notice of the Claim in accordance
         with Clause 3.2 and such assessment, the Purchaser has not within 30
         days of the date of the notice received instructions in writing from
         the Vendor to do so.

7.3      In respect of a Claim which is not conducted by the Vendor, and subject
         to the Vendor previously indemnifying the Group Company and Purchaser
         in accordance with Clause 7.2, the Purchaser shall, and shall procure
         that each Group Company shall:

         7.3.1    promptly submit all written communications relating to the
                  Claim which are to be transmitted to the relevant Taxation
                  Authority to the Vendor for its approval (not to be
                  unreasonably withheld or delayed) allowing reasonable time for
                  the Vendor to review then taking account of the date on which
                  the Group received notice of the Claim and any time limits
                  which apply and shall only transmit them after such approval
                  is given, except where necessary to submit an appeal before
                  the relevant time limit; and

         7.3.2    make no settlement or compromise of a Dispute and shall make
                  no payment in respect of it without the prior approval of the
                  Vendor, provided that this shall not prevent the making of a
                  payment of Taxation on the latest date on which such payment
                  can be made before interest, fines, and/or penalties will
                  apply to such Taxation unless the Vendor directs otherwise in
                  writing and has previously provided full indemnity and
                  security to the reasonable satisfaction of the Purchaser
                  against all such interest, fines, and/or penalties.

7.4      If the Vendor does not request the Purchaser or the Group Company to
         take any action under Clause 7.2 of this Deed or fails to indemnify and
         secure the Purchaser and the Group Company to the Purchaser's
         reasonable satisfaction within a period of time (commencing with the
         date of the notice given to the Vendor) that is reasonable having
         regard to the nature of the Claim and the existence of any time limit
         in relation

<PAGE>   100

         to avoiding, disputes, defending, resisting, appealing or compromising
         such Claim and which period shall not be less than 60 days or the
         Dispute concerns fraudulent or negligent conduct of the Vendor or the
         Group Company prior to Completion (but not otherwise), the Purchaser or
         Group Company shall have the conduct of the Dispute absolutely (without
         prejudice to its rights under the terms of this Deed) and shall be free
         to settle the Claim on such terms as the Purchaser or the Group Company
         may in its absolute discretion consider fit.

7.5      Subject to Clause 7.4, by agreement in writing between the Purchaser
         and the Vendor, the conduct of a Dispute shall be delegated to the
         Vendor upon the following terms, unless the Purchaser and the Vendor
         specifically agree otherwise in writing:

         7.5.1    the Group Company, the Purchaser and the Vendor shall use
                  their reasonable endeavours to keep each other fully informed
                  of all matters pertaining to a Dispute and shall be entitled
                  to see and keep copies of all relevant correspondence and
                  notes or other written records (or a record of any oral
                  discussions) as soon as practicable after receipt of the same
                  with any Taxation Authority to the extent that it relates to a
                  Dispute;

         7.5.2    the appointment of solicitors or other professional advisers
                  shall be notified to the Purchaser;

         7.5.3    all written communications pertaining to the Dispute be
                  prepared by the Vendor which are to be transmitted to the
                  relevant Taxation Authority shall first be submitted to the
                  Purchaser for approval and shall only be finally transmitted
                  if such approval is given (unless when such transmission is
                  required on order to meet a relevant time limit), which
                  approval is not to be unreasonably withheld or delayed; and

         7.5.4    the Vendor shall make no settlement or compromise of the
                  Dispute or agree any matter in the conduct of the Dispute
                  which is likely to affect the amount thereof or the future
                  liability to Taxation of the Company or of the Purchaser
                  without the prior approval of the Purchaser, such approval not
                  to be unreasonably withheld or delayed.

         7.5.5    the Vendor may pay amounts of the relevant Liability to
                  Taxation to the relevant Taxation Authority in satisfaction
                  (to the extent of such payment) of the liability of the Vendor
                  under Clause 2.1 in respect of the Liability to Taxation in
                  question.

         7.5.6    Notwithstanding any other provision of this Deed, where the
                  Vendor has conduct of a Claim, the Vendor may make payment of
                  any amount under Clause 7.5.5 where it is necessary to avoid
                  or avoid an increase to any item set out in Clause 1.8.2.

7.6      Neither the Purchaser nor any Group Company shall be subject to any
         claim by or liability to the Vendor for non-compliance with any of the
         foregoing provisions of this Clause 7 if the Purchaser or the Group
         Company has bona fide acted in accordance with the written instructions
         of the Vendor.

<PAGE>   101

8.       Withholdings and Deductions

8.1      All sums payable by the Vendor to the Purchaser under this Deed shall
         be paid free and clear of all deductions, withholdings, set-offs or
         counter-claims whatsoever save only as may be required by law or as
         expressly permitted by this Deed. If any deductions or withholdings are
         required by law the Vendor shall (except to the extent the same has
         been taken into account in calculating the amount due under any other
         provision of this Deed and except in the case of interest payable under
         Clause 2.6) be obliged to pay to the Purchaser such sum as will after
         such deduction or withholding has been made leave the Purchaser with
         the same amount as it would have been entitled to receive in the
         absence of any such requirement to make a deduction or withholding.

8.2      If any Taxation Authority charges to Taxation in the hands of the
         Purchaser any sum paid to the Purchaser by the Vendor pursuant to
         Clause 2 of this Deed (except to the extent the same has been taken
         into account in calculating any amount due under any other provision of
         this Deed) then the amount so payable shall be grossed up by such
         amount as will ensure that after payment of the Taxation so charged
         there shall be left a sum equal to the amount that would otherwise be
         payable under this Deed.

8.3      To the extent that the Vendor is satisfied (acting in good faith) it
         can so do without prejudice to the retention of any Saving, credit
         refund or similar benefit the Purchaser receives, if the Purchaser
         receives a Saving, credit for or refund of any Taxation payable by it
         or similar benefit by reason of any deduction or withholding for or on
         account of Taxation or Taxation referred to by Clause 8.2, the
         Purchaser shall reimburse to the Vendor such part of such additional
         amounts paid to it pursuant to Clause 8.1 above as shall leave the
         Purchaser (after taking account of such Saving, credit, refund or
         similar benefit) in no better and no worse position than it would have
         been if the Vendor had not been required to make such deduction or
         withholding.

8.4      If any deduction or withholding is made from any payment as
         contemplated in Clause 8.1, the Vendor shall supply to the Purchaser
         such official receipt, if any, or other evidence of payment to the
         relevant authority of the amount deducted or withheld and shall give
         all reasonable assistance to enable the Purchaser to receive a Saving,
         credit or refund or similar benefit by reason of the deduction or
         withholding as promptly as possible.

8.5      If the Purchaser becomes aware that it is or is likely to be entitled
         to receive a Saving, credit, refund or similar benefit referred to by
         Clause 8.3, it shall as soon as reasonably practicable, notify the
         Vendor.

9.       Disputes

9.1      All claims, disputes and differences between the parties hereto
         relating to Taxation arising out of or in connection with this Deed
         shall be referred to the Reporting Accountants.

9.2      Such reference shall be conducted in the same way as if it were a
         reference under the Agreement and the provisions of Clause 3.2(c) of
         the Agreement shall apply mutatis mutandis to this Deed.

<PAGE>   102

10.      Purchaser's Indemnity

10.1     The Purchaser covenants with and undertakes to the Vendor to pay to the
         relevant Taxation Authority on behalf of the Vendor an amount equal to
         any Taxation which is assessed under section 767A ICTA 1988 or section
         767AA ICTA 1988 on the Vendor by reason of any act or omission of the
         Group Company or the Purchaser other than any Taxation the liability
         for which falls upon the Vendor pursuant to Clause 2 of this Deed.

10.2     The covenant contained in Clause 10.2 above will apply to any interest
         penalties and reasonable costs and expenses incurred by the Vendor in
         connection with any such Taxation, such amount to be paid to the
         Vendor.

10.3     The due date for payment of any amount payable pursuant to this Clause
         will be the later of the date falling 5 days before latest date upon
         which the party assessed under section 767A ICTA 1988 or section 767AA
         ICTA 1988 is obliged to pay the Taxation in question to avoid any
         liability to interest or penalties and the date falling 10 days after
         the Vendor has served written notice on the Purchaser demanding such
         payment.

10.4     The Purchaser shall not be liable for any amount under this Clause
         where recovery (less costs and expenses) has already been made by the
         Vendor in respect of the liability in question or the matter giving
         rise to the Taxation or recovery has already been made under this Deed
         in respect of it.

11.      Vendor's Indemnity

11.1     The Vendor covenants with and undertakes to the Purchaser to pay to the
         relevant Taxation Authority on behalf of the Purchaser and/or any Group
         Company any amount of Taxation may be assessed under section 770 ICTA
         1988 on a Group Company with respect or arising in the period prior to
         Completion (such indemnity shall include, for the avoidance of doubt,
         any imputed interest liability which is imposed by a Taxation Authority
         on the Group Company with respect to or arising in the period prior to
         Completion).

11.2     The covenant contained in Clause 11.1 above shall include any interest
         penalties and reasonable costs and expenses incurred by the Purchaser
         in connection with any such Taxation, such amount to be paid to the
         Purchaser.

11.3     The due date for payment of any amount payable pursuant to this Clause
         will be the later of the date falling 5 days before latest date upon
         which the party assessed under section 770 ICTA 1988 is obliged to pay
         the Taxation in question to avoid any liability to interest or
         penalties and the date falling 10 days after the Purchaser has served
         written notice on the Vendor demanding such payment.

11.4     The exclusions set out within Clauses 3.1.1, 3.1.2 and 3.1.4 shall
         apply to the covenants given by the Vendor under this Clause 11
         (substituting for this purpose the reference "Clause 11 " for "Clause
         2" where it appears in Clause 3.1) so as to exclude or restrict the
         liability of the Vendor under this Clause 11.

<PAGE>   103

12.      Limits

12.1     The Vendor and/or the Purchaser (as the case may be) shall have no
         liability for any liability to Tax under this Deed (which shall include
         for the avoidance of doubt any liability to Tax pursuant to the
         covenants set out in Clauses 10 and 11 hereto) unless the Vendor
         and/or the Purchaser (as the case may be) have notified the other of
         such liability to Tax, on or before seven years from the date of
         Completion.

13.      Other Provisions

13.1     The provisions of Clauses 6.2 and 6.11 (Limitations on Vendor's
         Liabilities), 9 (Confidential Information), 10 (Announcements), 11
         (Competition), 12 (Costs), 13 (Interest), 14 (General), (Interest), 15
         (Assignment), 16 (Further Assurance), 18 (Notices), 19 (Governing Law
         and Jurisdiction), 20 (Counterparts), and 21 (Contracts (Right of Third
         Parties) Act 1999) of the Agreement shall apply to this Deed as if
         expressly incorporated herein save that references to "this Agreement"
         shall be construed as references to "this Deed" other than within
         Clauses 6.2 and 6.11 of the Agreement, provided that Clause 13 of the
         Agreement shall not apply to any item that already includes interest
         pursuant to this Deed.

In witness whereof parties hereto have duly been executed this deed the day and
year first before written

<PAGE>   104

EXECUTED as a Deed by             )
BRADLEY INTERNATIONAL             )
HOLDINGS, LIMITED                 )
Acting by its duly appointed
Attorney Paul James
Jones

/s/ Paul Jones
----------------------------------
Director

in the presence of:-

/s/ Linda Crow - Solicitor
----------------------------------
Director/Secretary

SIGNED as a Deed by               )
NEWELL COMPANY LIMITED            )
Acting by its duly appointed

/s/ John Tempelaar-Lietz
----------------------------------
Director

----------------------------------
Director/Secretary<PAGE>   1
                                                                    Exhibit 10.3

                               CHARTER AGREEMENT

         This Charter Agreement is entered into by and between Europa Cruises
Corporation and/or Europa Stardancer Corporation (hereinafter "Europa" or the
"Owner") and Seven Star Charters, Inc. (hereinafter "Seven" or "the
Charterer".)

         Whereas Europa is interested in leasing a Vessel known as the
M/V Stardancer (hereinafter "the Vessel") to Seven on the terms and conditions
set forth herein; and

         Whereas Seven is interested in leasing the Vessel known as the M/V
Stardancer from Europa on the terms and conditions set forth herein;

         Now, therefore, in consideration of the mutual covenants and
conditions expressed herein, it is agreed as follows:

TERM

That Europa and/or its subsidiary, Europa Stardancer Corporation will charter
that vessel commonly known as the M/V Stardancer to Seven for a period of five
years beginning January 1, 1999 and ending December 30, 2003, together with
that inventory and gaming equipment identified in Exhibit 1, attached hereto,
for a charter fee of One Million and Eighty Thousand Dollars ($1,080,000.00)
per year.

NONREFUNDABLE FEE

That Seven will pay Europa a nonrefundable fee in the amount of Five Thousand
Dollars ($5,000.00). The fee will be applied to escrow insurance payments to be
made to A. Amato or its successor as provided for under "Insurance."

ADDITIONAL ADVANCE CHARTER FEE

That Seven will pay Europa a nonrefundable advance charter fee for the one year
beginning January 1, 1999 and ending December 31, 1999 in the amount of Two
Hundred and Seventy Thousand Dollars ($270,000.00) on or before December 23,
1999, which amount will be paid in cash. That the $270,000.00 nonrefundable
advance charter fee will be wired to the following account:

Europa Cruises Corporation
First Union National Bank of Florida
Madeira Beach, Florida
Credit Account Number 2090001028808
DBA Number: 063107513

                                       1
<PAGE>   2

In the event the Vessel is not delivered to the Charterer, the $270,000.00,
together with interest thereon, and the otherwise nonrefundable fee in the
amount of $5,000 will be returned to the Charterer.

APPLICATION OF ADVANCE CHARTER FEES

That the nonrefundable advance charter fee of $270,000.00 will be applied to
the following charter periods:

January 1, 1999 through January 31, 1999: ($90,000.00)
November 1, 1999 through November 30, 1999: ($90,000.00)
December 1, 1999 through December 31, 1999: ($90,000.00)

That a letter of credit in the amount of One Hundred and Fifty Thousand Dollars
in a form acceptable to the Owner will be provided to Europa as a security
deposit. The security deposit is not an advance payment of charter fees nor
will it be deemed, in any way whatsoever, to constitute a measure of owner's
damages in case of default or in the event the Vessel sustains damage(s) during
the term of the charter. Upon the occurrence of any default, owner may use such
funds to the extent necessary, to make good any arrears in charter payments.
Likewise, in the event the Vessel sustains any damages, the owner may use such
funds to effect repair or as partial compensation for any damage to the Vessel.
Any deposit remaining at the conclusion of the charter period will be returned
to Seven after deduction for damages sustained, if any, repairs made, if any,
or unpaid charter fees.

ADDITIONAL CHARTER FEES

That Seven will pay Europa eight additional charter payments in the amount of
One Hundred and One Thousand, Two Hundred and Fifty Dollars ($101,250.00) each
per month for the period March 1, 1999 through October 31, 1999, which payments
will be due and payable on the first day of each of said months, with the
initial payment due March 1, 1999 and the final payment due October 1, 1999.

That Seven will pay Europa forty-eight additional charter payments in the
amount of Ninety Thousand Dollars ($90,000.00) each per month for the period
January 1, 2000 through December 30, 2003, which payments will be due and
payable on the first day of each month, with the initial payment due January 1,
2000 and the final payment due December 1, 2003.

OPTION TO PURCHASE VESSEL

That Seven shall have an option to purchase the Vessel known as the M/V
Stardancer together with that equipment identified on Exhibit 1 attached
hereto, at any time on or before December 30, 2001, for an option price of TWO
MILLION, EIGHT HUNDRED THOUSAND DOLLARS

                                       2

<PAGE>   3

($2,800,000.) payable in cash on or before December 30, 2001.

In the event Seven exercises its option to purchase and closes on the purchase
of the Vessel known as the Europa Stardancer on or before March 15, 1999 only,
90 percent (90%) of the following payments, if same were made, will be applied
to the purchase price:

a)       the nonrefundable advance charter fee of $270,000; and

b)       the $90,000 payment due March 1, 1999.

In the event Seven exercises its option to purchase and closes on the purchase
of the Vessel known as the Europa Stardancer on or before June 30, 1999, fifty
percent (50%) of the following payments, if same were made, will be applied to
the purchase price:

a)       the nonrefundable advance charter fee of $270,000; and

b)       all other charter payments then due and made as of June 30, 1999.

In the event Seven exercises its option to purchase and closes on the purchase
of the Vessel known as the Europa Stardancer on or before December 30, 1999, 25
percent (25%) of the following payments, if same were made, will be applied to
the purchase price:

a)       the nonrefundable advance charter fee of $270,000; and

b)       all other charter payments then due and made as of December 30, 1999.

It is understood and agreed that Seven will have no option to purchase the
vessel known as the Europa Stardancer after December 31, 2001. In the event
Seven exercises its option to purchase the Vessel and closes on the purchase of
the Vessel, Europa shall transfer title to the Vessel and all itemized
inventory free and clear of all liens and encumbrances at closing. It is
understood that the sale of the Vessel will be "as is" and exclusive of any
guarantees or express or implied warranties or warranties with respect to
fitness for a particular purpose.

In addition to its option to purchase under this agreement, it is agreed that
Seven will have a right of first refusal after December 31, 2001 to purchase
the Stardancer in the event a third party offers to purchase the Vessel on
terms acceptable to the Owner. Upon receipt of an offer to purchase the
Stardancer after December 31, 2001 which is acceptable to the Owner, the owner
will notify Seven in writing of the amount of the offer and the terms of the
offer. Seven will notify the owner within fifteen calendar days as to whether
or not Seven will purchase the Vessel on the same terms or other terms
acceptable to the Owner. Seven will have sixty calendar days from receipt of
the notice within which to close on

                                       3
<PAGE>   4

the sale of the Vessel. In the event Seven is unable to close on the sale of
the Vessel within sixty calendar days from receipt of the notice, the owner
will be entitled to sell the Vessel to a third party subject to this Charter
Agreement.

DELIVERY

That the Owner agrees to deliver the Vessel commonly known as the M/V
Stardancer on about January 5, 1999 to a location to be identified by Seven in
South Carolina. The Vessel shall be in working order and ready for service,
including certification from the Coast Guard Control Verification to permit the
carriage of passengers and voyages not more than 20 miles offshore. The Owner
represents and warrants that it has the full right and authority to deliver the
Vessel with the equipment identified in Exhibit 1 on board. The Owner's
obligation to deliver the Vessel is subject to and conditioned upon the timely
payment by Seven of all advance charter fees and all payments due.

DEFAULT

That in the event a charter payment is not received on the first day of each
month of the charter, Seven shall be deemed to be in default. In the event the
default is not cured within seven calendar days, the vessel shall be returned
to Europa but Europa shall be entitled to all sums due pursuant to the
Agreement, and attorneys fees and costs incident to collection of any sums
payable under the Agreement.

CAPTAIN/CHIEF ENGINEER

That the parties agree that Europa shall provide the captain of the Vessel
(also known as "the Master" of the "Vessel") on a temporary basis and the chief
engineer of the vessel on a permanent basis, who shall be employees of Europa.
Seven shall reimburse Europa for the salaries, taxes, and benefits associated
with these employees. The salaries, social security and payroll taxes of the
captains and engineers shall be paid by Seven to the owner on Monday of each
week during the term of this Charter. The owner shall pay workmen's
compensation insurance for such persons and provide a certificate of insurance
to the Charterer if requested. The Owner shall pay each captain and engineer
promptly after receipt of such funds from the Charterer. On each cruise there
shall be a minimum of one captain (at a salary of $125.00 per cruise if the
Captain is employed by Europa) and one engineer at a salary of $100.00 per
cruise if the engineer is employed by Europa). Seven shall make arrangements
for and shall be responsible for the costs of living accommodations for any
captain or engineer employed by Europa.

The Charterer shall provide, at its expense, any additional deck hands required
by the U.S. Coast Guard. Charterer and owner agree that on each cruise either
one owner's captain or one owner's

                                       4
<PAGE>   5

engineer will be on the Vessel while the Vessel is under charter. This
requirement will cease in the event the Seven purchases the Vessel. Seven
agrees to provide one meal per cruise each to the captain and engineer on board
the vessel. The captain of the Vessel shall have the sole and exclusive
authority to control and direct the operation of the Vessel, including the
authority to determine when and under what circumstances it shall be safe for
the Vessel to leave port.

CONDITION OF VESSEL UPON RETURN OF VESSEL

Seven agrees to return the vessel to Europa at the conclusion of the charter in
at least the same condition the vessel was in when received absent ordinary
wear and tear together with that inventory and equipment identified in attached
Exhibit 1. Seven shall be responsible for and shall replace or make good any
injury or damage to the Vessel, its equipment or furnishings, caused by itself,
its employees, agents, or passengers, except to the extent the damage has been
reimbursed to Owner by Owner's insurance. Owner understands and agrees that
Seven intends to make and may make minor or major or substantial improvements
to the Vessel and that Seven may add additional gaming equipment to the Vessel.
It is understood that any structural or major improvements to the Vessel shall
be made only with written approval of the Owner, which approval will not be
unreasonably withheld. It is understood that any gaming equipment or
paraphernalia purchased by Seven remains the property of Seven at the conclusion
of the charter.

It is understood that Seven's Letter of Credit will be cancelled once owner has
accepted the return of the Vessel in writing pursuant to this paragraph.

INSURANCE

The parties understand that Europa currently carries insurance on all of its
vessels, including the Stardancer. It is agreed that Seven will pay Europa
Eight Thousand Dollars ($8,000) per month or Ninety-six Thousand Dollars
($96,000) per year and that Europa will continue to pay all insurance premiums
currently being carried on the Vessel and shall provide that insurance coverage
that is presently maintained by the Owner during the course of the Charter. The
payments shall be due and payable on the first day of each month. Europa shall
furnish proof of all insurance currently in force and to be maintained during
the course of this Agreement or any extensions thereof.

If the Charterer desires any additional insurance, including but not limited to
any public liability or workmen's compensation insurance, it shall be the
obligation of the Charterer to purchase same at Charterer's expense.

                                       5
<PAGE>   6

In the event of any claim arising out of any insurance policy, it shall be the
sole obligation of the charterer to pay the lesser of the actual expense or the
deductibles set forth under each insurance policy listed in Exhibit 2 attached
hereto, but in no event, more than the deductible set forth in Exhibit 2.
Charterer shall maintain an escrow balance with A. Amato or its successor for
payment of P&I as well as medical expenses. The escrow balance will be
maintained as follows for each year of the charter:

March 1:                  $12,000.00
June 1:                   $12,000.00
September 1:              $12,000.00
December 1:               $12,000.00

Any money escrowed with A. Amato or its successor will remain so escrowed for
up to twelve months following the termination of the Charter or any extensions
thereof. All money remaining at the end of the Charter or any extension thereof
will be remitted to Charterer. The Charterer agrees to follow the Owners
accident reporting procedures set forth in attached Exhibit 3.

In the event that Seven purchases the Vessel, Seven's obligation to pay for
said insurance under this paragraph and Owners obligation to provide said
insurance under this paragraph will cease upon transfer of title to the Vessel.

REPAIRS MAINTENANCE/DRYDOCK

Seven shall pay for any and all repairs, maintenance and/or drydock required
during the term of the charter or any extension thereof. Seven agrees to
maintain the Vessel in accordance with the list of scheduled maintenance
procedures set forth in attached Exhibit 4.

RUNNING EXPENSES

Seven agrees to pay for all running expenses (normal operating expenses) during
the term of the charter or any extension thereof, including but not limited to,
fuel and water, deck engine room, consumable stores, pilotage, port charges,
provisions and supplies, suitable dockage, hurricane dockage, drydocking,
repairs and maintenance charges.

REPLACEMENTS

That Seven agrees to be responsible for and to replace, repair or pay for any
injury or damage to the Vessel caused during the term of the Charter or any
extension thereof, except to the extent that the injury or damage was
reimbursed to owner by insurance.

TAXES

That Seven shall pay all taxes and assessments of any nature that

                                       6
<PAGE>   7

may be assessed against the Charterer or the owner or operator of the Vessel or
the Vessel in connection with the use of the Vessel during the term of the
Charter or any extension thereof, including but not limited to, admissions
taxes, sales taxes, special county taxes, use taxes, federal excise taxes,
liquor taxes, penalties and interest thereon, and any attorneys fees incurred
in connection with the collection thereof and shall indemnify the Owner and/or
Europa Cruises Corporation against any claims, liens and collection efforts in
connection therewith. Seven shall not be responsible for taxes assessable with
respect to registration fees incurred in connection with ownership of the
Vessel or personal property taxes arising in connection with ownership of the
Vessel in Florida or income taxes with respect to the charter fees received
pursuant to this charter. Seven agrees to provide proof to Owner within five
calendar days of request thereof, that the Charterer is paying all taxes due
and payable.

LOSS OF EARNINGS/BUSINESS INTERRUPTION

Owner shall not be responsible for any loss of earnings or business suffered as
a result of any repair, maintenance or service due to the vessel during the
charter or any extension thereof.

ASSIGNMENT

Seven shall have no right whatsoever to assign the Charter Agreement or any
extension thereof without the express, written consent of the Owner. It is
understood that the Owner may withhold consent for any reason whatsoever. The
Owner has agreed that Seven may assign this Charter Agreement to a to-be-formed
corporation to be headed by Sam Gray.

On the other hand, it is understood and agreed that the owner shall have the
absolute right to assign the charter Agreement or any extension thereof and/or
to sell the vessel subject to the Charter Agreement and option to purchase
therein.

NAVIGATION LIMITS

Seven agrees that the Vessel shall not be operated within twenty-five miles of
Miami Beach, Florida, Ft. Myers Beach, Florida and/or Madeira Beach, Florida.

The parties agree that the Vessel shall be restricted to the coastal waters off
those states in which it is operated and within 20 nautical miles of the coast
of said States and shall be operated in accordance with any limits imposed by
said States and shall be restricted to waters in which the owner, insurance
carrier for the Vessel and the mortgagor of the Vessel agree the Vessel may be
operated.

Seven agrees to notify the owner immediately preceding any

                                       7
<PAGE>   8

relocation of the Vessel from its original delivery destination and immediately
preceding any transfer to a drydock location.

The Captain of the Vessel shall have the sole and exclusive authority to
determine when and under what circumstances it shall be safe for the Vessel to
leave port. However, the Charterer shall have the right to refuse to sail any
cruise even if the captain should determine that it is safe to do so.

Seven agrees that it will operate the Vessel at a port in which it is legal to
operate a Vessel which engages in gaming in international waters. Without prior
written approval of the Owner, the Vessel shall not be docked at or cruise from
a location other than the location identified by Seven to which the Vessel will
originally be delivered. Seven understands that any movement of the Vessel to
another location must be approved by Owner and Owner's insurance carriers.

USE OF VESSEL

Seven agrees that the Vessel shall be employed only for lawful purposes and for
the carriage of passengers and their personal belongings and that Seven shall
not transport cargo, nor in any way violate any federal, state or local laws,
rules or regulations at any time and shall comply with all federal, state and
local laws in all respects. No passengers or their belongings may be
transported or carried to any port other than the port of embarkation.

LIENS

That neither the Charterer nor the Captain or crew shall have any right, power
or authority to create, incur or permit to be imposed upon the Vessel or any
equipment thereon any liens whatsoever except for salvage. The Charterer agrees
to carry a properly certified copy of the Charter Agreement with the ships
papers and on demand to exhibit it to any person having business with the
Vessel that might give rise to a lien thereon. The Charterer agrees to notify
any person or entity furnishing repairs, supplies, towage or other necessaries
to the Vessel that neither the Charterer nor the Master has any right to
create, incur or permit to be imposed upon the Vessel any liens whatsoever
except for salvage. The notice shall be in writing. Prior to the release of
that lien against the casino equipment held by Casinos Austria
Liegenachaftsverwaltung-Und Leasing, Gesmbh, the Charterer further agrees to
fasten to the Vessel in a conspicuous place and to maintain during the life of
this Charter or any extension thereof a notice reading as follows:

         "This Vessel is the property of the Europa

                                       8
<PAGE>   9

         Stardancer corporation and the casino equipment is the property of
         Casinos Austria Liegenschaftsverwaltung-Und Leasing, Gesmbh. This
         Vessel is under charter to Seven Star Charters, Inc. The casino
         equipment is leased to Europa Leasing Corporation and by the terms of
         the Charter neither the Charterer or the Master has any right, power,
         or authority to create, incur, or permit to be imposed upon the Vessel
         or the Casino equipment any liens or encumbrances whatsoever except
         for salvage.

TERMINATION

That the parties agree that the Owner may terminate the Charter Agreement upon
the occurrence of any of the following which shall be deemed to constitute
defaults under the Agreement:

a)       If Seven shall file in any court of the United States or any state a
petition in bankruptcy or insolvency or a petition for reorganization or for the
appointment of a receiver or trustee of all or a substantial part of the
Charterer's property, or if Charterer makes an assignment for or petition for or
enters into an arrangement for the benefit of creditors or if a petition in
bankruptcy is filed against Charterer which is not discharged within thirty days
thereafter; or

b)       If Charterer shall have committed a material breach of the Charter
Agreement and shall not, within seven calendar days have cured such breach. In
addition to the breach of any other material provision of the Agreement, any
failure to effect payment of charter payments when due or payment for repairs
or running expenses when due shall constitute a material breach of the charter
Agreement which shall entitle the Owner in its sole and absolute discretion to
terminate the Charter Agreement. Early termination of the Charter Agreement by
the Owner due to nonpayment of sums due or payable shall not relieve the
Charterer of its obligation under the Charter Agreement to pay the entire
amount of the charter hire for the full remaining term of the Charter Agreement
and to pay sums due and owing for expenses or repairs incurred.

It is expressly understood and agreed that time is of the essence with respect
to all payments and reimbursements due the Owner pursuant to this Agreement.
All payments and reimbursements once made by the Charterer to the Owner
pursuant to this Agreement shall not be refundable. Unless otherwise provided
in this agreement, early termination of the Agreement shall not relieve the
Charterer of its obligation to pay the entire amount of the charter hire for
the full remaining term of this Agreement or any extension thereof.

                                       9
<PAGE>   10

INDEMNIFICATION/HOLD HARMLESS

That during the term of the Charter Agreement or any extension thereof, the
Charterer agrees to indemnify and hold harmless the Owner, Europa Cruises
Corporation and all of its subsidiaries (collectively "Europa") and the
officers, directors, employees, agents and attorneys of the Owner and/or Europa
against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject as the result of the
Charterer's use of the Vessel or any seizure of the Vessel by any federal,
state, county, city, municipal authority, agency or instrumentality or any
other governmental agency, or the attachment or levy upon the Vessel by any
creditor of the Charterer and to reimburse Europa and the indemnified persons
for any legal or other expenses incurred by them in connection with any
litigation, civil or criminal, whether or not resulting in any liability. This
indemnity agreement is in addition to any other liability which the Charterer
may otherwise have to the Owner, Europa Cruises Corporation and/or the
indemnified persons.

The Owner and any other indemnified person shall have the absolute right to
employ any attorney they may choose, individually or collectively, the fees and
expenses of such attorney(s) to be at reasonable market rates to be paid by the
Charterer and to take any action the Owner and/or the indemnified persons, in
their sole and absolute discretion, deem necessary and appropriate upon
seizure, attachment of or levy upon the vessel by Charterer's creditors. The
Owner and/or any indemnified person may enforce this indemnification agreement
by lien against any money or property of the Charterer, including but not
limited to, a maritime lien against and attachment or seizure of any vessel
owned in whole or in part by the Charterer without posting bond. The seizure,
attachment of or levy upon the Vessel by any federal, state, county, city or
municipal agency or instrumentality or by any other governmental agency or by a
creditor of the Charterer shall not relieve the Charterer of its obligation to
pay the full amount of the charter hire payments pursuant to this Agreement or
any extension thereof and to pay any other expenses and/or taxes payable by
the Charterer pursuant to this Agreement or any extension thereof.
Notwithstanding any other provision of this Agreement, the owner may, but shall
not be required to submit any claims arising under this indemnity agreement to
arbitration.

ARBITRATION

That any dispute arising out of the Charter Agreement will be submitted to
binding arbitration to be held in Madeira Beach, Florida, with one arbitrator
to be chosen by agreement of the parties. The parties shall share the cost of
said arbitrator.

                                      10
<PAGE>   11

FINDERS' FEES

The parties acknowledge that a three percent (3%) brokerage commission is due
and owing to Lou Daleo in connection with this Charter Agreement. The parties
understand that the commission is to be paid by the Owner upon receipt of funds
and out of funds due to the Owner under this Agreement. The parties agree that
Seven is not responsible for the payment of any brokerage commissions in
connection with this Charter Agreement.

NOTICES

All notices required to be given under this Agreement shall be forwarded as
follows:

If to Europa, to both of the following by certified mail, return receipt
requested and by facsimile:

1.       Deborah A. Vitale, President
         Europa Cruises Corporation
         150-153rd Avenue
         Suite 202
         Madeira Beach, Florida 33708
         Facsimile No.: 813-319-9125
         Telephone:     813-393-2885

AND

2.       Deborah A. Vitale
         Chairman of the Board of Directors
         Europa Cruises Corporation
         1013 Princess Street
         Alexandria, Virginia 22314
         Facsimile No.: 703-683-6816
         Telephone:     703-683-6800

If to Charterer, to both of the following by certified mail, return receipt
requested or by facsimile:

1.       Sam Gray, President
         Seven Star Charters, Inc.
         240 Webley Lane
         Alpharetta, Georgia 30022
         Facsimile No.: 770-667-9874
         Telephone No.: 800-234-5946
         Cell No.:      843-514-1462

AND

2.       Jim Russell
         Facsimile No.:

                                      11
<PAGE>   12

BINDING EFFECT

This Agreement shall bind and inure to the benefit of the parties, their
personal representatives, successors in interest, legal representatives and
assigns, where permitted.

ENTIRE AGREEMENT

This Agreement represents the entire understanding between the parties and
supersedes all other negotiations, agreements, representations and covenants,
whether written or oral. This Agreement may not be modified or amended except
by a written instrument signed by the parties hereto. The parties intend this
Agreement to be the entire integration of all of their agreements of any
nature. No other agreements, representations, promises, commitments, or the
like, of any nature, exist between the parties except as set forth herein. No
representations have been made by owner with respect to the suitability of or
fitness for a particular purpose of the Vessel. The owner has made no
warranties, express or implied as to the Vessel.

HEADINGS

Paragraph headings are for reference purposes only and shall not be considered
in interpreting this Agreement. As used herein, the male gender shall include
the female and neuter genders; the singular shall include the plural, and the
plural shall include the singular.

GOVERNING LAW

The parties agree that this Agreement shall be construed in all respects,
including validity, interpretation and effect, in accordance with the laws of
the Florida and without giving effect to the respective states of the parties
with respect to conflicts of laws.

SEVERABILITY

The provisions of this Agreement shall be severable and the invalidity or
unenforceability of any one or more of the provisions of this Agreement shall
not affect the validity or enforceability of the other provisions.

WAIVER

No waiver of any breach of or default under this Agreement by any party shall
be considered to be a waiver of any other breach or default under this
Agreement.

                                      12
<PAGE>   13
REPRESENTATION AS TO AUTHORITY TO ACT

The undersigned represent and warrant that they are duly empowered end
authorized to execute this Agreement on behalf of their respective principals.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHARTERER

The Charterer further warrants to the Owner that it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia, that the execution and delivery of this Agreement and the performance
and observance of the terms thereof, will not conflict with or result in the
breach or the terms, condition or provisions of, or constitute a default under
or result in or permit the creation or imposition of, any lien, charge or
encumbrance upon the Vessel or any part thereof pursuant to any contract,
indenture, mortgage, lease or other agreement or instrument to which the
Charterer is a party or by which the Charterer is bound or may be affected. The
Charterer further represents and warrants to the owner that its business
complies with and during the term of the charter or any extension thereof, will
continue to comply with all applicable federal, state, county, city and
municipal laws, rules, regulations, and ordinances and that the Charterer is
not insolvent or bankrupt or is contemplating or is recently contemplating
bankruptcy, receivership, or reorganization proceedings, and no petition for
bankruptcy, whether voluntary or involuntary, or assignment for the benefit of
creditors' right has been filed under the laws of the United States or any
state thereof against the Charterer and there are no outstanding judgments,
decrees or orders which would materially and adversely affect the Vessel or any
of Charterer's business or the obligations of the Charterer under this
Agreement.

EFFECTIVE DATE

That this Agreement shall become effective upon the execution by the parties
hereto of this Agreement.

IN WITNESS WHEREOF, the parties have met their hands this 28th day of December,
1998.

/s/ Deborah A. Vitale
-------------------------------------
EUROPA CRUISES CORPORATION
EUROPA STARDANCER CORPORATION
OWNER
BY DEBORAH A. VITALE, PRESIDENT

/s/ Samuel A. Gray
-------------------------------------
SEVEN STAR CHARTERS, INC.
CHARTERER
BY SAM GRAY, PRESIDENT

                                      13

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