Document:

Exhibit
10.1

 

 

 

	
  

  	
   

  	
   

  
	
   

  	 

	
  ASSET
  PURCHASE AGREEMENT

  	 

	
   

  	 

	
  BETWEEN

  	 

	
   

  	 

	
  MVP
  GROUP INTERNATIONAL, INC.

  	 

	
   

  	 

	
  AND

  	 

	
   

  	 

	
  CANDLE
  CORPORATION OF AMERICA

  	 

	
   

  	 

	
  dated
  as of

  	 

	
   

  	 

	
  April
  27, 2007

  	 

	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  
				

 

 

 

TABLE
OF CONTENTS

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  BASIC TRANSACTION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Purchase and Sale of Assets

  	
   

  	
  8

  
	
   

  	
  (B)

  	
  Assumption of Liabilities

  	
   

  	
  8

  
	
   

  	
  (C)

  	
  Purchase Price

  	
   

  	
  8

  
	
   

  	
  (D)

  	
  The Closing

  	
   

  	
  8

  
	
   

  	
  (E)

  	
  Deliveries at the Closing

  	
   

  	
  9

  
	
   

  	
  (F)

  	
  Purchase Price Allocation

  	
   

  	
  9

  
	
   

  	
  (G)

  	
  Net Asset Value Adjustment

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  SELLER’S REPRESENTATIONS AND WARRANTIES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Organization of Seller

  	
   

  	
  12

  
	
   

  	
  (B)

  	
  Authorization of Transaction

  	
   

  	
  12

  
	
   

  	
  (C)

  	
  Non-contravention

  	
   

  	
  12

  
	
   

  	
  (D)

  	
  Brokers’ Fees

  	
   

  	
  12

  
	
   

  	
  (E)

  	
  Title to Assets

  	
   

  	
  12

  
	
   

  	
  (F)

  	
  Selected Financial Data

  	
   

  	
  13

  
	
   

  	
  (G)

  	
  [RESERVED]

  	
   

  	
  14

  
	
   

  	
  (H)

  	
  Leased Real Property

  	
   

  	
  14

  
	
   

  	
  (I)

  	
  Acquired Intellectual
  Property

  	
   

  	
  15

  
	
   

  	
  (J)

  	
  Acquired Tangible Assets

  	
   

  	
  17

  
	
   

  	
  (K)

  	
  Acquired Inventory

  	
   

  	
  17

  
	
   

  	
  (L)

  	
  Acquired Contracts

  	
   

  	
  17

  
	
   

  	
  (M)

  	
  Acquired Receivables

  	
   

  	
  17

  
	
   

  	
  (N)

  	
  Environmental, Health, and
  Safety Matters

  	
   

  	
  18

  
	
   

  	
  (O)

  	
  Legal Compliance

  	
   

  	
  19

  
	
   

  	
  (P)

  	
  Tax Matters

  	
   

  	
  19

  
	
   

  	
  (Q)

  	
  Litigation

  	
   

  	
  19

  
	
   

  	
  (R)

  	
  Product Warranty; Product
  Liability

  	
   

  	
  19

  
	
   

  	
  (S)

  	
  Solvency

  	
   

  	
  20

  
	
   

  	
  (T)

  	
  Employees

  	
   

  	
  20

  
	
   

  	
  (U)

  	
  Accounts Payable

  	
   

  	
  20

  
	
   

  	
  (V)

  	
  Acquired Assets

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  BUYER’S REPRESENTATIONS AND WARRANTIES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Organization of Buyer

  	
   

  	
  20

  
	
   

  	
  (B)

  	
  Ownership of Buyer

  	
   

  	
  20

  
	
   

  	
  (C)

  	
  Authorization of
  Transaction

  	
   

  	
  20

  
	
   

  	
  (D)

  	
  Non-contravention

  	
   

  	
  21

  
	
   

  	
  (E)

  	
  Brokers’ Fees

  	
   

  	
  21

  
							

 

 i
 

 

	
  SECTION 5.

  	
   

  	
  [RESERVED]

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  POST-CLOSING COVENANTS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  General

  	
   

  	
  21

  
	
   

  	
  (B)

  	
  Transition

  	
   

  	
  22

  
	
   

  	
  (C)

  	
  Non-Competition

  	
   

  	
  22

  
	
   

  	
  (D)

  	
  Preservation of Records

  	
   

  	
  24

  
	
   

  	
  (E)

  	
  Release of Guaranty

  	
   

  	
  24

  
	
   

  	
  (F)

  	
  Wal-Mart Relationship

  	
   

  	
  24

  
	
   

  	
  (G)

  	
  Employee Matters

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  CONDITIONS TO OBLIGATION TO CLOSE

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Conditions to Buyer’s
  Obligation

  	
   

  	
  25

  
	
   

  	
  (B)

  	
  Conditions to Seller’s Obligation

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  REMEDIES FOR BREACHES OF THIS AGREEMENT

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Survival of Representations
  and Warranties

  	
   

  	
  28

  
	
   

  	
  (B)

  	
  Indemnification Provisions
  for Buyer’s Benefit

  	
   

  	
  28

  
	
   

  	
  (C)

  	
  Indemnification Provisions
  for Seller’s Benefit

  	
   

  	
  28

  
	
   

  	
  (D)

  	
  Limitations

  	
   

  	
  29

  
	
   

  	
  (E)

  	
  Matters Involving Third
  Parties

  	
   

  	
  29

  
	
   

  	
  (F)

  	
  Determination of Adverse
  Consequences

  	
   

  	
  29

  
	
   

  	
  (G)

  	
  Exclusive Remedy

  	
   

  	
  30

  
	
   

  	
  (H)

  	
  Blyth Guaranty

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  [RESERVED]

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Press Releases and Public
  Announcements

  	
   

  	
  30

  
	
   

  	
  (B)

  	
  No Third-Party
  Beneficiaries

  	
   

  	
  31

  
	
   

  	
  (C)

  	
  Entire Agreement

  	
   

  	
  31

  
	
   

  	
  (D)

  	
  Succession and Assignment

  	
   

  	
  31

  
	
   

  	
  (E)

  	
  Payments to Buyer

  	
   

  	
  31

  
	
   

  	
  (F)

  	
  Counterparts

  	
   

  	
  31

  
	
   

  	
  (G)

  	
  Headings

  	
   

  	
  32

  
	
   

  	
  (H)

  	
  Notices

  	
   

  	
  32

  
	
   

  	
  (I)

  	
  Governing Law

  	
   

  	
  33

  
	
   

  	
  (J)

  	
  Amendments and Waivers

  	
   

  	
  33

  
	
   

  	
  (K)

  	
  Severability

  	
   

  	
  33

  
	
   

  	
  (L)

  	
  Expenses

  	
   

  	
  33

  
	
   

  	
  (M)

  	
  Construction

  	
   

  	
  33

  
	
   

  	
  (N)

  	
  Incorporation of Exhibits
  and Schedules

  	
   

  	
  33

  
	
   

  	
  (O)

  	
  Confidentiality Agreement

  	
   

  	
  33

  
							

 

 ii
 

Schedules and Exhibits

	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1A

  	
   

  	
  —

  	
   

  	
  Acquired Contracts

  
	
  Schedule 1B

  	
   

  	
  —

  	
   

  	
  Acquired Intellectual Property

  
	
  Schedule 2

  	
   

  	
  —

  	
   

  	
  Assumed Purchase Orders

  
	
  Schedule 3

  	
   

  	
  —

  	
   

  	
  Excluded Assets

  
	
  Schedule 4

  	
   

  	
  —

  	
   

  	
  Purchase Price Allocation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  —

  	
   

  	
  Forms of Assignments

  
	
  Exhibit B

  	
   

  	
  —

  	
   

  	
  Form of Assumption

  
	
  Exhibit C

  	
   

  	
  —

  	
   

  	
  Selected Financial Data

  
	
  Exhibit D

  	
   

  	
  —

  	
   

  	
  Transition Services Agreement

  
	
  Exhibit E

  	
   

  	
  —

  	
   

  	
  Form of Opinion of Seller’s Counsel

  
	
  Exhibit F

  	
   

  	
  —

  	
   

  	
  Forms of Opinions of Buyer’s Counsel

  
	
  Exhibit G

  	
   

  	
  —

  	
   

  	
  Form of Overstock Inventory Agreement

  
	
  Exhibit H

  	
   

  	
  —

  	
   

  	
  Form of Patent License Agreement

  
	
  Exhibit I

  	
   

  	
  —

  	
   

  	
  Form of Trademark License Agreement

  
	
  Disclosure Schedule

  	
   

  	
  —

  	
   

  	
  Exceptions to Representations and Warranties

  
							

 

 iii

ASSET
PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is entered into
as of April 27, 2007, by and between MVP GROUP INTERNATIONAL, INC., a Kentucky
corporation (“Buyer”), CANDLE CORPORATION OF AMERICA, a New York
corporation (“Seller”), and, solely for purposes of Section 8(h),
Blyth, Inc., a Delaware corporation (“Blyth”).  Buyer and Seller are referred to collectively
herein as the “Parties.”

WHEREAS, Buyer desires to purchase from Seller certain assets used in
(and assume certain of the liabilities of Seller related to) the Blyth
Homescents International mass merchandiser candle and pot pourri business
conducted under the trademarks “Carolina”, “Kate’s Original Recipe” and “Florasense”
(the “Business”); and

WHEREAS, Seller desires to sell to Buyer such assets and assign to
Buyer such liabilities.

Now, therefore, in consideration of the foregoing premises and the
mutual promises herein made and the representations, warranties and covenants
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows.

Section 1.               Definitions.

“Acquired Assets” means all of Seller’s right, title, and
interest in and to the following, and only the following, specified assets:

(a)           the Leased Real
Property;

(b)           the Acquired
Bentonville Assets;

(c)           the Acquired Memphis
Assets;

(d)           the Assumed Purchase
Orders;

(e)           the Acquired Receivables;

(f)            the Acquired Contracts;

(g)           the Acquired Intellectual Property;

(h)           the Acquired Inventory; and

(i)            the Acquired
Rights.

provided, however, that the
term “Acquired Assets” shall not include any of the Excluded Assets.

“Acquired Bentonville Assets” means all of the tangible assets
of Seller that are used to operate the Bentonville Facility.

“Acquired Contracts” means the agreements, contracts, leases,
subleases and other similar arrangements (in each case, whether written or
oral), and rights thereunder listed on Schedule 1A.

“Acquired Intellectual Property” means (i) the Intellectual
Property listed on Schedule 1B, provided, that, to the extent that
Seller uses any unregistered trademarks or fragrance names in connection with
the Business that are not listed on Schedule 1B, such unregistered
trademarks or fragrance names shall be Acquired Intellectual Property unless
expressly excluded on Schedule 3 (Excluded Assets) and (ii) the
copyright or other proprietary right embodied in any original works of
authorship either created by Seller or for which Seller has obtained the
intellectual property rights and which are transferred into Buyer’s physical
possession pursuant hereto.

“Acquired Inventory” means the finished goods inventory of the
Business listed on Exhibits INV 2.0 and 3.0 to the Closing Date Net
Asset Value Statement, which includes current and active inventory and
inventories related to the Assumed Purchase Orders, but excludes excess and
obsolete inventory and raw material inventory.

“Acquired Memphis Assets” means the tangible assets listed on Exhibits
PPE and CIP to the Closing Date Net Asset Value Statement.

“Acquired Receivables” means the accounts, notes, and other
receivables listed on Exhibits AR 1.0 and AR 1.1 to the Closing Date Net
Asset Value Statement after deduction of the Sterno-related accounts, notes and
other receivables listed in Exhibits AR 2.0 and AR 2.1 to the Closing
Date Net Asset Value Statement (without duplication).

“Acquired Rights” means all rights of Seller arising on or after
the Closing Date associated with the Acquired Contracts and all rights of Seller
associated with the Acquired Receivables.

“Additional Assurances” has the meaning set forth in Section
10(o) below.

“Adverse Consequences” means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys’
fees and expenses.

“Affiliate” has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.

“Agent” has the meaning set forth in Section 10(d) below.

“Assumed Accounts Payable” means the accounts payable listed on Exhibits
AP 1.0, AP 2.0, AP 3.0 and AP 4.0 to the Closing Date Net Asset Value
Statement.

“Assumed Accrued Expenses” means the accrued expenses listed on Exhibits
AE, AE 1.0 and AE 2.0 to the Closing Date Net Asset Value Statement.

 2
 

“Assumed Liabilities” means the following, and only the
following, liabilities of the Seller:

(a)                                  the
Assumed Accounts Payable;

(b)                                 the
Assumed Purchase Orders;

(c)                                  the
Assumed Accrued Expenses;

(d)                                 all
obligations of Seller under the Acquired Contracts arising or accruing on or
after the Closing Date;

(e)                                  all
obligations of Seller under the Leases arising or accruing on or after the
Closing Date;

(f)                                    all
obligations arising out of Buyer’s operation of the Bentonville Facility on or
after the Closing Date; and

(g)                                 all
obligations arising out of Buyer’s operation of the Memphis Facility on or
after the Closing Date;

provided,
however, that the term “Assumed Liabilities” shall not include
any of the Excluded Liabilities.

“Assumed Purchase Orders” means the open inventory purchase
orders related to the Business as of 11:59 p.m., New York City time on the
Closing Date to be listed on the updated Schedule 2 to be delivered
pursuant to Section 2(g)(i), below.

“Bentonville Facility” means the office facility of Seller
located at 210 North Walton Blvd, Suite 21/22, Bentonville, Arkansas.

“Blocked Account” has the meaning set forth in Section 10(e)
below.

“Business” has the meaning set forth in the preface above.

“Buyer” has the meaning set forth in the preface above.

“Buyer Closing Date Net Asset Value Statement” has the meaning
set forth in Section 2(g) below.

“Cash” means cash and cash equivalents (including marketable
securities and short-term investments).

“CERCLA” has the meaning set forth in Section 3(n) below.

“Closing” has the meaning set forth in Section 2(d)
below.

“Closing Date” has the meaning set forth in Section 2(d)
below.

 3
 

“Closing Date Net Asset Value” means the Net Asset Value, as of
11:59 p.m., New York City time, on the Closing Date.

“Closing Date Net Asset Value Statement” has the meaning set
forth in Section 2(g) below; provided, however, that pending delivery of
the Closing Date Net Asset Value Statement as provided in such Section 2(g),
the term Closing Date Net Asset Value Statement shall mean Exhibit C
attached hereto, except that, to the extent that any of the assets and
liabilities shown on such Exhibit C have changed between the Financial
Statement Date and the Closing Date, such Exhibit C shall be deemed to
be adjusted to reflect such changes in the assets and liabilities shown thereon
during the period from the Financial Statement Date to and including the
Closing Date.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means that certain Confidentiality
Agreement dated July 11, 2006 by and between the Buyer and Blyth.

“Confidential Information” has the meaning ascribed to such term
in the Confidentiality Agreement.

“Disclosure Schedule” has the meaning set forth in Section 3
below.

“Environmental, Health, and Safety Requirements” means all federal,
state, local, and foreign statutes, regulations, ordinances, and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances, or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation.

“Excluded Assets” means (i) the Excluded Inventory and (ii) the
assets of the Seller that are listed on Schedule 3.

“Excluded Inventory” means the raw material inventory of the
Business listed on Exhibit INV 1.0 to the Closing Date Net Asset Value
Statement.

“Excluded Liabilities” means any liability or obligation of
Seller other than those set forth in the definition of “Assumed Liabilities”,
including: (a) any liability arising out of or relating to the operation of the
Business by Seller or Seller’s leasing, ownership or operating of real property
(other than any such operation or leasing for or on behalf of Buyer pursuant to
the Transition Services Agreement), including any liability relating to
products manufactured or distributed by or for the Seller; (b) any liability
under any Acquired Contract that arises out of or relates to any breach of such
Acquired Contract that occurred prior to the Closing Date; (c) any liability of
Seller or any of Seller’s Affiliates for Taxes, including any liability of
Seller or any of Seller’s Affiliates for Taxes as a result of Seller’s
operation of the Business or Taxes payable by Seller or any of Seller’s
Affiliates that will arise as a result of the sale of the Assets pursuant to 

 4
 

this Agreement; (d) any liability of Seller or any of
Seller’s Affiliates that is not an Assumed Accrued Expense and that relates to
payroll, vacation, sick leave, workers’ compensation, unemployment benefits,
pension benefits, health care plans or benefits or other employee plans or
benefits of any kind for Seller’s employees or former employees or both, in
every case arising out of and relating to Seller’s employment of such employees
or former employees and including any liability of Seller under any employment,
severance, retention or termination agreement with any employee of Seller or
any of Seller’s Affiliates; (e) any liability of Seller under this Agreement or
other document executed in connection with the transactions contemplated
hereby; and (f) any liability of Seller based upon Seller’s acts or omissions
occurring after the Closing.

“Final Closing Date Net Asset Value” has the meaning set forth
in Section 2(g) below.

“Financial Statement Date” means March 24, 2007.

“GAAP” means United States generally accepted accounting
principles as in effect from time to time, consistently applied.

“Guaranty” has the meaning set forth in Section 6(e)
below.

“Improvements” has the meaning set forth in Section 3(h)
below.

“Indemnified Party” has the meaning set forth in Section 8(d)
below.

“Indemnifying Party” has the meaning set forth in Section
8(d) below.

“Intellectual Property” means: (a) inventions (whether
patentable or unpatentable and whether or not reduced to practice),
improvements thereto, and patents, patent applications, and patent disclosures,
together with reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) trademarks, service marks, trade
dress, logos, slogans, trade names, Internet domain names and telephone
numbers, together with translations, adaptations, derivations, and combinations
thereof and including goodwill associated therewith, and applications,
registrations, and renewals in connection therewith, (c) websites, graphics,
designs, labels, packaging and other copyrightable works, copyrights, and
applications, registrations, and renewals in connection therewith, (d) product
specifications, formulations, trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (e)
computer software (including source code, executable code, data, databases, and
related documentation), (f) advertising and promotional materials, (g) other
proprietary rights, and (h) copies and tangible embodiments thereof (in
whatever form or medium).

“Key Customers” means the Persons identified as customers in the
Sales Figures.

“Knowledge” means actual knowledge of Charles Leichtweis, Steven
Kosmalski, or Robert B. Goergen, Jr. after reasonable investigation.

“Lease Consent” has the meaning set forth in Section 7(a)
below.

 5
 

“Leased Real Property” means the real property leased by Seller
and located at 210 North Walton Blvd, Suite 21/22, Bentonville, Arkansas and
6100 Holmes Road, Memphis, Tennessee.

“Leases” means the lease agreements or other contracts,
including all amendments, extensions, renewals, guaranties, and other
agreements with respect thereto, pursuant to which Seller holds any interest in
any Leased Real Property.

“Lenders” has the meaning set forth in Section 10(d)
below.

“Lien” means any mortgage, pledge, lien, right of way, easement,
encroachment, encumbrance, charge, claim or other security interest or
restriction on use other than (a) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate proceedings
and as to which appropriate reserves have been established and (b) purchase
money liens and liens securing rental payments under capital lease
arrangements.

“Material Adverse Effect” means any effect that would be
materially adverse to the ability of any Party to consummate timely the
transactions contemplated hereby in accordance with the terms set forth herein.

“Memphis Facility” means Seller’s distribution center located at
6100 Holmes Road, Memphis, Tennessee.

“Net Asset Value” means the difference between (a) the sum of
the values of the Acquired Inventory, the Acquired Receivables, and the
Acquired Memphis Assets less (b) the amount of the Assumed Accounts Payable and
the Assumed Accrued Expenses, in each case determined in accordance with the Seller’s
Past Practice.

“Net Asset Value Adjustment” means the adjustment to the
Purchase Price provided for in Section 2(g).

“New Employees” has the meaning set forth in Section 3(t)
below.

“Ordinary Course of Business” means the ordinary course of the
Seller’s business as presently conducted it being understood and agreed that
the Seller and certain of its Affiliates are currently undertaking a
restructuring of the North American wholesale mass home fragrance business
conducted by Seller and such Affiliates (including the Business) with the
effect, among other things, of reducing the size and scope of such business,
and reducing the aggregate income of such business, and that all action(s)
taken in connection with such restructuring are, and for purposes of this
Agreement shall be deemed to be, in the ordinary course of the Seller’s
Business.

“Overstock Inventory Agreement” means the agreement to be
entered into on the date hereof by and between Buyer and Seller regarding the
transfer to Buyer by Seller of certain overstock inventory of Seller related to
the Business, the sale of such overstock inventory by Buyer and the division of
revenues from such sales, substantially in the form of Exhibit G hereto.

“Party” has the meaning set forth in the preface above.

 6
 

“Patent License Agreement” means the Patent License Agreement to
be entered into by and between Buyer and Seller, substantially in the form of Exhibit
H hereto.

“Person” means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, any other business entity or a
governmental entity (or any department, agency, or political subdivision
thereof).

“Projections” has the meaning set forth in Section 3(f)
below.

“Purchase Price” has the meaning set forth in Section 2(c)
below.

“Real Property Laws” has the meaning set forth in Section
3(h) below.

“Release of Guaranty” has the meaning set forth in Section
6(e) below.

“Restricted Business” means selling Restricted Products in the
Restricted Territories.

“Restricted Customers” means Albertson’s, Big Lots, Boscovs,
Dollar General, Family Dollar, Fred Meyer, HEB, Kohls, Kroger, Longs, Michaels
Stores, Publix, Rite Aid, Ross, Stein Mart, TJX
Corp., Value City Dept., and Wal-Mart.

“Restricted Products” means candles, private label liquid or dry
pot pourri and private label incense.

“Restricted Territories” has the meaning set forth in Section
6(c) below.

“Sales Figures” has the meaning set forth in Section 3(f)
below.

“Securities Exchange Act” means the Securities Exchange Act of
1934, as amended.

“Selected Financial Data” has the meaning set forth in Section
3(f) below.

“Seller’s Past Practice” means the practices and procedures
(including, with respect to assumptions and estimates and methods of valuation
of inventory) used by Seller in the Ordinary Course of Business in valuing
assets and liabilities of the Seller for purposes of preparing financial
statements of the Seller in accordance with GAAP, which practices and
procedures have been disclosed to Buyer insofar as they relate to the valuation
of the assets and liabilities of the Seller that are included in the Net Asset
Value.

“Seller” has the meaning set forth in the preface above.

“Tax” or “Taxes” means any federal, state, local, or
foreign taxes, charges, fees, imposts or other assessments, including those
related to income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental (including
taxes under Code §59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any 

 7
 

kind whatsoever, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any
interest, penalty, or addition thereto, whether disputed or not.

“Tax Benefit” has the meaning set forth in Section 8(e)
below.

“Tax Return”
means any return, declaration, report, claim for refund, or information return
or statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.

“Third-Party Claim” has the meaning set forth in Section 8(d)
below.

“Trademark License Agreement” means the Trademark License
Agreement to be entered into by and between Buyer and Seller, substantially in
the form of Exhibit I hereto.

“Transaction Documents” has the meaning set forth in Section
3(b) below.

“Transition Services Agreement” means the Transition Services
Agreement to be entered into by and between Buyer and Seller, substantially in
the form of Exhibit D hereto.

Section 2.               Basic
Transaction.

(a)           Purchase and Sale
of Assets.  On and subject to
the terms and conditions of this Agreement, Buyer agrees to purchase from
Seller, and Seller agrees to sell, transfer, convey, and deliver to Buyer, all
of the Acquired Assets at the Closing for the consideration specified below in
this Section 2.

(b)           Assumption of
Liabilities.  On and subject
to the terms and conditions of this Agreement, Buyer agrees to assume and
become responsible for all of the Assumed Liabilities at the Closing.  Buyer will not assume or have any
responsibility, however, with respect to any other obligation or liability of
Seller not included within the definition of Assumed Liabilities.

(c)           Purchase
Price.  The Buyer agrees to pay to
the Seller $21,830,000 (the “Purchase Price”), by delivery of cash,
payable by wire transfer or delivery of other immediately available funds.  The Purchase Price is subject to adjustment
as provided in Section 2(g) below.

(d)           The Closing.  The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the
offices of Nelson Mullins Riley & Scarborough LLP, in Atlanta, Georgia,
commencing at 10:00 a.m. local time on the date hereof (the “Closing Date”)
and the effective time of the Closing shall be 11:59 p.m. New York City time on
the Closing Date;

 

 8

(e)           Deliveries
at the Closing.  At the
Closing, (i) Seller will deliver to Buyer the various certificates,
instruments, and documents referred to in Section 7(a) below; (ii) Buyer
will deliver to Seller the various certificates, instruments, and documents referred
to in Section 7(b) below; (iii) Seller will execute, acknowledge (if
appropriate), and deliver to Buyer (A) an assignment in the form of Exhibit
A and (B) such other instruments of sale, transfer, conveyance, and
assignment as Buyer and its counsel may reasonably request; (iv) Buyer will
execute, acknowledge (if appropriate), and deliver to Seller (A) an assumption
in the form attached hereto as Exhibit B and (B) such other instruments
of assumption as Seller and its counsel may reasonably request; and (v) Buyer
will deliver to Seller the consideration specified in Section 2(c)
above.

(f)            Purchase Price Allocation.  The Purchase Price is being
allocated among the Acquired Assets by the Parties as set forth on Schedule
4 and if the Purchase Price is adjusted pursuant to Section 2(g),
below, such adjusted Purchase Price will be allocated in a manner consistent
with the allocation set forth on Schedule 4.  Such allocation is intended to comply with
the requirements of Section 1060 of the Internal Revenue Code of 1986, as
amended.  Seller and Buyer shall file
Form 8594 with their respective Tax Returns consistent with such
allocation.  The Parties shall treat and
report the transaction contemplated by this Agreement in all respects
consistently for purposes of any federal, state or local Tax, including the
calculation of gain, loss and basis with reference to the Purchase Price
allocation made pursuant to this Section 2(f).  The
parties shall not take any action or position inconsistent with the obligations
set forth in this Agreement.  Seller
agrees  to indemnify and hold Buyer and its
Affiliates harmless and Buyer hereby agrees to indemnify and hold Seller
harmless, from and against any and all losses, liabilities and expenses
(including additional income taxes and reasonable fees and disbursements of
counsel) that may be incurred by the indemnified party as a result of the
failure of the indemnifying party so to report the sale and purchase of the
Acquired Assets as required by applicable laws.

(g)           Net
Asset Value Adjustment.

(i)            No
later than ten (10) business days after the Closing, the Seller shall deliver
to the Buyer an unaudited statement of the Closing Date Net Asset Value which
will be in the same format as Exhibit C hereto, including with respect to
exhibits and schedules (the “Closing Date Net Asset Value Statement”),
together with (A) a certificate of an authorized officer of the Seller stating
that the Closing Date Net Asset Value Statement was prepared in accordance with
Seller’s Past Practice and (B) an updated Schedule 2 (listing of Assumed
Purchase Orders) which updated Schedule 2 will be in the same format as Schedule
2 attached hereto and will reflect the open purchase orders related to the
Business as of 11:59 p.m., New York City time on the Closing Date.  The Buyer shall notify the Seller, in
writing, within ten (10) business days of Seller’s delivery of the Closing Date
Net Asset Value Statement whether it agrees or disagrees with the Closing Date
Net Asset Value as shown on the Closing Date Net Asset Value Statement.  If the Buyer agrees with the Closing Date Net
Asset Value Statement, then the Closing Date Net Asset Value shall be deemed to
be the Final Closing Date Net Asset Value (as defined below) and, subject to
the provisions of the last sentence of Section 2(g)(v), below, the
relevant Party shall make the payment, if any, required of it pursuant to such
Section 2(g)(v).

 9
 

(ii)           If
the Buyer disagrees with the Closing Date Net Asset Value as shown on the
Closing Date Net Asset Value Statement, then as soon as practicable following
the Closing Date (but not later than 30 days after the date upon which Seller
delivers the Closing Date Net Asset Value Statement), the Buyer shall prepare
and deliver to the Seller, its own statement of the Net Asset Value as of 11:59
p.m., New York City time, on the Closing Date (the “Buyer Closing Date Net
Asset Value Statement” and the Closing Date Net Asset Value as reflected on
the Buyer Closing Date Net Asset Value Statement being referred to herein as the
“Buyer Determined Closing Date Net Asset Value”), which Buyer Closing
Date Net Asset Value Statement shall have been have reviewed and approved, in
writing, by a nationally recognized accounting or inventory valuation firm
reasonably acceptable to Seller, as fairly presenting the Closing Date Net
Asset Value.  In preparing the Buyer
Closing Date Net Asset Value Statement, the Buyer shall be entitled to have
access to the books and records of the Seller and the work papers of the Seller
prepared in connection with the preparation of the Closing Date Net Asset Value
Statement and shall be entitled to discuss such books and records and work
papers with the Seller and those persons responsible for the preparation
thereof.  The Buyer Closing Date Net
Asset Value Statement shall be prepared in accordance with Seller’s Past
Practice determined as if Seller had not sold the Acquired Assets to the Buyer
and had instead continued to operate the Business on and after the Closing
Date.  In the event that in preparing the
Buyer Closing Date Net Asset Value Statement the Buyer conducts a physical
inventory, the Seller shall be entitled to have one or more representatives
present during the conduct of such physical inventory.

(iii)          In
the event that the Seller does not agree with the Buyer Determined Closing Date
Net Asset Value as reflected on the Buyer Closing Date Net Asset Value
Statement, the Seller shall so inform the Buyer in writing within 30 days after
the Seller’s receipt thereof, such writing to set forth the objections of the
Seller in reasonable detail.  If the
Seller and the Buyer cannot reach agreement as to any disputed matter relating
to the Closing Date Net Asset Value within 15 days after notification by the
Seller to the Buyer of a dispute, they shall forthwith refer the dispute to a
nationally recognized accounting firm mutually agreeable to the Seller and the
Buyer for resolution, with the understanding that: (i) the Closing Date Net
Asset Value, as finally determined by such firm, shall not be less than the
amount thereof shown in Buyer’s Closing Date Net Asset Value Statement nor
greater than the amount thereof shown in the Seller’s objection delivered
pursuant to this clause (ii); and (ii) such firm shall resolve all disputed
items within 20 days after such disputed items are referred to it.  If the Buyer and the Seller are unable to
agree on the choice of an accounting firm, then Grant Thornton LLP shall serve
as the accounting firm.  If Grant
Thornton LLP is unwilling to so serve, the Buyer and the Seller shall select a
nationally recognized accounting firm by lot (after excluding their respective
regular outside accounting firms, if applicable, and the accounting firm that
initially reviewed and approved the Buyer Closing Date Net Asset Value Statement
as set forth in Section 2(g)(ii)). 
The decision of any such accounting firm under this clause (ii) with
respect to all disputed matters relating to the Closing Date Net Asset Value
shall be deemed final and conclusive and shall be binding upon the Seller and
the Buyer.  In addition, if the Seller
does not object to the Buyer Determined Closing Date Net Asset Value within the
30-day period referred to above, the Buyer Determined Closing Date Net Asset
Value as reflected on the Buyer Closing Date Net Asset Value Statement as so
prepared shall be deemed final and conclusive and binding upon the Seller and
the Buyer.

 10
 

(iv)          The
Seller shall be entitled to have access to the books and records of the Buyer
and the work papers of the Buyer prepared in connection with the preparation of
the Buyer Closing Date Net Asset Value Statement and shall be entitled to
discuss such books and records and work papers with the Buyer and those persons
responsible for the preparation thereof. 
The accounting firm selected pursuant to Section 2(g)(iii) shall
be entitled to have access to the books and records of the Buyer and the Seller
and the work papers of the Buyer and the Seller prepared in connection with the
preparation of the Closing Date Net Asset Value Statement and the Buyer Closing
Date Net Asset Value Statement and shall be entitled to discuss such books and
records and work papers with the Buyer and the Seller and those persons
responsible for the preparation thereof.

(v)           If
the Closing Date Net Asset Value as finally determined pursuant to this Section
2(g) (the “Final Closing Date Net Asset Value”) exceeds $15,375,000,
then, subject to the provisions of the last sentence of this Section 2(g)(v),
the Purchase Price shall be increased by an amount equal to the amount of such
excess.  If the Final Closing Date Net
Asset Value is less than $15,375,000, then, subject to the provisions of the
last sentence of this Section 2(g)(v), the Purchase Price shall be
decreased by an amount equal to the amount of such shortfall.  Notwithstanding the foregoing, no adjustment
shall be made to the Purchase Price pursuant to this Section 2(g) unless
the amount of such adjustment as determined pursuant to this Section 2(g)(v)
equals or exceeds $200,000; provided, that if the amount of such adjustment
as so determined equals or exceeds $200,000, the entirety of such adjustment
shall be made and paid as set forth in Section 2(g)(vi), below.

(vi)          If,
pursuant to Section 2(g)(i) or Section 2(g)(v), Buyer is required to make a
payment to Seller, Buyer shall pay such amount by wire transfer to such account
as shall be designated by the Seller, in writing, in cash to the Seller within
five (5) business days after the date upon which the Closing Date Net Asset
Value is deemed final and conclusive pursuant to this Section 2(g).  If, pursuant to Section 2(g)(i) or Section
2(g)(v), Seller is required to make a payment to Buyer, Seller shall pay such
amount by wire transfer to the Blocked Account or such other account as shall
be designated by Buyer, in writing, after the date hereof, in cash to the Buyer
within five (5) business days after the date upon which the Closing Date Net
Asset Value is deemed final and conclusive pursuant to this Section 2(g).

(vii)         If
the Final Closing Date Net Asset Value is determined by an accounting firm
under Section 2(g)(iii), and such determination results in a payment to
the Seller, then the Buyer shall pay the aggregate fees and expenses of the
accounting firm selected to finally determine the Closing Date Net Asset Value.  If the Final Closing Date Net Asset Value is
determined by an accounting firm under Section 2(g)(iii), and such
determination results in a payment to the Buyer, or results in no payment to
either Buyer or Seller, then the Seller shall pay the aggregate fees and
expenses of the accounting firm selected to finally determine the Closing Date
Net Asset Value.

Section 3.               Seller’s
Representations and Warranties.  Seller
represents and warrants to Buyer that the statements contained in this Section
3 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 3), except as set forth in the disclosure schedule
accompanying this 

 11
 

Agreement (the “Disclosure
Schedule”).  The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3 and the other sections of this
Agreement pursuant to which disclosure is made or items are referred to in the
Disclosure Schedule.

(a)           Organization of
Seller.  Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, with full corporate power and
authority to conduct its business as now being conducted by it, to own and use
the properties it purports to own and use, and to perform its obligations under
the Acquired Contracts.

(b)           Authorization
of Transaction.  Seller has
full corporate power and authority to execute and deliver this Agreement and
the documents contemplated hereby (the “Transaction Documents”) and to
perform its obligations thereunder.  This
Agreement constitutes, and the other Transaction Documents when executed will
constitute, the valid and legally binding obligation of Seller, enforceable
against it in accordance with its terms and conditions.  The execution, delivery and performance of
the Transaction Documents have been duly authorized by Seller.

(c)           Non-contravention.  Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2
above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Seller or the Acquired
Assets are subject or any provision of the charter or bylaws of Seller or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Seller is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets), except (other than with respect
to any Acquired Assets) where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien would not have a Material Adverse Effect.  The Seller does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above), except where the failure to
give notice, to file, or to obtain any authorization, consent, or approval
would not have a Material Adverse Effect.

(d)           Brokers’ Fees.  Seller has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Buyer could become
liable or obligated.

(e)           Title to Assets.  Seller has good and marketable title
to, or a valid leasehold interest in, the Acquired Assets, free and clear of
any Liens or restriction on transfer. 
Subject to the Lease Consent which will be obtained prior to Closing,
Seller has the right to transfer the Acquired Assets to Buyer, free and clear
of any Liens.

 12
 

(f)            Selected
Financial Data.      Attached
hereto as Exhibit C  are the
following financial data (the “Selected Financial Data”):

(i)            The value of the
Acquired Bentonville Assets, as of the Financial Statement Date, determined in
accordance with Seller’s Past Practice;

(ii)           the value of the
Acquired Memphis Assets, as of the Financial Statement Date, determined in
accordance with Seller’s Past Practice;

(iii)          the value of the
Acquired Inventory, as of the Financial Statement Date, determined in
accordance with Seller’s Past Practice;

(iv)          the value of the
Acquired Receivables, as of the Financial Statement Date, determined in
accordance with Seller’s Past Practice;

(v)           the obligations of
the Seller in respect of the Assumed Accounts Payables, as of the Financial
Statement Date, determined in accordance with Seller’s Past Practice;

(vi)          the expenses
incurred by the Seller in operating the Bentonville Facility during the period
February 1, 2006 through January 31, 2007;

(vii)         the expenses
incurred by the Seller in operating the Memphis Facility during the period
February 1, 2006 through January 31, 2007;

(viii)        the sales of
products by the Seller to the Key Customers in connection with the conduct of
the Business during the period February 1, 2006 through January 31, 2007 (the “Sales
Figures”); and

(ix)           the projections as
of January 4, 2007 with respect to sales of products by the Seller to the Key
Customers in connection with the conduct of the Business during the period
February 1, 2007 through January 31, 2008 (the “Projections”).

The Selected Financial Data (other than the Projections) fairly present
the values, obligations and expenses set forth therein and are based upon the
books and records of the Seller, which have been maintained in accordance with
GAAP.  The Projections were (a) prepared
by management of the Seller in good faith, (b) were based on assumptions
believed by management of the Seller to be reasonable in light of current
conditions and current facts known at the time made and (c) represent good
faith estimates by management of the Seller as to the sales by the Seller to
the customers described therein in connection with the conduct of the Business
for the periods indicated; provided, however, that, absent a
showing of bad faith on the part of the management of the Seller, nothing
contained in the Projections shall be deemed to constitute a representation or
warranty by Seller as to future sales of products by the Seller in connection
with the conduct of the Business to such customers prior to the Closing, or by
the Buyer to such customers in connection with the business conducted by the
Buyer with the Acquired Assets after the Closing (it being understood that such
estimates and projections are subject to uncertainties and contingencies that
are beyond the control of the Seller and its management).

 13
 

(g)           [RESERVED]

(h)           Leased
Real Property.

(i)            Section
3(h)(i) of the Disclosure Schedule sets forth the address of each parcel of
Leased Real Property, and a true and complete list of all Leases for each such
Leased Real Property (including the date, term and termination date, and name
of the parties to such Lease document). 
Seller has delivered to Buyer a true and complete copy of each such
Lease document. Except as set forth in Section 3(h)(i) of the Disclosure
Schedule, with respect to each of such Leases:

(A)          such Lease is legal,
valid, binding, enforceable and in full force and effect;

(B)           except for those
Leases for which Lease Consents are obtained, the transactions contemplated by
this Agreement do not require the consent of any other party to such Lease,
will not result in a breach of or default under such Lease, and will not
otherwise cause such Lease to cease to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the Closing;

(C)           Seller’s possession
and quiet enjoyment of the Leased Real Property under such Lease has not  been disturbed and, to the Knowledge of
Seller, there are no disputes with respect to such Lease;

(D)          Seller is not and, to
the Knowledge of the Seller, no other party to any Lease is, in breach of or
default under such Lease; and, to the Knowledge of Seller, no event has
occurred or circumstance exists that, with the delivery of notice, the passage
of time or both, would constitute such a breach or default, or permit the
termination, modification or acceleration of rent under such Lease;

(E)           no security deposit
or portion thereof deposited with respect to such Lease has been applied in
respect of a breach of or default under such Lease that has not been
redeposited in full;

(F)           Seller does not owe,
and will not owe in the future, any brokerage commissions or finder’s fees with
respect to such Lease;

(G)           the other party to
such Lease is not an Affiliate of, and otherwise does not have any economic
interest in, Seller;

(H)          Seller has not
subleased, licensed or otherwise granted any Person the right to use or occupy
the Leased Real Property or any portion thereof; and

(I)            Seller has not
collaterally assigned or granted any other Lien in such Lease or any interest
therein.

 14
 

(ii)           All buildings, structures, fixtures, building systems and
equipment, and all components thereof, included in the Leased Real Property
(the “Improvements”) are in good condition and repair, reasonable wear
and tear excepted.

(iii)          To the Knowledge of Seller, the Leased Real Property is in
compliance with all applicable building, zoning, subdivision, health and safety
and other land use laws, including the Americans with Disabilities Act of 1990,
as amended, and all insurance requirements affecting the Leased Real Property
(collectively, the “Real Property Laws”).  Seller has not received any notice of
violation of any Real Property Law.

(iv)          Each parcel of Leased Real Property has direct access to a
public street adjoining the Leased Real Property or has access to a public
street via insurable easements benefiting such parcel of Leased Real Property,
and such access is not dependent on any land or other real property interest
that is not included in the Leased Real Property. None of the Improvements or
any portion thereof is dependent for its access, use or operation on any land,
building, improvement or other real property interest that is not included in
the Leased Real Property.

(v)           All water, oil, gas, electrical, steam, compressed air,
telecommunications, sewer, storm and waste water systems and other utility
services or systems for the Leased Real Property have been installed and are
operational and sufficient for the operation of the Business as currently
conducted thereon.

(vi)          Seller’s use or occupancy of the Leased Real Property or
any portion thereof and the operation of the Business as currently conducted is
not dependent on a “permitted non-conforming use” or “permitted non-conforming
structure” or similar variance, exemption or approval from any governmental
authority.

(vii)         None of the Leased Real Property or any portion thereof is
located in a flood hazard area (as defined by the Federal Emergency Management
Agency).

(i)            Acquired
Intellectual Property.

(i)            To
the Knowledge of Seller: (a) no third party has interfered with, infringed
upon, misappropriated, or violated the Acquired Intellectual Property or is
doing any of the aforesaid at this time; and (b) no Acquired Intellectual
Property interferes with, infringes upon or violates the intellectual property
rights of any third-party.  No copyrighted
or copyrightable material included in the Acquired Intellectual Property
infringes upon or violates the copyrights of any third party.  No know-how, process, formula, or product
included in the Acquired Intellectual Property violates any trade secret of any
third party.

(ii)           Section
3(i)(ii) of the Disclosure Schedule identifies: (a) each license,
agreement, or other permission that Seller has granted to any third party with
respect to any of the Acquired Intellectual Property (together with any
exceptions); and (b) each license, agreement, or other permission that has been
granted to Seller with respect to any of the Acquired Intellectual
Property.  All of the items identified on
Section 3(i)(ii) of the Disclosure Schedule constitute Acquired
Contracts.  With respect to each item
listed on Schedule 1(b) and 

 15
 

on Section 3(i)(ii) or Section 3(i)(iv) of the Disclosure
Schedule, as well as each other item of Acquired Intellectual Property:

(A)          Seller possesses all
right, title, and interest in and to the item, free and clear of any Lien,
license, or other restriction, and Seller is not obligated to pay any royalties
with respect thereto;

(B)           the item is not
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;

(C)           no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending or, to
the Knowledge of Seller, is threatened that challenges the legality, validity,
enforceability, use, or ownership of the item;

(D)          Seller has never
agreed to indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item;

(E)           no loss or
expiration of the item is threatened, pending, or reasonably foreseeable; and

(F)           Schedule 1B
includes all fictional names, trade marks, trade names and service marks that
have been registered with the applicable governmental authority, including the
United States Patent and Trademark Office or the equivalent national trademark
office in any foreign jurisdiction, including the European Union, all of which
are currently in compliance with all applicable laws, and are valid and
enforceable.  Section 3(i)(ii)(F)
of the Disclosure Schedule includes a list of some selected common law
trademarks consisting of unregistered fragrance names that are used in the
Business (the “Fragrance Names”). 
Notwithstanding anything to the contrary herein, Seller makes no
representations or warranties with respect to any Fragrance Names (including,
without limitation, any Fragrance Names not listed on Section 3(i)(ii)(F)
of the Disclosure Schedule), including, without limitation, with respect to the
existence or extent of common law trademark rights therein or with respect to
whether use of such names may violate any third party’s rights.  Neither the inclusion of any fragrance name
in Section 3(i)(ii)(F) of the Disclosure Schedule nor anything else in
this Agreement shall constitute an admission by Seller as to the existence of
any protectable rights in such fragrance names or be relied upon by Purchaser
to assert rights against Seller or its licensees hereafter.

(iii)          Section 3(i)(iii) of the Disclosure Schedule
identifies each material item of Acquired Intellectual Property that any third
party owns and Seller uses pursuant to license, sublicense, agreement, or
permission. Seller has delivered to Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date).  All of the items identified on Section
3(i)(iii) of the Disclosure Schedule constitute Acquired Contracts.  With respect to each such item of used
Intellectual Property required to be identified in Section 3(i)(iii) of
the Disclosure Schedule:

 16
 

(A)          Seller
has not granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission; and

(B)           no loss or
expiration of the item is threatened, pending, or reasonably foreseeable,
except for patents expiring at the end of their statutory terms (and not as a
result of any act or omission by Seller, including without limitation, a
failure by Seller to pay any required maintenance fees).

(iv)          Section 3(i)(iv) of the Disclosure Schedule
identifies each patent or registration that has been issued to Seller which is
used in the operation of the Business and identifies each pending patent
application or application for registration that Seller has made with respect
to any of the Intellectual Property used by Seller in the Business. Seller has
delivered to Buyer correct and complete copies of all such patents, registrations
and applications (as amended to date).  Section
3(i)(iv) of the Disclosure Schedule also identifies each material trademark
and Internet domain name used in the operation of the Business.

(v)           The
Acquired Intellectual Property constitutes all of the material Intellectual
Property used by Seller in the operation of the Business.

(j)            Acquired
Tangible Assets.  The
machinery, equipment, and other tangible assets included in the Acquired Assets
are free from material defects (patent and latent), have been maintained in
accordance with normal industry practice, and are in good operating condition
and repair (subject to normal wear and tear).

(k)           Acquired
Inventory.  The Acquired
Inventory consists of manufactured and processed parts, work in process, and
finished goods, all of which is fit for the purpose for which it was procured
or manufactured, and none of which is obsolete, excess, damaged, or
defective.  Inventory now on hand that
was purchased after the Financial Statement Date and inventory purchased pursuant
to the Assumed Purchase Orders but not yet on hand was purchased in the
Ordinary Course of Business at a cost not exceeding market prices prevailing at
the time of purchase.

(l)            Acquired
Contracts  Schedule 1A
contains a list of, and Seller has delivered to Buyer a correct and complete
copy of, each written Acquired Contract (as amended to date) and a written
summary setting forth the material terms and conditions of each oral Acquired
Contract.  With respect to Seller, and,
to the best knowledge of Seller, each other party to each Acquired Contract:
(A) the agreement is legal, valid, binding and enforceable in accordance with
its terms, and in full force and effect; (B) no party is in material breach or
default, and no event has occurred that with notice or lapse of time would
constitute a material breach or default, or permit termination, modification,
or acceleration, under the agreement; and (C) no party has repudiated any
provision of the agreement.

(m)          Acquired
Receivables.

The Acquired Receivables are all of the receivables related to that
portion of the Business conducted with the Acquired Assets.  All Acquired Receivables are valid
receivables subject to no setoffs or counterclaims and are current and collectible
in accordance with their terms and at their recorded amounts, subject only to
the reserve for bad debts, charge-backs and the like set 

 17
 

forth in Exhibits CB, CB 1.0, CB 2.0, CB 3.0 and CB
4.0 to the Closing Date Net Asset Value Statement (without duplication).

(n)           Environmental,
Health, and Safety Matters.

With respect to the
operations conducted at any Leased Real Property:

(i)            Seller
has complied and is in compliance, in each case in all material respects, with
all Environmental, Health, and Safety Requirements.

(ii)           Without
limiting the generality of the foregoing, Seller has obtained, has complied,
and is in compliance with, in each case in all respects, all material permits,
licenses and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of the Leased Real Property
and the operation of its business as conducted thereon; and a list of all such
material permits, licenses and other authorizations is set forth in Section
3(n)(ii) of the Disclosure Schedule.

(iii)          Seller
has not received any written or oral notice, report or other information
regarding any actual or alleged material violation of Environmental, Health,
and Safety Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any material investigatory, remedial or corrective obligations,
relating to the operations conducted at the Leased Real Property arising under
Environmental, Health, and Safety Requirements.

(iv)          Seller
has not, at any Leased Real Property, treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, manufactured,
distributed, or released any substance, including without limitation any
hazardous substance, or owned or operated any Leased Real Property or facility
thereon (and no such property or facility is contaminated by any such
substance) so as to give rise to any current or future material liabilities,
including any material liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (“CERCLA”) or the Solid Waste Disposal
Act, as amended or any other Environmental, Health, and Safety Requirements.

(v)           Neither
this Agreement nor the consummation of the transactions that are the subject of
this Agreement will result in any material obligations for site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to any of the so-called “transaction-triggered” or “responsible
property transfer” Environmental, Health, and Safety Requirements.

(vi)          Seller
has not, at any Leased Real Property, designed, manufactured, sold, marketed,
installed, or distributed products or other items containing asbestos.

(vii)         Seller
has furnished to Buyer all environmental audits, reports and other material
environmental documents relating to the Leased Real Property that are in its
possession.

 18

(o)           Legal Compliance.  Seller
has complied in all material respects with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder and including the Foreign Corrupt Practices Act,
15 U.S.C. 78dd-1, et seq.) of federal, state, local, and foreign governments
(and all agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.

(p)           Tax Matters.

(i)            Seller has filed
all material Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all material respects. All material Taxes owed by
Seller (whether or not shown on any Tax Return) have been paid.  Seller is not currently the beneficiary of
any extension of time within which to file any income Tax Return.  Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party, and all Forms W-2 and 1099 required with respect thereto have been
properly completed and timely filed.

(ii)           There is no
material dispute or claim concerning any Tax liability of Seller either: (A)
claimed or raised by any authority in writing; or (B) as to which Seller has
Knowledge.

(q)           Litigation. 
Section 3(q) of the Disclosure Schedule sets forth each instance
in which Seller: (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge; or (ii) is a party or, to the Knowledge of Seller,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator, in either case, affecting the Business or the Acquired Assets.

(r)            Product
Warranty; Product Liability.

(i)            Substantially
all of the products manufactured, sold, leased, and delivered by Seller in the
operation of the Business have conformed in all material respects with all
applicable contractual commitments and all express and implied warranties, and
Seller has no material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) for
replacement or repair thereof or other damages in connection therewith.

(ii)           Seller has
no material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by
Seller in its operation of that portion of the Business conducted with the
Acquired Assets.

 19
 

(s)           Solvency. 
Seller is not now insolvent and will not be rendered insolvent by any of
the transactions contemplated hereby.  As
used in this Section 3(s), “insolvent” means that the sum of the debts
and other probable liabilities of Seller exceed the present fair saleable value
of Seller’s assets.

(t)            Employees.  Section
3(t)(i) of the Disclosure Schedule sets forth the name, annual salary for
the fiscal year ended January 31, 2007, bonus paid in respect of fiscal year
ended January 31, 2007, hiring date and accrued vacation for each of the employees
to be offered employment by Buyer (the “New Employees”).  None of the New Employees has received any
raise or compensation in the last 6 months except in the Ordinary Course of
Business.  Seller is not nor has it been
in a material dispute with any of the New Employees, and, to the Knowledge of
Seller, Seller has no reason to believe that any New Employee will not accept
employment with Buyer.

(ii)           Section
3(t)(ii) of the Disclosure Schedules sets forth a list of all workers’
compensation claims filed against Seller or any of its Affiliates from January
1, 2000 through April 20, 2007 by any New Employee.

(u)           Accounts Payable.  The Assumed Accounts Payable are related
solely to the Business and were incurred in the Ordinary Course of Business.

(v)           Acquired Assets.  The Acquired Assets, in conjunction with the
Excluded Assets, certain Intellectual Property to be licensed by Seller to
Buyer pursuant to the Patent License Agreement and certain assets to be made
available by Seller to Buyer pursuant to the Transition Services Agreement,
constitute all of the material assets that are currently utilized by the Seller
to operate that portion of the Business conducted by Seller with the assets
being purchased by Buyer.

Section 4.               Buyer’s Representations and
Warranties.  Buyer represents
and warrants to Seller that the statements contained in this Section 4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this Section
4).

(a)           Organization of Buyer.  Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation, with full corporate power and authority to conduct its
business as now being conducted by it and to own and use the properties it
purports to own and use.

(b)           Ownership
of Buyer.  As of the date hereof, all
issued and outstanding shares of capital stock of the Buyer are held by the
persons and in the amounts set forth in Section 4(b) of the Disclosure
Schedule.

(c)           Authorization of
Transaction.  Buyer has full
corporate power and authority to execute and deliver the Transaction Documents
and to perform its obligations thereunder. 
This Agreement constitutes, and the other Transaction Documents when
executed will constitute, the valid and legally binding obligation of Buyer,
enforceable against it in accordance with its 

 20
 

terms and conditions.  The
execution, delivery and performance of the Transaction Documents have been duly
authorized by Buyer.

(d)           Non-contravention.  Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2
above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Buyer is subject or any provision
of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
are subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien would not have a Material Adverse Effect.  Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above), except where the failure to
give notice, to file, or to obtain any authorization, consent, or approval
would not have a Material Adverse Effect.

(e)           Brokers’ Fees.  Buyer has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Seller could become
liable or obligated.

Section 5.               [RESERVED]

Section 6.               Post-Closing
Covenants.  The Parties agree
as follows with respect to the period following the Closing:

(a)           General.  Each Party shall, at the request of
any other Party from time to time and at any time, whether on or after the
Closing Date, and without further consideration, execute and deliver such
deeds, assignments, transfers, assumptions, conveyances, powers of attorney,
receipts, acknowledgments, acceptances and assurances as may be reasonably
necessary to procure for the Party so requesting, and its successors and
assigns, or for aiding and assisting in collecting and reducing to possession,
any and all of the Acquired Assets, or for the assumption of the Assumed
Liabilities, or to otherwise satisfy and perform the obligations of the Parties
hereunder.  Without limiting the
generality of the foregoing, Seller shall, upon the request of Buyer, in a
timely manner on and after the Closing Date execute and deliver to Buyer such
other documents, releases, assignments and other instruments as may be
reasonably required to effectuate completely the transfer and assignment to
Buyer of, and to vest fully in Buyer, Seller’s rights to, the Acquired
Assets.  In furtherance of the foregoing,
Seller shall accumulate weekly the proceeds of any Acquired Receivables
received by it and such proceeds shall be remitted to Buyer no later than the
third business day following the last day of the week in which received and
shall be held in trust for the benefit of Buyer until so remitted.

 21
 

(b)           Transition.  Seller will not take any action that
is designed to or could reasonably be anticipated to discourage any lessor,
licensor, customer, supplier, or other business associate of Seller from
maintaining the same business relationships with Buyer after the Closing as it
maintained with Seller prior to the Closing. 
Seller will promptly forward to Buyer any amounts received in respect of
any Acquired Receivable.

(c)           Non-Competition.

(i)            In
consideration of the Purchase Price and the assumption by Buyer of the Assumed
Liabilities, for a period of five (5) years from the Closing Date (the “Restricted
Period”), Seller and its Affiliates shall not, except as provided in Section
6(c)(v), below, sell in the United States or its territories, Mexico or
Canada (the “Restricted Territories”) Restricted Products to the
Restricted Customers.

(ii)           During
the Restricted Period, Seller and its Affiliates shall not, directly or
indirectly through another entity, (x) induce or attempt to induce any customer
to cease doing Restricted Business with Buyer or any of its Affiliates, (y)
induce or attempt to induce any supplier, licensee, licensor, franchisee or
other business relation of Buyer or any of its Affiliates to terminate its
Restricted Business related relationship with Buyer or such Affiliate or (z)
interfere with the Restricted Business related relationship between Buyer
and/or such Affiliate and any such customer, supplier, licensor, licensee or
franchisee (including by making any negative statements or communications to
such customer, supplier, licensor, licensee or franchisee about the Restricted
Business of Buyer or such Affiliates) with the goal of disrupting such
Restricted Business related relationship;

(iii)          During
the Restricted Period, Seller and its Affiliates shall not, directly or
indirectly through another entity, solicit, induce or conspire with or attempt
to solicit, induce or conspire with any employee or officer of Buyer or any of
its Affiliates to leave the employ of Buyer or any of its Affiliates, or to
compete in the Restricted Business against the Buyer or any of its Affiliates
or interfere with the employment relationship between Buyer or any of its
Affiliates and any employee or officer of Buyer or such Affiliate(s) in any way
that is adverse to such employment relationship;

(iv)          During
the Restricted Period, Seller and its Affiliates shall not divert or attempt to
divert any or all of the Restricted Business of Buyer’s or any of Buyer’s
Affiliate’s customers or suppliers from Buyer or its Affiliates in violation of
this Agreement or applicable law (including any applicable trade secrets law).

(v)           Notwithstanding
anything to the contrary contained in this Agreement, Seller and its Affiliates
shall be entitled to sell, and shall not be restricted in any way from selling,
to any Person and whether in the Restricted Territories or otherwise:

(A)          Non-fragranced
candles and non-candle products under the brand names Sterno®, Ambria® or Handy Fuel®;

(B)           candles and candle-related products to
customers other than Wal-Mart where such candles and candle-related products do
not constitute more than 

 22
 

10% of the aggregate sales
by Seller and/or its Affiliates to customers other than Wal-Mart; and

(C)           candles and candle
products sold to customers other than Wal-Mart under the brand name Colonial
CandleTM or
any related brand name.

(vi)          The
covenants in this Section 6(c) are severable and separate, and the
unenforceability of any specific covenant in this Section 6(c) is not
intended by any Party to, and shall not, affect the provisions of any other
covenant in this Section 6(c).  If
any court of competent jurisdiction shall determine that the scope, time, or
territorial restrictions set forth in this Section 6(c) are unreasonable
as applied to Seller, the Parties acknowledge their mutual intention and
agreement that those restrictions be enforced to the fullest extent the court
deems reasonable, and that they thereby shall be reformed to that extent as
applied to Seller.

(vii)         All
of the covenants in this Section 6(c) are intended by each Party hereto
to be, and shall be construed as, an agreement independent of any other
provision in this Agreement and the existence of any claim or cause of action
of Seller against Buyer, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Buyer of any covenant in
this Section 6(c).  It is
specifically agreed that the time periods specified in Section 6(c)(i)
shall be computed by excluding from that computation any time during which
Seller has been found by a court of competent jurisdiction to have been in
violation of any provision of Section 6(c)(i).

(viii)        Buyer
and Seller hereby agree that this Section 6(c) is a material and
substantial part of this Agreement, and absent Seller agreeing to be bound by
this Section 6(c), Buyer would not have consummated the Acquisition.

(ix)           The
parties hereto agree that money damages would not necessarily be an adequate
remedy for any breach of this Section 6(c).  Because of the difficulty in measuring the
economic losses that may be incurred by Buyer as a result of any breach by
Seller of the covenants in this Section 6(c) and because of the
immediate and irreparable damage that could be caused to Buyer for which it
would have no other adequate remedy, Seller agrees that Buyer may enforce the
provisions of this Section 6(c) by any equitable or legal means,
including seeking an appropriate injunction or restraining order against Seller
if a breach of any of those provisions occurs. 
Therefore, in the event of a breach or threatened breach of this Section
6(c), Buyer or its successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief
(temporary and/or permanent), in order to enforce, or prevent any violations
of, the provisions hereof.

(x)            Notwithstanding
anything to the contrary contained in this Agreement:

(A)          nothing in this
Agreement shall or shall be deemed to prohibit the running by Seller or any of
Seller’s Affiliates of general advertisements, not specifically addressed to
Buyer or its Affiliates, offering employment or the hiring of any person who
responds to any such general advertisement; and

 23
 

(B)           neither Seller nor
any of its Affiliates shall be restricted from owning, and each shall be
entitled to be the owner of, not more than five percent (5%) of the outstanding
securities of any class of an entity, whether engaged in the Restricted Business
or not, which is publicly traded, so long as Seller has no active participation
in the business of such entity.

(d)           Preservation
of Records.  Seller shall preserve
and keep copies of all data (to the extent not physically transferred to the
Buyer at or after the Closing, with the Memphis Facility or otherwise) related
to that portion of the Business conducted with the Acquired Assets, including
customer lists, referral sources, research and development reports, production
reports, any performance testing results on products, service and warranty
records, financial and accounting records, creative materials, advertising
materials, promotional materials, correspondence and other similar documents
for a period of five (5) years from the Closing Date and shall make such
documents available to Buyer as may be reasonably required by Buyer in
connection with, among other things, the conduct by the Buyer of the Business
conducted with the Acquired Assets and shall permit Buyer to make and keep
copies of such records, at Seller’s sole cost and expense.  In addition, Seller shall, and shall cause
its Affiliates to, preserve and keep the financial records held by it relating
to the Business for a period of three (3) years from the Closing Date and shall
make such records available to Buyer as may be reasonably required by Buyer in
connection with, among other things, the conduct by the Buyer of the Business
conducted with the Acquired Assets, any insurance claims, governmental
investigations, or securities offerings and shall permit Buyer to make and keep
copies of such records, at Buyer’s sole cost and expense.

(e)           Release
of Guaranty.  Buyer will use
commercially reasonable efforts to cooperate with Seller in obtaining a release
(the “Release of Guaranty”) of the guaranty of Blyth of the obligations
of Seller under the Lease with respect to the Memphis  Facility
(the “Guaranty”).  Without
limiting the foregoing, as soon as practicable and, in any event, no later than
thirty (30) days from the Closing Date, Buyer shall obtain or provide to the
landlord under the Lease with respect to the Memphis Facility a letter of
credit or other credit enhancement acceptable to such landlord and Buyer as
security for Buyer’s performance under the lease and in substitution for the
Guaranty.

(f)            Wal-Mart Relationship.  Seller shall cooperate with the Buyer, and
the Buyer shall cooperate with the Seller, in endeavoring to ensure that the
customer relationship, with respect to the Business only, of Seller with
Wal-Mart shall transfer to Buyer from and after the Closing.  Without limiting the generality of the
foregoing, (i) Buyer shall take reasonable steps to assure Wal-Mart that Buyer
shall be, and shall continue to be, able to service the customer relationship
with Wal-Mart including, without limitation, through the continued maintenance
and operation of the Memphis Facility and the Bentonville Facility, supporting
radio frequency identification (RFID) programs and maintenance of existing
service levels and receivables terms; and (ii) Buyer and Seller shall cooperate
in making such presentations to Wal-Mart as are necessary or advisable to
facilitate the transfer of the aforedescribed customer relationship with
Wal-Mart from Seller to Buyer, including, without limitation, by making appropriate
personnel available and providing available data to the extent not subject to
conflicting confidentiality agreements or requirements.

 24
 

(g)           Employee
Matters.  No later than five (5)
business days after the Closing, Buyer shall (A) offer employment on an at-will
basis, to those persons listed in Section 6(g)(A) of the Disclosure
Schedule, such offer of employment to be on terms that are comparable to those
upon which such persons were, immediately prior to the Closing, employed by
Seller including, without limitation, as to compensation and benefits (it being
understood and agreed that the provisions of this Section 6(g) are not
for the benefit of any of the persons listed in Section 6(g)(A) of the
Disclosure Schedule and shall not, and shall not be construed to, give or vest
in any of such persons any right or entitlement to employment or continued
employment or to a particular level of compensation or benefits with or from
either Seller or Buyer) and (B) make appropriate arrangements to transition
those persons set forth on Section 6(g)(A) and Section 6(g)(B) of
the Disclosure Schedule who have been offered and accepted employment with the
Buyer to the payroll accounting and other human resources systems of Buyer and
to Buyer’s benefit plans. Seller agrees that, after Closing, Buyer may, but
shall not be required to, offer employment, on an at-will basis, to those
persons listed in Section 6(g)(B) of the Disclosure Schedule.  Buyer acknowledges and agrees that, in the
event that Buyer does not, for any reason, offer employment to any of the
persons listed in Section 6(g)(A) or Section 6(g)(B) of the
Disclosure Schedule, Seller may, but shall not be required to, retain any of
such persons as employees of Seller and utilize any of such persons to provide
services to Buyer pursuant to the Transition Services Agreement, including,
without limitation, services set forth on Exhibit A thereto, in which event
Buyer shall pay to Seller the consideration provided for in, and in the manner
provided in, Section 4.1 of the Transition Services Agreement, which
consideration shall be in addition to the consideration specified in Exhibit A
to the Transition Services Agreement and shall be calculated taking into
account stay bonuses or other incentives, if any, paid or provided by Seller to
any or all of such persons so retained. 
Seller agrees that any such stay bonuses or other incentives, if any,
will be calculated and determined in a manner consistent with the manner in
which stay bonuses currently set forth on Exhibit A to the Transition Services
Agreement were determined.

Section 7.               Conditions
to Obligation to Close.

(a)           Conditions to Buyer’s Obligation.  The obligation of Buyer to consummate
the transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:

(i)            the representations
and warranties set forth in Section 3 above shall be true and correct in
all material respects (except for those representations and warranties
qualified by “material,” which shall be true and correct in all respects) at
and as of the Closing Date;

(ii)           Seller shall have
performed and complied with all of its covenants hereunder in all material
respects (other than those covenants contained in Section 2(e) which
shall have been complied with in all respects) through the Closing;

(iii)          no action, suit, or
proceeding shall be pending before (or that could come before) any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before (or that could come before) any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of 

 25
 

the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (C)
adversely affect the right of Buyer to own the Acquired Assets (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);

(iv)          Seller shall have
delivered to Buyer a certificate, executed by an authorized officer of Seller,
to the effect that each of the conditions specified above in Section
7(a)(i)-(iii) is satisfied in all respects;

(v)           the Buyer and the
Seller shall have entered into each of the Transition Services Agreement,
Patent License Agreement, the Overstock Inventory Agreement and the Trademark
License Agreement and all of the same shall be in full force and effect;

(vi)          Buyer shall have
received from counsel to Seller an opinion in form and substance as set forth
in Exhibit E attached hereto, addressed to Buyer and on which Buyer’s
lenders shall be entitled to rely, and dated as of the Closing Date;

(vii)         all actions to be
taken by Seller in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Buyer;

(viii)        Seller shall have
obtained and delivered to Buyer a written consent for the assignment of the
Lease for the Memphis Facility (the “Lease Consent”), in form and
substance reasonably satisfactory to Buyer;

(ix)           no damage or
destruction or other change shall have occurred with respect to any of the
Leased Real Property or any portion thereof that, individually or in the
aggregate, would materially impair the use or occupancy of the Leased Real
Property;

(x)            Buyer shall have
obtained financing in form and substance reasonably satisfactory to it and its
counsel, necessary to consummate the transactions contemplated hereby and the
conditions precedent to such financing shall have been satisfied; and

(xi)           Buyer shall have
had substantive diligence discussions with Wal-Mart regarding Wal-Mart’s
relationship with Seller and its continued relationship with Buyer, and
Wal-Mart shall not have advised Buyer that it intends to adversely change the
relationship between Wal-Mart, on the one hand, and Buyer and Buyer’s Wal-Mart
relationship management team, on the other, from that currently in existence
between Wal-Mart, on the one hand, and Seller and Seller’s Wal-Mart
relationship management team, on the other.

Buyer may waive any condition specified in this Section 7(a) if
it executes a writing so stating at or prior to the Closing.

(b)           Conditions to Seller’s Obligation.  The obligation of Seller to consummate
the transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:

 26
 

(i)            the representations and warranties
set forth in Section 4 above shall be true and correct in all material
respects (except for those representations and warranties qualified by “material,”
which shall be true and correct in all respects) at and as of the Closing Date;

(ii)           Buyer shall have
performed and complied with all of its covenants hereunder in all material
respects (other than those covenants contained in Section 2(e) which
shall have been complied with in all respects) through the Closing;

(iii)          no action, suit, or
proceeding shall be pending before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);

(iv)          Buyer shall have
delivered to Seller a certificate, executed by an authorized officer of Buyer,
to the effect that each of the conditions specified above in Section
7(b)(i)-(iii) is satisfied in all respects;

(v)           Seller and Buyer
shall have received all material authorizations, consents, and approvals of
governments and governmental agencies referred to in Section 3(c) and Section
4(c) above;

(vi)          the Buyer and the
Seller shall have entered into each of the Transition Services Agreement,
Patent License Agreement, the Overstock Inventory Agreement and the Trademark
License Agreement and all of the same shall be in full force and effect;

(vii)         Seller shall have
received from counsel and local counsel to Buyer opinions in form and substance
as set forth in Exhibit F attached hereto, addressed to Seller and dated
as of the Closing Date;

(viii)        all actions to be
taken by Buyer in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller;

(ix)           the execution,
delivery and performance of this Agreement, and all other related matters,
shall have been approved by the Boards of Directors of Seller and of Blyth; and

(x)            Buyer shall have
paid the Purchase Price to Seller.

Seller may waive any condition specified in this Section 7(b) if
it executes a writing so stating at or prior to the Closing.

Section 8.               Remedies
for Breaches of This Agreement.

 27
 

(a)           Survival of
Representations and Warranties.  All
of the representations and warranties of Buyer and Seller contained in this
Agreement shall survive the Closing and continue in full force and effect for a
period of fifteen months thereafter; provided, however, that the
representations and warranties contained in: (i) Sections 3(b), 3(d)
and 3(e) and Sections 4(b) and (d) shall survive the
Closing and continue in full force and effect indefinitely; and (ii) Sections
3(n) and (p) shall survive the Closing and continue in full force
and effect until the 90th day following the applicable statute of
limitations.

(b)           Indemnification
Provisions for Buyer’s Benefit.  

(i)            In the event Seller
breaches any of its representations, warranties, and covenants contained in
this Agreement, and, provided that Buyer makes a written claim for
indemnification against Seller pursuant to Sections 8(d) and 10(g)
below within the survival period (if there is an applicable survival period
pursuant to Section 8(a) above), then Seller agrees to indemnify Buyer
from and against the entirety of any Adverse Consequences Buyer may suffer
(including any Adverse Consequences Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach; provided, however, that (A)
Seller shall not have any obligation to indemnify Buyer from and against any
Adverse Consequences resulting from, arising out of, relating to, in the nature
of, or caused by the breach of any representation or warranty of Seller
contained in Section 3(c) or Sections 3(f)-(u) above unless and
until Buyer has suffered Adverse Consequences by reason of all such breaches in
excess of a $300,000 aggregate deductible (after which point Seller will be
obligated only to indemnify Buyer from and against further such Adverse
Consequences) and (B) (other than with respect to Seller’s representations and
warranties contained in Sections 3(a), (b), (d), (e),
(n) and (p) as to which the aggregate ceiling will be an amount
equal to the Purchase Price), there will be a $6,000,000 aggregate ceiling on
the obligation of Seller to indemnify Buyer from and against Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by breaches of the representations and warranties of Seller.

(ii)           Seller agrees to
indemnify Buyer from and against the entirety of any Adverse Consequences Buyer
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by any liability of Seller that is not an Assumed Liability,
indefinitely.

(c)           Indemnification
Provisions for Seller’s Benefit.

(i)            In the event Buyer
breaches any of its representations, warranties, and covenants contained in
this Agreement, and, provided that Seller makes a written claim for
indemnification against Buyer pursuant to Sections 8(d) and 10(g) below
within the survival period (if there is an applicable survival period pursuant
to Section 8(a) above), then Buyer agrees to indemnify Seller from and
against the entirety of any Adverse Consequences suffered (including any
Adverse Consequences suffered after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach.

(ii)           Buyer agrees to
indemnify Seller from and against the entirety of any Adverse Consequences
suffered resulting from, arising out of, relating to, in the nature of, or
caused by any Assumed Liability.

 

 28

(d)           Limitations.  Notwithstanding the foregoing, no
indemnification for any Adverse Consequences shall be made pursuant to this Section
8 if and to the extent that such Adverse Consequences were taken into
account in determining whether or not any adjustment would be made to the
Purchase Price pursuant to Section 2(g) (whether or not any such
adjustment was, in fact, made) or the amount of any such adjustment.

(e)           Matters Involving
Third Parties.

(i)            If any third party
notifies any Party (the “Indemnified Party”) with respect to any matter
(a “Third-Party Claim”) that may give rise to a claim for
indemnification against the other Party (the “Indemnifying Party”) under
this Section 8, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party is thereby actually and
materially prejudiced.

(ii)           The Indemnifying
Party will have the right to assume the defense of the Third-Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party at any
time within 15 business days after the Indemnified Party has given notice of
the Third-Party Claim; provided, however, that the Indemnifying
Party must conduct the defense of the Third-Party Claim actively and diligently
thereafter in order to preserve its rights in this regard; and provided further
that the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third-Party Claim.

(iii)          So long as the
Indemnifying Party has assumed and is conducting the defense of the Third-Party
Claim in accordance with Section 8(e)(ii) above, (A) the Indemnifying
Party will not consent to the entry of any judgment on or enter into any
settlement with respect to the Third-Party Claim without the prior written
consent of the Indemnified Party (not to be unreasonably withheld) unless the
judgment or proposed settlement involves only the payment of money damages by
the Indemnifying Party and does not impose an injunction or other equitable
relief upon the Indemnified Party and (B) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnifying
Party (not to be unreasonably withheld).

(iv)          In the event the
Indemnifying Party does not assume and conduct the defense of the Third-Party
Claim in accordance with Section 8(e)(ii) above, however, (A) the
Indemnified Party may defend against, and consent to the entry of any judgment
on or enter into any settlement with respect to, the Third-Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in connection
therewith) and (B) the Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third-Party Claim to the
fullest extent provided in this Section 8.

(f)            Determination of Adverse Consequences.  Indemnification
payments under this Section 8 shall be paid by the Indemnifying Party
without reduction for any Tax Benefits available to the Indemnified Party. However,
to the extent that the Indemnified Party 

 29
 

recognizes Tax Benefits as a result of any Adverse Consequences, the
Indemnified Party shall pay the amount of such Tax Benefits (but not in excess
of the indemnification payment or payments actually received from the
Indemnifying Party with respect to such Adverse Consequences) to the
Indemnifying Party as such Tax Benefits are actually recognized by the
Indemnified Party.  For this purpose, the
Indemnified Party shall be deemed to recognize a tax benefit (“Tax Benefit”)
with respect to a taxable year if, and to the extent that, the Indemnified
Party’s cumulative liability for Taxes through the end of such taxable year,
calculated by excluding any Tax items attributable to the Adverse Consequences
from all taxable years, exceeds the Indemnified Party’s actual cumulative
liability for Taxes through the end of such taxable year, calculated by taking
into account any Tax items attributable to the Adverse Consequences and the
receipt of indemnification payment under this Section 8 for all taxable
years (to the extent permitted by relevant Tax law and treating such Tax items
as the last items taken into account for any taxable year).  All indemnification payments under this Section
8 shall be deemed adjustments to the Purchase Price.

(g)           Exclusive Remedy.  Other
than with respect to the Net Asset Value Adjustment set forth in Section
2(g), Buyer and Seller acknowledge and agree that the foregoing
indemnification provisions in this Section 8 shall be the exclusive
remedy of Buyer and Seller with respect to the transactions contemplated by
this Agreement; provided that, in the case of fraud or willful
misrepresentation or breach, the foregoing indemnification provisions shall not
be exclusive, but shall be in addition to any other rights or remedies to which
Buyer and Seller or their respective assigns, as the case may be, may be
entitled at law or in equity.  Without
limiting the generality of the immediately preceding sentence, but subject to
the proviso contained therein, Buyer and Seller hereby waive any statutory,
equitable, or common law rights or remedies relating to any environmental
matters, including without limitation any such matters arising under any
Environmental, Health, and Safety Requirements and including without limitation
any arising under CERCLA. Blyth Guaranty. Blyth, as the direct and
beneficial owner of all of the equity interests of Seller, hereby agrees to
unconditionally, irrevocably and absolutely guaranty to Buyer and its permitted
assigns the prompt and complete payment of all amounts owing to such Person by
Seller pursuant to this Section 8. In the event Seller fails or refuses
to timely pay any amounts owing Buyer (or its permitted assigns) under this Section
8, Buyer (or its permitted assigns) shall make a written demand upon Blyth
at the address set forth on the signature page hereto to pay such unpaid
amounts.

Section 9.               [RESERVED]

Section 10.             Miscellaneous.

(a)           Press Releases and Public Announcements.  No
Party shall issue any press release or public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other Party; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly traded securities (in
which case the disclosing Party will advise the other Party prior to making the
disclosure).

 30
 

(b)           No Third-Party Beneficiaries.  This
Agreement shall not confer any rights or remedies upon any Person other than
the Parties and their respective successors and permitted assigns.

(c)           Entire Agreement.  This Agreement (including the
documents (including, without limitation, the Confidentiality Agreement)
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.

(d)           Succession and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns.  No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that
Buyer may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any or all of which cases Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder) and (iii) collaterally assign any or all of its rights
and interests hereunder to one or more lenders to the Buyer, including, without
limitation, Wachovia Bank, National Association, in its capacity as agent (the “Agent”)
for the lenders (the “Lenders”) from time to time party to that certain Loan
and Security Agreement by and among the Buyer, the Agent, and the Lenders as
the same may be amended, modified, supplemented, extended, renewed, restated or
replaced from time to time.

(e)           Payments
to Buyer.

Seller acknowledges that Buyer has collaterally assigned to the Agent
its rights and interests (but not obligations) under this Agreement.  If Seller is required to make a payment to
Buyer, Buyer hereby directs the Seller to pay such amount to Buyer by wire
transfer in cash pursuant to the following wire transfer instructions: to
Wachovia Bank, National Association, Atlanta, Georgia, ABA No. 053-207-766, for
credit to Wachovia Bank, National Association, Account No. 2000028274625 re: MVP
Group International, Inc. (the “Blocked Account”), unless another
account is designated by the Buyer, in writing, after the date hereof.  The Parties agree that amounts payable to
Buyer by Seller pursuant to any right of Buyer to indemnification under this
Agreement, or pursuant to Section 2(g) of this Agreement, may be offset
by Seller against amounts payable by Buyer under the Transition Services
Agreement or the Overstock Inventory Agreement. 
The Seller agrees (i) that it shall not offset amounts payable by Buyer
to it against the proceeds of Acquired Receivables that may be received by it
after the date hereof, such proceeds of Accounts Receivable to be forwarded as
provided in Section 6(a), above and (ii) to provide reasonable notice of
any proposed set off under this Section 10(e).

(f)            Counterparts.  This
Agreement may be executed in one or more counterparts (including by means of
electronic transmission), each of which shall be deemed an original but all of
which together will constitute one and the same instrument.

 31
 

(g)           Headings.  The section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.

(h)           Notices.  All notices, requests,
demands, claims, and other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given on receipt as shown by
written or electronic records and either (i) delivered personally to the
recipient, (ii) sent to the recipient by reputable overnight courier service
(charges prepaid), (iii) sent to the recipient by facsimile transmission or
electronic mail, or (iv) mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid, and addressed to the
intended recipient as set forth below:

	
  If to Seller:

  	
   

  	
  Blyth, Inc.

  
	
   

  	
   

  	
  One East Weaver Street

  
	
   

  	
   

  	
  Greenwich, CT 06831

  
	
   

  	
   

  	
  Attention: Michael S. Novins, Esq.

  
	
   

  	
   

  	
  Fax: (203) 552-9168

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Finn Dixon & Herling LLP

  
	
   

  	
   

  	
  177 Broad Street, 15th Floor

  
	
   

  	
   

  	
  Stamford, CT 06901-2048

  
	
   

  	
   

  	
  Attention: Harold B. Finn III, Esq.

  
	
   

  	
   

  	
  Fax: (203) 325-5001

  
	
   

  	
   

  	
   

  
	
  If to Buyer:

  	
   

  	
  MVP Group International, Inc.

  
	
   

  	
   

  	
  1031 Le Grand Blvd.

  
	
   

  	
   

  	
  Charleston, SC 29492

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Fax: (843) 216-8386

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Nelson Mullins Riley & Scarborough LLP

  
	
   

  	
   

  	
  999 Peachtree Street, NE, 14th Floor

  
	
   

  	
   

  	
  Atlanta, GA 30309

  
	
   

  	
   

  	
  Attention: Rusty Pickering, Esq.

  
	
   

  	
   

  	
  Fax: (404) 817-6035

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Wachovia Bank, National Association, as Agent

  
	
   

  	
   

  	
  171 17th Street NW

  
	
   

  	
   

  	
  Atlanta, GA 30363

  
	
   

  	
   

  	
  Attention: Portfolio Manager - MVP

  
	
   

  	
   

  	
  Fax: (404) 214-7299

  

 

Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.  The copies referred to above in this Section
10(h) shall not be required to effectively deliver notice pursuant hereto to
the Parties and the failure of any Party to provide 

 32
 

such a copy or to provide a copy as provided for in
the notice provision(s) of any document, instrument or agreement executed in
connection herewith, shall not constitute a breach of this Agreement or of any
such document, instrument or agreement.

(i)            Governing Law.  This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict
of law provision or rule (whether of the New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.

(j)            Amendments and Waivers.  No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Buyer and Seller.  No waiver by any Party of any provision of
the Agreement or any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be valid unless the same
shall be in writing and signed by the Party making such waiver nor shall such
waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

(k)           Severability.  Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.

(l)            Expenses.  Each of Buyer and
Seller shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.

(m)          Construction.  The
Parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.  The word “including” shall mean including
without limitation.

(n)           Incorporation of Exhibits and Schedules.  The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.

(o)           Confidentiality Agreement.  The
Parties acknowledge and agree that (a) each of the Parties shall be bound by
each and all of the terms, provisions and conditions set forth in the
Confidentiality Agreement as if it were an original party thereto, and by doing
so, it shall have all of the rights and obligations of a party thereto, with
Buyer having the same rights and obligations as MVP (as defined in the
Confidentiality Agreement) and Seller having the same rights and obligations as
Blyth (as defined in the Confidentiality Agreement) and (b) the Confidentiality
Agreement shall remain in full force and effect notwithstanding the execution
and delivery of this Agreement and the consummation of the transactions that
are contemplated hereby; provided, however, that in the event
that the transactions contemplated hereby are 

 33
 

consummated, Buyer shall be entitled to use, in connection with the
conduct of the business conducted by Buyer with the Acquired Assets, the
Confidential Information provided to it by Seller to conduct such
business.  Without limiting the
foregoing, Buyer and Seller acknowledge that each has heretofore provided, and
will hereafter provide, sensitive Confidential Information to the other and
that each has heretofore granted, and will hereafter grant, access to the other’s
personnel who are critical to the conduct of their respective businesses.
Accordingly, each of the Parties further promises and agrees that, in the event
that this Agreement is terminated for any reason, it will not thereafter (a)
use any Confidential Information provided to it by the other Party in
connection with the conduct of a business that is competitive with that of such
other Party, or (b) for a period of three years from the date of such
termination, hire, engage as a consultant or otherwise engage the services of
any of the other Party’s employees (the “Additional Assurances”). The
foregoing Additional Assurances are intended to supplement the Confidentiality
Agreement and shall be governed by the provisions of Sections 7, 9, 10 and 12
of the Confidentiality Agreement, which are incorporated herein and made a part
hereof. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 10(o) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Section 10(o) shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

* *
* * *

 34

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.

	
  

  	
  MVP GROUP INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Troy Propes

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CANDLE CORPORATION OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael Novins

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SOLELY FOR PURPOSES OF SECTION 8(H):

  
	
   

  	
   

  
	
   

  	
  BLYTH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Michael Novins

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
  Address: 

  	
  One East Weaver Street

  	
   

  
	
   

  	
   

  	
   

  	
  Greenwich, CT 06831

  	
   

  

 

Signature
Page to Asset Purchase AgreementEXHIBIT 10.1

                               Licensing Agreement

     Agreement made this 30th day of May, 2007, by and between Evans Systems,
Inc., a Texas Corporation, with a principal place of business at 1 Town Square
Boulevard, Ste. 347, Asheville, North Carolina 28803 ("Licensee" or "Evans
Systems") and Childwatch, Inc., a Not for profit Corporation, with a principal
place of business at P.O. Box 691782, Orlando, Florida 32869 ("Licensor" or
"Child Watch").

                                    RECITALS

     WHEREAS, Child Watch is the sole owner of certain trademarks, service
marks, and trade names;

     WHEREAS, Child Watch is in the business of assisting parents of missing
children and working with law enforcement in the search for a missing child by
organizing volunteers and distributing posters; and

     WHEREAS, Evans Systems is desirous of obtaining a license to utilize
certain trademarks and service marks of Child Watch in connection with the
development of a Child Watch Alert Network on a digital signage network for the
purpose of displaying pictures of missing persons to the public; and:

     WHEREAS, Child Watch is agreeable to such use by Evan Systems of certain
trademarks and service marks subject to the provisions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. (a) Licensor grants to Licensee a License to the exclusive right to
market the Product and Service and brand name world wide for a period commencing
on June 1, 2007 (the "Effective Date") and ending five (5) years from the
Effective Date (the "Initial Term") unless sooner terminated pursuant to the
provisions of this Agreement. The term "License" as used herein shall mean the
exclusive non-transferable right of Licensee to reproduce, market and distribute
to end-users the Product and Service, Child Watch brand name and pictures of
missing persons subject to the provisions of this Agreement. "Exclusive" shall
mean that Licensor shall not engage in any similar promotions with other
competing companies of Licensee during the term of this Agreement.

        (b) Grant. Subject to the provisions of this Agreement, including
without limitation all Child Watch approval rights described herein, Child Watch
hereby grants to Evan Systems, and Evan Systems hereby accepts the grant by
Child Watch of, the exclusive, nontransferable right and license during the Term
of this Agreement to use the Licensed Rights solely in connection with the
development and operation of the Child Watch Network ("Network") in the
Territory in accordance with the Terms set forth herein. "Licensed Rights" shall
mean the right to develop and operate the Child Watch Network in the Territory,

<PAGE>

the right to offer the programs ("Licensed Services") subject to Child Watch's
approval rights. The network will be named "Child Watch Network" and Child Watch
will be the exclusive organization.

        (c) Reservation of Rights. No license or right is granted for the use of
any trademark, service mark, trade dress, logo or similar identifying design
other than the Licensed Marks and no right is granted for the offering of
License Services or the sale of Branded Merchandise by any means or method other
than as set forth in this Agreement and the attached Schedules; and Evans
Systems shall exercise Licensed Rights and use the Licensed Marks only for the
purposes of this Agreement and as prescribed herein, only with respect to the
Licensed Rights, and only to offer such Licensed Services and/or sell such
Branded Merchandise pursuant to the terms of this Agreement. Except as expressly
set forth in this Agreement, no right of renewal or option to extend is granted
and Evans Systems shall have no right to exercise the Licensed Rights; no right
to use the Licensed Marks; and no right to continue marketing, distributing or
selling Licensed Services and/or Branded Merchandise or to continue holding
itself out as a licensee of Child Watch after the expiration or termination of
this Agreement. Evan Systems shall have the right to a "Sell-Off" period as
described in this agreement. All rights not specifically granted in this
Agreement are expressly reserved by Child Watch.

        (d) It is mutually agreed that either party may terminate this Agreement
at the end of the Initial Term by giving the other party written notice thereof
at least Three (3) months prior to the expiration of the Initial Term. Should
either party fail to give such notice, this Agreement shall continue upon the
same terms and conditions in force and effective immediately prior to the
expiration of the Initial Term, for an additional period of four (4) year
periods. After the Initial Term, either party may terminate the renewal of this
Agreement by giving ninety (90) days' written notice of its intention to
terminate at any time prior to the expiration of the then current term.

2. Licensee hereby accepts the right to market the Product and Service and brand
name and agrees to do so in accordance with the provisions of this Agreement.

3. Licensee is an independent contractor and nothing contained herein shall be
deemed or interpreted to constitute Licensee to be the agent or legal
representative of Licensor for any purpose whatsoever. Licensee is not granted
any right or authority to assume or create any obligation or responsibility,
express or implied, on behalf of or in the name of Licensor, or to bind Licensor
in any manner or fashion whatsoever.

4. Licensee shall pay to Licensor a royalty of fifteen (15%) percent on net
sales of advertising revenue of generated through the digital signage network
(the "Royalty Fee"). Net sales shall not include sales commissions or any
customer deductions (such as discounts, sales and rebates). All expenses and
disbursements incurred by Licensee shall be the sole responsibility of Licensee
and Licensor shall not be obligated for those expenses or disbursements in any
manner whatsoever.

5. Discharge of Responsibilities. Pursuant to the license granted in Section 1
(A) above, Evan Systems shall exercise the Licensed Rights and shall provide
reports and information to Child Watch as herein required. Evan Systems shall
expend all necessary capital toward the development of the Child Watch Network

<PAGE>

to fully exploit the rights granted by Child Watch herein, secure all employees,
agents and technical skills necessary therefore and shall be responsible for all
costs and expenses incurred by Evan Systems in the discharge of its obligations
under this Agreement. Child Watch shall be under no obligation to provide any
services or any other acts in regard to this Agreement, other than described
herein. (These expenses should include the costs to operate the digital network
and make all updates required by Child Watch for displaying pictures and info.)

6. Statement and Payments. By the fifteenth (15th) day following the end of each
month, Evan Systems shall furnish full and accurate statements, certified by an
officer of Evan Systems, showing all information relating to the calculation of
Gross Revenue for such month. No Withholding. All payments made by Evan Systems
under this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any income, stamp or other taxes, charges,
fees, deductions or withholdings.

7. Audits. Evan Systems shall keep accurate books of account and records
covering all transactions relating to the license granted in this Agreement.
Child Watch and its authorized representatives shall have the right, at all
reasonable times and upon reasonable prior notice, to examine and audit such
books of account and records and all other documents and materials in Evan
Systems possession or under its control (including records of Evan Systems
parents, subsidiaries, affiliates and third parties, if such exist and are
involved in activities which relate to this Agreement) relating to this
Agreement. Child Watch shall have free and full access for such purposes and
shall have the right to make extracts and copies of and from such records and
documents. Should an audit by Child Watch establish a deficiency between the
amount found to be due Child Watch and the amount Evan Systems actually paid or
reported, Evan Systems shall promptly pay the amount of such deficiency. Should
such audit establish a deficiency of more than three percent (3%), Evan Systems
shall also pay for the cost of the audit. All such books of account and records
shall be kept available for at least three (3) years after the expiration or
termination of this Agreement, or five (5) years after the end of the Contract
Year, to which they relate, whichever is longer.

8. Annual Reports. Within ninety (90) days following the end of each Contract
Year of this Agreement, Evan Systems shall deliver to Child Watch a written
statement setting forth the Annual Gross Revenue for such Contract Year,
including sufficient information and detail to confirm the calculation of all
revenue generated from the operation of the Network, which statement shall be
signed and certified as true and correct by an independent certified public
accounting firm chosen by Evan Systems and acceptable to Child Watch, which
acceptance shall not be withheld unreasonably. If this statement discloses that
the amount of Royalty Fees paid during any period to which the report relates
was less than the amount required to be paid or that any other amount is due
Child Watch, Evan Systems shall immediately pay such amounts within 10 days.

9. Licensee shall pay Licensor within 15 days of the end of each month the
Royalty. Payment from Licensee to Licensor shall be included with the written
report described above. All payments will be made in United States dollars, at
the address designated above by Licensor.

10. The provisions of Paragraph 1(a) and (b) notwithstanding, in the event that
Licensee shall default in the terms and conditions of this Agreement on
Licensee's part to be kept, performed and observed, including without limiting

<PAGE>

the generality of the foregoing, prompt payment of all royalties and other
obligations incurred under the terms of this Agreement, this Agreement shall be
subject to cancellation by Licensor upon thirty (30) days written notice by
Certified Mail return receipt requested, to Licensee, during which period of
fourteen (14) days Licensee shall have the right to remedy such default. Upon
the remedying of such default the cancellation notice shall have no further
force or effect.

     The provisions of Paragraph 1(a) and (b) notwithstanding, in the event that
Licensor shall default in the terms and conditions of this Agreement on
Licensor's part to be kept, performed and observed, including without limiting
the generality of the foregoing, and other obligations incurred under the terms
of this Agreement, this Agreement shall be subject to cancellation by Licensee
upon thirty (30) days written notice by Certified Mail return receipt requested,
to Licensor, during which period of fourteen (14) days Licensor shall have the
right to remedy such default. Upon the remedying of such default the
cancellation notice shall have no further force or effect.

11.  Ownership Rights.

     (a) Ownership of Technology. Each party shall retain ownership of all their
Technology owned by it as of the Effective Date or first developed or reduced to
practice thereafter by employees or consultants of either party or acquired from
third parties. Further, both parties acknowledge that their Technology is their
sole property, and that this Agreement only grants Licensee limited right to
market and distribute the Product and Service.

     (b) Trademark Use During Agreement. During the term of this Agreement, both
parties are authorized to use each others trademarks and logos. Both parties'
uses of the trademarks and logos in connection with the advertisement, promotion
and distribution of Licensee and Licensor products are subject to any and all
restrictions to which either party is subject to. Either party's authorization
to use the other party's trademarks and logos shall at all times be subject to
review and the parties agree that it will alter its use of such trademarks and
logos promptly upon written notification by the other party.

     (c) No Rights in Either Parties' Technology, Patents, Trademarks or
Copyrights. Both Parties agree that it will not at any time during or after this
Agreement, with the exception of what is covered in this agreement, assert or
claim any interest to the other's Technology, Products, Service, patent,
trademark, copyright, or any other intellectual property right relating to their
Product, Service or Technology.

     (d) The trademarks and trade names under which Licensee markets Licensor
Product and Service are the property of Licensor. This Agreement gives Licensee
no rights therein, except the restricted license to reproduce such trademarks
and trade names in connection with the purposes of this Agreement. Licensee may
not market the Licensor Product and Service under any other or different name
than those specified by Licensor.

     (f) Licensee agrees to maintain and respect the trademark, trade name and
copyright notices of any Licensor products and services in connection with its
advertisement and distribution of the Product and Service. Licensee hereby

<PAGE>

agrees to include a reference to Licensor in any advertisement for the Licensed
Product and Service. Licensor shall use reasonable commercial efforts to ensure
compliance hereto. Licensee shall not take any action relating to the Licensor
Product and Service that reflects unfavorably on the Licensor or upon Licensor's
good name, goodwill or reputation. Licensee shall include appropriate legal
notices of Licensor trademarks and shall not make any representations or
warranties regarding the Product and Service, except as authorized by Licensor.

12.  During the term of this Agreement, Licensee agrees to administer and
maintain www.watchittech.com. However, the administration and maintenance of
said website shall in no way be deemed or interpreted to constitute Licensor as
owner of said site. Said website shall at all times be owned by Licensee.
Further, Licensee shall be permitted to utilize and market the Service and
brandname on Licensee's website, but any references to and Service listed on the
website shall be removed when the agreement ends.

13.  Both parties agree to use their best efforts to market and promote the
Product and Service and the services of each party during the term of this
Agreement.

14.  In the event of termination of this Agreement, whether voluntary or
involuntary, Licensee agrees that Licensee will not, for a period of ninety (90)
days from the effective date of termination, engage in the manufacture, sale or
distribution of the Product and Service similar to the exact items Licensed to
Licensee hereunder. However, any pending sales or outstanding quotes as of the
effective date of termination will be completed by both Licensor and Licensee
and each party shall be entitled to the monies owed under the provisions hereof.

15.  It is agreed between the parties hereto that there are no oral or other
agreements or understandings between the parties relating to the selling or
servicing of Product. This agreement supersedes all prior agreements between the
parties and is intended to be a complete and exclusive statement of the full
agreement of the parties.

16.  The provisions of this Agreement shall be deemed to obligate, extend to and
inure to the benefit of the successors, assigns, transferees, grantees, and
indemnities of each of the parties to this Agreement.

17.  This Agreement and the interpretation and enforcement of the terms of this
Agreement shall be governed under and subject to the laws of the State of
Florida. Jurisdiction for court action, court and authorities in the State of
Florida or the Federal District Court having venue for the State of Florida
should have jurisdiction over all controversies that may arise with respect to
this agreement. Company hereby waives any other venue to which it might be
entitled to by virtue of domicile or otherwise and expressly consents and
acknowledges that the courts and authorities in the State of Florida shall have
jurisdiction.

18.  Indemnifications.

     (a) By Evan Systems. Evan Systems shall be solely responsible for, and
shall defend, hold harmless and indemnify Child Watch, and its affiliates,
directors, officers, employees and agents (collectively "Child Watch Parties")

<PAGE>

against, any claims, demands, causes of action or damages, including attorney's
fees (collectively "Claims") arising out of: (i) any act or omission of Evan
Systems hereunder, (ii) any breach of this Agreement by Evan Systems, (iii) any
breach of the terms of this Agreement by Evan Systems (iv) the manufacture,
distribution, advertisement, marketing, promotion, sale, possession or use of
any Licensed Product or Services including, but not limited to, Claims relating
to any defect (whether obvious or hidden and whether or not present in any
sample approved by Child Watch) in a Licensed Product or in any packaging or
other materials (including advertising or promotional materials), or any
injuries to persons or property, or to Evan Systems failure to comply with any
and all applicable Laws including, without limitation, laws relating to use of
any patent, process, method, or device by Evan Systems in connection with the
Licensed Products; or (vi) any Claim that the use of any design or graphic
component of any Licensed Product violates or infringes upon the trademark,
copyright, patent, trade secret, trade dress or other intellectual property
rights of Child Watch or a third party.

     (b) Child Watch. Child Watch shall be solely responsible for, and shall
defend, hold harmless and indemnify Evan Systems, its directors, officers,
employees and agents against any Claims arising out of a claim that the use of a
Licensed Mark which is used as authorized by this Agreement violates or
infringes upon the trademark, copyright or other intellectual property rights
(including trade dress) of a third party;

     (c) Conditions of Indemnification. As a condition of indemnification under
this Section, the party seeking indemnification (for purposes of this Section
called the "Indemnitee") shall give the other party (for purposes of this
Section called the "Indemnifying Party") prompt written notice of any third
party Claim. The Indemnifying Party shall have the right (but not the
obligation) to assume the defense or settlement of any such Claim at its
expense, by counsel of its choice. If the Indemnifying Party assumes such
defense, the Indemnitee shall cooperate fully with and assist the Indemnifying
Party in defense of the Claim and the Indemnifying Party shall reimburse the
Indemnitee for all reasonable out-of-pocket expenses actually incurred by the
Indemnitee in connection with such cooperation and assistance. The Indemnifying
Party shall not enter into a settlement of such Claim or admit liability or
fault without the Indemnitee's prior written approval.

     (d) Insurance. Evan Systems shall obtain and maintain, at its sole expense,
product liability insurance and comprehensive general liability insurance
providing protection for Child Watch and its Affiliates, as additional insured's
on Evan Systems insurance policies or otherwise, against any Claims arising out
of this Agreement, including without limitation, any alleged defects in the
Licensed Products or Services or any use of the Licensed Products or Services,
in an amount of no less than two million dollars combined single limit or bodily
injuries and/or property damage without any deductible, uninsured amount. Such
insurance shall be carried by an insurer with a rating by A.M. Best & Co. of A-7
or other rating satisfactory to Child Watch. Such insurance policy shall also
provide that Child Watch receive written notice within thirty (30) days prior to
the effective date of the cancellation, non-renewal or any material change in
coverage. Evan Systems shall deliver to Child Watch a certificate of such
insurance evidencing satisfactory coverage prior to conducting its first
installation. Such insurance obligations shall not limit Evan Systems indemnity
obligations, except to the extent that Evan Systems insurance company actually
pays Child Watch amounts which Evan Systems would otherwise be obligated to pay
Child Watch.

<PAGE>

19.  Nondisclosure and Confidentiality Requirements.

     (a) Nondisclosure Requirements. During the Term of this Agreement, either
Child Watch or EVANS SYSTEMS (the "Provider") may provide Confidential
Information to the other party (the "Recipient"). The Recipient shall not
publish, reproduce, disclose or release the Confidential Information of the
Provider, in whole or in part, to any third party (including without limitation
to any contractor, agent, government agency, or customer) without the prior
written consent of the Provider in its sole discretion. Notwithstanding anything
stated to the contrary, the Recipient may publish such information to its
accountants, auditors and pursuant to any appropriate and required court or
administrative order. The Recipient shall not disclose Confidential Information
to any subsidiary or other Affiliate of the Recipient unless that company has a
need to know and agrees to be bound by the provisions of this Agreement.

     (b) Degree of Care. The Recipient shall employ at least the same degree of
care in protecting the Confidential Information as it employs in protecting its
own Confidential Information, but not less than a reasonable degree of care.
Without limiting the foregoing, the Recipient shall not copy any Confidential
Information, except as may be required to perform its duties under this
Agreement, and shall store the Confidential Information in a secure place. The
Recipient shall ensure that Confidential Information is disclosed only to those
of its employees or third parties who require access to such information and who
have been advised of the confidentiality provisions of this Agreement.

     (c) Use and Ownership of Confidential Information. The Recipient may
receive and use Confidential Information pursuant to this Agreement solely for
the purposes of this: Agreement. The Recipient shall not use the Confidential
Information for the benefit of third parties. The Recipient understands and
acknowledges that the Provider has a proprietary interest in and shall retain
all rights to and ownership of Confidential Information. Upon request by the
Provider, or upon the termination or expiration of this Agreement, Recipient
will return to Provider all Confidential Information, including all copies,
derivatives, or summaries thereof.

20.  Goodwill. EVANS SYSTEMS and Child Watch recognize that (i) a portion of the
value of the Licensed Marks is attributable to goodwill, (ii) the goodwill
attached to the Licensed Marks belongs exclusively to Child Watch, and (iii)
that the Licensed Marks have secondary meanings in the minds of the public.

21.  Ownership and Protection of Rights.

     (a) Unauthorized Activities. EVANS SYSTEMS shall promptly notify Child
Watch in writing of any potential infringement of the Intellectual Property, and
of the existence or sale of any Unauthorized Goods which comes to EVANS
SYSTEMS's attention. Child Watch shall have the sole right to determine whether
or not any action shall be taken on account of any such infringement. EVANS
SYSTEMS agrees not to contact any third party, not to make any demands for
claims and not to institute any suit or action on account of any infringement of
Child Watch's rights or the Licensed Marks without obtaining the express prior
written permission of Child Watch in each instance.

<PAGE>

     (b) Assistance in Protecting Marks. EVANS SYSTEMS shall cooperate to the
fullest extent necessary to assist Child Watch in the protection of the Licensed
Rights in the Territory in and to the Intellectual Property, including, without
limitation, being named by Child Watch as a complainant in any action brought
within the Territory against an infringer, and shall protect the rights of EVANS
SYSTEMS in the Territory in and to the Intellectual Property. Child Watch and
EVANS SYSTEMS shall share equally in the costs of protecting the rights of Child
Watch in and to the Licensed Marks and all intellectual property rights in, to
or arising from the Licensed Rights and/or Branded Merchandise.

         If EVANS SYSTEMS becomes aware of any infringement of any Licensed
Marks that are not included in the Intellectual Property, it will use reasonable
efforts to advise Child Watch of such infringement and, at Child Watch's
request, shall provide reasonable cooperation and assistance to Child Watch in
Child Watch's protection of those other Child Watch Marks.

     (c) Ownership of Marks. EVANS SYSTEMS acknowledges that Child Watch is the
exclusive owner of all right, title, and interest in and to the Child Watch
Licensed Marks (as described in this agreement) and is also the owner of the
goodwill attached or which shall become attached to the Licensed Marks in
connection with the business and goods in relation to which the same has been,
is or shall be used. Sales of Child Watch Branded Merchandise by EVANS SYSTEMS
shall be deemed to have been made by Child Watch for purposes of trademark
registration or the accrual of common law trademark rights in and to the Child
Watch Licensed Marks and any use of the Child Watch Licensed Marks by EVANS
SYSTEMS shall inure to the benefit of Child Watch EVANS SYSTEMS shall not at any
time, knowingly do or suffer to be done any act or thing which may in any way
adversely affect any rights of Child Watch in and to any of the Child Watch
Licensed Marks or any registration thereof or which, directly or indirectly, may
reduce the value of the Child Watch Licensed Marks or detract from Child Watch's
reputation. EVANS SYSTEMS shall not, at any time, do or suffer to be done any
act or thing which may in any way adversely affect any rights of Child Watch in
and to any Child Watch Licensed Mark or any registration thereof or which,
directly or indirectly, may reduce the value of the Child Watch Licensed Marks.
Any intellectual property rights in the Child Watch Licensed Marks which may
arise out of their use with the Licensed Rights and Branded Merchandise and any
associated goodwill which may accrue to EVANS SYSTEMS shall inure for the
benefit of Child Watch.

     (d) Trade Dress. With respect to any legally protectible configuration,
design, and trade dress of the Licensed Rights and/or Branded Merchandise (the
"Product Trade Dress") developed in conjunction with the terms of this
Agreement, EVANS SYSTEMS acknowledges that Child Watch is the exclusive owner of
all right, title and interest in and to the Product Trade Dress, together with
all the goodwill attached thereto. Sales of services and Branded Merchandise in
the exercise of the Licensed Rights by EVANS SYSTEMS shall be deemed to have
been made by Child Watch solely for purposes of accrual of rights in the
Licensed Marks. Section 1 notwithstanding, nothing herein shall prevent Child
Watch, upon the termination or expiration of this Agreement, from using the
Licensed Marks in connection with products similar or identical to the Licensed
Services and/or Branded Merchandise.

<PAGE>

     (e) Document Records. At Child Watch's request, EVANS SYSTEMS shall execute
any documents reasonably required by Child Watch to confirm (i) Child Watch's
ownership of all rights in and to the Licensed Marks and (ii) the respective
rights of Child Watch and EVANS SYSTEMS pursuant to this Agreement. EVANS
SYSTEMS shall cooperate with Child Watch in connection with the filing and
prosecution by Child Watch of (i) applications in Child Watch's name to register
the Licensed Marks and the maintenance or renewal of such registrations as may
issue; and (ii) such applications, agreements, or other documents as may be
necessary to register EVANS SYSTEMS as a permitted or registered user of the
Licensed Marks or is required to record this Agreement.

     (f) Markings; Notices. EVANS SYSTEMS shall use all marks, trade dress, and
copyrights arising out of this Agreement strictly in compliance with the legal
rights obtaining therein and shall use such markings in connection therewith as
may be required by applicable law. Without limitation to the foregoing, Child
Watch may from time-to-time designate such copyright, trademark or service mark
notices (including the form, location and content of such notices) that EVANS
SYSTEMS shall cause to appear on the Branded Merchandise and that EVANS SYSTEMS
shall cause to appear on or within each Licensed Product.

     (g) Cross-Licensing; Co-Branding. EVANS SYSTEMS shall not cross-license or
otherwise use any other licensed properties or marks with the Licensed Services,
Branded Merchandise, Product Trade Dress, Product Copyrights, or Licensed Marks
without first obtaining Child Watch's written approval.

     (h) Derivative Marks. EVANS SYSTEMS shall not during the Term, (i) use any
form of the Licensed Marks or any logos or designs relating thereto except in
the form and as expressly provided in this Agreement; or, during or after the
Term, (ii) use any trademarks, trade names, service marks, logos or designs
confusingly similar to the Licensed Marks.

22.  Compliance with Standards.

     (a) Unauthorized Goods. EVANS SYSTEMS understands and acknowledges the
meanings of "Unauthorized Goods or Services" as used in this Agreement and EVANS
SYSTEMS shall use all commercially reasonable means to prevent the creation of
any such goods by its employees, agents, representatives or any others operating
under its direction, supervision or control and involving the Child Watch Marks.

     (b) Compliance with Laws: Governmental Approvals. EVANS SYSTEMS shall at
all times conduct all aspects of its business in a reasonable and professional
manner and in compliance with all applicable Laws and highest standard of
business ethics then prevailing in the industry. It shall be EVANS SYSTEMS's
sole responsibility, at its sole expense, to obtain all approvals (including,
but not limited to, approvals of advertising materials) of all Governmental
Authorities which maybe necessary in connection with EVANS SYSTEMS's performance
under this Agreement. Child Watch's approval of any promotional or advertising
materials shall not imply a representation or belief that Child Watch believes
such materials are sufficient to meet applicable Laws, nor shall it imply that
Child Watch agrees with or supports any claims made by EVANS SYSTEMS in any
advertising materials relating to the Licensed Services or Branded Merchandise.

<PAGE>

     (c) Customer Complaints. Both parties agree that if either party receives
any written customer complaints and/or comments with respect to the Licensed
Services and/or Branded Merchandise that party will forward the complaints
and/or comments to the other party within ten (10) days of receipt. Each party
shall provide the other with copies of all written responses to complaints.
EVANS SYSTEMS shall not make any warranties or representations related to the
Licensed Services and/or Branded Merchandise or establish any return or exchange
policy without submitting in writing to Child Watch the proposed language of the
such warranty, policy or representation and obtaining the prior written approval
of Child Watch, in its sole discretion.

23.  Termination.

     (a) Child Watch Termination Events. Without prejudice to any other rights
Child Watch may have pursuant to this Agreement or otherwise, Child Watch shall
have the right to terminate this Agreement at any time if:

         EVANS SYSTEMS fails to pay the Royalty when due.

         EVANS SYSTEMS fails to timely remit a payment when due and shall fail
to cure such non-payment within thirty (30) days of its receipt of written
notice from Child Watch.

         EVANS SYSTEMS institutes voluntary proceedings in bankruptcy or permits
the institution of such proceedings against it.

         EVANS SYSTEMS shall fail to perform any term or undertaking in this
Agreement, the failure of which shall have a material adverse effect on Child
Watch, unless EVANS SYSTEMS has promptly commenced and continues diligent
efforts to remedy the default within thirty (30) days following written notice
thereof EVANS SYSTEMS commits any act or omission resulting in fraud, willful
misconduct or gross negligence.

         In CHILD WATCH's reasonable good faith discretion, CHILD WATCH
determines that EVANS SYSTEMS, undermines the integrity or otherwise harms CHILD
WATCH by any act or agreement not previously approved by CHILD WATCH, CHILD
WATCH may terminate this agreement upon thirty (30) days written notice to EVANS
SYSTEMS. If during such thirty day notice period, EVANS SYSTEMS cures the harm
on Child Watch and its brands (in CHILD WATCH's reasonable good faith
discretion), Child Watch shall rescind the termination notice.

         A termination pursuant to this Subsection 21 shall take effect (i)
thirty (30) days after written notice of such failure to perform, default or
breach is sent by Child Watch if such failure to perform, default or breach can
be Completely Cured (as defined below) and such failure to perform, default or
breach has not been Completely Cured during such thirty (30) day period, or (ii)
immediately after written notice of such failure to perform, default or breach
is sent by Child Watch if such failure to perform, default or breach cannot be
Completely Cured. For purposes of this paragraph, "Completely Cured" means that

<PAGE>

such failure to perform, default or breach is cured so that, in the reasonable
judgment of Child Watch, such failure to perform, default or breach will have
had no effect on or caused no damage to Child Watch.

     (b) EVANS SYSTEMS Termination Events. Without prejudice to any other rights
EVANS SYSTEMS may have pursuant to this Agreement or otherwise, EVANS SYSTEMS
shall have the right to terminate this Agreement at any time if:

         (1) Child Watch shall be in breach of any material term or condition of
this Agreement. A termination pursuant to this clause shall take effect (i)
thirty (30) days after written notice of such failure to perform or breach is
sent by EVANS SYSTEMS if such failure to perform or breach can be Completely
Cured (as defined below) and such failure to perform or breach has not been
Completely Cured during such thirty (30) day period, or (ii) immediately after
written notice of such failure to perform or breach is sent by EVANS SYSTEMS if
such failure to perform or breach cannot be Completely Cured. For purposes of
this paragraph, "Completely Cured" means that such failure to perform or breach
is cured so that, in the reasonable judgment of EVANS SYSTEMS, such failure to
perform or breach will have had no effect on or caused no damage to EVANS
SYSTEMS.

     (c) Rights upon Termination. On any termination or expiration of this
Agreement EVANS SYSTEMS shall immediately pay to Child Watch all amounts due and
owing hereunder, including but not limited to all Minimum Guarantees, as
prorated to the effective date of termination not already paid by EVANS SYSTEMS.

         EVANS SYSTEMS will be deemed to have automatically and irrevocably
assigned, transferred, and conveyed to Child Watch any rights, equities, good
will, titles or other rights in and to the Licensed Marks developed during the
Term which may have been obtained by EVANS SYSTEMS or which may have vested in
EVANS SYSTEMS in pursuance of any endeavors covered hereby, and EVANS SYSTEMS
will execute any instruments requested by Child Watch to accomplish or confirm
the foregoing. Any such assignment, transfer or conveyance shall be without
other consideration than the mutual covenants and considerations of this
Agreement.

         EVANS SYSTEMS shall immediately discontinue the use of all Child Watch
Branded Merchandise, Licensed Services and Licensed Marks, including
advertising, promotional materials, packaging and other objects bearing any
Licensed Marks. EVANS SYSTEMS shall have the right to sell the remaining
Licensed Article(s) within the licensed territory for a period of one hundred
and eighty (180) days following expiration of the License Term ("Sell-off
Period) provided that: (i) the provisions of this Agreement, including those
concerning the calculation and payment of Royalties, shall remain in force and
effect during the Sell-off Period, (ii) within sixty (60) days from the
expiration of the Sell-off Period, EVANS SYSTEMS shall furnish to Child Watch a
statement showing the quantity, type, class, category, sku number and condition
of Licensed Article(s) and/or Advertising and Promotion materials then on hand
or held for EVANS SYSTEMS's inventory ("Final Inventory").

<PAGE>

     (d) Child Watch may immediately license others to use the Child Watch
Licensed Marks to produce, sell, market and advertise products or services
similar or identical to the Licensed Products or Services by any means and
methods throughout the Territory.

24.  Wherever the context so requires, the singular number shall include the
plural and the plural shall include the singular.

25.  If any provision of this Agreement is held to be illegal or invalid by a
court of competent jurisdiction, such provision shall be deemed to be severed
and deleted and neither such provision, nor its severance and deletion, shall
affect the validity of the remaining provisions.

26.  Neither Company, nor Consultant, shall have the right to assign or delegate
this Agreement or any rights or obligations created hereby unless the
non-assigning party expressly approves the assignment in writing.

27.  All notices must be in writing and sent to the appropriate address listed
above, or to such other address as either party may designate in writing, by
first class mail and either certified mail return receipt requested or overnight
courier service. In the case of certified mail notice shall be deemed given as
of the date of deposit with the United States Postal Service, and in case of
overnight courier service notice shall be deemed given as of the date of deposit
with such overnight courier service.

28.  All documentation and information which is designated by the Delivering
Party (herein so called) as proprietary or confidential, including without
limitation drawings, Source Code, computer program listings, techniques,
algorithms and processes and technical and marketing information ("Confidential
Information") which is supplied by the Delivering Party to the Receiving Party
(herein so called) in connection with this Agreement (other than documentation
and information intended for distribution to third parties) shall be treated
confidentially by the Receiving Party and its employees and shall not be
disclosed by the Receiving Party without the Delivering Party's prior written
consent. Information shall not be considered to be Confidential Information if
it (1) is already or otherwise becomes publicly known through no act of the
Receiving Party; (2) is lawfully received from third parties subject to no
restriction of confidentiality; (3) can be shown by the Receiving Party to have
been independently developed by it prior to such disclosure; or (4) is lawfully
required to be disclosed to any governmental agency or is otherwise required to
be disclosed by law or by court or administrative order, provided that the
Receiving Party shall send notice of such proposed disclosure to the Delivering
Party and shall allow the Delivering Party to seek a protective order or take
other reasonable steps to protect the confidentiality thereof. The Receiving
Party agrees to protect the Confidential Information of the Delivering Party
with the same standard of care and procedures which it uses to protect its own
trade secrets and proprietary information. The Receiving Party agrees to be
responsible for its directors, officers, employees, contractors and consultants
maintaining the confidentiality of the Confidential Information in accordance
with the terms of this Section. Notwithstanding any provision of this Agreement
to the contrary, the Receiving Party may only use the Confidential Information
of the Delivering Party in order to perform its obligations under or in
connection with this Agreement unless otherwise authorized by the Receiving
Party.

<PAGE>

29.  Liable.

     (a) In no event shall Licensee be liable for any loss of profits, loss of
business, loss of use or of data, interruption of business, or for indirect,
special, incidental or consequential damages of any kind whether under this
Agreement or otherwise, even if Licensee has been advised of the possibility of
such damages, or for any claim against Licensor by any other party. In no case
will Licensee be liable for any representation or warranty made to any third
party by Licensor.

     (b) In no event shall Licensor be liable for any loss of profits, loss of
business, loss of use or of data, interruption of business, or for indirect,
special, incidental or consequential damages of any kind whether under this
Agreement or otherwise, even if Licensor has been advised of the possibility of
such damages, or for any claim against Licensee by any other party. In no case
will Licensor be liable for any representation or warranty made to any third
party by Licensee.

     (c) Notwithstanding anything in this Agreement to the contrary, either
party's entire liability to the other party for damages concerning performance
or nonperformance by the other party or in any way related to the subject matter
of this Agreement and regardless of whether the claim for such damages is based
in contract or in tort, shall not exceed the amount of the payments made
hereunder by either party to the other party in the six months prior to such
claim.

     (d) Notwithstanding the above, each party shall be responsible to the other
for any and all damages of any kind in an award or settlement of (a) a breach of
the confidentiality provisions of this Agreement. The limitations in this
Section shall apply notwithstanding any failure of essential purpose of any
limited remedy.

In witness hereof, the parties have executed this Agreement the date first above
written.

Licensor:

----------------------------------
Child Watch of North America, Inc.
By:

Licensee:

----------------------------------
Evans Systems, Inc.
By:  Frank Moody, President

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